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FACTS

DOLE Secretary Ruben D. Torres issued Department Order No. 16 Series of 1991 temporarily
suspending the recruitment by private employment agencies of ƠFilipino domestic helpers going
to Hong Kongơ. As a result of the department order DOLE, through the POEA took over the
business of deploying Hong Kong bound workers.

The petitioner, PASEI, the largest organization of private employment and recruitment agencies
duly licensed and authorized by the POEA to engage in the business of obtaining overseas
employment for Filipino land-based workers filed a petition for prohibition to annul the
aforementioned order and to prohibit implementation.

ISSUES

(1) whether or not respondents acted with grave abuse of discretion and/or in excess of their
rule-making authority in issuing said circulars;
(2) whether or not the assailed DOLE and POEA circulars are contrary to the Constitution, are
unreasonable, unfair and oppressive; and
(3) whether or not the requirements of publication and filing with the Office of the National
Administrative Register were not complied with.

HELD

FIRST, the respondents acted well within in their authority and did not commit grave abuse of
discretion. This is because Article 36 (LC) clearly grants the Labor Secretary to restrict and
regulate recruitment and placement activities, to wit:
Art. 36. Regulatory Power. Ɯ The Secretary of Labor shall have the power to restrict
and regulate the recruitment and placement activities of all agencies within the coverage
of this title [Regulation of Recruitment and Placement Activities] and is hereby
authorized to issue orders and promulgate rules and regulations to carry out the
objectives and implement the provisions of this title.

SECOND, the vesture of quasi-legislative and quasi-judicial powers in administrative bodies is

constitutional. It is necessitated by the growing complexities of the modern society.

THIRD, the orders and circulars issued are however, invalid and unenforceable. The reason is
the lack of proper publication and filing in the Office of the National Administrative Registrar as
required in Article 2 of the Civil Code to wit:
Art. 2. Laws shall take effect after fifteen (15) days following the completion of their
publication in the Official Gazatte, unless it is otherwise provided;
Article 5 of the Labor Code to wit:
Art. 5. Rules and Regulations. Ɯ The Department of Labor and other government
 agencies charged with the administration and enforcement of this Code or any of its
parts shall promulgate the necessary implementing rules and regulations. Such rules and
regulations shall become effective fifteen (15) days after announcement of their
adoption in newspapers of general circulation;
and Sections 3(1) and 4, Chapter 2, Book VII of the Administrative Code of 1987 which provide:
Sec. 3. Filing. Ɯ (1) Every agency shall file with the University of the Philippines Law
Center, three (3) certified copies of every rule adopted by it. Rules in force on the date
of effectivity of this Code which are not filed within three (3) months shall not thereafter
be the basis of any sanction against any party or persons. (Chapter 2, Book VII of the
Administrative Code of 1987.)
Sec. 4. Effectivity. Ɯ In addition to other rule-making requirements provided by law not
inconsistent with this Book, each rule shall become effective fifteen (15) days from the
date of filing as above provided unless a different date is fixed by law, or specified in the
rule in cases of imminent danger to public health, safety and welfare, the existence of
which must be expressed in a statement accompanying the rule. The agency shall take
appropriate measures to make emergency rules known to persons who may be affected
by them. (Chapter 2, Book VII of the Administrative Code of 1987).

Prohibition granted.

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FACTS

Cuambot was an overseas worker who was deployed to Saudi Arabia to work as a car body
builder in Al Waha Workshop in Unaizah City, by petitioner G & M Philippines. Before his two
year contract was terminated Cuambot returned to the Philippines where he filed a complaint in
the NLRC against his recruitment agency, herein petitioner, for unpaid wages, withheld salaries,
refund of plane ticket and repatriation bond, later amended to include illegal dismissal, claim for
the unexpired portion of his employment contract, actual, exemplary and moral damages, and
attorneyƞs fees.
Petitioner, in defense, presented copies of 7 payslips issued in favor of Cuambot. Cuambot
countered that his signatures in the payslips were forged and further claims that he never got
his salaries except only for the SAR100 as monthly allowance. G&M answered back by saying
that there was great possibility that Cuambot had changed his signature while abroad so that
he could file a complaint or illegal dismissal upon his return.

ISSUES

1. whether or not the respondentƞs signatures are mere forgeries

2. whether respondent executed the resignation letter

HELD

After examination of the evidence on record, the petition must fail.

The petitionerƞs attempts at establishing its case are not enough to convince the court of the
veracity of its claims. Amongst other things, the petitioner failed to submit the original copies of
the pay slips and the resignation letter to prove that they were actually penned by respondent,
they failed to submit an original copy of the employment contract to prove that they had
actually given a copy of such to respondent for him to sign, and a cursory look at the
resignation letter and the handwritten payslips show that they were written by one person.

Indeed, the rule is that all doubts in the implementation and the interpretation of the Labor
Code shall be resolved in favor of labor, in order to give effect to the policy of the State to
Ơafford protection to labor, promote full employment, ensure equal work opportunities
regardless of sex, race or creed, and regulate the relations between workers and employers,ơ
and to Ơassure the rights of workers to self-organization, collective bargaining, security of
tenure, and just and humane conditions of work.

It is a well-settled doctrine, that if doubts exist between the evidence presented by the
employer and the employee, the scales of justice must be tilted in favor of the latter. It is a
time-honored rule that in controversies between a laborer and his master, doubts reasonably
arising from the evidence, or in the interpretation of agreements and writing should be resolved
in the formerƞs favor. The policy is to extend the doctrine to a greater number of employees
who can avail of the benefits under the law, which is in consonance with the avowed policy of
the State to give maximum aid and protection of labor.

Moreover, one who pleads payment has the burden of proving it. The reason for the rule is that
the pertinent personnel files, payrolls, records, remittances and other similar documents ƛ
which will show that overtime, differentials, service incentive leave, and other claims of workers
have been paid ƛ are not in the possession of the worker but in the custody and absolute
control of the employer. Thus, the burden of showing with legal certainty that the obligation
has been discharged with payment falls on the debtor, in accordance with the rule that one who
pleads payment has the burden of proving it. Only when the debtor introduces evidence that
the obligation has been extinguished does the burden shift to the creditor, who is then under a
duty of producing evidence to show why payment does not extinguish the obligation In this
case, petitioner was unable to present ample evidence to prove its claim that respondent had
received all his salaries and benefits in full.
Petition denied for lack of merit.

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FACTS

ABS-CBN signed an Agreement with the Mel and Jay Management and Development
Corporation (MJMDC). Referred to as ƠAGENTơ, MJMDC agreed to provide Jay Sonzaƞs services
exclusively to ABS-CBN as talent. After more than two years, Sonza as agent of MJMDC wrote a
letter to ABS-CBN notifying them of the formerƞs intention to rescind the agreement. Sonza
waived and renounced the recovery of the remaining amounts stipulated in the agreement but
reserved the right to seek the recovery of other benefits under the same.

Later, SONZA filed a complaint against ABS-CBN before the DOLE-NCR, alleging that ABS-CBN
did not pay his salaries, separation pay, service incentive leave pay, 13th month pay, signing
bonus, travel allowance and amounts due under the Employees Stock Option Plan ("ESOP"). In
response ABS-CBN filed a Motion to Dismiss on the ground that no employer-employee
relationship existed between the parties. Meanwhile, pursuant to the Agreement, ABS-CBN
continued to remit SONZAƞs monthly talent fees through his account at PCIBank. ABS-CBN later
opened a new account with the same bank where ABS-CBN deposited SONZAƞs talent fees and
other payments due him under the Agreement.

ISSUE

Whether or not there existed an employee-employer relationship between Sonza and ABS-CBN.

HELD

Applying the four fold test, there is no employee-employer relationship. The elements of an
employer-employee relationship are: (a) the selection and engagement of the employee; (b)
the payment of wages; (c) the power of dismissal; and (d) the employerƞs power to control the
employee on the means and methods by which the work is accomplished. The last element, the
so-called "control test", is the most important element.

A. Selection and Engagement of Employee

Sonza says that independent contractors often present themselves as persons distinguishable
form other employees because of their unique skills, expertise or talent. He however is not such
because of the fact that there are other broadcasters with similar experience and qualification.
This is not independent contractorship therefore because of the presence of other such capable
individuals.
The Supreme Court held that the selection of Sonza because of unique expertise and skills is a
circumstance indicative, but not conclusive of an independent contractual relationship. Also, if
indeed Sonza did not possess such skills, ABS CBN would not have entered into the Agreement
but would have hired him through the personnel department just like an ordinary employee. In
any event, the method of selecting and engaging does not conclusively determine his status.

B. Payment of Wages
Sonza claims that because his monthly fees all went to him and not to MJMDC as well as all the
benefits and privileges indicate his status as employee.
The court said that the compensation and the mode of payment was all a result of negotiations
that led to the Agreement. If indeed Sonza were an employee, there would be no need for
negotiation because these benefits are deemed incorporated into the contract.
His talent fees are likewise so huge and out of the ordinary that they indicate more an
independent contractual relationship rather than an employer-employee relationship. Also, the
power to bargain talent fees is a circumstance indicative, but not conclusive, of an independent
contractual relationship.

C. POWER OF DISMISSAL
For violation of any provision of the Agreement, either party may terminate their relationship.
Sonza failed to show that ABS CBN could terminate his services on grounds other than breach
of contract, such as retrenchment to prevent losses as provided under labor laws. In fact,
illustrative of the power of the Agreement, ABS CBN continued to pay Sonza monthly fees even
of they suffered losses because it was what the stipulations commanded.

D. POWER OF CONTROL
This last test is based on the extent the hirer has control over the worker. The greater the
supervision and control over the hirer exercises, the more likely the worker is deemed an
employee. The converse holds true as well ƛ the less control the hirer exercises, the more likely
the worker is considered an independent contractor.
First, Sonzaƞs argument that ABS CBN exercised control over the means and methods of his
work is misplaced. He was engaged to co-host a TV program and nothing more. How he
delivered is lines, appeared on television, and sounded on the radio were outside the control of
ABS CBN. He did not have to render 8 hours of work daily. The only prohibition was that he
could not criticize ABS CBN or its interests. Obviously SONZA had a free hand on what to say or
discuss in his shows provided he did not attack ABS-CBN or its interests. Clearly, ABS-CBN did
not exercise control over the means and methods of performance of SONZAƞs work.
Sonza also claims that ABS CBNƞs power not to broadcast his show tells of its power over the
methods and means of his work. The argument fails because althought ABS CBN had this right
under the agreement, it could not even dismiss nor discipline Sonza because it still had to
continue paying him. This shows that ABS CBNƞs control extended only to the result of Sonzaƞs
work.
Next, Sonza claims that ABS CBN exercise control by providing him with all the equipment and
crew. However, these are not the Ơtools and instrumentalitiesơ SONZA needed to perform his
job. What SONZA principally needed were his talent or skills and the costumes necessary for his
appearance.
SONZA urges us to rule that he was ABS-CBNƞs employee because ABS-CBN subjected him to its
rules and standards of performance. The Agreement stipulates that SONZA shall abide with the
rules and standards of performance "covering talents" of ABS-CBN. The Agreement does not
require SONZA to comply with the rules and standards of performance prescribed for employees
of ABS-CBN.
In this case, SONZA failed to show that these rules controlled his performance. 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.
Lastly, SONZA insists that the "exclusivity clause" in the Agreement is the most extreme form of
control which ABS-CBN exercised over him. This argument is futile. Even an independent
contractor can validly provide his services exclusively to the hiring party.

MJMDC as AGENT of SONZA

Sonza says that it is wrong to say that he is a talent of MJMDC. He insists that MJMDC is a
Ơlabor-onlyơ contractor and ABS CBN is his employer.
In a labor-only contract, there are three parties involved: (1) the "labor-only" contractor; (2)
the employee who is ostensibly under the employ of the "labor-only" contractor; and (3) the
principal who is deemed the real employer. Under this scheme, the "labor-only" contractor is
the agent of the principal. The law makes the principal responsible to the employees of the
"labor-only contractor" as if the principal itself directly hired or employed the employees.
These circumstances are not present in this case.

There are essentially only two parties involved under the Agreement, namely, SONZA and ABS-
CBN. MJMDC merely acted as SONZAƞs agent.

Talents as Independent Contractors

ABS-CBN claims that there exists a prevailing practice in the broadcast and entertainment
industries to treat talents like SONZA as independent contractors. SONZA argues that if such
practice exists, it is void for violating the right of labor to security of tenure. The right of labor
to security of tenure as guaranteed in the Constitution arises only if there is an employer-
employee relationship under labor laws. Not every performance of services for a fee creates an
employer-employee relationship. To hold that every person who renders services to another for
a fee is an employee - to give meaning to the security of tenure clause - will lead to absurd
results.

Individuals with special skills, expertise or talent enjoy the freedom to offer their services as
independent contractors. The right to life and livelihood guarantees this freedom to contract as
independent contractors. The right of labor to security of tenure cannot operate to deprive an
individual, possessed with special skills, expertise and talent, of his right to contract as an
independent contractor. An individual like an artist or talent has a right to render his services
without any one controlling the means and methods by which he performs his art or craft. This
Court will not interpret the right of labor to security of tenure to compel artists and talents to
render their services only as employees. If radio and television program hosts can render their
services only as employees, the station owners and managers can dictate to the radio and
television hosts what they say in their shows. This is not conducive to freedom of the press.

Petition denied.

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FACTS

Benjamin Limjoco was a Sales Division manager of petitioner Encyclopedia Britannica. He

received commissions from the products sold by his agents, while office expenses are deducted
from his commissions. Later, Limjoco resigned to pursue his private business. He then filed a
complaint against petitioner with DOLE for non-payment of separation pay and other benefits,
as well as illegal deduction from his sales commissions. Limjoco claimed that he was hired by
the petitioner, was assigned in the sales department and was earning an average of P40,000.00
monthly as commissions; that he was under the supervision of the officials of the petitioner who
issued to him and other personnel, memoranda, guidelines on company policies, instructions,
etc.

Petitioner, on its part, alleged that Limjoco was not its employee but an independent dealer
authorized to promote and sell its products and in return, received commissions therefrom.

ISSUE

Whether or not Limjoco was an independent contractor or an employee of Encyclopedia

Britannica?

HELD

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

must be present: 1. selection and engagement of the employee; 2. payment of wages; 3.
power of dismissal; and 4. the power to control the employeeƞs conduct. Of the above, control
of employeeƞs conduct is commonly regarded as the most crucial and determinative factor of
the presence or absence of an employer-employee relationship.

The fact that petitioner issued memoranda to private respondent and other sales managers did
not prove that petitioner had control over them. The memoranda were mere guidelines on
company policies which sales managers follow and further require on their sales agents. The
issuance of memoranda to Limjoco and other sales managers was only done to appraise them
and their respective agents of the company policies and procedures. Limjoco was free to
conduct and promote their sales operations. The occasional reports to the petitioner from
Limjoco were required in order to update the company of its dealerƞs performance. Even though
petitioner had fixed the prices of the products for reason of uniformity and that Limjoco cannot
alter them, he, nevertheless, had the free rein in the means and methods in selling them.

He was free to conduct his work and he was free to engage in other means of livelihood. At the
time he was a dealer for the petitioner, Limjoco was also a director and later the president of
the Farmerƞs Rural Bank. Had he been an employee of the petioner, he could not be employed
elsewhere and he would be required to devote full time for petitioner.

Petition granted.
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FACTS

SIMACUB, respondent union, filed a petition for certification as the sole and exclusive
bargaining agent of all the collectors of the Singer Sewing Machine Company, Bagiuo City
branch. The Company opposed the petition saying that the union members were not employees
but independent contractors as evidenced by the collection agency agreement they signed.

ISSUE

Whether there exists an employee-employer relationship?

HELD

The nature of the relationship between a collecting agent and the company depends on the
circumstances surrounding each case. In this case, the Agreement confirms the status of the
collecting agent as an independent contractor not only because he is explicitly described as
such but because he is allowed by the provisions of the agreement to perform collection
services without being subject to the control of the latter except only as to the result of his
work.

Hence, the requirement that receipt forms issued by the company shall be submitted once a
week is but a method to avoid co-mingling of personal funds of the agent with the money of
the company. Likewise, the use of standard report forms are only intended to facilitate order in
the office. Even if the report requirements are to be called control measures, any control is only
with respect to the end result of the collection since the requirements regulate the things to be
done after the performance of the collection job or the rendition of the service.
The respondents' contention that the union members are employees of the Company is based
on selected provisions of the Agreement but ignores the following circumstances which
respondents never refuted either in the trial proceedings before the labor officials nor in its
pleadings filed before this Court.
1. The collection agents are not required to observe office hours or report to Singer's office
everyday except, naturally and necessarily, for the purpose of remitting their collections; 2. The
collection agents do not have to devote their time exclusively for SINGER. There is no
prohibition on the part of the collection agents from working elsewhere. Nor are these agents
required to account for their time and submit a record of their activity.; 3. The manner and
method of effecting collections are left solely to the discretion of the collection agents without
any interference on the part of Singer.; 4. The collection agents shoulder their transportation
expenses incurred in the collections of the accounts assigned to them.; 5. The collection agents
are paid strictly on commission basis. The amounts paid to them are based solely on the
amounts of collection each of them make. They do not receive any commission if they do not
effect any collection even if they put a lot of effort in collecting. They are paid commission on
the basis of actual collections.; 6. The commissions earned by the collection agents are directly
deducted by them from the amount of collections they are able to effect. The net amount is
what is then remitted to Singer." (Rollo, pp. 7-8)
If indeed the union members are controlled as to the manner by which they are supposed to
perform their collections, they should have explicitly said so in detail by specifically denying
each of the facts asserted by the petitioner. As there seems to be no objections on the part of
the respondents, the Court finds that they miserably failed to defend their position.
A thorough examination of the facts of the case leads us to the conclusion that the existence of
an employer-employee relationship between the Company and the collection agents cannot be
sustained.
The last and most important element of the control test is not satisfied by the terms and
conditions of the contracts. There is nothing in the agreement which implies control by the
Company not only over the end to be achieved but also over the means and methods in
achieving the end.
The Court finds the contention of the respondents that the union members are employees
under Article 280 of the Labor Code to have no basis. The Court agrees with the petitioner's
argument that Article 280 is not the yardstick for determining the existence of an employment
relationship because it merely distinguishes between two kinds of employees. The Court finds
that since private respondents are not employees of the Company, they are not entitled to the
constitutional right to join or form a labor organization for purposes of collective bargaining.
Accordingly, there is no constitutional and legal basis for their "union" to be granted their
petition for direct certification.
Order of Med-Arbiter and DOLE Secretary reversed and set aside.

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FACTS
Petitioner was a salesman of respondent company earning a commission of 3% of the total paid
up sales covering the whole area of Mindanao. Aside from selling, he was also tasked with
collection. Respondent corporation through its president, often required Abante to report to a
particular area and occasionally required him to go to Manila to attend conferences.

Later on, bad blood ensued between the parties due to some bad accounts that Lamadrid
forced petitioner to cover. Later petitioner found out that respondent had informed his
customers not to deal with petitioner since it no longer recognized him as a commission
salesman. Petitioner filed a complaint for illegal dismissal with money claims against respondent
company and its president, Jose Lamadrid.

By way of defense, respondents countered that petitioner was not its employee but a freelance
salesman on commission basis.

ISSUE

Whether or not petitioner, as a commission salesman, is an employee of respondent

corporation.

HELD

To determine the existence of an employee-employer relationship, we apply the four fold test:
1) the manner of selection and engagement; (2) the payment of wages; (3) the presence or
absence of the power of dismissal; and (4) the presence or absence of the power of control.

Applying the aforementioned test, an employer-employee relationship is notably absent in this

case. It is true that he was paid in commission yet no quota was imposed therefore a dismal
performance would not warrant a ground for dismissal. There was no specific office hours he
was required to observe. He was not designated to conduct services at a particular area or
time. He pursued his selling without interference or supervision from the company. The
company did not prescribe the manner of selling merchandise. While he was sometimes
required to report to Manila, these were only intended to guide him. Moreover, petitioner was
free to offer his services to other companies.

Art. 280 is not a crucial factor because it only determines two kinds of employees. It doen;t
apply where there is no employer-employee relationship. While the term commission under
Article 96 of the LC was construed as being included in the term Ơwageơ, there is no categorical
pronouncement that the payment of commission is conclusive proof of the existence of an
employee-employer relationship.

The decision of the CA is affirmed.

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FACTS

De Vera and petitioner company entered into a contract where respondent was to attend to the
medical needs of petitionerƞs employees while being paid a retainer fee of P4,000 per month.
Later, De Vera was informed y petitioner that the retainership will be discontinued. Respondent
filed a case for illegal dismissal.

ISSUE

Whether or not de Vera is an employee of PhilComm or an independent contractor.

HELD

Applying the four fold test, de Vera is not an employee. There are several indicators apart from
the fact that the power to terminate the arrangement lay on both parties:

ƥ from the time he started to work with petitioner, he never was included in its
payroll; was never deducted any contribution for remittance to the Social Security System
(SSS);
ƥ he was subjected by petitioner to the ten (10%) percent withholding tax for his
professional fee, in accordance with the National Internal Revenue Code, matters which are
simply inconsistent with an employer-employee relationship;
ƥ the records are replete with evidence showing that respondent had to bill petitioner
for his monthly professional fees. It simply runs against the grain of common experience to
imagine that an ordinary employee has yet to bill his employer to receive his salary.

Finally, the element of control s absent.

Petition granted.
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FACTS

A petition for certification was filed with the Labor Relations Division of the Ministry of Labor by
PTCCEA in behalf of the caddies of petitioners. The petition was resolved in favor of the
caddies. The same union later filed for SSS coverage but the Social Security Commission denied
them for absence of employee employer relationship.

ISSUE

Whether or not persons rendering caddying services for members of golf clubs and their guests
in said clubƞs courses or premises are the employees of such clubs and therefore within the
compulsory coverage of the SSS.

HELD

The caddies are not employees for the following reasons:

-rules and regulations are permissible means to impose order where the caddies are allowed to
pursue their profession within the clubƞs premises
-they do not observe a particular working hour and are not at the call of the club
-the club has no measure of control over the incidents of the caddiesƞ work and compensation
-the group rotation system is only an assurance that the work is distributed fairly

Decision of the CA reversed and set aside.


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FACTS

Consulta was Managing Associate of Pamana. On 1987 she was issued a certification
authorizing her to negotiate for and in behalf of PAMANA with the Federation of Filipino Civilian
Employees Association. Consulta was able to secure an account with FFCEA in behalf of
PAMANA. However, Consulta claimed that PAMANA did not pay her commission for the PPCEA
account and filed a complaint for unpaid wages or commission.

ISSUE
Whether or not Consulta was an employee of PAMANA.

HELD

The SC held that Pamana was an independent agent and not an employee.
The power of control in the four fold test is missing. The manner in which Consulta was to
pursue her tasked activities was not subject to the control of PAMANA. Consulta failed to show
that she worked definite hours. The amount of time, the methods and means, the management
and maintenance of her sales division were left to her sound judgment.

Finally, Pamana paid Consulta not for labor she performed but only for the results of her labor.
Without results, Consultaƞs labor was her own burden and loss. Her right to compensation, or
to commission, depended on the tangible results of her work - whether she brought in paying
recruits.

The fact that the appointment required Consulta to solicit business exclusively for Pamana did
not mean Pamana exercised control over the means and methods of Consultaƞs work as the
term control is understood in labor jurisprudence. Neither did it make Consulta an employee of
Pamana. Pamana did not prohibit Consulta from engaging in any other business, or from being
connected with any other company, for as long as the business or company did not compete
with Pamanaƞs business. The exclusivity clause was a reasonable restriction to prevent similar
acts prejudicial to Pamanaƞs business interest. Article 1306 of the Civil Code provides that Ơ[t]he
contracting parties may establish such stipulation, clauses, terms and conditions as they may
deem convenient, provided that they are not contrary to law, morals, good customs, public
order, or public policy.

There being no employer-employee relationship between Pamana and Consulta, the Labor
Arbiter and the NLRC had no jurisdiction to entertain and rule on Consultaƞs money claim.
Consultaƞs remedy is to file an ordinary civil action to litigate her claim

Petition is dismissed.

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FACTS

Since 1968, respondent Basiao has been an agent for petitioner company, and is authorized to
solicit within the Philippines applications for insurance policies and annuities in accordance with
the existing rules and regulations of the company. In return, he would receive compensation, in
the form of commissions.

Some four years later, in April 1972, the parties entered into another contract Ɯ an Agency
Manager's Contract Ɯ and to implement his end of it Basiao organized an agency or office to
which he gave the name M. Basiao and Associates, while concurrently fulfilling his commitments
under the first contract with the Company. In May, 1979, the Company terminated the Agency
Manager's Contract. After vainly seeking a reconsideration, Basiao sued the Company in a civil
action and this, he was later to claim, prompted the latter to terminate also his engagement
under the first contract and to stop payment of his commissions starting April 1, 1980.

Basiao thereafter filed with the then Ministry of Labor a complaint against the Company and its
president. The complaint sought to recover commissions allegedly unpaid thereunder, plus
attorney's fees. The respondents disputed the Ministry's jurisdiction over Basiao's claim,
asserting that he was not the Company's employee, but an independent contractor.

ISSUE

Whether or not there exist an employer-employee relationship between Basiao and Insular Life.

HELD

The SC ruled in favor of Insular Life.

Not every form of control that the hiring party reserves to himself over the conduct of the party
hired in relation to the services rendered may be accorded the effect of establishing an
employer-employee relationship between them in the legal or technical sense of the term. A line
must be drawn somewhere, if the recognized distinction between an employee and an
individual contractor is not to vanish altogether.

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. The distinction acquires particular relevance in the case of an
enterprise affected with public interest, as is the business of insurance, and is on that account
subject to regulation by the State with respect, not only to the relations between insurer and
insured but also to the internal affairs of the insurance company. Rules and regulations
governing the conduct of the business are provided for in the Insurance Code and enforced by
the Insurance Commissioner. It is, therefore, usual and expected for an insurance company to
promulgate a set of rules to guide its commission agents in selling its policies that they may not
run afoul of the law and what it requires or prohibits. Of such a character are the rules which
prescribe the qualifications of persons who may be insured, subject insurance applications to
processing and approval by the Company, and also reserve to the Company the determination
of the premiums to be paid and the schedules of payment. None of these really invades the
agent's contractual prerogative to adopt his own selling methods or to sell insurance at his own
time and convenience, hence cannot justifiably be said to establish an employer-employee
relationship between him and the company.

The respondents limit themselves to pointing out that Basiao's contract with the Company
bound him to observe and conform to such rules and regulations as the latter might from time
to time prescribe. No showing has been made that any such rules or regulations were in fact
promulgated, much less that any rules existed or were issued which effectively controlled or
restricted his choice of methods Ɯ or the methods themselves Ɯ of selling insurance. Absent
such showing, the Court will not speculate that any exceptions or qualifications were imposed
on the express provision of the contract leaving Basiao "... free to exercise his own judgment as
to the time, place and means of soliciting insurance."

The Court, therefore, rules that under the contract invoked by him, Basiao was not an employee
of the petitioner, but a commission agent, an independent contractor whose claim for unpaid
commissions should have been litigated in an ordinary civil action.

NLRC Decision set aside.

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FACTS

Sometime in 1985, Erlinda Ramos, petitioner, was advised to undergo an operation for the
removal of a stone in her gall bladder. She was referred to Dr. Hosaka, a surgeon. Dr. Gutierrez
was likewise appointed as anesthesiologist.

During operation, complications arose resulting to injury to Ramos.

ISSUE

Is there an employee-employer relationship between the hospital and visiting consultants?

HELD

There is no employee-employer relationship.

1. As explained by respondent hospital, that the admission of a physician to membership in

DLSMC's medical staff as active or visiting consultant is first decided upon by the Credentials
Committee thereof, which is composed of the heads of the various specialty departments such
as the Department of Obstetrics and Gynecology, Pediatrics, Surgery with the department head
of the particular specialty applied for as chairman. The Credentials Committee then
recommends to DLSMC's Medical Director or Hospital Administrator the acceptance or rejection
of the applicant physician, and said director or administrator validates the committee's
recommendation. Similarly, in cases where a disciplinary action is lodged against a consultant,
the same is initiated by the department to whom the consultant concerned belongs and filed
with the Ethics Committee consisting of the department specialty heads. The medical
director/hospital administrator merely acts as ex-officio member of said committee.
2. Neither is there any showing that it is DLSMC which pays any of its consultants for medical
services rendered by the latter to their respective patients.
3. Moreover, the contract between the consultant in respondent hospital and his patient is
separate and distinct from the contract between respondent hospital and said patient. The first
has for its object the rendition of medical services by the consultant to the patient, while the
second concerns the provision by the hospital of facilities and services by its staff such as
nurses and laboratory personnel necessary for the proper treatment of the patient.

Further, no evidence was adduced to show that the injury suffered by petitioner Erlinda was
due to a failure on the part of respondent DLSMC to provide for hospital facilities and staff
necessary for her treatment.

For these reasons, DLSMC is absolved from liability and Dr. Hosaka and Dr. Gutierrez are
hereby declared to be solidarily liable.



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FACTS

Susan Carungcong was an insurance agent for Sun Life assurance Company of Canada. As an
agent she signed a number of agreements with Sun Life some concerning an agentƞs
commission, obligations, limitations on authority and termination of agreement. It was also
stressed that she shall be considered as an independent contractor and not and employee fo
Sun Life.

In 1989, her connection with Sun Life was terminated due to accounting discrepancies.
Petitioner filed a complaint with the NLRC-RAB for illegal dismissal.

ISSUE

Whether or not there exists a, employee-employer relationship.

HELD

It was emphasized in the agreements between the parties that Carungcong would be
considered as an independent contractor and not an employee.

It is germane to advert to the fact, which should by now be apparent, that Carungcong was not
your ordinary run-of-the-mill employee, nor even your average managerial employee or
supervisor. Her stated annual income from her occupation is impressive by any standards: "in
excess of P3,000,000.00," exclusive of overriding commissions. Certainly, she may not be
likened to an ordinary person applying for employment, or an ordinary employee striving to
keep his job, under the moral dominance of the hiring entity or individual.

These considerations impel concurrence with the conclusions of the challenged decision and
resolution of respondent Commission which considered Carungcong as an independent
contractor, not an employee of Sun Life. It is significant that this issue of the precise status of
Carungcong as an independent contractor, evidently deemed decisive by respondent
Commission, was discussed by it at some length not once, but twice, first in its Decision of July
29, 1994, and then in its second Decision of October 28, 1994 resolving the separate motions
for reconsideration of the parties.

Moreover, it is true that complainant Carungcong's duties and functions derived from her then
existing agreements/contracts were made subject to rules and regulations issued by respondent
company, and for that matter, have likewise been made subject of certain limitations imposed
by said respondent company. Nonetheless, these are not sufficient to accord the effect of
establishing employer-employee relationship absent in this case. This is so because the
insurance business is not just any other ordinary business. It is one that is imbued with public
interest hence, it must be governed buy the rules and regulations of the state. The controls
adverted to by complainant are latent in the kind of business she is into and are mainly aimed
at promoting the results the parties so desire and do not necessarily create any employer-
employee relationships, where the employers' controls have to interfere in the methods and
means by which the employee would like to employ to arrive at the desired results.

For that matter, complainant Carungcong was never paid a fixed wage or salary but was mainly
paid by commissions, depending on the level and volume of her performance/production, the
number of trained agents, when taken in and assigned to her, being responsible for her added
income as she gets a certain percentage from the said agents' production as part of her
commission.

Complainant's "theory of the case" appears to be limited to pointing out that respondent
company issued rules and regulations to which she should conform. However, no showing has
been made that such rules and regulations effectively and actually controlled or restricted her
choice of methods in performing her duties as New Business Manager. Without such proof,
there can be no plausible reason to believe that her contractual declaration that she was an
independent contractor has been qualified.

Thus, we see no reason to deviate from our original conclusion that complainant was never
respondents' employee. Complainant's motion for reconsideration is, therefore, denied.
Petition is dismissed.

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FACTS

Dr. Dean N. Climaco is a medical doctor who was hired by petitioner Coca-Cola by virtue of a
Retainer Agreement. The compensation to be paid is fixed at P3,000.00 per month. He may
charge professional fee for hospital services rendered in line with his specialization. He is to
observe clinic hours at the company premises from Monday to Saturday at least two (2) hours
each day unless such schedule is otherwise changed by the company as the situation so
warrants, subject to the labor Code provisions on Occupational Safety and Health Standards as
the Company may determine. It was also expressly stated in the contract that no employer-
employee relationship shall exist between the retainer and the company. The doctor also agrees
to perform the duties and obligations enumerated in the Comprehensive Medical Plan. After the
expiration of the 1-year retainer agreement, respondent continued to perform his functions as a
company doctor to Coca-Cola until he received a letter from the latter concluding their
retainership agreement effective 30 days from receipt thereof.

Respondent then filed a complaint before the NLRC, seeking recognition as a regular employee
of petitioner company and prayed for the payment of all benefits of a regular employee,
including 13th Month Pay, Cost of Living Allowance, Holiday Pay, Service Incentive Leave Pay,
and Christmas Bonus. This was later amended to include illegal dismissal.

ISSUE

W/n there existed an employee-employer relationship between Climaco and Coca Cola.

HELD

The SC held that there is no employer-employee relationship between petitioner and

respondent company. The Court, in determining the existence of an employer-employee
relationship, has invariably adhered to the four-fold test: (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 employeeƞs conduct, or the so-called Ơcontrol test,ơ considered to be the most
important element.

The circumstances of this case show that no employer-employee relationship exists between
the parties because the company lacked the power of control over the performance by
respondent of his duties. The company in providing a Comprehensive Medical Plan, merely
issued guidelines in order to ensue that the end result was achieved, but did not control the
means and methods by which respondent performed his assigned tasks. The company lacks the
power of control that the contract provides that the respondent shall be directly responsible to
the employee concerned and their dependents for any injury, harm or damage caused through
professional negligence, incompetence, or other valid causes of action. The Court also finds that
the schedule of work and the requirement to be on call for emergency cases do not amount to
such control, but are necessary incidents to the Retainership Agreement. The Court also notes
that the Retainership Agreement granted to both parties the power to terminate their
relationship upon giving a 30-day notice. Hence, petitioner company did not wield the sole
power of dismissal or termination. There is nothing wrong with the employment of respondent
as a retained physician of petitioner company and upholds the validity of the retainership
agreement which clearly states that no employer-employee relationship existed between the
parties.

Petition is granted.

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FACTS

Sometime in 1995, petitioner was hired by Kasei Corporation during its incorporation stage. She
was designated as Accountant and Corporate Secretary and was assigned to handle all the
accounting needs of the company. She was also designated as Liaison Officer to the City of
Makati to secure business permits, construction permits and other licenses for the initial
operation of the company.

In 1996, petitioner was designated Acting Manager. As Acting Manager, petitioner was assigned
to handle recruitment of all employees and perform management administration functions;
represent the company in all dealings with government agencies, especially with the Bureau of
Internal Revenue (BIR), Social Security System (SSS) and in the city government of Makati; and
to administer all other matters pertaining to the operation of Kasei Restaurant which is owned
and operated by Kasei Corporation.

For five years, petitioner performed the duties of Acting Manager. As of December 31, 2000 her
salary was P27,500.00 plus P3,000.00 housing allowance and a 10% share in the profit of Kasei
Corporation.

In January 2001, petitioner was replaced by Liza R. Fuentes as Manager. Petitioner alleged that
she was required to sign a prepared resolution for her replacement but she was assured that
she would still be connected with Kasei Corporation. Timoteo Acedo, the designated Treasurer,
convened a meeting of all employees of Kasei Corporation and announced that nothing had
changed and that petitioner was still connected with Kasei Corporation as Technical Assistant to
Seiji Kamura and in charge of all BIR matters.

Thereafter, Kasei Corporation reduced her salary by P2,500.00 a month beginning January up
to September 2001 for a total reduction of P22,500.00 as of September 2001. Petitioner was
not paid her mid-year bonus allegedly because the company was not earning well. On October
2001, petitioner did not receive her salary from the company. She made repeated follow-ups
with the company cashier but she was advised that the company was not earning well.

On October 15, 2001, petitioner asked for her salary from Acedo and the rest of the officers but
she was informed that she is no longer connected with the company.

Since she was no longer paid her salary, petitioner did not report for work and filed an action
for constructive dismissal before the labor arbiter.

ISSUE

Whether or not there was an employer-employee relationship between petitioner and private
respondent Kasei Corporation.

HELD

The SC held that there has been no uniform test to determine the existence of an employer-
employee relation. Generally, courts have relied on the so-called right of control test where the
person for whom the services are performed reserves a right to control not only the end to be
achieved but also the means to be used in reaching such end. In addition to the standard of
right-of-control, the existing economic conditions prevailing between the parties, like the
inclusion of the employee in the payrolls, can help in determining the existence of an employer-
employee relationship.

However, in certain cases the control test is not sufficient to give a complete picture of the
relationship between the parties, owing to the complexity of such a relationship where several
positions have been held by the worker. There are instances when, aside from the employerƞs
power to control the employee with respect to the means and methods by which the work is to
be accomplished, economic realities of the employment relations help provide a comprehensive
analysis of the true classification of the individual, whether as employee, independent
contractor, corporate officer or some other capacity.

The better approach would therefore be to adopt a two-tiered test involving: (1) the putative
employerƞs power to control the employee with respect to the means and methods by which the
work is to be accomplished; and (2) the underlying economic realities of the activity or
relationship. This two-tiered test would provide us with a framework of analysis, which would
take into consideration the totality of circumstances surrounding the true nature of the
relationship between the parties. This is especially appropriate in this case where there is no
written agreement or terms of reference to base the relationship on; and due to the complexity
of the relationship based on the various positions and responsibilities given to the worker over
the period of the latterƞs employment.

Thus, the determination of the relationship between employer and employee depends upon the
circumstances of the whole economic activity, such as: (1) the extent to which the services
performed are an integral part of the employerƞs business; (2) the extent of the workerƞs
investment in equipment and facilities; (3) the nature and degree of control exercised by the
employer; (4) the workerƞs opportunity for profit and loss; (5) the amount of initiative, skill,
judgment or foresight required for the success of the claimed independent enterprise; (6) the
permanency and duration of the relationship between the worker and the employer; and (7) the
degree of dependency of the worker upon the employer for his continued employment in that
line of business.

The proper standard of economic dependence is whether the worker is dependent on the
alleged employer for his continued employment in that line of business. In the United States,
the touchstone of economic reality in analyzing possible employment relationships for purposes
of the Federal Labor Standards Act is dependency. By analogy, the benchmark of economic
reality in analyzing possible employment relationships for purposes of the Labor Code ought to
be the economic dependence of the worker on his employer.

By applying the control test, there is no doubt that petitioner is an employee of Kasei
Corporation because she was under the direct control and supervision of Seiji Kamura, the
corporationƞs Technical Consultant. She reported for work regularly and served in various
capacities as Accountant, Liaison Officer, Technical Consultant, Acting Manager and Corporate
Secretary, with substantially the same job functions, that is, rendering accounting and tax
services to the company and performing functions necessary and desirable for the proper
operation of the corporation such as securing business permits and other licenses over an
indefinite period of engagement.
Based on the foregoing, there can be no other conclusion that petitioner is an employee of
respondent Kasei Corporation. She was selected and engaged by the company for
compensation, and is economically dependent upon respondent for her continued employment
in that line of business. Her main job function involved accounting and tax services rendered to
respondent corporation on a regular basis over an indefinite period of engagement. Respondent
corporation hired and engaged petitioner for compensation, with the power to dismiss her for
cause. More importantly, respondent corporation had the power to control petitioner with the
means and methods by which the work is to be accomplished.

The corporation constructively dismissed petitioner when it reduced her salary by P2,500 a
month from January to September 2001. This amounts to an illegal termination of employment,
where the petitioner is entitled to full backwages. Since the position of petitioner as accountant
is one of trust and confidence, and under the principle of strained relations, petitioner is further
entitled to separation pay, in lieu of reinstatement.

Petition is granted.

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FACTS

Petitioner ABS-CBN Broadcasting Corporation (ABS-CBN) employed respondents Nazareno,

Gerzon, Deiparine, and Lerasan as production assistants (PAs) on different dates. They were
assigned at the news and public affairs, for various radio programs in the Cebu Broadcasting
Station, with a monthly compensation of P4,000. They were issued ABS-CBN employeesƞ
identification cards and were required to work for a minimum of eight hours a day, including
Sundays and holidays. The PAs were under the control and supervision of Assistant Station
Manager Dante J. Luzon, and News Manager Leo Lastimosa.

On October 12, 2000, respondents filed a Complaint for Recognition of Regular Employment
Status, Underpayment of Overtime Pay, Holiday Pay, Premium Pay, Service Incentive Pay, Sick
Leave Pay, and 13th Month Pay with Damages against the petitioner before the NLRC.
Complainants alleged that they were engaged by respondent ABS-CBN as regular and full-time
employees for a continuous period of more than five (5) years with a monthly salary rate of
Four Thousand (P4,000.00) pesos beginning 1995 up until the filing of this complaint on
November 20, 2000. Respondents insisted that they belonged to a Ơwork poolơ from which
petitioner chose persons to be given specific assignments at its discretion, and were thus under
its direct supervision and control regardless of nomenclature. Complainants further pray of this
Arbiter to declare them regular and permanent employees of respondent ABS-CBN as a
condition precedent for their admission into the existing union and collective bargaining unit of
respondent company where they may as such acquire or otherwise perform their obligations
thereto or enjoy the benefits due therefrom.

For its part, petitioner alleged in its position paper that the respondents were PAs who basically
assist in the conduct of a particular program ran by an anchor or talent. Among their duties
include monitoring and receiving incoming calls from listeners and field reporters and calls of
news sources; generally, they perform leg work for the anchors during a program or a particular
production. They are considered in the industry as Ơprogram employeesơ in that, as
distinguished from regular or station employees, they are basically engaged by the station for a
particular or specific program broadcasted by the radio station. Petitioner asserted that as PAs,
the complainants were issued talent information sheets which are updated from time to time,
and are thus made the basis to determine the programs to which they shall later be called on to
assist.

Petitioner maintained that PAs, reporters, anchors and talents occasionally Ơsidelineơ for other
programs they produce, such as drama talents in other productions. As program employees, a
PAƞs engagement is coterminous with the completion of the program, and may be
extended/renewed provided that the program is on-going; a PA may also be assigned to new
programs upon the cancellation of one program and the commencement of another. As such
program employees, their compensation is computed on a program basis, a fixed amount for
performance services irrespective of the time consumed. At any rate, petitioner claimed, as the
payroll will show, respondents were paid all salaries and benefits due them under the law. Upon
appeal, the NLRC held that respondents are regular employees of the petitioner and that they
are covered by the CBA. The CA likewise dismissed the petition for certiorari filed by the
petitioner. Hence, this petition.

ISSUE

W/n respondents are regular employees of ABS CBN.

HELD

Respondents are Regular employees of the petitioner, ABS CBN.

Where a person has rendered at least one year of service, regardless of the nature of the
activity performed, or where the work is continuous or intermittent, the employment is
considered regular as long as the activity exists, the reason being that a customary
appointment is not indispensable before one may be formally declared as having attained
regular status. Article 280 of the Labor Code provides:

ART. 280. REGULAR AND CASUAL EMPLOYMENT.ƜThe 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.
The primary standard, therefore, of determining regular employment is the reasonable
connection between the particular activity performed by the employee in relation to the usual
trade or business of the employer. The test is whether the former is usually necessary or
desirable in the usual business or trade of the employer. The connection can be determined by
considering the nature of work performed and its relation to the scheme of the particular
business or trade in its entirety. Also, if the employee has been performing the job for at least a
year, even if the performance is not continuous and merely intermittent, the law deems
repeated and continuing need for its performance as sufficient evidence of the necessity if not
indispensability of that activity to the business. Hence, the employment is considered regular,
but only with respect to such activity and while such activity exists.

Not considered regular employees are Ơproject employees,ơ the completion or termination of
which is more or less determinable at the time of employment, such as those employed in
connection with a particular construction project, and Ơseasonal employeesơ whose employment
by its nature is only desirable for a limited period of time. Even then, any employee who has
rendered at least one year of service, whether continuous or intermittent, is deemed regular
with respect to the activity performed and while such activity actually exists.

It is of no moment that petitioner hired respondents as Ơtalents.ơ The fact that respondents
received pre-agreed Ơtalent feesơ instead of salaries, that they did not observe the required
office hours, and that they were permitted to join other productions during their free time are
not conclusive of the nature of their employment. Respondents cannot be considered Ơtalentsơ
because they are not actors or actresses or radio specialists or mere clerks or utility employees.
They are regular employees who perform several different duties under the control and
direction of ABS-CBN executives and supervisors.

Thus, there are two kinds of regular employees under the law: (1) those engaged to perform
activities which are necessary or desirable in the usual business or trade of the employer; and
(2) those casual employees who have rendered at least one year of service, whether continuous
or broken, with respect to the activities in which they are employed.

Additionally, respondents cannot be considered as project or program employees because no

evidence was presented to show that the duration and scope of the project were determined or
specified at the time of their engagement. Under existing jurisprudence, project could refer to
two distinguishable types of activities. First, a project may refer to a particular job or
undertaking that is within the regular or usual business of the employer, but which is distinct
and separate, and identifiable as such, from the other undertakings of the company. Such job
or undertaking begins and ends at determined or determinable times. Second, the term project
may also refer to a particular job or undertaking that is not within the regular business of the
employer. Such a job or undertaking must also be identifiably separate and distinct from the
ordinary or regular business operations of the employer. The job or undertaking also begins and
ends at determined or determinable times.
The principal test is whether or not the project employees were assigned to carry out a specific
project or undertaking, the duration and scope of which were specified at the time the
employees were engaged for that project.

As gleaned from the records of this case, petitioner itself is not certain how to categorize
respondents. In its earlier pleadings, petitioner classified respondents as program employees,
and in later pleadings, independent contractors. Program employees, or project employees, are
different from independent contractors because in the case of the latter, no employer-employee
relationship exists.

Petition is denied.
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FACTS

Petitioner is a sole proprietorship registered in the name of its proprietor, Enrico E. Alejo.
Respondents Eutiquio Antonio,Jay Antonio, Felicisimo Antonio, Leonardo Antonio, Sr. and
Roberto Fabian filed a complaint for illegal lay-off and illegal deductions before the NLRCƞs
Regional Arbitration Branch No. III. They claimed that they were dismissed on January 11, 2000
and sought separation pay from petitioner.

The respondents alleged that as regular employees, they worked from 8:00 a.m. to 5:00 p.m.
at petitionerƞs premises using petitionerƞs tools and equipment and they received P250 per day.
Eutiquio was employed as carpenter-foreman from 1991-1999; Jay as carpenter from 1993-
1999; Felicisimo as carpenter from 1994-1999; and Leonardo, Sr. also as carpenter from 1997-
1999. According to respondents, they were dismissed without just cause and due process;
hence, their prayer for reinstatement and full backwages. They also impleaded one Hermie
Alejo, a relative of the petitionerƞs owner, as co-respondent in their complaint.

On the other hand, petitioner Big AA Manufacturer, affirmed it is a sole proprietorship registered
in the name of Enrico Alejo and engaged in manufacturing office furniture, but it denied that
respondents were its regular employees. Instead, petitioner claimed that Eutiquio Antonio was
one of its independent contractors who used the services of the other respondents. According
to petitioner, its independent contractors were paid by results and were responsible for the
salaries of their own workers. Allegedly, there was no employer-employee relationship between
petitioner and respondents. However, petitioner stated it allowed respondents to use its
facilities to meet job orders. Petitioner also denied that respondents were laid-off by Big AA
Manufacturer, since they were project employees only. It added that since Eutiquio Antonio had
refused a job order of office tables, their contractual relationship ended. Petitioner surmised
that Eutiquio resented the January 10, 2000 Implementing Guidelines it issued to improve
efficiency and performance.

ISSUE

Whether or not respondents are regular employees of petitioner Big AA.

HELD

The SC held that considering the submission of the parties, it is constrained to agree with the
unanimous ruling of the Court of Appeals, NLRC and Labor Arbiter that respondents are
petitionerƞs regular employees. Respondents were employed for more than one year and their
work as carpenters was necessary or desirable in petitionerƞs usual trade or business of
manufacturing office furniture. Under Article 280 of the Labor Code, the applicable test to
determine whether an employment should be considered regular or non-regular is the
reasonable connection between the particular activity performed by the employee in relation to
the usual business or trade of the employer.

True, certain forms of employment require the performance of usual or desirable functions and
exceed one year but do not necessarily result to regular employment under Article 280 of the
Labor Code.21Some specific exceptions include project or seasonal employment. Yet, in this
case, respondents cannot be considered project employees. Petitioner had neither shown that
respondents were hired for a specific project the duration of which was determined at the time
of their hiring nor identified the specific project or phase thereof for which respondents were
hired.

It also agreed that Eutiquio was not an independent contractor for he does not carry a distinct
and independent business, and he does not possess substantial capital or investment in tools,
equipment, machinery or work premises.He works within petitionerƞs premises using the latterƞs
tools and materials, as admitted by petitioner. Eutiquio is also under petitionerƞs control and
supervision. Attesting to this is petitionerƞs admission that it allowed respondents to use its
facilities for the "proper implementation" of job orders. Moreover, the Implementing Guidelines
regulating attendance, overtime, deadlines, penalties; providing petitionerƞs right to fire
employees or "contractors"; requiring the carpentry division to join petitionerƞs exercise
program; and providing rules on machine maintenance, all reflect control and supervision over
respondents.

Petition is denied.

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SYLLABUS
1. LABOR AND SOCIAL LEGISLATION; REPUBLIC ACT NO. 5901 ( AN ACT
PRESCRIBING FORTY HOURS A WEEK OF LABOR FOR GOVERNMENT AND PRIVATE HOSPITALS
OR CLINIC PERSONNEL); REPEALED WITH THE PASSAGE OF THE LABOR CODE ON MAY 1,
1974. Ɯ Policy Instruction No. 54 relies and purports to implement Republic Act No. 5901,
otherwise known as "An Act Prescribing Forty Hours A Week of Labor For Government And
Private Hospitals Or Clinic Personnel", enacted on June 21, 1969. Reliance on Republic Act No.
5901, however is misplaced for the said statute, as correctly ruled by respondent NLRC, has
long been repealed with the passage of the Labor Code on May 1, 1974, Article 302 of which
explicitly provides: "All labor laws not adopted as part of this Code either directly or by
reference are repealed. All provisions of existing laws, orders, decrees, rules and regulations
inconsistent herewith are likewise repealed."
2. ID.; LABOR CODE; ARTICLE 83 THEREOF CONSTRUED; ADMINISTRATIVE
INTERPRETATION; THE COURT MAY STRIKE DOWN INTERPRETATION THAT DEVIATES FROM
THE PROVISION OF THE STATUTE. Ɯ Only Article 83 of the Labor Code which appears to have
substantially incorporated or reproduced the basic provisions of Republic Act No. 5901 may
support Policy Instructions No. 54 on which the latter's validity may be gauged. A cursory
reading of Article 83 of the Labor Code betrays petitioners' position that "hospital employees"
are entitled to "a full weekly salary with paid two (2) days' off if they have completed the 40-
hours/5-day work week". What Article 83 merely provides are: (1) the regular office hour of
eight hours a day, five days per week for health personnel, and (2) where the exigencies of
service require that health personnel work for six days or forty-eight hours then such health
personnel shall be entitled to an additional compensation of at least thirty percent of their
regular wage for work on the sixth day. There is nothing in the law that supports then Secretary
of Labor's assertion that "personnel in subject hospitals and clinics are entitled to a full weekly
wage for seven (7) days if they have completed the 40-hours/5-day workweek in any given
workweek." Needless to say, the Secretary of Labor exceeded his authority by including a two
days off with pay in contravention of the clear mandate of the statute. Such act the Court shall
not countenance. Administrative interpretation of the law is at best merely advisory, and the
Court will not hesitate to strike down an administrative interpretation that deviates from the
provision of the statute.
3. ID.; SECRETARY OF LABOR'S POLICY INSTRUCTIONS NO. 54; DECLARED VOID BY
THE COURT; RATIONALE. Ɯ Even if the Court was to subscribe with petitioner's erroneous
assertion that Republic Act No. 5901 has neither been amended nor repealed by the Labor
Code, we nevertheless find Policy Instructions No. 54 invalid. A perusal of Republic Act No.
5901 reveals nothing therein that gives two days off with pay for health personnel who
complete a 40 or 5-day workweek. In fact, the Explanatory Note of House Bill No. 16630 (later
passed into law as Republic Act No. 5901) explicitly states that the bill's sole purpose is to
shorten the working hours of health personnel and not to dole out a two-days off with pay.
Further, petitioners' position is also negated by the very rules and regulations promulgated by
the Bureau of Labor Standards which implement Republic Act No. 5901. If petitioners are
entitled to two days off with pay, then there appears to be no sense at all why Section 15 of
the implementing rules grants additional compensation equivalent to the regular rate plus at
least twenty-five percent thereof for work performed on Sunday to health personnel, or an
"additional straight-time pay which must be equivalent at least to the regular rate" "[f]or work
performed in excess of forty hours a week . . . Policy Instructions No. 54 to the Court's mind
unduly extended the statute. The Secretary of Labor moreover erred in invoking the "spirit and
intent" of Republic Act No. 5901 and Article 83 of the Labor Code for it is an elementary rule of
statutory construction that when the language of the law is clear and unequivocal, the law must
be taken to mean exactly what it says. No additions or revisions may be permitted. Policy
Instructions No. 54 being inconsistent with and repugnant to the provisions of Article 83 of the
Labor Code, as well as to Republic Act No. 5901, should be, as it is hereby; declared void.

FACTS

The rank-and-file employee-union officers and members of San Juan De Dios Hospital
Employees Association, sent on July 08, 1991, a letter with attached support signatures
requesting and pleading for the expeditious implementation and payment by respondent" Juan
De Dios Hospital "of the '40-HOURS/5-DAY WORKWEEK' with compensable weekly two (2) days
off provided for by Republic Act 5901 as clarified for enforcement by the Secretary of Labor's
Policy Instructions No. 54 dated April 12, 1988." Respondent hospital failed to give a favorable
response; thus, petitioners filed a complaint regarding their "claims for statutory benefits under
the above-cited law and policy issuance. The Labor Arbiter dismissed the complaint. Petitioners
appealed before public respondent National Labor Relations Commission (NLRC), which
affirmed the Labor Arbiter's decision. Petitioners' subsequent motion for reconsideration was
denied; hence, this petition under Rule 65 of the Rules of Court ascribing grave abuse of
discretion on the part of NLRC in concluding that Policy Instructions No. 54 "proceeds from a
wrong interpretation of RA 5901" and Article 83 of the Labor Code.

ISSUE

Whether Policy Instructions No. 54 issued by then Labor Secretary Franklin M. Drilon is valid or
not?

HELD

* Content of POLICY INSTRUCTIONS NO. 54 provides personnel in subject hospital and clinics
entitled to a full weekly wage for seven (7) days if they have completed the 40-hour/5-day
workweek in any given workweek which was declared void by SC.

We note that Policy Instruction No. 54 relies and purports to implement Republic Act No. 5901,
otherwise known as "An Act Prescribing Forty Hours A Week Of Labor For Government and
Private Hospitals Or Clinic Personnel", enacted on June 21, 1969. Reliance on Republic Act No.
5901, however, is misplaced for the said statute, as correctly ruled by respondent NLRC, has
long been repealed with the passage of the Labor Code on May 1, 1974, Article 302 of which
explicitly provides: "All labor laws not adopted as part of this Code either directly or by
reference are hereby repealed. All provisions of existing laws, orders, decree, rules and
regulations inconsistent herewith are likewise repealed." Accordingly, only Article 83 of the
Labor Code which appears to have substantially incorporated or reproduced the basic provisions
of Republic Act No. 5901 may support Policy Instructions No. 54 on which the latter's validity
may be gauged.

A cursory reading of Article 83 of the Labor Code betrays petitioners' position that "hospital
employees" are entitled to "a full weekly salary with paid two (2) days' off if they have
completed the 40-hour/5-day workweek". What Article 83 merely provides are: (1) the regular
office hour of eight hours a day, five days per week for health personnel, and (2) where the
exigencies of service require that health personnel work for six days or forty-eight hours then
such health personnel shall be entitled to an additional compensation of at least thirty percent
of their regular wage for work on the sixth day. There is nothing in the law that supports then
Secretary of Labor's assertion that "personnel in subject hospitals and clinics are entitled to a
full weekly wage for seven (7) days if they have completed the 40-hour/5-day workweek in any
given workweek". Needless to say, the Secretary of Labor exceeded his authority by including a
two days off with pay in contravention of the clear mandate of the statute. Such act the Court
shall not countenance. Administrative interpretation of the law, we reiterate, is at best merely
advisory, and the Court will not hesitate to strike down an administrative interpretation that
deviates from the provision of the statute.

Indeed, even if we were to subscribe with petitioners' erroneous assertion that Republic Act No.
5901 has neither been amended nor repealed by the Labor Code, we nevertheless find Policy
Instructions No. 54 invalid. A perusal of Republic Act No. 5901 reveals nothing therein that
gives two days off with pay for health personnel who complete a 40-hour work or 5-day
workweek. In fact, the Explanatory Note of House Bill No. 16630 (later passed into law as
Republic Act No. 5901) explicitly states that the bill's sole purpose is to shorten the working
hours of health personnel and not to dole out a two days off with pay.

The Secretary of Labor moreover erred in invoking the "spirit and intent" of Republic Act No.
5901 and Article 83 of the Labor Code for it is an elementary rule of statutory construction that
when the language of the law is clear and unequivocal, the law must be taken to mean exactly
what it says. 9 No additions or revisions may be permitted. Policy Instructions No. 54 being
inconsistent with and repugnant to the provision of Article 83 of the Labor Code, as well as to
Republic Act No. 5901, should be, as it is hereby, declared void.

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FACTS

Respondent Castro was employed by petitioner for a specific period from Sept. 5, 1988 to Oct.
4, 1988. He was rehired for another specific period from May 30, 1989 to Nov. 6, 1989. After
the 2 terms, he was recommended for re-employment with the companyƞs Maintenance Team
for the Davao project on Nov. 22, 1989. On Dec. 22, 1989, he was again re-hired and assigned
to the Maintenance Division of Davao Project tasked to install its annex plant machines. On May
21, 1990, Castroƞs employment was terminated due to the completion of the special project.

Castro then filed a complaint for illegal dismissal with the NLRC-RAB contending that being a
regular employee, he could not be dismissed without a just and valid cause. The petitioner, on
the other hand, alleged that Castro was a mere project employee whose employment was co-
terminus with the project for which he was hired, hence, may be terminated upon the end or
completion of the project for which he was hired.
On May 27, 1990, petitioner retrenched some 228 regular employees and Castro was not
named one of those.
The Labor Arbiter decided in favor of Castro and declared that he is a regular employee of
petitioner, but in light of the recent retrenchment, his employment was validly terminated. Upon
appeal, the NLRC ruled that petitioner is guilty of illegal dismissal and ordered the company to
reinstate him. Hence, this petition.

ISSUE

Whether or not private respondent Gil C. Castro is a regular employee or was a mere project
employee of petitioner.

HELD

The SC held that Castro is not a regular employee of the petitioner and thus, was not illegally
dismissed. The first paragraph of Art 280 provides that regardless of any written or oral
agreement to the contrary, an employee is deemed regular where he is engaged in necessary
or desirable activities in the usual trade or business of the employer.

A project employee, on the other hand, has been defined to be 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.

The second paragraph of the provision defines casual employees as those who do not fall under
the definition of the first paragraph.
However, with respect to the first two kinds of employees, the principal test for determining
whether an employee is a project employee or a regular employee is whether or not the project
employee was assigned to carry out a "specific project or undertaking," the duration and scope
of which were specified at the time the employee was engaged for that period.

In the course of its business, petitioner Cosmos undertakes distinct identifiable projects as it did
in the instant case when it formed special teams assigned to install and dismantle its annex
plant machines in various plants all over the country. These projects are distinct and separate,
and are identifiable as such, from its usual business of bottling beverage. Their duration and
scope are made known prior to their undertaking and their specified goal and purpose are
fulfilled once the projects are completed. When private respondent was initially hired for a
period of one month and re-hired for another five months, and then subsequently re-hired for
another five months, he was assigned to the petitioner's Maintenance Division tasked with the
installation and dismantling of its annex plant machines. Evidently, these projects or
undertakings, the duration and scope of which had been determined and made known to
private respondent at the time of his employment, can properly be treated as "projects" within
the meaning of the "first" kind. Considered as such, the services rendered by private
respondent hired therein for the duration of the projects may lawfully be terminated at the end
or completion of the same.

The mere fact that a project employee has worked on the Specific project for more than one (1)
year, does not necessary change his status as project employee and convert it to regular or
permanent employment. For it is obvious that the second paragraph of Article 280 of the Labor
Code, quoted above, providing that an employee who has served for at least one (1) year, shall
be considered a regular employee, relates only to casual employees, not to project employees.
Consequently, private respondent's protestation is completely baseless because being a project
employee, he does not fall within the ambit of the pertinent provision above-stated.

Clearly, therefore, private respondent being a project employee, or to use the correct term,
seasonal employee, considering that his employment was limited to the installation and
dismantling of petitioner's annex plant machines after which there was no more work to do, his
employment legally ended upon completion of the project. That being so, the termination of his
employment cannot and should not constitute an illegal dismissal. Neither should it constitute
retrenchment as private respondent was a seasonal employee whose services were already
terminated on May 21, 1990 prior to the termination of the other regular employees of Cosmos
by reason of retrenchment.
Petition is granted.

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FACTS

Respondent company is a corporation engaged in the production and marketing of steel

products. In the course of its operation, it undertook a ƠFive-year Expansion Programơ, which
resulted to the employment of the petitioners. The expansion program would consist of the ff.
projects: 1. setting up of a Ơcold rolling mill expansion project; 2. establishment of a Ơbillet
steel-making plantơ; 3. acquisition and installation of a ƠFive-stand TDMơ; and 4. the ƠCold Mill
Peripherals Projectơ. Instead of contracting out with an outside or independent contactor the
tasks of constructing the buildings with related civil and electrical works that would house the
new machineries and equipment, the company chose to execute and carry out the expansion
projects Ơin houseơ, as it were, by administration. Later, petitioners filed a complaint for unfair
labor practice, regularization, etc. The Labor Arbiter declared petitioners as regular employees.
But, upon appeal by the company, the NLRC ruled that the petitioners are project employees.
Hence, this petition.

ISSUE

Whether or not petitioners are project employees of NSC?

HELD

The SC ruled that petitioners are project employees. it is evidently important to become clear
about the meaning and scope of the term "project" in the present context. The "project" for the
carrying out of which "project employees" are hired would ordinarily have some relationship to
the usual business of the employer.

In the realm of business and industry, we note that "project" could refer to one or the other of
at least two (2) distinguishable types of activities. !#0*, a project could refer to a particular
job or undertaking that is within the regular or usual business of the employer company, but
which is distinct and separate, and identifiable as such, from the other undertakings of the
company. Such job or undertaking begins and ends at determined or determinable times. The
typical example of this first type of project is a particular construction job or project of a
construction company. A construction company ordinarily carries out two or more discrete
identifiable construction projects: e.g., a twenty-five- storey hotel in Makati; a residential
condominium building in Baguio City; and a domestic air terminal in Iloilo City. Employees who
are hired for the carrying out of one of these separate projects, the scope and duration of
which has been determined and made known to the employees at the time of employment, are
properly treated as "project employees," and their services may be lawfully terminated at
completion of the project.

The term "project" could also refer to,  )"10*, a particular job or undertaking that is not
within the regular business of the corporation. Such a job or undertaking must also be
identifiably separate and distinct from the ordinary or regular business operations of the
employer. The job or undertaking also begins and ends at determined or determinable times.
The case at bar presents what appears to our mind as a typical example of this kind of
"project."

The carrying out of the Five Year Expansion Program (or more precisely, each of its component
projects) constitutes a distinct undertaking identifiable from the ordinary business and activity
of NSC. Each component project, of course, begins and ends at specified times, which had
already been determined by the time petitioners were engaged. We also note that NSC did the
work here involved Ɯ the construction of buildings and civil and electrical works, installation of
machinery and equipment and the commissioning of such machinery Ɯ only for itself. Private
respondent NSC was not in the business of constructing buildings and installing plant machinery
for the general business community, i.e., for unrelated, third party, corporations. NSC did not
hold itself out to the public as a construction company or as an engineering corporation.

Which ever type of project employment is found in a particular case, a common basic requisite
is that the designation of named employees as "project employees" and their assignment to a
specific project, are effected and implemented in good faith, and not merely as a means of
evading otherwise applicable requirements of labor laws.

Thus, the particular component projects embraced in the Five Year Expansion Program, to
which petitioners were assigned, were distinguishable from the regular or ordinary business of
NSC which, of course, is the production or making and marketing of steel products. During the
time petitioners rendered services to NSC, their work was limited to one or another of the
specific component projects which made up the FAYEP I and II. There is nothing in the record
to show that petitioners were hired for, or in fact assigned to, other purposes, e.g., for
operating or maintaining the old, or previously installed and commissioned, steel-making
machinery and equipment, or for selling the finished steel products.

We, therefore, agree with the basic finding of the NLRC (and the Labor Arbiter) that the
petitioners were indeed "project employees:"

The present case therefore strictly falls under the definition of "project employees" on
paragraph one of Article 280 of the Labor Code, as amended. Moreover, it has been held that
the length of service of a project employee is not the controlling test of employment tenure but
whether or not "the employment has been fixed for a specific project or undertaking the
completion or termination of which has been determined at the time of the engagement of the
employee".

The proviso in the second paragraph of Article 280 relates only to casual employees and is not
applicable to those who fall within the definition of said Article's first paragraph, i.e., project
employees. The familiar grammatical rule is that a proviso is to be construed with reference to
the immediately preceding part of the provision to which it is attached, and not to other
sections thereof, unless the clear legislative intent is to restrict or qualify not only the phrase
immediately preceding the proviso but also earlier provisions of the statute or even the statute
itself as a whole. No such intent is observable in Article 280 of the Labor Code, which has been
quoted earlier.

Petition is dismissed.

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FACTS

The private respondents were hired by petitioner Pure Foods to work for a fixed period of five
months at its tuna cannery plant in General Santos City. After the expiration of their respective
contracts of employment, their services were terminated. They forthwith executed a "Release
and Quitclaim" stating that they had no claim whatsoever against the petitioner. Private
respondents then filed before the NLRC-Sub-RAB a complaint for illegal dismissal against the
petitioner.

The Labor Arbiter dismissed the complaint on the ground that the private respondents were
mere contractual workers, and not regular employees; hence, they could not avail of the law on
security of tenure. The termination of their services by reason of the expiration of their
contracts of employment was, therefore, justified.

The private respondents appealed the decision to the NLRC which affirmed the LAƞs decision.
However, on private respondents' motion for reconsideration, the NLRC rendered another
decision holding that the private respondent and their co-complainants were regular employees.
It declared that the contract of employment for five months was a "clandestine scheme
employed by the petitioner to stifle private respondents' right to security of tenure" and should
therefore be struck down and disregarded for being contrary to law, public policy, and morals.
Hence, their dismissal on account of the expiration of their respective contracts was illegal. Its
motion for reconsideration having been denied, the petitioner came to this Court contending
that respondent NLRC committed grave abuse of discretion amounting to lack of jurisdiction in
reversing the decision of the Labor Arbiter.

ISSUE

Whether or not private respondents are regular employees of petitioner company or mere
contractual employees.

HELD

The SC held that the petition devoid of merit. Under Art. 280, there are two kinds of regular
employees are (1) those who are engaged to perform activities which are necessary or
desirable in the usual business or trade of the employer; and (2) those casual employees who
have rendered at least one year of service, whether continuous or broken, with respect to the
activity in which they are employed.

In the instant case, the private respondents' activities consisted in the receiving, skinning,
loining, packing, and casing-up of tuna fish which were then exported by the petitioner.
Indisputably, they were performing activities which were necessary and desirable in petitioner's
business or trade. Contrary to petitioner's submission, the private respondents could not be
regarded as having been hired for a specific project or undertaking. The term "specific project
or undertaking" under Article 280 of the Labor Code contemplates an activity which is not
commonly or habitually performed or such type of work which is not done on a daily basis but
only for a specific duration of time or until completion; the services employed are then
necessary and desirable in the employer's usual business only for the period of time it takes to
complete the project. The fact that the petitioner repeatedly and continuously hired workers to
do the same kind of work as that performed by those whose contracts had expired negates
petitioner's contention that those workers were hired for a specific project or undertaking only.

Although, this Court has upheld the legality of fixed-term employment, none of the criteria had
been met in the present case. It could not be supposed that private respondents and all other
so-called "casual" workers of the petitioner KNOWINGLY and VOLUNTARILY agreed to the 5-
month employment contract. Cannery workers are never on equal terms with their employers.
Almost always, they agree to any terms of an employment contract just to get employed
considering that it is difficult to find work given their ordinary qualifications. Their freedom to
contract is empty and hollow because theirs is the freedom to starve if they refuse to work as
casual or contractual workers. Indeed, to the unemployed, security of tenure has no value. It
could not then be said that petitioner and private respondents "dealt with each other on more
or less equal terms with no moral dominance whatever being exercised by the former over the
latter.

The petitioner does not deny or rebut private respondents' averments (1) that the main bulk of
its workforce consisted of its so-called "casual" employees; (2) that as of July 1991, "casual"
workers numbered 1,835; and regular employee, 263; (3) that the company hired "casual"
every month for the duration of five months, after which their services were terminated and
they were replaced by other "casual" employees on the same five-month duration; and (4) that
these "casual" employees were actually doing work that were necessary and desirable in
petitioner's usual business. This scheme of the petitioner was apparently designed to prevent
the private respondents and the other "casual" employees from attaining the status of a regular
employee. It was a clear circumvention of the employees' right to security of tenure and to
other benefits like minimum wage, cost-of-living allowance, sick leave, holiday pay, and 13th
month pay. Indeed, the petitioner succeeded in evading the application of labor laws. Also, it
saved itself from the trouble or burden of establishing a just cause for terminating employees
by the simple expedient of refusing to renew the employment contracts.

The five-month period specified in private respondents' employment contracts having been
imposed precisely to circumvent the constitutional guarantee on security of tenure should,
therefore, be struck down or disregarded as contrary to public policy or morals. To uphold the
contractual arrangement between the petitioner and the private respondents would, in effect,
permit the former to avoid hiring permanent or regular employees by simply hiring them on a
temporary or casual basis, thereby violating the employees' security of tenure in their jobs.
Petition is dismissed.

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FACTS
The 194 individual complainants are members of complainant union in respondent company
which is engaged in the manufacture and processing of fruit and vegetable purees for export.
They were employed as seeders, operators, sorters, slicers, janitors, drivers, truck helpers,
mechanics and office personnel. On September 5, 1988 herein private respondent Philippine
Fruit and Vegetable Workers Union-Tupas Local Chapter, for and in behalf of 127 of its
members, filed a complaint for unfair labor practice and/or illegal dismissal with damages
against petitioner corporation. Private respondent alleged that many of its complaining
members started working for San Carlos Fruits Corporation which later incorporated into PFVII
in January or February 1983 until their dismissal on different dates in 1985, 1986, 1987 and
1988. They further alleged that the dismissals were due to complainants' involvement in union
activities and were without just cause.

ISSUE

Whether or not private respondents are seasonal employees whose employments ceased during
the off-season due to no work.

HELD

The SC held that private respondents are regular employees because they have been engaged
to perform activities which are usually necessary or desirable in the usual business or trade of
the employer, under the 1st par of Article 280.

Additionally, the proviso under the 2nd par of Article 280 considers as "casual" employees, all
other employees who do not fall under the definition of the 1st paragraph. The proviso, in said
second paragraph, deems as regular employees those "casual" employees who have rendered
at least one year of service regardless of the fact that such service may be continuous or
broken.

Under Article 280 of the Labor Code, an employment shall be deemed regular where the
employee: a) has been engaged to perform activities which are usually necessary or desirable in
the usual business or trade of the employer; or b) has rendered at least one year of service,
whether such service is continuous or broken, with respect to the activity in which he is
employed.

In the case at bar, the work of complainants as seeders, operators, sorters, slicers, janitors,
drivers, truck helpers, mechanics and office personnel is without doubt necessary in the usual
business of a food processing company like petitioner PFVII.
It should be noted that complainants' employment has not been fixed for a specific project or
undertaking the completion or termination of which has been determined at the time of their
appointment or hiring. Neither is their employment seasonal in nature. While it may be true that
some phases of petitioner company's processing operations is dependent on the supply of fruits
for a particular season, the other equally important aspects of its business, such as
manufacturing and marketing are not seasonal. The fact is that large-scale food processing
companies such as petitioner company continue to operate and do business throughout the
year even if the availability of fruits and vegetables is seasonal.
Having determined that private respondents are regular employees under the first paragraph,
we need not dwell on the question of whether or not they had rendered one year of service.

In this case only 80 of the 194 complainants provided evidence to support their claims, the
other 114 did not. Hence, whatever testimony or other proof of employment submitted by any
of them proves only the status of his own employment and not that of any other complainant.
Thus, only those members of respondent union who were able to prove their claims are entitled
to awards of backwages, 13th month pay and separation pay.

The decision of the NLRC is affirmed.

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FACTS

The petitioner Philips Semiconductors is a domestic corporation engaged in the production and
assembly of semiconductors such as power devices, RF modules, CATV modules, RF and metal
transistors and glass diods. It caters to domestic and foreign corporations that manufacture
computers, telecommunications equipment and cars. Aside from contractual employees, the
petitioner employed 1,029 regular workers. The employees were subjected to periodic
performance appraisal based on output, quality, attendance and work attitude.[2] One was
required to obtain a performance rating of at least 3.0 for the period covered by the
performance appraisal to maintain good standing as an employee.
Respondent, during her 5 consecutive contracts, got the following ratings: 3.15, 3.8, 3.4, and
2.8. The reason for her failed mark on the last contract was her absences. She was then asked
to explain such absences but she failed to do the same. Subsequently, respondentƞs supervisor
recommended that her employment be terminated due to habitual absenteeism. Thus, her
contract of employment was no longer renewed. Respondent then filed a complaint for illegal
dismissal. On the other hand, petitioner contends that respondent was not dismissed; her
contract merely expired.

The Labor Arbiter and the NLRC based their decision on the CBA between the petitioner and the
labor union which provides that a contractual employee would only be considered a regular
employee if he has completed 17 months of service and a performance rating of at least 3.0.
The respondent filed a motion for reconsideration but the NLRC denied the same. On appeal,
the CA reversed the decision of the NLRC. Hence, this petition.

ISSUE

Whether or not respondent was still a contractual employee of the company.

HELD

The SC agreed with the appellate court. Article 280 of the Labor Code of the Philippines was
emplaced in our statute books to prevent the circumvention by unscrupulous employers of the
employeeƞs right to be secure in his tenure by indiscriminately and completely ruling out all
written and oral agreements inconsistent with the concept of regular employment defined
therein. The language of the law manifests the intent to protect the tenurial interest of the
worker who may be denied the rights and benefits due a regular employee because of lopsided
agreements with the economically powerful employer who can maneuver to keep an employee
on a casual or temporary status for as long as it is convenient to it. In tandem with Article 281
of the Labor Code, Article 280 was designed to put an end to the pernicious practice of making
permanent casuals of our lowly employees by the simple expedient of extending to them
temporary or probationary appointments, ad infinitum.

The two kinds of regular employees under the law are (1) those engaged to perform activities
which are necessary or desirable in the usual business or trade of the employer; and (2) those
casual employees who have rendered at least one year of service, whether continuous or
broken, with respect to the activities in which they are employed. The primary standard to
determine a regular employment is the reasonable connection between the particular activity
performed by the employee in relation to the business or trade of the employer. The test is
whether the former is usually necessary or desirable in the usual business or trade of the
employer. If the employee has been performing the job for at least one year, even if the
performance is not continuous or merely intermittent, the law deems the repeated and
continuing need for its performance as sufficient evidence of the necessity, if not
indispensability of that activity to the business of the employer. Hence, the employment is also
considered regular, but only with respect to such activity and while such activity exists. The law
does not provide the qualification that the employee must first be issued a regular appointment
or must be declared as such before he can acquire a regular employee status.

In this case, the original contract of employment had been extended or renewed four times, to
the same position, with the same chores. Such a continuing need for the services of the
respondent is sufficient evidence of the necessity and indispensability of her services to the
petitionerƞs business. By operation of law, then, the respondent had attained the regular status
of her employment with the petitioner, and is thus entitled to security of tenure as provided for
in Article 279 of the Labor Code.

The limited period specified in petitionerƞs employment contract having been imposed precisely
to circumvent the constitutional guarantee on security of tenure should, therefore, be struck
down or disregarded as contrary to public policy or morals. To uphold the contractual
arrangement would, in effect, permit the former to avoid hiring permanent or regular
employees by simply hiring them on a temporary or casual basis, thereby violating the
employeeƞs security of tenure in their jobs.

Under Section 3, Article XVI of the Constitution, it is the policy of the State to assure the
workers of security of tenure and free them from the bondage of uncertainty of tenure woven
by some employers into their contracts of employment. The guarantee is an act of social
justice. When a person has no property, his job may possibly be his only possession or means
of livelihood and those of his dependents. When a person loses his job, his dependents suffer
as well. The worker should therefor be protected and insulated against any arbitrary deprivation
of his job.
The ruling in Brent School, Inc. v. Zamora is also not applicable in this case because it could not
be supposed that private respondents and all other so-called Ơcasualơ workers of the petitioner
KNOWINGLY and VOLUNTARILY agreed to the employment contract. Almost always, they agree
to any terms of an employment contract just to get employed considering that it is difficult to
find work given their ordinary qualifications. Their freedom to contract is empty and hollow
because theirs is the freedom to starve if they refuse to work as casual or contractual workers.
Indeed, to the unemployed, security of tenure has no value. It could not then be said that
petitioner and private respondents Ơdealt with each other on more or less equal terms with no
moral dominance whatever being exercised by the former over the latter.

The petitionerƞs reliance on the CBA is also misplaced. It is the express mandate of the CBA not
to include contractual employees within its coverage. Such being the case, we see no reason
why an agreement between the representative union and private respondent, delaying the
regularization of contractual employees, should bind petitioner as well as other contractual
employees. Indeed, nothing could be more unjust than to exclude contractual employees from
the benefits of the CBA on the premise that the same contains an exclusionary clause while at
the same time invoke a collateral agreement entered into between the parties to the CBA to
prevent a contractual employee from attaining the status of a regular employee.

The CBA, during its lifetime, constitutes the law between the parties. Such being the rule, the
aforementioned CBA should be binding only upon private respondent and its regular employees
who were duly represented by the bargaining union. The agreement embodied in the ƠMinutes
of Meetingơ between the representative union and private respondent, providing that
contractual employees shall become regular employees only after seventeen months of
employment, cannot bind petitioner. Such a provision runs contrary to law not only because
contractual employees do not form part of the collective bargaining unit which entered into the
CBA with private respondent but also because of the Labor Code provision on regularization.
The law explicitly states that an employee who had rendered at least one year of service,
whether such service is continuous or broken, shall be considered a regular employee. The
period set by law is one year. The seventeen months provided by the ƠMinutes of Meetingơ is
obviously much longer. The principle is well settled that the law forms part of and is read into
every contract without the need for the parties expressly making reference to it.

Petition is denied.

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FACTS

Coca-Cola Bottlers Phils., Inc., herein petitioner, engaged the services of respondent workers as
"sales route helpers" for a limited period of five months. After five months, respondent workers
were employed by petitioner company on a day-to-day basis. According to petitioner company,
respondent workers were hired to substitute for regular sales route helpers whenever the latter
would be unavailable or when there would be an unexpected shortage of manpower in any of
its work places or an unusually high volume of work. The practice was for the workers to wait
every morning outside the gates of the sales office of petitioner company. If thus hired, the
workers would then be paid their wages at the end of the day.

Ultimately, respondent workers asked petitioner company to extend to them regular

appointments. Petitioner company refused. Subsequently, the respondents filed with the NLRC
a complaint for the regularization of their employment with petitioner company. Claiming that
petitioner company meanwhile terminated their services, respondent workers filed a notice of
strike and a complaint for illegal dismissal and unfair labor practice with the NLRC. The parties,
later on, agreed to submit the controversy, for voluntary arbitration but the VA dismissed the
complaint on the ground that the respondent workers were not employees of Coca-cola.

ISSUE

Whether or not the nature of work of respondents in the company is of such nature as to be
deemed necessary and desirable in the usual business or trade of petitioner that could qualify
them to be regular employees.

HELD

The SC ruled that he argument of petitioner that its usual business or trade is softdrink
manufacturing and that the work assigned to respondent workers as sales route helpers so
involves merely Ơpostproduction activities,ơ one which is not indispensable in the manufacture
of its products, scarcely can be persuasive. If, as so argued by petitioner company, only those
whose work are directly involved in the production of softdrinks may be held performing
functions necessary and desirable in its usual business or trade, there would have then been no
need for it to even maintain regular truck sales route helpers. The nature of the work
performed must be viewed from a perspective of the business or trade in its entirety and not on
a confined scope.

The repeated rehiring of respondent workers and the continuing need for their services clearly
attest to the necessity or desirability of their services in the regular conduct of the business or
trade of petitioner company. The Court of Appeals has found each of respondents to have
worked for at least one year with petitioner company. While this Court, in Brent School, Inc. vs.
Zamora, has upheld the legality of a fixed-term employment, it has done so, however, with a
stern admonition that where from the circumstances it is apparent that the period has been
imposed to preclude the acquisition of tenurial security by the employee, then it should be
struck down as being contrary to law, morals, good customs, public order and public policy. The
pernicious practice of having employees, workers and laborers, engaged for a fixed period of
few months, short of the normal six-month probationary period of employment, and, thereafter,
to be hired on a day-to-day basis, mocks the law. Any obvious circumvention of the law cannot
be countenanced.

The fact that respondent workers have agreed to be employed on such basis and to forego the
protection given to them on their security of tenure, demonstrate nothing more than the serious
problem of impoverishment of so many of our people and the resulting unevenness between
labor and capital. A contract of employment is impressed with public interest. The provisions of
applicable statutes are deemed written into the contract, and Ơthe parties are not at liberty to
insulate themselves and their relationships from the impact of labor laws and regulations by
simply contracting with each other.ơ

Petition is dismissed.

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FACTS

Respondent Middleby Philippines Corporation hired petitioner as engineering support services

supervisor on a probationary basis for six months. Apparently unhappy with petitioner's
performance, respondent Middleby terminated petitioner's services. The bone of contention
centered on whether the termination occurred before or after the six-month probationary period
of employment.
The parties, presenting their respective copies of Alcira's appointment paper, claimed conflicting
starting dates of employment: May 20, 1996 according to petitioner and May 27, 1996
according to respondent. Both documents indicated petitioner's employment status as
"probationary (6 mos.)" and a remark that "after five months (petitioner's) performance shall be
evaluated and any adjustment in salary shall depend on (his) work performance."

Petitioner asserts that, on November 20, 1996, in the presence of his co-workers and
subordinates, a senior officer of respondent Middleby in bad faith withheld his time card and did
not allow him to work. Considering this as a dismissal "after the lapse of his probationary
employment," petitioner filed on November 21, 1996 a complaint in the National Labor
Relations Commission (NLRC) against respondent Middleby contending that he had already
become a regular employee as of the date he was illegally dismissed.

In their defense, respondents claim that, during petitioner's probationary employment, he

showed poor performance in his assigned tasks, incurred ten absences, was late several times
and violated company rules on the wearing of uniform. Since he failed to meet company
standards, petitioner's application to become a regular employee was disapproved and his
employment was terminated.

ISSUE

Whether or not petitioner attained regular employment in the private respondentƞs company.

HELD

The SC ruled that under the terms of his contract, petitionerƞs probationary employment was
only for five months as indicated by the remark "Please be informed that after five months, your
performance shall be evaluated and any adjustment in salary shall depend on your work
performance." The argument lacks merit. As correctly held by the labor arbiter, the appointment
contract also stated in another part thereof that petitioner's employment status was
"probationary (6 mos.)." The five-month period referred to the evaluation of his work.

Petitioner insists that he already attained the status of a regular employee when he was
dismissed on November 20, 1996 because, having started work on May 20, 1996, the six-month
probationary period ended on November 16, 1996. According to petitioner's computation, since
Article 13 of the Civil Code provides that one month is composed of thirty days, six months total
one hundred eighty days. As the appointment provided that petitioner's status was
"probationary (6 mos.)" without any specific date of termination, the 180th day fell on
November 16, 1996. Thus, when he was dismissed on November 20, 1996, he was already a
regular employee.

Petitioner's contention is incorrect. In CALS Poultry Supply Corporation, et al. vs. Roco, et al.,
this Court dealt with the same issue of whether an employment contract from May 16, 1995 to
November 15, 1995 was within or outside the six-month probationary period. We ruled that
November 15, 1995 was still within the six-month probationary period. We reiterate our ruling
in CALS Poultry Supply:
Our computation of the 6-month probationary period is reckoned from the date of appointment
up to the same calendar date of the 6th month following. In short, since the number of days in
each particular month was irrelevant, petitioner was still a probationary employee when
respondent Middleby opted not to "regularize" him on November 20, 1996.

Petition is denied.
c


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FACTS

Respondent Nelson Paras was first employed by Mitsubishi as a shuttle bus driver on March 19,
1976. He resigned on June 16, 1982. He applied for and was hired as a diesel mechanic and
heavy equipment operator in Saudi Arabia from 1982 to 1993. When he returned to the
Philippines, he was re-hired as a welder-fabricator at Mitsubishi tooling shop from October 3,
1994 to October 31, 1994. On October 29, 1994, his contract was renewed from November 1,
1994 up to March 3, 1995.

Sometime in May of 1996, Paras was re-hired on a probationary basis as a manufacturing

trainee at the Plant Engineering Maintenance Department. He and the new and re-hired
employees were given an orientation on May 15, 1996 by Emma P. Aninipot, respecting the
company's history, corporate philosophy, organizational structure, and company rules and
regulations, including the company standards for regularization, code of conduct and company-
provided benefits. Paras started reporting for work on May 27, 1996. He was assigned at the
paint ovens, air make-up and conveyors. As part of the MMPC's policy, Paras was evaluated by
his immediate supervisors Lito R. Lacambacal and Wilfredo J. Lopez after six (6) months, and
received an average rating. Later, Lacambacal informed Paras that based on his performance
rating, he would be regularized.

However, the Department and Division Managers, A.C. Velando and H.T. Victoria, including Mr.
Dante Ong reviewed the performance evaluation made on Paras. They unanimously agreed,
along with Paras' immediate supervisors, that the performance of Paras was unsatisfactory. As a
consequence, Paras was not considered for regularization. On November 26, 1996, he received
a Notice of Termination dated November 25, 1996, informing him that his services were
terminated effective the said date since he failed to meet the required company standards for
regularization.

ISSUE

Whether or not respondent Paras was already a regular employee on November 26, 1996;

HELD

The SC held that indeed, an employer, in the exercise of its management prerogative, may hire
an employee on a probationary basis in order to determine his fitness to perform work. Under
Article 281 of the Labor Code, the employer must inform the employee of the standards for
which his employment may be considered for regularization. Such probationary period, unless
covered by an apprenticeship agreement, shall not exceed six (6) months from the date the
employee started working. The employee's services may be terminated for just cause or for his
failure to qualify as a regular employee based on reasonable standards made known to him.

Respondent Paras was employed as a management trainee on a probationary basis. During the
orientation conducted on May 15, 1996, he was apprised of the standards upon which his
regularization would be based. He reported for work on May 27, 1996. As per the company's
policy, the probationary period was from three (3) months to a maximum of six (6) months.

Applying Article 13 of the Civil Code, the probationary period of six (6) months consists of one
hundred eighty (180) days. This is in conformity with paragraph one, Article 13 of the Civil
Code, which provides that the months which are not designated by their names shall be
understood as consisting of thirty (30) days each. The number of months in the probationary
period, six (6), should then be multiplied by the number of days within a month, thirty (30);
hence, the period of one hundred eighty (180) days.

As clearly provided for in the last paragraph of Article 13, in computing a period, the first day
shall be excluded and the last day included. Thus, the one hundred eighty (180) days
commenced on May 27, 1996, and ended on November 23, 1996. The termination letter dated
November 25, 1996 was served on respondent Paras only at 3:00 a.m. of November 26, 1996.
He was, by then, already a regular employee of the petitioner under Article 281 of the Labor
Code.

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FACTS

Petitioners are part of a work pool of shellers for respondent company. They are hired by the
company when there is an oversupply of coconuts to be shelled or when a regular employee
cannot report to work. The company hires them as extra hand or temporary replacement. In
2000, the company effected a new shelling system where extra shellers were paid P220/day
with a quota of 2000 per 8-hour daily labor. Those amenable to the new system were preferred
by the company. Petitioners were among those who refused to adopt the new system. As a
consequence, they were not given preference in hiring. They subsequently filed a complaint
with the NLRC-RAB for illegal dismissal. They allege that they are regular employees performing
activities usually necessary and desirable in the business or trade of respondent. They claim
that they were terminated without just cause and without notice and hearing.

The Labor Arbiter found that the extra shellers in the work pool, such as the petitioners herein,
were not regular employees of respondent. Thus, the Labor Arbiter held that petitioners were
not dismissed, but were simply not given work assignments because of their unjustified refusal
to adopt the new shelling system being implemented by respondent.

On appeal, the NLRC affirmed the Labor Arbiterƞs ruling. It reasoned that petitionersƞ adamant
refusal to work under the new shelling system cannot be accepted and sustained without
infringing respondentƞs management prerogative to introduce measures aimed at maximizing
production. Petitionersƞ motion for reconsideration was also denied by the NLRC. Undaunted,
petitioners filed with the Court of Appeals a special civil action for certiorari ascribing to the
NLRC grave abuse of discretion. The CA dismissed the petition.

ISSUE

Whether or not petitioners are regular employees of respondent company, and thus, illegally
dismissed.

HELD

The SC held that there no cogent reason to disturb the factual findings of the Labor Arbiter as
affirmed by the NLRC. We find supported by evidence on record their finding that petitioners
were not illegally dismissed, and that they were not regular employees to begin with.
Petition is denied.
c


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FACTS

The respondent General Milling Corporation is a domestic corporation engaged in the production
and sale of livestock and poultry. It is, likewise, the distributor of dressed chicken to various
restaurants and establishments nationwide. As such, it employs hundreds of employees, some
on a regular basis and others on a casual basis, as Ơemergency workers.ơ The petitioners were
employed by the respondent on different dates as emergency workers at its poultry plant in
Cainta, Rizal, under separate Ơtemporary/casual contracts of employmentơ for a period of five
months. Most of them worked as chicken dressers, while the others served as packers or
helpers. Upon the expiration of their respective contracts, their services were terminated. They
later filed separate complaints for illegal dismissal and non-payment of holiday pay, 13th month
pay, night-shift differential and service incentive leave pay against the respondent before the
Arbitration Branch of the National Labor Relations Commission.
The petitioners alleged that their work as chicken dressers was necessary and desirable in the
usual business of the respondent, and added that although they worked from 10:00 p.m. to
6:00 a.m., they were not paid night-shift differential. They stressed that based on the nature of
their work, they were regular employees of the respondent; hence, could not be dismissed from
their employment unless for just cause and after due notice. They asserted that the respondent
GMC terminated their contract of employment without just cause and due notice. They further
argued that the respondent could not rely on the nomenclature of their employment as
Ơtemporary or casual.ơ

ISSUE

Whether or not the petitioners were regular employees of the respondent GMC when their
employment was terminated.

HELD

The SC held the petitioners were employees with a fixed period, and, as such, were not regular
employees. Article 280 of the Labor Code comprehends three kinds of employees: (a) regular
employees or those whose work is necessary or desirable to the usual business of the
employer; (b) project employees or those 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 services to be performed is seasonal
in nature and the employment is for the duration of the season; and, (c) casual employees or
those who are neither regular nor project employees.

A regular employee is one who is engaged to perform activities which are necessary and
desirable in the usual business or trade of the employer as against those which are undertaken
for a specific project or are seasonal.[41] There are two separate instances whereby it can be
determined that an employment is regular: (1) if the particular activity performed by the
employee is necessary or desirable in the usual business or trade of the employer; and, (2) if
the employee has been performing the job for at least a year. Article 280 of the Labor Code
does not proscribe or prohibit an employment contract with a fixed period. It does not
necessarily follow that where the duties of the employee consist of activities usually necessary
or desirable in the usual business of the employer, the parties are forbidden from agreeing on a
period of time for the performance of such activities. There is thus nothing essentially
contradictory between a definite period of employment and the nature of the employeeƞs duties.

Stipulations in employment contracts providing for term employment or fixed period

employment are valid when the period were agreed upon knowingly and voluntarily by the
parties without force, duress or improper pressure, being brought to bear upon the employee
and absent any other circumstances vitiating his consent, or where it satisfactorily appears that
the employer and employee dealt with each other on more or less equal terms with no moral
dominance whatever being exercised by the former over the latter. An examination of the
contracts entered into by the petitioners showed that their employment was limited to a fixed
period, usually five or six months, and did not go beyond such period. The records reveal that
the stipulations in the employment contracts were knowingly and voluntarily agreed to by the
petitioners without force, duress or improper pressure, or any circumstances that vitiated their
consent. Similarly, nothing therein shows that these contracts were used as a subterfuge by the
respondent GMC to evade the provisions of Articles 279 and 280 of the Labor Code.

The petitioners were hired as Ơemergency workersơ and assigned as chicken dressers, packers
and helpers at the Cainta Processing Plant. While the petitionersƞ employment as chicken
dressers is necessary and desirable in the usual business of the respondent, they were
employed on a mere temporary basis, since their employment was limited to a fixed period. As
such, they cannot be said to be regular employees, but are merely Ơcontractual employees.ơ
Consequently, there was no illegal dismissal when the petitionersƞ services were terminated by
reason of the expiration of their contracts. Lack of notice of termination is of no consequence,
because when the contract specifies the period of its duration, it terminates on the expiration of
such period. A contract for employment for a definite period terminates by its own term at the
end of such period.

Petition is denied.

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FACTS

In 1992, petitioners entered into contracts of employment with respondent company as mixers,
packers and machine operators for a fixed term. On the expiration of their contracts, their
services were terminated. Forthwith, they each executed a quitclaim. On April 15, 1993,
petitioners filed complaints for illegal dismissal, underpayment of wages, non-payment of
overtime, night differential and 13th month pay, damages and attorneyƞs fees.

The labor arbiter ruled their dismissal to be illegal on the ground that they had become regular
employees who performed duties necessary and desirable in respondent companyƞs business.
The labor arbiter ordered the reinstatement of petitioners with award of backwages, 13th
month pay and service incentive leave pay. The claim for moral and exemplary damages was
denied for failure to establish bad faith on the part of respondents. All other claims were
likewise denied. On appeal, the NLRC set aside the LAƞs decision and ruled that having entered
into their employment contracts freely and voluntarily, they knew that their employment was
only for a fixed period and would end on the prescribed expiration date. Petitionersƞ motion for
reconsideration was denied.
In a petition for certiorari filed by petitioners, the CA set aside the NLRC decision and reinstated
the decision of the labor arbiter. However, on respondentsƞ motion for reconsideration, the CA
reversed itself. The CA reasoned that, while petitioners performed tasks which were necessary
and desirable in the usual business of respondent company, their employment contracts
providing for a fixed term remained valid. No force, duress, intimidation or moral dominance
was exerted on them. Respondents dealt with petitioners in good faith and within the valid
parameters of management prerogatives. Petitionersƞ motion for reconsideration was denied.
Hence, this recourse.

ISSUE

Whether or not petitioners are regular employees of respondent company.

HELD

The SC ruled that where the duties of the employee consist of activities which are necessary or
desirable in the usual business of the employer, the parties are not prohibited from agreeing on
the duration of employment. Article 280 does not proscribe or prohibit an employment contract
with a fixed period provided it is not intended to circumvent the security of tenure.

Two criteria validate a contract of employment with a fixed period: (1) the fixed period of
employment was knowingly and voluntarily agreed upon by the parties without any force,
duress or improper pressure being brought to bear on the employee and without any
circumstances vitiating consent or, (2) it satisfactorily appears that the employer and employee
dealt with each other on more or less equal terms with no moral dominance whatever being
exercised by the former on the latter. Against these criteria, petitionersƞ contracts of
employment with a fixed period were valid.

Each contract provided for an expiration date. Petitioners knew from the beginning that the
employment offered to them was not permanent but only for a certain fixed period. They were
free to accept or to refuse the offer. When they expressed their acceptance, they bound
themselves to the contract.

Simply put, petitioners were not regular employees. While their employment as mixers, packers
and machine operators was necessary and desirable in the usual business of respondent
company, they were employed temporarily only, during periods when there was heightened
demand for production. Consequently, there could have been no illegal dismissal when their
services were terminated on expiration of their contracts. There was even no need for notice of
termination because they knew exactly when their contracts would end. Contracts of
employment for a fixed period terminate on their own at the end of such period.

Contracts of employment for a fixed period are not unlawful. What is objectionable is the
practice of some scrupulous employers who try to circumvent the law protecting workers from
the capricious termination of employment. Employers have the right and prerogative to choose
their workers. ƠThe law, while protecting the rights of the employees, authorizes neither the
oppression nor destruction of the employer. When the law angles the scales of justice in favor
of labor, the scale should never be so tilted if the result is an injustice to the employer.ơ

Petition is denied.
c


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FACTS

Respondent Puente alleged that he worked with petitioner Filsystems, Inc. starting June 1989
initially as an installer, and was later promoted to mobile crane operator at the company
premises He claims that his work was not dependent on the completion or termination of any
project; that since his work was not dependent on any project, his employment with the
company was continuous and without interruption for the past 10 years. On October 1, 1999,
he was dismissed from his employment allegedly because he was a project employee. He filed a
pro forma complaint for illegal dismissal against the company on November 18, 1999.

Petitioner on the other hand alleged that complainant was hired as a project employee in the
companyƞs various projects; that his employment contracts showed that he was a project
worker with specific project assignments; that after completion of each project assignment, his
employment was likewise terminated and the same was correspondingly reported to the DOLE.

ISSUE

Whether or not whether respondent is a project employee.

HELD

The SC held that Art 280 of the labor Code defines project employees as those 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. Particularly, DO
19-1993 states that project employees are those employed in connection with a particular
construction project or phase thereof and whose employment is co-terminous with each project
or phase of the project to which they are assigned.

Either one or more of the following circumstances, among other, may be considered as
indicators that an employee is a project employee: (a) the duration of the specific/identified
undertaking for which the worker is engaged is reasonably determinable; (b) such duration, as
well as the specific work/service to be performed, is defined in an employment agreement and
is made clear to the employee at the time of hiring; (c) the work/service performed by the
employee is in connection with the particular project/undertaking for which he is engaged; (d)
the employee, while not employed and awaiting engagement, is free to offer his services to any
other employer; (e) The termination of his employment in the particular project/undertaking is
reported to the Department of Labor and Employment (DOLE) Regional Office having
jurisdiction over the workplace within 30 days following the date of his separation from work,
using the prescribed form on employeesƞ terminations/dismissals/suspensions; (f) an
undertaking in the employment contract by the employer to pay completion bonus to the
project employee as practiced by most construction companies.

The above-quoted provisions make it clear that a project employee is one whose Ơemployment
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.ơ
The length of service of a project employee is not the controlling test of employment tenure but
whether or not Ɲthe 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.ƞơ

In the present case, the contracts of employment of Puente attest to the fact that he was hired
for specific projects. His employment was coterminous with the completion of the projects for
which he had been hired. Those contracts expressly provided that his tenure of employment
depended on the duration of any phase of the project or on the completion of the construction
projects. Furthermore, petitioners regularly submitted to the labor department reports of the
termination of services of project workers. Such compliance with the reportorial requirement
confirms that respondent was a project employee.

That his employment contract does not mention particular dates that establish the specific
duration of the project does not preclude his classification as a project employee. This fact is
clear from the provisions of Clause 3.3(a) of Department Order No. 19, which states:
a) Project employees whose aggregate period of continuous employment in a construction
company is at least one year shall be considered regular employees, in the absence of a Ơday
certainơ agreed upon by the parties for the termination of their relationship. Project employees
who have become regular shall be entitled to separation pay.

A Ơdayơ as used herein, is understood to be that which must necessarily come, although is may
not be known exactly when. This means that where the final completion of a project or phase
thereof is in fact determinable and the expected completion is made known to the employee,
such project employee may not be considered regular, notwithstanding the one-year duration of
employment in the project or phase thereof or the one-year duration of two or more
employments in the same project or phase of the object.

Evidently, although the employment contract did not state a particular date, it did specify that
the termination of the partiesƞ employment relationship was to be on a Ơday certainơ -- the day
when the phase of work termed ƠLifting & Hauling of Materialsơ for the ƠWorld Finance Plazaơ
project would be completed. Thus, respondent cannot be considered to have been a regular
employee. He was a project employee.
That he was employed with Petitioner Filsystems for ten years in various projects did not ipso
facto make him a regular employee, considering that the definition of regular employment in
Article 280 of the Labor Code makes a specific exception with respect to project employment.
The mere rehiring of respondent on a project-to-project basis did not confer upon him regular
employment status. ƠThe practice was dictated by the practical consideration that experienced
construction workers are more preferred.ơ It did not change his status as a project employee.

Petition is granted.
c


7658
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FACTS

The respondent Esso is a foreign company based in Singapore and engaged in maritime
commerce. It is represented in the Philippines by its manning agent and co-respondent Trans-
Global, a corporation organized under the Philippine laws. Roberto Ravago was hired by Trans-
Global to work as a seaman on board various Esso vessels. On February 13, 1970, Ravago
commenced his duty as S/N wiper on board the Esso Bataan under a contract that lasted until
February 10, 1971. Thereafter, he was assigned to work in different Esso vessels where he was
designated diverse tasks, such as oiler, then assistant engineer. He was employed under a total
of 34 separate and unconnected contracts, each for a fixed period, by three different
companies, namely, Esso Tankers, Inc. (ETI), EEM and Esso International Shipping (Bahamas)
Co., Ltd. (EIS), Singapore Branch. Ravago worked with Esso vessels until August 22, 1992, a
period spanning more than 22 years.

Shortly after completing his latest contract with Esso, Ravago was granted a vacation leave with
pay. Preparatory to his embarkation under a new contract, he was ordered to report for a
Medical Pre-Employment Examination, which, according to the records, he passed. He, likewise,
attended a Pre-Departure Orientation Seminar conducted by the Capt. I.P. Estaniel Training
Center, a division of Trans-Global.

One night, a stray bullet hit Ravago on the left leg while he was waiting for a bus ride in Cubao,
Quezon City. He fractured his left proximal tibia and was hospitalized at the Philippine
Orthopedic Hospital. Ravagoƞs wife, Lolita, informed the petitioners of the incident for purposes
of availing medical benefits. As a result of his injury, Ravagoƞs doctor opined that he would not
be able to cope with the job of a seaman and suggested that he be given a desk job. For this
reason, the company physician found him to have lost his dexterity, making him unfit to work
once again as a seaman. Consequently, instead of rehiring Ravago, Esso paid him his Career
Employment Incentive Plan (CEIP) as of and his final tax refund. However, Ravago filed a
complaint for illegal dismissal with prayer for reinstatement, backwages, damages and
attorneyƞs fees against Trans-Global and Esso with the POEA Adjudication Office.

Respondents denied that Ravago was dismissed without notice and just cause. Rather, his
services were no longer engaged in view of the disability he suffered which rendered him unfit
to work as a seafarer. This fact was further validated by the company doctor and Ravagoƞs
attending physician. They averred that Ravago was a contractual employee and was hired
under 34 separate contracts by different companies.
Ravago insisted that he was fit to resume pre-injury activities and that he was not a mere
contractual employee because the respondents regularly and continuously rehired him for 23
years and, for his continuous service, was awarded a CEIP payment upon his termination from
employment.

ISSUE
Whether or not petitioner Ravago is a regular employee of respondent Esso.

HELD

The SC held that seafarers are contractual, not regular, employees. Seamen and overseas
contract workers are not covered by the term Ơregular employmentơ as defined in Article 280 of
the Labor Code.
Petition is denied.
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FACTS

Petitioners were employed by Esso through its local manning agency, Trans-Global. Both
petitioners individually wrote Esso of their respective intention to avail of the optional
retirement plan under the Consecutive Enlistment Incentive Plan (CEIP). However, their
requests were denied by Esso on the following grounds, to wit: (1) he was employed on a
contractual basis; (2) his contract of enlistment (COE) did not provide for retirement before the
age of sixty (60) years; and (3) he did not comply with the requirement for claiming benefits
under the CEIP, i.e., to submit a written advice to the company of his intention to terminate his
employment within thirty (30) days from his last disembarkation date. Millares filed a leave of
absence, but was later informed that another person was promoted to his position because of
his extended absence without leave. This AWOL was equated by Esso as abandonment of his
position and was he was subsequently dropped from the roster of crew members. The same
this happened to petitioner Lagda.

Petitioners Millares and Lagda then filed a complaint-affidavit for illegal dismissal and non-
payment of employee benefits against private respondents Esso International and Trans-Global,
before the POEA.

ISSUE

Whether or not petitioners are contractual employees whose contractual employments are
terminated every time their contracts of employment expire.

HELD

The SC held that seafarers are not regular employees. They are considered contractual
employees. They cannot be considered as regular employees under article 280 of the Labor
Code. Their employment is governed by the contracts they sign every time they are rehired and
their employment is terminated when the contact expires. Their employment is contractually
fixed for a certain period of time. They fall under the exception of article 280 whose
employment has been fixed for a specific project/undertaking the completion of which has been
determined at the time of engagement of the employee or where the work/services to be
performed is seasonal in nature and the employment is for the duration of the season.
Petition is partly granted.

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FACTS

The 76 individual respondents were part of the workforce of Hacienda Bino consisting of 220
workers, performing various works, such as cultivation, planting of cane points, fertilization,
watering, weeding, harvesting, and loading of harvested sugarcanes to cargo trucks.
On July 18, 1996, during the off-milling season, petitioner Starke issued an Order or Notice
which stated, thus:

To all Hacienda Employees:

Please bear in mind that all those who signed in favor of CARP are expressing their desire to get
out of employment on their own volition.
Wherefore, beginning today, July 18, only those who did not sign for CARP will be given
employment by Hda. Bino.
(Sgd.) Hortencia Starke

The respondents regarded such notice as a termination of their employment. As a consequence,

they filed a complaint for illegal dismissal, wage differentials, 13th month pay, holiday pay and
premium pay for holiday, service incentive leave pay, and moral and exemplary damages with
the NLRC-RAB.

The respondents alleged that they are regular and permanent workers of the hacienda and that
they were dismissed without just and lawful cause. They further alleged that they were
dismissed because they applied as beneficiaries under the Comprehensive Agrarian Reform
Program (CARP) over the land owned by petitioner Starke.

For her part, petitioner Starke recounted that the companyƞs Board of Directors petitioned the
Sangguniang Bayan of Kabankalan for authority to re-classify, from agricultural to industrial,
commercial and residential, the whole of Hacienda Bino, except the portion earmarked for the
CARP. She asserted that half of the workers supported the re-classification but the others,
which included the herein respondents, opted to become beneficiaries of the land under the
CARP. Petitioner Starke alleged that in July 1996, there was little work in the plantation as it
was off-season; and so, on account of the seasonal nature of the work, she issued the order
giving preference to those who supported the re-classification. She pointed out that when the
milling season began in October 1996, the work was plentiful again and she issued notices to all
workers, including the respondents, informing them of the availability of work. However, the
respondents refused to report back to work. With respect to the respondentsƞ money claims,
petitioner Starke submitted payrolls evidencing payment thereof.

ISSUE

Whether or not respondents are seasonal employees.

HELD

The SC held that the primary standard for determining regular employment is the reasonable
connection between the particular activity performed by the employee in Relation to the usual
trade o business of the employer. There is no doubt that the respondents were performing work
necessary and desirable in the usual trade or business of an employer. For respondents to be
excluded from those classified as regular employees, it is not enough that they perform work or
services that are seasonal in nature. They must have been employed only for the duration of
one (1) season. While the records sufficiently show that the respondentsƞ work in the hacienda
was seasonal in nature, there was, however, no proof that they were hired for the duration of
one season. In fact, the payrolls submitted by the petitioners, show that they availed the
services of the respondents since 1991. Absent any proof to the contrary, the general rule of
regular employment should, therefore, stand. It bears stressing that the employer has the
burden of proving the lawfulness of his employeesƞ dismissal.

Petition is denied.
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FACTS

In the course of a labor dispute between the petitioner and respondent union, the union
members were not given work for more than one month. In protest, complainants staged a
strike which was however settled upon the signing of a Memorandum of Agreement. A
conciliation meeting was conducted wherein Luisa Rombo, Ramona Rombo, Bobong Abrega,
and Boboy Silva were not considered by the company as employees, and thus may not be
members of the union. It was also agreed that a number of other employees will be reinstated.
When respondents again reneged on its commitment, complainants filed the present complaint.
It is alleged by the petitioners that the above employees are mere seasonal employees.

ISSUE

Whether or not the seasonal employees have become regular employees.

HELD

The SC held that for respondents to be excluded from those classified as regular employees, it
is not enough that they perform work or services that are seasonal in nature. They must have
also been employed only for the duration of one season. The evidence proves the existence of
the first, but not of the second, condition. The fact that respondents -- with the exception of
Luisa Rombo, Ramona Rombo, Bobong Abriga and Boboy Silva -- repeatedly worked as
sugarcane workers for petitioners for several years is not denied by the latter. Evidently,
petitioners employed respondents for more than one season. Therefore, the general rule of
regular employment is applicable.

The primary standard of determining regular employment is the reasonable connection between
the particular activity performed by the employee in relation to the usual trade or business of
the employer. The test is whether the former is usually necessary or desirable in the usual trade
or business of the employer. The connection can be determined by considering the nature of
the work performed and its relation to the scheme of the particular business or trade in its
entirety. Also if the employee has been performing the job for at least a year, even if the
performance is not continuous and merely intermittent, the law deems repeated and continuing
need for its performance as sufficient evidence of the necessity if not indispensability of that
activity to the business. Hence, the employment is considered regular, but only with respect to
such activity and while such activity exists.

Petition is denied.



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FACTS

Respondent Donelo started teaching on a contractual basis at St. Maryƞs University in 1992. In
1995, he was issued an appointment as an Assistant Professor I. Later on, he was promoted to
Assistant Professor III. He taught until the first semester of school year 1999-2000 when the
school discontinued giving him teaching assignments. For this, respondent filed a complaint for
illegal dismissal against the university.

In its defense, petitioner St. Maryƞs University showed that respondent was merely a part-time
instructor and, except for three semesters, carried a load of less than eighteen units. Petitioner
argued that respondent never attained permanent or regular status for he was not a full-time
teacher. Further, petitioner showed that respondent was under investigation by the university
for giving grades to students who did not attend classes. Petitioner alleged that respondent did
not respond to inquiries relative to the investigation. Instead, respondent filed the instant case
against the university.

ISSUE
Whether or not respondent Donelo is a full time teacher and thus qualified to become a
permanent teacher of petitioner.

HELD

The SC held that section 93 of the 1992 Manual of Regulations for Private Schools, provides
that full-time teachers who have satisfactorily completed their probationary period shall be
considered regular or permanent.[6] Furthermore, the probationary period shall not be more
than six consecutive regular semesters of satisfactory service for those in the tertiary level.
Thus, the following requisites must concur before a private school teacher acquires permanent
status: (1) the teacher is a full-time teacher; (2) the teacher must have rendered three
consecutive years of service; and (3) such service must have been satisfactory.

In the present case, petitioner claims that private respondent lacked the requisite years of
service with the university and also the appropriate quality of his service, i.e., it is less than
satisfactory. The basic question, however, is whether respondent is a full-time teacher.

Section 45 of the same manual provides that full-time academic personnel are those meeting all
the following requirements:
a. Who possess at least the minimum academic qualifications prescribed by the Department
under this Manual for all academic personnel;
b. Who are paid monthly or hourly, based on the regular teaching loads as provided for in the
policies, rules and standards of the Department and the school;
c. Whose total working day of not more than eight hours a day is devoted to the school;
d. Who have no other remunerative occupation elsewhere requiring regular hours of work that
will conflict with the working hours in the school; and
e. Who are not teaching full-time in any other educational institution.

All teaching personnel who do not meet the foregoing qualifications are considered part-time.

A perusal of the various orders of the then Department of Education, Culture and Sports
prescribing teaching loads shows that the regular full-time load of a faculty member is in the
range of 15 units to 24 units a semester or term, depending on the courses taught. Part-time
instructors carry a load of not more than 12 units.

The evidence on record reveals that, except for four non-consecutive terms, respondent
generally carried a load of twelve units or less from 1992 to 1999. There is also no evidence
that he performed other functions for the school when not teaching. These give the impression
that he was merely a part-time teacher. Although this is not conclusive since there are full-time
teachers who are allowed by the university to take fewer load, in this case, respondent did not
show that he belonged to the latter group, even after the university presented his teaching
record. With a teaching load of twelve units or less, he could not claim he worked for the
number of hours daily as prescribed by Section 45 of the Manual. Furthermore, the records
also indubitably show he was employed elsewhere from 1993 to 1996.

Since there is no showing that respondent worked on a full-time basis for at least three years,
he could not have acquired a permanent status. A part-time employee does not attain
permanent status no matter how long he has served the school. And as a part-timer, his
services could be terminated by the school without being held liable for illegal dismissal.
Moreover, the requirement of twin-notice applicable only to regular or permanent employees
could not be invoked by respondent.

Yet, this is not to say that part-time teachers may not have security of tenure. The school
could not lawfully terminate a part-timer before the end of the agreed period without just
cause. But once the period, semester, or term ends, there is no obligation on the part of the
school to renew the contract of employment for the next period, semester, or term.
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FACTS

Private Respondent Michelle Miclat (Miclat) was employed on April 21, 1997 on a probationary
basis as marketing assistant by petitioner Clarion Printing House (CLARION) owned by its co-
petitioner Eulogio Yutingco. At the time of her employment, she was not informed of the
standards that would qualify her as a regular employee.
On September 16, 1997, the EYCO Group of Companies of which CLARION formed part filed
with the SEC a Petition for Suspension of Payments and Rehabilitation. As a result of the
petition, on September 30, 1997, the SEC issued an Order approving the creation of an interim
receiver for the EYCO Group of Companies.
On October 10, 1997, the EYCO Group of Companies issued to its employees a Memorandum
announcing the formal entry of the Receiver Group and the functions thereof. Nothing more
was said in the Memorandum.

On October 22, 1997, CLARION informed Miclat by telephone that her employment contract had
been terminated effective October 23, 1997.

Miclat filed a case for Illegal Dismissal against CLARION and Yutingco before the NLRC.

On January 7, 1998 CLARION issued a Memorandum informing their company managers that
the company had to shut down some operations of the company due to Ơnumerous external
factors such as slowdown in business and consumer demandơ.

Miclatƞs Assertions before the L.A (Labor Arbiter) March, 1998:

1. She was a regular employee since CLARION never informed her of the standards to
qualify as a regular EE.
2. The claims of CLARION regarding their financial status is disputable.
3. Irregardless, assuming that her termination was necessary, it was done in violation of
her right to due process since the requirement for notice was not followed, she being informed
of her termination only a day before it took effect.
4. Miclat claims separation pay, 13th month pay and salaries for October 21, 22 and 23,
1997.
ON the other hand, CLARION claims that:
1. Their financial status, as can be deduced from their state of receivership, justified their
retrenchment. They were only following the ƠLast In, First One Outơ Policy.
2. They sufficiently complied with due process, referring to a July 21, 1997 Memorandum
where notice of the companyƞs state of receivership and an offer for voluntary separation to any
EE who was interested. This Memo, constituted as notice issued more than a month before
Miclatƞs termination on October 23.
The Labor Arbiter decided in favor of Miclat and ordered her reinstatement, backwages and
proportionate 13th month pay.

CLARION appealed to the NLRC emphasizing that the dismissal of Miclat was done in good faith
and in accordance with law thus she did not deserve the award given by the LA. In addition,
CLARION presented their balance sheets from 1997 to 1998 and the fact that they had to shut
down on 1998 as evidence of a reverse in their financial situation.

The NLRC affirmed the LAƞs decision:

There are three (3) valid requisites for valid retrenchment: (1) the retrenchment is necessary to
prevent losses and such losses are proven; (2) written notices to the employees and to the
Department of Labor and Employment at least one (1) month prior to the intended date of
retrenchment; and (3) payment of separation pay equivalent to one (1) month pay or at least
½ month pay for every year of service, whichever is higher.
The two notices are mandatory. If the notice to the workers is later than the notices sent to
DOLE, the date of termination should be at least one month from the date of notice to the
workers.

Also in Lopez Sugar Corporation v. Federation of Free Workers Philippine Labor Union
Association (PLUA-NACUSIP) and National Labor Relations Commission, the Supreme Court had
the occasion to set forth four standards which would justify retrenchment, being, firstly, - the
losses expected should be substantial and not merely de minimis in extent. If the loss
purportedly sought to be forestalled by retrenchment is clearly shown to be insubstantial and
inconsequential in character, the bona fide nature of the retrenchment would appear to be
seriously in question; secondly, - the substantial loss apprehended must be reasonably
imminent, as such imminence can be perceived objectively and in good faith by the employer.
There should, in other words, be a certain degree of urgency for the retrenchment, which is
after all a drastic course with serious consequences for the livelihood of the employees retired
or otherwise laid-off; thirdly, - because of the consequential nature of retrenchment, it must be
reasonably necessary and likely to effectively prevent the expected losses. The employer should
have taken other measures prior or parallel to retrenchment to forestall losses, i.e., cut other
cost than labor costs; and lastly, - the alleged losses if already realized and the expected
imminent losses sought to be forestalled, must be proven by sufficient and convincing evidence.

The NLRC dismissed CLARIONƞs petition due to its failure to present sufficient evidence pointing
to the requirements mentioned regarding a justifiable retrenchment (no sufficient evidence
regarding financial status) and a valid retrenchment (no compliance with two notices or
evidence regarding payment of separation pay, etc.).

Hence, CLARION appealed to the CA, contending in fine that:

1. That the mere fact that CLARION was placed under receivership is evidence that they
were in dire straights.
2. They complied in good faith with the requirements under law regarding dismissal of EEs.

The CA affirmed the NLRCƞs decision in this wise: that once again, CLARION failed to prove the
justifying circumstances for retrenchment and the evidence they presented regarding their
subsequent shut down was inadmissible since those were presented for the first time on appeal
with cause. And likewise notice was unsatisfactory.

CLARION appealed to the SC. It contended in addition that Labor cases were not governed by
the usual rules of procedure and therefore, the evidence presented on appeal should be
admitted.

The SC ruled that CLARIONƞs petition was partly meritorious.

CLARION was right in saying that Labor cases werenƞt governed by the usual Rules of
Procedure hence the evidence should be admitted.
It was also wrong for the lower court not to take judicial notice of the evidences regarding
CLARIONƞs financial problem. ơIn fine, CLARIONƞs claim that at the time it terminated Miclat it
was experiencing business reverses gains more light from the SECƞs disapproval of the EYCO
Group of Companiesƞ petition to be declared in state of suspension of payment, filed before
Miclatƞs termination, and of the SECƞs consequent order for the group of companiesƞ dissolution
and liquidation.ơ

Notwithstanding, the SC found that Miclat was a regular EE. Section 6, Rule I of the
Implementing Rules of Book VI of the Labor Code says that :
SEC. 6. Probationary employment. There is probationary employment where the employee,
upon his engagement, is made to undergo a trial period during which the employer determines
his fitness to qualify for regular employment, based on reasonable standards made known to
him at the time of engagement.
ƠProbationary employment shall be governed by the following rules:
xxx
(d) In all cases of probationary employment, the employer shall make known to the
employee the standards under which he will qualify as a regular employee at the time of his
engagement. Where no standards are made known to the employee at that time, he shall be
deemed a regular employeeơ.

Miclat must therefore be entitled to the privileges of a regular EE which brings us to the
question: Should Miclat be entitled to the privileges of an illegally dismissed regular employee?

The SC said yes since CLARION failed to comply with the requirements for valid dismissal under
Article 283 of the LC to wit:
ART. 283. CLOSURE OF ESTABLISHMENT AND REDUCTION OF PERSONNEL. ƛ 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 worker and the Ministry of Labor and
Employment at least one (1) month before the intended date thereof.

Hence, nominal damages are awarded to Miclat for CLARIONƞs violation of her statutory due
process rights. (see Tort principles)

Additionally, Article 283 of the Labor Code also provides that Ơ[i]n case of retrenchment to
prevent losses, . . . the separation pay shall be equivalent to one (1) month pay or at least one-
half (1/2) month pay for every year of service, whichever is higher. . . , [a] fraction of at least
six (6) months [being] considered one (1) whole year,ơ.

Also, paragraph 6 of the Revised Guidelines on the 13th Month Pay Law provides:
6. 13th Month Pay of Resigned or Separated Employee

An employee x x x whose services were terminated any time before the time for payment of the
13th month pay is entitled to this monetary benefit in proportion to the length of time he
worked during the calendar year up to the time of his resignation or termination from the
service. Thus if he worked only from January up to September his proportionate 13th month
pay shall be equivalent to 1/12 of his total basic salary he earned during that period.

Hence, Miclat was also rewarded separation pay and 13th month pay in addition to nominal
damages.
c


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FACTS

Petitioner is a plumbing contractor. Its business depends on the number and frequency of the
projects it is able to contract with its clients. Private respondent Solon worked for petitioner.
And his employment record shows that he has by petitioner from December 1994 to January
1998 in 10 projects. On February 23, 1998, while private respondent was about to log out from
work, he was informed by the warehouseman that the main office had instructed them to tell
him it was his last day of work as he had been terminated. When private respondent went to
the petitionerƞs office on February 24, 1998 to verify his status, he found out that indeed, he
had been terminated. He went back to petitionerƞs office on February 27, 1998 to sign a
clearance so he could claim his 13th month pay and tax refunds. However, he had second
thoughts and refused to sign the clearance when he read the clearance indicating he had
resigned. On March 6, 1998, he filed a complaint alleging that he was illegally dismissed
without just cause and without due process.

The petitioner asserts that the private respondent was a project employee. Thus, when the
project was completed and private respondent was not re-assigned to another project,
petitioner did not violate any law since it was petitionerƞs discretion to re-assign the private
respondent to other projects.

ISSUE

Whether the respondent is a project employee of the petitioner or a regular employee.

HELD

The SC held that the principal test in determining whether an employee is a Ơproject employeeơ
or Ơregular employee,ơ is, whether he is assigned to carry out a Ơspecific project or
undertaking,ơ the duration (and scope) of which are specified at the time the employee is
engaged in the project. ƠProjectơ refers to a particular job or undertaking that is within the
regular or usual business of the employer, but which is distinct and separate and identifiable
from the undertakings of the company. Such job or undertaking begins and ends at determined
or determinable times.
The SC was convinced he was initially a project employee. The services he rendered, the
duration and scope of each project are clear indications that he was hired as a project
employee.

However, once a project or work pool employee has been: (1) continuously, as opposed to
intermittently, re-hired by the same employer for the same tasks or nature of tasks; and (2)
these tasks are vital, necessary and indispensable to the usual business or trade of the
employer, then the employee must be deemed a regular employee.

The test to determine whether employment is regular or not is the reasonable connection
between the particular activity performed by the employee in relation to the usual business or
trade of the employer. Also, if the employee has been performing the job for at least one year,
even if the performance is not continuous or merely intermittent, the law deems the repeated
and continuing need for its performance as sufficient evidence of the necessity, if not
indispensability of that activity to the business. Thus, we held that where the employment of
project employees is extended long after the supposed project has been finished, the
employees are removed from the scope of project employees and are considered regular
employees.

While length of time may not be the controlling test for project employment, it is vital in
determining if the employee was hired for a specific undertaking or tasked to perform functions
vital, necessary and indispensable to the usual business or trade of the employer. Here, private
respondent had been a project employee several times over. His employment ceased to be
coterminous with specific projects when he was repeatedly re-hired due to the demands of
petitionerƞs business. Where from the circumstances it is apparent that periods have been
imposed to preclude the acquisition of tenurial security by the employee, they should be struck
down as contrary to public policy, morals, good customs or public order.

Further, Policy Instructions No. 20 requires employers to submit a report of an employeeƞs

termination to the nearest public employment office every time his employment was terminated
due to a completion of a project. The failure of the employer to file termination reports is an
indication that the employee is not a project employee. Department Order No. 19 superseding
Policy Instructions No. 20 also expressly provides that the report of termination is one of the
indications of project employment. In the case at bar, there was only one list of terminated
workers submitted to the Department of Labor and Employment. If private respondent was a
project employee, petitioner should have submitted a termination report for every completion of
a project to which the former was assigned.

Juxtaposing private respondentƞs employment history, vis the requirements in the test to
determine if he is a regular worker, we are constrained to say he is.

As a regular worker, private respondent is entitled to security of tenure under Article 279 of the
Labor Code and can only be removed for cause. We found no valid cause attending to private
respondentƞs dismissal and found also that his dismissal was without due process.

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FACTS

The respondents were hired by the petitioner company on various dates from 1991 to 1993 to
work at its duck farm. The respondents were hired under an employment contract which
provided for a five-month period. After the expiration of the said employment contracts, the
petitioner company would renew them and re-employ the respondents. This practice continued
until sometime in 1996, when the petitioners informed the respondents that they were no
longer renewing their employment contracts. The respondents, then, filed separate complaints
for illegal dismissal, reinstatement, backwages, damages and attorneyƞs fees against the
petitioners.

The petitioners submit that the respondents are not regular employees. They aver that it is of
no moment that the respondents have rendered service for more than a year since they were
covered by the five-month individual contracts to which they duly acquiesced. The petitioners
contend that they were free to terminate the services of the respondents at the expiration of
their individual contracts. The petitioners maintain that, in doing so, they merely implemented
the terms of the contracts.

The petitioners further assert that the respondentsƞ contracts of employment were not intended
to circumvent security of tenure. They point out that the respondents knowingly and voluntarily
agreed to sign the contracts without the petitioners having exercised any undue advantage over
them. Moreover, there is no evidence showing that the petitioners exerted moral dominance on
the respondents.

ISSUE

Whether or not respondents are regular employees of petitioner corporation.

HELD

The SC held that the CA, the NLRC and the Labor Arbiter correctly categorized the respondents
as regular employees of the petitioner company. The primary standard of determining regular
employment is the reasonable connection between the particular activity performed by the
employee in relation to the usual trade or business of the employer. The test is whether the
former is usually necessary or desirable in the usual business or trade of the employer. The
connection can be determined by considering the nature of work performed and its relation to
the scheme of the particular business or trade in its entirety. Also, if the employee has been
performing the job for at least a year, even if the performance is not continuous and merely
intermittent, the law deems repeated and continuing need for its performance as sufficient
evidence of the necessity if not indispensability of that activity to the business. Hence, the
employment is considered regular, but only with respect to such activity and while such activity
exists.

It is obvious that the said five-month contract of employment was used by petitioners as a
convenient subterfuge to prevent private respondents from becoming regular employees. Such
contractual arrangement should be struck down or disregarded as contrary to public policy or
morals. To uphold the same would, in effect, permit petitioners to avoid hiring permanent or
regular employees by simply hiring them on a temporary or casual basis, thereby violating the
employeesƞ security of tenure in their jobs. Petitionersƞ act of repeatedly and continuously hiring
private respondents in a span of 3 to 5 years to do the same kind of work negates their
contention that private respondents were hired for a specific project or undertaking only.

Petition is denied.

c


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FACTS

Respondent Ateneo hired, on a contractual basis, petitioner Lolita R. Lacuesta as a part-time

lecturer in its English Department for the second semester of school year 1988-1989 and was
later re-hired still on a contractual basis, for the first and second semesters of school year 1989-
1990. On July 13, 1990, the petitioner was first appointed as full-time instructor on probation,
in the same department effective June 1, 1990 until March 31, 1991. Thereafter, her contract
as faculty on probation was renewed effective April 1, 1991 until March 31, 1992. She was
again hired for a third year effective April 1, 1992 until March 31, 1993. During these three
years she was on probation status.

In January 27, 1993, respondent Garcia, notified petitioner that her contract would no longer be
renewed because she did not integrate well with the English Department. Petitioner then
appealed to the President of the Ateneo at the time, Fr. Joaquin Bernas, S.J. Fr. Bernas
explained to petitioner that she was not being terminated, but her contract would simply expire.
He also stated that the university president makes a permanent appointment only upon
recommendation of the Dean and confirmation of the Committee on Faculty Rank and
Permanent Appointment. He added that any appointment he might extend would be
tantamount to a midnight appointment.
He later offered petitioner the job as book editor in the University Press under terms
comparable to that of a faculty member. After accepting the offer of Fr. Bernas, petitioner
applied for clearane to collect her final pay as instructor. She was also made to sign a Quitclaim,
Discharge and Release.

Petitioner worked as editor in the University Press from April 1, 1993 to March 31, 1994
including an extension of two months after her contract expired. Upon expiry of her contract,
petitioner applied for clearance to collect her final salary as editor. Later, she agreed to extend
her contract from June 16, 1994 to October 31, 1994. Petitioner decided not to have her
contract renewed due to a severe back problem. She did not report back to work, but she
submitted her clearance on February 20, 1995.

On December 23, 1996, petitioner filed a complaint for illegal dismissal with prayer for
reinstatement, back wages, and moral and exemplary damages.

Petitioner contends that Articles 280 and 281 of the Labor Code, not the Manual of Regulations
for Private Schools, is the applicable law to determine whether or not an employee in an
educational institution has acquired regular or permanent status. She argues that (1) under
Article 281, probationary employment shall not exceed six (6) months from date of employment
unless a longer period had been stipulated by an apprenticeship agreement; (2) under Article
280, if the apprenticeship agreement stipulates a period longer than one year and the employee
rendered at least one year of service, whether continuous or broken, the employee shall be
considered as regular employee with respect to the activity in which he is employed while such
activity exists; and (3) it is with more reason that petitioner be made regular since she had
rendered services as part-time and full-time English teacher for four and a half years, services
which are necessary and desirable to the usual business of Ateneo.

Respondents, for their part, contend that the Manual of Regulations for Private Schools is
controlling. In the Manual, full-time teachers who have rendered three consecutive years of
satisfactory service shall be considered permanent. Respondents also claim that the petitioner
was not terminated but her employment contract expired at the end of the probationary period.
Further, institutions of higher learning, such as respondent Ateneo, enjoy the freedom to
choose who may teach according to its standards. Respondents also argue that the quitclaim,
discharge and release by petitioner is binding and should bar her complaint for illegal dismissal.

ISSUE

Whether or not petitioner has already become a regular employee (faculty) of respondent
Ateneo.

HELD
The SC held that the Manual of Regulations for Private Schools, and not the Labor Code,
determines whether or not a faculty member in an educational institution has attained regular
or permanent status. Under Policy Instructions No. 11 issued by the Department of Labor and
Employment, Ơthe probationary employment of professors, instructors and teachers shall be
subject to the standards established by the Department of Education and Culture.ơ Said
standards are embodied in paragraph 75[11] (now Section 93) of the Manual of Regulations for
Private Schools.

Section 93 of the 1992 Manual of Regulations for Private Schools provides that full-time
teachers who have satisfactorily completed their probationary period shall be considered regular
or permanent. Moreover, for those teaching in the tertiary level, the probationary period shall
not be more than six consecutive regular semesters of satisfactory service. The requisites to
acquire permanent employment, or security of tenure, are (1) the teacher is a full-time teacher;
(2) the teacher must have rendered three consecutive years of service; and (3) such service
must have been satisfactory.

Only when one has served as a full-time teacher can he acquire permanent or regular status.
The petitioner was a part-time lecturer before she was appointed as a full-time instructor on
probation. As a part-time lecturer, her employment as such had ended when her contract
expired. Thus, the three semesters she served as part-time lecturer could not be credited to
her in computing the number of years she has served to qualify her for permanent status.

Completing the probation period does not automatically qualify petitioner to become a
permanent employee of the university. Petitioner could only qualify to become a permanent
employee upon fulfilling the reasonable standards for permanent employment as faculty
member. Consistent with academic freedom and constitutional autonomy, an institution of
higher learning has the prerogative to provide standards for its teachers and determine whether
these standards have been met. At the end of the probation period, the decision to re-hire an
employee on probation, belongs to the university as the employer alone.

We reiterate, however, that probationary employees enjoy security of tenure, but only
within the period of probation. Likewise, an employee on probation can only be dismissed for
just cause or when he fails to qualify as a regular employee in accordance with the reasonable
standards made known by the employer at the time of his hiring. Upon expiration of their
contract of employment, academic personnel on probation cannot automatically claim security
of tenure and compel their employers to renew their employment contracts. In the instant
case, petitioner, did not attain permanent status and was not illegally dismissed.

Petition is denied.
c


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FACTS

Private respondent was employed by Poseidon Fishing in January 1988 as Chief Mate. After five
years, he was promoted to Boat Captain. In 1999, petitioners, without reason, demoted
respondent from Boat Captain to Radio Operator of petitioner Poseidon. As a Radio Operator,
he monitored the daily activities in their office and recorded in the duty logbook the names of
the callers and time of their calls.

On 3 July 2000, private respondent failed to record a 7:25 a.m. call in one of the logbooks.
However, he was able to record the same in the other logbook. Consequently, when he
reviewed the two logbooks, he noticed that he was not able to record the said call in one of the
logbooks so he immediately recorded the 7:25 a.m. call after the 7:30 a.m. entry. Around 9:00
oƞclock in the morning of 4 July 2000, petitioner Jesus, the manager, detected the error in the
entry in the logbook. Subsequently, she asked private respondent to prepare an incident report
to explain the reason for the said oversight.

At around 2:00 oƞclock in the afternoon of that same day, petitioner Poseidonƞs secretary,
summoned private respondent to get his separation pay amounting to Fifty-Five Thousand
Pesos (P55,000.00). However, he refused to accept the amount as he believed that he did
nothing illegal to warrant his immediate discharge from work.

Private respondent then filed a complaint for illegal dismissal with the Labor Arbiter. He averred
that petitioner Poseidon employed him as a Chief Mate sometime in January 1988. He claimed
that he was promoted to the position of Boat Captain five years after. However, in 1999, he was
demoted from Boat Captain to Radio Operator without any reason and shortly, he was
terminated without just cause and without due process of law.

Conversely, petitioners Poseidon and Terry de Jesus strongly asserted that private respondent
was a contractual or a casual employee whose services could be terminated at the end of the
contract even without a just or authorized cause in view of Article 280 of the Labor Code.
Petitioners further posited that when the private respondent was engaged, it was made clear to
him that he was being employed only on a Ơpor viajeơ or per trip basis and that his employment
would be terminated at the end of the trip for which he was being hired. As such, the private
respondent could not be entitled to separation pay and other monetary claims.

ISSUE

Whether or not respondent Estoquia is a regular employee of petitioner.

HELD

The SC held that the ruling in the Brent case could not apply in the case at bar. The acid test in
considering fixed-term contracts as valid is: if from the circumstances it is apparent that periods
have been imposed to preclude acquisition of tenurial security by the employee, they should be
disregarded for being contrary to public policy. The SC will not hesitate to nullify employment
contracts stipulating a fixed term after finding that the purpose behind these contracts was to
evade the application of the labor laws, since this is contrary to public policy.
Moreover, unlike in the Brent case where the period of the contract was fixed and clearly
stated, note that in the case at bar, the terms of employment of private respondent as provided
in the Kasunduan was not only vague, it also failed to provide an actual or specific date or
period for the contract. There is nothing in the contract that says complainant, who happened
to be the captain of said vessel, is a casual, seasonal or a project worker. The date July 1 to 31,
1998 under the heading ƠPagdatingơ had been placed there merely to indicate the possible date
of arrival of the vessel and is not an indication of the status of employment of the crew of the
vessel.

Furthermore, as petitioners themselves admitted in their petition before this Court, private
respondent was repeatedly hired as part of the boatƞs crew and he acted in various capacities
onboard the vessel. The test to determine whether employment is regular or not is the
reasonable connection between the particular activity performed by the employee in relation to
the usual business or trade of the employer. And, if the employee has been performing the job
for at least one year, even if the performance is not continuous or merely intermittent, the law
deems the repeated and continuing need for its performance as sufficient evidence of the
necessity, if not indispensability of that activity to the business. Ostensibly, in the case at bar, at
different times, private respondent occupied the position of Chief Mate, Boat Captain, and Radio
Operator. The act of hiring and re-hiring in various capacities is a mere gambit employed by
petitioner to thwart the tenurial protection of private respondent. Such pattern of re-hiring and
the recurring need for his services are testament to the necessity and indispensability of such
services to petitionersƞ business or trade.

Even if petitionersƞ contention that its industry is seasonal in nature, once a project or work pool
employee has been: (1) continuously, as opposed to intermittently, re-hired by the same
employer for the same tasks or nature of tasks; and (2) these tasks are vital, necessary and
indispensable to the usual business or trade of the employer, then the employee must be
deemed a regular employee.

In fine, inasmuch as private respondentƞs functions as described above are no doubt Ơusually
necessary or desirable in the usual business or tradeơ of petitioner fishing company and he was
hired continuously for 12 years for the same nature of tasks, we are constrained to say that he
belongs to the ilk of regular employee. Being one, private respondentƞs dismissal without valid
cause was illegal.

Petition is denied.


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FACTS
Petitioner company was engaged in a construction business where respondents were hired on
different dates from 1976 to 1992 either as laborers, road roller operators, painters or drivers.

In 1997, respondents filed two separate complaints for illegal dismissal against the company
and its General Manager, Oscar Banzon, before the Labor Arbiter. Petitioners allegedly
dismissed them without a valid reason and without due process of law. The complaints also
included claims for non-payment of the 13th month pay, five daysƞ service incentive leave pay,
premium pay for holidays and rest days, and moral and exemplary damages. The LA later on
ordered the consolidation of the two complaints.

Petitioners denied liability to respondents and countered that respondents were Ơproject
employeesơ since their services were necessary only when the company had projects to be
completed. Petitioners argued that, being project employees, respondentsƞ employment was
coterminous with the project to which they were assigned. They were not regular employees
who enjoyed security of tenure and entitlement to separation pay upon termination from work.

ISSUE

Whether respondents were project employees or regular employees.

HELD

The SC held that respondents were regular employees. The principal test for determining
whether employees are Ơproject employeesơ or Ơregular employeesơ is whether they are
assigned to carry out a specific project or undertaking, the duration and scope of which are
specified at the time they are engaged for that project. Such duration, as well as the particular
work/service to be performed, is defined in an employment agreement and is made clear to the
employees at the time of hiring.

In this case, petitioners did not have that kind of agreement with respondents. Neither did they
inform respondents of the nature of the latterƞs work at the time of hiring. Hence, for failure of
petitioners to substantiate their claim that respondents were project employees, we are
constrained to declare them as regular employees.

Petition is denied.
c


8

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FACTS:

May 1990 ƛ ARCEO applied for the position of telephone operator with PLDT. She, however,
failed the pre-employment qualifying examination. Having failed the test, ARCEO requested
PLDT to allow her to work at the latterƞs office even without pay. PLDT agreed and assigned her
to its commercial section where she was made to perform various tasks like photocopying
documents, sorting out telephone bills and notices of disconnection, and other minor
assignments and activities. After two weeks, PLDT decided to pay her the minimum wage.
February 15, 1991 ƛ PLDT saw no further need for ARCEO's services and decided to fire her
but, through the intervention of PLDTƞs commercial section supervisor, she was recommended
for an on-the-job training on minor traffic work. When she failed to assimilate traffic
procedures, the company transferred her to auxiliary services, a minor facility.
Subsequently, ARCEO took the pre-qualifying exams for the position of telephone operator two
more times but again failed in both attempts.
October 30, 1991 ƛ PLDT discharged ARCEO from employment. She then filed a case for illegal
dismissal before the labor arbiter. On May 11, 1993, the arbiter ruled in her favor. PLDT was
ordered to reinstate ARCEO to her Ơformer position or to an equivalent position.ơ
June 9, 1993 ƛ ARCEO was reinstated as casual employee with a minimum wage of P106 per
day. She was assigned to photocopy documents and sort out telephone bills.

CAUSE OF ACTION:
September 3, 1996 (more than three years after her reinstatement) ƛ ARCEO filed a complaint
for unfair labor practice, underpayment of salary, underpayment of overtime pay, holiday pay,
rest day pay and other monetary claims. She alleged in her complaint that, since her
reinstatement, she had yet to be regularized and had yet to receive the benefits due to a
regular employee.

DECISION of the labor arbiter, NLRC, CA:

August 18, 1997 ƛ The labor arbiter ruled that ARCEO was already qualified to become a
regular employee. He also found that PLDT denied her all the benefits and privileges of a
regular employee.
November 28, 1997 ƛ The NLRC affirmed the decision of the labor arbiter finding ARCEO eligible
to become a regular employee.
June 29, 2001 ƛ The CA affirmed the decision of the NLRC.

ISSUE:

Does the proviso in Art. 280 of the Labor Code which Ơregularizesơ a casual employee who has
rendered at least one year of service subject to the condition that the employment subsists or
the position still exists?

HELD

Reinstatement to an Ơequivalent positionơ ƛ PLDTƞs argument that respondentƞs position has

been abolished, if indeed true, does not preclude ARCEOƞs becoming a regular employee. The
order to reinstate her also included the alternative to reinstate her to Ơa position equivalent
thereto.ơ Thus, PLDT can still Ơregularizeơ her in an equivalent position.

PLDT failed to show position Ơno longer subsistsơ ƛ Moreover, PLDTƞs argument does not hold
water in the absence of proof that the activity in which ARCEO was engaged (like photocopying
of documents and sorting of telephone bills) no longer subsists. Under Art. 280, any employee
who has rendered at least one year of service Ơshall be considered a regular employee with
respect to the activity in which he is employed and his employment shall continue while such
activity exists.ơ For PLDTƞs failure to show that the activity undertaken by ARCEO has been
discontinued, we are constrained to confirm her Ơregularizationơ in that position.

Date of regularization (when entitled to benefits) ƛ Considering that she has already worked in
PLDT for more than one year at the time she was reinstated, she should be entitled to all the
benefits of a regular employee from June 9, 1993 the day of her actual reinstatement.

c


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FACTS
Respondent Cebu Metal is a corporation engaged in buying and selling of scrap iron. In the
Bacolod Branch, it has three regular (3) employees holding such positions as Officer-in-Charge,
a scaler and a yardman, whose salaries are paid directly by its main office in Cebu while others
are undertaking pakiao work in the unloading of scrap iron for stockpiling. Among those
workers who presented for work in the unloading of scrap iron in the area are the unemployed
persons or trisicad drivers standing by in the vicinity some of whom are the herein. llera, Eliseo
Torralba or any other persons who wanted to augment their income aside from their regular
jobs. They were hired around 1995-1996.

As compensation for their services, these workers including the herein complainants are paid at
the rate of P15.00 per ton for which each person can unload at least two (2) to three (3) tons
per hour or can earn at least P240.00 to P360.00 in eight (8) hours if work is only available
which payment necessarily includes cost of living allowance (COLA) and 13th-month pay.

On 10 January 1997, respondent complainants filed a Complaint before the Regional for
underpayment of wages and non-payment of the following benefits: 1) 13th month pay; 2)
holiday pay; and 3) service incentive leave pay.
On 6 March 1998, respondent complainants manifested that they were including in their
complaint against petitioner company, the claim for illegal dismissal. Such belated filing was
alleged to have been due to the fact that they were only dismissed after the filing of their
complaint.

The Labor Arbiter ruled that respondents were illegally dismissed and ordered petitioner to
reinstate them plus backwages. On appeal, the NLRC reversed the decision of the LA. The
NLRC rationalized that with the irregular nature of the work involved, the stoppage and
resumption of which depended solely on the availability or supply of scrap metal, it necessarily
follows that after the job of unloading was completed and Ơunloadersơ were paid the contract
price, the latterƞs working relationship with petitioner company legally ended. They were then
free to offer their services to others. The CA, on the other hand, reversed the NLRCƞs decision.
Hence, this petition.

ISSUE

Whether or not respondents are regular employees of petitioner company.

HELD

The SC held that the respondents were not regular employees of petitioner as held by the
NLRC.

The petty cash vouchers show that complainants are not paid on hourly or daily basis but on
Ơpakiaoơ or task basis at P15.00 per metric ton. There is no basis then for complainants to claim
that they are underpaid since there is no minimum wage in this type of work. Complainantsƞ
earnings depend upon their own diligence and speed in unloading and stockpiling scrap iron.
More importantly, it depends upon the availability of scrap iron to be unloaded and stockpiled.ơ

The above findings validate respondentƞs position as to the nature of complainantsƞ work. Their
services are needed only when scrap metals are delivered which occurs only one or twice a
week or sometimes no delivery at all in a given week. The irregular nature of work, stoppage of
work and then work again depending on the supply of scrap metal has not been denied by
complainants. Indeed, it would be unjust to require respondent to maintain complainants in the
payroll even if there is no more work to be done. To do so would make complainants privileged
retainers who collect payment from their employer for work not done. This is extremely unfair
and amount to cuddling of labor at the expense of management.

It should be remembered that The Philippine Constitution, while inexorably committed towards
the protection of the working class from exploitation and unfair treatment, nevertheless
mandates the policy of social justice so as to strike a balance between an avowed predilection
for labor, on the one hand, and the maintenance of the legal rights of capital, the proverbial
hen that lays the golden egg, on the other. Indeed, we should not be unmindful of the legal
norm that justice is in every case for the deserving, to be dispensed with in the light of
established facts, the applicable law, and existing jurisprudence.

Under the circumstances abovestated, there can be no illegal dismissal to speak of. Besides,
complainants cannot claim regularity in the hiring every time a truck comes loaded with scrap
metal. This is confirmed in the Petty cash Vouchers which are in the names of different leaders
who apportion the amount earned among his members. And, quite telling is the fact that not
every truck delivery of scrap metal requires the services of respondent complainants when a
particular truck is accompanied by its own Ơunloader.ơ And whenever required, respondent
complainants were not always the ones contracted to undertake the unloading of the trucks
since the work was offered to whomever were available at a given time.

Petition is granted.

c


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FACTS

After working as a carpenter for respondent since August 1991, petitionerƞs employment was
terminated on 30 October 1999. This prompted petitioner to file a complaint for illegal
dismissal, alleging that on said date he was verbally informed that he was already terminated
from employment and barred from entering the premises. On the same occasion, he was told
to look for another job. Thus, he claimed that he was unceremoniously terminated from
employment without any valid or authorized cause. On the other hand, respondent insisted
that petitioner was a mere project employee who was terminated upon completion of the
project for which he was hired.

Petitioner claims he is a regular employee since he worked for respondent continuously and
without interruption from 13 August 1991 up to 30 October 1999 and that his work as a
carpenter was necessary and desirable to the latterƞs usual business of shipbuilding and repair.
He asserts that when he was hired by respondent in 1991, there was no employment contract
fixing a definite period or duration of his engagement, and save for the contract covering the
period 20 September 1999 to 19 March 2000, respondent had been unable to show the other
project employment contracts ever since petitioner started working for the company.
Furthermore, respondent failed to file as many termination reports as there are completed
projects involving petitioner, he adds.

On the other hand, respondent insists that petitioner is a project employee as evidenced by the
project employment contracts it signed with him and employee termination reports it submitted
to the DOLE.

ISSUE

Whether or not petitioner is a project employee of respondent company.

HELD

The SC held that 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." Before an employee hired on a
per project basis can be dismissed, a report must be made to the nearest employment office of
the termination of the services of the workers every time it completed a project, pursuant to
Policy Instruction No. 20.

While the appropriate evidence to show that a person is a project employee is the employment
contract specifying the project and the duration of such project, the existence of such contract
is not always conclusive of the nature of oneƞs employment. In the instant case, respondent
seeks to prove the status of petitionerƞs employment through four (4) employment contracts
covering a period of only two (2) years to declare petitioner as a project employee.

All that respondent submitted were four (4) contracts covering the periods 29 July 1997 to 28
January 1998, 24 August 1998 to 25 February 1999, 3 March 1999 to 2 September 1999, and
20 September 1999 to 19 March 2000, as well as the employment termination reports for
January 1998, August 1998, February 1999 and October 1999. Respondent failed to present the
contracts purportedly covering petitionerƞs employment from 1991 to July 1997, spanning six
(6) years of the total eight (8) years of his employment. To explain its failure in this regard,
respondent claims that the records and contracts covering said period were destroyed by rains
and flashfloods that hit the companyƞs office. We are not convinced.

To begin with, respondent has been unable to refute petitionerƞs allegation that he did not sign
any contract when he started working for the company. The four employment contracts are
not sufficient to reach the conclusion that petitioner was, and has been, a project employee
earlier since 1991. The Court is not satisfied with the explanation that the other employment
contracts were destroyed by floods and rains. Respondent could have used other evidence to
prove project employment, but it did not do so, seemingly content with the convenient excuse
of Ơdestroyed documents.ơ

Even assuming that petitioner is a project employee, respondent failed to prove that his
termination was for a just and valid cause. While it is true that the employment contract states
that the contract ends upon a specific date, or upon completion of the project, respondent
failed to prove that the last project was indeed completed so as to justify petitionerƞs
termination from employment.

In termination cases, the burden of proof rests on the employer to show that the dismissal is
for a just cause. Thus, employers who hire project employees are mandated to state and,
once its veracity is challenged, to prove the actual basis for the latterƞs dismissal. Respondent
could have easily proved that the project or phase for which petitioner was hired has already
been completed. A certificate from the owner of the vessel serviced by the company, pictures
perhaps, of the work accomplished, and other proof of completion could have been procured by
respondent. However, all that we have is respondentƞs self-serving assertion that the project
has been completed.

This Court has held that an employment ceases to be co-terminous with specific projects when
the employee is continuously rehired due to the demands of employerƞs business and re-
engaged for many more projects without interruption. Once a project or work pool employee
has been: (1) continuously, as opposed to intermittently, rehired by the same employer for the
same tasks or nature of tasks; and (2) these tasks are vital, necessary and indispensable to the
usual business or trade of the employer, then the employee must be deemed a regular
employee, pursuant to Article 280 of the Labor Code and jurisprudence.

Surely, length of time is not the controlling test for project employment. Nevertheless, it is
vital in determining if the employee was hired for a specific undertaking or tasked to perform
functions vital, necessary and indispensable to the usual business or trade of the employer.[
Here, respondent had been a project employee several times over. His employment ceased to
be coterminous with specific projects when he was repeatedly re-hired due to the demands of
petitionerƞs business. Where from the circumstances it is apparent that periods have been
imposed to preclude the acquisition of tenurial security by the employee, they should be struck
down as contrary to public policy, morals, good customs or public order.

All considered, there are serious doubts in the evidence on record that petitioner is a project
employee, or that he was terminated for just cause. These doubts shall be resolved in favor of
petitioner, in line with the policy of the law to afford protection to labor and construe doubts in
favor of labor.

It is well-settled that the employer must affirmatively show rationally adequate evidence that
the dismissal was for a justifiable cause. When there is no showing of a clear, valid and legal
cause for the termination of employment, the law considers the matter a case of illegal
dismissal and the burden is on the employer to prove that the termination was for a valid or
authorized cause. For failure to prove otherwise, the Court has no recourse but to grant the
petition.

Petition is granted.
c


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FACTS

In November 1992, respondent Mayflor T. Ylagan was hired as an accounting clerk in the Cost
Accounting Department (CAD) of petitioner PLDT. In January 1994, she was transferred to the
Revenue Auditing Department. Later, on July 3, 1995, she was brought back to the CAD to
perform the same accounting duties. Respondent claims that in May 1996, PLDT refused to
renew her employment unless she signed up with an employment agency known as Corporate
Executive Search, Inc. (CESI). She was allegedly constrained to sign an employment contract
with the agency in order to keep her job with PLDT. But on February 5, 1997, PLDT allegedly
refused to allow her to report for work since her employment contract with CESI had already
expired.

PLDT, however, maintains that respondent was hired as a project employee assigned to the
Employment Payroll System Project from the onset of her employment. The project allegedly
started on September 21, 1992. It was discontinued in March 1997 when a new system was
developed to replace it. PLDT asserts that respondentƞs project employment was covered by
contracts for the period of July 3, 1995 to October 2, 1995 and October 3, 1995 to January 2,
1996. Hence, respondent was not dismissed from her work; her employment contract merely
expired as of January 2, 1996. PLDT, however, did not explain why respondent had to sign up
with CESI in May 1996. Claiming that her regular employment was terminated without cause,
respondent filed a complaint for illegal dismissal.

ISSUE

Whether or not respondent is a project employee.

HELD

The SC held that project employee is assigned to carry out a specific project or undertaking the
duration and scope of which are specified at the time the employee is engaged in the project.
A project is a job or undertaking which is distinct, separate and identifiable from the
undertakings of the company. A project employee is assigned to a project which begins and
ends at determined or determinable times.

Various indicators convince us that respondent was not a project employee but a regular
employee who was illegally dismissed.

First, respondent worked continuously for PLDT from November 1992 to July 1995 without any
mention of a Ơprojectơ to which she was specifically assigned. She was hired to perform
accounting duties which were not shown as distinct, separate and identifiable from the usual
undertakings of the company. Although essentially a telephone company, PLDT maintains its
own accounting department to which respondent was assigned.

Second, aside from its statement that respondent was hired as a project employee for the
Employment Payroll System Project which began in 1992, PLDT did not provide evidence of the
project employment contracts covering the period from November 1992 (when respondent was
hired) to July 1995. PLDT mentioned only two contracts but these pertained to her
employment period from July 1995 to January 1996.
 Third, despite the supposed expiration of respondentƞs project employment contract on January
2, 1996, respondent continued to work for PLDT until May 2, 1996 when respondent was
required to sign up with CESI.[12] Respondent worked for PLDT, under contract with CESI,
until February 3, 1997. PLDT explained that it no longer allowed respondent to report for work
by then since the project was already done. But the project was only completed in March
1997.

Most important of all, based on the records, PLDT did not report the termination of
respondentƞs supposed project employment to the Department of Labor and Employment as
project employee. Department Order No. 19 (as well as the old Policy Instructions No. 20)
required employers to submit a report of an employeeƞs termination to the nearest public
employment office every time his employment was terminated due to a completion of a
project.[13] PLDTƞs failure to file termination reports was an indication that the respondent was
not a project employee but a regular employee.

The test to determine whether employment is regular or not is the reasonable connection
between the particular activity performed by the employee in relation to the usual business or
trade of the employer. Also, if the employee has been performing the job for at least one year,
even if the performance is not continuous or merely intermittent, the law deems the repeated
and continuing need for its performance as sufficient evidence of the necessity, if not
indispensability of that activity to the business. Thus, we held that where the employment of
project employees is extended long after the supposed project has been finished, the
employees are removed from the scope of project employees and are considered regular
employees. While length of time may not be the controlling test for project employment, it is
crucial in determining if the employee is hired for a specific undertaking to perform functions
vital, necessary and indispensable to the usual business of the company.

Even assuming that respondent was hired as a project employee from the onset, we have ruled
that Ơonce such an employee has been: (1) continuously, as opposed to intermittently, re-hired
by the same employer for the same tasks or nature of tasks and (2) these tasks are vital,
necessary and indispensable to the usual business or trade of the employer, then the employee
must be deemed a regular employee. From the foregoing, the duration (of at least one year)
and necessity of respondentƞs employment have been established. She was therefore a regular
employee of PLDT. As such, respondent was entitled to all the privileges and benefits attached
to that status.

Petition is denied.


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FACTS

Petitioners were hired by respondent San Miguel Corporation (SMC) as ƠRelief Salesmenơ for the
Greater Manila Area (GMA) under separate but almost similarly worded ƠContracts of
Employment with Fixed Period.ơ After having entered into successive contracts of the same
nature with SMC, the services of petitioners were terminated after SMC no longer agreed to
forge another contract with them.

Respondent SMC claimed that the hiring of petitioners was not intended to be permanent, as
the same was merely occasioned by the need to fill in a vacuum arising from SMCƞs gradual
transition to a new system of selling and delivering its products. Respondents explained that
SMC previously operated under the ƠRoute System,ơ but began implementing in 1993 the ƠPre-
Selling Systemơ in which the salesmen under the earlier system would be replaced by Accounts
Specialists which called for upgraded qualifications. While some of the qualified regular
salesmen were readily upgraded to the position of Accounts Specialist, respondents claimed
that SMC still had to sell its beer products using the conventional routing system during the
transition stage, thus giving rise to the need for temporary employees; and the members of
the regular Route Crew then existing were required to undergo a training program to
determine whether they possessed or could be trained for the necessary attitude and aptitude
required of an Accounts Specialist, hence, the hiring of petitioners and others for a fixed period,
co-terminus with the completion of the transition period and Training Program for all
prospective Accounts Specialists.

Claiming that they were illegally dismissed, petitioners filed complaints for illegal dismissal
against respondents.

ISSUE

Whether or not petitioners were validly hired for a fixed period.

HELD

The SC held that under article 280 of the Labor Code, there are two kinds of regular employees,
namely: (1) those who are engaged to perform activities which are necessary or desirable in the
usual business or trade of the employer, and (2) those casual employees who have rendered at
least one year of service, whether continuous or broken, with respect to the activity in which
they are employed. Article 280 also recognizes project employees, those whose Ơemployment
has been fixed for a specific project or undertaking.ơ

Project employment is distinct from casual employment referred to in the second paragraph of
Article 280 for the proviso that Ơany employee who has rendered at least one year of service . .
. shall be considered a regular employeeơ does not apply to project employees, but only to
casual employees. Although Article 280 does not expressly recognize employment for a fixed
period, which is distinct from employment which has been fixed for a specific project or
undertaking, it has been clarified that employment for a fixed period is not in itself illegal. Even
if the duties of an employee consist of activities usually necessary or desirable in the usual
business of the employer, it does not necessarily follow that the parties are forbidden from
agreeing on a period of time for the performance of such activities through a contract of
employment for a fixed term.

Unfortunately, respondentsƞ contention that there are fixed periods stated in the contracts of
employment does not lie. Brent instructs that a contract of employment stipulating a fixed-
term, even if clear as regards the existence of a period, is invalid if it can be shown that the
same was executed with the intention of circumventing security of tenure, and should thus be
ignored.

Indeed, substantial evidence exists in the present case showing that the subject contracts were
utilized to deprive petitioners of their security of tenure.The contract of employment of
petitioner Fabela, for instance, states that the transition period from the Route System to the
Pre-Selling System would be twelve (12) months from April 4, 1995. It bears noting, however,
that petitioner Fabela, besides being hired again for another fixed period of four (4) months
after the lapse in April 1996 of the one-year contract, had already been working for respondent
SMC on a fixed-term basis as early as 1992, or one year before respondent SMC even began its
shift to the Pre-selling System in 1993.

Thus, there is sufficient basis to believe that the shift of SMC to the Pre-Selling System was not
the real basis for the forging of fixed-term contracts of employment with petitioners and that
the periods were fixed only as a means to preclude petitioners from acquiring security of
tenure.

A fixed-term employment is valid only under certain circumstances, such as when the employee
himself insists upon the period, or where the nature of the engagement is such that, without
being seasonal or for a specific project, a definite date of termination is a sine qua non.

Petition is granted.

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FACTS

Petitioner RIC is a corporation engaged in manufacturing tin cans for use in packaging of
consumer products, e.g., foods, paints, among other things. Respondent Taripe was employed
by petitioner RIC on 8 November 1999 as a Ơrectangular power press machine operatorơ with a
salary of P223.50 per day, until he was allegedly dismissed from his employment by the
petitioner on 6 April 2000.

On 17 February 2000, respondent Taripe filed a complaint against petitioner RIC for
regularization and payment of holiday pay, as well as indemnity for severed finger, which was
amended on 7 April 2000 to include illegal dismissal. Respondent Taripe alleges that RIC
employed him starting 8 November 1999 as power press machine operator, such position of
which was occupied by RICƞs regular employees and the functions of which were necessary to
the latterƞs business. Respondent Taripe adds that upon employment, he was made to sign a
document, which was not explained to him but which was made a condition for him to be taken
in and for which he was not furnished a copy. Respondent Taripe states that he was not
extended full benefits granted under the law and the CBA and that on 6 April 2000, while the
case for regularization was pending, he was summarily dismissed from his job although he
never violated any of the RICƞs company rules and regulations.

Petitioner RIC, for its part, claims that Taripe was a contractual employee, whose services were
required due to the increase in the demand in packaging requirement of its clients for Christmas
season and to build up stock levels during the early part of the following year; that on 6 March
2000, Taripeƞs employment contract expired.

Petitioner RIC emphasizes that while an employeeƞs status of employment is vested by law
pursuant to Article 280 of the Labor Code, as amended, said provision of law admits of two
exceptions, to wit: (1) those employments which have 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 employment; and (2) when the work or services to be performed are
seasonal; hence, the employment is for the duration of the season. Thus, there are certain
forms of employment which entail the performance of usual and desirable functions and which
exceed one year but do not necessarily qualify as regular employment under Article 280 of the
Labor Code, as amended.

ISSUE

Whether respondent was a regular employee of petitioner company.

HELD

The SC held that Article 280 of the Labor Code, as amended, classifies employees into three
categories, namely: (1) regular employees or those whose work is necessary or desirable to the
usual business of the employer; (2) project employees or those 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 services to be
performed is seasonal in nature and the employment is for the duration of the season; and (3)
casual employees or those who are neither regular nor project employees.

Regular employees are further classified into: (1) regular employees by nature of work; and (2)
regular employees by years of service. The former refers to those employees who perform a
particular activity which is necessary or desirable in the usual business or trade of the employer,
regardless of their length of service; while the latter refers to those employees who have been
performing the job, regardless of the nature thereof, for at least a year.

The aforesaid Article 280 of the Labor Code, as amended, however, does not proscribe or
prohibit an employment contract with a fixed period. It does not necessarily follow that where
the duties of the employee consist of activities usually necessary or desirable in the usual
business of the employer, the parties are forbidden from agreeing on a period of time for the
performance of such activities. There is nothing essentially contradictory between a definite
period of employment and the nature of the employeeƞs duties. What Article 280 of the Labor
Code, as amended, seeks to prevent is the practice of some unscrupulous and covetous
employers who wish to circumvent the law that protects lowly workers from capricious dismissal
from their employment. The aforesaid provision, however, should not be interpreted in such a
way as to deprive employers of the right and prerogative to choose their own workers if they
have sufficient basis to refuse an employee a regular status. Management has rights which
should also be protected.

In the case at bar, respondent Taripe signed a contract of employment prior to his admission
into the petitionerƞs company. Based on the said contract, respondent Taripeƞs employment
with the petitioner is good only for a period of five months unless the said contract is renewed
by mutual consent. And as claimed by petitioner RIC, respondent Taripe, along with its other
contractual employees, was hired only to meet the increase in demand for packaging materials
during the Christmas season and also to build up stock levels during the early part of the year.

Although Article 280 of the Labor Code, as amended, does not forbid fixed term employment, it
must, nevertheless, meet any of the following guidelines in order that it cannot be said to
circumvent security of tenure: (1) that the fixed period of employment was knowingly and
voluntarily agreed upon by the parties, without any force, duress or improper pressure being
brought to bear upon the employee and absent any other circumstances vitiating his consent;
or (2) it satisfactorily appears that the employer and employee dealt with each other on more
or less equal terms with no moral dominance whatever being exercised by the former on the
latter.

In the present case, it cannot be denied that the employment contract signed by respondent
Taripe did not mention that he was hired only for a specific undertaking, the completion of
which had been determined at the time of his engagement. The said employment contract
neither mentioned that respondent Taripeƞs services were seasonal in nature and that his
employment was only for the duration of the Christmas season as purposely claimed by
petitioner RIC. What was stipulated in the said contract was that respondent Taripeƞs
employment was contractual for the period of five months.

Likewise, other than the bare allegations of petitioner RIC that respondent Taripe was hired
only because of the increase in the demand for packaging materials during the Christmas
season, petitioner RIC failed to substantiate such claim with any other evidence. Petitioner RIC
did not present any evidence which might prove that respondent Taripe was employed for a
fixed or specific project or that his services were seasonal in nature.

Also, petitioner RIC failed to controvert the claim of respondent Taripe that he was made to
sign the contract of employment, prepared by petitioner RIC, as a condition for his hiring. Such
contract in which the terms are prepared by only one party and the other party merely affixes
his signature signifying his adhesion thereto is called contract of adhesion. It is an agreement
in which the parties bargaining are not on equal footing, the weaker partyƞs participation being
reduced to the alternative Ơto take it or leave it.ơ In the present case, respondent Taripe, in
need of a job, was compelled to agree to the contract, including the five-month period of
employment, just so he could be hired. Hence, it cannot be argued that respondent Taripe
signed the employment contract with a fixed term of five months willingly and with full
knowledge of the impact thereof.
With regard to the second guideline, petitioner RIC and respondent Taripe cannot be said to
have dealt with each other on more or less equal terms with no moral dominance exercised by
the former over the latter. As a power press operator, a rank and file employee, he can hardly
be on equal terms with petitioner RIC. As the Court of Appeals said, Ơalmost always, employees
agree to any terms of an employment contract just to get employed considering that it is
difficult to find work given their ordinary qualifications.ơ

Therefore, for failure of petitioner RIC to comply with the necessary guidelines for a valid fixed
term employment contract, it can be safely stated that the aforesaid contract signed by
respondent Taripe for a period of five months was a mere subterfuge to deny to the latter a
regular status of employment.

Settled is the rule that the primary standard of determining regular employment is the
reasonable connection between the particular activity performed by the employee in relation to
the casual business or trade of the employer. The connection can be determined by
considering the nature of the work performed and its relation to the scheme of the particular
business or trade in its entirety.

Given the foregoing, indeed, respondent Taripe, as a rectangular power press machine
operator, in charge of manufacturing covers for Ơfour liters rectangular tin cans,ơ was holding a
position which is necessary and desirable in the usual business or trade of petitioner RIC, which
was the manufacture of tin cans. Therefore, respondent Taripe was a regular employee of
petitioner RIC by the nature of work he performed in the company.

Respondent Taripe does not fall under the exceptions mentioned in Article 280 of the Labor
Code, as amended, because it was not proven by petitioner RIC that he was employed only for
a specific project or undertaking or his employment was merely seasonal. Similarly, the
position and function of power press operator cannot be said to be merely seasonal. Such
position cannot be considered as only needed for a specific project or undertaking because of
the very nature of the business of petitioner RIC. Indeed, respondent Taripe is a regular
employee of petitioner RIC and as such, he cannot be dismissed from his employment unless
there is just or authorized cause for his dismissal.

Well-established is the rule that regular employees enjoy security of tenure and they can only
be dismissed for just cause and with due process, notice and hearing. And in case of
employeesƞ dismissal, the burden is on the employer to prove that the dismissal was legal.
Thus, respondent Taripeƞs summary dismissal, not being based on any of the just or authorized
causes enumerated under Articles 282, 283, and 284 of the Labor Code, as amended, is illegal.

Petition is denied.

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FACTS

Petitioner, after conducting a series of studies regarding the profitability of its retail operations,
its existing branches and the number of employees, the petitioner came up with a Relocation
and Restructuring Program designed to (a) sustain its (PT&T's) retail operations; (b) decongest
surplus workforce in some branches, to promote efficiency and productivity; (c) lower expenses
incidental to hiring and training new personnel; and (d) avoid retrenchment of employees
occupying redundant positions. On August 11, 1997, private respondents received separate
letters from the petitioner, giving them the option to choose the branch to which they could be
transferred. Thereafter, through HRAG Bulletin No. 97-06-16, the private respondents and other
petitioner's employees were directed to "relocate" to their new PT&T Branches. The affected
employees were directed to report to their respective relocation assignments in a Letter dated
September 16, 1997. Moreover, the employees who would agree to the transfers would be
considered promoted.

The private respondents rejected the petitioner's offer. Petitioner, then, sent letters to the
private respondents requiring them to explain in writing why no disciplinary action should be
taken against them for their refusal to be transferred/relocated. In their respective replies to
the petitioner's letters, the private respondents explained that: The transfers imposed by the
management would cause enormous difficulties on the individual complainants. For one, their
new assignment involves distant places which would require their separation from their
respective families. Dissatisfied with this explanation, the petitioner considered the private
respondents' refusal as insubordination and willful disobedience to a lawful order; hence, the
private respondents were dismissed from work. 8 They forthwith filed their respective
complaints against the petitioner before the appropriate sub-regional branches of the NLRC.

In their position paper, the complainants (herein private respondents) declared that their
refusal to transfer could not possibly give rise to a valid dismissal on the ground of willful
disobedience, as their transfer was prejudicial and inconvenient; thus unreasonable. The private
respondents further opined that since their respective transfers resulted in their promotion, they
had the right to refuse or decline the positions being offered to them. Resultantly, the refusal to
accept the transfers could not have amounted to insubordination or willful disobedience to the
"lawful orders of the employer."

For its part, the company alleged that the private respondents' transfers were made in the
lawful exercise of its management prerogative and were done in good faith. The transfers were
aimed at decongesting surplus employees and detailing them to a more demanding branch.

ISSUE

Whether or not the private respondents were illegally dismissed.

HELD

The Supreme Court ruled that an employee cannot be promoted, even if merely as a result of a
transfer, without his consent. A transfer that results in promotion or demotion, advancement or
reduction or a transfer that aims to 'lure the employee away from his permanent position
cannot be done without the employees' consent. There is no law that compels an employee to
accept a promotion for the reason that a promotion is in the nature of a gift or reward, which a
person has a right to refuse. Hence, the exercise by the private respondents of their right
cannot be considered in law as insubordination, or willful disobedience of a lawful order of the
employer. As such, there was no valid cause for the private respondents' dismissal.

Decision of the CA affirmed.

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FACTS

Petitioner is an American citizen and the resident Manager of Northwest Airlines, Inc. in the
Philippines. He had been with the respondent company for 11 years, 9 of which was served in
the Philippines as Northwest manager in Manila. On August 18, 1975 he received an inter-office
communication from R.C. Jenkins, Northwest's Vice President for Orient Region based in Tokyo,
promoting him to the position of Director of International Sales and transferring him to
Northwest's General Office in Minneapolis, U.S.A., effective the same day. Petitioner,
acknowledging receipt of the above memo, expressed appreciation for the promotion and at the
same time regretted that for personal reasons and reasons involving his family (living in the
Philippines), he is unable to accept a transfer from the Philippines.

On September 9, 1975, the Vice-President for the Orient Region of Northwest advised petitioner
that "in view of the foregoing, your status as an employee of the company ceased on the close
of business on August 31, 1975" and "the company therefore considers your letter of August
28, 1975, to be a resignation without notice." On September 16, 1975, Northwest filed a Report
on Resignation of Managerial Employee i.e., Helmut Dosch before the Department of Labor,
copy thereof furnished petitioner. The Report was contested by the petitioner and the parties
were conciliated by Regional Office No. IV, Manila but failed to agree on a settlement. The case
was thus certified to the Executive Labor

Arbiter, National Labor Relations Commission, for compulsory arbitration.

ISSUE

Whether or not the petitioner is considered resigned from his employment.

HELD

The SC agree with the Labor Arbiter that petitioner did not resign or relinquish his position as
Manager-Philippines, Indeed, the letter sent by petitioner to R.C. Jenkins cannot be considered
as a resignation as petitioner indicated therein clearly that he preferred to remain as Manager-
Philippines of Northwest. The SC treated the Jenkins letter as directing the promotion of the
petitioner from his position as Philippine manager to Director of International Sales in
Minneapolis, U.S.A. It is not merely a transfer order alone but as the Solicitor General correctly
observes, "it is more in the nature of a promotion that a transfer, the latter being merely
incidental to such promotion." The inter-office communication of Vice President Jenkins is
captioned "Transfer" but it is basically and essentially a promotion for the nature of an
instrument is characterized not by the title given to it but by its body and contents. The
communication informed the petitioner that effective August 18, 1975, he was to be promoted
to the position of Director of International Sales, and his compensation would be upgraded and
the payroll accordingly adjusted.

Petitioner was, therefore, advanced to a higher position and rank and his salary was increased
and that is a promotion. It has been held that promotion denotes a scalar ascent of an officer or
an employee to another position, higher either in rank or salary.

A transfer is a movement from one position to another of equivalent rank, level or salary,
without break in the 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, Whereas, promotion denotes a scalar ascent of a
senior officer or employee to another position, higher either in rank or salary, transfer refers to
lateral movement from one position to another, of equivalent rank, level or salary. There is no
law that compels an employee to accept a promotion, as a promotion is in the nature of a gift
or a reward, which a person has a right to refuse. When petitioner refused to accept his
promotion to Director of International Sales, he was exercising a right and he cannot be
punished for it as qui jure suo utitur neminem laedit. He who uses his own legal right injures no
one.

Assuming for the sake of argument that the communication or letter of Mr. Jenkins was
basically a transfer, under the particular and peculiar facts obtaining in the case at bar,
petitioner's inability or his refusal to be transferred was not a valid cause for dismissal. While it
may be true that the right to transfer or reassign an employee is an employer's exclusive right
and the prerogative of management, such right is not absolute. The right of an employer to
freely select or discharge his employee is limited by the paramount police power for the
relations between capital and labor are not merely contractual but impressed with public
interest. And neither capital nor labor shall act oppressively against each other.
There can be no dispute that the constitutional guarantee of security of tenure mandated under
the Constitution applies to all employees and laborers, whether in the government service or in
the private sector. The fact that petitioner is a managerial employee does not by itself exclude
him from the protection of the constitutional guarantee of security of tenure. Even a manager in
a private concern has the right to be secure in his position, to decline a promotion where,
although the promotion carries an increase in his salary and rank but results in his transfer to a
new place of assignment or station and away from his family. Such an order constitutes
removal without just cause and is illegal. Nor can the removal be justified on the ground of loss
of confidence as now claimed by private respondent Northwest, insisting as it does that by
petitioner's alleged contumacious refusal to obey the transfer order, said petitioner was guilty of
insubordination.
c


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FACTS

Respondent bank issued a resolution effecting a reshuffling of employees to Ơfurther strengthen

the existing internal control system of all offices and employees.ơ Petitioner was one of those
included for reshuffling. In a letter to his manager, petitioner expressed his refusal to be
assigned to another branch and his request to be excluded from its implementation. Said
request was answered in the negative. Petitioner then requested for a twenty-day sick leave
due to his illness. While on leave, petitioner filed a complaint before the RAB IV for illegal
dismissal, underpayment, separation pay and damages against respondent bank.

ISSUE

Whether petitioner was constructively dismissed from his employment

HELD

The SC ruled that it find no reason to disturb the conclusion of the NLRC and the CA that there
was no constructive dismissal.

Constructive dismissal is defined as an involuntary resignation resorted to when continued

employment is rendered impossible, unreasonable or unlikely; when there is a demotion in rank
or a diminution of pay; or when a clear discrimination, insensibility or disdain by an employer
becomes unbearable to the employee. Petitioner argues that he was compelled to file an action
for constructive dismissal, because he had been demoted from appraiser to clerk and not given
any work to do, while his table had been placed near the toilet and eventually removed. He
adds that the reshuffling of employees was done in bad faith, because it was designed primarily
to force him to resign.

Jurisprudence recognizes the exercise of management prerogatives. For this reason, courts
often decline to interfere in legitimate business decisions of employers. Indeed, labor laws
discourage interference in employers' judgments concerning the conduct of their business. The
law must protect not only the welfare of employees, but also the right of employers. 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 Ɯ 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. This privilege is inherent in the right of employers to control and manage their
enterprise effectively. 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. 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 employee's 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."

Petitioner's transfer was made in pursuit of respondent's policy to "familiarize bank employees
with the various phases of bank operations and further strengthen the existing internal control
system" of all officers and employees. We have previously held that employees may be
transferred Ɯ based on their qualifications, aptitudes and competencies Ɯ to positions in which
they can function with maximum benefit to the company. 34 There appears no justification for
denying an employer the right to transfer employees to expand their competence and maximize
their full potential for the advancement of the establishment. Petitioner was not singled out;
other employees were also reassigned without their express consent. Neither was there any
demotion in the rank of petitioner; or any diminution of his salary, privileges and other benefits.

Petition is denied.

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FACTS

Private respondent started working for petitioner Norkis Trading Co., Inc. and was initially
assigned in the Calamba, Laguna branch. She was later appointed as Acting Administrative
Finance Officer with assignment at Naga City Branch, a position she held until she achieved
regular employment status. On December 1, 1993, she was appointed as Branch
Bookkeeper/Cashier of Naga City Branch (Rank Category 4B). On January 24, 2001, she was
promoted as Acting Senior Branch Control Officer for Bicol Region. During this time, Private
respondent was instructed by her immediate superior to confirm transactions pertaining to
collections and deposits of BCO Marivic Faura at Polangui. However, provate respondent was
informed by the company there was information received that that private respondent allegedly
disregarded the detailed instructions of her superior and failed to perform her duties as a Senior
Branch Control Officer. She was thus directed to explain in writing what actually transpired
during her assignment at Polangui. She complied by submitting her written. An investigation by
the companyƞs Internal Audit Group ensued and private respondent was formally charged with
ƠNegligence Resulting to Material Loss.ơ She was instructed to make herself available by
reporting to the Inquiry Assistance Panel (IAP) in the companyƞs head office in Mandaluyong.
After the hearing of the IAP was concluded, private respondent made a written ƠRequest for Re-
assignmentơ addressed to Ms. De Jesus to be assigned as Cashier of the Naga Branch which is
vacant and considering that she is a resident of Naga City and a mother. The company did not
accede to her requests and she continued reporting at the main office performing whatever
work assigned to her, such as monitoring of collections at Cubao Branch for which she
submitted an accomplishment report to Deputy Controller Emmanuel S. Tamayo.

For the period March 18 to April 1, 2003, the company withheld the Transportation and Travel
Allowance (ƠTNTơ) being received by private respondent amounting to P7,555.00, which
prompted her to formally protest her Ơquestionable assignmentơ at the Home Office (HO) in
Mandaluyong City which she insisted is against her appointment as Senior BCO for Bicol Region
and Samar. In a letter, addressed to Deputy Controller Emmanuel S. Tamayo, private
respondent berated management for wanting to ease her out of the company due to a labor
case (constructive dismissal) filed by her husband, who also worked at Norkis for more than
thirteen (13) years, and such withdrawal of her travel allowances is calculated to cause
suffering on her part. She expressed that the situation has become unbearable for her so that
she is constrained to report back to Naga City, there being no written order issued by
management for her to stay in the main office.

Upon returning to Naga City, however, private respondent learned from a co-employee that
Deputy Controller Tamayo through a telephone call gave instruction to deny her entry to the
branch premises and access to company records. She caused this incident to be entered at the
local police blotter. She later received a faxed ƠSpeedletterơ from Deputy Managing Director
Nichol Jude Thaddeus C. Juridico and Deputy Controller Emmanuel S. Tamayo directing her to
report back to the main office reminding her that her new assignment required her to report to
the main office pending issuance of a permanent assignment, and that she was instructed to
monitor the BCO of Porta Coeli Finance Corporation (PCFC) branches and to assist the BCO
Accounting Manager Belen Yaun in the meantime. She was ordered to explain in writing within
forty-eight (48) hours why no disciplinary action should be taken against her for abandonment
of work, which under existing company policy, carries the penalty of dismissal. She was also
directed to refund the total amount of P123,685.00 of travel and transportation allowance
received by her during the period June 1, 2002 and March 17, 2003 because she is not entitled
thereto while assigned at the main office.

In her faxed reply, private respondent explained that she reported at the main office starting
June 10, 2002 upon assurance given by her former superior, Ms. Aurea De Jesus, that she shall
be receiving her regular ƠTNTơ package as Senior BCO-Bicol Region and Samar since her stay in
the main office would be just temporary as they will just iron out the problem in Polangui
Branch. There was hesitation on her part since being a permanent resident of Naga City and
mother of three (3) children, she will be dislocated and separated from her family. She insisted
that it was never clarified to her that her area of assignment is being changed and also denied
that Deputy Controller Tamayo specifically instructed her to monitor the BCOs of Porta Coeli
Finance Corporation (PCFC) or assist Ms. Belen Yaun, pointing out that if she ever assisted Ms.
Yaun it was her initiative to get herself busy and if ever she had a record of travel to a PCFC
branch, it was done out of an emergency or her superior was just forced to. She asserted that
her assignment at the HO is a demotion intended to make her feel that her continued presence
in the company is no longer necessary because neither Mr. Tamayo nor Ms. Yaun have been
talking to her. Were it not for her monthly ƠTNT,ơ she could not have stayed at the HO because
her take-home pay amounted to only a little over P2,500.00 every fifteen (15) days, and its
subsequent withdrawal by the company constrained her to report back to Naga City branch, her
repeated requests to be returned to her post having been ignored for the reason that top
management was against it. She asserted that her ƠTNTơ being a long and accepted company
policy, may not be arbitrarily withdrawn and that all her cash advances and liquidations have
been previously approved by her superiors including Mr. Tamayo. She deplored the mental
anguish and social humiliation wrought to her by her present predicament and sought
understanding from the management, wanting to know the reasons behind their instruction to
deny her entry to the premises of the Naga City branch and access to company records as if
she were a thief.

In a memorandum, management reiterated its directive to private respondent for her to report
back to the main office, reminding her that despite her denial regarding any instruction from
Mr. Tamayo for her to monitor the PCFC branches, records showed that she had complied
based on reports she had submitted to the office. Private respondent, however, maintained her
position that she could no longer report to the Home Office after the company withdrew her
monthly ƠTNT.ơ She asserted that considering her difficult situation, she had no choice but to
stick to her appointment as Senior BCO-Bicol Region and Samar there being no superseding
memo changing her assignment.

Private respondent then received a memorandum from the IAP for an investigation on the
charges of abandonment of work, insubordination and refusal to report back to the place of
work (Head Office), and directing her to attend a hearing at the main office. Private respondent
acknowledged receipt of said memo but proposed that the hearing be held at Naga City or that
she be allowed to make a cash advance to defray her expenses in going to Mandaluyong City to
attend the hearing and investigation by the IAP. She failed to attend the IAP hearing on the
scheduled date as she had been waiting for action from management regarding the concerns
she had communicated. On that same day, she found out that her salary for the period April 1
to 15, 2003 was withheld and failing to get an explanation from management, she again
reported the matter to the police. Thereupon, she faxed a letter addressed to HRD Manager
Raquel Licsi that the situation had become unbearable for her tantamount to constructive
dismissal and consequently she will ventilate her case before the NLRC.

Private respondent subsequently filed a complaint for constructive dismissal before the regional
arbitration branch at Naga City, with claims for nonpayment of salaries, service incentive leave
pay, 13th month pay, and praying for reinstatement with full back wages, and moral and
exemplary damages, and attorneyƞs fees. After, private respondent received another memo on
the rescheduled date of IAP hearing, but in a handwritten reply she submitted to the Naga City
Branch, she manifested that she could not longer report at the HO in view of the case she had
already instituted with the NLRC. The company later terminated her services effective May 2,
2003.

ISSUE

Whether or not the decision decision to transfer or re-assign private respondent from Naga City
to the head office in Manila was a legitimate exercise of petitioner corporationƞs management
prerogative.

HELD

The Supreme Court ruled in the negative. Employers are allowed, under the broad concept of
management prerogative, to regulate all aspects of personnel administration including hiring,
work assignments, working methods, time, place and manner of work, tools to be used,
processes to be followed, supervision of workers, working regulations, transfer of employees,
work supervision, lay-off of workers, and the dismissal and recall of workers.

It is the employerƞs prerogative, based on its assessment and perception of its employeesƞ
qualifications, aptitudes, and competence, to move them around in the various areas of its
business operations in order to ascertain where they will function with maximum benefit to the
company. An employeeƞs right to security of tenure does not give him such a vested right in his
position as would deprive the company of its prerogative to change his assignment or transfer
him where he will be most useful. When his transfer is not unreasonable, nor inconvenient, nor
prejudicial to him, and it does not involve a demotion in rank or a diminution of his salaries,
benefits, and other privileges, the employee may not complain that it amounts to a constructive
dismissal.

The managementƞs right to transfer or re-assign its personnel, however, is not absolute as it is
subject to limitations imposed by law, collective bargaining agreements, and general principles
of fair play and justice.

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 employeeƞs
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 this case, petitioners failed to pass this test. While petitioners invoke management
prerogative in the transfer of private respondent to Manila, there is no showing at all of any
valid and legitimate reason (i.e., business necessity) for the verbal transfer order, as in fact
private respondent was not given work to do, only occasionally and constantly avoided by her
superiors. Her meek and desperate plea to be allowed to return to her former post in Naga City
Branch was met with total silence on managementƞs end. Such insensitivity and disdain
pervading her work environment became more intense when her travel allowances were
withdrawn and management demanded for refund of those amounts received by her on the
ground that she is not entitled thereto while posted in the main office, which realized such
erroneous grant only at a late stage after all the vouchers underwent routine approval by the
concerned officers of the company. No other conclusion is discernible from the attendant
circumstances except to confirm private respondentƞs sentiment gleaned from what she had
been hearing all along, that top management indeed wanted to Ơease her out of the company,ơ
as a consequence of her husbandƞs filing of a similar illegal dismissal suit before the NLRC.

Petition is denied.

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FACTS

Petitioner Philippine Long Distance Telephone Company, Inc. (PLDT) has 27 Exchanges in its
Greater Metro Manila (GMM) Network. Alfredo S. Paguio was the Head of the Garnet Exchange.
In 1994, PLDT assessed the performance of the 27 Exchanges comprising the GMM Network.
Upon receipt of the ratings, Paguio sent Rodolfo Santos, his immediate supervisor and the
Assistant Vice-President of the GMM East Center, a letter criticizing the PLDT criteria for
performance rating as unfair because they depended on manpower, and that the criteria failed
to recognize that exchanges with new plants could easily meet the objectives of GMM compared
to those with old plants. Despite Paguioƞs criticism, Garnet Exchange, the oldest plant in GMM,
obtained the top rating in the GMM. Nevertheless, Paguio reiterated his letter to Santos and
objected to the performance rating as it was based only on the attainment of objectives,
without considering other relevant factors. In June 1996, PLDT rebalanced the manpower of the
East Center. Paguio wrote Santos and requested reconsideration of the manpower rebalancing,
claiming it was unfair to Garnet Exchange because as the oldest exchange in the East Center, it
was disallowed to use contractors for new installations and was not made beneficiary of the cut-
over bonus. After Santos denied his request, Paguio elevated the matter to respondent Isabelo
Ferido, Jr., the First Vice-President-GMM Network Services.

On January 17, 1997, Paguio was reassigned as Head for Special Assignment at the Office of
the GMM East Center and asked to turn over his functions as Garnet Exchange Head to Tessie
Go. Believing that his transfer was a disciplinary action, Paguio requested Ferido for a formal
hearing of the charges against him and asked that his reassignment be deferred. He also filed a
complaint against Santos for grave abuse of authority and manipulation of the East Center
performance. As no action was taken by Ferido, Paguio elevated the matter to Enrique D. Perez,
the Senior Executive Vice-President and Chief Operating Officer of PLDT, who advised him to
await the resolution of his complaint.

Consequently, Ferido sent Paguio an inter-office memo stating that he found Paguioƞs
reassignment in order as it was based on the finding that Paguio was not a team player and
cannot accept decisions of management, which is short of insubordination. Ferido advised
Paguio to transfer to any group in the company that may avail of his services. Likewise, Perez,
thru an inter-office memo, informed Paguio that his transfer was not in the nature of a
disciplinary action that required investigation and that he agreed with the reasons of the
transfer. Aggrieved, Paguio filed, before the NLRC-RAB, a complaint for illegal dismissal which
was later amended to illegal demotion with prayer for reversion to old position,etc..

ISSUE

Whether or not the transfer of Paguio was legal.

HELD

The SC held that except as limited by special laws, an employer is free to regulate, according to
his own discretion and judgment, all aspects of employment, including the transfer of
employees. It is the employerƞs prerogative, based on its assessment and perception of its
employeesƞ qualifications, aptitudes, and competence, to deploy its employees in the various
areas of its business operations in order to ascertain where they will function with maximum
benefit to the company. An employeeƞs right to security of tenure does not give him such a
vested right in his position as would deprive the company of its prerogative to change his
assignment or transfer him where he will be most useful. Nonetheless, there are limits to the
management prerogative. While it may be conceded that management is in the best position to
know its operational needs, the exercise of management prerogative cannot be utilized to
circumvent the law and public policy on labor and social justice. That prerogative accorded
management should not defeat the very purpose for which our labor laws exist: to balance the
conflicting interests of labor and management. By its very nature, management prerogative
must be exercised always with the principles of fair play and justice. 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. The employer bears the burden of proving that the transfer of the employee has
complied with the foregoing test.

In the present case, we see no credible reason for Paguioƞs transfer except his criticisms of the
companyƞs performance evaluation methods. Based on the undisputed facts, Garnet Exchange
was doing well and excelled in the performance rating. In the same way, Paguioƞs performance
was consistently rated as outstanding. There was also no proof that Paguio refused to comply
with any management policy. Patently, his transfer could not be due to poor performance.
Neither was it because he was needed in the new post for the new assignment was functionless
and it was nothing but a title. Paguioƞs transfer could only be caused by the managementƞs
negative reception of his comments. It is prejudicial to Paguio because it left him out for a
possible promotion as he was assigned to a functionless position with neither office nor staff.

Petition of PLDT denied.

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FACTS

According to the respondents, Simbol and Comia allege that they did not resign voluntarily; they
were compelled to resign in view of an illegal company policy. As to respondent Estrella, she
alleges that she had a relationship with co-worker Zuñiga who misrepresented himself as a
married but separated man. After he got her pregnant, she discovered that he was not
separated. Thus, she severed her relationship with him to avoid dismissal due to the company
policy. On November 30, 1999, she met an accident and was advised by the doctor at the
Orthopedic Hospital to recuperate for twenty-one (21) days. She returned to work on December
21, 1999 but she found out that her name was on-hold at the gate. She was denied entry. She
was directed to proceed to the personnel office where one of the staff handed her a
memorandum. The memorandum stated that she was being dismissed for immoral conduct.
She refused to sign the memorandum because she was on leave for twenty-one (21) days and
has not been given a chance to explain. The management asked her to write an explanation.
However, after submission of the explanation, she was nonetheless dismissed by the company.
Due to her urgent need for money, she later submitted a letter of resignation in exchange for
her thirteenth month pay.

Respondents later filed a complaint for unfair labor practice, constructive dismissal, separation
pay and attorneyƞs fees. They averred that the aforementioned company policy is illegal and
contravenes Article 136 of the Labor Code.

ISSUE

Whether or not the 1995 Policy/Regulation of the company is violative of the Constitutional
rights towards marriage and the family of employees and of article 136 of the Labor Code.

HELD

The Supreme Court held that The 1987 Constitution under Article II, Section 18; Article XIII,
Section 3 state our policy towards the protection of labor under the following provisions. The
Civil Code likewise protects labor with the following provisions such as articles 1700 and 1702.

The Labor Code is the most comprehensive piece of legislation protecting labor. The case at bar
involves Article 136 of the Labor Code which provides:

Art. 136. It shall be unlawful for an employer to require as a condition of employment or

continuation of employment that a woman employee shall not get married, or to stipulate
expressly or tacitly that upon getting married a woman employee shall be deemed resigned or
separated, or to actually dismiss, discharge, discriminate or otherwise prejudice a woman
employee merely by reason of her marriage.

In denying the contention of the petitioner company, the SC applied the two factors to justify a
bona fide occupational qualification:

Since the finding of a bona fide occupational qualification justifies an employerƞs no-spouse rule,
the exception is interpreted strictly and narrowly. There must be a compelling business
necessity for which no alternative exists other than the discriminatory practice. To justify a bona
fide occupational qualification, the employer must prove two factors: (1) that the employment
qualification is reasonably related to the essential operation of the job involved; and, (2) that
there is a factual basis for believing that all or substantially all persons meeting the qualification
would be unable to properly perform the duties of the job.

The requirement that a company policy must be reasonable under the circumstances to qualify
as a valid exercise of management prerogative was also at issue in the 1997 case of Philippine
Telegraph and Telephone Company v. NLRC. In said case, the employee was dismissed in
violation of petitionerƞs policy of disqualifying from work any woman worker who contracts
marriage. We held that the company policy violates the right against discrimination afforded all
women workers under Article 136 of the Labor Code, but established a permissible exception,
viz.:

[A] requirement that a woman employee must remain unmarried could be justified as a Ơbona
fide occupational qualification,ơ or BFOQ, where the particular requirements of the job would
justify the same, but not on the ground of a general principle, such as the desirability of
spreading work in the workplace. A requirement of that nature would be valid provided it
reflects an inherent quality reasonably necessary for satisfactory job performance.

The cases of Duncan and PT&T instruct us that the requirement of reasonableness must be
clearly established to uphold the questioned employment policy. The employer has the burden
to prove the existence of a reasonable business necessity. The burden was successfully
discharged in Duncan but not in PT&T.

The SC do not find a reasonable business necessity in the case at bar.

Petitionersƞ sole contention that Ơthe company did not just want to have two (2) or more of its
employees related between the third degree by affinity and/or consanguinityơ is lame. That the
second paragraph was meant to give teeth to the first paragraph of the questioned rule is
evidently not the valid reasonable business necessity required by the law.

It is significant to note that in the case at bar, respondents were hired after they were found fit
for the job, but were asked to resign when they married a co-employee. Petitioners failed to
show how the marriage of Simbol, then a Sheeting Machine Operator, to Alma Dayrit, then an
employee of the Repacking Section, could be detrimental to its business operations. Neither did
petitioners explain how this detriment will happen in the case of Wilfreda Comia, then a
Production Helper in the Selecting Department, who married Howard Comia, then a helper in
the cutter-machine. The policy is premised on the mere fear that employees married to each
other will be less efficient. If we uphold the questioned rule without valid justification, the
employer can create policies based on an unproven presumption of a perceived danger at the
expense of an employeeƞs right to security of tenure.

Petitioners contend that their policy will apply only when one employee marries a co-employee,
but they are free to marry persons other than co-employees. The questioned policy may not
facially violate Article 136 of the Labor Code but it creates a disproportionate effect and under
the disparate impact theory, the only way it could pass judicial scrutiny is a showing that it is
reasonable despite the discriminatory, albeit disproportionate, effect. The failure of petitioners
to prove a legitimate business concern in imposing the questioned policy cannot prejudice the
employeeƞs right to be free from arbitrary discrimination based upon stereotypes of married
persons working together in one company.

Decision of the CA affirmed.

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FACTS

Petitioner had been working for Solidbank Corporation since July 1, 1977. He was initially
employed as an Audit Clerk, then as Credit Investigator, Senior Clerk, Assistant Accountant, and
Assistant Manager. Prior to his retirement, he became the Manager of the Credit Investigation
and Appraisal Division of the Consumerƞs Banking Group. In the meantime, Rivera and his
brother-in-law put up a poultry business in Cavite.

In December 1994, petitioner retired from Solidbank under its Special Retirement Program
(SRP). He was required by the bank to sign an undated Release, Waiver and Quitclaim wherein
Rivera Rivera acknowledged receipt of the net proceeds of his separation and retirement
benefits and promised that Ơ[he] would not, at any time, in any manner whatsoever, directly or
indirectly engage in any unlawful activity prejudicial to the interest of Solidbank, its parent,
affiliate or subsidiary companies, their stockholders, officers, directors, agents or employees,
and their successors-in-interest and will not disclose any information concerning the business of
Solidbank, its manner or operation, its plans, processes, or data of any kind.ơ Aside from
acknowledging that he had no cause of action against Solidbank or its affiliate companies,
Rivera agreed that the bank may bring any action to seek an award for damages resulting from
his breach of the Release, Waiver and Quitclaim, and that such award would include the return
of whatever sums paid to him by virtue of his retirement under the SRP.
Rivera was likewise required to sign an undated Undertaking as a supplement to the Release,
Waiver and Quitclaim in favor of Solidbank in which he declared that he received in full his
entitlement under the law (salaries, benefits, bonuses and other emoluments), including his
separation pay in accordance with the SRP. In this Undertaking, he promised that Ơ[he] will not
seek employment with a competitor bank or financial institution within one (1) year from
February 28, 1995, and that any breach of the Undertaking or the provisions of the Release,
Waiver and Quitclaim would entitle Solidbank to a cause of action against him before the
appropriate courts of law. Unlike the Release, Waiver and Quitclaim, the Undertaking was not
notarized.

On May 1, 1995, the Equitable Banking Corporation (Equitable) employed Rivera as Manager of
its Credit Investigation and Appraisal Division of its Consumersƞ Banking Group. Upon
discovering this, wrote a letter informing Rivera that he had violated the Undertaking. She
likewise demanded the return of all the monetary benefits he received in consideration of the
SRP within five (5) days from receipt; otherwise, appropriate legal action would be taken
against him.

When Rivera refused to return the amount demanded within the given period, Solidbank filed a
complaint for Sum of Money with Prayer for Writ of Preliminary Attachment before the Regional
Trial Court (RTC) of Manila on June 26, 1995. Solidbank, as plaintiff, alleged therein that in
accepting employment with a competitor bank for the same position he held in Solidbank before
his retirement, Rivera violated his Undertaking under the SRP. Considering that Rivera accepted
employment with Equitable barely three months after executing the Undertaking, it was clear
that he had no intention of honoring his commitment under said deed.

In his Answer, Rivera admitted that he received the net amount of P963,619.28 as separation
pay. However, the employment ban provision in the Undertaking was never conveyed to him
until he was made to sign it on February 28, 1995. He emphasized that, prior to said date,
Solidbank never disclosed any condition to the retirement scheme, nor did it impose such
employment ban on the bank officers and employees who had previously availed of the SRP. He
alleged that the undertaking not to Ơseek employment with any competitor bank or financial
institution within one (1) year from February 28, 1995ơ was void for being contrary to the
Constitution, the law and public policy, that it was unreasonable, arbitrary, oppressive,
discriminatory, cruel, unjust, inhuman, and violative of his human rights. He further claimed
that the Undertaking was a contract of adhesion because it was prepared solely by Solidbank
without his participation; considering his moral and economic disadvantage, it must be liberally
construed in his favor and strictly against the bank.

ISSUE

Whether the employment ban incorporated in the Undertaking which petitioner executed upon
his retirement is unreasonable, oppressive, hence, contrary to public policy.

HELD

The SC held that Article 1306 of the New Civil Code provides that 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. The
freedom of contract is both a constitutional and statutory right. A contract is the law between
the parties and courts have no choice but to enforce such contract as long as it is not contrary
to law, morals, good customs and against public policy. The well-entrenched doctrine is that the
law does not relieve a party from the effects of an unwise, foolish or disastrous contract,
entered into with full awareness of what he was doing and entered into and carried out in good
faith. Such a contract will not be discarded even if there was a mistake of law or fact. Courts
have no jurisdiction to look into the wisdom of the contract entered into by and between the
parties or to render a decision different therefrom. They have no power to relieve parties from
obligation voluntarily assailed, simply because their contracts turned out to be disastrous deals.

On the other hand, retirement plans, in light of the constitutional mandate of affording full
protection to labor, must be liberally construed in favor of the employee, it being the general
rule that pension or retirement plans formulated by the employer are to be construed against it.
Retirement benefits, after all, are intended to help the employee enjoy the remaining years of
his life, releasing him from the burden of worrying for his financial support, and are a form of
reward for being loyal to the employer.

In the present case, there is no factual basis to agree with the contention of the respondent
bank. On the face of the Undertaking, the post-retirement competitive employment ban is
unreasonable because it has no geographical limits; respondent is barred from accepting any
kind of employment in any competitive bank within the proscribed period. Although the period
of one year may appear reasonable, the matter of whether the restriction is reasonable or
unreasonable cannot be ascertained with finality solely from the terms and conditions of the
Undertaking, or even in tandem with the Release, Waiver and Quitclaim.

Undeniably, petitioner retired under the SRP and received P963,619.28 from respondent.
However, petitioner is not proscribed, by waiver or estoppel, from assailing the post-retirement
competitive employment ban since under Article 1409 of the New Civil Code, those contracts
whose cause, object or purpose is contrary to law, morals, good customs, public order or public
policy are inexistent or void from the beginning. Estoppel cannot give validity to an act that is
prohibited by law or one that is against public policy.

Respondent, as employer, is burdened to establish that a restrictive covenant barring an

employee from accepting a competitive employment after retirement or resignation is not an
unreasonable or oppressive, or in undue or unreasonable restraint of trade, thus, unenforceable
for being repugnant to public policy. There are two principal grounds on which the doctrine is
founded that a contract in restraint of trade is void as against public policy. One is, the injury to
the public by being deprived of the restricted partyƞs industry; and the other is, the injury to the
party himself by being precluded from pursuing his occupation, and thus being prevented from
supporting himself and his family.
Public welfare is first considered, and if it be not involved, and the restraint upon one party is
not greater than protection to the other party requires, the contract may be sustained. The
question is, whether, under the particular circumstances of the case and the nature of the
particular contract involved in it, the contract is, or is not, unreasonable.

In cases where an employee assails a contract containing a provision prohibiting him or her
from accepting competitive employment as against public policy, the employer has to adduce
evidence to prove that the restriction is reasonable and not greater than necessary to protect
the employerƞs legitimate business interests. The restraint may not be unduly harsh or
oppressive in curtailing the employeeƞs legitimate efforts to earn a livelihood and must be
reasonable in light of sound public policy.

Courts should carefully scrutinize all contracts limiting a manƞs natural right to follow any trade
or profession anywhere he pleases and in any lawful manner. But it is just as important to
protect the enjoyment of an establishment in trade or profession, which its employer has built
up by his own honest application to every day duty and the faithful performance of the tasks
which every day imposes upon the ordinary man. What one creates by his own labor is his.
Public policy does not intend that another than the producer shall reap the fruits of labor;
rather, it gives to him who labors the right by every legitimate means to protect the fruits of his
labor and secure the enjoyment of them to himself. Freedom to contract must not be
unreasonably abridged. Neither must the right to protect by reasonable restrictions that which a
man by industry, skill and good judgment has built up, be denied.

The Court reiterates that the determination of reasonableness is made on the particular facts
and circumstances of each case. The question of reasonableness of a restraint requires a
thorough consideration of surrounding circumstances, including the subject matter of the
contract, the purpose to be served, the determination of the parties, the extent of the restraint
and the specialization of the business of the employer. The court has to consider whether its
enforcement will be injurious to the public or cause undue hardships to the employee, and
whether the restraint imposed is greater than necessary to protect the employer. Thus, the
court must have before it evidence relating to the legitimate interests of the employer which
might be protected in terms of time, space and the types of activity proscribed.

Consideration must be given to the employeeƞs right to earn a living and to his ability to
determine with certainty the area within which his employment ban is restituted. A provision on
territorial limitation is necessary to guide an employee of what constitutes as violation of a
restrictive covenant and whether the geographic scope is co-extensive with that in which the
employer is doing business. In considering a territorial restriction, the facts and circumstances
surrounding the case must be considered.

Thus, in determining whether the contract is reasonable or not, the trial court should consider
the following factors: (a) whether the covenant protects a legitimate business interest of the
employer; (b) whether the covenant creates an undue burden on the employee; (c) whether
the covenant is injurious to the public welfare; (d) whether the time and territorial limitations
contained in the covenant are reasonable; and (e) whether the restraint is reasonable from the
standpoint of public policy.

We are not impervious of the distinction between restrictive covenants barring an employee to
accept a post-employment competitive employment or restraint on trade in employment
contracts and restraints on post-retirement competitive employment in pension and retirement
plans either incorporated in employment contracts or in collective bargaining agreements
between the employer and the union of employees, or separate from said contracts or collective
bargaining agreements which provide that an employee who accepts post retirement
competitive employment will forfeit retirement and other benefits or will be obliged to restitute
the same to the employer. The strong weight of authority is that forfeitures for engaging in
subsequent competitive employment included in pension and retirement plans are valid even
though unrestricted in time or geography.

A post-retirement competitive employment restriction is designed to protect the employer

against competition by former employees who may retire and obtain retirement or pension
benefits and, at the same time, engage in competitive employment.

Petition is granted.



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FACTS

Petitioner Constancia P. Duldulao was hired by respondent Baguio Colleges Foundation (BCF) as
secretary/clerk-typist and assigned to the College of Law sometime in June of 1987. In August
1996, a certain law student filed a complaint against petitioner for alleged irregularities in the
performance of her work. Petitioner was told to submit her answer to the complaint and given
several extensions within which to do so. However, despite the extensions, she failed to submit
her answer. Consequently, the dean of the College of Law informed the schoolƞs President of
petitionerƞs failure to file her answer and recommended the assignment of petitioner outside the
College of Law, not only because of such failure to answer but also her having admitted
fraternizing with students of the College. On the same day, respondentƞs Vice President for
Administration issued a Department Order informing her that she is transferred to the office of
the Principals of the High School and Elementary Departments.

On 3 October 1996, petitioner moved for reconsideration of the Department Order and
requested another five (5)-day extension within which to file her answer. Dean Aquino informed
petitioner that he could no longer act on her motion for reconsideration and motion for
extension since the matter had already been elevated to respondentƞs Executive Board due to
the delay in the submission of her answer. Petitioner eventually filed her answer on 7 October
1996.

Petitioner filed a case with the Administrative Investigating Committee which later found that
the Department Order appropriate since it was intended to prevent the controversy between
petitioner and the complaining student from adversely affecting a harmonious relationship
within the College of Law among all its constituents. It recommended that petitioner start
reporting to her new assignment. The recommendation was approved and adopted by President
Tenefrancia on 7 February 1997.

The Department Order notwithstanding, petitioner did not report for work and instead took a
vacation leave and several other leave of absences from October 1996 to January 1997. Finally,
petitioner filed a complaint for constructive dismissal before the NLRC RAB-CAR. She claimed
that she was arbitrarily directed to report for work in a location far from her original place of
assignment on account of which she would be incurring additional expenses in transportation.
In addition, she stated that aside from being tainted with procedural lapses in violation of her
right to due process, the transfer also amounted to her demotion in rank.
ISSUE

Whether petitionerƞs transfer as secretary/clerk-typist from the College of Law to the High
School and Elementary Departments amounts to constructive dismissal.

HELD

The SC held that there is constructive dismissal if an act of clear discrimination, insensibility, or
disdain by an employer becomes so unbearable on the part of the employee that it would
foreclose any choice by him except to forego his continued employment. It exists where there is
cessation of work because Ơcontinued employment is rendered impossible, unreasonable or
unlikely, as an offer involving a demotion in rank and a diminution in pay.ơ

At the onset, it must be stressed that petitioner has no vested right to the position of
secretary/clerk-typist of the College of Law that may operate to deprive respondent of its
prerogative to change or transfer her assignment to another department where she will be most
useful in its judgment. After all, petitioner was employed by respondent which is the BCF
system itself, not the College of Law only, which is but a component part of the system. Thus,
to respondent belongs the prerogative to reassign petitioner to any of its departments as it sees
fit, provided that such reassignment is made in good faith.

We have long recognized the prerogative of management to transfer an employee from one
office to another within the same business establishment, as the exigency of the business may
require, provided that the transfer does not result in a demotion in rank or a diminution in
salary, benefits and other privileges of the employee; or is not unreasonable, inconvenient or
prejudicial to the latter; or is not used as a subterfuge by the employer to rid himself of an
undesirable worker.

It is the employerƞs prerogative, based on its assessment and perception of its employeesƞ
qualifications, aptitudes, and competence, to move them around in the various areas of its
business operations in order to ascertain where they will function with maximum benefit to the
company. An employeeƞs right to security of tenure does not give him such a vested right in his
position as would deprive the company of its prerogative to change his assignment or transfer
him where he will be most useful. When his transfer is not unreasonable, nor inconvenient, nor
prejudicial to him, and it does not involve a demotion in rank or a diminution of his salaries,
benefits, and other privileges, the employee may not complain that it amounts to a constructive
dismissal.

The Court does not see how petitionerƞs transfer from the College of Law to the Office of the
Principals of the Elementary and High School Departments can be described as unreasonable,
inconvenient, or prejudicial to her. In her complaint, petitioner alleged that by reason of the
transfer, she would incur additional transportation expenses, be constrained to engage the
services of a househelp, and suffer a demotion in rank and status. As explained by respondent,
the difference in traveling distance is not so large as to cause great inconvenience to petitioner
as in fact, by merely changing the route to take, the distance from petitionerƞs house to the
College of Law and that from her house to her new assignment will almost be the same.

Neither is the transfer equivalent to a demotion in rank and status. Petitioner was a
secretary/clerk-typist of the College of Law. As such secretary/clerk-typist, she would only have
to perform the same duties in the Office of the Principals of the High School and Elementary
Departments.

Petitioner argues that she was denied her right to due process when she was transferred to
another department even before she was able to file her answer. Reassignments made by
management pending investigation of irregularities allegedly committed by an employee fall
within the ambit of management prerogative. The transfer, while incidental to the pending
charges against petitioner, was not meant to be a penalty, but rather a preventive measure to
avoid further damage to the College of Law. It was not designed to be the culmination of the
then on-going administrative case against petitioner. Hence, he order of transfer prior to the
submission of her answer cannot be deemed a violation of her right to due process.

This Court has, in several instances, upheld reassignments/transfers pending investigations of

the irregularities allegedly committed by employees, the rationale being that the purpose of
reassignments is no different from that of preventive suspension which management could
validly impose as a measure of protection of the companyƞs property pending investigation of
any malfeasance or misfeasance committed by the employee.

Petition is denied.

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FACTS

Petitioner, after conducting a series of studies regarding the profitability of its retail operations,
its existing branches and the number of employees, the petitioner came up with a Relocation
and Restructuring Program designed to (a) sustain its (PT&T's) retail operations; (b) decongest
surplus workforce in some branches, to promote efficiency and productivity; (c) lower expenses
incidental to hiring and training new personnel; and (d) avoid retrenchment of employees
occupying redundant positions. On August 11, 1997, private respondents received separate
letters from the petitioner, giving them the option to choose the branch to which they could be
transferred. Thereafter, through HRAG Bulletin No. 97-06-16, the private respondents and other
petitioner's employees were directed to "relocate" to their new PT&T Branches. The affected
employees were directed to report to their respective relocation assignments in a Letter dated
September 16, 1997. Moreover, the employees who would agree to the transfers would be
considered promoted.

The private respondents rejected the petitioner's offer. Petitioner, then, sent letters to the
private respondents requiring them to explain in writing why no disciplinary action should be
taken against them for their refusal to be transferred/relocated. In their respective replies to
the petitioner's letters, the private respondents explained that: The transfers imposed by the
management would cause enormous difficulties on the individual complainants. For one, their
new assignment involves distant places which would require their separation from their
respective families. Dissatisfied with this explanation, the petitioner considered the private
respondents' refusal as insubordination and willful disobedience to a lawful order; hence, the
private respondents were dismissed from work. They forthwith filed their respective complaints
against the petitioner before the appropriate sub-regional branches of the NLRC.

In their position paper, the complainants (herein private respondents) declared that their
refusal to transfer could not possibly give rise to a valid dismissal on the ground of willful
disobedience, as their transfer was prejudicial and inconvenient; thus unreasonable. The private
respondents further opined that since their respective transfers resulted in their promotion, they
had the right to refuse or decline the positions being offered to them. Resultantly, the refusal to
accept the transfers could not have amounted to insubordination or willful disobedience to the
"lawful orders of the employer."

For its part, the company alleged that the private respondents' transfers were made in the
lawful exercise of its management prerogative and were done in good faith. The transfers were
aimed at decongesting surplus employees and detailing them to a more demanding branch.

ISSUE

Whether or not the private respondents were illegally dismissed.

HELD

The Supreme Court ruled that an employee cannot be promoted, even if merely as a result of a
transfer, without his consent. A transfer that results in promotion or demotion, advancement or
reduction or a transfer that aims to 'lure the employee away from his permanent position
cannot be done without the employees' consent. There is no law that compels an employee to
accept a promotion for the reason that a promotion is in the nature of a gift or reward, which a
person has a right to refuse. Hence, the exercise by the private respondents of their right
cannot be considered in law as insubordination, or willful disobedience of a lawful order of the
employer. As such, there was no valid cause for the private respondents' dismissal.
Decision of the CA affirmed.

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FACTS

Petitioner Edgar Agustilo was hired on July 1, 1979 by respondent San Miguel Corporation
(SMC) as a temporary employee at its Mandaue Brewery in Mandaue, Cebu. On October 1,
1979, he was made permanent and designated as a safety clerk. On May 1, 1982, he was
transferred to the Engineering Department of the SMC Mandaue Brewery as an administrative
secretary. Sometime in 1991, SMC Mandaue Brewery adopted a policy that managers would no
longer be assigned secretaries and that only director level positions may be given secretaries.
As a result, on August 5, 1991, petitioner's position as administrative secretary was abolished
and he was transferred to the company's Plant Director's Office-Quality Improvement Team
(PDO QIT).

On February 7, 1992, petitioner was informed that 584 employees, including him, would be
retrenched due to the modernization program of the company. Petitioner was told that his
services would be terminated effective March 15, 1992 and that he would be paid his benefits
30 days after he was cleared of all accountabilities. In a letter, dated February 13, 1992, SMC
notified the DOLE of its modernization program.

On April 8, 1992, petitioner was given separation pay in the amount of P302,450.38,
representing 175% of his entitlements under the Labor Code. He signed a quitclaim designated
as "Receipt and Release" in favor of SMC before Senior Labor Employment Officer Mateo P.
Baldago of the Labor Standards Enforcement Division of the DOLE, Region VII.

Petitioner then filed a complaint against respondents for unfair labor practice, illegal dismissal,
and payment of separation pay, attorney's fees, and damages. He alleged that he was a regular
employee of SMC from 1979 to 1992; that on May 1, 1982, he was promoted to the position of
administrative secretary of the Engineering Department until his employment was terminated
on March 15, 1992 by reason of union activities.

ISSUE

Whether or not petitioner was illegally dismissed.

HELD

The SC held that the contention has no merit. Petitioner's employment was terminated on the
ground of the installation of labor saving devices by SMC. Art. 283 of the Labor Code provides:

ART. 283. Closure of establishment and reduction of personnel. Ɯ 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 Ministry of Labor and
Employment at least one (1) month before the intended date thereof. In case of termination
due to the installation of labor saving devices or redundancy, the worker affected thereby shall
be entitled to a separation pay equivalent to at least his one (1) month pay or to at least one
(1) month pay for every year of service, whichever is higher. In case of retrenchment to
prevent losses and in cases of 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 at least one-half (½) 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.

The respondent company have demonstrated by clear and convincing evidence that the
Mandaue plant where private respondent used to work had instituted a modernization program
which consisted of, among others, "a 45 million cases per year capacity brewhouse; a 1,400 HI
per hour filtration system; a complete cellaring system with six cylindro-conical tanks at 10,000
HI each to include other tankages and accessories; a 1,000 bottles per minute liter bottling line;
and support systems such as three 1,000 HP NH3 compressors with two liquid overfeed NH3
separators; an 80,000 lbs. per hour water tube steam generator and a 700-HO air compressor"
the operations of which are "all automated using microprocessor and electronic process
controllers and instrumentation systems through intelligent interfacing with Siemens Industrial
computers." All of these high-technology innovations, at the cost of 2.6 billion pesos, truly
render the functions of the Plant Director's Office Quality Control Unit, where private
respondent was transferred after his post as Administrative Secretary to the plant manager was
validly abolished, upon management prerogative that the same "did not add value to the
organization."

Petition denied.
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FACTS

Private respondent, Insular Builders, Inc., is a family-owned corporation managed and operated
principally by Antonio Murillo, father, and his son, Rodolfo Murillo. It is engaged in the
construction business. Petitioners, on the other hand, were workers who have rendered services
in various corporations of private respondents, namely Mindanao Integrated Builders, Inc., Sta.
Clara Plywood, Inc., Insular Builders, Inc. and Queen City Builders, Inc. Early 1993, at the
height of the feud between private respondents Antonio Murillo and Rodolfo Murillo, the former
discharged the latter from his position as manager of Insular Builders, Inc. and assumed control
of the company. Petitioners found themselves in the middle of the crossfire and were told to
temporarily stop working. Later, or on July 26, 1993, private respondent Antonio Murillo
dismissed petitioners and reported the matter to the DOLE. Petitioners were however made to
continue their work, rendering the same services, in the same place, locality and at the same
office but under a different company, the Queen City Builders, Inc., managed and controlled by
private respondent Rodolfo Murillo. On August 3, 1993, petitioners filed with the NLRC-RAB X, a
complaint for illegal dismissal, non-payment of wages, 13th month pay, and retirement pay as
regards petitioner Abdon Dayson. Petitioners averred that they were terminated from
employment on July 26, 1993 without prior notice and also in absence of any valid cause. They
alleged that their termination was an off-shoot of the supposed personal rift and disagreements
between private respondents Antonio Murillo and Rodolfo Murillo. On the other hand, private
respondents Insular Builders, Inc. and Antonio Murillo deny having employed petitioners
Baltazar Quilat, Abdon Dayson and Eleuterio Ensalada as they were personal employees of and
rendering services to private respondent Rodolfo Murillo.

ISSUE

Whether or not petitioners are entitled to full back wages and separation pay considering they
were found to be illegally dismissed.

HELD
The SC held that illegally dismissed employees were entitled to full back wages that should not
be diminished or reduced by the amount they had earned from another employment during the
period of their illegal dismissal. While litigating, employees must still earn a living. Furthermore,
as penalty for their illegal dismissal, their employers must pay them full back wages. This rule
has been uniformly applied in subsequent cases.

In the present case, petitioners were dismissed because of a "change of management." They
were not given any prior written notice, but simply told that their services were terminated on
the day they stopped working for Insular Builders, Inc. Under the circumstances, the CA was
correct in upholding the labor arbiter's finding that they had been illegally dismissed. Having
been illegally dismissed, petitioners should be awarded back wages in accordance with
Bustamante v. NLRC. The fact that they worked for a sister company immediately after being
dismissed from Insular Builders, Inc. should not preclude such award.

The Court deems it appropriate, however, to reconsider such earlier ruling on the computation
of backwages as enunciated in said Pines City Educational Center case, by now holding that
comfortably with the evident legislative intent as expressed in Rep. Act. No. 6715, above-
quoted, backwages to be awarded to an illegally dismissed employee, should not, as a general
rule, be diminished or reduced by the earnings derived by him elsewhere during the period of
his illegal dismissal. The underlying reason for this ruling is that the employee, while litigating
the legality (illegality) of his dismissal, must still earn a living to support himself and family,
while full backwages have to be paid by the employer as part of the price or penalty he has to
pay for illegally dismissing his employee. The clear legislative intent of the amendment in Rep.
Act No. 6715 is to give more benefits to workers than was previously given them under the
Mercury Drug rule or the 'deduction of earnings elsewhere' rule. Thus, a closer adherence to
the legislative policy behind Rep. Act. No. 6715 points to 'full backwages' as meaning exactly
that, i.e., without deducting from backwages the earnings derived elsewhere by the concerned
employee during the period of his illegal dismissal. In other words, the provision calling for 'full
backwages' to illegally dismissed employees is clear, plain and free from ambiguity and,
therefore, must be applied without attempted or strained interpretation. Index animi sermo est.
Therefore, in accordance with R.A. No. 6715, petitioners are entitled to their full backwages,
inclusive of allowances and other benefits or their monetary equivalent, from the time their
actual compensation was withheld from them up to the time of their actual reinstatement.

While it may be true that petitioners continued to work in the same place and office as in their
previous employment, it is equally true that they had in fact been illegally dismissed by their
previous employer. Thus, they lost their former work status and benefits in a manner violative
of the law. Be it noted that without their consent, their employment was changed Ɯ from
Insular, which was controlled by Antonio Morillo; to Queen City, which was "managed and
controlled by private respondent Rodolfo Murillo." "Thus, they became new employees of the
latter firm and, as such, were deprived of seniority and other employment benefits they had
when they were still with their former employer. Moreover, petitioners are entitled to separation
pay. As provided by Article 279 of the Labor Code, an illegally dismissed employee is entitled to
the twin reliefs of 1) either reinstatement or separation pay, if reinstatement is no longer
feasible; and 2) back wages. These are distinct and separate reliefs given to alleviate the
economic setback brought about by the employee's dismissal. The award of one does not bar
the other. Back wages may be awarded without reinstatement, and reinstatement may be
ordered without awarding back wages.
Petition for backwages and separation is granted.

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FACTS

Private respondent Riviera Home Improvements, Inc. is engaged in the business of selling and
installing ornamental and construction materials. It employed petitioners Virgilio Agabon and
Jenny Agabon as gypsum board and cornice installers on January 2, 1992 until February 23,
1999 when they were dismissed for abandonment of work. Petitioners then filed a complaint for
illegal dismissal and payment of money claims, which the Labor Arbiter rendered a decision
declaring the dismissals illegal and ordered private respondent to pay the monetary claims.

ISSUE

Whether or not petitioners were illegally dismissed.

HELD

The SC held that petitioners' dismissal was for a just cause. They had abandoned their
employment and were already working for another employer. To dismiss an employee, the law
requires not only the existence of a just and valid cause but also enjoins the employer to give
the employee the opportunity to be heard and to defend himself. Article 282 of the Labor Code
enumerates the just causes for termination by the employer: (a) serious misconduct or willful
disobedience by the employee of the lawful orders of his employer or the latter's representative
in connection with the employee's 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 his 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.

Abandonment is the deliberate and unjustified refusal of an employee to resume his

employment. It is a form of neglect of duty, hence, a just cause for termination of employment
by the employer. For a valid finding of abandonment, these two factors should be present: (1)
the failure to report for work or absence without valid or justifiable reason; and (2) a clear
intention to sever employer-employee relationship, with the second as the more determinative
factor which is manifested by overt acts from which it may be deduced that the employees has
no more intention to work. The intent to discontinue the employment must be shown by clear
proof that it was deliberate and unjustified.
In February 1999, petitioners were frequently absent having subcontracted for an installation
work for another company. Subcontracting for another company clearly showed the intention to
sever the employer-employee relationship with private respondent. This was not the first time
they did this. In January 1996, they did not report for work because they were working for
another company. Private respondent at that time warned petitioners that they would be
dismissed if this happened again. Petitioners disregarded the warning and exhibited a clear
intention to sever their employer-employee relationship. The record of an employee is a
relevant consideration in determining the penalty that should be meted out to him.

In another case, the SC held that an employee who deliberately absented from work without
leave or permission from his employer, for the purpose of looking for a job elsewhere, is
considered to have abandoned his job. We should apply this rule with more reason here where
petitioners were absent because they were already working in another company.

The law imposes many obligations on the employer such as providing just compensation to
workers, observance of the procedural requirements of notice and hearing in the termination of
employment. On the other hand, the law also recognizes the right of the employer to expect
from its workers not only good performance, adequate work and diligence, but also good
conduct, and loyalty. The employer may not be compelled to continue to employ such persons
whose continuance in the service will patently be inimical to his interests.

After establishing that the terminations were for a just and valid cause, we now determine if the
procedures for dismissal were observed. The procedure for terminating an employee is found in
Book VI, Rule I, Section 2(d) of the Omnibus Rules Implementing the Labor Code:

Standards of due process: requirements of notice. Ɯ In all cases of termination of employment,

the following standards of due process shall be substantially observed:

I. For termination of employment based on just causes as defined in Article 282 of the Code:
(a) A written notice served on the employee specifying the ground or grounds for termination,
and giving to said employee reasonable opportunity within which to explain his side;
(b) A hearing or conference during which the employee concerned, with the assistance of
counsel if the employee so desires, is given opportunity to respond to the charge, present his
evidence or rebut the evidence presented against him; and
(c) A written notice of termination served on the employee indicating that upon due
consideration of all the circumstances, grounds have been established to justify his termination.
In case of termination, the foregoing notices shall be served on the employee's last known
address. Dismissals based on just causes contemplate acts or omissions attributable to the
employee while dismissals based on authorized causes involve grounds under the Labor Code
which allow the employer to terminate employees. A termination for an authorized cause
requires payment of separation pay. When the termination of employment is declared illegal,
reinstatement and full backwages are mandated under Article 279. If reinstatement is no longer
possible where the dismissal was unjust, separation pay may be granted.

Procedurally, (1) if the dismissal is based on a just cause under Article 282, the employer must
give the employee two written notices and a hearing or opportunity to be heard if requested by
the employee before terminating the employment: a notice specifying the grounds for which
dismissal is sought a hearing or an opportunity to be heard and after hearing or opportunity to
be heard, a notice of the decision to dismiss; and (2) if the dismissal is based on authorized
causes under Articles 283 and 284, the employer must give the employee and the Department
of Labor and Employment written notices 30 days prior to the effectivity of his separation.

From the foregoing rules four possible situations may be derived: (1) the dismissal is for a just
cause under Article 282 of the Labor Code, for an authorized cause under Article 283, or for
health reasons under Article 284, and due process was observed; (2) the dismissal is without
just or authorized cause but due process was observed; (3) the dismissal is without just or
authorized cause and there was no due process; and (4) the dismissal is for just or authorized
cause but due process was not observed.

In the first situation, the dismissal is undoubtedly valid and the employer will not suffer any
liability.

In the second and third situations where the dismissals are illegal, Article 279 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 the fourth situation, the dismissal should be upheld. While the procedural infirmity cannot be
cured, it should not invalidate the dismissal. However, the employer should be held liable for
non-compliance with the procedural requirements of due process.

The present case squarely falls under the fourth situation. The dismissal should be upheld
because it was established that the petitioners abandoned their jobs to work for another
company. Private respondent, however, did not follow the notice requirements and instead
argued that sending notices to the last known addresses would have been useless because they
did not reside there anymore. Unfortunately for the private respondent, this is not a valid
excuse because the law mandates the twin notice requirements to the employee's last known
address.

Thus, it should be held liable for non-compliance with the procedural requirements of due
process.
Prior to 1989, the rule was that a dismissal or termination is illegal if the employee was not
given any notice. In the 1989 case of Wenphil Corp. v. National Labor Relations Commission,
we reversed this long-standing rule and held that the dismissed employee, although not given
any notice and hearing, was not entitled to reinstatement and backwages because the dismissal
was for grave misconduct and insubordination, a just ground for termination under Article 282.
The employee had a violent temper and caused trouble during office hours, defying superiors
who tried to pacify him. We concluded that reinstating the employee and awarding backwages
"may encourage him to do even worse and will render a mockery of the rules of discipline that
employees are required to observe." We further held that:

Under the circumstances, the dismissal of the private respondent for just cause should be
maintained. He has no right to return to his former employment.

However, the petitioner must nevertheless be held to account for failure to extend to private
respondent his right to an investigation before causing his dismissal. The rule is explicit as
above discussed. The dismissal of an employee must be for just or authorized cause and after
due process. Petitioner committed an infraction of the second requirement. Thus, it must be
imposed a sanction for its failure to give a formal notice and conduct an investigation as
required by law before dismissing petitioner from employment. Considering the circumstances
of this case petitioner must indemnify the private respondent the amount of P1,000.00. The
measure of this award depends on the facts of each case and the gravity of the omission
committed by the employer.

The rule thus evolved: where the employer had a valid reason to dismiss an employee but did
not follow the due process requirement, the dismissal may be upheld but the employer will be
penalized to pay an indemnity to the employee. Where the dismissal is for a just cause, as in
the instant case, the lack of statutory due process should not nullify the dismissal, or render it
illegal, or ineffectual. However, the employer should indemnify the employee for the violation of
his statutory rights. The indemnity to be imposed should be stiffer to discourage the abhorrent
practice of "dismiss now, pay later," which we sought to deter in the Serrano ruling. The
sanction should be in the nature of indemnification or penalty and should depend on the facts
of each case, taking into special consideration the gravity of the due process violation of the
employer.

Petition dismissed but respondent ordered to pay damages.

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FACTS

Petitioner company adopted a new Car Allocation Policy. Under the provisions of the said car
plan, a prioritization schedule in the assignment of company vehicles is to be fixed based on the
sales performance of the employees. Pursuant to the same, several company cars had to be re-
assessed and re-assigned in favor of other employees more qualified under the priority list.
Incidentally, included among the vehicles that had to be re-allocated in accordance with the
priority schedule of the new car plan were those of union officers Norman Cerezo and Jossie
Roda de Guzman.

A memorandum was sent by the company to de Guzman advising her that she would have to
surrender the vehicle assigned to her in light of the new car policy. De Guzman, however,
refused to turn over said car and instead sought reconsideration from the companyƞs National
Sales Manager. The latter, regrettably, did not accede to de Guzmanƞs request. On November
29, 1990, de Guzman, thru counsel, wrote the company, asking that the withdrawal of her car
be held in abeyance. The company, however, rejected her petition. On December 7, 1990, de
Guzman received another memorandum from the company, again instructing her to return the
vehicle. The following day, de Guzman sent a letter to the company reiterating her plea for the
suspension of the withdrawal of her car. On December 17, 1990, a final warning was sent to de
Guzman instructing her to return her assigned vehicle or else she would be charged for
insubordination and be dismissed. Finally, because of de Guzmanƞs staunch refusal to comply
with the order, through a letter dated December 20, 1990, she was cited, and at the same time,
terminated for gross insubordination.

Norman Cerezo, on the other hand, was likewise sent several instructions to surrender his
assigned car. However, he also refused to comply. On account of his defiance, the company, on
December 5, 1990, sent Cerezo a notice of dismissal effective immediately upon receipt.
Forthrightly, Cerezo referred the matter to his counsel who, on the same date, sought for the
reconsideration of Cerezoƞs discharge. On December 17, 1990, Cerezo received a letter from the
company informing him that his dismissal had been reconsidered and commuted to a thirty (30)
day suspension without pay.

The two respondents, together with their union, lodged a complaint before the Labor Arbiter
against the company for unfair labor practice, illegal dismissal and illegal suspension. They aver
that the new car Allocation Policy adopted by the company was intended to harass, retaliate
and discriminate against union officers and members in light with the previous altercation
between the union and the management during the heated certification election conducted
earlier. The union also challenged the legality of the suspension and dismissal of two of its
officers, namely: Norman Cerezo and Jossie Roda de Guzman. It argued that the suspension
and dismissal were effected without any prior hearing.

The company, on the other hand, disclaimed any intent to discourage union activities and to
tamper with the right of its employees to self-organization. GLAXO-WELLCOME also maintained
that its car allocation policy was implemented merely to rationalize the distribution of company
vehicles. It also asserted that de Guzman and Cerezo were notified, via several memoranda, of
the grounds for which the dismissal and suspension were effected.

ISSUE

Whether or not the notice and hearing requirements were complied with.

HELD

The SC held that section 2(d) of Rule 1 of Book VI of the Omnibus Rules Implementing the
Labor Code (Implementing Rules) sets forth the procedure for terminating employment as
follows:

(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 to 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 the employee so desires, is given opportunity to respond to the charge, present his
evidence, or rebut the evidence presented against him; and

(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.

To stress, if the dismissal is based on a just cause under Article 282 of the Labor Code, the
employer must give the employee (1) two written notices and (2) a hearing (or at least, an
opportunity to be heard). The first notice is intended to inform the employee of the employerƞs
intent to dismiss and the particular acts or omissions for which the dismissal is sought. The
second notice is intended to inform the employee of the employerƞs decision to dismiss. This
decision, however, must come only after the employee has been given a reasonable period,
from receipt of the first notice, within which to answer the charge; and ample opportunity to be
heard with the assistance of counsel, if the employee so desires. The twin requirements of (a)
two notices and (b) hearing are necessary to protect the employeeƞs security of tenure, which is
enshrined in the Constitution, the Labor Code and related laws. The notices to be given and the
hearing to be conducted generally constitute the two-part due process requirement of law that
the employer must accord the employee. This requirement was Ơnot a mere technicality but a
requirement of due process to which every employee is entitled to insure that the employerƞs
prerogative to dismiss or lay-off is not abused or exercised in an arbitrary manner.ơ

In the present case, petitioner sent respondents a total of three Memoranda stating that their
stubborn refusal to comply with the car policy and to surrender the subject vehicle constituted
gross insubordination, for which they could be dismissed. To each Memorandum, respondents
were able to reply and explain, with the aid of their counsel, why they had refused to return the
vehicles; and, in effect, why they should not be dismissed for gross insubordination. Initially,
they asked petitioner not to implement the car policy in the light of the Complaint and the
Motion for the Issuance of a Writ of Preliminary Injunction that they had filed. They explained
that they could not work effectively and efficiently for the company without the cars that had
been assigned to them.

In their written replies to petitionerƞs succeeding Memoranda -- which reiterated that their
actions constituted gross insubordination and could result in their termination -- respondents,
still through their counsel, reasoned that they were not claiming ownership of the car. They said
that their refusal to surrender the car to the company could not be denominated as gross
insubordination, because they were merely acting upon the advice of their counsel. They added
that, to enjoin the implementation of the car policy, they had already lodged with the NLRC a
complaint for unfair labor practice. Their counsel further alleged that De Guzman was
apprehensive that she might not immediately be given a replacement upon the return of the
car. He stressed that the vehicle was necessary to prevent adverse effects on the sales
performance of respondents. Ultimately, after petitioner had sent them a final warning, to which
they also ably replied, it served them a letter terminating their employment.

Neither Section 2 of Book V of Rule XXIII nor Section 2(d) of Rule 1 of Book VI of the
Implementing Rules requires strict literal compliance with the stated procedure; only substantial
compliance is needed. On this basis, the Memoranda sent to respondents may be deemed to
have sufficiently conformed to the first notice required under the Implementing Rules. The
Memoranda served the purpose of informing them of the pending matters beclouding their
employment and of extending to them an opportunity to clear the air. In fact, not only were
respondents duly informed of the particular acts for which their dismissal was sought; they
were, in truth and in fact, able to defend themselves and to respond to the charges with the
assistance of a counsel of their own choosing.

Without a doubt, respondents in the present case deliberately disregarded or disobeyed a

company policy. Their written explanations admitted their refusal to obey petitionerƞs directive
to return the vehicles. Their justification of their refusal to obey the lawful orders of their
employer did not militate against their obvious disobedience. Under the circumstances, they
were nonetheless given adequate opportunity to answer the charge, which in fact they did. In
arriving at the decision to dismiss them, petitioner took into consideration the explanations they
had offered.

Petition is granted.

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FACTS

Private respondents were hired by JAKA but their services were eventually terminated on
August 29, 1997 due to Ơdire financial straitsơ. It is not disputed by the parties that the
termination was effected without compliance of Article 283 of the LC because no written notice
was served on the employees and the DOLE at least one month before the respondentsƞ
termination.

Respondents filed a complaint for illegal dismissal against JAKA. JAKA was defeated on appeal
in the lower court hence this petition.
ISSUE

The issues boil down to one question: What are the implications where an employee is
dismissed for cause BUT without compliance of the notice requirement under the LC?

HELD

It is clear that an employer is liable for nominal damages even if the termination were upheld
due to just causes. However, it is also important to note the different implications between a
dismissal for just cause under Article 282 and one for authorized causes under Article 283.

JUST CAUSE AUTHORIZED CAUSE

Implies that the employee has committed, Usually dismissal process is initiated by the
or is guilty of, some violation against the employerƞs exercise of his management
employer; it can be said that the employee prerogative but not because of the
himself initiated the dismissal process. employeeƞs conduct.

The rule is that separation pay is not
required.
Hence,
If the termination is based on cause but
without notice requirement, the sanction
should be tempered because the dismissal
was initiated by the employee.
The rule is that separation pay is required.
If the termination is based on cause but
without notice requirement, the sanctions
should be stiffer because the sanctions
were initiated by the employer.

SC ruled that the termination was based on authorized cause (retrenchment), but since JAKA
did not comply with the notice requirement they have to pay 50k as nominal damages for non-
compliance with statutory due process. JAKA, however should not pay separation pay because
where it is true that the rule is to grant separation pay to employees terminated due to
authorized causes, the EXCEPTION is where the closure of business or cessation of operations is
due to serious business losses or financial reverses, duly proved, as in this case.
c


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FACTS

Aberdeen Court, Inc., employed Mateo C. Agustin (Agustin), herein respondent, for the purpose
of trouble shooting the electrical problems in said petitionerƞs establishment. Agustin was
engaged on a six-month probationary basis. The employment contract provided that should his
performance be considered unsatisfactory at any time by management during his probationary
period, the management can terminate my services at any time, even before the termination of
the agreed six-month period.

During his probationary period, the personnel of Centigrade Industries, Inc. performed a
reading of the exhaust air balancing at the fifth and sixth floors of Aberdeenƞs premises.
Petitioners claim that Agustin was placed in charge of the undertaking. On the other hand,
Agustin asserts that Engr. Abad merely requested him to accompany the aforesaid personnel to
show the location of the exhaust air outlet at the fifth and sixth floors of the premises. He avers
that the request of Engr. Abad is actually the responsibility of the companyƞs mechanical
engineers. Despite the fact that the request of Engr. Abad is not a part of his job since he is not
a mechanical engineer and there were three (3) other mechanical engineers on duty in the
company premises, Agustin, being a subordinate of Engr. Abad, obliged and accompanied the
aforementioned personnel to the location. There were no other specific instructions from Engr.
Abad to petitioner with respect to the conduct or actual reading to be made by the Centigrade
personnel.

It must be noted that the reading of exhaust air balancing is under the category of heating,
ventilating and air conditioning (HVAC) which are within the realm of field of work of
mechanical engineers. Being an electrical engineer, petitioner obviously has no knowledge of
the procedure and the equipment used by mechanical engineers in the conduct of the reading
of the exhaust air balancing.

After the Centigrade personnel finished their job, they submitted their report to Agustin.
Petitioners allege that Agustin accepted and signed the report, without verifying its correctness.
Engineer Abad later checked the work of the Centigrade employees only to find out that four
rooms in the fifth floor and five rooms in the sixth floor were incorrectly done. In contrast,
Agustin states that after the report was handed to him, he took the same to Engr. Abad, who
he claims was responsible for evaluating and confirming the said report. Allegedly, instead of
signing it himself, Engr. Abad directed respondent to sign it, giving the reason that Agustin was
present when the reading was conducted. Respondent Agustin complied, but he now points out
that his signature was not accompanied by any qualification that he accepted the report on
behalf of Aberdeen. He claims that he signed merely to evidence that he received a copy of the
report. According to petitioners, Aberdeen management confronted Agustin with his failure to
check the job and asked him to explain his side. Agustin allegedly ignored management and left
the company, which made it impossible for Aberdeen to transmit any further notice to him.

However, Agustin claims that two days after the report was submitted by Centigrade Industries,
he was summarily dismissed. In the afternoon of that day, he received a telephone call from
the personnel office of respondent company ordering him to report to that office after his tour
of duty. At about seven p.m. at the personnel office, Ms. Lani Carlos of the Personnel
Department, informed him that Aberdeen Court is terminating his services as electrical
engineer. Petitioner was flabbergasted. Ms. Carlos then informed him that he could get his two
(2) weeks salary in the amount of P4,000, more or less, on the condition that he will sign some
documents which provides that the company has no more liability and that he is voluntarily
resigning from Aberdeen Court. Aware of his rights, petitioner did not sign the offered
documents. He was then hurriedly led to the door by Ms. Carlos. The following day or on
January 16, 1997, petitioner requested assistance from the Department of Labor and
Employment (DOLE). A DOLE personnel told him to report for work since private respondents
did not serve him a notice of termination. As instructed, petitioner reported for work on the
same day. Upon arriving at the company premises, petitioner asked Ms. Carlos if he could still
report for work but private respondentƞs personnel officer told him that he cannot do so.
Respondent Agustin then filed a complaint for illegal dismissal.

ISSUE

Whether or not respondent was illegally dismissed.

HELD

The SC held that it can be gleaned from Article 281 of the Labor Code that there are two
grounds to legally terminate a probationary employee. It may be done either: a) for a just
cause or b) when employee fails to qualify as a regular employee in accordance with reasonable
standards made known by the employer to the employee at the start of the employment.
Petitioners say that Agustin was terminated because he failed to qualify as a regular employee.
Petitioners, however, allegedly did not show that respondent was apprised of these reasonable
standards at the start of the employment. The rudiments of due process demand that an
employee should be apprised beforehand of the conditions of his employment and the basis for
his advancement.

The Implementing Rules of the Labor Code in Book VI, Rule I, Section 6, also provides:

Probationary employment. -- There is probationary employment where the employee, upon his
engagement, is made to undergo a trial period during which the employer determines his
fitness to qualify for regular employment, based on reasonable standards made known to him
at the time of engagement.

Probationary employment shall be governed by the following rules:

...
(c) The services of an employee who has been engaged on probationary basis may be
terminated only for a just cause, when he fails to qualify as a regular employee in accordance
with the reasonable standards prescribed by the employer.

(d) In all cases of probationary employment, the employer shall make known to the employee
the standards under which he will qualify as a regular employee at the time of his engagement.
Where no standards are made known to the employee at that time, he shall be deemed a
regular employee.

The above rule, however, should not be used to exculpate a probationary employee who acts in
a manner contrary to basic knowledge and common sense, in regard to which there is no need
to spell out a policy or standard to be met. It bears stressing that even if technically the reading
of air exhaust balancing is not within the realm of expertise of the complainant, still it ought not
to be missed that prudence and due diligence imposed upon him not to readily accept the
report handed to him by the workers of Centigrade Industries. Required of the complainant was
that he himself proceed to the work area, inquire from the workers as to any difficulties
encountered, problems fixed and otherwise observe for himself the progress and/or
condition/quality of the work performed.

As it is, the SC found it hard to believe that complainant would just have been made to sign the
report to signify his presence. By saying so, complainant is inadvertently degrading himself from
an electrical engineer to a mere watchdog. It is in this regard that the SC concured with the
respondents that by his omission, lack of concern and grasp of basic knowledge and common
sense, complainant has shown himself to be undeserving of continued employment from
probationary employee to regular employee. Nevertheless, it appears that petitioners violated
due process in the dismissal of respondent, by not affording him the required notice. As this
Court held in Agabon, et al. v. NLRC, an employer who dismisses an employee for just cause
but does so without notice, is liable for nominal damages in the amount of P30,000.

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FACTS

A certain Villanueva alleged that he purchased a round trip ticket for the petitionerƞs Iloilo-
Manila-Iloilo flight route. He further averred that he took PAL flight PR 140 bound for Manila but
decided not to take the return flight to Iloilo and took a boat instead. Subsequently, he went to
the PAL office in Iloilo to request for a refund of his unused Manila-Iloilo ticket. To his
consternation, he was told that his ticket did not show that he took the PR 140 (Iloilo-Manila)
flight on August 22, 1995 and neither did his name appear in the passenger boarding manifest
for the said flight. Upon further verification, it was discovered that another person had collected
the refund of his Manila-Iloilo ticket.

Villanuevaƞs complaint triggered an investigation conducted by the petitioner through its internal
audit. The initial findings showed that PAL Ticket No. 079 2420943398 was issued to Villanueva
for the Iloilo-Manila-Iloilo route. He was originally booked on PAL flight PR 140 for Iloilo-Manila
on August 22, 1995. Villanueva actually took that flight and surrendered the Iloilo-Manila
coupon of his ticket to the petitionerƞs check-in counter in Iloilo. The Check-in Clerks then on
duty were Perseus Dinglasa and Claude Corpuz while the Load Control Clerk was Arturo Garrido.
However, with respect to Villanuevaƞs ticket, which was surrendered to Check-in Clerks Dinglasa
and Corpuz, it did not bear any boarding sequence number, seat number or baggage
information. Neither did it bear the initials of Dinglasa or Corpuz. Worse, Villanuevaƞs name did
not appear in the flight manifest prepared by Garrido. It appeared that Villanuevaƞs checked-in
ticket was not invalidated by Garrido as it did not bear any perforation or punched holes.

The investigation further showed that Villanuevaƞs PAL Ticket No. 079 2420943398 was
cancelled and in lieu thereof PAL Ticket No. 079 2420946097 was issued in his name, this time
for the Bacolod-Manila route initially with an open date. The new ticket was issued by Ticket
Freight Clerk Roberto Dinson. Thereafter, it was received by respondent Alendry De Leon, also
a Ticket Freight Clerk, who affixed revalidation sticker No. 11277306 thereon showing booking
on PAL flight PR 134 (Bacolod-Manila) on August 30, 1995. Subsequently, payment for the
refund of Villanuevaƞs new ticket was made by Dinson.

Upon finding that irregularities attended the refund of Villanuevaƞs ticket, the petitioner
conducted a more thorough investigation on the other tickets that had been refunded in its
Iloilo Airport Ticket Office for the period of July to September 1995. The petitionerƞs auditors
were able to contact those passengers who purportedly had their tickets refunded. These
passengers confirmed that they actually took their flights but, upon verification, their names did
not appear in the passenger boarding manifest of their respective flights. Further, they did not
ask for the refund of their tickets. Some even turned over the passenger coupons of their flown
or used tickets or boarding passes to prove that they took their flights. More than sixty (60)
passengers executed affidavits and/or certificates attesting that they actually took their
respective flights and that they did not request for any refund of their used or flown tickets nor
cancelled their bookings.

The petitioner then formed a Special Committee to look into the anomalous transactions. The
modus operandi was outlined, thus:

1. Upon presentation by the passenger of his ticket to the Check-in Clerk, the Check-in Clerk
issues a Boarding Pass. Without indicating the passengerƞs sequence number, seat number,
baggage information, nor his initial, the Check-in Clerk forwards the flight ticket coupon to the
Load Control Clerk for posting/listing of the name of the passenger in the Passenger Boarding
Manifest/Flight Manifest;

2. The Load Control Clerk instead of posting/listing the needed data in the Passenger Boarding
Manifest/Flight Manifest forwards the flight ticket coupon (without invalidating/perforating it) to
Ticket Freight Clerks/Check-in Clerks where the surrendered flight ticket coupon is either:
a. Rerouted, reissued or Ơin-lieuedơ to another sector;
b. Revalidated to make it appear that the passenger backed out;
c. Revalidated to open status.

The above-mentioned activities of the Ticket Freight Clerks and Check-in Clerks after the flight
ticket coupons are handed to them by [the] Load Control Clerk allow them to refund the same
without arousing suspicion from the Station and Accounting Department. There are instances
specially in cases of full flights where full fare coupons were even substituted with child fare
(half fare) tickets issued to fictitious persons or non-revenue tickets (trip pass) of their
dependents to ensure that the passenger whose ticket they intend to refund is assured a seat
and would not be bumped off to prevent early detection of this malevolent scheme.

From the foregoing, it was deduced that the scheme could only have been effected by the
employees of the petitioner themselves and by not just one but several of them acting in
concert. The investigation showed that the fraudulent refunds were perpetrated by the
respondents. These employees were all assigned at the petitionerƞs Iloilo Airport Ticket Office. It
appeared that the anomalous transactions occurred whenever these employees were on duty
and that the fraudulently refunded tickets passed through their hands for processing.
Consequently, administrative charges were filed against them for ƠFraud against the Company,
Falsification of Company Documents and Failure on the Job.ơ Each of the eight employees was
furnished with their respective notices of the administrative charges against them.

As indicated in the notices, the said employees were given ten (10) days to submit their
respective sworn written answers to the charges against them. Clarificatory hearings were
conducted by the petitionerƞs Administrative Investigating Panel where the said employees
appeared with their respective counsels. Thereafter, the panel submitted its report and
recommendation finding the respondent-employees guilty of the charges against them.
Accordingly, the petitioner meted the penalty of dismissal on these employees. It furnished
them their respective notices of dismissal stating therein the reasons and grounds thereforE.

The employees concerned, including respondent, filed their respective complaints for illegal
dismissal against the petitioner. The cases were consolidated and jointly tried. The Labor Arbiter
conducted a full-blown trial where the petitioner presented three of its employees who
described the procedure the ticket undergoes in the normal course from when the passenger
buys it to when it is used with the passenger actually boarding his or her flight. The Labor
Arbiter later rendered judgment dismissing the complaints for illegal dismissal. It was held that
the petitioner was able to establish by substantial evidence that there was valid and just cause
to terminate the employment of the complainants.

ISSUE

Whether or not respondent de Leon was illegally terminated.

HELD

The SC held that the CA erred in ruling that de Leon was illegally terminated. It ruled that the
findings and conclusions of the Labor Arbiter with respect to the validity of the dismissal of
respondent De Leon and his companions, which the NLRC affirmed in toto, are supported by
substantial evidence. The Court observes that the petitioner has presented ample evidence
showing respondent De Leonƞs involvement in the anomalous transactions of refunding used or
flown tickets. His involvement has been shown particularly in the instances of fraudulent refund
of tickets. To the Courtƞs mind these incidents, culled from the affidavits of the passengers and
the documentary evidence, indubitably establish respondent De Leonƞs involvement in the
fraudulent refund of tickets to the petitionerƞs prejudice.

Respondent De Leon claims that his acts were routinary and innocent and were made in the
performance of his functions. This contention is flimsy. Significantly, he performed these acts of
Ơin-lieuing,ơ rerouting, reissuing and affixing revalidation stickers without the passengers
themselves requesting such, because they, in fact, took their flights. Further, all these occurred
in the month of August 1995; hence, contrary to the CAƞs theory, they could not be considered
as Ơisolated actsơ which Ơcould be dismissed as negligence or oversightơ on the part of
respondent De Leon. Rather, his acts were highly irregular and convincingly demonstrate that
he acted in cahoots with the other dismissed employees to perpetrate their scam. In particular,
his acts of Ơin-lieuing,ơ rerouting, reissuing and affixing revalidation stickers facilitated the
fraudulent refund of the tickets.

In this case, there is ample evidence to support the findings and conclusions of the NLRC,
affirming those of the Labor Arbiter, that the dismissed employees, including respondent De
Leon, acted in concert to defraud the petitioner. As shown earlier, in not a few instances, the
tickets that were fraudulently refunded were processed by respondent De Leon, together with
the other dismissed employees, in connection with their functions without which collusion the
said anomalies could not have been committed.

Accordingly, the NLRC and the Labor Arbiter correctly found that the petitioner was justified in
terminating the employment of the dismissed employees, including respondent De Leon, as
there existed valid and just cause therefor. Their misconduct rendered them unworthy of the
trust and confidence reposed on them by the petitioner and warranted their dismissal. The CA
committed reversible error in setting aside those findings and conclusions with respect to
respondent De Leon.

Petition is granted.

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FACTS
Rogelio Javier was employed by the Standard Electric Manufacturing Corporation (SEMC) on
January 15, 1973 as radial spot machine operator in its Production Department. On July 31,
1995, Javier failed to report for work. He failed to notify the SEMC of the reason for his
absences. On August 9, 1995, he was arrested and detained for the charge of rape upon
complaint of his neighbor, Genalyn Barotilla. After the requisite preliminary investigation, an
Information for rape was filed in the Regional Trial Court (RTC) of Pasig. On January 13, 1996,
the SEMC received a letter from Javier, through counsel, informing the SEMC that Javier was
detained for the charge of rape and for that reason failed to report for work. He requested the
SEMC to defer the implementation of its intention to dismiss him. The SEMC denied Javierƞs
request and issued a Memorandum terminating his employment for having been absent without
leave (AWOL) for more than fifteen days from July 31, 1995; and (b) for committing rape.

On May 17, 1996, the RTC issued an Order granting Javierƞs demurrer to evidence and ordered
his release from jail. Shortly thereafter, Javier reported for work, but the SEMC refused to
accept him back. A grievance meeting between the Union, Javier and the SEMC was held, but
SEMC refused to re-admit Javier. On August 2, 1996, the Union and Javier filed a Complaint for
illegal dismissal against the SEMC before the NLRC. He averred that since the reason for his
detention for rape was non-existent, the termination of his employment was illegal.

For its part, the SEMC averred that Javierƞs prolonged absences caused irreparable damages to
its orderly operation; he had to be replaced so that the continuity and flow of production would
not be jeopardized. It could not afford to wait for Javierƞs indefinite return from detention, if at
all. The SEMC insisted that conformably with its Rules and Regulations, it was justified in
dismissing Javier for being absent without leave for fifteen days or so.

ISSUE

Whether or not Javier was illegally dismissed.

HELD

The SC held that respondent Javierƞs absence from August 9, 1995 cannot be deemed as an
abandonment of his work. Abandonment is a matter of intention and cannot lightly be inferred
or legally presumed from certain equivocal acts. To constitute as such, two requisites must
concur: first, the employee must have failed to report for work or must have been absent
without valid or justifiable reason; and second, there must have been a clear intention on the
part of the employee to sever the employer-employee relationship as manifested by some overt
acts, with the second element being the more determinative factor. Abandonment as a just
ground for dismissal requires clear, willful, deliberate, and unjustified refusal of the employee to
resume his employment. Mere absence or failure to report for work, even after notice to return,
is not tantamount to abandonment.

Moreover, respondent Javierƞs acquittal for rape makes it more compelling to view the illegality
of his dismissal. The trial court dismissed the case for Ơinsufficiency of evidence,ơ and such
ruling is tantamount to an acquittal of the crime charged, and proof that respondent Javierƞs
arrest and detention were without factual and legal basis in the first place.

The petitioner acted with precipitate haste in terminating respondent Javierƞs employment on
January 30, 1996, on the ground that he had raped the complainant therein. Respondent Javier
had yet to be tried for the said charge. In fine, the petitioner prejudged him, and preempted
the ruling of the RTC. The petitioner had, in effect, adjudged respondent Javier guilty without
due process of law. While it may be true that after the preliminary investigation of the
complaint, probable cause for rape was found and respondent Javier had to be detained, these
cannot be made as legal bases for the immediate termination of his employment.

Moreover, the petitioner did not accord respondent Javier an opportunity to explain his
absences from July 31, 1995. The petitionerƞs reliance on the alleged Letter dated August 17,
1995 is misplaced. There is no evidence on record that respondent Javier received such letter,
and its sudden presence is highly suspect. The Court agrees with respondent Javierƞs
observation that the letter was not mentioned nor annexed in the petitionerƞs Position Paper,
Rejoinder and even in its Opposition to the Appeal. The letter surfaced only on a much later
date, in 1999, when it was formally offered in evidence[26] and referred to in the petitionerƞs
Memorandum before the Labor Arbiter ƛ a clear inference that the said letter was but an
afterthought to justify petitionerƞs termination of respondent Javierƞs employment.

Further, we cannot subscribe to the petitionerƞs contention that the due process requirement
relative to the dismissal of respondent Javier was duly complied with when he was allowed to
explain his side during the grievance machinery conferences. Indeed, in the case at bar, the
petitioner did not conduct any investigation whatsoever prior to his termination, despite being
informed of respondent Javierƞs predicament by the latterƞs siblings, his Union and his counsel.
The meetings held pursuant to the grievance machinery provisions of the collective bargaining
agreement were only done after his dismissal had already taken effect on February 5, 1996.
Clearly, well-meaning these conferences might be, they can not cure an otherwise unlawful
termination. It bears stressing that for a dismissal to be validly effected, the twin requirements
of due process ƛ notice and hearing ƛ must be observed. In dismissing an employee, an
employer has the burden of proving that the former worker has been served two notices: (1)
one to apprise him of the particular acts or omissions for which his dismissal is sought; and (2)
the other to inform him of his employerƞs decision to dismiss him. As to the requirement of a
hearing, the essence of due process lies in an opportunity to be heard, and not always and
indispensably in an actual hearing.

Petition is dismissed.

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FACTS

Robert C. Casol was a deliveryman of respondent Purefoods Corporation. After completing the
deliveries on August 29, 1992, Casol allegedly informed Nestor Polendey who was the
designated driver of the van to leave the vehicle behind as he would use it to load LPG for
house use. Polendey thus left the vehicle with Casol while he proceeded back to the plant to
punch out. At around 2:00 a.m. of the following day, Casol reported to the motorpool of
respondent company that the van broke down and had to be towed. Upon inspection, it was
discovered that the van had a damaged crankcase and a cracked oil pan for which respondent
company spent P26,946.42 for the repair. Casol and Polendey were required to submit their
written explanation on the incident. However, only Polendey complied, alleging that Casol asked
him to get off the vehicle and leave the van with him. After the investigation, Casol was found
guilty of violating Section 15, Article VI of respondent companyƞs Amended Rules and
Regulations,particularly for unauthorized use of vehicle resulting to damages exceeding
P25,000.00. His employment was terminated effective November 9, 1992.

Casol and his union, filed a complaint for illegal dismissal disclaiming the formerƞs liability for the
damage, and alleging that even assuming that he was, the cost did not exceed P25,000.00 in
which case the imposable penalty under the company rules should only be suspension for six
(6) days. The labor arbiter found that the respondent company failed to establish that Casol
was responsible for the damage to the vehicle hence his dismissal was declared illegal. On
appeal, the NLRC reversed and set aside the arbiterƞs decision. It found Casolƞs use of the
vehicle as unauthorized and the damage caused exceeded P25,000.00; thus, respondent
company was justified in dismissing him based on loss of trust and confidence. The NLRC also
dismissed the complaint for lack of merit. On certiorari, the Court of Appeals affirmed the
findings of the NLRC that Casolƞs dismissal was justified and that the amount of damage
exceeded P25,000.00. Petitionersƞ motion for reconsideration was denied.

ISSUE

Whether or not petitioner Casol was illegally dismissed?

HELD

The SC ruled that Casol used the vehicle without authority and should be made liable therefor.

However, the crux of the dispute lies in the actual amount spent to repair the vehicle
considering that per respondent companyƞs rulebook, the penalty for Casolƞs offense could
either be suspension for six (6) days or outright dismissal, depending on whether the actual
cost of the damage exceeds P25,000.00.

Respondent companyƞs Amended Rules and Regulations provides that the penalty for the
unauthorized use of vehicles, if the amount of damage exceeds P10,000.00 but not more that
P25,000.00, is suspension for six (6) working days, for the 1st offense, suspension of fifteen
(15) working days, for the 2nd offense, and dismissal, for the 3rd offense. If the amount of
damage exceeds P25,000.00, the penalty is outright dismissal. Attached to the affidavit of Efren
Espina, an automotive mechanic and supervisor at respondent companyƞs motorpool, is a listing
of the essential and non-essential expenses incurred to repair the vehicle based on the itemized
receipt[19] issued by Chandler Phils. Inc. (Chandler) which repaired the van.

It is fair that only those expenses which are essential or indispensable to repair the damage and
directly related to the infraction committed by Casol shall be considered. Thus, non-essential
expenses or those which are required only to put the vehicle in optimum condition and resulting
from the normal wear and tear must be excluded from the computation. As indicated above, the
total expenses essential and indispensable to repair the damage amounted to P27,219.17. At
first glance, nothing seems amiss in the computation but a closer evaluation reveals that
respondent company erroneously applied the 10% VAT on the aggregate cost of labor and
essential spare parts. It is well to note that in the itemized official receipt issued by Chandler,
the 10% VAT was applied only to the cost of labor. This implies, therefore, that the VAT
component was deemed included in the unit price of the spare parts. Thus, it was error for
respondent company to impose anew the VAT thereon; it should have limited its application on
the cost of labor only.

Plainly, the cost of the damage directly related to or caused by the petitionerƞs infraction did not
exceed the P25,000.00 limit. Thus, the appropriate penalty was only suspension for six (6)
days, it appearing that it was Casolƞs first offense, and not outright dismissal. We carefully
reviewed the records of the case and we find no evidence and neither did respondent company
claim that it paid any amount other than those indicated in the receipts. Time and again we
have said that in illegal dismissal cases, the employer is burdened to prove just cause for
terminating the employment of its employee with clear and convincing evidence. The weakness
of the employeeƞs defense should not operate to relieve nor discharge the employer of its
burden to prove its charges pursuant to the guaranty of tenure granted by the Constitution to
employees under the Labor Code. The case of the employer must stand or fall on its own
merits.

Petition is granted.

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FACTS

Petitioner, Majurine L. Mauricio, started working as an Administrative Assistant in the Legal

Department of the Manila Banking Corporation on July 1, 1999 as a probationary employee. As
a pre-employment requirement, the bank directed the submission by petitioner of, among other
things, a 1x1 ID picture, 2 x 2 ID picture, two reference letters, and clearance from the
employeeƞs previous employment. Petitioner failed to submit the required documents, however.
The bank thus gave her up to December 15, 1999 to comply, and advised her that the
processing of her regularization as employee would be held in abeyance. Despite the deadline
given her, petitioner still failed to comply with the requirements, drawing the bank to send her a
Memorandum dated December 27, 1999 signed by its Vice-President for Personnel Department
Clarence D. Guerrero (Guerrero), giving her until December 29, 1999 to submit the
requirements, and informing that her failure to do so would cause the termination of her
employment effective December 29, 1999.

Petitioner, by letter of December 28, 1999, informed the bank that she could not secure a
clearance from her previous employer, the Manila Bankers Life Insurance Corporation (MBLIC),
as she had a pending case with it. She thus requested that any action relative to her
employment be held in abeyance as she was still following up the early resolution of the case.
Said request was denied by the bank. Petitioner thus filed on January 21, 2000 a complaint for
illegal dismissal, unpaid salary, and moral and exemplary damages against the bank and
Guerrero.

ISSUE

Whether or not petitioner was illegally dismissed.

HELD

The SC held that the CA was correct when it ruled that in terminating petitionerƞs probationary
employment due to her failure to submit a certificate of clearance from her previous employer,
the bank was merely exercising its management prerogative.

Petition is denied.

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FACTS

On February 23, 1999, petitioner Heavylift, a maritime agency, thru a letter signed by petitioner
Josephine Evangelio, Administrative and Finance Manager of Heavylift, informed respondent
Ma. Dottie Galay, Heavylift Insurance and Provisions Assistant, of her low performance rating
and the negative feedback from her team members regarding her work attitude. The letter also
notified her that she was being relieved of her other functions except the development of the
new Access program. Subsequently, on August 16, 1999, Galay was terminated for alleged loss
of confidence. Thereafter, she filed with the Labor Arbiter a complaint for illegal dismissal and
nonpayment of service incentive leave and 13th month pay against petitioners.

Petitioners alleged that Galay had an attitude problem and did not get along with her co-
employees for which she was constantly warned to improve. Petitioners aver that Galayƞs
attitude resulted to the decline in the companyƞs efficiency and productivity. Petitioners
presented a letter dated February 23, 1999 and a notice of termination dated August 16, 1999.
ISSUE

Whether or not respondent Galay was illegally dismissed.

HELD

The SC held that an employee who cannot get along with his co-employees is detrimental to the
company for he can upset and strain the working environment. Without the necessary
teamwork and synergy, the organization cannot function well. Thus, management has the
prerogative to take the necessary action to correct the situation and protect its organization.
When personal differences between employees and management affect the work environment,
the peace of the company is affected. Thus, an employeeƞs attitude problem is a valid ground
for his termination. It is a situation analogous to loss of trust and confidence that must be duly
proved by the employer. Similarly, compliance with the twin requirement of notice and hearing
must also be proven by the employer.

However, we are not convinced that in the present case, petitioners have shown sufficiently
clear and convincing evidence to justify Galayƞs termination. Though they are correct in saying
that in this case, proof beyond reasonable doubt is not required, still there must be substantial
evidence to support the termination on the ground of attitude. The mere mention of negative
feedback from her team members, and the letter dated February 23, 1999, are not proof of her
attitude problem. Likewise, her failure to refute petitionersƞ allegations of her negative attitude
does not amount to admission. Technical rules of procedure are not binding in labor cases.
Besides, the burden of proof is not on the employee but on the employer who must
affirmatively show adequate evidence that the dismissal was for justifiable cause.

Neither does the February 23, 1999 letter constitute the required notice. The letter did not
inform her of the specific acts complained of and their corresponding penalty. The law requires
the employer to give the worker to be dismissed two written notices before terminating his
employment, namely, (1) a notice which apprises the employee of the particular acts or
omissions for which his dismissal is sought; and (2) the subsequent notice which informs the
employee of the employerƞs decision to dismiss him. Additionally, the letter never gave
respondent Galay an opportunity to explain herself, hence denying her due process.

In sum, we find that Galay was illegally dismissed, because petitioners failed to show
adequately that a valid cause for terminating respondent exists, and because petitioners failed
to comply with the twin requirement of notice and hearing.

The decisions assailed are affirmed.













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FACTS

Facts: Regina M. Gopez wrote a letter to respondent Maynilad Water Services, Inc. alleging that
she entered into an agreement with petitioner Jesus B. Lopez, Mayniladƞs Senior Engineering
Assistant, to repair her water meter for a fee. Despite payment of P500, petitioner allegedly
never returned to fix the defective meter.

Mayniladƞs Head of Technical Operations-Sampaloc Sector issued a memorandum requiring

petitioner to answer the allegations. Petitioner denied the charges against him.

Maynilad also formed an Ad-Hoc Investigation Panel which recommended petitionerƞs dismissal
from the service based on its findings that petitioner committed serious misconduct in
contracting an unauthorized work for a fee. Thus, petitioner was served a notice of termination.

Aggrieved, petitioner filed a complaint for illegal dismissal claiming that he was dismissed
without just cause.

ISSUE

Whether or not petitionerƞs termination was valid.

HELD

Misconduct has been defined as improper or wrong conduct. It is the transgression of some
established and definite rule of action, a forbidden act, a dereliction of duty, willful in character,
and implies wrongful intent and not mere error of judgment. The misconduct to be serious must
be of such grave and aggravated character. Such misconduct, however serious, must
nevertheless be in connection with the employeeƞs work to constitute just cause for his
separation. Thus, for misconduct or improper behavior to be a just cause for dismissal: (a) it
must be serious; (b) must relate to the performance of the employeeƞs duties; and, (c) must
show that the employee has become unfit to continue working for the employer.

As a measure of self-preservation against acts inimical to its interests, an employer has the
right to dismiss an employee found committing acts of dishonesty and disloyalty. The employer
may not be compelled to continue to employ such a person whose continuance in the service
would patently be inimical to his employerƞs interest. The law, in protecting the rights of
workers, authorizes neither oppression nor self-destruction of the employer.

In the instant case, we find the penalty of dismissal from service reasonable and appropriate
and a valid exercise of management prerogative. Maynilad specifically prescribes that, should
any employee begin or continue to engage in conflict of interest activities despite management
pronouncement or disapproval, the appropriate disciplinary sanctions shall be imposed on him.
Appropriate disciplinary sanction, such as termination, is within the purview of management
imposition.

That Maynilad suffered no damage resulting from the acts of petitioner is inconsequential. In
Glaxo Wellcome Philippines, Inc. v. Nagkakaisang Empleyado ng Wellcome-DFA (NEW-DFA), we
held that deliberate disregard or disobedience of company rules could not be countenanced,
and any justification that the disobedient employee might put forth would be deemed
inconsequential. The lack of resulting damage was unimportant, because Ơthe heart of the
charge is the crooked and anarchic attitude of the employee towards his employer. Damage
aggravates the charge but its absence does not mitigate nor negate the employeeƞs liability.ơ
What is abhorrent and punishable is the act of contracting unauthorized work for a fee,
regardless of whether the act caused damage to the company. Thus, we hold that Maynilad
validly terminated the services of petitioner on the ground of serious misconduct which resulted
to the loss of trust of Maynilad upon petitioner because his credibility in doing his job as a team
leader of a repair crew has already been eroded.

As regards to the amount awarded to the petioner for financial assistance, the same must be
deleted. Financial assistance may be given as a measure of social justice in exceptional
circumstances and as an equitable concession. It is allowed only in those instances where the
employee is validly dismissed for causes other than serious misconduct or those reflecting on
his moral character.

WHEREFORE, the petition is DENIED.

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FACTS

On May 8, 2001, DAP received a letter from International Distributors Corporation (IDC)
informing it of the termination of their distributorship agreement. DAP alleges that by reason of
this termination, it was constrained to cease its business operations and to terminate the
employment of its employees, including respondent Maureen Marcial who had been DAP's
salesperson from May 4, 2000 until July 2001.

DAP claims that it notified its employees of the termination of their employments by reason of
redundancy. On July 28, 2001, DAP paid their wages and asked them to sign the payslips. It
likewise informed them that they would be paid their separation pay in installments because of
liquidity problems. The checks representing the separation pay were issued to the employees.
However, Marcial and 17 other employees refused to accept the checks and instead, filed a
complaint for illegal dismissal, money claims for non-payment of overtime pay and separation
pay and damages with the NLRC. During the course of the proceedings before the NLRC, 16
employees withdrew their complaint. Only respondent Marcial and Jason Diapen pursued their
claims.

Respondents alleged that DAP failed to comply with the notice requirement for a valid
termination due to redundancy or retrenchment. Respondent claims that it was only on July 28,
2001, when the employees of DAP were given their salaries and were asked to sign the
payslips, that they realized that their services were being terminated. Petitioners argue that
respondent cannot complain of lack of notice because all of DAPƞs employees were aware of the
cancellation of the distributorship agreement and the case it filed against IDP. As such,
respondent's actual knowledge of the redundancy is equivalent to notice.

ISSUE

Whether or not respondent was validly dismissed.

HELD

The SC held that article 283 of the Labor Code clearly provides:
Art. 283. Closure of establishment and reduction of personnel. ƛ 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 Ministry of Labor and
Employment at least one (1) month before the intended date thereof ....

Thus, we have held that the employer must comply with the following requisites to ensure the
validity of the redundancy program: 1) a written notice served on both the employees and the
Department of Labor and Employment (DOLE) at least one month prior to the intended date of
retrenchment; 2) payment of separation pay equivalent to at least one month pay or at least
one month pay for every year of service, whichever is higher; 3) good faith in abolishing the
redundant positions; and 4) fair and reasonable criteria in ascertaining what positions are to be
declared redundant and accordingly abolished. As mentioned earlier, respondent does not
question the soundness of the redundancy program implemented by DAP, but the lack of notice
required by law.

The employeesƞ actual knowledge of the termination of DAPƞs distributorship agreement with
IDP is not sufficient to replace the formal and written notice required by the law. In the written
notice, the employees are informed of the specific date of the termination, at least a month
prior to the date of effectivity, to give them sufficient time to make necessary arrangements. In
this case, notwithstanding the employeesƞ knowledge of the cancellation of the distributorship
agreement, they remained uncertain about the status of their employment when DAP failed to
formally inform them about the redundancy.

Furthermore, the validity of a termination can exist independently of the procedural infirmity in
the dismissal. This is not the first time where the Court upheld the dismissal but held the
employer liable for non-compliance with the procedural requirements. In Agabon v. National
Labor Relations Commission, the Court found that the dismissal of the employees therein as
valid and for a just cause because abandonment was firmly established. Nonetheless, the
employer was held liable because it was proven that the twin requirements of notice and
hearing were not followed.

However, in lieu of the payment of backwages, the employer was ordered to pay indemnity in
the form of nominal damages, thus:

The violation of the petitionersƞ right to statutory due process by the private respondent
warrants the payment of indemnity in the form of nominal damages. The amount of such
damages is addressed to the sound discretion of the court, taking into account the relevant
circumstancesƦ. We believe this form of damages would serve to deter employers from future
violations of the statutory due process rights of employees. At the very least, it provides a
vindication or recognition of this fundamental right granted to the latter under the Labor Code
and its Implementing Rules.

The above ruling was qualified in the case of Jaka Food Processing Corporation v. Pacot. In
Jaka, the employees were terminated because the corporation was financially distressed.
However, the employer failed to comply with the notice requirement under Article 283 of the
Labor Code when it failed to serve a written notice to the employees and the DOLE at least one
month before the intended date of termination. Significantly, the Court distinguished the case
from Agabon saying:

The difference between Agabon and the instant case is that in the former, the dismissal
was based on a just cause under Article 282 of the Labor Code while in the present case,
respondents were dismissed due to retrenchment, which is one of the authorized causes under
Article 283 of the same Code.

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

On another breath, a dismissal for an authorized cause under Article 283 does not necessarily
imply delinquency or culpability on the part of the employee. Instead, the dismissal process is
initiated by the employerƞs exercise of his management prerogative, i.e. when the employer
opts to install labor saving devices, when he decides to cease business operations or when, as
in this case, he undertakes to implement a retrenchment program.

Thus, we qualified the ruling in Agabon in this wise:

Accordingly, it is wise to hold that: (1) if the dismissal is based on a just cause under
Article 282 but the employer failed to comply with the notice requirement, the sanction to be
imposed upon him should be tempered because the dismissal process was, in effect, initiated by
an act imputable to the employee; and (2) if the dismissal is based on an authorized cause
under Article 283 but the employer failed to comply with the notice requirement, the sanction
should be stiffer because the dismissal process was initiated by the employerƞs exercise of his
management prerogative.

In light of the aforequoted ruling, we find the amount of P50,000.00 sufficient under the
circumstances as indemnity for the violation of respondentƞs statutory rights.

As provided in Article 283 of the Labor Code, respondent is likewise entitled to separation pay
equivalent to at least her one month pay or to at least one month pay for every year of service,
whichever is higher. The records clearly show that respondentƞs length of service is one year
and two months. She is therefore also entitled to separation pay equivalent to one month pay.

Petition is denied.
c


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FACTS

Petitioner Renato S. Gatbonton is an associate professor of respondent Mapua Institute of

Technology (MIT), Faculty of Civil Engineering. Some time in November 1998, a civil
engineering student of respondent MIT filed a letter-complaint against petitioner for
unfair/unjust grading system, sexual harassment and conduct unbecoming of an academician.
Pending investigation of the complaint, respondent MIT, through its Committee on Decorum
and Investigation placed petitioner under a 30-day preventive suspension effective January 11,
1999. The committee believed that petitionerƞs continued stay during the investigation affects
his performance as a faculty member, as well as the studentsƞ learning; and that the suspension
will allow petitioner to Ơprepare himself for the investigation and will prevent his influences to
other members of the community.ơ Thus, petitioner filed with the NLRC a complaint for illegal
suspension, damages and attorneyƞs fees.

Petitioner questioned the validity of the administrative proceedings with the Regional Trial Court
of Manila in a petition for certiorari but the case was terminated on May 21, 1999 when the
parties entered into a compromise agreement wherein respondent MIT agreed to publish in the
school organ the rules and regulations implementing R.A. No. 7877 or the Anti-Sexual
Harassment Act; disregard the previous administrative proceedings and conduct anew an
investigation on the charges against petitioner. Petitioner agreed to recognize the validity of
the published rules and regulations, as well as the authority of respondent to investigate, hear
and decide the administrative case against him.

ISSUE

Whether or not the preventive suspension of petitioner was valid.

HELD

The SC held that preventive suspension is a disciplinary measure for the protection of the
companyƞs property pending investigation of any alleged malfeasance or misfeasance
committed by the employee. The employer may place the worker concerned under preventive
suspension if his continued employment poses a serious and imminent threat to the life or
property of the employer or of his co-workers. However, when it is determined that there is no
sufficient basis to justify an employeeƞs preventive suspension, the latter is entitled to the
payment of salaries during the time of preventive suspension.

R.A. No. 7877 imposed the duty on educational or training institutions to Ơpromulgate rules and
regulations in consultation with and jointly approved by the employees or students or trainees,
through their duly designated representatives, prescribing the procedures for the investigation
of sexual harassment cases and the administrative sanctions therefor.ơ Petitionerƞs preventive
suspension was based on respondent MITƞs Rules and Regulations for the Implementation of
the Anti-Sexual Harassment Act of 1995, or R.A. No. 7877. Rule II, Section 1 of the MIT Rules
and Regulations provides:

Section 1. Preventive Suspension of Accused in Sexual Harassment Cases. Any member of the
educational community may be placed immediately under preventive suspension during the
pendency of the hearing of the charges of grave sexual harassment against him if the evidence
of his guilt is strong and the school head is morally convinced that the continued stay of the
accused during the period of investigation constitutes a distraction to the normal operations of
the institution or poses a risk or danger to the life or property of the other members of the
educational community.

However, the same is still not effective since it was still to be published as ruled in Tañada vs.
Tuvera:
Ʀ all statutes, including those of local application and private laws, shall be published as a
condition for their effectivity, which shall begin fifteen days after publication unless a different
effectivity is fixed by the legislature.

Covered by this rule are presidential decrees and executive orders promulgated by the President
in the exercise of legislative powers whenever the same are validly delegated by the legislature
or, at present, directly conferred by the Constitution. Administrative rules and regulations must
also be published if their purpose is to enforce or implement existing law pursuant also to a
valid delegation.

Interpretative regulations and those merely internal in nature, that is, regulating only the
personnel of the administrative agency and not the public, need not be published. Neither is
publication required of the so-called letters of instructions issued by administrative superiors
concerning the rules or guidelines to be followed by their subordinates in the performance of
their duties.

The SC agreed that the publication must be in full or it is no publication at all since its purpose
is to inform the public of the contents of the laws.

The Mapua Rules is one of those issuances that should be published for its effectivity, since its
purpose is to enforce and implement R.A. No. 7877, which is a law of general application.[14]
In fact, the Mapua Rules itself explicitly required publication of the rules for its effectivity, as
provided in Section 3, Rule IV (Administrative Provisions), which states that Ơ[T]hese Rules and
Regulations to implement the Anti-Sexual Harassment Act of 1995 shall take effect fifteen (15)
days after publication by the Committee.ơ Thus, at the time of the imposition of petitionerƞs
preventive suspension on January 11, 1999, the Mapua Rules were not yet legally effective, and
therefore the suspension had no legal basis.

Moreover, even assuming that the Mapua Rules are applicable, the Court finds that there is no
sufficient basis to justify his preventive suspension. Under the Mapua Rules, an accused may
be placed under preventive suspension during pendency of the hearing under any of the
following circumstances:
(a) if the evidence of his guilt is strong and the school head is morally convinced that the
continued stay of the accused during the period of investigation constitutes a distraction to the
normal operations of the institution; or
(b) the accused poses a risk or danger to the life or property of the other members
of the educational community.

In petitionerƞs case, there is no indication that petitionerƞs preventive suspension may be based
on the foregoing circumstances. Committee Resolution No. 1 passed by the Committee on
Decorum and Investigation states the reasons for petitionerƞs preventive suspension.

Said resolution does not show that evidence of petitionerƞs guilt is strong and that the school
head is morally convinced that petitionerƞs continued stay during the period of investigation
constitutes a distraction to the normal operations of the institution; or that petitioner poses a
risk or danger to the life or property of the other members of the educational community.

Even under the Labor Code, petitionerƞs preventive suspension finds no valid justification. As
provided in Section 8, Rule XXIII, Book V of the Omnibus Rules Implementing the Labor Code:
Sec. 8. Preventive Suspension. The employer may place the worker concerned under
preventive suspension if his continued employment poses a serious threat to the life or property
of the employer or of his co-workers.

As previously stated, there is nothing on record which shows that respondent MIT imposed the
preventive suspension on petitioner as his continued employment poses a serious threat to the
life or property of the employer or of his co-workers; therefore, his preventive suspension is not
justified. Consequently, the payment of wages during his 30-day preventive suspension, i.e.,
from January 11, 1999 to February 10, 1999, is in order.

Petition is partially granted.

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FACTS

Industrial Plywood Group Corporation (IPGC) is the owner of a plywood plant located at
Agusan, Pequeño, Butuan City, leased to Industrial Timber Corporation (ITC) on August 30,
1985 for a period of five years. Thereafter, ITC commenced operation of the plywood plant and
hired 387 workers. On March 16, 1990, ITC notified the DOLE and its workers that effective
March 19, 1990 it will undergo a Ơno plant operationơ due to lack of raw materials and will
resume only after it can secure logs for milling. Meanwhile, IPGC notified ITC of the expiration
of the lease contract in August 1990 and its intention not to renew the same.

On June 26, 1990, ITC notified the DOLE and its workers of the plantƞs shutdown due to the
non-renewal of anti-pollution permit that expired in April 1990. This fact and the alleged lack of
logs for milling constrained ITC to lay off all its workers until further notice. This was followed
by a final notice of closure or cessation of business operations on August 17, 1990 with an
advice for all the workers to collect the benefits due them under the law and CBA. On October
15, 1990, IPGC took over the plywood plant after it was issued a Wood Processing Plant Permit,
which included the anti-pollution permit, by the DENR coincidentally on the same day the ITC
ceased operation of the plant.

This prompted Virgilio Ababon, et al. to file a complaint against ITC and IPGC for illegal
dismissal, unfair labor practice and damages. They alleged, among others, that the cessation of
ITCƞs operation was intended to bust the union and that both corporations are one and the
same entity being controlled by one owner.

ISSUE

Whether or not complainants were illegally dismissed due to the closure of ITCƞs business.

HELD

The SC held that ITCƞs closure or cessation of business was done in good faith and for valid
reasons. The right to close the operation of an establishment or undertaking is one of the
authorized causes in terminating employment of workers, the only limitation being that the
closure must not be for the purpose of circumventing the provisions on termination of
employment embodied in the Labor Code.

A reading of article 283 of the Labor Code shows that a partial or total closure or cessation of
operations of establishment or undertaking may either be due to serious business losses or
financial reverses or otherwise. Under the first kind, the employer must sufficiently and
convincingly prove its allegation of substantial losses, while under the second kind, the
employer can lawfully close shop anytime as long as cessation of or withdrawal from business
operations was 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. Just as no law forces anyone to go into
business, no law can compel anybody to continue the same. It would be stretching the intent
and spirit of the law if a court interferes with management's prerogative to close or cease its
business operations just because the business is not suffering from any loss or because of the
desire to provide the workers continued employment.

In sum, under Article 283 of the Labor Code, three requirements are necessary for a valid
cessation of business operations: (a) service of a written notice to the employees and to the
DOLE at least one month before the intended date thereof; (b) the cessation of business must
be bona fide in character; and (c) payment to the employees of termination pay amounting to
one month pay or at least one-half month pay for every year of service, whichever is higher.

The records reveal that the decision to permanently close business operations was arrived at
after a suspension of operation for several months precipitated by lack of raw materials used for
milling operations, the expiration of the anti-pollution permit in April 1990, and the termination
of the lease contract with IPGC in August 1990 over the plywood plant at Agusan, Pequeño,
Butuan City.

As borne out from the records, respondent ITC actually underwent Ɲno plant operationƞ since 19
March 1990 due to lack of log supply. This fact is admitted by complainants (Minutes of
hearing, 28 October 1991). Since then several subsequent incidents prevented respondent ITC
to resume its business operations e.g. expiration and non-renewal of the wood processing plant
permit, anti-pollution permit, and the lease contract on the plywood plant. Without the raw
materials respondent ITC has nothing to produce. Without the permits it cannot lawfully
operate the plant. And without the contract of lease respondent ITC has no option but to cease
operation and turn over the plant to the lessor.

Moreover, the lack of raw materials used for milling operations was affirmed in Industrial
Timber Corporation v. National Labor Relations Commission as one of the reasons for the valid
closure of ITCƞs Butuan Logs Plant in 1989. In said case, we upheld the management
prerogative to close the plant as the only remedy available in order to prevent imminent heavy
losses on account of high production costs, erratic supply of raw materials, depressed prices
and poor market conditions for its wood products.

Having established that ITCƞs closure of the plywood plant was done in good faith and that it
was due to causes beyond its control, the conclusion is inevitable that said closure is valid.
Consequently, Ababon, et al. could not have been illegally dismissed to be entitled to full
backwages. Thus, we find it no longer necessary to discuss the issue regarding the
computation of their backwages. However, they are entitled to separation pay equivalent to
one month pay or at least one-half month pay for every year of service, whichever is higher.

Although the closure was done in good faith and for valid reasons, we find that ITC did not
comply with the notice requirement. While an employer is under no obligation to conduct
hearings before effecting termination of employment due to authorized cause, however, the law
requires that it must notify the DOLE and its employees at least one month before the intended
date of closure.

In the case at bar, ITC notified its employees and the DOLE of the Ɲno plant operationƞ on March
16, 1990 due to lack of raw materials. This was followed by a Ɲshut downƞ notice dated June
26, 1990 due to the expiration of the anti-pollution permit. However, this shutdown was only
temporary as ITC assured its employees that they could return to work once the renewal is
acted upon by the DENR. On August 17, 1990, the ITC sent its employees a final notice of
closure or cessation of business operations to take effect on the same day it was released. We
find that this falls short of the notice requirement for termination of employment due to
authorized cause considering that the DOLE was not furnished and the notice should have been
furnished both the employees and the DOLE at least one month before the intended date of
closure.

Where the dismissal is based on an authorized cause under Article 283 of the Labor Code but
the employer failed to comply with the notice requirement, the sanction should be stiff as the
dismissal process was initiated by the employerƞs exercise of his management prerogative, as
opposed to a dismissal based on a just cause under Article 282 with the same procedural
infirmity where the sanction to be imposed upon the employer should be tempered as the
dismissal process was, in effect, initiated by an act imputable to the employee.

Decision of the CA is reversed.

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FACTS

Petitioner is a domestic corporation engaged in textile manufacturing. It employed Peñaranda

as packer and Vidal as drugman. Both were assigned to the night shift.

Peñaranda was caught sleeping on the job on two occasions: first, on February 22, 2001 on the
table in the packing section, for which he was penalized with a 2-day suspension and given a
stern warning that a repetition of the offense would mean his dismissal; and second, on March
30, 2001, for which he was asked to explain why he should not be terminated for committing
the same offense. Peñaranda merely denied the allegations against him. Petitioner, however,
found his denial insufficient and terminated his employment on June 20, 2001.

Similarly, Vidal was caught sleeping during work hours on March 25, 2001. He was meted the
same penalty and warned, as in the case of his co-respondent, since it was his first offense. On
May 18, 2001, Vidal was caught sleeping for the second time inside a container van parked
beside the company premises. He was asked to explain why he should not be terminated from
work but he refused to comply with the order. This notwithstanding, he was given another
chance to submit his written explanation but again, he stubbornly refused to comply. Petitioner
dismissed him from work on June 20, 2001.

Thereafter, respondents filed separate complaints for illegal dismissal.

ISSUE

Whether or not respondents were validly terminated for just cause.

HELD

The SC held that under Article 282 of the Labor Code, willful disobedience of a lawful order of
the employer is a valid cause for dismissal. Willful disobedience of the employerƞs lawful orders,
as a just cause for the dismissal of an employee, envisages the concurrence of at least two
requisites: (1) the employeeƞs assailed conduct must have been willful or intentional, the
willfulness being characterized by a Ơwrongful and perverse attitudeơ; 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.

On the first requisite, it is undisputed that respondents violated Company Rule 8 twice. For their
first offense, both were given stern warning that another violation would cost them their jobs.
Refusing to heed the warning, Vidal cleverly tried to avoid being caught sleeping a second time
by sneaking inside the container van to doze off. On the other hand, Peñaranda, after being
awakened and warned by his supervisor, ignored the same and continued sleeping until caught
by the roving guard. These circumstances clearly show that respondentsƞ behavior was perverse
and willful.

The second requisite is also present in this case. As a manufacturer of finished textile, petitioner
utilizes machines which are operated continuously. The machinesƞ functions are interlocked in a
way that a disruption in one interrupts the entire operation. Thus, petitioner found it necessary
to be very explicit in prohibiting sleeping on the job in Company Rule 8.

In numerous decisions, this Court has recognized that management has the right to formulate
reasonable rules to regulate the conduct of its employees for the protection of its interests.
These reasonable house rules are considered by the Court as lawful orders and therefore
violations thereof will justify dismissal under Article 282(a) of the Labor Code.

We find Company Rule 8 to be a valid exercise of management prerogative and thus a lawful
order. Respondents were expected to abide by them and their transgression, despite clear
warnings, provided just cause for the termination of their employment.

In addition to the presence of just cause, procedural due process must also be observed to
legally dismiss an employee. The Labor Code requires the employer to furnish the employee
two written notices before it can terminate the latter from service:
(a) a written notice containing a statement of the cause for termination to afford the employee
ample opportunity to be heard and defend himself with the assistance of his representative, if
he so desires; and, (b) if the employer decides to terminate the services of the employee, the
employer must notify him in writing of the decision to dismiss him, stating clearly the reasons
therefor.

Petitioner not only satisfied the two-notice requirement, it also conducted an investigation,
albeit summary, to determine the culpability of the respondents. Respondents were confronted
in detail with the charges against them and given the opportunity to present their side. Vidal,
however, adamantly refused to respond to the charges and Peñaranda merely chose to give a
lame denial of the offense imputed to him. They were afforded a chance to defend themselves
but they opted to be obstinate and complacent.

The requirement of notice and hearing in termination cases does not connote full adversarial
proceedings as elucidated in numerous cases decided by this Court. Actual adversarial
proceedings become necessary only for clarification or when there is a need to propound
searching questions to witnesses who give vague testimonies. This is a procedural right which
the employee must ask for since it is not an inherent right, and summary proceedings may be
conducted thereon. As long as the employee is given the opportunity to explain his side and to
present evidence in support of his defense, due process is served.

Petition is granted.

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FACTS

This case originated from individual complaints filed by petitioners against Roselle Cinema,
Silver Screen Corporation and Vermy Trinidad (respondents) for illegal dismissal,
underpayment, non-payment of overtime pay, premium for holiday, premium pay for rest day,
holiday pay, service incentive leave, night shift differentials, separation pay, damages, and
attorneyƞs fees.

Escanillas last reported for work on January 5, 1997 after he was chastised by respondent
Trinidad for cleaning the semi-dark theater without a flashlight. When he did not report for
work the next day, Trinidad sent an employee to check on him, and the employee reported that
Escanillas was not sick, but was driving his tricycle. The next day, an employee was again sent
to Escanillas to tell the latter that he should report for work. On January 16, 1997, Escanillas,
who was then under the influence of alcohol, went to see Trinidad and confronted him.
Escanillas left, and was heard muttering that he was better off driving his tricycle. Escanillas
was also seen milling around the theater premises with other men, in what Trinidad perceived
to be an attempt on Escanillasƞs part to make good his previous threat that he would pounce on
Trinidad should Escanillas see him outside. He never reported for work again.

With regard to petitioner Martinez, he last reported for work on January 15, 1997. In the
evening of that day, Trinidad called him to replace a light bulb. Instead of complying, he told
Trinidad that it was not his job to do it. Despite this, Trinidad asked him to report for work
early the next day because he has to assist the repairman that would be coming to fix the
electric fan; but Martinez did not report for work the next day. It was discovered on January
16, 1997 that a part of the company vehicle that Martinez drove was missing, and the suspect
for the loss was Martinez. Two days after he last reported for work, Martinez assumed his new
job as driver with the Israel Pork and Beef Dealer.

The LA found that petitioner Abad was not dismissed. On January 31, 1997, Abad was asked to
explain regarding the missing shortages and Ơoveragesơ on the canteen stocks and remittances.
She was also reminded to observe decorum in the workplace, as there were several instances
when her suitors had been rude to Trinidad. Abad, however, stated that she would rather resign
than her personal life be interfered with. Abad then verbally offered to resign and left her
station without getting her wages.

ISSUE

Are the employees illegally dismissed? Is there abandonment by employee in the present case?

HELD

1. No. The employees are not illegally dismissed.

On the part of petitioner Escanillas, he was not deprived of his chance to return to work despite
his disagreement with Trinidad, and in fact, he was reminded several times by Trinidad, through
his employee, to report for work, but he did not do so; he was seen driving his tricycle on a
certain day when Trinidad sent his employee to ask him to report for work; and he was heard
muttering that he was better off driving his tricycle.

The same goes with petitioner Martinez. Inspite of his earlier insubordination, when he refused
to change the light bulb as ordered by Trinidad, he was asked to report early the next day, but,
like Escanillas, he did not return to work. Instead, two days after he last reported for work with
respondents, he took on another job as a driver with the Israel Pork and Beef Dealer.

With regard to petitioner Abad, apparently, she resented it when Trinidad asked her to explain
the shortages on her charge, and when she was reminded to observe proper ethics in the
workplace. Consequently, Abad was heard saying that sheƞd rather resign, after which she
manifested her intention to terminate her employment by leaving her station without getting
her pay check.

2. No. The case does not involve abandonment as ground for termination. Abandonment,
involves termination of an employee by the employer. There is no evidence showing that
respondents were actually dismissed by petitioners, let alone, on ground of abandonment.
Neither is there a showing that petitioners formally resigned from work. What is actually
involved herein is the informal voluntary termination of employment by the petitionersƞ
employees.

Given that petitioners were not illegally dismissed, but voluntarily terminated their work,
therefore, they are not entitled to an award of separation pay and backwages.


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FACTS

On December 30, 1973, petitioners hired on a per-voyage basis private respondent Dioscoro
Sedan as 3rd marine engineer and oiler in one of the vessels owned by petitioners. His last
voyage was on July 27, 1997 on board the vessel M/V Eastern Universe. His monthly pay was
P22,000. Additionally, after each voyage his earned leave credits are monetized and paid in
cash. He said he was disembarking because he was going to take the board examinations for
marine engineers.

Two months later, on September 27, 1997, Sedan sent a letter to petitioners applying for
optional retirement, citing as reason the death of his only daughter, hence the retirement
benefits he would receive would ease his financial burden. However, petitioners deferred action
on his application for optional retirement since his services on board ship were still needed.
Nonetheless, according to petitioners, the company expressed intention to extend him a loan in
order to defray the costs incurred for the burial and funeral expenses of his daughter. On
October 28, 1997, Sedan sent petitioners another letter insisting on the release of half of his
optional retirement benefits. Later, he said that he no longer wanted to continue working on
board a vessel for reasons of health.

On December 1, 1997, Sedan sent another letter to petitioners threatening to file a complaint if
his application was not granted. In reply, according to petitioners, the company management
sent a telegram on December 9, 1997 informing Sedan that his services were needed on board
a vessel and that he should report immediately for work as there was no available replacement.
Sedan claims he did not receive the telegram, nor was this fact proved by the company before
the Labor Arbiter or the NLRC.

Sedan proceeded to file a complaint with the Labor Arbiter against petitioners, demanding
payment of his retirement benefits, leave pay, 13th month pay and attorneyƞs fees.

Petitioners contend that by refusing to report for work and insisting on applying for optional
retirement, private respondent wrongly assumed that he was justified in abandoning his job.
Petitioners maintain that private respondentƞs refusal to report back to work, despite being duly
notified of the need for his service, is tantamount to voluntary resignation. Therefore,
petitioners contend, the respondent should not be entitled to any financial assistance.

ISSUE

Whether or not respondent is entitled to optional retirement benefits.

HELD

The SC held that respondent is not entitled to retirement benefits. The pertinent law governing
retirement is found in the Labor Code, which provides:
ART. 287. Retirement. ƛ Any employee may be retired upon reaching the retirement age
established in the collective bargaining agreement or other applicable employment contract.
In case of retirement, the employee shall be entitled to receive such retirement benefits as he
may have earned under existing laws and any collective bargaining agreement and other
agreements: Provided, however, That an employeeƞs retirement benefits under any collective
bargaining and other agreements shall not be less than those provided herein.
In the absence of a retirement plan or agreement providing for retirement benefits of
employees in the establishment, an employee upon reaching the age of sixty (60) years or
more, but not beyond sixty-five (65) years which is hereby declared the compulsory retirement
age, who has served at least five (5) years in the said establishment may retire and shall be
entitled to retirement pay equivalent to at least one half (1/2) month salary for every year of
service, a fraction of at least six (6) months being considered as one whole year.
xxx
The age of retirement is primarily determined by the existing agreement between the employer
and the employees. However, in the absence of such agreement, the retirement age shall be
fixed by law. Under the aforecited article of the Labor Code, the legally mandated age for
compulsory retirement is 65 years, while the set minimum age for optional retirement is 60
years.

In the instant case, there is an agreement between petitioner shipping company and its
employees. The agreement states:
xxx
B. Retirement under the Labor Code:
Any employee whether land-based office personnel or shipboard employee who shall
reach the age of sixty (60) while in active employment with this company may retire from the
service upon his written request in accordance with the provisions of Art. 277 of the Labor Code
and its Implementing Rules, Book 6, Rule 1, Sec. 13 and he shall be paid termination pay
equivalent to fifteen (15) days pay for every year of service as stated in said Labor Code and its
Implementing Rules. However, the company may at its own volition grant him a higher benefit
which shall not exceed the benefits provided for in the Retirement Gratuity table mentioned
elsewhere in this policy.
C. Optional Retirement:
It will be the exclusive prerogative and sole option of this company to retire any covered
employee who shall have rendered at least fifteen (15) years of credited service for land based
employees and 3,650 days actually on board vessel for shipboard personnel.

Clearly, the eligibility age for optional retirement is set at 60 years. However, employees of
herein petitioners who are under the age of 60 years, but have rendered at least 3650 days (10
years) on board ship or fifteen (15) years of service for land-based employees may also avail of
optional retirement, subject to the exclusive prerogative and sole option of petitioner company.

Records show that private respondent was only 48 years old when he applied for optional
retirement. Thus he cannot claim optional retirement benefits as a matter of right. His
application for optional retirement was subject to the exclusive prerogative and sole option of
the shipping company pursuant to the abovecited agreement between the workers and the
company.

Petition is denied.

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FACTS

Decorion was a regular employee of Maricalum Mining who started out as a Mill Mechanic
assigned to the Concentrator Maintenance Department and was later promoted to Foreman I.
On April 11, 1996, the Concentrator Maintenance Supervisor called a meeting which Decorion
failed to attend as he was then supervising the workers under him. Because of his alleged
insubordination for failure to attend the meeting, he was placed under preventive suspension
on the same day. He was also not allowed to report for work the following day. A month after
or on May 12, 1996, Decorion was served a Notice of Infraction and Proposed Dismissal to
enable him to present his side. On May 15, 1996, he submitted to the Personnel Department his
written reply to the notice. A grievance meeting was held upon Decorionƞs request on June 5,
1996, during which he manifested that he failed to attend the meeting on April 11, 1996
because he was then still assigning work to his men. He maintained that he has not committed
any offense and that his service record would show his efficiency.On July 23, 1996, Decorion
filed before the NLRC-RAB a complaint for illegal dismissal and payment of moral and exemplary
damages and attorneyƞs fees.

In the meantime, the matter of Decorionƞs suspension and proposed dismissal was referred to
Atty. Roman G. Pacia, Jr., Maricalum Miningƞs Chief and Head of Legal and Industrial Relations,
who issued a memorandum on August 13, 1996, recommending that Decorionƞs indefinite
suspension be made definite with a warning that a repetition of the same conduct would be
punished with dismissal. Maricalum Miningƞs Resident Manager issued a memorandum on
August 28, 1996, placing Decorion under definite disciplinary suspension of six (6) months
which would include the period of his preventive suspension which was made to take effect
retroactively from April 11, 1996 to October 9, 1996.

On September 4, 1996, Decorion was served a memorandum informing him of his temporary
lay-off due to Maricalum Miningƞs temporary suspension of operations and shut down of its
mining operations for six (6) months, with the assurance that in the event of resumption of
operations, he would be reinstated to his former position without loss of seniority rights.
Decorion, through counsel, wrote a letter to Maricalum Mining on October 8, 1996, requesting
that he be reinstated to his former position. The request was denied with the explanation that
priority for retention and inclusion in the skeleton force was given to employees who are
efficient and whose services are necessary during the shutdown.

Maricalum Mining insists that Decorion was not dismissed but merely preventively suspended on
April 11, 1996. Petitioner contends that constructive dismissal occurs only after the lapse of
more than six (6) months from the time an employee is placed on a Ơfloating statusơ as a result
of temporary preventive suspension from employment. Thus, it goes on to argue, since
Decorion was suspended for less than six (6) months, his suspension was legal.

Decorion, on the other hand, maintained that he was dismissed from employment on April 11,
1996 as he was then prevented from reporting for work. He avers that had the intention of
Maricalum Mining been to merely suspend him, it could have manifested this intention by at
least informing him of his suspension. As it happened, he was not served with any notice
relative to why he was disallowed to report for work. The grievance meeting conducted on June
5, 1996 was allegedly called only after he had repeatedly requested reconsideration of his
dismissal.
ISSUE

Whether or not respondent was dismissed by petitioner company.

HELD

The SC held that sections 8 and 9 of Rule XXIII, Book V of the Implementing Rules are explicit
that preventive suspension is justified where the employeeƞs continued employment poses a
serious and imminent threat to the life or property of the employer or of the employeeƞs co-
workers. Without this kind of threat, preventive suspension is not proper.

In this case, Decorion was suspended only because he failed to attend a meeting called by his
supervisor. There is no evidence to indicate that his failure to attend the meeting prejudiced
his employer or that his presence in the companyƞs premises posed a serious threat to his
employer and co-workers. The preventive suspension was clearly unjustified. What is more,
Decorionƞs suspension persisted beyond the 30-day period allowed by the Implementing Rules.
Preventive suspension which lasts beyond the maximum period allowed by the Implementing
Rules amounts to constructive dismissal.

Similarly, from the time Decorion was placed under preventive suspension on April 11, 1996 up
to the time a grievance meeting was conducted on June 5, 1996, 55 days had already passed.
Another 48 days went by before he filed a complaint for illegal dismissal on July 23, 1996.
Thus, at the time Decorion filed a complaint for illegal dismissal, he had already been
suspended for a total of 103 days.

Maricalum Miningƞs contention that there was as yet no illegal dismissal at the time of the filing
of the complaint is evidently unmeritorious. Decorionƞs preventive suspension had already
ripened into constructive dismissal at that time. While actual dismissal and constructive
dismissal do take place in different fashion, the legal consequences they generate are identical.
Decorionƞs employment may not have been actually terminated in the sense that he was not
served walking papers but there is no doubt that he was constructively dismissed as he was
forced to quit because continued employment was rendered impossible, unreasonable or
unlikely by Maricalum Miningƞs act of preventing him from reporting for work.

Petition is denied.


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FACTS

On 26 December 1998, after a CBA bargaining deadlock and a subsequent strike, both parties
executed and signed a MOA providing for salary increases and other economic and non-
economic benefits. It likewise contained a provision for the regularization of contractual, casual
and/or agency workers who have been working with private respondent for more than one
year. Said MOA was later incorporated to form part of the 1998-2001 CBA and was thereafter
ratified by the employees of the company.

Pursuant to the provisions of the MOA, both parties identified 64 vacant regular positions that
may be occupied by the existing casual, contractual or agency employees who have been in the
company for more than one year. Fifty-eight (58) of those whose names were submitted for
regularization passed the screening and were thereafter extended regular employment status,
while the other five failed the medical examination and were granted six months within which to
secure a clean bill of health. Within the six-month period, three of the five employees who
have initially failed in the medical examination were declared fit to work and were accorded
regular employment status. Consequently, petitioner demanded the payment of salary and
other benefits to the newly regularized employees retroactive to 1 December 1998, in accord
with the MOA. However, the private respondent refused to yield to said demands contending
that the date of effectivity of the regularization of said employees were 1 May 1999 and 1
October 1999. Thus, on 5 November 1999, petitioner filed a complaint before the NLRC for the
alleged violations of the subject MOA by the private respondent.

Meanwhile, a certification election was conducted on 17 August 1999 pursuant to the order of
the DOLE wherein the KASAMMA-CCO Independent surfaced as the winning union and was
then certified by the DOLE as the sole and exclusive bargaining agent of the rank-and-file
employees of private respondentƞs Manila and Antipolo plants for a period of five years from 1
July 1999 to 30 June 2004. On 23 August 1999, the KASAMMA-CCO Independent demanded
the renegotiation of the CBA which expired on 30 June 1998. Such request was denied by
private respondent on the contention that there was no basis for said demand as there was
already an existing CBA which was negotiated and concluded between petitioner and private
respondent, thus, it was untimely to reopen the said CBA which was yet to expire on 30 June
2001.

On 9 December 1999, despite the pendency of petitionerƞs complaint before the NLRC, private
respondent closed its Manila and Antipolo plants resulting in the termination of employment of
646 employees. On the same day, about 500 workers were given a notice of termination
effective 1 March 2000 on the ground of redundancy. The affected employees were considered
on paid leave from 9 December 1999 to 29 February 2000 and were paid their corresponding
salaries. On 13 December 1999, four days after its closure of the Manila and Antipolo plants,
private respondent served a notice of closure to the DOLE.

As a result of said closure, on 21 December 1999, petitioner amended its complaint filed before
the NLRC to include Ơunion busting, illegal dismissal/illegal lay-off, underpayment of salaries,
overtime, premium pay for holiday, rest day, holiday pay, vacation/sick leaves, 13th month pay,
moral and exemplary damages and attorneyƞs fees.ơ

ISSUE

Whether or not petitionerƞs members were validly terminated due to the closure of respondentƞs
plants.

HELD

The SC held that the closure of said plants is for an authorized cause.

The characterization of the employeeƞs service as no longer necessary or sustainable, and

therefore properly terminable, is an exercise of business judgment on the part of the employer.
The wisdom or soundness of such characterizing or decision is not subject to discretionary
review on the part of the Labor Arbiter nor of the NLRC so long, of course, as violation of law or
merely arbitrary and malicious action is not shown. The determination of the continuing
necessity of a particular officer or position in a business corporation is managementƞs
prerogative, and the courts will not interfere with the exercise of such so long as no abuse of
discretion or merely arbitrary or malicious action on the part of management is shown. In the
case at bar, the closure of the Manila and Antipolo plants and the resulting termination of the
employment of 646 employees is not tainted with bad faith. As found by the NLRC, the private
respondentƞs decision to close the plant was a result of a study conducted which established
that the most prudent course of action for the private respondent was to stop operations in said
plants and transfer production to other more modern and technologically advanced plants of
private respondent.

Other than its mere allegations, petitioner union failed to show that the closure of the two
plants was without factual basis and done in utter bad faith. No evidence was presented by
petitioner to prove its assertion that private respondent resorted to the closure of the Manila
and Antipolo plants to prevent the renegotiations of the CBA entered into between the parties.
As adequately explained by the NLRC, the subject closure and the resulting termination of the
639 employees was due to legitimate business considerations, as evidenced by the technical
study conducted by private respondent.

Anent the allegation that private respondent failed to comply with the notice requirements as
provided by the Labor Code in the cessation of its operations, the employees were served
notice on 9 December 1999 that their employment were being severed effective 1 March 2000;
however they were no longer required to report for work but they will continue to receive their
salary up to 29 February 2000. Therefore, as enunciated in the ruling in Serrano v. NLRC, said
act of private respondent constitutes substantial compliance with the notice requirement of the
Labor Code.

Decision of CA is affirmed.

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FACTS

On November 21, 1998, respondent Renato M. Gatbonton was hired as Chief Steward in
petitioner Dusit Hotel Nikkoƞs Food and Beverage Department. He signed a three-month
probationary employment contract until February 21, 1999, with a monthly salary of P25,000.
At the start of his employment, the standards by which he would be assessed to qualify for
regular employment were explained to him.

The hotel alleged that at the end of the probation period, Ingo Rauber, Director of its Food and
Beverage Department, observed that Gatbonton failed to meet the qualification standards for
Chief Steward, and Rauber recommended a two-month extension of Gatbontonƞs probationary
period, or until April 22, 1999. At the end of the 4th month, on March 24, 1999, Rauber
informed Gatbonton that the latter had poor ratings on staff supervision, productivity, quantity
of work, and overall efficiency and did not qualify as Chief Steward. Gatbonton requested
another month or until April 22, 1999 to improve his performance, to which Rauber agreed but
allegedly refused to sign the Performance Evaluation Form. Neither did he sign the
Memorandum on the extension.

On March 31, 1999, a notice of termination of probationary employment effective April 9, 1999,
on the above alleged grounds was served on Gatbonton. On April 12, 1999, he filed a
complaint for illegal dismissal and non-payment of wages, with prayers for reinstatement, full
backwages, and damages, including attorneyƞs fees.
ISSUE

Whether or not respondent was a regular employee at the time of his dismissal.

HELD

The SC held that as Article 281 clearly states, a probationary employee can be legally
terminated either: (1) for a just cause; or (2) when the employee fails to qualify as a regular
employee in accordance with the reasonable standards made known to him by the employer at
the start of the employment. Nonetheless, the power of the employer to terminate an
employee on probation is not without limitations. First, this power must be exercised in
accordance with the specific requirements of the contract. Second, the dissatisfaction on the
part of the employer must be real and in good faith, not feigned so as to circumvent the
contract or the law; and third, there must be no unlawful discrimination in the dismissal. In
termination cases, the burden of proving just or valid cause for dismissing an employee rests on
the employer.

Here, the petitioner did not present proof that the respondent was evaluated from November
21, 1998 to February 21, 1999, nor that his probationary employment was validly extended.
The petitioner alleged that at the end of the respondentƞs three-month probationary
employment, Rauber recommended that the period be extended for two months since
respondent Gatbonton was not yet ready for regular employment. The petitioner presented a
Personnel Action Form containing the recommendation. We observed, however, that this
document was prepared on March 31, 1999, the end of the 4th month of the respondentƞs
employment. In fact, the recommended action was termination of probationary employment
effective April 9, 1999, and not extension of probation period. Upon appeal to the NLRC, the
petitioner presented another Personnel Action Form prepared on March 2, 1999, showing that
the respondentƞs probationary employment was extended for two months effective February 23,
1999.

The Personnel Action Form dated March 2, 1999, contained the following remarks: Ơsubject to
undergo extension of probation for two (2) months as per attached memo.ơ Yet, we find this
document inconclusive. First, the action form did not contain the results of the respondentƞs
evaluation. Without the evaluation, the action form had no basis. Second, the action form
spoke of an attached memo which the petitioner identified as Rauberƞs Memorandum,
recommending the extension of the respondentƞs probation period for two months. Again, the
supposed Memorandum was not presented. Third, the action form did not bear the
respondentƞs signature.

In the absence of any evaluation or valid extension, we cannot conclude that respondent failed
to meet the standards of performance set by the hotel for a chief steward. At the expiration of
the three-month period, Gatbonton had become a regular employee. It is an elementary rule in
the law on labor relations that a probationary employee engaged to work beyond the
probationary period of six months, as provided under Article 281 of the Labor Code, or for any
length of time set forth by the employer (in this case, three months), shall be considered a
regular employee. This is clear in the last sentence of Article 281. Any circumvention of this
provision would put to naught the Stateƞs avowed protection for labor.

Since respondent was not dismissed for a just or authorized cause, his dismissal was illegal, and
he is entitled to reinstatement without loss of seniority rights, and other privileges as well as to
full backwages, inclusive of allowances, and to other benefits or their monetary equivalent
computed from the time his compensation was withheld from him up to the time of his actual
reinstatement.

Petition is denied.

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FACTS

Private respondent Castro was hired by petitioner as a mechanic in April 1975. He was
promoted to supervisor in 1986. On December 31, 1994, he suffered a stroke. On his doctorƞs
advice, he took a leave of absence from work. Pending recovery, he extended his leave several
times. While on leave, however, petitioner Roman G. Cruz sent him several letters first urging
him to return to work. The succeeding ones assumed the nature of show cause letters requiring
him to explain why he should not be disciplined for his prolonged absence. Cruz also filed
complaints for estafa and qualified theft against him. Because of these, Castro was constrained
to file a case for illegal dismissal against petitioner on the ground that Cruzƞs acts constituted
constructive dismissal.

On the other hand, private respondent Veloria was hired by petitioner in 1977 as a carpenter.
After several years, he was promoted to mechanic and, in 1993, as senior mechanic. Sometime
in the last week of February 1995, he figured in an accident. The overheated water coming
from the radiator of a car he was repairing spurted onto his face, burning it. He was forced to
absent himself from work to undergo recuperation. During his absence, he received several
letters from Cruz. One letter required him to explain the loss of several tools, another ordered
him to pay his loan and still another required him to explain his absences. He was later charged
for qualified theft of the missing tools. Because of petitionerƞs acts against him, Veloria joined
Castro in filing a case for illegal constructive dismissal against petitioner.

For its part, petitioner denied that private respondents were dismissed from their employment,
asserting that private respondents abandoned their work.

ISSUE

Whether or not private respondents were constructively dismissed without just cause.

HELD

The SC held that a perusal of the CA decision shows that the findings that petitioner failed to
overcome the burden of proving just cause for terminating the employment of private
respondents and that private respondents did not abandon their work were supported by
substantial evidence. Moreover, petitionerƞs obstinate insistence on the alleged serious
misconduct (i.e., the commission of estafa and/or qualified theft) of private respondents belies
his claim of abandonment as the ground for the dismissal of private respondents. Rather, it
strengthens the finding of petitionerƞs discrimination, insensibility and antagonism towards
private respondentswhich gave no choice to private respondents except to forego their
employment.

Petition is dismissed.

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FACTS

Respondent Sadac was appointed Vice President of the Legal Department of petitioner Bank
effective 1 August 1981, and subsequently General Counsel on 8 December 1981. On 26 June
1989, nine lawyers of petitioner Bankƞs Legal Department, in a letter-petition to the Chairman of
the Board of Directors, accused respondent Sadac of abusive conduct, and ultimately, petitioned
for a change in leadership of the department.

On the ground of lack of confidence in respondent Sadac, under the rules of client and lawyer
relationship, petitioner Bank instructed respondent Sadac to deliver all materials in his custody
in all cases in which the latter was appearing as its counsel of record. In reaction thereto,
respondent Sadac requested for a full hearing and formal investigation but the same remained
unheeded. On 9 November 1989, respondent Sadac filed a complaint for illegal dismissal with
damages against petitioner Bank and individual members of the Board of Directors thereof.
After learning of the filing of the complaint, petitioner Bank terminated the services of
respondent Sadac. Finally, on 10 August 1989, respondent Sadac was removed from his office
and ordered disentitled to any compensation and other benefits.

ISSUE
Whether or not Respondent Sadac was illegally dismissed.

HELD

The SC held that respondent Sadac was dismissal illegal. The existence of the employer-
employee relationship between petitioner Bank and respondent Sadac had been duly
established bringing the case within the coverage of the Labor Code. Sec. 26, Rule 138 of the
Rules of Court is not applicable, as claimed by the petitioner, that the association between the
parties was one of a client-lawyer relationship, and, thus, it could terminate at any time the
services of respondent Sadac. Respondent Sadacƞs dismissal was grounded on any of the
causes stated in Article 282 of the Labor Code. Petitioner Bank disregarded the procedural
requirements in terminating respondent Sadacƞs employment as so required by Section 2 and
Section 5, Rule XIV, Book V of the Implementing Rules of the Labor Code.

Decision of the NLRC is affirmed.

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FACTS

Petitioner Cruz was an employee of private respondent Citytrust from October 8, 1979. He held
the confidential position of Micro Technical Support Officer, who is responsible for the (1)
evaluation and recommendation from various departments/units request for Micro Computers
received by the Bidding Committee; and (b) further evaluation and acceptance of the bids
submitted including recommendation therof, which were done by the Technical Committee of
the Bank. The good performance of Cruz did not remain unnoticed for on several occasions he
was recognized with awards and citations, given salary increases and promoted to Authorized
Signer on May 1, 1991.

Later, there were feedbacks and information that certain irregularities were being committed in
the bidding process and purchase of computers, an area within the powers and responsibilities
of Cruz. To clarify matters, a special investigation was conducted by the Citytrust Internal Audit
Group and it was found out that there were unauthorized and unreported commissions and
rebates given out by one of its computer suppliers, MECO, for purchases made by Citytrust.
This was corroborated by the letter dated August 5, 1992 of the President and Controller of
MECO certifying that Cruz has received commissions and rebates amounting to P105,192.00
just for the period of September 1992 to March 1993.

Citytrust, then sent a show-cause memorandum to Cruz on August 6, 1993 placing him under a
30-day preventive suspension and directing him to appear in an administrative hearing by the
Ad Hoc Committee. Cruz submitted the said memorandum, the Ad Hoc Committee heard the
matter, and found Cruz guilty of fraud, serious misconduct, gross dishonesty and serious
violation of Bank policies, regulations and procedure. For the resultant loss of confidence,
Citytrust terminated Cruz from employment effective October 6, 1993. Aggrieved by this, Cruz
filed before the Labor Arbiter an action for Illegal Dismissal and Damages claiming that Citytrust
denied him due process and hastily dismissed him from service.

Petitioner claims that while his name appears in the check vouchers issued by MECO the
incontrovertible fact remains that his signature does not appear in any of said vouchers. Not
being a signatory of any of the said check vouchers, petitioner contends that there can be no
basis in concluding that he ever received any commission, special discount or rebate from
MECO. Petitioner also asserts that he was denied due process because he was not given the
opportunity to refute the charges imputed against him. While it is true that private respondent
conducted an investigation, petitioner claims that the same was done without his participation.

ISSUE

Whether or not petitioner was illegally dismissed.

HELD

The SC held that petitioner was not illegally dismissed.

Jurisprudence has distinguished the treatment of managerial employees or employees

occupying positions of trust and confidence from that of rank-and-file personnel, insofar as the
application of the doctrine of trust and confidence is concerned. There is no dispute that
petitioner is a confidential employee.

Hence, in the case of a managerial employee, the mere existence of a basis for believing that
such employee has breached the trust of his employer would suffice for his dismissal. Proof
beyond reasonable doubt is not required, it being sufficient that 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 by his
position.

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 employerƞs
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.

It is true that the check vouchers alone are not sufficient to prove his guilt owing to the fact
that his signatures do not appear in any of these vouchers. However, aside from the
abovementioned check vouchers, there are other pieces of evidence presented by Citytrust
which petitioner failed to refute and which points to the fact that he received commissions or
rebates from MECO. The evidence consists of the following:
(1) admission made by petitioner in his letter, dated August 3, 1993, that he received material
considerations from MECO since 1992;
(2) certification issued by MECO categorically stating that he was paid commissions totaling
P105,192.00; (3) testimonies of Leoncio Araullo, Vice President of Citytrust; and Ma. Lourdes
Foronda, Assistant Vice President for Staff Services Division of the Human Resources
Department of Citytrust, that petitioner admitted having received the amounts of P1,000.00 and
P500.00 from Art Cordero, an officer of MECO, claiming that these amounts are Ơfor the boysơ;
(4) statements in the affidavit of Florante del Mundo, auditor at the Internal Audit Department
of Citytrust that two of the checks issued by MECO in favor of petitioner were either encashed
by the latterƞs common-law-wife or deposited in his account.

In addition, the Court agrees with the CA that annotations appearing in the check vouchers
issued by MECO such as ƠPayment for the Rebate Given to Boy Cruz of Citytrustơ and ƠPayment
for the Sales Rebate Given to Boy Cruz of Citytrustơ are confirmations of the fact that the
checks were issued and given specifically by MECO to petitioner in consideration of his office
and services.

These pieces of evidence, when taken together, would constitute substantial evidence to prove
petitionerƞs guilt; and his failure to satisfactorily explain or rebut them only strengthens
Citytrustƞs case against him.

Thus, petitionerƞs acceptance of commissions and rebates from MECO, without the knowledge
and consent of Citytrust and without said rebates and commissions being reported and turned
over to the latter, are acts which can clearly be considered as a willful breach of the trust and
confidence reposed by Citytrust upon him. Settled is the rule that an employer cannot be
compelled to retain an employee who is guilty of acts inimical to the interests of the employer.
A company has the right to dismiss its employees if only as a measure of self-protection. This is
all the more true in the case of supervisors or personnel occupying positions of responsibility. In
the present case, the Court finds that the CA did not commit grave abuse of discretion when it
ruled that Citytrust is justified in dismissing petitioner from his employment for loss of trust and
confidence.

Due process was not denied to the petitioner as evidence by the letter of Citytrust dated August
6, 1993, which petitioner answered; and the investigation conducted by the Ad Hoc Committee
of Citytrust. Petitionerƞs concept of the opportunity to be heard is the chance to ventilate oneƞs
side in a formal hearing where he can have a face-to-face confrontation with his accusers. It is
well settled that the basic requirement of notice and hearing in termination cases is for the
employer to inform the employee of the specific charges against him and to hear his side and
defenses. This does not, however, mean a full adversarial proceeding. The parties may be
heard through pleadings, written explanations, position papers, memorandum or oral argument.
In all of these instances, the employer plays an active role by providing the employee with the
opportunity to present his side and answer the charges in substantial compliance with due
process.

Further, Citytrust complied with the first requirement of notice when it informed petitioner
through a letter, dated August 6, 1993, of the charges against him, directing him to explain in
writing why his employment should not be terminated and, thereafter, to appear in a hearing to
be conducted by the company to give him further opportunity to explain his side. Citytrust also
complied with the second requirement of notice when it sent a memorandum dated September
28, 1993, to petitioner informing him of his dismissal from employment and the reasons
therefor.

Petition is dismissed.

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FACTS

Petitioner Dator was hired by respondent UST in June 1983 as Instructor I of the Institute of
Religion with a maximum teaching load of 24 units. On December 15, 1995, petitioner was also
hired as Graft Investigation Officer II with the Office of the Ombudsman but he failed to
disclose such other employment to respondents, who discovered the same only during the first
semester of School Year 2000-2001. Thus, on June 16, 2000, petitioner was informed that his
teaching load would be reduced to 12 hours per week, pursuant to Section 5, Article III of the
UST Faculty Code which states that Ơfaculty members who have a full time outside employment
other than teaching may not be given a teaching load in excess of 12 hours per week.ơ

Petitioner asked for reconsideration of the reduction in his teaching load which was granted.
He was given an additional load of three teaching hours. On June 15, 2001, petitioner again
requested for an additional load of three units but his request was denied by respondent Rev.
Fr. Aligan. Petitioner filed a Complaint-Affidavit to the Chairperson of the Grievance Committee,
Dr. Gil Gamila, President of the University of Sto. Tomas Faculty Union, but the complaint was
dismissed. Petitioner appealed to respondent Rev. Fr. Tamerlane Lana, Rector of respondent
UST but the appeal was denied.

Petitioner thus filed a complaint for Illegal Reduction of Teaching Load and Illegal Change of
Employment Status, Damages, Unpaid Benefits and Attorneyƞs Fees and illegal constructive
dismissal before the Labor Arbiter on February 19, 2002.

Petitioner claimed that his arbitrary demotion from full-time to part-time faculty member
violated the provisions of the CBA, as well as his right to security of tenure. Likewise, he
argued that the UST Faculty Code which respondents relied upon to reduce his teaching load
has been superseded by the CBA, which enumerates grounds for the reduction of teaching load
Section 5. Reduction of Teaching Load. ƛ The teaching load of a faculty member may be
reduced for any of the following reasons:
a) A reduction in the number of classes or sections in the faculty, college, school or
department concerned, provided that, in such case a compensating load in other faculties,
colleges, school or department shall, as far as possible, be made available to the faculty
member concerned;
b) Non-offering of his/her specialized subject along his/her expertise in any given
semester or school year;
c) By way of sanction for inefficiency duly proven after due process and in accordance
with standards or criteria in force in the UNIVERSITY;
d) Failing Health of the faculty member duly certified by a Board of three (3) physicians
teaching in the Faculty of Medicine and Surgery of the University chosen as follows: one by the
faculty member concerned, one by the UNIVERSITY and one by the FACULTY UNION.

Petitioner contends that he is a tenured faculty member thus he is entitled to the same teaching
load as he had in the previous semesters; that he was not accorded due process when
respondents unilaterally reduced his teaching load; that Section 5, Article III of the Faculty
Code has no application in this case; and that respondents acted in bad faith.
On the other hand, respondents maintained that petitionerƞs teaching load was reduced in
accordance with Sections 5 and 6 of Article III of the Faculty Code which provide:
SEC. 5 ƛ Faculty members who have a full time outside employment other than
teaching may not be given a teaching load in excess of 12 hours per week.

Respondents maintain that petitionerƞs teaching load was reduced in accordance with Section 5,
Article III of the Faculty Code; that they did not violate petitionerƞs right to due process and
that he was given an opportunity to be heard; that petitioner falsified at least 13 written
statements where he deliberately failed to mention his full time employment with the Office of
the Ombudsman.

ISSUE

Whether or not the reduction of petitionerƞs teaching load was justified.

HELD

The SC held that UST committed no illegality when it ordered the reduction of Datorƞs load from
twenty-four (24) units to twelve (12) units per semester. While the CBA provides grounds for
reduction of teaching load, the question of whether a faculty member is considered full-time or
part-time is addressed by the Faculty Code which provides that where the full-time faculty
member is at the same time working as a full-time employee elsewhere, the faculty member is
considered part-time and a 12-hour teaching load limitation is imposed.

There is no dispute that petitioner was holding a full-time position with the Office of the
Ombudsman while working as a faculty member in UST. Accordingly, Section 5, Article III of
the Faculty Code applies.

The UST Faculty Code continues to exist and to apply to UST faculty members, but must give
way if its terms are in conflict with what the CBA provides. The standard in determining the
applicable is whether a conflict exists between the provisions the parties cited.

We see no conflict between the provisions the parties respectively cited as these provisions
apply to different situations. Article IV of the CBA are the rules on the teaching loads that
faculty members may normally expect to carry; it provides as well the grounds or reasons for
giving a tenured faculty member less than his normal teaching load. These provisions do not
address the question of when a faculty member is to be considered a full-time or a part-time
faculty member. Whether a faculty member should only be on part-time basis is governed by
Section 5 Article III of the UST Faculty Code we have quoted above. Thus, the provisions Dator
cited regarding deloading and the authorized grounds therefore do not apply because what is
involved is a change of status from full-time faculty member to a part-time one due to the
faculty memberƞs full-time employment elsewhere.

In contrast with the Ơauthorizedơ causes for deloading under the CBA, the change of status
from full-time faculty member with a 24-unit load to a part-time one with a 12-unit load in
effect involves a Ơdisqualificationơ to be a full-time faculty member because of the very practical
reason that he or she is already a full-time employee elsewhere. In the present case, this
Ơdisqualificationơ is compounded by Datorƞs repeated misrepresentations about his employment
status outside UST. The present case therefore is closer to being a disqualification situation
coupled with a disciplinary cause, rather than one involving a purely Ơauthorizedơ deloading
under the CBA.

Petitioner argues that he was under no obligation to disclose his employment with the Office of
the Ombudsman. He claims that the only information required of him pertained to 1) other
colleges where he is teaching, 2) teaching loads outside the university, and 3) a business firm
he is employed with. He argues that the Office of the Ombudsman, being a government
agency, does not fall under any of the foregoing categories.

Section 6, Article III of the Faculty Code states that all faculty members must submit each
semester a statement of the number of teaching hours per week to be rendered in other
institutions and/or daily hours of work or employment, inside or outside the University. The
rationale behind the rule is unmistakable. As pointed out by respondents, there is a need to
maintain USTƞs quality of education as well as to ensure that government service is not
jeopardized.

Petitioner admitted in his letter-request dated July 15, 2001 that Ơwith the implementation of a
CHED Circular, the teaching load assignment of government employees was limited to only 12
units per semester so as not to prejudice the interests of both the government and the
University and/or college concerned.ơ It is clear therefore that petitioner was aware of the
limitation.

Moreover, we find that petitioner was not denied due process. It is settled that due process is
simply an opportunity to be heard. In this case, respondents informed petitioner that his
teaching load would be reduced as he was working full-time with the Office of the Ombudsman.
Petitioner asked for reconsideration twice. His first request was granted and he was given an
additional load of three units for School Year 2000-2001. For School Year 2001-2002, petitioner
again requested an additional load of three units but was denied.

All told, petitionerƞs complaint cannot be sustained. An employeeƞs bare allegations of

constructive dismissal, when uncorroborated by the evidence on record, cannot be given
credence. A constructive dismissal occurs when the law deems that there is effectively a
termination of employment or Ơa quitting because continued employment is rendered
impossible, unreasonable or unlikely, such as in an offer involving a demotion in rank and a
diminution in pay.ơ Where, as in the present case, the employer was fully justified in giving a
faculty member a lesser load because the latter is disqualified under applicable rules from
handling a full load, and where the faculty member committed repeated misrepresentations in
his bid to maintain his full load, we cannot see any legal or factual basis to conclude that the
faculty member had been constructively dismissed.

Petition is denied.
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FACTS

Respondent Rey held the position of Credit Administration Supervisor or CAS at the Cagayan de
Oro City branch of the petitioner. Her primary duty of the CAS is to strictly monitor deadlines,
to supervise the credit and collection of payments and outstanding accounts due to the
petitioner from its independent dealers and various customers, and to screen prospective IBMs.
To discharge these responsibilities, the CAS is provided with a computer equipped with control
systems through which data is readily generated. Under this organizational setup, the CAS is
under the direct and immediate supervision of the Branch Operations Manager (BOM).

Sometime in June 1995, while respondent was still working in Butuan City, she allegedly
instructed the Accounts Receivable Clerk of the Cagayan de Oro outlet, a certain Ms. Magi
Caroline Mendoza, to change the credit term of one of the IBMs of the petitioner, a certain Ms.
Mariam Rey-Petilla, who happens to be respondentƞs sister-in-law, from the 52-day limit to an
Ơunauthorizedơ term of 60 days.

The respondent made the instruction, the petitioner avers, just before the computer data for
the computation of the Service Fee accruing to Ms. Rey-Petilla was about to be generated. Ms.
Mendoza then reported this allegedly unauthorized act of respondent to her Branch Operations
Manager, Mr. Villagracia.

Acting on the report, as the petitioner alleges, BOM Villagracia discreetly verified the records
and discovered that it was not only the 52-day credit term of IBM Rey-Petilla that had been
extended by the respondent, but there were several other IBMs whose credit terms had been
similarly extended beyond the periods allowed by company policy. BOM Villagracia then
summoned the respondent and required her to explain the unauthorized credit extensions. The
petitioner alleges that during that confrontation, respondent admitted her infractions and
begged the BOM not to elevate or disclose the matter further to higher authorities. In a letter,
Villagracia formally reported the matter to higher management, stating that respondent, Ơin
tears and remorseơ and confiding Ơher sincerest apology,ơ personally admitted that the credit
terms of certain IBMs were adjusted in the computer for purposes of computing the Service
Fees. Villagracia formally served a Ơshow-causeơ letter to respondent and placed her on
Ơindefinite suspensionơ. Respondent submitted her explanation denying the accusations made
against her and stated that the Ơdiscrepanciesơ in the service fees may have been the result of
deadlines falling on holidays, after Ơreconsiderationsơ had been requested by the IBM concerned
and with the full knowledge of and approval by BOM Villagracia as part of his campaign to
increase collections. Additionally, in the same letter-response, respondent vehemently denied
that she waived her right to explain as well as any admission she allegedly made before
Villagracia, and she pointed to the latter as the author of the Ơdiscrepancies.ơ

As a consequence of the discovery of the foregoing alleged Ơanomalous practiceơ of extending

the credit terms of certain IBMs, management undertook an audit of the Cagayan de Oro City
and Butuan City branches. During the process, the petitioner alleges, respondent was
interviewed by the auditors before whom she again openly admitted her infractions. On the
basis of the hearing, the alleged voluntary admissions of respondent, and the findings of the
auditorƞs report, the petitioner, on June 25, 1996, formally dismissed the respondent for breach
of trust and confidence.

Respondent then filed her Complaint for illegal dismissal, backwages and damages, with the
Labor Arbiter.

ISSUE

Whether or not she was illegally dismissed.

HELD

The SC held that respondent Rey was not illegally dismissed. She was dismissed by reason of
loss of trust and confidence.

Loss of confidence as a just cause for dismissal is premised on the fact that an employee
concerned holds a position of trust and confidence. This situation applies where a person is
entrusted with confidence on delicate matters, such as the custody, handling, or care and
protection of the employerƞs property. But, in order to constitute a just cause for dismissal, the
act complained of must be Ơwork-related,ơ such that the employee concerned is unfit to
continue working for the employer.

Distinction on loss of trust and confidence on the following employees:

(1) Rank-and-file employees - requires proof of involvement in the alleged events in
question, and that mere uncorroborated assertions and accusations by the employer will not be
sufficient;
(2) Managerial employees - the mere existence of a basis for believing that such employee
has breached the trust of his employer would suffice for his dismissal. Hence, in the case of
managerial employees, proof beyond reasonable doubt is not required; it is sufficient that there
is some basis for the loss of confidence, 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
by his position
In the case at bar, respondent is not an ordinary rank-and-file employee. Respondent occupied
a highly sensitive and critical position and may thus be dismissed on the ground of loss of trust
and confidence. The position carried with it the duty to observe proper company procedures in
the fulfillment of her job, as it relates closely to the financial interests of the company.
Respondentƞs unauthorized extensions of the credit periods of the dealers are prejudicial to the
interest of the petitioner and bear serious financial implications: First, the dealer concerned is
allowed to withhold remittances to the company for his or her credit purchases beyond the
expiration of the 38- or 52-day rolling deadline; second, the Credit Administration Charges or
interest penalties are not imposed on the erring dealer; third, the dealer concerned is allowed
to purchase goods on credit despite the fact that he or she has not remitted payment, which is
against company policy; and fourth, undue Service Fees were unknowingly paid by the
company to certain IBMs.

Petition is granted.

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FACTS

R. Jorge Development Corporation, doing business as Premium Agro-Vet Products, Inc., is a

distributor of veterinary products. It has a national network of area sales representatives who
generally operate singly in their assigned areas. In 1992, it hired Dr. Rey C. Tambong, as sales
representative. He was assigned as area sales representative for Area 17, comprising South
Cotabato, General Santos City, and Saranggani. Sometime in May 1996, due to his repeated
breach of company policies and insubordination, petitioner was offered another position, i.e.,
third party consultant, without a fixed income or percentage of sales.

ISSUE

Is the petitioner dismissed illegally?

HELD

The SC held that the petitioner was not dismissed illegally. The evidence show that
complainantƞs dismissal from the service is valid and for just causes as provided under Art. 280
of the Labor Code, as amended. The complainant committed fraud against respondent company
when he claimed reimbursement for expenses despite the fact that he was on leave of absence
and when he failed to account for amounts released to him for remittance to a customer.
Evidence also showed that he was on leave of absence when he failed to account for amounts
released to him for remittance to a customer. Evidence also showed that he is guilty of gross
negligence, allowing company products to expire. The same is tantamount to willful misconduct
and serious disobedience, as he admitted causing loss to the respondent. His repeated failure to
comply with company directives respecting submission of report and remittances of sales
collection also constitute just causes for his termination.

Petition is denied.

c


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FACTS

Petitioner Loida V. Malabago was the OIC-Store Supervisor of Pacifica Agrivet Supplies, Inc. at
Torres Branch in Tacloban City. Petitioner was terminated by respondent Pacifica Inc. for
committing a violation of its company policy by taking stocks from the company without the
proper documentation of the items. She did this not only once but thrice.

The branch clerk and utility man made a written report to Ms. Nimfa Buenafe, Area Manager,
Leyte, regarding petitionerƞs act of taking out stocks without issuing cash slips or sales invoices.
. Acting on the report, the Area Manager issued a memorandum directing petitioner to explain
why she did not make the proper documentation for the items that she took from the storeƞs
stock. The memorandum also stated that releasing stocks without any cash slip or charge
invoice is a Type D offense under the company policy, punishable with dismissal.

Petitioner submitted her explanation on the same date. She admitted the allegations
made in the report. She however argued that only releasing stocks to customers without
charge slip or sales invoice is considered as Type D offense under their company policy. The
act is not punishable if the items are released to the companyƞs employees like herself. She
also highlighted the fact that she always informed her co-workers every time that she took out
items from the store to show her good faith.

The Area Manager issued a memorandum suspending petitioner for fifteen (15) days pending
the investigation of her case. Petitioner received another memorandum from the Area Manager
advising her to report to the Cebu Main Office on December 3, 1999 in connection with the
ongoing investigation of her case.

Petitioner appeared before a panel of investigators at the companyƞs main office on December
3, 1999. The investigators apprised petitioner of the charges against her and asked her to
explain her side. Petitioner reiterated her position in her letter dated November 23, 1999.

On December 7, 1999, Assistant Vice President Isabel Bunac issued a memorandum informing
petitioner that private respondent has approved the recommendation of the investigating
committee for her dismissal. Accordingly, petitionerƞs employment was immediately terminated.

Petitioner filed a complaint for illegal dismissal against private respondent. She also included in
the complaint claims for overtime pay, separation pay, service incentive leave pay, vacation/sick
leaves, moral and exemplary damages, and attorneyƞs fees.

Petitioner alleged that she was deprived of due process before her dismissal. She also argued
that her act of taking out stocks from the store without cash slip or sales invoice may not be
considered as just cause for termination of employment under the Labor Code as she had no
intention to defraud or cause damage to the company and that she acted in utmost good faith.

The Labor Arbiter dismissed the complaint for lack of merit.

Petitioner appealed to the NLRC. The Commission, however, dismissed the appeal and affirmed
the decision of the Labor Arbiter. Petitioner filed a petition for certiorari before the Court of
Appeals.

The Court of Appeals upheld the validity of petitionerƞs dismissal on the ground of violation of a
company policy, which violation is punishable by dismissal under the employeesƞ manual. It,
however, found appropriate the award of separation pay to petitioner as financial assistance.

ISSUES

1.Whether petitionerƞs dismissal was valid; and

2.Whether the award of separation pay to petitioner is proper.

HELD
We affirm the decision of the Court of Appeals.
First, we find that petitionerƞs dismissal was valid.

Two requisites must concur for the valid termination of an employeeƞs services:
(a) the dismissal must be for any of the causes provided for in Article 282 of the Labor Code;
and
(b) the employee must be afforded an opportunity to be heard and defend himself.

In the case at bar, petitioner was dismissed for having been found guilty of taking out items
from the store without proper documentation.

We have held that it is the employerƞs prerogative to prescribe reasonable rules and regulations
necessary or proper for the conduct of its business or concern, to provide certain disciplinary
measures to implement said rules and to assure that the same be complied with. At the same
time, it is the duty of the employee to obey all reasonable rules, orders, and instructions of the
employer, and willful or intentional disobedience thereto, as a general rule, justifies rescission of
the contract of service and the peremptory dismissal of the employee.

Under Article 282 of the Labor Code, willful disobedience by the employee of the lawful orders
of his employer or representative in connection with his work is a ground for terminating an
employment. Petitionerƞs violation of the companyƞs regulations regarding the release of its
stock constitutes a valid ground for terminating her services.

Finally, with respect to the award of separation pay, we sustain the ruling of the Court of
Appeals. Under the Labor Code, an employee dismissed for any of the just causes enumerated
in Article 282 of the Labor Code is not entitled to separation pay. Exceptionally however,
separation pay, in the form of financial assistance, is granted as a measure of social justice
even when the employee is validly dismissed for cause as long as it is not for serious
misconduct or those other causes that reflect on his moral character.

In the case at bar, we agree with the findings of the Court of Appeals that the cause for
petitionerƞs dismissal did not reflect on her moral character.

The appellate court said:

In the instant case, the cause of petitionerƞs dismissal was the violation of company policy on
releasing stocks without any cash slip or charge slip. While petitioner was found to have
violated the said offense, the same however, does not reflect on her moral character. The
Court accords due consideration to petitionerƞs honesty in informing the branch clerks of the
items she took out and her further act of paying the value of the items. However and to
reiterate, her honesty does not absolve her from any liability she may have incurred for
violating a known company policy. The Court also considers the fact that petitionerƞs record of
employment with private respondent for more than five (5) years is entirely unblemished.
Hence, the consequent award of separation pay.

Thus, we find that the Court of Appeals did not err in rendering its assailed decision.

IN VIEW WHEREOF, the petition is DENIED. The decision of the Court of Appeals is AFFIRMED.
c


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FACTS

Respondent Cimech employed the services of petitioner Ruperto Suldao as a machinist with a
daily wage of P300.00 on a contractual status for a period of five months, but was later on
retained his services, making him a permanent employee.

Petitioner alleged that owing to a dearth in projects being handled by the respondent, he was
ordered by Ms. Elsa Labocay to take a leave of absence from November 1 to 6, 2002. He
reported for work on November 7, 2002 but was again ordered to take a leave of absence from
November 7 to 14, 2002. On November 15, 2002, he was purportedly ordered to make a letter-
request for field work transfer which he complied. The following day, he failed to report back
for work because he was sick. On November 17, 2002, he reported for work but was allegedly
barred from entering by the security guard on duty. On November 21, 2002, he was again
barred from entering the premises. Hence he filed the instant complaint for constructive
dismissal.

On the other hand, respondent alleged that due to lack of available work in the machine shop,
petitioner was temporarily transferred to its fabrication department sometime in November
2002. Petitioner refused to accept the transfer and insisted to work as a machinist. Because of
petitionerƞs arrogant and unruly behavior, he was led away by a guard. When petitioner
returned for work, he purportedly demanded a salary increase and wages for the days that he
did not work. Respondent considered the actuations of petitioner tantamount to
insubordination, hence, it suspended the petitioner for six days.

After his suspension on November 28, 2002, petitioner accepted his transfer to the fabrication
department but worked for only one day. During the companyƞs Christmas party on December
21, 2002, petitioner came and asked for his 13th month pay. On January 13, 2003, petitioner
demanded to get his one day salary deposit but was told to secure a clearance which he failed
to comply. Thereafter, petitioner filed the instant complaint for illegal dismissal.

ISSUE

Whether or not petitioner was constructively dismissed.

HELD

The SC held that petitioner was constructively dismissed.

Constructive dismissal or a constructive discharge has been defined as quitting because
continued employment is rendered impossible, unreasonable or unlikely, as an offer involving a
demotion in rank and a diminution in pay. In the instant case, there is constructive dismissal
because the continued employment of petitioner is rendered impossible so as to foreclose any
choice on his part except to resign from such employment.

While the decision to transfer employees to other areas of its operations forms part of the well
recognized prerogatives of management, it must be stressed, however, that the managerial
prerogative to transfer personnel must not be exercised with 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 the instant case, while petitionerƞs transfer was valid, the manner by which respondent
unjustifiably prevented him from returning to work on several occasions runs counter to the
claim of good faith on the part of respondent corporation. By reporting for work, petitioner
manifested his willingness to comply with the regulations of the corporation and his desire to
continue working for the latter. However, he was barred from entering the premises without
any explanation. This is a clear manifestation of disdain and insensibility on the part of an
employer towards a particular employee and a veritable hallmark of constructive dismissal.

Petition is granted.

'
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FACTS

The Associated Labor Union (ALU) is the exclusive bargaining agent of plantation workers of
petitioner Del Monte Philippines, Inc. (Del Monte) in Bukidnon where respondent is an employee
and a member of the said union. Timbal was charged by ALU for disloyalty to the union,
particularly for encouraging defections to a rival union.

Timbal filed an Answer before the Disloyalty Board, denying the allegations in the complaint and
the averments in Artajoƞs Affidavit. Nevertheless, the ALU Disloyalty Board concluded that
Timbal was guilty of acts or conduct inimical to the interests of ALU. It found that the acts
imputed to Timbal were partisan activities, prohibited since the Ơfreedom periodơ had not yet
commenced as of that time. Thus, the Disloyalty Board recommended the expulsion of Timbal
from membership in ALU, and likewise her dismissal from Del Monte in accordance with the
Union Security Clause in the existing CBA between ALU and Del Monte. The Disloyalty Board
also reached the same conclusions as to the co-employees, expressed in separate resolutions
also recommending their expulsion from ALU. Del Monte, then, terminated Timbal noting that
the termination was upon demand of ALU pursuant to Sections 4 and 5 of Article III of the
current Collective Bargaining Agreement.

Timbal filed a complaint against Del Monte and ALU with the NLRC-RAB for illegal dismissal,
unfair labor practice and damages.

ISSUE

Whether or not there is a sufficient cause for the dismissal of a rank-and-file employee through
the enforcement of a Collective Bargaining Agreement between the employer and the union.

HELD

The SC held that even if the dismissal of an employee is conditioned not on the grounds for
termination under the Labor Code, but pursuant to the provisions of a CBA, it still is necessary
to observe substantive due process in order to validate the dismissal. As applied to the Labor
Code, adherence to substantive due process is a requisite for a valid determination that just or
authorized causes existed to justify the dismissal. As applied to the dismissals grounded on
violations of the CBA, observance of substantial due process is indispensable in establishing the
presence of the cause or causes for dismissal as provided for in the CBA.

Substantive due process, as it applies to all forms of dismissals, encompasses the proper
presentation and appreciation of evidence to establish that cause under law exists for the
dismissal of an employee. This holds true even if the dismissal is predicated on particular causes
for dismissal established not by the Labor Code, but by the CBA. Further, in order that any CBA-
mandated dismissal may receive the warrant of the courts and labor tribunals, the causes for
dismissal as provided for in the CBA must satisfy to the evidentiary threshold of the NLRC and
the courts.

It is necessary to emphasize these principles since the immutable truth under our constitutional
and labor laws is that no employee can be dismissed without cause. The Agabon case may have
tempered the procedural due process requirements if just cause for dismissal existed, but in no
way did it eliminate the existence of a legally prescribed cause as a requisite for any dismissal.
The fact that a CBA may provide for additional grounds for dismissal other than those
established under the Labor Code does not detract from the necessity to duly establish the
existence of such grounds before the dismissal may be validated. And even if the employer or,
in this case, the collective bargaining agent, is satisfied that cause has been established to
warrant the dismissal, such satisfaction will be of no consequence if, upon legal challenge, they
are unable to establish before the NLRC or the courts the presence of such causes.

The Court sees the danger to jurisprudence and the rights of workers in acceding to Del
Monteƞs position. The dismissal for cause of employees must be justified by substantial
evidence, as appreciated by an impartial trier of facts.

The Disloyalty Board may have appreciated Piqueroƞs testimony in its own finding that Timbal
was guilty, yet the said board cannot be considered as a wholly neutral or dispassionate tribunal
since it was constituted by the very organization that stood as the offended party in the
disloyalty charge. Without impugning the integrity of ALU and the mechanisms it has employed
for the internal discipline of its members, we nonetheless hold that in order that the dismissal of
an employee may be validated by this Court, it is necessary that the grounds for dismissal are
justified by substantial evidence as duly appreciated by an impartial trier of facts. The existence
of Piqueroƞs testimony was appreciated only by the Disloyalty Board, but not by any of the
impartial tribunals which heard Timbalƞs case. The appreciation of such testimony by the
Disloyalty Board without any similar affirmation or concurrence by the NLRC-RAB, the NLRC, or
the Court of Appeals, cannot satisfy the substantive due process requirement as a means of
upholding Timbalƞs dismissal.

All told, The SC sees no error on the part of the Court of Appeals when it held that Timbal was
illegally dismissed.

Petition is denied.

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FACTS

Respondent Galaxie Steel is a corporation engaged in the business of manufacturing and sale of
re-bars and steel billets which are used primarily in the construction of high-rise buildings. On
account of serious business losses which occurred in 1997 up to mid-1999 totaling around
P127,000,000.00, Galaxie decided to close down its business operations. Galaxie thus filed on
July 30, 1999 a written notice with DOLE informing the latter of its intended closure and the
consequent termination of its employees effective August 31, 1999. And it posted the notice of
closure on the corporate bulletin board.

On September 8, 1999, petitioners Galaxie Steel Workers Union and Galaxie employees filed a
complaint for illegal dismissal, unfair labor practice, and money claims against Galaxie.

Petitioners contend that Galaxieƞs closure of business operations was motivated not by serious
business losses but by their anti-union stance; and that Galaxie did not serve written notices of
the closure of business operations upon its employees, it having merely posted a notice on the
company bulletin board.

ISSUE

Whether or not the closure of respondent company valid.

HELD

The SC held that the closure of the respondent company because the reason of the closure is
valid, being that, it is due to serious business reverses. The NLRCƞs finding on the legality of the
closure should be upheld for it is supported by substantial evidence consisting of the audited
financial statements showing that Galaxie continuously incurred losses from 1997 up to mid-
1999, to wit: P65,753,480.65 in 1997, P48,429,785.89 in 1998, and P13,204,389.97 in 1999;
and of the various demand notices of payments from creditor banks. Besides, the petitioners
had not presented evidence to the contrary; nor did they establish that the closure was
motivated by Galaxieƞs anti-union stance. True, the union was seeking the holding of a
certification election at the time that Galaxie closed its business operation, but that, without
more, was not sufficient to attribute anti-unionism against Galaxie.

However, the mere posting by the company of the notice in its bulletin board does not meet the
requirement of service of notice under Article 283 of the labor Code. The purpose of the
written notice is to inform the employees of the specific date of termination or closure of
business operations, and must be served upon them at least one month before the date of
effectivity to give them sufficient time to make the necessary arrangements. In order to meet
the foregoing purpose, service of the written notice must be made individually upon each and
every employee of the company.

Nevertheless, the validity of termination of services can exist independently of the procedural
infirmity in the dismissal. Where the dismissal is for an authorized cause, the lack of statutory
due process should not nullify the dismissal, or render it illegal, or ineffectual. However, the
employer should indemnify the employee, in the form of nominal damages, for the violation of
his right to statutory due process.

Decision of the CA is affirmed with modifications.

c


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1. Causing dissatisfaction among her staff as a result of her autocratic management style.
2. Violating some important provisions of the Hotel's Code of Conduct, to wit:
Section 19. Use of Company Time Premises, etc., for Personal Benefit: Using company time,
premises, vehicles, tools, equipment or materials for personal benefit. (accusation of dishonesty
(when she brought a vacuum cleaner out of the Hotel's premises and utilized the services of the
Hotel contract employees to work in her house without the knowledge of the Hotel)
Section 20. Unauthorized Possession of Company Property: Unauthorized possession or use of
any company, employee or guest property, hotel supplies.
3. Violating, on the basis of the testimonies of her staff, the following provisions of the
Hotel's Code of Conduct:
Section 4. Special Treatment or Privilege/ Bribery: Bribery in any form or manner; soliciting or
demanding anything of value in exchange for or in consideration of any act, decision or service
connected with the performance of the employee's duties or functions.
Section 5. Borrowing, Accepting Money or Soliciting Material favors from supplier/ customers:
Borrowing or accepting money, gifts, commission, offers of promises or soliciting material
favors from suppliers or customers with which the Company has a business relationship for his
own personal benefits.
Section 13. Kickbacks: Entering into arrangements with suppliers, customers or guests to
certain kickbacks or other preferential treatment.
On the basis of the above findings, the Hotel management terminated petitioner's employment
due to "loss of confidence".

The petitioner consequently filed with the NLRC-RAB a complaint for illegal dismissal against the
respondents.
ISSUE

Whether or not the petitioner illegally dismissed by the respondent Hotel.

HELD

The SC held that petitioner was not illegally dismissed by the Hotel. She was dismissed due to
breach of trust, otherwise known as loss of trust and confidence. The petitioner betrayed the
trust and confidence reposed on and expected of her when she brought home the Hotelƞs
vacuum cleaner and personally utilized the services of the Hotel's contract employees to work in
her house without the knowledge of her employer, in violation of the Hotel's Code of Conduct.
She used employees of a labor contractor of the hotel, to clean her house on a regular basis, is
another case of misconduct.

For a dismissal to be valid, two requisites must concur, namely:

(a) the dismissal must be for any of the causes stated in Article 282 of the Labor Code; and
(b) the employee must have been accorded due process, basic of which is the opportunity to be
heard and to defend himself.

An employer can terminate the services of an employee for just and valid causes, which must
be supported by clear and convincing evidence, and with due process, meaning that the
employee must be given notice with adequate opportunity to be heard before he is notified of
his actual dismissal for cause.

Paragraph (c) of Article 282 of the Labor Code provides that an employer may terminate an
employment for fraud or willful breach by the employee of the trust reposed in him by his
employer or the latterƞs duly authorized representative. A breach is willful if done intentionally,
knowingly and purposely, without justifiable excuse, as distinguished from an act done
carelessly, thoughtlessly, heedlessly or inadvertently. The following guidelines for the
application of the doctrine of loss of confidence:
(a) the loss of confidence should not be simulated;
(b) it should not be used as a subterfuge for causes which are improper, illegal or
unjustified;
(c) it should not be arbitrarily asserted in the face of overwhelming evidence to the
contrary; and
(d) it must be genuine, not a mere afterthought to justify an earlier action taken in bad
faith.
The treatment of managerial employees from that of the rank-and-file personnel, insofar as the
application of the doctrine of loss of trust and confidence is concerned, with respect to rank-
and-file personnel, loss of trust and confidence, as ground for valid dismissal, requires proof of
involvement in the alleged events in question, and that mere uncorroborated assertions and
accusations by the employer will not be sufficient. But as regards a managerial employee, the
mere existence of a basis for believing that such employee has breached the trust of his
employer would suffice for his dismissal. Hence, in the case of managerial employees, proof
beyond reasonable doubt is not required, albeit the evidence must be substantial and must
establish clearly and convincingly the facts on which the loss of confidence rests and not on the
employer's arbitrariness, whims and caprices or suspicion, otherwise the employee would
eternally remain at the mercy of the employer.

Petition is dismissed.




























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FACTS

Petitioner Carlos G. Azul was the branch accountant of respondent Banco Filipino -Iriga branch.
Upon audit, the bank found that petitioner was involved in Ơkitingơ operations by treating check
deposits as Ơcashơ and allowing withdrawals from uncollected check deposits. The audit
reported a total loss of P4,469,500.00.

An Ad Hoc Committee conducted a formal investigation, during which petitioner did not deny
his participation in the operations but insisted that he was merely following the instructions of
Danilo Disuanco, the branch manager. The latter allegedly instructed petitioner to use his
password and ID to release the float days, or the number of days for checks to be cleared for
withdrawal. Petitioner denied that he profited from the prohibited transactions. After the
investigation, the bank terminated petitionerƞs services and forfeited his benefits pursuant to
Section IX of the bankƞs Employee Guidelines.

Petitioner then filed with the NLR-RAB a complaint for illegal dismissal. He claims that petitioner
did not willfully and knowingly connive with Disuanco because it was the latter who, by himself,
engineered the Ơkitingơ operations using his managerial powers, discretion and strong
personality.

ISSUE

Whether petitioner was illegally dismissed.

HELD

The SC said that there is substantial evidence showing that there was valid cause for the bank
to dismiss petitionerƞs employment for loss of trust and confidence. Petitioner was a bank
accountant, which is a position of trust and confidence. The amount involved is significant,
almost P4.5 million. Petitioner admitted that he allowed his ID and password to be used in the
Ơkitingơ operations. This admission is evidence of the highest order and does not require
further proof. It binds the person who makes the same, and absent any showing that this was
made thru palpable mistake, no amount of rationalization can offset it.

By releasing the float days of uncleared checks, he was well aware that the same would not
only put the bank to undue risk but also constitutes a blatant violation of banking procedure.
Thus, his act constituted willful breach of the trust reposed on him as a bank officer. We might
have reached a contrary conclusion favorable to private respondent had he committed the
infraction by inadvertence or through simple negligence.

Petition is denied.
c


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FACTS

Petitioner Dennis D. Sy, herein substituted by his heirs Soledad Y. Sy, Ronald Allan Y. Sy, and
Melinda S. Pompenada, was the branch manager in Bajada, Davao City , of respondent
Metrobank.

On November 10 and 15, 1999, the bank released the results of the audit conducted in its
Bajada branch. The bank alleged that Sy allowed spouses Gorgonio and Elizabeth Ong to
conduct Ơkitingơ activities in their account with the bank. The bank placed Sy under preventive
suspension and gave him 48 hours to submit a written explanation. In response, Sy wrote a
letter explaining that he only made a wrong credit judgment.

Not satisfied with his answer, the bank notified Sy of other alleged violations of company
policies, to wit:
1. Granting of DBP-Clean accommodations totaling [P9.11M] from March to April 1999
to Sps. Samuel Aquino and Charito Sy-Aquino, your [brother-in-law] and sister, respectively.
This is in patent abuse of authority as you have knowledge that your branchƞs lending authority
has been suspended since January 1998.
2. Purchasing checks, Philam Bank and Bank of Commerce under Account Nos. 001103-
00467 and 00-9014-31103-4 which are payable to Landcraft Transport Services a company
owned by your aforementioned relatives. Please note that the signatories to the said checks are
also your aforementioned sister and [brother-in-law]. This has allowed your relatives to conduct
kiting activities through your branch with your knowledge and consent.

In reply, Sy explained in writing that the accommodation granted to spouses Samuel Aquino
and Charito Sy-Aquino was only P650,000, not P9.11M as claimed by the bank. He added that
the spouses even offered a parcel of land as collateral and were willing to sell a vehicle in
settlement of their obligation with the bank.
Unconvinced, the bank dismissed Sy. He then filed a complaint for illegal dismissal.

Petitioner claims that the alleged anomalous transactions were not at all prohibited, but were
allowed on a case-to-case basis; they were, at worst, simple errors of judgment on his part.
Respondent bank, however, counters that petitioner Sy committed acts of fraud, dishonesty,
and willful breach of the trust reposed in him, justifying his dismissal.

ISSUE

Whether or not petitioner was illegally terminated.

HELD

The SC held that petitioner Sy was validly dismissed on the ground of fraud and willful breach
of trust under Article 282 of the Labor Code. Records show that as bank manager, he
authorized Ơkitingơ or drawing of checks against uncollected funds in wanton violation of the
bankƞs policies. It was sufficient basis for the bank to lose trust in him.

Unlike a rank-and-file worker, where breach of trust as a ground for valid dismissal requires
proof of involvement in the alleged anomaly and where mere uncorroborated accusation by the
employer will not suffice, the sheer existence of a basis for believing that the employerƞs trust
has been breached is enough for the dismissal of a managerial employee.

As for the requirement of due process, records show that it has been fully satisfied in the
instant case. The bank had complied with the two-notice requirement, i.e.: (a) a written notice
of the cause for his dismissal to afford him ample opportunity to be heard and to defend himself
with the assistance of counsel, if he so desires; and (b) a written notice of the decision to
terminate him, stating clearly the reason therefor.

Petition is denied.
c


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FACTS

Complainants worked in respondentsƞ paper manufacturing business in various capacities as

machine operator, bookbinding head and/or helper. They claimed that, for refusal to sign for
the ratification of an addendum to an existing Collective Bargaining Agreement which was
intended to effect a reduction in their leave benefits of fifteen (15) days for every year of
service, they were subjected to acts of harassment such that, on November 11, 1998, when
they reported for work, they were not allowed entry by respondent companyƞs security guard
and that, they were instead instructed by the companyƞs Personnel Manager, Mr. Jessie
Ongsitco, to receive a Memorandum of Transfer which they refused. Complainants alleged that
their transfer to a provincial post constituted a case of constructive dismissal.

Respondents denied the charge, averring that the transfer had, for its sole consideration, the
best interest of the company and that it was an undertaking which the complainants agreed
when they signed their employment contracts with the respondent company.

Respondents further alleged that there was no reason to get back at the complainants on
account of their refusal to sign the adverted signature sheet for the ratification of an Addendum
to the 1995 CBA, since the majority of the employees in the bargaining unit had already ratified
the said addendum; that during their employment, complainants committed several offenses in
that, Tungpalan failed to report for work on March 12, 1998 then broke a breaker in August
1998, signed an overtime form but did not render overtime work, and had several unexcused
absences; Espiritu was also cited for a number of tardiness and absences; that Regalado was
suspended for seven (7) days in November 1997 for absences, issued a memorandum for not
wearing the proper uniform and for tardiness likewise; and that Paguirigan in 1998 had ten (10)
unexcused absences and was suspended twice on such account.

ISSUE

Whether or not respondents were constructively dismissed.

HELD

The SC held that respondents were constructively dismissed. It must be stressed that where
an employee complains of constructive dismissal, it is the employer who bears the burden of
proving that the transfer of an employee is for just and valid grounds, such as genuine business
necessity, and such transfer is not unreasonable, inconvenient, or prejudicial to the employee.
An employerƞs failure to discharge such burden would make him liable for unlawful contructive
dismissal.

In this case, the main argument of petitioner is that the transfers were an act of management
right and prerogative and respondents should not complain about such transfers since from the
beginning of their employment, they signified their willingness to be transferred to any of
petitionerƞs branches as shown in the Information Sheet each of them accomplished as a pre-
requisite for employment. Be that as it may, petitioner must show that the transfer was done in
good faith. 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.

Indeed, the combined circumstances of the immediate transfer of respondents to far-off

provinces after their refusal to sign the signature sheet of the document for the ratification of
the Addendum to the Collective Bargaining Agreement of 1995, and petitionerƞs emphasis on
respondentsƞ alleged previous infractions at work, point to the fact that the transfers are
motivated by ill-will on the part of petitioner. Petitionerƞs order for respondents to report for
work in petitionerƞs provincial branches on the very same day that they were served with the
Memo of Transfer is extremely unreasonable as the relocation would unduly inconvenience not
only respondents but their respective families. Petitioner, therefore, failed to sufficiently prove
that respondentsƞ transfer is for a just and valid cause and not unreasonable, inconvenient, or
prejudicial to the employee, making it liable for constructive dismissal.

Petition is denied.









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FACTS

Respondent Philippine Airlines, Inc. (PAL) maintained a daily petty cash fund of P250,000 in the
hands of one of its cashiers, petitioner Greg Anthony Cañeda. On July 9, 1996, the fund was
audited and found short of P34,338.69.

PALƞs investigation found petitioner liable for misappropriating company funds. His employment
was terminated effective July 29, 1996. PAL filed a complaint for estafa and falsification against
petitioner in the City Prosecution Office of Makati City. The case was, however, dismissed.

Petitioner filed a case for illegal dismissal with the labor arbiter where the latter ruled in favor of
Cañeda.
 During the course of theist appeal, PAL commenced its retrenchment program in June 1998
brought about by the heavy losses caused by then prevailing Asian economic crisis and the
pilotsƞ strike. Out of a workforce of 14,000, it retained only 8,000 employees. One of the
positions abolished was petitionerƞs. Since the position had ceased to exist, reinstatement
became impossible.

ISSUE

Whether or not petitioner was illegally dismissed.

HELD

The SC held that petitioner was validly dismissed.

To constitute a valid dismissal from employment, two requisites must be met, namely: (1) it
must be for a just or authorized cause and (2) the employee must be afforded due process.
The alleged violation of the first requirement lies at the root of this controversy. Article 282
of the Labor Code allows an employer to dismiss an employee for willful breach of trust or loss
of confidence. The basic premise for dismissal on this ground is that the employee concerned
holds a position of trust.

A special and unique employment relationship exists between a corporation and its cashier.
More than most key positions, that of cashier calls for utmost trust and confidence. It is the
breach of this trust that results in an employerƞs loss of confidence in the employee.

In dismissing a cashier on the ground of loss of confidence, it is sufficient that there is some
basis for the same or that the employer has a reasonable ground to believe that the employee
is responsible for the misconduct, thus making him unworthy of the trust and confidence
reposed in him. If there is sufficient evidence to show that the employer has ample reason to
distrust the employee, the labor tribunal cannot justly deny the employer the authority to
dismiss him.

The dismissal of the criminal complaint by the prosecutorƞs office could not have automatically
negated loss of confidence as a basis for administrative liability. It was enough that PAL had a
reasonable ground to believe that petitioner was responsible for the shortage and that he was
unworthy of the trust and confidence in him. This was so because, in holding a position
requiring full trust and confidence, he gave up some of the rigid guarantees available to
ordinary employees. Infractions which, if committed by others, might be overlooked or
condoned may be penalized with a more severe disciplinary action precisely because of the
special trust and confidence given the employee. A companyƞs resort to self-defense, in the
form of termination, would then be more easily justified.

As a rule this Court leans over backwards to help workers and employees continue in their
employment. We have mitigated penalties imposed by management on erring employees and
ordered employers to reinstate workers who have been punished enough through suspension.
However, breach of trust and confidence and acts of dishonesty and infidelity in the handling of
funds and properties are an entirely different matter.

It would be most unfair to require an employer to continue employing as its cashier a person
whom it reasonably believes is no longer capable of giving full and wholehearted
trustworthiness in the stewardship of company funds.

Petition is denied.

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FACTS

After the lower court ruled that petitioner was illegally dismissed and ordered respondent
company to reinstate petitioner, respondent company filed a motion for reconsideration praying
that instead of reinstatement, the petitioner will just be paid his separation pay.

ISSUE

Whether or not reinstatement is proper for the instant case.

HELD

The SC held that it would be best to award separation pay instead of reinstatement, in view of
the strained relations between petitioner and respondents. In fact, while petitioner prayed for
reinstatement, he also admitted that there is a Ơstrained relationship now prevailing between
him and respondents. Under the doctrine of strained relations, the payment of separation pay
has been considered an acceptable alternative to reinstatement when the latter option is no
longer desirable or viable.

In view of the illegal dismissal of petitioner, he is entitled to separation pay in lieu of

reinstatement for the reason above stated, computed from the date of petitionerƞs employment
until finality of our decision; and backwages to be computed from the date he was
constructively dismissed, i.e., July 17, 2002, up to the finality of this decision, less the amounts
paid in accordance with his payroll reinstatement. While the discretion to choose the mode of
reinstatement lies with the employer, the exercise thereof by respondents in the instant case
was a mockery of the true import of actual reinstatement, considering that petitioner was
reinstated as a Reserved Franchise Manager and was made to perform demeaning jobs.
Moreover, payroll reinstatement is proper in this case because the physical presence of
petitioner in the office might have worsened the already strained relations between him and
respondents, particularly, his immediate superior respondent De Jesus, to whom he will directly
report every day, as a Manager Reserve.

Petition is partly granted.

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FACTS

Petitioner Maribel S. Santos was hired as X-Ray Technician in the Radiology department of
private respondent St. Lukeƞs Medical Center, Inc. On April 22, 1992, Congress passed and
enacted Republic Act No. 7431 known as the ƠRadiologic Technology Act of 1992.ơ Said law
requires that no person shall practice or offer to practice as a radiology and/or x-ray
technologist in the Philippines without having obtained the proper certificate of registration from
the Board of Radiologic Technology.

St. Lukeƞs issued a final notice to all practitioners of Radiologic Technology to comply with the
requirement of Republic Act No. 7431 by December 31, 1995; otherwise, the unlicensed
employee will be transferred to an area which does not require a license to practice if a slot is
available. Petitioner was issued three memorandum on different dates requiring her to comply
with Republic Act. No. 7431 by taking and passing the forthcoming examination scheduled in
June 1997; otherwise, private respondent SLMC may be compelled to retire her from
employment should there be no other position available where she may be absorbed. Due to
the failure of Santos to comply with such requirement, St. Lukeƞs issued a notice to petitioner
informing the latter that the management of private respondent SLMC has approved her
retirement in lieu of separation pay. The Personnel Manager of St. Luke also issued a ƠNotice of
Separation from the Companyơ to petitioner Santos in view of the latterƞs refusal to accept St.
Lukeƞs offer for early retirement. The notice also states that while said private respondent
exerted its efforts to transfer petitioner Maribel S. Santos to other position/s, her qualifications
do not fit with any of the present vacant positions in the hospital.

Petitioner Santos filed a complaint against private respondent SLMC for illegal dismissal.

Private respondent St. Lukeƞs Medical Center, Inc. argues that petitioner was legally and validly
terminated in accordance with Republic Act Nos. 4226 and 7431; that its decision to terminate
petitioner Santos was made in good faith and was not the result of unfair discrimination; and
that petitioner Santosƞ non-transfer to another position in the SLMC was a valid exercise of
management prerogative.

ISSUE

Whether or not petitioner Santos was illegally dismissed.

HELD

The SC held that petitioner was validly dismissed.

The requirement for a certificate of registration is set forth under R.A. No. 7431 thus:
Sec. 15. Requirement for the Practice of Radiologic Technology and X-ray Technology. Ɯ
Unless exempt from the examinations under Sections 16 and 17 hereof, no person shall practice
or offer to practice as a radiologic and/or x-ray technologist in the Philippines without having
obtained the proper certificate of registration from the Board.

It is significant to note that petitioners expressly concede that the sole cause for petitioner
Santosƞ separation from work is her failure to pass the board licensure exam for X-ray
technicians, a precondition for obtaining the certificate of registration from the Board. It is
argued, though, that petitioner Santosƞ failure to comply with the certification requirement did
not constitute just cause for termination as it violated her constitutional right to security of
tenure.

While the right of workers to security of tenure is guaranteed by the Constitution, its exercise
may be reasonably regulated pursuant to the police power of the State to safeguard health,
morals, peace, education, order, safety, and the general welfare of the people. Consequently,
persons who desire to engage in the learned professions requiring scientific or technical
knowledge may be required to take an examination as a prerequisite to engaging in their
chosen careers. The most concrete example of this would be in the field of medicine, the
practice of which in all its branches has been closely regulated by the State. It has long been
recognized that the regulation of this field is a reasonable method of protecting the health and
safety of the public to protect the public from the potentially deadly effects of incompetence
and ignorance among those who would practice medicine. The same rationale applies in the
regulation of the practice of radiologic and x-ray technology.

The enactment of R.A. (Nos.) 7431 and 4226 are recognized as an exercise of the Stateƞs
inherent police power. It should be noted that the police power embraces the power to
prescribe regulations to promote the health, morals, educations, good order, safety or general
welfare of the people. The state is justified in prescribing the specific requirements for x-ray
technicians and/or any other professions connected with the health and safety of its citizens.
Respondent-appellee being engaged in the hospital and health care business, is a proper
subject of the cited law; thus, having in mind the legal requirements of these laws, the latter
cannot close its eyes and let complainant-appellantƞs private interest override public interest.

No malice or ill-will can be imputed upon private respondent as the separation of petitioner
Santos was undertaken by it conformably to an existing statute. It is undeniable that her
continued employment without the required Board certification exposed the hospital to possible
sanctions and even to a revocation of its license to operate. Certainly, private respondent could
not be expected to retain petitioner Santos despite the inimical threat posed by the latter to its
business. This notwithstanding, the records bear out the fact that petitioner Santos was given
ample opportunity to qualify for the position and was sufficiently warned that her failure to do
so would result in her separation from work in the event there were no other vacant positions
to which she could be transferred. Despite these warnings, petitioner Santos was still unable to
comply and pass the required exam. To reiterate, the requirement for Board certification was
set by statute. Justice, fairness and due process demand that an employer should not be
penalized for situations where it had no participation or control.

While our laws endeavor to give life to the constitutional policy on social justice and the
protection of labor, it does not mean that every labor dispute will be decided in favor of the
workers. The law also recognizes that management has rights which are also entitled to respect
and enforcement in the interest of fair play. Labor laws, to be sure, do not authorize
interference with the employer's judgment in the conduct of the latterƞs business. Private
respondent is free to determine, using its own discretion and business judgment, all elements of
employment, "from hiring to firing" except in cases of unlawful discrimination or those which
may be provided by law. None of these exceptions is present in the instant case.

Petition is denied.

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FACTS

Petitioner, Lorna Dising Punzal, had been working for respondent, ETSI Technologies, Inc.
(ETSI), holding the position of Department Secretary. On October 30, 2001, petitioner sent an
electronic mail (e-mail) message to her officemates announcing the holding of a Halloween
party that was to be held in the office the following day.

Petitionerƞs immediate superior, Remorado, who was one of those to whom the e-mail message
was sent, advised petitioner to first secure the approval of the Senior Vice President Geisert for
the holding of the party in the office. Petitioner soon learned that Geisert did not approve of the
plan to hold a party in the office. She thereupon sent also on October 30, 2001 another e-mail
message to her officemates, which reads:

Sorry for the mail that I sent you, unfortunately the SVP of ETSI Technologies, Inc. did not
agree to our idea to bring our children in the office for the TRICK or TREATING. He was so
unfairƦpara bang palagi siyang iniisahan sa trabahoƦbakit most of the parents na mag-joined
ang anak ay naka-VL naman. Anyway, solohin na lang niya bukas ang office.
Anyway, to those parents who would like to bring their Kids in Megamall there will be Trick or
Treating at Mc Donalds Megamall Bldg. A at 10:00 AM tomorrow and letƞs not spoil the fun for
our kids.

Petitioner was then informed that Geisert got a copy of her e-mail message and that he
required her to explain in writing within 48 hours why she should not be given disciplinary
action for committing Article IV, No. 5 & 8 Improper conduct or acts of discourtesy or disrespect
and Making malicious statements concerning Company Officer, whereby such offenses may be
subject to suspension to termination depending upon the gravity of the offense/s as specified in
our ETSIƞs Code of Conduct and Discipline.

In her explanation she contended that she had no malicious intention in sending the second e-
mail message and that she Ơnever expected such kind of words can be called as Ɲacts of
discourtesy or disrespect.ơ A conference was also conducted where petitioner to give her a
chance to explain her side. Finding her explanation not acceptable, the company sent a letter to
the petitioner terminating her services.

Petitioner then filed before the NLRC a complaint for illegal dismissal against ETSI, Geisert, and
Remudaro. Petitioner posits that her second e-mail message was merely an exercise of her right
to freedom of expression without any malice on her part. On the other hand, ETSI, et al.
maintain that petitionerƞs second e-mail message was tainted with bad faith and constituted a
grave violation of the companyƞs code of discipline.

ISSUE

Whether or not petitioner was illegally dismissed by respondent company.

HELD

The SC held that petitioner was validly dismissed. A scrutiny of petitionerƞs second e-mail
message shows that her remarks were not merely an expression of her opinion about Geisertƞs
decision; they were directed against Geisert himself, viz: ƠHe was so unfair . . . para bang
palagi siyang iniisahan sa trabaho. . . Anyway, solohin na lang niya bukas ang office.ơ
Petitioner, in her closing statement even invited her co-workers to join a trick or treating activity
at another venue during office hours and there is no showing that it was declared a holiday,
encouraging them to ignore Geisertƞs authority. Additionally, petitioner sent the e-mail message
in reaction to Geisertƞs decision which he had all the right to make. That it has been a tradition
in ETSI to celebrate occasions such as Christmas, birthdays, Halloween, and others does not
remove Geisertƞs prerogative to approve or disapprove plans to hold such celebrations in office
premises and during company time.

It is settled that it is the prerogative of management to regulate, according to its discretion and
judgment, all aspects of employment. This flows from the established rule that labor law does
not authorize the substitution of the judgment of the employer in the conduct of its business.
Such management prerogative may be availed of without fear of any liability so long as it is
exercised in good faith for the advancement of the employersƞ interest and not for the purpose
of defeating or circumventing the rights of employees under special laws or valid agreement
and are not exercised in a malicious, harsh, oppressive, vindictive or wanton manner or out of
malice or spite.

In the case at bar, the disapproval of the plan to hold the Halloween partymay not be
considered to have been actuated by bad faith. It may not be ignored that holding a trick or
treat party in the office premises of respondent ETSI would certainly affect the operations of
the office, since children will be freely roaming around the office premises, things may get
misplaced and the noise in the office will simply be too hard to ignore.

Given the reasonableness of Geisertƞs decision that provoked petitioner to send the second e-
mail message, the message resounds of subversion and undermines the authority and
credibility of managementơ and petitioner Ơdisplayed a tendency to act without managementƞs
approval, and even against managementƞs willơ.

Moreover, in circulating the second e-mail message, petitioner violated Articles III (8) and IV
(5) of ETSIƞs Code of Conduct on Ơmaking false or malicious statements concerning the
Company, its officers and employees or its products and servicesơ and Ơimproper conduct or
acts of discourtesy or disrespect to fellow employees, visitors, guests, clients, at any time.ơ

In fine, petitioner, having been dismissed for just cause, is neither entitled to reinstatement nor
to backwages.
However, since ETSI failed to inform petitioner of her right to be represented by counsel during
the conference with ETSI, petitioner is entitled to an award of nominal damage, which is fixed
at P30,000.00

Petition is partly granted.

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FACTS

Respondent MY San informed its employees and union that they intend to sell the company to
respondent Monde and that MY San will terminate their employment and payment of their
separation pay will be in accordance with the law. In connection with this event, the union and
MY San agreed that a list of MY San employees will be submitted to respondent Monde
purposes of rehiring if said employee applies and qualifies, subject to such criteria as the new
corporation may impose. Respondent Monde then commenced its operations. All the former
employees of respondent M.Y. San who were terminated upon its closure and who applied and
qualified for probationary employment, including petitioners herein, started working for
respondent Monde on a contractual basis for a period of six months. Subsequently, petitioners
were terminated on various dates.

Thus, petitioners filed a complaint for illegal dismissal and underpayment, damages and
attorneyƞs fees and litigation cost with the NLRC- RAB.

Petitioners alleged that respondent My San stopped its operations, but three days after,
resumed its operation with the same top management running the business; the union officers,
in exchange for being re-hired, acceded to bust the union; and the sale of respondent M.Y. San
to respondent Monde was merely a ploy to circumvent the provisions of the Labor Code.

Respondent M.Y. San insisted that its employer-employee relationship with petitioners had
ceased to exist, thus, the complaint for illegal dismissal against it could no longer prosper. It
further contended that the power to hire and fire employees is now lodged in the new business
owner, respondent Monde.

On the other hand, respondent Monde alleged that petitioners had no cause of action against it.
Monde claimed that the respective supervisors of Monde conducted an evaluation of the
performance of all its probationary employees, including herein complainants, to determine
their fitness to qualify as regular employees therein. The probationary employees of Monde who
passed the performance appraisal and who qualified as regular employees thereof were
accordingly appointed as such. Out of the one hundred sixteen (116) probationary employees
engaged by respondent Monde, a total of seventy-four employees qualified for regular
employment. For those who did not qualify for regular employment, including herein
complainants, respondent Monde gave complainants the remainder of their probationary period
within which to prove their qualification for regular employment therewith. Notwithstanding the
opportunity given to herein complainants to improve their performance to qualify for regular
employment with Monde, complainants either: (a) resigned from their employment with Monde;
(b) refused to report for work on 02 May 2001 and on the days following; or (c) failed to qualify
for regular employment at the expiration of the period of their probationary employment.

ISSUE

Whether or not petitioners were illegally dismissed.

HELD

The SC held that petitioners were validly dismissed. Petitioners were validly separated from
respondent MY San.

Work is a necessity that has economic significance deserving legal protection. The provisions
on social justice and protection to labor in the Constitution dictate so. However, employers are
also accorded rights and privileges to assure their self-determination and independence and
reasonable return of capital. This mass of privileges comprises the so-called management
prerogatives. One of the rights accorded an employer is the right to close an establishment or
undertaking. Just as no law forces anyone to go into business, no law can compel anybody to
continue the same. The right to close the operations of an establishment or undertaking is
explicitly recognized under the Labor Code as one of the authorized causes in terminating
employment of workers, the only limitation being that the closure must not be for the purpose
of circumventing the provisions on terminations of employment embodied in article 283 of the
Labor Code.

Under Article 283 of the Labor Code, three requirements are necessary for a valid cessation of
business operations, namely:
(1) service of a written notice to the employees and to the DOLE at least one (1)
month before the intended date thereof;
(2) the cessation must be bona fide in character; and
(3) payment to the employees of termination pay amounting to at least one half
(1/2) month pay for every year of service, or one (1) month pay, whichever is higher.

The records reveal that private respondent M.Y. San complied with the aforecited requirements.
M.Y. San employees were adequately informed of the intended business closure and a written
notice to the Regional Director of DOLE was filed by respondent M.Y. San, informing the DOLE
that M.Y. San will be closed effective 31 January 2001.

The ultimate test of the validity of closure or cessation of establishment or undertaking is that it
must be bona fide in character. And the burden of proving such falls upon the employer.

Respondent M.Y. San in good faith complied with the requirements for closure; sold and
conveyed all its assets to respondent Monde for valuable consideration; and there were no
previous labor problems. It has been ruled that an employer may adopt policies or changes or
adjustments in the operations to insure profit to itself or protect the investments of its
stockholders, and in the exercise of such management prerogative, the employer may merge or
consolidate its business with another, or sell or dispose all or substantially all of its assets and
properties which may bring about the dismissal or termination of its employees in the process.
Petitioners were also validly dismissed by respondent Monde.

There is no dispute that petitioners were probationary employees as stated in their individual
contracts of employment with respondent Monde. While petitioners were only probationary
employees who do not enjoy permanent status, nonetheless, they were still entitled to the
constitutional protection of security of tenure. As may be gleaned in article 281 of the Labor
Code, their employment may only be terminated for a valid and just cause or for failing to
qualify as a regular employee in accordance with the reasonable standards made known to him
by the employer at the time of engagement and after being accorded due process.

Procedural due process requires that the employee be given two written notices before he is
terminated, consisting of a notice which apprises the employee of the particular acts/omissions
for which the dismissal is sought and the subsequent notice which informs the employee of the
employerƞs decision to dismiss him.

In the case at bar, petitioners were notified of the standards they have to meet to qualify as
regular employees of respondent Monde when the latter apprised them, at the start of their
employment.

Some of the petitioners in this case voluntarily resigned (Barnuevo, Reyes, Ollorsa, and
Cerbito), some were validly dismissed because of Absence Without Leave (Espina, Aquino,
Bandino, Petalio, Jr., Ebreo, B. Paz, Deocareza and L. Paz), while some others were terminated
because they failed to qualify as regular employees in accordance with the terms and conditions
of their probationary employment with respondent Monde (Celis, Fernandez, Rodriguez,
Punzalan, Lourdes Alfonso Q., Panlilio, Arceo, Pascual, Bajo, Blanco, Abela, Fajanilag, and
Wong).

It must be noted that petitioners were terminated prior to the expiration of their probationary
contracts. As probationary employees, they enjoyed only temporary employment status. In
general terms, this meant that they were terminable anytime, permanent employment not
having been attained in the meantime. The employer could well decide if he no longer needed
the probationaryƞs service or his performance fell short of expectations, as a probationary
employee is one who, for a given period of time, is under observation and evaluation to
determine whether or not he is qualified for permanent employment. During the probationary
period, the employer is given the opportunity to observe the skill, competence and attitude of
the employee to determine if he has the qualification to meet the reasonable standards for
permanent employment. The length of time is immaterial in determining the correlative rights
of both the employer and the employee in dealing with each other during said period. Thus, as
long as the termination was made before the expiration of the six-month probationary period,
the employer was well within his rights to sever the employer-employee relationship. A
contrary interpretation would defeat the clear meaning of the term Ơprobationary.ơ

Terminating employment is one of respondent Mondeƞs prerogatives. As an employer,

respondent Monde has the right to regulate, according to its discretion and best judgment,
including work assignment, working methods, processes to be followed, working regulations,
transfer of employees, work supervision, lay-off of workers and the discipline, dismissal and
recall of workers. Management has the prerogative to discipline its employees and to impose
appropriate penalties on erring workers pursuant to company rules and regulations.

This Court has upheld a companyƞs management prerogatives so long as they are exercised in
good faith for the advancement of the employerƞs interest and not for the purpose of defeating
or circumventing the rights of the employees under special laws and valid agreements.

The law imposes many obligations on the employer such as providing just compensation to
workers, observance of the procedural requirements of notice and hearing in the termination of
employment. On the other hand, the law recognizes the right of the employer to expect from its
workers not only good performance, adequate work and diligence, but also good conduct and
loyalty. The employer may not be compelled to continue to employ such persons whose
continuance in the service will patently be inimical to his interest.

Thus, respondent Monde exercised in good faith its management prerogative as there is no
dispute that petitioners had been habitually absent, neglectful of their work, and rendered
unsatisfactory service, to the damage and prejudice of the company.

The decision of the NLRC was affirmed.

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FACTS

Petitioners Barba and Gonzales were terminated from their employment with respondent
Philippine Airlines Inc. (PAL). In the case of Barba, he was terminated because of Fraud
because recorded in the latterƞs baggage tag that Nunez had checked-in four pieces of
baggage, with a total weight of 18 kilos, which was later found out to be 55 kilos. On the other
hand, Gonzales was terminated because of corruption/extortion/bribery when he offered to
have a passengerƞs excess baggage accommodated for a fee of US$100, for which no receipt
would be issued.

The Philippine Airlines Employeeƞs Association (PALEA), in behalf of Gonzales and Barba, filed a
complaint against PAL for illegal dismissal before the NLRC.

ISSUE

Whether or not the offenses of petitioners merit the penalty of dismissal.

HELD

The SC held that they are validly dismissed.

Although as a rule this Court leans over backwards to help workers and employees continue
with their employment or to mitigate the penalty imposed on them, acts of dishonesty in the
handling of company property are a different matter. The acts of Gonzales in offering a
passenger the services of the airlines, without compensating for the same, while at the same
time exacting a fee for himself, are undoubtedly inimical to the interests of his employer PAL.
Moreover, his reprehensible act badly reflects on the reputation of PAL and puts into question
the honesty and integrity of PALƞs employees. Such act would obviously merit the penalty of
dismissal. Gonzalesƞ attempt to make a profit for himself out of cheating his employer cannot be
mitigated by the fact that it was his first offense, or even his six years of service.

Like Gonzalesƞ offense, Barbaƞs act in incorrectly recording the baggage weight, was clearly an
act inimical to the interests of their employer, and of manifest dishonesty and disregard of his
duties, which deserves the supreme penalty of dismissal. Section 282(c) of the Labor Code,
sanctions the dismissal of employees for fraud or the willful breach by the employee of the trust
reposed in him by his employer or duly authorized representative.

The offenses of both Barba and Gonzales, in compromising the integrity of company records for
their personal reasons, are made more reprehensible because of the danger their acts pose on
the safety of the passengers and the crew. The proper recording of the weight of cargo is
crucial in determining how the cargo would be distributed in each aircraft. A resulting error
could imperil valuable equipment, even the lives of the passengers and crews. Furthermore,
the blatant dishonesty of their acts has tainted the reputations of the countless honest
employees working in our flagship airlines.

The dismissal of a dishonest employee is as much in the interests of labor as it is of

management. The labor force in any company is protected and the workersƞ security of tenure
strengthened when pilferage of equipment, goods, and products which endangers the viability
of an employer and, therefore, the workersƞ continued employment is minimized or eliminated
and consequently labor-management relations based on mutual trust and confidence are
promoted.

Petition is denied.
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FACTS
Federito B. Pido was employed by Cherubim Security and General Services, Inc. as a security
guard. He was assigned at the Ayala Museum, but was later transferred to the Tower and
Exchange Plaza of Ayala Center where he worked as a computer operator at the Console Room.
Like the other guards deployed by respondent at the Ayala Center, petitioner was under the
operational control and supervision of the Ayala Security Force (ASF) of the Ayala Group of
Companies.
On January 21, 2000, petitioner had an altercation with Richard Alcantara of the ASF, arising
from a statement of Alcantara that petitionerƞs security license for his .38 caliber revolver
service firearm and duty detail order had already expired. Alcantara filed a complaint for Gross
Misconduct, recommended that petitioner be relieved from his post, and that immediate
disciplinary action against him be taken.
Respondent thus conducted an investigation on January 25, 2000 during which petitioner
echoed his tale in his January 21, 2000 information report.
Petitioner was later to claim that he was suspended by respondent following his argument with
Alcantara.
As more than nine months had elapsed since the investigation was conducted by respondent
with no categorical findings thereon made, petitioner filed on October 23, 2000 a complaint for
illegal constructive dismissal, illegal suspension, and non-payment and underpayment of
salaries, holiday pay, rest day, service incentive leave, 13th month pay, meal and travel
allowance and night shift differential against respondent, along with its employee Rosario K.
Balais who was allegedly responsible for running the day to day affairs of respondentƞs
business. Petitioner likewise prayed for reinstatement and payment of full backwages,
attorneyƞs fees and other money claims.
In its position paper, respondent denied that it dismissed petitioner from the service, it claiming
that while it was still in the process of investigating the January 21, 2000 incident, it offered
petitioner another assignment which he declined, saying "pahinga muna ako [I will in the
meantime take a rest]."
The Labor Arbiter ruled for separation pay. The NLRC, on appeal, ruled reinstatement without
granting the other monetary claims. The ruling of the NLRC was affirmed by the Court of
Appeals, hence the petition with the Supreme Court.

ISSUE

1. Whether the petitionerƞs nine-month suspension is tantamount to constructive dismissal.

2. Whether the petitioner should be paid his backwages aside from his separation pay.
3. Whether the payment of separation pay is more viable than the order of reinstatement.

HELD

it is gathered that respondent intended to put petitioner under preventive suspension for an
indefinite period of time pending the investigation of the complaint against him. The allowable
period of suspension in such a case is not six months but only 30 days, following Sections 8 and
9 of Rule XXIII, Book V of the Omnibus Rules Implementing the Labor Code (Implementing
Rules),
SEC. 8. Preventive suspension. - The employer may place the worker concerned under
preventive suspension if his continued employment poses a serious and imminent threat to the
life or property of the employer or of his co-workers.
SEC. 9. Period of suspension. - No preventive suspension shall last longer than thirty (30) days.
The employer shall thereafter reinstate the worker in his former or in a substantially equivalent
position or the employer may extend the period of suspension provided that during the period
of extension, he pays the wages and other benefits due to the worker. In such case, the worker
shall not be bound to reimburse the amount paid to him during the extension if the employer
decides, after completion of the hearing, to dismiss the worker.
Respondent did not inform petitioner that it was extending its investigation, nor did it pay him
his wages and other benefits after the lapse of the 30-day period of suspension. Neither did
respondent issue an order lifting petitionerƞs suspension, or any official assignment,
memorandum or detail order for him to assume his post or another post. Respondent merely
chose to dawdle with the investigation, in absolute disregard of petitionerƞs welfare.
At the time petitioner filed the complaint for illegal suspension and/or constructive dismissal on
October 23, 2000, petitioner had already been placed under preventive suspension for nine
months. The Supreme Court ruled that the preventive suspension which lasted for nine months
amounted to constructive dismissal.
Petitioner, who is a regular employee of respondent, is entitled to reinstatement without loss of
seniority and payment of backwages from the time his compensation was withheld up to the
time of his actual reinstatement by virtue of Art. 279.
The Court also ruled that there exists no exception to the general rule that award of separation
pay would be proper in lieu of reinstatement.
Respondent is ordered to reinstate petitioner together with the payment of the corresponding
backwages.



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FACTS

JPL Marketing and Promotions is a domestic corporation engaged in the business of

recruitment and placement of workers. On the other hand, private respondents Noel Gonzales,
Ramon Abesa III and Faustino Aninipot were employed by JPL as merchandisers on separate
dates and assigned at different establishments in Naga City and Daet, Camarines Norte as
attendants to the display of California Marketing Corporation , one of petitionerƞs clients.
On 13 August 1996, JPL notified private respondents that CMC would stop its direct
merchandising activity in the Bicol Region, Isabela, and Cagayan Valley effective 15 August
1996. they were advised to wait for further notice as they would be transferred to other clients.
However, on 17 October 1996, private respondents Abesa and Gonzales filed before the
National Labor Relations Commission Regional Arbitration Branch (NLRC) Sub V complaints for
illegal dismissal, praying for separation pay, 13th month pay, service incentive leave pay and
payment for moral damages. Aninipot filed a similar case thereafter.
Executive Labor Arbiter Gelacio L. Rivera, Jr. dismissed the complaints for lack of merit. The
Labor Arbiter found that Gonzales and Abesa applied with and were employed by the store
where they were originally assigned by JPL even before the lapse of the six (6)-month period
given by law to JPL to provide private respondents a new assignment. Thus, they may be
considered to have unilaterally severed their relation with JPL, and cannot charge JPL with
illegal dismissal. The Labor Arbiter held that it was incumbent upon private respondents to wait
until they were reassigned by JPL, and if after six months they were not reassigned, they can
file an action for separation pay but not for illegal dismissal. The claims for 13th month pay and
service incentive leave pay was also denied since private respondents were paid way above the
applicable minimum wage during their employment.
NLRC. agreed with the Labor Arbiterƞs finding that when private respondents filed their
complaints, the six-month period had not yet expired, and that CMCƞs decision to stop its
operations in the areas was beyond the control of JPL, thus, they were not illegally dismissed.
However, it found that despite JPLƞs effort to look for clients to which private respondents may
be reassigned it was unable to do so, and hence they are entitled to separation pay.
The Court of Appeals dismissed the petition and affirmed in toto the NLRC resolution.
While conceding that there was no illegal dismissal, it justified the award of separation pay on
the grounds of equity and social justice.

Issue

Whether or not the respondents are entitled to separation pay?

Held

Under Arts. 283 and 284 of the Labor Code, separation pay is authorized only in cases of
dismissals due to any of these reasons: (a) installation of labor saving devices; (b) redundancy;
(c) retrenchment; (d) cessation of the employer's business; and (e) when the employee is
suffering from a disease and his continued employment is prohibited by law or is prejudicial to
his health and to the health of his co-employees.
However, separation pay shall be allowed as a measure of social justice in those cases where
the employee is validly dismissed for causes other than serious misconduct or those reflecting
on his moral character, but only when he was illegally dismissed.
In addition, Sec. 4(b), Rule I, Book VI of the Implementing Rules to Implement the Labor Code
provides for the payment of separation pay to an employee entitled to reinstatement but the
establishment where he is to be reinstated has closed or has ceased operations or his present
position no longer exists at the time of reinstatement for reasons not attributable to the
employer.
The common denominator of the instances where payment of separation pay is
warranted is that the employee was dismissed by the employer. In the instant case, there was
no dismissal to speak of. Private respondents were simply not dismissed at all, whether legally
or illegally. What they received from JPL was not a notice of termination of employment, but a
memo informing them of the termination of CMCƞs contract with JPL. More importantly, they
were advised that they were to be reassigned. At that time, there was no severance of
employment to speak of.
Furthermore, Art. 286 of the Labor Code allows the bona fide suspension of the operation
of a business or undertaking for a period not exceeding six (6) months, wherein an
employee/employees are placed on the so-called Ơfloating status.ơ When that Ơfloating statusơ
of an employee lasts for more than six months, he may be considered to have been illegally
dismissed from the service. Thus, he is entitled to the corresponding benefits for his
separation, and this would apply to suspension either of the entire business or of a specific
component thereof.
As clearly borne out by the records of this case, private respondents sought employment
from other establishments even before the expiration of the six (6)-month period provided by
law. As they admitted in their comment, all three of them applied for and were employed by
another establishment after they received the notice from JPL. JPL did not terminate their
employment; they themselves severed their relations with JPL. Thus, they are not entitled to
separation pay.
Nonetheless, JPL cannot escape the payment of 13th month pay and service incentive
leave pay to private respondents. Said benefits are mandated by law and should be given to
employees as a matter of right.
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FACTS

Respondent Romualdo Payong, Jr. was employed by Manly Express, Inc. and/or Siy Eng T.
Ching as welder. Sometime in December 1999, he was complaining of eyesight problems.
Brought to an eye specialist by private respondent Ching, he was diagnosed to be suffering
from eye cataract. Despite having the cataract removed in January of 2000, he was disallowed
to return to his work by Ching. Much later, on August 1, 2000, he was given a letter of
termination of employment.

Thus, Payong filed a complaint for illegal dismissal with money claims against Manly.

ISSUE

Whether or not Payong was illegally dismissed by Manly.

HELD

The SC held that Payong was illegally dismissed by Manly. Article 284 of the Labor Code
authorizes an employer to terminate an employee on the ground of disease, thus:

Art. 284. Disease as ground for termination. ƛ An employer may terminate the services of an
employee who has been found to be suffering from any disease and whose continued
employment is prohibited by law or is prejudicial to his health as well as to the health of his co-
employees: Ʀ.

However, in order to validly terminate employment on this ground, Section 8, Rule I, Book VI of
the Omnibus Rules Implementing the Labor Code requires:
Sec. 8. Disease as a ground for dismissal. ƛ Where the employee suffers from a disease and his
continued employment is prohibited by law or prejudicial to his health or to the health of his co-
employees, the employer shall not terminate his employment unless there is a certification by a
competent public health authority that the disease is of such nature or at such a stage that it
cannot be cured within a period of six (6) months even with proper medical treatment. If the
disease or ailment can be cured within the period, the employer shall not terminate the
employee but shall ask the employee to take a leave. The employer shall reinstate such
employee to his former position immediately upon the restoration of his normal health.

The rule is explicit. For a dismissal on the ground of disease to be considered valid, two
requisites must concur: (a) the employee suffers from a disease which cannot be cured within
six months and his continued employment is prohibited by law or prejudicial to his health or to
the health of his co-employees, and (b) a certification to that effect must be issued by a
competent public health authority.

In the present case, there was no proof that Payongƞs continued employment was prohibited by
law or prejudicial to his health and that of his co-employees. No medical certificate by a
competent public health authority was submitted that Payong was suffering from a disease that
cannot be cured within a period of six months. In the absence of such certification, Payongƞs
dismissal must necessarily be declared illegal.

The SC also noted that Manly failed to comply with the procedure for terminating an employee.
In dismissing an employee, the employer has the burden of proving that the employee has
been served two notices: (1) one to apprise him of the particular acts or omissions for which his
dismissal is sought, and (2) the other to inform him of his employerƞs decision to dismiss him.
The first notice must state that dismissal is sought for the act or omission charged against the
employee, otherwise, the notice cannot be considered sufficient compliance with the rules

Petition is denied.















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FACTS

Private respondent Jaime Sahot started working as a truck helper for petitionersƞ family-owned
trucking business named Vicente Sy Trucking. Throughout all the changes in names and for 36
years, private respondent continuously served the trucking business of petitioners. When Sahot
was already 59 years old, he had been incurring absences as he was suffering from various
ailments. Particularly causing him pain was his left thigh, which greatly affected the
performance of his task as a driver. Sahot had filed a week-long leave sometime in May 1994.
On May 27th, he was medically examined and treated for EOR, presleyopia, hypertensive
retinopathy G II), HPM, UTI, Osteoarthritis and heart enlargement. On said grounds, Belen
Paulino of the SBT Trucking Service management told him to file a formal request for extension
of his leave. At the end of his week-long absence, Sahot applied for extension of his leave for
the whole month of June, 1994. It was at this time when petitioners allegedly threatened to
terminate his employment should he refuse to go back to work. They carried out their threat
and dismissed him from work, effective June 30, 1994. He ended up sick, jobless and penniless.

On September 13, 1994, Sahot filed with the NLRC NCR Arbitration Branch, a complaint for
illegal dismissal for recovery of separation pay against Vicente Sy and Trinidad Paulino-Sy,
Belen Paulino, Vicente Sy Trucking, T. Paulino Trucking Service, 6Bƞs Trucking and SBT
Trucking, herein petitioners.

Petitioners, on their part, claimed that sometime prior to June 1, 1994, Sahot went on leave
and was not able to report for work for almost seven days. On June 1, 1994, Sahot asked
permission to extend his leave of absence until June 30, 1994. It appeared that from the
expiration of his leave, private respondent never reported back to work nor did he file an
extension of his leave. Instead, he filed the complaint for illegal dismissal against the trucking
company and its owners. Petitioners add that due to Sahotƞs refusal to work after the expiration
of his authorized leave of absence, he should be deemed to have voluntarily resigned from his
work. They contended that Sahot had all the time to extend his leave or at least inform
petitioners of his health condition.

The Labor Arbiter ruled in favor of the company. It held that Sahot failed to return to work.
However, upon appeal, the NLRC modified the LAƞs decision, ruling that Sahot did not abandon
his job but his employment was terminated on account of his illness, pursuant to Article 284 of
the Labor Code.

ISSUE

Whether or not there was valid termination of employment due to his illness.

HELD
The SC held that although illness can be a valid ground for terminating an employee, the
dismissal was invalid. Article 284 of the Labor Code authorizes an employer to terminate an
employee on the ground of disease. However, in order to validly terminate employment on this
ground, Book VI, Rule I, Section 8 of the Omnibus Implementing Rules of the Labor Code
requires:

Sec. 8. Disease as a ground for dismissal- Where the employee suffers from a disease and his
continued employment is prohibited by law or prejudicial to his health or to the health of his co-
employees, the employer shall not terminate his employment unless there is a certification by
competent public health authority that the disease is of such nature or at such a stage that it
cannot be cured within a period of six (6) months even with proper medical treatment. If the
disease or ailment can be cured within the period, the employer shall not terminate the
employee but shall ask the employee to take a leave. The employer shall reinstate such
employee to his former position immediately upon the restoration of his normal health.

The requirement for a medical certificate under Article 284 of the Labor Code cannot be
dispensed with; otherwise, it would sanction the unilateral and arbitrary determination by the
employer of the gravity or extent of the employeeƞs illness and thus defeat the public policy in
the protection of labor.

In the case at bar, the employer clearly did not comply with the medical certificate requirement
before Sahotƞs dismissal was effected. Since the burden of proving the validity of the dismissal
of the employee rests on the employer, the latter should likewise bear the burden of showing
that the requisites for a valid dismissal due to a disease have been complied with. In the
absence of the required certification by a competent public health authority, this Court has ruled
against the validity of the employeeƞs dismissal. It is therefore incumbent upon the private
respondents to prove by the quantum of evidence required by law that petitioner was not
dismissed, or if dismissed, that the dismissal was not illegal; otherwise, the dismissal would be
unjustified. This Court will not sanction a dismissal premised on mere conjectures and
suspicions, the evidence must be substantial and not arbitrary and must be founded on clearly
established facts sufficient to warrant his separation from work.

In addition, we must likewise determine if the procedural aspect of due process had been
complied with by the employer. From the records, it clearly appears that procedural due process
was not observed in the separation of private respondent by the management of the trucking
company. The employer is required to furnish an employee with two written notices before the
latter is dismissed: (1) the notice to apprise the employee of the particular acts or omissions for
which his dismissal is sought, which is the equivalent of a charge; and (2) the notice informing
the employee of his dismissal, to be issued after the employee has been given reasonable
opportunity to answer and to be heard on his defense. These, the petitioners failed to do, even
only for record purposes. What management did was to threaten the employee with dismissal,
then actually implement the threat when the occasion presented itself because of private
respondentƞs painful left thigh.

All told, both the substantive and procedural aspects of due process were violated. Clearly,
therefore, Sahotƞs dismissal is tainted with invalidity.
Petition is denied.
c


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FACTS
On 15 October 1993, petitioner school retired Llagas and Javier, President and Vice-president of
respondent union, respectively, who had rendered more than twenty (20) years of continuous
service, pursuant to Section 2, Article X of the CBA, to wit:

An employee may be retired, either upon application by the employee himself or by the decision
of the Director of the School, upon reaching the age of sixty (60) or after having rendered
at least twenty (20) years of service to the School the last three (3) years of which must be
continuous.

Because of the foregoing, the union filed a Notice of Strike with the NCMB and later staged a
strike and picketed in the schoolƞs entrance. Later, the union filed a complaint for unfair labor
practice against petitioner school before the NLRC.

The School avers that the retirement of Llagas and Javier was clearly in accordance with a
specific right granted under the CBA. The School justifies its actions by invoking our rulings in
Pantranco North Express, Inc. v. NLRC and Bulletin Publishing Corporation v. Sanchez that no
unfair labor practice is committed by management if the retirement was made in accord with
management prerogative or in case of voluntary retirement, upon approval of management.

The Union, on the other hand, argues that the retirement of the two union officers is a mere
subterfuge to bust the union.

ISSUE

Whether or not the retirement of Llagas and Javier is legal.

HELD

The SC held that the termination of employment of Llagas and Javier was valid, arising as it did
from a management prerogative granted by the mutually-negotiated CBA between the School
and the Union.
Pursuant to the existing CBA, the School has the option to retire an employee upon reaching
the age limit of sixty (60) or after having rendered at least twenty (20) years of service to the
School, the last three (3) years of which must be continuous. Retirement is different specie of
termination of employment from dismissal for just or authorized causes under Articles 282 and
283 of the Labor Code. While in all three cases, the employee to be terminated may be
unwilling to part from service, there are eminently higher standards to be met by the employer
validly exercising the prerogative to dismiss for just or authorized causes. In those two
instances, it is indispensable that the employer establish the existence of just or authorized
causes for dismissal as spelled out in the Labor Code. Retirement, on the other hand, is the
result of a bilateral act of the parties, a voluntary agreement between the employer and the
employee whereby the latter after reaching a certain age agrees and/or consents to sever his
employment with the former.

Article 287 of the Labor Code, as amended, governs retirement of employees, stating:

ART. 287. Retirement. ƛ Any employee may be retired upon reaching the retirement age
established in the collective bargaining agreement or other applicable employment contract.
In case of retirement, the employee shall be entitled to receive such retirement
benefits as he may have earned under existing laws and any collective bargaining agreement
and other agreements: Provided, however, That an employeeƞs retirement benefits under any
collective bargaining agreement and other agreements shall not be less than those provided
herein.
In the absence of a retirement plan or agreement providing for retirement benefits
of employees in the establishment, an employee upon reaching the age of sixty (60) years or
more, but not beyond sixty-five (65) years which is hereby declared the compulsory retirement
age, who has served at least five (5) years in the said establishment, may retire and shall be
entitled to retirement pay equivalent to at least one-half (1/2) month salary for every year of
service, a fraction of at least six (6) months being considered as one whole year.

By their acceptance of the CBA, the Union and its members are obliged to abide by the
commitments and limitations they had agreed to cede to management. The questioned
retirement provisions cannot be deemed as an imposition foisted on the Union, which very well
had the right to have refused to agree to allowing management to retire retire employees with
at least 20 years of service.

It should not be taken to mean that retirement provisions agreed upon in the CBA are
absolutely beyond the ambit of judicial review and nullification. A CBA, as a labor contract, is
not merely contractual in nature but impressed with public interest. If the retirement provisions
in the CBA run contrary to law, public morals, or public policy, such provisions may very well be
voided. Certainly, a CBA provision or employment contract that would allow management to
subvert security of tenure and allow it to unilaterally Ơretireơ employees after one month of
service cannot be upheld. Neither will the Court sustain a retirement clause that entitles the
retiring employee to benefits less than what is guaranteed under Article 287 of the Labor Code,
pursuant to the provisionƞs express proviso thereto in the provision.

Yet the CBA in the case at bar contains no such infirmities which must be stricken down.
Twenty years is a more than ideal length of service an employee can render to one employer.
Under ordinary contemplation, a CBA provision entitling an employee to retire after 20 years of
service and accordingly collect retirement benefits is Ơreward for services rendered since it
enables an employee to reap the fruits of his labor Ɯ particularly retirement benefits, whether
lump-sum or otherwise Ɯ at an earlier age, when said employee, in presumably better physical
and mental condition, can enjoy them better and longer.ơ

A CBA may validly accord management the prerogative to optionally retire an employee under
the terms and conditions mutually agreed upon by management and the bargaining union, even
if such agreement allows for retirement at an age lower than the optional retirement age or the
compulsory retirement age.

Petition is granted.

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FACTS

Sometime in 1958, petitioner began working for respondentƞs university medical center as a
nurse. In a letter dated December 3, 1992, respondent, through its Human Resources
Development Office, informed petitioner that she was approaching her 35th year of service with
the university and was due for automatic retirement on November 18, 1993, at which time she
would be 57 years old. This was pursuant to respondentƞs retirement plan for its employees,
which provided that its members could be automatically retired Ơupon reaching the age of 65 or
after 35 years of uninterrupted service to the university.ơ

Petitioner emphatically insisted that the compulsory retirement under the plan was tantamount
to a dismissal and pleaded with respondent to be allowed to work until the age of 60 because
this was the minimum age at which she could qualify for SSS pension. But respondent stood pat
on its decision to retire her, citing Ơcompany policy.ơ

Petitioner then filed a complaint in the NLRC for Ơtermination of service with preliminary
injunction and/or restraining order.ơ On November 18, 1993, respondent compulsorily retired
petitioner.

ISSUE

Whether or not the retirement of petitioner by respondent university amounts to illegal

dismissal.

HELD

The SC held that the retirement of petitioner by respondent university constitutes illegal
dismissal.
Retirement plans allowing employers to retire employees who are less than the compulsory
retirement age of 65 are not per se repugnant to the constitutional guaranty of security of
tenure. Article 287 of the Labor Code provides:

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

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

However, after reviewing the assailed decision together with the rules and regulations of
respondentƞs retirement plan, we find that the plan runs afoul of the constitutional guaranty of
security of tenure contained in Article XIII, also known as the provision on Social Justice and
Human Rights. A perusal of the rules and regulations of the plan shows that participation
therein was not voluntary at all.

Retirement is the result of a bilateral act of the parties, a voluntary agreement between the
employer and the employee whereby the latter, after reaching a certain age agrees to sever his
or her employment with the former. In Pantranco North Express, Inc. v. NLRC, to which both
the CA and respondent refer, the imposition of a retirement age below the compulsory age of
65 was deemed acceptable because this was part of the CBA between the employer and the
employees. The consent of the employees, as represented by their bargaining unit, to be retired
even before the statutory retirement age of 65 was laid out clearly in black and white and was
therefore in accord with Article 287.

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

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

As already stated, an employer is free to impose a retirement age less than 65 for as long as it
has the employeesƞ consent. Stated conversely, employees are free to accept the employerƞs
offer to lower the retirement age if they feel they can get a better deal with the retirement plan
presented by the employer. Thus, having terminated petitioner solely on the basis of a provision
of a retirement plan which was not freely assented to by her, respondent was guilty of illegal
dismissal.

Petition is granted.
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FACTS

Petitioner PAL unilaterally retired airline pilot Captain Albino Collantes under Section 2, Article
VII, of the 1967 PAL-ALPAP Retirement Plan. Contending that the retirement of Captain
Collantes constituted illegal dismissal and union busting, ALPAP filed a Notice of Strike with the
Department of Labor and Employment (DOLE). Pursuant to Article 263 (g) of the Labor Code,
the Secretary of the DOLE assumed jurisdiction over the labor dispute. On June 13, 1998, the
Secretary issued the assailed order upholding PALƞs action of unilaterally retiring Captain
Collantes and recognizing the same as a valid exercise of its option under Section 2, Article VII,
of the 1967 PAL-ALPAP Retirement Plan. The Secretary further ordered that the basis of the
computation of Captain Collantesƞ retirement benefits should be Article 287 of the Labor Code
(as amended by Republic Act No. 7641) and not Section 2, Article VII, of the PAL-ALPAP
Retirement Plan. The Secretary added that in the exercise of its option to retire pilots, PAL
should first consult the pilot concerned before implementing his retirement.

ISSUE # 1

Whether or not the Article 287 of the Labor Code should be the basis of the computation of
Capt. Collantesƞ retirement benefits.

HELD IN #1

The SC held that it is the PAL-ALPAP Retirement Plan that should be the basis of the
computation of retirement benefits.

The pertinent provision of the 1967 PAL-ALPAP Retirement Plan states:

SECTION 1. Normal Retirement. (a) Any member who completed twenty (20) years of service
as a pilot for PAL or has flown 20,000 hours for PAL shall be eligible for normal retirement. The
normal retirement date is the date on which he completes twenty (20) years of service, or on
which he logs his 20,000 hours as a pilot for PAL. The member who retires on his normal
retirement shall be entitled to either (a) a lump sum payment of P100,000.00 or (b) to such
termination pay benefits to which he may be entitled to under existing laws, whichever is the
greater amount.

SECTION 2. Late Retirement. Any member who remains in the service of the Company after his
normal retirement date may retire either at his option or at the option of the Company and
when so retired he shall be entitled either (a) to a lump sum payment of P5,000.00 for each
completed year of service rendered as a pilot, or (b) to such termination pay benefits to which
he may be entitled under existing laws, whichever is the greater amount.

A pilot who retires after twenty years of service or after flying 20,000 hours would still be in the
prime of his life and at the peak of his career, compared to one who retires at the age of 60
years old. Based on this peculiar circumstance that PAL pilots are in, the parties provided for a
special scheme of retirement different from that contemplated in the Labor Code. Conversely,
the provisions of Article 287 of the Labor Code could not have contemplated the situation of
PALƞs pilots. Rather, it was intended for those who have no more plans of employment after
retirement, and are thus in need of financial assistance and reward for the years that they have
rendered service.

In any event, petitioner contends that its pilots who retire below the retirement age of 60 years
not only receive the benefits under the 1967 PAL-ALPAP Retirement Plan but also an equity of
the retirement fund under the PAL Pilotsƞ Retirement Benefit Plan, entered into between
petitioner and respondent on May 30, 1972.

The PAL Pilotsƞ Retirement Benefit Plan is a retirement fund raised from contributions
exclusively from petitioner of amounts equivalent to 20% of each pilotƞs gross monthly pay.
Upon retirement, each pilot stands to receive the full amount of the contribution. In sum,
therefore, the pilot gets an amount equivalent to 240% of his gross monthly income for every
year of service he rendered to petitioner. This is in addition to the amount of not less than
P100,000.00 that he shall receive under the 1967 Retirement Plan.
On the other hand, Article 287 of the Labor Code only mandates the employers, in the absence
of a retirement plan to pay retirement pay equivalent to at least one-half (1/2) month salary for
every year of service, a fraction of at least six (6) months being considered as one whole year.

In short, the retirement benefits that a pilot would get under the provisions of the above-
quoted Article 287 of the Labor Code are less than those that he would get under the applicable
retirement plans of petitioner.

ISSUE #2

Whether or not the Secretary can compel the company to consult the pilot concerned before
retirement is implemented.

HELD IN #2

The SC held that such additional requirement would constitute as amendment to the PAL-ALPAP
Retirement Plan. The option of an employer to retire its employees is recognized as valid.

Retirement of an employee may be done upon initiative and option of the management. And
where there are cases of voluntary retirement, the same is effective only upon the approval of
management. There should be no unfair labor practice committed by management if the
retirement of private respondents were made in accord with the agreed option.

Surely, the requirement to consult the pilots prior to their retirement defeats the exercise by
management of its option to retire the said employees. It gives the pilot concerned an undue
prerogative to assail the decision of management. Due process only requires that notice be
given to the pilot of petitionerƞs decision to retire him. Hence, the Secretary of Labor
overstepped the boundaries of reason and fairness when he imposed on petitioner the
additional requirement of consulting each pilot prior to retiring him.

Petition is granted.

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FACTS

Private Respondent Felix R. Alegre, Jr. was employed by PTI as a senior investigative reporter
of the Philippine Star. He later became chief investigative writer and then assistant to the
publisher.

On October 20, 1988, Respondent Alegre filed a request for a thirty-day leave of absence
effective on the same date, citing the advice of his personal physician for him to undergo
further medical consultations abroad. Four days later, he wrote a "Memorandum for File"
addressed to Petitioner Betty Go-Belmonte with copies furnished to members of the board of
directors of PTI, which expressed respondentƞs negative feelings towards the company.

On December 6, 1988, Respondent Alegre received from Petitioner Belmonte a letter, informing
the former that the Board has accepted his resignation. The following day, Respondent Alegre
wrote Petitioner Belmonte expressing surprise over the acceptance of his "resignation", since he
did not resign. Unheeded, Respondent Alegre filed a complaint for illegal dismissal and damages
against herein petitioners.

ISSUE # 1

Whether or not the Memorandum for File constitutes voluntary resignation.

HELD IN # 1

The SC held that said memorandum juridically constituted a letter of resignation. Alegre's choice
of words and way of expression betray his allegation that the memorandum was simply an
"opportunity to open the eyes of Belmonte to the work environment in petitioners' newspaper
with the end in view of persuading her to take a hand at improving said environment."
Apprising his employer of his frustrations in his job and differences with his immediate superior
is certainly not done in an abrasive, offensive and disrespectful manner. A cordial or, at the very
least, civil attitude, according due deference to one's superiors, is still observed, especially
among high-ranking management officers. The Court takes judicial notice of the Filipino values
of pakikisama and paggalang which are not only prevalent among members of a family and
community but within organizations as well, including work sites. An employee is expected to
extend due respect to management, the employer being the "proverbial hen that lays the
golden egg," so to speak.

An aggrieved employee who wants to unburden himself of his disappointments and frustrations
in his job or relations with his immediate superior would normally approach said superior
directly or otherwise ask some other officer possibly to mediate and discuss the problem with
the end in view of settling their differences without causing ferocious conflicts. No matter how
the employee dislikes his employer professionally, and even if he is in a confrontational
disposition, he cannot afford to be disrespectful and dare to talk with an unguarded tongue
and/or with a baleful pen. Here, respondent Alegre was anything but respectful and polite. His
memorandum is too affrontive, combative and confrontational. It certainly causes resentment,
even when read by an objective reader.

His incendiary words and sarcastic remarks negate any desire to improve work relations with
petitioners. Such strongly worded letter constituted an act of Ơburning his bridgesơ with the
officers of the company.

Further, the actions of respondent, such as clearing his work desk of personal belongings, not
reporting back to work after his leave, and his immediate employment with another employer,
confirm his intention to terminate his employment with petitioner.

ISSUE # 2

Whether or not a resignation be unilaterally withdrawn.

HELD IN # 2

The SC held that resignations, once accepted, may not be withdrawn without the consent of the
employer. If the employer accepts the withdrawal, the employee retains his job. If the employer
does not, the employee cannot claim illegal dismissal. To say that an employee who has
resigned is illegally dismissed, is to encroach upon the right of employers to hire persons who
will be of service to them.

Obviously, this is a recognition of the contractual nature of employment which requires

mutuality of consent between the parties. An employment contract is consensual and voluntary.
Hence, if the employee "finds himself in a situation where he believes that personal reasons
cannot be sacrificed in favor of the exigency of the service, then he has no other choice but to
disassociate himself from his employment". If accepted by the employer, the consequent effect
of resignation is severance of the contract of employment.

A resigned employee who desires to take his job back has to re-apply therefor and he shall
have the status of a stranger who cannot unilaterally demand an appointment. He cannot
arrogate unto himself the same position which he earlier decided to leave. To allow him to do
so would be to deprive the employer of his basic right to choose whom to employ. Such is
tantamount to undue oppression of the employer. It has been held that an employer is free to
regulate, according to his own discretion and judgment, all aspects of employment including
hiring. The law, in protecting the rights of the laborer, impels neither the oppression nor self-
destruction of the employer.

Consistent with our ruling in Intertrod, the resignation of respondent Alegre after its acceptance
by petitioners can no longer be withdrawn without the consent of the latter. In fairness to the
employer, an employee cannot backtrack on his resignation at his whim and without the
conformity of the former.

Petition is granted.














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FACTS

Private respondent was hired by petitioner in 1964 as a bus conductor. He eventually joined the
Pantranco Employees Association-PTGWO. He continued the petitioner's employ until August
12, 1989, when he was retired at the age of fifty-two (52) after having rendered twenty five
years' service. The basis of his retirement was the compulsory retirement provision of the
collective bargaining agreement between the petitioner and the aforenamed union. Private
respondent received P49,300.00 as retirement pay. On February 15, 1990, private respondent
filed a complaint 4 for illegal dismissal against petitioner with the NLRC-RAB.

ISSUE

Whether or not a Collective Bargaining Agreement provision allowing compulsory retirement

before age 60 but after twenty five years of service legal and enforceable.
HELD

The SC held that it is.

Retirement and dismissal are entirely different from each other. Retirement is the result of a
bilateral act of the parties, a voluntary agreement between the employer and the employees
whereby the latter after reaching a certain age agrees and/or consents to severe his
employment with the former. On the other hand, dismissal refers to the unilateral act of the
employer in terminating services of an employee with or without cause. In fine, in the case of
dismissal, it is only the employer who decides when to terminate the services of an employee.

Moreover, concomitant with the provisions on retirement in a Labor Agreement is a stipulation

regarding retirement benefits pertaining to a retired employee. Here again, the retirement
benefits are subject to stipulation by the parties unlike in dismissals where separation pay is
fixed by law in cases of dismissals without just cause. Evident, therefore, from the foregoing is
that retirements which are agreed upon by the employer and the employee in their collective
bargaining agreement are not dismissals.

To further fortify the aforesaid conclusion, it is noteworthy that even the New Labor Code
recognizes this distinction when it treats retirement from service under a separate title from
that of a dismissal or termination of employment, aside from expressly recognizing the right of
the employer to retire any employee who has reached the retirement age established in the
collective bargaining agreement or other applicable employment contract and the latter to
receive such retirement benefits as he may have earned under existing laws and any collective
bargaining or other agreement.

The Labor Code as worded permits employers and employees to fix the applicable retirement
age at below 60 years. Moreover, providing for early retirement does not constitute diminution
of benefits. In almost all countries today, early retirement, i.e., before age 60, is considered a
reward for services rendered since it enables an employee to reap the fruits of his labor Ɯ
particularly retirement benefits, whether lump-sum or otherwise Ɯ at an earlier age, when said
employee, in presumably better physical and mental condition, can enjoy them better and
longer. As a matter of fact, one of the advantages of early retirement is that the corresponding
retirement benefits, usually consisting of a substantial cash windfall, can early on be put to
productive and profitable uses by way of income-generating investments, thereby affording a
more significant measure of financial security and independence for the retiree who, up till
then, had to contend with life's vicissitudes within the parameters of his fortnightly or weekly
wages. Thus we are now seeing many CBA's with such early retirement provisions. And the
same cannot be considered a diminution of employment benefits.

Further, being a union member, private respondent is bound by the CBA because its terms and
conditions constitute the law between the parties. The parties are bound not only to the
fulfillment of what has been expressly stipulated but also to all the consequences which,
according to their nature, may be in keeping with good faith, usage and law. It binds not only
the union but also its members. Private respondent cannot therefore claim illegal dismissal
when he was compulsorily retired after rendering twenty-five (25) years of service since his
retirement is in accordance with the CBA.

Petition is granted.

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FACTS

Petitioner Far East hired on March 4, 1996 private respondent Jimmy Lebatique as truck driver
with a daily wage of P223.50. He delivered animal feeds to the companyƞs clients. On January
24, 2000, Lebatique complained of nonpayment of overtime work particularly on January 22,
2000, when he was required to make a second delivery in Novaliches, Quezon City. That same
day, Manuel Uy, brother of Far Eastƞs General Manager and petitioner Alexander Uy, suspended
Lebatique apparently for illegal use of company vehicle. Even so, Lebatique reported for work
the next day but he was prohibited from entering the company premises.

On January 26, 2000, Lebatique sought the assistance of the Department of Labor and
Employment (DOLE) Public Assistance and Complaints Unit concerning the nonpayment of his
overtime pay. According to Lebatique, two days later, he received a telegram from petitioners
requiring him to report for work. When he did the next day, January 29, 2000, Alexander asked
him why he was claiming overtime pay. Lebatique explained that he had never been paid for
overtime work since he started working for the company. He also told Alexander that Manuel
had fired him. After talking to Manuel, Alexander terminated Lebatique and told him to look for
another job. On March 20, 2000, Lebatique filed a complaint for illegal dismissal and
nonpayment of overtime pay.

Petitioners maintain that Lebatique, as a driver, is not entitled to overtime pay since he is a field
personnel whose time outside the company premises cannot be determined with reasonable
certainty. According to petitioners, the drivers do not observe regular working hours unlike the
other office employees. The drivers may report early in the morning to make their deliveries or
in the afternoon, depending on the production of animal feeds and the traffic conditions.
Petitioners also aver that Lebatique worked for less than eight hours a day.

Respondent, on his part claims that he is not a field personnel, thus, he is entitled to overtime
pay and service incentive leave pay.

ISSUE
Whether or not petitioner id entitled to overtime pay and service incentive leave.

HELD

The SC held that Lebatique is not a field personnel for the following reasons:
(1) company drivers, including Lebatique, are directed to deliver the goods at a specified time
and place;
(2) they are not given the discretion to solicit, select and contact prospective clients; and
(3) Far East issued a directive that company drivers should stay at the clientƞs premises during
truck-ban hours which is from 5:00 to 9:00 a.m. and 5:00 to 9:00 p.m.

Even petitioners admit that the drivers can report early in the morning, to make their deliveries,
or in the afternoon, depending on the production of animal feeds. Drivers, like Lebatique, are
under the control and supervision of management officers. Lebatique, therefore, is a regular
employee whose tasks are usually necessary and desirable to the usual trade and business of
the company. Thus, he is entitled to the benefits accorded to regular employees of Far East,
including overtime pay and service incentive leave pay.

Note that all money claims arising from an employer-employee relationship shall be filed within
three years from the time the cause of action accrued; otherwise, they shall be forever barred.
Further, if it is established that the benefits being claimed have been withheld from the
employee for a period longer than three years, the amount pertaining to the period beyond the
three-year prescriptive period is therefore barred by prescription. The amount that can only be
demanded by the aggrieved employee shall be limited to the amount of the benefits withheld
within three years before the filing of the complaint.

Lebatique timely filed his claim for service incentive leave pay, considering that in this situation,
the prescriptive period commences at the time he was terminated. On the other hand, his
claim regarding nonpayment of overtime pay since he was hired in March 1996 is a different
matter. In the case of overtime pay, he can only demand for the overtime pay withheld for the
period within three years preceding the filing of the complaint on March 20, 2000.

Petition is denied.

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FACTS

In June 1993, respondent was employed by the petitioner as a bus driver. On the night of 24
August 1994, the bus he was driving was bumped by a Dagupan-bound bus. As a consequence
thereof, respondent suffered a fractured left leg and was rushed to the Country Medical and
Trauma Center in Tarlac City where he was operated on and confined from 24 August 1994 up
to 10 October 1994. One month after his release from the said hospital, the respondent was
confined again for further treatment of his fractured left leg at the Specialist Group Hospital in
Dagupan City. His confinement therein lasted a month. Petitioner shouldered the doctorƞs
professional fee and the operation, medication and hospital expenses of the respondent in the
aforestated hospitals.

In January 1998, the respondent, still limping heavily, went to the petitionerƞs office to report
for work. He was, however, informed by the petitioner that he was considered resigned from
his job. Respondent refused to accede and insisted on having a dialogue with the petitionerƞs
officer named Yolanda Montes. During their meeting, Montes told him that he was deemed to
have resigned from his work and to accept a consideration of P50,000.00. Respondent rejected
the explanation and offer. Thereafter, before Christmas of 1998, he again conversed with
Montes who reiterated to him that he was regarded as resigned but raised the consideration
therein to P100,000.00. Respondent rebuffed the increased offer. On 30 June 1999,
respondent, through his counsel, sent a letter to the petitioner demanding employment-related
money claims.

There being no response from the petitioner, the respondent filed before the Labor Arbiter on 1
September 1999 a complaint for (1) unfair labor practice; (2) illegal dismissal; (3)
underpayment of wages; (4) nonpayment of overtime and holiday premium, service incentive
leave pay, vacation and sick leave benefits, 13th month pay; (5) excessive deduction of
withholding tax and SSS premium; and (6) moral and exemplary damages and attorneyƞs fees.

In its Position Paper dated 27 March 2000, petitioner claimed that the respondentƞs cause of
action against petitioner had already prescribed because when the former instituted the
aforesaid complaint on 1 September 1999, more than five years had already lapsed from the
accrual of his cause of action on 24 August 1994.

ISSUE

Whether or not the cause of action of respondent has already prescribed.

HELD

The SC held that the cause of action of respondent has not prescribed.

In illegal dismissal cases, the employee concerned is given a period of four years from the time
of his dismissal within which to institute a complaint. This is based on Article 1146 of the New
Civil Code which states that actions based upon an injury to the rights of the plaintiff must be
brought within four years.
The four-year prescriptive period shall commence to run only upon the accrual of a cause of
action of the worker. It is settled that in illegal dismissal cases, the cause of action accrues
from the time the employment of the worker was unjustly terminated. Thus, the four-year
prescriptive period shall be counted and computed from the date of the employeeƞs dismissal up
to the date of the filing of complaint for unlawful termination of employment.

In the case at bar, it is error to conclude that the employment of the respondent was unjustly
terminated on 10 November 1994 because he was, at that time, still confined at the hospital for
further treatment of his fractured left leg. He must be considered as merely on sick leave at
such time. Likewise, the respondent cannot also be deemed as illegally dismissed from work
upon his release from the said hospital in December 1994 up to December 1997 since the
records show that the respondent still reported for work to the petitioner and was granted sick
and disability leave by the petitioner during the same period.

The respondent must be considered as unjustly terminated from work in January 1998 since
this was the first time he was informed by the petitioner that he was deemed resigned from his
work. During that same occasion, the petitioner, in fact, tried to convince the respondent to
accept an amount of P50,000.00 as a consolation for his dismissal but the latter rejected it.
Thus, it was only at this time that the respondentƞs cause of action accrued. Consequently, the
respondentƞs filing of complaint for illegal dismissal on 1 September 1999 was well within the
four-year prescriptive period.

It is also significant to note that from 10 November 1994 up to December 1997, the petitioner
never formally informed the respondent of the fact of his dismissal either through a written
notice or hearing. Indeed, it cannot be gainfully said that respondent was unlawfully dismissed
on 10 November 1994 and that the cause of action accrued on that date.

Decision of the CA partly affirmed.

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FACTS

Avantgarde, agent of Sembawang hired Degamo as oiler for the vessel Nippon Reefer. While on
duty, Degamo met an accident which resulted to his repatriation back to the Philippines on
1995. On December 24, 1997 he was declared fit to work so he went and followed up his
sickness benefits with Avantgarde. His efforts proved fruitless when on January 6, 1998
Avantgarde replied that they could no longer entertain his request. On March 4-5, 1998 he
wrote no Sembawang but likewise to no avail. Finally on March 2, 2001, he lodged a complaint
for payment of disability benefits and other money claims with the RAB. The RAB and
consequently, the NLRC denied his claim on the ground of prescription. In the CA, Degamoƞs
petition for recon was also denied along with his petition for extension.

ISSUE
1. Whether the action has prescribed, and; 2. Whether the denial of the motion for extension
was proper.

Degamo anchors his argument on Article 1152 of the NCC saying that the prescriptive period
was tolled by his extra-judicial demand on Dec. 24, 1997. On the other hand, Avantgarde
anchors its argument on POEA Memorandum Circular No. 55, Series of 1996 and Article 291 of
the Labor Code.

HELD

The POEA Circular is not applicable since it was promulgated on 1997 while the employment
contract of the parties was entered on 1994. On the other hand Article 291 is applicable.
In Cadalin v. POEAƞs Administrator Article 291 covers all money claims from employer-
employee relationship and is broader in scope than claims arising from a specific law. It is not
limited to money claims recoverable under the Labor Code, but applies also to claims of
overseas contract workers.
Article 291 provides that all money claims arising from employer-employee relations shall
be filed within three years from the time the cause of action accrued, otherwise, these shall be
forever barred. A cause of action accrues upon the categorical denial of claim. Petitionerƞs
cause of action accrued only on January 6, 1998, when Avantgarde denied his claim and so
breached its obligation to petitioner. Petitioner could not have a cause of action prior to this
because his earlier requests were warded off by indefinite promises. The complaint filed on
March 2, 2001 is beyond the three-year period mandated by the Labor Code.

Petition denied.





























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FACTS

In the course of its business operations, LUDO engaged the arrastre services of Cresencio Lu
Arrastre Services (CLAS) for the loading and unloading of its finished products at the wharf.
Accordingly, several arrastre workers were deployed by CLAS to perform the services needed by
LUDO. These arrastre workers were subsequently hired, on different dates, as regular rank-and-
file employees of LUDO every time the latter needed additional manpower services. Said
employees thereafter joined respondent union, the LUDO Employees Union (LEU), which acted
as the exclusive bargaining agent of the rank-and-file employees.

On April 13, 1992, respondent union entered into a collective bargaining agreement with LUDO
which provides certain benefits to the employees, the amount of which vary according to the
length of service rendered by the availing employee. Thereafter, the union requested LUDO to
include in its membersƞ period of service the time during which they rendered arrastre services
to LUDO through the CLAS so that they could get higher benefits. LUDO failed to act on the
request. Thus, the matter was submitted for voluntary arbitration.

Petitioner contends that the money claim in this case is barred by prescription. Respondents, for
their part, aver that the three-year prescriptive period is reckoned only from the time the
obligor declares his refusal to comply with his obligation in clear and unequivocal terms. In this
case, respondents maintain that LUDO merely promised to review the company records in
response to respondentsƞ demand for adjustment in the date of their regularization without
making a categorical statement of refusal.

ISSUE

Whether or not the claims of respondent union have already prescribed.

HELD
The SC held that the claims of respondent union have not prescribed.

The cause of action accrues until the party obligated refuses to comply with his duty. Being
warded off by promises, the workers not having decided to assert their rights, their causes of
action had not accrued. Since the parties had continued their negotiations even after the matter
was raised before the Grievance Procedure and the voluntary arbitration, the respondents had
not refused to comply with their duty. They just wanted the complainants to present some
proofs. The complainantƞs cause of action had not therefore accrued yet.

In fact, the respondentsƞ promised to correct their length of service and grant them the back
CBA benefits if the complainants can prove they are entitled rendered the former in estoppel,
barring them from raising the defense of laches or prescription. To hold otherwise would
amount to rewarding the respondents for their duplicitous representation and abet them in a
dishonest scheme against their workers.

Petition is denied.

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FACTS

Respondent Annalisa Cortes was hired as of the Rural Bank of Coron. Later, she married a
member of the family which ran the corporation. Respondent later on became the Financial
Assistant, Personnel Officer and Corporate Secretary of The Rural Bank of Coron and some
other sensitive positions in the sister companies of the Bank.

On examination of the financial books of the corporations by petitioner Sandra Garcia Escat, she
found out that respondent was involved in several anomalies, drawing petitioners to
terminate respondentƞs services on November 23, 1998 in petitioner corporations.

Respondent filed a complaint for illegal dismissal and non-payment of salaries and other
benefits with the NLRC.

Petitioners moved for the dismissal of the complaint on the ground of lack of jurisdiction,
contending that the case was an intra-corporate controversy involving the removal of a
corporate officer, respondent being the Corporate Secretary of the Rural Bank of Coron, Inc.,
hence, cognizable by the Securities and Exchange Commission (SEC) pursuant to Section 5 of
PD 902-A.

ISSUE

Whether or not the NLRC had jurisdiction over the case.

HELD

The SC held that Labor Arbiter has jurisdiction over respondentƞs complaint.

While, indeed, respondent was the Corporate Secretary of the Rural Bank of Coron, she was
also its Financial Assistant and the Personnel Officer of the two other petitioner corporations.

Mainland Construction Co., Inc. v. Movilla instructs that a corporation can engage its corporate
officers to perform services under a circumstance which would make them employees.

The Labor Arbiter has thus jurisdiction over respondentƞs complaint.

Petition is denied.

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FACTS

Private respondent Dominie Del Quero charged A/J Raymundo Pawnshop, Inc., Virgilio Kawachi
and petitioner Julius Kawachi with illegal dismissal, non-execution of a contract of employment,
violation of the minimum wage law, and non-payment of overtime pay. The complaint was filed
before NLRC. The complaint essentially alleged that Virgilio Kawachi hired private respondent
as a clerk of the pawnshop and that on certain occasions, she worked beyond the regular
working hours but was not paid the corresponding overtime pay. The complaint also narrated
an incident on 10 August 2002, wherein petitioner Julius Kawachi scolded private respondent in
front of many people about the way she treated the customers of the pawnshop and afterwards
terminated private respondentƞs employment without affording her due process.

On 7 November 2002, private respondent Dominie Del Quero filed an action for damages
against petitioners Julius Kawachi and Gayle Kawachi before the MeTC of Quezon City. The
complaint for damages specifically sought the recovery of moral damages, exemplary damages
and attorneyƞs fees.

Petitioners moved for the dismissal of the complaint in the MeTC on the grounds of lack of
jurisdiction and forum-shopping. Petitioners argue that the NLRC has jurisdiction over the
action for damages because the alleged injury is work-related. They also contend that private
respondent should not be allowed to split her causes of action by filing the action for damages
separately from the labor case.

The RTC held that private respondentƞs action for damages was based on the alleged tortious
acts committed by her employers and did not seek any relief under the Labor Code.

ISSUE

Whether or not the TRC has jurisdiction in this instant action.

HELD

The SC held that the RTC has no jurisdiction in the instant case.

Article 217(a) of the Labor Code, as amended, clearly bestows upon the Labor Arbiter original
and exclusive jurisdiction over claims for damages arising from employer-employee relations Ɯ
in other words, the Labor Arbiter has jurisdiction to award not only the reliefs provided by labor
laws, but also damages governed by the Civil Code.

Under the reasonable causal connection rule, if there is a reasonable causal connection between
the claim asserted and the employer-employee relations, then the case is within the jurisdiction
of our labor courts. In the absence of such nexus, it is the regular courts that have jurisdiction.

It is clear that the question of the legality of the act of dismissal is intimately related to the
issue of the legality of the manner by which that act of dismissal was performed. But while the
Labor Code treats of the nature of, and the remedy available as regards the first ƛ the
employeeƞs separation from employment ƛ it does not at all deal with the second ƛ the manner
of that separation ƛ which is governed exclusively by the Civil Code. In addressing the first
issue, the Labor Arbiter applies the Labor Code; in addressing the second, the Civil Code. And
this appears to be the plain and patent intendment of the law. For apart from the reliefs
expressly set out in the Labor Code flowing from illegal dismissal from employment, no other
damages may be awarded to an illegally dismissed employee other than those specified by the
Civil Code. Hence, the fact that the issueƜof whether or not moral or other damages were
suffered by an employee and in the affirmative, the amount that should properly be awarded to
him in the circumstancesƜis determined under the provisions of the Civil Code and not the
Labor Code, obviously was not meant to create a cause of action independent of that for illegal
dismissal and thus place the matter beyond the Labor Arbiterƞs jurisdiction.

In the instant case, the allegations in private respondentƞs complaint for damages show that her
injury was the offshoot of petitionersƞ immediate harsh reaction as her administrative superiors
to the supposedly sloppy manner by which she had discharged her duties. Petitionersƞ reaction
culminated in private respondentƞs dismissal from work in the very same incident. The incident
on 10 August 2002 alleged in the complaint for damages was similarly narrated in private
respondentƞs Affidavit-Complaint supporting her action for illegal dismissal before the NLRC.
Clearly, the alleged injury is directly related to the employer-employee relations of the parties.

Where the employer-employee relationship is merely incidental and the cause of action
proceeds from a different source of obligation, the Court has not hesitated to uphold the
jurisdiction of the regular courts. Where the damages claimed for were based on tort,
malicious prosecution, or breach of contract, as when the claimant seeks to recover a debt from
a former employee or seeks liquidated damages in the enforcement of a prior employment
contract, the jurisdiction of regular courts was upheld. The scenario that obtains in this case is
obviously different. The allegations in private respondentƞs complaint unmistakably relate to the
manner of her alleged illegal dismissal.

In the instant case, the NLRC has jurisdiction over private respondentƞs complaint for illegal
dismissal and damages arising therefrom. She cannot be allowed to file a separate or
independent civil action for damages where the alleged injury has a reasonable connection to
her termination from employment. Consequently, the action for damages filed before the MeTC
must be dismissed.

Petition is granted.




















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FACTS

Petitioner Easycall Communications Phils., Inc. was a domestic corporation primarily engaged
in the business of message handling. Petitioner, through its general manager, Malonzo, hired
the services of respondent as assistant to the general manager. He was given the responsibility
of ensuring that the expansion plans outside Metro Manila and Metro Cebu were achieved at the
soonest possible time. He was promoted to assistant vice president for nationwide expansion
and later appointed to the even higher position of vice president for nationwide expansion.
Respondentƞs promotion was based on his performance during the six months preceding his
appointment. As vice president for nationwide expansion, he became responsible for the sales
and rentals of pager units in petitionerƞs expansion areas. He was also in charge of coordinating
with the dealers in these areas.

Thereafter, Malonzo reviewed the sales performance of respondent and scrutinized the status of
petitionerƞs Nationwide Expansion Program (NEP) which was under respondentƞs responsibility.
He found that respondentƞs actual sales for the period October 1992ƛMarch 1993 was 78% of
his sales commitment and 70% of his sales target. Malonzo also checked the frequency and
duration of the provincial sales development visits made by respondent for the same period to
expansion areas under his jurisdiction. He discovered that the latter spent around 40% of the
total number of working days for that period in the field.

The management then confronted respondent regarding his sales performance and provincial
sales development visits. A series of dialogues between petitionerƞs management and
respondent ensued. He was then informed that the general manager wanted his resignation.
Respondent, however, declared that he had no intention of resigning from his position.
Consequently, respondent received a notice of termination signed by Malonzo. Aggrieved, the
respondent filed a complaint for illegal dismissal with the NLRC.

Petitioner argues that since respondent was a Ơcorporate officer,ơ the NLRC had no jurisdiction
over the subject matter under PD 902-A.

ISSUE

Whether or not the NLRC has jurisdiction over the subject matter.
HELD

The SC held that under Section 5 of PD 902-A, the law applicable at the time this controversy
arose, the SEC, not the NLRC, had original and exclusive jurisdiction over cases involving the
removal of corporate officers. Section 5(c) of PD 902-A applied to a corporate officerƞs dismissal
for his dismissal was a corporate act and/or an intra-corporate controversy.

However, it had to be first established that the person removed or dismissed was a corporate
officer before the removal or dismissal could properly fall within the jurisdiction of the SEC and
not the NLRC. Here, aside from its bare allegation, petitioner failed to show that respondent
was in fact a corporate officer.

ƠCorporate officersơ in the context of PD 902-A are those officers of a corporation who are given
that character either by the Corporation Code or by the corporationƞs by-laws. Under Section 25
of the Corporation Code, the Ơcorporate officersơ are the president, secretary, treasurer and
such other officers as may be provided for in the by-laws.

The burden of proof is on the party who makes the allegation. Here, petitioner merely alleged
that respondent was a corporate officer. However, it failed to prove that its by-laws provided for
the office of Ơvice president for nationwide expansion.ơ Since petitioner failed to satisfy the
burden of proof that was required of it, we cannot sanction its claim that respondent was a
Ơcorporate officerơ whose removal was cognizable by the SEC under PD 902-A and not by the
NLRC under the Labor Code.

An Ơofficeơ is created by the charter of the corporation and the officer is elected by the directors
or stockholders. On the other hand, an employee occupies no office and generally is employed
not by the action of the directors or stockholders but by the managing officer of the corporation
who also determines the compensation to be paid to such employee.

In this case, respondent was appointed vice president for nationwide expansion by Malonzo,
petitionerƞs general manager, not by the board of directors of petitioner. It was also Malonzo
who determined the compensation package of respondent. Thus, respondent was an employee,
not a Ơcorporate officer.ơ It is therefore correct that jurisdiction over the case was properly with
the NLRC, not the SEC.

Petition is denied.

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57   -. #57
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FACTS
The Discipline Committee of petitioner Duty Free rendered a decision finding respondent Mojica
guilty Neglect of Duty by causing considerable damage to or loss of materials, assets and
property of Duty Free. Thus, Mojica was considered forcibly resigned from the service with
forfeiture of all benefits except his salary and the monetary value of the accrued leave credits.

Mojica was formally informed of his forced resignation and thereupon, he filed a complaint for
illegal dismissal with prayer for reinstatement, payment of full back wages, damages, and
attorneyƞs fees, against DFP before the NLRC.

ISSUE

Whether or not NLRC has jurisdiction over the controversy.

HELD

The SC held that respondent Mojica is a civil service employee; therefore, jurisdiction is lodged
not with the NLRC, but with the Civil Service Commission.

Duty Free was created under Executive Order No. 46 on September 4, 1986 primarily to
augment the service facilities for tourists and to generate foreign exchange and revenue for the
government. In order for the government to exercise direct and effective control and regulation
over the tax and duty free shops, their establishment and operation was vested in the Ministry,
now Department of Tourism, through its implementing arm, the Philippine Tourism Authority
(PTA). All the net profits from the merchandising operations of the shops accrued to the DOT.

As provided under Presidential Decree (PD) No. 564, PTA is a corporate body attached to the
DOT. As an attached agency, the recruitment, transfer, promotion and dismissal of all its
personnel was governed by a merit system established in accordance with the civil service rules.
In fact, all PTA officials and employees are subject to the Civil Service rules and regulations.

Accordingly, since Duty Free is under the exclusive authority of the PTA, it follows that its
officials and employees are likewise subject to the Civil Service rules and regulations. Clearly
then, Mojicaƞs recourse to the Labor Arbiter was not proper. He should have followed the
procedure laid down in Duty Freeƞs merit system and the Civil Service rules and regulations.

The decision of the CA was set aside.




























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FACTS

Petitioner hired respondent Villamor as branch manager in its Cebu Office. Later, petitioner
reclassified respondentƞs position to that of Division Manager, which position respondent held
until his resignation on February 1, 2002. Immediately after his resignation, respondent started
working for Aspac International, a corporation engaged in the same line of business as that of
petitioner.

Thereafter, petitioner Yusen Air filed against respondent a complaint for injunction and
damages with prayer for a temporary restraining order in the RTC of Parañaque City, on the
ground that respondent violated the provision in his contract that he should not affiliate himself
with competitors for a period of two years from his resignation or separation from petitioner
company.

Respondent also filed against petitioner a case for illegal dismissal before the NLRC. Instead of
filing an answer to the case in the RTC, respondent moved for the dismissal of said case,
arguing that the RTC has no jurisdiction over the subject matter of said case because an
employer-employee relationship is involved.

Petitioner contends that its cause of action did not arise from employer-employee relations even
if the claim therein is based on a provision in its handbook.

ISSUE
Whether or not the RTC has jurisdiction over the present controversy.

HELD

The SC held that the RTC has jurisdiction over the case.

Jurisprudence has evolved the rule that claims for damages under paragraph 4 of Article 217, to
be cognizable by the Labor Arbiter, must have a reasonable causal connection with any of the
claims provided for in that article. Only if there is such a connection with the other claims can a
claim for damages be considered as arising from employer-employee relations.

Article 217, as amended by Section 9 of RA 6715, provides:

Art. 217. Jurisdiction of Labor Arbiters and the Commission. Ɯ (a) Except as otherwise provided
under this Code, the Labor Arbiters shall have original and exclusive jurisdiction to hear and
decide, within thirty (30) calendar days after the submission of the case by the parties for
decision without extension, even in the absence of stenographic notes, the following cases
involving all workers, whether agricultural or non-agricultural:
xxx xxx xxx
4. Claims for actual, moral, exemplary and other forms of damages arising from the
employer-employee relations;"

While paragraph 3 above refers to Ơall money claims of workers,ơ it is not necessary to suppose
that the entire universe of money claims that might be asserted by workers against their
employers has been absorbed into the original and exclusive jurisdiction of Labor Arbiters. In
the first place, paragraph 3 should be read not in isolation from but rather within the context
formed by paragraph 1 (relating to unfair labor practices), paragraph 2 (relating to claims
concerning terms and conditions of employment), paragraph 4 (claims relating to household
services, a particular species of employer-employee relations), and paragraph 5 (relating to
certain activities prohibited to employees or employers).

It is evident that there is a unifying element which runs through paragraph 1 to 5 and that is,
that they all refer to cases or disputes arising out of or in connection with an employer-
employee relationship. This is, in other words, a situation where the rule of noscitur a sociis
may be usefully invoked in clarifying the scope of paragraph 3, and any other paragraph of
Article 217 of the Labor Code, as amended.

We reach the above conclusion from an examination of the terms themselves of Article 217, as
last amended by B.P. Blg 227, and even though earlier versions of Article 217 of the Labor Code
expressly brought within the jurisdiction of the Labor Arbiters and the NLRC Ơcases arising from
employer-employee relations,ơ which clause was not expressly carried over, in printerƞs ink, in
Article 217 as it exists today. For it cannot be presumed that money claims of workers which do
not arise out of or in connection with their employer-employee relationship, and which would
therefore fall within the general jurisdiction of regular courts of justice, were intended by the
legislative authority to be taken away from the jurisdiction of the courts and lodged with Labor
Arbiters on an exclusive basis. The Court, therefore, believes and so holds that the Ơmoney
claims of workersơ referred to in paragraph 3 of Article 217 embraces money claims which arise
out of or in connection with the employer-employee relationship, or some aspect or incident of
such relationship. Put a little differently, that money claims of workers which now fall within
the original and exclusive jurisdiction of Labor Arbiters are those money claims which have
some reasonable causal connection with the employer-employee relationship.

When, as here, the cause of action is based on a quasi-delict or tort, which has no reasonable
causal connection with any of the claims provided for in Article 217, jurisdiction over the action
is with the regular courts.

As it is, petitioner does not ask for any relief under the Labor Code. It merely seeks to recover
damages based on the partiesƞ contract of employment as redress for respondent's breach
thereof. Such cause of action is within the realm of Civil Law, and jurisdiction over the
controversy belongs to the regular courts. More so must this be in the present case, what with
the reality that the stipulation refers to the post-employment relations of the parties.

For sure, a plain and cursory reading of the complaint will readily reveal that the subject matter
is one of claim for damages arising from a breach of contract, which is within the ambit of the
regular courtƞs jurisdiction.

It is basic that jurisdiction over the subject matter is determined upon the allegations made in
the complaint, irrespective of whether or not the plaintiff is entitled to recover upon the claim
asserted therein, which is a matter resolved only after and as a result of a trial. Neither can
jurisdiction of a court be made to depend upon the defenses made by a defendant in his
answer or motion to dismiss. If such were the rule, the question of jurisdiction would depend
almost entirely upon the defendant.

The orders of the lower courts are set aside.

&
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FACTS

Respondent, because of tardiness was supposedly terminated by the petitioner company, but
because of the timely intervention of the union, the dismissal was not effected. However, he
incurred another infraction when he obtained a loan from a magazine dealer and when he was
not able to pay the loan, he stopped collecting the outstanding dues of the dealer/creditor.
After requiring him to explain, respondent admitted his failure to pay the loan but gave no
definitive explanation for the same. Thereafter, he was penalized with suspension. He was also
not allowed to do field work, and was transferred to a new position. Despite the completion of
his suspension, respondent stopped reporting for work and sent a letter communicating his
refusal to accept the transfer. He then filed a complaint for constructive dismissal, non-payment
of backwages and other money claims with the labor arbiter.

The complaint was resolved in favor of respondent. Petitioner lodged an appeal with the NLRC,
raising as a ground the lack of jurisdiction of the labor arbiter over respondentƞs complaint.
Significally, this issue was not raised by petitioner in the proceedings before the Labor Arbiter.

The NLRC reversed the decision of the LA and ruled that the LA has no jurisdiction over the
case, it being a grievance issue properly cognizable by the voluntary arbitrator. However, the
CA reinstated the ruling of the CA. The CA held that the active participation of the party against
whom the action was brought, coupled with his failure to object to the jurisdiction of the court
or quasi-judicial body where the action is pending, is tantamount to an invocation of that
jurisdiction and a willingness to abide by the resolution of the case and will bar said party from
later on impugning the court or bodyƞs jurisdiction.

ISSUE

Whether or not petitioner is estopped from questioning the jurisdiction of the LA during appeal.

HELD

The SC held that petitioner is not estopped from questioning the jurisdiction of the LA during
appeal.

The general rule is that the jurisdiction of a court over the subject matter of the action is a
matter of law and may not be conferred by consent or agreement of the parties. The lack of
jurisdiction of a court may be raised at any stage of the proceedings, even on appeal. This
doctrine has been qualified by recent pronouncements which stemmed principally from the
ruling in the cited case of Sibonghanoy. It is to be regretted, however, that the holding in said
case had been applied to situations which were obviously not contemplated therein. The
exceptional circumstances involved in Sibonghanoy which justified the departure from the
accepted concept of non-waivability of objection to jurisdiction has been ignored and, instead a
blanket doctrine had been repeatedly upheld that rendered the supposed ruling in Sibonghanoy
not as the exception, but rather the general rule, virtually overthrowing altogether the time
honored principle that the issue of jurisdiction is not lost by waiver or by estoppel.

The operation of the principle of estoppel on the question of jurisdiction seemingly depends
upon whether the lower court actually had jurisdiction or not. If it had no jurisdiction, but the
case was tried and decided upon the theory that it had jurisdiction, the parties are not barred,
on appeal, from assailing such jurisdiction, for the same 'must exist as a matter of law, and may
not be conferred by consent of the parties or by estoppel. However, if the lower court had
jurisdiction, and the case was heard and decided upon a given theory, such, for instance, as
that the court had no jurisdiction, the party who induced it to adopt such theory will not be
permitted, on appeal, to assume an inconsistent positionƜthat the lower court had jurisdiction.
Here, the principle of estoppel applies. The rule that jurisdiction is conferred by law, and does
not depend upon the will of the parties, has no bearing thereon.
Applying the general rule that estoppel does not confer jurisdiction, petitioner is not estopped
from assailing the jurisdiction of the labor arbiter before the NLRC on appeal.

Decision of the CA is set aside.



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FACTS

In 1987, respondent started working for petitioner corporation as a Production Supervisor. In

early February 1996, during a strike of the rank-and file union, respondent was advised to take
a leave of absence until further notice. Respondent later was invited by the company to answer
the following charges:

1.) That on February 21, 1996, at around 9:00 A.M. you entered the company fabrication shop
where you were assigned as supervisor and caused to create fire by secretly switching Ɲonƞ the
idle plastic oven and grounded the 2 electric machine welders while the Ɲstrikeƞ was on-going
outside the premises.
Witnesses also in the persons of Mr. Luis Mimay, and his men found out later what you have
done and noticed the electric current and the burning of the oven already very hot. You
secretly left the premises and had not for the said witnesses and contractors, you had
vehemently caused to burn the companyƞs main building and its offices.

3.) That you allegedly on several occasions, urged strongly the same group of contractors led
by Mr. Luis Mimay, working on some left over jobs at the factory, to slow down work or not to
work at all in sympathy to the Ɲstrikersƞ who are in the ranking files. Those proved also that as
our trusted staff and supervisor you have caused disruption of work of the contractors. The
company suffered losses in its failure to accomplish its job projects on due dates. Your
actuations and actions proved disastrous to the companyƞs interest. Considering these
circumstances, we urge you to reply your side on these matters so that we could institute
proper corresponding action based on the above in 5 days time from receipt of this letter.

Respondent through counsel, denied the charges proffered against him, and insisted that they
were fabricated to justify his termination due to suspicions that he was a strike-sympathizer.
Respondent later filed on January 29, 1997 a complaint against herein petitioners for illegal
dismissal, reinstatement, backwages and damages with the NLRC-RAB. Respondent complained
that although he was not sent a formal notice of termination, he was effectively dismissed from
employment for after he was asked to take a leave of absence on February 21, 1996, as he did,
and he was not instructed nor allowed to return to work, nor paid his salaries.

On June 30, 1997, the Labor Arbiter dismissed the complaint on the ground that respondentƞs
cause of action was barred by prior judgment, that was rendered on June 24, 1996 by Labor
Arbiter Nieves V. De Castro in other consolidated cases which found respondent among those
guilty of committing prohibited acts and whose employment was consequently declared lost.

Respondent appealed the dismissal of his complaint to the NLRC before which he argued that
the Labor Arbiter did not acquire jurisdiction over his person in the above-said consolidated
cases since service of summons to the therein respondents President of KMM-Katipunan and the
President of the local union Bigkis Manggagawa sa Dynamic Signmakers Outdoor Advertising
Services, in either of which he is not a member, cannot be considered proper service to him.
Respondent thus concluded that a void judgment such as one rendered without jurisdiction over
the person of the party maybe assailed at any time, either directly or collaterally.

ISSUE

whether or not the Labor Arbiter acquired jurisdiction over the person of the respondent.

HELD

The SC held that the LA did not acquire jurisdiction over the person of the respondent.

The validity of a judgment or order of a court or quasi-judicial tribunal which has become final
and executory may be attacked when the records show that it lacked jurisdiction to render the
judgment. For a judgment rendered against one in a case where jurisdiction over his person
was not acquired is void, and a void judgment maybe assailed or impugned at any time either
directly or collaterally by means of a petition filed in the same or separate case, or by resisting
such judgment in any action or proceeding wherein it is invoked.

Petitioners in fact do not even dispute respondentƞs claim that no summons was ever issued
and served on him either personally or through registered mail as required under Rule III,
Sections 3 and 6 of the Rules of Procedure of the NLRC, as amended by Resolution No. 01-02,
Series of 2002:

SEC. 3. Issuance of Summons. Within two (2) days from receipt of a case, the Labor Arbiter
shall issue the required summons, attaching thereto a copy of the complaint/petition and
supporting documents, if any. The summons, together with a copy of the complaint, shall
specify the date, time and place of the conciliation and mediation conference in two (2)
settings.
xxx

SEC. 6. Service of Notices and Resolutions. a) Notices or summonses and copies of orders, shall
be served on the parties to the case personally by the bailiff or duly authorized public officer
within three (3) days from receipt thereof or by registered mail, provided that in special
circumstances, service of summons may be effected in accordance with the pertinent provisions
of the Rules of Court; xxx
Supplementary or applied by analogy to these provisions are the provisions and prevailing
jurisprudence in Civil Procedure. Where there is then no service of summons on or a voluntary
general appearance by the defendant, the court acquires no jurisdiction to pronounce a
judgment in the cause.

At all events, even if administrative tribunals exercising quasi-judicial powers are not strictly
bound by procedural requirements, they are still bound by law and equity to observe the
fundamental requirements of due process.

Petition is denied



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FACTS

Petitioner was appointed by respondent Phil. Malay Poultry as its general manager. In 1996-
1997, respondents suffered losses which caused them to reduce production and retrench
employees in Philmalay. On June 30, 1997, petitioner Reyes gave verbal notice to respondent
Francis T. Lau that he will serve as General Manager of Philmalay until December 31, 1997 only.
In a letter dated January 12, 1998, petitioner confirmed his verbal notice of resignation and
requested that he be given the same benefits granted to retrenched and resigned employees of
the company, consisting of separation pay equivalent to 1 month salary for every year of
service and the monetary equivalent of his sick leave and vacation leave. He likewise requested
the benefits stipulated in his contract as well as office rentals for the use of his house as office
of the respondent and the retainer fees for the retained law firm.

In a letter dated January 19, 1998, respondent Philmalay retrenched petitioner effective
January 20, 1998 and promised to pay him separation benefits pursuant to the provisions of the
Labor Code. 7 He was, however, offered a separation pay equivalent to four months only, or
the total amount of P578,600.00. The offer was not accepted by petitioner and efforts to settle
the impasse proved futile. Petitioner then filed with the NLRC-RAB a complaint for
underpayment of wages and non-payment of separation pay, sick leave, vacation leave and
other benefits against respondents.

The Labor Arbiter ruled in favor of petitioner but was modified by the NLRC on appeal.
Petitioner filed a motion for reconsideration, however, the same was denied. Undaunted,
petitioner filed a petition for certiorari with the Court of Appeals, which was dismissed on
January 28, 2002 for failure to attach to the petition the following: "(1) complainant's
(petitioner) Position Paper filed before the Labor Arbiter; (2) Decision dated 22 December 1992
penned by Labor Arbiter Ariel Cadiente Santos; and (3) Memorandum of Appeal filed by the
petitioner." Petitioner, thereafter, filed a motion for reconsideration, attaching thereto a copy of
the Labor Arbiter's decision and the pleadings he failed to attach to the petition. The Court of
Appeals, however, denied petitioner's motion for reconsideration. Hence, this petition.

ISSUE

Whether or not there was substantial compliance by petitioner when it submitted belatedly the
lacking attachment for his petition.

HELD

The SC held that there was substantial compliance.

Rules of procedure should not be applied in a very technical sense, for they are adopted to help
secure, not override, substantial justice. There is ample jurisprudence holding that the
subsequent and substantial compliance of an appellant may call for the relaxation of the rules of
procedure. The subsequent submission of the missing documents with the motion for
reconsideration amounts to substantial compliance.

The same leniency should be applied to the instant case considering that petitioner
subsequently submitted with his motion for reconsideration the certified true copy of the Labor
Arbiter's decision, the complainant's position paper and the respondent's memorandum of
appeal. Clearly, petitioner had demonstrated willingness to comply with the requirements set by
the rules. If we are to apply the rules of procedure in a very rigid and technical sense, as the
Court of Appeals did in this case, the ends of justice would be defeated.

The pleadings and documents filed extensively discussed the issues raised by the parties. Such
being the case, there is sufficient basis to resolve the instant controversy. Labor laws mandate
the speedy disposition of cases, with the least attention to technicalities but without sacrificing
the fundamental requisites of due process. Remanding the case to the Court of Appeals will
only frustrate speedy justice and, in any event, would be a futile exercise, as in all probability
the case would end up with this Court. We shall thus rule on the substantial claims of the
parties.

Petition is granted.

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FACTS
On January 6, 1997, Mel Velarde loaned from Eugenio Lopez, Jr. president of respondet
company an amount of P10,000,000.00. Petitioner was then the general Manager of Sky Vision,
a subsidiary of respondent company. As petitioner failed to pay the installments as they became
due, respondent, apparently in answer to a proposal of petitioner respecting the settlement of
the loan, advised him by letter dated July 15, 1998 that he may use his retirement benefits in
Sky Vision in partial settlement of his loan after he settles his accountabilities to the latter and
gives his written instructions to it (Sky Vision). Petitioner protested the computation indicated in
the July 15, 1998 letter, he asserting that the imputed unliquidated advances from Sky Vision
had already been properly liquidated.

On August 18, 1998, respondent company filed a complaint for collection of sum of money with
damages at the Pasig City RTC against petitioner Velarde, alleging that petitioner violated the
Section 6 of the loan agreement as he failed to put up the needed collateral for the loan and
pay the installments as they became due, and that despite his receipt of letters of demand
dated December 1, 1997 and January 13, 1998, he refused to pay.

In his answer, petitioner alleged that the loan agreement did not reflect his true agreement
with respondent, it being merely a Ơcover documentơ to evidence the reward to him of ten
million pesos (P10,000,000.00) for his loyalty and excellent performance as General Manager of
Sky Vision and that the payment, if any was expected, was in the form of continued service;
and that it was when he was compelled by respondent to retire that the form of payment
agreed upon was rendered impossible, prompting the late Eugenio Lopez, Jr. to agree that his
retirement benefits from Sky Vision would instead be applied to the loan. As counterclaim, he
contended that he was entitled to retirement benefits from Sky Vision in the amount of
P98,280,000.00, unpaid salaries in the amount of P2,740,000.00, unpaid incentives in the
amount of P500,000, unpaid share from the Ơnet income of Plaintiff corporation,ơ equity in his
service vehicle in the amount of P1,500,000, reasonable return on the stock ownership plan for
services rendered as General Manager, and moral damages and attorneyƞs fees.

Respondent moved for the dismissal of the counterclaim for want of jurisdiction. Respondent
asserted that the counterclaims, being money claims arising from a labor relationship, are
within the exclusive competence of the NLRC. On the other hand, petitioner alleged that due to
the tortuous manner he was coerced into retirement, it is the RTC and not the NLRC which has
exclusive jurisdiction over his counterclaims.

ISSUE

Whether or not the RTC has jurisdiction of the present case.

HELD

The SC held that it is the RTC which has jurisdiction by virtue of R.A. 8799.

Section 5(c) of P.D. 902-A (as amended by R.A. 8799, the Securities Regulation Code)
previously applies to a corporate officerƞs dismissal. For a corporate officerƞs dismissal is always
a corporate act and/or an intra-corporate controversy and that its nature is not altered by the
reason or wisdom which the Board of Directors may have in taking such action.
With regard to petitionerƞs claim for unpaid salaries, unpaid share in net income, reasonable
return on the stock ownership plan and other benefits for services rendered to Sky Vision,
jurisdiction thereon pertains to the Securities Exchange Commission even if the complaint by a
corporate officer includes money claims since such claims are actually part of the prerequisite of
his position and, therefore, interlinked with his relations with the corporation. The question of
remuneration involving a person who is not a mere employee but a stockholder and officer of
the corporation is not a simple labor problem but a matter that comes within the area of
corporate affairs and management, and is in fact a corporate controversy in contemplation of
the Corporation Code.

While petitionerƞs counterclaims were filed on December 1, 1998, the second challenged order
of the trial court denying respondentƞs motion for reconsideration of the denial of its motion to
dismiss was issued on October 9, 2000 at which time P.D. 902-A had been amended by R.A.
8799 (approved on July 19, 2000) which mandated the transfer of jurisdiction over intra-
corporate controversies, subject of the counterclaims, to RTCs.

But even if the subject matter of the counterclaims is now cognizable by RTCs, the filing thereof
against respondent is improper, it not being the real party-in-interest, for it is petitionerƞs
employer Sky Vision, respondentƞs subsidiary. It cannot be gainsaid that a subsidiary has an
independent and separate juridical personality, distinct from that of its parent company, hence,
any claim or suit against the latter does not bind the former and vice versa.

This Court is thus not convinced that the real party-in-interest with regard to the counterclaim
for damages arising from the alleged tortuous manner by which petitioner was forced to retire
as General Manager of Sky Vision is respondent.

Petition is denied.

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FACTS

Evelyn Tolosa, was the widow of Captain Virgilio Tolosa who was hired by Qwana-Kaiun,
through its manning agent, Asia Bulk, to be the master of the Vessel named M/V Lady Dona.
CAPT. TOLOSA had a monthly compensation of US$1700, plus US$400.00 monthly overtime
allowance. His contract officially began on November 1, 1992, as supported by his contract of
employment when he assumed command of the vessel in Yokohama, Japan. The vessel
departed for Long Beach California, passing by Hawaii in the middle of the voyage. At the time
of embarkation, CAPT. TOLOSA was allegedly shown to be in good health.
ƠDuring Ɲchanneling activitiesƞ upon the vesselƞs departure from Yokohama sometime on
November 6, 1992, CAPT. TOLOSA was drenched with rainwater. The following day, November
7, 1992, he had a slight fever and in the succeeding twelve (12) days, his health rapidly
deteriorated resulting in his death on November 18, 1992. It was alleged that the request for
emergency evacuation of Capt Tolosa was too late.

Because of the death of CAPT. TOLOSA, his wife, EVELYN, as petitioner, filed a
Complaint/Position Paper before the POEA against Qwana-Kaiun, thru its resident-agent, Mr.
Fumio Nakagawa, ASIA BULK, Pedro Garate and Mario Asis, as respondents. The case was
however transferred to the NLRC, when the amendatory legislation expanding its jurisdiction,
and removing overseas employment related claims from the ambit of POEA jurisdiction.

Petitioner argues that her cause of action is not predicated on a quasi delict or tort, but on the
failure of private respondents -- as employers of her husband (Captain Tolosa) -- to provide him
with timely, adequate and competent medical services under Article 161 of the Labor Code.

Respondents aver that the Labor Arbiter has no jurisdiction over the subject matter, since her
cause did not arise from an employer-employee relation, but from a quasi delict or tort.
Further, there is no reasonable causal connection between her suit for damages and her claim
under Article 217 (a)(4) of the Labor Code, which allows an award of damages incident to an
employer-employee relation.

ISSUE

Whether or not the Labor Arbiter has jurisdiction over the subject matter.

HELD

The SC held that the NLRC and the labor arbiter had no jurisdiction over petitionerƞs claim for
damages, because that ruling was based on a quasi delict or tort per Article 2176 of the Civil
Code.

After carefully examining the complaint/position paper of petitioner, we are convinced that the
allegations therein are in the nature of an action based on a quasidelict or tort. It is evident that
she sued Pedro Garate and Mario Asis for gross negligence. Petitionerƞs complaint/position
paper refers to and extensively discusses the negligent acts of shipmates Garate and Asis, who
had no employer-employee relation with Captain Tolosa. The SC stressed that the case does not
involve the adjudication of a labor dispute, but the recovery of damages based on a quasi
delict. The jurisdiction of labor tribunals is limited to disputes arising from employer-employee
relations.

Not every dispute between an employer and employee involves matters that only labor arbiters
and the NLRC can resolve in the exercise of their adjudicatory or quasi-judicial powers. The
jurisdiction of labor arbiters and the NLRC under Article 217 of the Labor Code is limited to
disputes arising from an employer-employee relationship which can only be resolved by
reference to the Labor Code, other labor statutes, or their collective bargaining agreement.ơ
While it is true that labor arbiters and the NLRC have jurisdiction to award not only reliefs
provided by labor laws, but also damages governed by the Civil Code, these reliefs must still be
based on an action that has a reasonable causal connection with the Labor Code, other labor
statutes, or collective bargaining agreements. The central issue is determined essentially from
the relief sought in the complaint.

ƠClaims for damages under paragraph 4 of Article 217 must have a reasonable causal
connection with any of the claims provided for in the article in order to be cognizable by the
labor arbiter. Only if there is such a connection with the other claims can the claim for
damages be considered as arising from employer-employee relations.ơ In the present case,
petitionerƞs claim for damages is not related to any other claim under Article 217, other labor
statutes, or collective bargaining agreements.

Petitioner cannot anchor her claim for damages to Article 161 of the Labor Code, which does
not grant or specify a claim or relief. This provision is only a safety and health standard under
Book IV of the same Code. The enforcement of this labor standard rests with the labor
secretary. Thus, claims for an employerƞs violation thereof are beyond the jurisdiction of the
labor arbiter. In other words, petitioner cannot enforce the labor standard provided for in
Article 161 by suing for damages before the labor arbiter.

It is not the NLRC but the regular courts that have jurisdiction over actions for damages, in
which the employer-employee relation is merely incidental, and in which the cause of action
proceeds from a different source of obligation such as a tort. Since petitionerƞs claim for
damages is predicated on a quasi delict or tort that has no reasonable causal connection with
any of the claims provided for in Article 217, other labor statutes, or collective bargaining
agreements, jurisdiction over the action lies with the regular courts -- not with the NLRC or the
labor arbiters.

Petition is denied.

''
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FACTS

Sometime on January 26, 1998, the respondent Standard Chartered Bank and petitioner
Eduardo G. Eviota executed a contract of employment under which the petitioner was employed
by the respondent bank as Compensation and Benefits Manager, VP (M21). Petitioner came up
with many proposals which the bank approved and made preparations of. He was also given
privileges like car, renovation of the office, and even a trip to Singapore at the companyƞs
expense. However, the petitioner abruptly resigned from the respondent bank barely a month
after his employment and rejoined his former employer. On June 19, 1998, the respondent
bank filed a complaint against the petitioner with the RTC of Makati City for damages brought
about his abrupt resignation.

Though petitioner reimbursed part of the amount demanded by Standard, he was not able to
pay it full.

Standard alleged that assuming arguendo that Eviota had the right to terminate his
employment with the Bank for no reason, the manner in and circumstances under which he
exercised the same are clearly abusive and contrary to the rules governing human relations,
governed by the Civil Code.

Further, Standard alleged that petitioner also violated the Labor Code when he terminated his
employment without one (1) notice in advance. This stipulation was also provided in the
employment contract of Eviota with Standard, which would also constitute breach of contract.

The petitioner filed a motion to dismiss the complaint on the ground that the action for
damages of the respondent bank was within the exclusive jurisdiction of the Labor Arbiter under
paragraph 4, Article 217 of the Labor Code of the Philippines, as amended. The petitioner
averred that the respondent bankƞs claim for damages arose out of or were in connection with
his employer-employee relationship with the respondent bank or some aspect or incident of
such relationship. The respondent bank opposed the motion, claiming that its action for
damages was within the exclusive jurisdiction of the trial court. Although its claims for damages
incidentally involved an employer-employee relationship, the said claims are actually predicated
on the petitionerƞs acts and omissions which are separately, specifically and distinctly governed
by the New Civil Code.

ISSUE

Whether or not the RTC had jurisdiction over the case.

HELD

The SC held that the RTC has jurisdiction. Case law has it that the nature of an action and the
subject matter thereof, as well as which court has jurisdiction over the same, are determined by
the material allegations of the complaint and the reliefs prayed for in relation to the law
involved. Not every controversy or money claim by an employee against the employer or vice-
versa is within the exclusive jurisdiction of the labor arbiter. A money claim by a worker against
the employer or vice-versa is within the exclusive jurisdiction of the labor arbiter only if there is
a Ơreasonable causal connectionơ between the claim asserted and employee-employer relation.
Absent such a link, the complaint will be cognizable by the regular courts of justice.

Actions between employees and employer where the employer-employee relationship is merely
incidental and the cause of action precedes from a different source of obligation is within the
exclusive jurisdiction of the regular court. The jurisdiction of the Labor Arbiter under Article 217
of the Labor Code, as amended, is limited to disputes arising from an employer-employee
relationship which can only be resolved by reference to the Labor Code of the Philippines, other
labor laws or their collective bargaining agreements.

Jurisprudence has evolved the rule that claims for damages under paragraph 4 of Article 217, to
be cognizable by the Labor Arbiter, must have a reasonable causal connection with any of the
claims provided for in that article. Only if there is such a connection with the other claims can
the claim for damages be considered as arising from employer-employee relations.

In this case, the private respondentƞs first cause of action for damages is anchored on the
petitionerƞs employment of deceit and of making the private respondent believe that he would
fulfill his obligation under the employment contract with assiduousness and earnestness. The
petitioner volte face when, without the requisite thirty-day notice under the contract and the
Labor Code of the Philippines, as amended, he abandoned his office and rejoined his former
employer; thus, forcing the private respondent to hire a replacement. The private respondent
was left in a lurch, and its corporate plans and program in jeopardy and disarray. Moreover,
the petitioner took off with the private respondentƞs computer diskette, papers and documents
containing confidential information on employee compensation and other bank matters. On its
second cause of action, the petitioner simply walked away from his employment with the
private respondent sans any written notice, to the prejudice of the private respondent, its
banking operations and the conduct of its business. Anent its third cause of action, the
petitioner made false and derogatory statements that the private respondent reneged on its
obligations under their contract of employment; thus, depicting the private respondent as
unworthy of trust.

The primary relief sought is for liquidated damages for breach of a contractual obligation. The
other items demanded are not labor benefits demanded by workers generally taken cognizance
of in labor disputes, such as payment of wages, overtime compensation or separation pay. The
items claimed are the natural consequences flowing from breach of an obligation, intrinsically a
civil dispute.

It is evident that the causes of action of the private respondent against the petitioner do not
involve the provisions of the Labor Code of the Philippines and other labor laws but the New
Civil Code. Thus, the said causes of action are intrinsically civil. There is no causal relationship
between the causes of action of the private respondentƞs causes of action against the petitioner
and their employer-employee relationship. The fact that the private respondent was the
erstwhile employer of the petitioner under an existing employment contract before the latter
abandoned his employment is merely incidental.

Petition is denied.


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FACTS

Petitioner Pastor Austria worked as a Pastor for respondent Church. He was dismissed by the
respondent Church for misappropriation of denominational funs, willful breach of trust, serious
misconduct, gross and habitual neglect, etc.

Reacting on the dismissal, petitioner filed a complaint with the Labor Arbiter for illegal dismissal
against respondent Church. Respondents averred that that by virtue of the doctrine of
separation of church and state, the Labor Arbiter and the NLRC have no jurisdiction to entertain
the complaint filed by petitioner. Since the matter at bar allegedly involves the discipline of a
religious minister, it is to be considered a purely ecclesiastical affair to which the State has no
right to interfere.

ISSUE

Whether or not the Labor Arbiter and the NLRC have jurisdiction in the case at bar.

HELD

The SC held that the LA and the NLRC have jurisdiction. The principle of separation of church
and state finds no application in this case.

The rationale of the principle of the separation of church and state is summed up in the familiar
saying, ƠStrong fences make good neighbors.ơ The idea advocated by this principle is to
delineate the boundaries between the two institutions and thus avoid encroachments by one
against the other because of a misunderstanding of the limits of their respective exclusive
jurisdictions. The demarcation line calls on the entities to Ơrender therefore unto Ceasar the
things that are Ceasarƞs and unto God the things that are Godƞs.ơ While the State is prohibited
from interfering in purely ecclesiastical affairs, the Church is likewise barred from meddling in
purely secular matters.

The case at bar does not concern an ecclesiastical or purely religious affair as to bar the State
from taking cognizance of the same. An ecclesiastical affair is Ơone that concerns doctrine,
creed, or form or worship of the church, or the adoption and enforcement within a religious
association of needful laws and regulations for the government of the membership, and the
power of excluding from such associations those deemed unworthy of membership. Based on
this definition, an ecclesiastical affair involves the relationship between the church and its
members and relate to matters of faith, religious doctrines, worship and governance of the
congregation. To be concrete, examples of this so-called ecclesiastical affairs to which the
State cannot meddle are proceedings for excommunication, ordinations of religious ministers,
administration of sacraments and other activities with which attached religious significance.

The case at bar does not even remotely concern any of the abovecited examples. While the
matter at hand relates to the church and its religious minister it does not ipso facto give the
case a religious significance. Simply stated, what is involved here is the relationship of the
church as an employer and the minister as an employee. It is purely secular and has no
relation whatsoever with the practice of faith, worship or doctrines of the church. In this case,
petitioner was not excommunicated or expelled from the membership of the SDA but was
terminated from employment. Indeed, the matter of terminating an employee, which is purely
secular in nature, is different from the ecclesiastical act of expelling a member from the
religious congregation.

The grounds invoked for petitionerƞs dismissal, namely: misappropriation of denominational

funds, willful breach of trust, serious misconduct, gross and habitual neglect of duties and
commission of an offense against the person of his employerƞs duly authorize representative,
are all based on Article 282 of the Labor Code which enumerates the just causes for termination
of employment. By this alone, it is palpable that the reason for petitionerƞs dismissal from the
service is not religious in nature. Coupled with this is the act of the SDA in furnishing NLRC
with a copy of petitionerƞs letter of termination.

It is, thus, clear that when the SDA terminated the services of petitioner, it was merely
exercising its management prerogative to fire an employee which it believes to be unfit for the
job. As such, the State, through the Labor Arbiter and the NLRC, has the right to take
cognizance of the case and to determine whether the SDA, as employer, rightfully exercised its
management prerogative to dismiss an employee. This is in consonance with the mandate of
the Constitution to afford full protection to labor.

Under the Labor Code, the provision which governs the dismissal of employees, is
comprehensive enough to include religious corporations, such as the SDA, in its coverage.
Article 278 of the Labor Code on post-employment states that Ơthe provisions of this Title shall
apply to all establishments or undertakings, whether for profit or not.ơ Obviously, the cited
article does not make any exception in favor of a religious corporation.
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FACTS

On October 18, 1991 and August 21, 1992, Hanjin and the Philippine Government, through
the National Irrigation Administration (NIA), executed contracts for the construction of the
Malinao Dam at Pilar, Bohol. From August 1995 to August 1996, Hanjin contracted the services
of 712 carpenters, masons, truck drivers, helpers, laborers, heavy equipment operators,
leadmen, engineers, steelmen, mechanics, electricians and others.

In April 1998, 712 employees filed complaints for illegal dismissal and for payment of benefits
against Hanjin and Nam Hyun Kim before the National Labor Relations Commission (NLRC). The
complainants averred that they were regular employees of Hanjin and that they were separated
from employment without any lawful or just cause. Petitioners alleged that the complainants
were mere project employees in its Bohol Irrigation Project.

On May 12, 1998, the Labor Arbiter rendered judgment in favor of the 428 complainants.

Petitioners appealed the decision to the NLRC, which affirmed with modification the Labor
Arbiterƞs ruling. The NLRC dismissed the complaints of 34 complainants and awarded monetary
benefits to the others.

Unsatisfied, petitioners filed a Petition for Certiorari under Rule 65 of the Revised Rules of Court
in the CA.

On March 18, 2004, the CA dismissed the petition and affirmed the NLRCƞs ruling. Petitioners
moved to reconsider the decision, which the CA denied.

Thus Petitioner filed for Petition for Certiorari under Rule 65 of the Revised Rules of Court.

ISSUE

Whether or not the petitioner, Hanjin Engineering should have filed an Appeal under Rule 45 of
the Rules of Court or Petition for certiorari under Rule 65.

HELD

The proper recourse of the aggrieved party from a 1 )!!"+,  is a petition for # $! @
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As gleaned from the records, petitioners received a copy of the assailed CA decision on March
24, 2004 and filed its motion for reconsideration on April 6, 2004. Petitioners received a copy of
the Order dated October 11, 2004 denying their Motion for Reconsideration on October 20,
2004. Instead of filing a petition under Rule 45, they filed on November 23, 2004 the instant
Petition for Certiorari under Rule 65.
Petitioners had until November 4, 2004 within which to file a petition for review on certiorari on
pure questions of law. However, as already stated, petitioners filed their petition in this Court
only on November 23, 2004; indubitably, the decision of the CA had by then already become
final and executory, beyond the purview of this Court to act upon.

Since the Court of Appeals had jurisdiction over the petition under Rule 65, any alleged errors
committed by it in the exercise of its jurisdiction would be errors of judgment which are
reviewable by timely appeal and not by a special civil action of certiorari. If the aggrieved party
fails to do so within the reglementary period, and the decision accordingly becomes final and
executory, he cannot avail himself of the writ of certiorari, his predicament being the effect of
his deliberate inaction.

The appeal from a final disposition of the Court of Appeals is a petition for review under Rule 45
and not a special civil action under Rule 65 of the Rules of Court, now Rule 45 and Rule 65,
respectively, of the 1997 Rules of Civil Procedure. Rule 45 is clear that the decisions, final
orders or resolutions of the Court of Appeals in any case, i.e., regardless of the nature of the
action or proceeding involved, may be appealed to this Court by filing a petition for review,
which would be but a continuation of the appellate process over the original case. Under Rule
45, the reglementary period to appeal is fifteen (15) days from notice of judgment or denial of
motion for reconsideration.

For the writ of certiorari under Rule 65 of the Rules of Court to issue, a petitioner must show
that he has no plain, speedy and adequate remedy in the ordinary course of law against its
perceived grievance. A remedy is considered Ơplain, speedy and adequateơ if it will promptly
relieve the petitioner from the injurious effects of the judgment and the acts of the lower court
or agency. In this case, appeal was not only available but also a speedy and adequate remedy.

Clearly, petitioners interposed the present special civil action of certiorari under Rule 65
as an alternative to their petition not because it is the speedy and adequate remedy but to
make up for the loss of their right of an ordinary appeal. It is elementary that the special civil
action of certiorari is not and cannot be a substitute for an appeal, where the latter remedy is
available, as it was in this case. A special civil action under Rule 65 of the Rules of Court cannot
cure a partyƞs failure to timely file a petition for review on certiorari under Rule 45 of the
Revised Rules of Court. Rule 65 is an independent action that cannot be availed of as a
substitute for the lost remedy of an ordinary appeal, including that under Rule 45, especially if
such loss or lapse was occasioned by a partyƞs neglect or error in the choice of remedies. There
are exceptions to this rule: (a) when public welfare and the advancement of public policy
dictates; (b) when the broader interest of justice so requires; (c) when the writs issued are null
and void; or (d) when the questioned order amounts to an oppressive exercise of judicial
authority. None of these recognized exceptions, however, is present in the case at bar.
Petitioners failed to show circumstances that would justify a deviation from the general rule as
to make available a petition for certiorari in lieu of taking an appeal.

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FACTS

Petitioners were former employees of Cottonway Marketing Corp. (Cottonway), hired as promo
girls for their garment products. In October, 1994, after their services were terminated as the
company was allegedly suffering business losses, petitioners filed with the National Labor
Relations Commission (NLRC) a complaint for illegal dismissal, underpayment of salary, and
non-payment of premium pay for rest day, service incentive leave pay and thirteenth month pay
against Cottonway Marketing Corp. and Network Fashion Inc./JCT International Trading.
On December 19, 1995, Labor Arbiter Romulus S. Protasio issued a Decision finding petitioners'
retrenchment valid and ordering Cottonway to pay petitioners' separation pay and their
proportionate thirteenth month pay.
On appeal, the NLRC, in its Decision dated March 26, 1996, reversed the Decision of the Labor
Arbiter and ordered the reinstatement of petitioners without loss of seniority rights and other
privileges. Cottonway filed a motion for reconsideration which was denied by the Commission
in a Resolution dated July 31, 1996.
On August 30, 1996, Cottonway filed with the NLRC a manifestation stating that they have
complied with the order of reinstatement by sending notices dated June 5, 1996 requiring the
petitioners to return to work, but to no avail; and consequently, they sent letters to petitioners
dated August 1, 1996 informing them that they have lost their employment for failure to comply
with the return to work order. Cottonway also filed a petition for certiorari with the Supreme
Court which was dismissed on October 14, 1996.
On November 6, 1997, petitioners filed with the NLRC a motion for execution of its Decision on
the ground that it had become final and executory. Meanwhile, Cottonway filed a motion for
reconsideration of the Supreme Court Resolution of October 14, 1996 dismissing the petition for
certiorari. The motion for reconsideration was denied with finality on January 13, 1997.
On March 4, 1997, Cottonway filed a manifestation with the NLRC reiterating their allegations in
their manifestation dated August 30, 1996, and further alleging that petitioners have already
found employment elsewhere. The Commission ruled that its Decision dated March 26, 1996
has become final and executory and it is the ministerial duty of the Labor Arbiter to issue the
corresponding writ of execution to effect full and unqualified implementation of said decision.
Cottonway filed a petition for certiorari with the Court of Appeals seeking the reversal of the
ruling of the NLRC and the reinstatement. The appellate court granted the petition in its
Decision dated March 13, 2000. It ruled that petitioners' reinstatement was no longer possible
as they deliberately refused to return to work despite the notice given by Cottonway. The Court
of Appeals thus held that the amount of backwages due them should be computed only up to
the time they received their notice of termination.

ISSUE

Whether or not the Court of Appeals acted with grave abuse of discretion when it set aside the
Decision of the NLRC reinstating the petitioners and ordering the payment of backwages and
other benefits.

HELD

The decision of the NLRC dated March 26, 1996 has become final and executory upon the
dismissal by this Court of Cottonwayƞs petition for certiorari assailing said decision and the
denial of its motion for reconsideration. Said judgment may no longer be disturbed or modified
by any court or tribunal. It is a fundamental rule that when a judgment becomes final and
executory, it becomes immutable and unalterable, and any amendment or alteration which
substantially affects a final and executory judgment is void, including the entire proceedings
held for that purpose. Once a judgment becomes final and executory, the prevailing party can
have it executed as a matter of right, and the issuance of a writ of execution becomes a
ministerial duty of the court. A decision that has attained finality becomes the law of the case
regardless of any claim that it is erroneous. The writ of execution must therefore conform to the
judgment to be executed and adhere strictly to the very essential particulars.
To justify the modification of the final and executory decision of the NLRC dated March 26,
1996, the Court of Appeals cited the existence of a supervening event, that is, the valid
termination of petitioners' employment due to their refusal to return to work despite notice from
respondents reinstating them to their former position.

We cannot concur with said ruling. Petitioners' alleged failure to return to work cannot be
made the basis for their termination. Such failure does not amount to abandonment which
would justify the severance of their employment. To warrant a valid dismissal on the ground of
abandonment, the employer must prove the concurrence of two elements: (1) the failure to
report for work or absence without valid or justifiable reason, and (2) a clear intention to sever
the employer-employee relationship.

We note that Cottonway, before finally deciding to dispense with their services, did not give the
petitioners the opportunity to explain why they were not able to report to work. The records
also do not bear any proof that all the petitioners received a copy of the letters. Cottonway
merely claimed that some of them have left the country and some have found other
employment. This, however, does not necessarily mean that petitioners were no longer
interested in resuming their employment at Cottonway as it has not been shown that their
employment in the other companies was permanent. It should be expected that petitioners
would seek other means of income to tide them over during the time that the legality of their
termination is under litigation. Furthermore, petitioners never abandoned their suit against
Cottonway.

It appears that the supposed notice sent by Cottonway to the petitioners demanding that they
report back to work immediately was only a scheme to remove the petitioners for good.
Petitionersƞ failure to instantaneously abide by the directive gave them a convenient reason to
dispense with their services. This the Court cannot allow. Cottonway cited Article 223 of the
Labor Code providing that the decision ordering the reinstatement of an illegally dismissed
employee is immediately executory even pending appeal as basis for its decision to terminate
the employment of petitioners.

The foregoing provision is intended for the benefit of the employee and cannot be used to
defeat their own interest. The law mandates the employer to either admit the dismissed
employee back to work under the same terms and conditions prevailing prior to his dismissal or
to reinstate him in the payroll to abate further loss of income on the part of the employee
during the pendency of the appeal. But we cannot stretch the language of the law as to give
the employer the right to remove an employee who fails to immediately comply with the
reinstatement order, especially when there is reasonable explanation for the failure. If
Cottonway were really sincere in its offer to immediately reinstate petitioners to their former
positions, it should have given them reasonable time to wind up their current preoccupation or
at least to explain why they could not return to work at Cottonway at once. Cottonway did not
do either. Instead, it gave them only five days to report to their posts and when the petitioners
failed to do so, it lost no time in serving them their individual notices of termination.
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FACTS

Roquero, along with Rene Pabayo, were ground equipment mechanics of respondent PAL. From
the evidence on record, it appears that Roquero and Pabayo were caught red-handed
possessing and using Methampethamine Hydrochloride or shabu in a raid conducted by PAL
security officers and NARCOM personnel. Roquero and Pabayo received a Ơnotice of
administrative chargeơ for violating the PAL Code of Discipline. They were required to answer
the charges and were placed under preventive suspension. Roquero and company alleged that
they were set up by PAL to take the drugs through a certain trainee. In a Memorandum dated
July 14, 1994, Roquero and Pabayo were dismissed by PAL. Thus, they filed a case for illegal
dismissal.

The Labor Arbiter ruled against Roquero and upheld the validity of their dismissal, but awarded
separation pay.
While the case was on appeal with the NLRC, the complainants were acquitted by the RTC, in
the criminal case which charged them with Ơconspiracy for possession and use of a regulated
drug in violation of Section 16, Article III of Republic Act 6425,ơ on the ground of instigation.

The NLRC ruled in favor of complainants as it likewise found PAL guilty of instigation. It ordered
reinstatement to their former positions but without backwages. Complainants did not appeal
from the decision but filed a motion for a writ of execution of the order of reinstatement. The
Labor Arbiter granted the motion but PAL refused to execute the said order on the ground that
they have filed a Petition for Review before this Court. In accordance with the case of St. Martin
Funeral Home vs. NLRC and Bienvenido Aricayos, PALƞs petition was referred to the Court of
Appeals.

The CA reversed the decision of the NLRC and held that petitionerƞs dismissal was valid, but it
denied the award of separation pay. Hence, petitioner filed this petition for review under Rule
45.

ISSUE

Whether or not PAL can validly refuse to execute an order for reinstatement on the ground that
the case is still on appeal.

HELD

The SC held that PAL cannot refuse to execute an order for reinstatement on the ground that
the case is still on appeal.

Article 223(3) of the Labor Code (as amended by Section 12 of Republic Act No. 6715, and
Section 2 of the NLRC Interim Rules on Appeals under RA No. 6715, Amending the Labor Code)
provide that an order of reinstatement by the Labor Arbiter is immediately executory even
pending appeal.

In authorizing execution pending appeal of the reinstatement aspect of a decision of the Labor
Arbiter reinstating a dismissed or separated employee, the law itself has laid down a
compassionate policy which, once more, vivifies and enhances the provisions of the 1987
Constitution on labor and the working man. These duties and responsibilities of the State are
imposed not so much to express sympathy for the workingman as to forcefully and
meaningfully underscore labor as a primary social and economic force, which the Constitution
also expressly affirms with equal intensity. Labor is an indispensable partner for the nationƞs
progress and stability. In short, with respect to decisions reinstating employees, the law itself
has determined a sufficiently overwhelming reason for its execution pending appeal.

Then, by and pursuant to the same power (police power), the State may authorize an
immediate implementation, pending appeal, of a decision reinstating a dismissed or separated
employee since that saving act is designed to stop, although temporarily since the appeal may
be decided in favor of the appellant, a continuing threat or danger to the survival or even the
life of the dismissed or separated employee and his family.

The order of reinstatement is immediately executory. The unjustified refusal of the employer to
reinstate a dismissed employee entitles him to payment of his salaries effective from the time
the employer failed to reinstate him despite the issuance of a writ of execution. Unless there is
a restraining order issued, it is ministerial upon the Labor Arbiter to implement the order of
reinstatement. In the case at bar, no restraining order was granted.

Thus, it was mandatory on PAL to actually reinstate Roquero or reinstate him in the payroll.
Having failed to do so, PAL must pay Roquero the salary he is entitled to, as if he was
reinstated, from the time of the decision of the NLRC until the finality of the decision of this
Court.

We reiterate the rule that technicalities have no room in labor cases where the Rules of Court
are applied only in a suppletory manner and only to effectuate the objectives of the Labor Code
and not to defeat them. Hence, even if the order of reinstatement of the Labor Arbiter is
reversed on appeal, it is obligatory on the part of the employer to reinstate and pay the wages
of the dismissed employee during the period of appeal until reversal by the higher court. On the
other hand, if the employee has been reinstated during the appeal period and such
reinstatement order is reversed with finality, the employee is not required to reimburse
whatever salary he received for he is entitled to such, more so if he actually rendered services
during the period.

Dismissal of Petitioner is affirmed, but respondent PAL is ordered to pay the wages to which
Roquero is entitled from the time the reinstatement order was issued until the finality of this
decision.
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FACTS

Sometime in September, 1997, private respondent Perla B. Bolando was hired by petitioner
Mary Abigailƞs Food Services, Inc. (Abigailƞs for brevity), to work as a counter-girl at its branch
at the Rizal Technological College. Bolandoƞs work schedule was from 10:00 oƞclock a.m. to
8:00 oƞclock p.m., except on Saturdays when she works from 9:00 oƞclock a.m. to 4:00 oƞclock
p.m. She likewise works on Sundays when required by management. Bolando receives a daily
wage of P 180.00 with two (2) complete meal allowances of P40.00.

On February 10, 1998, Bolando was given a memorandum by management terminating her
services due to excessive tardiness and falsification of time record.
Contending that her dismissal by reason of tardiness is unjust, harsh and unreasonable, and
that she was denied due process as she was not given an opportunity to be heard, Bolando
filed with the arbitration branch of the NLRC, National Capital Region, a complaint for illegal
dismissal.

In a decision dated November 12, 1998, the Labor Arbiter rendered judgment for Bolando.

Petitioners received, thru counsel, their copy of the aforementioned decision of the Labor
Arbiter on December 23, 1998. As such, the last day of the 10-day period for them to take an
appeal therefrom to the NLRC under the Labor Code would be on January 2, 1999. Because
January 2, 1999 was a Saturday, petitioners filed their Notice of Appeal and Memorandum of
Partial Appeal on the following business day, January 4, 1999, a Monday, and subsequently
posted a surety bond only on January 7, 1999.

In a Resolution dated February 26, 1999, the NLRCƞs Third Division, finding that the required
bond was posted three (3) days beyond the 10-day reglementary period for perfecting an
appeal, dismissed petitionersƞ appeal Ơfor failure to perfect the same within the reglementary
periodơ.

Petitioners moved for a reconsideration, asseverating that their late filing of the required bond
should not prejudice the perfection of their appeal considering the timely filing of their Notice of
Appeal and Memorandum of Partial
Appeal, and the liberal interpretation given to the provisions of the Labor Code in the matter of
appeal bond in cases involving monetary awards, as in the instant case. Such was denied by
the NLRC
Therefrom, petitioners went to the Court of Appeals on a petition for certiorari under Rule 65
maintaining that the NLRC should have relaxed the time-requirement for the posting of appeal
bond, additionally claiming that the long holiday (Christmas season) which followed their receipt
on December 23, 1998 of the Labor Arbiterƞs decision rendered the timely filing of the required
bond an impossibility. The same was dismissed by the Court of Appeals and accordingly
affirmed the assailed decision of the NLRC.

ISSUE

Whether or not petitionersƞ appeal with the NLRC was correctly dismissed for failure to perfect
the same by not posting the required bond within the reglementary period provided for by law.

HELD

The posting of a cash or surety bond is a requirement sine qua non for the perfection of an
appeal from the labor arbiterƞs monetary award. Notably, the perfection of an appeal within the
period and in the manner prescribed by law is jurisdictional and non-compliance with the
requirements therefore is fatal and has the effect of rendering the judgment sought to be
appealed final and executory. Such requirement cannot be trifled with.

Here, while it is true that petitioners seasonably filed their notice of appeal and memorandum of
partial appeal, they admittedly posted the required bond three (3) days late. Hence, their
appeal from the decision of the Labor Arbiter to the NLRC was never perfected.

It is of no moment that petitionersƞ notice of appeal and memorandum of partial appeal were
timely filed. We need
not stress that Article 223 of the Labor Code, as amended, is explicit that Ơan appeal by the
employer may be perfected only upon the posting of a cash or surety bondơ.

The intention of the lawmakers to make the bond an indispensable requisite for the perfection
of an appeal by the employer is clearly limned in the provision that an appeal by the employer
may be perfected Ơonly upon the posting of a cash or surety bondơ. The word Ɲonlyƞ makes it
perfectly clear, that the lawmakers intended that the posting of a cash or surety bond by the
employer to be the exclusive means by which an employer's appeal may be perfected.
With the reality that herein petitioners failed to perfect their appeal by the non-payment of the
appeal bond within the ten-day period provided for by law, it follows that the judgment of the
labor arbiter has passed to the realm of finality. Neither, therefore, the NLRC nor the Court of
Appeals may be faulted for ruling against petitioners.

On a final note, it bears stressing that the right to appeal is merely statutory and one who seeks
to avail of it must comply with the statute or rules. The requirements for perfecting an appeal
within the reglementary period specified in the law must be strictly followed as they are
considered indispensable interdictions against needless delays.
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FACTS

In late 1998, [herein Respondent Florence Cabansag] arrived in Singapore as a tourist. She
applied for employment, with the Singapore Branch of the Philippine National Bank. At the time,
the Singapore PNB Branch was under the helm of Ruben C. Tobias, a lawyer, as General
Manager, with the rank of Vice-President of the Bank. She applied for employment as Branch
Credit Officer, at a total monthly package of $SG4,500.00, effective upon assumption of duties
after approval. Ruben C. Tobias found her eminently qualified and wrote on October 26, 1998,
a letter to the President of the Bank in Manila, recommending the appointment of Florence O.
Cabansag, for the position.

On December 7, 1998, Ruben C. Tobias wrote a letter to Florence O. Cabansag offering her a
temporary appointment, as Credit Officer, at a basic salary of Singapore Dollars 4,500.00, a
month and, upon her successful completion of her probation to be determined solely, by the
Bank, she may be extended at the discretion of the Bank, a permanent appointment and that
her temporary appointment was subject to certain terms and conditions.
Cabansag accepted the position and assumed office. In the meantime, the Philippine Embassy
in Singapore processed the employment contract of Florence O. Cabansag and, on March 8,
1999, she was issued by the Philippine Overseas Employment Administration, an ƝOverseas
Employment Certificate,ƞ certifying that she was a bona fide contract worker for Singapore.

Barely three (3) months in office Tobias told Cabansag that her resignation was imperative as a
Ɲcost-cutting measureƞ of the Bank. Tobias, likewise, told Cabansag that the PNB Singapore
Branch will be sold or transformed into a remittance office and that, in either way, she had to
resign from her employment. She then asked Ruben C. Tobias that she be furnished with a
ƝFormal Adviceƞ from the PNB Head Office in Manila. However, Ruben C. Tobias flatly refused.
Florence O. Cabansag did not submit any letter of resignation.

On April 16, 1999, Ruben C. Tobias again summoned Florence O. Cabansag to his office and
demanded that she submit her letter of resignation, with the pretext that he needed a Chinese-
speaking Credit Officer to penetrate the local market, with the information that a Chinese-
speaking Credit Officer had already been hired and will be reporting for work soon. She was
warned that, unless she submitted her letter of resignation, her employment record will be
blemished with the notation ƝDISMISSEDƞ spread thereon. Without giving any definitive answer,
Florence O. Cabansag asked Ruben C. Tobias that she be given sufficient time to look for
another job. Ruben C. Tobias told her that she should be Ɲoutƞ of her employment by May 15,
1999.

However, on April 19, 1999, Ruben C. Tobias again summoned Florence O. Cabansag and
adamantly ordered her to submit her letter of resignation. She refused. On April 20, 1999, she
received a letter from Ruben C. Tobias terminating her employment with the Bank.
On January 18, 2000, the Labor Arbiter rendered judgment in favor of the Complainant and
against the Respondents. PNB appealed the labor arbiterƞs Decision to the NLRC. In a
Resolution dated June 29, 2001, the Commission affirmed that Decision.
Petitioner appealed to the Court of Appeals which rendered a decision in favor of Florence
Cabansag.

ISSUE

Whether or not the arbitration branch of the NLRC in the National Capital Region has
jurisdiction over the instant controversy.

HELD

The jurisdiction of labor arbiters and the NLRC is specified in Article 217 of the Labor Code and
more specifically, Section 10 of RA 8042 reads in part:
ƠSECTION 10. Money Claims. Ɯ Notwithstanding any provision of law to the contrary, the
Labor Arbiters of the National Labor Relations Commission (NLRC) shall have the original and
exclusive jurisdiction to hear and decide, within ninety (90) calendar days after the filing of the
complaint, the claims arising out of an employer-employee relationship or by virtue of any law
or contract involving Filipino workers for overseas deployment including claims for actual,
moral, exemplary and other forms of damages.

Based on the foregoing provisions, labor arbiters clearly have original and exclusive jurisdiction
over claims arising from employer-employee relations, including termination disputes involving
all workers, among whom are overseas Filipino workers (OFW). We are not unmindful of the
fact that respondent was directly hired, while on a tourist status in Singapore, by the PNB
branch in that city state. Prior to employing respondent, petitioner had to obtain an
employment pass for her from the Singapore Ministry of Manpower. Securing the pass was a
regulatory requirement pursuant to the immigration regulations of that country.

Noteworthy is the fact that respondent likewise applied for and secured an Overseas
Employment Certificate from the POEA through the Philippine Embassy in Singapore. The
Certificate, issued on March 8, 1999, declared her a bona fide contract worker for Singapore.
Under Philippine law, this document authorized her working status in a foreign country and
entitled her to all benefits and processes under our statutes. Thus, even assuming arguendo
that she was considered at the start of her employment as a Ơdirect hireơ governed by and
subject to the laws, common practices and customs prevailing in Singapore she subsequently
became a contract worker or an OFW who was covered by Philippine labor laws and policies
upon certification by the POEA. At the time her employment was illegally terminated, she
already possessed the POEA employment Certificate.
Whether employed locally or overseas, all Filipino workers enjoy the protective mantle of
Philippine labor and social legislation, contract stipulations to the contrary notwithstanding.
For purposes of venue, workplace shall be understood as the place or locality where the
employee is regularly assigned when the cause of action arose. It shall include the place where
the employee is supposed to report back after a temporary detail, assignment or travel. In the
case of field employees, as well as ambulant or itinerant workers, their workplace is where they
are regularly assigned, or where they are supposed to regularly receive their salaries/wages or
work instructions from, and report the results of their assignment to their employers.

Under the ƠMigrant Workers and Overseas Filipinos Act of 1995ơ (RA 8042), a migrant worker
Ơrefers to a person who is to be engaged, is engaged or has been engaged in a remunerated
activity in a state of which he or she is not a legal resident; to be used interchangeably with
overseas Filipino worker.ơ[21] Undeniably, respondent was employed by petitioner in its branch
office in Singapore. Admittedly, she is a Filipino and not a legal resident of that state. She thus
falls within the category of Ơmigrant workerơ or Ơoverseas Filipino worker.ơ


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FACTS

In January 1989, the Coca-Cola Bottlers Philippines, Inc. Sales Force Union-PTGWO (UNION)
filed a Notice of Strike with the National Conciliation and Mediation Board raising certain issues
for conciliation. As a result of said dispute, the UNION staged a strike.

Subsequently, the Board succeeded in making the parties agree to a voluntary settlement of the
case via a Memorandum of Agreement signed by them on February 9, 1989. Among others, the
petitioner and the respondent agreed, as follows:

1. Christmas Bonus

The Company shall grant to all those covered by the Bargaining Unit represented by the Union
an amount equivalent to fifty (50%) percent of their average commission for the last six (6)
months.

The union hereby acknowledges that the granting of a Christmas bonus is purely a Management
prerogative and as such, in determining the amount thereof the same is solely a discretion of
Management. The parties however agree that henceforth whenever Management exercises this
prerogative, the same shall include the average commission for the last six (6) months prior to
the grant.

Since then, the management granted to each covered employee every December of the year a
certain percentage of his basic pay and an amount equivalent to fifty (50%) percent of his
average commission for the last six months prior to the grant. However, in December 1999, the
respondent granted a fixed amount of P4,000.00 only, eliminating thereby the said 50%
employeeƞs average commission for the last six months for members of the union. Thus,
claiming the same as violation of the MOA, the union submitted its grievance to the respondent.
No settlement was reached, hence, the case was then referred to a Panel of Voluntary
Arbitrators.

The Union asseverates that the grant of the additional 50% of the average commission has
become a practice since 1989 and has ripened into a contractual obligation. On the other hand,
the respondent company countered that in 1999 it suffered its worst financial performance in its
history; that its sales volume was twenty percent (20%) behind plan and ten percent (10%)
below the sales in 1998, as a result, it suffered an abnormal loss of Two Billion Five Hundred
Million Pesos (P2,500,000,000.00); that faced with tremendous losses, the management
decided not to grant bonuses to its employees in 1999; that through Memorandum 99010 dated
December 14, 1999, its President, Mr. Peter Baker explained to the employees the companyƞs
financial situation and the decision not to grant bonuses; that in the same memo however, the
company granted a special ex gratia payment of Four Thousand Pesos (P4,000.00) to all its
permanent employees.

After hearing and the submission of evidence and position papers, the Arbitration Panel
composed of Apron Mangabat and Noel Sanchez, as chairman and member, respectively,
denied petitionerƞs claim and declared that the P4,000.00 given as ex gratia is not a bonus,
while Arnel Dolendo, another member dissented.

A copy of this Decision dated 21 January 2001 was received by petitionerƞs counsel on 20
February 2001. It was only signed by the Chairman of the Panel, Mr. Apron Mangabat, and one
of its members, Atty. Noel Sanchez and not by Atty. Arnel Dolendo. Petitioners claim that
because Ơthe Panelƞs decision without such dissenting and separate opinion attached thereto
makes the decision incomplete and prematurely issued.ơ

On 12 March 2001, petitioner filed a motion for reconsideration of the 21 January 2001
Decision.On 30 May 2001, the Panel denied petitionerƞs motion for reconsideration. A copy of
the Order of denial was received by petitioner on 09 July 2001. By virtue thereof, petitioner
filed a Petition for Review before the Court of Appeals on 24 July 2001.

The Court of Appeals ruled that the the P4,000.00 Ơspecial ex gratiaơ payment is a Christmas
bonus, hence, petitionerƞs members are entitled to the additional 50% average commission but
dismissed the petition on the ground that petitionerƞs motion for reconsideration dated 12
March 2001 of the Decision of the Panel that was originally received on 20 February 2001 was
filed out of time; hence, the said Decision already became final and executory after ten (10)
calendar days from receipt of the copy of the Decision by the parties pursuant to Article 262-A
of the Labor Code.

ISSUE

Whether or not the Court of Appeals committed a reversible error when it dismissed the petition
on mere technicality contrary to settled jurisprudence, after favorably ruling on the merits in
favor of petitioner.
HELD

The resolution of the present controversy hinges for the most part on the correct disposition of
petitionerƞs argument that the Panelƞs Decision sans the dissenting opinion of one of its
members was irregularly issued; hence, did not toll the running of the prescriptive period within
which to file a motion for reconsideration. To sustain petitionerƞs argument would mean that
the subject Decision could still be reviewed by the Court of Appeals. A contrary resolution
would stamp the subject decision with finality rendering it impervious to review pursuant to the
doctrine of finality of judgments.

Rule VII, Section 1 of the ƠProcedural Guidelines in the Conduct of Voluntary Arbitration
Proceedingsơ provides the key. Therein, what constitutes the voluntary arbitratorƞs decision is
defined with precision, to wit:

Section 1. Decision Award. -- The final arbitral disposition of issue/s submitted to voluntary
arbitration is the Decision. The disposition may take the form of a dismissal of a claim or grant
of specific remedy, either by way of prohibition of particular acts or specific performance of
particular acts. In the latter case the decision is called an Award.

In herein case, the Decision of the Panel was in the form of a dismissal of petitionerƞs
complaint. Naturally, this dismissal was contained in the main decision and not in the
dissenting opinion. Thus, under Section 6, Rule VII of the same guidelines implementing Article
262-A of the Labor Code, this Decision, as a matter of course, would become final and
executory after ten (10) calendar days from receipt of copies of the decision by the parties even
without receipt of the dissenting opinion unless, in the meantime, a motion for reconsideration
or a petition for review to the Court of Appeals under Rule 43 of the Rules of Court is filed
within the same 10-day period. As correctly pointed out by the Court of Appeals, a dissenting
opinion is not binding on the parties as it is a mere expression of the individual view of the
dissenting member from the conclusion held by the majority of the Court, following our ruling in
Garcia v. Perez as reiterated in National Union of Workers in Hotels, Restaurants and Allied
Industries v. NLRC.

Prescinding from the foregoing, the Court of Appeals correctly dismissed the petition before it
as it no longer had any appellate jurisdiction to alter or nullify the decision of the Panel. The
Panelƞs Decision had become final and executory, hence, unchallengeable.
























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FACTS

This is a petition for review on certiorari assailing NLRC's Resolution in dismissing the appeal for
petitioner's failure to post an appeal bond.

Respondent was employed as a security guard by petitioner. When petitioner's personal

manager proposed to change his employment from regular to retainer & to pay him his
retirement benefits amounting to P 15,000.00, respondent denied. When he reported to work,
he was told that petitioner has terminated his employment.

Petitioner, in its answer to the complaint denied the allegation. Labor Arbiter rendered a
decision dismissing the complaint. On appeal, NLRC issued a resolution remanding the case to
LA for further proceeding. LA rendered decision finding that respondent was illegally dismissed
from employment and ordered petitioner to pay him full backwages, separation pay, unpaid
portion of his 13th month pay and service incentive leave, cash bond refund, and attorney's
fees.

Petitioner filed with NLRC an appeal and motion to reduce the appeal bond.

NLRC's dismissed the appeal for petitioner's failure to post an appeal bond. Petitioner filed a
motion for reconsideration but was denied by NLRC. Petitioner then filed for petition for
certiorari alleging that NLRC committed grave abuse of discretion in dismissing its appeal.

ISSUE

Whether or not NLRC committed grave abuse of discretion in dismissing its appeal.

HELD
Under Art 223 of the Labor Code, the posting of appeal bond is mandatory. In case of a
judgment involving a monetary award, an appeal by the employer may be perfected only upon
the posting of a cash/surety bond issued by a reputable bond company duly accredited by the
commission in the amount equivalent to the monetary award in the judgment appealed from.

If NLRC was not able to resolve such "Motion to Reduce Bond" within the ten (10) reglementary
period following receipt of the order, resolution or decision of the NLRC, appellant still has to
post an appeal bond to forestall the finality of such order, resolution or decision.

Requisites for perfection of appeal laid down in Sec 4(a) & 6 of Rule VI of the NLRC Rules of
Procedure (as amended by Resolution No 01-02 Series of 2002). The appeal shall be filed within
the reglementary period as provided in Sec 1 of Rule VI, shall be verified by appellant himself in
accordance with Sec 4, Rule 7 of the Rules of Court with proof of payment of the required
appeal fee and the posting of a cash/surety bond as provided in Sec 6, Rule VI; shall be
accompanied by a memorandum of appeal in three (3) legibly typewritten copies which shall
state the grounds relied upon and the arguments in support thereof; the relief prayed for; and a
statement of the date when the appellant received the appellant decision, resolution or order &
certification of non-forum shopping with proof of service on the other party of such appeal. A
mere notice of appeal without complying with the other requisites aforestated shall not stop the
running period of perfecting an appeal.

The perfection of an appeal in the manner and within the period prescribed by law is not only
mandatory but jurisdictional, and failure to conform to the rules will render the judgment
sought to be received final and unappealable.

Petition is denied.

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FACTS

On 25 March 1999, respondents filed a complaint against petitioners and a certain Ret. B/Gen.
Javier D. Carbonell for underpayment/nonpayment of salaries, overtime pay, premium pay for
holiday and rest day, service incentive leave pay, holiday pay, and attorneyƞs fees. The
complaint was amended on 20 April 1999 to include the charges of illegal dismissal, illegal
deductions, underpayment/nonpayment of allowance, separation pay, and claims for 13th
month pay, moral and exemplary damages as well as night shift differential.

According to respondents, during the time that they were in the employ of petitioners, they
were receiving compensation which was below the minimum wage fixed by law. They were
also made to render services everyday for 12 hours but were not paid the requisite overtime
pay, nightshift differential, and holiday pay. Respondents likewise lamented the fact that
petitioners failed to provide them with weekly rest period, service incentive leave pay, and 13th
month pay. As a result of these perceived unfairness, respondents filed a complaint before the
Labor Standards Enforcement Division of the Department of Labor on 6 January 1999. Upon
learning of the complaint, respondentsƞ services were terminated without the benefit of notice
and hearing.

For their part, petitioners denied respondentsƞ claim of illegal dismissal. Petitioners explained
that management policies dictate that the security guards be rotated to different assignments to
avoid fraternization and that they be required to take refresher courses at their headquarters.
Respondents allegedly refused to comply with these policies and instead went on leave or
simply refused to report at their headquarters. As for respondentsƞ money claims, petitioners
insisted that respondents worked for only eight hours a day, six days a week and that they
received their premium pays for services rendered during holidays and rest day. The service
incentive leave of respondents was allegedly made payable as soon as respondents applied for
said benefit.

ISSUE

WHETHER OR NOT THE COURT OF APPEALS ERRED WHEN IT DECLARED THAT THE REMEDY
ADOPTED BY THE PETITIONERS IS ERRONEOUS.

HELD

Petitioners contend that based on the rules of procedure of the NLRC, the order granting the
issuance of the 2nd alias writ of execution could not have been the proper subject of an appeal
before the NLRC neither could petitioners have sought the remedy of certiorari from the NLRC.
Petitioners argue that the rules of procedure of the NLRC do not provide for any remedy or
procedure for challenging the order granting a writ of execution; hence, the pertinent provision
of the Revised Rules of Court should apply which in this case is Section 1 of Rule 41

It is a basic tenet of procedural rules that for a special civil action for a petition for certiorari to
prosper, the following requisites must concur: (1) the writ is directed against a tribunal, a board
or an officer exercising judicial or quasi-judicial functions; (2) such tribunal, board or officer has
acted without or in excess of jurisdiction, or with grave abuse of discretion amounting to lack or
excess of jurisdiction; and (3) there is no appeal or any plain, speedy and adequate remedy in
the ordinary course of law.

In this case, petitioners insist that the NLRC is bereft of authority to rule on a matter involving
grave abuse of discretion that may be committed by a labor arbiter. Such conclusion, however,
proceeds from a limited understanding of the appellate jurisdiction of the NLRC under
Article 223 of the Labor Code

Given the foregoing, we hold that the Court of Appeals correctly dismissed the petition for
certiorari brought before it. Notwithstanding this procedural defect committed by petitioners, in
the interest of substantial justice

WHEREFORE, premises considered, this Court AFFIRMS the Decision of the Court of Appeals
dated 31 July 2003 and the Order dated 23 April 2003 of the Labor Arbiter declaring petitioners
liable for additional accrued backwages. The amount of money claims due the respondents is,
however, MODIFIED. Let the records of this case be remanded to the Computation and
Examination Unit of the NLRC for proper computation of subject money claims as above-
discussed.

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FACTS

Ricardo Samaniego was initially hired by Unilab as Professional Service Representative of its
marketing arm, Westmont. Later, Unilab promoted him as a Senior Business Development
Associate and assigned him in Isabela as Acting District Manager of Westmont and Chairman of
Unilab Special Projects. He was then transferred to Metro Manila pending the investigation of
his subordinate and physicians of Region II involved in a sales discount and Rx trade-off
controversy. He was placed under floating status and assigned to perform duties not connected
with his position. This transfer resulted in the diminution of his salary.

Ricardo Samaniego then filed with the Office of the Labor Arbiter for illegal dismissal and
damages against Westmont and Unilab, as well as Unilabƞs Officer

Westmont and Unilab filed a motion to dismiss Samaniegoƞs complaint on the ground of
improper venue and lack of cause of action. They argued that it should be filed with the NLRC
in Manila, not with the Office of the Labor Arbiter in Tuguegarao City, Cagayan, and that the
action should be against Westmont, Samaniegoƞs employer.

The Labor Arbiter denied the motion to dismiss, Citing Section 1, Rule IV, of the NLRC Rules
and Procedure allowing the Labor Arbiter to order a change of venue in meritous cases, he then
set the case for preliminary conference during which the petitioners expressly reserved their
right to contest the order denying motion to dismiss.

Petitioners filed with the NLRC an Urgent Petition to Change or Transfer Venue. They also filed
to suspend proceedings in view of the pendency of their petition.

The Labor Arbiter issued an order directing parties to submit their respective papers and
supporting documents within 20 days from notice, after which the case shall be submitted for
decision.

The NLRC acting on the petition to change venue, ordered the Labor Arbiter to forward the
records of the case. The Labor Arbiter retained a complete duplicate original copies of the
records and set the case for hearing. They petitioners filed a motion for cancellation of the
hearings because their petition for change of venue has remained unresolved. They did not
submit their position papers and did not attend hearing, thus the Labor Arbiter considered the
case submitted for Decision based on the records and the evidence submitted by Samaniego
and rendered a decision finding that Samaniego is illegally and unjustly dismissed
constructively.

Petitioners appeal to the NLRC. The NLRC dismissed the petition for change of venue because
when the cause of action arouse, Samaniegoƞs workplace in Isabela over which the Labor
Arbiter in Cagayan has the jurisdiction. However it declared the decision of the NLRC null and
void because it continued to conduct further proceedings despite the pendency of the appeal-
treated Urgent Petition for Change and Westmont and Unilab are denied due process.

Both Parties applied for motion for reconsideration but both were denied by the NLRC.

Hence this petition.

ISSUE

1. Whether or Not Court of Appeals erred in denying their motion to dismiss by reason of
improper venue.
2. Whether or Not Westmont and Unilab are denied of due process.

HELD

The petition to change or transfer venue filed by herein petitioners with the NLRC is not the
proper remedy to assail the Labor Arbiterƞs order denying their motion to dismiss. Such order is
merely interlocutory, hence not appealable as provided in Section 3 of the 1997 NLRC Rules and
Procedures.

An order denying a motion to dismiss is interlocutory, and so the proper in such a case is to
appeal after a decision has been rendered.

Assuming that the petition to change or transfer venue is the proper remedy, still we find that
the CA did not err in sustaining the Labor Arbiterƞs Order of denying the motion to dismiss
because under the 1997 NLRC rules and procedure under Section 1, All cases which the Labor
Arbiters have authority to hear and decide may be filed in the Regional Arbitration Branch
having jurisdiction over the workplace of the complainant/petitioner. The question of venue
essentially relates to the trial and touches more upon the convenience of the parties, rather
than upon the substance and merits of the case. Our permissive rules underlying the provisions
on venue are intended to assure convenience for the plaintiff and his witnesses and to promote
the end of justice. This axiom all the more finds applicability in cases involving labor and
management because of the principle, paramount in our jurisdiction, that the State shall afford
to full protection of labor.

Because Samaniegoƞs regular place of assignment was in Isabela when he was transferred to
Metro Manila or when the cause of action arose. Clearly, the Appellate Court was correct in
Affirming the Labor Arbiterƞs finding that the proper venue is in the RAB No. II at Tuguegarao
City, Cagayan.

On the contention that Westmont and Unilab that they were denied due process, well settled is
the rule that the essence of due process is simply an opportunity to be heard or as applied to
administrative proceeding, an opportunity to explain oneƞs side or an opportunity to seek a
reconsideration of the action or ruling complained of. The requirement of due process in labor
cases before a Labor Arbiter is satisfied when the parties are given the opportunity to submit
their position papers to which they are supposed to attach all the supporting documents or
documentary evidence that would prove their respective claims, in the even the Labor Arbiter
determines that no formal hearing would be conducted of that such hearing was not necessary.

As shown by the records, the Labor Arbiter gave Westmont and Unilab, not only once, but
thrice, the opportunity to submit their position papers and supporting affidavits and documents.
But they were obstinate. Clearly, they were not denied their right to due process.

The assailed decision of the CA is affirmed.

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FACTS

Petitioner union represents the teaching and the non-teaching staff of respondent university.
The union has existing collective bargaining agreements with the university. Increases in the
salary of both teaching and non-teaching personnel for the period 2000 to 2005 were provided
in the collective bargaining agreements.

Respondent university admits that for the salary increases for the schoolƞs faculty, some were
taken from the university fund and the others are deducted form the incremental proceeds.

Petitioner asserts that the integrated IP granted in the CBAs should not be deducted from the
personnelƞs 70% share in the IP. Petitioner filed with the NCMB a preventive mediation for the
recovery of IP losses due to the universityƞs alleged deduction of the cost of CBA-won economic
benefits form the 70% share of the teachers and employees in the IP.

The parties submitted the case for a voluntary arbitration. On April 10, 2003, Voluntary
Arbitrator Apron Mangabat upheld the position of the university and dismissed the case.
Petitioner brought the case to the Court of Appeals via petition for certiorari under Rule 65 of
the 1997 Rules of Court. The CA dismissed the petition on the ground that petitioner used a
wrong mode of appeal. It held that petitioner should have filed an appeal under Ruled 43.

ISSUE

Is the decision of the voluntary arbitrator appealable to the Court of Appeals under Rule 43?

HELD

No. Decisions of the voluntary arbitrator under the Labor Code are appealable to the Court of
Appeals. In Luzon Developemnt Bank vs. Association of Luzon Development Bank Employees,
the Court observed that the Labor Code was silent as regards the appeals from the decisions of
the voluntary arbitrator, unlike those of the Labor Arbiter which may be appealed to the
National Labor Relations Commission. The Court noted, however, that the voluntary arbitrator is
a government instrumentality within the contemplation of Section 9 of Batas Pambansa Blg.
(BP) 129 which provides for the appellate jurisdiction of the Court of Appeals. The decisions of
the voluntary arbitrator are akin to those of the Regional Trial Court, and, therefore, should first
be appealed to the Court of Appeals before being elevated to this Court. This is in furtherance
and consistent with the original purpose of Circular No. 1-91 to provide a uniform procedure for
the appellate review of adjudications of all quasi-judicial agencies not expressly excepted from
the coverage of Section 9 of BP 129. Circular No. 1-91 was later revised and became Revised
Administrative Circular No. 1-95. The Rules of Court Revision Committee incorporated said
circular in Rule 43 of the 1997 Rules of Civil Procedure. The inclusion of the decisions of the
voluntary arbitrator in the Rule was based on the Courtƞs pronouncements in Luzon
Development Bank v. Association of Luzon Development Bank Employees. Petitionerƞs
argument, therefore, that the ruling in said case is inapplicable in this case is without merit.

Moreover, petition for certiorari is an extraordinary remedy that is adopted to correct errors of
jurisdiction committed by the lower court or quasi-judicial agency, or when there is grave abuse
of discretion on the part of such court or agency amounting to lack or excess of jurisdiction.
Where the error is not one of jurisdiction, but of law or fact which is a mistake of judgment, the
proper remedy should be appeal. In addition, an independent action for certiorari may be
availed of only when there is no appeal or any plain, speedy and adequate remedy in the
ordinary course of law. There was no question of jurisdiction involved in the decision of the
voluntary arbitrator. What was being questioned was merely his findings of whether the
universityƞs practice of sourcing the integrated IP in the CBA from the 70% share of the
personnel in the IP violates the provisions of the CBA. Such is a proper subject of an appeal.

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FACTS

Enrico Zamora was an employee of Air Phils. Corp. as a flight deck crew. He applied for
promotion to the position of airplane captain and underwent the requisite training program.
After training, he inquired about his promotion but APC did not act on it, instead, it continued to
give him assignments as flght deck crew.

He filed a complaint with the Labor Arbiter with the contention that the withholding of his
promotion amounted to constructive dismissal. APC, on its side, contended that complainant
stopped reporting for work, not because he was forced to resign but because he had joined a
rival company, Grand Air.

The Labor Arbiter ruled in favor of Zamora. On appeal, the NLRC held that there was no
dismissal, constructive or otherwise because it was Zamora himself who voluntarily terminated
his employment by not reporting for work and by joining the competitor Grand Air. However,
upon Motion for Reconsideration filed by Zamora, the NLRC affirmed its decision but ordered
APC to pay Zamora his unpaid salaries and allowances in the total amount of P198, 502.00.
Hence, this petition for review on certiorari with APC questioning why it should be made to pay.

ISSUE

Whether or not APC should be made to pay respondents unpaid salaries and allowances?

HELD

The premise of award of unpaid salary to respondent is that prior to the reversal of NLRC of the
decision of the Labor Arbiter, the order of reinstatement embodied therein was already the
subject of an alias writ of execution pending appeal. Although petitioner did not comply with
this writ of execution, its intransigence made it liable nonetheless to the salaries of respondent
pending appeal.
In Roquero vs Philippine Airlines, Inc. 401 SCRA 424(2003), it was ruled that technicalities have
no room in labor cases where the Rules of Court are applied ony in suppletory manner and only
to effectuate the objectves of the Labor Code and not to defeat them. Hence, even if the order
of reinsatment of the labor Arbiter is reversed on appeal, it is obligatory on the part of the
employer to reinstate and pay the wages of the dismissed employee during the period of appeal
until reversal by the higher court. On the other hand, if the employee has been reinstated
during the appeal period and such reinstatement order is reversed with finality, the employee is
not required to reimburse whatever salary he received for he is entitled to such, more so if he
actually rendered services during the period.

Petition granted.













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FACTS

Petitioner Eurotech Hair Systems, Inc. is a domestic corporation engaged in the manufacture
and export of wigs and toupees. Petitioners Lutz Kunack and Jose E. Barin are the companyƞs
president and general manager, respectively.Respondent Antonio S. Go served as Eurotechƞs
operations manager from September 2, 1996 until he was dismissed on September 27, 1999. As
operations manager, he drafted and implemented the plans for the production of wigs and
toupees. Respondentƞs responsibilities included manpower planning to meet the monthly
production targets.In 1999, the company suffered production shortfalls. Thus, on September 2,
1999, petitioner Barin issued respondent a memorandum, strongly advising him to improve his
performance. He was also admonished because of the late shipment of 80 units of hairpieces to
one of petitionersƞ clients, Bergmann Company. On September 7, 1999, Eurotech issued another
memorandum reiterating the previous reminder for respondent to improve his performance.
Again, on September 21, 1999, Eurotech issued two memoranda, reminding respondent of his
continued failure to improve his performance. He was given 24 hours to explain in writing why
the company should not terminate his services on the ground of loss of trust and confidence.
On September 24, 1999, Eurotech issued yet another memorandum reminding respondent of
his failure to submit his written explanation and granting him another 24 hours to submit such
explanation. The second 24-hour period lapsed without respondentƞs explanation. On
September 27, 1999, petitioner Kunack finally issued respondent a termination letter citing loss
of trust and confidence.

Respondent filed against a complaint petitioners. The Labor Arbiter ruled for respondent. The
NLRC reversed the Labor Arbiter and dismissed the complaint. The CA set aside the decision of
the NLRC and essentially reinstated the ruling of the Labor Arbiter.

Respondent received said Decision of the Court of Appeals on July 21, 2003. Prior to such
receipt, he had executed a quitclaim in consideration of P450,000. Hence, on July 16, 2003,
the Labor Arbiter issued an Order dismissing with prejudice the complaint for illegal dismissal in
view of the said waiver.

ISSUE/S

1. Was the respondent's dismissal in accordance with the law?

2. Is the compromise agreement entered into by the parties valid?

HELD

1. No. In the instant case, petitioners failed to prove that respondent was terminated for a
valid cause. Evidence adduced was utterly wanting as to respondentƞs alleged inefficiency
constituting a willful breach of the trust and confidence reposed in him by petitioners.

Loss of trust and confidence to be a valid ground for an employeeƞs dismissal must be based on
a willful breach and founded on clearly established facts. A breach is willful if it is done
intentionally, knowingly and purposely, without justifiable excuse, as distinguished from an act
done carelessly, thoughtlessly, heedlessly or inadvertently. While failure to observe prescribed
standards of work, or to fulfill reasonable work assignments due to inefficiency may be a just
cause for dismissal, the employer must show what standards of work or reasonable work
assignments were prescribed which the employee failed to observe. In addition, the employer
must prove that the employeeƞs failure to observe any such standards or assignments was due
to his own inefficiency.

In this case, petitioners showed that respondent failed to meet production targets despite
reminders to measure up to the goals set by the company. However, they were unable to prove
that such failure was due to respondentƞs inefficiency. Significant factors that might explain the
companyƞs poor production include existing market conditions at the time, the overall spending
behavior of consumers, and the prevailing state of the countryƞs economy as a whole. The
companyƞs production shortfalls cannot be attributed to respondent alone, absent any showing
that he willfully breached the trust and confidence reposed in him by the petitioners.

2. Yes, the compromise agreement entered into by the parties is valid.

Article 227 of the Labor Code provides:

ART. 227. Compromise agreements. ƛ Any compromise settlement, including those involving
labor standard laws, voluntarily agreed upon by the parties with the assistance of the Bureau or
the regional office of the Department of Labor, shall be final and binding upon the parties. Ʀ

Note, however, that even if contracted without the assistance of labor officials, compromise
agreements between workers and their employers remain valid and are still considered
desirable means of settling disputes.

A compromise agreement is valid as long as the consideration is reasonable and the employee
signed the waiver voluntarily, with a full understanding of what he was entering into. All that is
required for the compromise to be deemed voluntarily entered into is personal and specific
individual consent. Thus, contrary to respondentƞs contention, the employeeƞs counsel need not
be present at the time of the signing of the compromise agreement.

In this case, we find the consideration of P450,000 fair and reasonable under the
circumstances. In addition, records show that respondent gave his personal and specific
individual consent with a full understanding of the stakes involved. In our view, the compromise
agreement in this case does not suffer from the badges of invalidity.

The fact that the Order, which dismissed the case in view of the compromise agreement, was
issued during the pendency of the petition for certiorari in the Court of Appeals does not divest
the Labor Arbiter of jurisdiction. A petition for certiorari is an original action and does not
interrupt the course of the principal case unless a temporary restraining order or a writ of
preliminary injunction has been issued against the public respondent from further proceeding.
The Labor Arbiter thus acted well within his jurisdiction. Therefore, the Labor Arbiterƞs Order
dismissing the case with prejudice in view of the compromise agreement entered into by the
parties must be upheld.

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FACTS

The Philippine Journalists, Inc. (PJI) is a domestic corporation engaged in the publication and
sale of newspapers and magazines. The exclusive bargaining agent of all the rank-and-file
employees in the company is the Journal Employees Union.
Sometime in April 2005, the Union filed a notice of strike before the National Conciliation and
Mediation Board (NCMB), claiming that PJI was guilty of unfair labor practice. PJI was then
going to implement a retrenchment program due to Ơover-staffing or bloated work force and
continuing actual losses sustained by the company for the past three years resulting in negative
stockholders equity of P127.0 million.ơ The Secretary of the Department of Labor and
Employment (DOLE) certified the labor dispute to the National Labor Relations Commission
(NLRC) for compulsory arbitration pursuant to Article 263 (g) of the Labor Code.

The parties were required to submit their respective position papers. PJI filed a motion to
dismiss, contending that the Secretary of Labor had no jurisdiction to assume over the case and
thus erred in certifying it to the Commission. The NLRC denied the motion. PJI, thereafter, filed
a Motion to Defer Further Proceedings, alleging, among others, that the filing of its position
paper might jeopardize attempts to settle the matter extrajudicially, which the NLRC also
denied. The case was, thereafter, submitted for decision.

In its Resolution dated May 31, 2001, the NLRC declared that the 31 complainants were illegally
dismissed and that there was no basis for the implementation of petitionerƞs retrenchment
program. Thereafter, the parties executed a Compromise Agreement dated July 9, 2001, where
PJI undertook to reinstate the 31 complainant-employees effective July 1, 2001 without loss of
seniority rights and benefits; 17 of them who were previously retrenched were agreed to be
given full and complete payment of their respective monetary claims, while 14 others would be
paid their monetary claims minus what they received by way of separation pay. The
compromise agreement was submitted to the NLRC for approval. The compromise agreement
was approved and was deemed closed and terminated.

However, the Union filed another Notice of Strike on July 1, 2002, The Union claimed that 29
employees were illegally dismissed from employment, and that the salaries and benefits of 50
others had been illegally reduced. After the retrenchment program was implemented, 200 Union
members-employees who continued working for petitioner had been made to sign five-month
contracts. The Union also alleged that the company, through its legal officer, threatened to
dismiss some 200 union members from employment if they refused to conform to a 40% to
50% salary reduction; indeed, the 29 employees who refused to accede to these demands were
dismissed on June 28, 2002. The Union prayed that the dismissed employees be reinstated with
payment of full backwages and all other benefits or their monetary equivalent from the date of
their dismissal on July 3, 2002 up to the actual date of reinstatement; and that the CBA benefits
(as of November 2002) of the 29 employees and 50 others be restored.

In its Resolution dated July 31, 2003, the NLRC ruled that the complainants were not illegally
dismissed. The May 31, 2001 Resolution declaring the retrenchment program illegal did not
attain finality as Ơit had been academically mooted by the compromise agreement entered into
between both parties on July 9, 2001.ơ According to the Commission, it was on the basis of this
agreement that the July 25, 2002 Resolution which declared the case closed and terminated
was issued. Pursuant to Article 223 of the Labor Code, this later resolution attained finality upon
the expiration of ten days from both partiesƞ receipt thereof. Thus, the May 31, 2001 Resolution
could not be made the basis to justify the alleged continued employment regularity of the 29
complainants subsequent to their retrenchment.
The Union assailed the ruling of the NLRC before the CA via petition for certiorari under Rule
65. In its Decision dated August 17, 2004, the appellate court held that the NLRC gravely
abused its discretion in ruling for PJI. The compromise agreement referred only to the award
given by the NLRC to the complainants in the said case, that is, the obligation of the employer
to the complainants. The CA further held that the act of respondent in hiring the retrenched
employees as contractual workers was a ploy to circumvent the latterƞs security of tenure. This
is evidenced by the admission of PJI, that it hired contractual employees (majority of whom
were those retrenched) because of increased, albeit uncertain, demand for its publications. The
CA pointed out that this was done almost immediately after implementing the retrenchment
program. Another Ơtelling featureơ is the fact that the said employees were re-hired for five-
month contracts only, and were later offered regular employment with salaries lower than what
they were previously receiving. The CA also ruled that the dismissed employees were not
barred from pursuing their monetary claims despite the fact that they had accepted their
separation pay and signed their quitclaims.

ISSUE

The primary issue before the Court is whether an NLRC Resolution, which includes a
pronouncement that the members of a union had been illegally dismissed, is abandoned or
rendered Ơmoot and academicơ by a compromise agreement subsequently entered into between
the dismissed employees and the employer and if such a compromise agreement constitutes res
judicata to a new complaint later filed by other union members-employees, not parties to the
agreement, who likewise claim to have been illegally dismissed.

HELD

Article 227 of the Labor Code of the Philippines authorizes compromise agreements voluntarily
agreed upon by the parties, in conformity with the basic policy of the State Ơto promote and
emphasize the primacy of free collective bargaining and negotiations, including voluntary
arbitration, mediation and conciliation, as modes of settling labor or industrial disputes.ơ
ART. 227 Compromise Agreements. ƛ Any compromise settlement, including those involving
labor standard laws, voluntarily agreed upon by the parties with the assistance of the Bureau or
the regional office of the Department of Labor, shall be final and binding upon the parties. The
National Labor Relations Commission or any court shall not assume jurisdiction over issues
involved therein except in case of noncompliance thereof or if there is prima facie evidence that
the settlement was obtained through fraud, misrepresentation, or coercion.

Thus, a judgment rendered in accordance with a compromise agreement is not appealable, and
is immediately executory unless a motion is filed to set aside the agreement on the ground of
fraud, mistake, or duress, in which case an appeal may be taken against the order denying the
motion. Under Article 2037 of the Civil Code, Ơa compromise has upon the parties the effect and
authority of res judicata,ơ even when effected without judicial approval; and under the principle
of res judicata, an issue which had already been laid to rest by the parties themselves can no
longer be relitigated.

Adjective law governing judicial compromises annunciate that once approved by the court, a
judicial compromise is not appealable and it thereby becomes immediately executory but this
rule must be understood to refer and apply only to those who are bound by the compromise
and, on the assumption that they are the only parties to the case, the litigation comes to an
end except only as regards to its compliance and the fulfillment by the parties of their
respective obligations thereunder.

In any event, the compromise agreement cannot bind a party who did not voluntarily take part
in the settlement itself and gave specific individual consent. It must be remembered that a
compromise agreement is also a contract; it requires the consent of the parties, and it is only
then that the agreement may be considered as voluntarily entered into.

A careful perusal of the wordings of the compromise agreement will show that the parties
agreed that the only issue to be resolved was the question of the monetary claim of several
employees.
The findings of the appellate court are in accord with the evidence on record, and we note with
approval the following pronouncement:

Respondents alleged that it hired contractual employees majority of whom were those
retrenched because of the increased but uncertain demand for its publications. Respondent did
this almost immediately after its alleged retrenchment program. Another telling feature in the
scheme of respondent is the fact that these contractual employees were given contracts of five
(5) month durations and thereafter, were offered regular employment with salaries lower than
their previous salaries. The Labor Code explicitly prohibits the diminution of employeeƞs
benefits. Clearly, the situation in the case at bar is one of the things the provision on security of
tenure seeks to prevent.

Lastly, it could not be said that the employees in this case are barred from pursuing their claims
because of their acceptance of separation pay and their signing of quitclaims. It is settled that
Ơquitclaims, waivers and/or complete releases executed by employees do not stop them from
pursuing their claims ƛ if there is a showing of undue pressure or duress. The basic reason for
this is that such quitclaims, waivers and/or complete releases being figuratively exacted through
the barrel of a gun, are against public policy and therefore null and void ab initio (ACD
Investigation Security Agency, Inc. v. Pablo D. Daquera, G.R. No. 147473, March 30, 2004).ơ

In the case at bar, the employees were faced with impending termination. As such, it was but
natural for them to accept whatever monetary benefits that they could get.



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FACTS

Petitioner was employed by respondent as security guard and was assigned to one of its clients,
La Suerte Cigar and Cigarette Factory (La Suerte).

In May 1994, petitioner filed a criminal complaint for oral defamation against Lt. Maravillas,
Security Manager of La Suerte. Lt. Maravillas thus requested respondent to replace petitioner.
On June 1, 1994, respondent formally relieved petitioner from his post at La Suerte. Prior to
said date, however, petitioner was no longer allowed to report for duty at the clientƞs premises.

Petitioner filed a complaint for illegal dismissal and money claims against respondent and La
Suerte. He claimed, among others, that there was no valid or just cause for his dismissal and
that he was not accorded due process before his services were terminated.

The Labor Arbiter ruled in favor of petitioner. Respondent appealed to the NLRC. The NLRC, in
its resolution dated February 13, 1996, dismissed the appeal for late filing. Entry of judgment
was made on March 18, 1996.

On March 22, 1996, respondent filed a motion for reconsideration of the February 13, 1996
resolution. In its Decision dated July 31, 1996, the NLRC granted the motion for
reconsideration despite the entry of judgment, as it was shown that respondent received a copy
of the February 13, 1996 resolution only on March 21, 1996. The entry of judgment on March
18, 1996 was therefore premature.

ISSUE

Whether or not the Court of Appeals and the NLRC erred:

1. in not considering the Resolution dismissing the appeal of Sentinel -- with the
issuance and release of Entry of Judgment ƛ for having been filed out of time, final and nothing
more could be done as the NLRC thereafter had lost jurisdiction over the case; and
2. in holding that the petitioner merely relied upon his submission that there was
already an Entry of Judgment and did not argue anymore on the merits of the case, which
failure of petitioner was even made point against him.

HELD

We agree with the Court of Appeals that the entry of judgment made on March 18, 1996 was
premature as respondent received a copy of the NLRC resolution dismissing the appeal only on
March 21, 1996. However, despite the timeliness of the motion for reconsideration which was
filed on March 22, 1996, it still failed on the merits.

The NLRC initially dismissed respondentƞs appeal for being late. It is undisputed that
respondent received a copy of the decision of the Labor Arbiter on December 1, 1995. On the
tenth day, or on December 11, 1995, respondent filed a Notice of Appeal with Motion for
Extension of Time to File Memorandum of Appeal. Although respondent posted a surety bond
on that date, it nonetheless moved for an extension of one day to file its memorandum of
appeal.

Under the law, an appeal from the decision of the Labor Arbiter is perfected upon filing of a
memorandum of appeal and payment of the appeal fee within ten (10) calendar days from
receipt of the questioned decision, award or order of the Labor Arbiter. In case of a judgment
involving a monetary award, the appellant is also required to post a cash or surety bond in the
amount equivalent to the monetary award in the judgment appealed from. The Rules of
Procedure of the NLRC prohibits the filing of a motion for extension of time to perfect the
appeal, and the filing of a notice of appeal without the memorandum of appeal will not stall the
running of the period to appeal. A mere notice of appeal without complying with the other
requisites shall not stop the running of the period for perfecting an appeal.

Respondent did not even cite in its motion for reconsideration any justifiable excuse for the
belated filing of the memorandum of appeal. Well-settled is the principle that the perfection of
an appeal within the statutory or reglementary period is not only mandatory, but jurisdictional,
and failure to do so renders the questioned decision final and executory and deprives the
appellate court of jurisdiction to alter the final judgment, much less to entertain the appeal.

Moreover, under Article 223 of the Labor Code, an appeal from the decisions, awards or orders
of the Labor Arbiter may be entertained only on the following grounds:
a. If there is prima facie evidence of abuse of discretion on the part of the Labor Arbiter;
b. If the decision, order or award was secured through fraud or coercion, including graft and
corruption;
c. If made purely on questions of law; and
d. If serious errors in the findings of facts are raised which would cause grave or irreparable
damage or injury to the appellant.

A reading of the decision of the Labor Arbiter shows that none of these conditions exists in the
case at bar thus petition is GRANTED.
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FACTS

By virtue of Resolution No. 334 of the Central Bankƞs Monetary Board, the Philippine Veterans
Bank (Bank, hereafter) was placed under receivership.

In consequence, the Bank adopted a retrenchment and reorganization program which was
challenged before the Supreme Court by the Philippine Veterans Bank Employees Union (Union,
hereafter) on the ground that the program allegedly violated the security of tenure of the
Bankƞs employees.

While G.R. No. 67125 was pending, the Monetary Board issued Resolution No. 612, dated June
7, 1985, ordering the liquidation of the Bank. The Monetary Board then appointed a liquidator
who, pursuant to the authority vested by the same Board, terminated the employment of all the
employees of the Bank Thereafter, the liquidator commenced payment of separation pay and
other benefits to the terminated employees.
Congress enacted Republic Act (R.A.) No. 7169, authorizing the Central Bank to reopen the
Bank.

Labor Arbiter

The Labor Arbiter rendered a decision dismissing the claim of the Union for reinstatement of the
individual complainants it represents as well as the claims for payment of backwages, for lack of
merit.

NLRC

In time, the Union appealed the Labor Arbiterƞs decision to the NLRC proper.

NLRC rendered a Decision reversing and setting aside that of the Labor Arbiter. Additionally,
the NLRC directed the immediate reinstatement of all Union members subject to the operational
requirements of the Bank which it likewise ordered to cease and desist from further hiring new
employees.

The Bank, in its petition, docketed as G.R. No. 113423, sought to nullify the NLRC decision of
September 14, 1993, reinstating the members of the Union, and its Resolution of November
22, 1993, denying the Bankƞs motion for reconsideration. While in its petition, docketed as G.R.
No. 115421, the Union sought a modification of the same decision so as to include the award of
backwages.

While G.R. Nos. 113423 and 115421 were pending before the Court, the Union, through its duly
authorized officers, and the Bank entered into a Compromise Agreement for the amicable
settlement of all other cases and claims then pending with the NLRC and/or other tribunals
arising from the employment of the individual complainants with the Bank.

A substantial majority of the members of the Union ratified the compromise agreement.

The Labor Arbiter approved the compromise agreement and issued an Order finding the terms
and conditions set forth in the Compromise Agreement to be not contrary to law, morals and
public policy.

A number of the employees, in separate appeals to the NLRC, contested the foregoing Order of
the Labor Arbiter. They argued that the compromise agreement is contrary to law and
jurisprudence.

On October 2, 1996, the NLRC decided the aforementioned separate appeals from the Labor
Arbiterƞs Order of February 16, 1996 approving the compromise agreement. The NLRC ruled
that those who received and acknowledged receipt of the first payment, as agreed upon in the
questioned Compromise Agreement, and who executed the corresponding Quitclaim, Waiver
and Release were bound by the same Compromise Agreement.

CA

On December 21, 2001, the CA rendered the herein challenged consolidated decision declaring
that the NLRC gravely abused its discretion in ordering the reinstatement of the union members
and accordingly declared null and void its September 14, 1993 decision and the November 22,
1993 resolution, and instead reiterated the March 31, 1993 decision of the Labor Arbiter.
ISSUE

Was the compromise agreement entered into by the Union officers with the Bank valid?

RULING

Yes. The compromise agreement entered into by the Union with the Bank was valid.

Petitioners fault the CA in upholding the validity of the Compromise Agreement. They claim
that said agreement is not binding on employees who did not ratify it and even to those who
were allegedly tricked and/or deceived by the Union into accepting the first payment under the
same agreement.

The argument is utterly baseless. A labor unionƞs function is to represent its members. It can
file an action or enter into compromise agreements on behalf of its members. Here, majority of
the Bankƞs employees authorized the Union to enter into a compromise agreement with the
Bank on their behalves. Union members were bound by the resulting compromise agreement
when they affixed their signatures thereon, thereby giving their individual assent thereto, and
when they accepted the benefits due them under that agreement. As it is, the Compromise
Agreement in question detailed the amounts to be received by each employee. Petitioners and
other employees of the Bank knew exactly what they were ratifying when they affixed their
signatures in the said compromise agreement.

Further, respondent Union is a closed shop union. For this reason, it was the only one with
legal authority to negotiate, transact, and enter into any agreement with the Bank. The
Compromise Agreement was ratified by 282 Union members representing a majority of its entire
529 membership. The ratification of the Compromise Agreement by the majority of the Union
members necessarily binds the minority.

The general rule that the Labor Arbiter must be present during the signing of the compromise
agreement is not immune to certain exceptions. Here, the submission of the Compromise
Agreement on joint motion of the parties for approval by the Labor Arbiter cured whatever
defect the signing of the agreement in the absence of the Labor Arbiter would have caused. So
it is that in Santiago v. De Guzman, the Court ruled:

A compromise agreement entered into by the parties not in the presence of the Labor Arbiter
before whom the case is pending shall be approved by him, if after confronting the parties,
particularly the complainants, he is satisfied that they understand the terms and conditions of
Ơthe settlement and that it was entered into freely and voluntarily by them.

It is incumbent upon the Labor Arbiter not only to persuade the parties to settle amicably, but
equally to ensure the compromise agreement is a fair one and that the same was forged freely,
voluntarily with full understanding of the terms and conditions embodies therein as well as the
consequences thereof.ơ
It is likewise noteworthy that as of March 31, 2004, thirty (30) of the herein thirty-seven (37)
petitioners already received payment under the same Compromise Agreement. The acceptance
by said petitioners of the benefits bars them from repudiating the agreement. They cannot be
allowed to adopt an inconsistent position at the expense of the Bank. Petitioners cannot
belatedly reject or repudiate their acts of accepting the monetary consideration under the
compromise agreement, to the prejudice of the Bank.

Evidently, Domingo, et. al. ratified the Compromise Agreement and even voluntarily received
the first payment under that agreement, executing the corresponding Quitclaim, Waiver and
Release in the process. Having done that, they are deemed bound by the Compromise
Agreement under the previously discussed principle of res judicata and/or estoppel.

We find that the subsequent decision of petitioners Domingo, et. al. to repudiate the
Compromise Agreement was merely an afterthought, whatever would be the reason for their
subsequent change of mind. Since they had entered into a binding contract on their own
volition and received benefits therefrom, they are therefore estopped from questioning the
validity of said contract later on. Parenthetically, it is interesting to note that while the
petitioners try to impugn the Compromise Agreement that they themselves entered into, they
have not made any offer or effort to return the money they received as first payment under
said agreement.

Records reveal that when the Bank offered termination or separation pay to its remaining
employees by way of a compromise agreement, a great majority of them accepted the amount
as justifiable settlement of their claims. Like these quitclaims and releases, there are voluntary
agreements which represent reasonable settlements and are considered binding on the parties.
Petitioners, therefore, cannot renege on the compromise agreement they entered into after
accepting benefits earlier simply because they may have felt that they committed a mistake in
accepting their termination/separation pay. As no proof was presented to show that the
compromise agreement in dispute was entered into through fraud, misrepresentation or
coercion, the same must be recognized as valid and binding upon all the 529 employees of the
Bank. In fine, the petitioners and the other employees are estopped from questioning the
validity of the Compromise Agreement.

In law, a compromise agreement, once approved, has the effect of res judicata between the
parties and should not be disturbed except for vices of consent, forgery, fraud,
misrepresentation and coercion, none of which exists in this case. The Compromise Agreement
between the Union and the Bank binds the minority Union members.

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FACTS

Balagtas Multi-Purpose Cooperative, Inc. is a duly organized and existing cooperative under the
laws of the Philippines. Sometime in April 1991, Balagtas hired Josefina G. Hipolito-Herrero, as
part time manager in its office in Sulok, Panginay, Balagtas, Bulacan, where she was required to
report.

In September 1992, Balagtas created a branch office at Wawa, Balagtas, Bulacan. Josefina was
required to report at the said Wawa branch from 8:00 to 12:00 noon before reporting to her
office at Sulok from 2:00 to 6:00 p.m. For the additional work, Josefina received a proportionate
increase in salary.

In the early part of 1994, the board members contemplated closing its Wawa Branch Office
inasmuch as the desired number of the members and volume of transactions were not met
with, rendering it more costly to maintain.

On May 1, 1994, in their monthly meeting, Josefina informed them that she intends to take a
leave of absence from May 9 to May 30, 1994. Her proposal was immediately approved by the
board.

Subsequently, the board members resolved to close its Wawa branch. Meantime, after the lapse
of her leave of absence on May 30, 1994, Josefina did not report for work anymore. Later on,
she filed her resignation.

Almost nine (9) months thereafter Josefina filed a complaint with the Provincial Office of the
Department of Labor in Malolos, Bulacan for illegal dismissal, and non-payment of 13th month
pay or Christmas Bonus. She prayed that she be reinstated and paid backwages as well as
moral damages.

The Labor Arbiter rendered a decision in favor of Josefina ordering the petitioners to pay
separation pay, backwages and 13th month pay.

Aggrieved, Balagtas appealed the decision to the National Labor Relations Commission (NLRC)
but failed to post either a cash or surety bond as required by Article 223 of the Labor Code.
Instead, petitioners filed a manifestation and motion, stating, among others, that under
Republic Act No. 6938, Article 62(7) of the Cooperative Code of the Philippines, petitioners are
exempt from putting up a bond in an appeal from the decision of the inferior court. In a
Resolution, the NLRC ordered the Petitioner to post a bond within 10 days.

Petitioners then filed a petition for certiorari with the CA, alleging that the NLRC acted with
grave abuse of discretion amounting to excess or lack of jurisdiction in directing them to post
an appeal bond despite the clear mandate of Article 62, paragraph (7) of Republic Act No. 6938
(Cooperative Code) which dispensed with such requirement.

After the parties submitted their respective pleadings, the CA resolved to dismiss the petition in
the assailed decision dated September 27, 2002 holding that the exemption from putting up a
bond by a cooperative applies to cases decided by inferior courts only.

ISSUE

Whether cooperatives are exempted from filing a cash or surety bond required to perfect an
employerƞs appeal under Section 223 of Presidential Decree No. 442 ,the Labor Code.
HELD

The provision cited by petitioners cannot be taken in isolation and must be interpreted in
relation to the Cooperative Code in its entirety. It must be kept in mind that the enactment of
the Cooperative Code is pursuant to the Stateƞs declared policy of fostering the Ơcreation and
growth of cooperatives as a practical vehicle for prompting self-reliance and harnessing people
power towards the attainment of economic development and social justice.ơ In line with this,
certain benefits and privileges were expressly granted to cooperative entities under the statute.
The provision invoked by petitioners regarding the exemption from payment of an appeal bond
is only one among a number of such privileges which appear under the article entitled ƠTax and
Other Exemptionsơ of the code.

Considering that the provision relates to Ơtax and other exemptions,ơ the same must be strictly
construed. This follows the well-settled principle that exceptions are to be strictly. An express
exception, exemption, or saving clause excludes other exceptions. Express exceptions constitute
the only limitations on the operation of a statute and no other exception will be implied. The
rule proceeds from the premise that the legislative body would not have made specific
enumerations in a statute, if it had the intention not to restrict its meaning and confine its terms
to those expressly mentioned.

The term Ơcourtơ has a settled meaning in this jurisdiction which cannot be reasonably
interpreted as extending to quasi-judicial bodies like the NLRC unless otherwise clearly and
expressly indicated in the wording of the statute. Simply because these tribunals or agencies
exercise quasi-judicial functions does not convert them into courts of law.

For this reason, petitioners must comply with the requirement set forth in Article 223 of the
Labor Code in order to perfect their appeal to the NLRC. It must be pointed out that the right to
appeal is not a constitutional, natural or inherent right. It is a privilege of statutory origin and,
therefore, available only if granted or provided by statute. The law may validly provide
limitations or qualifications thereto or relief to the prevailing party in the event an appeal is
interposed by the losing party.

In this case, the obvious and logical purpose of an appeal bond is to insure, during the period
of appeal, against any occurrence that would defeat or diminish recovery by the employee
under the judgment if the latter is subsequently affirmed. This is consistent with the Stateƞs
constitutional mandate to afford full protection to labor in order to forcefully and meaningfully
underscore labor as a primary social and economic force.

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FACTS
Petitioner Estrellita Salazar became Sales Representative of respondent company, Philippine
Duplicators, Inc. on May 1, 1987. She was assigned at the Southern Section of Metro Manila
under the direct supervision of respondent Leonora Fontanilla. Petitioner received her last
compensation in the amount of PhP 14,095.73 which covered her basic salary and monthly
commission.

Petitioner alleged that on December 7, 1998, respondent Fontanilla called her to the latterƞs
office and handed her a memorandum with a ball pen requesting her to receive it. Petitioner
refused to receive it because it stated her termination from employment and asked Fontanilla
why she should be terminated as she had done nothing wrong.

On December 9, 1998, respondent Fontanilla directed Salazar, through a memorandum to

explain, within 72 hours from receipt of said document, why no disciplinary action should be
taken against her in violation of Section 8, Category V of the companyƞs Handbook on
Constructive Discipline for Ơfalsifying company recordsơ.

On December 8, 1999, Labor Arbiter Manuel R. Caday rendered his Decision finding that
petitionerƞs dismissal was for a just cause, but respondent Duplicators breached the twin-notice
requirement for dismissal under Section 2 (c), Rule XXIII, Book V of the Implementing Rules
and Regulations of the Labor Code. Thus, Duplicators was ordered to pay an indemnity of PhP
10,000.00 to petitioner Salazar.

On January 26, 2000, Salazar filed a Memorandum of Appeal from the adverse Decision. On
August 28, 2000, the NLRC decided the appeal finding that there was actually no termination of
Salazarƞs employment but considering that reinstatement was not advisable due to the strained
relationship between the parties, separation pay was ordered paid to petitioner in lieu of
reinstatement.

The CA AFFIRMED the decision of the NLRC with modification. The dismissal of the petitioner
is perforce declared lawful and valid. Nonetheless, as a measure of compassion and social
justice, she is hereby pronounced entitled to separation pay equivalent to one monthƞs salary
for every year of service rendered.

Simply stated, the CA ruled that the termination of Salazarƞs employment was legal and valid.
While the dismissed employee was not entitled to separation pay, the CA nonetheless awarded
severance pay pursuant to settled jurisprudence and in the interest of social justice. Lastly, it
ruled that there was no breach of the due process requirements prescribed for dismissal from
employment.

Under Petition for Review on Certiorari is before SC, Salazar contends that NLRC should not
have deleted the award of indemnity of PhP 10,000.00 in her favor since both Duplicators and
Fontanilla did not interpose any appeal from the Decision of Labor Arbiter Manuel Caday and
hence, no affirmative relief could be granted to said respondents.

ISSUE

Whether or not the NLRC could validly delete the award of indemnity in Salazarƞs favor since
respondents did not appeal.

HELD

As a general rule, Ơa party who has not appealed cannot obtain from the appellate court any
affirmative relief other than the ones granted in the appealed decision.ơ

The reason for this rule is that since parties did not appeal from the decision or resolution, they
are presumed to be satisfied with the adjudication. Furthermore, Rule 141 on Legal Fees
provides that if the fee is not paid, then Ơthe court may refuse to proceed with the action until
they are paid and may dismiss the appeal or the action or proceeding.ơ The case or appeal is
deemed filed only upon payment of the docket or appeal fee considering that jurisdiction is
acquired by the court over the case or the appeal only upon full payment of the prescribed fee.
Thus, the court has no jurisdiction or authority to grant affirmative relief to the party who did
not appeal as there is no obligation to pay any fee. Furthermore, in the interest of fairness, it
would not be proper and just to award affirmative relief to the appellees since they did not
comply with the requirements of appeal. In this case, Rule VI, Section 3 of the NLRC Rules of
Procedure [2000] prescribes the following:

Section 3. REQUISITES FOR PERFECTION OF APPEAL. a) The Appeal shall be filed within the
reglementary period as provided in Section 1 of this Rule; shall be under oath with proof of
payment of the required appeal fee and the posting of a cash or surety bond as provided in
Section 6 of this Rule; shall be accompanied by memorandum of appeal which shall state the
grounds relied upon and the arguments in support thereof; the relief prayed for; and a
statement of the date when the appellant received the appealed decision, order or award and
proof of service on the other party of such appeal.

Complying with these specifications is a difficult and tedious process, specifically the posting of
cash or surety bond. It would be discriminatory and inequitable if a party who has not complied
with these requirements will be granted affirmative relief.

In the instant case, did the NLRC violate the rule in labor cases that an appellee cannot be
awarded any affirmative relief?

We find no deviation from the doctrine.

The Labor Arbiter ruled that petitioner Salazarƞs dismissal was for a just cause but discovered an
infraction of the two-notice requirement on the dismissal of an employee for which he ordered
Duplicators to pay the indemnity of PhP 10,000.00 to Salazar. However, on petitionerƞs appeal,
the NLRC believed that there was after all no dismissal of petitioner Salazar but due to strained
relationship, the company was made to pay separation pay of PhP 14,095.73 instead of paying
the indemnity of PhP 10,000.00 imposed by the Labor Arbiter. It is the deletion of the PhP
10,000.00 indemnity that is being assailed by the petitioner as a grant of affirmative relief to
respondent Duplicators.

We are not persuaded.

Petitionerƞs first ground in her Memorandum of Appeal before the NLRC stated that Labor
Arbiter Cadayƞs rulingƛthat she was not illegally dismissed was Ơerroneous.ơ In resolving this
issue, the NLRC overturned Cadayƞs finding of petitionerƞs valid dismissal, and instead concluded
that there was no termination of petitionerƞs employment. As a consequence, the NLRC had to
recall the award of PhP 10,000.00 indemnity imposed by Arbiter Caday although not prayed for
by respondent Duplicators since the said award was inconsistent with the finding that
petitionerƞs employment subsisted. Without petitionerƞs dismissal, there can be no legal basis
for the indemnity; hence, Duplicators is not obliged to comply with the two (2)ƛnotice
requirement. In annulling the award, the NLRC merely exercised its authority under Article 218
(d) of the Labor Code to correct or amend any error committed by a labor arbiter in aid of its
exclusive appellate jurisdiction. Petitioner has no reason to complain that she was deprived of
monetary benefits since the NLRCƞs Decision did not actually benefit Duplicators as the PhP
14,095.76 separation pay granted to petitioner is certainly greater than the PhP 10,000.00
indemnity deleted by the NLRC.

WHEREFORE, the petition is DENIED and the March 15, 2002 Decision of the Court of Appeals
and the August 7, 2002 Resolution in CA-G.R. SP No. 62556 are AFFIRMED.

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FACTS
Atty. Benjamin Alar is the counsel for the complainants in a labor case filed with the Labor
Arbiter which dismissed the complaint. On appeal, NLRCƞs First Division upheld the dismissal. In
his Motion for Reconsideration with Motion to Inhibit (MRMI), Atty. Alar used improper and
abusive language full of diatribes castigating the Labor Arbiter and the ponente of the NLRC
decision. Johnny Ng, one of the respondents, filed a disbarment case against Alar before the
IBP Commission on Bar Discipline for such misbehavior.

Alar contended, inter alia, that the Rules of Court/Code of Professional Responsibility applies
only suppletorily at the NLRC when the NLRC Rules of Procedure has no provision on
disciplinary matters for litigants and lawyers appearing before it and that Rule X of the NLRC
Rules of Procedure provides for adequate sanctions against misbehaving lawyers and litigants
appearing in cases before it. Finally he asserted that the Rules of Court/Code of Professional
Responsibility does not apply to lawyers practicing at the NLRC, the latter not being a court and
that LAs and NLRC Commissioners are not judges nor justices and the Code of Judicial Conduct
similarly do not apply to them, not being part of the judiciary

ISSUE

Is a lawyerƞs misbehavior before the NLRC susceptible of the provisions of the Code of
Professional Conduct?

HELD

The MRMI contains insults and diatribes against the NLRC, attacking both its moral and
intellectual integrity, replete with implied accusations of partiality, impropriety and lack of
diligence. Respondent used improper and offensive language in his pleadings that does not
admit any justification.

The assertion that the NLRC not being a court, its commissioners, not being judges or justices
and therefore not part of the judiciary and that consequently, the Code of Judicial Conduct does
not apply to them, is unavailing. In Lubiano v. Gordolla, the Court held that respondent became
unmindful of the fact that in addressing the NLRC, he nonetheless remained a member of the
Bar, an oath-bound servant of the law, whose first duty is not to his client but to the
administration of justice and whose conduct ought to be and must be scrupulously observant of
law and ethics.

Respondent has clearly violated Canons 8 and 11 of the Code of Professional Responsibility. His
actions erode the publicƞs perception of the legal profession.
c


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FACTS

St. Martin Funeral Homes, Inc. (St. Martin) was originally owned by the mother of Amelita
Malabed. Bienvenido Aricayos, a former overseas contract worker, was granted financial
assistance by Amelitaƞs mother. In return, Aricayos extended assistance to Amelitaƞs mother in
managing St. Martin without compensation. There was no written employment contract
between Amelitaƞs mother and Aricayos nor is he listed as an employee in the payroll of St.
Martin.

When Amelitaƞs mother died, she took over as manager of St. Martin. After discovering some
alleged anomalies, Amelita removed the authority of Aricayos and his wife from taking part in
managing St. Martinƞs operations.

Aricayos filed a complaints for illegal dismissal with prayer for reinstatement, payment of back
wages, and damages. After requiring the parties to submit memoranda, position papers, and
other documentary evidences in support of their respective positions, the Labor Arbiter
rendered a Decision, in favor of petitioner declaring that his office had no jurisdiction over the
case citing Dela Salle University vs. NLRC, 135 SCR 674, 677 (1988) where the existence of an
employer-employee relationship is disputed and not assumed, as in these cases, the
determination of that question should be handled by the regular courts after full dress trial and
not by the Labor Arbiter.

ISSUE

Whether the Labor Arbiter made a determination of the presence of an employer-employee

relationship between St. Martin and respondent Aricayos based on the evidence on record.

HELD

It is clear that the issue submitted for resolution is a question of fact which is proscribed by the
rule disallowing factual issues in appeal by certiorari to the Supreme Court under Rule 45. This
is explicit in Rule 45, Section 1 that petitions of this nature Ơshall raise only questions of law
which must be distinctly set forth.ơ Petitioner St. Martin would like the Court to examine the
pleadings and documentary evidence extant on the records of the Labor Arbiter to determine if
said official indeed made a finding on the existence of the alleged employer-employee nexus
between the parties based on the facts contained in said pleadings and evidence. Evidently this
issue is embraced by the circumscription.

Even with the inadequate information and few documents on hand, one thing is clearƛƛthat the
Labor Arbiter did not set the labor case for hearing to be able to determine the veracity of the
conflicting positions of the parties. On this point alone, a remand is needed.

We held in a catena of cases that while a formal trial or hearing is discretionary on the part of
the Labor Arbiter, when there are factual issues that require a formal presentation of evidence
in a hearing, the Labor Arbiter cannot simply rely on the position papers, more so, on mere
unsubstantiated claims of parties.
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FACTS

Respondents were security guards of the United Field Sea Watchman and Checkers Agency
(UFSWCA) assigned to the Port of Surigao City operated by the Philippine Ports Authority (PPA).
UFSWCA is a single proprietorship owned by Jaime Amamio. Its operations in Surigao City are
managed by Glenn Guiral.

In the course of their employment, respondents applied for loans with the SSS Office at Surigao
City. To their dismay, they found that UFSWCA has not been remitting to the SSS their
contributions being deducted regularly from their salaries. Upon advice of the SSS, they filed
with the DOLE in Surigao del Norte complaints against UFSWCA.

On June 30, 1997, UFSWCA issued Agency Order No. 167-97 reassigning respondents to
various PPA offices in Iligan City, Ozamiz City, Cagayan, Nasipit, and Iloilo. Respondents refused
to heed the agency order as they were residing in Surigao City with their families and they
considered the order a form of retaliation on the part of UFSWCA. Instead, they continued
reporting for work at the PPA office in Surigao City. Hence, UFSWCA refused to pay their
salaries for the month of June 1997 as they were considered absent without leave.

Consequently, respondents filed with the Labor Arbitration Branch in Butuan City a complaint
for illegal dismissal, unfair labor practice and nonpayment of wages, backwages, differential
pay, and rest day premium pay against petitioners.

Labor Arbiter Rogelio Legaspi found repondentsƞ dismissal illegal and ordered UFSWCA and/or
Jaime Amamio and PPA, Surgao City to jointly and severally pay respondents salary
differentials, 13th month pay, service incentive leave pay, unpaid salaries, premium pay for
holidays and rest days, backwages as well as damages for illegal dismissal and unfair labor
practice.

On appeal by petitioners, NLRC deleted the awards for backawages, damages, and attorneyƞs
fees as well as the awards granted to Constancio Danuco.

On petition for certiorari by respondents, the CA set aside the Resolution of the NLRC holding
that it committed grave abuse of discretion amounting to lack or excess of jurisdiction when it
gave due course to petitionersƞ appeal which was filed beyond the reglementary period. The
CAƞs decision was premised on the finding of patent irregularity in the registry return slips
addressed to private respondent Jaime Amamio and his counsel Atty. Estanislao Ebarle which
are not the original return slips of the Decision of the Labor Arbiter. The non-submission of the
original return slips is an indication that if the originals were submitted they would reveal that
private respondent Jaime Amamio and Atty. Estanislao Ebarle received the Decision of the Labor
Arbiter on a much earlier date.

Hence, the instant petition.

ISSUE

Whether or not the Court of Appeals erred in holding that petitionersƞ appeal to the NLRC was
filed beyond the reglementary period.

HELD

Petition is denied. The decision and resolution of the CA are affirmed.

Rule 131, Section 3 (e) of the Revised Rules of Evidence provides that Ɲevidence willfully
suppressed would be adverse if produced.ƞ There being no contradictory evidence to debunk
such supposition, the presumption stands.

Article 223 of the Labor Code provides in part:

ART. 223. Appeals. ƛ Decisions, awards, or orders of the Labor Arbiter are final and executory
unless appealed to the Commission by any or both parties within ten (10) calendar days from
receipt of such decisions, awards, or orders, x x x.

The appeal not having been filed within the ten (10) day period to appeal, the appeal filed by
private respondents before the NLRC should not have been given due course. The failure of
private respondents to perfect the appeal in accordance with the prescribed procedure renders
the same ineffective to stop the running of the ten (10) day reglementary period to appeal

The right to appeal is not part of due process but a mere statutory privilege that has to be
exercised only in the manner and in accordance with the provisions of law. Since the perfection
of an appeal within the statutory reglementary period is not only mandatory but also
jurisdictional, petitionersƞ failure to perfect their appeal to the NLRC seasonably rendered the
Labor Arbiterƞs Decision final and executory. Accordingly, the NLRC has no jurisdiction to give
due course to petitionersƞ appeal, much less render a Resolution modifying the Labor Arbiterƞs
Decision. Indeed, such Resolution is a patent nullity for want of jurisdiction.

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FACTS
Ireneo Panganiban (respondent) was employed as Assistant General Manager of the
Intercontinental Broadcasting Corporation (petitioner) from May 1986 until his preventive
suspension on August 26, 1988. Respondent resigned from his employment on September 2,
1988. On April 12, 1989, respondent filed with the Regional Trial Court of Quezon City, Branch
93, Civil Case No. Q-89-2244 against the members of the Board of Administrators (BOA) of
petitioner alleging, among others, non-payment of his unpaid commissions.

A motion to dismiss was filed by Joselito Santiago, one of the defendants, on the ground of lack
of jurisdiction, as respondent's claim was a labor money claim, but this was denied by the RTC
per Orders dated October 19, 1990 and November 23, 1990.

Thus, Santiago filed a petition for certiorari with the CA, docketed as CA-G.R. SP No. 23821,
and in a Decision dated October 29, 1991, the CA granted Santiago's petition for lack of
jurisdiction and set aside the RTC's Orders dated October 19, 1990 and November 23, 1990.

Thereafter, respondent was elected by the BOA as Vice-President for Marketing in July 1992. He
resigned in April 1993.

On July 24, 1996, respondent filed against petitioner a complaint for illegal dismissal, separation
pay, retirement benefits, unpaid commissions, and damages.

In a Decision dated September 23, 1997, the Labor Arbiter (LA) ordered respondent's
reinstatement with full backwages, and the payment of his unpaid commission in the amount of
P2,521,769.77, damages and attorney's fees. Petitioner appealed to the National Labor
Relations Commission (NLRC) but, the appeal was dismissed. Petitioner filed a motion for
reconsideration of the NLRC's dismissal, which was denied.

Petitioner then filed a petition with the CA .On July 30, 1999, the CA rendered its Decision,
granting the petition.Respondent filed a motion for reconsideration of the CA Decision, and on
August 21, 2001, the CA rendered the assailed Resolution. Hence, this petition.

ISSUE

Whether or not respondent's claim for unpaid commissions in the amount of P2,521,769.77 has
already prescribed.

HELD

The applicable law in this case is Article 291 of the Labor Code which provides that Ơall 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 be forever barred.ơ The term Ơmoney claimsơ covers all money claims arising from an
employer-employee relation.

Corollarily, Article 217 of the Labor Code provides for the jurisdiction of labor courts, which
includes money claims arising from employer-employee relations

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.

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. On this point, the Court ruled that although the commencement of a civil action stops
the running of the statute of prescription or limitations, its dismissal or voluntary abandonment
by plaintiff leaves the parties in exactly the same position as though no action had been
commenced at all.

Hence, while the filing of Civil Case No. Q-89-2244 could have interrupted the running of the
three-year prescriptive period, its consequent dismissal by the CA in CA-G.R. SP No. 23821 due
to lack of jurisdiction effectively canceled the tolling of the prescriptive period within which to
file his money claim, leaving respondent in exactly the same position as though no civil case
had been filed at all.[17] The running of the three-year prescriptive period not having been
interrupted by the filing of Civil Case No. Q-89-2244, respondent's cause of action had already
prescribed on September 2, 1991, three years after his cessation of employment on September
2, 1988. Consequently, when respondent filed his complaint for illegal dismissal, separation pay,
retirement benefits, and damages in July 24, 1996, his claim, clearly, had already been barred
by prescription.

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FACTS

Sometime during the first quarter of 1994, they separately filed complaints for illegal dismissal
and underpayment of salaries and related benefits against the above mentioned corporation
and its principals.

On 5 December 1996, the Labor Arbiter issued an Order declaring the instant case submitted
for resolution. The Order in part reads: [I]nstant case is deemed submitted for decision based
on the pleadings and records on hand. Be this as it may, parties are however given fifteen (15)
days upon receipt of this Order to file/submit their last responsive pleadings on this case.

On 29 August 1997, Solgus submitted a Memorandum alleging that: complainants Telin,

Lacerna, Emano, Ballon, Menor, Jr., and Alagos had executed Affidavits of Desistance
evidencing that their complaints had been amicably settled; and the complaints of Deseo and
Soriano should be dismissed because they failed to complete their six-month probationary
period and were, therefore, not regular employees. In a Decision dated 15 October 1997, the
Labor Arbiter dismissed the complaints and affirmed the validity of the Affidavits of Desistance.
On 27 November 1998, the NLRC reversed.
ISSUE

Whether or not the Affidavits of Desistance should be considered

HELD

The NLRC Rules of Procedure particularly Section 3, Rule V, provides:

Section 3. Submission of Position Papers/Memorandum. ƛ Should the parties fail to agree upon
an amicable settlement, either in whole or in part, during the conferences, the Labor Arbiter
shall issue an order stating therein the matters taken up and agreed upon during the
conferences and directing the parties to simultaneously file their respective verified position
papers.

These verified position papers shall cover only 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 latterƞs direct testimony. The parties shall thereafter not be allowed to allege
facts, or present evidence to prove facts, not referred to and any cause or causes of action not
included in the complaint or position papers, affidavits and other documents. x x x. (Emphasis
supplied.)

The records clearly indicate that Solgus received the 5 December 1996 Order of the Labor
Arbiter on 2 January 1997. However, it inexplicably managed to submit its Memorandum only
on 27 August 1997 when it presented for the first time the alleged Affidavits of Desistance
executed by complainants Telin and Alagos.

Therefore, the Affidavits of Desistance of complainants as presented by Solgus should not be

considered on the ground that it made no reference at all in its position paper, reply, and
rejoinder to the existence of the said affidavits in patent violation of the aforementioned rule of
the NLRC. The belated presentation of the purported Affidavits of Desistance deprived
complainants Telin and Alagos of the opportunity to debunk the authenticity of said Affidavits of
Desistance before the Labor Arbiter in gross violation of the rules of fair play. Pertaining as it
does to a waiver of rights, Solgus should have exercised more prudence in the custody of these
documents.

The genuineness of the allegedly executed affidavits of desistance by Telin and Alagos is
doubtful since the two deny having executed the same. Such being the case, the rule that
when the voluntariness of the execution of the affidavit of desistance or release is put into issue
then the claim of the employee may still be given due course, finds application in this case.

The Affidavits of Desistance do not even bear the prima facie evidence of their due execution
accorded to private documents, because even the notaries public before whom they were
acknowledged issued a certification that no such affidavit was acknowledged by Telin and
Alagos before them.

Quitclaims, releases and other waivers of benefits granted by law or contracts in favor of
workers should be strictly scrutinized, in regard not only to the words and terms used but also
to the factual circumstances under which they have been executed, to protect the weak and the
disadvantaged. Under prevailing jurisprudence, a deed of release or quitclaim cannot bar an
employee from demanding benefits to which he is legally entitled. It is the employerƞs duty to
prove that such quitclaims were voluntary. The mere fact that the respondents were not
physically coerced or intimidated does not necessarily imply that they freely or voluntarily
consented to the terms thereof. Settled is the rule that quitclaims are ineffective in barring full
recovery of the benefits due the employee.

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FACTS

Respondent is a Canadian citizen and was a resident of New Westminster, British Columbia,
Canada. He had been a consultant in the field of environmental engineering and water supply
and sanitation. Pacicon Philippines, Inc. (PPI) is a corporation duly established and
incorporated in accordance with the laws of the Philippines. The primary purpose of PPI was to
engage in the business of providing specialty and technical services both in and out of the
Philippines. It is a subsidiary of Pacific Consultants International of Japan (PCIJ). The president
of PPI, Jens Peter Henrichsen, who was also the director of PCIJ, was based in Tokyo, Japan.

On January 7, 1998, Henrichsen transmitted a letter of employment to respondent in Canada,

requesting him to accept the same and affix his conformity thereto. Respondent made some
revisions in the letter of employment and signed the contract. He then sent a copy to
Henrichsen. The letter of employment contains among others a stipulation which states:
Ơ Any question of interpretation, understanding or fulfillment of the conditions of
employment, as well as any question arising between the Employee and the Company which is
in consequence of or connected with his employment with the Company and which can not be
settled amicably, is to be finally settled, binding to both parties through written submissions, by
the Court of Arbitration in London.

Respondent arrived in the Philippines and assumed his position as PPI Sector Manager. He was
accorded the status of a resident alien.

As required by Rule XIV (Employment of Aliens) of the Omnibus Rules Implementing the
Labor Code, PPI applied for an Alien Employment Permit (Permit) for respondent before the
Department of Labor and Employment (DOLE).

On May 5, 1999, respondent received a letter from Henrichsen informing him that his
employment had been terminated effective August 4, 1999 for the reason that PCIJ and PPI
had not been successful in the water and sanitation sector in the Philippines. However, on July
24, 1999, Henrichsen, by electronic mail, requested respondent to stay put in his job after
August 5, 1999, until such time that he would be able to report on certain projects and discuss
all the opportunities he had developed. Respondent continued his work with PPI until the end
of business hours on October 1, 1999.
Respondent filed with PPI several money claims, including unpaid salary, leave pay, air fare
from Manila to Canada, and cost of shipment of goods to Canada. PPI partially settled some of
his claims (US$5,635.99), but refused to pay the rest.

On December 5, 2000, respondent filed a Complaint for Illegal Dismissal against petitioners PPI
and Henrichsen with the Labor Arbiter. In his Complaint, respondent alleged that he was
illegally dismissed; PPI had not notified the DOLE of its decision to close one of its departments,
which resulted in his dismissal; and they failed to notify him that his employment was
terminated after August 4, 1999. Respondent also claimed for separation pay and other unpaid
benefits. He alleged that the company acted in bad faith and disregarded his rights.

Petitioners filed a Motion to Dismiss the complaint on the following grounds: (1) the Labor
Arbiter had no jurisdiction over the subject matter; and (2) venue was improperly laid. It
averred that respondent was a Canadian citizen, a transient expatriate who had left the
Philippines. He was employed and dismissed by PCIJ, a foreign corporation with principal office
in Tokyo, Japan. Since respondentƞs cause of action was based on his letter of employment
executed in Tokyo, Japan dated January 7, 1998, under the principle of lex loci contractus, the
complaint should have been filed in Tokyo, Japan. Petitioners claimed that respondent did not
offer any justification for filing his complaint against PPI before the NLRC in the Philippines.
Moreover, under Section 12 of the General Conditions of Employment appended to the letter of
employment dated January 7, 1998, complainant and PCIJ had agreed that any employment-
related dispute should be brought before the London Court of Arbitration. Since even the
Supreme Court had already ruled that such an agreement on venue is valid, Philippine courts
have no jurisdiction.

The Labor Arbiter rendered a decision granting petitionersƞ Motion to Dismiss. The Labor
Arbiter found, among others, that the January 7, 1998 contract of employment between
respondent and PCIJ was controlling; the Philippines was only the Ơduty stationơ where
Schonfeld was required to work under the General Conditions of Employment. PCIJ remained
respondentƞs employer despite his having been sent to the Philippines. Since the parties had
agreed that any differences regarding employer-employee relationship should be submitted to
the jurisdiction of the court of arbitration in London, this agreement is controlling.

On appeal, the NLRC agreed with the disquisitions of the Labor Arbiter and affirmed the latterƞs
decision in toto.
Respondent then filed a petition for certiorari under Rule 65 with the CA. The CA found the
petition meritorious. Applying the four-fold test of determining an employer-employee
relationship, the CA declared that respondent was an employee of PPI. On the issue of venue,
the appellate court declared that, even under the January 7, 1998 contract of employment, the
parties were not precluded from bringing a case related thereto in other venues. While there
was, indeed, an agreement that issues between the parties were to be resolved in the London
Court of Arbitration, the venue is not exclusive, since there is no stipulation that the complaint
cannot be filed in any other forum other than in the Philippines. It ordered the remand of the
case to the Labor Arbiter for disposition of the merits of the case.
ISSUE
 Whether or not the Philippine Labor Arbiter can take cognizance over the case
notwithstanding what was stated in the Employment Contract?

RULING

The settled rule on stipulations regarding venue, as held by this Court in the vintage case of
Philippine Banking Corporation v. Tensuan, is that while they are considered valid and
enforceable, venue stipulations in a contract do not, as a rule, supersede the general rule set
forth in Rule 4 of the Revised Rules of Court in the absence of qualifying or restrictive words.
They should be considered merely as an agreement or additional forum, not as limiting venue
to the specified place. They are not exclusive but, rather permissive. If the intention of the
parties were to restrict venue, there must be accompanying language clearly and categorically
expressing their purpose and design that actions between them be litigated only at the place
named by them.

In the instant case, no restrictive words like Ơonly,ơ Ơsolely,ơ Ơexclusively in this court,ơ Ơin no
other court save Ɯ,ơ Ơparticularly,ơ Ơnowhere else but/except Ɯ,ơ or words of equal import
were stated in the contract. It cannot be said that the court of arbitration in London is an
exclusive venue to bring forth any complaint arising out of the employment contract.

Petitioners contend that respondent should have filed his Complaint in his place of permanent
residence, or where the PCIJ holds its principal office, at the place where the contract of
employment was signed, in London as stated in their contract. By enumerating possible venues
where respondent could have filed his complaint, however, petitioners themselves admitted that
the provision on venue in the employment contract is indeed merely permissive.

Petitionersƞ insistence on the application of the principle of forum non conveniens must
be rejected. The bare fact that respondent is a Canadian citizen and was a repatriate does not
warrant the application of the principle for the following reasons:

First. The Labor Code of the Philippines does not include forum non conveniens as a
ground for the dismissal of the complaint.

Second. The propriety of dismissing a case based on this principle requires a factual
determination; hence, it is properly considered as defense.

Third. In Bank of America, NT&SA, Bank of America International, Ltd. v. Court of

Appeals, this Court held that:

x x x [a] Philippine Court may assume jurisdiction over the case if it chooses to do so;
provided, that the following requisites are met: (1) that the Philippine Court is one to which the
parties may conveniently resort to; (2) that the Philippine Court is in a position to make an
intelligent decision as to the law and the facts; and, (3) that the Philippine Court has or is likely
to have power to enforce its decision. x x x

Admittedly, all the foregoing requisites are present in this case.

WHEREFORE, the petition is DENIED.

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FACTS

On September 4, 2001, respondents received a memorandum placing each one of them on

preventive suspension for 30 days without pay and ordering them to explain within 48 hours
reported violations of the companyƞs Code of Conduct.

In compliance with the memorandum, respondents filed their written explanations, denying or
refuting the charges against them.

On October 4, 2001, respondents, with the exception of Quiambao and Palermo, were served
with notices of dismissal after petitioners adjudged them guilty of the charges.
The dismissal of respondents was based on the statements of two witnesses, Henry dela Vega
Balen (Balen) and Roderick Malana (Malana), their co-employees, that they had connived with
one another in pocketing tips which were intended for the group, serving food or drinks without
receipts or with tampered ones, and committing like forms of stealing, resulting in losses or
damages to the company.

An audit report dated September 19, 2001 on the companyƞs accountable forms and on
incidents of missing bar order slips (OS), swapping of dining and bar OS, unrecorded bar OS
issuance, and excessive cancellation of OS and official receipts, was also considered as evidence
against respondents.

As for Quiambao and Palermo, while they were directed to immediately report to the Human
Resources Department (HRD), they were allegedly not given any assignments.

Respondents thus filed three separate cases against herein petitioners, the company and
Adriano Jr. Corporation, together with the Cabalen restaurant at the Glorietta, for illegal
dismissal and illegal suspension, with claims for 13th month pay, sick and vacation leaves,
monthly allowances, weekly tip, monthly signed chit, unpaid salaries, moral and exemplary
damages, attorneyƞs fees, and regularization for respondents Palermo, Pangilinan, Lacson,
Deang and De Guzman. The complaints were later amended to implead herein individual
petitioners as respondents.

Labor arbiter ordered their reinstatement.

NLRC affirmed the decision.

Court of Appeals set aside and reversed the decision.

Hence this petition.

ISSUE

Whether or not there was a valid dismissal

HELD

SC affirmed the decision of the Court of appeals.

It is a well-established rule that the employer has the burden of proving a valid dismissal of an
employee,for which two requisites must concur: (a) the dismissal must be for any of the causes
expressed in the Labor Code; and (b) the employee must be accorded due process, basic of
which is the opportunity to be heard and to defend himself.

To establish a just or authorized cause for dismissal, substantial evidence or Ơsuch amount of
relevant evidence which a reasonable mind might accept as adequate to justify a conclusionơ is
required. Further required is that an employee sought to be dismissed must be served two
written notices before the termination of his employment. The first notice must apprise him of
the particular acts or omissions upon which his dismissal is grounded; the second, to inform him
of the employerƞs decision to terminate his employment. While the failure of the employer to
comply with these notice requirements does not make the dismissal illegal as long as a just or
authorized cause has been proved, it renders the employer liable for payment of damages
because of the violation of the workerƞs right to statutory due process.

Section 3 of Rule V of the New Rules of Procedure of the NLRC, which governs the proceedings
before the Labor Arbiter, provides:

Section 3. Submission of Position Papers/Memorandum. ƛ Should the parties fail to agree upon
an amicable settlement, either in whole or in part, during the conferences, the Labor Arbiter
shall issue an order stating therein the matters taken up and agreed upon during the
conferences and directing the parties to simultaneously file their respective verified position
papers.
These verified position papers shall cover only 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 latterƞs direct testimony. The parties shall thereafter not be allowed to allege
facts, or present evidence to prove facts, not referred to and any cause or causes of action not
included in the complaint or position papers, affidavits and other documents . . . (Emphasis and
underscoring supplied)

Section 9 of the same Rule states that Ơproceedings before a Labor Arbiter shall be non-litigious
in natureơ and that Ơsubject 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.ơ It is
sufficient that the documents submitted by the parties have a bearing on the issue at hand and
support the positions taken by them.

In light of the afore-quoted provisions, there was no necessity for the statements of Balen and
Malana to be sworn to before a notary public or that the said witnesses be presented in person
before the Labor Arbiter. For the statements to be of probative value, however, they must
measure up to basic evidentiary requirements.

In IBM Philippines, Inc. v. NLRC, this Court clarified that the liberality in administrative
procedure Ơdoes not go so far as to justify orders without a basis in evidence having rational
probative value.ơ And in Uichico v. National Labor Relations Commission, it held:

x x x It is true that administrative and quasi-judicial bodies like the NLRC are not bound by
technical rules of procedure in the adjudication of cases. However, this procedural rule should
not be construed as a license to disregard certain fundamental evidentiary rules. While the
rules of evidence prevailing in courts of law or equity are not controlling in the proceedings
before the NLRC, the evidence presented before it must at least have a modicum of
admissibility for it to be given some probative value. x x x. (Emphasis and underscoring
supplied)

In the instant case, only photocopies of the statements of Balen and Malana form part of the
records despite petitionersƞ reliance thereon to prove respondentsƞ purported transgressions.
Jarcia Machine Shop and Auto Supply, Inc. v. NLRC held that the unsigned photocopies of daily
time records (DTRs), which were presented by the therein employer to show that its employee
was neglectful of his duties, were of Ơdoubtful or dubious probative value.ơ

Indeed, the DTRs annexed to the present petition would tend to establish private respondentƞs
neglectful attitude towards his work duties as shown by repeated and habitual absences and
tardiness and propensity for working undertime for the year 1992. But the problem with these
DTRs is that they are neither originals nor certified true copies. They are plain photocopies of
the originals, if the latter do exist. More importantly, they are not even signed by private
respondent nor by any of the employerƞs representatives x x x.

Likewise, although Balen and Malanaƞs statements bore their signatures, they are wanting in
material particulars, the most glaring of which are the dates of execution. Understandably,
respondents objected to their admission, they claiming that the statements were presented only
after their cases for illegal dismissal were filed before the Labor Arbiter.

In Balenƞs statement, his name was hand printed on the first page thereof on the space
provided therefor, but the spaces intended for the date and the witnesses were left blank.

The purported transcript of Malanaƞs 15-page question-and-answer testimony, on the other

hand, while bearing his hand printed name and signature at the top rightmost margin of the
first page and on every page thereafter, merely indicated the person making the inquiry with
the initials ƠTLG.ơ While the initials may have referred to Theresa L. Gaddi, manager of the
HRD, this point was never clarified by petitioners, hence, it remains in the realm of speculation
and surmises. Neither were the omissions as to date and other particulars rectified. The
appellate courtƞs discrediting of the statements as bereft of rational probative value upon which
a decision or order may properly be based is thus well-taken.

Respecting the audit report, petitioners posit that the therein mentioned documented incidents-
bases of faulting respondents were so numerous to have been incurred in the normal course of
business. It added that the statements of Balen and Malana regarding the alleged wrongdoings
of respondents who had possession of the accountable forms were corroborated by the audit
report.

It bears noting that while the audit report covered a 20-month period (January 2000 to August
31, 2001), respondents had served only partly in the restaurantƞs Glorietta branch due to the
companyƞs practice of rotating employees every so often. For that matter, respondents
Quiambao and Obien were assigned to the same branch in March and August of 2000,
respectively; Deang and Lacson, in October 2000; De Leon in April 2001; and De Guzman in
June 2001 only. Respondentsƞ alleged involvement in the reported irregularities moreover
appeared to be incongruent with the companyƞs awarding them of certificates of
commendation, recognition or appreciation for their invaluable service during the same period.

Petitionersƞ contention that the number of cancelled OS and receipts and the incidents of
swapping dining OS with bar OS were beyond the normal course of business deserves scant
attention, petitioners not having established the average figures in the ordinary course of its
business.

All told, neither the statements of Balen and Malana nor the audit report could support a valid
ground for dismissal.

It also does not help petitionersƞ cause that they failed to follow rudiments of due process and
even the rules laid down in their own Code of Conduct. Section 2 of Rule XIV of the Omnibus
Rules Implementing the Labor Code specifically provides, as follows:

Section 2. Standards of due process; requirements of notice. ƛ In all cases of termination of

employment, the following standards of due process shall be substantially observed:

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

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

(b) A hearing or conference during which the employee concerned, with the assistance of
counsel, if the employee so desires, is given opportunity to respond to the charge, present his
evidence, or rebut the evidence presented against him; and

(c) A written notice of termination served on the employee indicating that upon due
consideration of all the circumstances, grounds have been established to justify his termination.

The foregoing provision has been interpreted to mean that the written notice to the employees
who stand to lose their employment must specify the particular acts or omissions constituting
the grounds for their dismissal. The rule ensures that the employees are able to answer the
charges and to defend themselves from imputed wrongdoings before their dismissals are
ordered.

A review of the charges in the Notice to Explain and Suspension of September 4, 2001 shows
that most, if not all, were couched in general terms. Thus, respondents Quiambao and Obien
were charged with Ơnegligence in the performance of duties resulting to losses or damages
amounting to more than P5,000.00ơ and Ơinvolvement in stealing in any form.ơ On the other
hand, Palermo, Lacson and De Leon were charged with Ơissuing /serving food or drinks without
corresponding receipts or [with] tampered receiptsơ and Ơstealing in any form,ơ while
Pangilinan and De Guzman were charged with Ơpocketing tips intended for the groupơ and
Ơstealing in any form.ơ The charges against Deang, meanwhile, consisted of Ơwithholding
information on administrative or legal casesơ and Ơstealing in any form.ơ

Precisely because of petitionersƞ failure to sufficiently state the acts or omissions constituting
the alleged transgressions that respondent Obien asked to be clarified of the charges against
her. Because of the vagueness of the charges, it followed that respondents could only issue a
general denial.

The Corrective Action Report (CARE) furnished each of the respondents in accordance with the
companyƞs Code of Conduct was not any better. It did not contain the date/s when the alleged
infractions were committed, the person/s who reported the same for investigation, or the
signatures of the employeesƞ immediate supervisors.

Petitioners did not even heed their own procedures on disciplinary actions. The only facts
extant in the records are that respondents were issued above-said CARE Forms asking them to
explain their alleged infractions within 48 hours; and they subsequently received notices of
dismissal after they submitted their written explanations. There is, however, nothing to show
that before their dismissal, respondents were informed of their immediate supervisorsƞ decision
to terminate their services, or that they were thereafter invited to an administrative
investigation before the HRD manager or officer who is tasked to conduct the investigation in
the presence of the employeesƞ immediate supervisor/s and the witnesses, if necessary, as
provided under Section IV of the companyƞs Code of Conduct.

No record of any administrative investigation proceeding, which under the companyƞs rules, was
to be Ơminuted,ơ had also been presented. Hence, only petitionersƞ allegation that the
statements of the witnesses were taken as part of the administrative investigation is before this
Court. Allegations without proof do not deserve consideration.

Finally, on the dismissal of Quiambao allegedly on the ground of business losses, it was
incumbent upon petitioners to prove it by substantial evidence. It did not, however. In fact,
Quiambao presented documents to disprove the validity of his retrenchment on that ground.
For petitionersƞ failure to discharge its burden then, this Court is constrained to hold that
respondent Quiambaoƞs dismissal was not valid.

Petition is DENIED. The challenged Decision of the Court of Appeals is AFFIRMED

c


73(*8
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FACTS

On 6 March 1986, a Collective Bargaining Agreement was entered into between Cainta Catholic
School (School) and the Cainta Catholic School Employees Union (Union) effective 1 January
1986 to 31 May 1989.

Msgr. Mariano Balbago (Balbago) was appointed School Director in April 1987. From this time,
the Union became inactive.
It was only in 10 September 1993 that the Union held an election of officers, with

Mrs. Rosalina Llagas (Llagas) being elected as President;

Paz Javier (Javier), Vice-President;
Fe Villegas (Villegas), Treasurer; and
Maria Luisa Santos (Santos), Secretary.

Llagas was then the Dean of the Student Affairs while Villegas and Santos were Year-Level
Chairmen. The other elected officers were Rizalina Fernandez, Ester Amigo, secretaries; Nena
Marvilla, treasurer; Gilda Galange and Jimmy del Rosario, auditors; Filomeno Dacanay and
Adelina Andres, P.R.O.s; and Danilo Amigo and Arturo Guevarra, business managers.

On 15 October 1993, the School retired Llagas and Javier, who had rendered more than twenty
(20) years of continuous service, pursuant to Section 2, Article X of the CBA, to wit:
An employee may be retired, either upon application by the employee himself or by the decision
of the Director of the School, upon reaching the age of sixty (60) or after having rendered
at least twenty (20) years of service to the School the last three (3) years of which must be
continuous.

Because of this union struck and picketed the Schoolƞs entrances.

On 11 November 1993, then Secretary of Labor Ma. Nieves R. Confesor issued an Order
certifying the labor dispute to the National Labor Relations Commission (NLRC).

On 20 December 1993, the School filed a petition directly with the NLRC to declare the strike
illegal. While On 27 July 1994, the Union filed a complaint for unfair labor practice before the
NLRC
On 31 January 1997, the NLRC rendered a Resolution favoring the School.

The NLRC ruled that the retirement of Llagas and Javier is legal as the School was merely
exercising an option given to it under the CBA. The NLRC dismissed the unfair labor practice
charge against the School for insufficiency of evidence. Furthermore, it was found that the
strike declared by the Union from 8 to 12 November 1993 is illegal, thereby declaring all union
officers to have lost their employment status.

However Court of Appeals ruled in favor of the respondents And concluded that the retirement
of the two (2) union officers was clearly to bust the reactivated union.

ISSUE

Whether or not Llagas a supervisory level is entitled to join a union?

HELD

Llagas cannot join the union.

The School insisted that Llagas and Javier were actually managerial employees, and it was
illegal for the Union to have called a strike on behalf of two employees who were not legally
qualified to be members of the Union in the first place. The Union, on the other hand,
maintains that they are rank-and-file employees.

Article 212(m) of the Labor Code defines a managerial employee as "one who is vested with
powers or prerogatives to lay down and execute management policies and/or to hire, transfer,
suspend, lay-off, recall, discharge, assign or discipline employees, or to effectively recommend
such managerial actions." The functions of the Dean of Student Affairs, as occupied by Llagas,
are enumerated in the Faculty Manual. The salient portions are hereby enumerated:

a. Manages the High School Department with the Registrar and Guidance Counselors
(acting as a COLLEGIAL BODY) in the absence of the Director or Principal.
b. Enforces the school rules and regulations governing students to maintain discipline.
g. Plans with the Guidance Counselors student leadership training programs to encourage
dynamic and responsible leadership among the students and submits the same for the approval
of the Principal/Director.
i. Studies proposals on extra-curricular or co-curricular activities and projects proposed by
teachers and students and recommends to the Principal/Director the necessary approval.
j. Implements and supervises activities and projects approved by the Principal/Director so that
the activities and projects follow faithfully the conditions set forth by the Principal/Director in
the approval.
k. Assists in the planning, supervising and evaluating of programs of co-curricular activities in
line with the philosophy and objectives of the School for the total development of the students.
l. Recommends to the Principal policies and rules to serve as guides to effective implementation
of the student activity program.
It is fairly obvious from a perusal of the list that the Dean of Student Affairs exercises
managerial functions, thereby classifying Llagas as a managerial employee.
Javier was occupying the position of Subject Area Coordinator. Her duties and
responsibilities include:

1. Recommends to the principalƞs consideration the appointment of faculty members in the

department, their promotion, discipline and even termination;
2. Recommends advisory responsibilities of faculty members;
3. Recommends to the principal curricular changes, purchase the books and periodicals,
supplies and equipment for the growth of the school;
4. Recommends his/her colleagues and serves as channel between teachers in the department
the principal and/or director.

Supervisory employees, as defined in Article 212(m) are those who, in the interest of the
employer, effectively recommend such managerial actions if the exercise of such authority is
not merely routinary or clerical in nature but requires the use of independent judgment.
In the same vein, a reading of the above functions leads us to conclude that Javier was a
supervisory employee. Verily, Javier made recommendations as to what actions to take in
hiring, termination, disciplinary actions, and management policies, among others.
We can concede, as the Court of Appeals noted, that such job descriptions or appellations are
meaningless should it be established that the actual duties performed by the employees
concerned are neither managerial nor supervisory in nature. Yet on this point, we defer to the
factual finding of the NLRC, the proximate trier of facts, that Llagas and Javier were indeed
managerial and supervisory employees, respectively.

Having established that Llagas is a managerial employee, she is proscribed from joining a labor
union, more so being elected as union officer. In the case of Javier, a supervisory employee,
she may join a labor union composed only of supervisory employees. Finding both union
officers to be employees not belonging to the rank-and-file, their membership in the Union has
become questionable, rendering the Union inutile to represent their cause.