CHAPTER 13 - RELIEFS AND REMEDIES IN ILLEGAL DISMISSAL CASES

1.

Lopez v NLRC 297 SCRA 508

MELODY PAULINO LOPEZ vs. NLRC, LETRAN COLLEGE-MANILA, FR.

ROGELIO ALARCON, O.P., FR. EDWIN LAO, O.P. and MS. PERLY NAVARRO
MARTINEZ, J. October 8, 1998

Melody Paulino Lopez was employed with Letran College Manila from
June 1979 to July 1, 1991
Career Orientation Day, then Guidance Counselor Lopez successfully
implemented an agenda where 1,070 of their elementary students had an
opportunity to witness and mingle with military men in uniform, capped
with the landing of helicopters on the quadrangle of the school compound
Lopez wrote a letter to respondent Rev. Fr. Alarcon, O.P. about a conspiracy of harassment, intimidation and persecution that had set in to
make her resign since the time she approached Gen. De Villa for help in
the Career Orientation
Unsavory reports unknown to Lopez surfaced in her 201 file, such as a
letter-complaint and an incident report when Lopez challenged a Ms.
Jarabelo to a fight
After the Career Orientation, Mr. Moralino, Elementary Principal, ordered to remove Lopez as Elementary Guidance Counselor
Lopez was given the position of Head Psychometrician whose responsibility was to supervise the test, but when tests were given in the elementary department, Mr. Moralino ordered the security guard not to let her
enter. Mr. Moralinos attitude towards complainant became negative
when he learned that complainant was a union member
Lopez was offered a sizable amount of money in exchange for her voluntary resignation because Fr. Alarcon wanted her out, but complainant refused
16 February 1991, Lopez who earlier had been suspended for 5 days, reported for work
11am, Mr. Ramon Mendoza asked from the security guard for the key to
the guidance counseling office, but respondent Fr. Edwin Lao refused to
give the key. Mr. Mendoza asked Lopez to intercede for him
o Respondents insist that Lopez uttered indecent and obscene remarks against Fr. Lao
o Lopez denied & accused Fr. Lao for embarrassing and humiliating her
Lopez was placed under preventive suspension for 30 days
Lopez filed a complaint with the Arbitration of NLRC for illegal suspension, praying for the lifting of said suspension, plus recovery of damages
Ad Hoc Committee was organized by Fr. Lao tasked to look into the
charges against Lopez for serious misconduct and offense by the employee against the person of her employer
Lopez received an official notice dated 08 May 1991 dismissing her from
employment for alleged acts of serious misconduct, commission of a crime

(grave oral defamation), insubordination, unfaithfulness to employers

interest, quarreling and challenging to a fight and loss of confidence
Lopez filed a Motion To Amend Complaint amending her cause of action
from illegal suspension to illegal dismissal

LA: petitioner was dismissed for just cause and with due process
NLRC: illegal dismissal due to absence of just cause and due process but ordered
private respondents to grant petitioner separation pay in lieu of reinstatement;
claim for damages was, however, dismissed

petitioner questions the ruling of the NLRC in awarding separation pay

in lieu of reinstatement despite the fact that there was an illegal dismissal effected by private respondent school; seeks payment of backwages,
allowances, and other benefits

ISSUE: WoN finding of illegal dismissal ipso facto results in reinstatement of the
dismissed employee (NO)

despite a finding of illegal dismissal against private respondent

school, petitioner should not be reinstated
as per NLRC - Note that the incident of February 16, 1991 occurred totally unrelated to the work of Lopez. As Head Psychometrician and an
erstwhile guidance counselor of an exclusive catholic school noted for its
teachings of moral uprightness, her demeanor subsequent thereto, to say
the least, were far from ideal as a role model not only for the whole
studentry, but for her peers.
In general, the remedy for illegal dismissal is the reinstatement
of the employee to his former position without loss of seniority
rights and the payment of backwages. But there may be instances as when reinstatement is not a viable remedy as where as in
this case the relations between the employer and the employee
have been so severely strained (Kingsize Manufacturing Corp. v.
NLRC)
respondents took the February 16, 1991 incident as a leverage to ease
out petitioner from school after having unearthed from her 201-file all
the "litany of misconducts" petitioner allegedly committed throughout
her 13 years of stay with the school. These past infractions cannot be collectively taken as a justification for her dismissal from the service
petitioner is not required to prove her innocence on the charges; the burden rests upon respondents to establish the valid cause of petitioner's
termination. Having failed to establish by concrete and direct evidence,
no substantial basis exists for petitioner's dismissal.
according to LC 279, illegally dismissed employees are entitled to
reinstatement and full backwages. The phraseology of the law means
that both reliefs are available to the illegally dismissed employee as a
matter of course. However, if reinstatement is not possible, the
employees are entitled to the grant of separation pay and full
backwages. Reliefs of separation pay and backwages are cumulative, not alternative remedies. Separation pay shall be granted as
an option to reinstatement if reinstatement can no longer be en1

forced due to the strained relations between the parties brought

about by the litigation in this case.
Since reinstatement would not be to the best interest of the parties, in lieu thereof, the NLRC correctly awarded separation pay equivalent to 1 month's salary for
every year of service, a fraction of at least 6 months being considered as 1 whole
year
<backwages> agree with the recommendation of the OSG that in addition to separation pay (which is in lieu of reinstatement), the petitioner should also be entitled to backwages

no showing that her dismissal was effected in a wanton or oppressive

manner

<attorney's fees> not recoverable where there is no sufficient showing of bad

faith on the part of private respondents. NCC 2208(2), award thereof is justified if the claimant is compelled to litigate with third persons or to incur expenses to protect his interest by reason of an unjustified act of the party
against whom it is sought
2.

3.

Respondents filed a complaint for constructive illegal dismissal and

unfair labor practice with the Arbitration Branch of the NLRC. LA
agreed with the respondents and ordered MPSI to reinstate them to their
former or equivalent positions without loss of seniority rights and other
privileges and ordering both AWU and MPSI to jointly and severally pay
them their backwages from the time of their illegal dismissal on June 11,
1993 up to the time of their reinstatement.

4.

NLRC affirmed and this NLRC decision became final and executory.
MPSI reinstated respondents on 26 February 1996 to the following
positions: Alfredo L. Lanza CRE-120; Rolando T. Rodolfo CRE-370;
Renato P. Villanueva CRE-412; Brendo S. Poquiz DWV-112.

Bustamante vs. NLRC - illegally dismissed employee is entitled to his

full backwages from the time his compensation was withheld from him
(which, as a rule, is from the time of his illegal dismissal) up to the time
of his actual reinstatement.
RA 6715 points to "full backwages" i.e. without deducting from
backwages the earnings derived elsewhere by the concerned employee
during the period of his illegal dismissal.
petitioner was terminated from service on May 8, 1991, which is after the
March 21, 1989 ruling in Bustamante

<damages> Moral damages are recoverable when the dismissal of an employee is attended by bad faith or fraud or constitutes an act oppressive to labor,
or is done in a manner contrary to good morals, good customs or public policy.
Exemplary damages may be awarded if the dismissal is effected in a wanton,
oppressive or malevolent manner.

provision of the MPSI-AWU CBA.

5.

Respondents filed a mxn for contempt for non-compliance with the

partial writ of execution. They also prayed for additional backwages
because they were allegedly not reinstated to their former positions or to
equivalent positions.

6.

LA held that it was proper for MPSI to reinstate respondents to their

former positions as CRE-120, CRE-370 and CRE-412, respectively.
However, LA found that on respondent Brendo S. Poquiz, MPSI failed to
prove that his position was still available or that MPSI offered him a
substantially equivalent position. Thus, additional backwages to
respondent Brendo S. Poquiz but denied the same to respondents Alfredo
L. Lanza, Rolando T. Rodolfo, and Renato P. Villanueva.

7.

MPSI appealed the Order to the NLRC, which modified it by deleting the
award of additional backwages in favor of respondent Brendo S. Poquiz.

Asian Terminals v Villanueva GR No. 143219 (2006)

Asian Terminals v. VIllanueva

28 November 2006; Carpio, J.
Digest prepared by Jethro Koon
I. Facts
1.

Respondents were employees of Marina Port Services, Inc. and members

of the Associated Workers Union of the Philippines (AWU).

2.

In a letter dated 9 June 1993 to MPSI, the AWU president sought the
dismissal from service of respondents who were expelled from AWU. On
11 June 1993, the MPSI issued a memorandum to respondents
terminating them effective immediately pursuant to the closed-shop

Respondents alleged that MPSI did not reinstate them to their

former positions or to equivalent positions. They were
deliverymen at their dismissal and not CRE or casual rotation
employee. For his part, respondent Brendo S. Poquiz alleged
that a certain Salvador Refruto had already occupied his former
position.

8.

MPSI had reclassified the positions of deliveryman and day

worker vessel as casual rotation employee (CRE) and
dockworker vessel (DWV), respectively. The NLRC upheld the
MPSI
managements
prerogative
of
streamlining
its
organizational set-up which resulted in the reclassification of
positions. Thus, MPSI had properly reinstated respondents to
substantially equivalent positions and that respondents are no
longer entitled to the award of additional backwages.

Respondents filed a petition for certiorari with the CA, which reversed
the NLRC (for GAD) and ordered reinstatement. The CA held that at the
time of theor dismissal, they were already regular considering their
length of service. Citing LC280, as long as the employee has rendered at
least one year of service, he becomes a regular employee for the activity
2

in which he is employed. Thus, if the positions previously held by

respondents have already been abolished, then respondents should be
reinstated to substantially equivalent positions.
II. Issues

which he was reinstated.

Respondents allege that MPSI should reinstate them to positions equivalent to
those currently occupied by their co-employees who previously held the same
position before their dismissal.

Whether MPSI reinstated respondents to their former or equivalent positions.

YES
III. Holding
NLRC decision is reinstated.
IV. Ratio
MPSI asserts that it reinstated respondents to their former positions. According to
MPSI, respondents were regular employees and that their designation as casual
rotation employees merely meant that they work on rotation.
1.

2.

3.

Reinstatement means restoration to a state or condition from which one

had been removed or separated. The person reinstated assumes the
position he had occupied prior to his dismissal. Reinstatement
presupposes that the previous position from which one had been removed
still exists, or that there is an unfilled position which is substantially
equivalent or of similar nature as the one previously occupied by the
employee.
The NLRC found that MPSI indeed reinstated respondents to their
former positions or to substantially equivalent positions. The records of
the case support this finding. Factual findings of labor officials, who
possess the expertise in matters within their jurisdiction, are generally
accorded great weight if substantial evidence support the findings.
These were the positions occupied by respondents before MPSI dismissed
them, as evinced in the letter dated 9 June 1993 of the AWU president to
MPSI (see Facts #2) indicating the names of the respondents, and their
positions, identical with the positions when they were reinstated. These
positions were also the same indicated in the memo terminating their
services (Facts #2, 2nd paragraph).

Respondents Alfredo L. Lanza, Rolando T. Rodolfo, and Renato P. Villanueva

allege that they should be reinstated to their former position as deliverymen while
respondent Brendo S. Poquiz insists on reinstatement to his former position as day
worker vessel (DWV).
4.

Respondents Rolando T. Rodolfo and Renato P. Villanueva submitted

evidence showing their appointment to the position of reserved
deliveryman. Even their MPSI identification cards, which were both
validated only for the year 1981, indicated their position as reserved
deliveryman. There is no evidence showing that the position of
deliveryman is the same as reserved deliveryman. Furthermore, they
failed to prove that they were already occupying the position of
deliveryman at the time of their dismissal. Brendo S. Poquizs AWU ID
card indicated his position merely as DWV-112, the same position to

5.

3.

Reinstatement means restoration to the former position occupied prior to

dismissal or to substantially equivalent position. Reinstatement does not
mean promotion.
Composite Enterprises v Caparoso GR No. 159919 (2007)

COMPOSITE v CAPAROSO (2007)

FACTS:
Composite Enterprises Inc is a supplier of confectioneries to retailers. Emilio
Caparoso and Joeve Quindipan were employed as its deliverymen until termination.
Said workers filed for illegal dismissal with NLRC. Composite denied illegal dismissal, alleging workers were employed on a month-to-month basis and they were
terminated as a result of expiration of their contracts of employment.
LA ruled for workers with order for reinstatement and full backwages.
Composite appealed with NLRC and manifested that it cannot reinstate workers
because their previous positions were no longer available due to its retrenchment
program. Composite moved for separation pay in lieu of reinstatement.
While appeal was pending, workers filed with LA a Motion to Pay Complainants
their Salary with Prayer for Issuance of a Writ of Execution. LA granted, directing Sheriff to effect reinstatement. Composite reinstated workers into its payroll,
conditioned on NLRCs ruling to allow separation pay in lieu of reinstatement.
NLRC eventually set aside LAs decision, holding that there was no illegal dismissal since workers contracts of employment were for a fixed period. Composite
filed an Ex-Parte Manifestation with LA, manifesting there was no basis for reinstatement in view of NLRCs decision.
LA directed Composite to pay workers accrued salaries, covering the period between receipt by Composite of LAs earlier decision to reversal by NLRC.
Composite appealed with NLRC, insisting on separation pay in lieu of reinstatement. NLRC held that its reversal of LA did not affect workers entitlement to
accrued salaries pending appeal, that only entitlement to backwages was forfeited, and that there was no basis for awarding separation pay in lieu of reinstatement.
Composite filed MR with NLRC, which was denied. Composite filed two subsequent petitions for certiorari with CA. Both were denied on procedural grounds.
ISSUE & RULING: WON workers were entitled to separation pay instead of
accrued salaries
3

NO. LC Art 223, as amended by RA 6715, and Sec 2 of NLRC Interim Rules on
Appeals under RA 6715 provide that an order of reinstatement by LA is immediately executory even pending appeal. This saving act is designed to stop, although
temporarily since the appeal may be decided in favor of appellant, a continuing
threat or danger to the survival or even life of the dismissed employee and his
family.
Reinstatement is the restoration to a state or condition from which one has been
removed or separated. The intent of the law in making a reinstatement order
immediatelyexecutory is much like a return-to-work order, i.e., to restore the
status quo in the workplace in the meantime that the issues raised and the proofs
presented by the contending parties have not yet been finally resolved. It is a legal provision which is fair to both labor and management because while execution
of the order cannot be stayed by the posting of a bond by the employer, the workers also cannot demand their physical reinstatement if the employer opts to reinstate them only in the payroll.
Payment of separation pay as a substitute for reinstatement is allowed
only under exceptional circumstances, viz: (1) when reasons exist which are not
attributable to the fault or are beyond the control of the employer, such as when
the employer -- who is in severe financial strait, has suffered serious business
losses, and has ceased operations -- implements retrenchment, or abolishes the
position due to the installation of labor-saving devices; (2) when the illegally dismissed employee has contracted a disease and his reinstatement will endanger
the safety of his co-employees; or, (3) where a strained relationship exists between
the employer and the dismissed employee.
As regards retrenchment, it is a management prerogative consistently recognized and affirmed by this Court. It is, however, subject to faithful compliance
with the substantive and procedural requirements laid down by law and jurisprudence. For retrenchment to be considered valid, the following substantial requirements must be met: (a) the losses expected should be substantial and not
merely de minimis in extent; (b) the substantial losses apprehended must be reasonably imminent such as can be perceived objectively and in good faith by the
employer; (c) the retrenchment must be reasonably necessary and likely to effectively prevent the expected losses; and (d) the alleged losses, if already incurred,
and the expected imminent losses sought to be forestalled, must be proved by sufficient and convincing evidence. In the discharge of these requirements, it is the
employer who has the onus, this being in the nature of an affirmative defense.
Normally, the condition of business losses is shown by audited financial documents like yearly balance sheets, profit and loss statements and annual income
tax returns. The financial statements must be prepared and signed by independent auditors, failing which these can be assailed as self-serving documents.
IN THIS CASE, Composite sought to justify the payment of separation pay instead of reinstatement on the basis of its implementation of a retrenchment program for serious and persistent financial difficulties. However, it only submitted
as evidence the notice of its intention to implement a retrenchment program,
which it sent to DOLE. It did not submit its financial statements duly audited by

an independent external auditor. Its failure to do so seriously casts doubt on its

claim of losses and insistence on the payment of separation pay.
4.
(2007)

Johnson & Johnson v Johnson Office and Sales Union GR No. 172799

JOHNSON & JOHNSON (PHILS.), INC. V. JOHNSON OFFICE & SALES UNION-FFW
(CELEBRADO)
Johnson & Johnson (Phils.), Inc., Janssen Pharmaceutica, and/or Rafael
Besa vs. Johnson Office & Sales Union-Federation of Free Workers
(FFW), Ma. Jesusa Bonsol and Rizalinda Hirondo
G.R. No. 172799 | July 6, 2007 | 2nd Division | Tinga, J.
FACTS:
Bonsol and Hirondo filed for illegal dismissal against Johnson & Johnson
(Phils.), Inc. and Janssen Pharmaceutica. LA dismissed the complaint, but
the NLRC ruled that the violations of company procedure committed by them did
not constitute serious misconduct or willful disobedience; hence, they were entitled to reinstatement.
Johnson & Johnson acceded to this, but offered its intention to pay separation
pay but Bonsol and Hirondo refused and insisted on their reinstatement.
The company insisted that they have the right to choose either the payment of
separation pay or the reinstatement based on the finding that while their termination was illegal, they were not entirely faultless as they did not follow the exact procedure in the performance of their duties and that reinstatement was no
longer feasible in view of the strained relations between the parties.
However, NLRC dismissed this because it recognized the right to choose of
Bonsol and Hirondo and disregarded Johnson & Johnsons claim of strained
relations. CA affirmed the NLRC.
ISSUE:
Whether or not the option to choose between reinstatement or separation pay
belongs, by default, to the employees? (No.)
HELD:
NO. Johnson & Johnson, et. al are mistaken in holding that they have the prerogative to choose whether to reinstate them to their former positions or to just
pay their monetary award. Neither party can claim that it has the categorical
right to choose between reinstatement and the payment of the monetary award.
Ultimately, the NLRC has the authority to execute its judgment and to settle any
issue that may arise pertaining to the manner or details of implementing its
judgment.
Well-entrenched is the rule that an illegally dismissed employee is entitled to
reinstatement as a matter of right. However, where reinstatement is not feasible,
expedient or practical, as where reinstatement would only exacerbate the tension
and strained relations between the parties, or where the relationship between the
4

employer and employee has been unduly strained by reason of their irreconcilable
differences, particularly where the illegally dismissed employee held a managerial or key position in the company, it would be more prudent to order payment of
separation pay instead of reinstatement. The payment of separation compensation in lieu of the reinstatement of an employee who was illegally dismissed from
work shall be allowed if and only if the employer can prove the existence of circumstances showing that reinstatement will no longer be for the mutual benefit of the
employer and employee.

The NLRC properly exercised its authority to resolve the controversy when it categorically ordered the reinstatement to the former positions. The NLRC upheld
the continuing primacy of reinstatement as the available relief and made short
shrift that separation pay should be awarded in lieu of reinstatement. The Court
defers the common finding of the NLRC and Court of Appeals since the issue of
the existence of strained relations between the parties is factual in nature.
5.

Retuya v Dumarpa 408 SCRA 315 ( 2003)

Retuya vs Dumarpa
Facts:
-

Antonio Murilo (father) and Rodolfo Murillo (son) manage Insular Builders, Inc (all respondents). The petitioners were workers who have rendered services to corporations owned by the respondents.
The petitioners were told to temporarily stop working when the Murillos
engaged in a feud. Father discharged son from work and took over Insular Builders. Thereafter, father dismissed the petitioners but they were
made to continue doing the same work in Queen City Builders, a corporation managed by son.
Petitioners filed a complaint for illegal dismissal, non-payment of wages,
and other benefits. They claimed that they were terminated without valid cause and with no notice.
Defendants claim that petitioners are not their employees, and that it
was son who was employing them.
LA found for petitioners. Father and Insular Builders are liable. NLRC
reversed.
CA upheld LA ruling.

Issues:
W/N petitioners are entitled to the benefits? YES
W/N son is liable to pay solidarily with father and Insular Builders? NO
Held:
-

Illegally dismissed employees are entitled to back wages that should not
be diminished or reduced by the amount they have earned from another
employment during the period of their illegal dismissal.
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.
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 -- from Insular, which was controlled by father; to Queen City,
which was managed and controlled by son. 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 employees 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.
The Court held here that son is not liable because he was not the employer of petitioners when they were dismissed from Insular Builders,
Inc. It was father who dismissed them, as evidenced by the Dismissal
Report submitted to the DOLE. In fact, the son was also dismissed together with petitioners.

6.

Union of Supervisors v Secretary of Labor, 128 SCRA 442 (1984)

7.

Divine Word High School v NLRC 143 SCRA 346 ( 1986)

Divine Word HS v. NLRC and Catenza

Topic: reliefs and remedies in illegal dismissal cases, reinstatement
Facts:

Luz Catenza filed a complaint for illegal dismissal after Divine Word
sacked her for misdeeds and immoral acts of her husband Pablo, then
principal of the same school
Divine Word contends that it was her conduct of covering up and concealing said immoral acts committed by her husband against a student,
Remie Ignacio
Labor Arbiter submitted the case for decision without waiting for petitioner to rest its case
LA: reinstatement, backwages
NLRC: affirmed

Issue(s), Holding & Ratio:

1.

w/n Catenza was illegally dismissed

5

Yes, Divine Word failed to prove their allegations about the alleged conduct of
Pedro and the supposed concealment by Luz.
It is very apparent that the main reason she was dismissed was because of the
alleged immoral conduct of her husband. He was never investigated or convicted.
Neither was there any proof to the covering up asserted by the school.
2.

The Labor Arbiter Francisco Robles dismissed Loreta's complaint for lack
of merit. He found it more probable that Loreta was dismissed from her
employment due to Wensha's loss of trust and confidence in her. This ruling was affirmed by the NLRC in its December 29, 2006 Resolution
Loreta moved for a reconsideration of the NLRC's ruling but her motion
was denied.

Loreta then went to the CA on a petition for certiorari. The CA reversed the ruling of the NLRC on the ground that it gravely abused its
discretion in appreciating the factual bases that led to Loreta's dismissal.
The CA noted that there were irregularities and inconsistencies in
Wensha's position.

w/n Divine Word was denied due process

No, because the school was afforded every opportunity to present their evidence,
but they repeatedly failed to appear at the 4 consecutive hearings scheduled.
There is no denial of due process where a party was afforded an opportunity to
present their case.
3.

they advised her to take a leave of absence for one month while they conducted an investigation on the matter.

w/n reinstatement can still be made.

No, while herself innocent, the continued presence of Catenza as a teacher in the
Catholic institution may well be met with antipathy and antagonism by some
sectors in the school community.
8.

Espejo v NLRC 255 SCRA 430 ( 1996)

9.

Wensha Spa Center Inc v Yung GR No. 185122 (2010)

WENSHA SPA CENTER, INC. AND/OR XU ZHI JIE, VS. LORETAT. YUNG

Issue:

Held:

Yes, there is illegal dismissal. Loreta's security of tenure is guaranteed

by the Constitution and the Labor Code. Under the security of tenure
guarantee, a worker can only be terminated from his employment for
cause and after due process.

For a valid termination by the employer: (1) the dismissal must be for a
valid cause as provided in Article 282, or for any of the authorized causes
under Articles 283 and 284 of the Labor Code; and (2) the employee must
be afforded an opportunity to be heard and to defend himself. A just and
valid cause for an employee's dismissal must be supported by substantial
evidence, and before the employee can be dismissed, he must be given
notice and an adequate opportunity to be heard.

As correctly found by the CA, the cause of Loreta's dismissal is questionable. Loss of trust and confidence to be a valid ground for dismissal must
have basis and must be founded on clearly established facts. It is the employer who bears the burden of proving that its dismissal of the employee
is for a valid or authorized cause supported by substantial evidence.

The Court finds Loreta's complaint credible. There is consistency in her

pleadings and evidence. The records are bereft of evidence that Loreta
was duly informed of the charges against her and that she was given the
opportunity to respond to those charges prior to her dismissal. If there
were indeed charges against Loreta that Wensha had to investigate, then
it should have informed her of those charges and required her to explain
her side. The law requires that two notices be given to an employee prior
to a valid termination. Under the law and jurisprudence, an illegally
dismissed employee is entitled to two reliefs - backwages and reinstatement, which are separate and distinct. Under the doctrine of strained relations, the payment of separation pay has been considered an acceptable

Facts:

Wensha Spa Center, Inc. in Quezon City is in the business of sauna bath
and massage services. is its president, respondent Loreta T. Yung was its
administrative
manager
at
the
time
of
her
termination
from employment.

In her position paper, Loreta stated that she used to be employed by

Manmen where Xu was a client. Xu was apparently impressed by
Loreta's performance. Xu convinced Loreta to transfer and work at
Wensha.

Loreta introduced positive changes to Wensha which resulted in increased business. This pleased Xu so that on May 18, 2004, she was promoted to the position of Administrative Manager. Loreta recounted that
on August 10, 2004, she was asked to leave her office because Xu and a
Feng Shui master were exploring the premises.

Later that day, Xu asked Loreta to go on leave with pay for one
month. She did so and returned on September 10, 2004.

Upon her return, Xu and his wife asked her to resign from Wensha because, according to the FengShui master, her aura did not match that of
Xu. That same afternoon, Loreta went to the NLRC and filed a case for
illegal dismissal against Xu and Wensha.

Wensha and Xu denied illegally terminating Loreta's employment. They

claimed that two months after Loreta was hired, they received various
complaints against her from the employees so that on August 10, 2004,

WON there is Illegal Dismissal.

10.

alternative to reinstatement when the latter option is no longer desirable

or viable.

DUP Sound Phils. v CA GR No. 168317 ( 2011)

DUP SOUND PHILS V. CA

FACTS:

Cirilo A. Pial was an employee of DUP Sound Phils. (DUP), an entity engaged in the business of recording cassette tapes for various recording
companies.
1st Employment- May-December 1988
2nd Employment- October 1991 job of mastering tape; main function
was to adjust the sound level and intensity of the music to be recorded as
well as arrange the sequence of the songs to be recorded in the cassette
tapes
August 21, 2001- was absent from work due to sickness
Next day: office secretary told him not to report for work until such time
that they will advise him to do so as per Tan, the owners instruction
After 3 weeks, without receiving any notice, Pialagain called up their office, the secretary told him to look for another job since he was terminated.
Pial filed for unpaid service incentive leave pay, full backwages, separation pay.
LA: Illegally Dismissed. Reinstatement plus backwages, COLA and Service Incentive Pay
NLRC: Deleted backwages. No ID nor abandonment of work
CA reinstated the LA Decision

(1) the failure to report for work or absence without valid or justifiable
reason
(2) a clear intention to sever employer-employee relationship, with the
second as the more determinative factor which is manifested by overt acts
from which it may be deduced that the employee has no more intention to
work.

ISSUE/s:

W/N there was Illegal dismissal? YES

W/N there was abandonment of work? NO

HELD:
No Abandonment of Work

DUP failed to prove that the latter indeed stopped reporting for work
without any justifiable cause or a valid leave of absence

They merely presented the affidavits of their office secretary

which narrated their version of the facts. These affidavits, however, are not
only insufficient to prove their defense but also undeserving of credence because they are self-serving

BESIDES: No employee would recklessly abandon his job knowing fully

well the acute unemployment problem and the difficulty of looking for a
means of livelihood nowadays.
They should have immediately sent a notice or show-cause letter at his
last known address requiring him to report for work, or to explain his absence with a warning that his failure to do so would be construed as
abandonment of his work

Even if he did abandonshould have afforded him due process by serving him written notices, as well as a chance to explain his side
Dismissal based on a just cause under Article 282: ER must give the EE
2 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 and after hearing or opportunity to
be heard, a notice of the decision to dismiss
PLUS: refusal to report for work subsequent to the Labor Arbiter's issuance of an order for his reinstatement not abandonment of his job.
GR: failure to report for work after a notice to return to work has been
served does not necessarily constitute abandonment.
As defined under established jurisprudence, 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:

The intent to discontinue the employment must be shown by clear proof

that it was deliberate and unjustified
NOTE: He was made to perform the job of a bodegero of which he is unfamiliar and which is totally different from his previous task of mastering tape. Moreover, he was assigned to a different workplace, which is a
warehouse, where he was isolated from all other employees.
The failure to immediately refute the claims is an implied admission

He was Illegally Dismissed.

DUP failed to submit sufficient evidence to show that dismissal was for a
justifiable cause and in accordance with due process

ON REINSTATEMENT:

Article 223 provides that an EE entitled to reinstatement shall either be

admitted back to work under the same terms and conditions prevailing
prior to his dismissal or separation, or, at the option of the employer,
merely reinstated in the payroll.
It is established in jurisprudence that reinstatement means restoration
to a state or condition from which one had been removed or separated.
The person reinstated assumes the position he had occupied prior to his
dismissal.
Reinstatement presupposes that the previous position from which one
had been removed still exists, or that there is an unfilled position which
is substantially equivalent or of similar nature as the one previously occupied by the employee.
7

THUS it cannot be said that petitioners intended to reinstate private respondent neither to his former position under the same terms and conditions nor to a substantially equivalent position.
The notice that petitioners sent is silent with regard to the position or
exact nature they wanted the private respondent to assume. He was then
assigned to a different job, as well as transfer of work assignment without any justification which cannot be deemed as faithful compliance with
the reinstatement order
He was placed in an untenable situation which practically left him with
no choice but to leave his assigned task also shows the strained relations
that has developed between the parties
Reinstatement is no longer viable where relations between the employer and the employee have been so severely strained, that it is not in
the best interest of the parties, nor is it advisable or practical to order reinstatement, or where the employee decides not to be reinstated.
In the case, reinstatement would be impractical and would hardly promote the best interest of the parties. Resentment and enmity between
petitioners and private respondent necessarily strained the relationship
between them or even provoked antipathy and antagonism as shown by
the acts of the parties subsequent to the order of reinstatement.
Besides, private respondent expressly prayed for an award of separation
pay in lieu of reinstatement from the very start of the proceedings before
the Labor Arbiter. By so doing, he forecloses reinstatement as a relief by
implication.
Where reinstatement is no longer viable as an option, separation pay
equivalent to one (1) month salary for every year of service should be
awarded as an alternative

LA: Not illegally dismissed. Chang offered to re-employ Ranara but the
latter refused. It was Ranara who chose not to work for Chang anymore.
NLRC: Affirmed LA. The offer to re-employ the petitioner should not be
disregarded in assessing the motives of the parties as it was a genuine effort on the part of the private respondents to settle the controversy.

Issue/Holding/Ratio
WON the petitioner was illegally dismissed. Yes, he was illegally dismissed without due process.
The secretary would not have presumed to dismissed him if she had not
been authorized to do so, considering the seriousness of this act. Neither
Chang nor his mother (OIC in his absence) reversed such act. They could
not have failed to notice that Ranara was replaced since they employ less
than ten persons.
Ranara could not have abandoned his work since he instituted an action
within three days of his termination.
The fact that his employer later made an offer to re-employ him did not
cure the vice of his earlier arbitrary dismissal. The wrong had been
committed and the harm done. Notably, it was only after the complaint
had been filed that it occurred to Chang, in a belated gesture of good will,
to invite Ranara back to work in his store.
Also it is expected that he wouldnt want to work for the respondents
again because it would be uncomfortable to work under the hostile eyes
of an employer who was forced to reinstate him.
It is clear that the petitioner was illegally dismissed without even the politeness of a proper notice. Without cause and without any investigation,
formal or otherwise, Ranara was simply told that he should not report
back for work the following day. When he did so just the same, thinking
she had only spoken in jest, he found that somebody else had been employed in his place. When he protested his replacement, he was even
scolded for being "hard-headed" and not accepting his dismissal.
The failure of the petitioner to file a motion for reconsideration of the
NLRC decision before coming to this Court was not a fatal omission. In
the interest of substantial justice, and especially in cases involving the
rights of workers, the procedural lapse may be disregarded to enable the
Court to examine and resolve the conflicting rights and responsibilities of
the parties.

Note: He failed to prove he started employment from 1991. Separation Pay must
be reckoned from January 1996. Backwages from August 22, 2001 until finality of
decision.
11.

Ranara v NLRC 212 SCRA 631 ( 1992)

Ranara v. NLRC
G.R. No. 100969; 14 August 1992; Cruz, J.
Facts

Carlos Ranara was working as a driver with Oro Union Construction

Supply when he was told by Fe Leonar, secretary of Jimmy Ting Chang,
not to come back the following day.
He considered this as a joke and still reported for work the next day, only
to find some other person handling the vehicle assigned to him.
When he approached Leonar to ask why his services were terminated she
replied that MR. Chang just doesnt want his services anymore.
Ranara filed a complaint for illegal dismissal.
Chang denied that he illegally discharged Ranara. He was at the hospital
at the time and Leonar nor his mother was given authority to terminate
Ranaras services. He alleged that Ranara abandoned work.

12.

Garcia v PAL GR No. 164856 ( 2009)

Garcia v. PAL
GR No. 164856 / 20 Jan 2009 / J. Carpio Morales
FACTS

Petitioners Juanito Garcia and Alberto Dumago were allegedly caught in

the act of sniffing shabu when a team of company security personnel and
law enforcers raided the PAL Technical Center's toolroom section on 24 Jul
1995.
8

After due notice, PAL dismissed petitioners on 9 Oct for transgressing the
PAL Code of Discipline, prompting them to file for illegal dismissal.

LA decided on 11 Jan 1999, ordering PAL to immediately comply with

the reinstatement aspect of the decision.

Prior to the promulgation of the LA decision, PAL was placed by the SEC
under a rehabilitation receiver, as it was suffering severe financial losses.

NLRC reversed said decision on 31 Jan 2000 and dismissed petitioners'

complaint for lack of merit.

MR was denied by resolution of 28 Apr and entry of judgment was issued

on 13 Jul 2000.

Meanwhile afterwards, the LA on 5 Oct issued a writ of execution on the

reinstatement aspect of the11 Jan 1999 decision and on 25 Oct issued a notice of garnishment.

PAL moved to quash the writ and lift the notice while petitioners moved to
release the garnished amount.

PAL filed an urgent petition for injunction with the NLRC which by
resolutions on 26 Nov 2001 and 28 Jan 2002, affirmed the validity of
the writ and notice, but suspended and referred the action to the
rehabilitation receiver for appropriate action.

HELD
First sub-issue:

Crucial is the interpretation of par. 3 of LC Art. 223 which reads:

The SC reversed the Genuino v. NLRC doctrine and reinstated the

rule that a dismissed employee whose case was favorably decided
by the Labor Arbiter is entitled to receive wages pending appeal
upon reinstatement, which is immediately executory. Unless there is
a restraining order, it is ministerial upon the Labor Arbiter to implement
the order of reinstatement and it is mandatory on the employer to comply
therewith.

The Genuino case ruled that the employer has a right to require the
dismissed employee on payroll reinstatement to refund the salaries
he received while the case was pending appeal if the decision of the
LA is later reversed on the ground that the dismissal is valid.

Thus it was argued that there is no point in releasing wages to petitioners since their dismissal was found to be valid, and to do so
would constitute unjust enrichment.

A favorable decision by the LA under this rule could harm employees

more than help them, as the employee to make ends meet will spend
the salary during the pendency of appeal, only to end up having to
refund the sum in case of a final unfavorable decision.

The salaries disposed pendente lite merely serve as a bond paid in

installment by the employer, because if the LA's decision is reversed,
the employer gets back the amount without having to spend for bond
premiums. This circumvents, if not directly contradicts, the
proscription that the "posting of a bond by the employer shall not
stay the execution for reinstatement."

PAL went up to CA which nullified NLRC decision on two grounds:

1.

A subsequent finding of valid dismissal removes the basis for implementing the reinstatement aspect of a labor arbiter's decision

2.

The impossibility to comply with the reinstatement order due to corporate rehabilitation provides a reasonable justification for the failure to exercise the options under Art. 223 of the LC.

SC partially granted petition and reinstated NLRC resolutions insofar

as it suspended the proceedings while PAL is under receivership.

The SEC, by order of 28 Sep 2007, granted PAL's request to exit from rehabilitation proceedings. In view of this, SC moves to resolve remaining issue.

ISSUE

In any event, the decision of the Labor Arbiter reinstating a dismissed or separated employee, insofar as the reinstatement aspect
is concerned, shall immediately be executory, pending appeal.
The employee shall either be admitted back to work under the same
terms and conditions prevailing prior to his dismissal or separation,
or, at the option of the employer, merely reinstated in the payroll.
The posting of a bond by the employer shall not stay the execution
for reinstatement provided herein.

W/N petitioners may collect wages during the period between the LA order
of reinstatement pending appeal and the NLRC decision overturning the
LA. No, because of the second ground.

W/N a subsequent finding of valid dismissal removes the basis for

implementing the reinstatement aspect of an LA decision. NO

The social justice principles of labor law outweigh or render inapplicable the civil law doctrine of unjust enrichment.

W/N the impossibility to comply with the reinstatement order due to

corporate rehabilitation provides a reasonable justification for the
failure to exercise the options under Art. 223 of the LC. YES.

Another argument in J. Velasco's separate opinion in the earlier case is

that unlike the present case, in the previous cases which contains this doctrine like Air Philippines v. Zamora, the writ of execution was secured prior to the reversal of the LA decision. This proposition is tenuous because:
9

Matter is treated as a race against time, without considering the

cause of delay

There is a requirement for a writ of execution despite the immediately executory nature of the reinstatement aspect of the decision.

Even if the order of reinstatement by the LA 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.

Facts:

June 1990: Medicard Philippines, Inc. (respondent), a health maintenance

organization, hired petitioner Myrna P. Magana (petitioner) as company
nurse whom respondent detailed to its corporate client, the Manila Pavilion
Hotel (Hotel). Although respondent initially hired petitioner on probation, respondent converted petitioner's employment status to permanent in February
1993.

October 1994: Magana was summarily replaced with another nurse. In lieu of
a nursing-related position, respondent offered petitioner the position of liaison officer. Finding the offer unacceptable and with her continued nonassignment, petitioner sued respondent and the Hotel in the NLRC for illegal
dismissal and payment of benefits and damages.

LA ruled that such dismissal is illegal and ordered reinstatement; respondent

a mere labor contractor for the Hotel which exercised control and termination
powers over petitioner. The arbiter considered the Hotel's summary replacement of petitioner indicative of lack of cause for her dismissal and of bad
faith; ordered the Hotel to reinstate petitioner and, with respondent, jointly
and severally pay petitioner backwages, 13th month pay, damages and attorney's fees.

NLRC: affirmed LA decision awarded reinstatement wages under Art. 233.

CA: dismissal was not illegal and removed the award of reinstatement wages.

Second sub-issue

After the LA's decision is reversed by a higher tribunal, the employee

may be barred from collecting the accrued wages if it is shown
that:
1.

There is actual delay or the fact that the order of reinstatement

pending appeal was not executed prior to its reversal

2.

The delay must not be due to the employer's unjustified act or

omission.

Here, petitioner exerted efforts to execute the LA decision but the writ of
execution was only issued after the reversal by the NLRC of the LA decision.

There was actual delay (requirement 1)

Employer's omission is justified (requirement 2)

Unless there is a restraining order the implementation of the order of reinstatement is ministerial and mandatory.

But injunction or suspension of claims by legislative fiat (the receivership) partakes the nature of a restraining order that constitutes a legal justification for PAL's non-compliance.

Thus, the obligation to pay petitioners' salaries pending appeal did not attach.

PAL was effectively deprived of alternative choices under LC Art. 223, not
only by the statutory injunction but in view of the interim relinquishment
of management control to give way to full exercise of the powers of the rehabilitation receiver.

Dispositive:

13.

Petition partially denied. CA decision upheld because of second ground.

Magana v Medicard Phil. Inc GR No. 174833 ( 2010)

Magana v Medicard Phil. Inc. (digest by Robby Solis)

(Carpio, J; GR 174833; 15 December 2010)

Issue: WON reinstatement wages for Magana are demandable

Held/Ratio: NO
Important part is paragraph 2:
Art. 223 LC Appeal. 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. Such appeal may be entertained only
on any of the following grounds:
If there is prima facie evidence of abuse of discretion on the part of the Labor Arbiter;
If the decision, order or award was secured
through fraud or coercion, including graft and
corruption;
If made purely on questions of law; and
If serious errors in the findings of facts are
raised which would cause grave or irreparable
damage or injury to the appellant.
Xxx
10

In any event, the decision of the Labor Arbiter reinstating a dismissed or separated
employee, insofar as the reinstatement aspect is concerned, shall immediately be
executory, even pending appeal. The employee shall either be admitted back to
work under the same terms and conditions
prevailing prior to his dismissal or separation or, at the option of the employer,
merely reinstated in the payroll. The posting of a bond by the employer shall not
stay the execution for reinstatement provided herein.
Xxx
The Commission shall decide all cases within
twenty (20) calendar days from receipt of the
answer of the appellee. The decision of the
Commission shall be final and executory after
ten (10) calendar days from receipt thereof by
the parties.
Any law enforcement agency may be deputized
by the Secretary of Labor and Employment or
the Commission in the enforcement of decisions, awards or orders. (As amended by Section 12, Republic Act No. 6715, March 21,
1989)

Article 223 gives employers two options, namely, to (1) actually reinstate the
dismissed employees or, (2) constructively reinstate them in the payroll. Either way, this must be done immediately upon the filing of their appeal,
without need of any executory writ. This unusual, mandatory order by law to
execute reinstatement orders pending appeal, unheard of in ordinary civil
proceedings, is a police power measure, grounded on the theory that the
preservation of the lives of the citizens is a basic duty of the State, that is
more vital than the preservation of corporate profits. Then, by and pursuant
to the same 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 its
family.
The SC ruled that pending appeal, reinstatement wages under 223 is mandatory, and does not require an executor writ for it to be demanded by the employee ordered to be reinstated. Also, the subsequent ruling of a higher court
of the validity of the dismissal will not preclude the reinstatement wages
from being demandable; neither will it make the dismissed employee liable to
return reinstatement wages.

Respondent is not only bound to pay petitioner her reinstatement wages, had
it done so, it is precluded from recovering the amount paid post-reversal of
the arbiter's reinstatement order by the Court of Appeals.

Dispositive: WHEREFORE, we GRANT the petition We REVERSE the Decision

dated 11 April 2006 and the Resolution dated 5 September 2006 of the Court of
Appeals insofar as they deleted the award of reinstatement wages to petitioner
Myrna P. Magana. We ORDER respondent Medicard Philippines, Inc. to pay petitioner reinstatement wages computed from the filing of respondent's appeal of the
labor arbiter's decision on 5 October 2000 until its receipt of the Court of Appeals'
Decision dated 11 April 2006.
14.

College of Immaculate Concepcion v NLRC GR No. 167563 ( 2010)

15.

Lansangan v Amkor Technology Phil. Inc GR No. 177026 ( 2009)

LANSANGAN vs AMKOR TECHNOLOGY PHILIPPINES Case Digest

LUNESA O. LANSANGAN AND ROCITA CENDAA v. AMKOR TECHNOLOGY PHILIPPINES
577 SCRA 493 (2009)
FACTS:
An email was sent to Amkor Technology Philippines (Amkor) through their
General Manager alleging that the Lunesa Lansangan (Lansangan) and Rocita
Cendana (Cendana) stole company time.
Lansangan and Cendana admitted to the wrongdoing and were terminated for
extremely serious offenses as defined in its Code of Discipline.
The two then filed a case of illegal dismissal against Amkor.
The Labor Arbiter (LA) dismissed petitioners complaint, having found them
guilty of an offense of dishonesty punishable as a serious form of misconduct and
fraud or breach of trust under Article 282 of the Labor Code.LA, however, ordered
the reinstatement of petitioners to their former positions without backwages as a
measure of equitable and compassionate relief owing mainly to petitioners prior
unblemished employment records, show of remorse, harshness of the penalty and
defective attendance monitoring system of respondent.
The two did not appeal the finding that they were guilty, and moved for the writ
of execution. Amkor assailed the reinstatement aspect of the decision to NLRC
and was subsequently granted. The NLRC deleted the grant for reinstatement of
the LA.
The CA affirmed the decision of the NLRC that Lansangan and Cendana are
guilty and should not be reinstated but modified in so far as backwages are concerned that it must be paid in full.
ISSUE: Whether or not Lansangan and Cendana are entitled to backwages and
reinstatement
HELD: No.
11

The Arbiter found Lansangan and Cendanas dismissal to be valid. Such finding
had, as stated earlier, become final, they not having appealed it. Lansangan and
Cendanas are not entitled to full backwages as their dismissal was not found to
be illegal. Agabon v. NLRC so states payment of backwages and other benefits
is justified only if the employee was unjustly dismissed.
16.

Aurora Land v NLRC 266 SCRA 48 (1997)

17.

St Michael's Inst v Santos 371SCRA 283 ( 2001)

18.

Asian Terminals Inc v NLRC GR No. 158458 ( 2007)

1995 termination notice it issued, petitioners expressly acknowledged that respondent began incurring absences without leave after [he was] put behind bars
due to [his] involvement in a killing incident. It clearly indicates that petitioners
knew early on of the situation of respondent. It also explains why in its reply before the LA, appeal before the NLRC and petition for certiorari before CA,
petitioners never questioned the truth about respondent's detention.
A.

ASIAN TERMINALS v. NLRC and Labrador

J. Austria-Martinez
G.R. No. 163252
TOPIC: Backwages; Absences incurred by an employee who is prevented from reporting for work due to his detention to answer some criminal charge is excusable
if his detention is baseless, in that the criminal charge against him is not at all
supported by sufficient evidence. 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: (1), the employee must have failed to report for
work or must have been absent without valid or justifiable reason; and (2) there
must have been a clear intention on the part of the employee to sever the employeremployee relationship as manifested by some overt acts, with the second element
being the more determinative factor.
FACTS: Romeo Labrador was a stevedore antigue with petitioner who was detained for allegedly being involved in a killing incident. He was absent for more
than a year so petitioner sent him a letter requiring him to explain within 72
hours why he should not suffer any disciplinary penalty for his prolonged absence. After another letter asking him to explain his situation, petitioner wrote
Labrador to inform him of his termination.
Following his acquittal and release from detention, Labrador reported for work
but petitioner asked him to re-apply. Labrador filed a case for illegal dismissal,
separation pay, non-payment of labor standard benefits, etc.
LA: In favour of Labrador; asked petitioner to pay backwages
NLRC: AFFIRMED LA decision with MODIFICATION deleting 13th month and
SIL pay
C: AFFIRMED NLRC decision with MODIFICATION re: backpay
ISSUE: Whether or not Labrador was entitled to backwages in spite of his absence of 3 years from employment (YES)
RESOLUTION: Petition PARTIALLY GRANTED; CA decision AFFIRMED
Illegal Dismissal; Prolonged absence excusable because of detention for
a criminal charge; Respondent was in detention during the entire period of his
absence from work and his situation was known to petitioners. In the February 8,

Abandonment; When acts considered abandonment; To justify the dismissal of respondent for abandonment, petitioners should have established
by concrete evidence the concurrence of two elements: (1) that respondent
had the intention to deliberately and without justification abandon his employment or refuse to resume his work; (2), that respondent performed overt
acts from which it may be deduced that he no longer intended to work.

Petitioners failed to discharge such burden of proof. Respondent's absences, even

after notice to return to work, cannot be equated with abandonment, especially
the latter incurred said absences unwillingly and without fault.
Absences incurred by an employee who is prevented from reporting for work due
to his detention to answer some criminal charge is excusable if his detention is
baseless, in that the criminal charge against him is not at all supported by sufficient evidence.
Labrador was prevented from reporting for work by reason of his detention. That
his detention turned out to be without basis, as the criminal charge upon which
said detention was ordered was later dismissed for lack of evidence, made the
absences he incurred as a consequence not only involuntary but also excusable. It
was not the intention of respondent to absent himself, or his fault that he was
detained on an erroneous charge. In no way may the absences he incurred under
such circumstances be likened to abandonment. His dismissal being illegal, respondent is entitled to backwages as a matter of right provided by law.
19.

Bustamante v NLRC 265 SCRA 1 (1996)

Bustamante v. NLRC
28 November 1996
J. Padilla
Petitioner
Osmalik S. Bustamante, Paulino A. Bantayan, Fernando L. Bustamante, Mario
D. Sumonod, and Sabu J. Lamaran
Respondent
National Labor Relations Commission, Fifth Division and Evergreen Farms, Inc.
First Division of SC promulgated a decision reversing the NLRC decision and
reinstating the LAs decision with the modification that backwages should be paid
to petitioners from the time of their illegal dismissal on June 25 1990 up to the
date of their reinstatement. If reinstatement was no longer feasible, one-month
salary shall be paid as ordered in the LAs decision in addition to the adjudged
12

backwages. Private respondent now moves to reconsider because petitioners are

not entitled to recover backwages because they were not actually dismissed as
they were probationary workers and assuming they were entitled to backwages,
computation should not start from cessation of work up to actual reinstatement.
Salary earned elsewhere should be deducted.

Respondents

Issue
Whether or not the income derived by the employee elsewhere during the period
of his illegal dismissal should be deducted from the award of backwages. NO
Ratio:
Court explained different laws enacted over the years for computation. RA 875
Industrial Peace Act, PD 442 (Labor Code) RA 6715 amending Art 279 of the LC,
When RA 6715 took effect on 21 March 1989, the pertinent portion of Article 279
of the Labor Code was amended to read as follows:

[] An employee who unjustly dismissed from work shall be entitled to

reinstatement without loss of seniority rights and other privileges and to
his full backwages, inclusive of allowances, and to his other benefits or
their monetary equivalent computed from the time his compensation was
withheld from him up to the time of his actual reinstatement.
LAW NOW: An employee who is unjustly dismissed from work shall be entitled
to reinstatement without loss of seniority rights and other privileges and to his
full backwages, inclusive of allowances and to his other benefits or their monetary
equivalent computed from the time his compensation is withheld from him up to
the time of his actual reinstatement.
Backwages to be awarded to an illegally dismissed employee should not be diminished/reduced by the earnings derived by him elsewhere during the period of his
illegal dismissal. The underlying reason for this is that the employee while litigating the legality 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/penalty he has to pay for illegally dismissing his employee
LEGISLATIVE INTENT: give more benefits to workers
20.

STAR PAPER CORPORATION vs. CARLITO ESPIRI

PAGUIRIGAN, TEODORO SUBAGAN, LUISITO MAGNAMPO

TU,

Complainants worked in respondents 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 CBA which was intended to effect a reduction in their
leave benefits of 15 days for every year of service, they were subjected to
acts of harassment

Nevertheless, on considerations of justice and equity, separation pay was

awarded at the rate of 1/2 months salary for every year of service

NLRC affirmed LA

Respondents no longer filed MR to NLRC but filed a petition

for certiorari with the CA, explaining: filing of the instant petition is
proper in view of the extreme urgency of the issues (same issue anyway if
MR)

CA: NLRC and LA reversed

TOMAS

November 2, 2006 AUSTRIA-MARTINEZ, J.

denied allegations, transfer had, for its sole consideration, the best interest of the company and that it was agreed into when they signed their
employment contracts
no reason to get back at the complainants on account of their refusal to
sign the adverted signature sheet, since majority of the employees in the
bargaining unit had already ratified
during their employment, complainants committed several offenses:
o Tungpalan failed to report for work; broke a breaker; signed an
overtime form but did not render overtime work, and had several unexcused absences
o Espiritu a number of tardiness and absences
o Regalado was suspended 7 days for absences, issued a memorandum for not wearing the proper uniform and for tardiness
o Paguirigan had 10 unexcused absences and was suspended
twice on such account

LA: transfer was an act of management right and prerogative

Star Paper Corp v Espiritu GR No. 154006 ( 2006)

November 11, 1998, they reported for work, but not allowed entry & they
were instead instructed by Personnel Manager, Mr. Jessie Ongsitco, to
receive a Memorandum of Transfer which they refused
alleged that their transfer to a provincial post constituted constructive
dismissal

there was a previous meeting between petitioners [herein respondents]

and the representative of the Corporation and an agreement was reached
- petitioners allowed to report for work the following day leaving the settlement of the money claims as the lone issue to be resolved
promised reinstatement to the petitioners was not effected but instead,
petitioners were served the memorandum of their transfer all the complainants were residents of Metro Manila, their transfer to Iloilo, Bacolod, Davao, Cebu and Cagayan on the same day was served to them is
very unreasonable
there was bad faith on the part of the Corporation specially when the
Memo of Transfer of work assignment came less than a week after petitioners refused to sign

13

(CA) STAR PAPERS CORPORATION ordered to pay separation pay equivalent to

1 month salary for every year of service; as per RA 6715, petitioners are entitled
to their full backwages, inclusive of allowances and other benefits or their monetary equivalent computed from the time their actual compensation was withheld
from them up to the time of the finality of this decision
ISSUE: WoN petitioners were constructively dismissed (YES) / WoN CA erred in
ordering payment of backwages from dismissal up to reinstatement (NO)
(there was procedural ish but I didnt include on recognized exceptions to the general rule of filing MR)
respondents were constructively dismissed

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 employers failure to discharge such burden would make
him liable for unlawful constructive dismissal.
o 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 CBA, and petitioners emphasis on respondents alleged previous infractions at work, point to the fact that the transfers are
motivated by ill-will
o Petitioner, failed to sufficiently prove that transfer is for a just
and valid cause and not unreasonable, inconvenient, or prejudicial to the employee, making it liable for constructive dismissal

Petitioner: CA erred in ordering payment of backwages from dismissal up to reinstatement instead of ordering backwages only from the time the CA ruled
SC: CA never ordered the reinstatement of respondents but instead ordered the
payment of separation pay. As to issue of backwages, where an employee
would have been entitled to reinstatement with full backwages, but circumstances, i.e., strained relationships, makes reinstatement impossible,
the more equitable disposition would be an award of separation
pay equivalent to at least one month pay, or one month pay for every year of service, whichever is higher, in addition to full backwages, inclusive of allowances, and other benefits or their monetary equivalent, computed from the time
the employees compensation was withheld from him up to the time of
his supposed actual reinstatement

since payment of backwages and separation pay were ordered only upon
CA Decision, and the case was further elevated to this Court, then the
supposed actual reinstatement, had reinstatement been feasible, would
have been upon the finality of this Courts decision
computation of full backwages, inclusive of allowances, and other benefits or their monetary equivalent, should be computed from the time
the respondents compensation was withheld from them up to
the time of the finality of this decision

21.

Acesite Corp v NLRC 449 SCRA 360 ( 2005)

ACESITE CORPORATION, HOLIDAY INN, JOHANN ANGERBAUER and

PHIL KENNEDY vs. NLRC and LEO A. GONZALES
LEO A. GONZALES, vs. ACESITE (PHILIPPINES) HOTEL CORPORATION,
HOLIDAY INN MANILA, JOHANN ANGERBAUER and PHIL KENNEDY
January 26, 2005 CARPIO MORALES, J.

Leo A. Gonzales was hired on October 18, 1993 as Chief of Security of

Manila Pavillion Hotel. January 1, 1995, Acesite Corporation took over
the operations and renamed it Holiday Inn
March 25, 1998, Gonzales took a 4-day sick leave and took emergency
leave on March 30, 1998. April 16-29, 1998, took a 12-day vacation leave
Before expiration of his 12-day vacation leave, Gonzales filed an application for emergency leave for 10 days commencing on April 30 - May 13 NOT approved
Acesites claim, he received a telegram informing him of the disapproval
and asking him to report on April 30 (Gonzales did not report)
telegram sent advising him that he was on unauthorized leave and asking him to provide a written explanation within the next 24 hours why
he was not reporting for work. required to report for work the following
day
May 2, 1998, Gonzales father Anacleto sent a telegram to Acesite stating
that he was still recovering from severe stomach disorder and would report back for work on May 4, 1998. medical certificate dated May 3, 1998
issued by a Dr. Laureano C. Gonzales, Jr. stating that Gonzales was under his care from April 30 May 3, 1998 was presented
May 4, 1998, around lunchtime, Gonzales reported for work and presented himself to Johann Angerbauer, then Resident Manager of the hotel
o
Angerbauer: asked him to explain why he had been absent despite orders
o Gonzales: he requested for leave without pay from May 5-9
which was provisionally approved on condition that he (Gonzales) would be sending his explanation through e-mail
o 5:33pm Gonzales sent his explanation to Angerbauer through email
May 4, 1998 Angerbauer sent inter-office memo, allegedly received at
around 7:55 pm by the security staff: As discussed during our meeting,
you are advised to submit an explanation within 24 hours why you did
not report to work 1st May 1998? And why you came in late today 4thof
May 1998, as we had a 10:30 AM scheduled communication meeting with
the incoming Security Agency.
We will be having another meeting tomorrow regarding the turnover of
the outgoing Security Agency. I will be expecting your presence during
the said meeting.

Gonzales claims that he got hold of a copy of memo only on May 8

14

Gonzales not having reported on May 5, 1998, Angerbauer sent him telegram at his provincial address (why havent you explained blah blah security concerns - PLEASE CONSIDER THIS AS OUR FINAL ADVICE.)
Gonzales, claims to have received only in the afternoon of May 7; immediately repaired back to Manila on May 8, only to be humiliatingly and
ignominiously barred by the guard (a subordinate of [Gonzales]) from entering
May 7, Angerbauer issued Notice of Termination through an inter-office
memo (violations of rule no. 27, Type C, of the House Code of Discipline
Acts of gross disobedience or insubordination and provisions of the Labor Code, specifically Art. 282. Termination by Employer, par. (a) x x x
willful disobedience by the employee of the lawful orders of his employer
or representative in connection with his work.)
Gonzales filed a complaint] against Acesite, Angerbauer and Kennedy for
illegal dismissal with prayer for reinstatement and payment of full
backwages, service incentive leave, 13th month pay, moral and exemplary
damages and attorneys fees. Gonzales, however, failed to appear in 2
consecutive hearings dismissed
Gonzales refiled his complaint for illegal dismissal against Angerbauer
and Kennedy, which he amended by impleading Acesite as respondent

LA: dismissed; Gonzales was dismissed for just cause and was not denied of due
process
NLRC reversed LA
2) pay backwages beginning for the period May 16, 1998, until he is
actually reinstated, inclusive of all his other fringe benefits or their monetary
equivalent;
4)

pay

CA: Gonzales was illegally dismissed, affirmed with modification NLRC

amount P800,000 each as moral and exemplary damages unwarranted.

collective amount of P100,000 as moral and exemplary damages is just
under the circumstances.

1. reinstate. If reinstatement is no longer feasible, then payment of separation

pay equivalent to month pay for every year of service is hereby ordered;
2. pay full back wages commencing on 14 May 1998 in view of his 1 week suspension until he is actually reinstated;
3. pay P100,000 as moral and exemplary damages
4. pay 10% - attorneys fees
ISSUE: WoN Gonzales illegally dismissed (YES) / WoN deletion by CA of fringe
benefits proper(NO)

Gonzales cannot be considered to have willfully disobeyed his employer

because 2 requisites: employees assailed conduct has been willful or intentional, the willfulness being characterized by a wrongful and perverse attitude; and the order violated must have been reasonable, lawful, made known to the employee and must pertain to the duties which
he had been engaged to discharge
Gonzales conduct has not been shown to have been characterized by a
perverse attitude. His receipt of telegram disapproving his application
for emergency leave starting April 30, 1998 has not been shown. He immediately hied back to Manila upon receipt - negates perverse attitude.
As to alleged concealment of his candidacy (for provincial board member)
as a ground for Acesites loss of trust and confidence in him not companys position before. Concealment of candidacy angle is mere afterthought to further justify his illegal dismissal.
Gonzales perceived feigning of illness, purely speculator
If there is anything that Gonzales can be faulted for, it is his being too
presumptuous that his application for leave would be approved.

(on strained relations, therefore pay instead of reinstatement alam nyo na yan!)
Gonzales position is one of trust and confidence, he being in charge of the over-all
security of said hotel. Thus, reinstatement is no longer possible.
moral and exemplary damages unwarranted

1) immediately reinstate complainant

3) pay P800,000 as moral damages; P800,000 exemplary

10% attorneys fees

no just cause to dismiss Gonzales

grounds alleged by Gonzales not sufficiently proven to award such

(Angerbauer and Kennedy as corporate offices NOT solidarily liable with Acesite
no inhuman treatment of Gonzales; bad faith or malice was not proven.
Angerbauer, acting on behalf of Acesite, was, like Gonzales, perhaps also too presumptuous in thinking that the telegrams ordering the latter to report for work
were all received on time, drawing him to hastily conclude that Gonzales intentionally disobeyed the orders)
(IMPROTANT PART!)
As to the deletion of the fringe benefits or their monetary equivalent,
not in accord with law and jurisprudence.
LC 279 - xxx An employee who is unjustly dismissed from work shall be entitled to
reinstatement without loss of seniority rights and other privileges and to his full
backwages, inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his compensation was withheld from
him up to the time of his actual reinstatement.
(attorneys fees proper because Gonzales having been forced to litigate and incur
expenses to protect his rights and interest BUT reduce to P10,000)
22.

Phil. Aeolus v. NLRC, 331SCRA 237 (2000)

23.

Reyes v CA 409 SCRA 267 ( 2003)

REYES vs CA
15

Dr. Pedrito Reyes held the following positions:

Technical/Sales Manager of Leong Hup Poultry Farms of Malaysia: sells
parent stock day-old chicks and provides technical assistance to clients.
Salary of $4,500/month. Started employment in 1989.

General Manager of Philippine Malay Poultry Breeders in the Philippines (formed by Leong Hup). Salary of $5,500/month. Started employment in 1992.
Leong Hup and Phil. Malay suffered losses in 1996-1997 which caused them to
reduce production and retrench employees in Phil. Malay. Dr. Reyes gave verbal
notice to Francis Lau (President) that he will serve as GM only until Dec. 31,
1997, and submitted his letter of resignation of Jan. 12, 1998. He asks for the
benefits given to retrenched/resigned employees such as separation pay of 1
month salary for every year of service and the monetary equivalent of his sick and
vacation leaves.
Additionally, he asks for:

payment of underpaid salary from Dec. 1989- Dec. 31, 1997 + additional
1 salary payable every year at the rate of P26.30

brand new car (Galant Super Saloon)

life insurance policy

office rentals at the rate of $300 for use of his residence as the office of
Phil. Malay

retention of the legal services of Quasha Ancheta Pena and Nolasco Law
Firm for the illegal recruitment case against him
Phil. Malay only offered him separation pay for 4 months, which Reyes did not
accept. He thus filed a complaint against respondent.
LA: granted Reyes all the benefits he claims, plus attorney's fees equivalent to
10% of the total claim
NLRC: omitted from the award: unpaid salary from Jan. 1, 1998- Jan. 18, 1998,
vacation leave pay, brand new car, office rentals, life insurance policy, moral
damages (P2.5 million), and exemplary damages (P2.5 million). It likewise reduced the amount of separation pay (basing it on 8 years of service instead of 9),
and also reduced the award of attorney's fees (excluding separation pay as its
basis).
Reyes appealed to the CA, but the CA dismissed such for failure to attach to the
petition his: position paper filed before the Labor Arbiter, his Memorandum of
Appeal, and the Labor Arbiter's decision. Reyes later attached these but the CA
still sustained its ruling.
Issues:
1.w/n CA erred in dismissing the petitition
2. w/n LA's decision should be reinstated
Held:

1. YES. Subsequent and substantial compliance of an appellant may call for the
relaxation of the rules of procedure. 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.
2. NO. The Court ruled on the following awards:

24.

Unpaid salary: NLRC correct in ruling that Reyes is not entitled to compensation from Jan. 1, 1998- Jan 19, 1998 as he did not prove that he
rendered services during that time
Damages: NLRC correct in deleting award for moral and exemplary
damages as respondents were not shown to have acted in bad faith nor in
a wanton, oppressive, or malevolvent manner
Car and insurance benefits: NLRC correct in omitting such as these are
only granted during the course of employment and should thus not be a
part of the separation package
Office rentals: NLRC correct in omitting this as claim for such is not
within the jurisdiction of labor courts. The rent agreement is based on
contractual, and not employer-employee, relations.
Sick and vacation leaves: NLRC shouldn't have deleted the award of vacation leaves to Reyes. Vacation and sick leaves are awarded as part of
the retrenchment packages whether or not these have been used.
Attorney's fees: NLRC erred in excluding separation pay as part of the
basis for attorney's fees, as such is part of the wages he recovered.
Art. 111. Attorney's fees-- (a) in cases of unlawful withholding of wages,
the culpable party may be assessed attorney's fees equivalent to 10% of
the amount of wages recovered....
There are 2 kinds of attorney's fees:
(1) Ordinary: reasonable compensation paid to a lawyer by his client for
the legal services he has rendered
(2) Extraordinary: a form of damages ordered by the court to be paid to
the litigant by the losing party pursuant to Art. 2208 of the Civil Code. In
labor cases in particular, the following provisions apply:
2208: In the absence of stipulation, attorney's fees and expenses of litigation, other than judicial costs, cannot be recovered except:
(7) in actions for the recovery of wages of household helpers, laborers and
skilled workers.
111 (Labor Code) Attorney's Fees: (a) in cases of unlawful withholding of
wages, the culpable party may be assessed attorney's fees equivalent to
10% of the amount of wages recovered. (b) It shall be unlawful for any
person to demand or accept, in any judicial or administrative proceedings
for the recovery of wages, attorney's fees which exceed 10% of the amount
of wages recovered.
M+W Zander Phil Inc v Enriquez GR No. 169173 ( 2009)

M+W ZANDER PHILIPPINES, v. ENRIQUEZ

FACTS:
Enriquez was hired on probationary basis as the Administration Manager
and Executive Assistant to the General Manager of petitioner M+W Zander
Philippines, Inc. (M+W Zander. She was confirmed as a permanent employee.
M+W Zander relieved its General Manager, Mr. Eric Van Stiegeren, and in
his place appointed Mr. Rolf Wiltschek (Wiltschek). The appointment of
Wiltschek as the Acting General Manager was announced in a meeting. On
16

the same day, a Letter of Appeal was signed by 29 employees of M+W Zander,
opposing the appointment of Wiltschek.
A day after the Letter of Appeal was released, a number of employees did not
report to work.
Upon discovering respondent Enriquez's participation in drafting and in circulating the Letter of Appeal, as well as in the alleged work stoppage that occurred a day after the release of the Letter, M+W Zander sent a Notice to respondent Enriquez, requiring her to explain within 48 hours from receipt of
the notice why no disciplinary action should be taken against her for willful
breach of trust and using her authority and/or influence as Administration
Manager of M+W Zander over her subordinates to stage a "no work day" on.
It was indicated that willful breach of trust has a corresponding penalty of
dismissal. Meanwhile, respondent Enriquez was placed under preventive
suspension for 15 working days.
On March 1, 2002, a Notice of Termination was received by respondent informing her that her services as Administration Manager and Executive Assistant to the General Manager of M+W Zander are terminated effective the
same day. The respondent was found liable for "willful breach of trust and
confidence in using [her] authority and/or influence as Administrative Manager of M+W Zander Philippines over [her] subordinate to stage a 'no work
day' last February 1, 2002, which in turn disrupted vital operations in the
Company."
The Court found that Eriquez had been illegally dismissed.
ISSUE: Whether or not Enriquez is entitled to moral damages and attorneys
fees
HELD: Yes. She is entitled to moral damages and attorneys fees.
RATIO:
Moral damages are recoverable only where the dismissal of the employee was
attended by bad faith or fraud, or constituted an act oppressive to labor, or
was done in a manner contrary to morals, good customs or public policy. Such
an award cannot be justified solely upon the premise that the employer fired
his employee without just cause or due process. Additional facts must be
pleaded and proven to warrant the grant of moral damages under the Civil
Code, i.e., that the act of dismissal was attended by bad faith or fraud, or constituted an act oppressive to labor, or was done in a manner contrary to morals, good customs or public policy; and, of course, that social humiliation,
wounded feelings, grave anxiety, and similar injury resulted therefrom.
In previous cases where moral damages and attorney's fees were awarded,
the manner of termination was done in a humiliating and insulting manner,
such as in the case of Balayan Colleges v. National Labor Relations
Commission where the employer posted copies of its letters of termination
to the teachers inside the school campus and it also furnished copies to the
town mayor and Parish Priest of their community for the purpose of maligning the teachers' reputation. So also in the case of Chiang Kai Shek School

v. Court of Appeals, this Court awarded moral damages to a teacher who

was flatly, and without warning or a formal notice, told that she was dismissed.
In the case at bar, we see it fit to award moral damages to respondent because the manner in which respondent was treated upon petitioners' suspicion of her involvement in drafting and in circulating the letter of appeal and
the alleged staging of the "no work day" is contrary to good morals because it
caused unnecessary humiliation to respondent.
When respondent reported to work a day after the alleged "no work day", she
was given a notice of preventive suspension, her personal belongings were inspected, and she was escorted outside of the premises, without any explanation. Furthermore, an order was given by the administration to her subordinates that in no case shall she be allowed inside the company premises without an authorized escort. Such measures were unwarranted because the
charges against respondent have no connection to the breach of trust involving loss of money or company property, which could have called for securing
company property from respondent.
The crux is precisely that the charges against respondent are divorced from
the essence of loss of trust and confidence which is the commission of an
act that is dishonest, deceitful or fraudulent. And despite this, based merely
on mere suspicion, respondent was treated unfairly when she was not given
an explanation why her personal belongings were inspected, why she was
asked to leave the company building, why she had to be escorted by guards,
why she was banned from the premises, and, most importantly, why it was
necessary at all to issue an order to her subordinates that she is not allowed
in the company premises unless she is escorted by authorized personnel. These measures are uncalled for, unfair and oppressive.
ON ATTORNEYS FEES
Attorney's fees may be awarded only when the employee is illegally dismissed
in bad faith and is compelled to litigate or incur expenses to protect his rights
by reason of the unjustified acts of his employer. Respondent's unjustified
and unwarranted dismissal prompted her to engage the professional services
of a counsel and she is thus entitled to an award of attorney's fees.
ON PERSONAL LIABILITY OF THE GENERAL MANAGER
The general manager of a corporation should not be made personally answerable for the payment of an illegally dismissed employee's monetary claims
arising from the dismissal unless he had acted maliciously or in bad faith in
terminating the services of the employee. The employer corporation has a
separate and distinct personality from its officers who merely act as its
agents. ED
The exception noted is where the official "had acted maliciously or in bad
faith", in which event he may be made personally liable for his own act. That
exception is not applicable in the case at bar, because it has not been proven
that Wiltschek was impleaded in his capacity as General Manager of peti17

tioner corporation and there appears to be no evidence on record that he acted maliciously or in bad faith in terminating the services of respondent. His
act, therefore, was within the scope of his authority and was a corporate act
for which he should not be held personally liable for.
25.

"J" Marketing corp v Taran GR No. 163924 ( 2009)

J MARKETING CORPORATION v. TARAN (2009)

PERALTA, J.:
FACTS: From February 1981 to February 28, 1993, Cesar L. Taran worked as
credit investigator/collector for J Marketing Corporation, an appliance and motorcycle dealer with a branch in Tacloban City. Sometime in February 1993, respondent informed petitioner's then OIC Branch Manager Hector L. Caludac of
his intention to resign effective March 1, 1993. Caludac sent respondent a Memorandum requiring him to submit a formal resignation letter, respondent thus filed
his resignation letter. A few months after, the respondent filed a case with the
NLRC for illegal dismissal and holiday differential. He claimed that there was a
verbal arrangement between him and petitioner whereby the latter would pay
him 100% separation pay and other benefits, provided that he would formally
tender his resignation from the company. But after several follow-ups, petitioner
failed to pay respondent his monetary claims; hence, the latter was constrained to
file a complaint.
Petitioner contended that respondent's dismissal was justified, because he failed
to meet his collection quota, in which poor performance compelled him to voluntarily resign due to inefficiency. The Labor Arbiter, the NLRC, and the CA all
agreed that there was a verbal agreement between Caludac and respondent,
without which the latter would not have tendered his resignation letter.
ISSUE: WON respondent is entitled to any benefit under the law after having
resigned voluntarily.
HELD: YES. He is entitled to separation benefits. Petition was DENIED.
RATIO: That complainant submitted a resignation letter is uncontroverted. The
findings of the lower courts reveal that before complainant submitted his resignation letter, he had verbal agreement with the Regional Manager that he had to
formally tender his resignation from the company to entitle him to a grant of
100% separation pay. This verbal agreement can be inferred from the tenor of the
letter sent to him on February 13, 1993, by Mr. Caludac, Branch OIC. A reading
of the memorandum especially the phrase which you verbally inform the Regional Manager of your intention to resign, positively suggests that there was a prior
arrangement between complainant and the Regional Manager of the former's intention to resign.
It is well to note that there is no provision in the Labor Code that grants separation pay to voluntarily resigning employees. Separation pay may be awarded only
in cases when the termination of employment is due to (a) installation of laborsaving devices, (b) redundancy, (c) retrenchment, (d) closing or cessation of business operations, (e) disease of an employee and his continued employment is prejudicial to himself or his co-employees, or (f) when an employee is illegally dis-

missed but reinstatement is no longer feasible. In fact, the rule is that an employee who voluntarily resigns from employment is not entitled to separation pay,
except when it is stipulated in the employment contract or collective bargaining
agreement (CBA), or it is sanctioned by established employer practice or policy.
Here, respondent was separated from his employment not on the grounds mentioned above. Neither was there a stipulation in his employment contract or CBA
or even a company practice or policy that would grant separation pay to employees who voluntarily resigned. Nevertheless, the labor tribunals as well as the CA
resolved to grant respondent his prayer for separation pay, explaining that he
deserved to receive the same as a gratuity for his loyalty and long service to the
company, not to mention the representation of Caludac that he would be given all
the benefits due him.
Clearly, the primary consideration that impelled respondent to tender his resignation letter was the assurance that he would be paid his separation pay. It is
thus unlikely for someone to just leave his employer for whom he has worked for
twelve (12) years without any expectation of financial assistance.
In Alfaro v. CA, the court held that as a general rule, separation pay need not be
paid to an employee who voluntarily resigns. However, an employer who agrees to
expend such benefit as an incident of the resignation should not be allowed to renege on the fulfillment of such commitment. In this case, Caludac, as OIC Branch
Manager in Tacloban City, represented petitioner and was responsible for overseeing respondent's work in pursuance of the company's goal of an increase in
sales and customer satisfaction. Such control was manifested through the communications of Caludac to respondent regarding the latter's performance.
Corollarily, the court cannot fault respondent for relying on Caludac's representations and promises, as in fact it was to him that he first verbally relayed his plan
to resign from the company. Not only the CA, but also the Labor Arbiter and the
NLRC, that was convinced that without the assurance of payment of benefits,
respondent would not have tendered his resignation letter.
On Respondent's claim for rest day pay differential:
The court upheld the decision of the NLRC that he was entitled to a rest day pay
differential. An examination of the vouchers submitted by respondent showed
that while complainant was paid bi-monthly, he was actually paid on the number
of days worked. Thus, every time he is absent, he will not be paid for the day. He
is for all intents and purposes, a daily paid employee. As such, he has to be paid
rest day pay when he works on his rest days. With complainant's categorical assertion that he worked during his rest days especially in the month of December,
the Labor arbiter did not err in awarding him rest day pay. There is however a
need to modify this award to cover only the period from July 1990 up to July 1993
as the claim before 1990 had already prescribed.
Respondent filed his claim for rest day differential in July 1993. It follows then
that he is only entitled to his rest day pay within the three-year period counted
from the time of the filing of his complaint, or from July 1990. Thus, the NLRC
correctly ruled that respondent's claim before July 1990 had already prescribed in
accordance with Article 291 of the Labor Code.
18

26.

BPI v NLRC GR No 179801 (2010)

Palteng v UCPB

27.

Triad Security and Allied Services v Ortega 481 SCRA 591 ( 2006)

February 27, 2009 | QUISUMBING, J.

Triad Security and Allied Services, Inc. and Que v. Ortega Jr. et al (2006).

FACTS:

Former employees of Triad Security filed complaint grounded on multiple causes

of action including illegal dismissal and non-payment of minimum wages and
other benefits.

They were found liable by the LA. Order of the Labor Arbiter:
1.
2.
3.
4.
5.
6.

Reinstate to their former jobs

Pay jointly and solidarily complainants backwages and to such further
backwages as they accrue until reinstatement order is complied with.
If reinstatement not possible, pay separation pay.
Pay money claims
Pay attorneys fees
Total amount due for backwages and separation pay was: P2,097,152.26
as calculated by the Computation and Examination Unit.

Triad Security appealed the amount awarded:

1.
2.
3.

They already paid separation pay, backwages should no longer be included in the amount due.
The guards had already found other jobs. To award them backwages
would be unjust enrichment.
They claim that they owe only P603,794.77.

ISSUE: How to calculate backwages?

SC: RE remedies
Illegally dismissed employee is entitled to two reliefs: backwages and reinstatement. These are separate and distinct from each other. However, separation pay
is granted where reinstatement is no longer feasible because of strained relations
between the employee and the employer. In effect, an illegally dismissed employee is entitled to either reinstatement, if viable, or separation pay if reinstatement
is no longer viable and backwages.
Backwages and separation pay are, therefore, distinct reliefs granted to one who
was illegally dismissed from employment. The award of one does not preclude
that of the other as this court had, in proper cases, ordered the payment of both.
IN THIS CASE:
Triad only paid the separation pay more than years after LAs judgment. Until
the payment of separation pay is carried out, the employer should not be allowed
to remain unpunished for the delay, if not outright refusal, to immediately execute the reinstatement aspect of the labor arbiters decision.
28.

Palteng v UCPB GR No. 172199 ( 2009)

Reliefs and Remedies in Illegal Dismissal Cases> Backwages, Damages, Attorney's Fees

Petitioner Elizabeth Palteng was the Senior Assistant Manager/Branch

Operations Officer of respondent United Coconut Planters Bank.
Area Head and VP Rodriguez reported to the banks Internal Audit and
Credit Review Division that a bank client has incurred Past Due Domestic Bills Purchased (BP). After conducting a diligence audit, the division
reported to the Audit and Examination Committee that Palteng committed several offenses under the Employee Discipline Code in connection
with Mercados Past Due Domestic BP. It also recommended that the
matter be referred to the Committee on Employee Discipline for proper
disposition.
Palteng accepted full responsibility for granting the BP accommodation
against Mercados personal checks beyond and outside her authority but
while she admitted committing a major offense that may cause her dismissal, she claimed that it was an honest mistake.
Palteng was dismissed with forfeiture of all benefits and filed a complaint for illegal dismissal.
LA declared petitioners termination illegal and ordered payment of separation pay (in lieu of reinstatement), backwages & attorneys fees and
awarded moral, exemplary damages.
On appeal, NLRC affirmed assailed decision except that the awards of
moral and exemplary damages were ordered deleted.
Bank appealed to the CA which affirmed with further modification the
assailed decision (award of backwages in favor of respondent Palteng was
made to correspond to the period from the date of her dismissal up to the
promulgation of the LAs decision instead of until finality of the decision).
Petitioner brought the case to the SC submitting that the CA erred in
limiting the award of backwages to only up to the date of the promulgation. Respondent counters that petitioner is not entitled to the payment
of backwages since she is not entirely faultless or fully innocent of the offenses imputed against her

ISSUE/HELD: W/N petitioner is entitled to the payment of backwages. NO.

RATIO: Settled is the rule that an employee who is illegally dismissed from work
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. However, in the event that
reinstatement is no longer possible, the employee may be given separation pay
instead.Notably, reinstatement and payment of backwages are distinct and separate reliefs given to alleviate the economic setback brought about by the employees dismissal. The award of one does not bar the other. Backwages may be
awarded without reinstatement, and reinstatement may be ordered without
awarding backwages.
19

In a number of cases, the SC, despite ordering reinstatement or payment of separation pay in lieu of reinstatement, has not awarded backwages as penalty for the
misconduct or infraction committed by the employee. In the case at bar, petitioner
admitted that she granted the BP accommodation against Mercados personal
checks beyond and outside her authority. The LA, the NLRC and the CA all found
her to have committed an "error of judgment,","honest mistake" vis--vis a "major
offense."
Since petitioner was not faultless in regard to the offenses imputed
against her, SC held that the award of separation pay only, without
backwages, is proper.
29.
Business Day Information Systems and Services Inc v NLRC 221SCRA 9
( 1993)
Business Day Information Systems and Services Inc. v. NLRC
Businessday Information Systems due to financial reverses, some plant employees, including the private respondents, were laid off. BSSI retained some employees in an attempt to rehabilitate its business as a trading company. However,
barely two and a half months later, these remaining employees were likewise discharged because the company decided to cease business operations altogether.
At the conciliation proceedings before Labor Arbiter Manuel P. Asuncion, petitioners denied that there was unlawful discrimination in the payment of separation benefits to the employees. They argued that the first batch of employees was
paid "retrenchment" benefits mandated by law, while the remaining employees
were granted higher "separation" benefits because their termination was on account of the closure of the business.
In case of retrenchment of a company to prevent losses and closure of business
operation, the law provides:
Art. 283. Closure of establishment and reduction of personnel.-The employer may
also terminate the employment of any employee due to the installation of labor
saving devices, redundancy, retrenchment to prevent losses or the closing or cessation of operations 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 nut due to serious business losses or financial
reverses, the separation pay shall be equivalent to one (1) month pay or at least
one half (1/2) month pay for every year of service, whichever is higher. A fraction
of at least six (6) months shall be considered one (1) whole year." (Labor Code;
emphasis supplied.)
Undoubtedly, petitioners' right to terminate employees on account of retrenchment to prevent losses or closure of business operations, is recognized by law, but

it may not pay separation benefits unequally for such discrimination breeds resentment and ill-will among those who have been treated less generously than
others.
The law requires the granting of the same amount of separation benefits to the
affected employees in any of the cases. The respondent argued that the giving of
more separation benefit to the second and third batches of employees separated
was their expression of gratitude and benevolence to the remaining employees
who have tried to save and make the company viable in the remaining days of
operations. The law requires an employer to extend equal treatment to its employees. It may not, in the guise of exercising management prerogatives, grant
greater benefits to some and less to others. Management prerogatives are not
absolute prerogatives but are subject to legal limits, collective bargaining agreements, or general principles of fair play and justice (UST vs. NLRC, 190 SCRA
758). Article 283 of the Labor Code, as amended, protects workers whose employment is terminated because of closure of the establishment or reduction of
personnel (Abella vs. NLRC, 152 SCRA 141, 145).NLRC AFFIRMED.
30.

Songco v NLRC 183 SCRA 610 (1990)

Songco, et al. vs. National Labor Relations Commission

G.R. Nos. 50999-51000
(March 23, 1990)
FACTS: Zuelig filed an application for clearance to terminate the services of
Songco, and others, on the ground of retrenchment due to financial losses. During
the hearing, the parties agreed that the sole issue to be resolved was the basis of
the separation pay due. The salesmen received monthly salaries of at least
P400.00 and commission for every sale they made.
The Collective Bargaining Agreements between Zuelig and the union of which
Songco, et al. were members contained the following provision: "Any employee
who is separated from employment due to old age, sickness, death or permanent
lay-off, not due to the fault of said employee, shall receive from the company a
retirement gratuity in an amount equivalent to one (1) month's salary per year of
service."
The Labor Arbiter ordered Zuelig to pay Songco et al., separation pay equivalent
to their one month salary (exclusive of commissions, allowances, etc.) for every
year of service with the company.
The National Labor Relations Commission sustained the Arbiter.
ISSUE: Whether or not earned sales commissions and allowances should be included in the monthly salary of Songco, et al. for the purpose of computing their
separation pay.
RULING:
In the computation of backwages and separation pay, account must be taken not
only of the basic salary of the employee, but also of the transportation and emergency living allowances.
20

Even if the commissions were in the form of incentives or encouragement, so that

the salesman would be inspired to put a little more industry on jobs particularly
assigned to them, still these commissions are direct remunerations for services
rendered which contributed to the increase of income of the employee. Commission is the recompense compensation or reward of an agent, salesman, executor,
trustee, receiver, factor, broker or bailee, when the same is calculated as a percentage on the amount of his transactions or on the profit to the principal. The
nature of the work of a salesman and the reason for such type of remuneration for
services rendered demonstrate that commissions are part of Songco, et al's wage
or salary.
The Court takes judicial notice of the fact that some salesmen do not receive any
basic salary, but depend on commissions and allowances or commissions alone,
although an employer-employee relationships exists.
If the opposite view is adopted, i.e., that commissions do not form part of the wage
or salary, then in effect, we will be saying that this kind of salesmen do not receive any salary and, therefore, not entitled to separation pay in the event of discharge from employment. This narrow interpretation is not in accord with the
liberal spirit of the labor laws, and considering the purpose of separation pay
which is, to alleviate the difficulties which confront a dismissed employee thrown
to the streets to face the harsh necessities of life.
In Soriano vs. NLRC (155 SCRA 124), we held that the commissions also claimed
by the employee (override commission plus net deposit incentive) are not properly
includible in such base figure since such commissions must be earned by actual
market transactions attributable to the petitioner [salesman]. Since the commissions in the present case were earned by actual transactions attributable to Song,
et al., these should be included in their separation pay. In the computation thereof, what should be taken into account is the average commission earned during
their last year of employment.
31.

Labor Arbiter: There was valid dismissal. However the LA awarded separation
pay for del Rosarios 21 years of service without previous derogatory record.
NLRC: Dismissed Manila Waters appeal for failure to append a certification
against forum shopping.
CA: Affirmed the LAs award of separation pay considering that Del Rosario rendered 21 years of service to the company without previous derogatory record.
Issue: W/N del Rosario is entitled to separation pay. NO.
While Manila Water questioned the ruling of the LA, del Rosario did not appeal
his illegal dismissal so the court no longer dwelt on the question of his termination. Only the question of separation pay was discussed.
As a general rule, an employee who has been dismissed for any of the just causes
enumerated under Article 282 of the Labor Code is not entitled to a separation
pay. In exceptional cases, however, the Court has granted separation pay to a
legally dismissed employee as an act of "social justice" or on "equitable grounds."
In both instances, it is required that the dismissal (1) was not for serious misconduct; and (2) did not reflect on the moral character of the employee.
In the case of Toyota Motor Phils. Corp. Workers Association vs. NLRC, the court
expanded the exclusions on separation pay saying that it shall be allowed as a
measure of social justice only in instances where the employee is validly dismissed for causes OTHER THAN:
1.
2.
3.
4.
5.
6.
7.

San Miguel Corp v Javate 205 SCRA 469 (1992)

32.
Manila Water Company v. Carlito del Rosario G.R. No. 188747, January
29, 2014
Manila Water vs. Carlito del Rosario
Perez, J.
Facts:

Del Rosario was employed as Instrument Technician by Metropolitan

Waterworks and Sewerage System (MWSS). When MWSS was reorganized by the National Water Crisis Act of 1995, Manila Water absorbed some employees of MWSS including Del Rosario.
Manila Water discovered that 24 water meters were missing in its stockroom. Upon initial investigation, it appeared that del Rosario and another co-employee were involved. Manila Water issued a memo for del Rosario to explain why he shouldnt be dealt with administratively. He confessed his involvement.

Manila Water conducted a hearing and del Rosario again confessed his
involvement. Manila Water proceeded to dismiss him from employment.
Del Rosario filed an action for illegal dismissal.

serious misconduct,
willful disobedience,
gross and habitual neglect of duty,
fraud or
willful breach of trust,
commission of a crime against the employer or his family, or
those reflecting on his moral character.

The admitted cause of Del Rosarios dismissal amounts to serious misconduct. He

is responsible for the loss of the water meters in flagrant violation of the companys policy. The fact that Del Rosario served Manila Water/MWSS for more than
twenty years with no negative record prior to his dismissal, does not call for such
award of benefits, since his violation reflects a regrettable lack of loyalty and
worse, betrayal of the company.
The grant of separation pay to a dismissed employee is determined by the cause
of the dismissal. The years of service may determine how much separation pay
may be awarded. It is, however, not the reason why such pay should be granted at
all.
33.

SAMASAH-NUWHRAIN v Magsalin GR Nos 164939, 172303 ( 2011)

SAMASAH-NUWHRAIN v. Hon. Magsalin and Hotel Enterprises of the Phil.

21

6 June 2011; VIllarama, J.

without prior permission from his Department Head. He was required to

submit an explanation, but the explanation he submitted was found
unsatisfactory. Moral found Caragdag liable for violating OSDA 3.07, i.e.,
"leaving work assignment during official working hours without prior
permission from the department head or immediate superior," and
suspended him for three days.

Digest prepared by Jethro Koon

I. Facts
1.

2.

3.

4.

5.

6.

Hyatts General Manager, issued a Memo informing all hotel employees

that hotel security have been instructed to conduct a thorough bag
inspection and body frisking in every entrance and exit of the hotel. He
enjoined employees to comply therewith. Copies of the Memo were
furnished to the petitioner.
Caragdag, a waiter at the hotels Cafe Al Fresco restaurant and a
director of the union, refused to be frisked by the security personnel. The
incident was reported to the hotels HR which issued a Memo to
Caragdag requiring him to explain why no disciplinary action should be
taken against him. The following day, the same thing happened. HR
imposed on Caragdag the penalty of reprimand for the February 3, 2001
incident, which was considered a first offense, and suspended him for
three days for the February 6, 2001 incident, which was considered as a
second offense. Both penalties were in accordance with the hotels Code
of Discipline.

7.

Because of the succession of infractions he committed, the HR required

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

8.

Caragdag was sent a Notice of Dismissal. The Voluntary Arbitrator held

that the three separate suspensions are valid, the dismissal is legal and
OSDA 4.32 of Hyatts Code of Discipline is reasonable. However, for
humanitarian considerations, Hyatt is hereby ordered to grant financial
assistance to Mr. Caragdag in the amount of PhP100,000.00.

Subsequently, when Mike Moral (manager of Hyatts Cafe Al Fresco and

Caragdags immediate superior), was about to counsel two staff members
at the training room, Caragdag suddenly opened the door and yelled at
the two with an enraged look. In a disturbing voice he said, "Ang titigas
talaga ng ulo nyo. Sinabi ko na sa inyo na huwag kayong makikipagusap
sa management habang ongoing pa ang kaso!" Moral asked Caragdag
what the problem was and informed him that he was simply talking to
his staff. Moral also told Caragdag that he did not have the right to
interrupt and intimidate him during his counseling session with his staff.
Moral issued a Memo requiring Caragdag to explain his actions.
Caragdag submitted his written explanation narrating that he was
informed by someone that the two staff members were requesting for his
assistance because Moral had invited them to the training room.
Believing that he should advise the two that they should be accompanied
by a union officer to any inquisition, he went to the training room.
However, before he could enter the door, Moral blocked him. Thus, he
told the two staff that they should be assisted by a union rep before
giving any statement to management. Caragdag also prayed that Moral
be investigated for harassing union officers and union members.
Moral found the explanations unsatisfactory. In a Memo, Moral held
Caragdag liable for Offenses Subject to Disciplinary Action 3.01 of the
hotels Code of Discipline, i.e., "threatening, intimidating, coercing, and
provoking to a fight your superior for reasons directly connected with his
discharge of official duty." Thus, Caragdag was imposed the penalty of
seven days suspension in accordance with the hotels Code of Discipline.
Still later, Caragdag left his work assignment during official hours

9.

Voluntary Arbitrator reasoned that the union officers and

members had no right to breach company rules and regulations
on security and employee discipline on the basis of certain
suspicions against management and an ongoing CBA negotiation
standoff.

Voluntary Arbitrator also found that when Caragdag advised

Lacambacal and Alvaro not to give any statement, he threatened
and intimidated his superior while the latter was performing his
duties.

Moreover, there is no reason why he did not arrange his time-off

with the Department Head concerned. Thus, Caragdag was
validly dismissed pursuant to OSDA 4.32 of Hyatts Code of
Discipline, which states that an employee who commits three
different acts of misconduct within a twelve (12)-month period
commits serious misconduct.

Caragdag sought reconsideration of the decision while respondent filed a

motion for partial reconsideration. However, the Voluntary Arbitrator
denied both motions.

10. Caragdag assailed the decision of the Voluntary Arbitrator before the CA
thru certiorari. CA dismissed the petition outright for being the wrong
remedy (should have been a petition for review). Even if it were the
correct mode of appeal, it was filed out of time. MR was denied and
Caragdag is now before the SC thru a petition for review on certiorari.
22

11. In the meantime, the hotel also filed a petition for review with the CA on
the ground that the Voluntary Arbitrator committed a grievous error in
awarding financial assistance to Caragdag despite his finding that the
dismissal due to serious misconduct was valid. CA deleted the award,
citing PCIB v. Abad which held that the grant of separation pay or other
financial assistance to an employee dismissed for just cause is based on
equity and is a measure of social justice, awarded to an employee who
has been validly dismissed if the dismissal was not due to serious
misconduct or causes that reflected adversely on the moral character of
the employee. MR was denied and Caragdag filed a petition for review on
certiorari for this case as well.

Compassion for the poor is an imperative of every humane society but

only when the recipient is not a rascal claiming an undeserved privilege.
Those who invoke social justice may do so only if their hands are clean
and their motives blameless and not simply because they happen to be
poor. This great policy of our Constitution is not meant for the protection
of those who have proved they are not worthy of it, like the workers who
have tainted the cause of labor with the blemishes of their own character.

II. Issues
Whether the CA erred in deleting the award of financial assistance in the amount
of P100,000.00 to Caragdag. NO
III. Holding
CA decisions affirmed.
IV. Ratio
Caragdag is entitled to financial assistance in the amount of P100,000 on
humanitarian considerations. Caragdags infractions were due to his being a
union officer and his acts did not show moral depravity. While it is true that the
award of financial assistance is given only for dismissals due to causes specified
under Articles 283 and 284 of the Labor Code, as amended, this Court has, by way
of exception, allowed the grant of financial assistance to an employee dismissed for
just causes based on equity.
1.

The grant of separation pay or some other financial assistance to an

employee dismissed for just causes is based on equity. In PLDT v. NLRC,
SC ruled that severance compensation, or whatever name it is called, on
the ground of social justice shall be allowed only when the cause of the
dismissal is other than serious misconduct or for causes which reflect
adversely on the employees moral character.

2.

A contrary rule would have the effect, of rewarding rather than

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

3.

The policy of social justice is not intended to countenance wrongdoing

simply because it is committed by the underprivileged. At best it may
mitigate the penalty but it certainly will not condone the offense.

4.

In Piedad v. Lanao del Norte Electric Cooperative, Inc., SC ruled that a

series of irregularities when put together may constitute serious
misconduct, which under LC282.

5.

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

should not be entitled to financial assistance.

34.

Equitable PCI Bank v Dompor GR No. 163293, 163297 ( 2010)

Equitable PCI v. Dompor

8 December 2010; Del Castillo, J.
Digest prepared by Jethro Koon [NOTE: WALANG FINANCIAL ASSISTANCE
SA CASE]
I. Facts
1.

Dompor was employed by PCIB, which came to be Equitable PCI, and

now herein BDO Unibank. He was assigned as branch manager of
PCIBs Makati Cinema Branch.

2.

PCIBs Operations Subcenter Head, Gabriel called the attention of

PCIBs Ayala-Makati Area Head, Mallillin, regarding a number of PLDT
dividend checks being sent for clearing by PCIB Makati Cinema Branch.
It appears that Dompor allowed Luz Fuentes, a client-depositor of PCIB
Makati Cinema Branch who opened a checking account to deposit several
second-endorsed PLDT dividend checks beginning the last quarter of
1995.

3.

A special audit was then conducted which showed that 67,748 PLDT
second-endorsed dividend checks, covered by 332 deposit slips, and with
a total amount of P6.713 million, were drawn on RCBC-Makati and made
payable to different payee corporations and prominent personalities.

These checks were thereafter fraudulently negotiated in favor of

Fuentes and deposited to her account from September 1995 to
July 1996.

The audit report also revealed striking similarities of strokes in

the signatures of the different payees appearing on the checks.

The report further noted that the transactions, which were

inadequately documented, have exposed the bank to probable
losses and could make the bank liable under its endorsement as
the checks drawer may claim reimbursement on the ground of
23

wrong payment or forgery.

Thus, from its findings and evaluation, the audit committee

recommended Dompor's dismissal from employment and setting
up of a contingent liability for the potential loss for violation of
banks policies and failure to exercise prudence expected of a
branch head.

4.

After several admin/internal proceedings, Dompor was dismissed him.

5.

Dompor filed a complaint for illegal dismissal, averring that his

dismissal was without just cause as the alleged loss of trust and
confidence is not substantial. He maintained that his acceptance of the
second-endorsed checks did not violate any existing bank policy; that he
accepted said checks in good faith, solely for marketing considerations,
and after compliance with bank requirements; that the bank did not
suffer damage since all the checks were cleared by the drawee bank and
none were dishonored; and, that he is not an incorrigible offender with
previous derogatory record. He also claimed denial of due process
alleging that his dismissal was predetermined as evidenced by the fact
that no further investigation was conducted after the submission of his
reply-explanation.

6.

7.

8.

Equitable claimed that Dompor committed flagrant and willful

disobedience of bank policies and procedures that exposed it to risk of
huge losses when Dompor accepted checks endorsed by corporations or
firms for credit to the personal account of Fuentes as well as checks with
unusual endorsements; when he accepted deposits which exceed his
single approving limit of P15,000,000.00 per transaction; when he failed
to close the account of Fuentes despite the mishandling of her account;
and, when Dompor failed to ensure that all procedures and approval
requirements are complied with and being followed by designated staff
and officer, thereby abusing the discretion and authority as branch
manager. It was also advanced that Dompors fraudulent infractions
gave rise to Equitables loss of confidence and breach of trust as would
constitute enough basis for termination and that due process was
accorded to Dompor after giving him an opportunity to be heard and be
informed of the charges.
LA found the dismissal valid. There were enough infractions committed
which constitute serious misconduct or willful disobedience and willful
breach of trust and that Equitable need not incur damages to sustain the
validity of dismissal. The Labor Arbiter, however, awarded Dompor
separation pay equivalent to one-half (1/2) month salary for every year of
service for equity considerations after giving due regard to Dompors 22
years of service.
Both appealed to the NLRC. NLRC affirmed the Labor Arbiters Decision.
Equitable, as employer, has the discretion of terminating an employee
who holds a position of trust and confidence on the ground of lack or
absence thereof. And here, there was enough basis on account of the

formers evident disobedience. NLRC also ruled that due process was
accorded. NLRC likewise sustained the award of separation pay as a
form of equitable relief.
9.

Both filed petitions for certiorari with the CA. CA reversed the NLRC
and held that the dismissal was effected without due process of law and
without just cause. The termination was preordained as manifested by
Equitable's lack of intention to even consider his explanation before the
decision to terminate him was arrived at. This is shown by the fact that
even before Dompor received the show cause memorandum, the
management, thru the audit team, had already recommended his
dismissal. Dompors appeal from the notice of dismissal was left
unheeded by Equitable. On the substantive aspect, the CA found no
transgression of bank internal rules but rather, compliance with the
limitations and restrictions imposed in connection with the acceptance
for deposit of second-endorsed checks, thereby exhibiting good faith, if
not, mere lapses in judgment. According to the CA, the potential loss that
Equitable may incur was merely speculative as no material harm was
actually sustained by the bank.

10. Dompor filed a motion to clarify and amend the dispositive portion of the
CA Decision to include his reinstatement without loss of seniority rights
and other privileges as provided for by the Labor Code. Equitable, on the
other hand, filed an MR to reverse the finding of illegal dismissal. CA
denied both motions.
II. Holding
NLRC and LA decisions are reinstated.
III. Ratio
We are aware that in several instances this Court has awarded separation pay as
a measure of social justice. However, separation pay shall be allowed as a
measure of social justice only in those instances where the employee is validly
dismissed for cause other than serious misconduct, and separation pay should not
be conceded to an employee who was dismissed based on willful disobedience.
Consequently, the same should be deleted.
1.

To justify willful disobedience or insubordination as a valid ground for

termination, "the employees assailed conduct must have been willful or
characterized by a wrongful or perverse attitude and the order violated
must have been reasonable, lawful, made known to the employee, and
must pertain to the duties which he had been engaged to discharge."

2.

Willful breach of trust requires that "the loss of confidence must not be
simulated; it should not be used as a subterfuge for causes which are
illegal, improper or unjustified; it may not be arbitrarily asserted in the
face of overwhelming evidence to the contrary; it must be genuine, not a
mere afterthought to justify earlier action taken in bad faith; and, the
employee involved holds a position of trust and confidence."

3.

While Equitables manual of procedures does not absolutely prohibit the

24

negotiation or acceptance of second-endorsed checks for deposits, it does

expressly disallow the acceptance of checks endorsed by corporations,
societies, firms, etc. and checks with unusual endorsements.
4.

It was not denied that on June 27, 1996, Dompor was instructed by
management to stop accepting second-endorsed checks due to the
irregularities attendant to the transactions with Fuentes. Despite such
reasonable order, on two occasions, Dompor unhesitatingly
accommodated the request of Fuentes to accept her checks allegedly on
the strength of the Area Heads approval on the first instance and on the
second instance, Dompor justifies his acceptance of the checks as the
same were nevertheless returned and cancelled on the ground that the
checks include those payable to corporations.

5.

The return and cancellation of these checks do not change the fact that
Dompor had accepted for deposit checks which are payable to
corporations, thereby flagrantly violating bank guidelines.

6.

Moreover, in the investigation, Gabriel observed that the signatures

appearing at the back of the checks accepted by Dompor bore the same
strokes. The negotiation of checks by hundreds of payees to only one
individual should have alerted Dompor as to the authenticity of the
endorsements. These considerations have convinced the Court that the
PLDT dividend checks indeed contain unusual and suspicious
endorsements and cannot be overruled by the mere denial of Dompor.

The CA put premium on Dompors efforts in doing his job well by increasing the
branchs deposit level and protecting the interest of Equitable notwithstanding
lapses in judgment, thus discounting bad faith in Dompors acts. The penalty of
dismissal is discordant with the infraction as no monetary prejudice was caused to
Equitable and in consideration of his many years of valuable service.
7.

35.

SC disagrees. Dompor unduly yielded to the whims of a client and gave

undue advantage to her instead of performing his duties towards the best
interest of the bank. As narrated by one of the branch staff personnel,
Fuentes was able to open an account thru Dompors approval even
without the requisite documents. Also, all transactions coursed by
Fuentes were approved by Dompor even if questionable. Despite several
recommendations and orders by his superiors to close the account of
Fuentes due to several infractions committed and mishandling of the
account, Dompor defied the instructions. Dompor even accommodated
the negotiation of second-endorsed checks deposited by Fuentes even if
the latter was not extended any credit line. It bears stressing that
Dompor failed to prove that Fuentes is a valued client, as to warrant the
undue accommodation given her, as mere allegation does not suffice
especially since Equitable contradicts the same.
PLOT v NLRC 164 SCRA 671 (1988)

PLDT v. NLRC and Abucay (1988).

Marilyn Abucay was a traffic operator for PLDT. She was dismissed for cause
when two customers complained that she was demanding P3,800 from them to
facilitate their application for telephone line installation. The Labor Arbiter held
that the dismissal was valid but ordered PLDT to pay her 1 month pay for every
year of service (10 years total). PLDT appealed.
ISSUE: Was lower courts award of separation pay to an employee dismissed for
just
cause
contrary
to
law?
(YES in this case).
SC: A review of jurisprudence reveals that the award of separation pay despite
valid dismissal is:
1.
2.
3.

The award is grounded on equity and not law; authority to award such is
found in social justice and Constitutional preference for labor.
The application of such has not been consistent. Awards have been given
for a range of offenses and the amounts have also been different.
HOWEVER, there must be more consistency in its application, hence:

DOCTRINE RE AWARD OF SEPARATION PAY for Employees Dismissed

for Just Cause: We hold that separation pay shall be allowed as a measure of
social justice only in those instances where the employee is validly dismissed for
causes other than serious misconduct or those reflecting on his moral
character.
A contrary rule would reward rather than punish the erring employee for his offense. And we do not agree that the punishment is his dismissal only and that the
separation pay has nothing to do with the wrong he has committed.
DOCTRINE RE HOW TO COMPUTE: Court also rules that the separation pay
should be computed at the rate of one month salary for every year of service, assuming the length of such service is deemed material, without prejudice
to contract stipulations.
DISSENTS:
1.
2.
36.

We should not rationalize compassion. I vote to affirm the grant of financial assistance. (Grino-Aquino)
NLRC should decide the amount to award depending on the facts of each
case (Fernan/Padilla)
Paduata v MECO GR no 170098 ( 2012)

PADUATA v MERALCO (2012)

FACTS:
Daniel Paduata has been an employee of MERALCO for 13 years. While he was
Acting Stockman, however, he started incurring several absences due to rheumatic arthritis. MERALCO averred that these absences were unauthorized and unexcused since he did not submit the required medical certificate, in violation of
MERALCOs Company Code on Employee Discipline.

25

Investigations were conducted. Paduata participated. But the absences continued.

Finally, MERALCO sent Paduata a memo requiring him to explain in writing
within 72 hours why he should not be penalized for incurring absences. Paduata
did not submit the required explanation. MERALCO eventually wrote Paduata a
letter informing him of his dismissal due to absences in April, May, July, and August 1999.
Shortly before the notice of dismissal, however, MERALCO offered Paduata separation pay, apparently to avoid dispute with him.
ISSUES & RULING:
1)

WON ground for dismissal was valid

YES. There was no medical certificate for absences in April and May. As
for absences in August, supervisor belied Paduatas claim regarding prior
authorization and Paduata was unable to substantiate the existence of a
medical certificate. There was also no medical certificate for absences in
July.
Company Code on Employee Discipline required employees to submit
medical certification in case of sick leave if there was no prior authorization from a company doctor.

2)

WON notice of dismissal was validly served on Paduata

YES. Paduata presented no evidence other than his bare claim that
MERALCO sent its notice of dismissal to someone else in Tondo.
MERALCO had sent Paduata quite a number of memoranda and notices
which, like the notice of dismissal, were correctly addressed to his house
in Tanauan, Batangas. And he received these all. There was no reason
for MERALCO to send the final notice of dismissal to some other address
in Tondo, Manila.

3)

WON separation pay as financial assistance may be allowed

YES. Considering what the Court said in Eastern Shipping v. Sedan,
that financial assistance may be allowed as a measure of social justice
and exceptional circumstances, such may be extended to Paduata who
apparently suffered from recurring illness that prevented him from doing
his work.

gypsum board and cornice installers until they were dismissed for abandonment
of work.
The latter filed a complaint for illegal dismissal. LA declared the dismissals illegal and ordered it to pay the monetary claims. NLRC reversed the decision. CA
agreed with NLRC.
ISSUE:
Whether or not indemnity in the form of nominal damages must be paid to an
employee who is legally dismissed but the employer did not observe procedural
due process? (Yes)
HELD:
YES. They had abandoned their employment and were already working for another employer. They 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. 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.
In this case, where the employer had a valid reason to dismiss an employee but
did not follow the due process requirement (because they thought sending letters
to their last known address as futile), the dismissal may be upheld but the employer will be penalized to pay an indemnity to the employee. This became known
as Belated Due Process Rule.
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. 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. The sanction should be in the nature of indemnification or penalty, and depends on the facts of each case and the gravity of the
omission committed by the employer.

G.R. No. 158693 | November 17, 2004 | En Banc | Ynares-Santiago, J.

The violation of the employees right to statutory due process by the employer
warrants the payment of indemnity in the form of nominal damages. The amount
of such damages is addressed to the sound discretion of the court, taking into account the relevant circumstances. 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.

FACTS:

Separate Opinions

Riviera Home Improvements, Inc. is engaged in the business of selling and

installing ornamental and construction materials. It employed the Agabons as

Puno, J., Dissenting:

37.

Agabon v NLRC, 442 SCRA 573 ( 2004)

AGABON V. NLRC (CELEBRADO)

Jenny M. Agabon and Virgilio C. Agabon vs. NLRC, Riviera Home Improvements, Inc., and Vicente Angeles

26

To simply allow payment of nominal damages for violation of employees right to

due process is to give undue advantage to employers. We cannot allow the employers to marginalize the right of the workingman to due process for a few pesos
without mocking the protection accorded by the Constitution to the powerless.
The deprivation of the right to security of tenure and due process is beyond monetary valuation.
An employee may not have a Torrens title to his job but it is not too much to require that before he is dismissed by his employer, he should be given a simple
notice of the cause of his dismissal and a summary hearing to present his side. All
our constitutional and statutory precepts on social justice and the protection of
labor will go to naught if we perpetuate our ruling that a dismissal without the
required prior notice is valid and if we just penalize with the payment of pennies
violations of the employees right to due process.
Panganiban, J., Dissenting:
In ruling that the dismissal should be deemed legal, the majority has virtually
rendered nugatory the employees right to due process as mandated by law and
the Constitution. It has implicitly allowed the employer simply to ignore such
right and just pay the employee. I respectfully submit that illegal dismissal results not only from the absence of a legal cause, in accordance with Articles 282 to
284 of the Labor Code, but likewise from the failure to observe due process. There
are many labor and other cases in which acts violative of due process have unequivocally been declared illegal by the Court.
Tinga, J., Concurring:
It is but proper that the Civil Code serve as the basis for the indemnity, it being
the law that regulates the private relations of the members of civil society, determining their respective rights and obligations with reference to persons, things,
and civil acts. No matter how impressed with the public interest the relationship
between a private employer and employee is, it still is ultimately a relationship
between private individuals.
Neither the Labor Code nor its implementing rules states that a termination for
just cause is voided because the requirement of notice and hearing was not observed. This is not simply an inadvertent semantic failure, but a conscious effort
to protect the prerogatives of the employer to dismiss an employee for just cause.
The just causes enumerated under the Labor Cod are characterized by the harmful behavior of an employee against the business or the person of the employer.
These are not negated by the absence of notice or hearing. The Labor Code presents no textually demonstrable commitment to invalidate a dismissal for just
cause due to the absence of notice or hearing. This is not surprising, as such remedy will not restore the employer or employee into equity.
The award of separation pay as a measure of social justice has no statutory basis,
but clearly emanates from the Courts so-called equity jurisdiction.
38.

Serrano v NLRC 323 SCRA 445 (2000)

FACTS
Ruben Serrano was the head of the security checkers section of Isetann Department Store. He was charged with the task of supervising security checkers in
their jobs (apprehending shoplifters and preventing pilferage of merchandise). On
October 11, 1991, the management sent him a letter immediately terminating his
services as security section head, effective on the same day. The reason given by
the management was retrenchment; they had opted to hire an independent security agency as a cost-cutting measure. Serrano filed a complaint for ID, illegal
layoff, ULP, underpayment of wages and non-payment of salary and OT pay with
the LA.
The LA rendered a decision in favor of Serrano. It stated that Isetann failed to
establish that it had retrenched its security division, that the petitioner was not
accorded due process, etc. and even stated that the day after Serranos dismissal,
Isetann employed a safety and security supervisor with similar duties to that
of the former.
The NLRC on the other hand reversed the LA but ordered Isetann to pay separation pay equivalent to one month per year of service, unpaid salary, et al. It held
that the phase-out of the security section was a valid exercise of management
prerogative on the part of Isetann, for which the NLRC cannot substitute its
judgment in the absence of bad faith or abuse of discretion on the part of the latter; and that the security and safety supervisors position was long in place prior
to Serranos separation from the company, or the phase-out of the Security Section.
ISSUE
Whether the petitioners dismissal was illegal.
RULING: Valid, but ineffectual (without legal effect) payment of backwages,
separation pay and other monetary claims
o. The Court held that the dismissal was due to an authorized cause under Art.
283 of the Labor Code, i.e. redundancy. However, while an authorized cause exists, Isetann failed to follow the procedural requirement provided byArt. 283 of
LC. For termination due to authorized causes, the employer must give a written
notice of termination to the employee concerned and to the DOLE at least 30 days
prior to its effectivity. This Isetann failed to do. The question now arises as
to whether the failure of Isetann to comply with the procedural requirements
renders the dismissal invalid, or, in the event that it is valid, what the appropriate sanction or penalty must be meted out. Prior to the doctrine laid down in the
decision rendered in Wenphil Corp.NLRC in 1989, the termination of
an employee, even for just cause but without following the requisite procedure,
renders such dismissal illegal, and therefore null and void.
In the Wenphil doctrine , this was reversed; the said rule was unjust to employers. Instead, the dismissal was held to be still valid but the employer was sanctioned by way of the payment of indemnity (damages)

Serrano vs NLRC
27

 in that case, P1,000. The amount of indemnity will be depended on the circumstances of each case, taking into account the gravity of the offense committed by
the employer.
Now, the Court once again examines the Wenphil doctrine. Puno says that the
effect of the Wenphil doctrine was such that there has been a dismiss now, pay
later policy where the employers were able to circumvent the procedural requisites of termination, which is more convenient than the compliance with the 30day notice. Panganiban said that the monetary sanctions were too insignificant,
niggardly, sometimes even late. Both justices are of the opinion that the deprivation of due process which must be accorded to the employee renders the dismissal
illegal. Puno quoted that Legislative, Executive and Judicial proceedings that
deny due process do so under the pain of nullity. Panganiban stated that such
denial of due process renders decisions and proceedings void for lack of jurisdiction.

out observing procedural reqts as also ID is to add another ground for

ID, thereby amending Art. 279.; Further, there is a disparity in legal
treatment, as employees who resign without giving due notice are only
liable for damages; it does not make their resignation void.
In this case, the separation pay was a distinct award from the payment of back
wages as a way of penalty. Petition was denied.

The present ruling of the Court held that the dismissal of the employee is merely
ineffectual, not void. The dismissal was upheld but it is ineffectual. The sanction
provided was the payment of back wages from the time of dismissal up to the decision of the court finding just or authorized cause. This was thought to balance
the interests of both parties, recognizing the employees right to notice and at the
same time the right of the employer to dismiss for any of the just and authorized
causes.
The Court also responded to the arguments of Justices Puno and Panganiban by
stating that the violation in the procedural requirement of termination is not a
denial of the fundamental right to due process. This is because of the ff reasons:
1)

2)

3)
4)

5)

The due process clause is a limitation on governmental powers, inapplicable to the exercise of private power, such as in this case. The provision
No person shall be deprived of life, liberty and property without due
process of law pertains only to the State, as only it has the authority to
do the same.
The purpose of the notice and hearing under the Due process clause is to
provide an opportunity for the employee to be heard before the power of
the organized society is brought upon the individual. Under Art. 283,
however, the purpose is to give him time to prepare for the eventual loss
of his job and for DOLE to determine whether economic causes exist
to justify termination. It is not to give opportunity to be heard there is
no charge against the employee under Art. 283
The employer cannot be expected to be an impartial judge of his own
cause.4)
Not all notice requirements are requisites of due process. Some are simply a part of a procedure to be followed before a right granted to party can
be exercised; others are an application of the Justinian precept. Such is
the case here. The failure of the employer to observe a procedure for the
termination of employment which makes the termination of employment
merely ineffectual.
Art. 279 of the LC provides that only dismissal without just or authorized cause renders such dismissal illegal. To consider termination with28

40.

AMA Computer College - East Rizal v Ignacio GR No. 178520 ( 2009)

41.

Alba v Yupangco GR No. 188233 (2010)

Alba and de Guzman v. Yupangco

Topic: reliefs and remedies in illegal dismissal cases, liability of corporate officers
Facts:

Alba and de Guzman filed separate complaints for illegal dismissal and
payment of retirement benefits against Y.L. Land Corporation and Ultra
Motors Corporation, respectively
Yupangco was impleaded in his capacity as President of both corporations
LA: in favor of both, liable jointly
NLRC: certified the resolution as final and executory
LA issued a Writ of Execution which was returned unsatisfied prompting
issuance of an alias writ
Yupangcos club shares at the Manila Golf and Country Club was
distrained
Yupangco argues that he should not be made solidarily liable with the
corporations
2 other alias writs were issued
CA: set aside all writs

Issue(s), Holding & Ratio:

4.

w/n Yupangco can be made solidarily liable

No, there is no proof that dismissal was effected with malice of bad faith. His liability can therefore only be joint.
In labor cases, corporate directors and officers are solidarily liable with the corporation for the termination of employees done with malice or in bad faith.
By declaring that respondents liability is solidary, the Labor Arbiter modified the
already final and executory October 25, 1999 Decision. That is impermissible,
even if the modification is meant to correct erroneous conclusions of fact and law,
whether it be made by the court that rendered it or by the highest court in the
land. The only recognized exceptions are the corrections of clerical errors or the
making of so-called nunc pro tunc entries which cause no prejudice to any party
and in cases where the judgment is void. Said exceptions are not present in the
present case.
Since the alias writ of execution did not conform, is different from and thus went
beyond or varied the tenor of the judgment which gave it life, it is a nullity. To
maintain otherwise would be to ignore the constitutional provision against depriving a person of his property without due process of law.
42.

Globe Teleco v Crisologo GR No. 174644 ( 2007)

29

43.
2011)

Nationwide Security And Allied Services v Valderrama GR No. 186614 (

is placed on a "floating status," he does not receive any salary or financial

benefit provided by law.

NATIONWIDE SECURITY AND ALLIED SERVICES, INC. vs. RONALD P.

VALDERAMA
Facts:

Respondent Ronald Valderama was hired by Nationwide Security and Allied Serv
ices (NSAS) as security guard on April 18, 2002. He was assigned at the
Philippine Heart Center (PHC), Quezon City, until his relief on January
30, 2006.
Valderama was not given any assignment thereafter. Thus, on August 2,
2006, he filed a complaint for constructive dismissal and nonpayment
of 13th month pay, with prayer for damages against petitioner and Romeo Nolasco.
However, NSAS alleged that Valderama was not constructively or illegally dismissed, but had voluntarily resigned. NSAS averred that
Valderama has committed serious violations of the security rules in the
workplace. And by the order of the Operations Manager, he was relieved
from his post at the Philippine Heart Center and was directed to report
to the office. Despite his voluntary resignation, NSAS sent him a letter
through registered mail to report for the office and give information on
whether or not he was still interested for report for duty or not.

Due to the grim economic consequences to the employee, the employer

should bear the burden of proving that there are no posts available to
which the employee temporarily out of work can be assigned.

Valderama claims that he was relieved from PHC on January 30, 2006;
thereafter, he was not given a new assignment.

Petitioner, on the other hand, asserts that respondent refused to report

to petitioner for his reassignment.

Otherwise stated, petitioner claims that respondent abandoned his job.

In this case, NSAS failed to establish clear evidence of Valderama's intention to abandon his employment. .

Except for NASA's bare assertion that respondent did not report to the
office for reassignment, no proof was offered to prove that respondent intended to sever the employer-employee relationship.

Indubitably, Valderama remained on "floating status" for more than six

months. He was relieved on January 30, 2006, and was not given a new
assignment at the time he filed the complaint on August 2, 2006.

Jurisprudence is trite with pronouncements that the temporary inactivity or "floating status" of security guards should continue only for six
months. Otherwise, the security agency concerned could be liable for constructive dismissal. The failure of petitioner to give respondent a work
assignment beyond the reasonable six-month period makes it liable for
constructive dismissal. If there is a surplus of security guards caused by
lack of clients or projects, the security agency may resort to retrenchment
upon compliance with the requirements set forth in the Labor Code. In
this way, the security agency will not to be held liable for constructive
dismissal and be burdened with the payment of backwages.

However, Valderama did not bother to reply nor did he report to the office.

Issue:

WON Valderama was illegally dismissed?

Held:

Yes, he was. In cases involving security guards, a relief and transfer order in itself does not sever employment relationship between a security
guard and his agency.
An employee has the right to security of tenure, but this does not give
him a vested right to his position as would deprive the company of its
prerogative to change his assignment or transfer him where his service,
as security guard, will be most beneficial to the client.
Temporary "off-detail" or the period of time security guards are made to
wait until they are transferred or assigned to a new post or client does
not constitute constructive dismissal, so long as such status does
not continue beyond six months.
The onus of proving that there is no post available to which the security
guard can be assigned rests on the employer, viz.: When a security guard

44.

Bilbao v Saudi Arabian Airlines GR No. 183915 ( 2011)

BILBAO V SAUDI ARABIAN AIRLINES

FACTS:

Bilbao was a former flight attendant of SaudiA from 1988 to 2004. She
was assigned at the Manila Office with regular flights from Manila to
Jeddah, Saudi Arabia and VV.
Due to operational requirements, 10 FAs including Bilboa were transferred to Jeddah Office, and she initially complied with the transfer order
but later resigned instead by tendering a resignation letter.
Bilbao ALSO executed and signed an Undertaking similar to that of a
Receipt, Release and Quitclaim wherein she acknowledged receipt of a
sum of money as full and complete end-of-service award with final settlement and have no further claims whatsoever against Saudi Arabian
Airlines
30

Bilbao then filed with the NLRC a complaint for reinstatement and payment of full backwages. Two other FAs also filed a complaint.
Resignation was not voluntary
Common theory: transfer to Jeddah was a prelude to their termination since they were all allegedly between 39 and 40 years of age
Defense of SaudiA:
Letters were handwritten and duly signed
Was not subjected to any force, intimidation, or coercion as they
wrote the letter.
Received without protest a generous separation package (despite
fact that those who voluntarily resigned are not entitled such)
Office transfer of FAs was a valid exercise of its management
prerogative
LA: Illegally dismissed. Backwages and separation pay granted.
NLRC: Reversed. Dismissed
Addtl. defense of SaudiA: claim of illegal dismissal was a mere
afterthought as they waited for almost one year from the date of
their alleged dismissal to file it.
CA: Affirmed NLRC.. Resignation of OWN FREE WILL AND VOLUNTARY ACT

ISSUE/s:

W/N Bilbao voluntarily resigned? YES

W/N there was Illegal Dismissal? NO

HELD:
On her Voluntary Resignation
Her resignation letter and undertaking that evidenced her receipt of separation
pay, when taken together with her educational attainment and the circumstances
surrounding the filing of the complaint for illegal dismissal, comprise substantial
proof of Bilbaos voluntary resignation.
Resignation is the voluntary act of an employee who is in a situation where one
believes that personal reasons cannot be sacrificed in favor of the exigency of the
service, and one has no other choice but to dissociate oneself from employment.
It is a formal pronouncement or relinquishment of an office, with the intention of
relinquishing the office accompanied by the act of relinquishment.
As the intent to relinquish must concur with the overt act of relinquishment, the
acts of the employee before and after the alleged resignation must be considered
in determining whether he or she, in fact, intended to sever his or her employment.
She tendered her resignation letter a week after her transfer to the Jeddah office,
a letter that used words of appreciation and gratitude (for support which Saudia
gave for 18 yrs of service) negates the notion that she was forced and coerced to
resign.

She also executed an Undertaking in favor of Saudia, wherein she declared that
she received her full and complete end-of-service award with final settlement.
She also waited for more than 10 months after separation to file a complaint for
illegal dismissal.
Even if the letter was prepared by SAUDIA, she couldnt have been coerced and
intimidated into signing it.
She was no ordinary employee who may not be able to completely comprehend and realize the consequences of her acts AND an educated individual.
There was no competent evidence to prove that she was forced or threatened by
Saudia. Bare and self-serving allegations of coercion or intimidation, unsubstantiated by evidence, do not constitute proof to sufficiently support a finding of
forced resignation.
No Illegal Dismissal
There was no showing that the Undertaking and resignation letter were executed
by Bilbao under force or intimidation
.
45.

Azcor v NLRC 303 SCRA 26 ( 1999)

Azcor Manufacturing v. NLRC

G.R. No. 117963; February 11, 1999; Bellosillo, J.
Facts
CANDIDO CAPULSOs version
He worked as ceramics worker for AZCOR for more than 2 years with a
daily wage of 118 plus sick and vacation leaves. An amount of 50php was
being deducted from his salary from April September of 1999.

Upon doctors recommendation, he took a sick leave as he was suffering

from bronchial asthma. Apparently, this was caused by his job as a ceramics worker due to lack of occupational safety gadgets. He allegedly
inhaled harmful ceramic dusts.

Such leave was approved. However when he went back to work, he was
not allowed to do so by his supervisors. He was informed that only the
President could admit him back. He was not reinstated after 5 attempts
to return,

He presented the following documentary evidence to show that he was

indeed an employee of the company and that he was illegally dismissed:
Affidavit that he was terminated without just cause, ID issued by
AZCOR, certification of SSS premium payments, SSS member assistance
form, certification of SSS employee contributions and payslips.
AZCORs version

They admitted that Capulso was their employee, but alleged that he
went on terminal leave due to his illness, and eventually, filed a resignation letter.
31

The following are their documentary evidence: Sworn statement from the
supervisor that Capulso actually resigned, contract of employment with
Filipinas Paso evidencing that he was transferred to such company already, dated letter of resignation, undated letter of resignation, BIR
form, Individual income tax return and an alphabetical list of Filipinas
Pasos employees.
LA: For AZCOR

to Add Force or disregarded the clients budget ceiling, sent out several communications to clients containing erroneous data and computations, consistently failed to submit her reports, and submitted fictitious daily activity reports and reimbursement slips.

Mandapat gave Add Force her response to the show-cause memorandum

along with her resignation letter supposedly in protest of the preventive suspension. Subsequently, she filed a complaint with the LA, claiming she was
constructively dismissed when she was placed on preventive suspension, her
access to the internet cut-off, and then pressured by Add Force to resign in
exchange for separation pay. She denied that she was negligent, and faulted
the Chief Executive Officer for his indecisiveness and the lack of support staff
for the sales department. She claimed that her preventive suspension was illegal for being indefinite, since its duration was not stated in the show-cause
memorandum. She argued that she did pose any danger to the lives of Add
Forces officers or its properties to warrant the preventive suspension.

Add Force insisted that Mandapat resigned and was not dismissed. It explained that Mandapat was placed on preventive suspension because of the
risk she posed on its property and business. Add Force added that
Mandapats preventive suspension for 1 day can hardly be considered indefinite, given that she immediately resigned 1 day after the suspension.

LA: charges of gross and habitual neglect and loss of trust and confidence
were not substantiated, and declared Mandapat to have been constructively
dismissed.

NLRC: affirmed the LA finding of constructive dismissal.

CA: reversed the decisions of NLRC and LA. The CA sustained the preventive
suspension as a valid exercise of management prerogative pending investigation for a perceived violation of company rules. The CA ruled that Mandapat
chose to resign from her job and her resignation mooted the issue of preventive suspension.

Mandapat questioned the CAs ruling before SC.

CA: Reversed and held that there was illegal dismissal.

*During the pendency of the case, Capulso died.
Issue/Holding/Ratio
Was there a voluntary resignation from Candido Capulso? No. There was
no voluntary resignation. AZCOR and Filipinas Paso were held jointly and
solidarily liable to the heirs of Capulso for backwages (from dismissal to death)
and separation pay.

46.

To constitute voluntary resignation, there must be an unconditional intent to do so. The fact that he went back to work and pursued this case
shows the lack of intent to resign. The resignation letters presented by
AZCOR are similarly worded, both of which were in English and had
blanks. These circumstances show that the letters were pre-drafted. He
was not even conversant in the English language due to his low level of
education. He even denied that the signatures therein were actually his.
Even if it was his however, AZCOR was not able to prove that Capulso
actually knew what he was signing when he signed the letter.
Furthermore, even if he delayed in filing the case (4 months after dismissal), such cannot operate against Capulso as he actually had 4 years to
file an action under the law. In these kinds of cases, the onus of proving
that the dismissal was for a just and authorized cause rests with the employer.
A'Prime Security Services v NLRC 322 SCRA 283 ( 2000)

47.

Mandapat v Add Force Personnel Services GR No. 180285 ( 2010)

Mandapat v Add Force Personnel Services (Digest by Robby Solis)

(Perez, J. GR 180285; 06 July 2010)
Facts:

Ma. Socorro Mandapat was hired by Add Force Personnel Services, Inc. as
Sales and Marketing Manager to negotiate and consummate contracts with
clients who wanted to avail of Add Forces services.

Add Force gave Mandapat a show-cause notice directing her to explain why
she should not be disciplined for gross and habitual neglect of duties and willful breach of trust. The notice also placed her on preventive suspension during the course of the investigation. According to Add Force, during her 5-mo.
stint as Sales and Marketing Manager, Mandapat failed to close a single
deal, issued several proposals to clients which were grossly disadvantageous

Issue: WON Mandapat was constructively dismissed.

Held/Ratio: NO

Constructive dismissal exists when an act of clear discrimination, insensibility or disdain by an employer has become so unbearable to the employee leaving him with no option but to forego his continued employment.

There was no act of discrimination committed against Mandapat that would

render her employment unbearable.

Section 8, Rule XXIII, Book V, Omnibus Rules Implementing the Labor Code,
as amended by Department Order No. 9, S. 1997:
Preventive suspension may be legally imposed on employee whose alleged violation is the subject of an investigation. The purpose of his suspension is to
32

prevent him from causing harm or injury to the company as well as to his fellow employees.

Section 9, Rule XXIII, Book V, Omnibus Rules Implementing the Labor Code,
as amended by Department Order No. 9, S. 1997:
No preventive suspension shall last longer than 30 days and the employer
shall thereafter reinstate the worker in his former or in a substantially
equivalent position or the employer may extend the period of suspension provided that during the period of extension, he pays the wages and other benefits due to the worker. When preventive suspension exceeds the maximum
period allowed without reinstating the employee either by actual or payroll
reinstatement or when preventive suspension is for an indefinite period, only
then will constructive dismissal set in.

While no period was mentioned in the show-cause memorandum, the inclusion of the phrase during the course of investigation would lead to a reasonable and logical presumption that said suspension in fact had a duration
which could very well be not more than 30 days as mandated by law. And, as
the CA correctly observed, the suspension was rendered moot by Mandapats
resignation tendered a day after the suspension was made effective.

At most, she was merely given the option to either resign or face disciplinary
action, which the APSI had every right to conduct in light of the numerous infractions committed by Mandapat. There is nothing irregular in providing an
option to her. Ultimately, the final decision on whether to resign or face disciplinary actions rests on Mandapat alone.

Dispositive:
WHEREFORE, the petition is DENIED. The 27 July 2007 Decision of the Court
of Appeals in CA-G.R. SP No. 98868 is AFFIRMED.
48.
Intercontinental Broadcasting Corporation v Amarllla GR No.
162775 (2006)
49.

Jaculbe v Silliman University GR No. 156934 (2007)

ALPHA C. JACULBE, Petitioner, vs. SILIMAN UNIVERSITY, Respondent

FACTS:
Sometime in 1958, petitioner began working for respondents university medical
center as a nurse.

The preventive suspension was also necessary to protect Add Forces assets
and operations pending investigation of Mandapat. As Sales Manager,
Mandapat had the power to enter into contracts that would bind Add Force,
regardless of whether these contracts would prove to be beneficial or prejudicial to its interest.

In a letter dated Dec 3, 1992, respondent, through its HR, informed petitioner
that she was approaching her 35th year of service with the university and was
due for automatic retirement on Nov 18, 1993, at which time she would be 57
years old. This was pursuant to respondents retirement plan for its employees
which provided that its members could be automatically retired "upon reaching
the age of 65 or after 35 years of uninterrupted service to the university.

The cutting-off of Mandapats internet access was not harassment but a consequence of the investigation against her and was intended to prevent her
from having further access to the companys network-based documents and
forms. Add Forces acts were just measures to protect itself while the investigation was ongoing.

Petitioner insisted that the compulsory retirement under the plan was tantamount to a dismissal and pleaded with respondent to be allowed to work until the
age of 60 because this was the minimum age at which she could qualify for SSS
pension. But respondent stood pat on its decision to retire her, citing "company
policy."

There was no coercion employed on Mandapat to resign. Mere allegations of

threat or force do not constitute evidence to support a finding of forced resignation. In order for intimidation to vitiate consent, the following requisites
must concur: (1) the intimidation caused the consent to be given; (2) the
threatened act is unjust or unlawful; (3) the threat is real or serious, there
being evident disproportion between the evil and the resistance which all
men can offer, leading to the choice of doing the act which is forced on the
person to do as the lesser evil; and (4) it produces a well-grounded fear from
the fact that the person from whom it comes has the necessary means or ability to inflict the threatened injury to his person or property. None of these
requisites was proven by Mandapat. No demand was made on her to resign.
At most, she was merely given the option to either resign or face disciplinary
investigation, which Add Force had every right to conduct in light of her numerous infractions. There was nothing irregular in providing an option to
her. Ultimately, the final decision on whether to resign or face disciplinary
action rested on her alone.

Petitioner filed a complaint in the NLRC for "termination of service with preliminary injunction and/or restraining order."
On Nov 18, 1993, respondent compulsorily retired petitioner.
ISSUES:
1) did respondents retirement plan imposing automatic retirement after 35 years
of service contravene the security of tenure clause in the 1987 Constitution and
the Labor Code?
2) did respondent commit illegal dismissal by retiring petitioner solely by reason
of such provision in its retirement plan?
HELD:
YES.

33

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.
Retirement plans allowing employers to retire employees who are less than the
compulsory retirement age of 65 are not per se repugnant to the constitutional
guaranty of security of tenure. By its express language, the Labor Code permits
employers and employees to fix the applicable retirement age at below 60 years.
However, after reviewing the rules and regulations of respondents retirement
plan, the Court finds that the plan runs afoul of the constitutional guaranty of
security of tenure. As already stated, an employer is free to impose a retirement
age less than 65 for as long as it has the employees consent. Stated conversely,
employees are free to accept the employers offer to lower the retirement age if
they feel they can get a better deal with the retirement plan presented by the employer.
The retirement plan came into being in 1970 or 12 years after petitioner started
working for respondent. In short, it was not part of the terms of employment to
which petitioner agreed when she started working for respondent.
2) YES, 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.
50.

Reyes v NLRC GR No. 160233 (2007)

51.
Universal Robina Sugar Milling Corp v Caballeda 560 SCRA 115
(2008)
52.

Enriquez Security Services v Cabotaje GR No. 147993 (2006)

fits must be reckoned from 1985, when petitioner was incorporated, and not in
1979.
Cabotaje filed a complaint in the NLRC for payment of retirement benefits under
RA 7641 (Retirement Pay Law).
LA: In favour of Cabotaje; new companys obligation to absorb employees
NLRC: Still in favour of Cabotaje, but reduced award to month pay for every
year of service
CA: Affirmed NLRC decision
ISSUES: Whether or not RA 7641 shall retroactively apply to the case at bar
(YES)
Whether or not 5 days SIL pay or just a 1/12 portion thereof should be included in
the month salary for purposes of computing retirement pay (YES 5 days SIL
pay shall be included)
Whether or not length of service of a retired employee in a dissolved company
should be included in his length of service with his last employer for computing
retirement pay (YES)
RESOLUTION: Petition DENIED; CA decision AFFIRMED
B.

Retirement Pay Law; Retroactive Application; RA 7641 retroactively

applies, as provided for in Paragraph B of the guidelines: In reckoning the
length of service, the period of employment with the same employer before
the effectivity of the date of the law on January 7, 1993 shall be included.

C.

Inclusion of Service Incentive Leave Pay in monthly computation of

retirement benefit; Basis; Rule II of the Implementing Rules of Book VI
further clarifies what comprises 1/2 month salary due a retiring employee.

ENRIQUEZ SECURITY V. CABOTAJE

*~J. Corona~*
G.R. No. 147993
TOPIC: Retirement; RA 7641 is undoubtedly a social legislation. The law has
been enacted as a labor protection measure and as a curative statute that absent
a retirement plan devised by, an agreement with, or a voluntary grant from, an
employer can respond, in part at least, to the financial well-being of workers during their twilight years soon following their life of labor. There should be little
doubt about the fact that the law can apply to labor contracts still existing
at the time the statute has taken effect, and that its benefits can be reckoned not only from the date of the laws enactment but retroactively to the
time said employment contracts have started.
FACTS: Petitioners employed Victor Cabotaje as a security guard in 1979, when
it was still named Enroquez Security and Investigation (ESIA). Enriquez Security
Service Incorporated was formed in 1985, with Enriquez still a security guard
with ESSI. Upon reaching 60 in 1997, he applied for retirement, and petitioner
acknowledged his entitlement to retirement benefits but insisted that such bene-

Components of One-half (1/2) Month Salary. For the purpose of determining the
minimum retirement pay due an employee under this Rule, the term one-half
month salary shall include all the following:
(a) Fifteen (15) days salary of the employee based on his latest salary rate. x x x;
(b) The cash equivalent of not more than five (5) days of service incentive leave;
(c) One-twelfth of the 13th month pay due an employee;
(d) All other benefits that the employer and employee may agree upon that should
be included in the computation of the employees retirement pay.
D.

53.

Piercing the corporate veil; ESIA and ESSI are the same corporation; (1) Cabotaje worked with both ESIA and ESSI; (2) His employment
with both security agencies was continuous and uninterrupted; (3) both agencies were owned by the Enriquezes; (4) ESIA and ESSI occupied the same office
Ozales v Unilab 559 SCRA 26 (2008)
34

sideration of the continued faithful service of the employee for the requisite
period.
The employer and the employee may establish such stipulations, clauses,
terms, and conditions as they may deem convenient; however, their stipulations, clauses, terms, and conditions should not be contrary to law, morals,
good customs, public order, or public policy.

Oxales v Unilab
21 July 2008
J. Reyes

Complaint for additional retirement benefits, recovery of the cash

equivalent of unused sick leaves, damages, and attorneys fees against
UNILAB.
United Retirement Plan (URP) - a comprehensive retirement program
aimed at providing for retirement, resignation, disability, and death benefits of its members. It mandates the compulsory retirement of any
member-employee who reaches the age of 60. Both UNILAB and the employee contribute to the URP. On one hand, UNILAB provides for the account of the employee an actuarially-determined amount to Trust Fund
A. On the other hand, the employee chips in 2% of his monthly salary
to Trust Fund B. Upon retirement, the employee gets both amounts
standing in his name in Trust Fund A and Trust Fund B. As retirement
benefits, the employee receives (1) from Trust Fund A a lump sum of 1
months pay per year of service based on the members last or terminal
basic monthly salary, and (2) whatever the employee has contributed to
Trust Fund B, together with the income minus any losses incurred. The
URP excludes commissions, overtime, bonuses, or extra compensations in the computation of the basic salary for purposes of retirement.
Oxales was a retired employee of Unilab who insisted that his bonuses,
allowances and 13th month pay should have been included in the computation of his retirement benefits. However, Unilab argues to the contrary
pursuant to the companys United Retirement Plan. The company URP
states that "basic monthly salary" for purposes of computing the retirement pay refers to the basic rate of pay converted to basic monthly salary
of the employee excluding commissions, overtime, bonuses, or extra compensations."

Issues:
1.

2.

W/N in the computation of his retirement and sick leave benefits,

UNILAB should have factored such benefits like bonuses, cash and meal
allowances, rice rations, service incentive leaves, and 1/12 of the 13th
month pay. NO
W/N R.A. No. 7641 is applicable for purposes of computing his retirement
benefits. NO

Held:
The URP of Unilab should be upheld. In this case, RA 7641 or the Retirement Pay
Law does not apply in view of the URP which gives to the retiring employee more
than what the law requires.
1.

A retirement plan in a company partakes the nature of a contract, with the

employer and the employee as the contracting parties. It creates a contractual obligation in which the promise to pay retirement benefits is made in con-

The URP is not contrary to law, morals, good customs,

public order, or public policy to merit its nullification. The
URP has a 1.5 months salary for every year of service as the basis
of entitlement. Under the new law, only .5 month of the retirees
salary inclusive however, of not more than 5 days of service incentive leave and 1/12 of the 13th month pay are used as the bases in
the retirement benefits computation.
Mathematically speaking therefore, complainants [Oxales] benefits received amounting to P1,599,179.00 under Trust Fund A together with the cash equivalent of his unused leaves which has an
amount of P176,313.06 and his contribution in the Trust Fund B
amounting to P397,738.33 are way above the entitlement he could
have received under Republic Act 7641,
Thus, The URP is valid and must be upheld.
2. "The Retirement Pay Law," only applies in a situation (1) there is no collective
bargaining agreement or other applicable employment contract providing for retirement benefits for an employee; or (2) there is a collective bargaining agreement or other applicable employment contract providing for retirement benefits
for an employee, but it is below the requirements set for by law. The reason for
the first situation is to prevent the absurd situation where an employee, who is
otherwise deserving, is denied retirement benefits by the nefarious scheme of employers in not providing for retirement benefits for their employees. The reason
for the second situation is found in the maxim pacta private juri public derogare
non possunt or that private contracts cannot derogate from the public law.
54.

Gerlach v Reuters Ltd Phil. 448 SCRA 535 (2005)

53 MARILYN ODCHIMAR GERLACH vs. REUTERS LIMITED, PHILS

January 17, 2005 SANDOVAL-GUTIERREZ, J.:

February 15, 1982, respondent Reuters Limited, Phils, a company engaged in news dissemination with offices worldwide, hired Marilyn
Odchimar Gerlach, petitioner, as its local correspondent
October 1, 1983, Reuters implemented a local Retirement Benefit Plan
for its Philippine-hired employees
o funded by the company, but an employee-participant may volunteer to contribute a percentage of his basic monthly salary
o Petitioner was automatically covered by the Plan by reason of
her age and length of service
o she opted not to contribute
o worked in Reuters Philippines up to December 23, 1983
35

January 23, 1984, respondent assigned petitioner as a journalist to Reuters Singapore

o Singapore salary of Singapore Dollars 3,500 per month, paid 13
times a year. In addition, furnished accommodation
o home base will continue to be Manila and should you return there at the end of this assignment or following subsequent assignments your terms and conditions of employment would revert to those of local staff
December 7, 1983, Addison wrote petitioner regarding her social security
and pension funds during her stay in Singapore: For the purpose of
calculating the Company contribution to the retirement plan, you
will retain a notional Philippine salary of Peso 5,980 per month
payable 13 times a year. Your notional salary will be reviewed on
1 October in line with other Manila office staff.
Petitioner stayed in Singapore up to December 1985
April 15, 1985, Addison informed her of the corresponding increases in
her actual and notional salaries:Following your Singapore salary increase in January, I am writing to confirm that your notional Peso salary has been increased to 6,900 per month and pension contributions
will be adjusted accordingly.
March 26 to June 4, 1986, petitioner was assigned to Reuters Hongkong
July, 1986, she was appointed correspondent in Sri Lanka and that her
peso salary was increased to P12,600per month
o While in Sri Lanka, petitioners notional peso salary was increased twice.
October 12, 1988, she was directed to return to Manila and resume her
post by December 15, 1988
o she requested to be assigned to the Reuters Office either in
Bonn, West Germany or in London DENIED
o applied for a 14-month study leave to take up economic subjects
at Bonn University GRANTED, 14- month leave without pay
from January 1, 1989 up to March 1, 1990
May 20, 1990, petitioner resigned from Reuters
March 1, 1991, petitioner received her retirement benefits under the
Plan in the amount of P79,228.04, which amount was determined by the
trustee bank (BPI) in accordance with the provisions of the Plan. The
computation was based on her notional salary
o she questioned the amount she received as well as her entitlement to a disturbance grant, contending that her retirement
benefits must be computed on the basis of her actual salary
abroad, not on her notional salary
October 25, 1991, respondent, through its Manila Office Manager, Roberto Moreno, replied with the following explanation: concept of a notional salary is standard practice globally and the notional salary is routinely
mentioned in assignment and salary increase letters including letters to
you
o there is a good case for increasing the final salary on which
your retirement payment is computed. The figure has been

raised from P305,000 to Pesos 350,750 an increase of 15% to

take account of likely salary rises up to your final departure
date
o you definitely are entitled to a resettlement allowance. At the
time this stood at STG 1,750 but he has recommended we pay
you the present rate of STG 2,050 in peso equivalent.
petitioner filed with the Office of the Labor Arbiter, NCR, a money claim
against respondent,
LA: respondent to pay petitioner additional retirement benefits
in the sum of P436,000.00, which amount was based on her actual
salary abroad, not on her notional salary
NLRC: remand to LA for trial on the merits
LA: second Decision awarding exactly the same amounts stated in the
first
NLRC reversed
CA in favor of Reuters

ISSUE: WoN computation of petitioners retirement benefits should be based on

her basic annual salary while stationed abroad (NO)
3 kinds of retirement schemes
1.
2.
3.

compulsory and contributory

set up by agreement between the employer and the employees in CBA or
other agreements
voluntarily given by the employer, expressly as in an announced company policy or impliedly as in a failure to contest the employee's claim for
retirement benefits CASE AT BAR

LC 287. Retirement. 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."

Llora Motors, Inc. vs. Drilon: LC 287, does not in itself purport to impose
any obligation upon employers to set up a retirement scheme for their
employees over and above that already established under existing laws,
like the Social Security Act

Section 14(a), Rule 1 of LC IRR Book VI:

"Sec. 14. Retirement benefits. (a) An employee who is retired pursuant to a bona
fide retirement plan or in accordance with the applicable individual or collective
agreement or established employer policy shall be entitled to all the retirement
benefits provided therein . . ."

respondent based petitioners retirement benefits on its Plan and established policy, which is in accord with the above provision
36

petitioners retirement benefits must be based on her notional Philippine

salary
clear that from the very start of her first assignment overseas, respondent apprised her that the companys contribution to the Plan is based on
her notional Philippine salary
under the Plan, the companys contribution to the fund is 10% of the
basic monthly salary of each participant. Respondent also informed petitioner of the amount of her notional Philippine salary whenever she was
transferred to her next overseas assignment or when there were increases in her salary, both actual and notional.
respondent was able to prove that it has been its practice worldwide that
the notional salary of an employee is its basis in computing its
contribution to the retirement plan for a local employee detailed
abroad

CA AFFIRMED. Costs against petitioner.

55.

Sta Catalina v NLRC 416 SCRA 233 (2003)

56.

PAL v Airlines Pilots' Association 373 SCRA 302 (2002)

PAL vs AIRLINES PILOTS' ASSOCIATION

Respondent ALPAP is the exclusive bargaining representative of all commercial
airline pilots of PAL. The issue is rooted in PAL's act of unilaterally retiring pilot
Capt. Albino Collantes under the PAL-ALPAP Retirement Plan, which respondent claims is illegal dismissal and union busting. ALPAP filed a Notice of Strike
with the DOLE.
DOLE Secretary issued the assailed order upholding PAL's action of retiring
Capt. Collantes, and ordered the basis of computation of his retirement benefits
to be Art. 287 of the Labor Code and no the PAL-ALPAP Retirement Plan. Secretary added that PAL should first consult the pilot concerned before implementing
his retirement.
Issues:
1. what should be the basis for the computation of retirement benefits?
2. w/n PAL should consult the pilot concerned before exercising its option to retire
pilots
Held:
1. Retirement benefits should be computed according to the PAL-ALPAP Retirement Plan which provides:
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.
On the other hand, Art. 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.
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 employees 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 plan 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 as the compulsory retirement age, who has served at least five (5) years in
the said establishment, may retire and shall be entitled to retirement pay equivalent to at least one-half (1/2) month salary for every year of service, a fraction of
at least six (6) months being considered as one whole year.
Unless the parties provide for broader inclusions, the term one-half (1/2) month
salary shall mean fifteen (15) days plus one-twelfth (1/12) of the 13th month pay
and the cash equivalent of not more than five (5) days of service incentive leaves.
xxx xxx xxx.
The retirement benefits that a pilot would get under LC 287 are less than those
under PAL's retirement plan. Additionally, the Labor Code does not contemplate
the peculiar circumstance of PAL pilots, as LC 287 is intended for those who have
no more plans of employment after retirement. Thus, petitioner should be paid
according to the PAL-ALPAP Retirement Plan.
2. NO. 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 petitioners
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.
57.

Ariola v Phllex Mining Corp 466 SCRA 152 (2005)

ARIOLA V. PHILEX MINING

37

FACTS:
Petitioners Roberto Ariola, Franco Mallare, Benjamin Biete and Hermogenes
Mamayson
("petitioners")
are
former
supervisors
of
respondent Philex Mining Corporation ("Philex"). In 1992, Philex sustained financial
losses in its operations. To save costs, Philex adopted several measures including
reducing personnel through early voluntary retirement and retrenchment programs. A workforce audit showed that Philex had 310 "excess positions." Philex re-assigned some of the employees belonging to this group while
others took early retirement, leaving 241 positions for retrenchment.
On 29 April 1993, Philex and the labor union representing the rank-and-file employees signed a Memorandum of Agreement ("rank-and-file's MOA") prescribing
the criteria for retrenchment. The following day, 30 April 1993, the union representing the supervisory employees also signed a Memorandum of Agreement
("supervisors' MOA") with Philex similarly prescribing the criteria for retrenchment.
On 14 May 1993, Philex informed the Department of Labor and Employment
("DOLE"), Cordillera Administrative Region, Baguio City, of its plan to retrench
241 employees.
On 1 June 1993, petitioners, with six other supervisors and 49 rank-and-file employees, received from Philex termination notices informing them of their retrenchment under their respective MOAs effective 30 June 1993. Philex paid
them separation pay. All of them signed Deeds of Release and Quitclaim
in Philex's favor.
It was alleged that the employees had availed of the early voluntary retirement
program of the company as VA Advincula mentioned in her decision. The vouchers signed by them indicating their receipt of payment of retirement.
ISSUE: Whether or not the employees retired or were retrenched
HELD: They did not retire; they were retrenched.
RATIO:
The vouchers which the petitioners signed show their receipt of "retirement gratuity." Although there is no dispute that petitioners received varied
amounts denominated in the vouchers in question as "retirement gratuity," the
records show that Philex paid these amounts because of petitioners' retrenchment.
Thus, in the letter dated 1 June 1993, addressed to petitioner Benjamin Biete
("Biete"), Tomas Z. Roxas, Jr. ("Roxas") of Philex Retirement Trust informed petitioner Biete that he was entitled to receive "retirement gratuity" equivalent to
one month salary for every year of service because "[Biete's] separation at the
instance of Philex MiningCorporation as a result of its retrenchment program.
Clearly, under Philex's Retirement Gratuity Plan, "retirement gratuity" is paid
not only to retiring employees but also to those who, like petitioners, are dismissed for cause "beyond their control" such as retrenchment. Indeed, Philex treated the "retirement gratuity" as petitioners' basic separation pay,

which, with transportation allowance, comprised their "net separation [pay]" as

indicated in Deeds of Release and Quitclaims petitioners signed. Significantly, Philex paid petitioners such separation pay after notifying them of their retrenchment.
This applies squarely to the present case as Roxas' letter lies at the heart
of Philex's defense of payment of retirement gratuity to prove petitioners' alleged
retirement. Philexcannot feign ignorance of this letter. ECDAcS
Furthermore, Philex's failure to submit other documents proving petitioners'
claimed retirement, such as their applications for retirement under Philex's early
voluntary retirement program and their clearance slips, undermines its claim.
The submission of these documents, which should indicate the reason for petitioners' separation from service, would have put to rest any doubt on the cause of
such separation.
The vouchers in question do not suffice to prove petitioners' retirement
from Philex. Retirement results from a voluntary agreement between the employer and the employee where the latter, after reaching a certain age, agrees to sever
his employment with the former. Thus if, as in the present case, the intent to retire is not clearly established or if the retirement is involuntary, it is to be treated
as a discharge.
58.

Equitable PCI Bank v Caguia 466 SCRA 686 (2005)

EQUITABLE PCIBANK and WILFREDO VERGARA vs. GENEROSA A.

CAGUIOA (2005)
PANGANIBAN, J.:
FACTS: Senior Manager Generosa A. Caguioa filed a complaint for illegal dismissal, payment of salary, allowances, retirement benefits, 13th month pay, moral and exemplary damages, and actual damages on October 8, 2000 against Equitable PCI Bank. She indicated that she was hired in May 1963 and received a
total monthly pay of P39,630.00 at the time of her dismissal on October 6, 2000.
She had served the respondent bank for 35 years when discharged.
George L. Go, respondents Chairman of the Board, called her attention to the
complaint of client Antonio Jarina regarding accounting activities, involving her
participation, which cost him considerable damage. It was about bank checks,
which were issued to Jarina in exchange for cash at a discounted rate -- all by
means of his own capital. The scheme failed, resulting in his loss of investments
amounting to P4,325,051.65. Caguioa vehemently denied any knowledge of the
discounting activities.
Respondents Bankwide Evaluation Committee (BEC) issued a Decision Memo,
finding her guilty of having personally participated in the check discounting activity of Mr. Antonio Jarina, and therefrom, personally benefited/profited to the
prejudice of the bank. She would be dismissed with automatic forfeiture of benefits. She appealed and the respondent denied her appeal and issued the termination letter dated October 5, 2000. She alleged further that from her dismissal on
October 2000, respondent has refused to pay her salaries, wages and benefits; and
38

by reason of her wanton, arbitrary and illegal dismissal, she suffered damages
and incurred expenses, which should be assessed, in her favor.
The Labor Arbiter upheld the dismissal of Caguioa and ruled that the respondent
Bank in a valid exercise of management prerogative terminated her employment,
finding her to have violated its Code of Conduct. The NLRC reversed the decision
of the LA and declared that there was illegal dismissal. The CA held that Caguioa
had been illegally dismissed from employment for lack of clear and convincing
evidence which establish her direct participation in the alleged check discounting
activity/transaction remotely detrimental to the business and interest of the petitioner bank.
ISSUE: WON respondent was illegally dismissed.

HELD: There was NO illegal dismissal. Petition was GRANTED.

RATIO: The records show that more than substantial evidence supports the labor
arbiters finding that respondent had direct participation in the check-discounting
scheme, and that her dismissal was valid. Petitioners submitted to the labor arbiter relevant and material pieces of evidence. To a patient person with an auditing
background, the conclusion made by petitioners is clearly supported by the bank
records and the audit trail, which the NLRC brushed aside as too unclear to be
considered standing alone and uncorroborated. Hence, the cavalier disregard of
the evidence constitutes a violation of due process.
The leniency sought by respondent on the basis of her 35 years of service to the
bank must be weighed in conjunction with the other considerations raised by petitioners. As that service has been amply compensated, her plea for leniency cannot
offset her dishonesty. Even government employees who are validly dismissed
from the service by reason of timely discovered offenses are deprived of retirement benefits. Treating respondent in the same manner as the loyal and codeabiding employees, despite the timely discovery of her Code violations, may indeed have a demoralizing effect on the entire bank. Be it remembered that banks
thrive on and endeavor to retain public trust and confidence, every violation of
which must thus be accompanied by appropriate sanctions.
Finally, being a managerial employee, respondent may be dismissed by petitioners for breach of trust. Employers are allowed wide latitude of discretion in cases
of termination of managerial employees, who perform functions that by their nature require full trust and confidence.
59.

Sy v Metrobank Bank & Trust Company GR No. 160618 (2006)

60.

PLOT v Reus 557 SCRA 379 (2008)

61.

Rivera v Unilab GR No. 155639 (2009)

Retirement
Rivera v Unilab
April 22, 2009 | BRION, J.
FACTS:

Petitioner Rivera commenced employment with respondent United Laboratories, Inc. (UNILAB) on April 7, 1958 as senior manufacturing
pharmacist. She later became Director of UNILAB's Manufacturing Division.
In 1959, UNILAB adopted a comprehensive retirement plan supported
by a retirement fund, consisting of Trust Fund A where it would put in
its contributions for the account of the member-employee and Trust Fund
B consisting of the contributions of the members themselves. Under the
plan, a member is compulsorily retired upon reaching the normal retirement date which is the date when the member has reached age 60 or has
completed 30 years of service, whichever comes first.
In 1988, Rivera completed 30 years of service and UNILAB retired
her pursuant to the terms of the plan. Rivera's accrued retirement benefits under Trust Fund A and Trust Fund B were withdrawn from the retirement fund and deposited in Trust Fund C, a special account from
which she could make withdrawals as she pleased.
At Rivera's request, UNILAB allowed her to continue working for the
company; she was even promoted to the position of Assistant VicePresident and rendered service to the company in this capacity until the
end of 1992, at which time, Rivera retired from employment with the
company.
From 1993 to 1994, Rivera served as a personal consultant under contract with UNILABs sister companies.
On December 16, 1992, the company amended its retirement plan,
providing, among others, for an increase in retirement benefits from 1
month to 1.5 months of terminal basic salary for every year of service.
Rivera asked that her retirement benefits be increased in accordance
with the amended retirement program.UNILAB did not reply to this letter and Rivera made two follow-up letters, reiterating her demand.
UNILAB denied Riveras request, and explained that since the upgrade
of the retirement benefit formula occurred in December 1992, the upgraded formula does not apply to her; what applied to her case is the
formula that governed in 1988, the year she compulsory retired from the
plan.
Rivera sought legal assistance and demanded a recomputation through
her lawyer. UNILAB again rejected the demand.
Rivera sought relief from the NLRC in an action against UNILAB for recovery of unpaid retirement pay differential.
LA dismissed the complaint for lack of merit.
NLRC denied Riveras appeal.
After the latters MR was denied, case was elevated to the CA which
ruled in favor of Rivera and remanded the case to the Labor Arbiter for
hearing on the merits. It found that Rivera's claim for retirement had not
yet prescribed but avoided ruling on the merits of the case by reason of
what it recognized as "an existing controversy as to the crucial fact of
when precisely petitioner retired from respondent company for purposes
of determining whether or not she is covered by respondent's amended
retirement plan so as to fix the amount of retirement benefits." MR filed
39

by respondent and partial MR filed by petitioner (asking the CA to resolve the remaining issues raised) were both denied. Hence, the present
petition.

Section 13 of the Rules to Implement the Labor Code, on the other hand,
provided that
In the absence of any collective bargaining agreement or other
applicable agreement concerning terms and conditions of employment which provides for retirement at an older age, an employee may be retired upon reaching the age of sixty (60) years.
These were the governing laws at the end of 1988 when the petitioner
compulsorily retired under the UNILAB retirement plan. Thus, her retirement was governed by the applicable agreement which was
the UNILAB retirement plan. Under the terms of this pre-1992
plan, her retirement was mandatory as she had reached 30 years
of service.
"Retirement" as a fact carries with it certain legal effects, one of which is
the retired employees termination of the services with the company as of
the retirement date. With this retirement, her coverage by the UNILAB
retirement plan ceased based on the express terms of the plan.
A twist in Riveras case is that she continued working beyond the compulsory separation from service that resulted from her retirement.
Whether she could or could not resume working with the company is, as
a rule, a consensual matter for the parties to agree upon, limited only by
company policies and the applicable terms of the retirement plan. Her
employment terms under this renewed employment are based on what
she and the company agreed upon. Whether these terms included renewed coverage in the retirement plan is an evidentiary gap that could
have been conclusively shown by evidence of deductions of contributions
to the plan after 1988. Two indicators, however, tell us that no such coverage took place. The first is that the terms of the retirement plan, before
and after its 1992 amendment, continued to exclude those who have rendered 30 years of service or have reached 60 years of age. Therefore, the
plan could not have covered her. The second is the absence of evidence of,
or of any demand for, any reimbursement of what Rivera would have
paid as contributions to the plan had her coverage and deductions continued after 1988. Thus, SC concluded that her renewed service did
not have the benefit of any retirement plan coverage

ISSUES/HELD:
1.
2.
3.

W/N petitioners cause of action has already prescribed. NO

W/N case should be remanded. NO
W/N petitioner is entitled to retirement pay differential for the subsequent work she undertook. NO.

RATIO:

1. Rivera's claim for retirement pay differential only accrued on January

2.

3.

15, 1993 when she received her retirement pay check. It could not have
accrued on December 31, 1988 as what was clearly due her then was her
retirement pay up to that date, a matter that is not disputed. On the other hand, the first opportunity for her to claim her retirement pay differential corresponding to her claimed continuous work up to December 31,
1992 came only on January 15, 1993 when she received her final pay that
did not include her service after December 31, 1988. However, the running of the 3-year prescriptive period was effectively interrupted by her
first letter to the respondent on January 7, 1995 when she demanded additional retirement benefits under the 1992 amended retirement plan.
When petitioner then brought her case to the NLRC on August 9, 1996 it
was well within the prescriptive period.
Upon SCs examination of the records of the case, it found that the parties have freely made factual allegations in the course of the dispute
without any major dispute on any material factual issue. Thus, it held
that its in the position to completely rule on the case (Court also noted
that the case is already 13 years old and Rivera is already 78). Also, the
argument that SC will be violating the doctrine of the hierarchy of courts
if it acts on the case, is misplaced: the case had gone through the labor
tribunals and the CA who had all the opportunity to rule on the substantive aspect of the case, yet they failed to do so, or were sidetracked by the
issue of prescription.
Under the facts submitted, SC found that Rivera did retire from the
company on December 31, 1988 after 30 years of service pursuant
to the terms of the companys retirement plan. This was a mandatory retirement and she had no claim relating to the completeness of the
retirement pay she received as of that date.
Retirement in its ordinary signification is the termination of an employees service upon reaching retirement age. Prior to the Retirement Pay
Law (R.A. 7641), Article 287 of the Labor Code simply provided that Any employee may be retired upon reaching the retirement age
established in the collective bargaining agreement or other applicable employment contract; the employee shall be entitled
to receive such retirement benefits as he may have earned under
existing laws and any collective bargaining or other agreement.

Could she have availed of retirement benefits under the Retirement Pay Law that was signed on December 9, 1992 and became effective on December 31 of that year? Unfortunately for her, the answer is
still in the negative as she did not qualify under the terms of that
law when she was retired effective December 31, 1992. At that
point, she was not covered by any applicable retirement plan, as
heretofore discussed. In the absence of a plan, the Retirement Pay
Law requires that an employee must have served for at least 5
years to be entitled to coverage. As of December 31, 2002, her service
without any retirement plan coverage was only 4 years.
62.

Korean Air Co Ltd. V Yuson GR No. 170369 (2010)

G.R. No. 170369

40

KOREAN AIR CO., LTD. and SUK KYOO KIM, vs. ADELINA A.S. YUSON,
June 16, 2010
Nature
This is a petition for review on certiorari under Rule 45 of the Rules of Court. The
petition challenges the Decision and Resolution of the Court of Appeals. The
Court of Appeals set aside the Resolution of the National Labor Relations
Commission (NLRC), affirming the Decision of the Labor Arbiter.
Facts:
In July 1975, Korean Air Co., Ltd. (Korean Air) hired Adelina A.S. Yuson
(Yuson) as reservations agent. Korean Air promoted Yuson to assistant manager
in 1993, and to passenger sales manager in 1999. Korean Air had an
International Passenger Manual (IPM) which contained, among others, travel
benefit to its employees. However, Korean Air never implemented the travel
benefit under the manual. Instead, Korean Air granted all its employees travel
benefit as contained in the collective bargaining agreement (CBA). Yuson availed
of the travel benefit under the CBA during her stay in the company.
In April 2001, Yuson requested Korean Air that she be transferred from the
passenger sales department to the cargo department because she intended to
pursue a cargo agency business after her retirement. Korean Air then temporarily
transferred Yuson to the cargo department as cargo dispatch. Yuson continued
to receive the same compensation and exercise the same authority as passenger
sales manager.
In view of its net loss of over $367,000,000 in 2000 and in order to cut costs,
Korean Air offered its employees an early retirement program (ERP) not only for
Head Office staffs but throughout all Korean Air branches abroad. Yuson
accepted the offer for early retirement. However, Korean Airs Philippine general
manager Suk informed Yuson that she was excluded from the ERP because she
was retiring on 8 January 2002. Consequently, in a letter dated 1 September 2001
and addressed to Suk, Yuson claimed that Korean Air was bound by the perfected
contract and accused the company of harassment and discrimination.

ERP, for moral and exemplary damages, and for attorneys fees but directed to
pay complainant her retirement benefits.
On 14 February 2003, Tae and Yuson entered into a compromise agreement
and amicably settled the criminal case wherein Yuson accepted P1,671,546.92 as
retirement benefit under Article 287.
Yuson filed with the NLRC an appeal memorandum challenging Labor
Arbiter Santos decision. NLRCs decision adopted the report and
recommendations of Labor Arbiter Tamayo to order Korean Air and Suk to pay
Yuson her benefit under the ERP and to give her 10 Korean Air economy tickets.
Korean Air and Suk filed with the NLRC a motion for reconsideration. In its
resolution, NLRC set aside its previous decision and affirmed Labor Arbiter
Santos decision. Yuson filed with the Court of Appeals a petition for certiorari
under Rule 65 of the Rules of Court. The Court of Appeals set aside the NLRCs
resolution and affirmed the commissions decision.
Issues
1.

Whether or not Yusons claim for benefit under the ERP became moot when
she availed of the optional retirement under Article 287 of the Labor Code.

2.

Whether or not Yuson may claim benefit under the ERP.

3.

Whether or not Korean Air forced Yuson to retire on 8 January 2002.

4.

Whether or not Korean Air should award Yuson 10 Korean Air economy
tickets.

Held:
1.

The third paragraph of Article 287 states that:

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.

In her reply, Suk stated that the Early Retirement Program (ERP) was
not an absolute offer but rather an invitation to possible qualified employees to
consider the ERP subject to the approval and acceptance by the Company,
through the Head Office, in the exercise of its discretion. The ERP is supposedly
for employees who have still a number of years to serve the Company in order to
prevent further losses.
Thus, on 28 November 2001, Yuson filed with the arbitration branch of the
NLRC a complaint against Korean Air and Suk for payment of benefit under the
ERP, moral damages, exemplary damages, and attorneys fees.
Consequently, on 8 January 2002, her 60th birthday, Yuson availed of the
optional retirement under Article 287 of the Labor Code, as amended.
In a Resolution dated 30 July 2002, the Bureau dismissed the complaint.
Labor Arbiter Santos denied for lack of merit Yusons claims for benefit under the

Yes, Yusons claim for benefit under the ERP became moot when she availed
of the optional retirement under Article 287 and accepted the benefit. By her
acceptance of the benefit, Yuson is deemed to have opted to retire under
Article 287.

2.

No, Yuson may not claim benefit under the ERP as there was no perfected
contract. Approval of applications for the ERP is within Korean Airs
management prerogatives. The exercise of management prerogative is valid
as long as it is not done in a malicious, harsh, oppressive, vindictive, or
wanton manner. In the present case, the Court sees no bad faith on Korean
Airs part. The 21 August 2001 memorandum clearly states that Korean Air,
41

on its discretion, was offering ERP to its employees. The memorandum also
states that the reason for the ERP was to prevent further losses. Korean Air
did not abuse its discretion when it excluded Yuson in the ERP. To allow
Yuson to avail of the ERP would have been contrary to the purpose of the
ERP.
3.

4.

No. Korean Air did not force Yuson to retire on 8 January 2002. The
surrounding circumstances show that Korean Air did not force Yuson to
retire on 8 January 2002. As admitted by complainant, she was set to
retire by January 2002 ; and in it was shown in the records of the case that
Yuson was about to retire sometime in January 2002, which in fact
happened.

his clearance, however, he was informed that the costs of his training
will be deducted from his retirement pay, which will be computed at the
rate of P 5,000.00 per year of service.

5.

PAL refused to yield. Elegir filed a complaint for non-payment of

retirement pay, moral damages, exemplary damages and attorneys fees
against PAL.

6.

LA ratiocinated that PAL had no right to withhold the payment of

Elegirs retirement benefits simply because he retired from service before
the lapse of three (3) years. To begin with, there was no document
evidencing the fact that Elegir was required to stay with PAL for three (3)
years from the completion of his training or that he was bound to
reimburse the company of the costs of his training should he retire from
service before the completion of the period. LA likewise dismissed the
theory espoused by PAL that Elegirs submission of his bid for the new
position which necessarily requires training created an innominate
contract of du ut facias between him and the company since their
relationship is governed by the CBA.

7.

NLRC reversed. It would be grossly unfair and unjust to PAL if Elegir he

be allowed to reap the fruits of this training, which upgraded his
knowledge and skills that would enable him to demand higher pay, if he
would not be made to return said benefits in the form of service for a
reasonable period of time, say three (3) years as PALs company policy
demands.

8.

In its MR, PAL asseverated that the decision of the NLRC, directing the
computation of Elegirs retirement benefits based on Article 287 of the
Labor Code, instead of the CBA, was inconsistent with the disposition of
this Court in PAL v. APAP, where the SC sustained PALs position and
directed the payment of retirement benefits of the complainant pilot in
accordance with the PAL-ALPAP Retirement Plan. However, NLRC
denied PALs MR.

9.

CA agreed with PAL. Elegir filed an MR but the same was denied.

Yuson was not entitled to the tickets. Korean Air had never implemented the
IPM in the Philippines. Its, employees, including Yuson, received the travel
benefit under the CBA. During her 26-year stay in Korean Air, Yuson already
received more than 10 tickets.

The SC granted the petition and affirmed the Resolution of the National Labor
Relations Commission which, in turn, affirmed the Decision of the Labor Arbiter.
63.
2012

Bibiano C. Elegir vs. Philippine Airlines, Inc. G.R. No. 181995, July 16,

Elegir v. PAL
16 July 2012; Reyes, J.
Digest prepared by Jethro Koon
I. Facts
1.

Elegir was hired by PAL as a commercial pilot, specifically designated as

HS748 Limited First Officer, on March 16, 1971. In 1995, PAL embarked
on a refleeting program and acquired new and highly sophisticated
aircrafts. Subsequently, it sent an invitation to bid to all its flight deck
crew, announcing the opening of eight (8) B747-400 Captain positions
that were created by the refleeting program.

2.

Elegir, who was then holding the position of A-300 Captain, submitted
his bid and was awarded the same. He, with seven (7) other pilots, was
sent for training at Boeing in Seattle. He completed his training on
September 19, 1995.

3.

4.

On November 5, 1996, after rendering twenty-five (25) years, eight (8)

months and twenty (20) days of continuous service, Elegir applied for
optional retirement authorized under the CBA. PAL asked him to
reconsider his decision, asseverating that the company has yet to recover
the full value of the costs of his training. It warned him that if he leaves
PAL before he has rendered service for at least three (3) years, it shall be
constrained to deduct the costs of his training from his retirement pay.
On November 6, 1996, Elegir went on terminal leave for thirty (30) days
and thereafter made effective his retirement from service. Upon securing

Elegir, through his counsel, sent PAL a correspondence,

asserting that his retirement benefits should be based on the
computation stated in the Labor Code.

II. Issues
Whether Elegirs retirement benefits should be computed based on Article 287 of
the Labor Code or on PALs retirement plans. PAL retirement plans
Whether Elegir should reimburse PAL with the proportionate costs of his training.
YES
Whether interest should be imposed on the monetary award in favor of Elegir.
NO
III. Holding
42

CA affirmed

4.

After perusing the records of this case, SC failed to find any significant
fact or circumstance that could warrant a departure from the established
jurisprudence. Elegir admitted that as in Almario, the prevailing CBA
between PAL and ALPAP at the time of his retirement incorporated the
same3-year stipulation

5.

Undeniably, Elegir was enriched at the expense of PAL. After undergoing

the training fully shouldered by PAL, he acquired a higher level of
technical competence which, in the professional realm, translates to a
higher compensation.

IV. Ratio
Elegirs retirement pay should be computed based on PALs retirement plans.
Elegir maintains that it is Article 287 of the Labor Code which should be applied
in the computation of his retirement pay since the same provides for higher
benefits. He pointed out that the pilot in PAL v. ALPAP retired at 45, while he
opted to retire at 52. He further emphasized that the ruling was anchored on a
finding that the retirement benefits that the pilot would get under Article 287 of
the Labor Code are less than those he would get under PALs retirement plans.
1.

2.

It can be clearly inferred from the language of LC287 that it is applicable

only to a situation where (1) there is no CBA or other applicable
employment contract providing for retirement benefits for an employee,
or (2) there is a CBA or other applicable employment contract providing
for retirement benefits for an employee, but it is below the requirement
set by law. The rationale for the first situation is to prevent the absurd
situation where an employee, deserving to receive retirement benefits, is
denied them through the nefarious scheme of employers to deprive
employees of the benefits due them under existing labor laws. On the
other hand, the second situation aims to prevent private contracts from
derogating from the public law.
The determining factor in choosing which retirement scheme to apply is
still superiority in terms of benefits provided. Thus, even if there is an
existing CBA but the same does not provide for retirement benefits equal
or superior to that which is provided under Article 287 of the Labor Code,
the latter will apply. In this manner, the employee can be assured of a
reasonable amount of retirement pay for his sustenance.

Award of interest not warranted under the circumstances.

Elegir claims that the CA should have imposed interest on the monetary award in
his favor. To support his claim, he cited the case of Eastern Shipping Lines, Inc. v.
CA (riboflavin case).
1.

The jurisprudential guideline clearly referred to breach of an obligation

consisting of a forbearance of money, goods or credit before the
imposition of a legal interest of 12% can be warranted. Such essential
element is nowhere to be found in the facts of this case.

2.

If at all, the monetary award in favor of Elegir will earn legal interest
from the time the judgment becomes final and executory until the same
is fully satisfied, regardless of the nature of the breached obligation. The
imposition is justified considering that the interim period from the
finality of judgment, awarding a monetary claim and until payment
thereof, is deemed to be equivalent to a forbearance of credit.

64.
Eastern Mediterranean Maritime Ltd., et al. v Estanislao Surlo, et al.
G.R. No. 154213

Elegir should reimburse PAL with the costs of his training.

1.

Almario v. Philippine Airlines, Inc. is controlling. Essentially, in the

mentioned case, SC recognized the right of PAL to recoup the costs of a
pilots training in the form of service for a period of at least three (3)
years. This right emanated from the CBA between PAL and ALPAP,
which must be complied with good faith by the parties (note that the
same agreement has been examined and ordered as valid by the DOLE
already in a circular).

2.

Further, SC considered PALs act of sending its crew for training as an

investment which expects an equitable return in the form of service
within a reasonable period of time such that a pilot who decides to leave
the company before it is able to regain the full value of the investment
must proportionately reimburse the latter for the costs of his training
(doctrine also found in Almario).

3.

NCC 22 also finds application: Every person who through an act of

performance by another, or any other means, acquires or comes into
possession of something at the expense of the latter without just or legal
ground, shall return the same to him.
43