LABOR

EMPLOYER-EMPLOYEE RELATION

Ramy Gallego vs. Bayer Philippines, Inc., et. al.

G.R. No. 179807, July 31, 2009

Facts:

Ramy Gallego was contracted in 1992 by Bayer Philippines as crop protection

technician to promote and market Bayer products by making farm visits to convince the
farmers to buy their products. Petitioner employment came to a halt in 1996 prompting
Gallego to seek another employment, but he was reemployed in 1997 as part of the
product image which actually performing the same task as crop protection technician.
In 2001, he was directed to submit a resignation letter and ordered to return all pieces of
service equipment, which he refused. He continued performing his duties and received
compensation until January 2002, however, in April 2002, he received a memorandum
that he will be transferred to Luzon; and that he heard that respondents spread rumors
that reached the dealers in Antique that he is no longer connected with Bayer and any
transaction with him will not be honored as of April 30, 2002.

Believing he was terminated, he instituted a complaint for illegal dismissal before the
NLRC. Respondents Bayer and Guillermo denied the existence of employment
relationship, while, respondents Product Image and Bergonia admitted that the
petitioner was hired as contractual employee and that he has stopped reporting for
work. The Labor Arbiter declared that respondents were guilty of illegal dismissal. On
appeal by the respondents, the NLRC reversed the Arbiter‟s decision and contended
that petitioner was not dismissed but has abandoned his employment by failure to report
on his duties. Hence, this petition for Review.

Issues:

(1) Was there employment relation between petitioner and respondent Bayer?
(2) Was petitioner illegally dismissed from his employment?

Ruling (First Issue):

The existence of an employer-employee relationship is determined on the basis of four

standards, namely: (a) the manner of selection and engagement of the putative
employee; (b) the mode of payment of wages; (c) the presence or absence of power of
dismissal; and (d) the presence or absence of control of the putative employee‟s
conduct. Most determinative among these factors is the so-called "control test." If at all,
the only control measure retained by Bayer over petitioner was to act as his de facto
supervisor in certifying to the veracity of the accomplishment reports he submitted to
Product Image. This is by no means the kind of control that establishes an employer-
employee relationship as it pertains only to the results and not the manner and method
of doing the work. It would be a rare contract of service that gives untrammelled
freedom to the party hired and eschews any intervention whatsoever in his performance
of the engagement. Surely, it would be foolhardy for any company to completely give
the reins and totally ignore the operations it has contracted out. In fine, Product Image is
ineluctably the employer of petitioner.

(Second Issue):

The Court appreciates no evidence that petitioner was dismissed. What it finds is that
petitioner unilaterally stopped reporting for work before filing a complaint for illegal
dismissal, based on his belief that Guillermo and Bergonia had spread rumors that his
transactions on behalf of Bayer would no longer be honored as of April 30, 2002. This
belief remains just that – it is unsubstantiated. While in cases of illegal dismissal, the
employer bears the burden of proving that the dismissal is for a valid or authorized
cause, the employee must first establish by substantial evidence the fact of dismissal

Miguela Santuyo, et al. vs. Remerco Garments Manufacturing, Inc. and/or

Victoria Reyes

GR No. 174420; March 22, 2010

Facts:

Petitioners, who are employees of the Remerco Garments Manufacturing, Inc. (RGMI),
were among those recalled to work by the company, after their union, the Kaisahan ng
Manggagawa sa Remerco Garments Manufacturing Inc. (KMM Kilusan), staged a 2-
year illegal strike from 1992 to 1994. Among the conditions of their recall was that they
would no longer be paid a daily rate but on a piece-rate basis. However, even before
RGMI could normalize its operations, the union filed a notice of strike in the National
Conciliation and Mediation Board (NCMB) on August 8, 1995. According to the union,
RGMI conducted a time and motion study and changed the salary scheme from a daily
rate to piece-rate basis without consulting it. It claimed that RGMI therefore not only
violated the existing collective bargaining agreement (CBA) but also diminished the
salaries agreed upon. It therefore committed an unfair labor practice. The conciliation
proceedings between the union and RGMI before the NCMB resulted in a lock-out. The
union went on strike in November 1995. Therafter, the Secretary of Labor assumed
jurisdiction over the case, pursuant to Article 263(g) of the Labor Code. It ordered all
striking workers to return to work.

The Secretary of Labor found that the employees would receive higher wages if they
were paid on a piece-rate rather than on a daily rate basis. Hence, the new salary
scheme would be more advantageous to the employees. For this reason, despite the
provisions of the CBA, the change in salary scheme was validated.

In an order dated September 18, 1996, the Secretary of Labor ordered all employees to
return to work and RGMI to pay its employees their unpaid salaries (from September
25, 1995 to October 14, 1995) on the piece-rate basis. Neither the union nor RGMI
appealed the aforementioned order. Meanwhile, however, on October 18, 1995, while
the conciliation proceedings between the union and respondent were pending,
petitioners filed a complaint for illegal dismissal against RGMI and respondent Victoria
Reyes, accusing the latter of harassment. Petitioners subsequently amended their
complaint, demanding payment of their accrued salaries from September 25 to October
14, 1995.

Respondents moved to dismiss the complaint in view of the pending conciliation

proceedings, involving the same issue, in the NCMB. It also claimed that alleged
violations of the CBA should be resolved according to the grievance procedure laid out
therein. It argued that the labor arbiter had no jurisdiction over the complaint. The labor
arbiter assumed jurisdiction over the case and rendered a decision granting the claims
of the union. The NLRC denied the appeal of the respondents. The Court of Appeals,
however, reversed the NLRC and ruled that the labor arbiter had no jurisdiction over the
complaint. This prompted the petitioners to elevate the matter to the Supreme Court.

Issues:
1. Did the labor arbiter have jurisdiction over the complaint filed by the petitioners?

2. Was the labor arbiter barred by prior judgment from assuming jurisdiction over the
complaint?

Ruling (First Issue):

No, the labor arbiter did not have jurisdiction over the complaint. Petitioners clearly and
consistently questioned the legality of RGMI‟s adoption of the new salary scheme (i.e.,
piece-rate basis), asserting that such action, among others, violated the existing CBA.
The controversy was not a simple case of illegal dismissal but a labor dispute involving
the manner of ascertaining employees‟ salaries, a matter which was governed by the
existing CBA. Article 217 of the Labor Code provides that “[c]ases arising from the
interpretation or implementation of collective bargaining agreements and those arising
from the interpretation or enforcement of company personnel policies shall be disposed
of by the Labor Arbiter by referring the same to the grievance machinery and voluntary
arbitration as may be provided in said agreements.”

This provision requires labor arbiters to refer cases involving the implementation of
CBAs to the grievance machinery provided therein and to voluntary arbitration.

Moreover, Article 260 of the Labor Code clarifies that such disputes must be referred
first to the grievance machinery and, if unresolved within seven days, they shall
automatically be referred to voluntary arbitration. Thus, under Article 261 of the Labor
Code, voluntary arbitrators have original and exclusive jurisdiction over matters which
have not been resolved by the grievance machinery. Pursuant to Articles 217 in relation
to Articles 260 and 261 of the Labor Code, the labor arbiter should have referred the
matter to the grievance machinery provided in the CBA. Because the labor arbiter
clearly did not have jurisdiction over the subject matter, his decision was void.

(Second Issue):

Yes, the labor arbiter was barred by prior judgment from assuming jurisdiction over the
complaint. The Secretary of Labor resolved the labor dispute between the union and
RGMI in his September 18, 1996 order. Since neither the union nor RGMI appealed the
said order, it became final and executory. Article 263(g) of the Labor Code gives the
Secretary of Labor discretion to assume jurisdiction over a labor dispute likely to cause
a strike or a lockout in an industry indispensable to the national interest and to decide
the controversy or to refer the same to the NLRC for compulsory arbitration. In doing so,
the Secretary of Labor shall resolve all questions and controversies in order to settle the
dispute. The Secretary of Labor assumed jurisdiction over the controversy because
RGMI had a substantial number of employees and was a major exporter of garments to
the United States and Canada

Settled is the rule that unions are the agent of its members for the purpose of securing
just and fair wages and good working conditions. Since petitioners were part of the
bargaining unit represented by the union and members thereof, the September 18, 1996
order of the Secretary of Labor applies to them.

Furthermore, since the union was the bargaining agent of petitioners, the complaint was
barred under the principle of conclusiveness of judgments. The parties to a case are
bound by the findings in a previous judgment with respect to matters actually raised and
adjudged therein. Hence, the labor arbiter should have dismissed the complaint on the
ground of res judicata.

APPEALS

Del Rosario vs. Philippine Journalists, Inc.

G.R. No. 181516, August 19, 2009

Facts:

The instant petition stemmed from a complaint filed by petitioner, Cesario L. del
Rosario, against herein respondent, Philippine Journalists, Inc. (PJI), for illegal
dismissal with money claims.

On November 5, 2002, the Labor Arbiter rendered a decision in favor of petitioner.

Respondent elevated its case to the National Labor Relations Commission (NLRC). On
January 6, 2003, it filed its memorandum of appeal together with the appeal bond
issued by Philippine Pryce Assurance Corporation (PPAC).
On December 15, 2003, the NLRC issued a resolutiondismissing the appeal for failure
to perfect the same due to the posting of the appeal bond from a bonding company not
duly accredited by the Court. But in a bid of liberality, the NLRC directed respondent to
post a new bond, but respondent failed to comply. Thus, on March 31, 2005, the NLRC
issued a resolution dismissing the appeal.

Aggrieved, respondent filed a petition for certiorari under Rule 65 of the Rules of Court
before the Court of Appeals (CA). The CA reversed the NLRC, saying that the NLRC
committed grave abuse of discretion in dismissing PJI‟s appeal based on an erroneous
finding that the surety bond respondent posted was void. The CA ratiocinated that at the
time the subject bond was issued, PPAC was still authorized to issue the same. Thus,
there was no legal basis to dismiss PJI‟s appeal because it had actually posted a valid
bond. The CA directed the NLRC to give due course to the appeal, as well as directed
the respondent to file a new bond.

Issue:

Should the appeal be granted due course?

Ruling:

Yes. The Supreme Court sided with the Court of Appeals. Article 223 of the Labor Code
mandates that in cases of judgment involving a monetary award, an appeal by the
employer may be perfected only upon the posting of a cash or surety bond issued by a
reputable bonding company duly accredited by the Commission in an amount
equivalent to the monetary award in the judgment appealed from.

The filing of a supersedeas bond for the perfection of an appeal is mandatory and
jurisdictional. The requirement that employers post a cash or surety bond to perfect their
appeal is apparently intended to assure workers that if they prevail in the case, they will
receive the money judgment in their favor upon the dismissal of the former‟s appeal. It
was intended to discourage employers from using an appeal to delay, or even evade,
their obligations to satisfy their employees' just and lawful claims.

At the time of the filing of the surety bond by PJI on January 2, 2003, PPAC was still an
accredited bonding company. Thus, it was but proper to honor the appeal bond issued
by a bonding company duly accredited by this Court at the time of its issuance. The
subsequent revocation of the authority of a bonding company should not prejudice
parties who relied on its authority. The revocation of authority of a bonding company is
prospective in application.

Still, the Court takes due notice of the opportunity given to PJI to post a new bond
issued by an accredited bonding company in the NLRC resolution dated February 23,
2004. Yet, PJI insisted on the validity of the bond it had filed despite the fact the PPAC
was no longer accredited to act as a surety. This notwithstanding, guided by the
principle that technical rules of procedure should not hamper the quest for justice and
truth, this Court deems it prudent that the case be reviewed and decided on the merits,
in view of the question on the employer-employee relationship of the parties and its
resultant legal consequences. But, so as not to prejudice the rights of petitioner in this
case, the Court reiterates the CA directive for PJI to post a new bond issued by an
accredited bonding company.

REGULAR EMPLOYEES

Philippine Long Distance Telephone Company vs. Rizalina Raut, et. al.

G.R. No. 174209, August 25, 2009

Facts:

This is an illegal case by Raut, Emnace and Capistrano against PLDT. They alleged
that they were illegally dismissed on November 30 and December 16, 1996. The Labor
Arbiter ruled in their favor reinstating the respondents to their former position or if not
feasible anymore to another equal position without loss of seniority rights and benefits
and its backwages.

Soon after, the respondents were reinstated, but allegedly continued to be treated as
temporary employees of the company. Petitioner appealed the decision alleging that the
respondents were never employees of the company but that of an independent
contractor, Peerless Integrated Services. However, NLRC affirmed the arbiter‟s
decision. The Court of Appeals also granted the NLRC‟s ruling. The judgment became
final and exeutory.

Issue:

Are respondents considered regular employees?

Ruling:

The Labor Arbiter, the NLRC, and the Court of Appeals found that the respondents are
regular employees of the petitioner as provided under Article 279, in relation to Article
280 of the Labor Code. Thus, the lower tribunals all affirmed the order of reinstatement
of respondents and their corresponding entitlement to the payment of salaries and other
benefits received by petitioner‟s regular employees.

Finally, on the increase in the computation of the monetary award to respondents, the
decision of the Labor Arbiter specified that for purposes of putting up a bond should
petitioner appeal, the backwages were computed only for a certain period. Otherwise,
the actual backwages to be paid to respondents are computed from the date of
dismissal until the finality of the decision. In addition, because petitioner continues to
refuse and accord regular status to respondents and to pay them their corresponding
wages even after the lapse of two (2) years from the finality of the Labor Arbiter‟s
decision, the Labor Arbiter correctly included that in its order of execution. Thus, the
Labor Arbiter‟s order of execution simply covered the correct computation of wages and
other payments enjoyed by petitioner‟s regular employees.
Locsin vs. PLDT

GR No. 185251, October 2, 2009

Facts:

On November 1, 1990, respondent Philippine Long Distance Telephone Company

(PLDT) and the Security and Safety Corporation of the Philippines (SSCP) entered into
a Security Services Agreement (Agreement) whereby SSCP would provide armed
security guards to PLDT to be assigned to its various offices. Pursuant to such
agreement, petitioners Raul Locsin and Eddie Tomaquin, among other security guards,
were posted at a PLDT office.

On August 30, 2001, respondent issued a Letter dated August 30, 2001 terminating the
Agreement effective October 1, 2001. Despite the termination of the Agreement,
however, petitioners continued to secure the premises of their assigned office. They
were allegedly directed to remain at their post by representatives of respondent. In
support of their contention, petitioners provided the Labor Arbiter with copies of
petitioner Locsin‟s pay slips for the period of January to September 2002.
Then, on September 30, 2002, petitioners‟ services were terminated. Thus, petitioners
filed a complaint before the Labor Arbiter for illegal dismissal and recovery of money
claims such as overtime pay, holiday pay, premium pay for holiday and rest day, service
incentive leave pay, Emergency Cost of Living Allowance, and moral and exemplary
damages against PLDT.

The Labor Arbiter rendered a Decision finding PLDT liable for illegal dismissal. It was
explained in the Decision that petitioners were found to be employees of PLDT and not
of SSCP. Such conclusion was arrived at with the factual finding that petitioners
continued to serve as guards of PLDT‟s offices. As such employees, petitioners were
entitled to substantive and procedural due process before termination of employment.

Issue:

Is there employer-employee relationship?

Ruling:

Yes. From the foregoing circumstances, reason dictates that we conclude that
petitioners remained at their post under the instructions of respondent. We can further
conclude that respondent dictated upon petitioners that the latter perform their regular
duties to secure the premises during operating hours. This, to our mind and under the
circumstances, is sufficient to establish the existence of an employer-employee
relationship.

To reiterate, while respondent and SSCP no longer had any legal relationship with the
termination of the Agreement, petitioners remained at their post securing the premises
of respondent while receiving their salaries, allegedly from SSCP. Clearly, such a
situation makes no sense, and the denials proffered by respondent do not shed any
light to the situation. It is but reasonable to conclude that, with the behest and,
presumably, directive of respondent, petitioners continued with their services. Evidently,
such are indicia of control that respondent exercised over petitioners.
Evidently, respondent having the power of control over petitioners must be considered
as petitioners‟ employer––from the termination of the Agreement onwards––as this was
the only time that any evidence of control was exhibited by respondent over petitioners
and in light of our ruling in Abella. Thus, as aptly declared by the NLRC, petitioners
were entitled to the rights and benefits of employees of respondent, including due
process requirements in the termination of their services.

Both the Labor Arbiter and NLRC found that respondent did not observe such due
process requirements. Having failed to do so, respondent is guilty of illegal dismissal.

Masonic Contractor Inc. vs Madjos, Tiamzon and Rapadas

G.R. No. 185094, November 25, 2009

Facts:

Respondents Magdalena Madjos, Zenaida Tiamzon and Carmelita Rapadas were

employed sometime in 1991 as all-around laborers (driver/sweeper/ “taga-libing”/grass-
cutter) by Masonic Contractor, Inc. (MCI). Each of them received an initial daily wage of
P165.00 and were required to report for work from 7:00 a.m. to 4:00 p.m. Three years
thereafter, MCI increased their wages by P15.00 per day but not without earning the ire
of Melvin Balais, president of MCI.

Sometime in 2004, Balais told Madjos, Tiamzon and Rapadas, along with nine (9) other
employees, to take a two-day leave. When they reported for work two days thereafter,
they were barred from entering the work premises and were informed that they had
already been replaced by other workers. This prompted Madjos and her co-workers to
file a complaint against herein petitioners for illegal dismissal and for non-payment of
overtime pay, holiday pay, 13th month pay, and damages.

Petitioners, for their part, denied being the direct employer of respondents. Essentially,
they argued that MCI had maintenance contracts with different memorial park
companies and that, over the years, they had engaged the services of a certain Luz
Malibiran to provide them with the necessary manpower depending on MCI‟s volume of
work.
Issue:

Are respondents regular employees of petitioner?

Ruling:

Yes. Petitioners‟ defense that they merely contracted the services of respondents
through Malibiran fails to persuade us. The facts of this case show that respondents
have been under the employ of MCI as early as 1991. They were hired not to perform a
specific job or undertaking. Instead, they were employed as all-around laborers doing
varied and intermittent jobs, such as those of drivers, sweepers, gardeners, and even
undertakers or tagalibing, until they were arbitrarily terminated by MCI in 2004. Their
wages were paid directly by MCI, as evidenced by the latter‟s payroll summary, belying
its self-serving and unsupported contention that it paid directly to Malibiran for
respondents‟ services. Respondents had identification cards or gate passes issued not
by Malibiran, but by MCI, and were required to wear uniforms bearing MCI‟s emblem or
logo when they reported for work.

It is common practice for companies to provide identification cards to individuals not

only as a security measure, but more importantly to identify the bearers thereof as bona
fide employees of the firm or institution that issued them. The provision of company-
issued identification cards and uniforms to respondents, aside from their inclusion in
MCI‟s summary payroll, indubitably constitutes substantial evidence sufficient to support
only one conclusion: that respondents were indeed employees of MCI.
Gomez vs PNOC

G.R. No. 174044, November 27, 2009

Facts:

Petitioner Gloria V. Gomez used to work as Manager of the Legal Department of Petron
Corporation, then a government-owned corporation. With Petron‟s privatization, she
availed of the company‟s early retirement program and left that organization on April 30,
1994. On the following day, May 1, 1994, however, Filoil Refinery Corporation (Filoil),
also a government-owned corporation, appointed her its corporate secretary and legal
counsel, with the same managerial rank, compensation, and benefits that she used to
enjoy at Petron. However, the privatization did not materialize so Gomez continued to
serve as corporate secretary of respondent PDMC. On September 23, 1996 its
president re-hired her as administrator and legal counsel of the company.
On March 29, 1999 the new board of directors of respondent PDMC removed petitioner
Gomez as corporate secretary. Further, at the board‟s meeting on October 21, 1999
the board questioned her continued employment as administrator. In answer, she
presented the former president‟s May 24, 1998 letter that extended her term.
Dissatisfied with this, the board sought the advice of its legal department, which
expressed the view that Gomez‟s term extension was an ultra vires act of the former
president. It reasoned that, since her position was functionally that of a vice-president
or general manager, her term could be extended under the company‟s by-laws only with
the approval of the board. The legal department held that her “de facto” tenure could be
legally put to an end.

Petitioner Gomez for her part conceded that as corporate secretary, she served only as
a corporate officer. But, when they named her administrator, she became a regular
managerial employee. Consequently, the respondent PDMC‟s board did not have to
approve either her appointment as such or the extension of her term in 1998.

Issue:

Is Gomez an ordinary employee whose complaint is within the jurisdiction of the NLRC?

Ruling:

Yes. The relationship of a person to a corporation, whether as officer or agent or

employee, is not determined by the nature of the services he performs but by the
incidents of his relationship with the corporation as they actually exist. That the
employee served concurrently as corporate secretary for a time is immaterial. A
corporation is not prohibited from hiring a corporate officer to perform services under
circumstances which will make him an employee. Indeed, it is possible for one to have a
dual role of officer and employee. NLRC has jurisdiction over a complaint filed by one
who served both as corporate officer and employee, when the money claims were made
as an employee and not as a corporate officer.

PROJECT EMPLOYEES

William Uy Construction vs. Trinidad

G.R. No. 183250, March 10, 2010

Facts:

Trinidad claimed that he had been working with the latter company for 16 years since
1988 as driver of its service vehicle, dump truck, and transit mixer. He had signed
several employment contracts with the company that identified him as a project
employee although he had always been assigned to work on one project after another
with some intervals. On December 2004, he was terminated from work due to the
shutdown of operations due to lack of projects but he later found out that there was a
project in Batangas but he was no longer hired back.

Petitioner company countered that it was in the construction business. By the nature of
such business, it had to hire and engage the services of project construction workers,
including respondent Trinidad, whose employments had to be co-terminous with the
completion of specific company projects. For this reason, every time the company
employed Trinidad, he had to execute an employment contract with it, called
Appointment as Project Worker.

The Labor Arbiter dismissed Trinidad‟s complaint for unjust dismissal and ordered
petitioner company to pay Trinidad P1,500.00 in unpaid service incentive leave, taking
into consideration the three-year prescriptive period for money claims. The Labor
Arbiter held that, since Trinidad was a project employee and since his company
submitted the appropriate establishment termination report to DOLE, his loss of work
cannot be regarded as unjust dismissal. National Labor Relations Commission (NLRC)
affirmed the Labor Arbiter‟s ruling, prompting respondent Trinidad to elevate his case to
the Court of Appeals (CA). The CA reversed the NLRC‟s findings

Issue:

Is respondent Trinidad a regular employee?

Ruling:

No. The test for distinguishing a “project employee” from a “regular employee” is
whether or not he has been assigned to carry out a “specific project or undertaking,”
with the duration and scope of his engagement specified at the time his service is
contracted. Here, it is not disputed that petitioner company contracted respondent
Trinidad‟s service by specific projects with the duration of his work clearly set out in his
employment contracts. He remained a project employee regardless of the number of
years and the various projects he worked for the company.

Generally, length of service provides a fair yardstick for determining when an employee
initially hired on a temporary basis becomes a permanent one, entitled to the security
and benefits of regularization. But this standard will not be fair, if applied to the
construction industry, simply because construction firms cannot guarantee work and
funding for its payrolls beyond the life of each project. The repeated and successive
rehiring of project employees do 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.

Trinidad‟s series of employments with petitioner company were co-terminous with its
projects. When its Boni Serrano-Katipunan Interchange Project was finished in
December 2004, Trinidad‟s employment ended with it. He was not dismissed. His
employment contract simply ended with the project for which he had signed up. His
employment history belies the claim that he continuously worked for the company.
Intervals or gaps separated one contract from another.

The CA noted that DOLE Order 19 required employers to submit a report of termination
of employees every completion of construction project. And, since petitioner company
submitted at the hearing before the Labor Arbiter only the termination report covering
respondent Trinidad‟s last project, it failed to satisfy such requirement.

LABOR ONLY CONTRACTING

Coca-Cola Bottlers Phils., Inc., vs. Agito, Oca III, Alariao, Jr., Ong, Arvin,
Francisco, and Golez

G.R. No. 179546, February 13, 2009

Facts:

Respondents filed before the NLRC two complaints against Petitioner, Interserve,
Peerless Integrated Services, Inc., Better Builders, Inc., and Excellent Partners, Inc. for
reinstatement with backwages, regularization, nonpayment of 13th month pay, and
damages. Respondents alleged in their Position Paper that they were salesmen
assigned at the Lagro Sales Office of petitioner. They had been in the employ of
petitioner for years, but were not regularized. Their employment was terminated on 8
April 2002 without just cause and due process. However, they failed to state the
reason/s for filing a complaint against Interserve; Peerless Integrated Services, Inc.;
Better Builders, Inc.; and Excellent Partners, Inc.

Petitioner Coca-cola filed its Position Paper (with Motion to Dismiss), where it averred
that respondents were employees of Interserve who were tasked to perform contracted
services in accordance with the provisions of the Contract of Services executed
between petitioner and Interserve on 23 March 2002. Said Contract between petitioner
and Interserve, covering the period of 1 April 2002 to 30 September 2002, constituted
legitimate job contracting, given that the latter was a bona fide independent contractor
with substantial capital or investment in the form of tools, equipment, and machinery
necessary in the conduct of its business.

To prove the status of Interserve as an independent contractor, petitioner presented the

following pieces of evidence: (1) the Articles of Incorporation of Interserve; (2) the
Certificate of Registration of Interserve with the Bureau of Internal Revenue; (3) the
Income Tax Return, with Audited Financial Statements, of Interserve for 2001; and (4)
the Certificate of Registration of Interserve as an independent job contractor, issued by
the Department of Labor and Employment (DOLE).

As a result, petitioner asserted that respondents were employees of Interserve, since it

was the latter which hired them, paid their wages, and supervised their work, as proven
by: (1) respondents‟ Personal Data Files in the records of Interserve; (2) respondents‟
Contract of Temporary Employment with Interserve; and (3) the payroll records of
Interserve. Petitioner, thus, sought the dismissal of respondents‟ complaint against it on
the ground that the Labor Arbiter did not acquire jurisdiction over the same in the
absence of an employer-employee relationship between petitioner and the respondents.

The Labor Arbiter found that respondents were employees of Interserve and not of
petitioner. The Labor Arbiter placed considerable weight on the fact that Interserve was
registered with the DOLE as an independent job contractor, with total assets amounting
to P1,439,785.00 as of 31 December 2001. It was Interserve that kept and maintained
respondents‟ employee records, including their Personal Data Sheets; Contracts of
Employment; and remittances to the Social Securities System (SSS), Medicare and
Pag-ibig Fund, thus, further supporting the Labor Arbiter‟s finding that respondents were
employees of Interserve. She ruled that the circulars, rules and regulations which
petitioner issued from time to time to respondents were not indicative of control as to
make the latter its employees.
Unsatisfied with the foregoing Decision of the Labor Arbiter, respondents filed an appeal
with the NLRC. In their Memorandum of Appeal, respondents maintained that contrary
to the finding of the Labor Arbiter, their work was indispensable to the principal business
of petitioner. Respondents supported their claim with copies of the Delivery Agreement
between petitioner and TRMD Incorporated, stating that petitioner was “engaged in the
manufacture, distribution and sale of soft drinks and other related products with various
plants and sales offices and warehouses located all over the Philippines.” Moreover,
petitioner supplied the tools and equipment used by respondents in their jobs such as
forklifts, pallet, etc. Respondents were also required to work in the warehouses, sales
offices, and plants of petitioner. Respondents pointed out that, in contrast, Interserve
did not own trucks, pallets cartillas, or any other equipment necessary in the sale of
Coca-Cola products.

The NLRC affirmed the Labor Arbiter‟s Decision and pronounced that no employer-
employee relationship existed between petitioner and respondents. Aggrieved once
more, respondents sought recourse with the Court of Appeals by filing a Petition for
Certiorari under Rule 65. The Court of Appeals reversed the NLRC decision. The
appellate court ruled that Interserve was a labor-only contractor, with insufficient capital
and investments for the services which it was contracted to perform. With only
P510,000.00 invested in its service vehicles and P200,000.00 in its machineries and
equipment, Interserve would be hard-pressed to meet the demands of daily soft drink
deliveries of petitioner in the Lagro area. The Court Appeals concluded that the
respondents used the equipment, tools, and facilities of petitioner in the day-to-day
sales operations.

Additionally, the Court of Appeals determined that petitioner had effective control over
the means and method of respondents‟ work as evidenced by the Daily Sales
Monitoring Report, the Conventional Route System Proposed Set-up, and the
memoranda issued by the supervisor of petitioner addressed to workers, who, like
respondents, were supposedly supplied by contractors. The appellate court deemed
that the respondents, who were tasked to deliver, distribute, and sell Coca-Cola
products, carried out functions directly related and necessary to the main business of
petitioner. The appellate court finally noted that certain provisions of the Contract of
Service between petitioner and Interserve suggested that the latter‟s undertaking did not
involve a specific job, but rather the supply of manpower.

Issue:

Is Interserve a legitimate job contractor?

Ruling:

No.The law clearly establishes an employer-employee relationship between the

principal employer and the contractor‟s employee upon a finding that the contractor is
engaged in “labor-only” contracting. Article 106 of the Labor Code categorically states:
“There is „labor-only‟ contracting where the person supplying workers to an employee
does not have substantial capital or investment in the form of tools, equipment,
machineries, work premises, among others, and the workers recruited and placed by
such persons are performing activities which are directly related to the principal
business of such employer.” Thus, performing activities directly related to the principal
business of the employer is only one of the two indicators that “labor-only” contracting
exists; the other is lack of substantial capital or investment. The Court finds that both
indicators exist in the case at bar.

Respondents worked for petitioner as salesmen, with the exception of respondent Gil
Francisco whose job was designated as leadman. In the Delivery Agreement between
petitioner and TRMD Incorporated, it is stated that petitioner is engaged in the
manufacture, distribution and sale of softdrinks and other related products. The work of
respondents, constituting distribution and sale of Coca-Cola products, is clearly
indispensable to the principal business of petitioner. The repeated re-hiring of some of
the respondents supports this finding. Petitioner also does not contradict respondents‟
allegations that the former has Sales Departments and Sales Offices in its various
offices, plants, and warehouses; and that petitioner hires Regional Sales Supervisors
and District Sales Supervisors who supervise and control the salesmen and sales route
helpers.

As to the supposed substantial capital and investment required of an independent job

contractor, petitioner calls the attention of the Court to the authorized capital stock of
Interserve amounting to P2,000,000.00. It cites as authority Filipinas Synthetic Fiber
Corp. v. National Labor Relations Commission and Frondozo v. National Labor
Relations Commission, where the contractors‟ authorized capital stock of P1,600,000.00
and P2,000,000.00, respectively, were considered substantial for the purpose of
concluding that they were legitimate job contractors. Petitioner also refers to Neri v.
National Labor Relations Commission where it was held that a contractor ceases to be
a labor-only contractor by having substantial capital alone, without investment in tools
and equipment.

Note: Labor-only contracting would give rise to: (1) the creation of an employer-
employee relationship between the principal and the employees of the contractor or
sub-contractor; and (2) the solidary liability of the principal and the contractor to the
employees in the event of any violation of the Labor Code.

Coca-cola Bottlers Philippines vs. Ricky Dela Cruz, et. al.

G.R. No. 184977, December 7, 2009

Facts:

Respondents filed two separate complaints for regularization with money claims against
Coca-Cola Bottlers Philippines, Inc. Before the Labor Arbiter, the respondents alleged
that they are route helpers assigned to work in the petitioner‟s trucks. They go from the
Coca-Cola sales offices or plants to customer outlets; they were hired either directly by
the petitioner or by its contractors, but they do not enjoy the full remuneration, benefits
and privileges granted to the petitioner‟s regular sales force. They argued that the
services they render are necessary and desirable in the regular business of the
petitioner. In defense, the petitioner contended that it entered into contracts of services
with Peerless and Excellent Partners Cooperative, Inc. (Excellent) to provide allied
services; under these contracts, Peerless and Excellent retained the right to select, hire,
dismiss, supervise, control and discipline and pay the salaries of all personnel they
assign to the petitioner; in return for these services, Peerless and Excellent were paid a
stipulated fee. The petitioner posited that there is no employer-employee relationship
between the company and the respondents and the complaints should be dismissed for
lack of jurisdiction on the part of the NLRC. In reply, the respondents countered that
they worked under the control and supervision of the company‟s supervisors who
prepared their work schedules and assignments. Peerless and Excellent, too, did not
have sufficient capital or investment to provide services to the petitioner. The
respondents thus argued that the petitioner‟s contracts of services with Peerless and
Excellent are in the nature of "labor-only" contracts prohibited by law.

Issue:

Was there labor-only contracting?

Ruling:

Yes. The contract between the principal and the contractor is not the final word on how
the contracted workers relate to the principal and the purported contractor; the
relationships must be tested on the basis of how they actually operate. The legitimate
job contractor must have the capitalization and equipment to undertake the sale and
distribution of the manufacturer‟s products, and must do it on its own using its own
means and selling methods.

Even before going into the realities of workplace operations, the Court of Appeals found
that the service contracts themselves provide ample leads into the relationship between
the company, on the one hand, and Peerless and Excellent, on the other. The Court of
Appeals noted that both the Peerless and the Excellent contracts show that their
obligation was solely to provide the company with “the services of contractual
employees,” and nothing more. These contracted services were for the handling and
delivery of the company‟s products and allied services. Following D.O. 18-02 and the
contracts that spoke purely of the supply of labor, the Court of Appeals concluded that
Peerless and Excellent were labor-only contractors unless they could prove that they
had the required capitalization and the right of control over their contracted workers.

The contractors were not independently selling and distributing company products,
using their own equipment, means and methods of selling and distribution; they only
supplied the manpower that helped the company in the handing of products for sale and
distribution. In the context of D.O. 18-02, the contracting for sale and distribution as an
independent and self-contained operation is a legitimate contract, but the pure supply of
manpower with the task of assisting in sales and distribution controlled by a principal
falls within prohibited labor-only contracting. Consequently, the contracted personnel,
engaged in component functions in the main business of the company under the latter‟s
supervision and control, cannot but be regular company employees.
Joeb Aliviado, et al. vs. Procter & Gamble Philippines, Inc., et al.

G.R. No. 160506, March 9, 2010

Facts:

Petitioners worked as merchandisers of P&G. They all individually signed employment

contracts with either Promm-Gem or SAPS for periods of more or less five months at a
time.They were assigned at different outlets, supermarkets and stores where they
handled all the products of P&G. They received their wages from Promm-Gem or
SAPS. Subsequently, petitioners filed a complaintagainst P&G for regularization,
service incentive leave pay and other benefits with damages. The complaint was later
amendedto include the matter of their subsequent dismissal.

The Labor Arbiter dismissed the complaint for lack of merit and ruled that there was no
employer-employee relationship between petitioners and P&G. He found that the
selection and engagement of the petitioners, the payment of their wages, the power of
dismissal and control with respect to the means and methods by which their work was
accomplished, were all done and exercised by Promm-Gem/SAPS. He further found
that Promm-Gem and SAPS were legitimate independent job contractors. On appeal to
the NLRC, the NlRC affirmed the decision of the labor arbiter. Petitioners then filed a
petition for certiorari with the CA, alleging grave abuse of discretion amounting to lack or
excess of jurisdiction on the part of the Labor Arbiter and the NLRC. However, said
petition was also denied by the CA.

Issues:
1.) Is P&G the employer of petitioners?

2.) Were petitioners illegally dismissed?

Ruling:

Qualify. In order to determine whether P&G is the employer of petitioners, it is

necessary to first determine whether Promm-Gem and SAPS are labor-only contractors
or legitimate job contractors. 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.

The Court held that Promm-Gem cannot be regarded as labor-only contractor but a
legitimate independent contractor because the financial statement of Promm-Gem
shows that it has authorized capital stock of P1 million and a paid-in capital, or capital
available for operations, of P500,000.00 as of 1990. It also has long term assets worth
P432, 895.28 and current assets of P719, 042.32. Promm-Gem has also proven that it
maintained its own warehouse and office space with a floor area of 870 square meters.
It also had under its name three registered vehicles which were used for its
promotional/merchandising business. Promm-Gem also has other clients aside from
P&G.

On the other hand, the Articles of Incorporation of SAPS shows that it has a paid-in
capital of only P31, 250.00. There is no other evidence presented to show how much its
working capital and assets are. Furthermore, there is no showing of substantial
investment in tools, equipment or other assets. Considering that SAPS has no
substantial capital or investment and the workers it recruited are performing activities
which are directly related to the principal business of P&G, the court held that SAPS is
engaged in "labor-only contracting". The contractor is considered merely an agent of the
principal employer and the latter is responsible to the employees of the labor-only
contractor as if such employees had been directly employed by the principal employer.

With regard to the termination letters given by Promm-Gem to its employees uniformly
specified the cause of dismissal as grave misconduct and breach of trust. The court
held that there were no valid causes for the dismissal of petitioners-employees of
Promm-Gem.

Misconduct to be valid just cause for dismissal, such misconduct (a) must be serious;
(b) must relate to the performance of the employee‟s duties; and (c) must show that the
employee has become unfit to continue working for the employer. In the case,
petitioners-employees of Promm-Gem may have committed an error of judgment in
claiming to be employees of P&G, but it cannot be said that they were motivated by any
wrongful intent in doing so. As such, they are guilty of only simple misconduct for
assailing the integrity of Promm-Gem as a legitimate and independent promotion firm. A
misconduct which is not serious or grave, as that existing in the instant case, cannot be
a valid basis for dismissing an employee.

Meanwhile, loss of trust and confidence, as a ground for dismissal, must be based on
the willful breach of the trust reposed in the employee by his employer. Ordinary breach
will not suffice. Loss of trust and confidence, as a cause for termination of employment,
is premised on the fact that the employee concerned holds a position of responsibility or
of trust and confidence. And, in order to constitute a just cause for dismissal, the act
complained of must be work-related and must show that the employee is unfit to
continue to work for the employer. In the case at bar, In the instant case, the petitioners-
employees of Promm-Gem have not been shown to be occupying positions of
responsibility or of trust and confidence. Neither is there any evidence to show that they
are unfit to continue to work as merchandisers for Promm-Gem. Hence, no valid cause
for dismissal by Promm-Gem against petitioner-employees.

With regard to the petitioners placed with P&G by SAPS, they were given no written
notice of dismissal. The records show that upon receipt by SAPS of P&G‟s letter
terminating their "Merchandising Services Contact", they in turn verbally informed the
concerned petitioners not to report for work anymore. It must be emphasized that the
onus probandi to prove the lawfulness of the dismissal rests with the employer. In
termination cases, the burden of proof rests upon the employer to show that the
dismissal is for just and valid cause. In the instant case, P&G failed to discharge the
burden of proving the legality and validity of the dismissals of those petitioners who are
considered its employees. Hence, the dismissals necessarily were not justified and are
therefore illegal.

OUTSOURCING

Temic Automotic Philippines vs.

Temic Automotive Philipppines Employees Union-FFW

G.R. No. 186965, December 23, 2009

Facts:

By practice, the petitioner contracts out some of the work in the warehouse department,
to three independent service providers or forwarders. These forwarders also have their
own employees who hold the positions of clerk, material handler, system encoder and
general clerk. The regular employees of the petitioner and those of the forwarders share
the same work area and use the same equipment, tools and computers all belonging to
the petitioner.

This outsourcing arrangement gave rise to a union grievance on the issue of the scope
and coverage of the collective bargaining unit, specifically to the question of "whether or
not the functions of the forwarders’ employees are functions being performed by the
regular rank-and-file employees covered by the bargaining unit." The union thus
demanded that the forwarders' employees be absorbed into the petitioner's regular
employee force and be given positions within the bargaining unit. The petitioner, on the
other hand, on the premise that the contracting arrangement with the forwarders is a
valid exercise of its management prerogative, posited that the union's position is a
violation of its management prerogative to determine who to hire and what to contract
out, and that the regular rank-and-file employees and their forwarders‟ employees
serving as its clerks, material handlers, system encoders and general clerks do not
have the same functions as regular company employees.

Issue:

Was the company validly outsourcing the services involving forwarding, packing,
loading and clerical activities related thereto?

Ruling:

Yes. The employer was within its right in entering the forwarding agreements with the
forwarders as an exercise of its management prerogative. The employer‟s declared
objective for the arrangement is to achieve greater economy and efficiency in its
operations – a universally accepted business objective and standard that the union has
never questioned. In Meralco v. Quisumbing,[G.R. No. 127598, January 27, 1999] the
Court joined this universal recognition of outsourcing as a legitimate activity when it held
that a company can determine in its best judgment whether it should contract out a part
of its work for as long as the employer is motivated by good faith; the contracting is not
for purposes of circumventing the law; and does not involve or be the result of malicious
or arbitrary action.
ALIEN EMPLOYMENT PERMIT

WPP Marketing Communications, Inc., et al. vs. Jocelyn M. Galera

GR No. 169207; March 25, 2010

Jocelyn M. Galera vs. WPP Marketing Communications, Inc., et al.

GR No. 169239; March 25, 2010

Facts:

Petitioner Jocelyn M. Galera is an American citizen, who was hired by respondent John
Steedman, Chairman of WPP Worldwide and Chief Executive Officer of Mindshare, Co.,
a corporation based in Hong Kong, China, to work in the Philippines for private
respondent WPP Marketing Communications, Inc. (WPP), a corporation registered and
operating under the laws of Philippines. Under the employment contract, Galera would
commence employment on September 1, 1999, with the position of Managing Director
of Mindshare Philippines. Thus, without obtaining an alien employment permit, Galera
commenced her employment with WPP Philippines on the said date. It was only after
four months from the time she commenced employment that private respondent WPP
filed before the Bureau of Immigration an application for petitioner Galera to receive a
working visa. In the application, she was designated as Vice-President of WPP.
Petitioner alleged that she was constrained to sign the application in order that she
could remain in the Philippines and retain her employment.

On December 14, 2000, private respondent Galera was verbally informed by Steedman
that her employment had been terminated. She received her termination letter the
following day. Her termination prompted Galera to commence a complaint for illegal
dismissal before the labor arbiter. The labor arbiter found WPP, Steedman, Webster,
and Lansang liable for illegal dismissal and damages. Furthermore the labor arbiter
stated that Galera was not only illegally dismissed but was also not accorded due
process, saying that Galera was not given an opportunity by WPP to defend herself and
explain her side. Thus, WPP did not observe both substantive and procedural due
process in terminating Galera‟s employment. The labor arbiter ordered WPP to reinstate
Galera and to pay her backwages, transportation and housing benefits, and moral and
exemplary damages, among others.

On appeal, the NLRC reversed the labor arbiter‟s ruling. The NLRC ruled that Galera
was WPP‟s Vice-President, and therefore, a corporate officer at the time she was
removed by the Board of Directors on 14 December 2000. The NLRC ruled that the
labor arbiter had no jurisdiction over the case because being a corporate officer, a case
arising from her termination is considered as an intra-corporate dispute, which was
cognizable by the Securities and Exchange Commission under P.D. 902-A (but now by
the Regional Trial Courts designated as Commercial Courts by the Supreme Court
pursuant to Section 5.2 of RA No.8799).

The Court of Appeals reversed the NLRC. It ruled that Galera‟s appointment by the
Board of Directors of the WPP as Vice President for Media had no legal effect as WPP‟s
by-laws provided for only one Vice-President, which at that time was occupied.
Furthermore, WPP‟s by-laws did not include a managing director as among its
corporate officers. The Court of Appeals ordered WPP to pay Galera backwages and
separation pay, as well as housing benefits, moral and exemplary damages, and
attorney‟s fees, among others.

The case was subsequently elevated to the Supreme Court.

Issues:

1. Is Galera an employee or a corporate officer of WPP?

2. Did the labor arbiter have jurisdiction over the case?

3. Was Galera illegally dismissed?

4. Is Galera entitled to collect the award of backwages and damages even if she did not
have an alien employment permit when she commenced her employment in the
Philippines?
Ruling (First Issue):

Galera is an employee of WPP. She is not a corporate officer of WPP. An examination

of WPP‟s by-laws resulted in a finding that Galera‟s appointment as a corporate officer
(Vice-President with the operational title of Managing Director of Mindshare) during a
special meeting of WPP‟s Board of Directors is an appointment to a non-existent
corporate office. WPP‟s by-laws provided for only one Vice-President. At the time of
Galera‟s appointment on December 31, 1999, WPP already had one Vice-President in
the person of Webster. Galera cannot be said to be a director of WPP also because all
five directorship positions provided in the by-laws are already occupied.

The appellate court further justified that Galera was an employee and not a corporate
officer by subjecting WPP and Galera‟s relationship to the four-fold test: (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 with respect to the
means and methods by which the work is to be accomplished. The appellate court
found that Sections 1 and 4 of the employment contract mandate where and how often
she is to perform her work; Sections 3, 5, 6 and 7 show that wages she receives are
completely controlled by WPP; and Sections 10 and 11 clearly state that she is subject
to the regular disciplinary procedures of WPP.

(Second Issue):

The Labor Arbiter had jurisdiction over the illegal dismissal complaint filed by Galera.
Galera being an employee, the Labor Arbiter and the NLRC had jurisdiction over her
illegal dismissal complaint. Article 217 of the Labor Code vests the Labor Arbiter with
the jurisdiction to hear and decide, among others termination disputes, involving
workers, whether agricultural or non-agricultural.
(Third Issue):

Yes, WPP‟s dismissal of Galera lacked both substantive and procedural due process.

WPP failed to prove any just or authorized cause for Galera‟s dismissal. WPP was
unable to substantiate the allegations of Steedman‟s December 15, 2000 letter to
Galera, (questioning her leadership and competence). Galera, on the other hand,
presented documentary evidence in the form of congratulatory letters, including one
from Steedman, which contents are diametrically opposed to the December 15, 2000
letter. Also, the law requires that the employer must furnish the worker sought to be
dismissed with two written notices before termination of employment can be legally
effected: (1) notice which apprises the employee of the particular acts or omissions for
which his dismissal is sought; and (2) the subsequent notice which informs the
employee of the employer‟s decision to dismiss him. Failure to comply with the
requirements taints the dismissal with illegality. WPP‟s acts clearly show that Galera‟s
dismissal did not comply with the two-notice rule.

(Fourth Issue):

No, Galera could not claim the employees benefits she is entitled under Philippine
Labor Laws. The law and the rules are consistent in stating that the employment permit
must be acquired prior to employment. Article 40 of the Labor Code states: "Any alien
seeking admission to the Philippines for employment purposes and any domestic or
foreign employer who desires to engage an alien for employment in the Philippines shall
obtain an employment permit from the Department of Labor. Section 4, Rule XIV, Book
1 of the Implementing Rules and Regulations provides, among others, that if an alien
enters the country under a non-working visa and wishes to be employed thereafter, he
may only be allowed to be employed upon presentation of a duly approved employment
permit.

Galera cannot come to this Court with unclean hands. To grant Galera‟s prayer is to
sanction the violation of the Philippine labor laws requiring aliens to secure work permits
before their employment. We hold that the status quo must prevail in the present case
and we leave the parties where they are. This ruling, however, does not bar Galera from
seeking relief from other jurisdictions.

ILLEGAL RECRUITMENT

People vs. Balagan and Avila

G.R. No. 183099, February 3, 2010

Facts:

Complainant went into the office of a certain recruiter whom he heard can facilitate
employment overseas. Upon arriving at the latter‟s office, the recruiter asked him if he
was interested in getting employment abroad. After answering in the affirmative, the
recruiter told him to submit certain requirements (e.g. passport and other requirements).
After doing so, the recruiter told Complainant to prepare P150,000 for deployment. A
few days later, Complainant went to the recruiter‟s office and handed P37,000. A day
after that, he gave another P20,000. These amounts, however, were not personally
handed to said recruiter, but instead was given to the accused (Balagan and Avila) who
allegedly served as the recruiter‟s clerk and secretary respectively.
No deployment occurred. Complainant demanded for the return of the money, but the
recruiter refused. Upon Complainant‟s inquiry with the POEA, he discovered that the
recruiter and the accused (Balagan and Avila) were not licensed to perform recruitment
activities. Aggrieved he filed a case of Syndicated Illegal Recruitment and Estafa
against the accused (Balagan and Avila only). The RTC convicted the accused as
charged, but on appeal, the CA, while affirming the conviction of Estafa, modified the
conviction of Syndicated Illegal Recruitment to Simple Illegal Recruitment. Hence, the
present petition.

Issue:

Was the modification correct?

Ruling:

Yes, because the prosecution failed to establish that the illegal recruitment was
committed by a syndicate.[1]
People vs. Maritess Martinez y Dulay

G.R. No. 158627, March 5, 2010

Facts:

Appellant Maritess Martinez and her daughter, Jenilyn Martinez, were charged with
seven counts of Estafa before the RTC of Manila. In addition, appellant together with
her children Jenilyn Martinez and Julius Martinez, were also charged with the crime of
Illegal Recruitment in large scale. However, warrants of arrest were served only against
appellantand Julius Martinez, whereas accused Jenilyn Martinez remains at large. The
RTC rendedered a decision acquitting Julius Martinez while declaring Maritess Martinez
guilty of four (4) counts of estafa and illegal recruitment. On appeal the CA affirmed the
appellants conviction of (4) counts of estafa, while in the case of illegal recruitment
modified it as illegal recruitment in large scale.

Issue:

Is appellant guilty of illegal recruitment in large scale?

Ruling:

Yes. As defined in Art. 38 of the Labor Code, Illegal Recruitment a) any recruitment
activities, including the prohibited practices enumerated under Article 34 of this Code, to
be undertaken by non-licensees or non-holders of authority shall be deemed illegal and
punishable under Article 39 of this Code. x x x (b) Illegal recruitment when committed by
a syndicate or in large scale shall be considered an offense involving economic
sabotage and shall be penalized in accordance with Article 39 hereof. illegal recruitment
is deemed committed by a syndicate if carried out by a group of three (3) or more
persons conspiring and/or confederating with one another in carrying out any unlawful
or illegal transaction, enterprise or scheme defined under the first paragraph hereof.
Illegal recruitment is deemed committed in large scale if committed against three (3) or
more persons individually or as a group.

In the instant case, the prosecution satisfactorily established that appellant was not a
licensee or holder of authority to deploy workers abroad. By this fact alone, she is
deemed to have engaged in illegal recruitment and the same was committed in large
scale because it was carried out against the four complainants.

The three elements of the crime of illegal recruitment, to wit: a) the offender has no valid
license or authority required by law to enable him to lawfully engage in recruitment and
placement of workers; b) the offender undertakes any of the activities within the
meaning of "recruitment and placement" under Article 13(b) of the Labor Code, or any
of the prohibited practices enumerated under Article 34 of the said Code (now Section 6
of RA 8042); and c) the offender committed the same against three or more persons,
individually or as a group, are present in the instant case.
LNS international Manpower Services vs. Armando Padua, Jr.

G.R. No. 179792, March 5, 2010

Facts:

Respondent Armando C. Padua, Jr. filed a Sworn Statement before the Adjudication
Office of the POEA against LNS and Sharikat Al Saedi International Manpower
(Sharikat) for violation of Section 2(b), (d), and (e) of Rule I, Part VI of the 2002 POEA
Rules and Regulations Governing the Recruitment and Employment of Land-based
Overseas Workers. Respondent Padua alleged that he applied as auto electrician with
petitioner LNS and assured of a job in Saudi Arabia. Respondent paid to LNS the
processing fees, medical expenses, and trade test. Respondent Padua further alleged
that it was another agency, Sharikat, which processed his papers and eventually
deployed him to Saudi Arabia. However, he returned to the Philippines because he was
not allegedly paid his salaries and also because of violations in the terms and conditions
of his employment contract.

In its answer, LNS admitted that Padua applied for employment abroad but he withdrew
all the documents he submitted to LNS. As proof, LNS attached the withdrawal letter
duly signed by Padua. Thus, LNS claimed that it could not be held liable for non-
issuance of receipt or misrepresentation. The POEA issued its order finding LNS liable
for non-issuance of receipt and misrepresentation. As to Sharikat, the POEA found no
sufficient evidence to hold it liable for the violations charged. On appeal to the Secretary
of DOLE, it dismissed the appeal of petitioner and affirmed the ruling of the POEA.
Aggrieved, petitioner filed with the CA a petition for certiorari but it was dismissed.

Issue:

Is petitioner liable for non-issuance of receipt and misrepresentation?

Ruling:

No. As a general rule, factual findings of administrative and quasi-judicial agencies

specializing in their respective fields, especially when affirmed by the CA, must be
accorded high respect, if not finality. However, the Court find out that the factual findings
do not conform to the evidence on record or are not supported by substantial evidence,
as in the instant case.

The self-serving and unsubstantiated allegations of respondent cannot defeat the

concrete evidence submitted by petitioner. In fine, for failure to adduce any shred of
evidence of payment made to petitioner, or that petitioner referred or endorsed
respondent for employment abroad to another agency, the charges of non-issuance of
receipt and misrepresentation against petitioner could not possibly prosper. By the
voluntary withdrawal of respondent‟s application from petitioner, the latter could not
have been involved in the recruitment and placement of respondent and consequently
could not be held liable for any violation.
People vs. Melissa Chua

G.R. No. 184058, March 10, 2010

Facts:

Melissa Chua (appellant) was indicted for Illegal Recruitment (Large Scale). Appellant
pleaded not guilty on arraignment. Her co-accused Josie remained at large. The cases
were consolidated, hence, trial proceeded only with respect to appellant. Of the five
complainants, only three testified, namely, Marilyn D. Macaranas (Marilyn), Erik de Guia
Tan (Tan) and Harry James King (King). Appellant denied the charges. Claiming having
worked as a temporary cashier from January to October, 2002 at the office of Golden
Gate, owned by one Marilyn Calueng, she maintained that Golden Gate was a licensed
recruitment agency and that Josie, who is her godmother, was an agent.

Appellant was convicted thereof by the Regional Trial Court (RTC) of Manila. She was
also indicted for five counts of Estafa but was convicted only for three. The Court of
Appeals affirmed appellant‟s conviction.

Issue:

Is appellant guilty of illegal recruitment in large scale?

Ruling:

Yes. For illegal recruitment in large scale to prosper, the prosecution has to prove three
essential elements, to wit: (1) the accused undertook a recruitment activity under Article
13(b) or any prohibited practice under Article 34 of the Labor Code; (2) the accused did
not have the license or the authority to lawfully engage in the recruitment and placement
of workers; and (3) the accused committed such illegal activity against three or more
persons individually or as a group.

In the present case, Golden Gate, of which appellant admitted being a cashier from
January to October 2002, was initially authorized to recruit workers for deployment
abroad. Per the certification from the POEA, Golden Gate‟s license only expired on
February 23, 2002 and it was delisted from the roster of licensed agencies on April 2,
2002.
Appellant was positively pointed to as one of the persons who enticed the complainants
to part with their money upon the fraudulent representation that they would be able to
secure for them employment abroad. In the absence of any evidence that the
complainants were motivated by improper motives, the trial court‟s assessment of their
credibility shall not be interfered with by the Court

Even if appellant were a mere temporary cashier of Golden Gate, that did not make her
any less an employee to be held liable for illegal recruitment as principal by direct
participation, together with the employer, as it was shown that she actively and
consciously participated in the recruitment process.

Assuming arguendo that appellant was unaware of the illegal nature of the recruitment
business of Golden Gate, that does not free her of liability either. Illegal Recruitment in
Large Scale penalized under Republic Act No. 8042, or "The Migrant Workers and
Overseas Filipinos Act of 1995," is a special law, a violation of which is malum
prohibitum, not malum in se. Intent is thus immaterial. And that explains why appellant
was, aside from Estafa, convicted of such offense.

JUST AND AUTHORIZED CAUSES

FRAUD AND LOSS OF CONFIDENCE

Eric dela Cruz and Raul Lacuata vs. Coca-Cola Bottlers Philippines, Inc.

G. R. No. 180465, July 31, 2009

Facts:

On August 12, 2000, Raymundo Sales, a salesman of Coca-Cola Bottlers met an

accident while diving respondent‟s motor vehicle which he was then not authorized to
us. While Sales was hospitalized, he was observed to have been under the influence of
liquor during the incident. This was also indicated in the police blotter dated the same
day. However, respondent discovered that Sales‟ co-employees (Espina, dela Cruz and
Lacuata) secured an August 15 police blotter and August 14 medical certificate omitting
the statement that Sales was under the influence of liquor.
After initial investigation, respondent issued memoranda requiring the petitioner to
explain why no disciplinary action should be taken against them for violation of the
Employees‟ Code vis a vis Article 282 of the Labor Code in connection to their
production of the police blotter and medical certificate which did not state the full details
of the accident. Petitioners denied the participation of the alteration of the document.
However, after further investigation, it showed that petitioners conspired to have an
altered report prepared to make it appear that Sales was not under an influence of
liquor.

The Labor Arbiter dismissed Espina‟s complaint for lack of merit, while de la Cruz was
found to have been illegally dismissed and reinstatement was ordered. Meanwhile,
Lacuata was found to have been at fault and that respondent was justified in losing trust
and confidence in him. On appeal by the respondent, the NLRC affirmed the decision
of the Labor Arbiter. Respondent then filed a certiorari before the Court of Appeals
wherein it ruled that the petitioners were validly dismissed. Hence, this Review by the
petitioners.

Issue:

Did the Court of Appeals err in deciding that the petitioners were validly dismissed?

Ruling:

The Court of Appeals correctly overturned the decision of the Labor Arbiter and the
NLRC since the petitioners were supervisory employees and thus covered with the trust
and confidence rule. For loss of trust and confidence to be a ground for termination of
employment, it must be willful and must be connected with the employee‟s work. The
records of the case are rife with proof that the supervisors committed acts which are
inimical to the interest and stability, not only to the management, but of the company
itself. They did so through deceitful means and methods. Indeed, by obtaining an
altered police report and medical certificate, petitioners attempted to cover up the fact
that Sales was under the influence of liquor when the accident took place. In doing so,
they committed acts inimical to respondent‟s interests. They thus committed a work-
related willful breach of trust and confidence reposed in them.
Eats-Cetera Food Services vs. Letran

GR No. 179507, October 2, 2009

Facts:

Espadero had been employed by Eats-cetera Food Services Outlet since June 30, 2001
as cashier. On November 20, 2002, when she reported for duty, Espadero discovered
that her time card was already punched in. After asking around, she found out that a
certain Joselito Cahayagan was the one who punched in her time card. Espadero,
however, failed to report the incident to her supervisor, Clarissa Reduca (Reduca). This
prompted Reduca to report the incident to the personnel manager, Greta dela Hostria.
Espadero contended that she was dismissed outright without being given ample
opportunity to explain her side. She claimed that on November 21, 2002, petitioners
called her and asked her to make a letter of admission as a condition for her
reemployment.

After writing the letter, Espadero was told to wait for an assignment. The following day,
on November 22, 2002, the company issued a Memorandum terminating her for
violation of Rule 24 of the company rules and regulations. Because of this, Espadero
decided to file a complaint for illegal dismissal before the NLRC.

Petitioners, however, maintained that the company rules and regulations, as well as the
corresponding penalties in case of violation thereof, were made known to Espadero
before and upon her actual employment as cashier. They also argued that contrary to
her claim, petitioners gave Espadero ample opportunity to explain her side.

Petitioners also claimed that they conducted an impartial investigation of the incident
and found substantial evidence that Espadero was in cahoots with a co-worker in
punching in her time card. For this reason, petitioners decided to terminate her.

Issue:

Is Espadero‟s infraction serious enough to warrant the penalty of dismissal?

Ruling:

Yes. Espadero‟s position as a cashier is one that requires a high degree of trust and
confidence, and that her infraction reasonably taints such trust and confidence reposed
upon her by her employer. The rule, therefore, is that if there is sufficient evidence to
show that the employee occupying a position of trust and confidence is guilty of a
breach of trust, or that his employer has ample reason to distrust him, the labor tribunal
cannot justly deny the employer the authority to dismiss such employee.

In the instant case, petitioners cannot be faulted for losing their trust in Espadero. As an
employee occupying a job which requires utmost fidelity to her employers, she failed to
report to her immediate supervisor the tampering of her time card. Whether her failure
was deliberate or due to sheer negligence, and whether Espadero was or was not in
cahoots with a co-worker, the fact remains that the tampering was not promptly reported
and could, very likely, not have been known by petitioners, or, at least, could have been
discovered at a much later period, if it had not been reported by Espadero‟s supervisor
to the personnel manager. Petitioners, therefore, cannot be blamed for losing their trust
in Espadero.

Moreover, the peculiar nature of Espadero‟s position aggravates her misconduct. The
misconduct, to be serious, must be of such a grave character and not merely trivial or
unimportant. To constitute just cause for termination, it must be in connection with the
employee‟s work. With the degree of trust expected of Espadero, such infraction can
hardly be classified as one that is trivial or unimportant. Her failure to promptly report
the incident reflects a cavalier regard for the responsibility required of her in the
discharge of the duties of her position.

Bibiana Farms and Mills v. Arturo Lado

G.R. No. 157861, February 2, 2010

Facts:

Respondent was a warehouseman for the Petitioner, acting as empty sacks controller
among other functions. On one occasion, a customer transacted with the Petitioner‟s
cashier for the purchase of 3,000 pieces of empty sacks. The cashier gave a note to the
customer and instructed the latter to show said note to the warehouseman. The note
contained instructions as to how many sacks were to be loaded. After showing the note
to the Respondent (the warehouseman), the latter loaded the said sacks for the
customer, but despite the cashier‟s instruction, the Respondent loaded a total of 3,400
sacks instead of just 3,000; and if not for the cashier‟s timely inspection, the 400 sack
excess would have been brought by the customer without payment.

The next day, the Petitioner‟s General Operations Manager issued two (2) memoranda
directing Respondent to submit his written explanation on the release of sacks contrary
to the cashier‟s instructions. After submitting his explanation, another memorandum was
issued Manager informing him that he is being placed under preventive suspension
pending investigation. Another notice was sent to his house informing him of the date of
the investigation but Respondent‟s house maid refused to accept it. On September 11,
1998, an investigation was conducted, but before a decision can be made on the
investigation, Respondent filed, a complaint for illegal preventive suspension against the
Petitioner. A few days after, Respondent received a Notice of Termination dismissing
him from the service the grounds being "serious misconduct, dishonesty, willful breach
of trust, fraud, loss of confidence and other grounds". Aggrieved, Respondent filed
another case for illegal termination. Both cases were consolidated.

Issue:

Was the termination valid?

Ruling:

Yes. Under the Labor Code, the requirements for the lawful dismissal of an employee
are two-fold: substantive and procedural. Not only must the dismissal be for a just or
authorized cause, the basic requirements of procedural due process – notice and
hearing – must likewise be observed. Without the concurrence of the two, the
termination is illegal.

On the just cause issue, Respondent was no ordinary rank-and-file employee. As

warehouseman, his duties involved the handling of incoming and outgoing materials. He
had, as the Arbiter noted, access to company property;tasked to closely monitor and
handle company property, especially the outflow of sacks to avoid or minimize losses. In
other words, Respondent held a position of trust and confidence. When he disregarded
the cashier‟s note, Respondent violated company procedures, laying the company open
to the possibility of loss. This is a serious misconduct for which he should be held
accountable.

On the issue of procedural due process, the essence of due process is the opportunity
to be heard; it is the denial of this opportunity that constitutes violation of due process of
law. The respondent was given the opportunity to be heard when a proper notice of
investigation was sent to him, although the notice did not reach him for reasons outside
the petitioner‟s control. He was not also totally unheard on the matter as he was able to
explain his side through the two (2) explanation letters he submitted.
Philippine Journalists, Inc. vs. NLRC

G.R. No. 187120, February 16, 2010

Facts:

PJI is a corporation engaged in the publication of People's Journal, People's Journal

Tonight, People's Journal International, People's Taliba, Women's Journal, and Insider.
In December 1978, it employed respondent Eduardo S. Rivera (Rivera) as proof reader.
Rivera rose from the ranks over the years, becoming purchasing manager in 1998. His
primary duty involved the canvassing and purchase of paper and other materials for
PJI's day-to-day operations. Sometime in November 2002, Women's Journal
implemented a calendar insertion project requiring paper-coated materials. Rivera
canvassed and purchased the material sheet. Consistencies in the canvass and prices
were found. On January 8, 2003, PJI's Chief Legal Counsel issued a
memorandumrequiring Rivera to explain in writing why he "should not be terminated
from employment for defrauding or attempting to defraud the Company " in the
canvassing and purchase of Women‟s Journal‟s paper requirements. Rivera submitted
his written explanation, denying that he defrauded or attempted to defraud PJI. Ruiz-
Bruno issued a memorandum on the same day to Assistant Purchasing Manager Jean
Alvarado (Alvarado), requiring her to explain the difference in the quotation prices. On
the same day, Alvarado submitted her explanation, stating that she signed the canvass
sheet as instructed by Rivera and she claimed that the figures were written by Rivera
himself.

In a memorandum dated February 7, 2003, Rivera was terminated "on the ground of
loss of confidence". Rivera filed a complaint for illegal dismissal. Labor Arbiter found
that Rivera's dismissal was proper. The NLRC reversed the labor arbiter's decision
which was affirmed by the CA.

Issue:

Is the dismissal on the ground of loss of confidence valid?

Ruling:
Yes. As the company's purchasing manager, Rivera held a position of trust and
confidence; his role in the procurement of the company's operational requirements is
critical. PJI is a publication company and is engaged in a highly competitive enterprise.
The facts shows that Rivera arranged a purchase transaction markedly
disadvantageous to the company mainly due to: (1) his failure to conduct an honest-to-
goodness canvass of prices for the required paper material and (2) his dishonesty, or at
least his misrepresentations, in making it appear that he canvassed two suppliers when
he really dealt only with one of them.

Substantial evidence exists justifying Rivera‟s dismissal for a just cause – loss of trust
and confidence. For loss of trust and confidence to be a ground for dismissal, the law
requires only that there be at least some basis to justify the dismissal.

To place this conclusion in Rivera‟s own terms, contrary to what he claimed, his
dismissal was not on the basis of "mere speculation and conjecture," but on the basis of
relevant evidence that a reasonable mind might accept to support a conclusion. In legal
terms, this is the quantum of proof required in administrative proceedings.

White Diamond Trading Corporation and/or Jerry Uy and Jessie Uy vs. NLRC,
Norlito Escoto, Mary Grace Pastoril and Maria Myrna Omela

GR No. 186019; March 29, 2010

Facts:

The respondents were employees of White Diamond Trading Corporation, a company

engaged in buying and selling second-hand cars. At the time of their dismissal, Norlito
Escoto was the company‟s salesman, Mary Grace Pastoril was the secretary, and Maria
Myrna Omela was the assistant secretary.

On February of 2004, Norlito Escoto sold a Toyota Town Ace to Teodoro Aquino for
P200,000. Acting on instructions from Escoto, Aquino handed P200,000 to Omela,
which amount Aquino counted in the presence of Pastoril. Pastoril then took out the
deed of sale and handed it to Aquino. The deed showed that the consideration for the
sale was P190,000. Omela issued to Aquino a receipt indicating the purchase price of
P200,000. However, the duplicate copy of the receipt, which the company retained, only
reflected a purchase price of P190,000. The address and telephone number of Aquino
was also altered in the duplicate receipt retained by the company. On the same day,
another employee, Neil Rodriguez, made inquiries from the company‟s manager
regarding the sale of the vehicle from. The manager told him that the purchase price
was P190,000. This prompted him to wonder why Escoto gave him P1,000. Upon
learning of the said fact, the manager instructed Rodriguez to investigate the sale.
Soon, the company learned from Aquino that he bought the vehicle for P200,000 and
that days after the sale the three respondents went to his (Aquino) house to return to
him P10,000, which the respondents said was his discount. Prior to returning the
P10,000, the respondents told Aquino that if somebody would like to see the original
receipt, he (Aquino) should just say that the receipt was lost. As a result of the
investigation, Escoto, Pastoril, and Omela were terminated by the company. Thereafter,
they filed a case of illegal dismissal against the petitioners.

The labor arbiter dismissed the complaint, ruling that the dismissal was valid because
the respondents conspired in defrauding the company. The NLRC affirmed the ruling of
the labor arbiter, but with modifications. The NLRC said that Pastoril showed no
contributory act in the fraud committed as her role was simply that of handing to Aquino
the deed of sale. Thus, it ruled that Pastoril‟s dismissal was without just cause. The
NLRC also ruled that while Escoto and Omela‟s dismissal were valid, the company,
however, failed to observe the twin-notice rule required in termination of employment. It
said that while the company conducted an investigation, the questions posed to the
respondents were not reduced to writing. Thus, the NLRC awarded Escoto and Omela
nominal damages. The Court of Appeals affirmed the NLRC.

Issues:

(1) Was the dismissal of Pastoril valid?

(2) Are the dismissed employees entitled to nominal damages because on non-
observance of the twin-notice rule?

Ruling (First Issue):

Yes, the dismissal of Pastoril was valid. Pastoril was not an innocent participant in the
fraudulent sale of the company's Toyota Town Ace. She acted in concert with Escoto
and Omela in the transaction that defrauded their employer in the amount of
P10,000.00. Pastoril prepared and issued the deed of sale indicating that the vehicle
was sold for P190,000.00, although she knew that the buyer was being charged
P200,000.00 for the vehicle. Escoto, Omela and Pastoril helped themselves to the price
difference and tried to silence Rodriguez (who got wind of the anomaly) by giving him
P1,000.00 and passing the P10,000.00 price difference off as the approved discount
Aquino asked for. Under these facts, there was a conspiracy where every participant
had made significant contributory acts. Pastoril's involvement in the questionable
transaction was much more than handing over to Aquino his copy of the deed of sale.
The payment of the purchase price, the issuance of the receipt and the handing of the
deed of sale to Aquino were not separate isolated acts. They occurred in one
continuous logical sequence with the players in close proximity with one another. Under
these circumstances, to say that Pastoril merely handed over the deed of sale to Aquino
without even looking at the document or knowing what it contained, and without
knowing what was actually happening, can hardly be believed.

(Second Issue):

Yes, Pastoril, Escoto and Omela are entitled to nominal damages because of the
company‟s non-observance of the twin notice rule required in termination of
employment. The company itself admits that it failed to observe procedural due process
in Pastoril's dismissal and, for this reason, it states that the payment of indemnity in the
form of nominal damages is warranted. We note further that the NLRC had the same
conclusion with respect to Escoto and Omela; hence, the award to them of P10,000.00
each by way of nominal damages. We find a similar award of nominal damages to
Pastoril to be warranted.
SERIOUS/GRAVE/GROSS MISCONDUCT

Ester Maralit vs. Philippine National Bank

G. R. No. 163788, August 24, 2009

Facts:

Petitioner worked for respondent Bank from August 27, 1968 to December 31, 1998.
She began as a casual clerk and climbed her way to become branch manager. In
February 1998, PNB offered its personnel an early retirement plan through Special
Separation Incentive Plan (SSIP). Under the Circular, personnel with pending
administrative cases or who are under preliminary investigation may the avail of it,
however, payment of their benefits shall be made only after the resolution of their cases
and only if they are not disqualified from receiving such benefits.
On September 8, 1998, PNB Internal Audit Group found that Maralit violated bank
policies, which resulted in the return of unfunded checks. She was the asked to submit
her written explanation under oath. On September 15, 1998, Maralit filed her application
for early retirement. However, on September 29, PNB charged her with serious
misconduct, gross violation of bank rules and regulations, and conduct prejudicial to the
best interest of the bank. Next month thereof, she was placed under preventive
suspension.

On November 1998, PNB conditionally approved Maralit‟s application for early

retirement effective on December 31, 1998. Only on January 11, 1999 that she
submitted her answer and stated that she did the same in good faith and favorable to
the bank.

On April 14, 2000, Maralit received a letter from PNB‟s Administrative Adjudication
Panel finding her guilty with the abovementioned violations. Then she filed a complaint
with the arbitration branch of the NLRC for non-payment of retirement benefits and
separation pay against PNB. Both the Arbiter and the NLRC found that she was entitled
retirement benefits. However, the Court of Appeals set aside the decision and held that
the NLRC committed grave abuse of discretion when it affirmed the decision of the
Arbiter for Maralit was under preliminary investigation when she filed her application for
early retirement and that she was afforded due process.

Issue:

Was Maralit illegally dismissed by her employer Bank?

Ruling:

No. Respondent Bank termination is valid. PNB‟s Administrative Adjudication Panel

found her guilty of serious misconduct, gross violation of bank rules and regulations,
and conduct prejudicial to the best interest of the bank for she violated bank policies
which resulted in the return of unfunded checks amounting to P54,950,000. Accordingly,
PNB‟s dismissal of Maralut from the service with forfeiture of her retirement benefits is
rightful. Having dismissed with just cause, she is not entitled with her retirement
benefits.
There is substantial evidence showing that there was valid cause for the bank to
dismiss petitioner‟s employment for loss of trust and confidence. Petitioner was a bank
accountant, which is a position of trust and confidence.

Superlines Transportation Company, Inc. vs. Pinera

G.R. No. 188742, Oct. 13, 2009

Facts:

Respondent Pinera was complained by Zeny Iligan through a letter addressed to

petitioner for misappropriation of money sent by Iligan thru petitioner. Petitioner
immediately investigated the complaint. It informed respondent of the allegations
against him and ordered him to answer the same. Respondent admitted using the
money for his personal needs. Thus, petitioner terminated respondent‟s employment on
June 18, 2004 and notified him of its decision. Subsequently, respondent filed a
complaint for illegal dismissal with the labor arbiter asserting that petitioner did not have
any just or valid cause for terminating his employment. In a decision dated March 23,
2007, the labor arbiter dismissed the complaint for lack of cause of action. She found
that respondent‟s dismissal was legal as he was guilty of serious misconduct. On
appeal, the National Labor Relations Commission (NLRC) affirmed the decision of the
labor arbiter in toto. On petition for certiorari in the Court of Appeals (CA), the appellate
court held that misappropriation did not constitute serious misconduct, hence,
respondent was illegally dismissed. Petitioner moved for reconsideration but it was
denied, hence, this petition.

Issue:

Is respondent guilty of misconduct?

Ruling:

Yes. An employee who fails to account for and deliver the funds entrusted to him is
liable for misappropriating the same and is consequently guilty of serious misconduct.
Petitioner therefore validly dismissed respondent.
Jose, Jr. vs Michaelmar Phils., Inc.
G.R. No. 169606, November 27, 2009

Facts:

Michaelmar Philippines, Inc. (MPI) is the Philippine agent of Michaelmar Shipping

Services, Inc. (MSSI). In an undertaking dated 2 July 2002 and an employment
contract dated 4 July 2002, MSSI through MPI engaged the services of Bernardo B.
Jose, Jr. as oiler of M/T Limar. The employment contract stated in part that any
seaman will be instantly dismissed if they are found to have positive trace of alcohol or
any of the banned substances in any random testing sample. Jose, Jr. began
performing his duties on board the M/T Limar on 21 August 2002. On 8 October 2002,
a random drug test was conducted on all officers and crew members of M/T Limar at the
port of Curacao. Jose, Jr. was found positive for marijuana. Jose, Jr. was informed
about the result of his drug test and was asked if he was taking any medication. Jose,
Jr. said that he was taking Centrum vitamins. He was allowed to continue performing his
duties on board the M/T Limar from 8 October to 29 November 2002. Despite getting a
96% total rating and was described as very hardworking, trustworthy, and reliable, Jose,
Jr. was repatriated to the Philippines when M/T Limar reached the next port of
destination after the random drug test. Jose, Jr. filed with the NLRC a complaint against
MPI and MSSI for illegal dismissal with claim for his salaries for the unexpired portion of
the employment contract.

Issue:

Was the dismissal based on a just cause?

Ruling:

Yes. Article 282(a) of the Labor Code states that the employer may terminate an
employment for serious misconduct. Drug use in the premises of the employer
constitutes serious misconduct. In Bughaw, Jr. v. Treasure Island Industrial
Corporation, the Court held that:

The charge of drug use inside the company‟s premises and during working hours
against petitioner constitutes serious misconduct, which is one of the just causes for
termination. Misconduct is 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 merely an error in 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, in connection with the work of the employee, constitute just
cause for his separation. This Court took judicial notice of scientific findings that drug
abuse can damage the mental faculties of the user. It is beyond question therefore that
any employee under the influence of drugs cannot possibly continue doing his duties
without posing a serious threat to the lives and property of his co-workers and even his
employer. (Emphasis supplied)

However, Jose, Jr. was not given any written notice about his dismissal. But the
propriety of Jose, Jr.‟s dismissal is not affected by the lack of written notices. When the
dismissal is for just cause, the lack of due process does not render the dismissal
ineffectual but merely gives rise to the payment of P30,000 in nominal damages.

Wilfredo Baron vs. NLRC

G.R. No. 182299, February 22, 2010

Facts:

The president and general manager of the MSI ordered an inventory to be conducted
and even ordered Baron to be temporarily relieved for the audit and the employees
were instructed (1) to give all the support needed by the audit team; (2) to surrender all
keys and documents; (3) not to bring out anything belonging to management; and (4) to
undergo a search before leaving the office.Petitioners, however, refused to cooperate in
the audit process, and thereafter, refrained from reporting for work. Nonetheless, the
audit was completed, and an Internal Audit Reportwas submitted. According to the audit
team, there were several irregularities in the operations of MSI. The accounting system
designed by Baron was generally weak and compliance to procedures was not strictly
implemented. The team was also convinced that Baron abused his authority and took
advantage of the laxity of the system he designed.

Hence, MSI decided to terminate their services. The petitioners filed a complaint in the
NLRC that they were dismissed whimsically and capriciously in a very oppressive
manner, without valid cause and without due process of law.
Issues:

(1) Were petitioners validly dismissed on the grounds of grave misconduct and loss of
confidence?

(2) Were petitioners accorded their right to due process when they were terminated
from their employment?

Ruling (First Issue):

Yes. The Constitution, statutes and jurisprudence uniformly mandate that no worker
shall be dismissed except for a just or valid cause provided by law, and only after due
process is properly observed. The just causes for termination of employment are
enumerated in Article 282 of the Labor Code, as amended. For there to be a valid
dismissal based on loss of trust and confidence, the breach of trust must be willful,
meaning it must be done intentionally, knowingly, and purposely, without justifiable
excuse. The basic premise for dismissal on the ground of loss of confidence is that the
employees concerned hold a position of trust and confidence. It is the breach of this
trust that results in the employer‟s loss of confidence in the employee. In the instant
case, we note that petitioners were holding the following positions: Wilfredo Baron -
operations manager, Jomar dela Rosa and Jefferson dela Rosa - sales representatives,
Cynthia Junatas and Marife Ballesca - accounting clerks, and Lourdes Rabago -
warehouse checker. Clearly, petitioners were holding positions imbued with trust and
confidence, which are deemed to have been reposed on them by virtue of the nature of
their work.

(Second Issue):

Yes. Records show that respondents complied with the two-notice rule. On various
dates, two [2] separate notices were given the employees. In the first notice, the acts
imputed against them were enumerated with a call for an investigation, while the second
notice contained MSI‟s decision terminating them after they failed to respond to the first
notice. Thus, the employees‟ inaction is attributable to them. Due process is not violated
where a person is given the opportunity to be heard but chooses not to give his side of
the case.

Evidence shows that petitioners were properly notified of the charges against them.
They received letters instructing them to explain within seventy-two (72) hours from
receipt why they should not be dismissed for their offenses. They were likewise warned
that failure to reply would mean that they were waiving their right to present evidence in
their favor.
Caltex vs. Agad
G.R. 162017, APRIL 23, 2010

Facts:

Petitioner Caltex Philippines, Inc. (Caltex) employed respondent Hermie G. Agad

(Agad) as Depot Superintendent-A on a probationary basis for six months. On 28
February 1984, Agad became a regular employee. After Agad had served for two
years since 1990 as Superintendent of the Tacloban Bulk Depot (Depot) in Leyte,
Caltex transferred Agad to Bauan Bulk Depot in Batangas effective 16 May 1992. To
transfer his belongings from Leyte to Batangas, Agad secured the carpentry services of
Alfredo Delda (Delda), the owner of A.A. Delda Engineering Services (Delda Services)
for the construction of two crates. Agad paid Delda P15,500, evidenced by Official
Receipt and submitted the receipt and Caltex reimbursed him the said amount.

Caltex conducted its regular audit of employees‟ account and expenses. The company
auditor of Caltex verified the crating expense incurred by Agad with Delda. Delda
alleged that he was forced by Agad to issue the official receipt in order to get a
favorable recommendation from the incoming superintendent of the Depot.

In another audit report, the company auditor declared that 190 pieces of 11 kg. liquefied
petroleum gas (LPG) cylinders from the Depot were allegedly withdrawn when Agad
was still depot superintendent In a Confidential Memorandum, Agad was informed of his
dismissal on the grounds of serious misconduct and loss of trust and confidence. The
LA held that there were no just causes for Agad‟s termination of employment. The
NLRC reversed the decision of the LA and held that there existed just causes which
justified Agad‟s dismissal. Agad filed a Motion for Reconsideration which was denied.
He then filed a petition for certiorari under Rule 65 with the CA for the nullification of the
decision of the NLRC. The CA modified the judgment of the NLRC and ruled in favor of
Agad. Caltex filed a Motion for Reconsideration which was denied. Hence, the instant
petition.

Issue:

Did Caltex legally terminate Agad‟s employment on just causes?

Ruling:

The findings of the CA and National Labor Relations Commission (NLRC) establish the
following: (1) Agad‟s request for withdrawal of the 190 cylinders of LPG as stated in a
Memorandum dated 12 February 1992 cannot be given credence since the
Memorandum pertains to the replacement of the scrap materials due to
Boy Bato consisting of 3,000 kilograms of black iron plates and not to the subject LPG
cylinders; (2) Agad did not observe Caltex‟s rules and regulations when he transferred
the said cylinders to Millanes‟ compound without the RMRD form as required
under Caltex‟s Field Accounting Manual; (3) Agad gave specific instructions
to Millanes to sell the cylinders without bidding to third parties in violation of company
rules; (4) Agad failed to submit the periodic inventory report of the LPG cylinders to the
accounting department; (5) Agad did not remit the proceeds of the sale of the LPG
cylinders; and (6) even if considered as scrap materials, the LPG cylinders still had
monetary value which Agad cannot appropriate for himself without Caltex‟s consent.

Considering these findings, it is clear that Agad committed a serious infraction

amounting to theft of company property. This act is akin to serious misconduct or willful
disobedience by the employee of the lawful orders of his employer in connection with
his work, a just cause for termination of employment recognized under Article 282(a) of
the Labor Code. Misconduct has been defined as a transgression of some established
and definite rule of action, a forbidden act, a dereliction of duty, willful in character, and
implies wrongful intent and not mere error in judgment. To be serious, the misconduct
must be of such grave and aggravated character.

RETRENCHMENT

Tala vs. NLRC

G. R. 1755040, April 6, 2010

Facts:

The respondent, The Software Factory, Inc. (TSFI), is a domestic corporation engaged
in providing information technology and computer consultancy to the public. In April
2001, it employed Talam as a full-time programmer. In the latter part of 2001 and in
2002, TSFI suffered financial reverses. Its external financial auditor advised that it cut
on its payroll expenses which accounted for 41% of its total operating costs. TSFI
heeded the advice and decided to retrench some of its employees, using as basis its
employees' service income and contribution margins to the company. TSFI found that
Talam was one of two employees with the least or with no income contribution for the
year 2002. Consequently, respondents verbally informed Talam that his services with
the company would be terminated thirty (30) days after September 27, 2002.

On November 29, 2002, Talam questioned the legality of his separation from the service
through a complaint for illegal dismissal and illegal deduction, with claims for service
incentive leave pay, damages and attorney's fees against TSFI. Talam alleged before
the Labor Arbiter that his dismissal from employment was illegal because the company
did not comply with the requisites under Article 283 of the Labor Code for a valid
retrenchment action. On October 28, 2003, Executive Labor Arbiter rendered a
decision declaring Talam's dismissal illegal. The Arbiter held that while it is TSFI's right
to reduce its workforce to prevent losses, it failed to present evidence that the company
adopted a retrenchment program and there was also no evidence showing clearly that
Talam should be retrenched.

TSFI appealed to the NLRC. In a Decision, the NLRC set aside the labor arbiter's
ruling and dismissed Talam's complaint without prejudice, for improper venue. TSFI
moved for reconsideration of the NLRC resolution which was partially granted. This
time, the NLRC deleted the award of backwages and 13th month pay, but ordered the
company to pay Talam P30,000.00 as nominal damages for violating his right to
procedural due process, citing Jaka Food Processing Corp. v. Darwin Pacot, et al.,
where the Court held that although the complainant's dismissal was based on an
authorized cause, nominal damages were awarded because of the respondent's failure
to comply with the notice requirement. The NLRC ruled that the non-observance of the
notice requirement will not invalidate Talam's separation on the ground of retrenchment;
thus, the award of full backwages was not proper. Talam moved for reconsideration, but
the NLRC denied the motion. Talam thereafter sought relief from the CA through a
petition for certiorari under Rule 65 of the Rules of Court, charging the NLRC with grave
abuse of discretion for its resolutions of September 27, 2005 and January 31, 2006. In
particular, Talam questioned the deletion of the award to him of backwages and 13th
month pay.

The CA denied the petition for lack of merit. It found Talam's separation from the
service by reason of retrenchment to be valid. However, while it acknowledged that
TSFI was suffering from financial losses as confirmed by the report of independent
external auditor, it ruled that the company failed to give Talam the notice required by
law. The CA opined that although the law mandated that the written notice of
termination of employment for authorized causes should be served at least one month
before the effective date of the termination, the employment contract should prevail
because it does not violate the minimum requirement under Article 283 of the Labor
Code. Even if Article 283 were to be followed, the CA added, TSFI still failed to comply
with the notice requirement considering that the notices to Talam and to DOLE were for
less than thirty (30) days.

Although Talam's dismissal was due to a cause authorized by law, the CA deemed
TSFI liable for nominal damages for violation of Talam's right to procedural due
process. The appellate court affirmed with modification the assailed NLRC decision. It
increased to P50,000.00 the nominal damages of P30,000.00 awarded by the
NLRC. Talam moved for reconsideration of the decision, but the CA denied the motion.
Hence, the present recourse to the Court.

Issue:

Is the dismissal valid?

Ruling:

Yes. Talam was not an unlettered employee; he was an information technology

consultant and must have been fully aware of the consequences of what he was
entering into. The quitclaim was a voluntary act as there is no showing that he was
coerced into executing the instrument; he received a valuable consideration for his less
than two years of service with the company. Thus, from all indications, the release and
quitclaim was a valid and binding undertaking that should have been recognized by the
labor authorities and the CA. While the law frowns upon releases and quitclaims
executed by employees who are inveigled or pressured into signing them by
unscrupulous employers seeking to evade their legal responsibilities, a legitimate waiver
representing a voluntary settlement of a laborer‟s claims should be respected by the
courts as the law between the parties. In the Court‟s view, Talam‟s release and
quitclaim fall into the category of legitimate waivers as defined by the Court.

With Talam‟s voluntary execution of the release and quitclaim, the Court found the filing
of the illegal dismissal case tainted with bad faith. Neither can TSFI be made to answer
for failure to afford Talam procedural due process. The release and quitclaim, in the
Court‟s mind, erased whatever infirmities there might have been in the notice of
termination as Talam had already voluntarily accepted his dismissal through the release
and quitclaim. As such, the written notice became academic; the notice, after all, is
merely a protective measure put in place by law and serves no useful purpose after
protection has been assured. The Court thus finds no basis for the conclusion
that TSFI violated procedural due process and should pay nominal damages.

The CA committed no reversible error in affirming the NLRC ruling that Talam was
validly dismissed on the ground of retrenchment.

First. The decision to retrench had a basis; it was not simulated nor resorted to for the
purpose of getting rid of employees. The decision was upon the recommendation of the
company‟s external auditor Leah A. Villanueva, as contained in her letter to the TSFI
Board of Directors in October 2002. As the CA noted, the standard proof of a
company‟s financial standing is its financial statements duly audited by credible external
auditors. We see nothing in the records which impugns Villanueva's assessment of the
financial condition of TSFI at the time material to the case.

Second. The cost-cutting measure recommended involved reduction of TSFI‟s payroll

expense account which, as the auditor found, makes up 41% of the company‟s total
operating expenses. Talam insinuates that the share in the company‟s operating costs
of personnel expenses is misleading, contending that the bulk of the expense goes into
management fees. While this may be so, it cannot be denied that the management
group is still part of the personnel component of the company, and absent any showing
of bad faith, the choice of who should be retrenched must be conceded to the company
for as long as there exists a basis for it.

In the present case, we note that the auditor suggested that TSFI “review the
contribution margin per consultant and compensation packages of personnel in the
executive and support group.” Again, absent any showing of bad faith, we cannot fault
the company for choosing the option of looking at the margins of contribution of the
consultants to the income of the company as primary retrenchment standard. It is just
unfortunate that based on this yardstick, Talam came out as one of two consultants with
very high negative contribution margins and was therefore chosen for retrenchment.

Third. Talam was dismissed due to a cause authorized by law – retrenchment to

prevent losses. At the time of Talam‟s dismissal, TSFI‟s financial condition, as found by
the external auditor, showed that it was not just expecting losses, it already suffered a
net income loss of P2,474,418.00 and retained earnings deficit of P7,424,250.00 for the
period ending December 31, 2002.

Fourth. TSFI resorted to other measures to abate its losses. It claimed that during the
crises period, it used as an office a small-room (a mere cubicle) with only a two-person
support staff; it reduced the salaries of its employees by as much as 30%. This
submission by the company is substantiated by the schedule of Operating Expenses for
the year ended December 31, 2002 and September 30, 2002. A quick glance at the
schedule readily shows a reduction of TSFI‟s operating expenses across the board.
The schedule indicates a substantial decrease in the operating expenses. On the whole,
we find that TSFI satisfied the requisites for a valid retrenchment.
REDUNDANCY

Lowe, Inc. vs. CA and Mutuc

G.R. Nos. 164813 & 174590, August 14, 2009

Facts:

Lowe, an advertising agency, is a corporation duly organized and existing under the
laws of the Philippines. On 23 June 2000, at the height of the influx of advertising
projects, Lowe hired Mutuc as a Creative Director to help out the four other Creative
Directors of Lowe. Mutuc was given a salary of P100,000 a month. On 26 February
2001, Mutuc became a regular employee of Lowe.

However, in 2001, most of Lowe‟s clients reduced their advertising budget. In response
to the situation, Lowe implemented cost-cutting measures including a redundancy
program. On 31 October 2001, Lowe terminated Mutuc‟s services because her position
was declared redundant.

Subsequently, Mutuc filed a complaint for illegal dismissal, nonpayment of 13th month
pay with prayer for the award of moral and exemplary damages plus attorney‟s fees
against Lowe.

The Labor Arbiter ruled that Lowe satisfied the requisites for a valid implementation of a
redundancy program. The Labor Arbiter found self-serving Mutuc‟s allegation that she
was terminated from service due to professional jealousy.

Issue:

Was there a valid dismissal on the ground of redundancy?

Held:

Yes. Redundancy, which is one of the authorized causes for the dismissal of an
employee, is governed by Article 283 of the Labor Code. Redundancy exists when the
service of an employee is in excess of what is reasonably demanded by the actual
requirements of the business.A redundant position is one rendered superfluous by any
number of factors, such as overhiring of workers, decreased volume of business,
dropping of a particular product line previously manufactured by the company or
phasing out of a service activity formerly undertaken by the enterprise.

For a valid implementation of a redundancy program, the employer must comply with
the following requisites: (1) written notice served on both the employee and the DOLE at
least one month prior to the intended date of termination; (2) payment of separation pay
equivalent to at least one month pay or at least one month pay for every year of service,
whichever is higher; (3) good faith in abolishing the redundant position; and (4) fair and
reasonable criteria in ascertaining what positions are to be declared redundant.

The controversy lies on whether Lowe used any fair and reasonable criteria in declaring
Mutuc‟s position redundant and whether there was bad faith in the abolition of her
position. Lowe insists that it used fair and reasonable criteria in declaring Mutuc‟s
position redundant. Lowe argues that Mutuc was the most junior of all the executives of
Lowe and that, based on its performance evaluation, Mutuc was also the least efficient
among the Creative Directors.

The Court recognizes that a host of relevant factors comes into play in determining who
among the employees should be retained or separated. Among the accepted criteria in
implementing a redundancy program are: (1) preferred status; (2) efficiency; and (3)
seniority.

The determination of the continuing necessity of a particular officer or position in a

business corporation is a management prerogative, and the courts will not interfere
unless arbitrary or malicious action on the part of management is shown. Aside from
Mutuc‟s self-serving statements, we find no evidence to support her conclusion that she
was dismissed because of the "rift" with Castro. Considering further that Mutuc held a
position which was definitely managerial in character, Lowe had a broad latitude of
discretion in abolishing her position. An employer has a much wider discretion in
terminating the employment of managerial personnel as compared to rank and file
employees.

De Lecciones vs. NLRC, NNA Philippines Co., Inc. et. al.

G.R. No. 184735, September 17, 2009

Facts:

The respondent, a research and translation service company with less than ten
employees and a wholly-owned subsidiary of NNA Japan employed the petitioner on
August 1, 1997, and she held various positions in the company, the latest of which as
Administrator. Additionally, she served as Corporate Secretary until July 3, 2002. She
alleged that she usually worked from 9:00 a.m. to 10:00 p.m. - 12:00 midnight and
sometimes even until 2:00 a.m. or 9:00 a.m. She claimed that the respondent promised
to compensate her for extra hours, as well as for doing tasks other than that what she
was contracted for.

On May 17, 2002, the Board of Directors of NNA Japan decided to streamline the
operations of its subsidiaries including the respondent, and thus issued a memorandum
directing the respondent to transfer the corporate secretary‟s functions to the external
counsel. The memorandum also gave management the discretion to determine which
positions should be declared redundant.
On July 4, 2002, the respondent‟s Board of Directors held an organizational meeting
where the petitioner was not re-elected as corporate secretary. The board also directed
the respondent‟s President at the time, Ms. Kimi Kimura, to reorganize the corporation
and abolish any redundant position.

On October 17, 2002, the petitioner received a notice of termination of employment on

the ground that her position as Administrator had been declared redundant. On the
same day, the respondent filed a report of the petitioner‟s separation from service with
the Office of the DOLE in the National Capital Region.

On November 15, 2002, the respondent issued the petitioner a memorandum advising
her of the release of checks in her favor representing her salary and accrued benefits
including her separation pay. On the same day, she accepted the checks for her last
salary; 13th month pay; unused leave credits for seven days; year-end tax refund; and
reimbursement of advances made to the company. She refused to accept the check
representing her separation pay in the amount of P244, 182.07 (based on her salary
and allowances).

On January 16, 2004, Labor Arbiter Aliman D. Mangandog dismissed the complaint for
lack of merit, but ordered the respondent to pay the petitioner separation pay computed
at one (1) month‟s salary for every year of service. The petitioner appealed the decision
to the NLRC.

Issue:

Was the termination valid?

Ruling:

Yes. The separation of the petitioner by reason of redundancy was supported by the
evidence on record. She was separated from the service after the respondent‟s
reorganization where her position as Administrator was declared redundant. She was
served notice within the statutory period of thirty (30) days and so was the DOLE-NCR.
The petitioner was assured of all the benefits under the law.
The petitioner imputes bad faith and malice on the respondent in declaring her position
as Administrator redundant, but failed to present convincing proof that the respondent
abused its prerogative in terminating her employment or that it was motivated by ill-will
in doing so. It was a business decision arrived at in the face of financial losses being
suffered by the company at the time.

The general rule is that the characterization by an employer of an employee‟s services

as no longer necessary or sustainable is an exercise of business judgment on the part
of the employer. The wisdom or soundness of such a characterization or decision is not,
as a general rule, subject to discretionary review on the part of the Labor Arbiter, the
NLRC and the CA. Such characterization may, however, be rejected if the same is
found to be in violation of the law or is arbitrary or malicious.

We find no violations of law in the respondent‟s actions against the petitioner, nor was
the respondent arbitrary or influenced by malice in terminating the petitioner‟s
employment for redundancy. This ground for termination is a legitimate exercise of
management prerogative unless attended to by arbitrariness or by the failure to follow
statutory requirements. No arbitrariness or any violations took place in the present case.

MANAGEMENT PREROGATIVE

Aguanza vs. Asian Terminal, Inc.

G.R. No. 163505, August 14, 2009

Facts:

Petitioner Gualberto Aguanza was employed with respondent company Asian Terminal,
Inc. from April 15, 1989 to October 1997. He was initially employed as Derickman or
Crane Operator and was assigned as such aboard Bismark IV, a floating crane barge
owned by Asian Terminals, Inc. based at the port of Manila. Aside from his basic pay,
he received meal allowance, fixed overtime pay and out-of port allowance [when the
barge is assigned outside Metro Manila].

Sometime in September 1997, the Bismark IV, together with its crew, was temporarily
assigned at the Mariveles Grains Terminal in Mariveles, Bataan. Then, on October 20,
1997, respondent James Keith issued a memo to the crew of Bismark IV stating that the
barge had been permanently transferred to the Mariveles Grains terminal beginning
October 1, 1997 and because of that, its crew would no longer be entitled to out of port
benefits of 16 hours overtime and P200 a day out-of port allowance.

Because of the said development, Aguanza questioned the diminution of his benefits.
Aguanza insisted on reporting to work in Manila although his barge, Bismark IV, and its
other crew were already permanently based in Mariveles, Bataan. [Aguanza] was not
allowed to time in in Manila because his work was in Mariveles, Bataan. He therefore
was not able to render his services, and was accordingly not paid for doing nothing.

Issue:

Was Aguanza constructively dismissed?

Ruling:

No. The transfer of operations is a valid exercise of management prerogative. Aguanza

asserts that his transfer constituted constructive dismissal, while ATI asserts that
Aguanza‟s transfer was a valid exercise of management prerogative.

ATI‟s transfer of Bismark IV‟s base from Manila to Bataan was, contrary to Aguanza‟s
assertions, a valid exercise of management prerogative. The transfer of employees has
been traditionally among the acts identified as a management prerogative subject only
to limitations found in law, collective bargaining agreement, and general principles of fair
play and justice. Even as the law is solicitous of the welfare of employees, it must also
protect the right of an employer to exercise what are clearly management prerogatives.
The free will of management to conduct its own business affairs to achieve its purpose
cannot be denied.

On the other hand, the transfer of an employee may constitute constructive dismissal
"when continued employment is rendered impossible, unreasonable or unlikely; when
there is a demotion in rank and/or a diminution in pay; or when a clear discrimination,
insensibility or disdain by an employer becomes unbearable to the employee."
Aguanza‟s situation is not within the purview of this discussion.
Malayan Employees Association, et. al. vs. Malayan Insurance Company
G.R. No. 181357, February 2, 2010

Facts:

Petitioner is the exclusive bargaining agent of the rank-and-file employees of

Respondent company whose CBA with the latter allows union officials to avail of union
leaves with pay for the purpose of attending labor relations activities. While the CBA
was in effect, the company issued a rule requiring not only the prior notice that the CBA
expressly requires, but prior approval by the department head before the union and its
members can avail of union leaves. The rule was placed into effect in November 2002
without any objection from the union until a union officer, Mangalino, filed union leave
applications in January and February, 2004. His department head disapproved the
applications because the department was undermanned at that time.

Despite the disapproval, Mangalino proceeded to take the union leave. He said he
believed in good faith that he had complied with the existing company practice and with
the procedure set forth in the CBA. The company responded by suspending him for one
week and, thereafter, for a month, for his second offense in February 2004. After all
internal grievance machineries, and subsequent recourse to the NCMB failed to arrive
at a conciliation between the parties, they submitted the matter for voluntary arbitration.
The VA ruled that the suspension was illegal, but on appeal to the CA, the latter
reversed the VA. .

Issue:

Was the suspension based on failure to comply with the company‟s “prior approval rule”
valid notwithstanding its absence in the CBA?

Ruling:

Yes. While it is true that the union and its members have been granted union leave
privileges under the CBA, the grant cannot be considered separately from the other
provisions of the CBA, particularly the provision on management prerogatives where the
CBA reserved for the company the full and complete authority in managing and running
its business. We see nothing in the wordings of the union leave provision that removes
from the company the right to prescribe reasonable rules and regulations to govern the
manner of availing of union leaves, particularly the prerogative to require prior approval.
Precisely, prior notice is expressly required under the CBA so that the company can
appropriately respond to the request for leave. In this sense, the rule requiring prior
approval only made express what is implied in the terms of the CBA. In any event, the
rule on its face is not unreasonable, oppressive, nor violative of CBA terms.
Furthermore, ample evidence exists in the records indicating the union‟s acquiescence
to the rule. Notably, no letter from the union complaining about the unilateral change in
policy appears on record. The "prior approval" policy fully supported the validity of the
suspensions the company imposed on Mangalino. As an employee, Mangalino had the
clear obligation to comply with the management disapproval of his requested leave.
That he still went on leave, in open disregard of his superior‟s orders, rendered
Mangalino open to the charge of insubordination, separately from his absence without
official leave

Jimmy Areno, Jr. vs. Sky Cable PCC –Baguio

G.R. No. 180302, February 5, 2010

Facts:

Petitioner was an employee of Respondent Sky Cable. Pursuant to a complaint filed by

a co-worker against the Petitioner, Respondent Sky Cable conducted an administrative
investigation to determine the truth on the matter. Both parties were notified and given
the opportunity to be heard. After the proper investigation, the panel found the
allegations to be true, and by virtue of the Company‟s Code of Discipline, the Petitioner
was suspended for three days. Despite the order of suspension, however, the
Petitioner continued to report for work. When the matter was brought to the attention of
the Respondent, the latter issued a 1st Notice of Termination, requiring the Petitioner to
explain why he should not be terminated for insubordination. Unsatisfied by Petitioner‟s
explanation, Respondent terminated the Petitioner, giving notice therefor. Aggrieved,
petitioner filed a case for illegal dismissal. The Labor Arbiter, NLRC and eventually the
CA all agreed that the dismissal was valid. Unsatisfied, Petitioner filed the present
petition for Certiorari.

Issue:

Is the petition meritorious?

Ruling:

No. The decision to suspend petitioner was rendered after investigation and a finding by
respondent that petitioner has indeed made malicious statements against a co-
employee. It is axiomatic that appropriate disciplinary sanction is within the purview of
management imposition. What should not be overlooked is the prerogative of an
employer company to prescribe reasonable rules and regulations necessary for the
proper conduct of its business and to provide certain disciplinary measures in order to
implement said rules to assure that the same would be complied with. Respondent then
acted within its rights as an employer when it decided to exercise its management
prerogative to impose disciplinary measure on its erring employee. The suspension and
subsequent termination were therefore valid.

Pantoja vs. Sca Hygiene Products

G.R. 163554, April 23, 2010

Facts:

Respondent, a corporation engaged in the manufacture, sale and distribution of

industrial paper and tissue products, employed petitioner as a utility man on March 15,
1987. 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 effective May 5, 1999. 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 brought about by the low volume of
sales and orders for industrial paper products.

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. On June 20, 2000,
petitioner filed a complaint for illegal dismissal against respondent assailing his
termination as without any valid cause.

On March 23, 2001, 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 CA
reversed the NLRC‟s Decision and reinstated the Labor Arbiter‟s Decision dismissing
the compliant. 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.

Issue:

Is the respondent guilty of illegal dismissal?

Ruling:

No. Respondent‟s right of management prerogative was exercised in good faith.

Respondent presented evidence of the low volume of sales and orders for the
production of industrial paper in 1999 which inevitably resulted to the company‟s
decision to streamline its operations. This fact was corroborated by respondent‟s VP-
Tissue Manufacturing Director and was not disputed by petitioner. Exercising its
management prerogative and sound business judgment, respondent decided to cut
down on operational costs by shutting down one of its paper mill. In this case, the
abolishment of Paper Mill No. 4 was undoubtedly a business judgment arrived at in the
face of the low demand for the production of industrial paper at the time. Despite an
apparent reason to implement a retrenchment program as a cost-cutting measure,
respondent, however, did not outrightly dismiss the workers affected by the closure of
Paper Mill No. 4 but gave them an option to be transferred to posts of equal rank and
pay. This is an indication of good faith on respondent‟s part as it exhausted other
possible measures other than retrenchment. Besides, the employer‟s prerogative to
bring down labor costs by retrenching must be exercised essentially as a measure of
last resort, after less drastic means have been tried and found wanting. Giving the
workers an option to be transferred without any diminution in rank and pay specifically
belie petitioner‟s allegation that the alleged streamlining scheme was implemented as a
ploy to ease out employees, thus, the absence of bad faith. 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.

GROSS NEGLIGENCE/GROSS AND HABITUAL NEGLECT OF DUTY

Estacio and Manliclic vs. Pampanga I Electric Coop.

G.R. No. 183196, August 19, 2009

Facts:

Petitioner Estacio had been employed at respondent PELCO I as a bill custodian since
1977, while petitioner Manliclic had been working for respondent PELCO I as a bill
collector since June 1992. On 22 August 2002, Nelia D. Lorenzo (Lorenzo), the Internal
Auditor of respondent PELCO I, submitted her "Audit Findings at the San Luis Area
Office" to respondent Engr. Allas, pertinent portions of which state:

Evaluation of the results of physical inventory of bills through reconciliation of records

such as aging schedule of consumer accounts receivable balance, collection reports
and other related documents revealed 87 bills amounting to One Hundred Twenty Six
Thousand Seven Hundred Fifty and 93/100 (P126,750.93) remained unremitted as of
August 20, 2002.

Accounting of which includes the accountability of Ms. Estacio amounting to One

Hundred Twenty Three Thousand Eight Hundred Seven and 14/100 (P123,807.14)
representing 86 bills.

Respondent Engr. Allas issued a Memorandum dated 6 September 2002 to petitioner

Estacio informing her of the audit findings, and directing her to explain in writing why no
disciplinary action should be imposed upon her for Gross Negligence of Duty under
Section 6.6 of Board Policy No. 01-04 dated 23 July 2001.

Unsatisfied with petitioner Estacio‟s explanation, respondent Engr. Allas issued a

Memorandumcharging Estacio with gross negligence of duty. A formal
investigation/hearing then ensued, during which petitioner Estacio was duly represented
by counsel. The investigating committee, in the report it submitted to respondent Engr.
Allas on 23 October 2002, found petitioner Estacio guilty of dishonesty and gross
negligence of duty. Allas then dismissed Estacio from service.

In the same "Audit Findings at the San Luis Area Office" submitted to respondent
Engineer Allas on 22 August 2002, Internal Auditor Lorenzo reported that petitioner
Manliclic, a bill collector, failed to remit to respondent PELCO I management his
collection amounting to P4,813.11, as of 20 August 2002.

Respondent Engr. Allas issued a Memorandum dated 6 September 2002 directing

petitioner Manliclic to explain in writing why no disciplinary action should be taken
against him for committing offenses against respondent PELCO I properties,under
Section 2.1 of Board Policy No. 01-04 dated 23 July 2001.
On 11 September 2002, petitioner Manliclic submitted his written explanation admitting
the he used the amount of P4,813.11 from his collection to cover pressing family
obligations and requesting two months to pay the same. With this admission,
respondent Engr. Allas issued another Memorandum dated 28 September 2002
dismissing petitioner Manliclic from service effective 1 October 2002, with forfeiture
of benefits.

Issue:

Were Estacio and Manliclic illegally dismissed?

Ruling:

No. The requisites for a valid dismissal are: (a) the employee must be afforded due
process, i.e., he must be given an opportunity to be heard and defend himself; and (b)
the dismissal must be for a valid cause as provided in Article 282 of the Labor Code or
for any of the authorized causes under Articles 283 and 284 of the same Code. Well-
settled is the rule that the essence of due process is simply an opportunity to be heard
or as applied to administrative proceedings, an opportunity to explain one's side or an
opportunity to seek a reconsideration of the action or ruling complained of.

It is undisputed that petitioners were accorded due process. Through the Memoranda
issued by respondent Engr. Allas, petitioners were duly informed of the results of the
audit conducted by Internal Auditor Lazaro, which were unfavorable to petitioners.
Petitioners were given a chance to submit their written explanations. As to petitioner
Estacio, a formal hearing/investigation was even conducted by an investigating
committee. Only thereafter, did respondent Engr. Allas notify petitioners Estacio and
Manliclic, through a Decision dated 25 October 2002 and Memorandum dated 28
September 2002, respectively, that they were found guilty of the charges against them
and were being dismissed from service. Both petitioners had the opportunity to seek
reconsideration of their dismissal.

Llamas vs. Ocean Gateway & Management, Inc.

G.R. No. 179293, August 14, 2009

Facts:

Ocean Gateway Maritime and Management, Inc. hired Eden Llamas on August 1, 2001
as an accounting manager. On February 9, 2002, Mary Anne T. Macaraig, respondent‟s
Chief Executive Officer, called petitioner‟s attention to her failure, despite repeated
demands, to accomplish the long overdue monthly and annual company financial
reports and to remit the company‟s contributions to the SSS and PhilHealth for
November and December 2001. Subsequently or on February 20, 2002, Mary Anne
again instructed petitioner to remit on that day or until the following day the company‟s
contributions to the SSS and PhilHealth for January 2002. Again, she failed to comply.
On February 26, 2002 Mary Anne sent a memorandum to petitioner charging her with
gross and habitual neglect of duty and/or misconduct or willful disobedience and
insubordination, detailing therein the bases of the charges, and requiring her to submit a
written explanation why she should not be penalized or dismissed from employment.
Complying with the show cause order, petitioner claimed that the delay was due to the
fact that she was overloaded with work and undermanned.

On account of the delay in the remittance of those contributions, respondent was

penalized in the amount of P18,580.41 which it charged to petitioner via salary
deductions. Respondent sent her a notice of termination from employment on July 31,
2002, anchored on gross and habitual neglect of duty and/or serious misconduct or
willful disobedience/insubordination. Petitioner, on the other hand, filed before the
NLRC a Complaint against respondent and Mary Anne for illegal dismissal, damages
and attorney‟s fees. She later amended her complaint to include as cause of action non-
payment of overtime pay. Still, in her Position Paper, she included illegal deductions as
additional cause of action.

Issue:

Was the dismissal valid?

Ruling:

Yes. Under Article 282 (b) of the Labor Code, negligence must be both gross and
habitual to justify the dismissal of an employee. Gross negligence is characterized by
want of even slight care, acting or omitting to act in a situation where there is a duty to
act, not inadvertently but willfully and intentionally with a conscious indifference to
consequences insofar as other persons may be affected.
In the present case, petitioner, as respondent‟s Accounting Manager, failed to discharge
her important duty of remitting SSS/PhilHealth contributions not once but quadruple
times, resulting in respondent‟s incurring of penalties totaling P18,580.41, not to
mention the employees/members‟ contributions being unupdated.

Her claim of being overworked and undermanned does not persuade. As noted by
respondent, the company had been in operation for less than three (3) months at the
time the negligence and delays were committed, with only a few transactions and only
with one principal, Malaysian Merchant Marine Bhd., hence, its financial and accounting
books should not have been difficult to prepare. Moreover, as claimed by respondent
which was not refuted by petitioner, shefailed to remit the contributions as early as
November 2001 during which time, however, on-the-job trainees were still with the
company, hence, her claim of being undermanned behind such failure does not lie.

On petitioner‟s declaration that "I believe that I did something good for our office when
our declaration of gross income submitted to City Hall for the renewal of our municipal
license was lower than our actual gross income for which the office had paid a lower
amount," the Court finds the same as betraying a streak of dishonesty in her. It partakes
of serious misconduct.

For misconduct or improper behavior to be a just cause for dismissal, (a) it must be
serious; (b) must relate to the performance of the employee‟s duties; and (c) must show
that the employee has become unfit to continue working for the employer. Indeed, an
employer may not be compelled to continue to employ such person whose continuance
in the service would be patently inimical to his employer‟s interest.

For her act of understating the company‟s profits or financial position was willful and not
a mere error of judgment, committed as it was in order to "save" costs, which to her
warped mind, was supposed to benefit respondent. It was not merely a violation of
company policy, but of the law itself, and put respondent at risk of being made legally
liable. Verily, it warrants her dismissal from employment as respondent‟s Accounting
Manager, for as correctly ruled by the appellate court, an employer cannot be compelled
to retain in its employ someone whose services is inimical to its interests.

[1] This is a minute resolution. The ruling did not discuss in detail the prosecution‟s
failure to prove the existence of a syndicate
ILLEGAL DISMISSAL

CONSTRUCTIVE DISMISSAL

Payno vs. Orizon Trading Corp / Orata Trading

G.R. No. 175345, August 19, 2009

Facts:

On October 21, 1993, petitioner Baltazar L. Payno was employed as electrician by

Orata Trading, a single proprietorship engaged in signboard and billboard advertising.
He was later promoted to senior installer.

On April 11, 2000, petitioner was informed by the personnel manager that Orata Trading
would cease its business operations and that Orizon Trading Corporation was taking
over. Petitioner asked about the status of his employment, and further inquired if he
would be receiving separation pay due to the closure of Orata Trading. He was told that
no separation pay was forthcoming, since Orizon Trading Corporation was merely
absorbing Orata Trading - maintaining its premises, and retaining all its officers and
employees without any diminution in salary and rank. He was, however, informed that
he would have to sign a new employment contract with Orizon Trading Corporation.

Perturbed with the new set-up, petitioner, on May 4, 2000, filed a complaint against
Orizon Trading for payment of separation pay due to the closure of Orata Trading.
Petitioner, nonetheless, continued to work with Orizon Trading Corporation.
Subsequently, petitioner was called to the office, and was told not to report for work
anymore if he did not sign the employment contract. The general manager, respondent
Flordeliza Legaspi, offered him the amount of P7,000.00 as separation pay. Petitioner
refused since it was insufficient and not commensurate to the more than seven (7)
years he had worked with Orata Trading.
On June 5, 2000, petitioner filed an Amended Complaint to include "illegal dismissal" as
another cause of action against respondents, maintaining the relief for payment of
separation pay, damages and attorney‟s fees. Respondent however alleged that it was
respondent who resigned.

Issue:

Was there constructive/illegal dismissal of Payno?

Ruling:

Yes. In termination cases, it is incumbent upon the employer to prove either the non-
existence or the validity of dismissal. Inasmuch as respondents alleged petitioner‟s
resignation as the cause of his separation from work, respondents had the burden to
prove the same. The case of the employer must stand or fall on its own merits and not
on the weakness of the employee‟s defense.

Resignation is the voluntary act of an employee who is in a situation where one believes
that personal reasons cannot be sacrificed in favor of the exigency of the service, and
one who has no other choice but to dissociate oneself from employment. As the intent
to relinquish must concur with the overt act of relinquishment, the acts of the employee
before and after the alleged resignation must be considered in determining whether, in
fact, he intended to sever his employment. In this case, we find no overt act on the part
of petitioner that he was ready to sever his employment ties. The alleged resignation
was actually premised by respondents only on the filing of the complaint for separation
pay, but this alone is not sufficient proof that petitioner intended to resign from the
company. What strongly negates the claim of resignation is the fact that petitioner filed
the amended complaint for illegal dismissal immediately after he was not allowed to
report for work on June 3, 2000. Resignation is inconsistent with the filing of the
complaint for illegal dismissal.

Furthermore, it must be noted that respondents admit the closure of the business of
Orata Trading and the immediate takeover by Orizon Trading Corporation. Under Article
283 of the Labor Code, the closing or cessation of the operations of Orata Trading
renders it liable for the payment of separation pay to the employees. Since petitioner
was informed by Orata‟s personnel manager that no separation pay was forthcoming,
the former was constrained to file a claim therefor. Petitioner was afraid to lose all
benefits to which he was entitled for the seven years he had worked with Orata Trading.
This fear was not unfounded, since he was required to sign a new employment contract
and considered as a new employee of Orizon Trading Corporation, and the years of
service behind him would amount to nothing.

Martinez vs. B&B Fish Broker

G.R. No. 179985, September 18, 2009

Facts:

Odilon L. Martinez was employed as a cashier on February 2000 by B&B Fish Broker, a
partnership owned and managed by respondent Norberto M. Lucinario and Jose Suico.
On November 24, 2002, Lucinario called petitioner‟s attention to his alleged shortages
in his cash collections and ordered him to, as he did, take a leave the following day.
When petitioner reported back for work on November 26, 2002, he was relieved of his
position and reassigned as company custodian.

On December 2, 2002, petitioner filed an application for a four-day leave effective on

even date due to an inflamed jaw. His application, addressed to Lucinario, was received
by a co-employee, Arielle Penaranda. On December 9, 2002, petitioner discovered that
his name had been removed from the company logbook and was prevented from
logging in. And he was informed that his application for a four-day leave of absence had
been denied. The following day, petitioner, having understood that the removal of his
name from the logbook amounted to the termination of his employment, tried to confer
with Lucinario but to no avail, hence, filed a complaint against B&B Fish Broker and/or
Lucinario, for illegal dismissal, underpayment and non-payment of wages with prayer for
reinstatement, before the Arbitration Branch of the National Labor Relations
Commission.

Issue:

Was the dismissal valid?

Ruling:

No. On his [petitioner] return, he discovered that his name was erased from the
logbook, was refused entry into the company premises, and learned that his application
for a 4-day leave was not approved. He thereupon exerted efforts to communicate with
Lucinario on the status of his employment, but to no avail.

What thus surfaces is that petitioner was constructively dismissed. No actual dismissal
might have occurred in the sense that petitioner was not served with a notice of
termination, but there was constructive dismissal, petitioner having been placed in a
position where continued employment was rendered impossible and unreasonable by
the circumstances indicated above.

Pilapil vs. NLRC

G.R. No. 178229, Oct. 23, 2009

Facts:

Petitioners, 188 in all, were employees of C. Alcantara and Sons, Inc. (CASI) and
members of the Nagkahiusang Mamumuo sa Alsons, Southern Philippines Federation
of Labor (NAMAAL-SPFL). NAMAAL-SPFL and CASI forged a collective bargaining
agreement (CBA) effective January 10, 1995 up to December 31, 1999. On the
proposal of NAMAAL-SPFL, negotiation for the modification of the CBA was
commenced but ended in a deadlock. NAMAAL-SPFL filed a Notice of Strike before the
National Conciliation and Mediation Board (NCMB) on the ground of "deadlock in
collective bargaining." As conciliation failed, majority of the employees voted for the
holding of a strike. A strike was held with makeshift structures, huge streamers and
banners, the strikers barricaded the main private road leading to, and prevented ingress
to and egress from, the CASI compound, thereby paralyzing CASI‟s operations. CASI
filed a petition to declare the strike illegal before the NLRC against the officers and
members of the union, excluding petitioners, who were alleged to be responsible for
some of the prohibited and illegal activities during the strike. NLRC issued a TRO which
was enforced finally. CASI resumed its operation and instructed petitioners to report to
work within two (2) days from receipt of notice with the caveat that if they don‟t, it would
take necessary measures for the protection of its interest. Petitioners ignored the
directives of CASI.

The Labor Arbiter declared the strike illegal which was affirmed by the NLRC. While
NAMAAL-SPFL‟s petition for certiorari before the Court of Appeals was pending,
petitioners voluntarily offer to return to work. CASI refused the offer of petitioners. In the
meantime, the CA affirmed the decision of NLRC that the strike was illegal. Petitioners
filed complaints for constructive dismissal. The Labor Arbiter dismissed the complaint
but ordered the payment of separation pay. Both petitioners and CASI appealed to the
NLRC. The NLRC, finding merit only in the appeal of CASI, nullified the decision of the
LA. The motion for reconsideration was denied by NLRC. The CA dismissed the appeal
of the petitioners, hence this petition.

Issue:

Were petitioners constructively dismissed?

Ruling:

No. Petitioners‟ citation in their favor of Article 264 (A) of the Labor Code which
provides that "mere participation of a worker in a lawful strike shall not constitute
sufficient ground for termination of his employment, even if a replacement had been
hired by the employer during such lawful strike" is misplaced. First, the strike in which
petitioners participated was declared illegal. Second, petitioners were not dismissed for
their participation in the strike but for abandonment of their jobs. For abandonment to
exist, it is essential that (a) the employee must have failed to report for work or must
have been absent without valid or justifiable reason; and (b) there must have been a
clear intention to sever the employer-employee relationship manifested by some overt
acts.

In petitioners‟ case, despite the directive cum caveat of CASI for them to report back for
work within two days from receipt thereof, they failed to comply therewith. After three
years, as reflected above, they offered to return to work. Their intention to sever the
employer-employee relationship with CASI is manifested, however, by the length of time
they refused to return to work, for they had, in the interim, been looking for other jobs. In
fine, as petitioners were not constructively dismissed for they abandoned their jobs, they
are not entitled to reinstatement, backwages, damages, and attorney‟s fees.

Merck Sharp and Dohme (Philippines) vs Robles, Gonito and Cristobal

G.R. No. 176506, November 25, 2009

Facts:

Respondents are former health care representatives assigned at the District V-MSD
Cardiovascular Unit, Region I of Merck Sharp. They were placed under preventive
suspension on the ground of loss of trust and confidence by allegedly submitting false,
misleading, or inaccurate data about the work of other employees.
Subsequently, Robles and Gonito were informed that their services had been
terminated. Cristobal, on the other hand, was informed that his suspension was lifted.
However, he was reassigned to District I of Baguio City and La Union as his new area of
responsibility. Christian requested for a transfer. His request was not favorably acted
upon, instead, he received his second Employees‟ Notice to Explain dated January 19,
2004, for dishonesty and offenses against company interest. Thereafter, Christian got
sick due to the stress brought about by his receiving several ENTEs. As such, he was
compelled to apply for a sick leave. Christian stated that his sick leave application was
not acted upon and instead he received his third ENTE dated February 4, 2004, for
insubordination, serious misconduct or willful disobedience. Christian, thereafter,
resigned citing oppression and utter unbearability of the work atmosphere. Christian
then amended his complaint for constructive dismissal.

Issue:

Was there constructive dismissal?

Ruling:

Yes. MSD is adamant that the CA erred in not characterizing the work reassignment of
respondent Cristobal as falling within the ambit of management prerogative and, thus,
beyond challenge. In addition, MSD postulates that the work reassignment of medical
representatives, such as respondent Cristobal, is not only dictated by the nature of the
work, but is, more importantly, written in the employment contract.

Once more, the Court agreed with MSD‟s statement of the general rule that the work
reassignment of an employee is a management prerogative. Indeed, even the
Constitution recognizes “the right of enterprises to reasonable returns on investments,
and to expansion and growth.” Yet, the invocation of management prerogative carries
the corresponding burden of proving such contention.

Time and again the Court has ruled that in constructive dismissal cases, the employer
has the burden of proving that the transfer of an employee is for just and valid grounds,
such as genuine business necessity. The employer must demonstrate that the transfer
is not unreasonable, inconvenient, or prejudicial to the employee and that the transfer
does not involve a demotion in rank or a diminution of salary and other benefits. If the
employer fails to overcome this burden of proof, the employee‟s transfer is tantamount
to unlawful constructive dismissal.
Philippine Veterans Bank vs. NLRC and Benigno Martinez

GR No. 188882; March 30, 2010

Facts:

Respondent Benigno Martinez was the Dumaguete City branch manager of the
Philippine Veterans Bank from September 1, 2001 upto January 8, 2003, the date
respondent tendered his resignation because “it [was] so expensive for [him] to be
staying away from [his] family,” which circumstance was brought about by his transfer to
the Makati head office the bank since October 2002..

Respondent claimed that he was transferred to the Makati branch office after he earned
the ire of the bank‟s Area Head for Visayas and Mindanao. This was because he
requested one of the big depositors of the bank, who was the mayor of Valencia,
Negros Oriental, to talk to the said Area Head regarding huge withdrawals by
depositors, which was precipitated by newspaper reports of alleged anomalies hounding
the bank‟s high-ranking officials. Earlier, the respondent already approached the Area
Head about the same matter but the said Area Head simply brushed off the issue. On
October 2002, the Area Head went to the Dumaguete branch of the bank and brought
with him the person who would replace respondent as branch manager. The respondent
was ordered to report to the bank‟s head office in Makati. There, the bank‟s Vice
President and Head of its Branch Banking Division told him that he would undergo
training. No such training took place. Instead, the respondent was made to do clerical
jobs. He had to travel four hours everyday from his rented house in Cavite to Makati.
This consumed travel and living expenses consumed half of his salary. This prompted
him to tender his resignation on January 8, 2003. Thereafter, he filed a complaint for
constructive dismissal before the labor arbiter.

In its position paper, the petitioner claimed that Martinez‟s transfer was not motivated by
bad faith. It said that it was pursuant to Special Order No. 880, which ordered the
respondent's transfer to the Branch Banking Division to undergo Branch Head Training
effective October 21, 2002. The labor arbiter dismissed his complaint and ruled that the
respondent voluntarily resigned from service. The NLRC reversed the labor arbiter. It
ruled that respondent was constructively dismissed and that the unceremonious
replacement of the respondent on October 2002 was akin to contructive dismissal. The
Court of Appeals affirmed the NLRC and ruled that the respondent's transfer from
Dumaguete to Makati City was clearly unreasonable, inconvenient and put him in the
difficult predicament of choosing whether to live away from his family or to bring them to
Manila which will entail additional expenses on his part. The petitioner elevated the case
to the Supreme Court.

Issue:

Was the respondent constructively dismissed?

Ruling:

Yes, the transfer of the Dumaguete Branch Manager of Veterans Bank to Makati
constituted constructive dismissal. The test of constructive dismissal is whether a
reasonable person in the employee's position would have felt compelled to give up his
position under the circumstances. Based on the factual considerations in the present
case, we hold that the hostile and unreasonable working conditions of the petitioner
justified the finding of the NLRC and the CA that respondent was constructively
dismissed.

In constructive dismissal cases, the employer has the burden of proving that its conduct
and action or the transfer of an employee are for valid and legitimate grounds such as
genuine business necessity. Particularly, for a transfer not to be considered a
constructive dismissal, the employer must be able to show that such transfer is not
unreasonable, inconvenient, or prejudicial to the employee. Failure of the employer to
overcome this burden of proof taints the employee's transfer as a constructive
dismissal. In the present case, the petitioner failed to discharge this burden. The
combination of the harsh actions of the petitioner rendered the employment condition of
respondent hostile and unbearable. First, the petitioner failed to show any urgency or
genuine business necessity to transfer the respondent to the Makati Head Office.
Second, the respondent's transfer from Dumaguete to Makati City is clearly
unreasonable, inconvenient and oppressive, since the respondent and his family are
residents of Dumaguete City. Third, the petitioner failed to present any valid reason why
it had to require the respondent to go to Makati Head Office to undergo branch head
training when it could have just easily required the latter to undertake the same training
in the VISMIN area. Finally, there was nothing in the order of transfer as to what
position the respondent would occupy after his training; the respondent was effectively
placed in a "floating" status.

Manolo Peñaflor vs. Outdoor Clothing Manufacturing Corp.

G.R. No. 177114, April 13, 2010

Facts:

Peñaflor was hired as probationary HRD Manager of Outdoor Clothing on September 2,

1999. On March 13, 2000, more than six months from the time he was hired, Outdoor
Clothing‟s President, Nathaniel Syfu, appointed Edwin Buenaobra as the concurrent
HRD and Accounting Manager. After enduring what he claimed as discriminatory
treatment at work, Peñaflor considered the appointment of Buenaobra to his position as
the last straw, and thus filed his irrevocable resignation from Outdoor Clothing effective
at the close of office hours on March 15, 2000. He thereafter filed an illegal dismissal
complaint with the labor arbiter claiming that he had been constructively dismissed. The
labor arbiter agreed with Peñaflor and issued a decision in his favor. On appeal, the
NLRC reversed the earlier decision. The CA likewise affirmed the decision of the NLRC.
Hence this petition.

Issue:

Can Peñaflor‟s resignation be considered as constructive dismissal equivalent to an

illegal dismissal?

Ruling:

Yes. While the letter states that Peñaflor‟s resignation was irrevocable, it does not
necessarily signify that it was also voluntarily executed. Precisely because of the
attendant hostile and discriminatory working environment, Peñaflor decided to
permanently sever his ties with Outdoor Clothing. This falls squarely within the concept
of constructive dismissal that jurisprudence defines, among others, as involuntarily
resignation due to the harsh, hostile, and unfavorable conditions set by the employer. It
arises when a clear discrimination, insensibility, or disdain by an employer exists and
has become unbearable to the employee. The gauge for constructive dismissal is
whether a reasonable person in the employee‟s position would feel compelled to give up
his employment under the prevailing circumstances. With the appointment of
Buenaobra to the position he then still occupied, Peñaflor felt that he was being eased
out and this perception made him decide to leave the company.

The fact of filing a resignation letter alone does not shift the burden of proving that the
employee‟s dismissal was for a just and valid cause from the employer to the employee.
In Mora v. Avesco, we ruled that should the employer interpose the defense of
resignation, it is still incumbent upon the employer to prove that the employee
voluntarily resigned. To our mind, Outdoor Clothing did not discharge this burden by
belatedly presenting the three memoranda it relied on. If these memoranda were
authentic, they would have shown that Peñaflor‟s resignation preceded the appointment
of Buenaobra. Thus, they would be evidence supporting the claim of voluntariness of
Peñaflor‟s resignation and should have been presented early on in the case. Outdoor
Clothing however raised them only before the NLRC when they had lost the case before
the labor arbiter.

Whatever doubts that remain in our minds on the credibility of the parties‟ evidence
should, by the law‟s dictate, be settled in favor of the working man. Our ruling that
Peñaflor was constructively dismissed from his employment with Outdoor Clothing
therefore stands.

Peñaflor vs. Outdoor Clothing Manufacturing Corp.

G.R. No. 177114, April 13, 2010

Facts:

Peñaflor was hired as probationary HRD Manager of Outdoor Clothing on September 2,

1999. On March 13, 2000, more than six months from the time he was hired, Peñaflor
learned that Outdoor Clothing‟s President, Nathaniel Syfu (Syfu), appointed Edwin
Buenaobra (Buenaobra) as the concurrent HRD and Accounting Manager. After
enduring what he claimed as discriminatory treatment at work, Peñaflor considered the
appointment of Buenaobra to his position as the last straw, and thus filed his irrevocable
resignation from Outdoor Clothing effective at the close of office hours on March 15,
2000. He thereafter filed an illegal dismissal complaint with the labor arbiter claiming
that he had been constructively dismissed. The labor arbiter agreed with Peñaflor and
issued a decision in his favour.

On appeal, the National Labor Relations Commission (NLRC) reversed the labor
arbiter‟s ruling. When Peñaflor questioned the NLRC‟s decision before the CA, the
appellate court affirmed the NLRC‟s decision. Hence, Peñaflor filed a petition for review
on certiorari with the Court.

Issue:

Was Peñaflor constructively dismissed?

Ruling:

Yes. While the letter states that Peñaflor‟s resignation was irrevocable, it does not
necessarily signify that it was also voluntarily executed. Precisely because of the
attendant hostile and discriminatory working environment, Peñaflor decided to
permanently sever his ties with Outdoor Clothing. This falls squarely within the concept
of constructive dismissal that jurisprudence defines, among others, as involuntarily
resignation due to the harsh, hostile, and unfavorable conditions set by the employer. It
arises when a clear discrimination, insensibility, or disdain by an employer exists and
has become unbearable to the employee. The gauge for constructive dismissal is
whether a reasonable person in the employee‟s position would feel compelled to give up
his employment under the prevailing circumstances. With the appointment
of Buenaobra to the position he then still occupied, Peñaflor felt that he was being
eased out and this perception made him decide to leave the company.

The fact of filing a resignation letter alone does not shift the burden of proving that the
employee‟s dismissal was for a just and valid cause from the employer to the
employee. In Mora v. Avesco [G.R. No. 177414, November 14, 2008, 571 SCRA 226],
the Court ruled that should the employer interpose the defense of resignation, it is still
incumbent upon the employer to prove that the employee voluntarily resigned.

ILLEGAL DISMISSAL BASED ON ALLEGATIONS OF ABANDONMENT

Mantle Trading Services, Inc., et. al. vs. NLRC, et. a.

G.R. No. 166705, July 28, 2009

Facts:

Petitioner company, Mantle Trading Services, Inc., is engaged in the fishing business.
Madriaga was hired by petitioner company as a "batilyo" or fish hauler. Subsequently,
he became a "tagapuno" It was reported that Madriaga received money to put more fish
in Alfaro‟s tubs, formal incident reports were submitted to the petitioner company. On
September 11, 1999, Madriaga was allegedly barred by the payroll master, Mr. Charlie
Baqued, from reporting for work. Petitioner company, on the other hand, alleged that
Madriaga abandoned his work when he was about to be investigated for the reports.

Petitioner company alleged, among others, that Madriaga was a seasonal employee
and he was not dismissed.

The Labor Arbiter ruled that Madriaga was a regular. The Labor Arbiter also faulted the
petitioner company in failing to comply with the requirement of notice before dismissing
an employee. The NLRC affirmed the Labor Arbiter‟s ruling that Madriaga was a regular
employee but it held that Madriaga was not illegally dismissed. In any case, even if it
were true, the act of the payroll master in preventing the complainant from reporting for
work cannot be deemed respondent‟s act in the absence of evidence that said payroll
master had the authority to dismiss employees. What appears to have happened here is
that complainant was not dismissed by the respondent company but the complainant
without ascertaining the authority of the payroll master, heeded the latter‟s order for him
not to report for work.The NLRC rejected petitioner company‟s contention that Madriaga
abandoned his work. It ruled that mere absence is not sufficient. There must be proof
that there was deliberate and unjustified refusal on the part of the employee to resume
his employment without any intention of returning.

The Court of Appeals affirmed the finding of the Labor Arbiter and the NLRC that
Madriaga was a regular employee, however, reversed the Labor Arbiter and the NLRC
on the issue of abandonment of work. It held that there was a causal connection
between the charge against Madriaga of having received money from a fish trader and
his failure to seek his immediate reinstatement. It ruled that Madriaga abandoned his
work as it was only invoked two years after his alleged dismissal.

Issue:

Was private respondent illegally dismissed?

Ruling:

Yes. It is settled that to effect a valid dismissal, the law requires that a) there be just and
valid cause as provided under Article 282 of the Labor Code; and b) the employee be
afforded an opportunity to be heard and to defend himself. The two-notice requirement
must be complied with, to wit: a) a written notice containing a statement of the cause for
the termination to afford the employee ample opportunity to be heard and defend
himself with the assistance of his representative, if he so desires; and b) if the employer
decides to terminate the services of the employee, the employer must notify him in
writing of the decision to dismiss him, stating clearly the reason therefore.20

The case of Agabon v. NLRC, et al. applies to the case at bar. In Agabon, the dismissal
was found by the Court to be based on a just cause because the employee abandoned
his work. But it also found that the employer did not follow the notice requirement
demanded by due process. It ruled that this violation of due process on the part of the
employer did not nullify the dismissal, or render it illegal, or ineffectual. Nonetheless, the
employer was ordered to indemnify the employee for the violation of his right to due
process.

A dismissal for just cause under Article 282 implies that the employee concerned has
committed, or is guilty of, some violation against the employer, i.e. the employee has
committed some serious misconduct, is guilty of some fraud against the employer, or,
as in Agabon, he has neglected his duties. Thus, it can be said that the employee
himself initiated the dismissal process.

Since in the case of JAKA, the employee was terminated for authorized causes as the
employer was suffering from serious business losses, the Court fixed the indemnity at a
higher amount of P50,000.00. In the case at bar, the cause for termination was
abandonment, thus it is due to the employee‟s fault. It is equitable under these
circumstances to order the petitioner company to pay nominal damages in the amount
of P30,000.00, similar to the case of Agabon.

We affirm the award of salary differentials, 13th month pay and holiday pay, awarded by
the NLRC and the Court of Appeals. We note that although petitioner company had
cause to terminate Madriaga, this has no bearing on the issue of award of salary
differentials, holiday pay and 13th month pay because prior to his valid dismissal, he
performed work as a regular employee of petitioner company, and he is entitled to the
benefits provided under the law. Thus, in the case of Agabon, even while the Court
found that the dismissal was for a just cause, the employee was still awarded his
monetary claims.

Eagle Star Security Services vs. Bonifacio Mirando

G.R. No. 179512, July 30, 2009

Facts:

Bonifacio Mirando, who was hired by Eagle Star Security Services, Inc. as a security
guard on July 29, 1997. When he reported for work on December 15, 2001, he was told
by the detachment commander, Juanito Endencio (Endencio), not to report for duty per
instruction of the head office. Respondent thus called up the head office and was told by
Wilfredo Dayon that he was removed from duty by Ernesto Agodilla (Agodilla),
petitioner‟s operations manager. As respondent was thereafter no longer asked to
report for duty, he filed on December 18, 2001 a complaint for illegal dismissal against
petitioner and its president Wilfredo Encarnacion at the National Labor Relations
Commission . He later amended his complaint on February 1, 2002 to include a prayer
for reinstatement and payment of full backwages, damages and attorney‟s fees.

Responding to the complaint, petitioner alleged that respondent went on absence

without official leave on December 16, 2001 and had not since reported for work,
drawing it to send him a notice on December 26, 2001 to explain his absence, but he
failed to respond thereto. Labor Arbiter found that respondent was illegally
dismissed.On appeal, the NLRC modified the Labor Arbiter‟s Decision by dismissing the
complaint as against Encarnacion and amended the awards granted.

Issue:

Was petitioner illegally dismissed?

Ruling:

Yes. The persistence of respondent to resume his duties, not to mention his immediate
filing of the illegal dismissal complaint, should dissipate any doubt that he did not
abandon his job. Clutching at straws, petitioner argues that respondent was on
temporary "off-detail," the period of time a security guard is made to wait until he is
transferred or assigned to a new post or client and since petitioner‟s business is
primarily dependent on contracts entered into with third parties, the temporary "off-
detail" of respondent does not amount to dismissal as long as the period does not
exceed 6 months, following Art. 286 of the Labor Code.25
Petitioner‟s citation of Article 286 of the Labor is misplaced. Philippine Industrial
Security Agency v. Dapiton teaches:

We stress that Article 286 applies only when there is a bonafide suspension of the
employer‟s operation of a business or undertaking for a period not exceeding six (6)
months. In such a case, there is no termination of employment but only a temporary
displacement of employees, albeit the displacement should not exceed six (6) months.
The paramount consideration should be the dire exigency of the business of the
employer that compels it to put some of its employees temporarily out of work. In
security services, the temporary "off-detail" of guards takes place when the security
agency‟s clients decide not to renew their contracts with the security agency, resulting in
a situation where the available posts under its existing contracts are less than the
number of guards in its roster.26

In the present case, there is no showing that there was lack of available posts at
petitioner‟s clients or that there was a request from the client-bank, where respondent
was last posted and which continued to hire petitioner‟s services, to replace respondent
with another. Petitioner suddenly prevented him from reporting on his tour of duty at the
bank on December 15, 2001 and had not thereafter asked him to report for duty. In
fine, the appellate court‟s affirmance of the NLRC decision is in order.

Faeldonia vs. Tong Yak Groceries

GR No. 182499, October 2, 2009

Facts:

Petitioner alleged that she worked at Tong Yak Groceries as sales/stock clerk from
March 1978 until her dismissal on April 20, 2000; that on January 26, 2000, while on an
errand for her employer, she stepped on a rusted half-inch nail which injured her foot
and caused her to be absent from work. Her foot was operated on and she was
confined at the hospital for 24 days. Respondents paid the hospital bill amounting to
P22,266.40. Petitioner was released from the hospital on March 1, 2000, but was
advised to report daily for wound dressing for three weeks. Respondents paid for all the
expenses.

Petitioner also alleged that on March 10, 2000, she was summoned by respondent
Merlita Go who told her that, “ayaw na namin sa iyo dahil may sakit ka, paengkang-
engkang kung lumakad at pagtatawanan ka lamang ng mga kasamahan mo dito.”
However, petitioner did not give much attention to said statement. She was able to
secure from the SSS a Sickness Notification signed by Dr. William Ty certifying that she
is fit to resume work by April 20, 2000. Petitioner reported back to work on April 20,
2000 but was told to resign and that she would be given a sum of money to start a
business. When petitioner asked how much financial assistance would be given her,
respondent Merlita Go angrily stated, “Marami na akong nagastos sa pagpapa-ospital
sa iyo.”

Thereafter, respondents no longer allowed petitioner to go back to work. Hence, she

filed a complaint for illegal dismissal with money claims before the NLRC,claiming that
her dismissal was not for cause and without due process.

Issue:

Is there illegal dismissal?

Ruling:

Yes. In termination cases, the burden of proof rests upon the employer to show that
the dismissal is for a just and valid cause and failure to do so would necessarily mean
that the dismissal was illegal. Following this principle, it is incumbent upon the
respondents to prove by substantial evidence that petitioner abandoned her job. For
abandonment to exist, it must be shown that (1) the employee has failed to report for
work or must have been absent without valid or justifiable reason; and (2) that there
must have been a clear intention to sever the employer-employee relationship as
manifested by some overt acts.

Respondents failed to discharge this burden. Mere absence of petitioner is not

sufficient to establish the allegation of abandonment. The prolonged absence of
petitioner was not without justifiable reason because it was established that her failure
to report for work was due to the injury she suffered in the course of her employment
and with sufficient notice to respondents. Above all, the intention to sever the
employer-employee relationship was not duly established by respondents. The prior
submission of a medical certificate that petitioner is fit to resume work negates the claim
of respondents that the former demanded for separation pay on account of her failing
health. Certainly, petitioner cannot demand for separation benefits on the ground of
illness while at the same time presenting a certification that she is fit to work.
Respondents could have denied petitioner‟s demand at that instance and ordered her to
return to work had it not been their intention to sever petitioner from their employ.
Hence, we find the allegation that petitioner presented herself for work but was refused
by respondents more credible.

It should be noted that respondents also failed to observe the requirements of

procedural due process in effecting petitioner‟s dismissal. 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
employer‟s decision to terminate him. In cases of abandonment of work, notice shall be
served at the worker‟s last known address. Here, no such notice was served to
petitioner. Hence, for breach of the due process requirements, respondents shall also
be liable in the amount of P30,000 as indemnity in the form of nominal damages.
Baron Republic Theatrical vs. Peralta

GR No. 170525, October 2, 2009

Facts:

Petitioner [herein respondent], Normita P. Peralta (“PERALTA”) was hired by BARON

REPUBLIC THEATRICAL (“BARON”) sometime in 1983 as a ticket seller and was later
on promoted as General Manager. On March 14, 1993, she was informed by the owner
and operator of BARON, respondent [herein petitioner] Rodrigo Salazar (“SALAZAR”)
that her employment was already terminated effective that day. She was not given any
reason why her services were being terminated. Thereafter, she filed a case for illegal
dismissal with claim for reinstatement, payment of backwages, unpaid salary, 13th
month pay, service incentive leave, damages and attorney's fees against her employer,
BARON/SALAZAR.

As to petitioner [herein respondent] Edilberto H. Aguilar (“AGUILAR”), he was hired as

electrician/air-conditioner operator at MAJOR CINEMA (“MAJOR”) sometime in January
of 1983. In May 1994, he was informed by the owner-operator of MAJOR, [herein
petitioner] Wilson Pascual (“PASCUAL”), that his employment was terminated effective
that day. No explanation was given to AGUILAR why his service was being terminated.
Hence, he filed a complaint against his employers, PASCUAL/MAJOR for illegal
dismissal, payment of wage differentials as a result of underpayment, overtime pay,
holiday and rest day/pay and service incentive leave pay.

The CA held that as to Peralta, Salazar failed to discharge his burden of proving that he
paid the former her 13th month pay. In the same manner, the appellate court ruled that
Pascual failed to prove that Aguilar was guilty of abandonment. Moreover, the CA
reinstated the award of attorney's fees holding that Peralta and Aguilar were both forced
to litigate in order to protect their rights and interests. On the other hand, the CA
affirmed the ruling of the NLRC which deleted the award of service incentive leave pay
to Peralta and Aguilar.

Issue:

Does the employer have the burden of proving that the employee was dismissed for a
just cause?

Ruling:

Yes. It is a basic principle that in illegal dismissal cases, the burden of proof rests
upon the employer to show that the dismissal of the employee is for a just cause and
failure to do so would necessarily mean that the dismissal is not justified. In addition, in
claims of abandonment by an employee, the settled rule is that the employer bears the
burden of showing a deliberate and unjustified refusal by the employee to resume his
employment without any intention of returning. Moreover, in evaluating a charge of
abandonment, the jurisprudential rule is that abandonment is a matter of intention that
cannot be lightly presumed from equivocal acts. To constitute abandonment, two
elements must concur: (1) the failure to report for work or absence without valid or
justifiable reason, and (2) a clear intent, manifested through overt acts, to sever the
employer-employee relationship.

In the present case, petitioner Pascual consistently denies that Aguilar was terminated
from his employment and that, instead, he abandoned his work and never returned after
his request for salary increase was rejected. However, denial, in this case, does not
suffice; it should be coupled with evidence to support it.

Contrary to petitioners' asseveration that Aguilar is guilty of abandoning his job, the
Court finds no error in the finding of the Labor Arbiter, as affirmed by the CA, that there
was no clear intention on Aguilar‟s part to sever the employer-employee relationship.
Considering that “intention” is a mental state, petitioners must show that respondent
Aguilar‟s overt acts point unerringly to his intent not to work anymore. In this regard,
petitioners failed.

In fact, Aguilar‟s filing of a complaint for illegal dismissal the day following his
termination, as well as his subsequent prayer for reinstatement in his Position Paper,
are indications which strongly speak against the petitioners' charge of abandonment. An
employee who loses no time in protesting his layoff cannot by any reasoning be said to
have abandoned his work for it is illogical for an employee to abandon his employment
and, thereafter, file a complaint for illegal dismissal and pray for reinstatement.
Cobarrubias vs. Saint Louis University

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

Facts:

Cobarrubias (petitioner) was hired as a faculty member at St. Louis University, Inc.
(respondent) in Baguio City in 1982. On May 2003, she was informed that she had
failed to meet the required minimum evaluation rating for faculty members during the 5-
year period beginning school year 1998 until 2003 to thus place her on forced leave
during the first semester of school year 2003-2004; and that while on forced leave, all
benefits due her would be suspended following Section 7.7 of the existing Collective
Bargaining Agreement (CBA) between respondent and the Union of Faculty and
Employees of Saint Louis University.

Petitioner thereupon filed on June 5, 2003 a complaint for illegal dismissal with prayer
for reinstatement, backwages, moral and exemplary damages, attorney‟s fees and
payment of service incentive leave before the Regional Arbitration Branch, Cordillera
Administrative Region of the National Labor Relations Commission. The Executive
Labor Arbiter, for lack of jurisdiction, was later to refer the case to the National
Conciliation and Mediation Board by Order of January 19, 2005.

Before the start of the Second Semester for School Year 2003-2004, petitioner was
informed by respondent that a 24-unit teaching load had been prepared for her and that
the Second Semester will begin on November 3, 2003. However, petitioner did not
respond and despite subsequent letters by respondent requesting her to report for work,
she did not resume her teaching post. On Dec 6, 2003, after their letters to petitioner
were left unanswered, she was dismissed for abandonment.
Before the Voluntary Arbitrator designated to handle the case, the issues of the legality
of petitioner‟s dismissal for abandonment and the validity of her forced leave were
raised. The Arbiter ruled that there was no abandonment and that the CBA provision
from which her forced leave had been based was void. Further, petitioner was not
accorded due process as the twin requirements of notice and hearing were not
observed. Petitioner was ordered to be reinstated. Respondent filed a petition for review
before the CA, which ruled that the Arbiter breached the bounds of his authority by
nullifying Sec. 7.7 of the CBA and that the Arbiter‟s authority to settle labor disputes is
confined only to the proper interpretation and implementation of the CBA provisions.
The CA further ruled that the assailed CBA provision was not contrary to law and that
there was sufficient compliance with the due process requirement. In its decision, the
CA declared that the petitioner was illegally suspended but validly dismissed.

Issue:

Did petitioner abandon her work that would constitute a valid ground for her dismissal?

Ruling:

Yes. Petitioner was, for five times, notified in writing by respondent to resume teaching
for the second semester of school year 2003-2004 following the service of her
suspension during the first semester. She was advised that a teaching load had already
been prepared for her. Respondent never ever replied to those notices.

Petitioner forgets that her complaint for “illegal dismissal” which she filed on June 5,
2003 sprang, not from her dismissal on December 6, 2003 due to abandonmentbut,
from her suspension during the first semester of school year 2003-2004. While the filing
of a complaint with a prayer for reinstatement negates an intention to sever the
employer-employee relationship, the same contemplates an action made subsequent to
dismissal. Petitioner‟s justification for her failure to respond to the notices – that her
acceptance of the offer could be constituted as a waiver of her claims – is not indeed a
valid excuse.
Diversified Security vs. Bautista

G.R. No. 152234, April 15, 2010

Facts:

Respondent was employed by petitioner as an Executive Pool Secretary, but petitioner

alleged that respondent turned out to be incompetent. Petitioner then assigned her to
perform menial or insignificant jobs and allegedly transferred her to their branch office in
Makati City. However, respondent allegedly failed to report for work at said branch office
on the day she was supposed to do so. On the other hand, respondent claimed that
petitioner dismissed her on October 31, 1997 without any valid reason, neither was she
given any notice and hearing. In December of 1997, respondent filed a case for illegal
dismissal against petitioner. Petitioner countered that respondent was not dismissed;
rather, she was the one who severed her connection with petitioner by her "voluntary
and unequivocal acts." The Labor Arbiter issued a Decision, ordering the respondents
jointly and severally, to pay the total sum of P92,733.33 as separation pay and
proportionate mandatory 13th month pay of complainant.

The foregoing Decision was appealed to the (NLRC), but the NLRC affirmed the Labor
Arbiter's ruling that herein respondent was illegally dismissed. Petitioners then filed a
petition for certiorari with the CA which modified the Decision of the NLRC. Petitioner
moved for reconsideration, but the same was denied. Hence, this petition.

Issue:

Is there an illegal dismissal?

Ruling:

The Court views with approval the observation of the CA and the NLRC that the
employer cannot justify the defense of abandonment as it failed to prove that indeed the
employee had abandoned her work. It did not even bother to send a letter to her last
known address requiring her to report for work and explain her alleged continued
absences.

The ratiocination of the NLRC on this score merits the Court‟s imprimatur, viz: The law
clearly spells out the manner by which an unjustified refusal to return to work by an
employee may be established. Thus, respondent should have given complainant a
notice with warning concerning her alleged absences (Section 2, Rule XIV, Book V,
Implementing Rules and Regulations of the Labor Code). The notice requirement
actually consists of two parts to be separately served on the employee to wit: (1) notice
to apprise the employee of his absences with a warning concerning a possible
severance of employment in the event of an unjustified excuse therefor, and (2)
subsequent notice of the decision to dismiss in the event of an employee‟s refusal to
pay heed to such warning. Only after complying with those requirements can it be
reasonably concluded that the employee actually abandoned his job. In the present
case, more than two (2) months had already lapsed since the employee allegedly
started to absent herself when she instituted her action for illegal dismissal. During the
said period of time, no action was taken by the company regarding the employee‟s
alleged absences, something which is quite peculiar had her employment not been
severed at all. Accordingly, the Court found no merit in the company‟s defense of
abandonment in view of an utter lack of evidence to support the same. Hence, the
employee‟s charge of illegal dismissal stands uncontroverted.
ILLEGAL DISMISSAL BASED ON ALLEGATIONS OF
RETRENCHMENT/REDUNDANCY

Bio Quest Marketing vs. Edmund Rey

G.R. No. 181503, September 18, 2009

Facts:

Edmund Rey was hired by petitioner Bio Quest Marketing, Inc. on December 1, 1997 as
its Area Collector in Quezon, Batangas and all the provinces of the Bicol region. As
Area Collector, he was tasked to collect payment for various veterinary products sold to
feedmill companies, piggery and poultry farms within his area of assignment. Allegedly
as part of its cost cutting measures brought about by a decline in its sales receipts and
collections, petitioner furnished the DOLE a copy of the retrenchment notice on
September 3, 2003. And by letter of August 30, 2003 which was received by
respondent, petitioner terminated his services on September 29, 2003.

Claiming that he was dismissed without a valid cause and the observance of due
process, respondent filed a complaint for illegal dismissal against petitioner. Petitioner
averred, however, that it furnished complainant a retrenchment notice in compliance
with Art. 283 of the Labor Code; and that it had the prerogative to retrench its
employees including respondent to forestall business losses, to prove which claim of
business losses it submitted a comparative report of its sales and collections for 2001-
2003.

Issue:

Was the dismissal valid?

Ruling:

No. While retrenchment to avoid or minimize business losses is a justified ground to

dismiss employees under Article 283 of the Labor Code, the employer, however, bears
the burden to prove such ground with clear and satisfactory evidence, failing which the
dismissal on such ground is unjustified. Petitioner contends that contrary to the findings
of the Labor Arbiter and the appellate court, the comparative report of its sales and
collections for years 2001, 2002 and 2003 sufficiently proves that it was "suffering or
was about to suffer imminent losses due to the gap between sales and collection,
and/or poor collection efforts, coupled with declining sales;" and that although the report
showed an increase of sales from 2001 to 2002, there was a sharp decline thereof in
2003 by more than P38 Million while collections from 2002 to 2003 decreased by almost
P100 Million.

While the above-said comparative report of sales and collections indicates that there
was a decrease in the amount of sales and collections from 2002 to 2003, the same
does not suffice to prove that petitioner was suffering or about to suffer losses within the
contemplation of Article 283 of the Labor Code.

Clarion Printing House, Inc. v. NLRC teaches that sliding incomes or decreasing gross
revenues alone do not necessarily indicate business losses within the meaning of
Article 283, for, in the nature of things, the possibility of incurring losses is constantly
present in business operations. The decline in petitioner‟s sales and collections from
2002 to 2003 cannot thus be considered as the loss referred to in Article 283 of the
Labor Code, petitioner having failed to prove the stringent requirement that it was
substantial, continuing and without any immediate prospect of abating.

To consider every loss incurred or expected to be incurred by a company as a

justification of retrenchment would be susceptible to abuse by scheming employers who
might be merely feigning business losses or reverses in their business ventures to ease
out employees.

As for the Statement of Profit and Loss submitted by petitioner, the same does not bear
the signature of a certified public accountant. Neither is there a showing that it was
audited by an independent auditor, hence, it is a self-serving document which ought to
be treated as a mere scrap of paper devoid of any probative value.

At all events, even if the comparative report were to be considered, the Court is not
persuaded on the necessity of resorting to retrenchment to prevent or minimize actual
or imminent business losses on the part of petitioner. For retrenchment should only be
resorted to when other less drastic means have been tried and found to be inadequate.
So Polymart Paper Industries, Inc. v. NLRC instructs:

. . . Even if business losses were indeed sufficiently proven, the employer must still
prove that retrenchment was resorted to only after less drastic measures such as the
reduction of both management and rank-and-file bonuses and salaries, going on
reduced time, improving manufacturing efficiency, reduction of marketing and
advertising costs, faster collection of customer accounts, reduction of raw materials
investment and others, have been tried and found wanting.

In the case at bar, petitioner did not adduce evidence to prove that retrenchment was
resorted to because other measures were undertaken to abate actual or future business
losses but thus failed.
SMC vs. Teodosio

GR No. 163033, October 2, 2009

Facts:

On September 5, 1991, respondent Eduardo Teodosio was hired by San Miguel

Corporation (SMC) as a casual forklift operator in its Bacolod City Brewery. As a forklift
operator, respondent was tasked with loading and unloading pallet of beer cases within
the brewery premises. Respondent continuously worked from September 5, 1991 until
March 1992, after which he was “asked to rest” for a while. A month after, or sometime
in April 1992, respondent was rehired for the same position, and after serving for about
five to six months, he was again “asked to rest.” After three weeks, he was again
rehired as a forklift operator. He continued to work as such until August 1993.

Sometime in August 1993, respondent was made to sign an “Employment with a Fixed
Period” contract by SMC, wherein it was stipulated, among other things, that
respondent‟s employment would be “from August 7, 1993 to August 30, 1995, or upon
cessation of the instability/fluctuation of the market demand, whichever comes first.”
Thereafter, respondent worked at the plant without interruption as a forklift operator.

On March 20, 1995, respondent was transferred to the plant‟s bottling section as a case
piler. In a letter dated April 10, 1995, respondent formally informed SMC of his
opposition to his transfer to the bottling section. He asserted that he would be more
effective as a forklift operator because he had been employed as such for more than
three years already. Respondent also requested that he be transferred to his former
position as a forklift operator. However, SMC did not answer his letter.

In an undated letter, respondent informed SMC that he was applying for the vacant
position of bottling crew as he was interested in becoming a regular employee of SMC.

On June 1, 1995, SMC notified the respondent that his employment shall be terminated
on July 1, 1995 in compliance with the Employment with a Fixed Period contract. SMC
explained that this was due to the reorganization and streamlining of its operations.

In a letter dated July 3, 1995, respondent expressed his dismay for his dismissal. He
informed SMC that despite the fact that he would be compelled to receive his separation
pay and would be forced to sign a waiver to that effect, this does not mean that he
would be waiving his right to question his dismissal and to claim employment benefits
as provided in the Collective Bargaining Agreement (CBA) and company policies.

Thereafter, respondent signed a Receipt and Release document in favor of SMC and
accepted his separation pay, thereby releasing all his claims against SMC.On July 4,
1995, respondent filed a Complaint against SMC.

Issues:

(1) Is respondent a regular employee?

(2) Is there illegal dismissal?

Ruling (First Issue):

Yes. Based on the circumstances surrounding respondent‟s employment by SMC, this

Court is convinced that he has attained the status of a regular employee long before he
executed the employment contract with a fixed period. The Labor Code provides that a
casual employee can be considered as a regular employee if said casual employee has
rendered at least one year of service regardless of the fact that such service may be
continuous or broken. Section 3, Rule V, Book II of the Implementing Rules and
Regulations of the Labor Code clearly defines the term “at least one year of service” to
mean service within 12 months, whether continuous or broken, reckoned from the date
the employee started working, including authorized absences and paid regular holidays,
unless the working days in the establishment, as a matter of practice or policy, or as
provided in the employment contract, is less than 12 months, in which case said period
shall be considered one year. 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 of the employer.

Moreover, the nature of respondent‟s work is necessary in the business in which SMC is
engaged. SMC is primarily engaged in the manufacture and marketing of beer
products, for which purpose, it specifically maintains a brewery in Bacolod City.
Respondent, on the other hand, was engaged as a forklift operator tasked to lift and
transfer pallets and pile them from the bottling section to the piling area. SMC admitted
that it hired respondent as a forklift operator since the third quarter of 1991 when, in the
absence of fully automated palletizers, manual transfers of beer cases and empties
would be extensive within the brewery and its premises.

Undoubtedly, respondent is a regular employee of SMC. Consequently, the

employment contract with a fixed period which SMC had respondent execute was
meant only to circumvent respondent‟s right to security of tenure and is, therefore,
invalid.

(Second Issue):

Yes. Since respondent was already a regular employee months before the execution of
the Employment with a Fixed Period contract, its execution was merely a ploy on SMC‟s
part to deprive respondent of his tenurial security. Hence, no valid fixed-term contract
was executed. The employment status of a person is defined and prescribed by law
and not by what the parties say it should be. Equally important to consider is that a
contract of employment is impressed with public interest such that labor contracts must
yield to the common good. Provisions of applicable statutes are deemed written into the
contract, and the parties are not at liberty to insulate themselves and their relationships
from the impact of labor laws and regulations by simply contracting with each other.

Having gained the status of a regular employee, respondent is entitled to security of

tenure and could only be dismissed on just or authorized causes and after he has been
accorded due process.

Virgilio Anabe vs. Asian Construction (Asiakonstruckt)

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:
Was petitioner‟s dismissal justified?

Ruling:

No.Retrenchment is the termination of employment initiated by the employer through no

fault of and without prejudice to the employees, it is resorted to during periods of
business recession, industrial depression, or seasonal fluctuations or during lulls
occasioned by lack of orders, shortage of materials, conversion of the plant for a new
production program or the introduction of new methods or more efficient machinery or of
automation. It is a management prerogative resorted to, to avoid or minimize business
losses.

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.

The losses must be supported by sufficient and convincing evidence. The normal
method of discharging this burden of proof is the submission of financial statements
duly audited by independent external auditors. For failure of Asiakonstrukt to clearly and
satisfactorily substantiate its financial losses, the dismissal of the employee on account
of retrenchment is unjustified.

Metro Construction, Inc. vs. Aman

G.R. No. 168324 , Oct. 12, 2009

Facts:

Respondent Aman has been working with the petitioners since 1975, as a laborer until
he was promoted as a foreman. On May 15, 2001, petitioner Dr. Lai summoned him to
his office where the former unceremoniously and illegally dismissed him from his
employment by asserting that the company no longer needed his services. In a letter
dated July 19, 2001, petitioners informed respondent that he will be temporarily
terminated because of completed projects, lack of work and continuous financial losses
with an assurance that petitioners will be contracting him if ever there will be new
projects. On July 24, 2001, petitioner sent a letter to respondent informing him of the
prospective project that petitioners would undertake in a few months time.
On July 6, 2001, respondent filed a case of illegal dismissal against petitioners which
was dismissed by the Labor Arbiter for lack of merit. The Labor Arbiter found that
petitioner did not dismiss Aman, but only laid him off temporarily. Respondent filed an
appeal with the NLRC which affirmed the decision of the LA and denied the motion for
reconsideration.

On appeal, the appellate court ruled that petitioners illegally dismissed respondent and
ordered the payment of backwages from the time of illegal dismissal. The finding by the
NLRC of Aman‟s temporary termination was not supported by substantial evidence.
Moreover, the appellate court declared that Aman‟s dismissal was illegal because of the
lack of observance of both procedural and substantive due process. The appellate court
denied petitioners motion for reconsideration, hence this petition.

Issue:

Was petitioner illegally dismissed?

Ruling:

Yes. In an unlawful dismissal case, the employer has the burden of proving the lawful
cause sustaining the dismissal of the employee. The employer must affirmatively show
rationally adequate evidence that the dismissal was for a justifiable cause. Apart from
its self-serving allegations, Metro failed to prove that it sustained serious business
losses. To justify retrenchment, the employer must prove serious business losses, and
not just any kind or amount of loss. Metro should have produced its books of accounts,
profit and loss statements, and even its accountant to competently amplify its financial
position. Petitioners‟ unsubstantiated assertion that they did not dismiss Aman, coupled
with the two letters sent to Aman, shows that petitioners failed to observe the twin
requirements of notice and hearing for a valid dismissal. The law requires that the
employer must furnish the worker sought to be dismissed with two written notices before
termination of employment can be legally effected: (1) notice which apprises the
employee of the particular acts or omissions for which his dismissal is sought; and (2)
the subsequent notice which informs the employee of the employer‟s decision to
dismiss him. Failure to comply with the requirements taints the dismissal with illegality.

Article 279 of the Labor Code mandates that the employee who is illegally dismissed
and not given due process 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.

Farley Fulache vs. ABS-CBN Broadcasting

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

Facts:

The petitioners alleged that the ABS-CBN Rank-and-File Employees Union executed a
collective bargaining agreement (CBA) which came to their knowledge only when they
obtained copies of the agreement. They were excluded from coverage of the CBA as
ABS-CBN considered them temporary and not regular employees. They claimed they
had already rendered more than a year of service in the company and, therefore, should
have been recognized as regular employees entitled to security of tenure and to the
privileges and benefits enjoyed by regular employees. They asked that they be paid
overtime, night shift differential, holiday, rest day and service incentive leave pay. They
also prayed for an award of moral damages and attorney‟s fees.

On the other hand, ABS-CBN alleged that the petitioners‟ services were contracted on
various dates by its Cebu station as independent contractors/off camera talents, and
they were not entitled to regularization in these capacities. The Labor Arbiter a decision
holding that the petitioners were regular employees of ABS-CBN, not independent
contractors, and are entitled to the benefits and privileges of regular employees. While
the regularization case was pending appeal before the NLRC, ABS-CBN dismissed the
petitioners Fulache, Jabonero, Castillo, Lagunzad and Atinen (all drivers) for their
refusal to sign up contracts of employment with service contractor Able Services. The
four drivers then filed a complaint for illegal dismissal.

The Labor Arbiter rendered a decision on the illegal dismissal case upholding the
validity of ABS-CBN's contracting out of certain work or services in its operations. The
labor arbiter found that petitioners Fulache, Jabonero, Castillo, Lagunzad and Atinen
had been dismissed due to redundancy, an authorized cause under the law. He
awarded them separation pay of one (1) month‟s salary for every year of service.

On appeal, the NLRC rendered a joint decision on the regularization and illegal
dismissal cases. The NLRC ruled that there was an employer-employee relationship
between the petitioners and ABS-CBN as the company exercised control over the
petitioners in the performance of their work; the petitioners were regular employees
because they were engaged to perform activities usually necessary or desirable in ABS-
CBN's trade or business; they cannot be considered contractual employees since they
were not paid for the result of their work, but on a monthly basis and were required to do
their work in accordance with the company‟s schedule. On the illegal dismissal case,
the NLRC found Fulache, Jabonero, Castillo, Lagunzad and Atinen had been illegally
dismissed and awarded them backwages and separation pay in lieu of reinstatement.
Under both cases, the petitioners were awarded CBA benefits and privileges from the
time they became regular employees up to the time of their dismissal.

Upon the filing of the Motion for Reconsideration by ABS-CBN however, the NLRC ruled
again on the illegal dismissal case and held that while petitioners were recognized as
regular employees, were declared dismissed due to redundancy. On appeal to the
Court of Appeals, the CA ruled that the petitioners failed to prove their claim to CBA
benefits since they never raised the issue in the compulsory arbitration proceedings,
and did not appeal the labor arbiter‟s decision which was silent on their entitlement to
CBA benefits. The CA found that the petitioners failed to show with specificity how
Section 1 (Appropriate Bargaining Unit) and the other provisions of the CBA applied to
them. The CA likewise affirmed the decision of the NLRC holding that the drivers were
not illegally dismissed as their separation from the service was due to redundancy.
Furthermore, they had not presented any evidence that ABS-CBN abused its
prerogative in contracting out the services of drivers.

Issues:

1. Are petitioners regular employees of ABS-CBN and thus entitled to CBA benefits?

2. Were petitioners illegally dismissed?

Ruling (First Issue):

Yes. The Supreme Court upheld the decision of the Labor Abiter that petitioners are
regular employees of ABS-CBN. As regular employees, the petitioners fall within the
coverage of the bargaining unit and are therefore entitled to CBA benefits as a matter of
law and contract. The parties‟ 1999-2002 CBA provided in its Article I (Scope of the
Agreement) that:
Section 1. APPROPRIATE BARGAINING UNIT. – The parties agree that the
appropriate bargaining unit shall be regular rank-and-file employees of ABS-CBN
BROADCASTING CORPORATION but shall not include:

a) Personnel classified as Supervisor and Confidential employees;

b) Personnel who are on "casual" or "probationary" status as defined in Section 2

hereof;

c) Personnel who are on "contract" status or who are paid for specified units of work
such as writer-producers, talent-artists, and singers.

Under these terms, the petitioners are members of the appropriate bargaining unit
because they are regular rank-and-file employees and do not belong to any of the
excluded categories. Specifically, nothing in the records shows that they are supervisory
or confidential employees; neither are they casual nor probationary employees. Most
importantly, the labor arbiter‟s decision – affirmed all the way up to the CA level – ruled
against ABS-CBN‟s submission that they are independent contractors. Thus, as regular
rank-and-file employees, they fall within CBA coverage under the CBA‟s express terms
and are entitled to its benefits.

(Second Issue):

Yes.The termination of employment of the four drivers occurred under highly

questionable circumstances and with plain and unadulterated bad faith. The records
show that the regularization case was in fact the root of the resulting bad faith as this
case gave rise and led to the dismissal case. In the course of this appeal, ABS-CBN
took matters into its own hands and terminated the petitioners‟ services, clearly
disregarding its own appeal then pending with the NLRC. Notably, this appeal posited
that the petitioners were not employees (whose services therefore could be terminated
through dismissal under the Labor Code); they were independent contractors whose
services could be terminated at will, subject only to the terms of their contracts. To
justify the termination of service, the company cited redundancy as its authorized cause
but offered no justificatory supporting evidence. It merely claimed that it was contracting
out the petitioners‟ activities in the exercise of its management prerogative. ABS-CBN‟s
intent, of course, based on the records, was to transfer the petitioners and their
activities to a service contractor without paying any attention to the requirements of our
labor laws; hence, ABS-CBN dismissed the petitioners when they refused to sign up
with the service contractor. In this manner, ABS-CBN fell into a downward spiral of
irreconcilable legal positions, all undertaken in the hope of saving itself from the
decision declaring its "talents" to be regular employees. Furthermore, ABS-CBN forgot
that by claiming redundancy as authorized cause for dismissal, it impliedly admitted that
the petitioners were regular employees whose services, by law, can only be terminated
for the just and authorized causes defined under the Labor Code.

Likewise ABS-CBN forgot that it had an existing CBA with a union, which agreement
must be respected in any move affecting the security of tenure of affected employees;
otherwise, it ran the risk of committing unfair labor practice – both a criminal and an
administrative offense. ABS-CBN clearly acted with patent bad faith. The injustice
committed on the petitioners/drivers requires rectification. The bad faith in ABS-CBN‟s
move toward its illegitimate goal was not even hidden; it dismissed the petitioners –
already recognized as regular employees – for refusing to sign up with its service
contractor. Thus, from every perspective, the petitioners were illegally dismissed.

By law, illegally dismissed employees are entitled to reinstatement without loss of

seniority rights and other privileges and to full backwages, inclusive of allowances, and
to other benefits or their monetary equivalent from the time their compensation was
withheld from them up to the time of their actual reinstatement. The four dismissed
drivers deserve no less. Moreover, they are also entitled to moral damages since their
dismissal was attended by bad faith. For having been compelled to litigate and to incur
expenses to protect their rights and interest, the petitioners are likewise entitled to
attorney‟s fees.

ILLEGAL DISMISSAL BASED ON ALLEGATIONS OF

DISHONESTY/FRAUD/BREACH OF TRUST/ LOSS OF CONFIDENCE

Abelardo Abel vs. Philex Mining Corporation

G. R. No. 178976, July 31, 2009

Facts:
Petitioner was hired by respondent sometime in 1988. He was assigned as legal claim
consultant for five years prior to his transfer to Mine Engineering and Draw Control
Department wherein he was assigned as the Unit Head in early 2002. Sometime in
September 2002, petitioner was implicated in an irregularity occurring in the subsidence
area of respondent‟s mine site. Lupega, a subsidence checker at the mine area
executed an affidavit against the petitioner alleging the anomaly committed by petitioner
against the corporation for not acting on the reports submitted by Lupega regarding the
irregular practice of the loading operations in the site. Lupega‟s basis was some
exchange phone calls he heard between the petitioner and Caballero, ANSECA‟s
accountant.

Due to this, through a Memorandum by the respondent‟s Litigation and investigation

division, petitioner was found guilty of fraud resulting in loss and confidence and gross
of neglect of duties and was eventually meted out the penalty of dismissal for
employment. The petitioner filed a complaint for illegal dismissal before the NLRC
wherein the Labor Arbiter ruled in favor of the petitioner. The Labor Arbiter found that
respondent failed to prove by substantial evidence the alleged fraud committed by
petitioner, explaining that the telephone conversations between petitioner and Didith
Caballero of ANSECA would not suffice to lay the basis for respondent‟s loss of trust
and confidence in petitioner. The NLRC reversed the decision of the Labor Arbiter and
held that petitioner is guilty of gross and habitual neglect of duty. Hence, this petition.

Issue:

Was petitioner illegally dismissed?

Ruling:

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
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.

Respondent relies on petitioner‟s reports regarding his inspection of the work

accomplishment of such contractors. As a result of his monitoring the enforcement of
respondent‟s contracts which involve large sums of money, petitioner may well be
considered an employee with a position of trust analogous to those falling under the
second class. A position where a person is entrusted with confidence on delicate
matters, or with the custody, handling or care and protection of the employer‟s property
is one of trust and confidence.

Loss of trust and confidence, to be a valid cause for dismissal, must be based on a
willful breach of trust and founded on clearly established facts. The basis for the
dismissal must be clearly and convincingly established but proof beyond reasonable
doubt is not necessary.Respondent‟s evidence against petitioner fails to meet this
standard. Its lone witness, Lupega, did not support his affidavit and testimony during the
company investigation with any piece of evidence at all. No other employee working at
respondent‟s mine site attested to the truth of any of his statements. Standing alone,
Lupega‟s account of the subsidence area anomaly could hardly be considered
substantial evidence. And while there is no concrete showing of any ill motive on the
part of Lupega to falsely accuse petitioner, that Lupega himself was under investigation
when he implicated petitioner in the subsidence area anomaly makes his
uncorroborated version suspect.

There being no just cause for the termination of petitioner‟s employment, the compelling
conclusion is that he was dismissed illegally. While it is unnecessary at this point to
delve into the requirement of procedural due process, the Court shall nevertheless
discuss it in view of its importance.

Henlin Panay Company vs. NLRC

G.R. No. 180718, Oct.23, 2009

Facts:

Private respondent Nory A. Bolanos worked as a service crew for the petitioner. While
manning Counter B, the brother-in-law of private respondent, Javier arrived and ordered
mami from her and paid for it. After private respondent closed her counter, Javier
ordered again from the other counter. Petitioner Francisco, the supervisor checked the
journal tape of Counter B and did not find the food ordered by Javier punched in the
cash register. Private respondent told petitioner that the food was ordered at Counter A,
which when scrutinized did not reflect the last order of Javier. The service crew of
Counter A admitted that got the order of Javier and made a mistake in the entry.
Petitioner Francisco ordered private respondent not to report for work the next day and
that she was dismissed from service. Petitioners on part presented that the matter was
under investigation. And that when private respondent reported for work to the owner of
the Henlin franchise, she was required to report to work but she did not report.

Mediation between the parties failed. Private respondent filed an illegal dismissal
complaint. The Labor Arbiter dismissed the claim. Upon appeal with the NLRC, the
decision was reversed. Petitioners elevated the case to the Court of Appeals which
affirmed the findings of the NLRC. Petitioners argue that no illegal dismissal took
place. They aver that petitioner Francisco just informed private respondent that her
case was still under investigation. Indeed, the Henlin Panay management did not give
her any notice of termination nor prevented her from coming to work. Neither was she
stripped of her right to work in the premises. They insist that it was Bolanos who, after
the incident, refused to work despite being required to report for duty. They aver that
Francisco had no authority to dismiss employees.

Issue:

Are petitioners liable for illegal dismissal?

Ruling:

Yes. Clearly, this case is one of illegal dismissal. First, there is no just or authorized
cause for petitioners to terminate private respondent‟s employment. Her alleged act of
dishonesty of “passing out” food for free was not proven. Neither was there
incompetence on her part when some food items were not punched in the cash register
as she was not the cashier manning it when the food items were ordered. In fact, the
other cashier even owned up to said mistake. Second, private respondent was not
afforded due process by petitioners before she was dismissed. A day after the incident,
she was verbally dismissed from her employment without being given the chance to be
heard and defend herself. Article 279 of the Labor Code, as amended, provides that an
illegally dismissed employee shall be entitled to reinstatement without loss of seniority
rights, full backwages and other benefits or their monetary equivalent computed from
the time her compensation was withheld from her up to her actual reinstatement. In the
instant case, however, we will not order private respondent‟s reinstatement as she did
not pray for it and considering that antagonism caused a severe strain in the parties‟
employer-employee relationship. Instead, she is awarded separation pay pegged at
one month pay for every year of service reckoned from her first day of employment up
to the finality of this decision.

St. Luke’s Medical Center vs. Fadrigo

G.R. No. 185933, November 25, 2009

Facts:

Respondent Jennifer Lynne C. Fadrigo was the Customer Affairs Department Manager
of petitioner SLMC. As such, respondent supervised the Wellness Program Office
(WPO), which administers SLMC‟s check up packages. On April 23, 2005, Dr. Charity
Gorospe called up the WPO to refer a patient for immediate check up. The call was
answered by Michelle Rillo, a trainee at the front desk, who transferred the call to Hazel
Tingzon, a casual employee. Tingzon explained to Dr. Gorospe the mechanics of
undergoing a check up, which could not be administered immediately as Dr. Gorospe
wanted.

On April 27, 2005, respondent received a memorandum from Lagniton requiring her to
show cause why no disciplinary action should be taken against her for insubordination,
gross inefficiency and incompetence due to the April 23 incident. The memorandum
stated that respondent allowed a trainee and a casual employee, Rillo and Tingzon, to
man the WPO during official business hours. Likewise, respondent allegedly failed to
comply with the management order to immediately pull out Rillo and Tingzon.
Consequently, she was terminated. Claiming termination without cause, respondent
filed with the Labor Arbiter a complaint for illegal dismissal.

Before the Supreme Court, SLMC insists that respondent was validly dismissed. It
argues that respondent was a managerial employee and, as such, the mere existence
of a basis for believing that respondent has breached the trust of her employer would
suffice for her dismissal.

Issue:

Is there breach of trust in the case at bar?

Ruling:

No. Willful disobedience or insubordination, as alleged in this case, necessitates the

concurrence of at least two requisites: (1) the employee's assailed conduct must have
been willful, that is, characterized by a wrongful and perverse attitude; and (2) the order
violated must have been reasonable, lawful, made known to the employee, and must
pertain to the duties which he had been engaged to discharge. The facts of this case
do not show the presence of the first requisite.

The loss of confidence must be based not on an ordinary breach by the employee of the
trust reposed in him by the employer, but on a willful breach. 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 employer‟s arbitrariness, whims, caprices or
suspicion; otherwise, the employee would eternally remain at the mercy of the
employer. It should be genuine and not simulated; nor should it appear as a mere
afterthought to justify an earlier action taken in bad faith or as a subterfuge for causes
that are improper, illegal or unjustified.
Sargasso Construction and Development Corp. vs. NLRC

G.R. No. 164118 , February 9, 2010

Facts:

Mongcal was employed as a payloader operator by the respondent company and was
paid a monthly salary of not less than P3,900.00 for working seven (7) days a week
including Saturdays, Sundays and holidays. On June 29, 1995 at around 2:30 o'clock in
the morning, a Aldrin Rasote, a dump truck driver of the respondent company requested
complainant to load his dump truck with construction materials at the crusher site; that
fully aware of the policy of the company allowing dump truck drivers to start hauling
materials even at early hours of the morning and considering that truck drivers were
required by the company to haul a quota of the number of truck loads of aggregates to
be delivered to the construction site everyday as per instruction given to them,
complainant willingly obliged to do his job. It was later on discovered that Rasote had
diverted the delivery of said materials loaded to another person. As a result of this
incident, complainant was dismissed from his job effective 30 June 1995. A criminal
complaint for theft was filed against him. Complainant alleged that his dismissal from
work was without any valid ground and violative of the rules on due process. Hence, he
prays for reinstatement, backwages, and separation pay if reinstatement is no longer
feasible. Respondents aver that complainant was validly dismissed from his job based
on loss of confidence due to commission of offense constituting act of dishonesty and
flagrant violation of respondent's policy. The Labor Arbiter dismissed the complaint but
ordered the company to pay the complainant P1,000.00 for failure to observe due
process requirements of law. On appeal, the National Labor Relations Commission
(NLRC) overturned the Labor Arbiter's ruling. Thus, this petition for certiorari.
Issue:

Whether private respondent Mongcal was illegally dismissed by petitioner.

Ruling:

Yes. The long-standing rule is that the existence of a conspiracy must be proved by
clear, direct and convincing evidence. While it is true that in conspiracy, direct proof is
not essential, it must however, be shown that it exists as clearly as the commission of
the offense itself. There must at least be adequate proof that the malefactors had come
to an agreement concerning the commission of a felony and decided to commit it. It is
quite clear that the evidence presented in this case did not reach the level required to
find respondent Mongcal guilty of conspiring to commit theft of company property.
Petitioner failed to prove that respondent Mongcal was involved at all or agreed with the
scheme to steal aggregates from petitioner. There was no showing whatsoever, that
respondent Mongcal had any knowledge that Aldrin Rasote had the intention of stealing
company property.

Under Article 279 of the Labor Code, an illegally dismissed employee "shall be entitled
to reinstatement without loss of seniority rights and other privileges and to his full
backwages, inclusive of allowances, and to his other benefits or their monetary
equivalent computed from the time his compensation was withheld from him up to the
time of his actual reinstatement." In addition to full backwages, the Court has also
repeatedly ruled that in cases where reinstatement is no longer feasible due to strained
relations, then separation pay may be awarded instead of reinstatement.Petitioner is
ORDERED to pay respondent Gorgonio Mongcal (a) separation pay in the amount
equivalent to one (1) month pay for every year of service; and (b) backwages, computed
from the time compensation of respondent Mongcal was withheld from him when he
was unjustly terminated, up to the time of payment thereof.

ILLEGAL DISMISSAL BASED ON ALLEGATIONS OF GROSS AND HABITUAL

NEGLECT OF DUTIES

Kulas Ideas & Creations vs. Juliet Alcoseba, et. al.

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

Facts:

Respondents Juliet Alcoseba (Juliet) and Flordelinda Arao-arao (Flordelinda) were

employed as sales attendants of herein petitioner KULAS Ideas & Creations (KULAS), a
gift boutique owned by petitioners Gil Francis Maningo and Ma. Rachel Maningo. As
part of their duties and responsibilities, Juliet and Flordelinda were tasked to sell
KULAS‟s products, prepare weekly sales reports and assist the clerk in the monthly
inventory of saleable goods. DOLE inspected the outlet in Ayala Center and found that
the employers made several violations and made to pay salary differentials to their
employees. After this occurrence KULAS found discrepancies in the inventory and in
the monetary issues which lead to the suspension of the respondents via memorandum.
Then both respondents were asked to give reasons why should they not be dismissed
because of "gross neglect of duties and responsibilities resulting to huge economic loss
incurred by the company" and "dishonesty" which they did and later on asked about the
status of their employment and KULAS did not answer, instead filed an action for estafa
against the two but was dismissed. The respondents alleged that they were suspected
that they were the one who instigated the DOLE to make the inspection which lead
them to file a complaint for illegal dismissal. Both the Arbiter and the NLRC found that
there was no illegal dismissal. The Court of Appeals reversed the decision and awarded
respondents money claims as well .

Issue:

Is there an illegal dismissal?

Ruling:

Yes. Article 282 (b) imposes a stringent condition before an employer may terminate an
employment due to gross and habitual neglect by the employee of his duties. To sustain
a termination of employment based on this provision of law, the negligence must not
only be gross but also habitual. Inventory preparation and reporting did not fall on
respondents‟ shoulders since they were to "assist the [stock] clerk" only. They were
neither cashiers nor clerks tasked with handling the daily sales proceeds of the outlet.
Worth mentioning at this point is the allegation of the [respondents] that upon their
assumption at the Ayala Center branch, the management did not conduct an actual
inventory as well as a proper turnover of stocks. Verily, [petitioners] are guilty of
contributory negligence for failure to conduct a proper turnover of stocks in the boutique
upon [respondents‟] assumption therein.

The Court finds that petitioners even failed to comply with the procedural requirements
for a valid dismissal. The law mandates the following requisites:
(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.

The case be REMANDED to the Labor Arbiter for proper computation of respondents‟
backwages and separation pay.

ILLEGAL DISMISSAL BASED ON ALLEGATIONS OF SERIOUS MISCONDUCT

Philippine Long Distance Telephone Company vs Berbano, Jr.

G.R. No. 165199, November 27, 2009

Facts:

Berbano was hired by PLDT as a Computer Assistant. However, he alleged that he also
performed the functions of a Specialist for EWSD who was responsible for handling,
operations and maintenance of the whole EWSD Network handling network database,
fault clearance, database modification alarm monitoring, traffic routing, trunk
administration, password and tariff administration and others. Being trained as EWSD
OMC Specialist, complainant claimed that respondent expected him to have “depth of
understanding” in continuous painstaking research and study. Thus, he initiated a study
of “hi-tech EWSD Switching Equipment,” a part of which is the software installation of
various subscriber service features and control operation. It is at this time that
complainant tapped his brother-in-law‟s number without the latter‟s knowledge and
installed service features in it for study.

When PLDT found out about the unauthorized installation of the said features, Berbano
admitted that he was responsible for such installation for purposes of study and testing.
After formal investigation and finding unacceptable the complainant‟s explanation,
respondent PLDT dismissed complainant from the service.
The Labor Arbiter ordered the reinstatement of Berbano and the payment of
backwages. On appeal to the NRLC, the order was reversed. However, the CA
reinstated the Labor Arbiter‟s decision.

Issue:

Was the dismissal of Berbano warranted?

Ruling:

No. Well-settled is the rule that no employee shall be validly dismissed from
employment without the observance of substantive and procedural due process. The
minimum standards of due process are prescribed under Article 277(b) of the Labor
Code of the Philippines.

Thus, dismissal from service of an employee is valid if the following requirements are
complied with: (a) substantive due process which requires that the ground for dismissal
is one of the just or authorized causes enumerated in the Labor Code, and (b)
procedural due process which requires that the employee be given an opportunity to be
heard and defend himself.

In this case, procedural due process was followed by PLDT when it notified respondent
of the complaint against him through an inter-office memorandum and in another inter-
office memorandum informing respondent that his act of installing special features in his
brother-in-law‟s telephone line without authorization from petitioner constituted “gross
misconduct” and was “grossly violative of existing company rules and regulations,”
hence, warranting his termination from service.

As regards substantial due process, the grounds for termination of employment must be
based on just or authorized causes. The notice of termination sent by petitioner to
respondent indicated that the latter was dismissed from service due to unauthorized
installation of service features in his brother-in-law‟s telephone line, which allegedly
constituted gross misconduct. Misconduct has been defined as improper or wrong
conduct. It is the transgression of some established and definite rule of action, a
forbidden act, a dereliction of duty, willful in character, and implies wrongful intent and
not mere error of judgment. Ordinary misconduct would not justify the termination of
services of the employee as the Labor Code is explicit that the misconduct must be
serious. To be serious, the misconduct must be of such grave and aggravated character
and not merely trivial and unimportant. Such misconduct, however serious, must
nevertheless be in connection with the employee‟s work to constitute just cause for his
separation. As amplified by jurisprudence, misconduct, to be a just cause for dismissal,
must (a) be serious; (b) relate to the performance of the employee‟s duties; and (c)
show that the employee has become unfit to continue working for the employer.
Moreover, in National Labor Relations Commission v. Salgarino, this Court stressed that
“[i]n order to constitute serious misconduct which will warrant the dismissal of an
employee under paragraph (a) of Article 282 of the Labor Code, it is not sufficient that
the act or conduct complained of has violated some established rules or policies. It is
equally important and required that the act or conduct must have been performed with
wrongful intent.”

The Supreme Court found that the misconduct of respondent is not of serious nature as
to warrant respondent‟s dismissal from service. The records of this case are bereft of
any showing that the alleged misconduct was performed by respondent with wrongful
intent. On the contrary, respondent readily admitted having installed the service features
in his brother-in-law‟s telephone line for purposes of study and research which could
have benefitted petitioner. Moreover, as pointed out by the appellate court,
respondent‟s misconduct did not result in any economic loss on the part of petitioner
since the service features were not yet available in the market at the time respondent
caused its unauthorized installation.

The penalty of dismissal from service is not commensurate to respondent‟s offense.

Although petitioner, as an employer, has the right to discipline its erring employees,
exercise of such right should be tempered with compassion and understanding. The
magnitude of the infraction committed by an employee must be weighed and equated
with the penalty prescribed and must be commensurate thereto, in view of the gravity of
the penalty of dismissal or termination from the service. The employer should bear in
mind that in termination cases, what is at stake is not simply the employee‟s job or
position but his very livelihood.
Blazer Car Marketing, Inc. & Freddie Chua vs.

Spouses Tomas T. Bulauan, et al.

G.R. No. 181483, March 9, 2010

Facts:

Respondents, spouses Tomas Bulauan and Analyn Briones, were employees of

petitioner Blazer Car Marketing, Inc., which is owned and managed by petitioner
Freddie Chua. Respondent Briones was hired as a secretary/warehouse clerk, while
Bulauan, worked as a driver. Respondent spouses Briones and Balauan filed a
complaint against petitioners for illegal dismissal.

In their position paper, respondent Briones told Chua she needed an ID card so that
she could apply for a loan from the SSS and the Pag-ibig Fund and so that she could
show it to customers when they asked for it. Briones recounted that when Chua affixed
his signature to her ID card, she commented, "Sir, napapansin ko iba ang pirma mo sa
certification na ibinigay mo sa asawa ko." She was referring to the certificate of
employment that Chua previously issued to respondent Bulauan. Petitioner Chua
allegedly reacted wildly, became furious, and shouted at the top of his voice, "Hoy, wala
ka na doon, wala kang pakialam." Briones claimed that when she reported for work the
following day, she was barred by Chua, who told her, "Pa SSS ka pa diyan. Hoy,
tanggal ka sa trabaho." For his part, respondent Bulauan after making deliveries, he
was instructed to proceed to Chua‟s residence. There, Chua, who was then holding a
golf club, angrily told him, "Hoy, hiwalayan mo ang asawa mo kung gusto mo tanggapin
kita sa trabaho." The following day, he was barred from reporting for work by Chua, who
told him, "Hoy, tanggal ka na rin sa trabaho."

Petitioner claimed that Briones was caught making company ID cards without
management authority. He said that they immediately conducted an investigation, and
some of the employees attested that Briones had, indeed, made ID cards for them, for a
price. Petitioner Chua maintained that Briones was not dismissed from employment

The Labor Arbiter rendered a decision dismissing the complaint, but ordering petitioners
to pay prorated 13th month pay. On appeal, the NLRC affirmed the Labor Arbiter‟s
decision. Respondents elevated the case to the CA through a petition for certiorari. The
CA granted the petition and awarded backwages and separation pay, in lieu of
reinstatement, to respondents.

Issue:

Were respondent spouses illegally dismissed?

Ruling:

Yes. The Supreme Court sustained CA‟s finding that respondents were dismissed from
employment and that such dismissal was without just cause. The contention that
respondent Briones was being investigated for making ID cards for the other
employees, without authority, impresses us merely as a contrived excuse resorted to,
simply to justify the unlawful dismissal. Its truthfulness is highly suspect. But even if it
were true that respondent Briones made ID cards for petitioners‟ employees without
authority, the act would not amount to serious misconduct as to justify dismissal. For
misconduct to be a just cause for dismissal (a) it must be serious; (b) it must relate to
the performance of the employee‟s duties; and (c) it must show that the employee has
become unfit to continue working for the employer. To be serious within the meaning
and intendment of the law, the misconduct must be of such grave and aggravated
character and not merely trivial and unimportant.It requires a wrongful intent, which is
apparently absent in respondent Briones‟ case.

ILLEGAL DISMISSAL BASED ON ALLEGED VIOLATION OF CLOSED-SHOP

AGREEMENT

General Milling Corporation vs. Ernesto Casio, et al.

G.R. No. 149552, March 10, 2010

Facts:

The labor union Ilaw at Buklod ng Mangagawa (IBM) was the sole and exclusive
bargaining agent of the rank and file employees of GMC in Lapu-Lapu City. Through its
officers entered into a close shop provisions in the CBA. Ernesto Casio, et al. were
regular employees of GMC. Rodolfo Gabiana, the IBM Regional Director for Visayas
and Mindanao, sent a letter and furnished Casio, et al. with copies of the Affidavits of
GMC employees Basilio Inoc and Juan Potot, charging Casio, et al. with "acts inimical
to the interest of the union." Through the same letter, Gabiana gave Casio, et al. three
days from receipt thereof within which to file their answers or counter-affidavits.
However, Casio, et al. refused to acknowledge receipt of Gabiana‟s letter.
Subsequently, Pino, et al., as officers and members of the IBM-Local 31, issued a
Resolution expelling Casio, et al. from the union. Pressured by the threatened filing of a
suit for unfair labor practice, GMC acceded to Gabiana‟s request to terminate the
employment of Casio, et al. GMC issued a Memorandum dated March 24, 1992
terminating the employment of Casio, et al. effective April 24, 1992 and placing the
latter under preventive suspension for the meantime.
The Voluntary Arbitrator dismissed the complaint for lack of merit. Dissatisfied with the
Voluntary Arbitration Award, Casio, et al. went to the Court of Appeals by way of a
Petition for Certiorari under Rule 65. The Court of Appeals granted the writ of certiorari
and set aside the Voluntary Arbitration Award. The appellate court ruled that while the
dismissal of Casio, et al., was made by GMC pursuant to a valid closed shop provision
under the CBA, the company, however, failed to observe the elementary rules of due
process in implementing the said dismissal.

Issue:

Were Casio, et al. illegally dismissed?

Ruling:

Yes. Irrefragably, GMC cannot dispense with the requirements of notice and hearing
before dismissing Casio, et al. even when said dismissal is pursuant to the closed shop
provision in the CBA. The rights of an employee to be informed of the charges against
him and to reasonable opportunity to present his side in a controversy with either the
company or his own union are not wiped away by a union security clause or a union
shop clause in a collective bargaining agreement.

In the case at bar, Casio, et al. did not receive any other communication from GMC,
except the written notice of termination dated March 24, 1992. GMC, by its own
admission, did not conduct a separate and independent investigation to determine the
sufficiency of the evidence supporting the expulsion of Casio, et al. by IBP-Local 31. It
straight away acceded to the demand of IBP-Local 31 to dismiss Casio, et al.

In sum, the Court finds that GMC illegally dismissed Casio, et al. because not only did
GMC fail to make a determination of the sufficiency of evidence to support the decision
of IBM-Local 31 to expel Casio, et al., but also to accord the expelled union members
procedural due process, i.e., notice and hearing, prior to the termination of their
employment
An employee who is illegally dismissed is entitled to the twin reliefs of full back wages
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.
Blazer Car Marketing, Inc. & Freddie Chua vs.

Spouses Tomas T. Bulauan, et al.

G.R. No. 181483, March 9, 2010

Facts:

Respondents, spouses Tomas Bulauan and Analyn Briones, were employees of

petitioner Blazer Car Marketing, Inc., which is owned and managed by petitioner
Freddie Chua. Respondent Briones was hired as a secretary/warehouse clerk, while
Bulauan, worked as a driver. Respondent spouses Briones and Balauan filed a
complaint against petitioners for illegal dismissal.

In their position paper, respondent Briones told Chua she needed an ID card so that
she could apply for a loan from the SSS and the Pag-ibig Fund and so that she could
show it to customers when they asked for it. Briones recounted that when Chua affixed
his signature to her ID card, she commented, "Sir, napapansin ko iba ang pirma mo sa
certification na ibinigay mo sa asawa ko." She was referring to the certificate of
employment that Chua previously issued to respondent Bulauan. Petitioner Chua
allegedly reacted wildly, became furious, and shouted at the top of his voice, "Hoy, wala
ka na doon, wala kang pakialam." Briones claimed that when she reported for work the
following day, she was barred by Chua, who told her, "Pa SSS ka pa diyan. Hoy,
tanggal ka sa trabaho." For his part, respondent Bulauan after making deliveries, he
was instructed to proceed to Chua‟s residence. There, Chua, who was then holding a
golf club, angrily told him, "Hoy, hiwalayan mo ang asawa mo kung gusto mo tanggapin
kita sa trabaho." The following day, he was barred from reporting for work by Chua, who
told him, "Hoy, tanggal ka na rin sa trabaho."

Petitioner claimed that Briones was caught making company ID cards without
management authority. He said that they immediately conducted an investigation, and
some of the employees attested that Briones had, indeed, made ID cards for them, for a
price. Petitioner Chua maintained that Briones was not dismissed from employment
The Labor Arbiter rendered a decision dismissing the complaint, but ordering petitioners
to pay prorated 13th month pay. On appeal, the NLRC affirmed the Labor Arbiter‟s
decision. Respondents elevated the case to the CA through a petition for certiorari. The
CA granted the petition and awarded backwages and separation pay, in lieu of
reinstatement, to respondents.

Issue:

Were respondent spouses illegally dismissed?

Ruling:

Yes. The Supreme Court sustained CA‟s finding that respondents were dismissed from
employment and that such dismissal was without just cause. The contention that
respondent Briones was being investigated for making ID cards for the other
employees, without authority, impresses us merely as a contrived excuse resorted to,
simply to justify the unlawful dismissal. Its truthfulness is highly suspect. But even if it
were true that respondent Briones made ID cards for petitioners‟ employees without
authority, the act would not amount to serious misconduct as to justify dismissal. For
misconduct to be a just cause for dismissal (a) it must be serious; (b) it must relate to
the performance of the employee‟s duties; and (c) it must show that the employee has
become unfit to continue working for the employer. To be serious within the meaning
and intendment of the law, the misconduct must be of such grave and aggravated
character and not merely trivial and unimportant.It requires a wrongful intent, which is
apparently absent in respondent Briones‟ case.

ILLEGAL DISMISSAL BASED ON ALLEGED VIOLATION OF CLOSED-SHOP

AGREEMENT

General Milling Corporation vs. Ernesto Casio, et al.

G.R. No. 149552, March 10, 2010

Facts:

The labor union Ilaw at Buklod ng Mangagawa (IBM) was the sole and exclusive
bargaining agent of the rank and file employees of GMC in Lapu-Lapu City. Through its
officers entered into a close shop provisions in the CBA. Ernesto Casio, et al. were
regular employees of GMC. Rodolfo Gabiana, the IBM Regional Director for Visayas
and Mindanao, sent a letter and furnished Casio, et al. with copies of the Affidavits of
GMC employees Basilio Inoc and Juan Potot, charging Casio, et al. with "acts inimical
to the interest of the union." Through the same letter, Gabiana gave Casio, et al. three
days from receipt thereof within which to file their answers or counter-affidavits.
However, Casio, et al. refused to acknowledge receipt of Gabiana‟s letter.
Subsequently, Pino, et al., as officers and members of the IBM-Local 31, issued a
Resolution expelling Casio, et al. from the union. Pressured by the threatened filing of a
suit for unfair labor practice, GMC acceded to Gabiana‟s request to terminate the
employment of Casio, et al. GMC issued a Memorandum dated March 24, 1992
terminating the employment of Casio, et al. effective April 24, 1992 and placing the
latter under preventive suspension for the meantime.

The Voluntary Arbitrator dismissed the complaint for lack of merit. Dissatisfied with the
Voluntary Arbitration Award, Casio, et al. went to the Court of Appeals by way of a
Petition for Certiorari under Rule 65. The Court of Appeals granted the writ of certiorari
and set aside the Voluntary Arbitration Award. The appellate court ruled that while the
dismissal of Casio, et al., was made by GMC pursuant to a valid closed shop provision
under the CBA, the company, however, failed to observe the elementary rules of due
process in implementing the said dismissal.

Issue:

Were Casio, et al. illegally dismissed?

Ruling:

Yes. Irrefragably, GMC cannot dispense with the requirements of notice and hearing
before dismissing Casio, et al. even when said dismissal is pursuant to the closed shop
provision in the CBA. The rights of an employee to be informed of the charges against
him and to reasonable opportunity to present his side in a controversy with either the
company or his own union are not wiped away by a union security clause or a union
shop clause in a collective bargaining agreement.

In the case at bar, Casio, et al. did not receive any other communication from GMC,
except the written notice of termination dated March 24, 1992. GMC, by its own
admission, did not conduct a separate and independent investigation to determine the
sufficiency of the evidence supporting the expulsion of Casio, et al. by IBP-Local 31. It
straight away acceded to the demand of IBP-Local 31 to dismiss Casio, et al.

In sum, the Court finds that GMC illegally dismissed Casio, et al. because not only did
GMC fail to make a determination of the sufficiency of evidence to support the decision
of IBM-Local 31 to expel Casio, et al., but also to accord the expelled union members
procedural due process, i.e., notice and hearing, prior to the termination of their
employment

An employee who is illegally dismissed is entitled to the twin reliefs of full back wages
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.

QUITCLAIMS

Goodrich Manufacturing Corp. v. Emerlina Ativo, et. al.

G.R. No. 188002, February 1, 2010

Facts:

On account of lingering financial constraints, Petitioner gave all its employees the option
to voluntarily resign from the company. Pursuant to this move, several employees,
including Respondents, decided to avail of the voluntary resignation option. They
executed their respective waivers and quitclaims and were paid their separation pay.
However, the following day, the Respondents filed complaints against Petitioner for
illegal dismissal with prayer for payment of their full monetary benefits before the NLRC.
The Labor Arbiter rendered a Decision favorable to the Respondents; but the NLRC
reversed it on the ground that the considerations in the deeds of waiver/quitclaim were
reasonable and that there was no showing that they signed the deeds of waiver/
quitclaim involuntarily or without understanding its implication and consequences.

Issue:

(1) Was the waiver and quitclaim valid?

(2) What are the elements of a valid waiver and quitclaim?

Ruling:

Yes. The waiver and quitclaim was valid. While it is true that the law disfavors
quitclaims and releases by employees who have been inveigled or pressured into
signing them, in certain cases however, the Court has given effect to such quitclaims if
the employer is able to prove the following requisites, to wit: (1) the employee executes
a deed of quitclaim voluntarily; (2) there is no fraud or deceit on the part of any of the
parties; (3) the consideration of the quitclaim is credible and reasonable; and (4) the
contract is not contrary to law, public order, public policy, morals or good customs, or
prejudicial to a third person with a right recognized by law.

In the case at bar, there is no evidence of coercion. In fact, in their Comment,

Respondents themselves admitted that they were not coerced to sign the quitclaims.
The contents of the quitclaim documents are simple, clear and unequivocal. The
records of the case are also bereft of any substantial evidence to show that respondents
did not know that they were relinquishing their right short of what they would have
expected. Put differently, at the time they were signing their quitclaims, respondents
honestly believed that the amounts received by them were fair and reasonable in
comparison to what they would have received had they refused to voluntarily resign
from the said company. Finally, the considerations received by the Respondents from
Petitioner do not appear to be grossly inadequate vis-à-vis what they should receive in
full. The difference between the amounts expected from those that were received may
be considered as a fair and reasonable bargain on the part of both parties.

CLOSURE OF BUSINESS

Carmen Dy-Dumalasa vs. Domingo Fernandez

G.R. No. 178760, July 23, 2009

Facts: Respondents are former employees of Helios Manufacturing Corporation, a

closed domestic corporation engaged in soap manufacturing located in Muntinlupa, of
which petitioner is a stockholder, a member of the Board of Directors, and Acting
Corporate Secretary. On October 23, 2001, respondents filed a complaint for illegal
dismissal or illegal closure of business, non-payment of salaries and other money
claims against HELIOS.

The Labor Arbiter found that the closure of the Muntinlupa office/plant was a sham, as
HELIOS simply relocated its operations to a new plant in Carmona, Cavite under the
new name of "Pat & Suzara," in response to the newly-established local union. As to
HELIOS being a separate juridical entity, the Labor Arbiter held that it and "Pat &
Suzara" are one and the same, using the same machineries and personnel in the new
plant. The Labor Arbiter thus concluded that "indeed, fraud and bad faith on the part of
the management are well-established" and, as such, HELIOS et al. are liable for the
judgment award.

While the appellate court reinstated the Labor Arbiter‟s decision, it held that since its
fallo did not indicate with certainty the solidary nature of the obligation, the obligation is
merely joint.

Issue:

Is a member of the board of directors solidarily liable?

Ruling:

No. A solidary or joint and several obligation is one in which each debtor is liable for the
entire obligation, and each creditor is entitled to demand the whole obligation. In a joint
obligation each obligor answers only for a part of the whole liability and to each obligee
belongs only a part of the correlative rights. Well-entrenched is the rule that solidary
obligation cannot lightly be inferred. There is a solidary liability only when the obligation
expressly so states, when the law so provides or when the nature of the obligation so
requires.

And as held in Carag v. NLRC:

To hold a director personally liable for debts of the corporation, and thus pierce the veil
of corporate fiction, the bad faith or wrongdoing of the director must be established
clearly and convincingly. Bad faith is never presumed. Bad faith does not connote bad
judgment or negligence. Bad faith imports a dishonest purpose. Bad faith means breach
of a known duty through some ill motive or interest. Bad faith partakes of the nature of
fraud.

Ineluctably, absent a clear and convincing showing of the bad faith in effecting the
closure of HELIOS that can be individually attributed to petitioner as an officer thereof,
and without the pronouncement in the Decision that she is being held solidarily liable,
petitioner is only jointly liable.

PROCEDURAL DUE PROCESS

Placido and Caragay vs. NLRC

G.R. No. 180888, September 18, 2009

Facts:

Petitioners Rolando Placido and Edgardo Caragay were employed as cable splicers by
respondent PLDT. It appears that since August 2000, PLDT had been receiving reports
of theft and destruction of its cables. On March 13, 2001, PLDT Duty Inspector Ricardo
Mojica and PLDT Security Guard/Driver Mark Anthony Cruto, proceeded to one of the
residences in Quezon City where they saw petitioners‟ service vehicle parked in front of
the house at No. 162. They likewise saw petitioners stripping and burning cables inside
the compound of the house which turned out to belong to Caragay‟s mother. With the
assistance of police and barangay officials, PLDT recovered the cables bearing the
"PLDT" marking.

An information for Qualified Theft was filed before the RTC. In a related move, PLDT
required petitioners to explain within 72 hours why no severe disciplinary action should
be taken against them for Serious Misconduct and Dishonesty. Petitioners denied the
charges against them claiming that they were on their way back from the house of one
Jabenz Quezada from whom they were inquiring about a vehicle when they were
detained by Mojica.
On petitioners‟ request, a formal hearing was scheduled. Their request for a copy of the
Security Investigation was denied, however, on the ground that they are only entitled to
"be informed of the charges, and they cannot demand for the report as it is still on the
confidential stage."

On May 17, 2002, PLDT sent notices of terminationto petitioners, prompting them to file
on May 24, 2002 a complaint for illegal dismissal before the Labor Arbiter. They aver
that they were denied due process when PLDT refused to furnish them a copy of the
Investigation Report and grant them a formal hearing in which they could be
represented by counsel of their choice.

Issue:

Were they (petitioners) denied of due process?

Ruling:

No.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.

The above quoted provision of Section 2(d) should not be taken to mean, however, that
holding an actual hearing or conference is a condition sine qua non for compliance with
the due process requirement in case of termination of employment. For the test for the
fair procedure guaranteed under the above-quoted Article 277(b) of the Labor Code is
not whether there has been a formal pretermination confrontation between the employer
and the employee. The "ample opportunity to be heard" standard is neither synonymous
nor similar to a formal hearing. To confine the employee‟s right to be heard to a solitary
form narrows down that right.

The essence of due process is simply an opportunity to be heard or, as applied to

administrative proceedings, an opportunity to explain one's side or an opportunity to
seek a reconsideration of the action or ruling complained of. What the law prohibits is
absolute absence of the opportunity to be heard, hence, a party cannot feign denial of
due process where he had been afforded the opportunity to present his side. A formal or
trial type hearing is not at all times and in all instances essential to due process, the
requirements of which are satisfied where the parties are afforded fair and reasonable
opportunity to explain their side of the controversy.

In the present case, petitioners were, among other things, given several written
invitations to submit themselves to PLDT‟s Investigation Unit to explain their side, but
they failed to heed them. A hearing, which petitioners attended along with their union
MKP representatives, was conducted on June 25, 2001 during which the principal
witnesses to the incident were presented. Petitioners were thus afforded the opportunity
to confront those witnesses and present evidence in their behalf, but they failed to do
so.

Celebes Japan Foods Corp vs. Yermo

GR No. 175855, October 2, 2009

Facts:

Petitioner Celebes Japan Foods Corporation is engaged in the business of buying,

processing and exporting of tuna fish, with buying station and plant located at the Davao
Fish Port Complex, Daliao, Toril, Davao City. Kanemitsu Yamaoka, Cesar Romero and
Kenji Fuji were the Chairman, Office Manager and Plant Supervisor, respectively, of
petitioner Celebes. Petitioner contracted with Penta Manpower and Allied Resources to
provide manpower services for the former's business, with the latter recruiting people to
work for the former, people who included respondents Susan Yermo, Orson Mamalis,
Bai Annie Alano, Michie Alfanta, Ginalyn Panilagao, Annalie Ayag, Jocelyn Agton, Jose
Jurie Surigao, Gilda Serrano, Joy Remarca, Erick Tac-An, and Jenne Carlos.
Respondents performed jobs such as slicer, laboratory crew packers,
recorders/encoders, loiners, vinyl bag openers/receivers or storage persons, and who
were necessary and desirable to the main business of petitioner.

On November 7, 2000, respondents were refused entrance by the guards manning the
gate of the Davao Fish Port Complex, as they were already terminated from work
effective November 1, 2000 based on a memorandum dated November 7, 2000 issued
by Romero, petitioner's office manager. The memorandum was posted in the
guardhouse.

On November 16, 2000, respondents filed with the Labor Arbiter (LA), Davao City, a
Complaint for illegal dismissal with money claims for holiday pay, service incentive,
leave pay, allowances, unpaid salaries, damages and attorney's fees against petitioner
and Penta Manpower, alleging that they were dismissed without just and valid cause
and due process. Petitioner was served a summons and a complaint.

On December 11, 2000, a mandatory conference was ordered but the amicable
settlement failed. The LA then ordered all the parties to file their respective position
papers. Respondents and Penta Manpower filed their position papers, while petitioner
did not file any despite receipt of notice.

Although respondents were dismissed for an authorized cause, the CA found that
petitioner did not comply with the statutory requirement of due process; thus, it ordered
petitioner to pay each of the respondents nominal damages in the amount of
P50,000.00. Petitioner filed a motion for reconsideration, praying for the reduction of the
nominal damages awarded from P50,000.00 to P5,000.00 for each respondent,
claiming that the financial condition of the employer must be considered in fixing the
amount of nominal damages.

Issue:

Should the award for nominal damages be reduced?

Ruling:
No. There was no bona fide attempt on the part of petitioner to comply with the notice
requirements under Article 283 of the Labor Code. Records show that on November 7,
2000, respondents were refused entrance by the guards manning the gate of the Davao
Fish Port Complex, based on a memorandum of even date issued by Romero,
petitioner's Office Manager, stating that respondents had been terminated effective
November 1, 2000. Respondents learned of the existence of such memorandum, which
was posted only in the guardhouse on the day they were refused entrance to the gate.
There was indeed no notice at all to respondents. Notably, there was not even any
reason stated in the memorandum why they were being terminated. We cannot
overemphasize the importance of the requirement of the notice of termination, for we
have ruled in a number of cases that non-compliance therewith is tantamount to
deprivation of the employee‟s right to due process.

Petitioner's reliance on Viernes v. National Labor Relations Commission to support its

claim for the reduction of the award of nominal damages is misplaced. The factual
circumstances are different. Viernes is an illegal dismissal case, since there was no
authorized cause for the dismissal of the employees. The employer was ordered to pay
backwages inclusive of allowances and other benefits, computed from the time the
compensation was withheld up to the actual reinstatement. In addition, since the
dismissal was done without due process, the nominal damages awarded was only
P2,590.00 equivalent to one-month salary of the employee. In this case, the dismissal
was valid, as it was due to an authorized cause, but without the observance of
procedural due process, and the only award given was nominal damages.

CRC Agricultural Trading, et. al. vs. NLRC

G.R. No. 177664, December 23, 2009

Facts:

The present petition traces its roots to the complaint for illegal dismissal filed by the
respondent against petitioners CRC Agricultural Trading and its owner, Rolando B.
Catindig (collectively, petitioners), before the Labor Arbiter. In his Sinumpaang
Salaysay, the respondent alleged that the petitioners employed him as a driver. The
respondent worked for the petitioners until he met an accident, after which the
petitioners no longer allowed him to work. After six years, the petitioners again hired the
respondent as a driver and offered him to stay inside the company‟s premises.

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. Petitioners no longer gave him any salary after that. As a result, the
respondent and his family moved out of the petitioners‟ compound. 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.

Issue:

Was respondent‟s dismissal justified?

RULING:
No.To justify the dismissal of an employee for a just cause, the employer must furnish
the worker with two written notices. The first is the notice to apprise the employee of the
particular acts or omissions for which his dismissal is sought. This may be loosely
considered as the charge against the employee. The second is the notice informing the
employee of the employer‟s decision to dismiss him. This decision, however, must come
only after the employee is given a reasonable period from receipt of the first notice
within which to answer the charge, and ample opportunity to be heard and defend
himself with the assistance of his representative, if he so desires. The requirement of
notice is not a mere technicality, but a requirement of due process to which every
employee is entitled.

The employer clearly failed to comply with the two-notice requirement. Nothing in the
records shows that the company ever sent the employee a written notice informing him
of the ground for which his dismissal was sought. It does not also appear that the
company held a hearing where the employee was given the opportunity to answer the
charges of abandonment. Neither did the company send a written notice to the
employee informing him that his service had been terminated and the reasons for the
termination of his employment. Under these facts, the respondent‟s dismissal was
illegal.

Hilton Heavy Equipment v. Ananias Dy

G.R. No. 164860, February 2, 2010

Facts:
Respondent was previously employed with Petitioner Corporation as the personal
bodyguard of Petitioner‟s President. On 19 April 2000, in the presence of the Petitoner‟s
employees and President, Respondent mauled a co-employee, within the premises of
the principal office of the Petitioner. Respondent defied orders of the President to stop
mauling said co-employee and also threatened to kill the latter, uttering that if he will be
given monetary consideration, he will cease working in the company. The Secretary of
the Petitioner, executed an affidavit attesting to the fact of Respondent‟s utterance of his
intention to resign from his job. Thereafter, Respondent stopped reporting to work.
Subsequently, the co-employee filed criminal complaints against Respondent for grave
threats and less serious physical injuries and the corresponding Informations were filed
before the Municipal Trial Court. These cases were later dismissed upon motion filed by
the mauled co-employee. A month after the mauling incident, on 19 May 2000, Lim
requested Respondent to come to the office where he was confronted by the
Petitioner‟s President and the latter‟s brother. Thereat, Respondent was paid the
amount of P120,000.00 as may be shown by a Solidbank Mandaue Branch payable to
cash, as separation pay. Aggrieved, Respondent filed a complaint for illegal dismissal
before the NLRC Regional Arbitration Branch.

Issues:

(1) Was the dismissal based on a just cause?

(2) Was due process observed?

Ruling:

Yes, the dismissal was based on a just cause but one done without due process. The
Court ruled: “In an unlawful dismissal case, the employer has the burden of proving the
lawful cause sustaining the dismissal of the employee. The employer must affirmatively
show rationally adequate evidence that the dismissal was for a justifiable cause.
Respondent‟s behavior constituted just cause.[1] However, petitioners cannot deny that
they failed to observe due process. The law requires that the employer must furnish the
worker sought to be dismissed with two written notices before termination of
employment can be legally effected: (1) notice which apprises the employee of the
particular acts or omissions for which his dismissal is sought; and (2) the subsequent
notice which informs the employee of the employer‟s decision to dismiss him. Failure to
comply with the requirements taints the dismissal with illegality.

Petitioners should thus indemnify Respondent for their failure to observe the
requirements of due process. Respondent is not entitled to reinstatement, backwages
and attorney‟s fees because Respondent‟s dismissal is for just cause but without due
process. In light of this Court‟s ruling in Agabon v. National Labor Relations
Commission, the violation of Respondent‟s right to statutory due process by petitioners,
even if the dismissal was for a just cause, warrants the payment of indemnity in the form
of nominal damages. This indemnity is intended not to penalize the employer but to
vindicate or recognize the employee‟s right to statutory due process which was violated
by the employer. Considering that both the Labor Arbiter and the NLRC found that
petitioners already gave Respondent P120,000 of their own free will, this amount should
thus constitute the nominal damages due to Respondent.”

Rolando Ancheta vs. Destiny Financial Plans, Inc.

G.R. No. 179702, February 16, 2010

Facts:

On December 1, 2002, respondent Destiny Financial Plans, Inc., a pre-need insurance

company, hired petitioner as Head of its Marketing Group, with a compensation
package of Ninety Thousand Pesos (P90,000.00) a month. On February 2, 2004, a
Marketing Committee meeting was called at the conference room of respondent
company. Present at the meeting were various leaders of the marketing team, and the
operations director of the company. During the meeting, it was announced that
petitioner was to resign from the respondent company. On February 11, 2004, petitioner
received a letter from respondent company, asking him to explain within forty-eight (48)
hours why his services should not be terminated for loss of confidence in his ability to
perform the functions of Marketing Director of the company. On February 13, 2004,
petitioner submitted his letter of explanation to respondent company.

On February 17, 2004, the board of directors of respondent company terminated

petitioner‟s services on the ground of loss of confidence. Thus, on March 16, 2004,
petitioner filed before the Labor Arbiter a complaint for illegal dismissal, with prayer for
reinstatement, payment of full backwages, payment of 13th month pay, moral and
exemplary damages, and attorney‟s fees, against respondent. Labor Arbiter rendered a
Decision declaring complainant‟s dismissal from employment to be illegal. On appeal,
the National Labor Relations Commission (NLRC) reversed the decision of the Labor
Arbiter.

Issue:

(1) Is petitioner‟s employment validly terminated because of loss of confidence?

(2) Is there violation of petitioner‟s right to procedural due process?

Ruling (First Issue):

Yes. Two requisites must concur in order that there be a valid dismissal from
employment, namely: (1) the dismissal must be for any of the causes expressed in
Article 282 of the Labor Code; and (2) the employee must be given an opportunity to be
heard and to defend himself. Under Article 282(c) of the Labor Code, the doctrine of
loss of confidence requires the concurrence of the following: (1) loss of confidence
should not be simulated; (2) it should not be used as a subterfuge for causes which are
improper, illegal, or unjustified; (3) it may not be arbitrarily asserted in the face of
overwhelming evidence to the contrary; (4) it must be genuine, not a mere afterthought
to justify an earlier action taken in bad faith; and (5) the employee involved holds a
position of trust and confidence.

Petitioner was a managerial employee of respondent company, holding a highly

sensitive position. Being the Head of the Marketing Group of respondent company, he
was in charge, among others, of the over-all production and sales performance of the
company. His performance was practically the lifeblood of the corporation, because its
earnings depended on the sales of the marketing group, which he used to head. The
position held by petitioner required the highest degree of trust and confidence of his
employer in the former‟s exercise of managerial discretion insofar as the conduct of the
latter‟s business was concerned.Petitioner‟s inability to perform the functions of his
office to the satisfaction of his employer and the former‟s poor judgment as marketing
head caused the company huge financial losses.
(Second Issue):

Yes. Private respondents did not strictly comply with the "two notice" requirement in
dismissing petitioner Ancheta. While private respondents sent a show cause letter to
petitioner Ancheta, the same letter precipitately implemented termination procedures,
i.e., demanded the return of the Executive elevator key which allows petitioner Ancheta
access to the office premises and the surrender of the company car assigned to him,
even as petitioner Ancheta had yet to answer and air his side. Such betrays the fact that
the said show cause letter was but a formality and petitioner Ancheta‟s dismissal is a
foregone conclusion. Respondents‟ failure to observe due process in the termination of
employment of petitioner for a just cause does not invalidate the dismissal but makes
respondent company liable for non-compliance with the procedural requirements of due
process. The violation of petitioner‟s right to statutory due process warrants the
payment of nominal damages.

Genesis Transport Service, Inc. vs.

Unyon ng Malayang Manggagawa ng Genesis Transport (UMMGT)

G.R. No. 182114, April 5, 2010

Facts:

Respondent Juan Taroy was hired on February 2, 1992 by petitioner Genesis Transport
Service, Inc. (Genesis Transport) as driver on commission basis at 9% of the gross
revenue per trip. On May 10, 2002, Taroy was, after due notice and hearing, terminated
from employment after an accident on April 20, 2002 where he was deemed to have
been driving recklessly.

Taroy thus filed a complaint for illegal dismissal and payment of service incentive leave
pay, claiming that he was singled out for termination because of his union activities,
other drivers who had met accidents not having been dismissed from employment.
Taroy later amended his complaint to implead his herein co-respondent Unyon ng
Malayang Manggagawa ng Genesis Transport (the union) as complainant and add as
grounds of his cause of action unfair labor practice (ULP), reimbursement of illegal
deductions on tollgate fees, and payment of service incentive leave pay.

Respecting the claim for refund of illegal deductions, Taroy alleged that in 1997,
petitioner started deducting from his weekly earnings an amount ranging from P160 to
P900 representing toll fees, without his consent and written authorization as required
under Article 113 of the Labor Code and contrary to company practice; and that
deductions were also taken from the bus conductor‟s earnings to thus result to double
deduction. Genesis Transport countered that Taroy committed several violations of
company rules for which he was given warnings or disciplined accordingly; that those
violations, the last of which was the April 20, 2002 incident, included poor driving skills,
tardiness, gambling inside the premises, use of shabu, smoking while driving,
insubordination and reckless driving; and that Taroy‟s dismissal was on a valid cause
and after affording him due process.

Issue:

Was the dismissal valid?

Ruling:

Yes. What the Rules require is that the employer act on the suspended worker‟s status
of employment within the 30-day period by concluding the investigation either by
absolving him of the charges, or meeting the corresponding penalty if liable, or
ultimately dismissing him. If the suspension exceeds the 30-day period without any
corresponding action on the part of the employer, the employer must reinstate the
employee or extend the period of suspension, provided the employee‟s wages and
benefits are paid in the interim.

In the present case, petitioner Company had until May 20, 2002 to act on Taroy‟s case.
It did by terminating him through a notice dated May 10, 2002, hence, the 30-day
requirement was not violated even if the termination notice was received only on June
4, 2002, absent any showing that the delayed service of the notice on Taroy was
attributable to Genesis Transport.

Technol Eight Philippines Corp. vs. NLRC

G.R. No. 187605, April 13, 2010

Facts:

The petitioner Technol Eight Philippines Corporation (Technol), manufactures metal

parts and motor vehicle components. It hired the respondent Dennis Amular (Amular) in
March 1998 and assigned him to Technol‟s Shearing Line, together with Clarence P.
Ducay (Ducay). Rafael Mendoza (Mendoza) was the line‟s team leader. On April 16,
2002 at about 5:30 p.m., Mendoza went to the Surf City Internet Café in Laguna. As
Mendoza was leaving the establishment, he was confronted by Amular and Ducay who
engaged him in a heated argument regarding their work in the shearing line, particularly
Mendoza‟s report to Avelino S. De Leon, Jr. (De Leon), Technol‟s Production Control
and Delivery (PCD) assistant supervisor, about Amular‟s and Ducay‟s questionable
behavior at work. The heated argument resulted in a fistfight that required the
intervention of the barangay tanods in the area.

Upon learning of the incident, Technol‟s management sent to Amular and Ducay a
notice of preventive suspension/notice of discharge advising them that their fistfight with
Mendoza violated Section 1-k of Technol‟s Human Resource Department (HRD)
Manual. The two were given forty-eight (48) hours to explain why no disciplinary action
should be taken against them for the incident. They were placed under preventive
suspension for thirty (30) days. Thereafter, Amular received a notice informing him that
Technol management will conduct an administrative hearing. He was also given two (2)
days to respond in writing to the statements attached to and supporting the notice. A
day before the hearing or on June 13, 2002, Amular filed a complaint for illegal
suspension/constructive dismissal with a prayer for separation pay, backwages and
several money claims, against Technol. Amular failed to attend the administrative
hearing. On July 4, 2002, Technol sent him a notice of dismissal.

Executive Labor Arbiter Salvador V. Reyes rendered a decision finding that Amular‟s
preventive suspension and subsequent dismissal were illegal. He ruled that Amular‟s
preventive suspension was based solely on unsubscribed written statements and that
Mendoza, Amular and Ducay had settled their differences even before Amular was
placed under preventive suspension. With respect to Amular‟s dismissal, the Arbiter
held that Technol failed to afford him procedural due process since he was not able to
present his side because he had filed a case before the National Labor Relations
Commission (NLRC) at the time he was called to a hearing; Technol also failed to
substantiate its allegations against Amular; the fistfight occurred around 200 to 300
meters away from the work area and it happened after office hours. Arbiter Reyes
awarded Amular separation pay (since he did not want to be reinstated), backwages,
13th month pay, service incentive leave pay and attorney‟s fees in the total amount of
P158,987.70.

Technol appealed to the NLRC. The NLRC affirmed the labor arbiter‟s ruling. Technol
thereafter sought relief from the CA through a petition for certiorari under Rule 65 of the
Rules of Court. The CA found no grave abuse of discretion on the part of the NLRC
when it affirmed the labor arbiter‟s ruling that Amular was illegally dismissed. The CA
denied the motion for reconsideration Technol subsequently filed, hence, the present
petition.

Issue:

Is Amular‟s dismissal valid?

Ruling:

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

[1] The Court did not specify under which “just” cause the acts of the Respondent fell under.

JURISDICTION

Jethro Intelligence and Yakult Phils. vs. SOLE, Garcia, et. al.

G.R. No. 172537, August 14, 2009

Facts:

On the basis of a complaintfiled by respondent Frederick Garcia (Garcia), one of the

security guards deployed by Jethro for underpayment of wages, legal/special holiday
pay, premium pay for rest day, 13th month pay, and night shift differential, the
Department of Labor and Employment (DOLE)-Regional Office conducted an inspection
at Yakult‟s premises in Calamba, Laguna in the course of which several labor standards
violations were noted, including keeping of payrolls and daily time records in the main
office, underpayment of wages, overtime pay and other benefits, and non-registration
with the DOLE.

The DOLE Regional Director, noting petitioners‟ failure to rectify the violations noted
during the above-stated inspection within the period given for the purpose, found them
jointly and severally liable to herein respondents for the aggregate amount of EIGHT
HUNDRED NINE THOUSAND TWO HUNDRED TEN AND 16/100 PESOS
(P809,210.16) representing their wage differentials, regular holiday pay, special day
premium pay, 13th month pay, overtime pay, service incentive leave pay, night shift
differential premium and rest day premium. This was affirmed by the Secretary of Labor
and Employment (SOLE) and by the Court of Appeals.

Unsatisfied, Jethro and Yakult went to the Supreme Court, alleging grave abuse of
discretion on the part of the DOLE Regional Director and the SOLE in this wise: (1) the
SOLE has no jurisdiction over the case because, following Article 129 of the Labor
Code, the aggregate money claim of each employee exceeded P5,000.00; (2) petitioner
Jethro, as the admitted employer of respondents, could not be expected to keep
payrolls and daily time records in Yakult‟s premises as its office is in Quezon City,
hence, the inspection conducted in Yakult‟s plant had no basis.

Petitioners maintain that Garcia‟s affidavit should not have been given weight, they not
having been afforded the opportunity to cross-examine him.

Issues:

(1) Does the case fall under DOLE Regional Director‟s jurisdiction?
(2) Is the lack of opportunity to cross examine detrimental to the case?

Ruling (First Issue):

Yes. While it is true that under Articles 129 and 217 of the Labor Code, the Labor
Arbiter has jurisdiction to hear and decide cases where the aggregate money claims of
each employee exceeds P5,000.00, said provisions do not contemplate nor cover the
visitorial and enforcement powers of the Secretary of Labor or his duly authorized
representatives. Rather, said powers are defined and set forth in Article 128[1] of the
Labor Code (as amended by R.A. No. 7730).

Art. 128 (b) retains and further strengthens the power of the Secretary of Labor or his
duly authorized representative to issue compliance orders to give effect to the labor
standards provisions of said Code and other labor legislation based on the findings of
labor employment and enforcement officers or industrial safety engineers made in the
course of inspection. Non-compliance is within the SOLE Representative’s jurisdiction.

While the employment records of the employees could not be expected to be found in
Yakult‟s premises in Calamba, as Jethro‟s offices are in Quezon City, the records show
that Jethro was given ample opportunity to present its payrolls and other pertinent
documents during the hearings and to rectify the violations noted during the ocular
inspection. It, however, failed to do so, more particularly to submit competent proof that
it was giving its security guards the wages and benefits mandated by law.

Jethro‟s failure to keep payrolls and daily time records in Yakult‟s premises was not the
only labor standard violation found to have been committed by it; it likewise failed to
register as a service contractor with the DOLE, pursuant to Department Order No. 18-02
and, as earlier stated, to pay the wages and benefits in accordance with the rates
prescribed by law.

(Second Issue):

No. Respecting petitioners‟ objection to the weight given to Garcia‟s affidavit, it bears
noting that said affidavit was not the only basis in arriving at the judgment award. The
payrolls for June 16-30, 2003 and February 1-15, 2004 reveal that the overtime rates
were below the required rate.That Garcia was not cross-examined on his affidavit is of
no moment. For, as Mayon Hotel and Restaurant vs. Adana instructs:

Article 221 of the Labor Code is clear: technical rules are not binding, and the
application of technical rules of procedure may be relaxed in labor cases to serve the
demand of substantial justice. The rule of evidence prevailing in court of law or equity
shall not be controlling in labor cases and it is the spirit and intention of the Labor Code
that the Labor Arbiter shall use every and all reasonable means to ascertain the facts in
each case speedily and objectively and without regard to technicalities of law or
procedure, all in the interest of due process. Labor laws mandate the speedy
administration of justice, with least attention to technicalities but without sacrificing the
fundamental requisites of due process

Halagueña vs. Philippine Airlines Inc.

G.R. No. 172013, Oct. 2, 2009

Facts:

Petitioners were employed as female flight attendants of respondent Philippine Airlines

(PAL) and members of the Flight Attendants and Stewards Association of the
Philippines (FASAP), a labor organization certified as the sole and exclusive certified as
the sole and exclusive bargaining representative of the flight attendants, flight stewards
and pursers of respondent. Respondent and FASAP entered into a Collective
Bargaining Agreement incorporating the terms and conditions of their agreement for the
years 2000 to 2005. Section 144 of the CBA provides that the compulsory retirement for
females shall be fifty-five (55) and for males shall be sixty (60). Petitioners and several
female cabin crews manifested that the aforementioned CBA provision on compulsory
retirement is discriminatory, and demanded for an equal treatment with their male
counterparts.

Petitioners filed a Special Civil Action for Declaratory Relief with Prayer for the Issuance
of Temporary Restraining Order and Writ of Preliminary Injunction with RTC. The RTC
issued an order upholding its jurisdiction over the present case as the thrust of the
Petition is Sec. 144 of the subject CBA which is allegedly discriminatory as it
discriminates against female flight attendants, in violation of the Constitution, the Labor
Code, and the CEDAW. The allegations in the Petition do not make out a labor dispute
arising from employer-employee relationship as none is shown to exist. The RTC issued
a TRO enjoining the respondent from implementing Section 144 of the CBA.

Respondent filed a Petition for Certiorari and Prohibition with Prayer for a Temporary
Restraining Order and Writ of Preliminary Injunction with the Court of Appeals (CA)
praying that the order of the RTC, which denied its objection to its jurisdiction, be
annulled and set aside for having been issued without and/or with grave abuse of
discretion amounting to lack of jurisdiction. The CA rendered a decision granting the
respondents‟ petition declaring that respondent court has no jurisdiction over the case.
The CA denied the motion for reconsideration, hence the instant petition.

Issue:

Does the trial court have jurisdiction over the petitioners' action challenging the legality
or constitutionality of the provisions on the compulsory retirement age contained in the
CBA?

Ruling:

Yes. The petitioners' primary relief is the annulment of Section 144, Part A of the PAL-
FASAP CBA, which allegedly discriminates against them for being female flight
attendants. The subject of litigation is incapable of pecuniary estimation, exclusively
cognizable by the RTC, pursuant to Section 19 (1) of B.P. Blg. 129, as amended. The
said issue cannot be resolved solely by applying the Labor Code. Rather, it requires the
application of the Constitution, labor statutes, law on contracts and the CEDAW, and the
power to apply and interpret the constitution and CEDAW is within the jurisdiction of trial
courts, a court of general jurisdiction. In George Grotjahn GMBH & Co. v. Isnani, this
Court held that not every dispute between an employer and employee involves matters
that only labor arbiters and the NLRC can resolve in the exercise of their adjudicatory or
quasi-judicial powers. The jurisdiction of labor arbiters and the NLRC under Article 217
of the Labor Code is limited to disputes arising from an employer-employee relationship
which can only be resolved by reference to the Labor Code, other labor statutes, or their
collective bargaining agreement.

Not every controversy or money claim by an employee against the employer or vice-
versa is within the exclusive jurisdiction of the labor arbiter. Actions between employees
and employer where the employer-employee relationship is merely incidental and the
cause of action precedes from a different source of obligation is within the exclusive
jurisdiction of the regular court. Here, the employer-employee relationship between the
parties is merely incidental and the cause of action ultimately arose from different
sources of obligation, i.e., the Constitution and CEDAW. [1] Art. 128 (b): Notwithstanding
the provisions of Articles 129 and 217 of this Code to the contrary, and in cases where the
relationship of employer-employee exists, the Secretary of Labor and Employment or his
duly authorized representatives shall have the power to issue compliance orders to give
effect to the labor standards provisions of this Code and other labor legislation based on
the findings of labor employment and enforcement officers or industrial safety engineers
made in the course of inspection. The Secretary or his duly authorized representatives shall
issue writs of execution to the appropriate authority for the enforcement of their orders,
except in cases where the employer contests the finding of the labor employment and
enforcement officer and raises issues supported by documentary proofs which were not
considered in the course of inspection. [Emphasis, underscoring and italics supplied]

Leslie Okol vs. Slimmers World International

G.R. No. 160146 , December 11, 2009

Facts:

Slimmers World employed petitioner Okol as a management trainee. She rose up the
ranks to become Head Office Manager and then Director and Vice President until her
dismissal. Prior to Okol‟s dismissal, Slimmers World preventively suspended Okol. The
suspension arose from the seizure by the Bureau of Customs of seven Precor elliptical
machines and seven Precor treadmills belonging to or consigned to Slimmers World.
The shipment of the equipment was placed under the names of Okol and two customs
brokers for a value less than US$500. For being undervalued, the equipment was
seized. Okol filed a complaint with the Arbitration branch of the NLRC against Slimmers
World, Behavior Modifications, Inc. and Moy (collectively called respondents) for illegal
suspension, illegal dismissal, unpaid commissions, damages and attorney‟s fees, with
prayer for reinstatement and payment of backwages.

Respondents filed a Motion to Dismisson the ground that the NLRC had no jurisdiction
over the subject matter of the complaint. The labor arbiter granted the motion to
dismiss. The labor arbiter ruled that Okol was the vice-president of Slimmers World at
the time of her dismissal. Since it involved a corporate officer, the dispute was an intra-
corporate controversy falling outside the jurisdiction of the Arbitration branch. Upon
appeal, the NLRC reversed the labor arbiter‟s order. Hence, the instant petition.

Issue:

Does the NLRC have jurisdiction over instant case?

Ruling:

No. From the documents submitted by the company, petitioner was a director and
officer of Slimmers World. The charges of illegal suspension, illegal dismissal, unpaid
commissions, reinstatement and back wages imputed by petitioner against the company
fall squarely within the ambit of intra-corporate disputes. In a number of cases, the
Court has held that a corporate officer‟s dismissal is always a corporate act, or an intra-
corporate controversy which arises between a stockholder and a corporation. The
question of remuneration involving a stockholder and officer, not a mere employee, is
not a simple labor problem but a matter that comes within the area of corporate affairs
and management and is a corporate controversy in contemplation of the Corporation
Code.

It is a settled rule that jurisdiction over the subject matter is conferred by law. The
determination of the rights of a director and corporate officer dismissed from his
employment as well as the corresponding liability of a corporation, if any, is an intra-
corporate dispute subject to the jurisdiction of the regular courts. Thus, the appellate
court correctly ruled that it is not the NLRC but the regular courts which have jurisdiction
over the present case.

Ronila Sorreda vs. Cambri DGE Electronics Corp.

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

Facts:

On May 8, 1999, petitioner was hired by respondent as a technician for a period of 5

months. Five weeks into the job, 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. Petitioner filed a complaintfor illegal dismissal
(later changed to breach of contract) claiming 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. The labor arbiter ruled in favor of petitioner
and that reinstatement and payment of backwages were the proper reliefs. Respondent
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.

Issue:

Does the Labor Arbiter have the jurisdiction to take cognizance of the case?

Ruling:
No. Jurisdiction over the subject matter of a complaint is determined by the allegations
of the complaint. Whereno 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.

Based on petitioner‟s allegations, his cause of action was based on an alleged second
contract of employment separate and distinct from the per-project employment contract.
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. 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. 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.

Hugo, et. al. vs. LRTA

GR. 181866, March 18, 2010

Facts:

LRTA, a GOCC, entered into a 10-year Agreement for the Management and Operation
of the Metro Manila Light Rail Transit System (the Agreement) from June 8, 1984 until
June 8, 1994 with Metro Transit Organization, Inc. (METRO). One of the stipulations in
the Agreement was “ METRO shall be free to employ such employees and officers as it
shall deem necessary in order to carry out the requirements of the Agreement. Such
employees and officers shall be the employees of METRO and not of LRTA. METRO
shall prepare a compensation schedule for the salaries and fringe benefits of its
personnel (Article 3, par. 3.05).” METRO thus hired its own employees including herein
petitioners-members of the Pinag-isang Lakas ng Manggagawa sa METRO, Inc.-
National Federation of Labor, otherwise known as PIGLAS-METRO, INC.-NFL-KMU
(the Union), the certified exclusive collective bargaining representative of METRO‟s
rank-and-file employees.

LRTA later purchased the shares of stocks of METRO via Deed of Sale of June 9,
1989. The two entities, however, continued with their distinct and separate juridical
personalities such that when the ten-year Agreement expired on June 8, 1994, they
renewed the same. On July 25, 2000, on account of a deadlock in the negotiation for
the new CBA between METRO and the Union, petitioners filed a Notice of Strike before
the National Conciliation and Mediation Board, National Capital Region (NCR). On even
date, the Union went on strike, completely paralyzing the operations of the light rail
transit system. The Secretary of Labor assumed jurisdiction and ordered the striking
employees to return to work and for METRO to accept them back under the same terms
and conditions prevailing before the strike.

When the Agreement with METRO expired on July 31, 2000, the LRTA did not renew it
but instead took over the management and operation of the LRT, hiring new personnel.
This prompted METRO to consider their employees, including herein petitioners,
terminated as of September 30, 2000. On February 28, 2002, petitioners filed a
complaint for illegal dismissal and unfair labor practice with prayer for reinstatement and
damages against METRO and LRTA before the NCR Arbitration Branch, National Labor
Relations Commission (NLRC). LRTA filed a motion to dismiss on the ground that the
Labor Arbiter and the NLRC had no jurisdiction over it and there was no employer-
employee relationship between LRTA and petitioners. The motion was granted and
petitioners appealed to the NLRC, which reversed the Labor Arbiter‟s order and ruled
that the NLRC has jurisdiction and that LRTA was an “indirect employer”. It further ruled
that the LRTA is a “necessary party” which ought to be joined as party for a complete
determination of petitioners‟ claims that the non-renewal of the Agreement by LRTA and
the cessation of business by METRO were carried out with the intent to cover up the
illegal dismissal of petitioners. The case was remanded to the Labor Arbiter who by
Decision of August 18, 2004 found for the petitioners.

LRTA appealed the decision to the NLRC and filed a motion for leave to post a property
bond in lieu of cash or surety bond. NLRC dismissed LRTA‟s appeal due to its failure to
perfect the same, no cash or surety bond having been posted. LRTA filed a Petition for
Certiorari before the CA which it granted and accordingly reversed the assailed
issuances of the NLRC. Petitioners filed a Petition for Review on Certiorari alleging that
LRTA‟s failure to perfect its appeal by posting a cash or surety bond “renders the Labor
Arbiter‟s judgment final and executory and the appeal ineffective and invalid.”

Issue:

Does the NLRC or the Labor Arbiter have jurisdiction over LRTA, a GOCC?

Ruling:

No. The Labor Arbiter and the NLRC do not have jurisdiction over LRTA. Petitioners
themselves admitted in their complaint that LRTA “is a government agency organized
and existing pursuant to an original charter (Executive Order No. 603),” and that they
are employees of METRO. LRTA, being a government-owned or controlled corporation
created by an original charter, is beyond the reach of the Department of Labor and
Employment which has jurisdiction over workers in the private sector. Employees of
METRO cannot be considered as employees of petitioner LRTA. The employees hired
by METRO are covered by the Labor Code and are under the jurisdiction of the
Department of Labor and Employment, whereas the employees of LRTA, a
government-owned and controlled corporation with original charter, are covered by civil
service rules. The workers of METRO cannot have the best of two worlds, e.g., be
considered government employees of LRTA, yet allowed to strike as private employees
under our labor laws.

Miguela Santuyo, et al. vs. Remerco Garments Manufacturing, Inc. and/or

Victoria Reyes

GR No. 174420; March 22, 2010

Facts:

Petitioners, who are employees of the Remerco Garments Manufacturing, Inc. (RGMI),
were among those recalled to work by the company, after their union, the Kaisahan ng
Manggagawa sa Remerco Garments Manufacturing Inc. (KMM Kilusan), staged a 2-
year illegal strike from 1992 to 1994. Among the conditions of their recall was that they
would no longer be paid a daily rate but on a piece-rate basis. However, even before
RGMI could normalize its operations, the union filed a notice of strike in the National
Conciliation and Mediation Board (NCMB) on August 8, 1995. According to the union,
RGMI conducted a time and motion study and changed the salary scheme from a daily
rate to piece-rate basis without consulting it. It claimed that RGMI therefore not only
violated the existing collective bargaining agreement (CBA) but also diminished the
salaries agreed upon. It therefore committed an unfair labor practice. The conciliation
proceedings between the union and RGMI before the NCMB resulted in a lock-out. The
union went on strike in November 1995. Therafter, the Secretary of Labor assumed
jurisdiction over the case, pursuant to Article 263(g) of the Labor Code. It ordered all
striking workers to return to work.

The Secretary of Labor found that the employees would receive higher wages if they
were paid on a piece-rate rather than on a daily rate basis. Hence, the new salary
scheme would be more advantageous to the employees. For this reason, despite the
provisions of the CBA, the change in salary scheme was validated.

In an order dated September 18, 1996, the Secretary of Labor ordered all employees to
return to work and RGMI to pay its employees their unpaid salaries (from September
25, 1995 to October 14, 1995) on the piece-rate basis. Neither the union nor RGMI
appealed the aforementioned order. Meanwhile, however, on October 18, 1995, while
the conciliation proceedings between the union and respondent were pending,
petitioners filed a complaint for illegal dismissal against RGMI and respondent Victoria
Reyes, accusing the latter of harassment. Petitioners subsequently amended their
complaint, demanding payment of their accrued salaries from September 25 to October
14, 1995.

Respondents moved to dismiss the complaint in view of the pending conciliation

proceedings, involving the same issue, in the NCMB. It also claimed that alleged
violations of the CBA should be resolved according to the grievance procedure laid out
therein. It argued that the labor arbiter had no jurisdiction over the complaint. The labor
arbiter assumed jurisdiction over the case and rendered a decision granting the claims
of the union. The NLRC denied the appeal of the respondents. The Court of Appeals,
however, reversed the NLRC and ruled that the labor arbiter had no jurisdiction over the
complaint. This prompted the petitioners to elevate the matter to the Supreme Court.

Issues:

1. Did the labor arbiter have jurisdiction over the complaint filed by the petitioners?
2. Was the labor arbiter barred by prior judgment from assuming jurisdiction over the
complaint?

Ruling (First Issue):

No, the labor arbiter did not have jurisdiction over the complaint. Petitioners clearly and
consistently questioned the legality of RGMI‟s adoption of the new salary scheme (i.e.,
piece-rate basis), asserting that such action, among others, violated the existing CBA.
The controversy was not a simple case of illegal dismissal but a labor dispute involving
the manner of ascertaining employees‟ salaries, a matter which was governed by the
existing CBA. Article 217 of the Labor Code provides that “[c]ases arising from the
interpretation or implementation of collective bargaining agreements and those arising
from the interpretation or enforcement of company personnel policies shall be disposed
of by the Labor Arbiter by referring the same to the grievance machinery and voluntary
arbitration as may be provided in said agreements.”

This provision requires labor arbiters to refer cases involving the implementation of
CBAs to the grievance machinery provided therein and to voluntary arbitration.

Moreover, Article 260 of the Labor Code clarifies that such disputes must be referred
first to the grievance machinery and, if unresolved within seven days, they shall
automatically be referred to voluntary arbitration. Thus, under Article 261 of the Labor
Code, voluntary arbitrators have original and exclusive jurisdiction over matters which
have not been resolved by the grievance machinery. Pursuant to Articles 217 in relation
to Articles 260 and 261 of the Labor Code, the labor arbiter should have referred the
matter to the grievance machinery provided in the CBA. Because the labor arbiter
clearly did not have jurisdiction over the subject matter, his decision was void.

(Second Issue):

Yes, the labor arbiter was barred by prior judgment from assuming jurisdiction over the
complaint. The Secretary of Labor resolved the labor dispute between the union and
RGMI in his September 18, 1996 order. Since neither the union nor RGMI appealed the
said order, it became final and executory. Article 263(g) of the Labor Code gives the
Secretary of Labor discretion to assume jurisdiction over a labor dispute likely to cause
a strike or a lockout in an industry indispensable to the national interest and to decide
the controversy or to refer the same to the NLRC for compulsory arbitration. In doing so,
the Secretary of Labor shall resolve all questions and controversies in order to settle the
dispute. The Secretary of Labor assumed jurisdiction over the controversy because
RGMI had a substantial number of employees and was a major exporter of garments to
the United States and Canada

Settled is the rule that unions are the agent of its members for the purpose of securing
just and fair wages and good working conditions. Since petitioners were part of the
bargaining unit represented by the union and members thereof, the September 18, 1996
order of the Secretary of Labor applies to them.

Furthermore, since the union was the bargaining agent of petitioners, the complaint was
barred under the principle of conclusiveness of judgments. The parties to a case are
bound by the findings in a previous judgment with respect to matters actually raised and
adjudged therein. Hence, the labor arbiter should have dismissed the complaint on the
ground of res judicata.

APPEALS

Del Rosario vs. Philippine Journalists, Inc.

G.R. No. 181516, August 19, 2009

Facts:

The instant petition stemmed from a complaint filed by petitioner, Cesario L. del
Rosario, against herein respondent, Philippine Journalists, Inc. (PJI), for illegal
dismissal with money claims.

On November 5, 2002, the Labor Arbiter rendered a decision in favor of petitioner.

Respondent elevated its case to the National Labor Relations Commission (NLRC). On
January 6, 2003, it filed its memorandum of appeal together with the appeal bond
issued by Philippine Pryce Assurance Corporation (PPAC).

On December 15, 2003, the NLRC issued a resolutiondismissing the appeal for failure
to perfect the same due to the posting of the appeal bond from a bonding company not
duly accredited by the Court. But in a bid of liberality, the NLRC directed respondent to
post a new bond, but respondent failed to comply. Thus, on March 31, 2005, the NLRC
issued a resolution dismissing the appeal.

Aggrieved, respondent filed a petition for certiorari under Rule 65 of the Rules of Court
before the Court of Appeals (CA). The CA reversed the NLRC, saying that the NLRC
committed grave abuse of discretion in dismissing PJI‟s appeal based on an erroneous
finding that the surety bond respondent posted was void. The CA ratiocinated that at the
time the subject bond was issued, PPAC was still authorized to issue the same. Thus,
there was no legal basis to dismiss PJI‟s appeal because it had actually posted a valid
bond. The CA directed the NLRC to give due course to the appeal, as well as directed
the respondent to file a new bond.

Issue:

Should the appeal be granted due course?

Ruling:

Yes. The Supreme Court sided with the Court of Appeals. Article 223 of the Labor Code
mandates that in cases of judgment involving a monetary award, an appeal by the
employer may be perfected only upon the posting of a cash or surety bond issued by a
reputable bonding company duly accredited by the Commission in an amount
equivalent to the monetary award in the judgment appealed from.

The filing of a supersedeas bond for the perfection of an appeal is mandatory and
jurisdictional. The requirement that employers post a cash or surety bond to perfect their
appeal is apparently intended to assure workers that if they prevail in the case, they will
receive the money judgment in their favor upon the dismissal of the former‟s appeal. It
was intended to discourage employers from using an appeal to delay, or even evade,
their obligations to satisfy their employees' just and lawful claims.

At the time of the filing of the surety bond by PJI on January 2, 2003, PPAC was still an
accredited bonding company. Thus, it was but proper to honor the appeal bond issued
by a bonding company duly accredited by this Court at the time of its issuance. The
subsequent revocation of the authority of a bonding company should not prejudice
parties who relied on its authority. The revocation of authority of a bonding company is
prospective in application.

Still, the Court takes due notice of the opportunity given to PJI to post a new bond
issued by an accredited bonding company in the NLRC resolution dated February 23,
2004. Yet, PJI insisted on the validity of the bond it had filed despite the fact the PPAC
was no longer accredited to act as a surety. This notwithstanding, guided by the
principle that technical rules of procedure should not hamper the quest for justice and
truth, this Court deems it prudent that the case be reviewed and decided on the merits,
in view of the question on the employer-employee relationship of the parties and its
resultant legal consequences. But, so as not to prejudice the rights of petitioner in this
case, the Court reiterates the CA directive for PJI to post a new bond issued by an
accredited bonding company.
Republic Cement Corp. vs. Guinmapang

G.R. No. 16891, August 24, 2009

Facts:

Guinmapang was an employee of Republic Cement from May 1996 to 15 August 2001.
Guinmapang‟s last position was supervisor with a monthly salary of P13,100. On 4 July
2001, Republic Cement issued General Circular No. 101-027 announcing the
implementation of a retrenchment program. On 12 July 2001, Guinmapang received a
notice from Republic Cement that his services were being terminated effective 15
August 2001 pursuant to the retrenchment program. On the same date, Republic
Cement also sent the required notice to the Department of Labor and Employment.
However, Guinmapang refused to receive the separation package offered by Republic
Cement.

Thereafter, Guinmapang filed a complaint for illegal dismissal and other money claims
against Republic Cement. On 30 May 2003, the Labor Arbiter ruled in Republic
Cement‟s favor.The dispositive portion of the 30 May 2003 decision provides:

WHEREFORE, premises considered, let the complaint be, as it is hereby, DISMISSED

for lack of merit. However, respondent Republic Cement Corporation, is hereby ordered
to pay the complainant his separation pay in the amount of Seventy Eight Thousand Six
Hundred Pesos (Php 78,600)

On 23 June 2003, Guinmapang‟s counsel received a copy of the Labor Arbiter‟s 30 May
2003 Decision. However, Guinmapang‟s counsel filed his appeal with the NLRC only on
4 July 2003, one day beyond the 10-day reglementary period to file an appeal.

In its 29 January 2004 Order, the NLRC dismissed Guinmapang‟s appeal. The 29
January 2004 Order of the NLRC provides:

WHEREFORE, premises considered, the instant appeal, having been filed after the
reglementary period, is hereby, DISMISSED.

Issue:
Was the dismissal by the NLRC, for failure to file within the 10-day reglementary period,
proper?

Ruling:

No. The Supreme Court agrees with the Court of Appeals. The Court of Appeals started
by declaring that in labor cases, the rules of procedure are not to be strictly adhered to.
The Court of Appeals said that technicalities should not be permitted to stand in the way
of equitably and completely resolving the rights and obligations of the parties. The Court
of Appeals gave credence to Guinmapang‟s explanation that the appeal was filed one
day late because Guinmapang‟s counsel suffered from an asthma attack a few days
before the last day for the filing of the appeal. Since no intent to delay the administration
of justice could be attributed to Guinmapang, a one day delay does not justify the
appeal‟s denial. More importantly, the Court of Appeals declared that Guinmapang‟s
appeal, on its face, appears to be impressed with merit. The constitutional mandate to
accord full protection to labor and to safeguard the employee‟s means of livelihood
should be given proper attention and sanction.A greater injustice may occur if said
appeal is not given due course than if the reglementary period to appeal were strictly
followed.

Hilario Ramirez vs. Court of Appeals

G.R. No. 182626, December 4, 2009

Facts:

Petitioner Ramirez hired respondent Valcueba as a rescue/emergency mechanic in his

taxi business. As alleged by Ramirez, Valcueba was assigned at the Babag station,
however he was directed to proceed to Calawisan, Lapu-lapu City, as a unit had
developed engine trouble and the mechanic assigned in that area was absent.
Valcueba did not report to the Calawisan station. In fact, he did not report to work
anymore. Petitioner on the other hand claimed that he was illegally dismissed when the
seecretary of Ramirez, informed him that he would not be allowed to return to work
unless he agreed to work on pakyaw basis. Ramirez however insisted that Valcueba
was never terminated from his employment. On the contrary, it was the latter who
abandoned his job. The Labor Arbiter held petitioner Ramirez not guilty of illegal
dismissal and ordered Valcueba to report back to work. In addition, Ramirez was
ordered to pay Valcueba his wage differential and 13th month pay equivalent to
P45,825.98. Ramirez thereafter filed a Memorandum of Appeal with Urgent Motion to
Reduce Appeal Bond before the NLRC. The NLRC however dismissed the appeal on
the ground that the same does not comply with Section 6, Rule VI of the NLRC Rules of
Procedure: “Ramirez has not offered a meritorious ground for the reduction of the
appeal bond and the amount of P10,000.00 he posted is not a reasonable amount in
relation to the monetary award of P45,825.98.” A subsequent Motion for
Reconsideration was denied by the NLRC. On appeal, the CA dismissed the petition for
failure to comply with the requisite verification.

Issue:

Was the bond posted by Ramirez sufficient to perfect his appeal?

Ruling:

No. Under the Rules, appeals involving monetary awards are perfected only upon
compliance with the following mandatory requisites, namely: (1) payment of the appeal
fees; (2) filing of the memorandum of appeal; and (3) payment of the required cash or
surety bond. The posting of a bond is indispensable to the perfection of an
appeal in cases involving monetary awards from the decision of the labor arbiter. The
intention of the lawmakers to make the bond a mandatory requisite for the perfection of
an appeal by the employer is clearly expressed in the provision that an appeal by the
employer may be perfected "only upon the posting of a cash or surety bond."
Clearly, the filing of the bond is not only mandatory but also a jurisdictional requirement
that must be complied with in order to confer jurisdiction upon the NLRC. Non-
compliance with the requirement renders the decision of the Labor Arbiter final and
executory. This requirement is intended to assure the workers that if they prevail in the
case, they will receive the money judgment in their favor upon the dismissal of the
employer's appeal.

Article 223 of the Labor Code indubitably requires that the appeal be perfected only
upon the posting of the cash or surety bond which is equivalent to the monetary award
in the judgment appealed from. While the bond may be reduced upon motion by the
employer, this is subject to the conditions that (1) the motion to reduce the bond shall be
based on meritorious grounds; and (2) a reasonable amount in relation to the monetary
award is posted by the appellant; otherwise, the filing of the motion to reduce bond shall
not stop the running of the period to perfect an appeal. The qualification effectively
requires that unless the NLRC grants the reduction of the cash bond within the 10-day
reglementary period, the employer is still expected to post the cash or surety bond
securing the full amount within the said 10-day period. Thus, the non-compliance of the
employer Ramirez of the legal requirements is fatal and had the effect of rendering the
judgment of the Labor Arbiter final and executory.

Juanito Tabigue vs. International Copra Export Corp.

G.R. No. 183335, December 23, 2009

Facts:

Petitioner Tabigue and his 19 co-petitioners, all employees of respondent INTERCO,

filed a Notice of Preventive Mediation with the Department of Labor and Employment –
National Conciliation and Mediation Board (NCMB), against respondent, for violation of
Collective Bargaining Agreement (CBA) and failure to sit on the grievance
conference/meeting.

As the parties failed to reach a settlement before the NCMB, petitioners requested to
elevate the case to voluntary arbitration. Before the parties could finally meet,
respondent presented before the NCMB a letter of the president of the INTERCO
Employees/Laborers‟ Union (the union) of which petitioners are members, addressed to
respondent‟s plant manager, stating that petitioners "are not duly authorized by the
board or the officers to represent the union.” Respondent thus moved to dismiss
petitioners‟ complaint for lack of jurisdiction.

The NCMB Director thus concluded that "the demand to submit the issues to voluntary
arbitration CAN NOT BE GRANTED. On petitioners‟ Motion for Reconsideration, the
NCMB Director, stated that the NCMB "has no rule-making power to decide on issues
as it only facilitates settlement among the parties to labor disputes."

Petitioners thus assailed the NCMB Director‟s decision via Petition for Review before
the Court of Appeals which dismissed it stating that NCMB is not a quasi-judicial agency
exercising quasi-judicial functions but merely a conciliatory body for the purpose of
facilitating settlement of disputes between parties, its decisions or that of its authorized
officer cannot be appealed either through a petition for review under Rule 43 or under
Rule 65 of the Revised Rules of Court.

Issue:

Does the NCMB, when exercising adjudicative powers, act as a quasi-judicial agency?

Ruling:
No. Rule 43 of the Rules of Court under which petitioners filed their petition before the
Court of Appeals applies to awards, judgments, final orders or resolutions of or
authorized by any quasi-judicial agency in the exercise of its quasi-judicial functions.
Given NCMB‟s functions, it cannot be considered a quasi-judicial agency. Hence, its
decisions or that of its authorized officer cannot be appealed either through a petition for
review under Rule 43 or under Rule 65 of the Revised Rules of Court.

Mindanao Times Corp. vs. Mitchel Confessor

G.R. No. 183417, February 5, 2010

Facts:

Aggrieved by the decision of the Labor Arbiter awarding separation pay, backwages and
attorney‟s fees, the employer appealed the arbiter‟s decision to the NLRC. But in
posting the required appeal bond necessary for the perfection of the appeal, the
Petitioner deposited the prescribed amount with a bank and only surrendered to the
NLRC the passbook covering the deposit, along with a Deed of Assignment it executed
assigning the proceeds of the deposit in favor of respondent and authorizing the NLRC
to release the same in the event that the Labor Arbiter‟s Decision becomes final and
executory.

Issue:

Did the Petitioner comply with the required cash or surety bond prescribed for cases
elevated to the NLRC?

Ruling:

No. Article 223 of the Labor Code provides that an appeal by the employer to the NLRC
from a judgment of a labor arbiter which involves a monetary award may be perfected
only upon the posting of a cash or surety bond issued by a reputable bonding company
duly accredited by the NLRC, in an amount equivalent to the monetary award in the
judgment appealed from. The posting of a bond is indispensable to the perfection of an
appeal. In the present case, the Deed of Assignment, as well as the passbook, which
petitioner submitted to the NLRC is neither a cash nor a surety bond. Petitioner‟s appeal
to the NLRC was thus not duly perfected, thereby rendering the Labor Arbiter‟s Decision
final and executory.

REINSTATEMENT
Cabigting vs San Miguel Foods, Inc.

G.R. No. 167706, November 5, 2009

Facts:

Petitioner Reynaldo G. Cabigting was hired as a receiver/ issuer at the San Miguel
Corporation, Feeds and Livestock Division (B-Meg) and after years of service, he was
promoted as inventory controller. Subsequently, respondent San Miguel Foods, Inc.,
through its President sent petitioner a letter informing him that his position as sales
office coordinator under its logistic department has been declared redundant.
Simultaneously, respondent terminated the services of petitioner effective July 31, 2000,
and offered him an early retirement package.

Petitioner was surprised upon receipt of the letter because he was not a sales office
coordinator, and yet he was being terminated as such. Accordingly, petitioner refused to
avail of the early retirement package. Prior to petitioner‟s termination on July 31, 2000,
he was an inventory controller, performing at the same time the function of a
warehouseman. Furthermore, petitioner was an active union officer of respondent‟s
union but upon his termination, was only a member thereof. With the support
of his union, petitioner filed a Complaint questioning his termination.

The Labor Arbiter rendered a Decision, where it ruled that petitioner was illegally
dismissed. Accordingly, the LA ordered respondent to pay petitioner backwages,
separation pay in lieu of reinstatement and attorney‟s fees. Petitioner appealed the
LA‟s Decision as to his non-reinstatement to his previous post. The NLRC ordered his
reinstatement. However, the CA, on the ground that there were strained relations
between employee and employer, reversed the portion of the NLRC Decision which
decreed petitioner‟s reinstatement.

Issue:

Do “strained relations” bar petitioner‟s reinstatement?

Ruling:

No. Under the law and prevailing jurisprudence, an illegally dismissed employee is
entitled to reinstatement as a matter of right. However, if reinstatement would only
exacerbate the tension and strained relations between the parties, or where the
relationship between the employer and the employee has been unduly strained by
reason of their irreconcilable differences, particularly where the illegally dismissed
employee held a managerial or key position in the company, it would be more prudent
to order payment of separation pay instead of reinstatement.

In order for the doctrine of strained relations to apply, it should be proved that the
employee concerned occupies a position where he enjoys the trust and confidence of
his employer and that it is likely that if reinstated, an atmosphere of antipathy and
antagonism may be generated as to adversely affect the efficiency and productivity of
the employee concerned.

Both the LA and the CA based their conclusions on impression alone. It bears to stress
that reinstatement is the rule and, for the exception of strained relations to apply, it
should be proved that it is likely that if reinstated, an atmosphere of antipathy and
antagonism would be generated as to adversely affect the efficiency and productivity of
the employee concerned. However, both the LA and the CA failed to state the basis for
their finding that a strained relationship exists.

Pangilinan vs. Wellmade Manufacturing Corp.

G.R. No. 187005, April 7, 2010

Facts:

Petitioner Ferdinand Pangilinan was employed by Wellmade Manufacturing Corporation

(respondent) on July 2, 2001 as Key Account Specialist tasked to sell Speed Detergent
products to supermarkets and groceries within his assigned area. On October 31, 2003,
petitioner used the service vehicle to travel to Naga City without approval from
respondent. While returning to Manila on November 3, 2003, the vehicle broke down
and it took more than two days to have it repaired. Petitioner admitted having used the
vehicle without respondent‟s approval and reported the incident1 on November 8, 2003
to the District Sales Manager.

The District manager, thereupon sent on November 13, 2003 a memorandum2 to

petitioner requiring him to explain within 48 hours why he should not be disciplined.
Petitioner explained that the vehicle had to undergo major repairs for two days the
expenses for which he himself shouldered. He stated that he would accept any
sanctions that may be imposed upon him. In another memorandum4 dated December
15, 2003, respondent required petitioner to explain within 24 hours his unauthorized
absence for the period November 22 to December 15, 2003. Petitioner explained that
he did not report for work starting November 22 because on November 21, he was told
by his supervisors to resign. and that he was willing to resign, as requested, provided
that the benefits due him would be given. It appears, however, that petitioner‟s letter
was received by respondent only on January 20, 2004, hence, in the interim or on
December 22, 2003 and January 5, 2004, respondent sent petitioner memoranda giving
him a last chance to explain his unauthorized absences.

Petitioner filed with the Labor Arbiter a complaintfor constructive dismissal. By Decision
of Labor Arbiter found respondent liable for illegal dismissal and ordered it to pay
petitioner separation pay computed at one month for every year of service, as well as
proportionate 13th month pay and service incentive leave pay. The Arbiter awarded
separation pay instead of reinstatement. However, NLRC affirmed the complainant was
illegally dismissed but ordered to reinstate Complainant to his former position and to
pay him his full backwages. The appellate court, on respondent‟s petition, modified the
NLRC decision. It held that the NLRC erred in ordering reinstatement, instead of
payment of separation pay,

Issue:

Whether Petitioner is entitled to bakwages or reinstatement.

Ruling:

Article 279 of the Labor Code provides that "[a]n 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...” An illegally dismissed employee is entitled to two
reliefs: backwages and reinstatement. The two reliefs provided are separate and
distinct. In instances where reinstatement is no longer feasible because of strained
relations between the employee and the employer, separation pay is granted. In effect,
an illegally dismissed employee is entitled to either reinstatement, if viable, or
separation pay if reinstatement is no longer viable, and backwages. Since reinstatement
is no longer feasible in the present case, the award of separation pay in lieu of
reinstatement is in order. Petitioner‟s prayer for the award of backwages is meritorious,
it, and the award of separation pay not being mutually exclusive.

NPC vs. Olandesca

G.R. No. 171434, April 23, 2010

Facts:

Respondent Alan A. Olandesca was first employed by petitioner as an Extension Aide

and was assigned at the Tiwi Watershed. Thereafter, he held various positions in
petitioner's corporation. While an employee of petitioner, respondent was allowed to
stay in a house within petitioner‟s premises. As Supervising Property Officer,
respondent had custody of all the materials and supplies stored. On several occasions,
from November 17, 1996 to January 25, 1997, respondent withdrew several items from
the warehouse/property office, without the required WRS(Warehouse Requisition Slip).
Among these items were barbed wires, interlink wires, nails, and G.I. wires. Upon
respondent's directive, all items he withdrew from the property office were duly recorded
on the security logbook of the security guard on duty. However, the items withdrawn
were already replaced by the said respondent.

Section Chief of the Angat filed a complaint against respondent for acts inimical to the
government and for violation of Article VI, Section 3(f) and 3.15 of the NPC Code of
Conduct and Discipline. Petitioner's Regional Board of Inquiry and Discipline (RBID)
heard the case and recommended that respondent suffer the penalty of dismissal with
forfeiture of all cash and non-cash benefits due him by virtue of his employment.
Respondent moved for the reconsideration of the decision, but the Board denied his
motion. The CA, however, granted the petition and ordered respondent‟s reinstatement
on the ground that respondent did not commit dishonesty. It said that respondent acted
in complete good faith, and was motivated only by a desire to serve the public beyond
the call of duty..

Issue:

Whether respondent is entitled to reinstatement.

Ruling:

Yes. It is not disputed that respondent took several materials and supplies from
petitioner's warehouse without the approved WRS. However, this should not be
construed as dishonesty on the part of respondent that would warrant his dismissal from
the service for the following reasons: 1) The withdrawals of the supplies were duly
recorded in the security guard's logbook, 2) Right after withdrawing the items,
respondent replaced them on his own initiative, without anyone instructing him to do so,
3) There is no clear showing that respondent misappropriated or converted the items for
his own personal use or benefit and 4) there was no basis to charge him for
malversation of public property as there was no misappropriation of the supplies for his
personal use and that the same were for general purpose and not for any specific use.

Nonetheless, although the respondent did not commit an overt act of dishonesty, he is
not exonerated from liability. Given the circumstances of the case, however, where
the proper penalty should only be a reprimand, this Court finds the aforementioned
cases to be inapplicable herein. On this note, this Court deems it proper to distinguish
between the penalties of dismissal or suspension and reprimand and their respective
effects on the grant or award of backwages. When an employee is dismissed or
suspended it is but logical that since he is barred from reporting to work the same
negates his right to be paid backwages. He has no opportunity to work during the period
he was dismissed or suspended and, therefore, he has no salary to expect. However,
the same does not hold true for an employee who is reprimanded. A reprimand usually
carries a warning that a repetition of the same or similar act will be dealt with more
severely. Under normal circumstances, an employee who is reprimanded is never
prevented from reporting to work. He continues to work despite the warning. Thus, in
the case at bar, since respondent’s penalty should only be a reprimand, this
Court deems it proper and equitable to affirm the CA’s award of backwages.

BACKWAGES/SEPARATION PAY

Daniel P. Javellana, Jr. vs. Albino Belen / Albino Belen vs. Daniel P. Javellana, Jr.
and Javellana farms

G.R. No. 181913, G.R. No. 182158, March 5, 2010

Facts:

Petitioner Albino Belen filed a complaint against respondents Javellana Farms, Inc. and
Daniel Javellana, Jr. for illegal dismissal and underpayment or non-payment of salaries,
overtime pay, holiday pay, service incentive leave pay (SILP), 13th month pay, premium
pay for holiday, and rest day as well as for moral and exemplary damages and
attorney's fees. Petitioner alleged that respondent Javellana hired him as company
driver on January 31, 1994and assigned him the tasks of picking up and delivering live
hogs, feeds, and lime stones used for cleaning the pigpens. On August 20, 1999,
respondent Javellana suddenly fired petitioner, which prompted petitioner to file a
complaint. Respondent Javellana on the other hand claimed that he hired petitioner not
as a company driver but as a family driver.

The Labor Arbiter found petitioner Belen to be a company driver as evidenced by the
pay slips that the farm issued to him and awarded him backwages, separation pay, 13th
month pay, SILP, holiday pay, salary differential, and attorney's fees. On appeal, the
National Labor Relations Commission (NLRC) declared Belen as a family driver. The
NLRC also found Belen to have been illegally dismissed. But since he was but a family
driver, the NLRC deleted the award of backwages and separation pay and instead
ordered Javellana to pay him 15 days salary by way of indemnity pursuant to Article 149
of the Labor Code. Aggrieved, petitioner elevated the matter to the CA, the CA held
Belen as a company driver since, aside from driving respondent Javellana and his
family, he also did jobs that were needed in Javellana's business operations, such as
hauling and delivering live hogs, feeds, and lime stones for the pig pens.The CA also
said that Javellana's abrupt dismissal of Belen for an isolated case of neglect of duty
was unjustified.

Issue:

Should the monetary award in his favor run until the finality of the decision in his case?

Ruling:

Yes. As provided in Art. 279 of the Labor Code, the law intends the award of backwages
and similar benefits to accumulate past the date of the Labor Arbiter's decision until the
dismissed employee is actually reinstated. But if, as in this case, reinstatement is no
longer possible, this Court has consistently ruled that backwages shall be computed
from the time of illegal dismissal until the date the decision becomes final.

The parties filed separate petitions before this Court. The petition in G.R. 181913, filed
by respondent Javellana, questioned the CA's finding of illegality of dismissal while the
petition in G.R. 182158, filed by petitioner Belen, challenged the amounts of money
claims awarded to him. The Court denied the first with finality in its resolution of
September 22, 2008; the second is the subject of the present case. Consequently,
Belen should be entitled to backwages from August 20, 1999, when he was dismissed,
to September 22, 2008, when the judgment for unjust dismissal in G.R. 181913 became
final.In his separation pay, technically the computation of separation pay would end on
the day he was dismissed on August 20, 1999 when he supposedly ceased to render
service and his wages ended. But, since Belen was entitled to collect backwages until
the judgment for illegal dismissal in his favor became final, here on September 22,
2008, the computation of his separation pay should also end on that date.

Further, since the monetary awards remained unpaid even after it became final on
September 22, 2008, it is but fair that respondent Javellana be required to pay 12%
interest per annum on those awards from September 22, 2008 until they are paid.