Basic Principles G.R. No.

167622 June 29, 2010

GREGORIO V. TONGKO, Petitioner, vs. THE MANUFACTURERS LIFE INSURANCE CO. (PHILS.), INC. and RENATO A. VERGEL DE DIOS,Respondents. Topic: Basic Principles Facts: The contractual relationship between Tongko and The Manufacturers Life Insurance Co. (Phils.), Inc. (Manulife)had two basic phases. The first or initial phase began on July 1, 1977, under a Career Agents Agreement (Agreement) that provided: It is understood and agreed that the Agent is an independent contractor and nothing contained herein shall be construed or interpreted as creating an employer-employee relationship between the Company and the Agent. The second phase started in 1983 when Tongko was named Unit Manager in Manulifes Sales Agency Organization. In 1990, he became a Branch Manager. Six years later (or in 1996), Tongko became a Regional Sales Manager. Tongkos gross earnings consisted of commissions, persistency income, and management overrides. Since the beginning, Tongko consistently declared himself self-employed in his income tax returns. Manulife eventually terminated the Agency Agreement with Tongko for his failure to align his directions with the avowed company policies. Issue: existence of an employment relationship Ruling: At the very least, three sets of laws namely, the Insurance Code, the Labor Code and the Civil Code have to be considered in looking at the present case. Not to be forgotten, too, is the Agreement that the parties adopted to govern their relationship for purposes of selling the insurance the company offers. Under the Insurance Code, the agent must, as a matter of qualification, be licensed and must also act within the parameters of the authority granted under the license and under the contract with the principal. On the other hand, the Civil Code defines an agent as a "person [who] binds himself to render some service or to do something in representation or on behalf of another, with the consent or authority of the latter."16 While this is a very broad definition that on its face may even encompass an employment relationship, the distinctions between agency and employment are sufficiently established by law and jurisprudence.

Generally, the determinative element is the control exercised over the one rendering service. The employer controls the employee both in the results and in the means and manner of achieving this result. The principal in an agency relationship, on the other hand, also has the prerogative to exercise control over the agent in undertaking the assigned task based on the parameters outlined in the pertinent laws. The Agreement, by its express terms, is in accordance with the Insurance Code model when it provided for a principal-agent relationship, and thus cannot lightly be set aside nor simply be considered as an agreement that does not reflect the parties true intent. This intent, incidentally, is reinforced by the system of compensation the Agreement provides, which likewise is in accordance with the production-based sales commissions the Insurance Code provides. That Tongko assumed a leadership role but nevertheless wholly remained an agent is the inevitable conclusion that results from the reading of the Agreement (the only agreement on record in this case) and his continuing role thereunder as sales agent, from the perspective of the Insurance and the Civil Codes and in light of what Tongko himself attested to as his role as Regional Sales Manager. Evidence indicates that Tongko consistently clung to the view that he was an independent agent selling Manulife insurance products since he invariably declared himself a business or self-employed person in his income tax returns. This consistency with, and action made pursuant to the Agreement were pieces of evidence that were never mentioned nor considered in our Decision of November 7, 2008. Had they been considered, they could, at the very least, serve as Tongkos admissions against his interest. Strictly speaking, Tongkos tax returns cannot but be legally significant because he certified under oath the amount he earned as gross business income, claimed business deductions, leading to his net taxable income. What, to Tongko, serve as evidence of labor law control are the codes of conduct that Manulife imposes on its agents in the sale of insurance. The mere presentation of codes or of rules and regulations, however, is not per se indicative of labor law control as the law and jurisprudence teach us. The general law on agency expressly allows the principal an element of control over the agent in a manner consistent with an agency relationship. In this sense, these control measures cannot be read as indicative of labor law control. Foremost among these are the directives that the principal may impose on the agent to achieve the assigned tasks, to the extent that they do not involve the means and manner of undertaking these tasks. The law likewise obligates the agent to render an account; in this sense, the principal may impose on the agent specific instructions on how an account shall be made, particularly on the matter of expenses and reimbursements. To these extents, control can be imposed through rules and regulations without intruding into the labor law concept of control for purposes of employment. From jurisprudence, an important lesson that the first Insular Life case teaches us is that a commitment to abide by the rules and regulations of an insurance company does not ipso facto make the insurance agent an employee. Neither do guidelines somehow restrictive of the insurance agents conduct necessarily indicate "control" as this term is defined in jurisprudence. Guidelines indicative of labor law "control," as the first Insular Life case tells us, should not merely relate to the mutually desirable result intended by the contractual relationship; they must have the nature of dictating the means

or methods to be employed in attaining the result, or of fixing the methodology and of binding or restricting the party hired to the use of these means. In fact, results-wise, the principal can impose production quotas and can determine how many agents, with specific territories, ought to be employed to achieve the companys objectives. These are management policy decisions that the labor law element of control cannot reach. Our ruling in these respects in the first Insular Life case was practically reiterated in Carungcong. Thus, as will be shown more fully below, Manulifes codes of conduct,30 all of which do not intrude into the insurance agents means and manner of conducting their sales and only control them as to the desired results and Insurance Code norms, cannot be used as basis for a finding that the labor law concept of control existed between Manulife and Tongko. In light of these conclusions, the sufficiency of Tongkos failure to comply with the company guidelines, as a ground for termination of Tongkos agency, is a matter that the labor tribunals cannot rule upon in the absence of an employer-employee relationship. Jurisdiction over the matter belongs to the courts applying the laws of insurance, agency and contracts.

[G.R. No. 169510, August 08, 2011] ATOK BIG WEDGE COMPANY, INC., PETITIONER, VS. JESUS P. GISON, RESPONDENT. Topic: Basic Principles Facts: Respondent Jesus P. Gison was engaged as part-time consultant on retainer basis by petitioner Atok Big Wedge Company, Inc. As a consultant on retainer basis, respondent assisted petitioner's retained legal counsel with matters pertaining to the prosecution of cases against illegal surface occupants within the area covered by the company's mineral claims. Respondent was likewise tasked to perform liaison work with several government agencies, which he said was his expertise. Petitioner did not require respondent to report to its office on a regular basis, except when occasionally requested by the management to discuss matters needing his expertise as a consultant. As payment for his services, respondent received a retainer fee of P3,000.00 a month,[3] which was delivered to him either at his residence or in a local restaurant. The parties executed a retainer agreement, but such agreement was misplaced and can no longer be found. The said arrangement continued for the next eleven years. Sometime thereafter, since respondent was getting old, he requested that petitioner cause his registration with the Social Security System (SSS), but petitioner did not accede to his request. Respondent filed a Complaint[4] with the SSS against petitioner for the latter's refusal to cause his registration with the SSS.

On the same date, respondent was advised that petitioner is terminating his retainer contract with the company since his services are no longer necessary. Issue: Existence of employer-employee relationship Ruling: To ascertain the existence of an employer-employee relationship jurisprudence has invariably adhered to the four-fold test, to wit: (1) the selection and engagement of the employee; (2) the payment of wages; (3) the power of dismissal; and (4) the power to control the employee's conduct, or the so-called "control test."[18] Of these four, the last one is the most important.[19] The so-called "control test" is commonly regarded as the most crucial and determinative indicator of the presence or absence of an employer-employee relationship. Under the control test, an employer-employee relationship exists where the person for whom the services are performed reserves the right to control not only the end achieved, but also the manner and means to be used in reaching that end.[20] Applying the aforementioned test, an employer-employee relationship is apparently absent in the case at bar. Among other things, respondent was not required to report everyday during regular office hours of petitioner. Respondent's monthly retainer fees were paid to him either at his residence or a local restaurant. More importantly, petitioner did not prescribe the manner in which respondent would accomplish any of the tasks in which his expertise as a liaison officer was needed; respondent was left alone and given the freedom to accomplish the tasks using his own means and method. Respondent was assigned tasks to perform, but petitioner did not control the manner and methods by which respondent performed these tasks. Verily, the absence of the element of control on the part of the petitioner engenders a conclusion that he is not an employee of the petitioner. Contrary to the conclusion of the CA, respondent is not an employee, much more a regular employee of petitioner. The appellate court's premise that regular employees are those who perform activities which are desirable and necessary for the business of the employer is not determinative in this case. In fact, any agreement may provide that one party shall render services for and in behalf of another, no matter how necessary for the latter's business, even without being hired as an employee.[23] Hence, respondent's length of service and petitioner's repeated act of assigning respondent some tasks to be performed did not result to respondent's entitlement to the rights and privileges of a regular employee. Furthermore, despite the fact that petitioner made use of the services of respondent for eleven years, he still cannot be considered as a regular employee of

petitioner. Article 280 of the Labor Code, in which the lower court used to buttress its findings that respondent became a regular employee of the petitioner, is not applicable in the case at bar. Indeed, the Court has ruled that said provision is not the yardstick for determining the existence of an employment relationship because it merely distinguishes between two kinds of employees, i.e., regular employees and casual employees, for purposes of determining the right of an employee to certain benefits, to join or form a union, or to security of tenure; it does not apply where the existence of an employment relationship is in dispute.[24] It is, therefore, erroneous on the part of the Court of Appeals to rely on Article 280 in determining whether an employer-employee relationship exists between respondent and the petitioner Considering that there is no employer-employee relationship between the parties, the termination of respondent's services by the petitioner after due notice did not constitute illegal dismissal warranting his reinstatement and the payment of full backwages, allowances and other benefits.

MARTICIO SEMBLANTE and DUBRICK PILAR, Petitioners,

G.R. No. 196426

Present:

- versus -

CARPIO,* J. VELASCO, JR., Chairperson, BRION,**

COURT OF APPEALS, 19THDIVISION, now SPECIAL FORMER 19TH DIVISION, GALLERA DE MANDAUE / SPOUSES VICENTE and MARIA LUISA LOOT, Respondents.

PERALTA, and SERENO,*** JJ.

Promulgated:

August 15, 2011 Topic: Basic Principles

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

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

On November 14, 2003, however, petitioners were denied entry into the cockpit upon the instructions of respondents, and were informed of the termination of their services effective that date. This prompted petitioners to file a complaint for illegal dismissal against respondents.

Issue:

existence of employer-employee relationship

Ruling:

Petitioners are NOT employees of respondents, since their relationship fails to pass muster the four-fold test of employment We have repeatedly mentioned in countless decisions: (1) the selection and engagement of the employee; (2) the payment of wages; (3) the power of dismissal; and (4) the power to control the employees conduct, which is the most important element.[18]

As found by both the NLRC and the CA, respondents had no part in petitioners selection and management;[19] petitioners compensation was paid out of the arriba(which is a percentage deducted from the total bets), not by petitioners; [20] and petitioners performed their functions as masiador and sentenciador free from the direction and control of respondents.[21] In the conduct of their work, petitioners relied mainly on their expertise that is characteristic of the cockfight gambling,[22] and were never given by respondents any tool needed for the performance of their work.[23]

The CA held:

Petitioners are duly licensed masiador and sentenciador in the cockpit owned by Lucia Loot. Cockfighting, which is a part of our cultural heritage, has a peculiar set of rules. It is a game based on the fighting ability of the game cocks in the cockpit. The referees and bet-takers need to have that kind of expertise that is characteristic of the cockfight gambling who can interpret the message conveyed even by mere gestures. They ought to have the talent and skill to get the bets from numerous cockfighting aficionados and decide which cockerel to put in the arena. They are placed in that elite spot where they can control the game and the crowd. They are not given salaries by cockpit owners as their compensation is based on the arriba. In fact, they can offer their services everywhere because they are duly licensed by the GAB. They are free to choose which cockpit arena to enter and offer their expertise. Private respondents cannot even control over the means and methods of the manner by which they perform their work. In this light, they are akin to independent contractors who possess unique skills, expertise and talent to distinguish them from ordinary employees.

Furthermore, private respondents did not supply petitioners with the tools and instrumentalities they needed to perform their work. Petitioners only needed their talent and skills to be a masiador and sentenciador. As such, they had all the tools they needed to perform their work.

Respondents, not being petitioners employers, could never have dismissed, legally or illegally, petitioners, since respondents were without power or prerogative to do so in the first place.

TOPIC 1: BASIC PRINCIPLES JOSE MEL BERNARTE vs. PHILIPPINE BASKETBALL ASSOC, ET. AL, 192084, September 14, 2011 G.R. No.

FACTS: Complainants (Jose Mel Bernarte and Renato Guevarra) aver that they were invited to join the PBA as referees. During the leadership of Commissioner Emilio Bernardino, they were made to sign contracts on a year-to-year basis. During the term of Commissioner Eala, however, changes were made on the terms of their employment. Complainant Bernarte, for instance, was not made to sign a contract during the first conference of the All-Filipino Cup which was from February 23, 2003 to June 2003. It was only during the second conference when he was made to sign a one and a half month contract for the period July 1 to August 5, 2003. On January 15, 2004, Bernarte received a letter from the Office of the Commissioner advising him that his contract would not be renewed citing his unsatisfactory performance on and off the court. It was a total shock for Bernarte who was awarded Referee of the year in 2003. He felt that the dismissal was caused by his refusal to fix a game upon order of Ernie De Leon. On the other hand, complainant Guevarra alleges that he was invited to join the PBA pool of referees in February 2001. On March 1, 2001, he signed a contract as trainee. Beginning 2002, he signed a yearly contract as Regular Class C referee. On May 6, 2003, respondent Martinez issued a memorandum to Guevarra expressing dissatisfaction over his questioning on the assignment of referees officiating out-of-town games. Beginning February 2004, he was no longer made to sign a contract. Respondents aver, on the other hand, that Complainants were not illegally dismissed because they were not employees of the PBA. Their respective contracts of retainer were simply not renewed. PBA had the prerogative of whether or not to renew their contracts, which they knew were fixed.4 ISSUE: whether petitioner is an employee of respondents, which in turn determines whether petitioner was illegally dismissed. RULING: The existence of an employer-employee relationship is ultimately a question of fact. As a general rule, factual issues are beyond the province of this Court. However, this rule admits of exceptions, one of which is where there are conflicting findings of fact between the Court of Appeals, on one hand, and the NLRC and Labor Arbiter, on the other, such as in the present case.18 To determine the existence of an employer-employee relationship, case law has consistently applied the four-fold test, to wit: (a) the selection and engagement of the

employee; (b) the payment of wages; (c) the power of dismissal; and (d) the employers power to control the employee on the means and methods by which the work is accomplished. The so-called control test is the most important indicator of the presence or absence of an employer-employee relationship.19 In this case, PBA admits repeatedly engaging petitioners services, as shown in the retainer contracts. PBA pays petitioner a retainer fee, exclusive of per diem or allowances, as stipulated in the retainer contract. PBA can terminate the retainer contract for petitioners violation of its terms and conditions. However, respondents (PBA) argue that the all-important element of control is lacking in this case, making petitioner an independent contractor and not an employee of respondents. Petitioner contends otherwise. Petitioner asserts that he is an employee of respondents since the latter exercise control over the performance of his work. Petitioner cites the following stipulations in the retainer contract which evidence control: (1) respondents classify or rate a referee; (2) respondents require referees to attend all basketball games organized or authorized by the PBA, at least one hour before the start of the first game of each day; (3) respondents assign petitioner to officiate ballgames, or to act as alternate referee or substitute; (4) referee agrees to observe and comply with all the requirements of the PBA governing the conduct of the referees whether on or off the court; (5) referee agrees (a) to keep himself in good physical, mental, and emotional condition during the life of the contract; (b) to give always his best effort and service, and loyalty to the PBA, and not to officiate as referee in any basketball game outside of the PBA, without written prior consent of the Commissioner; (c) always to conduct himself on and off the court according to the highest standards of honesty or morality; and (6) imposition of various sanctions for violation of the terms and conditions of the contract. The foregoing stipulations hardly demonstrate control over the means and methods by which petitioner performs his work as a referee officiating a PBA basketball game. The contractual stipulations do not pertain to, much less dictate, how and when petitioner will blow the whistle and make calls. On the contrary, they merely serve as rules of conduct or guidelines in order to maintain the integrity of the professional basketball league. As correctly observed by the Court of Appeals, how could a skilled referee perform his job without blowing a whistle and making calls? x x x [H]ow can the PBA control the performance of work of a referee without controlling his acts of blowing the whistle and making calls?20 In Sonza v. ABS-CBN Broadcasting Corporation,21 which determined the relationship between a television and radio station and one of its talents, the Court held that not all rules imposed by the hiring party on the hired party indicate that the latter is an employee of the former. The Court held: We find that these general rules are merely guidelines towards the achievement of the mutually desired result, which are top-rating television and radio programs that comply with standards of the industry. We have ruled that: Further, not every form of control that a party reserves to himself over the conduct of the other party in relation to the services being rendered may be accorded the effect of establishing an employer-employee relationship. The facts of this case fall squarely with the case of Insular Life Assurance Co., Ltd. v. NLRC. In said case, we held that: Logically, the line should be drawn between rules that merely serve as guidelines towards the achievement of the mutually desired result without dictating the means

or methods to be employed in attaining it, and those that control or fix the methodology and bind or restrict the party hired to the use of such means. The first, which aim only to promote the result, create no employer-employee relationship unlike the second, which address both the result and the means used to achieve it.22 We agree with respondents that once in the playing court, the referees exercise their own independent judgment, based on the rules of the game, as to when and how a call or decision is to be made. The referees decide whether an infraction was committed, and the PBA cannot overrule them once the decision is made on the playing court. The referees are the only, absolute, and final authority on the playing court. Respondents or any of the PBA officers cannot and do not determine which calls to make or not to make and cannot control the referee when he blows the whistle because such authority exclusively belongs to the referees. The very nature of petitioners job of officiating a professional basketball game undoubtedly calls for freedom of control by respondents. Moreover, the following circumstances indicate that petitioner is an independent contractor: (1) the referees are required to report for work only when PBA games are scheduled, which is three times a week spread over an average of only 105 playing days a year, and they officiate games at an average of two hours per game; and (2) the only deductions from the fees received by the referees are withholding taxes. In other words, unlike regular employees who ordinarily report for work eight hours per day for five days a week, petitioner is required to report for work only when PBA games are scheduled or three times a week at two hours per game. In addition, there are no deductions for contributions to the Social Security System, Philhealth or Pag-Ibig, which are the usual deductions from employees salaries. These undisputed circumstances buttress the fact that petitioner is an independent contractor, and not an employee of respondents. Furthermore, the applicable foreign case law declares that a referee is an independent contractor, whose special skills and independent judgment are required specifically for such position and cannot possibly be controlled by the hiring party. In Yonan v. United States Soccer Federation, Inc.,23 the United States District Court of Illinois held that plaintiff, a soccer referee, is an independent contractor, and not an employee of defendant which is the statutory body that governs soccer in the United States. As such, plaintiff was not entitled to protection by the Age Discrimination in Employment Act. The U.S. District Court ruled: Generally, if an employer has the right to control and direct the work of an individual, not only as to the result to be achieved, but also as to details by which the result is achieved, an employer/employee relationship is likely to exist. The Court must be careful to distinguish between control[ling] the conduct of another party contracting party by setting out in detail his obligations consistent with the freedom of contract, on the one hand, and the discretionary control an employer daily exercises over its employees conduct on the other. Yonan asserts that the Federation closely supervised his performance at each soccer game he officiated by giving him an assessor, discussing his performance, and controlling what clothes he wore while on the field and traveling. Putting aside that the Federation did not, for the most part, control what clothes he wore, the Federation did not supervise Yonan, but rather evaluated his performance after matches. That the Federation evaluated Yonan as a referee does not mean that he

was an employee. There is no question that parties retaining independent contractors may judge the performance of those contractors to determine if the contractual relationship should continue. x x x It is undisputed that the Federation did not control the way Yonan refereed his games. He had full discretion and authority, under the Laws of the Game, to call the game as he saw fit. x x x In a similar vein, subjecting Yonan to qualification standards and procedures like the Federations registration and training requirements does not create an employer/employee relationship. x x x A position that requires special skills and independent judgment weights in favor of independent contractor status. x x x Unskilled work, on the other hand, suggests an employment relationship. x x xHere, it is undisputed that soccer refereeing, especially at the professional and international level, requires a great deal of skill and natural ability. Yonan asserts that it was the Federations training that made him a top referee, and that suggests he was an employee. Though substantial training supports an employment inference, that inference is dulled significantly or negated when the putative employers activity is the result of a statutory requirement, not the employers choice. x x x In McInturff v. Battle Ground Academy of Franklin,24 it was held that the umpire was not an agent of the Tennessee Secondary School Athletic Association (TSSAA), so the players vicarious liability claim against the association should be dismissed. In finding that the umpire is an independent contractor, the Court of Appeals of Tennesse ruled: The TSSAA deals with umpires to achieve a result-uniform rules for all baseball games played between TSSAA member schools. The TSSAA does not supervise regular season games. It does not tell an official how to conduct the game beyond the framework established by the rules. The TSSAA does not, in the vernacular of the case law, control the means and method by which the umpires work. In addition, the fact that PBA repeatedly hired petitioner does not by itself prove that petitioner is an employee of the former. For a hired party to be considered an employee, the hiring party must have control over the means and methods by which the hired party is to perform his work, which is absent in this case. The continuous rehiring by PBA of petitioner simply signifies the renewal of the contract between PBA and petitioner, and highlights the satisfactory services rendered by petitioner warranting such contract renewal. Conversely, if PBA decides to discontinue petitioners services at the end of the term fixed in the contract, whether for unsatisfactory services, or violation of the terms and conditions of the contract, or for whatever other reason, the same merely results in the non-renewal of the contract, as in the present case. The non-renewal of the contract between the parties does not constitute illegal dismissal of petitioner by respondents. WHEREFORE, we DENY the petition and AFFIRM the assailed decision of the Court of Appeals.

Wage Enforcement and Recovery

TOPIC 6: WAGE ENFORECEMENT AND RECOVERY PEOPLEs BROADCASTING vs. SEC OF DOLE, GR 179652, May 8, 2009

FACTS: A complaint was filed by Jandeleon Juezan (respondent) against Peoples Broadcasting Service, Inc. (Bombo Radyo Phils., Inc) (petitioner) for illegal deduction, nonpayment of service incentive leave, 13th month pay, premium pay for holiday and rest day and illegal diminution of benefits, delayed payment of wages and non-coverage of SSS, PAG-IBIG and Philhealth before DOLE. On the basis of the complaint, the DOLE conducted a plant level inspection on 23 September 2003. In the Inspection Report Form,[3] the Labor Inspector wrote under the heading Findings/Recommendations non-diminution of benefits and Note: Respondent deny employer-employee relationship with the complainant- see Notice of Inspection results. In the Notice of Inspection Results[4] also bearing the date 23 September 2003, the Labor Inspector made the following notations: Management representative informed that complainant is a drama talent hired on a per drama participation basis hence no employeremployeeship [sic] existed between them. As proof of this, management presented photocopies of cash vouchers, billing statement, employments of specific undertaking (a contract between the talent director & the complainant), summary of billing of drama production etc. They (mgt.) has [sic] not control of the talent if he ventures into another contract w/ other broadcasting industries. On the other hand, complainant Juezans alleged violation of nondiminution of benefits is computed as follows: @ P 2,000/15 days + 1.5 mos = P 6,000 (August 1/03 to Sept 15/03) Note: Recommend for summary investigation or whatever action deem proper.[5] Petitioner was required to rectify/restitute the violations within five (5) days from receipt. No rectification was effected by petitioner; thus, summary investigations were conducted, with the parties eventually ordered to submit their respective position papers.[6] ISSUES: was there Employer-employee relationship? does the Secretary of Labor have the power to determine the existence of an employer-employee relationship? What is the jurisdiction of DOLE? RULING: To resolve this pivotal issue, one must look into the extent of the visitorial and enforcement power of the DOLE found in Article 128 (b) of the Labor Code, as amended by Republic Act 7730. It reads: Article 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 still 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 representative shall issue writs of execution to the appropriate authority for the enforcement of their orders, except in cases where the employer contests the findings of the labor employment and enforcement officer and raises issues supported by

documentary proofs which were not considered in the course of inspection. (emphasis supplied) xxx The provision is quite explicit that the visitorial and enforcement power of the DOLE comes into play only in cases when the relationship of employer-employee still exists. It also underscores the avowed objective underlying the grant of power to the DOLE which is to give effect to the labor standard provision of this Code and other labor legislation. Of course, a persons entitlement to labor standard benefits under the labor laws presupposes the existence of employer-employee relationship in the first place. The clause in cases where the relationship of employer-employee still exists signifies that the employer-employee relationship must have existed even before the emergence of the controversy. Necessarily, the DOLEs power does not apply in two instances, namely: (a) where the employer-employee relationship has ceased; and (b) where no such relationship has ever existed. The first situation is categorically covered by Sec. 3, Rule 11 of the Rules on the Disposition of Labor Standards Cases[15] issued by the DOLE Secretary. It reads: Rule II MONEY CLAIMS ARISING FROM INSPECTION COMPLAINT/ROUTINE

Sec. 3. Complaints where no employer-employee relationship actually exists. Where employer-employee relationship no longer exists by reason of the fact that it has already been severed, claims for payment of monetary benefits fall within the exclusive and original jurisdiction of the labor arbiters. Accordingly, if on the face of the complaint, it can be ascertained that employer-employee relationship no longer exists, the case, whether accompanied by an allegation of illegal dismissal, shall immediately be endorsed by the Regional Director to the appropriate branch of the National Labor Relations Commission (NLRC). In the recent case of Bay Haven, Inc. v. Abuan,[16] this Court recognized the first situation and accordingly ruled that a complainants allegation of his illegal dismissal had deprived the DOLE of jurisdiction as per Article 217 of the Labor Code.[17] In the first situation, the claim has to be referred to the NLRC because it is the NLRC which has jurisdiction in view of the termination of the employer-employee relationship. The same procedure has to be followed in the second situation since it is the NLRC that has jurisdiction in view of the absence of employer-employee relationship between the evidentiary parties from the start. Clearly the law accords a prerogative to the NLRC over the claim when the employeremployee relationship has terminated or such relationship has not arisen at all. The reason is obvious. In the second situation especially, the existence of an employer-employee relationship is a matter which is not easily determinable from an ordinary inspection, necessarily so, because the elements of such a relationship are not verifiable from a mere ocular examination. The intricacies and implications of an employer-employee relationship demand that the level of scrutiny should be far above the cursory and the mechanical. While documents, particularly documents found in the employers office

are the primary source materials, what may prove decisive are factors related to the history of the employers business operations, its current state as well as accepted contemporary practices in the industry. More often than not, the question of employeremployee relationship becomes a battle of evidence, the determination of which should be comprehensive and intensive and therefore best left to the specialized quasi-judicial body that is the NLRC. It can be assumed that the DOLE in the exercise of its visitorial and enforcement power somehow has to make a determination of the existence of an employer-employee relationship. Such prerogatival determination, however, cannot be coextensive with the visitorial and enforcement power itself. Indeed, such determination is merely preliminary, incidental and collateral to the DOLEs primary function of enforcing labor standards provisions. The determination of the existence of employer-employee relationship is still primarily lodged with the NLRC. This is the meaning of the clause in cases where the relationship of employer-employee still exists in Art. 128 (b). Thus, before the DOLE may exercise its powers under Article 128, two important questions must be resolved: (1) Does the employer-employee relationship still exist, or alternatively, was there ever an employer-employee relationship to speak of; and (2) Are there violations of the Labor Code or of any labor law? The existence of an employer-employee relationship is a statutory prerequisite to and a limitation on the power of the Secretary of Labor, one which the legislative branch is entitled to impose. The rationale underlying this limitation is to eliminate the prospect of competing conclusions of the Secretary of Labor and the NLRC, on a matter fraught with questions of fact and law, which is best resolved by the quasijudicial body, which is the NRLC, rather than an administrative official of the executive branch of the government A reading of Art. 128 of the Labor Code reveals that the Secretary of Labor or his authorized representatives was granted visitorial and enforcement powers for the purpose of determining violations of, and enforcing, the Labor Code and any labor law, wage order, or rules and regulations issued pursuant thereto. Necessarily, the actual existence of an employer-employee relationship affects the complexion of the putative findings that the Secretary of Labor may determine, since employees are entitled to a different set of rights under the Labor Code from the employer as opposed to non-employees. Among these differentiated rights are those accorded by the labor standards provisions of the Labor Code, which the Secretary of Labor is mandated to enforce. If there is no employeremployee relationship in the first place, the duty of the employer to adhere to those labor standards with respect to the non-employees is questionable. This decision should not be considered as placing an undue burden on the Secretary of Labor in the exercise of visitorial and enforcement powers, nor seen as an unprecedented diminution of the same, but rather a recognition of the statutory limitations thereon. A mere assertion of absence of employer-employee relationship does not deprive the DOLE of jurisdiction over the claim under Article 128 of the Labor Code. At least a prima facie showing of such absence of relationship, as in this case, is needed to preclude the DOLE from the exercise of its power. The Secretary of Labor would not have been precluded from exercising the powers under Article 128 (b) over petitioner if another person with better-grounded claim of employment than that which respondent had. Respondent, especially if he were an employee, could have very well enjoined other employees to

complain with the DOLE, and, at the same time, petitioner could ill-afford to disclaim an employment relationship with all of the people under its aegis. Without a doubt, petitioner, since the inception of this case had been consistent in maintaining that respondent is not its employee. Certainly, a preliminary determination, based on the evidence offered, and noted by the Labor Inspector during the inspection as well as submitted during the proceedings before the Regional Director puts in genuine doubt the existence of employer-employee relationship. From that point on, the prudent recourse on the part of the DOLE should have been to refer respondent to the NLRC for the proper dispensation of his claims. Furthermore, as discussed earlier, even the evidence relied on by the Regional Director in his order are mere self-serving declarations of respondent (Juezan), and hence cannot be relied upon as proof of employer-employee relationship. xxx In the instant case, save for respondents self-serving allegations and self-defeating evidence, there is no substantial basis to warrant the Regional Directors finding that respondent is an employee of petitioner. xxxx Although substantial evidence is not a function of quantity but rather of quality, the peculiar environmental circumstances of the instant case demand that something more should have been proffered.[33] Had there been other proofs of employment, such as respondents inclusion in petitioners payroll, or a clear exercise of control, the Court would have affirmed the finding of employer-employee relationship. The Regional Director, therefore, committed grievous error in ordering petitioner to answer for respondents claims. Moreover, with the conclusion that no employer-employee relationship has ever existed between petitioner and respondent, it is crystal-clear that the DOLE Regional Director had no jurisdiction over respondents complaint. Thus, the improvident exercise of power by the Secretary of Labor and the Regional Director behooves the court to subject their actions for review and to invalidate all the subsequent orders they issued. xxx The complaint against petitioner is DISMISSED.
CASE TITLE: Jethro Intelligence & Security Corp. vs Sec. of DOLE FACTS: Petitioner Jethro Intelligence and Security Corporation (Jethro) is a security service contractor with a security service contract agreement with co-petitioner Yakult Phils., Inc. (Yakult). On the basis of a complaint filed 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 DOLE Regional office conducted an inspection at Yakults premises 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. Hearings on Garcias complaint and on the subsequent complaints of his co-respondents Gil Cordero et al. were conducted during which Jethro submitted copies of payrolls covering June 16 to 30, 2003, February to May 16-31, 2004, June 16-30, 2003, and February 1-15, 2004. Jethro failed to submit daily time records of the claimants from 2002 to June 2004, however, despite the order for it to do so. By Order, 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 an amount 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. Petitioners were also ordered to submit proof of payment to the claimants within ten calendar days, failing which the entire award would be doubled, pursuant to Republic Act No. 8188, and the corresponding writs of execution and garnishment would be issued.

Jethro appealed to the SOLE. SOLE partially granted petitioner Jethros appeal by affirming with modification the Regional Directors Order by deleting the penalty of double indemnity and setting aside the writs of execution and garnishment, without prejudice to the subsequent issuance by the Regional Director of the writs necessary to implement the said Decision. Petitioners attribute 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 Yakults premises as its office is in Quezon City, hence, the inspection conducted in Yakults plant had no basis; and (3) having filed the required bond equivalent to the judgment award, and as the Regional Directors Order was not served on their counsel of record, the writs of execution and garnishment subsequently issued were not in order. ISSUE: WON the DOLE RD and the SOLE committed grave abuse of discretion. HELD: NO, they did not commit grave abuse of discretion. The scope of the visitorial powers of the SOLE and his/her duly authorized representatives was clarified in Allied Investigation Bureau, Inc. v. Secretary of Labor and Employment, viz: 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 of the Labor Code (as amended by R.A. No. 7730) thus: Art. 128. Visitorial and enforcement power. x x x x (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] xxxx The aforequoted [Art. 128] explicitly excludes from its coverage Articles 129 and 217 of the Labor Code by the phrase "(N)otwithstanding the provisions of Articles 129 and 217 of this Code to the contrary xxx" thereby retaining and further strengthening 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.13 (Emphasis and underscoring supplied.) In Ex-Bataan Veterans Security Agency, Inc. v. Laguesma case, the Court went on to hold that: x x x if the labor standards case is covered by the exception clause in Article 128(b) of the Labor Code, then the Regional Director will have to endorse the case to the appropriate Arbitration Branch of the NLRC. In order to divest the Regional Director or his representatives of jurisdiction, the following elements must be present: (a) that the employer contests the findings of the labor regulations officer and raises issues therein; (b) that in order to resolve such issues, there is a need to examine evidentiary matters; and (c) that such matters are not verifiable in the normal course of inspection. The rules also provide that the employer shall raise such objections during the hearing of the case or at any time after receipt of the notice of inspection results. In the case at bar, the Secretary of Labor correctly assumed jurisdiction over the case as it does not come under the exception clause in Art. 128(b) of the Labor Code. While petitioner Jethro appealed the inspection results and there is a need to examine evidentiary matters to resolve the issues raised, the payrolls presented by it were considered in the ordinary course of inspection. While the employment records of the employees could not be expected to be found in Yakults premises in Calamba, as Jethros 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. Moreover, respecting the fact that Jethros first counsel of record, Atty. Benjamin Rabuco III, was not furnished a copy of the Order of the Director, the SOLE noted in her assailed Decision that since Atty. Thaddeus Venturanza formally entered his appearance as Jethros new counsel on appeal and an appeal was indeed filed and duly verified by Jethros owner/manager, for all practical purposes, the failure to furnish Atty. Rabuco a copy of the said Order had been rendered moot. For, on account of such lapse, the SOLE deleted the double indemnity award and held that the writs issued in implementation of the Order were null and void, "without prejudice to the subsequent issuance by the Regional Director of the writs necessary to implement" the SOLE Decision. Thus, the DOLE-Regional Office subsequently issued the following Orders: Order holding in abeyance the release of the amount equivalent to the judgment award out of Yakult accounts pending the receipt of the supersedeas bond; and Order ordering the immediate release of the garnished amount. It bears emphasis that the SOLE, under Article 106 of the Labor Code, as amended, exercises quasijudicial power, at least to the extent necessary to determine violations of labor standards provisions of the Code and other labor legislation. He/she or the Regional Directors can issue compliance orders and writs of execution for the enforcement thereof. The significance of and binding effect of the compliance orders of the DOLE Secretary is enunciated in Article 128 of the Labor Code, as amended, viz: ART. 128. Visitorial and enforcement power. xxxx (d) It shall be unlawful for any person or entity to obstruct, impede, delay or otherwise render ineffective the orders of the Secretary of Labor or his duly authorized representatives issued

pursuant to the authority granted under this article, and no inferior court or entity shall issue temporary or permanent injunction or restraining order or otherwise assume jurisdiction over any case involving the enforcement orders issued in accordance with this article. And Sec. 5, Rule V (Execution) of the Rules on Disposition of Labor Standards Cases in Regional Offices provides that the filing of a petition for certiorari shall not stay the execution of the appealed order or decision, unless the aggrieved party secures a temporary restraining order (TRO) from the Court. In the case at bar, no TRO or injunction was issued, hence, the issuance of the questioned writs of execution and garnishment by the DOLE-Regional Director was in order.

CASE TITLE: PHILIPPINE HOTELIERS, INC., DUSIT HOTEL NIKKO-MANILA vs.NATIONAL UNION OF WORKERS IN HOTEL, RESTAURANT, AND ALLIED INDUSTRIES (NUWHRAIN-APL-IUF)- DUSIT HOTEL NIKKO CHAPTER FACTS: WO No. 9, approved by the Regional Tripartite Wages and Productivity Board (RTWPB) of the National Capital Region (NCR), took effect on 5 November 2001. It grants P30.00 ECOLA to particular employees and workers of all private sectors: Amount of ECOLA P15.00 P15.00 Effectivity 5 November 2001 1 February 2002

Respondent National Union of Workers in Hotel, Restaurant and Allied Industries-Dusit Hotel Nikko Chapter (Union), through its President, Reynaldo C. Rasing (Rasing), sent a letter to Director Alex Maraan (Dir. Maraan) of the Department of Labor and Employment-National Capital Region (DOLENCR), reporting the non-compliance of Dusit Hotel with WO No. 9, while there was an on-going compulsory arbitration before the National Labor Relations Commission (NLRC) due to a bargaining deadlock between the Union and Dusit Hotel. Acting on Rasings letters, the DOLE-NCR sent Labor Standards Officer Estrellita Natividad (LSO Natividad) to conduct an inspection of Dusit Hotel premises. Accordingly, the DOLE-NCR issued a Notice of Inspection Result directing Dusit Hotel to effect restitution and/or correction of the noted violations within five days from receipt of the Notice, and to submit any question on the findings of the labor inspector within the same period, otherwise, an order of compliance would be issued. In the meantime, the NLRC rendered a Decision the compulsory arbitration involving the Collective Bargaining Agreement (CBA) deadlock between Dusit Hotel and the Union granting the hotel employees the following wage increases, in accord with the CBA: Effective January 1, 2001- P500.00/month Effective January 1, 2002- P550.00/month Effective January 1, 2003- P600.00/month

Thereafter, DOLE-NCR, through Dir. Maraan, issued the Order directing Dusit Hotel to pay 144 of its employees the total amount corresponding to their unpaid ECOLA under WO No. 9; plus, the penalty of double indemnity, pursuant to Section 12 of Republic Act No. 6727, as amended by Republic Act No. 8188. Dusit Hotel filed a Motion for Reconsideration of the DOLE-NCR Order arguing that the NLRC Decision resolving the bargaining deadlock between Dusit Hotel and the Union, and awarding salary increases under the CBA to hotel employees retroactive to 1 January 2001, already rendered the DOLE-NCR Order moot and academic. With the increase in the salaries of the hotel employees ordered by the NLRC Decision of 9 October 2002, along with the hotel employees share in the service charges, the 144 hotel employees, covered by the DOLE-NCR Order of 22 October 2002, would already be receiving salaries beyond the coverage of WO No. 9. The wage increase granted by the NLRC in the latters Decision dated 9 October 2002 retroacted to 1 January 2001. The said wage increase, taken together with the hotel employees share in the service charges of Dusit Hotel, already constituted compliance with the WO No. 9. ISSUE: Whether the 144 hotel employees were still entitled to ECOLA granted by WO No. 9 despite the increases in their salaries, retroactive to 1 January 2001, ordered by NLRC in the latters Decision dated 9 October 2002. HELD: WO No. 9 very plainly stated that only private sector workers and employees in the NCR receiving daily wage rates of P250.00 to P290.00 shall be entitled to ECOLA. Necessarily, private sector workers and employees receiving daily wages of more than P290.00 were no longer entitled to ECOLA. The ECOLA was to be implemented in two tranches: P15.00/day beginning 5 November 2001; and the full amount of P30.00/day beginning 1 February 2002. WO No. 9 took effect on 5 November 2001. The Decision rendered by the NLRC on 9 October 2002 ordered Dusit Hotel to grant its employees salary increases retroactive to 1 January 2001 and 1 January 2002. In determining which of its employees were entitled to ECOLA, Dusit Hotel used as bases the daily salaries of its employees, inclusive of the retroactive salary increases. The Union protested and insisted that the bases for the determination of entitlement to ECOLA should be the hotel employees daily salaries, exclusive of the retroactive salary increases. According to the Union, Dusit Hotel cannot credit the salary increases as compliance with WO No. 9. Much of the confusion in this case arises from the insistence of the Union to apply Section 13 of WO No. 9, which states: Section 13. Wage increases/allowances granted by an employer in an organized establishment with three (3) months prior to the effectivity of this Order shall be credited as compliance with the prescribed increase set forth herein, provided the corresponding bargaining agreement provision allowing creditability exists. In the absence of such an agreement or provision in the CBA, any increase granted by the employer shall not be credited as compliance with the increase prescribed in this Order. In unorganized establishments, wage increases/allowances granted by the employer within three (3) months prior to the effectivity of this Order shall be credited as compliance therewith. In case the increases given are less than the prescribed adjustment, the employer shall pay the difference. Such increases shall not include anniversary increases, merit wage increases and those resulting from the regularization or promotion of employees. The Union harps on the fact that its CBA with Dusit Hotel does not contain any provision on creditability, thus, Dusit Hotel cannot credit the salary increases as compliance with the ECOLA

required to be paid under WO No. 9.1avvphi1 The reliance of the Union on Section 13 of WO No. 9 in this case is misplaced. Dusit Hotel is not contending creditability of the hotel employees salary increases as compliance with the ECOLA mandated by WO No. 9. Creditability means that Dusit Hotel would have been allowed to pay its employees the salary increases in place of the ECOLA required by WO No. 9. This, however, is not what Dusit Hotel is after. The position of Dusit Hotel is merely that the salary increases should be taken into account in determining the employees entitlement to ECOLA. The retroactive increases could raise the hotel employees daily salary rates above P290.00, consequently, placing said employees beyond the coverage of WO No. 9. Evidently, Section 13 of WO No. 9 on creditability is irrelevant and inapplicable herein. The Court agrees with Dusit Hotel that the increased salaries of the employees should be used as bases for determining whether they were entitled to ECOLA under WO No. 9. The very fact that the NLRC decreed that the salary increases of the Dusit Hotel employees shall be retroactive to 1 January 2001 and 1 January 2002, means that said employees were already supposed to receive the said salary increases beginning on these dates. The increased salaries were the rightful salaries of the hotel employees by 1 January 2001, then again by 1 January 2002. Although belatedly paid, the hotel employees still received their salary increases. It is only fair and just, therefore, that in determining entitlement of the hotel employees to ECOLA, their increased salaries by 1 January 2001 and 1 January 2002 shall be made the bases. There is no logic in recognizing the salary increases for one purpose (i.e., to recover the unpaid amounts thereof) but not for the other (i.e., to determine entitlement to ECOLA). For the Court to rule otherwise would be to sanction unjust enrichment on the part of the hotel employees, who would be receiving increases in their salaries, which would place them beyond the coverage of Section 1 of WO No. 9, yet still be paid ECOLA under the very same provision. The NLRC, in its Decision dated 9 October 2002, directed Dusit Hotel to increase the salaries of its employees by P500.00 per month, retroactive to 1 January 2001. After applying the said salary increase, only 82 hotel employees29 would have had daily salary rates falling within the range of P250.00 to P290.00. Thus, upon the effectivity of WO No. 9 on 5 November 2001, only the said 82 employees were entitled to receive the first tranch of ECOLA, equivalent to P15.00 per day. The NLRC Decision dated 9 October 2002 also ordered Dusit Hotel to effect a second round of increase in its employees salaries, equivalent to P550.00 per month, retroactive to 1 January 2002. As a result of this increase, the daily salary rates of all hotel employees were already above P290.00. Consequently, by 1 January 2002, no more hotel employee was qualified to receive ECOLA. Given that 82 hotel employees were entitled to receive the first tranch of ECOLA from 5 November 2001 to 31 December 2001, the Court must address the assertion of Dusit Hotel that the receipt by said hotel employees of their shares in the service charges already constituted substantial compliance with the prescribed payment of ECOLA under WO No. 9. The Court rules in the negative. It must be noted that the hotel employees have a right to their share in the service charges collected by Dusit Hotel, pursuant to Article 96 of the Labor Code of 1991, to wit: Article 96. Service charges. All service charges collected by hotels, restaurants and similar establishments shall be distributed at the rate of eighty-five percent (85%) for all covered employees and fifteen percent (15%) for management. The share of employees shall be

equally distributed among them. In case the service charge is abolished, the share of the covered employees shall be considered integrated in their wages. Since Dusit Hotel is explicitly mandated by the afore-quoted statutory provision to pay its employees and management their respective shares in the service charges collected, the hotel cannot claim that payment thereof to its 82 employees constitute substantial compliance with the payment of ECOLA under WO No. 9. Undoubtedly, the hotel employees right to their shares in the service charges collected by Dusit Hotel is distinct and separate from their right to ECOLA; gratification by the hotel of one does not result in the satisfaction of the other. The Court, however, finds no basis to hold Dusit Hotel liable for double indemnity. Under Section 2(m) of DOLE Department Order No. 10, Series of 1998, the Notice of Inspection Result "shall specify the violations discovered, if any, together with the officers recommendation and computation of the unpaid benefits due each worker with an advice that the employer shall be liable for double indemnity in case of refusal or failure to correct the violation within five calendar days from receipt of notice." A careful review of the Notice of Inspection Result issued herein by the DOLE-NCR to Dusit Hotel, reveals that the said Notice did not contain such an advice. Although the Notice directed Dusit Hotel to correct its noted violations within five days from receipt thereof, it was not sufficiently apprised that failure to do so within the given period would already result in its liability for double indemnity. The lack of advice deprived Dusit Hotel of the opportunity to decide and act accordingly within the five-day period, as to avoid the penalty of double indemnity. By 22 October 2002, the DOLE-NCR, through Dir. Maraan, already issued its Order directing Dusit Hotel to pay 144 of its employees the total amount corresponding to their unpaid ECOLA under WO No. 9; plus the penalty of double indemnity, pursuant to Section 12 of Republic Act No. 6727, as amended by Republic Act No. 8188. Although the Court is mindful of the fact that labor embraces individuals with a weaker and unlettered position as against capital, it is equally mindful of the protection that the law accords to capital. While the Constitution is committed to the policy of social justice and the protection of the working class, it should not be supposed that every labor dispute will be automatically decided in favor of labor. Management also has its own rights which, as such, are entitled to respect and enforcement in the interest of simple fair play. In sum, the Court holds that the retroactive salary increases should be taken into account in the determination of which hotel employees were entitled to ECOLA under WO No. 9. After applying the salary increases retroactive to 1 January 2001, 82 hotel employees still had daily salary rates between P250.00 and P290.00, thus, entitling them to receive the first tranch of ECOLA, equivalent to P15.00 per day, beginning 5 November 2001, the date of effectivity of WO No. 9, until 31 December 2001. Following the second round of salary increases retroactive to 1 January 2002, all the hotel employees were already receiving daily salary rates above P290.00, hence, leaving no one qualified to receive ECOLA. Receipt by the 82 hotel employees of their shares from the service charges collected by Dusit Hotel shall not be deemed payment of their ECOLA from 5 November 2001 to 31 December 2001.

Tiger Construction and Development Corp. (TCDC) vs Abay, et. al (GR No. 164141, Feb. 26,2010) Facts: Reynaldo Abay and other 51 employees filed a complaint to the Regional Office of the Department of Labor and Employment (DOLE).DOLE officials conducted an inspection at the premises of petitioner TCDC. Several labor standard violations were noted, such as deficiencies in record keeping, non-compliance with various wage orders, non-payment of holiday pay, and underpayment of 13th month pay. The case was then set for summary hearing.

Before the hearing could take place, the Director of Regional Office No. V, Ma. Glenda A. Manalo (Director Manalo), issued an Order on July 25, 2002, referring the case to NLRC on the ground that the aggregate money claim of each worker exceeds the jurisdictional amount which is P5,000.00. Before the NLRC could take any action, DOLE Secretary Sto. Tomas, in an apparent reversal of Director Manalos endorsement, issued another inspection authority on August 2, 2002 in the same case. Pursuant to such authority, DOLE officials conducted another investigation of petitioners premises and the same violations were discovered. Then DOLE officials issued a Notice of Inspection Results to petitioner directing it to rectify the violations within five days from notice. For failure to comply with the directive, the case was set for summary hearing on August 19, 2002. On even date, petitioner allegedly questioned the inspectors findings and argued that the proceedings before the regional office had been rendered moot by the issuance of the July 25, 2002 Order endorsing the case to the NLRC. According to petitioner, this July 25, 2002 Order was tantamount to a dismissal on the ground of lack of jurisdiction, which dismissal had attained finality; hence, all proceedings before the DOLE regional office after July 25, 2002 were null and void for want of jurisdiction. On September 30, 2002, Director Manalo issued an Order directing TCDC to pay P2,123,235.90 to its employees representing underpayment of salaries, 13th month pay, and underpayment of service incentive leave pay and regular holiday pay. TCDC filed a Motion for Reconsideration reiterating the argument that Director Manalo had lost jurisdiction over the matter. However Director Manalo again endorsed the case to the NLRC. But the NLRC returned the entire records of the case to Director Manalo on the ground that the NLRC does not have jurisdiction over the complaint. Finally, Manalo denied TCDCs MR for lack of merit. TCDC did not interpose an appeal within the prescribed period, so Director Manalo issued a Writ of Execution on February 12, 2003. While the sheriff was in the process of enforcing the Writ of Execution, and more than three months after the denial of its motion for reconsideration, TCDC filed an admittedly belated appeal with the DOLE Secretary. There it reiterated its argument that, subsequent to the July 25, 2002 Order, all of Director Manalos actions concerning the case are null and void for having been issued without jurisdiction.

Sec. Sto Tomas acted on the appeal but dismissed it for lack of merit. TCDC appealed to the CA but CA dismissed the case for failure to properly sign the Certification of non-forum shopping, the person who signed does not have authority to sign in behalf of the company. Issue: The issue in the case is whether petitioner can still assail the January 29, 2003 Order of Director Manalo allegedly on the ground of lack of jurisdiction, after said Order has attained finality and is already in the execution stage. Ruling: The petition lacks merit. Petitioner admits that it failed to appeal the January 29, 2003 Order within the period prescribed by law. It likewise admits that the case was already in the execution process when it resorted to a belated appeal to the DOLE Secretary. Petitioner, however, excuses itself from the effects of the finality of the Order by arguing that it was allegedly issued without jurisdiction and may be assailed at any time. While it is true that orders issued without jurisdiction are considered null and void and, as a general rule, may be assailed at any time, the fact of the matter is that in this case, Director Manalo acted within her jurisdiction. Under Article 128 (b) of the Labor Code, as amended by Republic Act (RA) No. 7730, the DOLE Secretary and her representatives, the regional directors, have jurisdiction over labor standards violations based on findings made in the course of inspection of an employers premises. The said jurisdiction is not affected by the amount of claim involved, as RA 7730 had effectively removed the jurisdictional limitations found in Articles 129 and 217 of the Labor Code insofar as inspection cases, pursuant to the visitorial and enforcement powers of the DOLE Secretary, are concerned. The last sentence of Article 128(b) of the Labor Code recognizes an exception to the jurisdiction of the DOLE Secretary and her representatives, but such exception is neither an issue nor applicable here. Director Manalos initial endorsement of the case to the NLRC, on the mistaken opinion that the claim was within the latters jurisdiction, did not oust or deprive her of jurisdiction over the case. She therefore retained the jurisdiction to decide the case when it was eventually returned to her office by the DOLE Secretary. Jurisdiction or authority to try a certain case is conferred by law and not by the interested parties, much less by one of them, and should be

exercised precisely by the person in authority or body in whose hands it has been placed by the law. We also cannot accept petitioners theory that Director Manalos initial endorsement of the case to the NLRC served as a dismissal of the case, which prevented her from subsequently assuming jurisdiction over the same. The said endorsement was evidently not meant as a final disposition of the case; it was a mere referral to another agency, the NLRC, on the mistaken belief that jurisdiction was lodged with the latter. It cannot preclude the regional director from subsequently deciding the case after the mistake was rectified and the case was returned to her by the DOLE Secretary, particularly since it was a labor case where procedural lapses may be disregarded in the interest of substantial justice. Procedural due process as understood in administrative proceedings follows a more flexible standard as long as the proceedings were undertaken in an atmosphere of fairness and justice. Although Director Manalos endorsement of the complaint to the NLRC turned out to be ill-advised (because the regional director actually had jurisdiction), we note that no right of the parties was prejudiced by such action. Petitioner was properly investigated, received a Notice of Inspection Results, participated fully in the summary hearings, filed a Motion for Reconsideration, and even a Supplemental Pleading to the Motion for Reconsideration. There is also reason to doubt the good faith of petitioner in raising the alleged lack of jurisdiction. If, in all honesty and earnestness, petitioner believed that Director Manalo was acting without jurisdiction, it could have filed a petition for certiorari under Rule 65 within the proper period prescribed, which is 60 days from notice of the order. Its failure to do so, without any explanation for such failure, belies its good faith. In such circumstances, it becomes apparent that petitioner is merely using the alleged lack of jurisdiction in a belated attempt to reverse or modify an order or judgment that had already become final and executory. This cannot be done. 5. Aquinas School vs. Sps. Inton, et.al (GR No. 184202, Jan. 26, 2011) Facts: Jose Luis, a grade 3 student of Aquinas school and son of Sps. Inton misbehaved during a religion class taught by Sister Yamyamin. Jose Luis left his assigned seat and went over to a classmate to play a joke of surprising him. Yamyamin noticed this and sent Jose Luis back to his seat. After a while, Jose Luis got up again and went over to the same classmate. This time, unable to tolerate the childs behavior, Yamyamin approached Jose Luis and kicked him on the legs several times. She also pulled and shoved his head on the classmates seat. Finally, she told the child to stay where he was on that spot of the room and finish copying the notes on the blackboard while seated on the floor.

Sps. Inton filed a case for damages against the school and the nun and a criminal case against the nun. Victoria, the mother, also sought for personal damages/ her own moral damages. RTC held Yamyamin liable for the damages prayed except Victorias claim for moral damages. Not satisfied, the Intons elevated the case to the Court of Appeals (CA).[2] They asked the CA to increase the award of damages and hold Aquinas solidarily liable with Yamyamin. Finding that an employer-employee relation existed between Aquinas and Yamyamin, the CA found them solidarily liable to Jose Luis. The CA, however, declined to increase the award of damages.[3] Jose Luis moved for partial reconsideration but this was denied. Aquinas, for its part, appealed directly to this Court from the CA decision through a petition for review on certiorari. Issue: Whether or not the CA was correct in holding Aquinas solidarily liable with Yamyamin for the damages awarded to Jose Luis.

Ruling: The CA found Aquinas liable to Jose Luis based on Article 2180 of the Civil Code upon the CAs belief that the school was Yamyamins employer. Aquinas contests this. The Court has consistently applied the four-fold test to determine the existence of an employer-employee relationship: the employer (a) selects and engages the employee; (b) pays his wages; (c) has power to dismiss him; and (d) has control over his work. Of these, the most crucial is the element of control. Control refers to the right of the employer, whether actually exercised or reserved, to control the work of the employee as well as the means and methods by which he accomplishes the same.[4] In this case, the school directress testified that Aquinas had an agreement with a congregation of sisters under which, in order to fulfill its ministry, the congregation would send religion teachers to Aquinas to provide catechesis to its students. Aquinas insists that it was not the school but Yamyamins religious congregation that chose her for the task of catechizing the schools grade three students, much like the way bishops designate the catechists who would teach religion in public schools. Under the circumstances, it was quite evident that Aquinas did not have control over Yamyamins teaching methods. The Intons had not refuted the school

directress testimony in this regard. Consequently, it was error for the CA to hold Aquinas solidarily liable with Yamyamin. Of course, Aquinas still had the responsibility of taking steps to ensure that only qualified outside catechists are allowed to teach its young students. In this regard, it cannot be said that Aquinas took no steps to avoid the occurrence of improper conduct towards the students by their religion teacher. First, Yamyamins transcript of records, certificates, and diplomas showed that she was qualified to teach religion. Second, there is no question that Aquinas ascertained that Yamyamin came from a legitimate religious congregation of sisters and that, given her Christian training, the school had reason to assume that she would behave properly towards the students. Third, the school gave Yamyamin a copy of the schools Administrative Faculty Staff Manual that set the standards for handling students. It also required her to attend a teaching orientation before she was allowed to teach beginning that June of 1998.[5] Fourth, the school pre-approved the content of the course she was to teach[6] to ensure that she was really catechizing the students. And fifth, the school had a program for subjecting Yamyamin to classroom evaluation. Unfortunately, since she was new and it was just the start of the school year, Aquinas did not have sufficient opportunity to observe her methods. At any rate, it acted promptly to relieve her of her assignment as soon as the school learned of the incident.[8] It cannot be said that Aquinas was guilty of outright neglect.
[7]

RIMO E. CAONG, JR., ALEXANDER J. TRESQUIO, and LORIANO D. DALUYON, Petitioners- versus AVELINO REGUALOS,Respondent. Digested by: George

G.R. No. 179428 January 26, 2011

Topic: Wage Enforcement and Recovery ***Despite my best efforts, I could not find an issue squarely on wage enforcement and recovery*** Nickname: Sa loob ng Jeepney

Is the policy of suspending drivers pending payment of arrears in their boundary obligations reasonable? Facts: Petitioners Primo E. Caong, Jr. (Caong), Alexander J. Tresquio (Tresquio), and Loriano D. Daluyon (Daluyon) were employed by respondent Avelino Regualos under a boundary agreement, as drivers of his jeepneys. In November 2001, they filed separate complaints1[2] for illegal dismissal against respondent who barred them from driving the vehicles due to deficiencies in their boundary payments. Caong was hired by respondent in September 1998 and became a permanent driver sometime in 2000. Tresquio was employed by respondent as driver in August 1996. He became a permanent driver in 1997. On the other hand, Daluyon started working for respondent in March 1998. He became a permanent driver in July 1998. During the mandatory conference, respondent manifested that petitioners were not dismissed and that they could drive his jeepneys once they paid their arrears. Petitioners, however, refused to do so. Petitioners Argument: Petitioners averred that they were illegally dismissed by respondent without just cause. They maintained that respondent did not comply with due process requirements before terminating their employment, as they were not furnished notice apprising them of their infractions and another informing them of their dismissal. Petitioners questioned respondents policy of automatically dismissing the drivers who fail to remit the full amount of the boundary as it allegedly (a) violates their right to due process; (b) does not constitute a just cause for dismissal; (c) disregards the reality that there are days when they could not raise the full amount of the boundary because of the scarcity of passengers. Respondents Argument: In his Position Paper, respondent alleged that petitioners were lessees of his vehicles and not his employees; hence, the Labor Arbiter had no jurisdiction. He claimed that he noticed that some of his lessees, including petitioners, were not fully paying the daily rental of his jeepneys. In a list which he attached to the Position Paper, it was shown that petitioners had actually incurred arrears since they started working. The list showed that Caongs total arrears amounted to P10,315.00, that of Tresquio was P10,760.00, while that of Daluyon was P6,890.00. He made inquiries and discovered that his lessees contracted loans with third parties and used the income of the jeepneys in

paying the loans. Thus, on November 4, 2001, he gathered all the lessees in a meeting and informed them that, effective November 5, 2001, those who would fail to fully pay the daily rental would not be allowed to rent a jeepney on the following day. He explained to them that the jeepneys were acquired on installment basis, and that he was paying the monthly amortizations through the lease income. Most of the lessees allegedly accepted the condition and paid their arrears. Petitioners, however, did not settle their arrears. Worse, their remittances were again short of the required boundary fee. Respondent stressed that, during the mandatory conference, he manifested that he would renew his lease with petitioners if they would pay the arrears they incurred during the said dates. The labor arbiter, the NLRC and the CA ruled that there was an employer employee relationship, but no termination and thus ruled in favor of RESPONDENT. ISSUE: Is the act of preventing the drivers from driving the jeepneys pending payment of their arrears legal? Ruling: (The SC heavily quoted the CA being in agreement with its decision) On the existence of ER-EE relationship: It is already settled that the relationship between jeepney owners/operators and jeepney drivers under the boundary system is that of employer-employee and not of lessorlessee. The fact that the drivers do not receive fixed wages but only get the amount in excess of the so-called boundary that they pay to the owner/operator is not sufficient to negate the relationship between them as employer and employee. On whether or not there was termination: The employer-employee relationship of the parties has not been severed, but merely suspended when respondent refused to allow petitioners to drive the jeepneys while there were unpaid boundary obligations. The fact that it was within the power of petitioners to return to work is proof that there was no termination of employment. The condition that petitioners should first pay their arrears only for the period of November 5-9, 2001 before they can be readmitted to work is neither impossible nor unreasonable if their total unpaid boundary obligations and the need to sustain the financial viability of the employers enterprisewhich would ultimately redound to the benefit of the employeesare taken into consideration.

As it was, the suspension dragged on for years because of petitioners stubborn refusal to pay. It would have been different if petitioners complied with the condition and respondent still refused to readmit them to work. Then there would have been a clear act of dismissal. But such was not the case. Instead of paying, petitioners even filed a complaint for illegal dismissal against respondent. On due process: Petitioners were not denied the right to due process. It pointed out that the case does not involve a termination of employment; hence, the strict application of the twinnotice rule is not warranted. What is important is that petitioners were given the opportunity to be heard. The meeting conducted by respondent on November 4, 2001 served as sufficient notice to petitioners. During the said meeting, respondent informed his employees, including petitioners, to strictly comply with the policy regarding remittances and warned them that they would not be allowed to take out the jeepneys if they did not remit the full amount of the boundary. Demonstrating their obstinacy, petitioners, on the days immediately following the implementation of the policy, incurred deficiencies in their boundary remittances. It is acknowledged that an employer has free rein and enjoys a wide latitude of discretion to regulate all aspects of employment, including the prerogative to instill discipline on his employees and to impose penalties, including dismissal, if warranted, upon erring employees. This is a management prerogative. Indeed, the manner in which management discretion. conducts its own affairs to achieve its purpose is within the managements The only limitation on the exercise of management prerogative is that the

policies, rules, and regulations on work-related activities of the employees must always be fair and reasonable, and the corresponding penalties, when prescribed, commensurate to the offense involved and to the degree of the infraction. On the argument that the the policy is unsound as it does not consider the times when passengers are scarce and the drivers are not able to raise the amount of the boundary: Petitioners concern relates to the implementation of the policy, which is another matter. A company policy must be implemented in such manner as will accord social justice and compassion to the employee. In case of noncompliance with the company policy, the employer must consider the surrounding circumstances and the reasons why the employee

failed to comply. When the circumstances merit the relaxation of the application of the policy, then its noncompliance must be excused. In the present case, petitioners merely alleged that there were only few passengers during the dates in question. Such excuse is not acceptable without any proof or, at least, an explanation as to why passengers were scarce at that time. It is simply a bare allegation, not worthy of belief. We also find the excuse unbelievable considering that petitioners incurred the shortages on separate days, and it appears that only petitioners failed to remit the full boundary payment on said dates. Under a boundary scheme, the driver remits the boundary, which is a fixed amount, to the owner/operator and gets to earn the amount in excess thereof. Thus, on a day when there are many passengers along the route, it is the driver who actually benefits from it. It would be unfair then if, during the times when passengers are scarce, the owner/operator will be made to suffer by not getting the full amount of the boundary. Unless clearly shown or explained by an event that irregularly and negatively affected the usual number of passengers within the route, the scarcity of passengers should not excuse the driver from paying the full amount of the boundary. [G.R. No. 172161, March 02, 2011] SLL INTERNATIONAL CABLES SPECIALIST AND SONNY L. LAGON, PETITIONERS, VS. NATIONAL LABOR RELATIONS COMMISSION, 4TH DIVISION, ROLDAN LOPEZ, EDGARDO ZUIGA AND DANILO CAETE, RESPONDENTS. Topic: Wage enforcement and recovery Digested by: George Facts: Sometime in 1996, and January 1997, private respondents Roldan Lopez (Lopez for brevity) and Danilo Caete (Caete for brevity), and Edgardo Zuiga (Zuiga for brevity) respectively, were hired by petitioner Lagon as apprentice or trainee cable/lineman. The three were paid the full minimum wage and other benefits but since they were only trainees, they did not report for work regularly but came in as substitutes to the regular workers or in undertakings that needed extra workers to expedite completion of work. After their training, Zuiga, Caete and Lopez were engaged as project employees by the petitioners in their Islacom project in Bohol, Antipolo Rizal project, Bulacan, Camarin, Caloocan City . All this time they were paid less than the minimum wage. For reasons of delay on the delivery of imported materials from Furukawa Corporation, the

Camarin project was not completed on the scheduled date of completion. Face[d] with economic problem[s], Lagon was constrained to cut down the overtime work of its worker[s] [,] including private respondents. Thus, when requested by private respondents on February 28, 2000 to work overtime, Lagon refused and told private respondents that if they insist, they would have to go home at their own expense and that they would not be given anymore time nor allowed to stay in the quarters. This prompted private respondents to leave their work and went home to Cebu. On March 3, 2000, private respondents filed a complaint for illegal dismissal, non-payment of wages, holiday pay, 13th month pay for 1997 and 1998 and service incentive leave pay as well as damages and attorney's fees. In their answers, petitioners admit employment of private respondents but claimed that the latter were only project employees[,] for their services were merely engaged for a specific project or undertaking and the same were covered by contracts duly signed by private respondents. Petitioners further alleged that the food allowance of P63.00 per day as well as private respondents allowance for lodging house, transportation, electricity, water and snacks allowance should be added to their basic pay. With these, petitioners claimed that private respondents received higher wage rate than that prescribed in Rizal and Manila. Issue: Whether the Petitioners are liable for nonpayment of wages. Ruling: Petitioners reiterated their position that the value of the facilities that the private respondents enjoyed should be included in the computation of the "wages" received by them. They argued that the rulings in Agabon v. NLRC[14]and Glaxo Wellcome Philippines, Inc. v. Nagkakaisang Empleyado Ng Wellcome-DFA[15] should be applied by analogy, in the sense that the lack of written acceptance of the employees of the facilities enjoyed by them should not mean that the value of the facilities could not be included in the computation of the private respondents' "wages." After a thorough review of the records, however, the Court finds no merit in the petition. As a general rule, on payment of wages, a party who alleges payment as a defense has the burden of proving it.[17] Specifically with respect to labor cases, the burden of proving payment of monetary claims rests on the employer, the rationale being that the pertinent personnel files, payrolls, records, remittances and other similar documents -- which will show that overtime, differentials, service incentive leave and other claims of workers have been paid -- are not in the possession of the worker but in the custody and absolute control of the employer.[18] In this case, petitioners, aside from bare allegations that private respondents received wages higher than the prescribed minimum, failed to present any evidence, such as payroll or payslips, to support their defense of payment. Thus, petitioners utterly failed to discharge the onus probandi. Private respondents, on the other hand, are entitled to be paid the minimum wage, whether they are regular or non-regular employees. Section 3, Rule VII of the Rules to Implement the Labor Code[19] specifically enumerates those who are not covered by the payment of minimum wage. Project employees are not among them. On whether the value of the facilities should be included in the computation of the "wages" received by private respondents, Section 1 of DOLE Memorandum Circular No. 2 provides that an employer may provide subsidized meals and snacks to his employees provided that

the subsidy shall not be less that 30% of the fair and reasonable value of such facilities. In such cases, the employer may deduct from the wages of the employees not more than 70% of the value of the meals and snacks enjoyed by the latter, provided that such deduction is with the written authorization of the employees concerned. Moreover, before the value of facilities can be deducted from the employees' wages, the following requisites must all be attendant: first, proof must be shown that such facilities are customarily furnished by the trade; second, the provision of deductible facilities must be voluntarily accepted in writing by the employee; and finally, facilities must be charged at reasonable value.[20] Mere availment is not sufficient to allow deductions from employees' wages.[21] These requirements, however, have not been met in this case. SLL failed to present any company policy or guideline showing that provisions for meals and lodging were part of the employee's salaries. It also failed to provide proof of the employees' written authorization, much less show how they arrived at their valuations. At any rate, it is not even clear whether private respondents actually enjoyed said facilities. The Court, at this point, makes a distinction between "facilities" and "supplements." It is of the view that the food and lodging, or the electricity and water allegedly consumed by private respondents in this case were not facilities but supplements. In the case of Atok-Big Wedge Assn. v. Atok-Big Wedge Co.,[22] the two terms were distinguished from one another in this wise: "Supplements," therefore, constitute extra remuneration or special privileges or benefits given to or received by the laborers over and above their ordinary earnings or wages. "Facilities," on the other hand, are items of expense necessary for the laborer's and his family's existence and subsistence so that by express provision of law (Sec. 2[g]), they form part of the wage and when furnished by the employer are deductible therefrom, since if they are not so furnished, the laborer would spend and pay for them just the same. In short, the benefit or privilege given to the employee which constitutes an extra remuneration above and over his basic or ordinary earning or wage is supplement; and when said benefit or privilege is part of the laborers' basic wages, it is a facility. The distinction lies not so much in the kind of benefit or item (food, lodging, bonus or sick leave) given, but in the purpose for which it is given.[23] In the case at bench, the items provided were given freely by SLL for the purpose of maintaining the efficiency and health of its workers while they were working at their respective projects. For said reason, the cases of Agabon and Glaxo are inapplicable in this case. At any rate, these were cases of dismissal with just and authorized causes. The present case involves the matter of the failure of the petitioners to comply with the payment of the prescribed minimum wage.

7. WAGE PROTECTION PROVISIONS & PROHIBITIONS REGARDING WAGES

AGUANZA vs ASIAN TERMINAL INC

GR No. 163505 August, 14, 2009

Facts: Petitioner Gualberto Aguanza was employed with respondent company Asian Terminal, Inc. 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.

He was receiving basic salary and additional benefits, among others, an out of port allowance when the barge is assigned outside Manila.

Sometime thereafter, the Bismark IV, together with its crew, was temporarily assigned at the Mariveles Grains Terminal in Mariveles, Bataan.

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 allowance. [Aguanza], with four other members of the crew, stated that they did not object to the transfer of Bismark IV to Mariveles, Bataan, but they objected to the reduction of their benefits.

When they objected to the reduction of their benefits, they were told by James Keith to report to the Manila office only to be told to report back to Bataan. On both occasions, [Aguanza] was not given any work assignment. He was then constrained to write to management for clarification of his status, at the same time informing the latter of his willingness to work either in Manila or Bataan without prejudice to taking appropriate actions to protect his rights.

Because of private respondents refusal to give him any work assignment and pay his salary, [Aguanza] filed a complaint for illegal dismissal against respondents.

Issue: Whether the operation is a valid exercise of management prerogative; whether Aguanza was illegally dismissed; whether there was diminution of pay

Ruling: Transfer of Operations is a Valid Exercise of Management Prerogative

Aguanza asserts that his transfer constituted constructive dismissal, while ATI asserts that Aguanzas transfer was a valid exercise of management prerogative. We agree with ATI.

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."10

Aguanzas continued employment was not impossible, unreasonable or unlikely; neither was there a clear discrimination against him. X x x There was no demotion in rank, as Aguanza would continue his work as Crane Operator. Furthermore, despite Aguanzas assertions, there was no diminution in pay.

Xxx

We, thus, agree with the NLRC and the appellate court when they stated that the fixed overtime of 16 hours, out-of-port allowance and meal allowance previously granted to Aguanza were merely supplements or employment benefits given on condition that Aguanzas assignment was out-ofport. The fixed overtime and allowances were not part of Aguanzas basic salary. Aguanzas basic salary was not reduced; hence, there was no violation of the rule against diminution of pay.

KIMBERLY-CLARK PHILS vs DIMAYUGA

GR No. 177705 September 18, 2009

FACTS: Dimayuga was Cost Accounting Supervisor, Gloria was Business Analyst and de Guia was Accounting Managerof Kimberly-Clark. Dimayuga and Gloria resigned prior to Kimberly-Clarks offering of early retirement package.Both pleaded that its benefits be retroactively extended to them. De Guia also resigned. All were able tobenefit from the early retirement package.

Kimberly-Clark then announced a lump sum retirement pay subsequently. Dimayuga, Gloria and de Guia filed a claim for this additional benefit with the NLRC. A decisionwas made denying Dimayuga and Gloria of this additional benefit because they ceased to be employees when the lump sum retirement pay was offered by Kimberly-Clark. De Guias lump sum retirement pay was granted, however, being an employee of Kimberly-Clark when this benefit was offered.

Appeals were filed in NLRC,which affirmed Dimayuga, Gloria and de Guias claim to the lumps sum retirement pay, ruling that Kimberly-Clarks denial to grant Dimayuga and Glorias lump sum retirement pay was an act of discrimination. Kimberly-Clark appealed to the CA which affirmed

NLRCs decision. Kimberly-Clark appealed to the SC contending that Dimayuga and Gloria signed quitclaims that no longer entitles them to the additional benefits.

ISSUE: WON Dimayuga and Gloria are entitled to the lump sum retirement pay.

RULING: SC decided in favor of Kimberly-Clark on the basis of the absence of a CBA or contract entitling Dimayuga and Gloria to thelump sum retirement pay. Dimayuga and Gloria resigned prior to the offering of Kimberly-Clark. TheBusiness day doctrine of equal treatment of all employees is misplaced because it involved retrenchment and separation pay, while the case at bar involved resignation and a lump sum retirement pay. Kimberly-Clark was not even obliged to apply its early retirement package retroactively to Dimayuga and Gloria. The quitclaims signed by Dimayuga and Gloria were honored. As for de Guias lump sum retirement pay claim, it was denied because this claim was for employees resigning due to Kimberly-Clarks downsizing and not due to career advancement.

LEPANTO CERAMICS vs LEPANTO CERAMICS EMPLOYEES ASSOCIATION

GR No. 180866 March 2, 2010

FACTS: Petitioner Lepanto Ceramics, Inc., a corporation primarily in the business of manufacture, makes, buy and sell, on whole sale basis, tiles, marbles, mosaics and other similar products. Respondent Lepanto Ceramics Employees Association is the sole and exclusive bargaining agent in the establishment of petitioner.

In 1998, petitioner gave P3, 000.00 as bonus to its employees, members of the respondent Association. Subsequently, in September 1999, petitioner and respondent Association entered into a Collective Bargaining Agreement (CBA) which provides for, among others, the grant of a Christmas gift package/bonus to the members of the respondent Association.

In the succeeding years, 1999, 2000, 2001, petitioner gave bonuses in a form of a certificate which is equivalent to P3, 000.00. However, in 2002, petitioner gave only P600.00 as cash benefit. Respondent Association objected to the P600.00 cash benefit and argued that it was in violation of the CBA. Petitioner averred that the giving of extra compensation was based on the companys available resources for a given year and the workers are not entitled to a bonus if the company does not make profits. Unable to amicably settle the dispute, the case was referred to the Voluntary Arbitrator. The Voluntary Arbitrator rendered a decision, declaring that petitioner is bound to grant each of its workers a Christmas bonus of P3,000.00 for the reason that the bonus was given prior to the effectivity of the CBA between the parties and that the financial losses of the

company is not a sufficient reason to exempt it from granting the same. On appeal, the Court of Appeals affirmed the ruling of the Voluntary Arbitrator.

ISSUE: Is petitioner obliged to give a Christmas bonus to respondent Association?

RULING: Yes. Generally, a bonus is not a demandable and enforceable obligation. For a bonus to be enforceable, it must have been promised by the employer and expressly agreed upon by the parties. Given that the bonus in this case is integrated in the CBA, the same partakes the nature of a demandable obligation. Verily, by virtue of its incorporation in the CBA, the Christmas bonus due to respondent Association has become more than just an act of generosity on the part of the petitioner but a contractual obligation it has undertaken.

A reading of the provision of the CBA reveals that the same provides for the giving of a "Christmas gift package/bonus" without qualification. The said provision did not state that the Christmas package shall be made to depend on the petitioners financial standing. The records are also bereft of any showing that the petitioner made it clear during CBA negotiations that the bonus was dependent on any condition. Indeed, if the petitioner and respondent Association intended that the P3,000.00 bonus would be dependent on the company earnings, such intention should have been expressed in the CBA.

All given, business losses are a feeble ground for petitioner to repudiate its obligation under the CBA. The rule is settled that any benefit and supplement being enjoyed by the employees cannot be reduced, diminished, discontinued or eliminated by the employer. The principle of nondiminution of benefits is founded on the constitutional mandate to protect the rights of workers and to promote their welfare and to afford labor full protection.

GENESIS TRANSPORT SERVICE INC vs UNYON NG MALAYANG MANGGAGAWA NG GENESIS TRANSPORT

GR No. 182114 April 5, 2010

FACTS: Taroy worked as a driver for Genesis on commission basis at 9% of the gross revenue per trip. Taroy was, after due notice and hearing, terminated from employment after an accident where he was deemed to have been driving recklessly.

Taroy 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 Unyon ng Malayang Manggagawa ng Genesis Transport (the union) as complainant and add as grounds of his cause of action unfair labor practice, reimbursement of illegal deductions on tollgate fees, and payment of service incentive leave pay.

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 conductors earnings to thus result to double deduction.

ISSUE: WON the toll fee deductions from the gross revenue amounted to wage deduction in violation of Article 113 of the Labor Code.

RULING: YES.

Albeit the amounts representing tollgate fees were deducted from gross revenues and not directly from Taroys commissions, the labor tribunal and the appellate court correctly held that the withholding of those amounts reduced the amount from which Taroys 9% commission would be computed. Such a computation not only marks a change in the method of payment of wages, resulting in a diminution of Taroys wages in violation of Article 113 vis--vis Article 100 of the Labor Code, as amended. It need not be underlined that without Taroys written consent or authorization, the deduction is considered illegal.

Besides, the invocation of the rule on "company practice" is generally used with respect to the grant of additional benefits to employees, not on issues involving diminution of benefits.

CENTRAL AZUCARERA DE TARLAC vs CENTRAL AZUCARERA DE TARLAC LABOR UNION-NLU

GR No. 188949 July 26, 2010

FACTS:

Respondent is a legitimate labor organization which serves as the exclusive bargaining representative of petitioners rank-and-file employees. In compliance with P.D. No. 851, petitioner granted its employees the mandatory thirteenth (13th) - month pay since 1975. The formula used by petitioner in computing the 13th-month pay was: Total Basic Annual Salary divided by 12. Included in petitioners computation of the Total Basic Annual Salary were the following: basic monthly salary; first eight (8) hours overtime pay on Sunday and legal/special holiday; night premium pay; and vacation and sick leaves for each year. Throughout the years, petitioner used this computation until 2006. November 6, 2004, respondent staged a strike. During the pendency of the strike, petitioner declared a temporary cessation of operations. December 2005, all the striking union members were allowed to return to work. Subsequently, petitioner declared another temporary cessation of operations for the months of April and May 2006. The suspension of operation was lifted on June 2006, but the rank-and-file employees were allowed to report for work on a fifteen (15) day-per-month rotation basis that lasted until September 2006. In December 2006, petitioner gave the employees their 13th-month pay based on the employees total earnings during the year divided by 12. Respondent objected to this computation. It averred that petitioner did not adhere to the usual computation of the 13th-month pay. It claimed that the divisor should have been eight (8) instead of 12, because the employees worked for only 8 months in 2006. It likewise asserted that petitioner did not observe the company practice of giving its employees the guaranteed amount equivalent to their one month pay, in instances where the computed 13th-month pay was less than their basic monthly pay. Petitioner argues that there was an error in the computation of the 13th-month pay of its employees, an error that was discovered by the management when respondent raised a question concerning the computation of the employees13th-month pay for 2006. Petitioner insists that the length of time (almost 30 years) during which an employer has performed a certain act beneficial to the employees, does not prove that such an act was not done in error. It maintains that for the claim of mistake to be negated, there must be a clear showing that the employer had freely, voluntarily, and continuously performed the act, knowing that he is under no obligation to do so. Petitioner asserts that such voluntariness was absent in this case.

ISSUE: WON petitioner should adhere to its established practice of granting 13th month pay on the basis of gross annual basic which includes basic pay, premium pay for work in rest days and special holidays, night shift differential and paid vacation and sick leaves for each year.

RULING: YES.

The 13th-month pay mandated by (P.D.) 851 represents an additional income based on wage but not part of the wage. It is equivalent to one-twelfth (1/12) of the total basic salary earned by

an employee within a calendar year. All rank-and-file employees, regardless of their designation or employment status and irrespective of the method by which their wages are paid, are entitled to this benefit, provided that they have worked for at least one month during the calendar year. If the employee worked for only a portion of the year, the 13th-month pay is computed pro rata.

The IRR of P.D. No. 851, promulgated on December 22, 1975, defines 13th-month pay and basic salary as follows:

Sec. 2. Definition of certain terms. - As used in this issuance:

(a) "Thirteenth-month pay" shall mean one twelfth (1/12) of the basic salary of an employee within a calendar year;

(b) "Basic salary" shall include all remunerations or earnings paid by an employer to an employee for services rendered but may not include cost-of-living allowances granted pursuant to Presidential Decree No. 525 or Letter of Instructions No. 174, profit-sharing payments, and all allowances and monetary benefits which are not considered or integrated as part of the regular or basic salary of the employee at the time of the promulgation of the Decree on December 16, 1975.

On January 16, 1976, the Supplementary Rules and Regulations Implementing P.D. No. 851 was issued. The Supplementary Rules clarifies that overtime pay, earnings, and other remuneration that are not part of the basic salary shall not be included in the computation of the 13th-month pay.

On November 16, 1987, the Revised Guidelines on the Implementation of the 13th-Month Pay Law was issued. Significantly, under this Revised Guidelines, it was specifically stated that the minimum 13th-month pay required by law shall not be less than one-twelfth (1/12) of the total basic salary earned by an employee within a calendar year.

Furthermore, the term basic salary of an employee for the purpose of computing the 13thmonth pay was interpreted to include all remuneration or earnings paid by the employer for services rendered, but does not include allowances and monetary benefits which are not integrated as part of the regular or basic salary, such as the cash equivalent of unused vacation and sick leave credits, overtime, premium, night differential and holiday pay, and cost-of-living allowances. However, these salary-related benefits should be included as part of the basic salary in the computation of the 13th-month pay if, by individual or collective agreement, company practice or policy, the same are treated as part of the basic salary of the employees.

Based on the foregoing, it is clear that there could have no erroneous interpretation or application of what is included in the term basic salary for purposes of computing the 13thmonth pay of employees.

The practice of petitioner in giving 13th-month pay based on the employees gross annual earnings which included the basic monthly salary, premium pay for work on rest days and special holidays, night shift differential pay and holiday pay continued for almost thirty (30) years and has ripened into a company policy or practice which cannot be unilaterally withdrawn.

Article 100 of the Labor Code, otherwise known as the Non-Diminution Rule, mandates that benefits given to employees cannot be taken back or reduced unilaterally by the employer because the benefit has become part of the employment contract, written or unwritten. The rule against diminution of benefits applies if it is shown that the grant of the benefit is based on an express policy or has ripened into a practice over a long period of time and that the practice is consistent and deliberate. Nevertheless, the rule will not apply if the practice is due to error in the construction or application of a doubtful or difficult question of law. But even in cases of error, it should be shown that the correction is done soon after discovery of the error. Also, the voluntariness of the grant of the benefit was manifested by the number of years the employer had paid the benefit to its employees.

Furthermore, petitioner cannot use the argument that it is suffering from financial losses to claim exemption from the coverage of the law on 13th-month pay, or to spare it from its erroneous unilateral computation of the 13th-month pay of its employees. Under Section 7 of the Rules and Regulations Implementing P.D. No. 851, distressed employers shall qualify for exemption from the requirement of the Decree only upon prior authorization by the Secretary of Labor. In this case, no such prior authorization has been obtained by petitioner; thus, it is not entitled to claim such exemption.

SHS PERFORATED MATERIALS INC vs DIAZ

GR No. 185814 October 13, 2010

Facts: Petitioner SHS Perforated Materials, Inc. (SHS) is a start-up corporation organized and existing under the laws of the Republic of the Philippines and registered with the Philippine Economic Zone Authority. Petitioner Winfried Hartmannshenn, a German national, is its president, in which capacity he determines the administration and direction of the day-to-day business affairs of SHS. Petitioner Hinrich Johann Schumacher, also a German national, is the treasurer and one of the board of directors. As such, he is authorized to pay all bills, payrolls, and other just debts of SHS of whatever nature upon maturity. Shumacher is also the Executive Vice-President of the European Chamber of Commerce of the Philippines (ECCP) which is a separate entity from SHS. Both entities have an arrangement where ECCP handles the payroll requirements of SHS to simplify business

operations and minimize operational expenses. Thus, the wages of SHS employees are paid out by ECCP, through its Accounting Services Department headed by Juliet Taguiang.

In this case, the withholding of respondents salary does not fall under any of the circumstances provided under Article 113. Neither was it established with certainty that respondent did not work from November 16 to November 30, 2005. Hence, the Court agrees with LA and the CA that the unlawful withholding of respondents salary amounts to constructive dismissal.

Issue: Whether or not the withholding of respondents salary fall under any of the circumstances provided in Art. 113.

Ruling: Management prerogative refers to the right of an employer to regulate all aspects of employment, such as the freedom to prescribe work assignments, working methods, processes to be followed, regulation regarding transfer of employees, supervision of their work, lay-off and discipline, and dismissal and recall of work. Although management prerogative refers to the right to regulate all aspects of employment, it cannot be understood to include the right to temporarily withhold salary/wages without the consent of the employees. To sanction such an interpretation would be contrary to Article 116 of the Labor Code, which provides:

Art. 116. Withholding of wages and kickbacks prohibited. It shall be unlawful for any person, directly or indirectly, to withhold any amount from the wages of a worker or induce him to give up any part of his wages by force, stealth, intimidation, threat or by any other means whatsoever without the workers consent.

8. PAYMENT OF WAGES

9. CONDITIONS OF EMPLOYMENT

BISIG MANGGAGAWA SA TRYCO vs NLRC G.R. No. 151309, October 15, 2008

FACTS: Tryco Pharma Corporation (Tryco) is a manufacturer of veterinary medicines and its principal office is located in Caloocan City. Petitioners Joselito Lario, Vivencio Barte, Saturnino Egera and Simplicio Aya-ay are its regular employees, occupying the positions of helper, shipment helper and factory workers, respectively, assigned to the Production Department. They are members of Bisig Manggagawa sa Tryco (BMT), the exclusive bargaining representative of the rank-and-file employees.

Tryco and the petitioners signed separate Memorand[a] of Agreement2 (MOA), providing for a compressed workweek schedule to be implemented in the company effective May 20, 1996. The MOA was entered into pursuant to Department of Labor and Employment Department Order (D.O.) No. 21, Series of 1990, Guidelines on the Implementation of Compressed Workweek. As provided in the MOA, 8:00 a.m. to 6:12 p.m., from Monday to Friday, shall be considered as the regular working hours, and no overtime pay shall be due and payable to the employee for work rendered during those hours. The MOA specifically stated that the employee waives the right to claim overtime pay for work rendered after 5:00 p.m. until 6:12 p.m. from Monday to Friday considering that the compressed workweek schedule is adopted in lieu of the regular workweek schedule which also consists of 46 hours. However, should an employee be permitted or required to work beyond 6:12 p.m., such employee shall be entitled to overtime pay. Tryco informed the Bureau of Working Conditions of the Department of Labor and Employment of the implementation of a compressed workweek in the company.

ISSUE: Is the MOA, providing for a CWW schedule, enforceable as it is not contrary to law?

RULING: Yes, the MOA, providing for a CWW schedule, is enforceable as it is not contrary to law.

Finally, we do not agree with the petitioners' assertion that the MOA is not enforceable as it is contrary to law. The MOA is enforceable and binding against the petitioners. Where it is shown that the person making the waiver did so voluntarily, with full understanding of what he was doing, and the consideration for the quitclaim is credible and reasonable, the transaction must be recognized as a valid and binding undertaking.

D.O. No. 21 sanctions the waiver of overtime pay in consideration of the benefits that the employees will derive from the adoption of a compressed workweek scheme, thus:

The compressed workweek scheme was originally conceived for establishments wishing to save on energy costs, promote greater work efficiency and lower the rate of employee absenteeism, among others. Workers favor the scheme considering that it would mean savings on the increasing cost of transportation fares for at least one (1) day a week; savings on meal and snack expenses; longer weekends, or an additional 52 off-days a year, that can be devoted to rest, leisure, family responsibilities, studies and other personal matters, and that it will spare them for at least another

day in a week from certain inconveniences that are the normal incidents of employment, such as commuting to and from the workplace, travel time spent, exposure to dust and motor vehicle fumes, dressing up for work, etc. Thus, under this scheme, the generally observed workweek of six (6) days is shortened to five (5) days but prolonging the working hours from Monday to Friday without the employer being obliged for pay overtime premium compensation for work performed in excess of eight (8) hours on weekdays, in exchange for the benefits abovecited that will accrue to the employees.

Moreover, the adoption of a compressed workweek scheme in the company will help temper any inconvenience that will be caused the petitioners by their transfer to a farther workplace.

Notably, the MOA complied with the following conditions set by the DOLE, under D.O. No. 21, to protect the interest of the employees in the implementation of a compressed workweek scheme: 1. The employees voluntarily agree to work more than eight (8) hours a day the total in a week of which shall not exceed their normal weekly hours of work prior to adoption of the compressed workweek arrangement; 2. There will not be any diminution whatsoever in the weekly or monthly take-home pay and fringe benefits of the employees; 3. If an employee is permitted or required to work in excess of his normal weekly hours of work prior to the adoption of the compressed workweek scheme, all such excess hours shall be considered overtime work and shall be compensated in accordance with the provisions of the Labor Code or applicable Collective Bargaining Agreement (CBA); 4. Appropriate waivers with respect to overtime premium pay for work performed in excess of eight (8) hours a day may be devised by the parties to the agreement. 5. The effectivity and implementation of the new working time arrangement shall be by agreement of the parties.

WHEREFORE, the petition is DENIED.

PNCC SKYWAY TRAFFIC MANAGEMENT AND SECURITY DIVISION WORKERS ORGANIZATION v. PNCC SKYWAY CORPORATION
G.R. No. 171231, February 17, 2010

FACTS: Petitioner PNCC Skyway Corporation Traffic Management and Security Division Workers' Organization (PSTMSDWO) is a labor union duly registered with the Department of Labor and Employment (DOLE) while respondent PNCC Skyway Corporation is a corporation duly organized

and operating under and by virtue of the laws of the Philippines. Petitioner and respondent entered into a Collective Bargaining Agreement (CBA) incorporating the terms and conditions of their agreement which included vacation leave and expenses for security license provisions, as follows:

ARTICLE VIII VACATION LEAVE AND SICK LEAVE Section 1. Vacation Leave. [a] Regular Employees covered by the bargaining unit who have completed at least one [1] year of continuous service shall be entitled to vacation leave with pay depending on the length of service as follows: 1-9 years of service 10-15 years of service 16-20 years of service 21-25 years of service - 15 working days - 16 working days - 17 working days - 18 working days

26 and above years of service - 19 working days.

[b] The company shall schedule the vacation leave of employees during the year taking into consideration the request of preference of the employees.(emphasis supplied)

[c] Any unused vacation leave shall be converted to cash and shall be paid to the employees on the first week of December each year.

ARTICLE XXI Section 6. Security License All covered employees must possess a valid License [Security Guard License] issued by the Chief, Philippine National Police or his duly authorized representative, to perform his duties as security guard. All expenses of security guard in securing/renewing their licenses shall be for their personal account. Guards, securing/renewing their license must apply for a leave of absence and/or a change of schedule. Any guard who fails to renew his security guard license should be placed on forced leave until such time that he can present a renewed security license.

In a Memorandum dated December 29, 2003,[3] respondent's Head of the Traffic Management and Security Department (TMSD) published the scheduled vacation leave of its TMSD personnel for the year 2004. Thereafter, the Head of the TMSD issued a Memorandum[4] dated January 9, 2004 to all TMSD personnel. In the said memorandum, it was provided that:

SCHEDULED VACATION LEAVE WITH PAY.

The 17 days (15 days SVL plus 2-day-off) scheduled vacation leave (SVL) with pay for the year 2004 had been published for everyone to take a vacation with pay which will be our opportunity to enjoy quality time with our families and perform our other activities requiring our personal attention and supervision. Swapping of SVL schedule is allowed on a one-on-one basis by submitting a written request at least 30 days before the actual schedule of SVL duly signed by the concerned parties. However, the undersigned may consider the re-scheduling of the SVL upon the written request of concerned TMSD personnel at least 30 days before the scheduled SVL. Rescheduling will be evaluated taking into consideration the TMSDs operational requirement.

Petitioner objected to the implementation of the said memorandum. It insisted that the individual members of the union have the right to schedule their vacation leave. It opined that the unilateral scheduling of the employees' vacation leave was done to avoid the monetization of their vacation leave in December 2004. Petitioner also demanded that the expenses for the required inservice training of its member security guards, as a requirement for the renewal of their license, be shouldered by the respondent. However, the respondent did not accede to petitioner's demands and stood firm on its decision to schedule all the vacation leave of petitioner's members. Due to the disagreement between the parties, petitioner elevated the matter to the DOLE-NCMB for preventive mediation. For failure to settle the issue amicably, the parties agreed to submit the issue before the voluntary arbitrator.

The voluntary arbitrator issued a Decision in favor of the petitioners. Aggrieved, respondent filed a Petition for Certiorari with Prayer for Temporary Restraining Order and/or Writ of Preliminary Injunction with the CA, and rendered a Decision annulling and setting aside the decision and order of the voluntary arbitrator. The CA ruled that since the provisions of the CBA were clear, the voluntary arbitrator has no authority to interpret the same beyond what was expressly written.

ISSUES: 1.) Does the management of PNCC have the sole discretion to schedule the vacation leave of petitioner? 2.) Is the management liable for the in-service training of the security guards?

RULING: 1.) Yes, the management of PNCC has the sole discretion to schedule the vacation leave of petitioner.

As to the issue on vacation leaves, the same has no merit.

In the case at bar, the contested provision of the CBA is clear and unequivocal. Article VIII, Section 1 (b) of the CBA categorically provides that the scheduling of vacation leave shall be under the option of the employer. The preference requested by the employees is not controlling because respondent retains its power and prerogative to consider or to ignore said request.

Indeed, the multitude or scarcity of personnel manning the tollways should not rest upon the option of the employees, as the public using the skyway system should be assured of its safety, security and convenience.

Although the preferred vacation leave schedule of petitioner's members should be given priority, they cannot demand, as a matter of right, that their request be automatically granted by the respondent. If the petitioners were given the exclusive right to schedule their vacation leave then said right should have been incorporated in the CBA. In the absence of such right and in view of the mandatory provision in the CBA giving respondent the right to schedule the vacation leave of its employees, compliance therewith is mandated by law.

In the grant of vacation leave privileges to an employee, the employer is given the leeway to impose conditions on the entitlement to and commutation of the same, as the grant of vacation leave is not a standard of law, but a prerogative of management.[18] It is a mere concession or act of grace of the employer and not a matter of right on the part of the employee.[19] Thus, it is well within the power and authority of an employer to impose certain conditions, as it deems fit, on the grant of vacation leaves, such as having the option to schedule the same.

Along that line, since the grant of vacation leave is a prerogative of the employer, the latter can compel its employees to exhaust all their vacation leave credits. Of course, any vacation leave credits left unscheduled by the employer, or any scheduled vacation leave that was not enjoyed by the employee upon the employer's directive, due to exigencies of the service, must be converted to cash, as provided in the CBA. However, it is incorrect to award payment of the cash equivalent of vacation leaves that were already used and enjoyed by the employees. By directing the conversion to cash of all utilized and paid vacation leaves, the voluntary arbitrator has licensed unjust enrichment in favor of the petitioner and caused undue financial burden on the respondent. Evidently, the Court cannot tolerate this.

It would seem that petitioner's goal in relentlessly arguing that its members preferred vacation leave schedule should be given preference is not allowed to them to avail themselves of their respective vacation leave credits at all but, instead, to convert these into cash.

In Cuajo v. Chua Lo Tan,[20] We said that the purpose of a vacation leave is to afford a laborer a chance to get a much-needed rest to replenish his worn-out energy and acquire a new vitality to enable him to efficiently perform his duties, and not merely to give him additional salary and bounty.

Accordingly, the vacation leave privilege was not intended to serve as additional salary, but as a non-monetary benefit. To give the employees the option not to consume it with the aim of converting it to cash at the end of the year would defeat the very purpose of vacation leave.

2.) Yes, the management is liable for the in-service training of the security guards.

On this point, We find the petition meritorious.

In the present case, Article XXI, Section 6 of the CBA provides that All expenses of security guards in securing /renewing their licenses shall be for their personal account. A reading of the provision would reveal that it encompasses all possible expenses a security guard would pay or incur in order to secure or renew his license. In-service training is a requirement for the renewal of a security guards license.[24] Hence, following the aforementioned CBA provision, the expenses for the same must be on the personal account of the employee. However, the 1994 Revised Rules and Regulations Implementing Republic Act No. 5487 provides the following:

Section 17. Responsibility for Training and Progressive Development. It is the primary responsibility of all operators private security agency and company security forces to maintain and upgrade the standards of efficiency, discipline, performance and competence of their personnel. To attain this end, each duly licensed private security agency and company security force shall establish a staff position for training and appoint a training officer whose primary functions are to determine the training needs of the agency/guards in relation to the needs of the client/ market/ industry, and to supervise and conduct appropriate training requirements. All private security personnel shall be re-trained at least once very two years.

Section 12. In service training. - a. To maintain and/or upgrade the standard of efficiency, discipline and competence of security guards and detectives, company security force and private security agencies upon prior authority shall conduct-in-service training at least two (2) weeks duration for their organic members by increments of at least two percent (2%) of their total strength. Where the quality of training is better served by centralization, the CSFD Directors may activate a training staff from local talents to assist. The cost of training shall be pro-rated among the participating agencies/private companies. All security officer must undergo in-service training at least once every two (2) years preferably two months before his or her birth month.

Since it is the primary responsibility of operators of company security forces to maintain and upgrade the standards of efficiency, discipline, performance and competence of their personnel, it follows that the expenses to be incurred therein shall be for the personal account of the company. Further, the intent of the law to impose upon the employer the obligation to pay for the cost of its employees training is manifested in the aforementioned laws provision that Where the quality of training is better served by centralization, the CFSD Directors may activate a training staff from

local talents to assist. The cost of training shall be pro-rated among the participating agencies/private companies. It can be gleaned from the said provision that cost of training shall be pro-rated among participating agencies and companies if the training is best served by centralization. The law mandates pro-rating of expenses because it would be impracticable and unfair to impose the burden of expenses suffered by all participants on only one participating agency or company. Thus, it follows that if there is no centralization, there can be no pro-rating, and the company that has its own security forces shall shoulder the entire cost for such training. If the intent of the law were to impose upon individual employees the cost of training, the provision on the pro-rating of expenses would not have found print in the law.

Further, petitioner alleged that prior to the inking of the CBA, it was the respondent company providing for the in-service training of the guards.[25] Respondent never controverted the said allegation and is thus deemed to have admitted the same.[26] Implicit from respondent's actuations was its acknowledgment of its legally mandated responsibility to shoulder the expenses for in-service training.

WHEREFORE, the petition is PARTIALLY GRANTED.

10. MINIMUM LABOR STANDARDS

PNCC SKYWAY TRAFFIC MANAGEMENT AND SECURITY DIVISION WORKERS ORGANIZATION v. PNCC SKYWAY CORPORATION
G.R. No. 171231, February 17, 2010

Facts: PSTMSDWO is a labor union duly registered with the DOLE. PNCC Skyway Corporation (PNCC) is a corporation duly organized and operating under and by virtue of the laws of the Philippines. PSTMSDWO and PNCC entered into a Collective Bargaining Agreement (CBA) incorporating the terms and conditions of their agreement which included vacation leave and expenses for security license provisions. The agreement provided that the company shall schedule the vacation leave of employees during the year taking into consideration the request of preference of the employees. As regards the security license, it was stipulated that all covered employees must possess a valid Security Guard License issued by the Chief, Philippine National Police or his duly authorized representative, to perform his duties as security guard and that all expenses in securing/renewing their licenses shall be for the employees personal account. In a memorandum to its employees, PNCC encouraged its employees to use up their leave credits as they were targeting a zero conversion at the end of the year. PSTMSDWO objected to the implementation of the said memorandum. It insisted that the individual members of the union have the right to schedule their vacation leave. It opined that the

unilateral scheduling of the employees' vacation leave was done to avoid the monetization of their vacation leave. It also demanded that the expenses for the required in-service training of its member security guards, as a requirement for the renewal of their license, be shouldered by PNCC. However, PNCC did not accede to PSTMSDWOs demands. Issues: 1. Whether the right to schedule the vacation leave belongs to PNCC or PSTMSDWO 2. Whether or not PNCC should shoulder the expenses for the required in-service training of its employees Ruling: 1. Whether the right to schedule the vacation leave belongs to PNCC or PSTMSDWO SC held that by virtue of the CBA, the right to schedule the vacation leave was given to PNCC. The rule is that where the language of a contract is plain and unambiguous, its meaning should be determined without reference to extrinsic facts or aids. The intention of the parties must be gathered from that language, and from that language alone. Stated differently, where the language of a written contract is clear and unambiguous, the contract must be taken to mean that which, on its face, it purports to mean, unless some good reason can be assigned to show that the words used should be understood in a different sense. In the case at bar, the contested provision of the CBA is clear and unequivocal. Article VIII, Section 1 (b) of the CBA categorically provides that the scheduling of vacation leave shall be under the option of the employer. The preference requested by the employees is not controlling because respondent retains its power and prerogative to consider or to ignore said request. It must be noted the grant to management of the right to schedule vacation leaves is not without good reason. Indeed, if union members were given the unilateral discretion to schedule their vacation leaves, the same may result in significantly crippling the number of key employees of the petitioner manning the toll ways on holidays and other peak seasons, where union members may wittingly or unwittingly choose to have a vacation. Put another way, the grant to management of the right to schedule vacation leaves ensures that there would always be enough people manning and servicing the toll ways, which in turn assures the public plying the same orderly and efficient toll way service. In the grant of vacation leave privileges to an employee, the employer is given the leeway to impose conditions on the entitlement to and commutation of the same, as the grant of vacation leave is not a standard of law, but a prerogative of management. It is a mere concession or act of grace of the employer and not a matter of right on the part of the employee. Thus, it is well within the power and authority of an employer to impose certain conditions, as it deems fit, on the grant of vacation leaves, such as having the option to schedule the same. Along that line, since the grant of vacation leave is a prerogative of the employer, the latter can compel its employees to exhaust all their vacation leave credits. Of course, any vacation leave credits left unscheduled by the employer, or any scheduled vacation leave that was not enjoyed by the employee upon the employer's directive, due to exigencies of the service, must be converted to cash, as provided in the CBA. Purpose of vacation leave: In Cuajo v. Chua Lo Tan, We said that the purpose of a vacation leave is to afford a laborer a chance to get a much-needed rest to replenish his worn-out energy and acquire a new vitality to enable him to efficiently perform his duties, and not merely to give him additional salary and bounty. 2. Whether or not PNCC should shoulder the expenses for the required in-service training of its employees

SC held that the expenses should be shouldered by PNCC.

Although it is a rule that a contract freely entered into between the parties should be respected, since a contract is the law between the parties, there are, however, certain exceptions to the rule, specifically Article 1306 of the Civil Code, which provides: The contracting parties may establish such stipulations, clauses, terms and conditions as they may deem convenient, provided they are not contrary to law, morals, good customs, public order, or public policy. Moreover, the relations between capital and labor are not merely contractual. "They are so impressed with public interest that labor contracts must yield to the common good x x x." The supremacy of the law over contracts is explained by the fact that labor contracts are not ordinary contracts; they are imbued with public interest and therefore are subject to the police power of the state. However, it should not be taken to mean that provisions agreed upon in the CBA are absolutely beyond the ambit of judicial review and nullification. If the provisions in the CBA run contrary to law, public morals, or public policy, such provisions may very well be voided. The 1994 Revised Rules and Regulations Implementing Republic Act No. 5487 provides the following: Section 17. Responsibility for Training and Progressive Development. It is the primary responsibility of all operators of private security agency and company security forces to maintain and upgrade the standards of efficiency, discipline, performance and competence of their personnel. To attain this end, each duly licensed private security agency and company security force shall establish a staff position for training and appoint a training officer whose primary functions are to determine the training needs of the agency/guards in relation to the needs of the client/ market/ industry, and to supervise and conduct appropriate training requirements. All private security personnel shall be re-trained at least once every two years. Since it is the primary responsibility of operators of company security forces to maintain and upgrade the standards of efficiency, discipline, performance and competence of their personnel, it follows that the expenses to be incurred therein shall be for the personal account of the company.

SECOND DIVISION G.R. No. 176748 September 1, 2010 JUDY O. DACUITAL,1 EUGENIO L. MONDANO, JR., JOSEPH GALER,2 MARIANO MORALES, ROBERTO RUANCE, JOSEPH PORCADILLA, RAULITO PALAD, RICARDO DIGAMON, NONITO PRISCO , EULOGIO M. TUTOR, MELVIN PEPITO, HELYTO N. REYES, 3 RANDOLF C. BALUDO, ALBERTO EPONDOL, RODELO A. SUSPER,4 EVARISTO VIGORI, 5 JONATHAN P. AYAAY, FELIPE ERILLA, ARIS A. GARCIA, ROY A. GARCIA, and RESTITUTO TAPANAN, Petitioners, vs. L.M. CAMUS ENGINEERING CORPORATION and/or LUIS M. CAMUS, Respondents. Facts: Respondent L.M. Camus Engineering Corporation (LMCEC) is a domestic corporation duly organized and existing under and by virtue of Philippine laws, engaged in construction, engineering, and air-conditioning business; while respondent Luis M. Camus (Camus) is the company president. Petitioners Judy O. Dacuital (Dacuital), et.al. were hired by LMCEC as welder, tinsmith, pipefitter, and mechanical employees. petitioners were required by LMCEC to surrender their identification cards and ATM cards and were ordered to execute contracts of employment. petitioners did not comply with the directive. Petitioners were later dismissed from employment.

Hence, the complaint for illegal dismissal and non-payment of monetary benefits filed by petitioners and other LMCEC employees who were similarly situated. they alleged that they were illegally dismissed from employment and that their employer failed to pay them their holiday pay, premium pay for holiday, rest day, service incentive leave pay, and 13th month pay during the existence and duration of their employment; that they were not provided with sick and vacation leaves. Respondents denied that petitioners allegations. They claimed that petitioners were project employees and, upon the completion of each project, they were served notices of project completion and that the termination was due to the completion of the projects for which they were hired. Petitioners, countered that they were regular employees as they had been engaged to perform activities which are usually necessary or desirable in the usual business or trade of LMCEC. that their employment was continuous and uninterrupted for more than one (1) year. Finally, they maintained that they were part of a work pool from which LMCEC drew its workers for its various projects. On July 24, 2002, Labor Arbiter (LA) Lilia S. Savari rendered a decision declaring the dismissal of the complainants illegal. Corollarily, except for complainant Helyto N. Reyes, who has voluntarily withdrawn his case against the respondents, all the other complainants are hereby ordered to report to respondents for reinstatement but without backwages. All other claims are dismissed for lack of merit. SO ORDERED.15 The LA did not give credence to respondents claim that petitioners were project employees because of the formers failure to present evidence showing that petitioners contracts of employment reflected the duration of each project for which they were employed. However, the LA refused to award backwages and other monetary claims on the ground that petitioners employment was not continuous as they belonged to the regular work pool of LMCEC. The employees jointly filed a partial appeal to the NLRC, except Pacatang and Lucas who filed their separate appeal. On the other hand, the Administrative Officer of LMCEC issued individual communications to petitioners directing their reinstatement pursuant to the LA decision.17 On June 9, 2004, the NLRC modified the LA decision, ordering the reinstatement of the complainants with limited backwages, without loss of seniority rights and other privileges. The computation division of the RAB-NCR is hereby ordered to compute the award as herein established.SO ORDERED. The NLRC agreed with the LA that petitioners were illegally dismissed from employment. However, in view of the delayed resolution of the case that could not be attributed to respondents, the NLRC limited the award of backwages from the date of dismissal up to six (6) months after the case was elevated on appeal on September 23, 2002. The appeal filed by Pacatang and Lucas was dismissed for having been filed out of time. Respondents and complainants Pacatang and Lucas moved for the reconsideration of the NLRC decision. the NLRC denied the motion for reconsideration filed by respondents, but granted that of Pacatang and Lucas, thereby entitling the latter to receive backwages. Petitioners subsequently moved for the execution of the NLRC decision.

Respondents, however, filed a Clarificatory Motion and Opposition to the Motion for Issuance of Entry of Judgment and Writ of Execution and for Recomputation of the Monetary Award22 in view of respondents petition before the CA and the reinstatement of some of the employees. the NLRC granted the motion. The NLRC took into consideration the fact that some of the employees who were earlier dismissed from employment had actually been reinstated. Hence, it limited the award of backwages from illegal dismissal up to the date of actual reinstatement. In the meantime, the respondents obtained a favorable decision in their petition before the CA, when the appellate court declared petitioners termination from employment valid and legal and consequently set aside the award of backwages Contrary to the conclusions of the LA and the NLRC, the CA held that petitioners were project employees as their employment contracts provided that their respective tenures of employment were dependent on the duration of the construction projects. As such employees, their employment could lawfully be terminated upon the completion of the project for which they were hired. Consequently, there was no illegal dismissal. Petitioners motion for reconsideration was denied on February 14, 2007. Aggrieved, petitioners come to us seeking a review of the CA Decision Issue: whether the CA was correct in concluding that petitioners were project employees and that their dismissal from employment was legal. Ruling: The petition is meritorious. On the procedural issues. Respondents point out that the decision of the LA had attained finality, except as to Palad, because of their failure to appeal. They explain that the Memorandum on Appeal filed with the NLRC was verified only by Palad without stating therein that he did it in representation of the other petitioners. In view of the finality of the NLRC decision, the instant petition should not prosper. We do not agree. Our pronouncement in Pacquing v. Coca-Cola Philippines, Inc. is instructive. As to the defective verification in the appeal memorandum before the NLRC, the same liberality applies. After all, the requirement regarding verification of a pleading is formal, not jurisdictional. Such requirement is simply a condition affecting the form of pleading, the noncompliance of which does not necessarily render the pleading fatally defective, xxx, if the attending circumstances are such that strict compliance with the rules may be dispensed with in order that the ends of justice may thereby be served. Moreover, no less than the Labor Code directs labor officials to use reasonable means to ascertain the facts speedily and objectively, with little regard to technicalities or formalities; while Section 10, Rule VII of the New Rules of Procedure of the NLRC provides that technical rules are not binding. Indeed, the application of technical rules of procedure may be relaxed in labor cases to serve the demand of substantial justice.

Clearly, the NLRC properly took cognizance of the appeal of all the named complainants even though it was signed by only one of them. While the right to appeal is a statutory and not a natural right, it is nonetheless an essential part of our judicial system. Courts are, therefore, advised to proceed with caution, so as not to deprive a party of the right to appeal. Litigants should have the amplest opportunity for the proper and just disposition of their cause. Thus, contrary to respondents claim, the decision had not attained finality even as to those who did not sign the appeal memorandum. Now on the substantive aspect. CA was NOT correct in concluding that petitioners were project employees. Article 280 of the Labor Code distinguishes a "project employee" from a "regular employee" in this wise: Article 280. Regular and casual employment.The provisions of written agreement to the contrary notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer, except where the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee or where the work or services to be performed is seasonal in nature and the employment is for the duration of the season. XXX A project employee is assigned to a project which begins and ends at determined or determinable times. xxx The principal test used to determine whether employees are project employees is whether or not the employees were assigned to carry out a specific project or undertaking, the duration or scope of which was specified at the time the employees were engaged for that project. Admittedly, respondents did not present the employment contracts of petitioners except that of Dacuital. They explained that it was no longer necessary to present the other contracts since petitioners were similarly situated. Even though the absence of a written contract does not by itself grant regular status to petitioners, such a contract is evidence that petitioners were informed of the duration and scope of their work and their status as project employees. In this case, where no other evidence was offered, the absence of the employment contracts raises a serious question of whether the employees were properly informed at the onset of their employment of their status as project employees. the contract (of Dacuital) does not show that he was informed of the nature, as well as the duration of his employment. In fact, the duration of the project for which he was allegedly hired was not specified in the contract. Even if we assume that under the above provision of the contract, Dacuital was informed of the nature of his employment and the duration of the project, that same contract is not sufficient evidence to show that the other employees were so informed. On the contrary, The non-presentation of these contracts gives rise to the presumption that the employees

were not informed of the nature and duration of their employment. It is doctrinally entrenched that in illegal dismissal cases, the employer has the burden of proving with clear, accurate, consistent, and convincing evidence that the dismissal was valid. Absent any other proof that the project employees were informed of their status as such, it will be presumed that they are regular employees. LMCECs failure to file termination reports upon the cessation of petitioners employment was an indication that petitioners were not project but regular employees. Well-established is the rule that regular employees enjoy security of tenure and they can only be dismissed for just or valid cause and upon compliance with due process. In cases involving an employees dismissal, the burden is on the employer to prove that the dismissal was legal. This burden was not amply discharged by LMCEC in this case. Being regular employees, petitioners were entitled to security of tenure, and their services may not be terminated except for causes provided by law. Finally, records failed to show that LMCEC afforded petitioners, as regular employees, due process prior to their dismissal, through the twin requirements of notice and hearing. Petitioners were not served notices informing them of the particular acts for which their dismissal was sought. Nor were they required to give their side regarding the charges made against them, if any. Certainly, petitioners dismissal was not carried out in accordance with law and was, therefore, illegal. Article 279 of the Labor Code, as amended, provides that an illegally dismissed employee shall be entitled to reinstatement, full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent from the time his compensation was withheld from him up to the time of his actual reinstatement. Contrary to the conclusion of the NLRC, the backwages due petitioners must be computed from the time they were unjustly dismissed until actual reinstatement to their former positions. Thus, until LMCEC implements the reinstatement aspect, its obligation to petitioners, insofar as accrued backwages and other benefits are concerned, continues to accumulate.50 The fact that petitioners did not appeal the NLRC decision on this matter does not bar this Court from ordering its modification. While as a general rule, a party who has not appealed is not entitled to affirmative relief other than the ones granted in the decision of the court below, this Court is imbued with sufficient authority and discretion to review matters, not otherwise assigned as errors on appeal, if it finds that their consideration is necessary in arriving at a complete and just resolution of the case or to serve the interests of justice or to avoid dispensing piecemeal justice. Besides, substantive rights like the award of backwages resulting from illegal dismissal must not be prejudiced by a rigid and technical application of the rules. As to respondent Camus liability as LMCEC president, it is settled that in the absence of malice, bad faith, or specific provision of law, a director or officer of a corporation cannot be made personally liable for corporate liabilities. To be sure, Camus has a personality which is distinct and separate from that of LMCEC. There was no proof that Camus acted in bad faith in dismissing petitioners from

employment. The mere fact that he is the president of the company does not make him personally liable for the payment of backwages. Finally, the Court notes that although Tapanan was named as petitioner, he was never included as a complainant before the NLRC. As such, he is not a party to this case. Moreover, as clearly stated in the LA decision, Reyes has voluntarily withdrawn his case against respondents. Thus, although he is one of the petitioners here, he is not covered by this Decision. WHEREFORE, premises considered, the petition is GRANTED. Petitioners dismissal from employment is declared illegal and, except Helyto N. Reyes and Restituto Tapanan, they are entitled to full backwages from the time of illegal dismissal until actual reinstatement. So ordered. -----------------THIRD DIVISION G.R. No. 184362 November 15, 2010 MILLENNIUM ERECTORS CORPORATION, Petitioner, vs. VIRGILIO MAGALLANES, Respondent.

Facts: Respondent Virgilio Magallanes started working in 1988 as a utility man for Laurencito Tiu (Tiu), Chief Executive Officer of Millennium Erectors Corporation (petitioner), Tius family, and Kenneth Construction Corporation. He was assigned to different construction projects undertaken by petitioner in Metro Manila, the last of which was for a building in Libis, Quezon City. In July of 2004 he was told not to report for work anymore allegedly due to old age, prompting him to file on August 6, 2004 an illegal dismissal complaint before the Labor Arbiter. petitioner claimed that respondent was a project employee whom it hired for a building project in Libis on January 30, 2003. Petitioner likewise submitted a termination report to the Department of Labor and Employment (DOLE) dated August 17, 2004. petitioner contended that it was incorporated only in February 2000, and Kenneth Construction Corporation which was established in 1989 and dissolved in 2000, was a separate and distinct entity. the Labor Arbiter ruled in favor of petitioner and dismissed the complaint, holding that respondent knew of the nature of his employment as a project employee, he having executed an employment contract specifying therein the name of and duration of the project from January 2003 until its completion; and that the services of respondent were terminated due to the completion of the project as shown by the termination report submitted to the DOLE. On appeal, the National Labor Relations Commission (NLRC) set aside the Labor Arbiters Decision holding that respondent was a regular, not a project employee, as the employment contract he supposedly signed contained the date of commencement but not a specific date

when it would end, contrary to the rule. the petitioner submitted and contrary to its claim that respondent was hired in January 2003, he had been employed in 2001, not 2003, The NLRC thus concluded that while respondents work as a utility man may not have been necessary or desirable in the usual business of petitioner as a construction company, that he performed the same functions continuously for 16 years converted an otherwise casual employment to regular employment, hence, his termination without just or authorized cause amounted to illegal dismissal. Petitioner moved for reconsideration of the NLRC decision, contending that respondents motion for reconsideration which it treated as an appeal was not perfected, it having been belatedly filed. Petitioners motion was denied. The Court of Appeals, to which petitioner appealed, affirmed the NLRCs ruling by Decision. Petitioner contends that the Labor Arbiters Decision dismissing the complaint had become final and executory following respondents failure to perfect his appeal, maintaining that the requirements for perfection of an appeal and for proof of service are not mere rules of technicality which may easily be set aside. Issue: is the ruling of the CA correct? Ruling: the CA is wrong. The NLRC did not err in treating respondents motion for reconsideration as an appeal, the presence of some procedural flaws including the lack of verification and proof of service notwithstanding. In labor cases, rules of procedure should not be applied in a very rigid and technical sense. They are merely tools designed to facilitate the attainment of justice, and where their strict application would result in the frustration rather than promotion of substantial justice, technicalities must be avoided. Where the ends of substantial justice shall be better served, the application of technical rules of procedure may be relaxed. Respecting the lack of verification, Pacquing v. Coca-Cola Philippines, Inc.12 instructs: As to the defective verification in the appeal memorandum before the NLRC, the same liberality applies. After all, the requirement regarding verification of a pleading is formal, not jurisdictional. Such requirement is simply a condition affecting the form of pleading, the noncompliance of which does not necessarily render the pleading fatally defective, xxx, if the attending circumstances are such that strict compliance with the rules may be dispensed with in order that the ends of justice may thereby be served. As for the requirement on proof of service, it may also be dispensed with since in appeals in labor cases, non-service of copy of the appeal or appeal memorandum to the adverse party is not a jurisdictional defect which calls for the dismissal of the appeal.13 On the merits of the case, the Court finds that, indeed, respondent was a regular, not a project employee. THe case of Saberola v. Suarez defines "project employee," viz:

A project employee is one whose "employment has been fixed for a specific project or undertaking, the completion or termination of which has been determined at the time of the engagement of the employee or where the work or service to be performed is seasonal in nature and the employment is for the duration of the season." And Equipment Technical Services v. Court of Appeals15 emphasizes the difference between a regular employee and a project employee: As the Court has consistently held, the service of project employees are coterminus [sic] with the project and may be terminated upon the end or completion of that project or project phase for which they were hired. Regular employees, in contrast, enjoy security of tenure and are entitled to hold on to their work or position until their services are terminated by any of the modes recognized under the Labor Code. Petitioners various payrolls dating as early as 2001 show that respondent had been employed by it. As aptly observed by the appellate court, these documents, rather than sustaining petitioners argument, only serve to support respondents contention that he had been employed in various projects, if not for 16 years, at the very least two years prior to his dismissal. Assuming arguendo that petitioner hired respondent initially on a per project basis, his continued rehiring, as shown by the sample payrolls converted his status to that of a regular employee. Following Cocomangas Beach Hotel Resort v. Visca, the repeated and continuing need for respondents services is sufficient evidence of the necessity, if not indispensability, of his services to petitioner's business and, as a regular employee, he could only be dismissed from employment for a just or authorized cause. Petitioner having failed to discharge its burden of proving that it terminated the services of respondent for cause and with due process, the challenged decision must remain. WHEREFORE, the petition is DENIED.

MANAGEMENT PREROGATIVE

Coca Cola Bottler Philippines Inc.

-vs-

Angel Del Villar

G.R. No. 163091 October 06, 2010

Facts:

The Company, one of the leading and largest manufacturers of beverages in the country, initially hired respondent Angel U. del Villar (Del Villar) on May 1, 1990 as Physical Distribution Fleet Manager with a job grade of S-7 and monthly salary of P50,000.00, aside from the use of a company car, gasoline allowance, and annual foreign travel, among other benefits. In 1992, as part of the reorganization of the Company, Del Villar became the Transportation Services Manager, under the Business Logistic Directorate, headed by Director Edgardo I. San Juan (San Juan). As Transportation Services Manager, Del Villar prepares the budget for the vehicles of the Company nationwide.

While serving as Transportation Services Manager, Del Villar submitted a Report dated January 4, 1996 to the Company President, Natale J. Di Cosmo (Di Cosmo), detailing an alleged fraudulent scheme undertaken by certain Company officials in conspiracy with local truck manufacturers, overpricing the trucks purchased by the Company by as much as P70,000.00 each. In the same Report, Del Villar implicated San Juan and Jose L. Pineda, Jr. (Pineda), among other Company officials, as part of the conspiracy. Pineda then served as the Executive Assistant in the Business Logistic Directorate in charge of the Refrigeration Services of the Company.

In 1996, the Company embarked on a reorganization of the Business Logistic Directorate. As a result, the functions related to Refrigeration were assigned to the Transportation Services Manager, which was renamed the Transportation and Refrigeration Services Manager. Mr. Nathaniel L. Evangelista, the Physical Distribution Superintendent of the Zamboanga Plant, was appointed the Corporate Transportation and Refrigeration Services Manager, replacing both Del Villar and Pineda, who were in charge of the Transportation Services and Refrigeration Services of the Company, respectively. Pineda was then appointed as the Corporate Purchasing and Materials Control Manager, while Del Villar as Pinedas Staff Assistant. These new appointments took effect on May 1, 1996.[4]

On July 8, 1996, seven months after the submission of his Report on the fraudulent scheme of several company officials, Del Villar received a Memorandum[5] from San Juan. Through said Memorandum, San Juan informed Del Villar that (1) Del Villar was designated as Staff Assistant to the Corporate

Purchasing and Materials Control Manager, with a job grade of NS-VII; (2) with Del Villars new assignment, he ceased to be entitled to the benefits accruing to an S-7 position under existing company rules and policies; and (3) Del Villar was to turn over the vehicle assigned to him as Transportation Services Manager to Pineda by July 10, 1996.

Although as the Staff Assistant of the Corporate Purchasing and Materials Control Manager, Del Villar continued to receive the same salary as Transportation Services Manager, but his car and other privileges were withdrawn and he spent his time at his new post sitting at a desk with no meaningful work whatsoever.[6] Del Villar believed that he was demoted by the Company to force him to resign. Unable to endure any further the harassment, Del Villar filed with the Arbitration Branch of the NLRC on November 11, 1996 a complaint against the Company for illegal demotion and forfeiture of company privileges. Del Villar also impleaded in his complaint Company President Di Cosmo, Vice-President and General Manager Jaime G. Oracion (Oracion), Senior Vice-President and Human Resources Director Rosa Maria Chua (Chua), San Juan, and Pineda. The complaint was docketed as NLRC CN. NCR-00-12-07634-96, assigned to Labor Arbiter Felipe Pati.

Issue:

Whether or not Coca-Cola acted illegally in demoting Del Villar?

Ruling:

From the Labor Arbiter

The Labor Arbiter rendered a Decision in Del Villars favor. The Labor Arbiter held that the allegations in Del Villars complaint sufficiently presented a cause of action against the Company.

The Company expectedly appealed to the NLRC.

From the NLRC

While the case was still pending appeal before the NLRC, Del Villar received a letter officially dismissing him from work due to an alleged redundancy in the position he is holding on with the company. Then, the NLRC reversed the Labor Arbiter, reasoning that:

We are more inclined to apply the presumption of good faith. Mere conclusions of fact and law should not be used as bases for an automatic finding of bad faith. In fine we find that [Del Villar] was not demoted and that the [Company] has not acted in bad faith or with malice.

Del Villar brought his case before the Court for Certiorari under Rule 65 of the Rules of Court.

of

Appeals via a

Petition

From the CA

The Court of Appeals promulgated its Decision favoring Del Villar. According to the Court of Appeals, the NLRC committed grave abuse of discretion by turning a blind eye on several indicia that clearly showed Del Villar was demoted without any lawful reason: (1) the very nomenclature used by the Company designating Del Villars new job: from Transportation Services Manager, Del Villar was suddenly designated as staff assistant to another manager; (2) the diminution in the benefits being enjoyed by Del Villar prior to his transfer, such as the use of the company car, gasoline allowance, and annual foreign travel; and (3) Del Villars new post in the Company did not require him to perform any meaningful work, a far cry from his previous responsibilities as Transportation Services Manager which include the preparation of the budget of the Company for all of its vehicles nationwide.

The Court of Appeals also made a finding of bad faith against the Company:

It is true that Labor Arbiters cannot dictate business owners on how to run their enterprises. Concededly, employers and their managers have all the leeway to make the necessary adjustments in their organizations. But the prerogative is

not absolute. It must be accompanied by good faith. We have reasonable ground to believe that the reorganization theory poised by [the Company] was a mere afterthought.

From the Supreme Court

Jurisprudence recognizes the exercise of management prerogative. For this reason, courts often decline to interfere in legitimate business decisions of employers. In fact, labor laws discourage interference in employers judgment concerning the conduct of their business.

In the pursuit of its legitimate business interest, management has the prerogative to transfer or assign employees from one office or area of operation to another provided there is no demotion in rank or diminution of salary, benefits, and other privileges; and the action is not motivated by discrimination, made in bad faith, or effected as a form of punishment or demotion without sufficient cause. The right of employees to security of tenure does not give them vested rights to their positions to the extent of depriving management of its prerogative to change their assignments or to transfer them.

Managerial prerogatives, however, are subject to limitations provided by law, collective bargaining agreements, and general principles of fair play and justice. In the case of Blue Dairy Corporation v. National Labor Relations Commission, we described in more detail the limitations on the right of management to transfer employees:

But, like other rights, there are limits thereto. The managerial prerogative to transfer personnel must be exercised without grave abuse of discretion, bearing in mind the basic elements of justice and fair play. Having the right should not be confused with the manner in which that right is exercised. Thus, it cannot be used as a subterfuge by the employer to rid himself of an undesirable worker. In particular, the employer must be able to show that the transfer is not unreasonable, inconvenient or prejudicial to the employee; nor does it involve a demotion in rank or a diminution of his salaries, privileges and other benefits. Should the employer fail to overcome this burden of proof, the employees transfer shall be tantamount to constructive dismissal, which has been defined as a quitting because continued employment is rendered impossible, unreasonable or unlikely; as an offer involving

a demotion in rank and diminution in pay. Likewise, constructive dismissal exists when an act of clear discrimination, insensibility or disdain by an employer has become so unbearable to the employee leaving him with no option but to forego with his continued employment.

In the case at bar, there is no dispute that Del Villar was transferred by the Company from the position of Transportation Services Manager to the position of Staff Assistant to the Corporate Purchasing and Materials Control Manager. The burden thus falls upon the Company to prove that Del Villars transfer was not tantamount to constructive dismissal. After a careful scrutiny of the records, we agree with the Labor Arbiter and the Court of Appeals that the Company failed to discharge this burden of proof. The Company and its officials attempt to justify the transfer of Del Villar by alleging his unsatisfactory performance as Transportation Services Manager. The dismal performance evaluations of Del Villar were prepared by San Juan and Pineda after Del Villar already implicated his two superiors in his Report dated January 4, 1996 in an alleged fraudulent scheme against the Company. More importantly, we give weight to the following instances establishing that Del Villar was not merely transferred from the position of Transportation Services Manager to the position of Staff Assistant to the Corporate Purchasing and Materials Control Manager; he was evidently demoted.

A transfer is a movement from one position to another which is of equivalent rank, level or salary, without break in service. Promotion, on the other hand, is the advancement from one position to another with an increase in duties and responsibilities as authorized by law, and usually accompanied by an increase in salary. Conversely, demotion involves a situation where an employee is relegated to a subordinate or less important position constituting a reduction to a lower grade or rank, with a corresponding decrease in duties and responsibilities, and usually accompanied by a decrease in salary.

First, as the Court of Appeals observed, Del Villars demotion is readily apparent in his new designation. Formerly, he was the Transportation Services Manager; then he was made a Staff Assistant a subordinate to another manager, particularly, the Corporate Purchasing and Materials Control Manager.

Second, the two posts are not of the same weight in terms of duties and responsibilities. There was a demotion in rank even when the respondent therein

continued to enjoy the rank of a supervisor, but her function was reduced to a mere house-to-house or direct sales agent.

Third, while Del Villars transfer did not result in the reduction of his salary, there was a diminution in his benefits. Del Villar could no longer enjoy the use of a company car, gasoline allowance, and annual foreign travel, which Del Villar previously enjoyed as Transportation Services Manager.

Fourth, it was not bad enough that Del Villar was demoted, but he was even placed by the Company under the control and supervision of Pineda as the latters Staff Assistant. It is not too difficult to imagine that the working relations between Del Villar, the accuser, and Pineda, the accused, had been strained and hostile. The situation would be more oppressive for Del Villar because of his subordinate position vis--vis Pineda.

Fifth, all the foregoing caused Del Villar inconvenience and prejudice, so unbearable for him that he was constrained to seek remedy from the NLRC. The Labor Arbiter was correct in his observation that had Del Villar resigned immediately after his transfer, he could be said to have been constructively dismissed. There is constructive dismissal when there is a demotion in rank and/or diminution in pay; or when a clear discrimination, insensibility or disdain by an employer becomes unbearable to the employee.

WHEREFORE, premises considered, the instant petition is DENIED for lack of merit. The Decision dated October 30, 2003 and Resolution dated March 29, 2004 of the Court of Appeals in CA-G.R. SP No. 53815 are hereby AFFIRMED with MODIFICATIONS.

MANILA ELECTRIC COMPANY, ALEXANDER S. DEYTO and RUBEN A. SAPITULA -vsROSARIO GOPEZ LIM G.R. No. 184769, October 5, 2010

Facts:

Rosario G. Lim (respondent), also known as Cherry Lim, is an administrative clerk at the Manila Electric Company (MERALCO). On June 4, 2008, an anonymous letter was posted at the door of the Metering Office of the Administration building of MERALCO Plaridel, Bulacan Sector, at which respondent is assigned, denouncing respondent. The letter reads: Cherry Lim: MATAPOS MONG LAMUNIN LAHAT NG BIYAYA NG MERALCO, NGAYON NAMAN AY GUSTO MONG PALAMON ANG BUONG KUMPANYA SA MGA BUWAYA NG GOBYERNO. KAPAL NG MUKHA MO, LUMAYAS KA RITO, WALANG UTANG NA LOOB. By Memorandum dated July 4, 2008, petitioner Alexander Deyto, Head of MERALCOs Human Resource Staffing, directed the transfer of respondent to MERALCOs Alabang Sector in Muntinlupa as "A/F OTMS Clerk," effective July 18, 2008 in light of the receipt of " reports that there were accusations and threats directed against [her] from unknown individuals and which could possibly compromise [her] safety and security." Respondent appealed her transfer and requested for a dialogue so she could voice her concerns and misgivings on the matter, claiming that the "punitive" nature of the transfer amounted to a denial of due process. Respondent coted the grueling travel from her residence in Pampanga to Alabang and back entails, and violation of the provisions on job security of their Collective Bargaining Agreement (CBA). Respondent thus requested for the deferment of the implementation of her transfer pending resolution of the issues she raised. Also, by respondents allegation, petitioners unlawful act and omission consisting of their continued failure and refusal to provide her with details or information about the alleged report which MERALCO purportedly received concerning threats to her safety and security amount to a violation of her right to privacy in life, liberty and security, correctible by habeas data. Respondent thus prayed for the issuance of a writ of habeas data. Additionally, respondent prayed for the issuance of a Temporary Restraining Order (TRO) enjoining petitioners from effecting her transfer to the MERALCO Alabang Sector. The trial court granted the prayers of respondent including the issuance of a writ of preliminary injunction directing petitioners to desist from implementing respondents transfer until such time that petitioners comply with the disclosures required. Hence, the present petition for review under Rule 45 of 1997 Rules of Civil Procedure. Issues: 1) The RTC lacked jurisdiction over the case and cannot restrain MERALCOs prerogative as employer to transfer the place of work of its employees. 2) Ruling: Petitioners argue that the RTC has no jurisdiction over what they contend is clearly a labor dispute although ingeniously crafted as a petition for habeas data, respondent is essentially questioning the transfer of her place of work by her employer"11 and the terms and conditions of her employment which arise from an employer-employee relationship over which the NLRC and the Labor Arbiters under Article The issuance of the writ is outside the parameters expressly set forth in the Rule on the Writ of Habeas Data.

217 of the Labor Code have jurisdiction. Petitioners thus maintain that the RTC had no authority to restrain the implementation of the Memorandum transferring respondents place of work which is purely a management prerogative, and that OCA-Circular No. 79-200312 expressly prohibits the issuance of TROs or injunctive writs in labor-related cases. Petitioners go on to point out that the Rule on the Writ of Habeas Data directs the issuance of the writ only against public officials or employees, or private individuals or entities engaged in the gathering, collecting or storing of data or information regarding an aggrieved partys person, family or home; and that MERALCO (or its officers) is clearly not engaged in such activities. The petition is impressed with merit. Respondents plea that she be spared from complying with MERALCOs Memorandum directing her reassignment to the Alabang Sector, under the guise of a quest for information or data allegedly in possession of petitioners, does not fall within the province of a writ of habeas data. Section 1 of the Rule on the Writ of Habeas Data provides: Section 1. Habeas Data. The writ of habeas data is a remedy available to any person whose right to privacy in life, liberty or security is violated or threatened by an unlawful act or omission of a public official or employee or of a private individual or entity engaged in the gathering, collecting or storing of data or information regarding the person, family, home and correspondence of the aggrieved party. As enunciated in the case of Castillo v. Cruz, it underscores the emphasis laid down in Tapuz v. del Rosario that the writs of amparo and habeas data will NOT issue to protect purely property or commercial concerns nor when the grounds invoked in support of the petitions therefor are vague or doubtful. Employment constitutes a property right under the context of the due process clause of the Constitution. It is evident that respondents reservations on the real reasons for her transfer - a legitimate concern respecting the terms and conditions of ones employment - are what prompted her to adopt the extraordinary remedy of habeas data. Jurisdiction over such concerns is inarguably lodged by law with the NLRC and the Labor Arbiters. WHEREFORE, the petition is GRANTED. The assailed September 22, 2008 Decision of the Bulacan RTC, Branch 7 in SP. Proc. No. 213-M-2008 is hereby REVERSED and SET ASIDE. SP. Proc. No. 213M-2008 is, accordingly, DISMISSED.

[G.R. No. 188086, August 03, 2011] FRANCIS BELLO, REPRESENTED HEREIN BY HIS DAUGHTER AND ATTORNEYIN-FACT, GERALDINE BELLO-ONA, PETITIONER, VS. BONIFACIO SECURITY SERVICES, INC. AND SAMUEL TOMAS, RESPONDENTS. Facts: Respondent Bonifacio Security Services, Inc. (BSSI) is a domestic private corporation engaged in the business of providing security services. In July 2001, the BSSI hired Bello as a roving traffic marshal to manage traffic and to conduct security and safety-related operations in the Bonifacio Global City (BGC). In August 2001, Bello was posted at the Negros Navigation Company in Pier 2, North Harbor, to supervise sectoral operations. In November 2001, he was assigned at BGC as assistant detachment commander. After a week, he was transferred to Pacific Plaza Towers as assistant detachment commander and later as detachment commander. In June 2002, he was assigned at Pier 2, North Harbor as assistant detachment commander, but later reassigned to BGC. In August 2002, the BSSI hired a new operations manager, resulting in the

reorganization of posts. In October 2002, Bello was assigned as roving traffic marshal at the BGC. On October 25, 2002, he filed an indefinite leave of absence when his new assignment took effect. On November 5, 2002, Bello filed a complaint against the BSSI and its General Manager, respondent Samuel Tomas, with the NLRC, claiming that he had been constructively dismissed when he was demoted from a detachment commander to a mere traffic marshal. He alleged that he received a series of promotions from 2001 to 2002, from traffic marshal to supervisor, to assistant detachment commander, and to detachment commander. Bellos Contention: Bello insists that he was constructively dismissed when he was demoted to a mere traffic marshal after having been promoted to the positions of supervisor, assistant detachment commander, and detachment commander. BSSI: BSSI denied Bello's claim of constructive dismissal, arguing that no promotion took place; Bello's designation as assistant detachment commander or detachment commander was not an employment position but a duty-related assignment; Bello abandoned his job when he went on an indefinite leave of absence and did not report for work. Labor Arbiters Ruling: Labor Arbiter found that Bello was illegally dismissed, noting that the BSSI failed to adduce evidence that Bello abandoned his employment. Thus, he ordered Bello's reinstatement and awarded him backwages. NLRC: NLRC affirmed the labor arbiter's decision, finding that Bello had been constructively dismissed when he was demoted to the rank-and-file position of traffic marshal after occupying the supervisory position of assistant detachment commander and detachment commander. CA: The CA nullified the NLRC resolutions, finding the records bereft of evidence substantiating the labor arbiter's and the NLRC's conclusions that Bello had been constructively dismissed. Bello offered no evidence to prove that there was a series of promotions that would justify his claim of subsequent demotion. Issue: Whether or not there was constructive dismissal. Ruling: We find no reason to disturb the CA conclusion that there was no constructive dismissal. Case law defines constructive dismissal as a cessation of work because continued employment has been rendered impossible, unreasonable, or unlikely, as when there is a demotion in rank or diminution in pay, or both, or when a clear discrimination, insensibility, or disdain by an employer becomes unbearable to the employee. We note that, other than his bare and self-serving allegations, Bello has not offered any evidence that he was promoted in a span of four months since his employment as traffic marshal in July 2001 to a detachment commander in November 2001. During his six-month probationary period of employment, it is highly improbable that Bello would be promoted after just a month of employment, from a traffic marshal in July 2001 to supervisor in August 2001, and three months later to assistant detachment commander and to detachment commander in November 2001. At most, the BSSI merely changed his assignment or transferred him to the post where his service

would be most beneficial to its clients. The management's prerogative of transferring and reassigning employees from one area of operation to another in order to meet the requirements of the business is generally not constitutive of constructive dismissal. We see this to be the case in the present dispute so that the consequent reassignment of Bello to a traffic marshal post was well within the scope of the BSSI's management prerogative. WHEREFORE, we hereby DENY the petition and AFFIRM the assailed CA decision.

Topic 14 Termination of Employment FELIX B. PEREZ and AMANTE G. DORIA, Petitioners, vs. PHILIPPINE TELEGRAPH AND TELEPHONE COMPANY and JOSE LUIS SANTIAGO, Respondents G.R. No. 152048 April 7, 2009 Facts: Petitioners Felix Perez and Amante Doria were employed by respondent PT&T as shipping clerk and supervisor, respectively. Acting on an alleged unsigned letter regarding anomalous transactions, PT&T formed a special audit team to investigate the matter. It was discovered that the Shipping Section jacked up the value of the freight costs for goods shipped and that the duplicates of the shipping documents allegedly showed traces of tampering, alteration and superimposition. Petitioners were placed on preventive suspension for 30 days for their alleged involvement in the anomaly. Their suspension was extended for 15 days twice. A memorandum was issued by respondents and a filing of criminal charges against Mr. Perez and Mr. Doria, Petitioners were then dismissed from the service for having falsified company documents. The petitioners filed a complaint for illegal suspension and illegal dismissal. They alleged that they were dismissed on November 8, 1993, the date they received the memorandum. LA: The labor arbiter found that the 30-day extension of petitioners suspension and their subsequent dismissal were both illegal. NLRC: The NLRC reversed the decision of the labor arbiter. It ruled that petitioners were dismissed for just cause, that they were accorded due process and that they were illegally suspended for only 15 days. CA: The CA affirmed the NLRC decision insofar as petitioners illegal suspension for 15 days and dismissal for just cause were concerned. However, it found that petitioners were dismissed without due process. Issue: WON there was just cause for petitioners dismissal and if they were accorded due process. Ruling: We rule in favor of petitioners. RESPONDENTS FAILED TO PROVE JUST CAUSE AND TO OBSERVE DUE PROCESS The CA, in upholding the NLRCs decision, reasoned that there was sufficient basis for respondents to lose their confidence in petitioners for allegedly tampering with the shipping documents.

Respondents emphasized the importance of a shipping order or request, as it was the basis of their liability to a cargo forwarder. We disagree. We find respondents evidence insufficient to clearly and convincingly establish the facts from which the loss of confidence resulted. Other than their bare allegations and the fact that such documents came into petitioners hands at some point, respondents should have provided evidence of petitioners functions, the extent of their duties, the procedure in the handling and approval of shipping requests and the fact that no personnel other than petitioners were involved. There was, therefore, a patent paucity of proof connecting petitioners to the alleged tampering of shipping documents. Willful breach by the employee of the trust reposed in him by his employer or duly authorized representative is a just cause for termination. However, in General Bank and Trust Co. v. CA, we said: Loss of confidence should not be simulated. It should not be used as a subterfuge for causes which are improper, illegal or unjustified. Loss of confidence may not be arbitrarily asserted in the face of overwhelming evidence to the contrary. It must be genuine, not a mere afterthought to justify an earlier action taken in bad faith. The employers evidence must clearly and convincingly show the facts on which the loss of confidence in the employee may be fairly made to rest. It must be adequately proven by substantial evidence. Respondents failed to discharge this burden. Respondents illegal act of dismissing petitioners was aggravated by their failure to observe due process. To meet the requirements of due process in the dismissal of an employee, an employer must furnish the worker with two written notices: (1) a written notice specifying the grounds for termination and giving to said employee a reasonable opportunity to explain his side and (2) another written notice indicating that, upon due consideration of all circumstances, grounds have been established to justify the employer's decision to dismiss the employee. Petitioners were neither apprised of the charges against them nor given a chance to defend themselves. They were simply and arbitrarily separated from work and served notices of termination in total disregard of their rights to due process and security of tenure. There is no need for a hearing or conference. We note a marked difference in the standards of due process to be followed as prescribed in the Labor Code and its implementing rules. The Labor Code, on one hand, provides that an employer must provide the employee ample opportunity to be heard and to defend himself with the assistance of his representative if he so desires: ART. 277. Miscellaneous provisions. x x x (b) Subject to the constitutional right of workers to security of tenure and their right to be protected against dismissal except for a just and authorized cause and without prejudice to the requirement of notice under Article 283 of this Code, the employer shall furnish the worker whose employment is sought to be terminated a written notice containing a statement of the causes for termination and shall afford the latter ample opportunity to be heard and to defend himself with the assistance of his representative if he so desires in accordance with company rules and regulations promulgated pursuant to guidelines set by the Department of Labor and Employment. Any decision taken by the employer shall be without prejudice to the right of the worker to contest the validity or legality of his dismissal by filing a complaint with the regional branch of the National Labor Relations Commission. The burden of proving that the termination was for a valid or authorized cause shall rest on the employer.

The omnibus rules implementing the Labor Code, on the other hand, require a hearing and conference during which the employee concerned is given the opportunity to respond to the charge, present his evidence or rebut the evidence presented against him: Section 2. Security of Tenure. x x x (d) In all cases of termination of employment, the following standards of due process shall be substantially observed: For termination of employment based on just causes as defined in Article 282 of the Labor Code: (i) A written notice served on the employee specifying the ground or grounds for termination, and giving said employee reasonable opportunity within which to explain his side. (ii) A hearing or conference during which the employee concerned, with the assistance of counsel if he so desires, is given opportunity to respond to the charge, present his evidence or rebut the evidence presented against him. (iii) A written notice of termination served on the employee, indicating that upon due consideration of all the circumstances, grounds have been established to justify his termination. Which one should be followed? Is a hearing (or conference) mandatory in cases involving the dismissal of an employee? Can the apparent conflict between the law and its IRR be reconciled? At the outset, we reaffirm the time-honored doctrine that, in case of conflict, the law prevails over the administrative regulations implementing it. The authority to promulgate implementing rules proceeds from the law itself. To be valid, a rule or regulation must conform to and be consistent with the provisions of the enabling statute. As such, it cannot amend the law either by abridging or expanding its scope. Article 277(b) of the Labor Code provides that, in cases of termination for a just cause, an employee must be given ample opportunity to be heard and to defend himself. Thus, the opportunity to be heard afforded by law to the employee is qualified by the word ample which ordinarily means considerably more than adequate or sufficient. In this regard, the phrase ample opportunity to be heard can be reasonably interpreted as extensive enough to cover actual hearing or conference. To this extent, Section 2(d), Rule I of the Implementing Rules of Book VI of the Labor Code is in conformity with Article 277(b). Nonetheless, Section 2(d), Rule I of the Implementing Rules of Book VI of the Labor Code should not be taken to mean that holding an actual hearing or conference is a condition sine qua non for compliance with the due process requirement in termination of employment. The test for the fair procedure guaranteed under Article 277(b) cannot be 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 employees right to be heard to a solitary form narrows down that right. It deprives him of other equally effective forms of adducing evidence in his defense. Certainly, such an exclusivist and absolutist interpretation is overly restrictive. The very nature of due process negates any concept of inflexible procedures universally applicable to every imaginable situation. The standard for the hearing requirement, ample opportunity, is couched in general language revealing the legislative intent to give some degree of flexibility or adaptability to meet the peculiarities of a given situation. To confine it to a single rigid proceeding such as a formal hearing will defeat its spirit.

Significantly, Section 2(d), Rule I of the Implementing Rules of Book VI of the Labor Code itself provides that the so-called standards of due process outlined therein shall be observed substantially, not strictly. This is a recognition that while a formal hearing or conference is ideal, it is not an absolute, mandatory or exclusive avenue of due process. An employees right to be heard in termination cases under Article 277(b) as implemented by Section 2(d), Rule I of the Implementing Rules of Book VI of the Labor Code should be interpreted in broad strokes. It is satisfied not only by a formal face to face confrontation but by any meaningful opportunity to controvert the charges against him and to submit evidence in support thereof. A hearing means that a party should be given a chance to adduce his evidence to support his side of the case and that the evidence should be taken into account in the adjudication of the controversy. To be heard does not mean verbal argumentation alone inasmuch as one may be heard just as effectively through written explanations, submissions or pleadings. Therefore, while the phrase ample opportunity to be heard may in fact include an actual hearing, it is not limited to a formal hearing only. In other words, the existence of an actual, formal trial-type hearing, although preferred, is not absolutely necessary to satisfy the employees right to be heard. This interpretation of Section 2(d), Rule I of the Implementing Rules of Book VI of the Labor Code reasonably implements the ample opportunity to be heard standard under Article 277(b) of the Labor Code without unduly restricting the language of the law or excessively burdening the employer. This not only respects the power vested in the Secretary of Labor and Employment to promulgate rules and regulations that will lay down the guidelines for the implementation of Article 277(b). More importantly, this is faithful to the mandate of Article 4 of the Labor Code that [a]ll doubts in the implementation and interpretation of the provisions of [the Labor Code], including its implementing rules and regulations shall be resolved in favor of labor. In sum, the following are the guiding principles in connection with the hearing requirement in dismissal cases: (a) ample opportunity to be heard means any meaningful opportunity (verbal or written) given to the employee to answer the charges against him and submit evidence in support of his defense, whether in a hearing, conference or some other fair, just and reasonable way. (b) a formal hearing or conference becomes mandatory only when requested by the employee in writing or substantial evidentiary disputes exist or a company rule or practice requires it, or when similar circumstances justify it. (c) the ample opportunity to be heard standard in the Labor Code prevails over the hearing or conference requirement in the implementing rules and regulations. PETITIONERS WERE ILLEGALLY SUSPENDED FOR 30 DAYS An employee may be validly suspended by the employer for just cause provided by law. Such suspension shall only be for a period of 30 days, after which the employee shall either be reinstated or paid his wages during the extended period. Where the dismissal was without just or authorized cause and there was no due process, Article 279 of the Labor Code, as amended, mandates that the employee is entitled to reinstatement without loss of seniority rights and other privileges and full backwages, inclusive of allowances, and other benefits or their monetary equivalent computed from the time the compensation was not paid up to the time of actual reinstatement. In this case, however, reinstatement is no longer possible because of the length of time that has passed from the date of the incident to final resolution. Fourteen years have transpired from the time

petitioners were wrongfully dismissed. To order reinstatement at this juncture will no longer serve any prudent or practical purpose. WHEREFORE, the petition is hereby GRANTED. The decision of the Court of Appeals finding that petitioners Felix B. Perez and Amante G. Doria were not illegally dismissed but were not accorded due process and were illegally suspended for 15 days, is SET ASIDE. The decision of the labor arbiter is hereby AFFIRMED with the MODIFICATION that petitioners should be paid their separation pay in lieu of reinstatement.
GARCIA VS. MOLINA, GR 157383, August 10, 2010

FACTS: Respondents Molina and Velasco, both Attorney V of the GSIS, received two separate Memoranda from petitioner Winston F. Garcia in his capacity as President and General Manager of the Government Service Insurance System charging them with grave misconduct. Specifically, Molina was charged for allegedly committing the following acts: 1) directly and continuously helping some alleged disgruntled employees to conduct concerted protest actions and/or illegal assemblies against the management and the GSIS President and General Manager; 2) leading the concerted protest activities held in the morning of May 22, 2002 during office hours within the GSIS compound; and 3) continuously performing said activities despite warning from his immediate superiors. In addition to the charge for grave misconduct for performing the same acts as Molina, Velasco was accused of performing acts in violation of the Rules on Office Decorum for leaving his office without informing his supervisor of his whereabouts; and gross insubordination for persistently disregarding petitioners instructions that Velasco should report to the petitioners office. Considering the gravity of the charges against them, petitioner ordered the preventive suspension of respondents for ninety (90) days without pay, effective immediately.

ISSUES: 1) Whether the order for the preventive suspension of respondents was valid. 2) Whether the respondents are entitled to back wages during the period of their preventive suspension.

RULING: Petitioner, as President and General Manager of GSIS, is vested the authority and responsibility to remove, suspend or otherwise discipline GSIS personnel for cause. However, despite the authority conferred on him by law, such power is not without limitations for it must be exercised in accordance with Civil Service rules. Indeed, the CSC Rules does not specifically provide that a formal charge without the requisite preliminary investigation is null and void. However, as clearly outlined in The Uniform Rules on Administrative Cases in the Civil Service, upon receipt of a complaint which is sufficient in form and substance, the disciplining authority shall require the person complained of to submit a Counter-Affidavit/Comment under oath within three days from receipt. The use of the word "shall" quite obviously indicates that it is mandatory for the disciplining authority to conduct a preliminary

investigation or at least respondent should be given the opportunity to comment and explain his side. As can be gleaned, this is done prior to the issuance of the formal charge and the comment required therein is different from the answer that may later be filed by respondents. Contrary to petitioners claim, no exception is provided for in the CSC Rules. Not even an indictment in flagranti as claimed by petitioner. It is noteworthy that the very acts subject of the administrative cases stemmed from an event that took place the day before the formal charges were issued. It appears, therefore, that the formal charges were issued after the sole determination by the petitioner as the disciplining authority that there was a prima facie case against respondents. The filing by petitioner of formal charges against the respondents without complying with the mandated preliminary investigation or at least give the respondents the opportunity to comment violated the latter's right to due process. Hence, the formal charges are void ab initio. It is true that prior notice and hearing are not required in the issuance of a preventive suspension order. However, considering that respondents were preventively suspended in the same formal charges that we now declare null and void, then their preventive suspension is likewise null and void. The CA committed no reversible error in ordering the payment of back salaries during the period of respondents preventive suspension. As the administrative proceedings involved in this case are void, no delinquency or misconduct may be imputed to respondents and the preventive suspension meted them is baseless. Consequently, respondents should be awarded their salaries during the period of their unjustified suspension. The principle of "no work, no pay" does not apply where the employee himself was unlawfully forced out of job. ST. MARYS ACADEMY OF DIPOLOG CITY VS. PALACIO, GR 164913, SEPTEMBER 8, 2010

FACTS: On different dates in the late 1990s, petitioner hired respondents Calibod, Laquio, Santander, Saile and Montederamos, as classroom teachers, and respondent Palacio, as guidance counselor. In separate letters dated March 31, 2000, however, petitioner informed them that their re-application for school year 2000-2001 could not be accepted because they failed to pass the Licensure Examination for Teachers (LET). According to petitioner, as non-board passers, respondents could not continue practicing their teaching profession pursuant to the Department of Education, Culture and Sports (DECS) Memorandum No. 10, S. 1998 which requires incumbent teachers to register as professional teachers pursuant to Section 27 of Republic Act (RA) No. 7836, otherwise known as the Philippine Teachers Professionalization Act of 1994. Together with four other classroom teachers namely Gail Josephine Padilla (Padilla), Virgilio Andalahao (Andalahao), Alma Decipulo (Decipulo), and Marlynn Palacio, who were similarly dismissed by petitioner on the same ground, respondents filed a complaint contesting their termination as highly irregular and premature. They admitted that they are indeed non-board passers, however, they also argued that their security of tenure could not simply be trampled upon for their failure to register with the Professional Regulation Commission (PRC) or to pass the LET prior to the deadline set by RA 7836. While the DECS Memorandum, pursuant to PRC Resolution No. 600, S. 1997, fixed the deadline for teachers to register on September 19, 2000, petitioner claimed that it decided to terminate their services as early as March 31, 2000 because it would be prejudicial to the school if their services will be terminated in the middle of the school year. The CA agreed with the findings of both the Labor Arbiter and the NLRC that the dismissal was effected prematurely in violation of existing laws, noting that respondents still had until September 19, 2000 within

which to pass the LET. As regards Padilla, Marlynn Palacio, Andalahao and Decipulo, the CA found them to be mere probationary, and not regular, employees. Their employment contracts merely expired and since the petitioner did not wish to renew their contracts, then there is no illegal dismissal to speak of.

ISSUE: Whether the dismissal of Respondents was valid.

RULING: The dismissal of Teresita Palacio, Calibod, Laquio, Santander, and Montederamos was premature and defeated their right to security of tenure. Sailes dismissal has legal basis for lack of the required qualification needed for continued practice of teaching. Pursuant to the aforestated law (RA 7836), resolution and memorandum, effective September 20, 2000, only holders of valid certificates of registration, valid professional licenses and valid special/temporary permits can engage in teaching in both public and private schools. Clearly, respondents, in the case at bar, had until September 19, 2000 to comply with the mandatory requirement to register as professional teachers. It is undisputed that respondents were all non-board passers when they were dismissed by petitioner on March 31, 2000. Based on the certification issued by the PRC on October 23, 2000, only respondent Santander passed the LET but only for the elementary level. Thus, she is still unqualified to teach in the high school level. All the others, except respondent Saile who is not qualified to take the LET, failed the examination. Petitioner harps on the fact that even if respondents were to take the LET in August of 2000, the results could not be known in time to meet the September 19, 2000 deadline. However, it is to be noted that the law still allows those who failed the licensure examination between 1996 and 2000 to continue teaching if they obtain temporary or special permits as para-teachers. In other words, as the law has provided a specific timeframe within which respondents could comply, petitioner has no right to deny them of this privilege accorded to them by law. As correctly pointed out by the Labor Arbiter and affirmed by the NLRC and the CA, the dismissal from service of respondents Palacio, Calibod, Laquio, Santander and Montederamos on March 31, 2000 was quite premature. Petitioner reasons out that it could not enter into written contracts with respondents for the period June 2000 to September 19, 2000 without violating the DECSs policy requiring contracts of yearly duration for elementary and high school teachers. We do not agree. Even if respondents contracts stipulate for a period of one year in compliance with DECSs directive, such stipulation could not be given effect for being violative of the law. Provisions in a contract must be read in conjunction with statutory and administrative regulations. Hence, mere reliance on the policy of DECS requiring yearly contracts for teachers should not prevent petitioner from retaining the services of respondents until and unless the law provides for cause for respondents dismissal. Petitioners intention and desire not to put the students education and school operation in jeopardy is neither a decisive consideration for respondents termination prior to the deadline set by law. Again, by setting a deadline for registration as professional teachers, the law has allowed incumbent teachers to practice their teaching profession until September 19, 2000, despite being unregistered and unlicensed. The prejudice that respondents retention would cause to the schools operation is only trivial if not speculative as compared to the consequences of respondents unemployment.

However, we take exception to the case of respondent Saile who, as alleged by petitioner, was not qualified to take the LET as she only had three out of the minimum 10 required educational units to be admitted to take the LET pursuant to Section 15 of RA 7836, which fact respondent Saile did not refute. Not being qualified to take the examination to become a duly licensed professional teacher, petitioner cannot be compelled to retain her services as she cannot possibly obtain the needed prerequisite to allow her to continue practicing the teaching profession. Thus, we find her termination just and legal. Limited backwages computed from March 31, 2000 to September 30, 2000 awarded in favor of Palacio, Calibod, Laquio, Santander and Montederamos are sustained. We note that petitioner only assailed the amount of backwages for the first time in its motion for reconsideration of the Decision of the CA. Thus, the Court cannot entertain the issue for being belatedly raised. Hence, the award of limited backwages covering the period from March 31, 2000 to September 30, 2000 as ruled by the Labor Arbiter and affirmed by both the NLRC and CA is in order. Case: Shimzu Phils Contractor Inc., vs Callanta (GR No. 165923, Sept. 29, 2010) Topic: Termination of employement Facts: Shimzu Phils. Contractor Inc. (Shimzu/petitioner), a corporation engaged in the construction business, employed Virgilio Callanta (respondent) on August 23, 1994 as Safety Officer assigned at petitioners Yutaka-Giken Project and eventually as Project Administrator of petitioners Structural Steel Division (SSD) in 1995. In a Memorandum dated June 7, 1997, respondent was informed that his services will be terminated effective July 9, 1997 due to the lack of any vacancy in other projects and the need to re-align the companys personnel requirements brought about by the imperatives of maximum financial commitments. Callanta then filed an illegal dismissal complaint against Shimzu claiming that petitioner failed to comply with the requirements called for by law before implementing a retrenchment program thereby rendering it legally infirmed. First, it did not comply with the provision of the Labor Code mandating the service of notice of retrenchment. He pointed out that the notice sent to him never mentioned retrenchment but only project completion as the cause of termination. Also, the notice sent to the Department of Labor and Employment (DOLE) did not conform to the 30-day prior notice requirement. Second, petitioner failed to use fair and reasonable criteria in determining which employees shall be retrenched or retained. Of course, Shimzu refuted all of these and alleges that the termination was valid and that it was done in good faith. It also maintains that it afforded Callanta procedural due process in effecting the said termination. The Labor Arbiter rendered a Decision holding that respondent was validly retrenched. The NLRC affirmed the decision but awarded damages since Shimzu failed to comply with the 30-day prior notice to the DOLE. The Court of Appeals set aside the NLRCs ruling holding that the dismissal was altogether invalid. Issue: W/N the dismissal was valid. Ruling: The dismissal is valid (and remains to be so) BUT Shimzu failed to observe the 30day notice rule thus entitling Callanta an award for damages. There was substantial compliance for a valid retrenchment; petitioner used fair and reasonable criteria in effecting retrenchment. As an authorized cause for separation from service under Article 283 of the Labor Code,24 retrenchment is a valid exercise of management prerogative subject to the strict requirements set by jurisprudence:

(1) That the retrenchment is reasonably necessary and likely to prevent business losses which, if already incurred, are not merely de minimis, but substantial, serious, actual and real, or if only expected, are reasonably imminent as perceived objectively and in good faith by the employer; (2) That the employer served written notice both to the employees and to the Department of Labor and Employment at least one month prior to the intended date of retrenchment; (3) That the employer pays the retrenched employees separation pay equivalent to one month pay or at least month pay for every year of service, whichever is higher; (4) That the employer exercises its prerogative to retrench employees in good faith for the advancement of its interest and not to defeat or circumvent the employees right to security of tenure; and (5) That the employer used fair and reasonable criteria in ascertaining who would be dismissed and who would be retained among the employees, such as status, x x x efficiency, seniority, physical fitness, age, and financial hardship for certain workers In implementing its retrenchment scheme, petitioner was constrained to streamline its operations and to downsize its complements in a progressive manner in order not to jeopardize the completion of its projects. Thus, several departments like the Civil Works Division, Electro-mechanical Works Division and the Territorial Project Management Offices, among others, were abolished in the early part of 1996 and thereafter the Structural Steel Division, of which respondent was an Administrator. Respondent was among the last batch of employees who were retrenched and by the end of year 1997, all of the employees of the Structural Steel Division were severed from employment. we find that petitioner implemented its retrenchment program in good faith because it undertook several measures in cutting down its costs, to wit, withdrawing certain privileges of petitioners executives and expatriates; limiting the grant of additional monetary benefits to managerial employees and cutting down expenses; selling of company vehicles; and infusing fresh capital into the company. Respondent did not attempt to refute that petitioner adopted these measures before implementing its retrenchment program. In fine, we hold that petitioner was able to prove that it incurred substantial business losses, that it offered to pay respondent his separation pay, that the retrenchment scheme was arrived at in good faith, and lastly, that the criteria or standard used in selecting the employees to be retrenched was work efficiency which passed the test of fairness and reasonableness. However, although there was authorized cause to dismiss respondent from the service, we find that petitioner did not comply with the 30-day notice requirement. Petitioner maintains that it substantially complied with the requirement of the law in that it, in fact, submitted two notices or reports with the DOLE. However, petitioner admitted that the reports were submitted 21 days, in the case of the first notice, and 16 days, in the case of the second notice, before the intended date of respondents dismissal. to be consistent with our ruling in Jaka Food Processing Corporation v. Pacot, the indemnity in the form of nominal damages should be fixed in the amount of P50,000.00.

Case: Manila Mining Corp. Employees Associatio-FFW vs Manila Mining Corp. (GR No. 178222-23) Topic: Termination of employment Facts: Respondent Manila Mining Corporation (MMC) is a publicly-listed corporation engaged in large-scale mining for gold and copper ore. MMC is required by law to maintain a tailings containment facility to store the waste material generated by its mining operations. Consequently, MMC constructed several tailings dams to treat and store its waste materials. One of these dams was Tailings Pond No. 7 (TP No. 7), which was constructed in 1993 and was operated under a permit issued by the Department of Environment and Natural Resources (DENR), through its Environmental Management Bureau (EMB) in Butuan City, Agusan del Norte. Upon expiration of the tailings permit on 25 July 2001, DENR-EMB did not issue a permanent permit due to the inability of MMC to secure an Environmental Compliance Certificate (ECC). An essential component of an ECC is social acceptability or the consent of the residents in the community to allow TP No. 7 to operate, which MMC failed to obtain.4 Hence, it was compelled to temporarily shut down its mining operations, resulting in the temporary lay-off of more than 400 employees in the mine site. On 30 July 2001, MMC called for the suspension of negotiations on the CBA with the Union until resumption of mining operations. Some of the layed-off employees are the respondents/complainants in this petition. Complainants challenged the validity of their lay-off on the averment that MMC was not suffering from business losses. They alleged that MMC did not want to bargain collectively with the Union, so that instead of submitting their counterproposal to the CBA, MMC decided to terminate all union officers and active members. Respondents justified the temporary lay-off as bona fide in character and a valid management prerogative pending the issuance of the permit to continuously operate TP No. 7. The National Labor Relations Commission (NLRC) modified the judgment of the labor arbiter and ordered the payment of separation pay equivalent to one month pay for every year of service. It ratiocinated that the temporary lay-off, which exceeded more than six (6) months, had the effect of severance of the employer-employee relationship. The Court of Appeals affirmed the NLRCs decision but modified the amount of separation pay. Issue: W/N the dismissal (lay-off exceeding 6 months) is valid. Ruling: The lay-off is valid but it does not excuse MMC from paying separation pay. The lay-off is neither illegal nor can it be considered as unfair labor practice. Despite all efforts exerted by MMC, it did not succeed in obtaining the consent of the residents of the community where the tailings pond would operate, one of the conditions imposed by DENR-EMB in granting its application for a permanent permit. It is precisely MMCs faultless failure to secure a permit which caused the temporary shutdown of its mining operations. As aptly put by the Court of Appeals: The evidence on record indeed clearly shows that MMCs suspension of its mining operations was bonafide and the reason for such suspension was supported by substantial evidence. MMC cannot conduct mining operations without a tailings disposal system. For this purpose, MMC operates TP No. 7 under a valid permit from the Department of Environment and Natural Resources (DENR) through its Environmental Management Bureau (EMB). In fact, a "Temporary Authority to Construct and Operate" was issued on January 25, 2001 in favor of

MMC valid for a period of six (6) months or until July 25, 2001. The NLRC did not dispute MMCs claim that it had timely filed an application for renewal of its permit to operate TP No. 7 but that the renewal permit was not immediately released by the DENR-EMB, hence, MMC was compelled to temporarily shutdown its milling and mining operations. Here, it is once apparent that the suspension of MMCs mining operations was not due to its fault nor was it necessitated by financial reasons. Such suspension was brought about by the non-issuance of a permit for the continued operation of TP No. 7 without which MMC cannot resume its milling and mining operations. Even as we declare the validity of the lay-off, we cannot say that MMC has no obligation at all to the laid-off employees. The validity of its act of suspending its operations does not excuse it from paying separation pay. We observe that MMC was forced by the circumstances, hence, it resorted to a temporary suspension of its mining and milling operations. It is clear that MMC had no choice. It would be well to reiterate at this juncture that the reason for such suspension cannot be attributed to DENR-EMB. It is thus, evident, that the MMC declared temporary suspension of operations to avert further losses Said provision (See Article 283) is emphatic that an employee, who was dismissed due to cessation of business operation, is entitled to the separation pay equivalent to one (1) month pay or at least one-half (1/2) month pay for every year of service, whichever is higher. And it is jurisprudential that separation pay should also be paid to employees even if the closure or cessation of operations is not due to losses. Under Article 283, the employer can lawfully close shop anytime as long as cessation of or withdrawal from business operations is bona fide in character and not impelled by a motive to defeat or circumvent the tenurial rights of employees, and as long as he pays his employees their termination pay in the amount corresponding to their length of service. The cessation of operations, in the case at bar is of such nature. It was proven that MMC stopped its operations precisely due to failure to secure permit to operate a tailings pond. Separation pay must nonetheless be given to the separated employees. G.R. No. 183390 February 16, 2011 PLASTIMER INDUSTRIAL CORPORATION and TEO KEE BIN vs NATALIA C. GOPO, KLEENIA R. VELEZ, FILEDELFA T. AMPARADO, MIGNON H. JOSEPH, AMELIA L. CANDA, MARISSA D. LABUNOS, MELANIE T. CAYABYAB, MA. CORAZON DELA CRUZ, and LUZVIMINDA CABASA, Facts: On 7 May 2004, Plastimer issued a Memorandum informing all its employees of the decision of the Board of Directors to downsize and reorganize its business operations due to withdrawal of investments and shares of stocks which resulted in the change of its corporate structure. On 14 May 2004, the employees of Plastimer, including the respondents were served written notices of their termination effective 13 June 2004. On 24 May 2004, Plastimer andPlastimer Industrial Corporation Christian Brotherhood (PICCB), the incumbent sole and exclusive collective bargaining representative of all rank and file employees, entered into a Memorandum of Agreement (MOA) relative to the terms and conditions that would govern the retrenchment of the affected employees. On 26 May 2004, Plastimer submitted to DOLE an Establishment Termination Report containing the list of the employees affected by the reorganization and downsizing. On 28 May 2004, the affected employees, including respondents, signed individual Release Waiver and Quitclaim.

Thereafter, respondents filed a complaint against Plastimer and its President Teo Kee Bin before the Labor Arbiter for illegal dismissal. Respondents alleged that they did not voluntarily relinquish their jobs and that they were required to sign the waivers and quitclaims without giving them an opportunity to read them and without explaining their contents and that Plastimer failed to establish the causes/valid reasons for the retrenchment and to comply with the one-month notice to the DOLE as well as the standard prescribed under the Collective Bargaining Agreement between Plastimer and the employees. Petitioners countered that the retrenchment was a management prerogative and that respondents got their retrenchment or separation pay even before the effective date of their separation from service. The Labor Arbiter ruled that petitioners were able to prove that there was a substantial withdrawal of stocks that led to the downsizing of the workforce. The Labor Arbiter ruled that notice to the affected employees were given on 14 May 2004, 30 days before its effective date on 14 June 2004. It was only the notice to the DOLE that was filed short of the 30-day period. NLRC affirmed the Labor Arbiters decision. The Court of Appeals reversed the NLRC decision. The Court of Appeals ruled that there was no valid cause for retrenchment. The Court of Appeals noted that the change of management and majority stock ownership was brought about by execution of deeds of assignment by several stockholders in favor of other stockholders. CA noted that while Plastimer claimed financial losses from 2001 to 2004, records showed an improvement of its finances in 2003; that Plastimer failed to use a reasonable and fair standard or criteria in ascertaining who would be dismissed and who would be retained among its employees. The Court of Appeals ruled that the MOA between Plastimer and PICCB only recognized the need for partial retrenchment and the computation of retrenchment pay without disclosing the criteria in the selection of the employees to be retrenched. Issue: Whether or not respondents were illegally retrenched by petitioners Held: The petition has merit. One-Month Notice of Termination of Employment Article 283 of the Labor Code provides: ART. 283. Closure of establishment and reduction of personnel. - The employer may also terminate the employment of any employee due to the installation of labor-saving devices, redundancy, retrenchment to prevent losses or the closing or cessation of operation of the establishment or undertaking unless the closing is for the purpose of circumventing the provisions of this Title, by serving a written notice on the workers and the Department of Labor and Employment at least one (1) month before the intended date thereof. In case of termination due to the installation of labor saving devices or redundancy, the worker affected thereby shall be entitled to a separation pay equivalent to at least his one (1) month pay or to at least one (1) month pay for every year of service, whichever is higher. In case of retrenchment to prevent losses and in cases of closures or cessation of operations of establishment or undertaking not due to serious business losses or financial reverses, the separation pay shall be equivalent to one (1) month pay or to at least one-half (1/2) month pay for every year of service, whichever is higher. A fraction of at least six (6) months shall be considered one (1) whole year. In this case, Plastimer submitted the notice of termination of employment to the DOLE on 26 May 2004. However, notice to the affected employees were given to them on 14 May 2004 or 30 days before the effectivity of their termination from employment on 13 June 2004. While notice to the DOLE was short of the one-month notice requirement, the affected employees were sufficiently informed of their retrenchment 30 days before its effectivity. Petitioners failure to comply with the one-month notice to the DOLE is only a procedural infirmity and does not render the retrenchment illegal. In Agabon v. NLRC, we ruled that when the dismissal is for a just cause, the absence of proper notice should not nullify the

dismissal or render it illegal or ineffectual. Instead, the employer should indemnify the employee for the violation of his statutory rights. Here, the failure to fully comply with the one-month notice of termination of employment did not render the retrenchment illegal but it entitles respondents to nominal damages. Validity of Retrenchment The Court of Appeals acknowledged that an independent auditor confirmed petitioners losses for the years 2001 and 2002. The fact that there was a net income in 2003 does not justify the Court of Appeals ruling that there was no valid reason for the retrenchment. Records showed that the net income of P6,185,707.05 for 2003 was not even enough for petitioners to recover from the P52,904,297.88 loss in 2002. Article 283 of the Labor Code recognizes retrenchment to prevent losses as a right of the management to meet clear and continuing economic threats or during periods of economic recession to prevent losses. There is no need for the employer to wait for substantial losses to materialize before exercising ultimate and drastic option to prevent such losses. Validity of Waivers and Quitclaims We agree with the Labor Arbiter and the NLRC that respondents were sufficiently apprised of their rights under the waivers and quitclaims that they signed. Each document contained the signatures of Edward Marcaida (Marcaida), PICCB President, and Atty. Bayani Diwa, the counsel for the union, which proved that respondents were duly assisted when they signed the waivers and quitclaims. Further, Marcaidas letter to Teo Kee Bin, dated 28 May 2004, proved that proper assistance was extended upon respondents. Hence, we rule that the waivers and quitclaims that respondents signed were valid. G.R. No. 191008 QUIRICO LOPEZ Vs ALTURAS GROUP OF COMPANIES and/or MARLITO UY April 11, 2011

Facts:

Quirico Lopez was hired by Alturas in 1997 as truck driver. Ten years later he was dismissed after he was allegedly caught by respondents security guard in the act of attempting to smuggle out of the company premises 60 kilos of scrap iron worth P840 aboard respondents van that was then assigned to him. Petitioner denied the allegations by a handwritten explanation written upon receipt of show cause notice.

Thereafter, the company terminated his employment by Notice of Termination on the grounds of loss of trust and confidence, and of violation of company rules and regulations. Respondent company also took into account the result of an investigation showing that petitioner had been smuggling out its cartons which he had sold, in conspiracy with one Maritess Alaba, for his own benefit to thus prompt it to

file a criminal case for Qualified Theft against him before the RTC. It had in fact earlier filed another criminal case for Qualified Theft against petitioner arising from the theft of the scrap iron.

Petitioner filed a complaint for illegal dismissal and underpayment of wages. He claimed that the smuggling charge against him was fabricated to justify his illegal dismissal.The Labor Arbiter held that petitioners dismissal was justified, for he, a truck driver, held a position of trust and confidence, and his act of stealing company property was a violation of the trust reposed upon him. NLRC set aside the Labor Arbiters Decision. The NLRC went on to hold that petitioner should have been afforded, or at least advised of the right to counsel. It thus held that any evaluation which was based only on the explanation to the show-cause letter and any so-called investigation but without confrontation of the vital witnesses, do[es] not suffice. The CA reversed the NLRC ruling. It held that respondent was justified in terminating petitioners employment on the ground of loss of trust and confidence by his acts. It further held that the evidence supporting the criminal charge are sufficient to show prima facie guilt, which constitutes just cause for petitioners dismissal; and that petitioners subsequent acquittal in the criminal case did not automatically preclude a determination that he is guilty of acts inimical to the employers interest resulting in loss of trust and confidence. Albeit the CA found that petitioners dismissal was for a just cause, it held that due process was not observed when respondent company failed to give him a chance to defend his side in a proper hearing.

Issue: I. the legality of the act of dismissal, which constitutes substantive due process II. the legality of the manner of dismissal which constitutes procedural due process

Held:

I. As to substantive due process, the Court finds that respondent companys loss of trust and confidence arising from petitioners smuggling out of the scrap iron and his past acts of unauthorized selling cartons belonging to respondent company, constituted just cause for terminating his services.

Loss of trust and confidence as a ground for dismissal of employees covers employees occupying a position of trust who are proven to have breached the trust and confidence reposed on them. Apropos is Cruz v. Court of Appeals[13] which explains the basis and quantum of evidence of loss of trust and confidence, viz: In addition, the language of Article 282(c) of the Labor Code states that the loss of trust and confidence must be based on willful breach of the trust reposed in the employee by his employer. Such 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. Moreover, it must be based on substantial evidence and not on the employers whims or caprices or suspicions otherwise, the employee would eternally remain at the mercy of the employer. Loss of confidence must not be indiscriminately used as a shield by the employer against a

claim that the dismissal of an employee was arbitrary. And, in order to constitute a just cause for dismissal, the act complained of must be work-related and shows that the employee concerned is unfit to continue working for the employer. In addition, loss of confidence as a just cause for termination of employment is premised on the fact that the employee concerned holds a position of responsibility, trust and confidence or that the employee concerned is entrusted with confidence with respect to delicate matters, such as the handling or care and protection of the property and assets of the employer. The betrayal of this trust is the essence of the offense for which an employee is penalized.

Petitioner, a driver assigned with a specific vehicle, was entrusted with the transportation of respondent companys goods and property, and consequently with its handling and protection, hence, even if he did not occupy a managerial position, he can be said to be holding a position of responsibility. As to his act principal ground for his dismissal his attempt to smuggle out the scrap iron belonging to respondent company, the same is undoubtedly work-related.

II. It is, however, with respect to the CAs finding that petitioner was not afforded procedural due process that the Court deviates from. Procedural due process has been defined as giving an opportunity to be heard before judgment is rendered. In termination cases, Perez v. Philippine Telegraph and Telephone Company,[16]illuminates on the correct proceedings to be followed therein in order to comply with the due process requirement: The above rulings are a clear recognition that the employer may provide an employee with ample opportunity to be heard and defend himself with the assistance of a representative or counsel in ways other than a formal hearing. The employee can be fully afforded a chance to respond to the charges against him, adduce his evidence or rebut the evidence against him through a wide array of methods, verbal or written. After receiving the first notice apprising him of the charges against him, the employee may submit a written explanation (which may be in the form of a letter, memorandum, affidavit or position paper) and offer evidence in support thereof, like relevant company records (such as his 201 file and daily time records) and the sworn statements of his witnesses. For this purpose, he may prepare his explanation personally or with the assistance of a representative or counsel. He may also ask the employer to provide him copy of records material to his defense. His written explanation may also include a request that a formal hearing or conference be held. In such a case, the conduct of a formal hearing or conference becomes mandatory, just as it is where there exist substantial evidentiary disputes or where company rules or practice requires an actual hearing as part of employment pretermination procedure.

Petitioner was given the opportunity to explain his side when he was informed of the charge against him and required to submit his written explanation with which he complied. That there might have been no hearing is of no moment, for as Autobus Workers Union v. NLRC[17] holds:

This Court has held that there is no violation of due process even if no hearing was conducted, where the party was given a chance to explain his side of the controversy. What is frowned upon is the denial of the opportunity to be heard.

The right to counsel and the assistance of one in investigations involving termination cases is neither indispensable nor mandatory, except when the employee himself requests for one or that he manifests that he wants a formal hearing on the charges against him. In petitioners case, there is no showing that he requested for a formal hearing to be conducted or that he be assisted by counsel. Verily, since he was furnished a second notice informing him of his dismissal and the grounds therefor, the twin-notice requirement had been complied with to call for a deletion of the appellate courts award of nominal damages to petitioner.

As Vergara v. NLRC holds: An employees acquittal in a criminal case does not automatically preclude a determination that he has been guilty of acts inimical to the employers interest resulting in loss of trust and confidence. Corollarily, the ground for the dismissal of an employee does not require proof beyond reasonable doubt; as noted earlier, the quantum of proof required is merely substantial evidence. More importantly, the trial court acquitted petitioner not because he did not commit the offense, but merely because of the failure of the prosecution to prove his guilt beyond reasonable doubt.. In other words, while the evidence presented against petitioner did not satisfy the quantum of proof required for conviction in a criminal case, it substantially proved his culpability which warranted his dismissal from employment.

Juliet Apicable vs Multimed Industries Inc. May 30, 2011 GR No. 178903 Facts: Petitioner Juliet Apicable disobeyed the order of transfer of the respondent Incorporation from Cebu to Pasig City under the advise of her lawyer. On November 4, 2002, respondent company sent petitioner a notice of termination effective November 7, 2003 for insubordination, prompting petitioner to file a complaint for illegal dismissal, non-payment of overtime pay, 13th month pay, service incentive leave pay, separation pay, damages and attorney's fees before the Labor Arbiter. By Decision of March 22, 2005, the Labor Arbiter dismissed petitioner's complaint, ruling that she was dismissed for just cause, i.e., fraud or loss or trust and confidence under Article 282 (a) and (c) of the Labor Code. NLRC and CA affirmed the LA ruling. Issue: whether petitioner is entitled separation pay by way of financial assistance Held: The petition fails.

Reno Foods, Inc. v. Nagkakaisang Lakas ng Manggagawa (NLM))-Katipunan[16]explains the propriety of granting separation pay in termination cases in this wise:

The law is clear. Separation pay is only warranted when the cause for termination is not attributable to the employee's fault, such as those provided in Articles 283 and 284 of the Labor Code, as well as in cases of illegal dismissal in which reinstatement is no longer feasible. It is not allowed when an employee is dismissed for just cause, such as serious misconduct. It is true that there have been instances when the Court awarded financial assistance to employees who were terminated for just causes, on grounds of equity and social justice. The same, however, has been curbed and rationalized in Philippine Long Distance Telephone Company v. National Labor Relations Commission. In that case, we recognized the harsh realities faced by employees that forced them, despite their good intentions, to violate company policies, for which the employer can rightly terminate their employment. For these instances, the award of financial assistance was allowed. But, in clear and unmistakable language, we also held that the award of financial assistance shall not be given to validly terminated employees, whose offenses are iniquitous or reflective of some depravity in their moral character. When the employee commits an act of dishonesty, depravity, or iniquity, the grant of financial assistance is misplaced compassion. It is tantamount not only to condoning a patently illegal or dishonest act, but an endorsement thereof. It will be an insult to all the laborers who despite their economic difficulties, strive to maintain good values and moral conduct. Petitioner was, it bears reiteration, dismissed for wilfully disobeying the lawful order of her employer to transfer from Cebu to Pasig City. As correctly noted by the appellate court, petitioner knew and accepted respondent company's policy on transfers when she was hired and was in fact even transferred many times from one area of operations to another - Bacolod City, Iloilo City and Cebu.

Bascon v. Court of Appeals[17] outlines the elements of gross insubordination as follows:

As regards the appellate court's finding that petitioners were justly terminated for gross insubordination or wilful disobedience, Article 282 of the Labor Code provides in part: An employer may terminate an employment for any of the following causes: (a) Serious misconduct or wilful disobedience by the employee of the lawful orders of his employer or representative in connection with his work. However, wilful disobedience of the employer's lawful orders, as a just cause for dismissal of an employee, envisages the concurrence of at least two requisites: (1) the employee's assailed conduct must have been wilful, 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. (emphasis and underscoring supplied) Clearly, petitioner's adamant refusal to transfer, coupled with her failure to heed the order for her return the company vehicle assigned to her and, more importantly, allowing her counsel to write letters couched in harsh language to her superiors unquestionably show that she was guilty of insubordination, hence, not entitled to the award of separation pay.

WILLIAM ENDELISEO BARROGA vs.DATA CENTER COLLEGE OF THE PHILIPPINES and WILFRED BACTAD June 27, 2011 G.R. No. 174158 Facts: Petitioner William Barroga was employed as an Instructor in Data Center College Laoag City branch in Ilocos Norte. On October 3, 2003, petitioner received a Memorandum transferring him to Data Center College Bangued, Abra branch as Head for Education/Instructor due to an urgent need for an experienced officer and computer instructor thereat. However, petitioner declined to accept his transfer to Abra citing the deteriorating health condition of his father and the absence of additional remuneration to defray expenses for board and lodging which constitutes implicit diminution of his salary. On November 10, 2003, petitioner filed a Complaint for constructive dismissal against respondents. Petitioner alleged that his proposed transfer to Abra constitutes a demotion in rank and diminution in pay and would cause personal inconvenience and hardship. He argued that

although he was being transferred to Abra branch supposedly with the same position he was then holding in Laoag branch as Head for Education, he later learned through a Memorandum from the administrator of Abra branch that he will be re-assigned merely as an instructor, thereby relegating him from an administrative officer to a rank-and-file employee. Moreover, the elimination of his allowance for board and lodging will result to an indirect reduction of his salary which is prohibited by labor laws. The Labor Arbiter ruled that there was no demotion in rank as petitioners original appointment as instructor on November 11, 1991 conferred upon respondents the right to transfer him to any of the schools branches and that petitioners designation as Head for Education can be withdrawn anytime since he held such administrative position in a non-permanent capacity. The Labor Arbiter held that the exclusion of his allowance for board, lodging and transportation was not constructive dismissal, enunciating that the concept of non-diminution of benefits under Article 100 of the Labor Code prohibits the elimination of benefits that are presently paid to workers to satisfy the requirements of prevailing minimum wage rates. Since the benefit claimed by petitioner is beyond the coverage of the minimum wage law, its non-inclusion in his re-assignment is not considered a violation. The NLRC affirmed the findings of the Labor Arbiter that there was no constructive dismissal. It ruled that the management decision to transfer petitioner was well within the rights of respondents in consonance with petitioners contract of employment and which was not sufficiently shown to have been exercised arbitrarily by respondents. It agreed with the Labor Arbiter that petitioners designation as Head for Education was temporary for which he could not invoke any tenurial security. Further, the NLRC held that it was not proven with certainty that the transfer would unduly prejudice petitioners financial situation. The NLRC, however, found petitioner to be entitled to overload honorarium pursuant to CHED Memorandum Order No. 25 for having assumed the position of Head for Education, albeit on a temporary basis. CA dismissed due to procedural infirmities. Issue: WON the petitioner is entitled to backwages and benefits Held:

Petitioners transfer is not tantamount to constructive dismissal.

Nevertheless, the instant petition merits dismissal on substantial grounds. After a careful review of the records and the arguments of the parties, we do not find any sufficient basis to conclude that petitioners re-assignment amounted to constructive dismissal. Constructive dismissal is quitting because continued employment is rendered impossible, unreasonable or unlikely, or because of a demotion in rank or a diminution of pay. It exists when there is a clear act of discrimination, insensibility or disdain by an employer which becomes unbearable for the employee to continue his employment.Petitioner alleges that the real purpose of his transfer is to demote him to the rank of an instructor from being the Head for Education performing administrative functions. Petitioner further argues that his re-assignment will entail an indirect reduction of his salary or diminution of pay considering that no additional allowance will be given to cover for board and lodging expenses. He claims that such additional allowance was given in the past and therefore cannot be discontinued and withdrawn without violating the prohibition against non-diminution of benefits. These allegations are bereft of merit. Petitioner was originally appointed as instructor in 1991 and was given additional administrative functions as Head for Education during his stint in Laoag branch. He did not deny having been designated as Head for Education in a temporary capacity for which he cannot invoke any tenurial security. Hence, being temporary in character, such designation is terminable at the pleasure of respondents who made such appointment. Moreover, respondents right to transfer petitioner rests not only on contractual stipulation but also on jurisprudential authorities. The Labor Arbiter and the NLRC both relied on the condition laid down in petitioners employment contract that respondents have the prerogative to assign petitioner in any of its branches or tie-up schools as the necessity demands. In any event, it is management prerogative for employers to transfer employees on just and valid grounds such as genuine business necessity. It is also important to stress at this point that respondents have shown that it was experiencing some financial constraints. Because of this, respondents opted to temporarily suspend the post-graduate studies of petitioner and some other employees who were given scholarship grants in order to prioritize more important expenditures. Indeed, we cannot fully subscribe to petitioners contention that his re-assignment was tainted with bad faith. As a matter of fact, respondents displayed commiseration over the health condition of petitioners father when they suggested that he take an indefinite leave of absence to attend to this personal difficulty. Also, during the time when respondents directed all its administrative officers to submit courtesy resignations, petitioners letter of resignation was not accepted.This bolsters the fact that respondents never intended to get rid of petitioner. In fine, petitioners assertions of bad faith on the part of respondents are purely unsubstantiated conjectures.

The Court agrees with the Labor Arbiter that there was no violation of the prohibition on diminution of benefits. Indeed, any benefit and perks being enjoyed by employees cannot be reduced and discontinued, otherwise, the constitutional mandate to afford full protection to labor shall be offended. But the rule against diminution of benefits is applicable only if the grant or benefit is founded on an express policy or has ripened into a practice over a long period which is consistent and deliberate. Petitioner was granted a monthly allowance for board and lodging during his stint as instructor in UNP-Vigan, Ilocos Sur as evinced in a letter dated June 6, 1992 with the condition stated in the following tenor: Please be informed that during your assignment at our tie-up at UNP-VIGAN, ILOCOS SUR , you will be receiving a monthly Board and Lodging of Pesos: One Thousand Two Hundred x x x (P1,200.00).

However, you are only entitled to such allowance, if you are assigned to the said tie-up and the same will be changed or forfeited depending upon the place of your next reassignment (Italics supplied.)
Petitioner failed to present any other evidence that respondents committed to provide the additional allowance or that they were consistently granting such benefit as to have ripened into a practice which cannot be peremptorily withdrawn. Moreover, there is no conclusive proof that petitioners basic salary will be reduced as it was not shown that such allowance is part of petitioners basic salary. Hence, there will be no violation of the rule against diminution of pay enunciated under Article 100 of the Labor Code.

G.R. No. 169905

September 7, 2011

St. PAUL COLLEGE QUEZON CITY, SR. LILIA THERESE TOLENTINO, SPC, SR. BERNADETTE RACADIO, SPC, AND SR. SARAH MANAPOL, Petitioners, vs. REMIGIO MICHAEL A. ANCHETA II AND CYNTHIA A. ANCHETA, Respondent. FACTS: Respondent Remigio Michael was hired by St. Paul College, Quezon City (SPCQC), a private Catholic educational institution, as a teacher in the General Education Department with a probationary rank in the School Year (SY) 1996-1997 which was renewed in the following SY 1997-1998. His wife, respondent Cynthia was hired by the same school as a part time teacher of the Mass Communication Department in the second semester of SY 1996-1997 and her appointment was renewed for SY 1997-1998. On February 13, 1998, respondent Remigio Michael wrote a letter 6 to petitioner Sr. Lilia, signifying his intention to renew his contract with SPCQC for SY 1998-1999. A letter7 of the same tenor was also written by respondent Cynthia addressed to petitioner Sr. Lilia. Petitioner Sr. Bernadette, on March 9, 1998, sent two letters8 with the same contents to the respondent spouses informing them that upon the recommendation of the College Council, the school is extending to them new contracts for SY 1998-1999. A letter9 dated April 22, 1998 was sent to petitioner Sr. Bernadette and signed by some of the teachers of SPCQC, including the respondent spouses. The said letter contained the teachers' sentiments regarding two school policies, namely: first, the policy of penalizing the delay in encoding final grades and, second, the policy of withholding salaries of the teachers. Meanwhile, a letter10 dated April 21, 1998 (the date, later on contested by respondent Remigio Michael to be ante-dated) was written by petitioner Sr. Bernadette to respondent Remigio Michael, reiterating the conversation that took place between them the day before the date of the said letter (April 20, 1998). The letter enumerated the departmental and instructional policies that respondent Remigio Michael failed to comply with, such as the late submission of final grades, failure to submit final test questions to the Program Coordinator, the giving of tests in the essay

form instead of the multiple choice format as mandated by the school and the high number of students with failing grades in the classes that he handled. Thereafter, petitioner Sr. Bernadette wrote a letter11 dated April 30, 1998 to petitioner Sr. Lilia, endorsing the immediate termination of the teaching services of the respondent spouses Respondent spouses were given an opportunity to comment on the above letter-recommendation of petitioner Sr. Bernadette.13 On May 4, 1998, respondent spouses sent their respective comments14 to petitioner Sr. Lilia. Subsequently, the respondent spouses received their respective letters of termination15 on May 14, 1998. Respondent spouses sent a letter16 for reconsideration to petitioner Sr. Lilia, but was eventually denied.17 Thus, respondent spouses filed a Complaint18 for illegal dismissal with the NLRC. On November 20, 2000, the Labor Arbiter dismissed the complaint . The decision of the Labor Arbiter was appealed to the NLRC, but was affirmed by the latter After the denial of their motion for reconsideration with the NLRC,21 the respondent spouses filed a petition for certiorari with the CA. In its Decision22 dated July 8, 2005, the CA granted the petition and reversed the decisions of the Labor Arbiter and the NLRC hence, the present petition. ISSUES: I. WON ATTY. REMIGIO MICHAEL A. ANCHETA II AND MS. CYNTHIA A. ANCHETA WERE LEGALLY TERMINATED BY ST. PAUL COLLEGE QUEZON CITY. II. WON ATTY. REMIGIO MICHAEL A. ANCHETA II AND MS. CYNTHIA A. ANCHETA WERE DISMISSED FOR JUST CAUSE AND AFTER DUE PROCESS. RULING: A reality we have to face in the consideration of employment on probationary status of teaching personnel is that they are not governed purely by the Labor Code. 25 The Labor Code is supplemented with respect to the period of probation by special rules found in the Manual of Regulations for Private Schools. 26 On the matter of probationary period, Section 92 of these regulations provides: Section 92. Probationary Period. - Subject in all instances to compliance with the Department and school requirements, the probationary period for academic personnel shall not be more than three (3) consecutive years of satisfactory service for those in the elementary and secondary levels, six (6) consecutive regular semesters of satisfactory service for those in the tertiary level, and nine (9) consecutive trimesters of satisfactory service for those in the tertiary level where collegiate courses are offered on a trimester basis. A probationary employee or probationer is one who is on trial for an employer, during which the latter determines whether or not he is qualified for permanent employment.27 The probationary employment is intended to afford the employer an opportunity to observe the fitness of a probationary employee while at work, and to ascertain whether he will become an efficient and productive employee.28 While the

employer observes the fitness, propriety and efficiency of a probationer to ascertain whether he is qualified for permanent employment, the probationer, on the other hand, seeks to prove to the employer that he has the qualifications to meet the reasonable standards for permanent employment.29 Thus, the word probationary, as used to describe the period of employment, implies the purpose of the term or period, not its length.30 The common practice is for the employer and the teacher to enter into a contract, effective for one school year.31At the end of the school year, the employer has the option not to renew the contract, particularly considering the teacher's performance.32 If the contract is not renewed, the employment relationship terminates.33 If the contract is renewed, usually for another school year, the probationary employment continues.34 Again, at the end of that period, the parties may opt to renew or not to renew the contract.35 If renewed, this second renewal of the contract for another school year would then be the last year since it would be the third school year of probationary employment.36 At the end of this third year, the employer may now decide whether to extend a permanent appointment to the employee, primarily on the basis of the employee having met the reasonable standards of competence and efficiency set by the employer.37 For the entire duration of this three-year period, the teacher remains under probation.38 Upon the expiration of his contract of employment, being simply on probation, he cannot automatically claim security of tenure and compel the employer to renew his employment contract.39 Petitioner school contends that it did not extend the contracts of respondent spouses. It claims that, although, it has sent letters to the spouses informing them that the school is extending to them new contracts for the coming school year, the letters do not constitute as actual employment contracts but merely offers to teach on the said school year. The respondent spouses wrote to the president, petitioner Sr. Lilia: Respondent Remigio Michael: Dear Sister, Peace! This signifies my intention of renewing my contract of employment with [SPCQC] for SY 1998-1999. Thank you.40 Respondent Cynthia: Dear Sister, I wish to continue teaching in St. Paul College Quezon City for school year 1998-99. Thank you very much.41 In response to the above, the college dean, petitioner Sr. Bernadette wrote the respondent spouses letters with the same contents, thus: This is to acknowledge receipt of your letter of application to teach during the School year of 1998-1999. Upon the recommendation of the College Council, I am happy to inform you that the school is extending to you a new contract for School year 1998-1999.

I wish to take this opportunity to thank you for the service which you have rendered to our students and to the school during the past School year 1997-1998. I hope you will again go out of your way and cooperate in this apostolate that we are doing. Congratulations and I look forward to a fruitful and harmonious time with you.42 Section 91 of the Manual of Regulations for Private Schools, states that: Section 91. Employment Contract. Every contract of employment shall specify the designation, qualification, salary rate, the period and nature of service and its date of effectivity, and such other terms and condition of employment as may be consistent with laws and rules, regulations and standards of the school. A copy of the contract shall be furnished the personnel concerned.43 It is important that the contract of probationary employment specify the period or term of its effectivity.44 The failure to stipulate its precise duration could lead to the inference that the contract is binding for the full three-year probationary period.45 Therefore, the letters sent by petitioner Sr. Racadio, which were void of any specifics cannot be considered as contracts. The closest they can resemble to are that of informal correspondence among the said individuals. As such, petitioner school has the right not to renew the contracts of the respondents, the old ones having been expired at the end of their terms. Assuming, arguendo, that the employment contracts between the petitioner school and the respondent spouses were renewed, this Court finds that there was a valid and just cause for their dismissal. The Labor Code commands that before an employer may legally dismiss an employee from the service, the requirement of substantial and procedural due process must be complied with.46 Under the requirement of substantial due process, the grounds for termination of employment must be based on just47 or authorized causes.48 Petitioner school charged respondent Remigio Michael of non-compliance with a school policy regarding the submission of final test questions to his program coordinator for checking or comment. Following due process, the same respondent admitted the charge in his letter. The plain admissions of the charges against them were the considerations taken into account by the petitioner school in their decision not to renew the respondent spouses' employment contracts. This is a right of the school that is mandated by law and jurisprudence. It is the prerogative of the school to set high standards of efficiency for its teachers since quality education is a mandate of the Constitution.52 As long as the standards fixed are reasonable and not arbitrary, courts are not at liberty to set them aside.53 Schools cannot be required to adopt standards which barely satisfy criteria set for government recognition.54 The same academic freedom grants the school the autonomy to decide for itself the terms and conditions for hiring its teacher, subject of course to the overarching limitations under the Labor Code.55 The authority to hire is likewise covered and protected by its management prerogative the right of an employer to regulate all aspects of employment, such as hiring, the freedom to prescribe work assignments, working methods, process to be followed, regulation regarding transfer of employees, supervision of their work, lay-off and discipline, and dismissal and recall of workers.56

G.R. No. 187887

September 7, 2011

PAMELA FLORENTINA P. JUMUAD, Petitioner, vs. HI-FLYER FOOD, INC. and/or JESUS R. MONTEMAYOR, Respondents. The Facts: Jumuad began her employment with respondent Hi-Flyer Food,, as management trainee. Hi-Flyer is a corporation licensed to operate Kentucky Fried Chicken (KFC) restaurants in the Philippines. Based on her performance through the years, Jumuad received several promotions until she became the area manager for the entire Visayas-Mindanao 1 region, comprising the provinces of Cebu, Bacolod, Iloilo and Bohol.5 Among the branches under her supervision were the KFC branches in Gaisano Mall, Cebu City (KFC-Gaisano); in Cocomall, Cebu City (KFC-Cocomall); and in Island City Mall, Bohol (KFC-Bohol). When Hi Flyer conducted a food safety, service and sanitation audit at KFC-Gaisano. The audit, denominated as CHAMPS Excellence Review (CER), revealed several sanitation violations, such as the presence of rodents and the use of a defective chiller for the storage of food. When asked to explain, Jumuad first pointed out that she had already taken steps to prevent the further infestation of the branch. As to why the branch became infested with rodents, Jumuad faulted managements decision to terminate the services of the branchs pest control program and to rely solely on the pest control program of the mall. As for the defective chiller, she explained that it was under repair at the time of the CER.11 Soon thereafter, Hi-Flyer ordered the KFCGaisano branch closed. Then later on Hi-Flyer audited the accounts of KFC-Bohol amid reports that certain employees were covering up cash shortages. Again Hi-Flyer conducted another CER, this time at its KFC-Cocomall branch. Grout and leaks at the branchs kitchen wall, dried up spills from the marinator, as well as a live rat under postmix, and signs of rodent gnawing/infestation were found. This time, Jumuad explained to management that she had been busy conducting management team meetings at the other KFC branches and that, at the date the CER was conducted, she had no scheduled visit at the KFC-Cocomall branch. Seeking to hold Jumuad accountable for the irregularities uncovered in the branches under her supervision, Hi-Flyer sent Jumuad an Irregularities Report16 and Notice of Charges. Jumuad submitted her written explanation. Hi-Flyer held an administrative hearing where Jumuad appeared with counsel. Apparently not satisfied with her explanations, Hi-Flyer served her a Notice of Dismissal effecting her termination.

This prompted Jumuad to file a complaint against Hi for illegal dismissal, praying for reinstatement and payment of separation pay, 13th month pay, service incentive leave, moral and exemplary damages, and attorneys fees. ISSUE: WON THE TERMINATION OF PETITIONER SERVICES IS VALIID. .RULING: On whether Jumuad was illegally dismissed, Article 282 of the Labor Code provides: Art. 282. Termination by Employer. An employer may terminate an employment for any of the following causes: (a) Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or representative in connection with his work; (b) Gross and habitual neglect by the employee of his duties; (c) Fraud or willful breach by the employee of the trust reposed in him by his employer or duly authorized representative; (d) Commission of a crime or offense by the employee against the person of his employer or any immediate member of his family or his duly authorized representative; and (e) Other causes analogous to the foregoing. Jumuad was terminated for neglect of duty and breach of trust and confidence. Gross negligence connotes want or absence of or failure to exercise slight care or diligence, or the entire absence of care. It evinces a thoughtless disregard of consequences without exerting any effort to avoid them. Fraud and willful neglect of duties imply bad faith of the employee in failing to perform his job, to the detriment of the employer and the latters business. Habitual neglect, on the other hand, implies repeated failure to perform one's duties for a period of time, depending upon the circumstances. It has been said that a single or an isolated act of negligence cannot constitute as a just cause for the dismissal of an employee.35 To be a ground for removal, the neglect of duty must be both gross and habitual.36 On the other hand, breach of trust and confidence, as a just cause for termination of employment, is premised on the fact that the employee concerned holds a position of trust and confidence, where greater trust is placed by management and from whom greater fidelity to duty is correspondingly expected. The betrayal of this trust is the essence of the offense for which an employee is penalized.37

It should be noted, however, that the finding of guilt or innocence in a charge of gross and habitual neglect of duty does not preclude the finding of guilty or innocence in a charge of breach of trust and confidence. Each of the charges must be treated separately, as the law itself has treated them separately. To repeat, to warrant removal from service for gross and habitual neglect of duty, it must be shown that the negligence should not merely be gross, but also habitual. In breach of trust and confidence, so long as it is shown there is some basis for management to lose its trust and confidence and that the dismissal was not used as an occasion for abuse, as a subterfuge for causes which are illegal, improper, and unjustified and is genuine, that is, not a mere afterthought intended to justify an earlier action taken in bad faith, the free will of management to conduct its own business affairs to achieve its purpose cannot be denied. After an assiduous review of the facts as contained in the records, the Court is convinced that Jumuad cannot be dismissed on the ground of gross and habitual neglect of duty. The Court notes the apparent neglect of Jumuad of her duty in ensuring that her subordinates were properly monitored and that she had dutifully done all that was expected of her to ensure the safety of the consuming public who continue to patronize the KFC branches under her jursidiction. Had Jumuad discharged her duties to be highly visible in the restaurants under her jurisdiction, monitor and support the day to day operations of the branches and ensure that all the facilities and equipment at the restaurant were properly maintained and serviced, the deplorable conditions and irregularities at the various KFC branches under her jurisdiction would have been prevented. Considering, however, that over a year had lapsed between the incidences at KFCGaisano and KFC-Bohol, and that the nature of the anomalies uncovered were each of a different nature, the Court finds that her acts or lack of action in the performance of her duties is not born of habit. Despite saying this, it cannot be denied that Jumuad willfully breached her duties as to be unworthy of the trust and confidence of Hi-Flyer. First, there is no denying that Jumuad was a managerial employee. As correctly noted by the appellate court, Jumuad executed management policies and had the power to discipline the employees of KFC branches in her area. She recommended actions on employees to the head office. Pertinent is Article 212 (m) of the Labor Code defining a managerial employee as one who is vested with powers or prerogatives to lay down and execute management policies and/or hire, transfer, suspend, lay off, recall, discharge, assign or discipline employees. Based on established facts, the mere existence of the grounds for the loss of trust and confidence justifies petitioners dismissal. Pursuant to the Courts ruling in Lima Land, Inc. v. Cuevas,38 as long as there is some basis for such loss of confidence, such as when the employer has reasonable ground to believe that the employee concerned is responsible for the purported misconduct, and the nature of his

participation therein renders him unworthy of the trust and confidence demanded of his position, a managerial employee may be dismissed. In the present case, the CERs reports of Hi-Flyer show that there were anomalies committed in the branches managed by Jumuad. On the principle of respondeat superior or command responsibility alone, Jumuad may be held liable for negligence in the performance of her managerial duties. She may not have been directly involved in causing the cash shortages in KFC-Bohol, but her involvement in not performing her duty monitoring and supporting the day to day operations of the branches and ensure that all the facilities and equipment at the restaurant were properly maintained and serviced, could have truly prevented the whole debacle from ever occurring.
Topic 15. Suspension of Business
SUSPENSION OF BUSINESS OPERATIONS

NATIONWIDE SECURITY AND ALLIED SERVICES, INC. vs. RONALD P. VALDERAMA G.R. No. 186614, February 23, 2011

Facts: Respondent Ronald Valderama (Valderama) was hired by Nationwide Security and Allied Services (NSAS) as security guard on April 18, 2002. He was assigned at the Philippine Heart Center (PHC), Quezon City, until his relief on January 30, 2006. Valderama was not given any assignment thereafter. Thus, on August 2, 2006, he filed a complaint for constructive dismissal and nonpayment of 13th month pay, with prayer for damages against petitioner and Romeo Nolasco. However, NSAS alleged that Valderama was not constructively or illegally dismissed, but had voluntarily resigned. NSAS averred that Valderama has committed serious violations of the security rules in the workplace. And by the order of the Operations Manager, he was relieved from his post at the Philippine Heart Center and was directed to report to the office. Despite his voluntary resignation, NSAS sent him a letter through registered mail to report for the office and give information on whether or not he was still interested for report for duty or not. However, Valderama did not bother to reply nor did he report to the office.

Issue: Was Valderama illegally dismissed?

SC Ruling: Yes, he was.

In cases involving security guards, a relief and transfer order in itself does not sever employment relationship between a security guard and his agency. An employee has the right to security of tenure, but this does not give him a vested right to his position as would deprive the company of its prerogative to change his assignment or transfer him where his service, as security guard, will be most beneficial to the client. Temporary "off-detail" or the period of time security guards are made to wait until they are transferred or assigned to a new post or client does not constitute constructive dismissal, so long as such status does not continue beyond six months. The onus of proving that there is no post available to which the security guard can be assigned rests on the employer, viz.: When a security guard is placed on a "floating status," he does not receive any salary or financial benefit provided by law. Due to the grim economic consequences to the employee, the employer should bear the burden of proving that there are no posts available to which the employee temporarily out of work can be assigned. Valderama claims that he was relieved from PHC on January 30, 2006; thereafter, he was not given a new assignment. Petitioner, on the other hand, asserts that respondent refused to report to petitioner for his reassignment. Otherwise stated, petitioner claims that respondent abandoned his job. In this case, NSAS failed to establish clear evidence of Valderama's intention to abandon his employment. Except for NASA's bare assertion that respondent did not report to the office for reassignment, no proof was offered to prove that respondent intended to sever the employer-employee relationship. Indubitably, Valderama remained on "floating status" for more than six months. He was relieved on January 30, 2006, and was not given a new assignment at the time he filed the complaint on August 2, 2006. Jurisprudence is trite with pronouncements that the temporary inactivity or "floating status" of security guards should continue only for six months. Otherwise, the security agency concerned could be liable for constructive dismissal. The failure of petitioner to give respondent a work assignment beyond the reasonable six-month period makes it liable for constructive dismissal. If there is a surplus of security guards caused by lack of clients or projects, the security agency may resort to retrenchment upon compliance with the requirements set forth in the Labor Code. In this way, the security agency will not to be held liable for constructive dismissal and be burdened with the payment of backwages. NIPPON HOUSING PHIL. INC., and/or TADASHI OTA, HOROSHI TAKADA, YUSUHIRO KAWATA, MR. NOBOYUSHI and JOEL REYES vs.MAIAH ANGELA LEYNES G.R. No. 177816, August 3, 2011

Facts: From its original business of providing building maintenance, it appears that petitioner Nippon Housing Philippines, Inc. (NHPI) ventured into building management, providing such services as handling of the lease of condominium units, collection of dues and compliance with government regulatory requirements. Having gained the Bay Gardens Condominium Project (the Project) of the Bay Gardens Condominium Corporation (BGCC) as its first and only building maintenance client, NHPI hired respondent Maiah Angela Leynes (Leynes) on 26 March 2001 for the position of Property Manager. She was tasked with surveying the requirements of the government and the client for said project, the formulation of house rules and regulations, the preparation of the annual operating and capital expenditure budget and for the hiring and deployment of manpower, salary and position determination as well as the assignment of the schedules and responsibilities of employees. On 6 February 2002, Leynes had a misunderstanding with Engr. Honesto Cantuba (Cantuba), the Building Engineer assigned at the Project, regarding the extension of the latters working hours. Aside from instructing the security guards to bar Engr. Cantuba from entry into the Project and to tell him to report to the NHPIs main office in Makati, Leynes also sent a letter dated 8 February 2002 by telefax to Joel Reyes (Reyes), NHPIs Human Resources Department (HRD) Head, apprising the latter of said Building Engineers supposed insubordination and disrespectful

conduct. With Engr. Cantubas submission of a reply in turn accusing Leynes of pride, conceit and poor managerial skills, Hiroshi Takada (Takada), NHPIs Vice President, went on to issue the 12 February 2002 memorandum, attributing the incident to "simple personal differences" and directing Leynes to allow Engr. Cantuba to report back for work.7 Disappointed with the foregoing management decision, Leynes submitted to Tadashi Ota, NHPIs President, a letter dated 12 February 2002, asking for an emergency leave of absence for the supposed purpose of coordinating with her lawyer regarding her resignation letter. While NHPI offered the Property Manager position to Engr. Carlos Jose on 13 February 2002 as a consequence Leynes signification of her intention to resign, it also appears that Leynes sent another letter to Reyes by telefax on the same day, expressing her intention to return to work on 15 February 2002 and to call off her planned resignation upon the advice of her lawyer. Having subsequently reported back for work and resumed performance of her assigned functions, Leynes was constrained to send out a 20 February 2002 written protest regarding the verbal information she supposedly received from Reyes that a substitute has already been hired for her position.On 22 February 2002, Leynes was further served by petitioner Yasuhiro Kawata and Noboyushi Hisada, NHPIs Senior Manager and Janitorial Manager, with a letter and memorandum from Reyes, relieving her from her position and directing her to report to NHPIs main office while she was on floating status. Aggrieved, Leynes lost no time in filing against NHPI and its above-named officers the 22 February 2002 complaint for illegal dismissal, unpaid salaries, benefits, damages and attorneys fees docketed before the arbitral level of the National Labor Relations Commission.

Issues: Was Leynes illegally dismissed?

SC Ruling: No, she wasn't. In view of the sensitive nature of Leynes position and the critical stage of the Projects business development, NHPI was constrained to relay the situation to BGCC which, in turn, requested the immediate adoption of remedial measures from Takada, including the appointment of a new Property Manager for the Project. Upon BGCCs recommendation, NHPI consequently hired Engr. Jose on 13 February 2002 as Leynes replacement. Far from being the indication of bad faith the CA construed the same to be, these factual antecedents suggest that NHPIs immediate hiring of Engr. Jose as the new Property Manager for the Project was brought about by Leynes own rash announcement of her intention to resign from her position. Although she subsequently changed her mind and sent Reyes a letter by telefax on 13 February 2002 announcing the reconsideration of her planned resignation and her intention to return to work on 15 February 2002, Leynes evidently had only herself to blame for precipitately setting in motion the events which led to NHPIs hiring of her own replacement. Acting on Leynes 20 February 2002 letter protesting against the hiring of her replacement and reiterating her lack of intention to resign from her position, the record, moreover, shows that NHPI simply placed her on floating status "until such time that another project could be secured" for her. Traditionally invoked by security agencies when guards are temporarily sidelined from duty while waiting to be transferred or assigned to a new post or client, Article 286 of the Labor Code has been applied to other industries when, as a consequence of the bona fide suspension of the operation of a business or undertaking, an employer is constrained to put employees on floating status for a period not exceeding six months. In brushing aside respondents reliance on said provision to justify the act of putting Leynes on floating status, the CA ruled that no evidence was adduced to show that there was a bona fide suspension of NHPIs business. What said court clearly overlooked, however, is the fact that NHPI had belatedly ventured into building management and, with BGCC as its only client in said undertaking, had no other Property Manager position available to Leynes.

Indeed, the right of employees to security of tenure does not give them vested rights to their positions to the extent of depriving management of its prerogative to change their assignments or to transfer them. The record shows that Leynes filed the complaint for actual illegal dismissal from which the case originated on 22 February 2002 or immediately upon being placed on floating status as a consequence of NHPIs hiring of a new Property Manager for the Project. The rule is settled, however, that "off-detailing" is not equivalent to dismissal, so long as such status does not continue beyond a reasonable time and that it is only when such a "floating status" lasts for more than six months that the employee may be considered to have been constructively dismissed. A complaint for illegal dismissal filed prior to the lapse of said six-month and/or the actual dismissal of the employee is generally considered as prematurely filed. n constructive dismissal cases, the employer is, concededly, charged with 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 To our mind, respondents have more than amply discharged this burden with proof of the circumstances surrounding Engr. Carlos employment as Property Manager for the Project and the consequent unavailability of a similar position for Leynes. With no other client aside from BGCC for the building management side of its business, we find that NHPI was acting well within its prerogatives when it eventually terminated Leynes services on the ground of redundancy.

Topic 16 Disease as Ground for Termination Topic 17. Other Causes of Severance of Employment Relation Topic 18. Prescription of Claims

PLDT vs. Pingol, GR No. 182622, September 8, 2010 Topic: Prescription of Claims The Labor Code has no specific provision on when a claim for illegal dismissal or a monetary claim accrues. Thus, the general law on prescription applies. Article 1150 of the Civil Code states: The time for prescription for all kinds of actions, when there is no special provision which ordains otherwise, shall be counted from the day they may be brought. (Emphasis supplied). FACTS: In 1979, respondent Roberto R. Pingol (Pingol) was hired by petitioner PLDT as a maintenance technician. On April 13, 1999, while still under the employ of PLDT, Pingol was admitted at The Medical City, Mandaluyong City, for paranoid personality disorder due to financial and marital problems. On May 14, 1999, he was discharged from the hospital. Thereafter, he reported for work but frequently absented himself due to his poor mental condition. From September 16, 1999 to December 31, 1999, Pingol was absent from work without official leave. According to PLDT, notices were sent to him with a stern warning that he would be dismissed from employment if he continued to be absent without official leave pursuant to PLDT Systems Practice A-007 which provides that Absence without authorized leaves for seven (7) consecutive days is subject to termination from the service. Despite the warning, he failed to show up

for work. On January 1, 2000, PLDT terminated his services on the grounds of unauthorized absences and abandonment of office. On March 29, 2004, four years later, Pingol filed Constructive Dismissal and Monetary Claims against PLDT. a Complaint for

In response, PLDT filed a motion to dismiss claiming, among others, that respondents cause of action had already prescribed as the complaint was filed four (4) years and three (3) months after his dismissal. The Labor Arbiter ruled in favor PLDT, however on appeal to the NLRC, the latter reversed such ruling and when further appealed to CA, the CA affirmed the ruling of the NLRC. ISSUE: Whether or not the claim for illegal dismissal and monetary judgment of Pingol has already prescribed. SC Ruling: Article 1146 of the New Civil Code provides: Art. 1146. The following actions must be instituted within four years:

(1) Upon an injury to the rights of the plaintiff; xxx xxx xxx

As this Court stated in Callanta v. Carnation, when one is arbitrarily and unjustly deprived of his job or means of livelihood, the action instituted to contest the legality of one's dismissal from employment constitutes, in essence, an action predicated "upon an injury to the rights of the plaintiff," as contemplated under Art. 1146 of the New Civil Code, which must be brought within four (4) years. With regard to the prescriptive period for money claims, Article 291 of the Labor Code states: Article 291. Money Claims. All money claims arising from employeremployee relations accruing during the effectivity of this Code shall be filed within three (3) years from the time the cause of action accrued; otherwise they shall be barred forever. In the case at bench, Pingol himself alleged the date January 1, 2000 as the date of his dismissal in his complaint filed on March 29, 2004, exactly four (4) years and three (3) months later. Respondent never denied making such admission or raised palpable mistake as the reason therefore. Thus, the petitioner correctly

relied on such allegation in the complaint to move for the dismissal of the case on the ground of prescription. The Labor Code has no specific provision on when a claim for illegal dismissal or a monetary claim accrues. Thus, the general law on prescription applies. Article 1150 of the Civil Code states: Article 1150. The time for prescription for all kinds of actions, when there is no special provision which ordains otherwise, shall be counted from the day they may be brought. (Emphasis supplied) The day the action may be brought is the day a claim starts as a legal possibility. In the present case, January 1, 2000 was the date that respondent Pingol was not allowed to perform his usual and regular job as a maintenance technician. Respondent Pingol cited the same date of dismissal in his complaint before the LA. As, thus, correctly ruled by the LA, the complaint filed had already prescribed. Like other causes of action, the prescriptive period for money claims is subject to interruption, and in the absence of an equivalent Labor Code provision for determining whether the said period may be interrupted, Article 1155 of the Civil Code may be applied, to wit: ART. 1155. The prescription of actions is interrupted when they are filed before the Court, when there is a written extrajudicial demand by the creditors, and when there is any written acknowledgment of the debt by the debtor. Thus, the prescription of an action is interrupted by (a) the filing of an action, (b) a written extrajudicial demand by the creditor, and (c) a written acknowledgment of the debt by the debtor. In this case, respondent Pingol never made any written extrajudicial demand. Neither did petitioner make any written acknowledgment of its alleged obligation. Thus, the claimed follow-ups could not have validly tolled the running of the prescriptive period. It is worthy to note that respondent never presented any proof to substantiate his allegation of follow-ups. Medline Management Inc. vs. Roslinda, GR No. 168715, September 15, 2010 Topic: Prescription of Claims Article 291 is the law governing the prescription of money claims of seafarers, a class of overseas contract workers. FACTS:

Petitioner Medline Management, Inc. (MMI), on behalf of its foreign principal, petitioner Grecomar Shipping Agency (GSA), hired Juliano Roslinda (Juliano) to work on board the vessel MV "Victory." Juliano was previously employed by the petitioners under two successive separate employment contracts of varying durations. His latest contract was approved by the POEA on September 9, 1998 for a duration of nine months. In accordance with which, he boarded the vessel MV "Victory" on October 25, 1998 as an oiler and, after several months of extension, was discharged on January 20, 2000. Months after his repatriation, or on March 6, 2000, Juliano consulted Dr. Pamela R. Lloren (Dr. Lloren) of Metropolitan Hospital. He complained about abdominal distention which is the medical term for a patient who vomits previously ingested foods. From March 8 to August 24, 2000, Juliano visited Dr. Lloren for a series of medical treatment. In a Medical Certificate issued by Dr. Lloren, the condition of Juliano required hemodialysis which was initially done twice a week for a period of two months and then once every 10 days. On August 27, 2001, Juliano died. On September 4, 2003, his wife Gliceria Roslinda and son Ariel Roslinda, respondents herein, filed a complaint against MMI and GSA for payment of death compensation, reimbursement of medical expenses, damages, and attorney's fees before the Labor Arbitration Branch of the NLRC. Petitioners received on September 25, 2003 a copy of the summons and complaint. Instead of filing an answer, they filed a Motion to Dismiss on the grounds of prescription, lack of jurisdiction and prematurity. Petitioners contended that the action has already prescribed because it was filed three years, seven months and 22 days from the time the deceased seafarer reached the point of hire. They also argued that the case should be dismissed outright for prematurity because respondents failed to comply with a condition precedent by not availing of the grievance machinery. Lastly, petitioners opined that the Labor Arbiter had no jurisdiction because there exists no employer-employee relationship between the parties. The Labor Arbiter denied the Motion to Dismiss, such ruling was later on affirmed by the NLRC and CA. ISSUE: Whether or not the claim of Roslinda already prescribed pursuant to the Standard Employment Contract. SC Ruling: The employment contract signed by Juliano stated that "Upon approval, the same shall be deemed an integral part of the Standard Employment Contract

(SEC) for seafarers."Section 28 of the POEA SEC states: SECTION 28. JURISDICTION The Philippine Overseas Employment Administration (POEA) or the National Labor Relations Commission (NLRC) shall have original and exclusive jurisdiction over any and all disputes or controversies arising out of or by virtue of this Contract. Recognizing the peculiar nature of overseas shipboard employment, the employer and the seafarer agree that all claims arising from this contract shall be made within one (1) year from the date of the seafarer's return to the point of hire. (Emphasis supplied) On the other hand, the Labor Code states: ART. 291. Money claims. All money claims arising from employer-employee relations accruing during the effectivity of this Code shall be filed within three (3) years from the time the cause of action accrued; otherwise they shall forever be barred. x x x x (Emphasis supplied) In Southeastern Shipping v. Navarra, Jr., we ruled that "Article 291 is the law governing the prescription of money claims of seafarers, a class of overseas contract workers. This law prevails over Section 28 of the Standard Employment Contract for Seafarers which provides for claims to be brought only within one year from the date of the seafarer's return to the point of hire." We further declared that "for the guidance of all, Section 28 of the Standard Employment Contract for Seafarers, insofar as it limits the prescriptive period within which the seafarers may file their money claims, is hereby declared null and void. The applicable provision is Article 291 of the Labor Code, it being more favorable to the seafarers and more in accord with the State's declared policy to afford full protection to labor. The prescriptive period in the present case is thus three years from the time the cause of action accrues." In the present case, the cause of action accrued on August 27, 2001 when Juliano died. Hence, the claim has not yet prescribed, since the complaint was filed with the arbitration branch of the NLRC on September 4, 2003.
Topic 19. Jurisdiction of the Labor Arbiter Topic 20 NLRC Rules of Procedure of the NLRC ORIENTAL SHIPMANAGEMENT CO., INC., Petitioner, vs. ROMY B. BASTOL, G.R. No. 186289 June 29, 2010

Topic: 2011 NLRC Rules of Procedure Facts: OSCI is a domestic manning agency engaged in the recruitment and placement of Filipino seafarers abroad. Paterco Shipping Ltd. is a foreign shipping company which owned and operated the vessel MV Felicita and a client of OSCI. Protection & Indemnity Club (PIC) was the insurer of PSL covering contingencies like illness claims and benefits of seamen. Pandiman Philippines, Inc. (PPI) is the local representative of PIC. As agent of PSL, OSCI hired Romy B. Bastol as bosun on November 29, 1995 evidenced by a Contract of Employment. On February 17, 1997, while on board the vessel, Bastol had a heart attack. He was subsequently repatriated due to his illness on March 7, 1997. Upon arrival here in the Philippines, on March 8, 1997, he was referred to the Jose L. Gutierrez Clinic in Malate, Manila for a follow-up examination where Dr. Achilles J. Peralta examined and found him to be suffering from "T/C Ischemic Heart Disease. Ant. Myocardial Infection." Dr. Peralta issued a Medical Report certifying that he was "Unfit for Sea Duty." Bastol, through counsel, sent a November 27, 1997 letter on December 2, 1997 to Capt. Rosendo C. Herrera, the President of OSCI, for a possible settlement of his claim for disability benefits. He attached the Medical Certificate issued by Dr. Vicaldo. His letter did not merit a response from OSCI. Thus, Bastol was compelled to file a Complaint before the Labor Arbiter on May 8, 1988 for: (a) medical disability benefit (Grade 1) of USD 60,000; (b) illness allowance until he is deemed fit to work again; (c) medical benefits for the treatment of his ailment; (d) moral damages of PhP 100,000; and (e) attorneys fee of 10% of the total monetary award. OSCI countered that Bastol is not entitled to his indemnity claims, among others, for disability benefits on account of non-compliance with the requirements of the 1994 revised Standard Employment Contract (SEC) by failing to properly submit himself for treatment and examination by the company-designated physician who is the only one authorized to set the degree of disability, i.e., disability grade. Issues: (1) whether the Complaint filed before the Labor Arbiter ought to be dismissed for lack of certification against forum shopping as required by the Rules and whether the verification by counsel is sufficient for Bastols Position Paper and Manifestation/Compliance; (2) whether the July 30, 1999 NLRC Decision constitutes res judicata and serves as the "law of the case"; and third, whether the belated submissions are allowed by the Rules, and the Affidavit of Dr. Vicaldo sufficient. In the meantime, pending resolution of the instant case, Romy B. Bastol died on December 13, 2009. Held: Procedural Issues In its bid to overturn the assailed Decision and Resolutions, OSCI foisted several procedural issues all based on the Rules of Court, the application of which it anchors on Sec. 3, Rule I of the NLRC Rules of Procedure then prevailing, which pertinently provided: Section 3. Suppletory application of Rules of Court and jurisprudence. In the absence of any applicable provision in these Rules, and in order to effectuate the objectives of the Labor Code, the pertinent provisions of the Revised Rules of Court of the Philippines and prevailing jurisprudence may, in the interest of expeditious dispensation of labor justice and whenever practicable and convenient, be applied by analogy or in a suppletory character and effect. OSCI argues that the Complaint of Bastol ought to have been dismissed at the outset, i.e., before the labor arbiter level, since it is an initiatory pleading which lacked the mandatorily required certification of non-forum shopping under Sec. 5, Rule 7 of the Rules of Court. In the same vein, OSCI contends that Bastols Position Paper and Manifestation/Compliance ought to have been considered as unsigned pleadings which produce no legal effect under Sec. 3,Rule 7 of the Rules of Court for violation of Sec. 4, Rule 7, requiring verification to be made upon personal knowledge or based on authentic records, because said pleadings were verified only by counsel, which verification is clearly not based on personal knowledge or based on authentic records.

Pro-forma Complaint Forms Used in the RAB The foregoing arguments are untenable. For the expeditious and inexpensive filing of complaints by employees, the Regional Arbitration Branch (RAB) of the NLRC provides pro-forma complaint forms. This is to facilitate the exercise and protection of employees rights by the convenient assertion of their claims against employers untrammeled by procedural rules and complexities. To comply with the certification against forum shopping requirement, a simple question embodied in the Complaint form answerable by "yes" or "no" suffices. Employee-complainants are not even required to have a counsel before they can file their complaint. An officer of the RAB, duly authorized to administer oaths, is readily available to facilitate the execution of the required subscription or jurat of the complaint. This can be seen in the case at bar. Bastol, assisted by counsel, filled out the Complaint form, line No. 11 of which is a question on anti-forum shopping which he answered by underlining the word "No." The strict application of Sec. 4, Rule 7 of the Rules of Court does not apply to labor complaints filed before the NLRC RAB. Verification by Counsel Sufficient Anent the issue of verification, we have scrutinized both the Position Paper and the Manifestation/Compliance filed by Bastol and we fail to see any violation thereof. First, there is no law or rule requiring verification for the Manifestation/Compliance. Second, the counsels verification in Bastols Position Paper substantially complies with the rule on verification. The second paragraph of Sec. 4, Rule 7 of the Rules of Court provides: "A pleading is verified by an affidavit that the affiant has read the pleading and that the allegations therein are true and correct of his personal knowledge or based on authentic records." On the other hand, the actual verification of counsel in Bastols Position Paper states: "That I am the counsel of record for the complainant in the above-entitled case; that I caused the preparation of the foregoing Position Paper; that I have read and understood the contents thereof; and that I confirm that all the allegations therein contained are true and correct based on recorded evidence." Appended to the position paper were Bastols contract of employment, counsels letter to OSCI, and various medical certifications issued by several doctors with similar findings and diagnosis of Bastols heart ailment. Evidently, the verification is proper as based on, and evidenced, by the appended documents, which were not disputed save the contents of the medical certificate issued by Dr. Vicaldo. First Substantive Issue: Res Judicata and "Law of the Case" OSCI strongly argues that the July 30, 1999 NLRC Decision remanding the case has become final and executory, thus the applicability of the doctrine of res judicata and the principle of the "law of the case" thereto. There being res judicata between the parties, the NLRCs setting aside of the January 28, 1999 Decision of Labor Arbiter Mayor, Jr. has become final. Thus, OSCI maintains that the CA gravely erred in reinstating the January 28, 1999 Decision of Labor Arbiter Mayor, Jr. And relying on the Courts pronouncement in Cucueco v. Court of Appeals on the principle of the "law of the case," OSCI asserts that the ruling of the July 30, 1999 NLRC Decision, remanding the case to the Labor Arbiter for clarificatory hearings requiring the personal appearance of Bastol and the testimonies of Dr. Lim and Dr. Vicaldo, may no longer be disturbed and must be complied with. Thus, it argues that the non-compliance thereof and the belated submission of an alleged affidavit by Dr. Vicaldo are clear contraventions of the prevailing "law of the case" as embodied in the final and executory July 30, 1999 NLRC Decision. The foregoing arguments of OSCI are tenuous at best. Doctrine of res judicata inapplicable We agree with OSCI that the CA committed double faux pas by (1) ruling on the remand of the case by the NLRC to the Labor Arbiter which was not the subject of Bastols appeal before it; and (2) reinstating the January 28, 1999 Decision of Labor Arbiter Mayor, Jr. which had earlier been set aside and was not the object of OSCIs appeal to the NLRC. But these lapses do not adversely affect the CAs determination of the propriety of the disability indemnity awarded to Bastol, as will be discussed here. Suffice it to say that the July 30, 1999 NLRC Decision cannot and does not constitute res judicata to the

instant case. In Estate of the Late Encarnacion Vda. de Panlilio v. Dizon, extensively quoting from the earlier case of Vda. de Cruzo v. Carriaga, Jr., we explained the nature of res judicata, as now embodied in Sec. 47, Rule 39 of the Rules of Court, in its two concepts of "bar by former judgment" and "conclusiveness of judgment." These concepts of the doctrine of res judicata are applicable to second actions involving substantially the same parties, the same subject matter, and cause or causes of action. In the instant case, there is no second action to speak of, involving as it is the very same action albeit the NLRC remanded it to the Labor Arbiter for further proceedings. Principle of "Law of the Case" inapplicable "Law of the case" has been defined as the opinion delivered on a former appealit is a term applied to an established rule that when an appellate court passes on a question and remands the case to the lower court for further proceedings, the question there settled becomes the law of the case upon subsequent appeal. OSCIs application of the law of the case principle to the instant case, as regards the remand of the case to the Labor Arbiter for clarificatory hearings, is misplaced. The only matter settled in the July 30, 1999 NLRC Decision, which can be regarded as law of the case, was the undisputed fact that Bastol was suffering from a heart ailment. As it is, the issue on the degree of disability of Bastols heart ailment and his entitlement to disability indemnity, as viewed by the NLRC through said decision, has yet to be resolved. Precisely, the NLRC remanded the case to Labor Arbiter Mayor, Jr. "for conduct of further approximate proceedings and to terminate the same with dispatch." Second Substantive Issue: Sufficiency of Sworn Affidavit And the primordial reason why the argument of OSCI for the mandatory conduct of clarificatory hearings requiring the personal appearance of Bastol and the testimonies of Dr. Lim and Dr. Vicaldo is erroneous is that the law and the rules do not require such mandatory clarificatory hearings. Labor Arbiter Has Discretion on the Propriety of Conducting Clarificatory Hearings We fully agree with Bastols arguments that the NLRC, while having appellate jurisdiction over decisions and resolutions of the Labor Arbiter, may not dictate to the latter how to conduct the labor case before him. Sec. 9 of Rule V of the then prevailing NLRC Rules of Procedure, issued on December 10, 1999, provided for the nature of proceedings before the Labor Arbiter, thus: Section 9. Nature of Proceedings. The proceedings before a Labor Arbiter shall be non-litigious in nature. Subject to the requirements of due process, the technicalities of law and procedure and the rules obtaining in the courts of law shall not strictly apply thereto. The Labor Arbiter may avail himself of all reasonable means to ascertain the facts of the controversy speedily, including ocular inspection and examination of well-informed persons. (Emphasis supplied.) And the Labor Arbiter is given full discretion to determine, motu proprio, on whether to conduct hearings or not. Secs. 3 and 4 of Rule V of the then prevailing NLRC Rules of Procedure also pertinently provided: Section 3. Submission of Position Papers/Memorandum. x x x These verified position papers shall cover those claims and causes of action raised in the complaint excluding those that may have been amicably settled, and shall be accompanied by all supporting documents including the affidavits of their respective witnesses which shall take the place of the latters direct testimony. x x x Section 4. Determination of Necessity of Hearing. Immediately after the submission by the parties of their position papers/memorandum, the Labor Arbiter shall motu proprio determine whether there is a need for a formal trial or hearing. At this stage, he may, at his discretion and for the purpose of making such determination, ask clarificatory questions to further elicit facts or information, including but not limited to the subpoena of relevant documentary evidence, if any from any party or witness. (Emphasis supplied.) The foregoing provisos manifestly show the non-litigious and the summary nature of the proceedings before the Labor Arbiter, who is given full discretion whether to conduct a hearing or not and to decide the case before him through position papers. In Iriga Telephone Co, Inc. v. National Labor Relations

Commission,57 the Court discussed the reason why it is discretionary on the part of the Labor Arbiter, who, motu proprio, determines whether to hold a hearing or not. Consequently, a hearing cannot be demanded by either party as a matter of right. The parties are required to file their corresponding position papers and all the documentary evidence and affidavits to prove their cause of action and defenses. The rationale behind this is to avoid delay and curtail the pernicious practice of withholding of evidence. In Pepsi Cola Products Philippines, Inc. v. Santos, the Court reiterated the Labor Arbiters discretion not to conduct formal or clarificatory hearings which is not violative of due process, thus: The holding of a formal hearing or trial is discretionary with the Labor Arbiter and is something that the parties cannot demand as a matter of right. The requirements of due process are satisfied when the parties are given the opportunity to submit position papers wherein they are supposed to attach all the documents that would prove their claim in case it be decided that no hearing should be conducted or was necessary. In sum, it can be properly said that the proceedings before the Labor Arbiter are non-litigious in nature and the technicalities of law and procedure, and the rules obtaining in the courts of law are not applicable. Thus, the rules allow the admission of affidavits by the Labor Arbiter as evidence despite the fact that the affiants were not presented for cross-examination by the counsel for the adverse party. To require otherwise would be to negate the rationale and purpose of the summary nature of the administrative proceedings and to make mandatory the application of the technical rules of evidence. What the other party should do is to present counter-affidavits instead of merely objecting on the ground that the affidavits are hearsay. The Court, however, has recognized specific instances of the impracticality for the Labor Arbiter to follow the position paper method of disposing cases; thus, formal or clarificatory hearings must be had in cases of termination of employment: such as, when claims are not properly ventilated for lack of proper determination whether complainant employee was a rank-and-file or a managerial employee, that the Labor Arbiter cannot rely solely on the parties bare allegations when the affidavits submitted presented conflicting factual issues, and considering the dearth of evidence presented by complainants the Labor Arbiter should have set the case for hearing. In the instant case, we find substantial evidence to support the decision of Labor Arbiter Lustria. Substantial evidence is such amount of evidence which a reasonable mind might accept as adequate to support a conclusion, even if other equally reasonable minds might conceivably opine otherwise. Late submission of documentary evidence admissible The nature of the proceedings before the Labor Arbiter is not only non-litigious and summary, but the Labor Arbiter is also given great leeway to resolve the case; thus, he may "avail himself of all reasonable means to ascertain the facts of the controversy." The belated submission of additional documentary evidence by Bastol after the case was already submitted for decision did not make the proceedings before the Labor Arbiter improper. The basic reason is that technical rules of procedure are not binding in labor cases. In Dacut v. Court of Appeals, we held that the fact that the Labor Arbiter admitted the companys reply after the case had been submitted for decision did not make the proceedings before him irregular. In Sasan, Sr. v. National Labor Relations Commission, we also held that the submission of additional evidence on appeal before the NLRC is not prohibited by its New Rules of Procedure; after all, rules of evidence prevailing in courts of law or equity are not controlling in labor cases.Indeed, technical rules of evidence do not apply if the decision to grant the petition proceeds from an examination of its sufficiency as well as a careful look into the arguments contained in position papers and other documents. And neither can OSCI rely on lack of due process. The essence of due process lies simply in an opportunity to be heard, and not that an actual hearing should always and indispensably he held. Considering that OSCI indeed contested the late submission of Bastol by filing its most vehement objection thereto on November 27, 2001, it cannot complain of not being accorded the opportunity to be heard and much less can it demand for the setting of an actual hearing. What OSCI could have and ought to have done was to present its own counter-affidavits. But it did not. WHEREFORE, premises considered, we DENY the instant petition for lack of merit. The Decision dated

August 12, 2008 and the Resolutions dated January 7, 2007 and February 6, 2009 of the Court of Appeals in CA-G.R. SP No. 100090 are hereby AFFIRMED with MODIFICATION in that what is REINSTATED therein is the January 31, 2003 Decision of Labor Arbiter. ST. LOUIS UNIVERSITY, INC., Petitioner, vs. COBARRUBIAS, Respondent.G.R. No. 187104 August 3, 2010 Topic: 2011 NLRC Rules of Procedure Facts: Respondent Evangeline C. Cobarrubias is an associate professor of the petitioners College of Human Sciences. She is an active member of the Union of Faculty and Employees of Saint Louis University (UFESLU). The 2001-2006 and 2006-2011 CBAs between SLU and UFESLU contain the following common provision on forced leave: Section 7.7. For teaching employees in college who fail the yearly evaluation, the following provisions shall apply: (a) Teaching employees who are retained for three (3) cumulative years in five (5) years shall be on forced leave for one (1) regular semester during which period all benefits due them shall be suspended.7 SLU placed Cobarrubias on forced leave for the first semester of School Year (SY) 2007-2008 when she failed the evaluation for SY 2002-2003, SY 2005-2006, and SY 2006-2007, with the rating of 85, 77, and 72.9 points, respectively, below the required rating of 87 points. To reverse the imposed forced leave, Cobarrubias sought recourse from the CBAs grievance machinery. Despite the conferences held, the parties still failed to settle their dispute, prompting Cobarrubias to file a case for illegal forced leave or illegal suspension with the National Conciliation and Mediation Board of the Department of Labor and Employment, Cordillera Administrative Region, Baguio City. When circulation and mediation again failed, the parties submitted the issues between them for voluntary arbitration before Voluntary Arbitrator (VA) Daniel T. Farias. Cobarrubias argued that the CA already resolved the forced leave issue in a prior case between the parties, CA-G.R. SP No. 90596, ruling that the forced leave for teachers who fail their evaluation for three (3) times within a five-year period should be coterminous with the CBA in force during the same five-year period. SLU, for its part, countered that the CA decision in CA-G.R. SP No. 90596 cannot be considered in deciding the present case since it is presently on appeal with this Court (G.R. No. 176717) and, thus, is not yet final. It argued that the forced leave provision applies irrespective of which CBA is applicable, provided the employee fails her evaluation three (3) times in five (5) years. The Petition SLU argues that the CA should not have reinstated the appeal since Cobarrubias failed to pay the docket fees within the prescribed period, and rendered the VA decision final and executory. Even if Cobarrubias procedural lapse is disregarded, SLU submits that Section 7.7(a) of the 2006-2011 CBA should apply irrespective of the five-year effectivity of each CBA. Issue: whether the CA erred in reinstating Cobarrubias petition despite her failure to pay the appeal fee within the reglementary period, and in reversing the VA decision. To state the obvious, the appeal fee is a threshold issue that renders all other issues unnecessary if SLUs position on this issue is correct. The Courts Ruling We find the petition meritorious. Payment of Appellate Court Docket Fees Appeal is not a natural right but a mere statutory privilege, thus, appeal must be made strictly in accordance with the provision set by law. Rule 43 of the Rules of Court provides that appeals from the judgment of the VA shall be taken to the CA, by filing a petition for review within fifteen (15) days from the receipt of the notice of judgment. Furthermore, upon the filing of the petition, the petitioner shall pay to the CA clerk of court the docketing and other lawful fees;non-compliance with the procedural requirements

shall be a sufficient ground for the petitions dismissal. Thus, payment in full of docket fees within the prescribed period is not only mandatory, but also jurisdictional. It is an essential requirement, without which, the decision appealed from would become final and executory as if no appeal has been filed. As early as the 1932 case of Lazaro v. Endencia and Andres, we stressed that the payment of the full amount of the docket fee is an indispensable step for the perfection of an appeal. In Lee v. Republic, we decided that even though half of the appellate court docket fee was deposited, no appeal was deemed perfected where the other half was tendered after the period within which payment should have been made. In Aranas v. Endona, we reiterated that the appeal is not perfected if only a part of the docket fee is deposited within the reglementary period and the remainder is tendered after the expiration of the period. The rulings in these cases have been consistently reiterated in subsequent cases: Guevarra v. Court of Appeals,Pedrosa v. Spouses Hill,Gegare v. Court of Appeals,Lazaro v. Court of Appeals,Sps. Manalili v. Sps. de Leon,La Salette College v. Pilotin, Saint Louis University v. Spouses Cordero,M.A. Santander Construction, Inc. v. Villanueva, Far Corporation v. Magdaluyo, Meatmasters Intl. Corp. v. Lelis Integrated Devt. Corp., Tamayo v. Tamayo, Jr., Enriquez v. Enriquez, KLT Fruits, Inc. v. WSR Fruits, Inc.,Tan v. Link, Ilusorio v. Ilusorio-Yap, and most recently in Tabigue v. International Copra Export Corporation, and continues to be the controlling doctrine. In the present case, Cobarrubias filed her petition for review on December 5, 2007, fifteen (15) days from receipt of the VA decision on November 20, 2007, but paid her docket fees in full only after seventy-two (72) days, when she filed her motion for reconsideration on February 15, 2008 and attached the postal money orders for P4,230.00. Undeniably, the docket fees were paid late, and without payment of the full docket fees, Cobarrubias appeal was not perfected within the reglementary period. Exceptions to the Rule on Payment of Appellate Court Docket Fees not applicable Procedural rules do not exist for the convenience of the litigants; the rules were established primarily to provide order to and enhance the efficiency of our judicial system. While procedural rules are liberally construed, the provisions on reglementary periods are strictly applied, indispensable as they are to the prevention of needless delays, and are necessary to the orderly and speedy discharge of judicial business. Viewed in this light, procedural rules are not to be belittled or dismissed simply because their nonobservance may have prejudiced a party's substantive rights; like all rules, they are required to be followed. However, there are recognized exceptions to their strict observance, such as: (1) most persuasive and weighty reasons; (2) to relieve a litigant from an injustice not commensurate with his failure to comply with the prescribed procedure; (3) good faith of the defaulting party by immediately paying within a reasonable time from the time of the default; (4) the existence of special or compelling circumstances; (5) the merits of the case; (6) a cause not entirely attributable to the fault or negligence of the party favored by the suspension of the rules; (7) a lack of any showing that the review sought is merely frivolous and dilatory; (8) the other party will not be unjustly prejudiced thereby; (9) fraud, accident, mistake or excusable negligence without the appellant's fault; (10) peculiar, legal and equitable circumstances attendant to each case; (11) in the name of substantial justice and fair play; (12) importance of the issues involved; and (13) exercise of sound discretion by the judge, guided by all the attendant circumstances. Thus, there should be an effort, on the part of the party invoking liberality, to advance a reasonable or meritorious explanation for his/her failure to comply with the rules.1avvphi1 In Cobarrubias' case, no such explanation has been advanced. Other than insisting that the ends of justice and fair play are better served if the case is decided on its merits, Cobarrubias offered no excuse for her failure to pay the docket fees in full when she filed her petition for review. To us, Cobarrubias omission is fatal to her cause. We, thus, find that the CA erred in reinstating Cobarrubias petition for review despite the nonpayment of the requisite docket fees within the reglementary period. The VA decision had lapsed to finality when the docket fees were paid; hence, the CA had no jurisdiction to entertain the appeal except to order its dismissal. WHEREFORE, the present petition is GRANTED. The assailed decision and resolution of the Court of Appeals in CA-G.R. SP No. 101708 are hereby DECLARED VOID and are consequently SET ASIDE.

The decision of the voluntary arbitrator, that the voided Court of Appeals decision and resolution nullified, stands. No pronouncement as to costs.

Case: Pfizer Inc. vs Velasco, G.R. No. 177467

Topic 20: 2011 NLRC Rules of Procedure

Facts: Velasco is a health care representative of Pfizer Inc. Because of a risky medical condition relating to her pregnancy, Velasco went leave of absence from work. While on leave, Pfizer sent her a Showcause Notice on an investigation against her for violations of company rules pertaining to unauthorized company dealings while placing her on preventive suspension. Velasco denied the charges. Velasco filed a case for illegal suspension before the Regional Arbitration Branch. Pfizer now invites Velasco for disciplinary hearing which Velasco prompted Pfizer that the issues can be tacked in the hearing of the case she filed with the RAB. Pfizer again notified Velasco to comment on the matter. Finally,Pfizer informed Velasco of her termination from work. The Labor Arbiter decided Velasco was illegally dismissed from work ordering reinstatement with backwages on December 5, 2003. Pfizer did not immediately reinstate Velasco as directed by LAs decision while waiting for its appeal before the NLRC. LA again ordered Pfizer to pay Velascos backwages and reinstate her. Pfizer then required Velasco to report to work only on June 27, 2005 (about 2 yrs from LAs decision). The NLRC later affirmed LAs decision. On a petition for certiorari to CA, CA reversed NLRCs decision, thereby affirming the validity of Velascos dismissal. On a motion for reconsideration by Velasco on CAs decision, still CA maintained its decision with modification directing Pfizer to pay Velasco her wages from the date of the Labor Arbiters Decision dated December 5, 2003 up to the Court of Appeals Decision dated November 23, 2005, because Pfizer did not comply with the reinstatement order of LA for such period. Velasco assailed this CA decision. Also, Pfizer imputed error to CA to still make it pay for Velascos wages from the date of LAs decision of Velascos reinstatement up to the date of CAs decision declaring validity of Velascos dismissal contending that it should not pay because Velasco did not comply with Pfizers June 27, 2005 return-work letter , thereby refusing reinstatement. Issues: 1.Was there reversible error on CA when it ordered Pfizer still pay for Velascos wages from the date of LAs decision up to the date CAs decision? 2. Did Phizer validly reinstate Velasco in its June 27, 2005 return-to-work letter ( 2 years after LAs order of reinstatement)? 3.Is Phizer correct in saying that it should not pay Velascos wages on the stated period but to for Velasco to refund the amount received from Phizer from LAs directive citong Genuino v. National Labor Relations Commission that If the decision of the labor arbiter is later reversed on appeal upon the finding that the ground for dismissal is valid, then the employer has the right to require the dismissed employee on payroll reinstatement to refund the salaries s/he received while the case was pending appeal? Ruling:

1. No.In Pioneer Texturizing Corporation v. National Labor Relations Commission, the Court held that an award or order of reinstatement is immediately self-executory without the need for the issuance of a writ of execution in accordance with the third paragraph of Article 223 of the Labor Code. The provision of Article 223 is clear that an award [by the Labor Arbiter] for reinstatement shall be immediately executory even pending appeal and the posting of a bond by the employer shall not stay the execution for reinstatement. The legislative intent is quite obvious, i.e., to make an award of reinstatement immediately enforceable, even pending appeal. To require the application for and issuance of a writ of execution as prerequisites for the execution of a reinstatement award would certainly betray and run counter to the very object and intent of Article 223, i.e., the immediate execution of a reinstatement order. The reason is simple. An application for a writ of execution and its issuance could be delayed for numerous reasons. A mere continuance or postponement of a scheduled hearing, for instance, or an inaction on the part of the Labor Arbiter or the NLRC could easily delay the issuance of the writ thereby setting at naught the strict mandate and noble purpose envisioned by Article 223. In other words, if the requirements of Article 224 [including the issuance of a writ of execution] were to govern, as we so declared in Maranaw, then the executory nature of a reinstatement order or award contemplated by Article 223 will be unduly circumscribed and rendered ineffectual.

PFIZER did not immediately admit respondent back to work which, according to the law, should have been done as soon as an order or award of reinstatement is handed down by the Labor Arbiter without need for the issuance of a writ of execution. 2. No. Under Article 223 of the Labor Code, an employee entitled to reinstatement shall either be admitted back to work under the same terms and conditions prevailing prior to his dismissal or separation or, at the option of the employer, merely reinstated in the payroll. Reinstatement means restoration to a state or condition from which one had been removed or separated. . The person reinstated assumes the position he had occupied prior to his dismissal. Reinstatement presupposes that the previous position from which one had been removed still exists, or that there is an unfilled position which is substantially equivalent or of similar nature as the one previously occupied by the employee. The return-to-work order PFIZER sent respondent is silent with regard to the position or the exact nature of employment that it wanted Velasco to take up as of July 1, 2005. Even if we assume that the job awaiting Velasco in the new location is of the same designation and pay category as what she had before, it is plain from the text of PFIZERs June 27, 2005 letter that such reinstatement was not under the same terms and conditions as her previous employment, considering that PFIZER ordered Velasco to report to its main office in Makati City while knowing fully well that Velascos previous job had her stationed in Baguio City (Velascos place of residence) and it was still necessary for Velasco to be briefed regarding her work assignments and responsibilities, including her relocation benefits. The management prerogative to transfer personnel must be exercised without grave abuse of discretion and putting to mind the basic elements of justice and fair play. There must be no showing that

it is unnecessary, inconvenient and prejudicial to the displaced employee. A transfer of work assignment without any justification therefor, even if respondent would be presumably doing the same job with the same pay, cannot be deemed faithful compliance with the reinstatement order. In other words, in this instance, there was no real, bona fide reinstatement to speak of prior to the reversal by the Court of Appeals of the finding of illegal dismissal. 3. Genuino ruling overturned by Garcia v. Philippine Airlines, Inc.. The Genuino ruling not only disregards the social justice principles behind the rule, but also institutes a scheme unduly favorable to management. Under such scheme, the salaries dispensed pendente lite merely serve as a bond posted in installment by the employer. For in the event of a reversal of the Labor Arbiter's decision ordering reinstatement, the employer gets back the same amount without having to spend ordinarily for bond premiums. This circumvents, if not directly contradicts, the proscription that the "posting of a bond [even a cash bond] by the employer shall not stay the execution for reinstatement." The Court reaffirms the prevailing principle that even if the order of reinstatement of the Labor Arbiter is reversed on appeal, it is obligatory on the part of the employer to reinstate and pay the wages of the dismissed employee during the period of appeal until reversal by the higher court.

An order for reinstatement entitles an employee to receive his accrued backwages from the moment the reinstatement order was issued up to the date when the same was reversed by a higher court without fear of refunding what he had received. The payment of such wages cannot be deemed as unjust enrichment on respondents part.
Luna vs Allado Construction Inc. Topic 20: 2011 NLRC Rules of Procedure Facts: Luna filed a complaint before the Labor Arbiter alleging he was an employee of Allado Construction Inc. (ACI for short) being part of ACIs personnel as its warehouseman and timekeeper for its construction projects. What made him file said complaint was that he was asked to sign a contract for project employment so that he can be given a reassignment. He refused to sign these contracts thus he was not given reassignment or any other work. His leave of absence was granted by ACI but on its expiration he was now advised to report to a new project site ( Kablacan,Sarangani), different from the one before his leave ( Maasim, Sarangani). He refused this new reassignment ,claiming illegal dismissal . The Labor Arbiter ruled Luna was deemed resigned thus dismissing Lunas complaint for illegal dismissal but ordered ACI to pay Luna financial assistance. Only ACI appealed the LAs decision, questioning the validity of the financial assistance. NLRC reversed the LAs decision declaring Luna was illegally dismissed and ordered ACI to pay backwages and separation pay. On certiorari before CA, CA overturned NLRCs decision that it ought not to have entertained the dismissal issue since it was not raised on appeal. Luna raised the case to SC on petition for review contending that under Article 218(c) of the Labor Code, the NLRC may, in the exercise of its appellate powers, correct, amend or waive any error, defect or irregularity whether in substance or in form and is not bound by technical rules of procedure.

Issue: Whether or not the NLRC can review issues not brought on appeal from the LA decision Ruling: NLRC cannot review issues not brought on appeal. Section 4(c), Rule VI of the 2002 Rules of Procedure of the NLRC, which was in effect at the time respondents appealed the Labor Arbiters decision, expressly provided that, on appeal, the NLRC shall limit itself only to the specific issues that were elevated for review. The same provision was retained as Section 4(d), Rule VI of the 2005 Revised Rules of Procedure of the NLRC. ( note: now in 2011 NLRC Rules of Procedure, said section is reproduced as Rule VI, Section 4(d) ) The NLRC evidently went against its own rules of procedure when it passed upon the issue of illegal dismissal although the question raised by ACI in their appeal was concerned solely with the legality of the labor arbiters award of financial assistance despite the finding that Luna was lawfully terminated. The NLRC shall, in cases of perfected appeals, limit itself to reviewing those issues which are raised on appeal. As a consequence thereof, any other issues which were not included in the appeal shall become final and executory. We are cognizant of the fact that Article 218(c) of the Labor Code grants the NLRC the authority to correct, amend or waive any error, defect or irregularity whether in substance or in form in the exercise of its appellate jurisdiction. The Labor Code provision, read in its entirety, states that the NLRCs power to correct errors, whether substantial or formal, may be exercised only in the determination of a question, matter or controversy within its jurisdiction [Art. 218, Labor Code]. Therefore, by considering the arguments and issues in the reply/opposition to appeal which were not properly raised by timely appeal nor comprehended within the scope of the issue raised in petitioners appeal, public respondent committed grave abuse of discretion amounting to excess of jurisdiction. The contention that the NLRC may nevertheless look into other issues although not raised on appeal since it is not bound by technical rules of procedure, is likewise devoid of merit. The law does not provide that the NLRC is totally free from technical rules of procedure, but only that the rules of evidence prevailing in courts of law or equity shall not be controlling in proceedings

before the NLRC [Art. 221, Labor Code]. This is hardly license for the NLRC to disregard and violate the implementing rules it has itself promulgated.
20. 2011 NLRC RULES OF PROCEDURE 11. University Plans Inc. vs. Solano, et al GR No. 170416 June 22, 2011 Facts: Respondents Solana, et al filed before the Labor Arbiter complaints for illegal dismissal, and damages against petitioner University Plans Incorporated. The Labor Arbiter found petitioner guilty of illegal dismissal and ordered respondents reinstatement as well as the payment of their full backwages, proportionate 13th month pay, moral/exemplary damages, and attorneys fees. Petitioner filed before the NLRC its Memorandum on Appeal as well as a Motion to Reduce Bond. Simultaneous with the filing of said pleadings, it posted a cash bond in the amount of P30,000.00. In its Motion to Reduce Bond, petitioner alleged that it was under receivership and that it cannot dispose of its assets at such a short notice. Because of this, it could not post the required bond. Nevertheless, it has P30,000.00 available for immediate disposition and prayed that said amount be deemed sufficient to satisfy the required bond for the perfection of its appeal. The NLRC denied petitioners Motion to Reduce Bond and directed it to post an additional appeal bond, otherwise the appeal shall be dismissed for non-perfection. In resolving the motion, the NLRC held that the amount of the appeal bond is fixed by law pursuant to Article 223 of the Labor Code. Petitioner filed a Motion for Reconsideration insisting that the NLRC has the discretion to reduce the appeal bond upon motion of appellant and on meritorious grounds. It argued that the fact that it was under receivership and could not dispose of any or all of its assets without prior court approval are meritorious grounds justifying the reduction of the appeal bond. Still, the NLRC denied their motion. Their petition before the CA was likewise denied. Issue: Whether or not the NLRC can conduct a preliminary determination of merit or lack of merit of a motion to reduce bond? Ruling: YES, the NLRC is not precluded from conducting a preliminary determination of the merit or lack of merit of a motion to reduce bond. Article 223 of the Labor Code provides in part: In case of a 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 the amount equivalent to the monetary award in the judgment appealed from. x x x x While pertinent portions of Section 6, Rule VI of the Revised Rules of Procedure of the NLRC read: SECTION 6. BOND. x x x x x x x x No motion to reduce bond shall be entertained except on meritorious grounds, and only upon the posting of a bond in a reasonable amount in relation to the monetary award. x x x The abovementioned provisions highlight the importance of posting a cash or surety bond in the perfection of an appeal to the NLRC from the Labor Arbiters judgment involving a monetary award. 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 word only in Article 223 of the Labor Code makes it unmistakably plain that the lawmakers intended the posting of a cash or surety bond by the employer to be the essential and exclusive means by which an employers appeal may be perfected. The word may

refers to the perfection of an appeal as optional on the part of the defeated party, but not to the compulsory posting of an appeal bond, if he desires to appeal. However, under Section 6, Rule VI of the NLRCs Revised Rules of Procedure, the bond may be reduced albeit only on meritorious grounds and upon posting of a partial bond in a reasonable amount in relation to the monetary award. According to jurisprudence, the bond requirement on appeals involving monetary awards has been and may be relaxed in meritorious cases. These cases include instances in which (1) there was substantial compliance with the Rules, (2) surrounding facts and circumstances constitute meritorious grounds to reduce the bond, (3) a liberal interpretation of the requirement of an appeal bond would serve the desired objective of resolving controversies on the merits, or (4) the appellants, at the very least, exhibited their willingness and/or good faith by posting a partial bond during the reglementary period. Notwithstanding petitioners failure to submit its financial statement and list of sources of income and to give more details relative to its receivership, it was nevertheless able to show through the Cease and Desist Orders of the SEC that it was indeed under a state of receivership. This should have been sufficient reason for the NLRC to not outrightly deny petitioners motion. Also, the present case falls under those cases where the bond requirement on appeal may be relaxed considering that (1) there was substantial compliance with the Rules; (2) the surrounding facts and circumstances constitute meritorious grounds to reduce the bond; and (3) the petitioner, at the very least, exhibited its willingness and/or good faith by posting a partial bond during the reglementary period. The NLRC can have a preliminary determination of the employers financial capability to post the required bond, without necessarily passing upon the merits. Since the intention is merely to give the NLRC an idea of the justification for the reduced bond, the evidence for the purpose would necessarily be less than the evidence required for a ruling on the merits. Indeed, it only bears stressing that the NLRC is not precluded from receiving evidence on appeal as technical rules of evidence are not binding in labor cases. On the contrary, the Labor Code explicitly mandates it to use every and all reasonable means to ascertain the facts in each case speedily and objectively, without regard to technicalities of law or procedure, all in the interest of due process WHEREFORE, the petition is GRANTED. The assailed Decisions are REVERSED and SET ASIDE. This case is ordered remanded to the NLRC for the conduct of preliminary determination of the merit or lack of merit of petitioners Motion to Reduce Bond. 21. Right To self Organization 22. Rights of Legitimate Labor Organization Escario vs. NLRC G.R. No. 160302 Facts: The petitioners were among the regular employees of respondent Pinakamasarap Corporation (PINA), a corporation engaged in manufacturing and selling food seasoning. On March 13, 1993, members of the Union walked out of PINAs premises and proceeded to the barangay office to show support for Juanito Caete, an officer of the Union charged with oral defamation by Aurora Manor, PINAs personnel manager. As a result of the walkout, PINA preventively suspended all officers of the Union. PINA terminated the officers of the Union after a month. On April 28, 1993, the Union filed a notice of strike, claiming that PINA was guilty of union busting through the constructive dismissal of its officers. PINA retaliated by charging the September 27, 2010

petitioners with ULP and abandonment of work, stating that they had violated provisions on strike of the collective bargaining agreement (CBA). The Labor Arbiter rendered a judgment declaring the subject strike to be illegal. On appeal, the NLRC sustained the finding that the strike was illegal, but reversed the LAs ruling that there was abandonment. Issue: The petitioners posit that they are entitled to full backwages from the date of dismissal until the date of actual reinstatement due to their not being found to have abandoned their jobs. Ruling: I Third Paragraph of Article 264 (a), Labor Code, is Applicable Article 279 provides: Article 279. Security of Tenure. In cases of regular employment, the employer shall not terminate the services of an employee except for a just cause or when authorized by this Title. An employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his compensation was withheld from him up to the time of his actual reinstatement. By its use of the phrase unjustly dismissed, Article 279 refers to a dismissal that is unjustly done, that is, the employer dismisses the employee without observing due process, either substantive or procedural. Substantive due process requires the attendance of any of the just or authorized causes for terminating an employee as provided under Article 278 (termination by employer), or Article 283 (closure of establishment and reduction of personnel), or Article 284 (disease as ground for termination), all of the Labor Code; while procedural due process demands compliance with the twin-notice requirement. In contrast, the third paragraph of Article 264(a) states: Art. 264. Prohibited activities. (a) xxx Any worker whose employment has been terminated as a consequence of an unlawful lockout shall be entitled to reinstatement with full backwages. Any union officer who knowingly participates in an illegal strike and any worker or union officer who knowingly participates in the commission of illegal acts during a strike may be declared to have lost his employment status; Provided, 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. On the consequences of an illegal strike, the provision distinguishes between a union officer and a union member participating in an illegal strike. A union officer who knowingly participates in an illegal strike is deemed to have lost his employment status, but a union member who is merely instigated or induced to participate in the illegal strike is more benignly treated.

The petitioners were terminated for joining a strike that was later declared to be illegal. The NLRC ordered their reinstatement or, in lieu of reinstatement, the payment of their separation pay, because they were mere rank-and-file workers whom the Unions officers had misled into joining the illegal strike. They were not unjustly dismissed from work. Based on the text and intent of the two aforequoted provisions of the Labor Code, therefore, it is plain that Article 264(a) is the applicable one. II 2. Petitioners not entitled to backwages despite their reinstatement. The principle of a "fair days wage for a fair days labor" remains as the basic factor in determining the award thereof. If there is no work performed by the employee there can be no wage or pay unless, of course, the laborer was able, willing and ready to work but was illegally locked out, suspended or dismissed or otherwise illegally prevented from working. III Appropriate Amount for Separation Pay Is One Month per Year of Service The petitioners were ordered reinstated because they were union members merely instigated or induced to participate in the illegal strike. By joining the strike, they did not renounce their employment relation with PINA but remained as its employees. xxx Under the circumstances, the grant of separation pay in lieu of reinstatement of the petitioners was proper.1awph!1 We hold that separation pay equivalent to one month per year of service in lieu of reinstatement fully aligns with the aforecited rulings of the Court on the matter. 22. RIGHTS OF LEGITIMATE LABOR ORGANIZATION 9. Automotive Engine Rebuilders vs. Progresibong Unyon ng mga Manggagaw sa AER GR No. 160138 July 13, 2011 Facts: AER is a company engaged in the automotive engine repair and rebuilding business and other precision and engineering works for more than 35 years. Progresibong Unyon Ng Mga Manggagawa sa AER (Unyon) is the legitimate labor union of the rank and file employees of AER. Unyon filed a petition for certification election before the DOLE after organizing their employees union within AER. The next day, AER forced all of its employees to submit their urine samples for drug testing. Those who refused were threatened with dismissal. Those who failed the drug test were suspended and required to submit a medical certificate attesting to their fitness before they can return to their work However, while they were in the process of securing their respective medical certificates, they received a letter from AER charging them with insubordination and absence without leave and directing them to explain their acts in writing. Despite their written explanation, AER refused to reinstate them. Unyon found out that AER was moving out machines from the main building to the AER-PSC compound located on another street. Sensing that management was going to engage in a runaway shop, Unyon tried to prevent the transfer of the machines by forcibly taking possession of the machines to return them to the main building.

The concerned employees also started a strike, barricaded company premises, and prevented the free ingress and egress of the other employees, officers, clients, and visitors and the transportation of company equipments. They also tried to use force and inflict violence against the other employees. Both filed a complaint against each other before the NLRC. AER accused the Unyon of illegal concerted activities (illegal strike, illegal walkout, illegal stoppage, and unfair labor practice) while Unyon accused AER of unfair labor practice, illegal suspension and illegal dismissal. The Labor Arbiter (LA) rendered a decision in favor of Unyon by directing AER to reinstate the concerned employees but without backwages. Unsatisfied with the decision, both parties appealed. The NLRC ruled that the concerned employees had no valid basis in conducting a strike. Considering that the concerted activity was illegal, AER had the right to immediately dismiss them. The case was then brought before the CA where it ruled that both parties were guilty of unfair labor practice. Both parties were found by the CA to be in pari delicto and must bear the consequences of their own wrongdoing. Therefore, the CA ordered that the concerned employees be reinstated immediately without backwages. Issue: Whether or not the dismissed employees are entitled to backwages? Ruling: NO. The SC affirms the ruling of the CA favoring the reinstatement of all the complaining employees including those who tested positive for illegal drugs, without backwages. The Court is in accord with the ruling of the LA and the CA that neither party came to court with clean hands. Both were in pari delicto. AERs fault is obvious from the fact that a day after the union filed a petition for certification election before the DOLE, it hit back by requiring all its employees to undergo a compulsory drug test. Although AER argues that the drug test was applied to all its employees, it was silent as to whether the drug test was a regular company policy and practice in their 35 years in the automotive engine repair and rebuilding business. As the Court sees it, it was AERs first ever drug test of its employees immediately implemented after the workers manifested their desire to organize themselves into a union. Indeed, the timing of the drug test was suspicious. To the Courts mind, the complaining workers temporarily walked out of their jobs because they strongly believed that management was committing an unfair labor practice. They had no intention of hurting anybody or steal company property. Contrary to AERs assertion, the striking workers did not intend to steal the line boring machine which they tried to cart away from the AER-PSC compound; they just wanted to return it to the main AER building. Like management, the union and the affected workers were also at fault for resorting to a concerted work slowdown and walking out of their jobs of protest for their illegal suspension. It was also wrong for them to have forced their way to the AER-PSC premises to try to bring out the boring machine. The photos shown by AER are enough proof that the picketing employees prevented the entry and exit of non-participating employees and possibly AERs clients. Although the unions sudden work stoppage lasted a day, it surely caused serious disturbance and tension within AERs premises and could have adversely affected AERs clients and business in general. In the case at bar, since both AER and the union are at fault or in pari delicto, they should be restored to their respective positions prior to the illegal strike and illegal lockout. Nonetheless, if reinstatement is no longer feasible, the concerned employees should be given separation pay up to the date set for the return of the complaining employees in lieu of reinstatement. Topic 23 Revised Guidelines of the NCMB for the Conduct of Voluntary Arbitration Proceedings Effective September 16, 2005 Topic 24 Unfair Labor Practice

Topic 25 Other Important Labor Provisions

TOPIC 25 A. CONTRACTING ARRANGEMENT 1. PEOPLE'S BROADCASTING (BOMBO RADYO PHILS) vs. SECRETARY OF DOLE et al., G.R. No. 179652 May 8, 2009 FACTS: Jandeleon Juezan filed a complaint against Bombo Radyo Phils. for illegal deduction, non-payment of service incentive leave, 13th month pay, premium pay for holiday and rest day and illegal diminution of benefits, delayed payment of wages and non-coverage of SSS, PAG-IBIG and Philhealth before the DOLE Regional Office No. 7, Cebu City. On the basis of the complaint, the DOLE conducted a plant level inspection. In the Inspection Report Form, the Labor Inspector wrote "Note: Respondent deny employer-employee relationship with the complainant- see Notice of Inspection results." In the Notice of Inspection Results, the Labor Inspector made the following notations: Management representative informed that complainant is a drama talent hired on a per drama participation basis" hence no employer-employee relationship between them. As proof of this, management presented photocopies of cash vouchers, billing statement, employments of specific undertaking (a contract between the talent director & the complainant), summary of billing of drama production etc. The management has no control of the talent if he ventures into another contract w/ other broadcasting industries. ISSUE: Does the Secretary of Labor have the power to determine the existence of an employer-employee relationship in the exercise of visitorial and enforcement power of DOLE under Article 128 (b) of the Labor Code? RULING: Yes, but it cannot be coextensive with the visitorial and enforcement power itself. Such determination is merely preliminary, incidental and collateral to the DOLEs primary function of enforcing labor standards provisions. The determination of the existence of employer-employee relationship is still primarily lodged with the NLRC. Article 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 still 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 representative shall issue writs of execution to the appropriate authority for the enforcement of their orders, except in cases where the employer contests the findings of the labor employment and enforcement officer and raises issues supported by documentary proofs which were not considered in the course of inspection. (emphasis supplied) xxx The provision is quite explicit that the visitorial and enforcement power of the DOLE comes into play only "in cases when the relationship of employer-employee still exists." The clause "in cases where the relationship of employer-employee still exists" signifies that the employer-employee relationship must have existed even before the emergence of the controversy. Necessarily, the DOLEs power does not apply in two instances, namely: (a) where the employer-employee relationship has ceased; and (b) where no such relationship has ever existed. In the first situation, the claim has to be referred to the NLRC because it is the NLRC which has jurisdiction in view of the termination of the employer-employee relationship. The same procedure has to be followed in the second situation since it is the NLRC that has jurisdiction in view of the absence of employer-employee relationship between the evidentiary parties from the start. Clearly the law accords a prerogative to the NLRC over the claim when the employer-employee relationship has terminated or such relationship has not arisen at all. The reason is obvious. In the second situation especially, the existence of an employer-employee relationship is a matter which is not easily determinable from an ordinary inspection, necessarily so, because the elements of such a relationship are not verifiable from a mere ocular examination. The intricacies and implications of an employer-employee relationship demand that the level of scrutiny should be far above the cursory and the mechanical. While documents, particularly documents found in the employers office are the primary source materials, what may prove decisive are factors related to the history of the employers business operations, its current state as well as accepted contemporary practices in the industry. More often than not, the question of employer-employee relationship becomes a battle of evidence, the determination of which should be comprehensive and intensive and therefore best left to the specialized quasi-judicial body that is the NLRC. It can be assumed that the DOLE in the exercise of its visitorial and enforcement power somehow has to make a determination of the existence of an employeremployee relationship. Such prerogatival determination, however, cannot be coextensive with the visitorial and enforcement power itself. Indeed, such determination is merely preliminary, incidental and collateral to the DOLEs primary function of enforcing labor standards provisions. The determination of the existence of employeremployee relationship is still primarily lodged with the NLRC. This is the meaning of the clause "in cases where the relationship of employer-employee still exists" in Art. 128 (b). Thus, before the DOLE may exercise its powers under Article 128, two important questions must be resolved: (1) Does the employer-employee relationship still exist, or

alternatively, was there ever an employer-employee relationship to speak of; and (2) Are there violations of the Labor Code or of any labor law? A mere assertion of absence of employer-employee relationship does not deprive the DOLE of jurisdiction over the claim under Article 128 of the Labor Code. At least a prima facie showing of such absence of relationship is needed to preclude the DOLE from the exercise of its power. Without a doubt, petitioner, since the inception of this case had been consistent in maintaining that respondent is not its employee. Certainly, a preliminary determination, based on the evidence offered, and noted by the Labor Inspector during the inspection as well as submitted during the proceedings before the Regional Director puts in genuine doubt the existence of employer-employee relationship. From that point on, the prudent recourse on the part of the DOLE should have been to refer respondent to the NLRC for the proper dispensation of his claims. Furthermore, as discussed earlier, even the evidence relied on by the Regional Director in his order are mere selfserving declarations of respondent, and hence cannot be relied upon as proof of employer-employee relationship. 2. EAGLE STAR SECURITY SERVICES, INC vs. Mirando, et al., G.R. No. 179512 July 30, 2009 FACTS: Bonifacio Mirando was hired by Eagle Star Security Services, Inc. as a security guard. He was posted at the Heroes Hill Branch of Equitable-PCI Bank with a 9:00 a.m.to-5:00 p.m. shift and a daily wage of P250.00. On December 14, 2001, Mirando was made to sign a duty schedule for December 15 (a Saturday). When he reported for work on December 15, 2001, he was told by the detachment commander, Juanito Endencio, not to report for duty per instruction of the head office. He thus called up the head office and was told by Wilfredo Dayon that he was removed from duty by Ernesto Agodilla, Eagle Star's operations manager. He filed a complaint for illegal dismissal against Eagle Star and its president Wilfredo Encarnacion at the NLRC. Eagle Star alleged that respondent went on absence without official leave (AWOL) 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. Eagle star goes on to argue that even assuming that respondent was not given any duty assignment, his filing of the complaint for illegal dismissal was "premature" as he should be considered to have been in floating status or off-detail under Article 286 of the Labor Code. ISSUE: Does the temporary off-detail of Mirando amount to dismissal?

RULING: Yes. Eagle Star argues that Miranda 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 petitioners 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. ART. 286. When employment not deemed terminated. The bona fide suspension of the operation of a business or undertaking for a period not exceeding six (6) months, or the fulfillment by the employee of a military or civic duty shall not terminate employment. In all such cases, the employer shall reinstate the employee to his former position without loss of seniority rights if he indicates his desire to resume his work not later than one (1) month from the resumption of operations of his employer or from his relief from the military or civic duty. Eagle Star's citation of Article 286 of the Labor Code is misplaced. Philippine Industrial Security Agency v. Dapiton teaches: We stress that Article 286 applies only when there is a bonafide suspension of the employers 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 agencys 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. Here, there is no showing that there was lack of available posts at Eagle Stars clients or that there was a request from the client-bank, where Miranda was last posted and which continued to hire Eagle Stars services, to replace respondent with another. Eagle Star 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. Thus, Miranda is illegally dismissed.
SAN MIGUEL CORPORATION, vs.SEMILLANO, et al G.R. No. 164257 July 5, 2010 Topic: Other Important Labor Provisions; A. Contracting Management AMPCO hired the services of Vicente et al. [respondents herein] on different dates in December [of 1991 and] 1994. All of them were assigned to work in SMCs Bottling Plant, in order to perform the following tasks: segregating bottles, removing dirt therefrom, filing them in designated places, loading and unloading the bottles to and from the delivery trucks, and performing other tasks as may be ordered by SMCs officers. [They] were required to work inside the premises of SMC using SMCs equipment

andrendered service with SMC for more than 6 months. SMC entered into a Contract of Services with AMPCO designating the latter as the employer of Vicente, et al. As a result, Vicente et al. failed to claim the rights and benefits ordinarily accorded a regular employee of SMC. In fact, they were not paid their 13th month pay. On June 6, 1995, they were not allowed to enter the premises of SMC. The project manager of AMPCO, Merlyn Polidario, told them to wait for further instructions from the SMCs supervisor. Vicente et al. waited for one month, unfortunately, they never heard a word from SMC. Vicente et al., as complainants, filed on July 17, 1995 a COMPLAINT FOR ILLEGAL DISMISSAL with the Labor Arbiter against AMPCO, Merlyn V. Polidario, SMC and Rufino I. Yatar [SMC Plant Manager], as respondents. xxx Complainants alleged that they were fillers of SMC Bottling Plant xxx assigned to perform activities necessary and desirable in the usual business of SMC. xxx They claim that they were under the control and supervision of SMC personnel and have worked for more than 6 months in the company. They assert that they are regular employees of SMC. However, SMC utilized AMPCO making it appear that the latter was their employer, so that SMC may evade the responsibility of paying the benefits due them under the law. Finally, complainants contend that AMPCO and SMC failed to give their 13th month pay and that they were prevented from entering the SMCs premises. Hence, complainants contend that they were illegally dismissed from service. On the other hand, respondent SMC raised the defense that it is not the employer of the complainants. According to SMC, AMPCO is their employer because the latter is an independent contractor xxx. Also SMC alleged that it was AMPCO that directly paid their salaries and remitted their contributions to the SSS. Finally, SMC assails the jurisdiction of the Labor Arbiter contending that the instant dispute is intracooperative in nature falling within the jurisdiction of the Arbitration Committee of the Cooperative Development Authority. ISSUE: whether or not AMPCO is a legitimate job contractor. A claim that an action for regularization has no legal basis and is violative of petitioners constitutional and statutory rights is, therefore, dependent upon the resolution of the issue posed above. HELD: Petitioner SMC, as principal employer, is solidarily liable with AMPCO, the labor-only contractor, for all the rightful claims of respondents. Generally, the findings of fact made by the Labor Arbiter and the NLRC, as the specialized agencies presumed to have the expertise on matters within their respective fields, are accorded much respect and even finality, when supported by ample evidence and affirmed by the CA. The fact that the NLRC, in its subsequent resolution, reversed its original decision does not render the foregoing inapplicable where the resolution itself is not supported by substantial evidence. Department of Labor and Employment (DOLE) Department Order No. 10, Series of 1997, defines "job contracting" and "labor-only contracting" as follows: Sec. 8. Job contracting. There is job contracting permissible under the Code if the following conditions are met: (1) The contractor carries on an independent business and undertakes the contract work on his own account under his own responsibility according to his own manner and method, free from the control and direction of his employer or principal in all matters connected with the performance of the work except as to the results thereof; and (2) The contractor has substantial capital or investment in the form of tools, equipment, machineries, work premises, and other materials which are necessary in the conduct of his business. Sec. 9. Labor-only contracting. (a) Any person who undertakes to supply workers to an employer shall be deemed to be engaged in labor-only contracting where such person: (1) Does not have substantial capital or investment in the form of tools, equipment, machineries, work premises and other materials; and (2) The workers recruited and placed by such persons are performing activities which are

directly related to the principal business or operations of the employer in which workers are habitually employed. (b) Labor-only contracting as defined herein is hereby prohibited and the person acting as contractor shall be considered merely as an agent or intermediary of the employer who shall be responsible to the workers in the same manner and extent as if the latter were directly employed by him. (c) For cases not falling under this Article, the Secretary of Labor shall determine through appropriate orders whether or not the contracting out of labor is permissible in the light of the circumstances of each case and after considering the operating needs of the employer and the rights of the workers involved. In such case, he may prescribe conditions and restrictions to insure the protection and welfare of the workers. Section 5 of Department Order No. 18-02 (Series of 2002) of the Rules Implementing Articles 106 to 109 of the Labor Code further provides that: "Substantial capital or investment" refers to capital stocks and subscribed capitalization in the case of corporations, tools, equipment, implements, machineries and work premises, actually and directly used by the contractor or subcontractor in the performance or completion of the job work or service contracted out. (emphasis supplied) The "right to control" shall refer to the right reserved to the person for whom the services of the contractual workers are performed, to determine not only the end to be achieved, but also the manner and means to be used in reaching that end. The test to determine the existence of independent contractorship is whether or not the one claiming to be an independent contractor has contracted to do the work according to his own methods and without being subject to the control of the employer, except only as to the results of the work.15 The existence of an independent and permissible contractor relationship is generally established by the following criteria: whether or not the contractor is carrying on an independent business; the nature and extent of the work; the skill required; the term and duration of the relationship; the right to assign the performance of a specified piece of work; the control and supervision of the work to another; the employer's power with respect to the hiring, firing and payment of the contractor's workers; the control of the premises; the duty to supply the premises, tools, appliances, materials, and labor; and the mode, manner and terms of payment.16 Although there may be indications of an independent contractor arrangement between petitioner and AMPCO, the most determinant of factors exists which indicate otherwise. Petitioners averment that AMPCO had total assets amounting to P932,599.22 and income of P2,777,603.46 in 1994 was squarely debunked by the LA. Thus: Furthermore, there are no pieces of evidence that AMPCO has substantial capital or investment. An examination its "Statement of Income and Changes in Undivided Savings" show that its income for the year 1994 was P2,777,603.46 while its operating expenses for said year is P2,718,315.33 or a net income of P59,288.13 for the year 1994; that its cash on hand for 1994 is P22,154.80. In fact, the NLRC in its original decision likewise stated as follows: In contrast, the (sic) AMPCOs main business activity is trading, maintaining a store catering to members and the public. Its job contracting with SMC is only a minor activity or sideline. The component of AMPCOs substantial capital are [sic]in fact invested and used in the trading business. This is palpably shown in the sizable amount of its accounts receivables amounting to more than P.6M out of its members capital of only P.47M in 1994. Neither did petitioner prove that AMPCO had substantial equipment, tools, machineries, and supplies actually and directly used by it in the performance or completion of the segregation and piling job. In fact, as correctly pointed out by the NLRC in its original decision, there is nothing in AMPCOs listof fixed assets, machineries, tools, and equipment which it could have used, actually and directly, in the performance or completion of its contracted job, work or service with petitioner. For said reason, there can

be no other logical conclusion but that the tools and equipment utilized by respondents are owned by petitioner SMC. It is likewise noteworthy that neither petitioner nor AMPCO has shown that the latter had clients other than petitioner. Therefore, AMPCO has no independent business. In connection therewith, DOLE Department Order No. 10 also states that an independent contractor carries on an independent business and undertakes the contract work on his own account, under his own responsibility, according to his own manner and method, and free from the control and direction of his employer or principal in all matters connected with the performance of the work except as to the results thereof. This embodies what has long been jurisprudentially recognized as the control test18 to determine the existence of employer-employee relationship. In the case at bench, petitioner faults the CA for holding that the respondents were under the control of petitioner whenever they performed the task of loading in the delivery trucks and unloading from them. It, however, fails to show how AMPCO took "entire charge, control and supervision of the work and service agreed upon." AMPCOs Comment on the Petition is likewise utterly silent on this point. Notably, both petitioner and AMPCO chose to ignore the uniform finding of the LA, NLRC (in its original decision) and the CA that one of the assigned jobs of respondents was to "perform other acts as may be ordered by SMCs officers." Significantly, AMPCO, opted not to challenge the original decision of the NLRC that found it a mere labor-only contractor.1avvphi1 Moreover, the Court is not convinced that AMPCO wielded "exclusive discretion in the discharge" of respondents. As the CA correctly pointed out, Merlyn Polidario, AMPCOs project manager, even told respondents to "wait for further instructions from the SMCs supervisor" after they were prevented from entering petitioner SMCs premises. Based on the foregoing, no other logical conclusion can be reached than that it was petitioner, not AMPCO, who wielded power of control. Despite the fact that the service contracts contain stipulations which are earmarks of independent contractorship, they do not make it legally so. The language of a contract is neither determinative nor conclusive of the relationship between the parties. Petitioner SMC and AMPCO cannot dictate, by a declaration in a contract, the character of AMPCOs business, that is, whether as labor-only contractor, or job contractor. AMPCOs character should be measured in terms of, and determined by, the criteria set by statute.AMPCOs actual status and participation regarding respondents employment clearly belie the contents of the written service contract. Petitioner cannot rely either on AMPCOs Certificate of Registration as an Independent Contractor issued by the proper Regional Office of the DOLE to prove its claim. It is not conclusive evidence of such status. The fact of registration simply prevents the legal presumption of being a mere labor-only contractor from arising.In distinguishing between permissible job contracting and prohibited labor-only contracting, the totality of the facts and the surrounding circumstances of the case are to be considered. The evidence is clear that respondents performed activities which were directly related to petitioners main line of business. Petitioner is primarily engaged in manufacturing and marketing of beer products, and respondents work of segregating and cleaning bottles is unarguably an important part of its manufacturing and marketing process. Thus, petitioner SMC, as principal employer, is solidarily liable with AMPCO, the labor-only contractor, for all the rightful claims of respondents. Under this set-up, AMPCO, as the "labor-only" contractor, is deemed an agent of the principal (SMC). The law makes the principal responsible over the employees of the "labor-only" contractor as if the principal itself directly hired the employees. WHEREFORE, the petition is DENIED. The February 19, 2004 Decision of the Court of Appeals, reversing the decision of the NLRC and reinstating the decision of the Labor Arbiter, is AFFIRMED.

Topic 25 B. Workers Preference

Topic 25. C. Attorneys Fees & Appearance of Lawyers Topic 26 A. Miscellaneous Provisions

Topic 26 B. Employment of Women Topic 26 F. Employment of Non-resident aliens Topic 26 H. Employmant of Academic/Non-academic Personnel in Private Educational Institution Topic 26 I. medical, Dental, and Occupational Safety Topic 26 J. Migrant Workers Act/Recruitment and Placement Topic 27. Social Legislation Topic 27: Social Legislation Case No. 1: SSS, et al. v. Alba, GR No. 165482, July 23, 2008 Facts: Apolonio Lamboso filed a claim for retirement benefit before the SSS, however, it was denied on the ground that he could not qualify for monthly pension under RA No. 1161 (the Social Security Act of 1954) as he then had only 39 paid contributions. He appealed before the Commission where it rendered resolution ruling among others that the failure on the part of Alba (owner of Hda. La Roca) to file his responsive pleading to the petition filed by Lamboso strongly indicates lack or absence of evidence, by way of rebuttal, to the positive assertion of the petitioner regarding his employment with the former from 1960 to April 1973. Also, the fact that Alba reported Lamboso to the SSS for coverage effective April 1, 1970 is already an incontrovertible proof of employment. Thus, the Commission ordered Alba and Benedicto (owner of Hda. Kamandag, who argued that Lamboso is only a lessee) to pay to the SSS the delinquent monthly contributions of Lamboso and further ordering the SSS to pay Lamboso his retirement benefit. The CA reversed and set aside both the resolution and the order of the Commission holding that Alba cannot be considered as an employer of Lamboso prior to 1970 because as administrator of the family-owned hacienda, he is not an employer under Section 8 (c) of the Social Security Act of 1954 unlike under Article 212 (e) of the Labor Code which defines an employer as, among others, any person acting directly or indirectly in the interest of the employer. As such, it declared, Far Alba had no obligation to remit to SSS the monthly contributions of Lamboso prior to 1970 and that inasmuch as Alba had duly remitted Lamboso's monthly contributions to the SSS for the period of January 1970 to March 1973, which totaled 39 contributions, he as Lamboso's employer should be absolved from the adjudged liability. Also, it stated that since it was Arturo Alba, Sr., Far Alba's father, who had failed to remit the SS contributions prior to 1970, Lamboso

should have asserted his claim before the estate proceedings of his deceased employer in accordance with Section 5, Rule 86 of the Rules of Court. Issue: Whether an administrator could be considered an employer within the scope of the Social Security Act of 1954. Ruling: [Far Alba denies having been Lamboso's employer before 1970. More than that, he denies having served as the hacienda's administrator before that year. These disavowals, however, are undermined by Lamboso's clear and direct testimony that Far Alba served as the hacienda's administrator from 1960 to 1965 and solely ran the place from 1965 onwards. Evidently, Far Alba had indeed served as Lamboso's employer from 1965 to 1970 or, at the very least, he had served as the hacienda's administrator before 1970.] We answer in the affirmative. First, the Court observes that Far Alba was no ordinary administrator. He was no less than the son of the hacienda's owner and as such he was an owner-in-waiting prior to his father's death. He was a member of the owner's family assigned to actively manage the operations of the hacienda. As he stood to benefit from the hacienda's successful operation, he ineluctably took his job and his father's wishes to heart. As emphasized by the Commission his and the owner's interests in the business where plainly and inextricably linked by filial bond. He more than just acted in the interests of his father as employer, and could himself pass off as the employer, the one carrying on the undertaking. Second, nomenclature aside, Far Alba was not merely an administrator of the hacienda. Applying the control test which is used to determine the existence of employer-employee relationship for purposes of compulsory coverage under the SSS law, Far Alba is technically Lamboso's employer. Lamboso testified that he was selected and his services were engaged by Far Alba himself. Corollarily, Far Alba held the prerogative of terminating Lamboso's employment. Lamboso also testified in a direct manner that he had been paid his wages by Far Alba. This testimony was seconded by Lamboso's co-worker, Rodolfo Sales. Anent the power of control with regard

to the work of the employee, the element refers merely to the existence of the power and not the actual exercise thereof. It is not essential for the employer to actually supervise the performance of duties of the employee; it is sufficient that the former has a right to wield the power. Plainly, Far Alba, as the hacienda administrator, acts as the legal representative of the employer and is thus an employer within the meaning of the law liable to pay the SS contributions. Finally, the Court believes that Section 8 (c) of the Social Security Act of 1954 is broad enough to include those persons acting directly or indirectly in the interest of the employer. As pointed out by the Court of Appeals, that the said provision does not contain the definitive phrase contained in Article 212 (e) of the Labor Code should not be taken to mean that administrators such as Far Alba, whose interests are closely linked with his father-employer, do not come within the purview of the law. If under Article 212 (e), persons acting in the interest of the employer, directly or indirectly, are obliged to follow the government labor relations policy, it could be reasonably concluded that such persons may likewise be held liable for the remittance of SS contributions which is an obligation created by law and an is employee's right protected by law. In any event, the Court sustains the jurisdiction of the Commission over disputes under the Social Security Act "with respect to coverage, benefits, contributions and penalties thereon or any other matter related thereto. In the case of Vera, et al. v. Judge Fernandez, the Court declared that claims by the government for unpaid taxes are not covered by the statute of non-claims as these are monetary obligations created by law. Even after the distribution of the estate, claims for taxes may be enforced against the distributees in proportion to their shares in the inheritance. Similarly, employers are required to remit the contributions to the SSS by mandate of law. As such, actions of this type should be treated in much the same way as taxesthat they are not required to be filed against the estate and that they be claimed against the heirs of the errant decedent. __________ Case No. 2: Rodrin v. GSIS, et al., GR No. 162837, July 28, 2008 Facts:

Petitioner Marlin L. Rodrin filed a claim for compensation benefits under PD 626, as amended, relative to the death of her husband Felixberto M. Rodrin before the GSIS. Brothers Anolito and Cesar Loyola stated that they were driving their respective cars with SPO1 Felixberto Rodrin, their brother-in-law. They decided to pass through a village to in going to their destination. At gate II of said village, they were allegedly permitted to enter by the duty security guards upon a favor given to SPO1 Rodrin.However, they were stopped on their exit at gate 1 by the security guards whose service shot guns were pointed toward their two cars. This prompted SPO1 Rodrin to alight from the car and approached Rodolfo, one of the guards. They were then asked why they persisted to enter gate II, despite the refusal of the guard. At this juncture, while they were engaged in a heated altercation, Rodolfo shot SPO1 Rodrin with a shot gun, hitting the latter on the left part of the body thereby causing his instantaneous death. The GSIS denied petitioner's claim for compensation benefits on the ground that the death of SPO1 Rodrin did not arise out nor was it in the course of his employment and the same was affirmed upon appeal to the ECC. Issue: Whether the death of SPO1 Rodrin compensable under PD 262, as amended. Ruling: For the compensability of an injury to an employee which results in his disability or death, Section 1(a), Rule III of the Amended Rules on Employees' Compensation imposes the following conditions: 1. The employee must have been injured at the place where his work required him to be; 2. The employee must have been performing his official functions; and 3. If the injury was sustained elsewhere, the employee must have been executing an order of the employer. The first condition has been met by petitioner. The GSIS and the ECC as well as the CA accepted the claim that SPO1 Rodrin may have been in the line of duty or on a surveillance mission at the time and place of his shooting. The ECC conceded that there was no question that SPO1 Rodrin was a member of the PNP at the time of his death; and that being so, he was considered to be at his place of work regardless of whether or not he was "on or off-duty.

Anent the second and third conditions, the GSIS, ECC and the CA found that SPO1 Rodrin, at the time of his death, was not in the performance of his official duties pursuant to an official order from his superior. Being specifically assigned to conduct intelligence work in Carmona and Bian, SPO1 Rodrin is presumed to have been performing his official duty when he was shot to death by a security guard while trying to pass though the Las Villas de Manila subdivision in Brgy. San Francisco, Bian, Laguna. Other than the fact the SPO1 Rodrin had intended to go to San Pedro, Laguna, a place which is not covered by his Letter-Orders, there is no basis to conclude that SPO1 Rodrin's business in going to San Pedro was private in nature and was not related to his job as an intelligence officer of the PNP. Intelligence work covers a broad spectrum of activities that, more often than not, would necessarily involve secret plans or unexpected courses of action to attain its objectives. Moreover, simply because SPO1 Rodrin was in the company of his brothers-in-law who are not members of any law enforcement agency does not establish that the business of SPO1 Rodrin at the time of his death was purely private in character. It should be noted that the GSIS itself, in its letter to petitioner dated December 20, 2000, found that SPO1 Rodrin sought the assistance of his brother-in-law Cesar Loyola in meeting a potential "asset" who could give information on a drug syndicate operating in the area. In the present case, the fact that the Letter-Orders indicated the possible location of the criminal suspects he was tasked to apprehend does not limit the conduct of his operation within the boundaries of these places. He was not prevented from immediately going to other locations if he had gathered information that these criminal elements were in said places. Hence, to conclude that SPO1 Rodrin was not in the performance of his official duty simply because, at the time of his death, he was then on his way to a place which was not specified in the subject Letter-Orders is absolutely erroneous. In the absence of sufficient evidence to prove otherwise, the presumption that SPO1 Rodrin was in the regular performance of his official duty when he was killed remains. The fact that the Bian Police failed to state in their Investigation Report dated July 17, 2000 that SPO1 Rodrin was on official mission when he

was killed does not militate against the claim of herein petitioner. The Investigation Report of the Bian Police focused only on the shooting incident and the circumstances surrounding the death of SPO1 Rodrin. The absence of any statement or indication which shows that SPO1 Rodrin was then on official mission does not mean that he, in fact, was not in the course of performing his duties as outlined in the subject Letter-Orders. Finally it is well to echo the Court's ruling in Employees Compensation Commission v. Court of Appeals, wherein it was held that: x x x in case of doubt, the sympathy of the law on social security is toward its beneficiaries, and the law, by its own terms, requires a construction of utmost liberality in their favor. For this reason, this Court lends a very sympathetic ear to the cries of the poor widows and orphans of police officers. If we must demand - as we ought to strict accountability from our policemen in safeguarding peace and order day and night, we must also to the same extent be ready to compensate their loved ones who, by their untimely death, are left without any means of supporting themselves.