1.

THE APPLICABLE LAWS

2. BASIC PRINCIPLES

1. Tesoro et al., vs. Metro Manila Retreaders Inc., et al., GR No. 171482, March 12, 2014

FACTS:

On various dates between 1991 and 1998, petitioners Ashmor M. Tesoro, Pedro Ang, and Gregorio
Sharp used to work as salesmen for respondents Metro Manila Retreaders, Inc., Northern Luzon
Retreaders, Inc., or Power Tire and Rubber Corporation. These are sister companies collectively called
“Bandag”. Bandag offered repair and retread services for used tires. In 1998, however, Bandag
developed a franchising scheme that would enable others to operate tire and retreading businesses using
its trade name and service system. Petitioners quit their jobs as salesmen and entered into separate
Service Franchise Agreements (SFAs) with Bandag for the operation of their respective franchises.
Under this SFA, Bandag would provide funding with the petitioners subject to regular liquidation of
revolving funds. The expenses of these funds will be deducted from their sale in order to determine their
income. After some time, petitioners began to default on their obligations to submit periodic liquidations of
their operational expenses in relation to the revolving funds Bandag provided them. Bandag terminated
their SFA.

Aggrieved, petitioners filed a complaint for constructive dismissal, non–payment of wages, incentive pay,
13th month pay and damages against Bandag with the National Labor Relations Commission (NLRC).
Petitioners contend that despite the SFA, they remained employees of Bandag. For its part, Bandag
pointed out that petitioners freely resigned from their employment and decided to avail themselves of the
opportunity to be independent entrepreneurs under the franchise scheme that Bandag had. Thus, no
employer–employee relationship existed between petitioners and Bandag.

ISSUE:

WON petitioners remained to be Bandag’s salesmen under the franchise scheme it entered into with
them.

RULING:

No, petitioners were no longer employees of Bandag the moment they entered into the SFA. Franchising
is a business method of expansion that allows an individual or group of individuals to market a product or
a service and to use of the patent, trademark, trade name and the systems prescribed by the owner.

The tests for determining employer–employee relationship are: (a) the selection and engagement of the
employee; (b) the payment of wages; (c) the power of dismissal; and (d) the employer’s power to control
the employee with respect to the means and methods by which the work is to be accomplished. The last
is called the “control test,” the most important element.

When petitioners agreed to operate Bandag’s franchise branches in different parts of the country, they
knew that this substantially changed their former relationships. They were to cease working as Bandag’s
salesmen, the positions they occupied before they ventured into running separate Bandag branches.
They were to cease receiving salaries or commissions. Their incomes were to depend on the profits they
made. Yet, petitioners did not then complain of constructive dismissal. They took their chances, ran their
branches, Gregorio Sharp in La Union for several months and Ashmor Tesoro in Baguio and Pedro Ang
in Pangasinan for over a year. Clearly, their belated claim of constructive dismissal is quite hollow.

It is pointed out that Bandag continued, like an employer, to exercise control over petitioners’ work. It
points out that Bandag: (a) retained the right to adjust the price rates of products and services; (b)
imposed minimum processed tire requirement (MPR); (c) reviewed and regulated credit applications; and
(d) retained the power to suspend petitioners’ services for failure to meet service standards. But
uniformity in prices, quality of services, and good business practices are the essence of all franchises. A
franchisee will damage the franchisor’s business if he sells at different prices, renders different or inferior
services, or engages in bad business practices. These business constraints are needed to maintain
collective responsibility for faultless and reliable service to the same class of customers for the same
prices.

This is not the “control” contemplated in employer–employee relationships. Control in such relationships
addresses the details of day to day work like assigning the particular task that has to be done, monitoring
the way tasks are done and their results, and determining the time during which the employee must report
for work or accomplish his assigned task.

Petitioners cannot use the revolving funds feature of the SFAs as evidence of their employer–employee
relationship with Bandag. These funds do not represent wages. They are more in the nature of capital
advances for operations that Bandag conceptualized to attract prospective franchisees. Petitioners’
incomes depended on the profits they make, controlled by their individual abilities to increase sales and
reduce operating costs.

2. Royale Homes Marketing Corp., vs. Alcantara, GR No. 195190, July 28, 2014

FACTS:

In 1994, Royale Homes, a corporation engaged in marketing real estates, appointed Alcantara as its
Marketing Director for a fixed period of one year. His work consisted mainly of marketing Royale Homes’
real estate inventories on an exclusive basis. Royale Homes reappointed him for several consecutive
years, the last of which covered the period January 1 to December 31, 2003 where he held the position of
Division 5 Vice-President-Sales.

On December 17, 2003, Alcantara filed a Complaint for Illegal Dismissal against Royale Homes and its
corporate officers. He alleged that he is a regular employee of Royale Homes since he is performing
tasks that are necessary and desirable to its business; that in 2003 the company gave him P1.2 million for
the services he rendered to it; that in the first week of November 2003, however, the executive officers of
Royale Homes told him that they were wondering why he still had the gall to come to office and sit at his
table;10and that the acts of the executive officers of Royale Homes amounted to his dismissal from work
without any valid or just cause and in gross disregard of the proper procedure for dismissing employees.
Thus, he also impleaded the corporate officers who, he averred, effected his dismissal in bad faith and in
an oppressive manner.

Alcantara prayed to be reinstated to his former position without loss of seniority rights and other
privileges, as well as to be paid backwages, moral and exemplary damages, and attorney’s fees. He
further sought that the ownership of the Mitsubishi Adventure with Plate No. WHD-945 be transferred to
his name.

Royale Homes, on the other hand, vehemently denied that Alcantara is its employee. It argued that the
appointment paper of Alcantara is clear that it engaged his services as an independent sales contractor
for a fixed term of one year only. He never received any other benefits from as he was paid purely on
commission basis. In addition, Royale Homes had no control on how Alcantara would accomplish his
tasks and responsibilities as he was free to solicit sales at any time and by any manner which he may
deem appropriate and necessary. He is even free to recruit his own sales personnel to assist him in
pursuance of his sales target.

According to Royale Homes, Alcantara decided to leave the company after his wife had formed a
brokerage company that directly competed with its business, and even recruited some of its sales agents.
In a special management committee meeting on October 8,2003, however, Alcantara announced publicly
and openly that he would leave the company by the end of October 2003 and that he would no longer
finish the unexpired term of his contract. He has decided to join his wife and pursue their own brokerage
business. Royale Homes accepted Alcantara’s decision. It then threw a despedida party in his honor and,
subsequently, appointed a new independent contractor. Two months after he relinquished his post,
however, Alcantara appeared in Royale Homes and submitted a letter claiming that he was illegally
dismissed.

On September 7, 2005,the Labor Arbiter rendered a Decision holding that Alcantara is an employee of
Royale Homes with a fixed-term employment period from January 1 to December 31, 2003 and that the
pre-termination of his contract was against the law.

Both parties appealed the Labor Arbiter’s Decision to the NLRC. Royale Homes claimed that the
Labor Arbiter grievously erred in ruling that there exists an employer-employee relationship between the
parties. It insisted that the contract between them expressly statesthat Alcantara is an independent
contractor and not an ordinary employee. It had no control over the means and methods by which he
performed his work. Alcantara, for his part, argued that the Labor Arbiter erred in ruling that his
employment was for a fixed-term and that he is not entitled to backwages, reinstatement, unpaid
commissions, and damages.

On February 23, 2009, the NLRC rendered its Decision ruling that Alcantara is not an employee but a
mere independent contractor of Royale Homes. It based its ruling mainly on the contract which
does not require Alcantara to observe regular working hours. He was also free to adopt the selling
methods he deemed most effective and can even recruit sales agents to assist him in marketing the
inventories of Royale Homes. The NLRC also considered the fact that Alcantara was not receiving
monthly salary, but was being paid on commission basis as stipulated in the contract. Being an
independent contractor, the NLRC concluded that Alcantara’s Complaint is cognizable by the regular
courts.
Alcantara moved for reconsideration. In a Resolution dated May 29, 2009, however, the NLRC denied his
motion.

Alcantara thus filed a Petition for Certiorari with the CA imputing grave abuse of discretion on the part of
the NLRC in ruling that he is not an employee of Royale Homes and that it is the regular courts which
have jurisdiction over the issue of whether the pre-termination of the contract is valid.
On June 23, 2010, the CA promulgated its Decision18 granting Alcantara’s Petition and reversing the
NLRC’s Decision. Applying the four-fold and economic reality tests, it held that Alcantara is an employee
of Royale Homes. Royale Homes exercised some degree of control over Alcantara since his job, is
subject to company rules, regulations, and periodic evaluations. He was also bound by the company code
of ethics. Moreover, the exclusivity clause of the contract has made Alcantara economically dependent on
Royale Homes, supporting the theory that he is an employee of said company.Considering, however, that
the CA was not satisfied with the proof adduced to establish the amount of Alcantara’s annual salary, it
remanded the case to the Labor Arbiter to determine the same and the monetary award he is entitled to.
With regard to the corporate officers, the CA absolved them from any liability for want of clear proof that
they assented to the patently unlawful acts or that they are guilty of bad faith or gross negligence. Royale
Homes filed a Motion for Reconsideration20 and a Supplemental Motion for Reconsideration. 21 In a
Resolution22 dated January 18, 2011, however, the CA denied said motions.

ISSUE:

WON Alcantara was an independent contractor or an employee of Royale Homes

RULING:

Alcantara is an independent contractor.

While the existence of employer-employee relationship is a matter of law, the characterization made by
the parties in their contract as to the nature of their juridical relationship cannot be simply ignored,
particularly in this case where the parties’ written contract unequivocally states their intention at the time
they entered into it. In this case, the contract,27 duly signed and not disputed by the parties, conspicuously
provides that "no employer-employee relationship exists between" Royale Homes and Alcantara, as well
as his sales agents. It is clear that they did not want to be bound by employer-employee relationship at
the time of the signing of the contract.

In determining the existence of an employer-employee relationship, this Court has generally relied on the
four-fold test. Among the four, the most determinative factor in ascertaining the existence of employer-
employee relationship is the "right of control test. It is deemed to be such an important factor that the
other requisites may even be disregarded. However, not every form of control is indicative of
employer-employee relationship. A person who performs work for another and is subjected to its rules,
regulations, and code of ethics does not necessarily become an employee as long as the level of control
does not interfere with the means and methods of accomplishing the assigned tasks.

Neither does the repeated hiring of Alcantara prove the existence of employer-employee relationship. The
continuous rehiring of Alcantara simply signifies the renewal of his contract with Royale Homes, and
highlights his satisfactory services warranting the renewal of such contract. Nor does the exclusivity
clause of contract establish the existence of the labor law concept of control. Alcantara was not prohibited
from engaging in any other business as long as he does not sell projects of Royale Homes’ competitors.
He can engage in selling various other products or engage in unrelated businesses.

The element of payment of wages is also absent in this case. As provided in the contract, Alcantara’s
remunerations consist only of commission override of 0.5%, budget allocation, sales incentive and other
forms of company support. There is no proof that he received fixed monthly salary. No payslip or payroll
was ever presented and there is no proof that Royale Homes deducted from his supposed salary
withholding tax or that it registered him with the Social Security System, Philippine Health Insurance
Corporation, or Pag-Ibig Fund.

This Court is, therefore, convinced that Alcantara is not an employee of Royale Homes, but a mere
independent contractor. The NLRC is, therefore, correct in concluding that the Labor Arbiter has no
jurisdiction over the case and that the same is cognizable by the regular courts.

3. Sameer Overseas Placement Agency vs. Cabiles, GR No. 170139, August 3, 2014, En
Banc

FACTS:
Petitioner is a recruitment and placement agency. It accepted the respondent’s application for a quality
control job in Taiwan and later asked respondent to sign a one-year employment contract as well as
required payment of a placement fee amounting to Php 70,000.00.

Respondent was deployed to work for Taiwan Wacoal, Co. Ltd. (Wacoal) on June 26, 1997; however, in
Taiwan, she was asked to work as a cutter.

Petitioner claims that on July 14, 1997, a certain Mr. Huwang from Wacoal informed respondent, without
prior notice, that she was terminated. Respondent claims that she was told that she only earned a total of
NT$9,000 and that Wacoal deducted NT$3,000 to cover her plane ticket to Manila.

On October 15, 1997, respondent filed a complaint with the National Labor Relations Commission (NLRC)
against petitioner and Wacoal for illegal dismissal. In response to the complaint, petitioner alleged that the
respondent’s termination was due to her inefficiency, negligence in her duties and her failure to comply
with the work requirements of her foreign employer. Petitioner also denied the payment of placement fee.
It further alleged that it was already substituted by Pacific Manpower & Management Services, Inc.
(Pacific Manpower) since Wacoal’s accreditation with petitioner had already been transferred to Pacific
Manpower on August 6, 1997 or before the filing of the complaint by respondent. Pacific Manpower, on
the other hand, moved for the dismissal of the complaint since there was no employer-employee
relationship between them.

On July 29, 1998, the Labor Arbiter ruled that the respondent’s complaint was based on mere allegations
and dismissed the complaint. In a resolution dated March 31, 2004, the NLRC declared respondent to
have been illegally dismissed since petitioner failed to prove that there were just causes for termination
and procedural due process was not observed in terminating the respondent. It awarded respondent only
three months’ worth of salary, the reimbursement of the amount withheld and attorney’s fees. However,
the NLRC did not rule on the issue of the alleged transfer of obligations to Pacific Manpower.

The Commission subsequently denied petitioner’s motion for reconsideration.

The Court of Appeals (CA) affirmed the decision of the NLRC with respect to the finding of illegal
dismissal but remanded the case to the NLRC to address the validity of petitioner’s allegations against
Pacific Manpower.

ISSUES:

1. WON the CA erred in affirming the ruling of the NLRC in finding the respondent illegally
dismissed.
2. WON petitioner is substituted by Pacific Manpower due to the transfer of Wacoal’s accreditation.

RULING:

1. No, the CA did not err in affirming the NLRC ruling. Petitioner failed to show that there was cause
for respondent’s dismissal. The employer, Wacoal, also failed to accord her due process of law.

Petitioner’s allegation that respondent was inefficient in her work and negligent in her duties may
constitute a just cause for termination under Article 282(b) of the Labor Code of the Philippines.
The burden of proving that there is just cause for termination is on the employer. It must be
affirmatively shown that: 1) the employer has set standards of conduct and workmanship against
which the employee will be judged; 2) such standards have been communicated to the employee;
and 3) the communication was made at a reasonable time prior to the employee's performance
assessment.

In this case, there was no evidence to support petitioner’s allegations that respondent failed to
comply with her foreign employer's work requirements. Petitioner did not even specify what
requirements were not met, what efficiency standards were violated, or what particular acts of
respondent constituted inefficiency.

There was also no showing that respondent was sufficiently informed of the standards against
which her work efficiency and performance were judged. The parties' conflict as to the position
held by respondent showed that even the matter as basic as the job title was not clear.

Further, respondent's dismissal less than one year from hiring and her repatriation on the same
day show that the employers did not comply with the due process requirement. Petitioner failed to
comply with the twin notice and hearing requirements. The abruptness of the termination negated
any finding that she was properly notified and given the opportunity to be heard. Her
constitutional right to due process of law was violated.
 2. No. Under Section 10 of the Migrant Workers and Overseas Filipinos Act of 1995, the foreign
employer and the local employment agency are jointly and severally liable for money claims
including claims arising out of an employer-employee relationship and/or damages.

The fundamental effect of joint and several liability is that each of the debtors is liable for the
entire obligation. A final determination may, therefore, be achieved even if only one of the joint
and several debtors are impleaded in an action. Hence, in the case of overseas employment,
either the local agency or the foreign employer may be sued for all claims arising from the foreign
employer's labor law violations. However, it must be emphasized that the local agency that is held
to answer for the overseas worker's money claims is not left without remedy. The law does not
preclude it from going after the foreign employer for reimbursement of whatever payment it has
made to the employee to answer for the money claims against the foreign employer.

The Court held that with the present state of the pleadings, it is not possible to determine whether
there was indeed a transfer of obligations from petitioner to Pacific. This should not be an
obstacle for the respondent overseas worker to proceed with the enforcement of this judgment.
Petitioner is possessed with the resources to determine the proper legal remedies to enforce its
rights against Pacific, if any.

3. Fuji Television Network vs. Espiritu, GR No. 204944-45, Dec. 3, 2014

FACTS:

Arlene S. Espiritu (Arlene) was engaged by Fuji Television Network, Inc. (Fuji) as a news
correspondent/producer tasked to report Philippine news to Fuji through its Manila Bureau field office. The
employment contract was initially for one year, but was successively renewed on a yearly basis with
salary adjustments upon every renewal.

In January 2009, Arlene was diagnosed with lung cancer. She informed Fuji about her condition, and the
Chief of News Agency of Fuji, Yoshiki Aoki, informed the former that the company had a problem with
renewing her contract considering her condition. Arlene insisted she was still fit to work as certified by her
attending physician.

After a series of verbal and written communications, Arlene and Fuji signed a non-renewal contract. In
consideration thereof, Arlene acknowledged the receipt of the total amount of her salary from March-May
2009, year-end bonus, mid-year bonus and separation pay. However, Arlene executed the non-renewal
contract under protest.

Arlene filed a complaint for illegal dismissal with the NCR Arbitration Branch of the NLRC, alleging that
she was forced to sign the non-renewal contract after Fuji came to know of her illness. She also alleged
that Fuji withheld her salaries and other benefits when she refused to sign, and that she was left with no
other recourse but to sign the non-renewal contract to get her salaries.

Labor Arbiter dismissed the complaint and held that Arlene was not a regular employee but an
independent contractor.

The NLRC reversed the Labor Arbiter’s decision and ruled that Arlene was a regular employee since she
continuously rendered services that were necessary and desirable to Fuji’s business.

The Court of Appeals affirmed that NLRC ruling with modification that Fuji immediately reinstate Arlene
to her position without loss of seniority rights and that she be paid her backwages and other emoluments
withheld from her. The Court of Appeals agreed with the NLRC that Arlene was a regular employee,
engaged to perform work that was necessary or desirable in the business of Fuji, and the successive
renewals of her fixed-term contract resulted in regular employment. The case of Sonza does not apply in
the case because Arlene was not contracted on account of a special talent or skill. Arlene was illegally
dismissed because Fuji failed to comply with the requirements of substantive and procedural due
process. Arlene, in fact, signed the non-renewal contract under protest as she was left without a choice.

Fuji filed a petition for review on certiorari under Rule 45 before the Supreme Court, alleging that Arlene
was hired as an independent contractor; that Fuji had no control over her work; that the employment
contracts were renewed upon Arlene’s insistence; that there was no illegal dismissal because she freely
agreed not to renew her fixed-term contract as evidenced by her email correspondences.

Arlene filed a manifestation stating that the SC could not take jurisdiction over the case since Fuji failed to
authorize Corazon Acerden, the assigned attorney-in-fact for Fuji, to sign the verification.

ISSUES:
 1. WON Arlene was an independent contractor
2. WON Arlene was a regular employee
3. Whether or not Arlene was illegally dismissed

RULING:

Art. 280. Regular and casual employment. The provisions of written agreement to the contrary
notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to
be regular where the employee has been engaged to perform activities which are usually necessary or
desirable in the usual business or trade of the employer, except where the employment has been fixed for
a specific project or undertaking the completion or termination of which has been determined at the time
of the engagement of the employee or where the work or services to be performed is seasonal in nature
and the employment is for the duration of the season.

An employment shall be deemed to be casual if it is not covered by the preceding paragraph; Provided,
That, any employee who has rendered at least one year of service, whether such service is continuous or
broken, shall be considered a regular employee with respect to the activity in which he is employed and
his employment shall continue while such activity exist.

Art. 279. Security of tenure. In cases of regular employment, the employer shall not terminate the
services of an employee except for a just cause of when authorized by this Title. An employee who is
unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other
privileges and to his full backwages, inclusive of allowances, and to his other benefits or their monetary
equivalent computed from the time his compensation was withheld from him up to the time of his actual
reinstatement.

Thus, on the right to security of tenure, no employee shall be dismissed, unless there are just or
authorized causes and only after compliance with procedural and substantive due process is conducted.

Art. 284. Disease as ground for termination. An employer may terminate the services of an employee
who has been found to be suffering from any disease and whose continued employment is prohibited by
law or is prejudicial to his health as well as to the health of his co-employees: Provided, That he is paid
separation pay equivalent to at least one (1) month salary or to one-half (1/2) month salary for every year
of service, whichever is greater, a fraction of at least six (6) months being considered as one (1) whole
year.

Book VI, Rule 1, Section 8 of the Omnibus Rules Implementing the Labor Code. Disease as a
ground for dismissal. – Where the employee suffers from a disease and his continued employment is
prohibited by law or prejudicial to his health or to the health of his co-employees, the employer shall not
terminate his employment unless there is a certification by a competent public health authority that the
disease is of such nature or at such a stage that it cannot be cured within a period of six (6) months even
with proper medical treatment. If the disease or ailment can be cured within the period, the employer shall
not terminate the employee but shall ask the employee to take a leave. The employer shall reinstate such
employee to his former position immediately upon the restoration of his normal health.

1. Arlene was not an independent contractor.

Fuji alleged that Arlene was an independent contractor citing the Sonzacase. She was hired because of
her skills. Her salary was higher than the normal rate. She had the power to bargain with her employer.
Her contract was for a fixed term. It also stated that Arlene was not forced to sign the non-renewal
agreement, considering that she sent an email with another version of her non-renewal agreement.

Arlene argued (1) that she was a regular employee because Fuji had control and supervision over her
work; (2) that she based her work on instructions from Fuji; (3) that the successive renewal of her
contracts for four years indicated that her work was necessary and desirable; (4) that the payment of
separation pay indicated that she was a regular employee; (5) that the Sonzacase is not applicable
because she was a plain reporter for Fuji; (6) that her illness was not a ground for her dismissal; (7) that
she signed the non-renewal agreement because she was not in a position to reject the same.

Distinctions among fixed-term employees, independent contractors, and regular employees

Fixed Term Employment

1) The fixed period of employment was knowingly and voluntarily agreed upon by the parties without any
force, duress, or improper pressure being brought to bear upon the employee and absent any other
circumstances vitiating his consent; or
2) It satisfactorily appears that the employer and the employee dealt with each other on more or less
equal terms with no moral dominance exercised by the former or the latter.
These indications, which must be read together, make the Brent doctrine applicable only in a few special
cases wherein the employer and employee are on more or less in equal footing in entering into the
contract. The reason for this is evident: when a prospective employee, on account of special skills or
market forces, is in a position to make demands upon the prospective employer, such prospective
employee needs less protection than the ordinary worker. Lesser limitations on the parties’ freedom of
contract are thus required for the protection of the employee. 155 (Citations omitted)

For as long as the guidelines laid down in Brent are satisfied, this court will recognize the validity of the
fixed-term contract. (GMA Network, Inc. vs. Pabriga)

Independent Contractor

One who carries on a distinct and independent business and undertakes to perform the job, work, or
service on its own account and under one’s own responsibility according to one’s own manner and
method, free from the control and direction of the principal in all matters connected with the performance
of the work except as to the results thereof.

No employer-employee relationship exists between the independent contractors and their principals.

Art. 106. Contractor or subcontractor. Whenever an employer enters into a contract with another
person for the performance of the former’s work, the employees of the contractor and of the latter’s
subcontractor, if any, shall be paid in accordance with the provisions of this Code.

XXX
The Secretary of Labor and Employment may, by appropriate regulations, restrict or prohibit the
contracting-out of labor to protect the rights of workers established under this Code. In so prohibiting or
restricting, he may make appropriate distinctions between labor-only contracting and job contracting as
well as differentiations within these types of contracting and determine who among the parties involved
shall be considered the employer for purposes of this Code, to prevent any violation or circumvention of
any provision of this Code.

There is “labor-only” contracting where the person supplying workers to an employer does not have
substantial capital or investment in the form of tools, equipment, machineries, work premises, among
others, and the workers recruited and placed by such person are performing activities which are directly
related to the principal business of such employer. In such cases, the person or intermediary shall be
considered merely as an agent of the employer who shall be responsible to the workers in the same
manner and extent as if the latter were directly employed by him.

Department Order No. 18-A, Series of 2011, Section 3

(c) . . . an arrangement whereby a principal agrees to put out or farm out with a contractor the
performance or completion of a specific job, work or service within a definite or predetermined period,
regardless of whether such job, work or service is to be performed or completed within or outside the
premises of the principal.

This department order also states that there is a trilateral relationship in legitimate job contracting and
subcontracting arrangements among the principal, contractor, and employees of the contractor. There is
no employer-employee relationship between the contractor and principal who engages the contractor’s
services, but there is an employer-employee relationship between the contractor and workers hired to
accomplish the work for the principal.

Jurisprudence has recognized another kind of independent contractor: individuals with unique skills and
talents that set them apart from ordinary employees. There is no trilateral relationship in this case
because the independent contractor himself or herself performs the work for the principal. In other words,
the relationship is bilateral.

XXX

There are different kinds of independent contractors: those engaged in legitimate job contracting and
those who have unique skills and talents that set them apart from ordinary employees.

Since no employer-employee relationship exists between independent contractors and their principals,
their contracts are governed by the Civil Code provisions on contracts and other applicable laws.

Regular Employees
Contracts of employment are different and have a higher level of regulation because they are impressed
with public interest. Article 13, Section 3 of the 1987 Constitution provides full protection to labor.

Apart from the Constitutional guarantee, Article 1700 of the Civil Code states that :The relations between
capital and labor are not merely contractual. They are so impressed with public interest that labor
contracts must yield to the common good. Therefore, such contracts are subject to the special laws on
labor unions, collective bargaining, strikes and lockouts, closed shop, wages, working conditions, hours of
labor and similar subjects.

In contracts of employment, the employer and the employee are not on equal footing. Thus, it is subject to
regulatory review by the labor tribunals and courts of law. The law serves to equalize the unequal. The
labor force is a special class that is constitutionally protected because of the inequality between capital
and labor.176 This presupposes that the labor force is weak.

The level of protection to labor should vary from case to caese. When a prospective employee, on
account of special skills or market forces, is in a position to make demands upon the prospective
employer, such prospective employee needs less protection than the ordinary worker.

The level of protection to labor must be determined on the basis of the nature of the work, qualifications of
the employee, and other relevant circumstances such as but not limited to educational attainment and
other special qualifications.

Fuji’s argument that Arlene was an independent contractor under a fixed-term contract is contradictory.
Employees under fixed-term contracts cannot be independent contractors because in fixed-term
contracts, an employer-employee relationship exists. The test in this kind of contract is not the necessity
and desirability of the employee’s activities, “but the day certain agreed upon by the parties for the
commencement and termination of the employment relationship.” For regular employees, the necessity
and desirability of their work in the usual course of the employer’s business are the determining factors.
On the other hand, independent contractors do not have employer-employee relationships with their
principals.

To determine the status of employment, the existence of employer-employee relationship must first be
settled with the use of the four-fold test, especially the qualifications for the power to control.

The distinction is in this guise:

Rules that merely serve as guidelines towards the achievement of a mutually desired result without
dictating the means or methods to be employed creates no employer-employee relationship; whereas
those that control or fix the methodology and bind or restrict the party hired to the use of such means
creates the relationship.

In appliacation, Arlene was hired by Fuji as a news producer, but there was no evidence that she was
hired for her unique skills that would distinguish her from ordinary employees. Her monthly salary
appeared to be a substantial sum. Fuji had the power to dismiss Arlene, as provided for in her
employment contract. The contract also indicated that Fuji had control over her work as she was rquired
to report for 8 hours from Monday to Friday. Fuji gave her instructions on what to report and even her
mode of transportation in carrying out her functions was controlled.

Therefore, Arlene could not be an independent contractor.

2. Arlene was a regular employee with a fixed-term contract.

In determining whether an employment should be considered regular or non-regular, the applicable test is
the reasonable connection between the particular activity performed by the employee in relation to the
usual business or trade of the employer. The standard, supplied by the law itself, is whether the work
undertaken is necessary or desirable in the usual business or trade of the employer, a fact that can be
assessed by looking into the nature of the services rendered and its relation to the general scheme under
which the business or trade is pursued in the usual course. It is distinguished from a specific undertaking
that is divorced from the normal activities required in carrying on the particular business or trade.

However, there may be a situation where an employee’s work is necessary but is not always desirable in
the usual course of business of the employer. In this situation, there is no regular employment.

Fuji’s Manila Bureau Office is a small unit and has a few employees. Arlene had to do all activities related
to news gathering.

A news producer “plans and supervises newscast [and] works with reporters in the field planning and
gathering information, including monitoring and getting news stories, rporting interviewing subjects in front
of a video camera, submission of news and current events reports pertaining to the Philippines, and
traveling to the regional office in Thailand.” She also had to report for work in Fuji’s office in Manila from
Mondays to Fridays, eight per day. She had no equipment and had to use the facilities of Fuji to
accomplish her tasks.

The successive renewals of her contract indicated the necessity and desirability of her work in the usual
course of Fuji’s business. Because of this, Arlene had become a regular employee with the right to
security of tenure.

Arlene’s contract indicating a fixed term did not automatically mean that she could never be a regular
employee. For as long as it was the employee who requested, or bargained, that the contract have a
“definite date of termination,” or that the fixed-term contract be freely entered into by the employer and the
employee, then the validity of the fixed-term contract will be upheld.

3. Arlene was illegally dismissed.

As a regular employee, Arlene was entitled to security of tenure under Article 279 of the Labor Code and
could be dismissed only for just or authorized causaes and after observance of due process.

The expiration of the contract does not negate the finding of illegal dismissal. The manner by which Fuji
informed Arlene of non-renewal through email a month after she informed Fuji of her illness is tantamount
to constructive dismissal. Further, Arlene was asked to sign a letter of resignation prepared by Fuji. The
existence of a fixed-term contract should not mean that there can be no illegal dismissal. Due process
must still be observed.

Moreoever, disease as a ground for termination under Article 284 of the Labor Code and Book VI, Rule 1,
Section 8 of the Omnibus Rules Implementing the Labor Code require two requirements to be complied
with: (1) the employee’s disease cannot be cured within six months and his continued employment is
prohibited by law or prejudicial to his health as well as to the health of his co-employees; and (2)
certification issued by a competent public health authority that even with proper medical treatment, the
disease cannot be cured within six months. The burden of proving compliance with these requisites is on
the employer. Non-compliance leads to illegal dismissal.

Arlene was not accorded due process. After informing her employer of her lung cancer, she was not given
the chance to present medical certificates. Fuji immediately concluded that Arlene could no longer
perform her duties because of chemotherapy. Neither did it suggest for her to take a leave. It did not
present any certificate from a competent public health authority.

Therefore, Arlene was illegally dismissed.

4. Cabaobas vs. Pepsicola GR No. 176908, March 25, 2015

FACTS:

Respondent Pepsi-Cola Products Philippines, Inc. (PCPPI) PCPPI’s Tanauan Plant allegedly incurred
business losses .To avert further losses, PCPPI implemented a company-wide retrenchment program
denominated as Corporate-wide Rightsizing Program (CRP) from 1999 to 2000, and retrenched forty-
seven (47) employees of its Tanauan Plant.

Twenty-seven (27) of said employees, led by Anecito Molon, filed complaints for illegal dismissal
Petitioners alleged that PCPPI was not facing serious financial losses because after their termination, it
regularized four (4) employees and hired replacements for the forty-seven (47) previously dismissed
employees.
PCPPI countered that petitioners were dismissed pursuant to its CRP to save the company from total
bankruptcy and collapse; thus, it sent notices of termination to them and to the Department of Labor and
Employment. In support of its argument that its CRP is a valid exercise of management prerogative,
PCPPI submitted audited financial statements showing that it suffered financial reverses in 1998 in the
total amount of SEVEN HUNDRED MILLION (P700,000,000.00) PESOS, TWENTYSEVEN MILLION
(P27,000,000.00) PESOS of which was allegedly incurred in the Tanauan Plant in 1999.

ISSUE:

WON the dismissal of the employees was valid pursuant to a retrenchment program adopted by the
employer

RULING:
The Court sustains PCPPI.

Essentially, the prerogative of an employer to retrench its employees must be exercised only as a last
resort, considering that it will lead to the loss of the employees' livelihood. It is justified only when all other
less drastic means have been tried and found insufficient or inadequate. Corollary thereto, the employer
must prove the requirements for a valid retrenchment by clear and convincing evidence
In due regard of these requisites, the Court observes that Pepsi had validly implemented its retrenchment
program. Records disclose that both the CA and the NLRC had already determined that Pepsi complied
with the requirements of substantial loss and due notice to both the DOLE and the workers to be
retrenched. PEPSICOLA’s financial statements are substantial evidence which carry great credibility and
reliability viewed in light of the financial crisis that hit the country which saw multinational corporations
closing shops and walking away, or adapting their own corporate rightsizing program.

The notice requirement was also complied with by PEPSI-COLA when it served notice of the corporate
rightsizing program to the DOLE and to the fourteen (14) employees who will be affected thereby at least
one (1) month prior to the date of retrenchment.

3. RIGHT TO HIRE
4. WAGES & WAGE RATIONALIZATION ACT

1. Vergara, Jr. vs. Coca-Cola Bottlers Phils Inc. G.R. No. 176985, April 1, 2013

FACTS:

Petitioner Ricardo E. Vergara, Jr. was an employee of respondent Coca-Cola Bottlers Philippines, Inc.
from May 1968 until he retired on January 31, 2002 as a District Sales Supervisor (DSS) for Las Piñas
City, Metro Manila.

As stipulated in respondent's existing Retirement Plan Rules and Regulations at the time, the Annual
Performance Incentive Pay of RSMs, DSSs, and SSSs shall be considered in the computation of
retirement benefits, as follows: Basic Monthly Salary + Monthly Average Performance Incentive
(which is the total performance incentive earned during the year immediately preceding 12
months) No. of Years in Service.

Claiming his entitlement to an additional PhP474,600.00 as Sales Management Incentives

(SMI) and to the amount of PhP496,016.67 which respondent allegedly deducted illegally,
representing the unpaid accounts of two dealers within his jurisdiction, petitioner filed a complaint before
the NLRC on June 11, 2002 for the payment of his "Full Retirement Benefits, Merit Increase,
Commission/Incentives, Length of Service, Actual, Moral and Exemplary Damages, and Attorney's Fees."

(Apparently, Petitioner argued that the granting of SMI to all retired DSSs regardless of whether or not
they qualify to the same had ripened into company practice. The only two pieces of evidence that he
stubbornly presented throughout the entirety of this case are the sworn statements of Renato C. Hidalgo
(Hidalgo) and Ramon V. Velazquez (Velasquez), former DSSs of respondent who retired in 2000 and
1998, respectively. They claimed that the SMI was included in their retirement package even if they did
not meet the sales and collection qualifiers. Therefore, the failure of employer to grant him his SMI is a
violation on the principle of non-diminution of benefits.)

ISSUE:

WON the granting of SMI to all retired DSSs regardless of whether or not they qualify to the same had
ripened into company practice

RULING:

Generally, employees have a vested right over existing benefits voluntarily granted to them by their
employer. Thus, any benefit and supplement being enjoyed by the employees cannot be reduced,
diminished, discontinued or eliminated by the employer. The principle of non-diminution of benefits is
actually founded on the Constitutional mandate to protect the rights of workers, to promote their welfare,
and to afford them full protection. In turn, said mandate is the basis of Article 4 of the Labor Code which
states that "all doubts in the implementation and interpretation of this Code, including its implementing
rules and regulations, shall be rendered in favor of labor."

There is diminution of benefits when the following requisites are present:

1. the grant or benefit is founded on a policy or has ripened into a practice over a long period of
time;
2. the practice is consistent and deliberate;
3. the practice is not due to error in the construction or application of a doubtful or difficult question
of law; and
4. The diminution or discontinuance is done unilaterally by the employer.

To be considered as a regular company practice, the employee must prove by substantial evidence that
the giving of the benefit is done over a long period of time, and that it has been made consistently and
deliberately. Jurisprudence has not laid down any hard-and-fast rule as to the length of time that company
practice should have been exercised in order to constitute voluntary employer practice. The common
denominator in previously decided cases appears to be the regularity and deliberateness of the grant of
benefits over a significant period of time. It requires an indubitable showing that the employer agreed to
continue giving the benefit knowing fully well that the employees are not covered by any provision of the
law or agreement requiring payment thereof. In sum, the benefit must be characterized by regularity,
voluntary and deliberate intent of the employer to grant the benefit over a considerable period of time.

Upon review of the entire case records, We find no substantial evidence to prove that the grant of
SMI to all retired DSSs regardless of whether or not they qualify to the same had ripened into
company practice.

The granting of the SMI in the retirement package of Velazquez was an isolated incident and could hardly
be classified as a company practice that may be considered an enforceable obligation. To repeat, the
principle against diminution of benefits is applicable only if the grant or benefit is founded on an
express policy or has ripened into a practice over a long period of time which is consistent and
deliberate; it presupposes that a company practice, policy and tradition favorable to the
employees has been clearly established; and that the payments made by the company pursuant to
it have ripened into benefits enjoyed by them. Certainly, a practice or custom is, as a general rule, not
a source of a legally demandable or enforceable right. Company practice, just like any other fact, habits,
customs, usage or patterns of conduct, must be proven by the offering party who must allege and
establish specific, repetitive conduct that might constitute evidence of habit or company practice.

2. Royal Plant Workers Union vs. Coca-Cola Bottlers Phils Inc. -Cebu Plant, G.R. No.
198783, April 15, 2013

FACTS:

Under the employ of each bottling plant of Coca-Cola are bottling operators. In the case of the plant in
Cebu City, there are 20 bottling operators who work for its Bottling Line 1 while there are 12-14 bottling
operators who man its Bottling Line 2. All of them are male and they are members of herein respondent
Royal Plant Workers Union (ROPWU).

In 1974, the bottling operators of then Bottling Line 2 were provided with chairs upon their request. In
1988, the bottling operators of then Bottling Line 1 followed suit and asked to be provided also with chairs.
Their request was likewise granted. Sometime in September 2008, the chairs provided for the operators
were removed pursuant to a national directive of petitioner. This directive is in line with the "I Operate, I
Maintain, I Clean" program of petitioner for bottling operators, wherein every bottling operator is given the
responsibility to keep the machinery and equipment assigned to him clean and safe. The program
reinforces the task of bottling operators to constantly move about in the performance of their duties and
responsibilities.

With this task of moving constantly to check on the machinery and equipment assigned to him, a bottling
operator does not need a chair anymore, hence, petitioner’s directive to remove them. Furthermore,
CCBPI rationalized that the removal of the chairs is implemented so that the bottling operators will avoid
sleeping, thus, prevent injuries to their persons. As bottling operators are working with machines which
consist of moving parts, it is imperative that they should not fall asleep as to do so would expose them to
hazards and injuries. In addition, sleeping will hamper the efficient flow of operations as the bottling
operators would be unable to perform their duties competently.

ISSUE:

WON the removal of the bottling operators’ chairs was a valid exercise of management prerogative.

RULING:

Yes. According to the Union, such removal constitutes a violation of the 1) Occupational Health and
Safety Standards which provide that every worker is entitled to be provided by the employer with
appropriate seats, among others; 2) policy of the State to assure the right of workers to a just and
humane condition of work as provided for in Article 3 of the Labor Code;8 3) Global Workplace Rights
Policy of CCBPI which provides for a safe and healthy workplace by maintaining a productive workplace
and by minimizing the risk of accident, injury and exposure to health risks; and 4) diminution of benefits
provided in Article 100 of the Labor Code.

The Court has held that management is free to regulate, according to its own discretion and judgment, all
aspects of employment, including hiring, work assignments, working methods, time, place, and manner of
work, processes to be followed, supervision of workers, working regulations, transfer of employees, work
supervision, lay-off of workers, and discipline, dismissal and recall of workers. The exercise of
management prerogative, however, is not absolute as it must be exercised in good faith and with due
regard to the rights of labor.10

In the present controversy, it cannot be denied that CCBPI removed the operators’ chairs pursuant to a
national directive and in line with its "I Operate, I Maintain, I Clean" program, launched to enable the
Union to perform their duties and responsibilities more efficiently. The chairs were not removed
indiscriminately. They were carefully studied with due regard to the welfare of the members of the Union.
The removal of the chairs was compensated by: a) a reduction of the operating hours of the bottling
operators from a two-and-one-half (2 ½)-hour rotation period to a one-and-a-half (1 ½) hour rotation
period; and b) an increase of the break period from 15 to 30 minutes between rotations.
Apparently, the decision to remove the chairs was done with good intentions as CCBPI wanted to avoid
instances of operators sleeping on the job while in the performance of their duties and responsibilities and
because of the fact that the chairs were not necessary considering that the operators constantly move
about while working. In short, the removal of the chairs was designed to increase work efficiency. Hence,
CCBPI’s exercise of its management prerogative was made in good faith without doing any harm to the
workers’ rights.

The rights of the Union under any labor law were not violated. There is no law that requires employers to
provide chairs for bottling operators. There was no violation either of the Health, Safety and Social
Welfare Benefit provisions under Book IV of the Labor Code of the Philippines. As shown in the foregoing,
the removal of the chairs was compensated by the reduction of the working hours and increase in the rest
period. The directive did not expose the bottling operators to safety and health hazards.

The Union should not complain too much about standing and moving about for one and one-half (1 ½)
hours because studies show that sitting in workplaces for a long time is hazardous to one’s health. The
CBA between the Union and CCBPI contains no provision whatsoever requiring the management to
provide chairs for the operators in the production/manufacturing line while performing their duties and
responsibilities.

The Court completely agrees with the CA ruling that the removal of the chairs did not violate the general
principles of justice and fair play because the bottling operators’ working time was considerably reduced
from two and a half (2 ½) hours to just one and a half (1 ½) hours and the break period, when they could
sit down, was increased to 30 minutes between rotations. The bottling operators’ new work schedule is
certainly advantageous to them because it greatly increases their rest period and significantly decreases
their working time. A break time of thirty (30) minutes after working for only one and a half (1 ½) hours is a
just and fair work schedule.
The operators’ chairs cannot be considered as one of the employee benefits covered in Article 10016 of
the Labor Code. In the Court’s view, the term "benefits" mentioned in the non-diminution rule refers to
monetary benefits or privileges given to the employee with monetary equivalents.

Such benefits or privileges form part of the employees’ wage, salary or compensation making them
enforceable obligations.

This Court has already decided several cases regarding the non-diminution rule where the benefits or
privileges involved in those cases mainly concern monetary considerations or privileges with monetary
equivalents. Without a doubt, equating the provision of chairs to the bottling operators is something within
the ambit of "benefits'' in the context of Article 100 of the Labor Code is unduly stretching the coverage of
the law. The interpretations of Article 100 of the Labor Code do not show even with the slightest hint that
such provision of chairs for the bottling operators may be sheltered under its mantle.

3. Maynilad Water Supervisors Asso. Vs. Maynilad Water Services, GR No.198935, Nov.
27, 2013

FACTS:

Maynilad Water Supervisors Association (MWSA) is an association composed of former supervisory

employees of Metropolitan Waterworks and Sewerage System (MWSS). These employees claim that
during their employment with MWSS, they were receiving a monthly cost of living allowance (COLA)
equivalent to 40% of their basic pay. The payment of these allowances and other additional
compensation, including the COLA were, however, discontinued without qualification effective when the
Department of Budget and Management (DBM) issued Corporate Compensation Circular No. 10 (CCC
No. 10). In 1997, MWSS was privatized and part of it, MWSS West, was acquired by Maynilad Water
Services, Inc. (Maynilad). Some of the employees of MWSS, which included members of MWSA, were
absorbed by Maynilad subject to the terms and conditions of a Concession Agreement, inter alia, to grant
to all Concessionaire Employees employee benefits no less favorable than those granted to such
employees by the MWSS at the time of their separation from MWSS, which however did not include the
payment of COLA.

In 1998, the Supreme Court declared DBM CCC No.10 ineffective for failure to comply with the
publication requirement. Consequently, MWSS partially released the COLA payments for its employees,
including members of MWSA, covering the years 1989 to 1997, and up to year 1999 for its retained
employees.

In 2002, MWSA filed a complaint before the Labor Arbiter praying for the payment of their COLA from the
year 1997, the time its members were absorbed by Maynilad, up to the present. MWSA argued that since
DBM CCC No. 10 was rendered ineffective, the COLA should be paid as part of the benefits enjoyed by
their members at the time of their separation from MWSS, and which should form part of their salaries
and benefits with Maynilad.

ISSUE:

WON Maynilad bound itself under the Concession Agreement to pay the COLA of the employees it
absorbed from MWSS.

RULING:

No. It is clear that COLA is not among the benefits to be received by the absorbed employees. Contrary
to the contention of MWSA, the declaration by the Court of the ineffectiveness of DBM CCC No. 10 due to
its non-publication in the Official Gazette or in a newspaper of general circulation in the country, did not
give rise to the employee's right to demand payment of the subject benefit from Maynilad.

It settled that COLA, not being an enumerated exclusion, was deemed already incorporated in the
standardized salary rates of government employees under the general rule of integration. In explaining its
inclusion in the standardized salary rates, the Court cited its ruling in National Tobacco Administration v.
COA, in that the enumerated fringe benefits in items (1) to (6) have one thing in common they belong to
one category of privilege called allowances which are usually granted to officials and employees of the
government to defray or reimburse the expenses incurred in the performance of their official functions.
Consequently, if these allowances are consolidated with the standardized salary rates, then the
government official or employee will be compelled to spend his personal funds in attending to his duties.
On the other hand, item (7) is a "catch-all proviso" for benefits in the nature of allowances similar to those
enumerated.

COLA is not in the nature of an allowance intended to reimburse expenses incurred by officials and
employees of the government in the performance of their official functions. It is not payment in
consideration of the fulfillment of official duty. As defined, cost of living refers to "the level of prices
relating to a range of everyday items" or "the cost of purchasing those goods and services which are
included in an accepted standard level of consumption." Based on this premise, COLA is a benefit
intended to cover increases in the cost of living. Thus, it is and should be integrated into the standardized
salary rates.

To grant COLA to herein petitioners now would create an absurd situation wherein they would be
receiving an additional COLA in the amount equivalent to 40% of their basic salary even if the Court has
already ruled that the COLA is already integrated in the employee's basic salary. Such conclusion would
give the absorbed employees far greater rights than their former co-employees or other government
employees from whom COLA was eventually disallowed.

Unless expressly assumed, labor contracts such as employment contracts and collective bargaining
agreements are not enforceable against a transferee of an enterprise, labor contracts being in personam,
thus binding only between the parties.

In the instant case, the only commitment of Maynilad under the Concession Agreement it entered with
MWSS was to provide the absorbed employees with a compensation package "no less favorable than
those granted to [them] by the MWSS at the time of their separation from MWSS, particularly those set
forth in Exhibit 'F' x x x." It is undisputed that Maynilad complied with such commitment. It cannot,
however, be compelled to assume the payment of an allowance which was not agreed upon. Such would
not only be unreasonable but also unfair for Maynilad. MWSS and Maynilad could not have presumed
that the COLA was part of the agreement when it was no longer being received by the employees at the
time of the execution of the contract, which is the reckoning point of their new employment.

4. The National Wages & Productivity Commission et al., vs. The Alliance of Progressive
Labor et al., GR No. 150326, March 12, 2014

FACTS:

On June 9, 1989, Republic Act No. 6727 was enacted into law. In order to rationalize wages throughout
the Philippines, Republic Act No. 6727 created the NWPC and the RTWPBs of the different regions.

Article 121 of the Labor Code, as amended by Section 3 of Republic Act No. 6727, empowered the
NWPC to formulate policies and guidelines on wages, incomes and productivity improvement at the
enterprise, industry and national levels; to prescribe rules and guidelines for the determination of
appropriate minimum wage and productivity measures at the regional, provincial or industry levels; and to
review regional wage levels set by the RTWPBs to determine whether the levels were in accordance with
the prescribed guidelines and national development plans, among others.

On the other hand, Article 122(b) of the Labor Code, also amended by Section 3 of Republic Act No.
6727, tasked the RTWPBs to determine and fix minimum wage rates applicable in their region, provinces
or industries therein; and to issue the corresponding wage orders, subject to the guidelines issued by the
NWPC.

Consequently, the RTWPB–NCR issued Wage Order No. NCR–07 on October 14, 1999 imposing an
increase of P25.50/day on the wages of all private sector workers and employees in the NCR and
pegging the minimum wage rate in the NCR at P223.50/day. 6 However, Section 2 and Section 9 of Wage
Order No. NCR–07 exempted certain sectors and industries from its coverage

Section 2. The adjustment in this Order does not cover the following:

A. [W]orkers in the following sectors which were granted corresponding wage increases on January 1,
1999 as prescribed by Wage Order No. NCR–06:
a.1. Agriculture workers
–Plantation P12.00
–Non–plantation P18.50

a.2. Cottage/handicraft industry P16.00

a.3. Private hospitals with bed capacity of 100 or less P12.00

a.4. Retail/Service establishments

–Employing 11–15 workers P12.00
–Employing not more than 10 workers P19.00

B. Workers in small establishments employing less that ten (10) workers.

x x x x

Section 9. Upon application with and as determined by the Board, based on documentation and other
requirements in accordance with applicable rules and regulations issued by the Commission, the following
may be exempt from the applicability of this Order:

1. Distressed establishments as defined in the NPWC Guidelines No. 01, series of 1996;

2. Exporters including indirect exporters with at least 50% export sales and with forward contracts
with their foreign buyers/principals entered into on or twelve (12) months before the date of publication of
this Order may be exempt during the lifetime of said contract but not to exceed twelve (12) months from
the effectivity of this Order.

Feeling aggrieved by their non–coverage by the wage adjustment, the Alliance of Progressive Labor
(APL) and the Tunay na Nagkakaisang Manggagawa sa Royal (TNMR) filed an appeal with the NWPC
assailing Section 2(A) and Section 9(2) of Wage Order No. NCR–07. They contended that neither the
NWPC nor the RTWPB–NCR had the authority to expand the non–coverage and exemptible categories
under the wage order; hence, the assailed sections of the wage order should be voided.
The NWPC upheld the validity of Section 2(A) and Section 9(2) of Wage Order No. NCR–07. It observed
that the RTWPB’s power to determine exemptible categories was adjunct to its wage fixing function
conferred by Article 122(e) of the Labor Code, as amended by Republic Act No. 6727; that such
authority of the RTWPB was also recognized in NWPC Guidelines No. 01, Series of 1996.

The APL and TNMR assailed the decisions of the NWPC on certiorari in the CA, contending that the
power of the RTWPB–NCR to determine exemptible categories was not an adjunct to its wage fixing
function. CA favored the respondents and granted the petition for certiorari.
Hence, this appeal by petition for review on certiorari by the NWPC and RTWPB–NCR.

ISSUE:

WON the RTWPB–NCR had had the authority to provide additional exemptions from the minimum wage
adjustments embodied in Wage Order No. NCR–07

RULING:

The RTWPB–NCR had the authority to provide additional exemptions from the minimum wage
adjustments embodied in Wage Order No. NCR–07.

The NWPC promulgated NWPC Guidelines No. 001–95 (Revised Rules of Procedure on Minimum Wage
Fixing) to govern the proceedings in the NWPC and the RTWPBs in the fixing of minimum wage rates by
region, province and industry. Section 1 of Rule VIII of NWPC Guidelines No. 001–95 recognized the
power of the RTWPBs to issue exemptions from the application of the wage orders subject to the
guidelines issued by the NWPC
(this is the rationale behind exemption)

SECTION 2. CATEGORIES OF EXEMPTIBLE ESTABLISHMENTS

Exemption of establishments from compliance with the wage increases and cost of living allowances
prescribed by the Boards may be granted in order to (1) assist establishments experiencing temporary
difficulties due to losses maintain the financial viability of their businesses and continued employment of
their workers; (2) encourage the establishment of new businesses and the creation of more jobs,
particularly in areas outside the National Capital Region and Export Processing Zones, in line with the
policy on industry dispersal; and (3) ease the burden of micro establishments, particularly in the retail and
service sector, that have a limited capacity to pay.

The following categories of establishments may be exempted upon application with and as determined by
the Board:

1. Distressed establishments
2. New business enterprises (NBEs)
3. Retail/Service establishments employing not more than ten (10) workers
4. Establishments adversely affected by natural calamities

Under the guidelines, the RTWPBs could issue exemptions from the application of the wage orders as
long as the exemptions complied with the rules of the NWPC. In its rules, the NWPC enumerated four
exemptible establishments, but the list was not exclusive. The RTWPBs had the authority to include in
the wage orders establishments that belonged to, or to exclude from the four enumerated exemptible
categories.

If the exemption was outside of the four exemptible categories, like here, the exemptible category should
be: (1) in accord with the rationale for exemption; (2) reviewed/approved by the NWPC; and (3) upon
review, the RTWPB issuing the wage order must submit a strong and justifiable reason or reasons for the
inclusion of such category. It is the compliance with the second requisite that is at issue here.

The NWPC, in arriving at its decision, weighed the arguments of the parties and ruled that the RTWPB–
NCR had substantial and justifiable reasons in exempting the sectors and establishments enumerated in
Section 2(A) and Section 9(2) based on the public hearings and consultations, meetings, social–economic
data and informations gathered prior to the issuance of Wage Order No. NCR–07. The very fact that the
validity of the assailed sections of Wage Order No. NCR–07 had been already passed upon and
upheld by the NWPC meant that the NWPC had already given the wage order its necessary legal
imprimatur. Accordingly, the requisite approval or review was complied with.

The RTWPBs are the thinking group of men and women guided by statutory standards and bound by the
rules and guidelines prescribed by the NWPC. In the nature of their functions, the RTWPBs investigate
and study all the pertinent facts to ascertain the conditions in their respective regions. Hence, they are
logically vested with the competence to determine the applicable minimum wages to be imposed as well
as the industries and sectors to exempt from the coverage of their wage orders.

Lastly, Wage Order No. NCR–07 is presumed to be regularly issued in the absence of any strong
showing of grave abuse of discretion on the part of RTWPB–NCR. The presumption of validity is made
stronger by the fact that its validity was upheld by the NWPC upon review.

5. Our Haus Realty Development Corp., vs. Parian et al., GR No. 204651, August 6, 2014

FACTS:

Respondents Alexander Parian, Jay Erinco, Alexander Canlas, Jerry Sabulao and Bernardo Tenedero
were all laborers working for petitioner Our Haus Realty Development Corporation (Our Haus), a
company engaged in the construction business. Sometime in May 2010, Our Haus experienced financial
distress. To alleviate its condition, Our Haus suspended some of its construction projects and asked the
affected workers, including the respondents, to take vacation leaves. Eventually, the respondents were
asked to report back to work but instead of doing so, they filed with the LA a complaint for underpayment
of their daily wages. They claimed that except for respondent Bernardo N. Tenedero, their wages were
below the minimum rates prescribed.

Before the LA, Our Haus primarily argued that the respondents' wages complied with the law's minimum
requirement. Aside from paying the monetary amount of the respondents' wages, Our Haus also
subsidized their meals (3 times a day), and gave them free lodging near the construction project they
were assigned to. In determining the total amount of the respondents' daily wages, the value of these
benefits should be considered, in line with Article 97(f) of the Labor Code. On the other hand, the
respondents argued that the value of their meals should not be considered in determining their wages'
total amount since the requirements set under Section 4 of DOLE Memorandum Circular No. 2 were not
complied with. The respondents pointed out that Our Haus never presented any proof that they agreed in
writing to the inclusion of their meals' value in their wages. Also, Our Haus failed to prove that the value of
the facilities it furnished was fair and reasonable. Finally, instead of deducting the maximum amount of
70% of the value of the meals, Our Haus actually withheld its full value.

The LA ruled in favor of Our Haus which was reversed by NLRC ruling that the respondents did not
authorize Our Haus in writing to charge the values of their board and lodging to their wages. Thus, the
same cannot be credited. In its petition before the CA, Our Haus propounded a new theory. It made a
distinction between deduction and charging. A written authorization is only necessary if the facility's value
will be deducted and will not be needed if it will merely be charged or included in the computation of
wages. Our Haus claimed that it did not actually deduct the values of the meals and housing benefits. It
only considered these in computing the total amount of wages paid to the respondents for purposes of
compliance with the minimum wage law. Hence, the written authorization requirement should not apply.

ISSUE:

WON there is a substantial distinction between the deduction and the charging of a facility's value to the
wages.

RULING:

There is NO substantial distinction between deducting and charging a facility's value from the employee's
wage and the legal requirements for creditability applies to both. In reality, deduction and charging both
operate to lessen the actual take-home pay of an employee; they are two sides of the same coin. In both,
the employee receives a lessened amount because supposedly, the facility's value, which is part of his
wage, had already been paid to him in kind. As there is no substantial distinction between the two, the
requirements set by law must apply to both.

These requirements are the following:

1. proof must be shown that such facilities are customarily furnished by the trade;
2. the provision of deductible facilities must be voluntarily accepted in writing by the employee; and
3. The facilities must be charged at fair and reasonable value.

We examine Our Haus' compliance with each of these requirements in seriatim.

a) The facility must be customarily furnished by the trade - Our Haus could not really be expected to
prove compliance with the first requirement since the living accommodation of workers in the construction
industry is not simply a matter of business practice. Peculiar to the construction business are the
occupational safety and health (OSH) services which the law itself mandates employers to provide to their
workers. This is to ensure the humane working conditions of construction employees despite their
constant exposure to hazardous working environments. Moreover, DOLE DO mandates that the cost of
the implementation of the requirements for the construction safety and health of workers, shall be
integrated to the overall project cost. As part of the project cost that construction companies already
charge to their clients, the value of the housing of their workers cannot be charged again to their
employees' salaries. Our Haus cannot pass the burden of the OSH costs of its construction projects to its
employees by deducting it as facilities. This is Our Haus' obligation under the law. Under the law, only the
value of the facilities may be deducted from the employees' wages but not the value of supplements.
Ultimately, the real difference lies not on the kind of the benefit but on the purpose why it was given by the
employer. If it is primarily for the employee's gain, then the benefit is a facility; if its provision is mainly for
the employer's advantage, then it is a supplement. Again, this is to ensure that employees are protected
in circumstances where the employer designates a benefit as deductible from the wages even though it
clearly works to the employer's greater convenience or advantage.

We conclude that even under the purpose test, the subsidized meals and free lodging provided by Our
Haus are actually supplements. Although they also work to benefit the respondents, an analysis of the
nature of these benefits in relation to Our Haus' business shows that they were given primarily for Our
Haus' greater convenience and advantage. If weighed on a scale, the balance tilts more towards Our
Haus' side. Accordingly, their values cannot be considered in computing the total amount of the
respondents' wages.

b) The provision of deductible facilities must be voluntarily accepted in writing by the employee -
a facility may only be deducted from the wage if the employer was authorized in writing by the concerned
employee. As it diminishes the take-home pay of an employee, the deduction must be with his express
consent. Our Haus belatedly submitted five kasunduans, supposedly executed by the respondents,
containing their conformity to the inclusion of the values of the meals and housing to their total wages.
Oddly, Our Haus only offered these documents when the NLRC had already ruled that respondents did
not accomplish any written authorization, to allow deduction from their wages. These five kasunduans
were also undated, making us wonder if they had really been executed when respondents first assumed
their jobs.

c) The facility must be charged at a fair and reasonable value - In the present case, Our Haus never
explained how it came up with the values it assigned for the benefits it provided; it merely listed its
supposed expenses without any supporting document. Since Our Haus is using these additional
expenses (cook's salary, water and LPG) to support its claim that it did not withhold the full amount of the
meals' value, Our Haus is burdened to present evidence to corroborate its claim. The records however,
are bereft of any evidence to support Our Haus' meal expense computation. Even the value it assigned
for the respondents' living accommodations was not supported by any documentary evidence. Without
any corroborative evidence, it cannot be said that Our Haus complied with this third requisite.

6. Vivares vs. St. Theresa College GR No. 202666, Sept. 29, 2014

FACTS:

Escudero, a high school computer teacher at St. Theresa’s College (STC), learned from her students that
some pictures of seniors dressed only in brassieres were uploaded by Tan, student of the said school, on
her Facebook profile sometime in January 2012. Escudero then asked her students if they knew who the
girls in the photos are. In turn, they readily identified Daluz, Suzara, and Taboada, among others. Using
STC’s computers, Escudero’s students logged in to their respective Facebook accounts and showed her
the photos, which include: (a) Daluz and Suzara drinking hard liquor and smoking cigarettes inside a bar;
and (b) Daluz and Suzara along the streets of Cebu wearing articles of clothing that show virtually the
entirety of their black brassieres. These photos were at times not confined to the girls’ Facebook friends
but were viewable by any Facebook user. Escudero then reported the matter and showed the photos to
Tigol, STC’s Discipline-in-Charge, for appropriate action. Upon investigation, STC found the identified
students to have violated the school’s Student Handbook and are barred from joining the commencement
exercises schedule on March 30, 2012 as part of their penalty.

The mother of Tan, and the mother of Daluz as an intervenor, filed a Petition for Injunction and Damages
against STC. RTC then issued a temporary restraining order (TRO) allowing the students to attend the
graduation ceremony, to which STC filed a motion of reconsideration. However, despite the issuance of
TRO, STC still barred the students from attending the graduation ceremony.

Petitioners, parents of Daluz and Suzara, then filed a Petition for the Issuance of Writ of Habeas Data
against the school on the basis of the following considerations among others:

1. The privacy setting of their children’s Facebook accounts was set at "Friends Only." They, thus,
have a reasonable expectation of privacy which must be respected.
2. The photos accessed belong to the girls and, thus, cannot be used and reproduced without their
consent. Escudero, however, violated their rights by saving digital copies of the photos and by
subsequently showing them to STC’s officials. Thus, the Facebook accounts of petitioners’ children were
intruded upon; and
3. The intrusion into the Facebook accounts, as well as the copying of information, data, and digital
images happened at STC’s Computer Laboratory;

They prayed that STC be ordered to surrender and deposit with the court all soft and printed copies of the
subject data and have such rendered to have been illegally obtained in violation of the children’s right to
privacy.

RTC initially issued the writ of habeas data. However, it then denied the petition upon STC’s compliance
with its directive to file their written return on the ground that the instant case is not one where a writ of
habeas data may issue since the precondition for its issuance that there exist a violation, actual or
threatened, of the students’ right to privacy was absent as there is no reasonable expectation of privacy
on Facebook especially that the photos were uploaded without restrictions as to who may view them.
Moreover, RTC noted that STC gathered the photographs through legal means and for a legal purpose
which is to implement the school’s policies and rules on discipline.

Hence, this appeal.

ISSUES:

1. WON a writ of habeas data should be issued against STC.

2. WON there was indeed an actual or threatened violation of the right to privacy in life, liberty and
security of minors.

RULING:

Contrary to the arguments of STC, the Supreme Court ruled that a writ of habeas data may be issued
against STC because of the following reasons:

1. The petition for writ of habeas data can be availed of even if this is not a case of extralegal killing
or enforced disappearance; and
2. The writ of habeas data can be availed of against STC even if it is not an entity engaged in the
business of “gathering, collecting, or storing data or information regarding the person, family, home and
correspondence of the aggrieved party”.

First, the Rule on Habeas Data does not state that it can be applied only in cases of extralegal killings or
enforced disappearances. Second, nothing in the Rule would suggest that the habeas data protection
shall be available only against abuses of a person or entity engaged in the business of gathering, storing,
and collecting of data.

However, the availment of the writ requires the existence of nexus between the right to privacy on the one
hand, and the right to life, liberty, and security on the other. Thus, the existence of a person’s right to
informational privacy and a showing of an actual or threatened violation of the right to privacy in life,
liberty, or security of the victim are indispensable before the privilege of writ may be extended.

In the case at bar, there is no showing that the students concerned made use of privacy tools which
would entitle them to reasonable expectation of privacy or right to information privacy. Evidence would
show that that their post (status) on Facebook were published as “Public” which can be viewed by every
Facebook user.

The default setting is “Public” and if a user wants to have some privacy, then he must choose any setting
other than “Public”. If it is true that the students concerned did set the posts subject of this case so much
so that only five people can see them (as they claim), then how come most of their classmates were able
to view them. This fact was not refuted by them. In fact, it was their classmates who informed and showed
their teacher, Escudero, of the said pictures. Therefore, it appears that they never used the privacy
settings of Facebook and have no reasonable expectation of privacy on the pictures uploaded.

Finally, STC did not violate the students’ right to privacy. The manner which the school gathered the
pictures cannot be considered illegal. As it appears, it was the classmates of the students who showed
the picture to their teacher and the latter, being the recipient of said pictures, merely delivered them to the
proper school authority and it was for a legal purpose, that is, to discipline their students according to the
standards of the school (to which the students and their parents agreed to in the first place because of the
fact that they enrolled their children there).

Therefore, a writ of habeas data cannot be issued against STC in this case and the petition therefor is
dismissed.
5. VIOLATION OF WAGE ORDERS
6. WAGE ENFORCEMENT AND RECOVERY

1. People’s Broadcasting (Bombo Radyo Phils) vs. Sec. of DOLE et al., GR No. 179652,
March 6, 2012 Resolution on the main Decision of May 8, 2009

FACTS:

Private respondent Jandeleon Juezan filed a complaint against petitioner with the DOLE Regional Office
No. 7 for illegal deduction, nonpayment of service incentive leave, 13 th month pay, premium pay for
holiday and rest day and illegal diminution of benefits, delayed payment of wages and non-coverage of
SSS, PAG-IBIG and PhilHealth.

The DOLE Regional Director found that private respondent was an employee of the petitioner and was
entitled to his money claims. Petitioner sought reconsideration but failed. The Acting DOLE Secretary
dismissed petitioner's appeal on the ground that petitioner submitted a Deed of Assignment of Bank
Deposit instead of posting a cash or surety bond. Upon appeal to the CA, petitioner claimed that it had
been denied due process; however, the CA held that petitioner was accorded due process as it had been
given the opportunity to be heard and that the DOLE Secretary had jurisdiction over the matter.

In the decision of the SC, the CA Decision was reversed and set aside, and the complaint against
petitioner was dismissed. The SC found that there was no employer-employee relationship between
petitioner and private respondent. It was held that while the DOLE may make a determination of the
existence of an employer-employee relationship, this function could not be co-extensive with the visitorial
and enforcement power provided in Article 128(b) of the Labor Code, as amended by Republic Act No.
7730. The NLRC was held to be the primary agency in determining the existence of an employer-
employee relationship.

From this decision, the Public Attorney's Office (PAO) filed a Motion for Clarification of Decision with
Leave of Court. The PAO sought to clarify as to when the visitorial and enforcement power of the DOLE
be not considered as co-extensive with the power to determine the existence of an employer-employee
relationship.

ISSUE:

WON the DOLE may make a determination of the existence of an employer-employee relationship and if
so, to what extent.

RULING:

Yes. Under Art. 128(b) of the Labor Code, as amended by RA 7730, the DOLE is fully empowered to
make a determination as to the existence of an employer-employee relationship in the exercise of its
visitorial and enforcement power. The determination of the existence of an employer-employee
relationship by the DOLE must be respected.

If the DOLE makes a finding that there is an existing employer-employee relationship, it takes cognizance
of the matter, to the exclusion of the NLRC. The DOLE would have no jurisdiction only if the employer-
employee relationship has already been terminated, or it appears, upon review, that no employer-
employee relationship existed in the first place.

If a complaint, accompanied by a claim for reinstatement, is filed with the DOLE, the jurisdiction is
properly with the Labor Arbiter under Article 217(3) of the Labor Code. If a complaint is filed with the
NLRC and there is still an existing employer-employee relationship, the jurisdiction is properly with the
DOLE. The findings of the DOLE, however, may still be questioned through a petition for certiorari under
Rule 65 of the Rules of Court.

2. Superior Packaging Corp., vs. Balagsay et al., G.R. No. 178909, October 10, 2012

FACTS:

The petitioner engaged the services of Lancer to provide reliever services to its business, which involves
the manufacture and sale of commercial and industrial corrugated boxes. According to petitioner, the
respondents were engaged for four (4) months from February to June 1998 and their tasks included
loading, unloading and segregation of corrugated boxes.
Thereafter, respondents filed complaint against the petitioner and President, Cesar Luz (Luz), for
underpayment of wages, non-payment of premium pay for worked rest, overtime pay and non-payment of
salary. Upon receipt Department of Labor and Employment (DOLE) conducted an inspection of the
petitioner’s premises and found several violations, to wit:
(1) Non-presentation of payrolls and daily time records;
(2) Non-submission of annual report of safety organization;
(3) Medical and accident/illness reports;
(4) Non-registration of establishment under Rule 1020 of Occupational and Health Standards; and
(5) No trained first aide.

Due to the petitioner’s failure to appear in the summary investigations conducted by the DOLE, an Order
was issued on June 18, 2003 finding in favor of the respondents and adopting the computation of the
claims submitted. Petitioner and Luz were ordered, among others, to pay respondents their total claims in
the amount of Eight Hundred Forty Thousand Four Hundred Sixty-Three Pesos and 38/100
(P 840,463.38).

Petitioner filed a motion for reconsideration on the ground that respondents are not its employees but of
Lancer and that they pay Lancer in lump sum for the services rendered. The DOLE, however, denied its
motion because petitioner failed to support its claim that the respondents are not its employees, and even
assuming that they were employed by Lancer, the petitioner still cannot escape liability as Section 13 of
the Department Order No. 10, Series of 1997, makes a principal jointly and severally liable with the
contractor to contractual employees to the extent of the work performed when the contractor fails to pay
its employees wages.

Their appeal to the Secretary of DOLE was dismissed thus, l petitioner and Luz filed a petition
for certiorari with the Court of Appeals (CA).

On November 17, 2006, the CA affirmed the Secretary of DOLEs orders, with the modification in that Luz
was absolved of any personal liability under the award.
Hence, this petition for review under Rule 45 of the Rules of Court.

ISSUES:

1. Whether or not DOLE has authority to determine the existence of an employer-employee

relationship
2. Whether or not Superior Packaging Corporation may be held solidarily liable with Lancer Staffing
& Services Network, Inc. (Lancer) for respondents unpaid money claims?

RULING:

The petition is bereft of merit. The DOLE clearly acted within its authority when it determined the
existence of an employer-employee relationship between the petitioner and respondents as it falls within
the purview of its visitorial and enforcement power under Article 128(b) of the Labor Code. The
determination of the existence of an employer-employee relationship by the DOLE must be respected.

With regard to the contention that there is no evidence to support the finding that the respondents
rendered overtime work and that they worked on their rest day, the resolution of this argument requires a
review of the factual findings and the evidence presented, Court said that it is not a trier of facts and it
applies with greater force in labor cases. Hence, where the factual findings of the labor tribunals or
agencies conform to, and are affirmed by, the CA, the same are accorded respect and finality, and are
binding to Supreme Court.

It was the consistent conclusion of the DOLE and the CA that Lancer was not an independent contractor
but was engaged in "labor-only contracting"; hence, the petitioner was considered an indirect employer of
respondents and liable to the latter for their unpaid money claims. At the time of the respondents
employment in 1998, the applicable regulation was DOLE Department Order No. 10, Series of 1997.
Under said Department Order, labor-only contracting was defined as follows:
Sec. 9. Labor-only contracting. (a) Any person who undertakes to supply workers to an employer shall be
deemed to be engaged in labor-only contracting where such person:
(1) Does not have substantial capital or investment in the form of tools, equipment, machineries, work
premises and other materials; and
(2) The workers recruited and placed by such persons are performing activities which are directly related
to the principal business or operations of the employer in which workers are habitually employed.

Labor-only contracting is prohibited and the person acting as contractor shall be considered merely as an
agent or intermediary of the employer who shall be responsible to the workers in the same manner and
extent as if the latter were directly employed by him.
According to the CA, the totality of the facts and surrounding circumstances of this case point to such
conclusion that Lancer was, indeed, a labor-only contractor. Aside from these is the undisputed fact that
the petitioner failed to produce any written service contract that might serve as proof of its alleged
agreement with Lancer.

Finally, a finding that a contractor is a "labor-only" contractor is equivalent to declaring that there is an
employer-employee relationship between the principal and the employees of the supposed contractor,
and the "labor only" contractor is considered as a mere agent of the principal, the real employer. The
former becomes solidarily liable for all the rightful claims of the employees.

Petitioner therefore, being the principal employer and Lancer, being the labor-only contractor, are
solidarily liable for respondents unpaid money claims.

7. WAGE PROTECTION PROVISIONS & PROHIBITIONS REGARDING WAGES

1. Locsin II vs. Mekeni Food Corp., GR No. 192105, December 9, 2013

FACTS:

Petitioner Antonio Locsin II was the Regional Sales Manager of respondent Mekeni Food Corporation. He
was hired on February 2004 to oversee the NCR and Luzon operation. In addition to his compensation
and benefit package, a car was offered to him under which one-half of the cost of the vehicle is to be paid
by the company and the other half to be deducted from petitioner's salary. The car valued at 280,000
which Locsin paid through salary deductions of 5,000 per month.

On February 2006, Locsin resigned. A total of 112,500.00 had already been deducted from his monthly
salary and applied as part of his share in the car plan. Upon resignation, petitioner made personal and
written follow-ups regarding his unpaid salaries, commissions, benefits, and offer to purchase his service
vehicle. Mekeni replied that the company car plan benefit applied only to employees who have been with
the company for five years; for this reason, the balance that petitioner should pay on his service vehicle
stood at P116,380.00 if he opts to purchase the same.

On May 3, 2007, petitioner filed against Mekeni and/or its President, Prudencio S. Garcia, a Complaint for
the recovery of monetary claims consisting of unpaid salaries, commissions, sick/vacation leave benefits,
and recovery of monthly salary deductions which were earmarked for his cost-sharing in the car plan.

ISSUE:

WON petitioner is entitled to a refund of all the amounts applied to the cost of the service vehicle under
the car plan.

RULING:

Any benefit or privilege enjoyed by petitioner from using the service vehicle was merely incidental and
insignificant, because for the most part the vehicle was under Mekeni's control and supervision. Free and
complete disposal is given to the petitioner only after the vehicle's cost is covered or paid in full. Until
then, the vehicle remains at the beck and call of Mekeni. Given the vast territory petitioner had to cover to
be able to perform his work effectively and generate business for his employer, the service vehicle was an
absolute necessity, or else Mekeni's business would suffer adversely. Thus, it is clear that while petitioner
was paying for half of the vehicle's value, Mekeni was reaping the full benefits from the use thereof.

Under Article 22 of the Civil Code, “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." Article 2142 of the same Code likewise clarifies that there are
certain lawful, voluntary and unilateral acts which give rise to the juridical relation of quasi-contract, to the
end that no one shall be unjustly enriched or benefited at the expense of another. In the absence of
specific terms and conditions governing the car plan arrangement between the petitioner and Mekeni, a
quasi-contractual relation was created between them. Consequently, Mekeni may not enrich itself by
charging petitioner for the use of its vehicle which is otherwise absolutely necessary to the full and
effective promotion of its business. It may not, under the claim that petitioner's payments constitute rents
for the use of the company vehicle, refuse to refund what petitioner had paid, for the reasons that the car
plan did not carry such a condition; the subject vehicle is an old car that is substantially, if not fully,
depreciated; the car plan arrangement benefited Mekeni for the most part; and any personal benefit
obtained by petitioner from using the vehicle was merely incidental.

Conversely, petitioner cannot recover the monetary value of Mekeni's counterpart contribution to the cost
of the vehicle; that is not property or money that belongs to him, nor was it intended to be given to him in
lieu of the car plan. Mekeni's share of the vehicle's cost was not part of petitioner's compensation
package. The vehicle is an asset that belonged to Mekeni. Just as Mekeni is unjustly enriched by failing to
refund petitioner's payments, so should petitioner not be awarded the value of Mekeni's counterpart
contribution to the car plan, as this would unjustly enrich him at Mekeni's expense.

Thus, Mekeni Food Corporation should refund petitioner Antonio Locsin II's payments under the car plan
agreement amounting only to the extent of the contribution Locsin made, totalling to the amount of
P112,500.00.

2. TH Shoplifters Corp., et al., vs. T&H Shopfitters Corp., Union, GR No. 191714, Feb. 26,
2014

FACTS:

On September 7, 2004, the T&H Shopfitters Corporation/ Gin Queen Corporation workers union (THS-GQ
Union) filed their Complaint for Unfair Labor Practice (ULP) by way of union busting, and Illegal Lockout,
with moral and exemplary damages and attorney’s fees, against T&H Shopfitters Corporation (T&H
Shopfitters) and Gin Queen Corporation before the Labor Arbiter (LA).

1st CAUSE:
In their desire to improve their working conditions, respondents and other employees of held their first
formal meeting on November 23, 2003 to discuss the formation of a union. The following day, seventeen
(17) employees were barred from entering petitioners’ factory premises located in Castillejos, Zambales,
and ordered to transfer to T&H Shopfitters’ warehouse at Subic Bay Freeport Zone (SBFZ) purportedly
because of its expansion. Afterwards, the said seventeen (17) employees were repeatedly ordered to go
on forced leave due to the unavailability of work.

Respondents contended that the affected employees were not given regular work assignments, while
subcontractors were continuously hired to perform their functions. Respondents sought the assistance of
the National Conciliation and Mediation Board. Subsequently, an agreement between petitioners and
THS-GQ Union was reached. Petitioners agreed to give priority to regular employees in the distribution of
work assignments. Respondents averred, however, that petitioners never complied with its commitment
but instead hired contractual workers. Instead, Respondents claimed that the work weeks of those
employees in the SBFZ plant were drastically reduced to only three (3) days in a month.

2nd CAUSE:
On March 24, 2004, THS-GQ Union filed a petition for certification election and an order was issued to
hold the certification election in both T&H Shopfitters and Gin Queen.
On October 10, 2004, petitioners sponsored a field trip to Iba, Zambales, for its employees. The officers
and members of the THS-GQ Union were purportedly excluded from the field trip. On the evening of the
field trip, a certain Angel Madriaga, a sales officer of petitioners, campaigned against the union in the
forthcoming certification election.
When the certification election was scheduled on October 11, 2004, the employees were escorted from
the field trip to the polling center in Zambales to cast their votes. The remaining employees situated at the
SBFZ plant cast their votes as well. Due to the heavy pressure exerted by petitioners, the votes for "no
union" prevailed.

3rd CAUSE:
A memorandum was issued by petitioner Ben Huang (Huang), Director for Gin Queen, informed its
employees of the expiration of the lease contract between Gin Queen and its lessor in Castillejos,
Zambales and announced the relocation of its office and workers to Cabangan, Zambales.

When the respondents, visited the site in Cabangan, discovered that it was a "talahiban" or grassland.
The said union officers and members were made to work as grass cutters in Cabangan, under the
supervision of a certain Barangay Captain Greg Pangan. Due to these circumstances, the employees
assigned in Cabangan did not report for work. The other employees who likewise failed to report in
Cabangan were meted out with suspension.

PETITIONERS’ DEFENSE:
In its defense, Petitioners also stress that they cannot be held liable for ULP for the reason that there is
no employer-employee relationship between the former and respondents. Further, Gin Queen avers that
its decision to implement an enforced rotation of work assignments for respondents was a management
prerogative permitted by law, justified due to the decrease in orders from its customers, they had to resort
to cost cutting measures to avoid anticipated financial losses. Thus, it assigned work on a rotational basis.
It explains that its failure to present concrete proof of its decreasing orders was due to the impossibility of
proving a negative assertion. It also asserts that the transfer from Castillejos to Cabangan was made in
good faith and solely because of the expiration of its lease contract in Castillejos. It was of the impression
that the employees, who opposed its economic measures, were merely motivated by spite in filing the
complaint for ULP against it.

ISSUE:

WON ULP acts were committed by petitioners against respondents.

RULING:

ULP were committed by petitioners against respondents.

Petitioners are being accused of violations of paragraphs (a), (c), and (e) of Article 257 (formerly Article
248) of the Labor Code,13 to wit:
Article 257. Unfair labor practices of employers.––It shall be unlawful for an employer to commit
any of the following unfair labor practices:
(a) To interfere with, restrain or coerce employees in the exercise of their right to self-
organization;
xxxx
(c) To contract out services or functions being performed by union members when such will
interfere with, restrain, or coerce employees in the exercise of their right to self-organization;
xxxx
(e) To discriminate in regard to wages, hours of work, and other terms and conditions of
employment in order to encourage or discourage membership in any labor organization. x x x

The questioned acts of petitioners, namely: 1) sponsoring a field trip to Zambales for its employees, to the
exclusion of union members, before the scheduled certification election; 2) the active campaign by the
sales officer of petitioners against the union prevailing as a bargaining agent during the field trip; 3)
escorting its employees after the field trip to the polling center; 4) the continuous hiring of subcontractors
performing respondents’ functions; 5) assigning union members to the Cabangan site to work as grass
cutters; and 6) the enforcement of work on a rotational basis for union members, taken together,
reasonably support an inference that, indeed, such were all orchestrated to restrict respondents’ free
exercise of their right to self-organization.

The Court is of the considered view those petitioners’ undisputed actions prior and immediately before the
scheduled certification election, while seemingly innocuous, unduly meddled in the affairs of its
employees in selecting their exclusive bargaining representative.

3. Wesleyan University-Phils., vs. Wesleyan University-Phils., Faculty & Staff Asso.,GR

No. 181806, March 12, 2014

FACTS:

Petitioner Wesleyan University-Philippines is a non-stock, non-profit educational institution duly organized

and existing under the laws of the Philippines. Respondent Wesleyan University-Philippines Faculty and
Staff Association, on the other hand, is a duly registered labor organization acting as the sole and
exclusive bargaining agent of all rank-and-file faculty and staff employees of petitioner.

In December 2003, the parties signed a 5-year CBA effective June 1, 2003 until May 31, 2008.
On August 16, 2005, petitioner, through its President, Atty. Maglaya , issued a Memorandum providing
guidelines on the implementation of vacation and sick leave credits as well as vacation leave
commutation which states that vacation and sick leave credits are not automatic as leave credits would be
earned on a month-to-month and only vacation leave is commuted or monetized to cash which is effected
after the second year of continuous service of an employee.

Respondents questioned the guidelines for being violative of existing practices and the CBA which
provide that all covered employees are entitled to 15 days sick leave and 15 days vacation leave with pay
every year and that after the second year of service, all unused vacation leave shall be converted to cash
and paid to the employee at the end of each school year, not later than August 30 of each year.

Respondent file a grievance complaint on the implementation of the vacation and sick leave policy.
Petitioner also announced its plan of implementing a one-retirement policy which was unacceptable to
respondent.
Respondent submitted affidavits to prove that there is an established practice of giving two retirement
benefits, one from the Private Education Retirement Annuity Association (PERAA) Plan and another from
the CBA Retirement Plan.
The Voluntary Arbitrator rendered a Decision declaring the one-retirement policy and the Memorandum
dated August 16, 2005 contrary to law. CA also affirmed the ruling of the Voluntary Arbitrator.

Petitioner argues that there is only one retirement plan as the CBA Retirement Plan and the PERAA Plan
are one and the same. It maintains that there is no established company practice or policy of giving two
retirement benefits to its employees. Respondent belies the claims of petitioner and asserts that there are
two retirement plans as the PERAA Retirement Plan, which has been implemented for more than 30
years, is different from the CBA Retirement Plan. Respondent further avers that it has always been a
practice of petitioner to give two retirement benefits and that this practice was established by substantial
evidence as found by both the Voluntary Arbitrator and the CA.

ISSUE:

WON the respondents are entitled to two retirement plans.

RULING:

The Non-Diminution Rule found in Article 100 of the Labor Code explicitly prohibits employers from
eliminating or reducing the benefits received by their employees. This rule, however, applies only if the
benefit is based on an express policy, a written contract, or has ripened into a practice. To be considered
a practice, it must be consistently and deliberately made by the employer over a long period of time.
Respondent was able to present substantial evidence in the form of affidavits to support its claim that
there are two retirement plans. Based on the affidavits, petitioner has been giving two retirement benefits
as early as 1997. Petitioner, on the other hand, failed to present any evidence to refute the veracity of
these affidavits. Petitioner's assertion that there is only one retirement plan as the CBA Retirement Plan
and the PERAA Plan are one and the same is not supported by any evidence.

The Memorandum dated August 16, 2005 is contrary to the existing CBA. It limits the available leave
credits of an employee at the start of the school year. The Memorandum dated imposes a limitation not
agreed upon by the parties nor stated in the CBA, so it must be struck down.

4. Bluer Than Blue Joint Ventures Co., vs. Esteban, GR No. 192582, April 7, 2014, Citing
2011 Nina Jewelry Manufacturing of Metal Arts Inc. vs. Montecillo

FACTS:

The respondent was employed as a sales clerk and assigned at the petitioner’s boutique. Her primary
tasks were attending to all customer needs, ensuring efficient inventory, coordinating orders from clients,
cashiering and reporting to the accounting department. The petitioner learned that some of their
employees had access to their POS system with the use of a universal password given to them by a
certain Elmer Flores, who in turn learned of the password from the respondent. The petitioner then
conducted an investigation and asked the petitioner to explain why she should not be disciplinarily dealt
with. During the investigation the respondent was placed under preventive suspension. After investigation
the petitioner terminated the respondent on the grounds of loss of trust or confidence. This respondent
was given her final wage and benefits less the inventory variance incurred by the store. This urged the
respondent to file a complaint for illegal dismissal, illegal suspension, holiday pay, rest day and separation
pay. The labor arbiter ruled in her favour awarding her backwages. The petitioner appealed the decision
in the NLRC and the decision was reversed. However, upon the respondent’s petition for certiorari in the
court of appeals the decision was reinstated. Hence, this petition.

ISSUE:

WON the negative sales variance could be validly deducted from the respondent’s wage?

RULING:

No, it cannot be deducted in this case.

Article 113 of the Labor Code provides that no employer, in his own behalf or in behalf of any person,
shall make any deduction from the wages of his employees, except in cases where the employer is
authorized by law or regulations issued by the Secretary of Labor and Employment, among others. The
Omnibus Rules Implementing the Labor Code, meanwhile, provides:

SECTION 14. Deduction for loss or damage. — Where the employer is engaged in a trade, occupation or
business where the practice of making deductions or requiring deposits is recognized to answer for the
reimbursement of loss or damage to tools, materials, or equipment supplied by the employer to the
employee, the employer may make wage deductions or require the employees to make deposits from
which deductions shall be made, subject to the following conditions:
a) That the employee concerned is clearly shown to be responsible for the loss or damage;
b) That the employee is given reasonable opportunity to show cause why deduction should
not be made;
c) That the amount of such deduction is fair and reasonable and shall not exceed the actual
loss or damage; and
d) That the deduction from the wages of the employee does not exceed 20 percent of the
employee's wages in a week.

In this case, the petitioner failed to sufficiently establish that Esteban was responsible for the negative
variance it had in its sales for the year 2005 to 2006 and that Esteban was given the opportunity to show
cause the deduction from her last salary should not be made.

Furthermore, the court ruled, in Nina Jewelry Marketing of Metal Arts, Inc. v. Montecillo, that:

[T]he petitioners should first establish that the making of deductions from the salaries is authorized by
law, or regulations issued by the Secretary of Labor. Further, the posting of cash bonds should be proven
as a recognized practice in the jewelry manufacturing business, or alternatively, the petitioners should
seek for the determination by the Secretary of Labor through the issuance of appropriate rules and
regulations that the policy the former seeks to implement is necessary or desirable in the conduct of
business. The petitioners failed in this respect. It bears stressing that without proofs that requiring
deposits and effecting deductions are recognized practices, or without securing the Secretary of Labor's
determination of the necessity or desirability of the same, the imposition of new policies relative to
deductions and deposits can be made subject to abuse by the employers. This is not what the law
intends.

5. Netlink Computer Incorporated vs. Eric Delmo, GR No. 160827, June 18, 2014

FACTS:

Netlink Computer, Inc. Products and Services hired Eric S. Delmo as an account manager tasked to sell
products and services of Netlink and paid Delmo on commission basis for each sale. When Delmo was
about to generate some sales, he asked for his commission but Netlink refused and instead gave him
partial cash advances chargeable to his commissions. Later on, Netlink began to find fault basing on
Delmo’s alleged absences and tardiness and subsequently refused Delmo’s entry into the company
premises which prompted Delmo to file a complaint for illegal dismissal. One of the many claims posed by
Delmo is the payment of US $7,588.30 as his unpaid commission on sales generated in their US
denominated transactions. Delmo claims that because he had earned them in US dollars, it is only fair
that his commissions be paid in US dollars.

Netlink maintains that the commissions of Delmo should be based on sales generated, actually paid by
and collected from the customers; that commissions must be paid on the basis of the conversion of the
US dollar to the Philippine peso at the time of sale.

ISSUE:

WON the payment of the commissions should be in US dollars?

RULING:

The appeal lacks merit.

As a general rule, all obligations shall be paid in Philippine currency. However, the contracting parties
may stipulate that foreign currencies may be used for settling obligations. This is pursuant to Republic Act
No. 8183, which provides as follows:

Section 1. All monetary obligations shall be settled in the Philippine currency which is legal tender in
the Philippines. However, the parties may agree that the obligation ortransaction shall be settled in
any other currency at the time of payment.

However, both Republic Act No. 529 and Republic Act No. 8183 did not stipulate the applicable rate of
exchange for the conversion of foreign currency-incurred obligations to their peso equivalent. It follows,
therefore, that the jurisprudence established under Republic Act No. 529 with regard to the rate of
conversion remains applicable. In one case, the court said that the real value of the foreign exchange-
incurred obligation up to the date of its payment should be preserved.
There was no written contract between Netlink and Delmo stipulating that the latter’s commissions would
be paid in US dollars. The absence of the contractual stipulation notwithstanding, Netlink was still liable to
pay Delmo in US dollars because the practice of paying its sales agents in US dollars for their US dollar-
denominated sales had become a company policy.

This was impliedly admitted by Netlink when it did not refute the allegation that the commissions earned
by Delmo and its other sales agents had been paid in US dollars. Instead of denying the allegation,
Netlink only sought a declaration that the US dollar commissions be paid using the exchange rate at the
time of sale.

The principle of non-diminution of benefits, which has been incorporated in Article 100 of the Labor Code,
forbade Netlink from unilaterally reducing, diminishing, discontinuing or eliminating the practice. Verily, the
phrase "supplements, or other employee benefits" in Article 100 is construed to mean the compensation
and privileges received by an employee aside from regular salaries or wages.

With regard to the length of time the company practice should have been observed to constitute a
voluntary employer practice that cannot be unilaterally reduced, diminished, discontinued or eliminated by
the employer, we find that jurisprudence has not laid down any rule requiring a specific minimum number
of years. With the payment of US dollar commissions having ripened into a company practice, there is no
way that the commissions due to Delmo were to be paid in US dollars or their equivalent in Philippine
currency determined at the time of the sales. To rule otherwise would be to cause an unjust diminution of
the commissions due and owing to Delmo.

6. Libcap Marketing Corp. vs. Lanny Jean B. Baquial, GR. No. 192011, June 30, 2014

FACTS:

LIBCAP, engaged in the freight forwarding business, employed Baquial as accounting clerk in Cagayan
de Oro. Her functions included depositing Libcap’s daily sales and collections with Global Bank (now
PSBank). An audit was conducted and showed that respondent made a double reporting of a single
deposit made on April 2,2001.

Libcap then sent a letter requiring respondent to explain in writing within 24 hours why there was a
discrepancy.

In her reply, respondent claimed that on April 2, 2001, she deposited with the bank two separate amounts
of P1,437.00 each, but that it appears that both separate deposits were covered by a single bank
validation, which defect should not be blamed on her but on the bank. Libcap discovered that only
one P1,437.00 deposit was made on April 2, 2001. On verification with PS Bank, its branch head
confirmed in a letter that only a single deposit of P1,437.00 was posted on April 2, 2001, and that there
was no misposting or deposits to other accounts of the same amount made on such date.
Meanwhile, the amount of P1,437.00 was deducted from respondent’s salary each payday on a
staggered basis.

Libcap required respondent to attend an investigation to be conducted in Ilo-ilo City but the latter failed to
attend such due to financial reasons. Hence, she was placed on preventive suspension and later on
received a Notice of Termination for dishonesty, embezzlement, inefficiency, and for commission of acts
inconsistent with Libcap’s work standards.

ISSUES:

1. WON there was a compliance with Procedural Due Process and WON the CA was justified in
awarding P100,000 as Nominal Damages deviating from the standard P30,000?
2. WON respondent has a cause of action to ask for the award of salary differentials, 13th month
pay and holiday pay? (in relation to wage protection provision)

RULING:

The Court denies the Petition.

1. Respondent was denied due process because respondent’s case has been pre-judged even prior
to the start of the investigation. The amount which petitioners claim was embezzled – was
peremptorily deducted each payday from respondent’s salary on a staggered basis.
The law and jurisprudence, contrary to petitioner’s claim, allow the award of nominal damages in
favor of an employee in a case where a valid cause for dismissal exists but the employer fails to
observe due process in dismissing the employee. Financial assistance is granted as a measure
of equity or social justice, and is in the nature or takes the place of severance compensation.
 The amount of P100,000.00 as nominal damages should be reduced to P30,000.00. Nominal
damages are awarded for the purpose of vindicating or recognizing a right and not for
indemnifying a loss. Nominal damages is awarded in favor of an employee in a case where a
valid cause for dismissal exists but the employer fails to observe due process in dismissing the
employee.

2. Pertinent Ruling:
Although petitioner company had cause to terminate Madriaga, this has no bearing on the issue
of award of salary differentials, holiday pay and 13th month pay because prior to his valid
dismissal, he performed work as a regular employee of petitioner company, and he is entitled to
the benefits provided under the law. Thus, in the case of Agabon, even while the Court found that
the dismissal was for a just cause, the employee was still awarded his monetary claims.
An employee should be compensated for the work he has rendered in accordance with the
minimum wage, and must be appropriately remunerated when he was suffered to work on a
regular holiday during the time he was employed by the petitioner company. As regards the 13th
month pay, an employee who was terminated at any time before the time for payment of the 13th
month pay is entitled to this monetary benefit in proportion to the length of time he worked during
the year, reckoned from the time he started working during the calendar year up to the time of his
termination from the service.
As a general rule, one who pleads payment has the burden of proving it. Even where the
employee must allege nonpayment, the general rule is that the burden rests on the employer to
prove payment, rather than on the employee to prove nonpayment. The reason for the rule is that
the pertinent personnel files, payrolls, records, remittances and other similar documents — which
will show that overtime, differentials, service incentive leave and other claims of workers have
been paid — are not in the possession of the employee but in the custody and absolute control of
the employer. Since in the case at bar petitioner company has not shown any proof of payment of
the correct amount of salary, holiday pay and 13th month pay, we affirm the award of Madriaga’s
monetary claims.

7. PLDT vs. Henry Estranero, G.R. No. 192518, October 15, 2014

FACTS:

PLDT adopted a company-wide Manpower Reduction Program (MRP) which declared many positions
redundant, including respondent’s as Auto-mechanic/electrician helper. Attracted by the separation pay
offered by the company, respondent expressed his conformity to his inclusion in the MRP. However,
respondent had outstanding liabilities from various loans he obtained from different entities (HDMF, SSS,
PLDT Cooperative). As a result, when respondent was made to sign the Receipt, Release and Quitclaim,
it showed that his take home pay was “zero pesos”. This prompted respondent to retract his availment of
the separation pay package. Despite this, respondent was no longer allowed to report for work.

Respondent then filed a complaint for illegal dismissal with reinstatement. The Labor Arbiter ruled that the
office lacks jurisdiction to pass upon the issue of PLDT’s act in deducting the total outstanding loans
which respondent obtained from different entities since the same do not involve employer-employee
relationship and may be enforced only through a separate civil action in the regular court. Both NLRC and
CA affirmed the decision

ISSUE:

WON petitioner can validly deduct the respondent’s outstanding loan obligation from his redundancy pay

RULING:

In this case, the deductions made to the respondent’s redundancy pay do not fall under any of the
circumstances proved under Article 113 of the Labor Code, nor was it established with certainty that the
respondent consented to the said deductions or that the petitioners had authority to make such
deductions. It would have been different if the deductions referred to respondent’s contributions for being
a member of the SSS, HDMF or withholding taxes on income because such are already sanctioned by
existing laws. Here. It is emphasized that the subject deductions pertain to outstanding loans from various
entities.

Petitioners may not offset the outstanding loans against respondent’s monetary benefits. Respondent
obtained loans from various entities and not with PLDT. Set-off or legal compensation cannot take place
between PLDT and respondent because they are not mutually creditor and debtor of each other. There
can be no valid set-off because the respondent’s creditor is not PLDT. Further, the LA has no jurisdiction
over the balance of the loan. It is a civil dispute involving creditor-debtor relations. Thus, PLDT has no
legal right to withhold respondent’s redundancy pay and other benefits to recompense for his outstanding
loan obligations to different entities.

8. Milan, et. al. vs National Labor Relations Commission, G.R. No. 202961, February 4,
2015

FACTS:

Petitioners are Solid Mills Inc.’s (SMI) employees. They were allowed to occupy SMI Village. According to
SMI, this was out of liberality on the condition that they would vacate anytime SMI deems fit. Later,
petitioners were informed that SMI would cease its operations due to serious business losses and were
also sent individual notices to vacate SMI Village. They were required to sign a memorandum of
agreement with release and quitclaim before their vacation and sick leave benefits, 13 th month pay, and
separation pay would be released. Employees who signed were considered to have agreed to vacate
SMI Village. Petitioners refused to sign and demanded payment of their benefits. They then filed
complaints before the Labor Arbiter (LA). The LA ruled that SMI illegally withheld petitioners’ benefits and
separation pay. The NLRC partly affirmed the LA’s decision and the CA ruled in favor of SMI.

ISSUE:

WON SMI can validly withhold petitioners’ benefits and separation pay until petitioners vacate SMI’s
property

RULING:

As a general rule, employers are prohibited from withholding wages from employees (Art. 116) and that
there should be no elimination or diminution of benefits (Art. 100). However, our law supports the
employers’ institution of clearance procedures before the release of wages. As an exception to the
general rule, the Labor Code provides (art. 113) that an employer can make deduction from wages in
cases where the employer is authorized by law or regulations issued by the Secretary of Labor and
Employment.

The Civil Code provides that withholding of wages, except for a debt due, shall not be made by the
employer (Art. 1706). “Debt” in this case refers to any obligation due from the employee to the employer.
It includes any accountability that the employee may have to the employer. There is no reason to limit its
scope to uniforms and equipment. More importantly, the union representing petitioners and SMI agreed
that the release of petitioners’ benefits shall be “less accountabilities”. “Accountability” means obligation
or debt. As long as the debt or obligation was incurred by virtue of the employer-employee relationship,
generally, it shall be included in the employee’s accountabilities that are subject to clearance procedures.
The return of the property’s possession became an obligation or liability on the part of the employees
when the employer-employee relationship cased. Thus, SMI has the right to withhold petitioners’ wages
and benefits because of this existing liability. Such wages and benefits are not being reduced. They are
subject only to the condition that the employees return the properties to the employer consistent with the
principle that “no one shall be unjustly enriched or benefited at the expense of another.”

8. PAYMENT OF WAGES
9. CONDITIONS OF EMPLOYMENT
10. MINIMUM LABOR STANDARDS BENEFITS

1. Radio Mindanao Network, Inc. And Eric S. Canoy Vs. Domingo Z. Ybarola, Jr. And
Alfonso E. Rivera, Jr. G.R. No. 198662, September 12, 2012

Labor Standard Benefits: Commissions are part of the salary; the release/quitclaim is deemed
ineffective.

FACTS:

Respondents Domingo Z. Ybarola, Jr. and Alfonso E. Rivera, Jr. were hired by RMN. They eventually
became account managers, soliciting advertisements and servicing various clients of RMN. On
September 15, 2002, the respondents' services were terminated as a result of RMN's
reorganization/restructuring; they were given their separation pay — P631,250.00 for Ybarola, and
P481,250.00 for Rivera. Sometime in December 2002, they executed release/quitclaim affidavits.

Dissatisfied with their separation pay, the respondents filed separate complaints (which were later
consolidated) against RMN and its President, Eric S. Canoy, for illegal dismissal with several money
claims, including attorney's fees. They indicated that their monthly salary rates were P60,000.00 for
Ybarola and P40,000.00 for Rivera.
a) Petitioners’ Arguments- (RADIO MINDANAO NETWORK, INC. and ERIC S. CANOY, petitioners,
vs. Plaintiff-Appellant’s Arguments- Lost)

- With regard to the controversy on the inclusion of the respondents' commissions in the computation of
their separation pay, the petitioners contended that the respondents failed to show proof that they earned
the commissions through actual market forces attributable to them. They submit that the commissions are
profit-sharing payments which do not form part of their salaries. As supported by the petitioners to the
National Labor Relations Commission (NLRC), as it ruled that the withholding tax certificate cannot be the
basis of the computation of the respondents' separation pay as the tax document included the
respondents' cost-of-living allowance and commissions; stating that as a general rule, commissions
cannot be included in the base figure for the computation of the separation pay because they have to be
earned by actual market transactions attributable to the respondents, as held by the Court in Soriano v.
NLRC 7 and San Miguel Jeepney Service v. NLRC. (LOST)

-The petitioners denied liability, contending that the amounts the respondents received represented a fair
and reasonable settlement of their claims, as attested to by the release/quitclaim affidavits which they
executed freely and voluntarily. They belied the respondents' claimed salary rates, alleging that they each
received a monthly salary of P9,177.00, as shown by the payrolls. On the release/quitclaim issue, the
petitioners bewail the CA's disregard of the Court's ruling in Talam that the quitclaim that Francis Ray
Talam, who was not an unlettered employee, executed was a voluntary act as there was no showing that
he was coerced into signing the instrument, and that he received a valuable consideration for his less
than two years of service with the company. They point out that in this case, the labor arbiter and the
NLRC correctly concluded that the respondents are hardly unlettered employees, but intelligent, well-
educated and who were too smart to be caught unaware of what they were doing. They stress, too, that
the respondents submitted no proof that they were in dire circumstances when they executed the
release/quitclaim document. (LOST)

- The petitioners fault the CA for not expressly declaring that no basis exists to hold Canoy personally
liable for the award to the respondents as they failed to specify any act Canoy committed against them or
to explain how Canoy participated in their dismissal. They express alarm as they believe that unless the
Court acts, the respondents will enforce the award against Canoy himself. (LOST)AICTD

b) Respondents’ Arguments- (DOMINGO Z. YBAROLA, JR. and ALFONSO E. RIVERA, JR- Win)

- That commissions should be part of the respondents’ salaries for purposes of computing the
separation pay. As supported by the labor arbiter as it adjusted the separation pay award based on the
respondents' Certificates of Compensation Payment/Tax Withheld showing that Ybarola and Rivera
were receiving an annual salary of P482,477.61 and P697,303.00, respectively. The Labor Arbiter
Patricio Libo-on dismissed the illegal dismissal complaint, but ordered the payment of additional
separation pay to the respondents.

-The respondents argued that the release/quitclaim they executed should not be a bar to the recovery
of the full benefits due them; while they admitted that they signed release documents, they did so due
to dire necessity.

- The respondents submit that the issue of Canoy's personal liability has become final and conclusive on
the parties as the petitioners failed to raise the issue on time. They maintain that as the records show, the
petitioners failed to raise the issue in their appeal to the NLRC and neither did they bring it up in their
motion for reconsideration of the CA's decision reinstating the labor arbiter's award.

ISSUES:

1. WON the commissions be included as part of the salary for purposes of computing the separation
pay;
2. WON the release/ quitclaim affidavit executed by the respondents should be appreciated;
3. WON the petitioner, Canoy, is personally liable in the present case.

RULING:

The CA granted the petition and set aside the assailed NLRC dispositions. It reinstated the labor arbiter's
separation pay award, rejecting the NLRC's ruling that the respondents' commissions are not included in
the computation of their separation pay. It pointed out that in the present case, the respondents earned
their commissions through actual market transactions attributable to them; these commissions, therefore,
were part of their salary.

The petitioners insist that the respondents' commissions were not part of their salaries, because they
failed to present proof that they earned the commission due to actual market transactions attributable to
them. They submit that the commissions are profit-sharing payments which do not form part of their
salaries. We are not convinced. If these commissions had been really profit-sharing bonuses to the
respondents, they should have received the same amounts, yet, as the NLRC itself noted, Ybarola and
Rivera received P372,173.11 and P586,998.50 commissions, respectively, in 2002. 15 The variance in
amounts the respondents received as commissions supports the CA's finding that the salary structure of
the respondents was such that they only received a minimal amount as guaranteed wage; a greater part
of their income was derived from the commissions they get from soliciting advertisements; these
advertisements are the "products" they sell. As the CA aptly noted, this kind of salary structure does not
detract from the character of the commissions being part of the salary or wage paid to the employees for
services rendered to the company, as the Court held in Philippine Duplicators, Inc. v. NLRC.

The appellate court declared the release/quitclaim affidavits executed by the respondents invalid for being
against public policy, citing two reasons:
(1) the terms of the settlement are unconscionable; the separation pay the respondents received
was deficient by at least P400,000.00 for each of them; and
(2) the absence of voluntariness when the respondents signed the document, it was their dire
circumstances and inability to support their families that finally drove them to accept the amount
the petitioners offered. Significantly, they dallied and it took them three months to sign the
release/quitclaim affidavits. The petitioners' reliance on our ruling in Talam v. National Labor
Relations Commission, 17 regarding the "proper appreciation of quitclaims," as they put it, is
misplaced. To be sure, a settlement under these terms is not and cannot be a reasonable one,
given especially the respondents' length of service — 25 years for Ybarola and 19 years for
Rivera. The CA was correct when it opined that the respondents were in dire straits when they
executed the release/quitclaim affidavits. Without jobs and with families to support, they dallied in
executing the quitclaim instrument, but were eventually forced to sign given their circumstances.

Lastly, the petitioners are estopped from raising the issue of Canoy's personal liability. They did not raise
it before the NLRC in their appeal from the labor arbiter's decision, nor with the CA in their motion for
reconsideration of the appellate court's judgment. The risk of having Canoy's personal liability for the
judgment award did not arise only with the filing of the present petition, it had been there all along — in
the NLRC, as well as in the CA.

The SC-SPECIAL SECOND DIVISIONWHEREFORE DENIED the motion for reconsideration with
finality.

2. Ariel L. David, Doing Business Under The Name And Style "Yiels Hog Dealer" vs
John G. Macasio, G.R. No. 195466. July 2, 2014.

Labor Standard Benefits: In applying and interpreting the labor law provisions on holiday, SIL and 13th
month pay to a worker engaged on "pakyaw" or task basis, Respondent Macasio is entitled to Holiday
Pay and SIL but not 13th month pay.

FACTS:

Macasio filed a complaint against petitioner Ariel L. David, doing business under the name and style
"Yiels Hog Dealer," for non-payment of overtime pay, holiday pay and 13th month pay. He also
claimed payment for moral and exemplary damages and attorney's fees. Macasio also claimed
payment for service incentive leave (SIL).

Macasio alleged before the LA that he had been working as a butcher for David since January 6, 1995.
Macasio claimed that David exercised effective control and supervision over his work, pointing out that
David: (1) set the work day, reporting time and hogs to be chopped, as well as the manner by which he
was to perform his work; (2) daily paid his salary of P700.00, which was increased from P600.00 in 2007,
P500.00 in 2006 and P400.00 in 2005; and (3) approved and disapproved his leaves. Macasio added that
David owned the hogs delivered for chopping, as well as the work tools and implements; the latter also
rented the workplace. Macasio further claimed that David employs about twenty-five (25) butchers and
delivery drivers.

David claims that Macasio was not his employee as he hired the latter on "pakyaw" or task basis. He
also claimed that he issued the Certificate of Employment, upon Macasio's request, only for overseas
employment purposes. David pointed out that Macasio: (1) usually starts his work at 10:00 p.m. and ends
at 2:00 a.m. of the following day or earlier, depending on the volume of the delivered hogs; (2) received
the fixed amount of P700.00 per engagement, regardless of the actual number of hours that he spent
chopping the delivered hogs; and (3) was not engaged to report for work and, accordingly, did not receive
any fee when no hogs were delivered.

Labor Arbiter and NLRC Rulings

The LA concluded that as Macasio was engaged on "pakyaw" or task basis, he is not entitled to overtime,
holiday, SIL and 13th month pay.

The NLRC affirmed the LA ruling. The NLRC observed that David did not require Macasio to observe an
eight-hour work schedule to earn the fixed P700.00 wage; and that Macasio had been performing a non-
time work, pointing out that Macasio was paid a fixed amount for the completion of the assigned task,
irrespective of the time consumed in its performance. Since Macasio was paid by result and not in terms
of the time that he spent in the workplace, Macasio is not covered by the Labor Standards laws on
overtime, SIL and holiday pay, and 13th month pay under the Rules and Regulations Implementing the
13th month pay law.

The CA's Ruling

The NLRC's ruling for having been rendered with grave abuse of discretion.
While the CA agreed with the LA and the NLRC that Macasio was a task basis employee, it nevertheless
found Macasio entitled to his monetary claims following the doctrine laid down in Serrano v. Severino
Santos Transit. 23 The CA explained that as a task basis employee, Macasio is excluded from the
coverage of holiday, SIL and 13th month pay only if he is likewise a "field personnel." As defined by the
Labor Code, a "field personnel" is one who performs the work away from the office or place of work and
whose regular work hours cannot be determined with reasonable certainty. In Macasio's case, the
elements that characterize a "field personnel" are evidently lacking as he had been working as a butcher
at David's "Yiels Hog Dealer" business in Sta. Mesa, Manila under David's supervision and control, and
for a fixed working schedule that starts at 10:00 p.m. Accordingly, the CA awarded Macasio's claim for
holiday, SIL and 13th month pay for three years, with 10% attorney's fees on the total monetary award.
The CA, however, denied Macasio's claim for moral and exemplary damages for lack of basis.

a) Petitioners’ Arguments- (ARIEL L. DAVID, doing business under the name and style "YIELS
HOG DEALER")

- David reiterates his submissions before the lower tribunals and adds that he never had any control over
the manner by which Macasio performed his work and he simply looked on to the "end-result." He also
contends that he never compelled Macasio to report for work and that under their arrangement, Macasio
was at liberty to choose whether to report for work or not as other butchers could carry out his tasks.
(LOST)

- Also, he posits that because he engaged Macasio on "pakyaw" or task basis then no employer-
employee relationship exists between them. (LOST)

b) Respondents’ Arguments- (John G. Macasio) (Partially WON)

- Macasio counters that he was not a task basis employee or a "field personnel" as David would have this
Court believe. As David failed to prove the alleged task basis or "pakyawan" agreement, Macasio
concludes that he was David's employee. (Partially Won- He is an employee paid on a task basis but not
a field personnel)
ISSUE:

The issue revolves around the proper application and interpretation of the labor law provisions on
holiday, SIL and 13th month pay to a worker engaged on "pakyaw" or task basis.

RULING:

Partial grant of the petition.

The Court's power in a Rule 45 petition limits us to a review of questions of law raised against the
assailed CA decision. In this petition, David essentially asks the question — whether Macasio is entitled
to holiday, SIL and 13th month pay. This one is a question of law. The determination of this question of
law however is intertwined with the largely factual issue of whether Macasio falls within the rule on
entitlement to these claims or within the exception. In either case, the resolution of this factual issue
presupposes another factual matter, that is, the presence of an employer-employee relationship between
David and Macasio.

Engagement on "pakyaw" or task basis does not characterize the relationship that may exist between the
parties, i.e., whether one of employment or independent contractorship. Article 97 (6) of the Labor Code
defines wages as ". . . the remuneration or earnings, however designated, capable of being expressed
in terms of money, whether fixed or ascertained on a time, task, piece, or commission basis, or
other method of calculating the same, which is payable by an employer to an employee under a
written or unwritten contract of employment for work done or to be done, or for services rendered or to be
rendered[.]" 35 In relation to Article 97 (6), Article 101 36 of the Labor Code speaks of workers paid by
results or those whose pay is calculated in terms of the quantity or quality of their work output which
includes "pakyaw" work and other non-time work.

The LA and the NLRC denied Macasio's claim not because of the absence of an employer-
employee but because of its finding that since Macasio is paid on pakyaw or task basis, then he is
not entitled to SIL, holiday and 13th month pay. Second, we consider it crucial, that in the separate
illegal dismissal case Macasio filed with the LA, the LA, the NLRC and the CA uniformly found the
existence of an employer-employee relationship. In other words, aside from being factual in nature, the
existence of an employer-employee relationship is in fact a non-issue in this case.

Be it noted that David had the right and power to control and supervise Macasio's work as to the means
and methods of performing it. All those working for David, including Macasio, could naturally be expected
to observe certain rules and requirements and David would necessarily exercise some degree of control
as the chopping of the hog meats would be subject to his specifications. Also, since Macasio performed
his tasks at David's workplace, David could easily exercise control and supervision over the former.
Accordingly, whether or not David actually exercised this right or power to control is beside the point as
the law simply requires the existence of this power to control or, as in this case, the existence of the right
and opportunity to control and supervise Macasio.

In sum, the totality of the surrounding circumstances of the present case sufficiently points to an
employer-employee relationship existing between David and Macasio. The existence of employment
relationship between the parties is determined by applying the "four-fold" test; engagement on "pakyaw"
or task basis does not determine the parties' relationship as it is simply a method of pay computation.
Accordingly, Macasio is David's employee, albeit engaged on "pakyaw" or task basis.

Macasio is engaged on "pakyaw" or task basis- At this point, we note that all three tribunals — the
LA, the NLRC and the CA — found that Macasio was engaged or paid on "pakyaw" or task basis. This
factual finding binds the Court under the rule that factual findings of labor tribunals when supported by
the established facts and in accord with the laws, especially when affirmed by the CA, is binding on this
Court.

A distinguishing characteristic of "pakyaw" or task basis engagement, as opposed to straight-hour wage

payment, is the non-consideration of the time spent in working. In a task-basis work, the emphasis is on
the task itself, in the sense that payment is reckoned in terms of completion of the work, not in terms of
the number of time spent in the completion of work. 45 Once the work or task is completed, the worker
receives a fixed amount as wage, without regard to the standard measurements of time generally used in
pay computation. In Macasio's case, the established facts show that he would usually start his work at
10:00 p.m. Thereafter, regardless of the total hours that he spent at the workplace or of the total number
of the hogs assigned to him for chopping, Macasio would receive the fixed amount of P700.00 once he
had completed his task. Clearly, these circumstances show a "pakyaw" or task basis engagement that all
three tribunals uniformly found.

On the issue of Macasio's entitlement to holiday, SIL and 13th month pay
Provisions governing SIL and holiday pay

Article 82 of the Labor Code provides the exclusions from the coverage of Title I, Book III of the Labor
Code — provisions governing working conditions and rest periods.
Art. 82. Coverage. — The provisions of [Title I] shall apply to employees in all
establishments and undertakings whether for profit or not, but not to government
employees, managerial employees, field personnel, members of the family of the
employer who are dependent on him for support, domestic helpers, persons in the
personal service of another, and workers who are paid by results as determined by
the Secretary of Labor in appropriate regulations.
xxx xxx xxx
"Field personnel" shall refer to non-agricultural employees who regularly perform their
duties away from the principal place of business or branch office of the employer and
whose actual hours of work in the field cannot be determined with reasonable certainty.
[emphases and underscores ours]

Among the Title I provisions are the provisions on holiday pay (under Article 94 of the Labor Code) and
SIL pay (under Article 95 of the Labor Code). Under Article 82, "field personnel" on one hand and
"workers who are paid by results" on the other hand, are not covered by the Title I provisions. The
wordings of Article 82 of the Labor Code additionally categorize workers "paid by results" and "field
personnel" as separate and distinct types of employees who are exempted from the Title I provisions of
the Labor Code.

The pertinent portion of Article 94 of the Labor Code and its corresponding provision in the IRR 47 reads:
 Art. 94. Right to holiday pay. — (a) Every worker shall be paid his regular daily wage
during regular holidays, except in retail and service establishments regularly employing
less than (10) workers[.] [emphasis ours]
xxx xxx xxx
SECTION 1. Coverage. — This Rule shall apply to all employees except:
xxx xxx xxx
(e) Field personnel and other employees whose time and performance is
unsupervised by the employer including those who are engaged on task or
contract basis, purely commission basis, or those who are paid a fixed amount for
performing work irrespective of the time consumed in the performance thereof.
[emphases ours]

On the other hand, Article 95 of the Labor Code and its corresponding provision in the IRR 48
pertinently provides:
Art. 95. Right to service incentive. — (a) Every employee who has rendered at least
one year of service shall be entitled to a yearly service incentive leave of five days with
pay.
(b) This provision shall not apply to those who are already enjoying the benefit herein
provided, those enjoying vacation leave with pay of at least five days and those
employed in establishments regularly employing less than ten employees or in
establishments exempted from granting this benefit by the Secretary of Labor and
Employment after considering the viability or financial condition of such establishment.
[emphases ours] DaCEIc
xxx xxx xxx
Section 1. Coverage. — This rule shall apply to all employees except:
xxx xxx xxx
(e) Field personnel and other employees whose performance is unsupervised by
the employer including those who are engaged on task or contract basis, purely
commission basis, or those who are paid a fixed amount for performing work
irrespective of the time consumed in the performance thereof. [emphasis ours]

General Rule
Under these provisions, the general rule is that holiday and SIL pay provisions cover all employees. To
be excluded from their coverage, an employee must be one of those that these provisions expressly
exempt, strictly in accordance with the exemption.

Exemptions
Under the IRR, exemption from the coverage of holiday and SIL pay refer to "field personnel and other
employees whose time and performance is unsupervised by the employer including those who are
engaged on task or contract basis[.]" Note that unlike Article 82 of the Labor Code, the IRR on holiday
and SIL pay do not exclude employees "engaged on task basis" as a separate and distinct category from
employees classified as "field personnel." Rather, these employees are altogether merged into one
classification of exempted employees.

Because of this difference, it may be argued that the Labor Code may be interpreted to mean that those
who are engaged on task basis, per se, are excluded from the SIL and holiday payment since this is what
the Labor Code provisions, in contrast with the IRR, strongly suggest. The arguable interpretation of this
rule may be conceded to be within the discretion granted to the LA and NLRC as the quasi-judicial bodies
with expertise on labor matters.

However, the payment of an employee on task or pakyaw basis alone is insufficient to exclude one from
the coverage of SIL and holiday pay. They are exempted from the coverage of Title I (including the
holiday and SIL pay) only if they qualify as "field personnel." The IRR therefore validly qualifies and limits
the general exclusion of "workers paid by results" found in Article 82 from the coverage of holiday and SIL
pay. This is the only reasonable interpretation since the determination of excluded workers who are paid
by results from the coverage of Title I is "determined by the Secretary of Labor in appropriate regulations."
The phrase "including those who are engaged on task or contract basis" serves to amplify the
interpretation of the Labor Code definition of "field personnel" as those "whose actual hours of work in the
field cannot be determined with reasonable certainty."

Entitlement to holiday pay

In determining whether workers engaged on "pakyaw" or task basis" is entitled to holiday and SIL pay, the
presence (or absence) of employer supervision as regards the worker's time and performance is the key:
if the worker is simply engaged on pakyaw or task basis, then the general rule is that he is entitled to a
holiday pay and SIL pay unless exempted from the exceptions specifically provided under Article 94
(holiday pay) and Article 95 (SIL pay) of the Labor Code. However, if the worker engaged on pakyaw or
task basis also falls within the meaning of "field personnel" under the law, then he is not entitled to these
monetary benefits.
Macasio does not fall under the classification of "field personnel"
Based on the definition of field personnel under Article 82, we agree with the CA that Macasio does not
fall under the definition of "field personnel." The CA's finding in this regard is supported by the established
facts of this case: first, Macasio regularly performed his duties at David's principal place of business;
second, his actual hours of work could be determined with reasonable certainty; and, third, David
supervised his time and performance of duties. Since Macasio cannot be considered a "field personnel,"
then he is not exempted from the grant of holiday, SIL pay even as he was engaged on "pakyaw" or task
basis.

Not being a "field personnel," we find the CA to be legally correct when it reversed the NLRC's ruling
dismissing Macasio's complaint for holiday and SIL pay for having been rendered with grave abuse of
discretion.

Non-Entitlement to 13th month pay

The governing law on 13th month pay is PD No. 851. 53 As with holiday and SIL pay, 13th month pay
benefits generally cover all employees; an employee must be one of those expressly enumerated to be
exempted. Section 3 of the Rules and Regulations Implementing P.D. No. 851 54 enumerates the
exemptions from the coverage of 13th month pay benefits. Under Section 3 (e), "employers of those who
are paid on . . . task basis, and those who are paid a fixed amount for performing a specific work,
irrespective of the time consumed in the performance thereof" 55 are exempted.

Note that unlike the IRR of the Labor Code on holiday and SIL pay, Section 3 (e) of the Rules and
Regulations Implementing PD No. 851 exempts employees "paid on task basis" without any reference to
"field personnel." This could only mean that insofar as payment of the 13th month pay is concerned, the
law did not intend to qualify the exemption from its coverage with the requirement that the task worker be
a "field personnel" at the same time.

WHEREFORE, the petition was PARTIALLY GRANTED insofar as the payment of 13th month pay to
respondent is concerned. In all other aspects, we AFFIRM the decision dated November 22, 2010 and
the resolution dated January 31, 2011 of the Court of Appeals in CA-G.R. SP No. 116003.

11. OTHER SPECIAL BENEFITS

1. Radio Mindanao Network, Inc. And Eric S. Canoy, Petitioners, Vs. Domingo Z.
Ybarola, Jr. And Alfonso E. Rivera, Jr., Respondents. G.R. No. 198662, September 12,
2012
FACTS:

Respondents Domingo Z. Ybarola, Jr. and Alfonso E. Rivera, Jr. were hired on June 15, 1977 and June 1,
1983, respectively, by RMN. They eventually became account managers, soliciting advertisements and
servicing various clients of RMN.

On September 15, 2002, the respondents' services were terminated as a result of RMN's
reorganization/restructuring; they were given their separation pay P631,250.00 for Ybarola, and
P481,250.00 for Rivera. Sometime in December 2002, they executed release/quitclaim affidavits.

Dissatisfied with their separation pay, the respondents filed separate complaints (which were later
consolidated) against RMN and its President, Eric S. Canoy, for illegal dismissal with several money
claims, including attorney's fees. They indicated that their monthly salary rates were P60,000.00 for
Ybarola and P40,000.00 for Rivera.

The Compulsory Arbitration Proceedings

The respondents argued that the release/quitclaim they executed should not be a bar to the recovery of
the full benefits due them; while they admitted that they signed release documents, they did so due to dire
necessity.

The petitioners denied liability, contending that the amounts the respondents received represented a fair
and reasonable settlement of their claims, as attested to by the release/quitclaim affidavits which they
executed freely and voluntarily. They belied the respondents' claimed salary rates, alleging that they each
received a monthly salary of P9,177.00, as shown by the payrolls.

Labor Arbiter
On July 18, 2007, Labor Arbiter Patricio Libo-on dismissed the illegal dismissal complaint, but ordered the
payment of additional separation pay to the respondents P490,066.00 for Ybarola and P429,517.55 for
Rivera.[5] The labor arbiter adjusted the separation pay award based on the respondents' Certificates of
Compensation Payment/Tax Withheld showing that Ybarola and Rivera were receiving an annual salary
of P482,477.61 and P697,303.00, respectively.

National Labor Relations Commission (NLRC)

On appeal by the petitioners to the National Labor Relations Commission (NLRC), the NLRC set aside
the labor arbiter's decision and dismissed the complaint for lack of merit. It ruled that the withholding tax
certificate cannot be the basis of the computation of the respondents' separation pay as the tax document
included the respondents' cost-of-living allowance and commissions; as a general rule, commissions
cannot be included in the base figure for the computation of the separation pay because they
have to be earned by actual market transactions attributable to the respondents, as held by the
Court in Soriano v. NLRC[7] and San Miguel Jeepney Service v. NLRC.[8] The NLRC upheld the validity of
the respondents' quitclaim affidavits as they failed to show that they were forced to execute the
documents.

From the NLRC, the respondents sought relief from the CA through a petition for certiorari under Rule 65
of the Rules of Court.

The CA Decision and the Court's Ruling

In its decision[9] of February 17, 2011, the CA granted the petition and set aside the assailed NLRC
dispositions. It reinstated the labor arbiter's separation pay award, rejecting the NLRC's ruling that
the respondents' commissions are not included in the computation of their separation pay. It
pointed out that in the present case, the respondents earned their commissions through actual market
transactions attributable to them; these commissions, therefore, were part of their salary.

The appellate court declared the release/quitclaim affidavits executed by the respondents invalid
for being against public policy, citing two reasons: (1) the terms of the settlement are
unconscionable; the separation pay the respondents received was deficient by at least
P400,000.00 for each of them; and (2) the absence of voluntariness when the respondents signed
the document, it was their dire circumstances and inability to support their families that finally
drove them to accept the amount the petitioners offered. Significantly, they dallied and it took them
three months to sign the release/quitclaim affidavits.

The petitioners moved for reconsideration, but the CA denied the motion in a resolution [10] dated
September 23, 2011. Thus, the petitioners appealed to this Court through a petition for review on
certiorari under Rule 45 of the Rules of Court.

ISSUE:

1. On the release/quitclaim issue, the petitioners bewail the CA's disregard of the Court's ruling
in Talam that the quitclaim that Francis Ray Talam, who was not an unlettered employee, executed
was a voluntary act as there was no showing that he was coerced into signing the instrument, and
that he received a valuable consideration for his less than two years of service with the company
2. With regard to the controversy on the inclusion of the respondents' commissions in the
computation of their separation pay

RULING:

We find the motion for reconsideration unmeritorious.

The petitioners insist that the respondents' commissions were not part of their salaries, because they
failed to present proof that they earned the commission due to actual market transactions attributable to
them. They submit that the commissions are profit-sharing payments which do not form part of their
salaries.

If these commissions had been really profit-sharing bonuses to the respondents, they should have
received the same amounts, yet, as the NLRC itself noted, Ybarola and Rivera received P372,173.11 and
P586,998.50 commissions, respectively, in 2002.

The variance in amounts the respondents received as commissions supports the CA's finding that the
salary structure of the respondents was such that they only received a minimal amount as guaranteed
wage; a greater part of their income was derived from the commissions they get from soliciting
advertisements; these advertisements are the "products" they sell. As the CA aptly noted, this kind of
salary structure does not detract from the character of the commissions being part of the salary or wage
paid to the employees for services rendered to the company.

The petitioners' reliance on our ruling in Talam v. National Labor Relations Commission,[17] regarding the
"proper appreciation of quitclaims," as they put it, is misplaced. While Talam, in the cited case, and
Ybarola and Rivera, in this case, are not unlettered employees, their situations differ in all other respects.
In Talam, the employee received a valuable consideration for his less than two years of service with the
company;[18] he was not shortchanged and no essential unfairness took place. In this case, as the CA
noted, the separation pay the respondents each received was deficient by at least P400,000.00; thus,
they were given only half of the amount they were legally entitled to. To be sure, a settlement under these
terms is not and cannot be a reasonable one, given especially the respondents' length of service 25 years
for Ybarola and 19 years for Rivera. The CA was correct when it opined that the respondents were in dire
straits when they executed the release/quitclaim affidavits. Without jobs and with families to support, they
dallied in executing the quitclaim instrument, but were eventually forced to sign given their circumstances.

2. Eleazar S. Padillo,+ Petitioner, Vs. Rural Bank Of Nabunturan, Inc. And Mark S.
Oropeza, Respondents. G.R. No. 199338, January 21, 2013

FACTS:

On October 1, 1977, petitioner, the late Eleazar Padillo (Padillo), was employed by respondent Rural
Bank of Nabunturan, Inc. (Bank) as its SA Bookkeeper. Due to liquidity problems which arose sometime
in 2003, the Bank took out retirement/insurance plans with Philippine American Life and General
Insurance Company (Philam Life) for all its employees in anticipation of its possible closure and the
concomitant severance of its personnel. In this regard, the Bank procured Philam Plan Certificate of Full
Payment No. 88204, Plan Type 02FP10SC, Agreement No. PP98013771 (Philam Life Plan) in favor of
Padillo for a benefit amount of P100,000.00 and which was set to mature on July 11, 2009.

During the latter part of 2007, Padillo suffered a mild stroke due to hypertension which consequently
impaired his ability to effectively pursue his work. In particular, he was diagnosed with Hypertension S/P
CVA (Cerebrovascular Accident) with short term memory loss, the nature of which had been classified as
a total disability. On September 10, 2007, he wrote a letter addressed to respondent Oropeza expressing
his intention to avail of an early retirement package. Despite several follow-ups, his request remained
unheeded.

On October 3, 2007, Padillo was separated from employment due to his poor and failing health as
reflected in a Certification dated December 4, 2007 issued by the Bank. Not having received his claimed
retirement benefits, Padillo filed on September 23, 2008 with the NLRC Regional Arbitration Branch No.
XI of Davao City a complaint for the recovery of unpaid retirement benefits.

The LA Ruling
On March 13, 2009, the LA issued a Decision dismissing Padillo's complaint but directed the Bank to pay
him the amount of P100,000.00 as financial assistance, treated as an advance from the amounts
receivable under the Philam Life Plan. It found Padillo disqualified to receive any benefits under Article
300 (formerly, Article 287) of the Labor Code of the Philippines (Labor Code) [14] as he was only fifty-five
(55) years old when he resigned, while the law specifically provides for an optional retirement age of sixty
(60) and compulsory retirement age of sixty-five (65). Dissatisfied with the LA's ruling, Padillo elevated the
matter to the NLRC.

The NLRC Ruling

On December 29, 2009, the NLRC's Fifth Division reversed and set aside the LA's ruling and ordered
respondents to pay Padillo the amount of P164,903.70 as separation pay, on top of the P100,000.00
Philam Life Plan benefit.Relying on the case of Abaquin Security and Detective Agency, Inc. v. Atienza
(Abaquin), the NLRC applied the Labor Code provision on termination on the ground of disease
particularly, Article 297 thereof (formerly, Article 323) holding that while Padillo did resign, he did
so only because of his poor health condition. Respondents moved for reconsideration but the same
was denied by the NLRC in its Resolution dated March 31, 2010. Aggrieved, respondents filed a petition
for certiorariwith the CA.

The CA Ruling
The CA held that Padillo could not, absent any agreement with the Bank, receive any retirement benefits
pursuant to Article 300 of the Labor Code considering that he was only fifty-five (55) years old when he
retired.[19] It likewise found the evidence insufficient to prove that the Bank has an existing company policy
of granting retirement benefits to its aging employees. Finally, citing the case of Villaruel v. Yeo Han
Guan (Villaruel),[20] it pronounced that separation pay on the ground of disease under Article 297 of the
Labor Code should not be given to Padillo because he was the one who initiated the severance of his
employment and that even before September 10, 2007, he already stopped working due to his poor and
failing health. [21]

Nonetheless, Padillo was still awarded the amount of P50,000.00 as financial assistance, in addition to
the benefits accruing under the Philam Life Plan, considering his twenty-nine (29) years of service with no
derogatory record and that he was severed not by reason of any infraction on his part but because of his
failing physical condition.[22]

ISSUE:

1. Whether Padillo is entitled to a separation pay under art 297?

2. Whether Padillo is entitled to a retirement pay?

RULING:

The petition is partly meritorious.

ART 297:
At the outset, it must be maintained that the Labor Code provision on termination on the ground of
disease under Article 297[24] does not apply in this case, considering that it was the petitioner and not the
Bank who severed the employment relations. As borne from the records, the clear import of Padillo's
September 10, 2007 letter[25] and the fact that he stopped working before the foregoing date and never
reported for work even thereafter show that it was Padillo who voluntarily retired and that he was not
terminated by the Bank.

A plain reading of the [Article 297 of the Labor Code] clearly presupposes that it is the employer who
terminates the services of the employee found to be suffering from any disease and whose
continued employment is prohibited by law or is prejudicial to his health as well as to the health of
his co-employees. It does not contemplate a situation where it is the employee who severs his or
her employment ties. This is precisely the reason why Section 8, Rule 1, Book VI of the Omnibus Rules
Implementing the Labor Code, directs that an employer shall not terminate the services of the employee
unless there is a certification by a competent public health authority that the disease is of such nature or
at such a stage that it cannot be cured within a period of six (6) months even with proper medical
treatment. (Emphasis, underscoring and words in brackets supplied)

Thus, given the inapplicability of Article 297 of the Labor Code to the case at bar, it necessarily follows
that petitioners' claim for separation pay anchored on such provision must be denied.

RETIREMENT PAY:
What remains applicable, however, is the Labor Code provision on retirement. In particular, Article 300 of
the Labor Code as amended by Republic Act Nos. 7641[32] and 8558[33] partly provides:
Art. 300. 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 employee's retirement benefits under any collective bargaining and other agreements
shall not be less than those provided herein.

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

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. (Emphasis and underscoring supplied)

Simply stated, in the absence of any applicable agreement, an employee must (1) retire when he is at
least sixty (60) years of age and (2) serve at least (5) years in the company to entitle him/her to a
retirement benefit of at least one-half (1/2) month salary for every year of service, with a fraction of at
least six (6) months being considered as one whole year. Notably, these age and tenure requirements are
cumulative and non-compliance with one negates the employee's entitlement to the retirement benefits
under Article 300 of the Labor Code altogether.

In this case, it is undisputed that there exists no retirement plan, collective bargaining agreement or any
other equivalent contract between the parties which set out the terms and condition for the retirement of
employees, with the sole exception of the Philam Life Plan which premiums had already been paid by the
Bank.
Neither was it proven that there exists an established company policy of giving early retirement packages
to the Bank's aging employees.

All told, in the absence of any applicable contract or any evolved company policy, Padillo should have met
the age and tenure requirements set forth under Article 300 of the Labor Code to be entitled to the
retirement benefits provided therein.

Unfortunately, while Padillo was able to comply with the five (5) year tenure requirement as he served for
twenty-nine (29) years he, however, fell short with respect to the sixty (60) year age requirement given
that he was only fifty-five (55) years old when he retired. Therefore, without prejudice to the proceeds due
under the Philam Life Plan, petitioners' claim for retirement benefits must be denied.

Nevertheless, the Court concurs with the CA that financial assistance should be awarded but at an
increased amount. With a veritable understanding that the award of financial assistance is usually the
final refuge of the laborer, considering as well the supervening length of time which had sadly
overtaken the point of Padillo's death an employee who had devoted twenty-nine (29) years of
dedicated service to the Bank the Court, in light of the dictates of social justice, holds that the
CA's financial assistance award should be increased from P50,000.00 to P75,000.00, still exclusive
of the P100,000.00 benefit receivable by the petitioners under the Philam Life Plan which remains
undisputed.

Finally, the Court finds no bad faith in any of respondents' actuations as they were within their right,
absent any proof of its abuse, to ignore Padillo's misplaced claim for retirement benefits. Respondents'
obstinate refusal to accede to Padillo's request is precisely justified by the fact that there lies no basis
under any applicable agreement or law which accords the latter the right to demand any retirement
benefits from the Bank. While the Court mindfully notes that damages may be recoverable due to an
abuse of right under Article 21[35] in conjunction with Article 19 of the Civil Code of the Philippines,[36] the
following elements must, however, obtain: (1) there is a legal right or duty; (2) exercised in bad faith; and
(3) for the sole intent of prejudicing or injuring another.[37] Records reveal that none of these elements
exists in the case at bar and thus, no damages on account of abuse of right may be recovered.

3. Philippine Spring Water Resources Inc. /Danilo Y. Lua vs Court Of Appeals And
Juvenstein B. Mahilum, G.R. No. 205278, June 11, 2014

FACTS:

Juvenstein Mahilum was hired by Phillippine Spring Water Resources Inc. as the Vice-President for Sales
and Marketing in the Bulacan-South Luzon area. He had a monthly salary of P15,000 plus 0.25%
commission on every cash on delivery and another 0.25% on new accounts.

Sometime in 2004, the company tasked him to manage the inauguration of the Bulacan Plant and the
Christmas Party. These events were to be held at the same time. However, because of his hectic and
conflicting schedules relative to meetings with clients in Makati, he delegated the task to Vicky
Evangelista who was then the Vice- President for Administration and Finance.

When the day of the above-mentioned events came, Danilo Lua, the Petitioner and the President of the
PSWRI was furious because he was not able to deliver his inaugural speech because he was not
included in the programme of the event.

Because of the fiasco, he was preventively suspended for 30 days and made to explain why Lua was not
given a moment to deliver his inaugural speech. An investigation was subsequently conducted. On March
2005, he received a letter dated January 1, 2005 and effective February 1, 2005 terminating his
appointment as VP.

One important fact to be noted is that, he signed a quitclaim in favor of PSWRI and allegedly
received P43,000 as a consideration of the Quitclaim.

He filed a complaint for illegal dismissal before the Labor Arbiter. LA dismissed the complaint ruling that
the execution of the quitclaim barred him from filing the complaint. NLRC reversed LA’s decision because
it upheld Mahilum’s contention that the quitclaim was executed without a consideration because the
amount of P43,000 was only an aggregate of the benefits which owed to him as a regular employee of
the company. The benefits namely: salaries for the period after preventive suspension, 13th month pay,
and earned commissions.
(Note that a quitclaim is a form of a compromise agreement. A Compromise Agreement is a contract, and
as such, it must have a separate and distinct consideration like any other contract for its validity.)
CA affirmed the NLRC’s decision and ordered the payment of a separation pay on top of the benefits
owing to him. CA further nullified the quitclaim for it was executed without consideration. Hence, PSWRI
went up to the Supreme Court to question the CA’s Decision.

ISSUE:

WON there was a grave abuse of discretion on the part of the CA when it ruled that:
1. Mahilum was illegally dismissed
2. Mahilum was entitled to a separation pay
3. Mahilum’s commissions were part and parcel of his basic salary, so that if they were not
integrated in the basic salary, they would be excluded in the computation of his full backwages.

RULING:

1. Mahilum Was Illegally Dismissed

As previously explained, Mahilum was a regular employee who was entitled to security of tenure. Thus,
he could only be dismissed from service for causes provided in Article 282 of the Labor Code.

The well-entrenched rule, especially in labor cases, is that findings of fact of quasi-judicial bodies,
like the NLRC, are accorded with respect, even finality, if supported by substantial evidence.
Particularly when passed upon and upheld by the CA, they are binding and conclusive upon the Court
and will not normally be disturbed. Although this doctrine is not without exceptions, the Court finds that
none is applicable to the present case. Here, the CA affirmed the ruling of the NLRC and adopted as its
own the latter's factual findings as to Mahilum’s illegal dismissal.

Consequently, the Court finds no reason to depart from the finding that Mahilum’s failure to
effectively discharge his assignment as the over-all chairman of the festivities was due to mere
inadvertence and the mistaken belief that he had properly delegated the details of the program to
another officer.

Further, his designation as the chairman of the whole affair did not form part of his duty as a supervisor.
Mahilum was engaged to supervise the sales and marketing aspects of PSWRI’s Bulacan Plant. Verily,
the charge of loss of trust and confidence had no leg tostand on, as the act complained of was not
work-related.

2. Mahilum Was Entitled To A Separation Pay

Due to the strained relations of the parties, however, the payment of separation pay has been considered
an acceptable alternative, when reinstatement is no longer desirable or viable. On the one hand, such
payment liberates the employee from what could be a highly oppressive work environment. On the other,
the payment releases the employer from the grossly unpalatable obligation of maintaining in its employ a
worker it could no longer trust. Thus, as an illegally or constructively dismissed employee, the respondent
is entitled to:
(1) either reinstatement, if viable, or separation pay, if reinstatement is no longer viable; and
(2) backwages.
These two reliefs are separate and distinct from each other and are awarded conjunctively.

3. Mahilum’s Commissions Are Not Part Of His Basic Salary

Backwages are granted on grounds of equity to workers for earnings lost due to their illegal dismissal
from work.

They represent reparation for the illegal dismissal of an employee based on earnings which the employee
would have obtained, either by virtue of a lawful decree or order, as in the case of a wage increase under
a wage order, or by rightful expectation, as in the case of one’s salary or wage. The outstanding feature of
backwages is the degree of assuredness to an employee that he would have had them as earnings had
he not been illegally terminated from his employment.

It is well-established in jurisprudence that the determination of whether or not a commission forms part of
the basic salary depends upon the circumstances or conditions for its payment. In Phil Duplicators, Inc. v.
NLRC, the Court held that commissions earned by salesmen form part of their basic salary. The
salesmen’s commissions, comprising a predetermined percentage of the selling price of the goods sold
by each salesman, were properly included in the term basic salary for purposes of computing the 13th
month pay.
The salesmen’s commissions are not overtime payments, nor profit-sharing payments nor any other
fringe benefit, but a portion of the salary structure which represents an automatic increment to the
monetary value initially assigned to each unit of work rendered by a salesman.

On the other hand, in Boie-Takeda Chemicals, Inc. v. De la Serna,22 the so-called commissions paid to or
received by medical representatives were excluded from the term basic salary because these were paid
to the medical representatives and rank-and-file employees as productivity bonuses, which were
generally tied to the productivity, or capacity for revenue production, of a corporation and such bonuses
closely resemble profit-sharing payments and had no clear direct or necessary relation to the amount of
work actually done by each individual employee.

In Mahilum’s case, Phil. Duplicator cannot be automatically applied without considering his position as
Vice-President for sales and marketing of the PSWRI’s Bulacan-South Luzon Area.
This factor constrains the Court to hold that Mahilum’s 0.25% commission based on the monthly
sales and 0.25% commission for cash payments must be taken to come in the nature of overriding
commission, not sales commission.

The latter is not properly includable in the basic salary as it must be earned by actual market transactions
attributable to the claimant. Curiously, Mahilum did not comment on the petitioners’ objection to the
award. Not being a salesman who directly effected any sale of a product, the commission embodied in the
agreement partook of the nature of profit-sharing business based on quota. In fine, the alleged
commissions were profit-sharing payments and had no clear, direct or necessary relation to the amount of
work he actually performed.

For said reason, Mahilum’s backwages must be pegged at his basic salary, excluding the
commissions mentioned by the NLRC, to be computed from the time of his dismissal up to the
finality of this decision.

WHEREFORE, the petition is PARTIALLY GRANTED. The July 23, 2010 Amended Decision and the
October 31, 2012 Resolution of the Twentieth Division of the Court of Appeals in CA G.R. SP No. 02636
are AFFIRMED with MODIFICATION.

Accordingly, Philippine Spring Water Resources Inc. is hereby ordered to pay Juvenstein B. Mahilum, his
separation pay, full backwages inclusive of his basic salary, proportionate 13th month pay, and
unused leave credits, to be computed based on his salary at the time of his illegal termination and
attorney's fees.

These payments shall earn legal interest at the rate of six (6%) percent per annum reckoned from their
due date.

4. Goodyear Philippines, Inc. And Remegio M. Ramos vs Marina L. Angus, G.R. No.
185449, November 12, 2014

FACTS:

Angus was employed by Goodyear on November 16, 1966 and occupied the position of Secretary to the
Manager of Quality and Technology.

In order to maintain the viability of its operations in the midst of economic reversals, Goodyear
implemented cost-saving measures which included the streamlining of its workforce.

Angus’ position was one of the positions abrogated by reason of redundancy.

The company offered to her to avail of the early retirement plan under the CBA. The retirement benefit
which she was entitled according to Ramos, who was the HR of Goodyear, was 47 day’s pay for every
year of service. This rate was arrived at after considering the number of years she worked for Goodyear
(a total of 32 years of service). She did not agree to this rate.

In other words, Angus accepted the retirement benefit under protest.

She filed an illegal dismissal case against Goodyear. She argued that she was not paid a separation pay
required to be given by the employer by reason of an employee’s severance from an employment due the
authorized cause of Redundancy. This claim is in addition to the retirement benefit she received from the
company. She claimed that that nothing in the company's Retirement Plan under the CBA, the CBA itself
or the Employment Contract prohibits the grant of more than one kind of separation pay; and, that
she was only forced to sign a quitclaim after accepting her retirement benefits.
ISSUE:

1. WON the availment by the employee of the retirement benefit plan precludes the payment by the
employer of the separation pay due the employee in case of termination of employment by
reason of Redundancy?

2. WON the Award of Moral Damages and Attorney’s Fees was proper?

RULING:

1. It is worthy to mention at this point that retirement benefits and separation pay are not mutually
exclusive.
Retirement benefits are a form of reward for an employee's loyalty and service to an employer and are
earned under existing laws, CBAs, employment contracts and company policies.

On the other hand, separation pay is that amount which an employee receives at the time of his
severance from employment, designed to provide the employee with the wherewithal during the period
that he is looking for another employment and is recoverable only in instances enumerated under Articles
283 and 284 of the Labor Code or in illegal dismissal cases when reinstatement is not feasible. In the
case at bar, Article 28342 clearly entitles Angus to separation pay apart from the retirement benefits she
received from petitioners.

Angus is entitled to both separation pay and early retirement benefit due to the absence of a specific
provision in the CEA prohibiting recovery of both.

In Aquino v. National Labor Relations Commission, citing Batangas Laguna Tayabas Bus Company v.
Court of Appeals and University of the East v. Hon. Minister of Labor, the Court held that an employee
is entitled to recover both separation pay and retirement benefits in the absence of a specific
prohibition in the Retirement Plan or CBA. Concomitantly, the Court ruled that an employee's right to
receive separation pay in addition to retirement benefits depends upon the provisions of the company's
Retirement Plan and/or CBA.

Angus presented the parties' 2001-2004 CBA and upon examination of the same, the Court agrees with
her that it does not contain any restriction on the availment of benefits under the company's
Retirement Plan and of separation pay. Indeed, the Labor Arbiter and the NLRC erred in ignoring this
material piece of evidence which is decisive of the issue presented before them. The CA, thus,
committed no error in reversing the Decisions of the labor tribunals when it ruled in favor of Angus'
entitlement to both retirement benefits and separation pay.
Moreover, the Court agrees with the CA that the amount Angus received from petitioners represented
only her retirement pay and not separation pay.

2. The award of Moral Damages and Attorney’s Fees was proper.

The Court likewise finds no cogent reason to overturn the CA's award of moral damages in the amount
ofP5,000.00 and attorney's fees. Moral damaiiges are awarded when fraud and bad faith have been
established, as in this case. Petitioners' false contention over what has been paid to Angus suggests an
attempt to feign compliance with their legal obligation to grant their employee all the benefits provided for
by agreement and law. Their bad faith is evident in the intent to circumvent this legal mandate. And as
Angus was then forced to litigate her just claims when petitioners refused to heed her demands for the
payment of separation pay, the award of attorney’s fees equivalent to 10% of the amount of separation
pay is also in order.

WHEREFORE, the Petition is DENIED. The May 13, 2008 Decision and November 17, 2008 Resolution
of the Court of Appeals in CA-G.R. SP No. 98418, are AFFIRMED.

12. RIGHT TO SECURITY OF TENURE

1. Herrera Manois vs. St. Scholasticas College GR No. 188914, Dec. 11, 2013

FACTS:

SSC, situated in the City of Manila, is a private educational institution offering elementary, secondary, and
tertiary education. Manaois graduated from SSC in October 1992 with a degree in Bachelor of Arts in
English. In 1994, she returned to her alma mater as a part-time English teacher. After taking a leave of
absence for one year, she was again rehired by SSC for the same position. Four years into the service,
she was later on recommended by her Department Chairperson to become a full-time faculty member of
the English Department.
Manaois thus applied for a position as full-time instructor for school year 2000-2001. She mentioned in
her application letter that she had been taking the course Master of Arts in English Studies, Major in
Creative Writing, at the University of the Philippines, Diliman (UP); that she was completing her master's
thesis; and that her oral defense was scheduled for June 2000. In a reply letter 4 dated 17 April 2000, the
Dean of Arts and Sciences informed her of the SSC Administrative Council's approval of her application.
SSC hired her as a probationary full-time faculty member with the assigned task of instructor for the
school year 2000-2001. Her probationary employment continued for a total of three consecutive years.

Because of the forthcoming completion of her third year of probationary employment, Manaois wrote the
Dean of Arts and Sciences requesting an extension of her teaching load for the school year 2003-2004.
Manaois eventually received a letter from the Dean of College and Chairperson of the Promotions and
Permanency Board officially informing her of the board's decision not to renew her contract.

ISSUE:

WON the completion of a master's degree is required in order for a tertiary level educator to earn the
status of permanency in a private educational institution.

RULING:

Probationary employment refers to the trial stage or period during which the employer examines the
competency and qualifications of job applicants, and determines whether they are qualified to be
extended permanent employment status. Such an arrangement affords an employer the opportunity —
before the full force of the guarantee of security of tenure comes into play — to fully scrutinize and
observe the fitness and worth of probationers while on the job and to determine whether they would
become proper and efficient employees. It also gives the probationers the chance to prove to the
employer that they possess the necessary qualities and qualifications to meet reasonable standards for
permanent employment.

Viewed next to the statements and actions of Manaois — i.e., the references to obtaining a master's
degree in her application letter, in the subsequent correspondences between her and SSC, and in the
letter seeking the extension of a teaching load for the school year 2003-2004; and her submission of
certifications from UP and from her thesis adviser — we find that there is indeed substantial evidence
proving that she knew about the necessary academic qualifications to obtain the status of permanency.

At this juncture, we reiterate the rule that mere completion of the three-year probation, even with an
above-average performance, does not guarantee that the employee will automatically acquire a
permanent employment status. It is settled jurisprudence that the probationer can only qualify upon
fulfillment of the reasonable standards set for permanent employment as a member of the teaching
personnel.

Thus, pursuant to the 1992 Manual, private educational institutions in the tertiary level may extend "full-
time faculty" status only to those who possess, inter alia, a master's degree in the field of study that will
be taught. This minimum requirement is neither subject to the prerogative of the school nor to the
agreement between the parties. For all intents and purposes, this qualification must be deemed impliedly
written in the employment contracts between private educational institutions and prospective faculty
members. The issue of whether probationers were informed of this academic requirement before they
were engaged as probationary employees is thus no longer material, as those who are seeking to be
educators are presumed to know these mandated qualifications. In the light of the failure of Manaois to
satisfy the academic requirements for the position, she may only be considered as a part-time instructor
pursuant to Section 45 of the 1992 Manual.

2. Universal Robina Sugar Milling Corp., vs. Acibo, GR No. 186439, January 15, 2014

FACTS:

URSUMCO is a domestic corporation engaged in the sugar cane milling business; Cabati is URSUMCO's
Business Unit General Manager. The complainants were employees of URSUMCO. They were hired on
various dates (between February 1988 and April 1996) and on different capacities, 8 i.e., drivers, crane
operators, bucket hookers, welders, mechanics, laboratory attendants and aides, steel workers, laborers,
carpenters and masons, among others. At the start of their respective engagements, the complainants
signed contracts of employment for a period of one (1) month or for a given season. URSUMCO
repeatedly hired the complainants to perform the same duties and, for every engagement, required the
latter to sign new employment contracts for the same duration of one month or a given season.
The complainants filed before the LA complaints for regularization, entitlement to the benefits under the
existing Collective Bargaining Agreement (CBA), and attorney's fees.

ISSUE:

WON respondents are regular employees of URSUMCO

HELD:

We find the respondents to be regular seasonal employees of URSUMCO.

Seasonal employment operates much in the same way as project employment, albeit it involves work or
service that is seasonal in nature or lasting for the duration of the season. As with project employment,
although the seasonal employment arrangement involves work that is seasonal or periodic in nature, the
employment itself is not automatically considered seasonal so as to prevent the employee from attaining
regular status. To exclude the asserted "seasonal" employee from those classified as regular employees,
the employer must show that: (1) the employee must be performing work or services that are seasonal in
nature; and (2) he had been employed for the duration of the season. Hence, when the "seasonal"
workers are continuously and repeatedly hired to perform the same tasks or activities for several seasons
or even after the cessation of the season, this length of time may likewise serve as badge of regular
employment. In fact, even though denominated as "seasonal workers," if these workers are called to work
from time to time and are only temporarily laid off during the off-season, the law does not consider them
separated from the service during the off-season period. The law simply considers these seasonal
workers on leave until re-employed.

The nature of the employment depends on the nature of the activities to be performed by the employee,
considering the nature of the employer's business, the duration and scope to be done, and, in some
cases, even the length of time of the performance and its continued existence. In light of the above legal
parameters laid down by the law and applicable jurisprudence, the respondents are neither project,
seasonal nor fixed-term employees, but regular seasonal workers of URSUMCO.

(1) The respondents were made to perform various tasks that did not at all pertain to any specific
phase of URSUMCO's strict milling operations that would ultimately cease upon completion of a
particular phase in the milling of sugar; rather, they were tasked to perform duties regularly and
habitually needed in URSUMCO's operations during the milling season.

(2) The respondents were regularly and repeatedly hired to perform the same tasks year after year.

3. Abbott Laboratories vs. Alcaraz, GR No. 192571, April 22, 2014, En Banc Res; see main
decision of July 23, 2013 (HANDWRITTEN)

4. Noblejas vs. Italian Maritime Academy Phils GR No. 207888, June 9, 2014

FACTS:

Petitioner Dionarto Q. Noblejas filed a complaint for illegal dismissal, tax refund, moral and exemplary
damages, non-payment of 13th month pay, food, gasoline and schooling allowances, health insurance,
monetized leave, and attorney's fees, against Italian Maritime Academy Phils., Inc. (IMAPI) and its
officers. IMAPI was a training center for seamen and an assessment center for determination of the
qualifications and competency of seamen and officers for possible promotion.

Record shows that Procerfina Terrei, IMAPI President, wrote a letter to Noblejas informing him that he
had been appointed as training instructor/assessor of the company on a contractual basis for a period of
three (3) months. After the expiration of the 3-month period, IMAPI hired Noblejas anew as training
instructor/assessor with the same salary rate, but no written contract was drawn for his rehiring.

The absence of a written contract to cover the renewal of his employment became Noblejas’ major
concern. To address all his apprehensions, he wrote Capt. Terrei, the Managing Director of IMAPI, a
letter requesting that a new contract be executed.

Noblejas averred that the company did not act on his letter-request, so he sought an audience with Capt.
Terrei. During the meeting, an altercation between them ensued. He claimed that after that incident, Capt.
Terrei instructed Ferrez, his secretary, to dismiss him from employment. He claimed that when he asked
from Ferrez for a copy of his old contract, she allegedly replied, “No, you better pack up all your things
now and go, you are now dismissed and you are no longer part in this office – clearly, you are terminated
from this day on.”
Respondents submitted that they could not be adjudged guilty of illegal dismissal because there was no
positive and overt act of dismissing Noblejas from employment.

Respondents presented a different version of what took place. According to respondents, Noblejas got
angry, hurled invectives against Ferrez and even threatened to file a case against them after she had
relayed to him the response of Capt. Terrei to his letter to the effect that there was no previous agreement
to grant him tax refund, health insurance and food, schooling and gasoline allowances and that he had to
render at least one year of service before the company could decide whether to accord him the status of a
regular employee. The following day, he did not report for work anymore and filed the complaint against
them.

The LA found that Noblejas was illegally dismissed from his employment, and awarded him limited
backwages. NLRC reversed the LA decision. NLRC ruled that he is a contractual employee and that he
was not illegally dismissed. Noblejas filed a petition for certiorari before the CA. CA upheld the findings of
the NLRC that Noblejas was a contractual employee of IMAPI and that there was no evidence to prove
that he was dismissed from employment.

ISSUES:

1. WON petitioner is a contractual employee.

2. WON petitioner was illegally dismissed.
3. WON petitioner is entitled to his money claims.

RULING:

1. Court finds Noblejas to be a regular employee of IMAPI.

Pursuant to Article 280 of the Labor Code, there are two kinds of regular employees, namely: (1) those
who are engaged to perform activities which are usually necessary or desirable in the usual business or
trade of the employer; and (2) those who have rendered at least one year of service, whether continuous
or broken, with respect to the activities in which they are employed. Regular employees are further
classified into (1) regular employees - by nature of work and (2) regular employees - by years of service.
The former refers to those employees who perform a particular function which is necessary or desirable in
the usual business or trade of the employer, regardless of their length of service; while the latter refers to
those employees who have been performing the job, regardless of its nature thereof, for at least a year.

In the case at bench, Noblejas was employed by IMAPI as a training instructor/assessor for a period of
three (3) months effective May 20, 2009. After the end of the 3-month period, he was rehired by IMAPI for
the same position and continued to work as such until March 16, 2010. There is no dispute that the work
of Noblejas was necessary or desirable in the business or trade of IMAPI, a training and assessment
center for seamen and officers of vessels. Moreover, such continuing need for his services is sufficient
evidence of the necessity and indispensability of his services to IMAPI’s business. Taken in this light,
Noblejas had indeed attained the status of a regular employee at the time he ceased to report for work on
March 17, 2010.

2. No illegal dismissal.

The Court is not unmindful of the rule in labor cases that the employer has the burden of proving that the
termination was for a valid or authorized cause. It is likewise incumbent upon the employees, however,
that they should first establish by competent evidence the fact of their dismissal from employment. It is an
age-old rule that the one who alleges a fact has the burden of proving it and the proof should be clear,
positive and convincing. Mere allegation is not evidence.

Aside from his mere assertion, no corroborative and competent evidence was adduced by Noblejas to
substantiate his claim that he was dismissed from employment. The record is bereft of any indication that
he was prevented from returning to work or otherwise deprived of any work assignment. It is also noted
that no evidence was submitted to show that respondent Ferrez, the secretary of Capt. Terrei, was
actually authorized by IMAPI to terminate the employment of the company’s employees or that Ferrez
was indeed instructed by Capt. Terrei to dismiss him from employment.

Respondents’ refusal to grant complainant’s demands does not constitute an overt act of dismissal. On
the contrary, it is rather the apparent disinterest of complainant to continue his employment with
respondent company that may be considered a covert act that severed his employment when the latter
did not grant the litany of his demands.

3. the Court sustains the LA in granting Noblejas proportionate 13th month pay covering the period of
January 1, 2010 to March 15, 2010 in the aggregate amount of P15,625.00. Furthermore, the
respondents should accept him back and reinstate him to his former position. There should, however, be
no payment of backwages under the principle of "no work, no pay."

5. Phil Spring Water Resources Inc. vs. Court of Appeals, GR No. 205278, June 11, 2014

FACTS:

Juvenstein Mahilum as VP for Sales and Marketing for the Bulacan-South Luzon Area. Sometime in
November 2004, the inauguration of PSWRI’s Bulacan plant would be celebrated at the same time with
the company’s Christmas party. Mahilum was designated as over-all chairman of the affair. Initial meeting
was reset because of some unexpected visitors who arrived without prior appointment. The next day,
Mahilum requested Evangelista, VP for Administration and Finance, to take charge of the meeting for the
inauguration. Thereafter, meetings on the program of activities for the inauguration and Christmas party
were conducted without Mahilum’s presence. Evangelista took charge and assumed the lead role until the
day of the affair.

On the inaugural day, Mahilum was not seen around to supervise the program proper as he entertained
some visitors of the company. According to him, he delegated the task to Evangelista. Mahilum’s attention
was, however, called when Lua, the CEO, got furious because he was not recognized during the
program. He was not mentioned in the opening remarks or called to deliver his inaugural speech. Upon
inquiry from the emcees of the program, Mahilum learned that they were not apprised of Lua’s decision to
deliver the speech considering that he previously declined to have a part in the program as he would be
very busy during the affair. Thus, Lua’s speech appeared to be "optional" in the printed program during
the affair.

On the following day, Mahilum was required to explain why Lua was not recognized and made to deliver
his speech. At the same time, he was placed under preventive suspension for thirty (30) days. Mahilum
submitted his written explanation. Subsequently, an investigation was conducted. When his 30-day
suspension ended, Mahilum reported for work but was prevented from entering the workplace. He
received a Memorandum terminating his services, and was made to sign a Quitclaim after receiving an
amount. He then filed for illegal dismissal.

LA dismissed Mahilum’s complaint for lack of merit on the ground that the quitclaim he had executed
barred his right to question his dismissal under the principle of estoppel. NLRC ruled in his favor on the
ground that the subject quitclaim did not bar the institution of the case for illegal dismissal. CA reversed
the NLRC decision. It ruled that Mahilum’s conduct during the inauguration did not constitute wilful
disobedience or breach of trust, hence, rendering his termination as illegal and without cause. However, it
upheld the validity of the executed quitclaim.

ISSUES:

1. WON Mahilum is a regular employee.

2. WON Mhilum was illegally dismissed.

RULING:

1. Mahilum was a regular employee.

It is the petitioners’ theory that Mahilum, who was hired in June 2004, was not a regular employee at the
time of his dismissal because his probationary status would end only if he could satisfactorily perform his
duties and functions as defined in the Personnel’s Manual/Company House Rules of Discipline. This
suspensive condition failed to arise.
For his part, Mahilum insists that he was a regular employee entitled to security of tenure. Having been
hired in June 2004, he must be considered to have already served the company for eight (8) months at
the time of his dismissal on February 1, 2005. This fact calls for the application of Article 281 of the Labor
Code:

Probationary employment shall not exceed six (6) months from the date the employee started
working, unless it is covered by an apprenticeship agreement stipulating a longer period. The
services of an employee who has been engaged on a probationary basis may be terminated for a
just cause or when he fails to qualify as a regular employee in accordance with reasonable
standards made known by the employer to the employee at the time of his engagement. An
employee who is allowed to work after a probationary period shall be considered a regular
employee.

The Court, however, cannot subscribe to the premise that Mahilum failed to qualify as a regular employee
when he failed to perform at par with the standards made known by the company to him. In this case, it is
clear that the primary cause of Mahilum’s dismissal from his employment was borne out of his alleged
lapses as chairman for the inauguration of the Bulacan plant company’s Christmas party. In fact, the
termination letter to him cited "loss of trust and confidence" as a ground for his dismissal. Under the
circumstances, the petitioners may not be permitted to belatedly harp on its choice not to extend his
alleged probationary status to regular employment as a ground for his dismissal. Besides, having been
allowed to work after the lapse of the probationary period, Mahilum became a regular employee. He was
hired in June 2004 and was dismissed on February 5,2005. Thus, he served the company for eight (8)
months.

2. Mahilum was illegally dismissed.

As previously explained, Mahilum was a regular employee who was entitled to security of tenure. Thus,
he could only be dismissed from service for causes provided in Article 282 of the Labor Code. At this
point, it bears stressing that the NLRC and the CA, in their decisions, both found Mahilum to have been
illegally dismissed. The well-entrenched rule, especially in labor cases, is that findings of fact of quasi-
judicial bodies, like the NLRC, are accorded with respect, even finality, if supported by substantial
evidence. Particularly when passed upon and upheld by the CA, they are binding and conclusive upon the
Court and will not normally be disturbed.

The charge of loss of trust and confidence had no leg tostand on, as the act complained of was not work-
related. His designation as the chairman of the whole affair did not form part of his duty as a supervisor.
Simply put, the petitioners were not able to prove that Mahilum was unfit to continue working for the
company. Likewise, warranting the agreement of the Court is the finding of the CA in its Amended
Decision that the quitclaim executed by Mahilum did not operate to bar a cause of action for illegal
dismissal.

Mahilum, as a regular employee at the time of his illegal dismissal, is entitled to separation pay and
backwages, computed from the time of his dismissal up to the finality of the decision. As correctly ruled by
the NLRC,reinstatement is no longer viable considering the circumstances of animosity between Mahilum
and Lua.

6. Omni hauling Services Inc. et al., vs. Tortoles, GR No. 199388, Sept. 3, 2014

FACTS:

Omni was awarded a one (1) year service contract by the local government of Quezon City to provide
garbage hauling services for the period July 1, 2002 to June 30, 2003. For this purpose, Omni hired
respondents as garbage truck drivers and paleros who were then paid on a per trip basis.

When the service contract was renewed for another year, or for the period July 1, 2003 to June 30, 2004,
petitioners required each of the respondents to sign employment contracts which provided that they will
be "re-hired" only for the duration of the same period. However, respondents refused to sign the
employment contracts,claiming that they were regular employees since they were engaged to perform
activities which were necessary and desirable to Omni’s usual business or trade. For this reason, Omni
terminated the employment of respondents which, in turn, resulted in the filing of cases for illegal
dismissal, nonpayment of Emergency Cost of Living Allowance (ECOLA) and 13th month pay, and actual,
moral, and exemplary damages.

LA ruled in favor of the petitioners and ruled that at the time of their engagement, they were informed that
their employment was limited for a specific period of one year which was co-terminus with the service
contract. Thus, they were not regular but merely project employees. As a result, their contracts with Omni
expired upon expiration of the service contract on June 30, 2003.

NLRC affirmed. CA reversed and held that NLRC failed to consider the glaring fact that no contract of
employment exists to support petitioners’ allegation that respondents are fixed-term (or properly speaking,
project) employees. Petitioners’ claim that respondents were properly apprised regarding the fixed period
of their employment at the time of their engagement is nothing but a mere allegation which is bereft of
substantiation. No evidence was offered to prove the supposed project employment. CA pointed out that
at the time respondents were asked to sign the employment contracts, they already became regular
employees by operation of law. It added that in order to be deemed as project employees, it is not enough
that an employee is hired for a specific project or phase of work; there must also be a determination of, or
a clear agreement on, the completion or termination of the project at the time the employee was engaged.

ISSUE:

WON respondents are project employees.

RULING:

No. The Court finds that the CA correctly granted respondents’ certiorari petition since the NLRC gravely
abused its discretion when it held that respondents were project employees despite petitioners’ failure to
establish their project employment status through substantial evidence.

Article 280 of the Labor Code distinguishes a "project employee" from a "regular employee" in this wise:

Art. 280. Regular and casual employment. The provisions of written agreement to the contrary
notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to
be regular where the employee has been engaged to perform activities which are usually necessary or
desirable in the usual business or trade of the employer, except where the employment has been fixed for
a specific project or undertaking the completion or termination of which has been determined at the time
of the engagement of the employee or where the work or service to be performed is seasonal in nature
and the employment is for the duration of the season.

According to jurisprudence, the principal test for determining whether particular employees are properly
characterized as "project employees" as distinguished from "regular employees,"is whether or not the
employees were assigned to carry out a "specific project or undertaking," the duration (and scope) of
which were specified at the time they were engaged for that project. The project could either be (1) a
particular job or undertaking that is within the regular or usual business of the employer company, but
which is distinct and separate, and identifiable as such, from the other undertakings of the company; or
(2) a particular job or undertaking that is not within the regular business of the corporation.1âwphi1 In
order to safeguard the rights of workers against the arbitrary use of the word "project" to prevent
employees from attaining a regular status, employers claiming that their workers are project employees
should not only prove that the duration and scope of the employment was specified at the time they were
engaged, but also that there was indeed a project.

Hence, even though the absence of a written contract does not by itself grant regular status to
respondents, such a contract is evidence that respondents were informed of the duration and scope of
their work and their status as project employees. In this case, where no other evidence was offered, the
absence of an employment contract puts into serious question whether the employees were properly
informed at the onset of their employment status as project employees. It is doctrinally entrenched that in
illegal dismissal cases, the employer has the burden of proving with clear, accurate, consistent and
convincing evidence that a dismissal was valid.

There were no evidence to show that respondents were made to sign employment contracts explicitly
stating that they were going to be hired as project employees. Thus, the presumption of regular
employment should be accorded in their favor. The determination that respondents are regular and not
merely project employees resultantly means that their services could not have been validly terminated at
the expiration of the project, or, in this case, the service contract of Omni with the Quezon City
government. As regular employees, it is incumbent upon petitioners to establish that respondents had
been dismissed for a just and/or authorized cause. However, petitioners failed in this respect; hence,
respondents were illegally dismissed.

7. Hacienda Ledd vs. Villegas, GR No. 179654, Sept. 22, 2014

FACTS:

Villegas is an employee at the Hacienda Leddy as early as 1960. During his employment up to the time of
his dismissal, Villegas performed sugar farming job 8 hours a day, 6 days a week work, continuously for
not less than 302 days a year, and for which services he was paidP45.00 per day. He likewise worked in
petitioner's coconut lumber business where he was paid P34.00 a day for 8 hours work.

On June 9, 1993, Gamboa went toVillegas' house and told him that his services were no longer needed
without prior notice or valid reason. Hence, Villegas filed the instant complaint for illegal dismissal.
Gamboa, on the other hand, denied having dismissed Villegas but admitted in his earlier position paper
that Villegas indeed worked with the said farm owned by his father, doing casual and odd jobs until the
latter's death in 1993. He was even given the benefit of occupying a small portion of the land where his
house was erected. He, however, maintained that Villegas ceased working at the farm as early as 1992,
contrary to his allegation that he was dismissed. However, later, Gamboa apparently retracted and
instead insisted that the farm records reveal that the only time Villegas rendered service for the hacienda
was only in the year 1993,specifically February 9, 1993 and February 11, 1993 when he was contracted
by the farm to cut coconut lumber which were given to regular workers for the repairs of their houses.
Gamboa added that they informed Villegas that they need the property, hence, they requested that he
vacate it, but he refused. Thus, Gamboa surmised that Villegas filed the instant complaint to gain
leverage so he would not be evicted from the land he is occupying.

Petitioner disputed that there exists an employer-employee relationship between him and Villegas. He
claimed that respondent was paid on a piece-rate basis without supervision. Petitioner added that since
his job was not necessary or desirable in the usual business or trade of the hacienda, he cannot be
considered as a regular employee. Petitioner insisted that it was Villegas who has stopped working in the
hacienda and that he was not dismissed.

The Labor Arbiter found that there was illegal dismissal. On appeal, NLRC set aside and vacated Labor
Arbiter’s decision. Complainant moved for reconsideration but was denied. Thus, filed for a petition for
certiorari under Rule 65. CA granted and annulled and set aside the NLRC decision and reinstated the
Labor Arbiter’s decision.

ISSUE:

WON respondent was a regular employee.

RULING:

Yes. Article 280 of the Labor Code, describes a regular employee as one who is either (1) engaged to
perform activities which are necessary or desirable in the usual business or trade of the employer; and (2)
those casual employees who have rendered at least one year of service, whether continuous or broken,
with respect to the activity in which he is employed.

In the instant case, if we are to follow the length of time that Villegas had worked with the Gamboas, it
should be more than 20 years of service. Even Gamboa admitted that by act of generosity and
compassion, Villegas was given a privilege of erecting his house inside the hacienda during his
employment.16 While it may indeed be an act of good will on the part of the Gamboas, still, such act is
usually done by the employer either out of gratitude for the employee’s service or for the employer's
convenience as the nature of the work calls for it. Indeed, petitioner's length of service is an indication of
the regularity of his employment. Even assuming that he was doing odd jobs around the farm, such long
period of doing said odd jobs is indicative that the same was either necessary or desirable to petitioner's
trade or business. Owing to the length of service alone, he became a regular employee, by operation of
law, one year after he was employed.

If the employee has been performing the job for at least one year, even if the performance is not
continuous or merely intermittent, the law deems the repeated and continuing need for its performance as
sufficient evidence of the necessity, if not indispensability of that activity to the business. Clearly,with
more than 20 years of service, Villegas, without doubt, passed this test to attain employment regularity.
While length of time may not be the controlling test to determine if Villegas is indeed a regular employee,
it is vital in establishing if he was hired to perform tasks which are necessary and indispensable to the
usual business or trade of the employer.

Gamboa likewise argued that Villegas was paid on a piece-rate basis. However, payment on a piece-rate
basis does not negate regular employment. "The term ‘wage’ is broadly defined in Article 97 of the Labor
Code as remuneration or earnings, capable of being expressed in terms of money whether fixed or
ascertained on a time, task, piece or commission basis. Payment by the piece is just a method of
compensation and does not define the essence of the relations."

Villegas is entitled to security of tenure under Article 279 of the Labor Code and can only be removed for
cause. We found no valid cause attending to his dismissal and found also that his dismissal was without
due process.

8. FVR Skills & Services Exponents Inc., vs. Seva, GR No. 200857, Oct. 22, 2014

FACTS:

The twenty-eight (28) respondents in this case were employees of petitioner FVR Skills and Services
Exponents, Inc. (petitioner), an independent contractor engaged in the business of providing janitorial and
other manpower services to its clients.
FVR was contracted by Robinsons Land Corporation to provide janitorial, manpower, and sanitation
services, for a period of one year - from January 1, 2008 to December 31, 2008.Pursuant to this, the
respondents were deployed to Robinsons.

Halfway through the service contract, the petitioner asked the respondents to execute individual contracts
which stipulated that their respective employments shall end on December 31, 2008, unless earlier
terminated.

Upon the expiration of the contract with Robinsons, respondents were terminated as project employees.
The respondents filed a complaint for illegal dismissal with the NLRC, arguing they were regular
employees who may only be dismissed for just or authorized causes.

ISSUES:

WON the employees are regular or project employees.

RULING:

The respondents are regular employees, not project employees.

Regular employees are either regular (1) those who were engaged to perform activities which are usually
necessary or desirable in the usual business or trade of the employer; and (2) those casual employees
who became regular after one year of service, whether continuous or broken, but only with respect to the
activity for which they have been hired. Respondents work as janitors clearly falls under category (1).

Even before the service contract with Robinsons, the respondents were already under the petitioner's
employ. From the time of their hiring until the time of their dismissal, there was no gap in between the
projects where they were assigned to. The petitioner continuously availed of their services by constantly
deploying them to its clients.

Respondents are not project employees because to qualify, it is necessary that the specific project or
undertaking had been identified and its period and completion date determined and made known to the
employee at the time of his engagement. Here, the employment contracts were executed only halfway
during the year, raising doubt as to the good faith of FVR.

9. Manalo vs.TNS Phils, Inc. GR No. 208567, Nov. 26, 2014

FACTS:

Respondent TNS Philippines Inc. (TNS) is a market research and consultancy firm.

Petitioners were hired by TNS as field personnel on various dates starting 1996 for several projects. They
were made to sign a project-to-project employment contract. Thereafter, TNS would file the corresponding
termination report with the Department of Labor and Employment Regional Office (DOLE-RO).

Petitioners were likewise assigned office-based tasks for which they were required to be in the office from
9:00 o’clock in the morning to 6:00 o’clock in the evening. These office based tasks were not on a per
project basis and petitioners did not sign any contract for these jobs. These assignments were not
reported to the DOLE either.

Petitioners were later dismissed because they were being replaced by new FIs contracted from an
agency. Old FIs would be assigned only to "ad hoc" projects which were seasonal. This prompted
petitioners to file a consolidated complaint for regularization before the LA.

ISSUES:

WON petitioners are regular or project employees

RULING:

Petitioners are regular employees.

Firstly, TNS failed to present petitioners latest employment contracts covering the period shown in the
termination reports. While originally petitioners may have been project employees, in the absence of proof
that the subsequent employment of petitioners continued to be on a project-to-project basis under a
contract of employment, petitioners were considered to have become regular employees.
Secondly, petitioners were both (1) continuously, as opposed to intermittently, rehired; and (2) performing
tasks vital, necessary and indispensable to the usual trade or business of the employer; thus they are
considered regular employees.

Thirdly, petitioners supposed employment contract indicated that they were to be project employees on
probationary status. However project employment and probationary employment are distinct from one
another and cannot co-exist with each other. Hence, should there be ambiguity in the provisions of the
contract; the rule is that all doubts, uncertainties, ambiguities and insufficiencies should be resolved in
favor of labor.

Petitioners were awarded backwages from the time of dismissal until the finality of the decision.

10. Fuji Television Network vs Espiritu, GR no. 204944-45, December 3, 2014

FACTS:

In 2005, Arlene S. Espiritu (“Arlene”) was engaged by Fuji Television Network, Inc. (“Fuji”) as a news
correspondent/producer4 “tasked to report Philippine news to Fuji through its Manila Bureau field
office.”5 Arlene’s employment contract initially provided for a term of one (1) year but was successively
renewed on a yearly basis with salary adjustment upon every renewal. 6chanRoblesvirtualLawlibrary

Sometime in January 2009, Arlene was diagnosed with lung cancer. 7 She informed Fuji about her
condition. In turn, the Chief of News Agency of Fuji, Yoshiki Aoki, informed Arlene “that the company will
have a problem renewing her contract”8 since it would be difficult for her to perform her job. 9She “insisted
that she was still fit to work as certified by her attending physician.” 10chanRoblesvirtualLawlibrary

AArlene and Fuji signed a non-renewal contract on May 5, 2009 where it was stipulated that her contract
would no longer be renewed after its expirationThe contract also provided that the parties release each
other from liabilities and responsibilities under the employment contract.12chanRoblesvirtualLawlibrary

In consideration of the non-renewal contract, Arlene “acknowledged receipt of the total amount of
US$18,050.00 representing her monthly salary from March 2009 to May 2009, year-end bonus, mid-year
bonus, and separation pay.”13 However, Arlene affixed her signature on the non-renewal contract with the
initials “U.P.” for “under protest.”svirtualLawlibrary

On May 6, 2009, the day after Arlene signed the non-renewal contract, she filed a complaint for illegal
dismissal and attorney’s fees with the National Capital Region Arbitration Branch of the National Labor
Relations Commission.

Labor Arbiter dismissed Arlene’s complaint holding that Arlene was not Fuji’s employee but an
independent contractor.

Arlene appealed before the National Labor Relations Commission. It held that Arlene was a regular
employee with respect to the activities for which she was employed since she continuously rendered
services that were deemed necessary and desirable to Fuji’s business.

ISSUES:

1. whether the latter is a regular employee.

2. WON Espiritu was illegally dismissed.
Arlene is a regular employee with fixed term employment

In determining whether an employment should be considered regular or non-regular, the applicable test is
the reasonable connection between the particular activity performed by the employee in relation to the
usual business or trade of the employer. The standard, supplied by the law itself, is whether the work
undertaken is necessary or desirable in the usual business or trade of the employer, a fact that can be
assessed by looking into the nature of the services rendered and its relation to the general scheme under
which the business or trade is pursued in the usual course.

The Court of Appeals affirmed the finding of the National Labor Relations Commission that the successive
renewals of Arlene’s contract indicated the necessity and desirability of her work in the usual course of
Fuji’s business. Because of this, Arlene had become a regular employee with the right to security of
tenure.

1. Arlene was illegally dismissed.

The expiration of Arlene’s contract does not negate the finding of illegal dismissal by Fuji. The manner by
which Fuji informed Arlene that her contract would no longer be renewed is tantamount to constructive
dismissal. To make matters worse, Arlene was asked to sign a letter of resignation prepared by
Fuji.235 The existence of a fixed-term contract should not mean that there can be no illegal dismissal. Due
process must still be observed in the pre-termination of fixed-term contracts of employment.

In addition, the Court of Appeals and the National Labor Relations Commission found that Arlene was
dismissed because of her health condition.

For dismissal under Article 284 to be valid, two requirements must be complied with: (1) the employee’s
disease cannot be cured within six (6) months and his “continued employment is prohibited by law or
prejudicial to his health as well as to the health of his co-employees”; and (2) certification issued by a
competent public health authority that even with proper medical treatment, the disease cannot be cured
within six (6) months.237 The burden of proving compliance with these requisites is on the
employer.238 Non-compliance leads to the conclusion that the dismissal was illegal.

There is no evidence showing that Arlene was accorded due process. After informing her employer of her
lung cancer, she was not given the chance to present medical certificates. Fuji immediately concluded
that Arlene could no longer perform her duties because of chemotherapy. It did not ask her how her
condition would affect her work. Neither did it suggest for her to take a leave, even though she was
entitled to sick leaves. Worse, it did not present any certificate from a competent public health authority.
What Fuji did was to inform her that her contract would no longer be renewed, and when she did not
agree, her salary was withheld.

11. Gadia vs. Sykes, GR No. 209499, January 28, 2015

FACTS:

Sykes Asia is a corporation engaged in Business Process Outsourcing (BPO) which provides support to
its international clients from various sectors (e.g., technology, telecommunications, retail services) by
carrying on some of their operations, governed by service contracts that it enters with them.11 On
September 2, 2003,12 Alltel Communications, Inc. (Alltel), a United States-based telecommunications firm,
contracted Sykes Asia’s services to accommodate the needs and demands of Alltel clients for its postpaid
and prepaid services (Alltel Project). Thus, on different dates, Sykes Asia hired petitioners as customer
service representatives, team leaders, and trainers for the Alltel Project.

Services for the said project went on smoothly until Alltel sent two (2) letters to Sykes Asia dated August
7, 200914 and September 9, 200915 informing the latter that it was terminating all support services
provided by Sykes Asia related to the Alltel Project. In view of this development, Sykes Asia sent each of
the petitioners end-of-life notices,16 informing them of their dismissal from employment due to the
termination of the Alltel Project. Aggrieved, petitioners filed separate complaints 17 for illegal dismissal
against respondents Sykes Asia.

In their defense,19 respondents averred that petitioners were not regular employees but merely project-
based employees, and as such, the termination of the Alltel Project served as a valid ground for their
dismissal.20 In support of their position, respondents noted that it was expressly indicated in petitioners’
respective employment contracts that their positions are “project-based” and thus, “co-terminus to the
project.”21 Respondents further maintained that they complied with the requirements of procedural due
process in dismissing petitioners by furnishing each of them their notices of termination at least thirty (30)
days prior to their respective dates of dismissal.

ISSUES:

1. WON Gadia, et. al are project employees.

2. WON they were illegally dismissed.

RULING:

1. Verily, for an employee to be considered project-based, the employer must show compliance with two
(2) requisites, namely that: (a) the employee was assigned to carry out a specific project or
undertaking; and (b) the duration and scope of which were specified at the time they were engaged
for such project.
In this case, records reveal that Sykes Asia adequately informed petitioners of their employment
status at the time of their engagement, as evidenced by the latter’s employment contracts which
similarly provide that they were hired in connection with the Alltel Project, and that their positions
were “project-based and as such is co-terminus to the project.” In this light, the CA correctly ruled that
petitioners were indeed project-based employees, considering that: (a) they were hired to carry out a
 specific undertaking, i.e., the Alltel Project; and (b) the duration and scope of such project were made
known to them at the time of their engagement, i.e., “co-terminus with the project.”

As regards the second requisite, the CA correctly stressed that “[t]he law and jurisprudence dictate
that ‘the duration of the undertaking begins and ends at determined or determinable times’” while
clarifying that “[t]he phrase ‘determinable times’ simply means capable of being determined or
fixed.”51 In this case, Sykes Asia substantially complied with this requisite when it expressly indicated
in petitioners’ employment contracts that their positions were “co-terminus with the project.” To the
mind of the Court, this caveat sufficiently apprised petitioners that their security of tenure with Sykes
Asia would only last as long as the Alltel Project was subsisting.

2. When the Alltel Project was terminated, petitioners no longer had any project to work on, and hence,
Sykes Asia may validly terminate them from employment. Further, the Court likewise notes the fact
that Sykes Asia duly submitted an Establishment Employment Report 52 and an Establishment
Termination Report53 to the Department of Labor and Employment Makati-Pasay Field Office
regarding the cessation of the Alltel Project and the list of employees that would be affected by such
cessation. As correctly pointed out by the CA, case law deems such submission as an indication that
the employment was indeed project-based.chanroblesvirtuallawlibrary

12. Basan vs. Coca-Cola Bottlers Phils., GR No. 174365, Feb. 4, 2015

FACTS :

Petitioners, filed a complaint for illegal dismissal with money claims against respondent Coca-Cola
Bottlers Philippines, alleging that respondent dismissed them without just cause and prior written notice
required by law. Petitioners essentially maintain that they were continuously hired by respondent
company to perform duties necessary and desirable in the usual trade or business and are, therefore,
regular employees. They allege that if their services had really been engaged for fixed specific periods,
respondent should have at least provided the contracts of employment evidencing the same.

Respondent corporation, however, countered that it hired petitioners as temporary route helpers to act as
substitutes for its absent regular route helpers merely for a fixed period in anticipation of the high volume
of work in its plants or sales offices. As such, petitioners' claims have no basis for they knew that their
assignment as route helpers was temporary in duration.

LA : ruled in favor of petitioners and found that since they were performing activities necessary and
desirable to the usual business of petitioner for more than the period for regularization, petitioners are
considered as regular employees, and thus, their dismissal was done contrary to law in the absence of
just cause and prior written notice.

NLRC : affirmed the Labor Arbiter's decision and rejected respondent's contention that petitioners were
merely employed for a specific project or undertaking the completion or termination of which has been
determined at the time of their engagement.

CA : Did not consider the respondents as regular employees and ruled that they are not entitled to
reinstatement and payment of full backwages.

ISSUE :

WON the employees are considered regular employees entitling them to reinstatement and payment of
backwages;

RULING :

The employees are regular employees and Coca-Cola Bottlers is guilty of Illegal Dismissal.

The repeated rehiring of respondent workers and the continuing need for their services clearly attest to
the necessity or desirability of their services in the regular conduct of the business or trade of petitioner
company. The Court of Appeals has found each of respondents to have worked for at least one year with
petitioner company. While this Court, in Brent School, Inc. Vs. Zamora, has upheld the legality of a fixed-
term employment, it has done so, however, with a stern admonition that where from the circumstances it
is apparent that the period has been imposed to preclude the acquisition of tenurial security by the
employee, then it should be struck down as being contrary to law, morals, good customs, public order and
public policy. The pernicious practice of having employees, workers and laborers, engaged for a fixed
period of few months, short of the normal six-month probationary period of employment, and, thereafter,
to be hired on a day-to-day basis, mocks the law. Any obvious circumvention of the law cannot be
countenanced. The fact that respondent workers have agreed to be employed on such basis and to
forego the protection given to them on their security of tenure, demonstrate nothing more than the serious
problem of impoverishment of so many of our people and the resulting unevenness between labor and
capital. A contract of employment is impressed with public interest. The provisions of applicable statutes
are deemed written into the contract, and "the parties are not at liberty to insulate themselves and their
relationships from the impact of labor laws and regulations by simply contracting with each other."

Considering, however, the possibility of abuse by employers in the utilization of fixed-term employment
contracts, this Court, in Brent, laid down the following criteria to prevent the circumvention of the
employee's security of tenure:

1) The fixed period of employment was knowingly and voluntarily agreed upon by the parties without any
force, duress, or improper pressure being brought to bear upon the employee and absent any other
circumstances vitiating his consent; or

2) It satisfactorily appears that the employer and the employee dealt with each other on more or less
equal terms with no moral dominance exercised by the former or the latter.

The records of this case is bereft of any proof which will show that petitioners freely entered into
agreements with respondent to perform services for a specified length of time. Hence, in the absence of
proof showing that petitioners knowingly agreed upon a fixed term of employment, the Supreme Court
upheld the findings of the Labor Arbiter and the NLRC and ruled that petitioners are, indeed, regular
employees, entitled to security of tenure.

13. Hacienda Cataywa vs. Lorezo, GR No. 179640, March 18, 2015

FACTS :

Respondent Rosario Lorezo filed Amended Petition before the SSC. She alleged that she was employed
as laborer in Hda. Cataywa in 1970 but was reported to the SSS only in 1978. She alleged that SSS
contributions were deducted from her wages from 1970 to 1995, but not all were remitted to the SSS
which, subsequently, caused the rejection of her claim.

Petitioners Manuel and Jose Villanueva refuted in their answer, the allegation that not all contributions of
respondent were remitted. Petitioners alleged that all farm workers of Hda. Cataywa were reported and
their contributions were duly paid and remitted to SSS.

Petitioners insist that Form R-1A as the only remaining source of information available shows that
Lorenzo was reported to the SSS December 19, 1978 Petitioners also alleged that respondent was a very
casual worker.

ISSUE
1. WON Lorezo is a casual employee and thus not subject to compulsory SSS coverage.

RULING :

They are in regular employment because of the nature of the job, and not because of the length of time
they have worked.
The primary standard in determining a regular employment is the reasonable connection between the
particular activity performed by the employee in relation to the usual business or trade of the employer..
The connection can be determined by considering the nature of the work performed and its relation to the
scheme of the particular business or trade in its entirety. Also, if the employee has been performing the
job for at least one year, even if the performance is not continuous or merely intermittent, the law deems
the repeated and continuing need for its performance as sufficient evidence of the necessity if not
indispensability of that activity to the business. Hence, the employment is also considered regular, but
only with respect to such activity and while such activity exists.
. Since petitioners provided that the cultivation of sugarcane is only for six months, respondent
cannot be considered as regular employee during the months when there is no cultivation.

13. MANAGEMENT PREROGATIVE

14. TERMINATION OF EMPLOYMENT

 1. Celdran vs. Forza Integrated Services et al., G.R. No. 189460, June 5, 2013, Res.

FACTS:

Petitioner Leo Mario C. Celdran was hired by private respondent City Service as Vice-President for the
Visayas Regional Office in Cebu City. Private respondents City Service Corporation and Peerless
Integrated Services, Incorporated are affiliate companies of respondent FORZA Integrated Corporation.
According to petitioner, his compensation package included a car plan wherein they would assume the
remaining balance of his car plan, with 50% by the company and the other 50% by Celdran himself; but,
to private respondents, it was a car lease arrangement. Celdran consistently refused to sign the said
lease contract as it was contrary to what he allegedly agreed with private respondent Valentin B. Prieto,
Jr. during his employment interview way back in May 2005.

On November 10, 2005, Celdran was accused of dishonesty, for charging a personal lunch to the
company, and was demanded to resign by the Chief Operating Officer Santiago. Celdran received a
termination notice signed by private respondent Santiago which led the former to file a complaint for
illegal dismissal on November 22, 2005, before the Regional Arbitration Branch of the National Labor
Relations Commission. However, the said case was settled as he was reinstated to his position on
December 27, 2005.

However, upon his return, Celdran was told to occupy the last open cubicle at the ground floor and given
a new copy of the motor vehicle lease contract for his signature which he refused to sign. He was relieved
as Mancom Chairman for no reason at all. He was subjected to check and inspection by the security
guard and his transportation and cellular phone allowances were subjected to new guidelines. Private
respondent City Service Corporation gave Celdran the option to buy the Honda CRV at its residual value
until February 9, 2006, otherwise, the former would recover the vehicle from the latter.

On February 14, 2006, Celdran filed a complaint with the Regional Arbitration Branch of the NLRC
charging private respondents with violation of the terms of the car plan. On March 2, 2006, Celdran was
placed under preventive suspension for 30 days due to his belligerent attitude and required to explain why
he should not be terminated. He was not asked to return to work after his suspension for which reason he
amended his complaint on April 11, 2006, to include charges of illegal suspension, constructive dismissal
and unpaid money claims.

In a letter dated April 11, 2006, private respondent City Service Corporation informed all its employees,
including Celdran, that by virtue of a board resolution dated March 17, 2006, the company decided to
replace the Visayas Regional Office with a small Liaison Office. Consequently, Celdran made a second
amendment of his complaint on April 18, 2006 to include charges of illegal lay-off/downsizing.

ISSUES:

1. WON there was constructive dismissal.

2. WON the petitioner was illegally dismissed.
3. WON individual respondents may not be held solidarily liable with respondent corporations.

RULING:

There was no constructive dismissal in the case at bar.

According to petitioner, he had been experiencing a kind of treatment that rendered "employment
impossible and unreasonable" as early as in the last quarter of 2005. However, he never resigned. In fact,
when he filed a complaint in March 2006 regarding his car plan benefit, he did not make any allegation
concerning his inability to continue working for respondents due to an alleged ill working environment. We
thus find that he was still willing and able to continue his employment despite any alleged ill treatment.
For there to be constructive dismissal, the employer must be shown to have committed an act of clear
discrimination, insensibility, or disdain, which had become so unbearable on the part of the employee that
it foreclosed any choice other than for the latter to forego continued employment.

Petitioner was not illegally dismissed when respondent company implemented a downsizing program
for their Visayas regional office.

Pursuant to Article 283 of the Labor Code, an employer may reduce the number of its employees based
on economic grounds in order to protect and preserve the employer's viability and ensure its
survival. Consequently, employers are given the management prerogative to implement a retrenchment
program for the purpose of preventing losses or cessation of business operations due to business
recession, industrial depression, seasonal fluctuations, lack of work, or considerable reduction in the
volume of their business.
Respondents were able to prove that their retrenchment program was justified and not implemented in
bad faith. As found by the ELA and the NLRC, respondents had been experiencing a downtrend in their
Visayas operations since three years before they decided to downsize. In fact, City Service was suffering
from continuous defeats in numerous biddings it had participated in. Furthermore, they showed that they
had complied with the requirement of written notice to the employees and to the DOLE at least one month
prior to the intended date of downsizing or retrenchment.

Individual respondents may not be held personally liable.

As a general rule, corporate directors, trustees, or officers are not personally liable for their official acts,
unless they have exceeded the scope of their authority. Indeed, personal liability may attach when
directors, trustees, or officers assent to a patently unlawful act of the corporation, or when they act in bad
faith, resulting in damages to the corporation, its stockholders, or other persons. However, there was no
substantial evidence on record proving bad faith in the termination of petitioner's employment due to
retrenchment.

2. Canedo vs. Kampilan Security & Detective Agency Inc. et al., G.R. No. 179326, July 31,
2013

FACTS:

Luciano Canedo was assigned by Kampilan Security and Detective Agency as security guard of the
National Power Corporation (NPC) at Toledo City. However, for not wearing a uniform while on duty as
per report of Allan Alfafara of the NPC. Canedo was suspended for a month. NPC thereafter informed
Kampilan that it was no longer interested in Canedo’s service and thus requested for his replacement. In
the meantime, Canedo requested from Arquiza of Kampilan to issue a certification in connection with his
intended retirement to which the latter acceded. Days later, Canedo filed before the labor arbiter a
complaint for illegal dismissal, illegal suspension and non-payment of monetary benefits against
Kampilan. He claimed that his suspension was without a valid ground and effected without due process,
hence, illegal. Kampilan countered that Canedo was not dismissed from service but he was just pulled put
from NPC in view of NPC’s request for his replacement.

ISSUE:

WON was dismissed from service.

RULING:

NO. In illegal dismissal cases, "while the employer bears the burden to prove that the termination was for
a valid or authorized cause, the employee must first establish by substantial evidence the fact of dismissal
from service." The burden of proving the allegations rests upon the party alleging and the proof must be
clear, positive and convincing. Thus, in this case, it is incumbent upon petitioner to prove his claim of
dismissal. While it is true that he was not allowed to report for work after the period of his suspension
expired, the same was due to NPC's request for his replacement as NPC was no longer interested in his
services. And as correctly argued by Kampilan, Canedo from that point onward is not considered
dismissed but merely on a floating status. "Such a 'floating status' is lawful and not unusual for security
guards employed in security agencies as their assignments primarily depend on the contracts entered into
by the agency with third parties."

A floating status can ripen into constructive dismissal only when it goes beyond the six-month maximum
period allowed by law. In this case, Canedo filed the Complaint for illegal dismissal even before the lapse
of the six-month period. Hence, his claim of illegal dismissal lacks basis. It was in fact Canedo who
intended to terminate his relationship with Kampilan through his planned retirement. This circumstance
negates his claim that he was terminated. Clearly, there is no dismissal to speak of this case.

3. National Union of Bank Employees vs. Philna Bank Employees Association, GR

No.174287, August 12, 2013

FACTS:

Respondent Philippine National Bank (PNB) used to be a government-owned and controlled banking
institution. ). Its rank-and-file employees, being government personnel, were represented for collective
negotiation by the Philnabank Employees Association (PEMA), a public sector union. In 1996, the
Securities and Exchange Commission approved PNB’s new Articles of Incorporation and By-laws and its
changed status as a private corporation. PEMA affiliated with petitioner National Union of Bank
Employees (NUBE), which is a labor federation composed of unions in the banking industry, adopting the
name NUBE-PNB Employees Chapter (NUBE-PEC).

Later, NUBE-PEC was certified as the sole and exclusive bargaining agent of the PNB rank-and-file
employees. Pursuant to Article V on Check-off and Agency Fees of the CBA, PNB shall deduct the
monthly membership fee and other assessments imposed by the union from the salary of each union
member, and agency fee (equivalent to the monthly membership dues) from the salary of the rank- and-
file employees within the bargaining unit who are not union members. Moreover, during the effectivity of
the CBA, NUBE, being the Federation union, agreed that PNB shall remit P15.00 of the P65.00 union
dues per month collected by PNB from every employee, and that PNB shall directly credit the amount to
NUBE’s current account with PNB.

Following the expiration of the CBA, the Philnabank Employees Association-FFW (PEMA-FFW) filed on
January 2, 2002 a petition for certification election among the rank-and-file employees of PNB. While the
petition for certification election was still pending, two significant events transpired — the independent
union registration of NUBE-PEC and its disaffiliation with NUBE. PEMA sent a letter to the PNB
management informing its disaffiliation from NUBE and requesting to stop, effective immediately, the
check-off of the P15.00 due for NUBE. Acting thereon, PNB informed NUBE of PEMA's letter and its
decision to continue the deduction of the P15.00 fees, but stop its remittance to NUBE effective July
2003. PNB also notified NUBE that the amounts collected would be held in a trust account pending the
resolution of the issue on PEMA's disaffiliation.

NUBE replied that: it remains as the exclusive bargaining representative of the PNB rank-and-file
employees; by signing the Resolution (on disaffiliation), the chapter officers have abandoned NUBE-PEC
and joined another union; in abandoning NUBE-PEC, the chapter officers have abdicated their respective
positions and resigned as such; in joining another union, the chapter officers committed an act of
disloyalty to NUBE-PEC and the general membership; the circumstances clearly show that there is an
emergency in NUBE-PEC necessitating its placement under temporary trusteeship; and that PNB should
cease and desist from dealing with Serrana, Roma, Latorre, Garcia, Medrano, and Magtibay, who are
expelled from NUBE-PEC.

DOLE ordered PNB to release all union dues withheld and to continue remitting the same to NUBE.

ISSUE:

WON PEMA validly disaffiliated itself from NUBE, the resolution of which, in turn, inevitably affects the
latter's right to collect the union dues held in trust by PNB

RULING:

Yes. PEMA validly disaffiliated itself from NUBE.

The earlier view that the right of the local members to withdraw from the federation and to form a new
local union depends upon the provisions of the union's constitution, by-laws and charter and, in the
absence of enforceable provisions in the federation's constitution preventing disaffiliation of a local union,
a local may sever its relationship with its parent. In the case at bar, there is nothing shown in the records
nor is it claimed by NUBE that PEMA was expressly forbidden to disaffiliate from the federation nor were
there any conditions imposed for a valid breakaway. This being so, PEMA is not precluded to disaffiliate
from NUBE after acquiring the status of an independent labor organization duly registered before the
DOLE.

Consequently, by PEMA's valid disaffiliation from NUBE, the vinculum that previously bound the two
entities was completely severed. As NUBE was divested of any and all power to act in representation of
PEMA, any act performed by the former that affects the interests and affairs of the latter, including the
supposed expulsion of Serrana et al., is rendered without force and effect.
Also, in effect, NUBE loses it right to collect all union dues held in its trust by PNB. The moment that
PEMA separated from and left NUBE and exists as an independent labor organization with a certificate of
registration, the former is no longer obliged to pay dues and assessments to the latter; naturally, there
would be no longer any reason or occasion for PNB to continue making deductions.

4. Integrated Microelectronics Inc. vs. Pionella, G.R. No. 200222, Aug. 28, 2013

FACTS:

Adonis Pionilla was hired by IMI as its production worker. On May 5, 2005, Pionilla received a notice from
IMI requiring him to explain the incident which occurred the day before where he was seen escorting a
lady to board the company shuttle bus at the Alabang Terminal. It was reported by the bus marshall that
the lady was wearing a company identification card (ID) – which serves as a free pass for shuttle bus
passengers – even if she was just a job applicant at IMI. In this regard, Pionilla admitted that he lent his
ID to the lady who turned out to be his relative. He further intimated that he risked lending her his ID to
save on their transportation expenses. Nevertheless, he apologized for his actions.

During the Conscience Committee hearing, Pionilla admitted that at the time of the incident, he had two
IDs in his name as he lost his original ID in November 2004 but was able to secure a temporary ID later.
Based on the foregoing, IMI found Pionilla guilty of violating Article 6.12 of the Company Rules and
Regulations (CRR) which prohibits the lending of one’s ID since the same is considered a breach of its
security rules and carries the penalty of dismissal. Subsequently, Pionilla received a letter informing him
of his dismissal from service.

Three days after, he filed a complaint for illegal dismissal with damages against IMI.
LA ruled in favor of Pionilla ordering reinstatement and payment of backwages. Dissatisfied, IMI elevated
the matter to the National Labor Relations Commission (NLRC).

NLRC reversed the LA’s ruling, finding Pionilla’s dismissal to be valid. It pointed out that Pionilla’s act of
lending his temporary ID was willful and intentional as he, in fact, admitted and apologized for the same.
The NLRC further ruled that Pionilla’s attitude in violating the CRR could be treated as perverse as
bolstered by his failure to surrender his temporary ID despite locating the original one. Dissatisfied,
Pionilla filed a petition for certiorari before the CA.

CA ruled in favor of Pionilla. It found that while IMI’s regulations on company IDs were reasonable, the
penalty of dismissal was too harsh and not commensurate to the misdeed committed. It also stated that
the while the right of the employer to discipline is beyond question, it, nevertheless, remains subject to
reasonable regulation. It further noted that Pionilla worked with IMI for a period of nine years without any
derogatory record and even observed that his performance rating had always been "outstanding."

Hence, the present motion for reconsideration.

ISSUE:

WON Pionilla is entitled to reinstatement and full backwages.

RULING:

The motion for reconsideration is partly granted. Court ordered his reinstatement but without backwages.

As a general rule, an illegally dismissed employee is entitled to reinstatement (or separation pay, if
reinstatement is not viable) and payment of full backwages. In certain cases, however, the Court has
carved out an exception to the foregoing rule and thereby ordered the reinstatement of the employee
without backwages on account of the following:

(a) the fact that dismissal of the employee would be too harsh of a penalty; and
(b) that the employer was in good faith in terminating the employee.

In this case, the Court observes that: (a) the penalty of dismissal was too harsh of a penalty to be
imposed against Pionilla for his infractions; and (b) IMI was in good faith when it dismissed Pionilla as his
dereliction of its policy on ID usage was honestly perceived to be a threat to the company's security.

The Court finds it proper to accord the same disposition and consequently directs the deletion of the
award of back wages in favor of Pionilla, notwithstanding the illegality of his dismissal.

5. MZR Industries et al., vs. Colambot, G.R. No. 179001, Aug. 28, 2013

FACTS:

On February 8, 2000, petitioner Marilou Quiroz, Owner and Vice-President for Finance and Marketing of
MZR, hired respondent Majen Colambot (Colambot) as messenger. Colambot’s duties and
responsibilities included field, messengerial and other liaison work.

However, beginning 2002, Colambot’s work performance started to deteriorate. Petitioners issued several
memoranda to Colambot for habitual tardiness, negligence, and violations of office policies, including
insubordinations, among others.

Petitioners claimed that despite written warnings for repeated tardiness and insubordination, Colambot
failed to mend his ways. Hence, in a Memorandum (October 25, 2004) issued by petitioner Lea Timbal,
MZR’s Administrative Manager, Colambot was given a notice of suspension for insubordination and
negligence.

Again, in a Memorandum (November 25, 2004), Colambot was suspended from November 26, 2004 until
December 6, 2004 for insubordination. Petitioners claimed they waited for Colambot to report back for
work on December 7, 2004, but they never heard from him anymore.
Later, petitioners were surprised to find out that Colambot had filed a complaint for illegal dismissal, illegal
suspension, underpayment of salaries, holiday pay, service incentive pay, 13 th month pay and separation
pay.

Petitioner insisted that while Colambot was suspended due to insubordination and negligence, they
maintained that they never terminated Colambot’s employment. Colambot, meanwhile, argued that
contrary to petitioners’ claim that he abandoned his job, he claimed that he did not report back to work
after the expiration of his suspension on December 6, 2004, because Quiroz told him that his employment
was already terminated effective December 7, 2004.

Labor Arbiter declared petitioner guilty of illegal dismissal. LA held that there was no abandonment as
there was no deliberate intent on the part of Colambot to sever the employer-employee relationship and
petitioner failed to notify Colambot to return to work. | Aggrieved, petitioner appealed to NLRC. NLRC
ruled in favor of Quiroz. But CA reversed.

ISSUES:

1. WON petitioner Quiroz is guilty of Illegal Dismissal

2. WON Colambot is guilty of abandonment

RULING:

1. No. There was no illegal dismissal, no dismissal having actually taken place. In illegal dismissal cases,
the employer bears the burden of proving that the termination was for a valid or authorized cause.
However, before the employer must bear the burden of proving that the dismissal was legal, the
employee must first establish by substantial evidence the fact of his dismissal from service. If there is no
dismissal, then there can be no question as to the legality or illegality thereof. In the present case,
however, the facts and the evidence do not establish a prima facie case that the employee was dismissed
from employment.

Other than Colambot's unsubstantiated allegation of having been verbally terminated from his work, there
was no evidence presented to show that he was indeed dismissed from work or was prevented from
returning to his work. In the absence of any showing of an overt or positive act proving that petitioners
had dismissed respondent, the latter's claim of illegal dismissal cannot be sustained. The Notice of
Suspension shows that he is merely suspended from work. It was also apparent that there was a specific
instruction for him to return back to work on Dec. 7.

There were no wordings whatsoever implying actual or constructive dismissal. Thus, Colambot's general
allegation of having been orally dismissed from the service as against the clear wordings and intent of the
notice of suspension which he signed, we are then inclined to believe that there was no dismissal.

2. No. To constitute abandonment of work, two elements must be present:

a. the employee must have failed to report for work or must have been absent without valid or justifiable
reason; and

b. there must have been a clear intention on the part of the employee to sever the employer-employee
relationship manifested by some overt act.

Mere absence or failure to report for work, even after notice to return, is not tantamount to abandonment.

The burden of proof to show that there was unjustified refusal to go back to work rests on the employer.
Abandonment is a matter of intention and cannot lightly be presumed from certain equivocal acts. To
constitute abandonment, there must be clear proof of deliberate and unjustified intent to sever the
employer-employee relationship.

In the instant case, other than Colambot's failure to report back to work after suspension, petitioners failed
to present any evidence which tend to show his intent to abandon his work. Petitioner failed to discharge
the burden.

These circumstances, taken together, the lack of evidence of dismissal and the lack of intent on the part
of the respondent to abandon his work, the remedy is reinstatement but without backwages. However,
considering that reinstatement is no longer applicable due to the strained relationship between the parties
and that Colambot already found another employment, each party must bear his or her own loss.

6. Asia Brewery Inc. vs. Tunay na Pagkakaisa ng Manggagawa sa Asia, G.R. No. 171594-96,
September 18, 2013

FACTS:

Tunay Na Pagkakaisa ng mga Manggagawa sa Asia (TPMA) is a legitimate labor organization, certified
as the sole and exclusive bargaining agent of all regular rank and file employees of [petitioner
corporation] Asia Brewery, Incorporated (ABI). The [petitioner corporation], on the other hand, is a
company engaged in the manufacture, sale and distribution of beer, shandy, glass and bottled water
products. It employs about 1,500 workers and has existing distributorship agreements with at least 13
companies.

Since their old collective bargaining agreement had already expired, the two are now negotiating for a
new CBA which will apply for the next 3 years. After about 18 sessions or negotiations, the parties were
still unable to reconcile their differences on their respective positions on most items, particularly on wages
and other economic benefits. TPMA declared a deadlock and filed for a strike.

The Secretary of Labor, Patricia Sto. Tomas, assumed jurisdiction over the matter resolved the deadlock
between the parties. She gave an arbitral award on the Wage increase that will take effect for the next 3
years and on the Health care premiums.

Thereafter, on February 9, 2004, the parties executed and signed the Collective Bargaining Agreement
with a term from August 1, 2003 to July 31, 2006.
However, TPMA questions the award rendered by the Secretary of Labor and imputing grave abuse of
discretion upon the public respondent because such awards were based on unaudited financial
statements. The Court of Appeals vacated the decision of the Secretary of Labor and and remanded it
back to render the proper awards based on the correct approach on deciding the dispute.

ISSUE:

WON the CA erred when it remanded to the Secretary of Labor the issue on wage increase?

RULING:

The Secretary of Labor gravely abused her discretion when she relied on the unaudited financial
statements of ABI in determining the wage award because such evidence is self-serving and
inadmissible. This may have resulted to a wage award that is based on an inaccurate and biased picture
of ABI’s capacity to pay – one of the more significant factors in making a wage award. Petitioner
corporation has offered no reason why it failed and/or refused to submit its audited financial statements
for the past five years relevant to this case. This only further casts doubt as to the veracity and accuracy
of the unaudited financial statements it submitted to the Secretary of Labor. Verily, we cannot
countenance this procedure because this could unduly deprive labor of its right to a just share in the fruits
of production and provide employers with a means to understate their profitability in order to defeat the
right of labor to a just wage.

As can be seen when it gave the wage award, the Secretary of Labor failed to indicate the actual data
upon which the wage award was based. It even appears that she utilized the "middle ground approach
which we precisely warned against in Meralco. Factors such as the actual and projected net operating
income, impact of the wage increase on net operating income, the company's previous CBAs, and
industry trends were not discussed in detail so that the precise bases of the wage award are not
discernible on the face of the Decision. The contending parties are effectively precluded from seeking a
review of the wage award, even if proper under our ruling in Meralco, because of the general but
unsubstantiated statement in the Decision that the wage award was based on factors like the bargaining
history, trends of arbitrated and agreed awards, and industry trends. In fine, there is no way of
determining if the Secretary of Labor utilized the proper evidence, figures or data in arriving at the subject
wage award as well as the reasonableness thereof. This falls short of the requirement of administrative
due process obligating the decision-maker to adjudicate the rights of the parties in such a manner that
they can know the various issues involved and the reasons for the decision rendered.

Based on the foregoing, we hold that the Secretary of Labor gravely abused her discretion in making the
subject wage award. The appellate court, thus, correctly remanded this case to the Secretary of Labor for
the proper determination of the wage award which should utilize, among others, the audited financial
statements of petitioner corporation and state with sufficient clarity the facts and law on which the wage
award is based.
 7. Gemina Jr vs. Bankwise Inc. et al., GR No. 175365, October 23, 2013

FACTS:

Petitioner Gemina signed an employment contract with respondent Bankwise as Marketing Officer with
the rank of Senior Manager, with an annual salary of P750,000.00 b ased on a fifteen-month scheme or
P50,000.00 per month and a service vehicle for his field work. The same contract stipulated for a fund
level commitment of P100,000,000.00 for the first six (6) months of employment.

During his first months in Bankwise, Gemina's performance was satisfactory. However, when the former
got involved in a controversy, he had difficulty in soliciting new depositors and after 5 months, he had the
lowest performance among the members of the fund management group. This prompted his supervisors
to call his attention and warn him of his obligations under the contract of employment and failure to
comply with those constitute breach of his contractual obligations.

Despite the warning, Gemina went on leave for eleven (11) days. Thereafter, he incurred absences
without leave and did not bother to inform the bank regarding the reason therefor. Pascua and Galapate,
petitioner's seniors tried to contact him to inquire about the reason of his long absence and requested him
to return the company vehicle but to no avail. Instead, petitioner filed a complaint for illegal dismissal
against Bankwise.

LA held that Gemina was illegally dismissed while the NLRC held that there was no constructive
dismissal, rather Gemina abandoned his employment. CA on the other hand denied the petition for
certiorari filed by the petitioner.

ISSUES:

a. WON the fund level commitment is a condition for Gemina’s employment to warrant breach of his
contractual obligations

b. WON Gemina was constructively dismissed

RULING:

a. The fund level commitment is a condition for Gemina's employment. A fund level commitment was
stipulated as a term or condition on Gemina’s contract of employment. Though not per se a ground for
dismissal, it is the standard by which Gemina’s performance will be evaluated by Bankwise’s
management. Thus, the contract states, "your performance relative to your ability to generate deposits
shall be monitored monthly and reviewed on your 6th month." The stated amount of funds sets the goal or
target amount of funds which Gemina should strive to generate within a specific number of months.

It must be clear, however, that the fund level commitment is not the sole basis of Gemina’s employment.
In the same manner, the failure to comply with this undertaking does not automatically lead to dismissal
from employment. Gemina will still be subjected to the management’s evaluation to determine his
performance based on the amount of funds he was able to bring in to the coffers of Bankwise. Even then,
Gemina may not conveniently brush aside compliance with the fund level commitment, thinking that it
does not have any implication on employment. It bears stressing that while not an automatic ground for
dismissal, the failure to generate the funds translates to a poor performance rating which may ultimately
jeopardize his continued employment. Depending on the results of the periodic evaluation undertaken by
the management, the failure to comply with the fund level commitment may eventually justify his dismissal
from employment. Thus, Gemina must put forth all his efforts in order to fulfill his fund level commitment.

b. There was no constructive dismissal. There is constructive dismissal when "there is cessation of work,
because ‘continued employment is rendered impossible, unreasonable or unlikely, as an offer involving a
demotion in rank or a diminution in pay’ and other benefits. Aptly called a dismissal in disguise or an act
amounting to dismissal but made to appear as if it were not, constructive dismissal may, likewise, exist if
an act of clear discrimination, insensibility, or disdain by an employer becomes so unbearable on the part
of the employee that it could foreclose any choice by him except to forego his continued employment."

8. Locsin II vs. Mekeni Food Corp., GR. No. 192105, December 9, 2013

In the absence of specific terms and conditions governing a car plan agreement between the employer
and employee, the former may not retain the installment payments made by the latter on the car plan and
treat them as rents for the use of the service vehicle, in the event that the employee ceases his
employment and is unable to complete the installment payments on the vehicle. The underlying reason is
that the service vehicle was precisely used in the former’s business; any personal benefit obtained by the
employee from its use is merely incidental.

FACTS:

In February 2004, respondent Mekeni Food Corporation (Mekeni) – a Philippine company engaged in
food manufacturing and meat processing – offered petitioner Antonio Locsin II the position of Regional
Sales Manager.In addition to a compensation and benefit package, Mekeni offered petitioner a car plan,
under which one-half of the cost of the vehicle is to be paid by the company and the other half to be
deducted from petitioner’s salary. To be able to effectively cover his appointed sales territory, Mekeni
furnished petitioner with a used Honda Civic car valued at P280,000.00, which used to be the service
vehicle of petitioner’s immediate supervisor. Petitioner paid for his 50% share through salary deductions
of P5,000.00 each month. Subsequently, Locsin resigned effective February 25, 2006. By then, a total of
P112,500.00 had been deducted from his monthly salary and applied as part of the employee’s share in
the car plan. Mekeni supposedly put in an equivalent amount as its share under the car plan. In his
resignation letter, petitioner made an offer to purchase his service vehicle by paying the outstanding
balance thereon. The parties negotiated, but could not agree on the terms of the proposed purchase.
Petitioner thus returned the vehicle to Mekeni on May 2, 2006. Petitioner made personal and written
follow-ups regarding his unpaid salaries, commissions, benefits, and offer to purchase his service vehicle.
Mekeni replied that the company car plan benefit applied only to employees who have been with the
company for five years; for this reason, the balance that petitioner should pay on his service vehicle stood
at P116,380.00 if he opts to purchase the same.

On May 3, 2007, petitioner filed against Mekeni a Complaint for the recovery of monetary claims
consisting of unpaid salaries, commissions, sick/vacation leave benefits, and recovery of monthly salary
deductions which were earmarked for his cost-sharing in the car plan. NLRC held that petitioner’s
amortization payments on his service vehicle amounting to P112,500.00 should be reimbursed; if not,
unjust enrichment would result, as the vehicle remained in the possession and ownership of Mekeni. In
addition, the employer’s share in the monthly car plan payments should likewise be awarded to petitioner
because it forms part of the latter’s benefits under the car plan. This was affirmed by the Court of
Appeals.

ISSUE:

WON the car plan privilege should be treated as part of the compensation package offered to petitioner at
the inception of his employment and instead likened it to a car loan on installment

RULING:

The Court cannot allow that payments made on the car plan should be forfeited by Mekeni and treated
simply as rentals for petitioner’s use of the company service vehicle. Nor may they be retained by it as
purported loan payments, as it would have this Court believe. In the first place, there is precisely no
stipulation to such effect in their agreement. Secondly, it may not be said that the car plan arrangement
between the parties was a benefit that the petitioner enjoyed; on the contrary, it was an absolute
necessity in Mekeni’s business operations, which benefited it to the fullest extent: without the service
vehicle, petitioner would have been unable to rapidly cover the vast sales territory assigned to him, and
sales or marketing of Mekeni’s products could not have been booked or made fast enough to move
Mekeni’s inventory.

In the case at bar, the disallowance of the subject car plan benefits would hamper the officials in the
performance of their functions to promote and develop trade which requires mobility in the
performance of official business. Indeed, the car plan benefits are supportive of the
implementation of the objectives and mission of the agency relative to the nature of its operation and
responsive to the exigencies of the service.

In light of the foregoing, it is unfair to deny petitioner a refund of all his contributions to the car plan. Under
Article 22 of the Civil Code, “[e]very 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.” Article 2142 of the same Code likewise clarifies that there are
certain lawful, voluntary and unilateral acts which give rise to the juridical relation of quasi-contract, to the
end that no one shall be unjustly enriched or benefited at the expense of another. In the absence of
specific terms and conditions governing the car plan arrangement between the petitioner and Mekeni, a
quasi-contractual relation was created between them. Consequently, Mekeni may not enrich itself by
charging petitioner for the use of its vehicle which is otherwise absolutely necessary to the full and
effective promotion of its business.
Conversely, petitioner cannot recover the monetary value of Mekeni’s counterpart contribution to the cost
of the vehicle; that is not property or money that belongs to him, nor was it intended to be given to him in
lieu of the car plan. In other words, Mekeni’s share of the vehicle’s cost was not part of petitioner’s
compensation package. Just as Mekeni is unjustly enriched by failing to refund petitioner’s payments, so
should petitioner not be awarded the value of Mekeni’s counterpart contribution to the car plan, as this
would unjustly enrich him at Mekeni’s expense.

In that respondent Mekeni Food Corporation is hereby ordered to REFUND petitioner Antonio Locsin II’s
payments under the car plan agreement in the total amount of P112,500.00.

9. International School Manila vs. International School Alliance of Educators (ISAE) etc., G.R.
No. 167286, February 5, 2014

FACTS:

In 1978, Evangeline Santos was first hired as a full-time Spanish language teacher. She was on leave of
absence from 1992. Upon her return sometime in August 1993, only one class of Spanish was available
for her to teach. Thus, for the school year 1993-1994, she agreed to teach one class of Spanish and four
other classes of Filipino. Since it was Santos’s first time to teach Filipino, the school’s administrators
observed her classes for which the results will be summarized in a Classroom Standards Evaluation
Forms. October of 1993, the Assistant Principal observed Santos’s Filipino II class. It was noted that she
needs improvement in the following criteria: (1) uses effective questioning techniques; (2) punctual and
time efficient; (3) states and enforces academic and classroom behavior expectations in a positive
manner; and (4) reinforces appropriate behavior. For the school years 1994-1995 (4 classes of Filipino),
1995-1996 (5 classes of Filipino), 1996-1997 (5 classes of Filipino), she indicated that she did not prefer a
change of teaching assignment. At certain times, the Assistant Principal would observe Santos’s classes
which resulted to more or less the same observations that she needed improvements on as with the first
observation. In 1996, her attention was called to the deficiencies in her planning and on the same year
she was required to undergo remediation phase of the evaluation process through a Professional Growth
Plan. Since the implementation, there was a noticeable improvement it yielded to a positive effect on her
performance. But not long after, May of 1996, Santos was advised her Professional Growth Plan had
been revised. Thereafter it seemed that the positive reviews of her performance were gradually replaced
by renewed concerns on her planning. A series of memo’s were sent calling Santos’s attention about the
problem they discovered and expressing frustration at her performance. As a result of which, a letter was
sent directing her to explain in writing why her employment should not be terminated for her failure to
meet the criteria for improvement and her substandard performance as a teacher. In her reply, she said
that the school forced her to teach Filipino, a subject which she had no preparation for. Thereafter, she
was informed the school considered her letter as explanation and it will also set a formal administrative
investigation. According to the Minutes of the Administrative Investigation, what took place were
clarifications as to the specific charge with reference to the letter of explanation. The charge against
Santos was gross inefficiency or negligence in the performance of her assigned work. In consequence
thereof, she was then told that her employment would cease effective June 7, 1997. Thereafter, a
complaint was filed against the petitioner.

ISSUES:

1. WON Evangeline Santos was illegally dismissed.

2. WON she is entitled to reinstatement or separation pay with backwages.

RULING:

(1) The collective bargaining agreement (CBA) expressly states that termination of employment shall be
in accordance with the Labor Code. Article 282 of the Labor Code provides that an employer may
terminate an employment for any of the ground mentioned in such section and one of which is gross and
habitual neglect by the employee of his duties. Gross inefficiency falls within the purview of “other causes
analogous to the foregoing,” and constitutes therefore, just cause to terminate an employee. “Gross
inefficiency” is closely related to “gross neglect,” for both involve specific acts of omission on the part of
the employee resulting in damage to the employer or to his business. As such, failure to prescribe such
standards of work, or to fulfill reasonable work assignments due to inefficiency may constitute just cause
for dismissal. Thus, the actuations of Santos complained of by the petitioners constituted gross and
habitual neglect of her duties.

For termination of employment based on just causes, the following are the requirements to constitute due
process: (i) a written notice served on the employee specifying the ground or grounds for termination, and
giving said employee reasonable opportunity within which to explain his side; (ii) a hearing or conference
during which the employee concerned, with the assistance of counsel if he so desires is given opportunity
to respond to the charge, present his evidence, or rebut the evidence presented against him; (iii) a written
notice of termination served on the employee, indicating that upon due consideration of all the
circumstances, grounds have been established to justify his termination. As such, in the instant case, the
school complied with all the requirements. After a thorough evaluation of Santos’s performance, the
school held a series of conferences and meetings with Santos, in order to improve her performance. On
March 29, 1996, the school required Santos to undertake a Professional Growth Plan. Thereafter, when
the intervention of the school failed to yield any considerable improvement on Santos, the Assistant
Principal wrote her a letter on April 10, 1997, which required her to explain in writing within forty-eight (48)
hours why her employment should not be terminated. On April 16, 1997, Santos was informed that the
administrative investigation would be conducted on April 23, 1997 where she would be given the
opportunity to be heard. On April 23, 1997, an administrative investigation was conducted wherein Santos
appeared with the assistance of ISAE President. In a letter dated May 29, 1997, the school informed
Santos of its decision to terminate her employment on the ground of her failure to meet the standards of
the school, which as discussed was tantamount to gross inefficiency. Thus, she was validly dismissed.

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

10. Abbot Laboratories vs. Alcaraz, G.R. No. 192571, April 23, 2013 (HANDWRITTEN)

11. McMer Corporation, Inc., et al vs. National Labor Relations Commission et al, G.R. No.
193421, June 4, 2014

FACTS:

On August 5, 1999, Mr. Libunao, private respondent, was employed by McMer Corporation, Inc. (McMer),
petitioner, as Legal Assistant and was promoted as Head of Legal Department concurrently as Officer-in-
Charge, effective on January 3, 2000. Brought often by the disagreement in the design and
implementation of company policies and procedures, there have been cold war between private
respondent and petitioners. The rift heightened when petitioner started verbally and maliciously imputing
unfounded inefficient performance of duty against the Department Head I & III. July 20, 2007, summon
was served upon private respondent by Roque to discuss administrative matters, including but not limited
to the alleged absence and tardiness. Sensing some unusual development in the attitude of petitioner
Roque, private respondent, instead of responding to the summon, went to petitioner Alvestir’s office, and
informed her of petitioner Roque’s disposition and his fear of a perceived danger to his person. He then
requested for petitioner Alvestir to go to petitioner Roque’s office instead, of which petitioner Alvestir
conceded. Moments later, petitioner Roque, at the height of anger, confronted private respondent and
commanded him to proceed to his office. At this juncture, private respondent was too scared to confront
Roque as the latter may inflict physical harm on him. As a consequence of the foregoing, private
respondent elected to discontinue work that afternoon and immediately proceeded to the Valenzuela
Police Headquarters to report on the incident in the police blotter. Private respondent did not report for
work from July 21, 2007 up to July 30, 2007. Because of this, petitioner McMer, through petitioner
Alvestir, issued a Memorandum dated July 30, 2007 directing private respondent to explain within five (5)
days why no disciplinary action should be imposed upon him for being in absence without official leave
(AWOL). Private respondent responded and then filed a complaint against petitioners. In the meantime
the letter was considered to discuss the possibility of amicable settlement but in the end he was
dismissed on account of strained relations.

ISSUE:

WON private respondent was constructively dismissed, and entitled to full backwages, separation pay in
lieu of reinstatement, and moral, exemplary and nominal damages.

RULING:

Yes. Constructive dismissal has been defined as a cessation of work because continued employment is
rendered impossible, unreasonable or unlikely; when there is a demotion in rank or diminution in pay or
both; or when a clear discrimination, insensibility, or disdain by an employer becomes unbearable to the
employee. The test of constructive dismissal is whether a reasonable person in the employee’s position
would have felt compelled to give up his position under the circumstances. It is an act amounting to
dismissal but made to appear as if it were not. As such, we uphold that there was constructive dismissal
because of the following acts committed by petitioners against private respondent, to wit: (1) About noon
of July 20, 2007, petitioner Roque went to private respondent’s office at the height of his anger with threat
to inflict physical harm, shouted a command for private respondent to proceed to petitioner’s office; (2)
Private respondent was approached sarcastically with commanding voice by petitioner Roque even in
front of some officers and rank-and file employees and newly-hired employees; and (3) Private
respondent’s professional ethic or moral belief was compromised due to certain business practices of
petitioner McMer that were never exposed due to the employee’s fear of reprisal, as shown in private
respondent’s Position Paper. Moreover, the sworn statement of Guiao is not only relevant and material
evidence, the same is likewise reliable and competent given that Guiao was physically present at
petitioner Alvestir’s office when the incident happened, and has therefore personal knowledge of what
transpired therein. Further, we find her description of petitioner Roque’s disposition adequate to support a
conclusion that private respondent was caught in the state of humiliation and embarrassment in the
presence of his co-employees as a result thereof. In view of the foregoing, private respondent was
constructively dismissed. Accordingly, we rule that the award of full backwages, separation pay in lieu of
reinstatement, moral, exemplary and nominal damages is in order pursuant to Section 279 of the Labor
Code, which explicitly states that 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. In the present case,
considering that reinstatement is no longer feasible due to the strained relations between petitioners and
private respondent, we find that the payment of separation pay of one month’s salary for every year of
service is just and reasonable as an alternative of reinstatement. Further, it cannot be gainsaid that
private respondent was unjustly treated in the workplace, and, consequently, bore wounded feelings and
suffered mental anguish during his tenure with petitioner McMer until he was constructively dismissed
from service. Thus, we uphold the grant of moral, exemplary and nominal damages in the aggregate
amount of P90,000.00 in favor of private respondent due to the wanton, oppressive and malevolent
manner by which private respondent was illegally and constructively terminated.

12. Philippine Spring Water Resources Inc vs. Court of Appeals, GR No. 205278, June 11, 2014

FACTS:

Philippine Spring Water Resources, Inc. (PSWRI) hired Mahilum as Vice-President for Sales and
Marketing for the Bulacan-South Luzon Area, for a monthly salary of 15,000.00 plus 0.25% commission
on every cash on delivery and another 0.25% on new accounts from July to August, 2004.

Sometime in November 2004, the inauguration of PSWRI’s Bulacan plant would be celebrated at the
same time with the company’s Christmas party. Mahilum was designated as over-all chairman of the affair
to be held on December 19, 2004. Thereafter, meetings on the program of activities for the inauguration
and Christmas party were conducted without Mahilum’s presence. Evangelista took charge and assumed
the lead role until the day of the affair.On the inaugural day, Mahilum was not seen around to supervise
the program proper as he entertained some visitors of the company. According to him, he delegated the
task to Evangelista.

Mahilum’s attention was, however, called when Lua got furious because he was not recognized during the
program. He was not mentioned in the opening remarks or called to deliver his inaugural speech. Upon
inquiry from the emcees of the program, Mahilum learned that they were not apprised of Lua’s decision to
deliver the speech considering that he previously declined to have a part in the program as he would be
very busy during the affair. Thus, Lua’s speech appeared to be "optional" in the printed program during
the affair.

On the following day, Mahilum was required to explain why Lua was not recognized and made to deliver
his speech. At the same time, he was placed under preventive suspension for thirty (30) days. Mahilum
submitted his written explanation. Subsequently, an investigation was conducted.

When his 30-day suspension ended, Mahilum reported for work but was prevented from entering the
workplace. Sometime in the first week of March 2005, he received a copy of the Memorandum, dated
January 31, 2005, terminating his services effective the next day or on February 1, 2005. On February 9,
2005, a clearance certificate was issued to Mahilum. He received the amount of P43,998.56 and was
made to execute the Release, Waiver and Quitclaim in favor of the company and Lua.

Mahilum filed a complaint for illegal dismissal with prayer for reinstatement, payment of back wages and
damages. He argued that he was illegally suspended and, thereafter, dismissed constructively from the
service. He also claimed that he was forced to sign the waiver.

ISSUE:
WON Mahilum illegally dismissed?

RULING:

Mahilum was a regular employee.

In insisting that Mahilum was a contractual employee and that the period of probation depended on the
agreement of the parties, the petitioners proffer the Memorandum of Agreement12 entered into by the
parties which provides:

6. THAT SECOND PARTY upon appointment shall be in a Probationary status for the next six (6) months
and may be extended a permanent appointment only if he can satisfactorily perform his duties and
functions as defined in the Personnel’s Manual/Company House Rules on Discipline.

It is the petitioners’ theory that Mahilum, who was hired in June 2004, was not a regular employee at the
time of his dismissal because his probationary status would end only if he could satisfactorily perform his
duties and functions as defined in the Personnel’s Manual/Company House Rules of Discipline. This
suspensive condition failed to arise.
For his part, Mahilum insists that he was a regular employee entitled to security of tenure. Having been
hired in June 2004, he must be considered to have already served the company for eight (8) months at
the time of his dismissal on February 1, 2005. This fact calls for the application of Article 281 of the Labor
Code.

Probationary employment shall not exceed six (6) months from the date the employee started working,
unless it is covered by an apprenticeship agreement stipulating a longer period. The services of an
employee who has been engaged on a probationary basis may be terminated for a just cause or when he
fails to qualify as a regular employee in accordance with reasonable standards made known by the
employer to the employee at the time of his engagement. An employee who is allowed to work after a
probationary period shall be considered a regular employee.

A probationary employee, like a regular employee, enjoys security of tenure. In cases of probationary
employment, however, aside from just or authorized causes of termination, an additional ground is
provided under Article 281 of the Labor Code, that is, the probationary employee may also be terminated
for failure to qualify as a regular employee in accordance with reasonable standards made known by the
employer to the employee at the time of the engagement. Thus, the services of an employee who has
been engaged on probationary basis may be terminated for any of the following: (1) a just or (2) an
authorized cause and (3) when he fails to qualify as a regular employee in accordance with reasonable
standards prescribed by the employer.

As applied to the petitioner’s arguments, it would seem that PSWRI and Lua now invoke the first and third
ground for Mahilum’s termination. The Court, however, cannot subscribe to the premise that Mahilum
failed to qualify as a regular employee when he failed to perform at par with the standards made known
by the company to him. In this case, it is clear that the primary cause of Mahilum’s dismissal from his
employment was borne out of his alleged lapses as chairman for the inauguration of the Bulacan plant
company’s Christmas party. In fact, the termination letter to him cited "loss of trust and confidence" as a
ground for his dismissal. Under the circumstances, the petitioners may not be permitted to belatedly harp
on its choice not to extend his alleged probationary status to regular employment as a ground for his
dismissal. Besides, having been allowed to work after the lapse of the probationary period, Mahilum
became a regular employee. He was hired in June 2004 and was dismissed on February 5,2005.
Thus, he served the company for eight (8) months. This is in consonance with CALS Poultry
Supply Corporation v. Roco,15 where the Court ruled that the computation of the 6-month
probationary period was reckoned from the date of appointment up to the same calendar date of
the 6th month following.

Mahilum was illegally dismissed

According to the petitioners, Mahilum’s behavior during the inauguration/party was allegedly tantamount
to: 1] serious misconduct, as displayed by a drinking binge with his own visitors causing the shame and
humiliation of Lua; and 2] willful disobedience, as shown by his refusal to carry out legitimate orders.

As previously explained, Mahilum was a regular employee who was entitled to security of tenure. Thus,
he could only be dismissed from service for causes provided in Article 282 of the Labor Code.The CA
affirmed the ruling of the NLRC and adopted as its own the latter's factual findings as to Mahilum’s illegal
dismissal. Consequently, the Court finds no reason to depart from the finding that Mahilum’s failure to
effectively discharge his assignment as the over-all chairman of the festivities was due to mere
inadvertence and the mistaken belief that he had properly delegated the details of the program to another
officer.
Further, his designation as the chairman of the whole affair did not form part of his duty as a supervisor.
Mahilum was engaged to supervise the sales and marketing aspects of PSWRI’s Bulacan Plant. Verily,
the charge of loss of trust and confidence had no leg tostand on, as the act complained of was not work-
related. Simply put, the petitioners were not able to prove that Mahilum was unfit to continue working for
the company. In the words of the CA:

Even as jurisprudence has distinguished the treatment of managerial employees or employees occupying
positions of trust and confidence from that of rank-and-file personnel, insofar as the application of the
doctrine of trust and confidence is concerned, such is inapplicable to the instant case since as above-
stated, private respondent’s lapse was justified, unintentional, without deliberate intent and unrelated to
the duty for which he was engaged.

Likewise, warranting the agreement of the Court is the finding of the CA in its Amended Decision that the
quitclaim executed by Mahilum did not operate to bar a cause of action for illegal dismissal. That the
amounts received by Mahilum were only those owing to him under the law indeed bolstered the fact that
the quitclaim was executed without consideration. Suffice it to say, the subject quitclaim may not be
considered as a valid and binding undertaking.

Mahilum, as a regular employee at the time of his illegal dismissal, is entitled to separation pay and
backwages, computed from the time of his dismissal up to the finality of the decision. As correctly ruled by
the NLRC,19 reinstatement is no longer viable considering the circumstances of animosity between
Mahilum and Lua.

Accordingly, Philippine Spring Water Resources Inc. is hereby ordered to pay Juvenstein B. Mahilum, his
separation pay, full backwages inclusive of his basic salary, proportionate 13th month pay, and unused
leave credits, to be computed based on his salary at the time of his illegal termination and attorney's
fees.These payments shall earn legal interest at the rate of six (6%) percent per annum reckoned from
their due date.

13. Libcap Marketing Corp. et al vs. Baquial, GR No. 192011, June 30, 2014

FACTS:

Libcap is engaged in the freight forwarding business with offices in Iloilo City. Respondent Lanny Jean B.
Baquial was employed by Libcap on October 12, 1999 as accounting clerk for Libcap’s Super Express
branch in Cagayan de Oro City. Her functions included depositing Libcap’s daily sales and collections in
Libcap’s bank account with Global Bank (now PSBank). She was paid a monthly salary of P4,600.00,and
was required to work from 8:00 a.m. to 6:30 p.m. six days each week without additional compensation
and/or overtime pay. From her salary each payday, an amount of P200.00 was deducted by way of cash
bond.

Sometime in March 2003, an audit of Libcap’s Super Express branch in Cagayan de Oro City was
conducted, and the resulting audit report showed that respondent made a double reporting of a single
deposit made on April 2,2001. In other words, a single April 2, 2001 bank deposit of P1,437.00 was used
to cover or account for two days’ sales of apparently identical amounts, covering the undeposited
collection for March 19, 2001 and current sales for March 31, 2001.

In a March 28, 2003 letter, Celiz required respondent to explain in writing within 24 hours why the cash
sales ofP1,437.00 each for March 31, 2001 and April 1, 2001 – as reported in the daily collection reports
– were covered by a single April 2, 2001 validated bank deposit slip for only P1,437.00.6

In an April 1, 2003 written reply, respondent claimed that on April 2, 2001, she deposited with the bank
two separate amounts of P1,437.00 each, but that it appears that both separate deposits were covered by
a single bank validation, which defect should not be blamed on her but on the bank.8 Respondent then
forwarded to Libcap’s head office two bank deposit slips to show that she deposited two amounts of
P1,437.00 each on April 2,2001 with Global Bank.9

Libcap discovered that only one P1,437.00 deposit was made on April 2, 2001. On verification with PS
Bank, its branch head confirmed in an August 7, 2003 letter that only a single deposit of P1,437.00 was
posted on April 2, 2001, and that there was no misposting or deposits to other accounts of the same
amount made on such date.10 The two bank deposit slips forwarded by respondent revealed that only
one of them was validated by the bank. Libcap’s bank account passbook showed that only one deposit for
P1,437.00 was made on April 2, 2001.12 Finally, Libcap’s Global Bank bank statement covering April 1–
30, 2001 showed that only one cash deposit of P1,437.00 was made on April 2, 2001.
On July 26, 2003, respondent received a Notice of Administrative Investigation requiring her to attend a
July 28, 2003 investigation at Libcap’s Iloilo office. Respondent was unable to attend due to lack of
financial resources. On July 28, 2003, respondent received a 2nd Notice of Administrative
Investigation17 requiring her to attend an August4, 2003 investigation in Iloilo City. Again, respondent
failed to attend. Respondent was placed on preventive suspension from July 29, 2003 to August 12,
2003. Respondent sent petitioners an August 6, 2003 written explanation. On August 16, 2003,
respondent received a Notice of Termination20 dated August 9, 2003, stating that she was terminated
from employment effective August 12, 2003 for dishonesty, embezzlement, inefficiency, and for
commission of acts inconsistent with Libcap’s work standards. Respondent filed a labor complaint for
illegal dismissal against petitioners, which was docketed in the National Labor Relations Commission,
Regional Arbitration Branch No. X, Cagayan de Oro City as NLRC Case No. RAB-10-08-00586-2003.

ISSUE:

WON Baquial illegally dismissed

RULING:

The Court denies the Petition.

At this juncture, it must be stated that respondent’s failure to file an appropriate appeal or petition from the
respective dispositions of the NLRC and the CA precludes her from questioning these dispositions at this
stage. "The rule is clear that no modification of judgment could be granted to a party who did not
appeal."39 Thus, respondent’s pleas for reinstatement and the payment of backwages, cash bond,
maternity leave benefits, moral damages, overtime pay, and attorney’s fees may no longer be taken up.

The CA, the NLRC and the Labor Arbiter are correct in concluding that respondent was denied due
process, but their reasons for arriving at such conclusion are erroneous. What they seem to have
overlooked is that respondent’s case has been pre-judged even prior to the start of the investigation on
July 28, 2003. This is evident from the fact that the amount of P1,437.00 – or the amount which
petitioners claim was embezzled – was peremptorily deducted each payday from respondent’s salary on
a staggered basis, culminating on June 30, 2003, or nearly one month prior to the scheduled investigation
on July 28, 2003. In doing so, petitioners have made it clear that they considered respondent as the
individual responsible for the embezzlement; thus, in petitioners’ eyes, respondent was adjudged guilty
even before she could be tried – the payroll deductions being her penalty and recompense.

By pre-judging respondent’s case, petitioners clearly violated her right to due process from the very
beginning, and from then on it could not be expected that she would obtain a fair resolution of her case. In
a democratic system, the infliction of punishment before trial is fundamentally abhorred. What petitioners
did was clearly illegal and improper.

While it is correct to conclude that there was valid cause for dismissal considering that respondent did not
contest the NLRC or CA findings to such effect through an appropriate appeal or petition, the only issue
that remains to be tackled is the correctness of the award of nominal damages.

Petitioners claim that respondent is not entitled to financial assistance given that she is guilty of theft or
embezzlement. The law and jurisprudence, on the other hand, allow the award of nominal damages in
favor of an employee in a case where a valid cause for dismissal exists but the employer fails to observe
due process in dismissing the employee. Financial assistance is granted as a measure of equity or social
justice, and is in the nature or takes the place of severance compensation.

On the other hand, nominal damages "may be awarded to a plaintiff whose right has been violated or
invaded by the defendant, for the purpose of vindicating or recognizing that right, and not for indemnifying
the plaintiff for any loss suffered by him. Its award is thus not for the purpose of indemnification for a loss
but for the recognition and vindication of a right." The amount of nominal damages to be awarded the
employee is addressed to the sound discretion of the court, taking into consideration the relevant
circumstances.

Again, we stress that though the Court is given the latitude to determine the amount of nominal damages
to be awarded to an employee who was validly dismissed but whose due process rights were violated, a
distinction should be made between a valid dismissal due to just causes under Article 282 of the Labor
Code and those based on authorized causes, under Article 283. The two causes for a valid dismissal
were differentiated in the case of Jaka Food Processing Corporation v. Pacot where the Court held that: A
dismissal for just cause under Article 282 implies that the employee concerned has committed, or is guilty
of, some violation against the employer, i.e. the employee has committed some serious misconduct, is
guilty of some fraud against the employer, or, as in Agabon, he has neglected his duties. Thus, it can be
said that the employee himself initiated the dismissal process.
On another breath, a dismissal for an authorized cause under Article 283 does not necessarily imply
delinquency or culpability on the part of the employee. Instead, the dismissal process is initiated by the
employer’s exercise of his management prerogative, i.e. when the employer opts to install labor saving
devices, when he decides to cease business operations or when, as in this case, he undertakes to
implement a retrenchment program.

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

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

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

An employee should be compensated for the work he has rendered in accordance with the minimum
wage, and must be appropriately remunerated when he was suffered to work on a regular holiday during
the time he was employed by the petitioner company. As regards the 13th month pay, an employee who
was terminated at any time before the time for payment of the 13th month pay is entitled to this monetary
benefit in proportion to the length of time he worked during the year, reckoned from the time he started
working during the calendar year up to the time of his termination from the service.

14. Ampeloquio vs. Jaka Distribution Inc., GR No. 196936, July 2, 2014

FACTS:

Petitioner Monchito R. Ampeloquio (Ampeloquio) is a reinstated employee of respondent Jaka

Distribution, Inc. (JAKA), formerly RMI Marketing Corporation (RMI). Previously, Ampeloquio had filed a
complaint for illegal dismissal against RMI before the National Labor Relations Commission (NLRC).
Subsequently, the Labor Arbiter found RMI guilty of illegal dismissal.

Ampeloquio resumed work as merchandiser at JAKA and reported at JAKA’s outlets within Metro Manila,
Shopwise Makati and Alabang. He received a daily wage of P252.00, without meal and transportation
allowance. On 4 April 2005, Ampeloquio was transferred outside of Metro Manila, to Lucena City and
subsequently to San Pablo City. At that time, he was receiving the same daily wage of P252.00, without
meal and transportation allowance. Ampeloquio was given a monthly cost of living allowance (COLA) of
P720.00.

Ampeloquio requested for salary adjustment and benefits retroactive to the date of his reinstatement, 6
August 2004, and payment of salary differential in the total amount of P42,196.00. Ampeloquio wrote
JAKA reiterating his request with an increase from his previous request of salary differential which
amounted to a total of P180,590.00.

Ampeloquio based his request on what other merchandisers of JAKA received. Because of the
discrepancy in wages, Ampeloquio filed anew before the NLRC, a complaint for underpayment of wages,
COLA, non-payment of meal and transportation allowances.

For their part, [JAKA] avers that it is engaged in the business of distribution of consumer goods; that
[Ampeloquio] is their only regular employee as merchandiser; that at the time of the filing of this case,
[Ampeloquio] is still working in a supermarket with a monthly salary of P7,985.00; that their other
merchandiser[s] are outsourced from manpower agencies or are seasonal employees hired during peak
season; that the salary of [Ampeloquio] was based on the minimum wage of P250.00 and ECOLA of
P50.00 per day; that it is in the process of computing the wage distortion in the implementation of 2005
wage increase of P25.00; that their exemption in the implementation of wage increase expired last 25
June 2006 prior to the filing of this complaint; that they did not act on [Ampeloquio’s] demand for money
claims due to the pendency of this case.
In their reply, [JAKA] admits that [Ampeloquio] was reinstated in accordance with the Labor Arbiter’s
decision in the illegal dismissal case; that he received the same rate as that of his co-employees, hence
there is no basis for [Ampeloquio’s] money claims. On the other hand, [Ampeloquio] stressed the
discrepancy and discrimination in the payment of wages which he allegedly suffered as he received lower
than that of his co-workers and to substantiate his arguments he submitted the payslips of his co-
employees.

On 25 May 2007, Labor Arbiter granted Ampeloquio’s complaint for underpayment of wages, basic and
COLA and non-payment of allowances, meal and transportation. On appeal by JAKA, the NLRC proper,
noted the exemption of JAKA from the pertinent Wage Order Nos. 10 & 11, and consequently, modified
the amounts ordered by the Labor Arbiter to be paid by JAKA to Ampeloquio.

Aggrieved by the NLRC’s modification of what Ampeloquio obviously perceived as an acceptable

monetary award, the latter filed a petition for certiorari before the Court of Appeals bewailing grave abuse
of discretion in: (1) the reduction of his award of salary differential to only 22,172.00; (2) the deletion of his
entitlement to transportation expenses; and (3) the deletion of the award of moral and exemplary
damages.

The appellate court in CA-G.R. SP No. 10444510 dismissed Ampeloquio’s petition for certiorari finding no
grave abuse of discretion in the NLRC’s ruling and finding that, in fact, it is supported by substantial
evidence.

ISSUE:

The scope viz-a-viz wages of reinstatement "without loss of seniority rights and other privileges”.

RULING:

Seniority rights refer to the creditable years of service in the employment record of the illegally dismissed
employee as if he or she never ceased working for the employer. In other words, the employee’s years of
service is deemed continuous and never interrupted. Such is likewise the rationale for reinstatement’s
twin relief of full backwages. Attached to the recognition of seniority rights of a reinstated employee who
had been illegally dismissed is the entitlement to wages appurtenant thereto. The case of Ampeloquio’s
reinstatement was ordered when merchandisers like him were no longer employed by JAKA.

Ampeloquio is correct in asserting that he is a senior employee compared to the other merchandisers and
other regular employees subsequently hired by JAKA, specifically two regular messenger employees
which Ampeloquio claims receive higher wages. He is not entitled to the same terms and conditions of
employment as that which was offered to the other regular employees (not merchandisers) subsequently
hired by JAKA. Ampeloquio cannot likewise compare his wages to that received by "casual or contractual
merchandisers" or merchandisers who are admittedly outsourced from manpower agencies or those who
are considered seasonal employees hired only during peak season.

We are not unaware that reinstatement is the rule and such covers reinstatement to the same or
substantially equivalent position without loss of seniority rights and privileges.

In this case, JAKA did not claim exceptions to the rule of reinstatement, i.e.,(1) strained relations, or (2)
abolition of the position;18 JAKA immediately complied with the Labor Arbiter’s order of reinstatement.

We note that, specifically, JAKA could have claimed that the position of merchandiser no longer exists
and has been abolished with the contracting of this job function. However, it merely opted to reinstate
Ampeloquio to the same position. There is no quarrel that with his reinstatement, Ampeloquio is now the
lone regular merchandiser of JAKA.

The option of reinstatement to a substantially equivalent position does not apply herein as reinstatement
to a substantially equivalent position entails the same or similar job functions and not just same wages or
salary. As applied to this case, Ampeloquio cannot be reinstated to a messengerial position although such
is a regular employment enjoying the same employment benefits and privileges. His employment cannot
likewise be converted into a contractual employment as such is actually a downgrade from his regular
employment enjoying security of tenure with JAKA.

As the sole regular merchandiser of JAKA, Ampeloquio’s reinstatement entitles him, at the minimum, to
the standard minimum wage at the time of his employment and to the wages he would have received
from JAKA had he not been illegally dismissed, as if there was no cessation of employment. Ampeloquio
is likewise entitled to any increase which JAKA may have given across the board to all its regular
employees. To repeat, Ampeloquio is not entitled to all benefits or privileges received by other employees
subsequently hired by JAKA just by the fact of his seniority in the service with JAKA.
The Court of Appeals was correct in its disquisition that:

x x x [W]ithout loss of seniority rights and benefits, this does not necessarily mean equal or more
rights than those employees hired by JAKA prior or subsequent to his reinstatement.1âwphi1 The
rule on how much pay a reinstated employee shall receive is governed by paragraph 3 of Article
223 of the Labor Code which provides as follows:

x x x 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 therein.
xxxx

When [Ampeloquio] was reinstated on August 6, 2004, he is entitled to receive a salary under the same
terms and conditions prevailing prior to his dismissal, provided this complies with the minimum wage law
prevailing at the time of reinstatement, in consonance to Article 99, 100 of P.D. No. 442, as amended.
Thus, this Court finds and agrees with the computation by the NLRC of [Ampeloquio's] wage rate. While
he [ Ampeloquio] may have been ordered reinstated to his former position without loss of seniority rights
and benefits, this Court cannot agree [with] the strained interpretation given by [Ampeloquio] that since he
is the most senior among his co-employees, he should be entitled to the same amount of wages and
benefits as that being received by them. x x x Thus, when he was reinstated on August 6, 2004, the
salary scale that governs shall be the minimum wage rate then prevailing or his actual daily wage rate,
which ever is higher.

The reduction of the salary differential award to Ampeloquio by the NLRC, and affirmed by the appellate
court, was correct given the exemption to Wage Order Nos. 10 & 11 granted to JAKA.

WHEREFORE, the appeal is DENIED. The Decision of the CA and NLRC are affirmed. No costs. SO
ORDERED.

15. Lim vs. HMR Phils Inc., GR No. 201483, August 4, 2014

FACTS:

On February 8, 200 I, petitioner Conrado A. Lim (Lim) filed a case for illegal dismissal and money claims
against respondents, HMR Philippines, Inc. (HMR)and its officers, Teresa G. Santos-Castro, Henry G.
Bunag and Nelson S. Camiller. The Labor Arbiter (LA) dismissed the complaint for lack of merit. The
NLRC reversed the LA and declared that the dismissal of herein complainant-appellant was illegal. Both
Lim and HMR filed their respective petitions for certiorari before the CA. The CA issued the Temporary
Restraining Order enjoining the execution of the NLRC decision but affirmed the NLRC decision with
modification.

On February 7, 2007, the SC, in G.R. No. 175950-51, dismissed the petition for certiorari. Entry of
judgment was ordered on July 27, 2007.5

On September 24, 2007, Lim moved for execution.6 On November 28, 2007, the Computation and
Research Unit (CRU) of the NLRC computed the total award to amount to P2,020,053.46,7 which
computed the backwages from February 3, 2001, the date of the illegal dismissal, up to October 31, 2007,
the date of actual reinstatement.

HMR opposed the computation arguing that the backwages should be computed until April 11, 2003 only,
the date of promulgation of the NLRC decision, as stated in the dispositive portion of the NLRC decision,
which provided that backwages shall be "reckoned from his dismissal on February 3, 2001 up to the
promulgation of this Decision." It also noted that the 10% annual increase was computed from 1998 to
2007, instead of only from 1998 to 2000 as decreed.

In his Comment, Lim argued that the body of the NLRC decision explictly stated that he was entitled to full
backwages from the time he was illegally dismissed until his actual reinstatement, which was also in
accord with Article 279 of the Labor Codea nd all prevailing jurisprudence.

On April 21, 2009, the LA issued the order granting the motion for execution filed by Lim holding that the
backwages should be reckoned until April 11, 2003 only in accordance with the NLRC decision.
Lim filed his "Motion Ad Cautelam for Reconsideration or Recomputation and Partial Execution of
Monetary Award," insisting that his backwages should be computed up to his actual reinstatement. On
August 28, 2009, the NLRC treated the motion as an appeal and sustained the computation of the LA.

In its assailed March 30, 2012 Decision, the CA dismissed the petition. It emphasized that the April 11,
2003 NLRC decision had long become final and executory after it was affirmed by the Court and, as such,
it may no longer be amended or corrected. The CA found that although the NLRC had recognized that
petitioner was entitled to backwages until actual reinstatement, nonetheless, it expressly limited the
computation of backwages to the promulgation date of its decision. It wrote that the issue ofwhether such
limitation was lawful or improper could no longer be ventilated due to the finality of the judgment.

Hence, the petition before the SC.

Petitioner Lim argues that Article 279 of the Labor Code and the prevailing jurisprudence provide that
illegally dismissed workers are entitled to an award of backwages from the time of the illegal dismissal
until they are actually reinstated. He states that the body of the NLRC decision was explicit in its intent to
award backwages until actual reinstatement, especially when read with its fallo, which ordered his
immediate reinstatement. Lim also points out that the LA completely failed to include in the computation
the unpaid 10% annual increase in his salary from 1998 to 2000, as awarded in the fallo of the NLRC
decision. He posits that the LA also failed to include the payment of other benefits, such as a 10%
increase in salary per annum, 15 days vacation leave and 15 days sick leave per annum, all as part of
employee benefitsfound in HMR’s Personnel Policy.

Petitioner Lim also argues that in accordance with the rules laid down in Eastern Shipping Lines v. Court
of Appeals,16 the monetary awards should be subject to interest. He prays that the respondents be made
to pay damages on account of their bad faith in delaying the payment and reinstatement of the petitioner,
which prompted him to file the present petition.

In their Comment,17 the respondents argue that the August 28, 2009 NLRC Resolution had already
become final and executory and could no longer be modified as the petitioner belatedly filed his motion for
reconsideration. In the same vein, they argue that the LA Order had also become final and executory
considering that the petitioner’s motion ad cautelam/appeal was not seasonably filed.

The respondents insist that the "decretal portion of the NLRC decision, dated April 11, 2003 limited the
amount of petitioner’s backwages from February 3, 2001 and up to promulgation of such Decision on April
11, 2003 only.18Granting that the body of such decision controls, they aver that the recoverable
backwages cannot go beyond December 26, 2007, the date HMR offered to reinstate Lim, who refused to
be reinstated and abandoned his job. They add that it was also clear from the dispositive portion that the
10% annual salary increase awarded was only for the years 1998 to 2000.

They also point out that the P12,500.00 base pay of Lim was already inclusive of holiday pay, and that the
conversion of sick leave to cash was subject to management discretion in accordance with company
policy.

They further argue that the claims for legal interest and additional moral and exemplary damages are
without merit because these were not awarded in the decision and they simply acted in good faith in
pursuing the legal remedies available to them.

ISSUES:

1. WON the computation of backwages should be reckoned until the promulgation of the NLRC Decision
on April 11, 2003 or until actual reinstatement?

2. WON the petitioner is entitled to the unpaid 10% annual salary increase from 1998-2000?

3. WON the petitioner is entitled to the 10% annual salary increase after the year 2000?

4. WON the interest in accordance with Eastern Shipping should be awarded?

RULING:

The petition is partly meritorious.

Backwages

It is beyond question that Lim was illegally dismissed by HMR. All that remains to be settled is the exact
amount owing to petitioner as an illegally dismissed employee.
Article 279 of the Labor Code is clear in providing that an illegally dismissed employee is entitled to his full
backwages computed from the time his compensation was withheld up to the time of his actual
reinstatement, to wit:

Art. 279. Security of tenure.In cases of regular employment, the employer shall not terminate the services
of an employee except for a just cause or when authorized by this Title. An employee who is unjustly
dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges
and to his full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent
computed from the time his compensation was withheld from him up to the time of his actual
reinstatement. [Emphases and underscoring supplied]

In accordance with this provision, the “body” of the April 11, 2003 NLRC decision expressly recognizes
that Lim is entitled to his full backwages until his actual reinstatement and nowhere in such body of the
decision was there a discussion restricting the award of backwages. Nonetheless, the fallo of the said
decision limited the computation of the backwages up to its promulgation on April 11, 2003, in this wise:

WHEREFORE, premises considered, judgment is hereby rendered declaring the appealed

Decision REVERSED and SET ASIDE; that the dismissal of herein complainant-appellant was
illegal and the respondent-appellee Company is hereby ordered to reinstate immediately the said
employee to his former position without loss of seniority rights and other privileges. Furthermore,
the respondent-appellee Company is hereby ordered to pay the complainant-appellant his full
backwages, reckoned from his dismissal on February 3, 2001 up to the promulgation of this
Decision.

All other claims are hereby DISMISSED for lack of merit.

The Computation and Research Unit (CRU) of this Commission is hereby directed to compute the
backwages and the 10% annual increase from 1998 to 2000. SO ORDERED.
Considering that the judgment decreeing the computation of backwages up to the promulgation of the
NLRC decision has long become final and executory, the key question is whether a recomputation of
backwages up to the date of the actual reinstatement of Lim would violate the principle of immutability of
judgments.

The rule is that it is the dispositive portion that categorically states the rights and obligations of the parties
to the dispute as against each other. Thus, it is the dispositive portion that must be enforced to ensure the
validity of the execution. A companion to this rule is the principle of immutability of final judgments. Save
for recognized exceptions, a final judgment may no longer be altered, amended or modified, even if the
alteration, amendment or modification is meant to correct what is perceived to be an erroneous
conclusion of fact or law and regardless of what court renders it. Any attempt to insert, change or add
matters not clearly contemplated inthe dispositive portion violates the rule on immutability of judgments.

The cases of Session Delights Ice Cream and Fast Foods v. Court of Appeals (Session Delights) and
Nacar v. Gallery Frames (Nacar) shed much light on the apparent discrepancy inthe case at hand.

Session Delights made clear that a case for illegal dismissal is one that relates to status, where the
decision or ruling is essentially declaratory of the status and of the rights, obligations and monetary
consequences that flow from the declared status, such as, the payment of separation pay and
backwages. In execution, what is primarily implemented is the declaratory finding on the status and the
rights and obligations of the parties therein; the arising monetary consequences from the declaration only
follow as component of the parties’ rights and obligations. The precise amount of backwages should
ideally be stated in the final decision; otherwise, the matter is for handling and computation by the LA of
origin as the labor official charged with the implementation of decisions before the NLRC.

In Session Delights, the computation of the LA was found to be time-bound, which implied the currency of
the computation up to the finality of the LA decision. In the present case, the NLRC declared backwages
to be reckoned "up to the promulgation" of its decision, which was an express declaration of the currency
of the computation up to the finality of the NLRC decision, especially considering that HMR was "ordered
to reinstate immediately" petitioner Lim. The decisions in both cases are premised on their immediate
execution, in that no question would have arisen had the parties terminated the case and the decision
implemented at that point.

No essential change is being made by a recomputation because such is a necessary consequence which
flows from the nature of the illegality of the dismissal. To reiterate, a recomputation, or an original
computation, if no previous computation was made, as in the present case, is a part of the law that is read
into the decision, namely, Article 279 of the Labor Code and established jurisprudence. Article 279
provides for the consequences of illegal dismissal, one of which is the payment of full backwages until
actual reinstatement, qualified only by jurisprudence when separation pay in lieu of reinstatement is
allowed, where the finality of the illegal dismissal decision instead becomes the reckoning point.
The nature of an illegal dismissal case requires that backwages continue to add on until full satisfaction.
The computation required to reflect full satisfaction does not constitute an alteration or amendment of the
final decision being implemented as the illegal dismissal ruling stands. Thus, in the present case, a
computation of backwages until actual reinstatement is not a violation of the principle of immutability of
final judgments.

The respondents aver that the recoverable backwages cannot go beyond December 26, 2007, the date
HMR offered to reinstate Lim, who allegedly refused to be reinstated and abandoned his job.

HMR sent the petitioner a letter, dated December 22, 2007, directing him to report for work on December
26, 2007, with an offer of separation pay in the amount of P150,000.00 in lieu of reinstatement which he
could avail of not later than December26, 2007. Lim replied in a letter, dated December 24, 2007,
requesting for a meeting in January 2008, considering that his counsel was out of the country; that the
NLRC was still in the process of computing the amount of the award which was necessary to consider the
offer of separation pay; and that a writ of execution had not yet been issued. HMR never responded to the
petitioner’s request, and up to the present, the latter has yet to be reinstated.

From the above, it is apparent that the petitioner cannot be deemed to have refused reinstatement or to
have abandoned his job. HMR’s offer of reinstatement appeared superficial and insincere considering that
it never replied to the petitioner’s letter. It did not make any further attempt to reinstate the petitioner
either. The recoverable backwages, thus, continue to run, and must be reckoned up until the petitioner’s
actual reinstatement.

10% annual salary increase

In Equitable Banking Corporation v. Sadac, the Court held that although Article 279 of the Labor Code
mandates that an employee’s full backwages be inclusive of allowances and other benefits, salary
increases cannot be interpreted as either an allowance or a benefit, as allowances and benefits are
separate from salary, while a salary increase is added to salary as an increment thereto. It was further
held therein that the base figure to be used in the computation of backwages was pegged at the wage
rate at the time of the employee’s dismissal, inclusive of regular allowances that the employee had been
receiving such as the emergency living allowances and the 13th month pay mandated by law. The award
of salary differentials was not allowed, the rule being that upon reinstatement, illegally dismissed
employees were to be paid their backwages without deduction and qualification as to any wage increases
orother benefits that might have been received by their co-workerswho were not dismissed.

It must be noted that the NLRC did not err in awarding the unpaid salary increase for the years 1998-2000
as such did NOT constitute backwages as a consequence of the petitioner’s illegal dismissal, but was
earned and owing to the petitioner before he was illegally terminated.

Interest

The interest of 6% per annum for obligations not constituting a loan or forbearance of money is one that
may be imposed at the discretion of the court. This form of interest is not mandatory but discretionary in
nature and therefore, not necessarily owing to the petitioner in the present case.

WHEREFORE, the petition is PARTLY GRANTED, the March 30, 2012 Decision of the Court of
Appeals, in CA-G.R. SP No. 112708 is REVERSED and SET ASIDE. Respondent HMR
Philippines, Inc. is ORDERED to PAY petitioner Conrado A. Lim:

(1) back wages computed from the time the petitioner was illegally dismissed on
February 3, 2001 up to his actual reinstatement, with a monthly base pay in the
amount of P15,125.00;
(2) the unpaid 10% annual salary increase from 1998-2000 in the amount
of P49,650.00 (NOT backwages but earned before he was illegally terminated);
(3) 13th monthpay;
(4) vacation pay in accordance with the personnel policy handbook;
(5) the cash value of his unused sick leaves;
(6) holiday pay, provided that the Labor Arbiter finds that such is not yet included in
the base pay;
(7) moral damages in the amount of P50,000.00;
(8) exemplary damages in the amount of P20,000.00;
(9) attorney's fees equivalent to 10% of the total amount due to the petitioner; and
(10) legal interest of 12% per annum of the total monetary awards computed from
July 27, 2007 to June 30, 2013, and 6% per annum from July 1, 2013 until their full
satisfaction.
The Labor Arbiter is ORDERED to compute the total monetary benefits awarded and due the petitioner in
accordance with this decision. SO ORDERED.

16. Benson Industries Employees Union, et al vs. Benson Industries, Inc., GR No. 200746,
August 6, 2014

FACTS:

Respondent, Benson Industries, Inc. sent its employees, including the petitioners, a notice informing them
of their intended termination from employment, on the ground of closure and/or cessation of business
operations. Petitioner, through the Union, filed a notice of strike but it did not push through due to the
parties’ amicable settlement, whereby the petitioners accepted Benson’s payment of separation pay,
computed at 15 days for every year of service, as per the parties’ Memorandum of Agreement.

Notwithstanding, petitioner proffered a claim for the payment of additional separation pay at the rate of 4
days for every year of service invoking a provision under the existing collective bargaining agreement
(CBA) executed between the Union and Benson. Such CBA provides that the Separation Pay shall not
less than 19 days’ pay for every year of service based upon the latest rate of pay of the employee
concerned.

The VA ruled in favor of the petitioners stating that the provisions of the CBA should be given effect since
it expresses the latest agreement of the parties. On appeal, the CA ruled in favor of Benson stating that
despite the express provision under the CBA, Benson cannot be compelled to do so considering its
current financial status.

ISSUE:

WON the petitioners are entitled to the additional separation benefits equivalent to 4 days of work for
every year of service.

RULING:

Yes.

While serious business losses generally exempt the employer from paying separation benefits, it must be
pointed that the exemption only pertains to the obligation of the employer under Article 297 of the Labor
Code.

When the obligation to pay separation benefits, however, is not sourced from the law but from contract,
such as an existing CBA between the employer and its employees, an examination of the latter’s
provision becomes necessary in order to determine the governing parameters for the said obligation.

When the parties agree to deviate and unqualifiedly covenant the payment of separation benefits
irrespective of the employer’s financial position, the obligatory force of the contract prevails and its terms
should be carried out to its full effect. Obligations arising from contracts have the force of law between the
contracting parties and thus should be complied with in good faith; and parties are bound by the
stipulations, clauses, terms and conditions they have agreed to, the only limitation being that these
stipulations are contrary to law, morals, public order and public policy.

Benson, with full knowledge of its financial situation, freely and voluntarily entered into such agreement
with petitioners.

Note: The court emphasized that since the CBA did not qualify in its payment of separation of pay, i.e., in
the event of closure due to serious business losses, then the provision of the CBA must be respected.

However, it would be different if there was no CBA involved or if the payment of separation benefits was
sourced from a unilateral company practice (generosity on the part of the company). It was in this context
that the Court held that “ to require [the company] to continue being generous when it is no longer in a
position to do so would certainly be unduly oppressive, unfair and most revolting to the conscience.”

17. Lopez vs. Irvine Construction Corp., G.R. No. 207253, August 20, 2014

FACTS:

Respondent Irvine Construction Corp. (Irvine) is a construction firm with office address at San Juan,
Manila. It initially hired Lopez as laborer in November 1994 and, thereafter, designated him as a guard at
its warehouse in Dasmarifias, Cavite in the year 2000, with a salary of P238.00 per day and working
hours from 7 o'clock in the morning until 4 o'clock in the afternoon, without any rest day. On December
18, 2005, Lopez was purportedly terminated from his employment, whereupon he was told "Ikaw ay lay-
off muna." Thus, on January 10, 2006, he filed a complaint for illegal dismissal with prayer for the
payment of separation benefits against Irvine before the NLRC Sub-Regional Arbitration Branch No. IV in
San Pablo City, Laguna.

Irvine denied Lopez's claims, alleging that he was employed only as a laborer who, however, sometimes
doubled as a guard. As laborer, Lopez's duty was to bring construction materials from the suppliers'
vehicles to the company warehouse when there is a construction project in Cavite. As evidenced by an
Establishment Termination Report dated December 28, 2005 which Irvine previously submitted before the
Department of Labor and Employment (DOLE), Lopez was, however, temporarily laid-off on December
27, 2005 after the Cavite project was finished. Eventually, Lopez was asked to return to work through a
letter dated June 5, 2006 (return to work order), allegedly sent to him within the six ( 6) month period
under Article 286 of the Labor Code which pertinently provides that "[t]he bona-fide suspension of the
operation of a business or undertaking for a period not exceeding six (6) months x x x shall not terminate
employment." As such, Irvine argued that Lopez's filing of the complaint for illegal dismissal was
premature.

On December 6, 2007, the Labor Arbiter (LA) rendered a Decision ruling that Lopez was illegally
dismissed.

On October 31, 2008, the NLRC rendered a Resolution upholding the LA's ruling.

The CA granted Irvine's certiorari petition thereby reversing the NLRC. It held that Lopez's complaint for
illegal dismissal was prematurely filed since there was no indicia that Lopez was actually prevented by
Irvine from returning to work or was deprived of any work assignments or duties. On the contrary, the CA
found that Lopez was asked to return to work within the six-month period under Article 286 of the Labor
Code. Accordingly, it concluded that Lopez was merely temporarily laid off, and, thus, he could not have
been dismissed.

ISSUE:

WON the CA erred in finding that the NLRC gravely abused its discretion in affirming the LA's ruling that
Lopez was illegally dismissed.

RULING:

The petition is meritorious.

Ruling on the propriety of Irvine's course of action in this case preliminarily calls for a determination of
Lopez's employment status that is, whether Lopez was a project or a regular employee. In this case, the
NLRC found that no substantial evidence had been presented by Irvine to show that Lopez had been
assigned to carry out a "specific project or undertaking," with its duration and scope specified at the time
of engagement.

As a regular employee, Lopez is entitled to security of tenure, and, hence, dismissible only if a just or
authorized cause exists therefor. Among the authorized causes for termination under Article 283 of
the Labor Code is retrenchment, or what is sometimes referred to as a "lay-off'

It is defined as the severance of employment, through no fault of and without prejudice to the employee,
resorted to by management during the periods of business recession, industrial depression, or seasonal
fluctuations, or during lulls caused by lack of orders, shortage of materials, conversion of the plant to a
new production program or the introduction of new methods or more efficient machinery, or of automation.
Elsewise stated, lay-off is an act of the employer of dismissing employees because of losses in the
operation, lack of work, and considerable reduction on the volume of its business, a right recognized and
affirmed by the Court.

However, a lay-off would be tantamount to a dismissal only if it is permanent. When a lay-off is only
temporary, the employment status of the employee is not deemed terminated, but merely suspended.

Pursuant to Article 286 of the Labor Code, the suspension of the operation of business or undertaking in a
temporary lay-off situation must not exceed six (6) months.

Within this six-month period, the employee should either be recalled or permanently retrenched.
Otherwise, the employee would be deemed to have been dismissed, and the employee held liable
therefore.
In the case at bar, Irvine asserts that it only temporarily laid-off Lopez from work on December 27, 2005
for the reason that its project in Cavite had already been finished.

To support its claim, it submitted the following pieces of evidence:

(a) a copy of an Establishment Termination Report evidencing Lopez's lay-off;
(b) a copy of the return to work order dated June 5, 2006; and
(c) an affidavit from Irvine's personnel manager, Aguinaldo Santos, which purports that said
return to work order was sent to Lopez by ordinary mail on June 5, 2006.

The CA gave credence to the foregoing and thus granted Irvine's certiorari petition against the NLRC
ruling which affirmed the LA's finding of illegal dismissal.

The CA is mistaken.

As the NLRC correctly ruled in this case, Lopez, who, as earlier discussed was a regular employee of
Irvine, was not merely temporarily laid off from work but was terminated from his employment without any
valid cause therefor; thus, the proper disposition is to affirm the LA's ruling that Lopez had been illegally
dismissed.

Lopez is a regular and not a project employee. Hence, the continuation of his engagement with Irvine,
either in Cavite, or possibly, in any of its business locations, should not have been affected by the
culmination of the Cavite project alone. In light of the well-entrenched rule that the burden to prove
the validity and legality of the termination of employment falls on the employer, Irvine should have
established the bona fide suspension of its business operations or undertaking that would have
resulted in the temporary lay-off of its employees for a period not exceeding six (6) months in
accordance with Article 286 of the Labor Code.

In this case, Irvine failed to prove compliance with the parameters of Article 286 of the Labor Code. As the
records would show, it merely completed one of its numerous construction projects which does not, by
and of itself, amount to a bona fide suspension of business operations or undertaking. In invoking Article
286 of the Labor Code, the paramount consideration should be the dire exigency of the business of
the employer that compels it to put some of its employees temporarily out of work.51 This means
that the employer should be able to prove that it is faced with a clear and compelling economic reason
which reasonably forces it to temporarily shut down its business operations or a particular undertaking,
incidentally resulting to the temporary lay-off of its employees.

Due to the grim economic consequences to the employee, case law states that the employer should
also bear the burden of proving that there are no posts available to which the employee
temporarily out of work can be assigned.

Verily, Irvine cannot conveniently suspend the work of any of its employees in the guise of a temporary
lay-off when it has not shown compliance with the legal parameters under Article 286 of the Labor Code.
With Irvine failing to prove such compliance, the resulting legal conclusion is that Lopez had been
constructively dismissed; and since the same was effected without any valid cause and due process, the
NLRC properly affirmed the LA's ruling that Lopez's dismissal was illegal.

In light of the foregoing, the CA therefore erred in granting Irvine's certiorari petition. Indeed, a petition for
certiorari should only be granted when grave abuse of discretion exists - that is, when a court or tribunal
acts in a capricious or whimsical exercise of judgment as is equivalent to lack of jurisdiction. 55 These
qualities of capriciousness and whimsicality the Court finds wanting in any of the NLRC 's actions in this
case; as such, the reversal of the CA's Decision is hereby warranted.

WHEREFORE, the petition is GRANTED. The Decision dated September 14, 2012 and the Resolution
dated April 12, 2013 of the Court of Appeals in CA-G.R. SP No. 1 08385-MIN are hereby REVERSED
and SET ASIDE.

18. Montinola vs. Philippine Airlines, GR No.198656, September 8, 2014

FACTS:

In the case at bar, petitioner is a flight attendant of PAL, respondent. Montinola and other flight crew
members were subjected to custom searches in Honolulu, Hawaii, USA. Items from the airline were
recovered from the flight crew by customs officials. Nancy Graham), US Customs and Border Protection
Supervisor, sent an email to PAL regarding the search. The email7 contained a list of PAL flight crew
members involved in the search and the items recovered. This was done by enumerating the employees
subject of the search and separately listing the items recovered from all the employees subjected to
search.
PAL conducted an investigation. Montinola was among those implicated because she was mentioned in
Graham’s emai.

PAL asked Montinola to comment on the same which Montinola did in a hand written explanation 3 days
therefrom stating that she did not take anything. There was a clarificatory hearing held. Montinola alleged
that her counsel objected during the clarificatory hearing regarding PAL’s failure to specify her
participation in the alleged pilferage.16 Atty. Pascual threatened Montinola that a request for clarification
would result in a waiver of the clarificatory hearing.17 This matter was not reflected in the transcript of the
hearing.18 Despite her counsel’s objections, Montinola allowed the clarificatory hearings to proceed
because she “wanted to extend her full cooperation [in] the investigation[s].” During the hearing,
Montinola admitted that in Honolulu, US customs personnel conducted a search of her person. At that
time, she had in her possession only the following food items: cooked camote, 3-in-1 coffee packs, and
Cadbury hot chocolate. Thus PAL found her guilty and ordered her suspended for 1 year.

Montinola questioned her suspension with the Labor Arbiter. The Labor Arbiter 26 found her suspension
illegal, finding that PAL never presented evidence that showed Montinola as the one responsible for any
of the illegally taken airline items.28 The Labor Arbiter ordered Montinola’s reinstatement with backwages,
inclusive of allowances and benefits. In addition, because the records are replete with substantial
evidence that the circumstances leading to complainant’s one-year suspension without pay are
characterized by arbitrariness and bad faith on the part of respondents. The totality of respondents’ acts
clearly shows that complainant had been treated unfairly and capriciously, for which complainant should
be awarded moral damages in the amount of P100,000.00 and exemplary damages also in the amount of
P100,000.00.31 The Labor Arbiter also awarded attorney’s fees to Montinola because she was “forced to
litigate and incur expenses to protect [her] rights

NLRC affirmed the finds of the Labor Arbiter as well as the imposition of moral and exemplary damages
and attorney’s fees. However, Court of Appeals deleted the said awards even if it found the suspension of
the employee was justified. This was because Court of Appeals found that there is no showing that PAL
was moved by any ill will or motive in suspending private respondent. According to the Court of Appeals,
petitioner gave private respondent every opportunity to refute the charges against her and to present her
side as part of due process. These negate the existence of bad faith on the part of petitioner.
Furthermore, the Court of Appeals found the award of attorney’s fees improper. The award of attorney’s
fees was merely cited in the dispositive portion of the decision without the RTC stating any legal or factual
basis for said award.

Montinola thus questions the decision of the Court of Appeals. Montinola claims that she is entitled to
moral damages because her illegal suspension was attended by bad faith, causing her to suffer “mental
anguish, fright, serious anxiety, and moral shock.”46 Furthermore, the illegal suspension tarnished her
good standing. Montinola underscores that the investigation against her was conducted in a “hasty,
impetuous, harsh and unjust”50 manner. She was not properly apprised of the charges against her.51 She
requested for proper notice of the acts violative of PAL’s Code of Discipline. Instead of giving proper
notice, PAL threatened that she would be waiving her right to a clarificatory hearing if she insisted on her
request.5

The claim for exemplary damages is anchored on Montinola’s belief that such damages “are designed to
permit the courts to mould behaviour that has socially deleterious consequences, and their imposition is
required by public policy to suppress the wanton acts of the offender.”55 In Montinola’s view, PAL
suspended her in a “wanton, oppressive, and malevolent manner.”

Finally, Montinola argues that she is entitled to attorney’s fees because she was forced to litigate. In
Article 2208, paragraph (2) of the Civil Code, individuals forced to litigate may ask for attorney’s fees.

ISSUE:

WON Montinola’s illegal suspension entitled her to an award of moral and exemplary damages and
attorney’s fees

RULING:

Montinola is entitled to moral and exemplary damages. She is also entitled to attorney’s fees.

I. With regard to the claim for moral damages:

Security of tenure of workers is not only statutorily protected, it is also a constitutionally guaranteed
right.61 Thus, any deprivation of this right must be attended by due process of law.62 This means that any
disciplinary action which affects employment must pass due process scrutiny in both its substantive and
procedural aspects. The constitutional protection for workers elevates their work to the status of a vested
right. It is a vested right protected not only against state action but against the arbitrary acts of the
employers as well. “[t]he right of a person to his labor is deemed to be property within the meaning of
constitutional guarantees.”

Suspension from work is prima facie a deprivation of this right. Thus, termination and suspension from
work must be reasonable (with just and authorized causes) to meet the constitutional requirement of due
process of law.

Due process requirement is met when: First, the employer furnishes the employee with a written notice
containing the cause for termination. Second, the employer gives the employee an opportunity to be
heard. This could be done either through a position paper or through a clarificatory hearing.66 The
employee may also be assisted by a representative or counsel. Finally, the employer must give another
written notice apprising the employee of its findings and the penalty to be imposed against the employee,
if any.

In this case, PAL complied with procedural due process as laid out in Article 277, paragraph (b) of the
Labor Code. PAL issued a written notice of administrative charge, conducted a clarificatory hearing, and
rendered a written decision suspending Montinola. However, we emphasize that the written notice of
administrative charge did not serve the purpose required under due process. PAL did not deny her
allegation that there would be a waiver of the clarificatory hearing if she insisted on a specific notice of
administrative charge. With Montinola unable to clarify the contents of the notice of administrative charge,
there were irregularities in the procedural due process accorded to her.

Further, there was no substantial evidence (which is required in administrative investigations) to show that
there was just cause for Montinola’s dismissal since PAL merely relied on these pieces of information in
finding administrative liability against Montinola: 1) a list of offenses found in PAL’s Code of Discipline that
Montinola allegedly violated; 2) a list of flight crew members that were checked at the Honolulu airport;
and 3) a list of all items confiscated from all these flight crew members. The lists are not sufficient to show
the participation of any of the flight crew members, least of all Montinola. None of the evidence presented
show that the customs officials confiscated any of these items from her.

Labor Arbiters are authorized by law to award moral and exemplary damages according to Article 217 of
the Labor Code. Moral damages in labor cases 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, these being, the 1. act of dismissal
was attended by bad faith or fraud, or 2. was oppressive to labor, or 3. done in a manner contrary to
morals, good customs, or public policy; and, of course, that social humiliation, wounded feelings, grave
anxiety, etc., resulted therefrom.

PAL’s actions in implicating Montinola and penalizing her for no clear reason show bad faith. PAL’s denial
of her request to clarify the charges against her shows its intent to do a wrongful act for moral obliquity. If
it were acting in good faith, it would have gathered more evidence from its contact in Honolulu or from
other employees before it started pointing fingers. PAL should not have haphazardly implicated Montinola
and denied her livelihood even for a moment.

PAL apparently granted Montinola procedural due process by giving her a notice of administrative charge
and conducting a hearing. However, this was more apparent than real. The notice of administrative
charge did not specify the acts committed by Montinola and how these acts violated PAL’s Code of
Discipline. The notice did not state which among the items confiscated by the US customs officials were
originally found in Montinola’s possession. Worse, the panel of PAL officers led by Atty. Pascual did not
entertain any query to clarify the charges against her.

Moral damages are, thus, appropriate

II. Montinola is also entitled to exemplary damages.

Article 2229 of the Civil Code, “[e]xemplary or corrective damages are imposed, by way of example or
correction for the public good, in addition to the moral, temperate, liquidated or compensatory damages.”

Exemplary damages are designed by our civil law to permit the courts to reshape behaviour that is
socially deleterious in its consequence by creating negative incentives or deterrents against such
behaviour.” In labor cases, the court may award exemplary damages “if the dismissal was effected in a
wanton, oppressive or malevolent manner.”

It is socially deleterious for PAL to suspend Montinola without just cause in the manner suffered by her.
Hence, exemplary damages are necessary to deter future employers from committing the same acts.
III. Montinola is also entitled to attorney’s fees.

ART. 2208. In the absence of stipulation, attorney’s fees and expenses of litigation, other than judicial
costs, cannot be recovered, except:

(1) When exemplary damages are awarded; (2) When the defendant’s act or
omission has compelled the plaintiff to litigate with third persons or to incur expenses
to protect his interest; (7) In actions for the recovery of wages of household helpers,
laborers and skilled workers

This case qualifies for the first, second, and seventh reasons thus justifying the award of attorney’s fees
to petitioner.

19. Northwest Airlines vs. Del Rosario, GR No. 157633, September 10, 2014

FACTS:

In the case at bar, Respondent, Del Rosario, was employed by Petitioner, Northwest Airlines, as one of
their flight attendants. Del Rosario was assigned to the Business Class Section of Northwest Flight NW
26 bound for Japan. Another flight attendant, Gamboa, who was assigned in the First Class Section,
wanted to borrow a wine bottle opener. So Gamboa’s runner went to the Business Class Section to
borrow wine bottle opener from Del Rosario. But Del Rosario said that any flight attendant who could not
bring a wine bottle opener had no business working in the First Class Section. Gamboa heard the remark
of Del Rosario and confronted her verbally. Their confrontation escalated into a heated argument.
Another flight attendant intervened but the two ignored her, prompting her to rush outside the aircraft to
get Morales, the Assistant Base Manager, to pacify them.

Morales tried to pacify Del Rosario and Gamboa, but the two did not stop. Because the two were still
arguing although the Business Class passengers were already boarding, she ordered them out of the
plane and transfer to another nearby Northwest aircraft. Morales held that she inquired from them about
what had happened, and even asked if they were willing to fly on the condition that they would have to
stay away from each other during the entire flight but because Del Rosario was not willing to commit
herself to do so, she decided not to allow both of them on Flight NW 26, and furnished them a Notice of
Removal from Service (effectively informing Del Rosario of her dismissal from the service pending an
investigation of the fighting incident between her and Gamboa).

After the investigation was conducted, Del Rosario was informed of her termination from the service.
Northwest stated that based on the results of the investigation, Del Rosario and Gamboa had engaged in
a fight on board the aircraft, even if there had been no actual physical contact between them; and that
because fighting was strictly prohibited by Northwest to the point that fighting could entail dismissal from
the service even if committed for the first time, Northwest considered her dismissal from the service
justified and in accordance with the Rules of Conduct for Employees

The petitioners hold that they dismissed respondent on the ground of serious misconduct and willful
disobedience for fighting on board the plane with another flight attendant even if there were already a few
passengers coming in. Respondent, on the other hand, argued that what transpired between them was
not a fight but merely an animated discussion because she alleged that fight pertained to combat or
battle, like the hostile encounter or engagement between opposing forces, suggesting primarily the notion
of a brawl or unpremeditated encounter while argument was a connected discourse based upon reason,
or a course of reasoning tending and intended to establish a position and to induce belief.

ISSUES:

1. WON Del Rosario dismissed with just cause

2. WON the monetary benefits appropriate

RULING:

Respondent Del Rosario was not validly dismissed with just cause.

Misconduct refers to the improper or wrong conduct that transgresses some established and definite rule
of action, a forbidden act, a dereliction of duty, willful in character, and implies wrongful intent and not
mere error in judgment. But misconduct or improper behavior, to be a just cause for termination of
employment, must: (a) be serious; (b) relate to the performance of the employee’s duties; and (c) show
that the employee has become unfit to continue working for the employer.
The last two elements of misconduct were present in the case of Del Rosario. The cause of her dismissal
related to the performance of her duties as a flight attendant, and she became unfit to continue working
for Northwest. However, the same cannot be said with regard to the first element which is seriousness of
the misconduct.

The term fight was considered to be different from the term argument. According to cases ruled by SC,
the term fight was held to be more than just an exchange of words that usually succeeded the provocation
by either party. It is not just a mere verbal tussle but a physical combat between two opposing parties.

Most of the witnesses said that they were engaged in an animated discussion. Thus, based on the
foregoing, the incident involving Del Rosario and Gamboa could not be justly considered as akin to the
fight contemplated by Northwest.

Even assuming arguendo that the incident was the kind of fight prohibited by Northwest’s Rules of
Conduct, the same could not be considered as of such seriousness as to warrant Del Rosario’s dismissal
from the service. The gravity of the fight, which was not more than a verbal argument between them, was
not enough to tarnish or diminish Northwest’s public image.

Thus, respondent was illegally dismissed.

20. Mount Carmel College Employees Union et al vs. Mount Carmel College Inc., GR No.
187621, September 24, 2014

FACTS:

The petitioners were elementary and high school academic and non-academic personnel employed by
Mount Carmel College (respondent). The petitioners were informed of their retrenchment by the
respondent due to the closure of the elementary and high school departments of the school. The
petitioners contend that such closure was merely a subterfuge of their termination due to their union
activities and such closure was motivated by ill-will just to get rid of the petitioners
who were all union members because in June 2001, the school re-opened its
elementary and high school departments with newly-hired teachers. The respondent,
on the other hand, denied committing any act of unfair labor practice and alleged that their retrenchment
was valid as it was due to the financial losses it suffered as result of a decline in its enrolment. The
expenses for its academic and non-academic personnel were already eating into its budget portion
allocated for capital and administrative development, and that the teachers' demand for increased
salaries and benefits, coupled with the decline in the enrolment, left the school with no choice but to close
down its grade school and high school departments.

ISSUE:
Whether there is valid retrenchment?

Held: No. The burden of proving that the termination of services is for a valid or authorized cause rests
upon the employer. In termination by retrenchment, not every loss incurred or expected to be incurred by
an employer can justify retrenchment. The respondent failed to present any proof establishing how the
continued operations of the elementary and high school departments has become impracticable. No
feasibility studies, analysis, or at the very least, an academic projection was presented to validate its
"forecast." The Financial Statements show that the respondent was not operating at a loss but actually
had surplus, albeit at a minimum

21. Temic Automotive Phils. vs. Cantos, GR No. 200729, September 29, 2014

FACTS:

Respondent Renato M. Cantos (Cantos) filed a complaint for illegal dismissal against petitioner Temic
Automotive (Phils.), Inc. (Temic). Cantos started his employment with Temic as Special Projects Officer of
the company's Materials Department. He was appointed Purchasing & Import-Export Manager
(Purchasing Manager) of the Logistics Department. He was named Warehouse & Import-Export Manager
(Wimpex Manager), the last position he held before he was allegedly dismissed illegally. Temic is a
member firm of Continental Corporation, a multi national company (with head office in Germany), with
over sixty facilities worldwide. A team from the head office audited Temic's operations. The audit team
allegedly discovered several irregularities, particularly with respect to Temic's purchasing transactions
supposedly attended by "fraudulent activities." Some purchase orders (POs), it was claimed, were
ensured to go to some suppliers, thereby systematically avoiding a competitive tender process. It
stressed that initial findings indicated that Cantos, as former Purchasing Manager, "was likely involved in
said transactions."
Temic issued a Show Cause and Preventive Suspension Notice to Cantos, requiring him to explain in
writing several infractions which he allegedly committed during his stint as Purchasing Manager.
Allegedly, Cantos failed to meet the required number of purchase quotations, in violation of paragraph
10.6.1 of FV 9-F0158 under which purchases of all articles must conform with Continental Temic
Electronics (Phils.), Inc. (CTEPI,) Procurement Policy and that of Temic as a general rule. Cantos would
claim that from 2005 to early 2008, he was tasked to also serve the Purchasing Department of CTEPI
(without additional compensation), a sister firm of Temic and that it was in relation with his work in CTEPI
that his dismissal was chiefly based. He would also claim that the purchasing procedures are essentially
the same for CTEPI and for Temic, except that in CTEPI's case, the signature of the GM is not required
for the Process Deviation Temporary Authority (PDTA). Temic then conducted an administrative
investigation where Cantos appeared, together with his counsel. Temic issued a notice of termination of
employment to Cantos, with immediate effect, on grounds of loss of trust and confidence. It stressed that
while Cantos initially denied any wrongdoing, he eventually admitted having bypassed some purchasing
procedures and/or local controls, although allegedly due to simple oversight on his part. It added that after
a careful deliberation and based on his own admission, as well as the evidence, it had been established
that he committed the acts he was charged with.

ISSUE:

WON the CA erred in ruling and declaring that Cantos had been illegally dismissed.

RULING:

We deny the petition for patent lack of merit. Like the CA, we are convinced that the NLRC committed
grave abuse of discretion in upholding Cantos' dismissal. We find no substantial evidence in the records
in support of its ruling. Tt is the employer's burden to prove that the dismissal was for a just or authorized
cause. Temic failed to discharge this burden of proof in Cantos' case.

First. The POs Temic offered in evidence to prove the principal charge against Cantos pertained to its
sister company CTEPI. It is puzzling that Temic did not bother to explain why it proceeded against Cantos
based on purchase transactions entered into by CTEPI and not by itself; it did not also explain the precise
relationship between it and CTEPI with respect to the POs in question. Thus, and apparently without
being aware that it was referring to CTEPI's purchasing procedures, it faulted Cantos for resorting to the
PDTAs without the signature and approval of the GM. Under Temic rules, the GM approves and signs the
PDTA; it is not a requirement under CTEPI rules.

Second. The foregoing notwithstanding and, as the CA declared, nowhere in the records is there
evidence that directly pointed to Cantos as having deliberately violated the company procedures for the
procurement of services and materials by allowing the proliferation of PDTAs. Other than the fact that
Cantos was the Purchasing Manager at the time and was a signatory to the PDTAs in question, we find
no other indication of his involvement in the execution of the subject PDTAs. Indeed, there is no evidence
on record that it was Cantos who caused the execution of the subject PDTAs or that he did it for his
personal gain or in collusion with Navarro and Balita of CTEPIs Manufacturing Department who were
suspected to be involved in fraudulent purchase transactions discovered by the audit team from Germany
in favor of certain suppliers. In fact, as the records show, Temic never refuted Cantos' submission that
under the purchasing procedures of both Temic and CTEPI, a PDTA starts at an end-user department
and that the PDTAs in question came from the Manufacturing Department as the end-user.

Third. Temic's contention that Cantos made an admission of guilt during the administrative investigation
likewise has no evidentiary support. It could have been done by simply presenting the minutes of the
investigation. No such investigation minutes were ever presented, only an attendance sheet. To our mind,
the minutes of the investigation are crucial, especially since Cantos has persistently denied that he made
the admission of wrongdoing during the investigation. Ignacio's affidavit, as well as that of Human
Resource Manager Del Rosario in the same tenor, cannot substitute for the minutes of the investigation
whose absence in the evidence presented remains unexplained.

22. Radio Mindanao Network, Inc vs. Amurao III, GR No. 167225, October 22, 2014

FACTS:

February 16, 1989, petitioner Radio Mindanao Network, Inc. (RMN) hired respondent Michael Maximo R.
Amurao III (Michael) as a radio broadcaster for its DWKC-FM station and production manager for its
metropolitan radio operations at a monthly salary of P28,400.00.

RMN decided to reformat and restructure the programming of its DWKC-FM station to meet the demands
of the broadcasting industry. On April 25, 2002, the president of RMN met with Michael and other
personnel of the station to inform them that the management's decision would necessarily affect their
employment; but assuring that they would be paid their retirement pay and other benefits. RMN furnished
Michael and other personnel separate letters dated May 14, 2002 to formalize the discussions on the said
meeting, however, Michael and the other personnel refused to sign them. Not long after, they accepted
the offer of RMN and executed affidavits relinquishing all their claims against the employer.

In Michael’s case, the Affidavit of Release/Quitclaim dated May 30, 2002 (quitclaim) stated that he retired
from his position as Production Manager from RMN effective June 15, 2002 for and in consideration of
sum P311,922.00, paid by RMN in additional retirement benefits per corrected employment period and
that he hereby release and discharge RMN, its Officers, Directors, and Managers from any and all claims
and demands whatsoever as maybe due incident to employment with radio station DWKC-FM and/or
cessation of the same with Radio Mindanao Network, Inc., on June 15, 2002. It also stated that he have
no more claims, right or action whatsoever nature whether past, present or contingent against said
corporation and that he manifest that the terms of this release and quitclaim have been read and
thoroughly understood by and accepted said terms on his own consent.

On October 14, 2002, or 5 months after receiving his benefits and his execution of the quitclaim, Michael
filed a complaint against RMN for illegal dismissal with money claims in the National Labor Relations
Commission (NLRC).

On November 12, 2002, the Labor Arbiter rendered a decision declaring the dismissal of Michael as
illegal on the ground that the reformatting and restructuring of RMN’s radio programming did not fall under
any of the just or authorized causes specified under Article 282, Article 283 and Article 284 of the Labor
Code that would make the termination of his employment valid; and holding the quitclaim Michael signed
as void because it was not voluntarily executed.

RMN appealed to the NLRC. However, the NLRC found no merit in the contention of RMN. It held that the
quitclaim was null and void for not being voluntarily executed; modified the decision of the Labor Arbiter in
that the amount already received by Michael was to be deducted from the monetary benefits awarded to
him;and deleted the awards for moral and exemplary damages.

RMN moved for reconsideration, but the NLRC denied its motion. Consequently, RMN filed with the Court
of Appeals (CA) its petition for certiorari, submitting that the NLRC thereby committed a grave abuse of its
discretion amounting to lack or excess of its jurisdiction. On August 31, 2004, however, the CA denied
due course to the petition and dismissed it for lack of merit. Hence, this appeal by petition for review on
certiorari.

ISSUE:

WON the quitclaim executed by the employee was valid and effective against him

RULING:

The petition is granted.

That Michael was illegally dismissed from his employment is beyond question. RMN does not dispute this.
Its only submission now is that it was discharged from whatever claims Michael had against it arising from
his employment by virtue of the Affidavit of Release/Quitclaim he signed in its favor. Accordingly, the
remaining question to resolve is whether the quitclaim was valid and binding.

Not all quitclaims are per se invalid or against public policy. A quitclaim is invalid or contrary to public
policy only: (1) where there is clear proof that the waiver was wrangled from an unsuspecting or gullible
person; or (2) where the terms of settlement are unconscionable on their face. In instances of invalid
quitclaims, the law steps in to annul the questionable waiver. Indeed, there are legitimate waivers that
represent the voluntary and reasonable settlements of laborers’ claims that should be respected by the
Court as the law between the parties. Where the party has voluntarily made the waiver, with a full
understanding of its terms as well as its consequences, and the consideration for the quitclaim is credible
and reasonable, the transaction must be recognized as a valid and binding undertaking, and may not later
be disowned simply because of a change of mind. A waiver is essentially contractual.

In our view, the requisites for the validity of Michael’s quitclaim were satisfied.
Firstly, Michael acknowledged in his quitclaim that he had read and thoroughly understood the terms of
his quitclaim and signed it of his own volition. Being a radio broadcaster and production manager, he
occupied a highly responsible position in the company, therefore, it would be implausible to hold, that he
could be easily duped into simply signing away his rights. Secondly, the settlement pay of P311,922.00
was credible and reasonable considering that Michael did not even assail such amount as
unconscionably low, or even state that he was entitled to a higher amount. Thirdly, that he was required to
sign the quitclaim as a condition to the release of the settlement pay did not prove that its execution was
coerced. RMN only took steps to protect its interest and obtain its release from all obligations once it paid
Michael his settlement pay. And, lastly, that he signed the quitclaim out of fear of not being able to provide
for the needs of his family and for the schooling of his children did not immediately indicate that he had
been forced to sign the same. Dire necessity should not necessarily be an acceptable ground for
annulling the quitclaim, especially because it was not at all shown that he had been forced to execute it
nor was it even proven that the consideration for the quitclaim was unconscionably low, and that he had
been tricked into accepting the consideration.

With the quitclaim having been freely and voluntarily signed, RMN was released and absolved from any
liability in favor of Michael. Suffice it to say that the quitclaim is ineffective in barring recovery of the full
measure of an employee's rights only when the transaction is shown to be questionable and the
consideration is scandalously low and inequitable. Such is not true here.

WHEREFORE, the Court GRANTS the petition for review on certiorari; REVERSES and SETS ASIDE the
decision promulgated on August 31, 2004; DECLARES the Affidavit of Release/Quitclaim executed by
and between respondent Michael Maximo R. Amurao III and petitioner Radio Mindanao Network, Inc.
valid and binding; and DISMISSES the complaint for illegal dismissal of Michael Maximo R. Amurao III.
No pronouncement on costs of suit. SO ORDERED.

23. Imasen Manufacturing Philippine Corp., vs. Alcon et al, GR No. 194884, October 22, 2014

FACTS:

Petitioner Imasen Philippine Manufacturing Corporation is a domestic corporation engaged in the

manufacture of auto seat-recliners and slide-adjusters. It hired the respondents as manual welders in
2001.

On October 5, 2002, respondents reported for work from 8:00 pm to 5:00 am of the following day,
however, at around 12:40 am, Altiche, Imasen’s security guard saw the respondents having sexual
intercourse on the floor, using a piece of carton as mattress. Altiche immediately relayed what he saw to
Danilo S. Ogana, another security guard on duty. Ogana made a follow-up inspection and saw several
employees, including the respondents, already leaving the area but noticed that Alcon picked up the
carton that Altiche claimed the respondents used as mattress during their sexual act, and returned it to
the place where the cartons were kept. Altiche then submitted a handwritten report of the incident to
Imasen’s Finance and Administration Manager.

October 14, 2002, Imasen issued the respondents separate interoffice memoranda informing them of
Altiche’s report on the October 5, 2002 incident and directing them to submit their individual explanation.
The respondents complied with the directive; they claimed that they were merely sleeping at the time of
the incident. On October 22, 2002, Imasen directed them to appear at the formal hearing of the
administrative charge against them which was conducted on October 30, 2002. On December 4, 2002,
Imasen issued the respondents separate interoffice memoranda terminating their services stating that it
found the respondents guilty of the act charged which it considered as "gross misconduct contrary to the
existing policies, rules and regulations of the company."

On December 5, 2002, the respondents filed before the LA the Complaint for illegal dismissal. The
respondents maintained their version of the incident. In the December 10, 2004 decision, the LA
dismissed the respondents’ complaint for lack of merit. In its December 24, 2008 decision, the NLRC
dismissed the respondents’ appeal for lack of merit, affirming the LA’s ruling, the NLRC declared that
Imasen substantially and convincingly proved just cause for dismissing the respondents and complied
with the required due process.

The respondents filed before the CA a petition for certiorari where the CA nullified the NLRC’s ruling. The
CA disagreed with the conclusion that the respondents’ sexual intercourse inside company premises
constituted serious misconduct that the Labor Code considers sufficient to justify the penalty of dismissal.
The CA reduced the respondents’ penalty to a three month suspension and ordered Imasen to: (1)
reinstate the respondents to their former position without loss of seniority rights and other privileges; and
(2) pay the respondents backwages from December 4, 2002 until actual reinstatement, less the wages
corresponding to the three-month suspension.

Accordingly, Imasen filed the present petition after the CA denied its motion for Reconsideration in the
CA’s December 22, 2010 resolution.

ISSUE:

WON the respondents’ infraction – engaging in sexual intercourse inside company premises during work
hours – amounts to serious misconduct within the terms of Article 282 (now Article 296) of the Labor
Code justifying their dismissal
RULING:

The petition is granted.

Tenurial Security vis-à-vis Management Prerogative

The law and jurisprudence guarantee to every employee security of tenure.Thus, the Court will not
hesitate to strike down as invalid any employer act that attempts to undermine workers’ tenurial security.
In protecting the rights of the workers, the law, however, does not authorize the oppression or self-
destruction of the employer.The constitutional commitment to the policy of social justice cannot be
understood to mean that every labor dispute shall automatically be decided in favor of labor. The
constitutional and legal protection equally recognize the employer’s right and prerogative to manage its
operation according to reasonable standards and norms of fair play. An employer has free reign over
every aspect of its business, including the dismissal of his employees as long as the exercise of its
management prerogative is done reasonably, in good faith, and in a manner not otherwise intended to
defeat or circumvent the rights of workers. In these lights, the Court’s task in the present petition is to
balance the conflicting rights of the respondents to security of tenure, on one hand, and of Imasen to
dismiss erring employees pursuant to the legitimate exercise of its management prerogative, on the other.

Management’s right to dismiss an employee; serious misconduct as just cause for the dismissal

The just causes for dismissing an employee are provided under Article 282 (now Article 296) of the Labor
Code. Under Article 282(a), serious misconduct by the employee justifies the employer in terminating his
or her employment. Misconduct is defined as an improper or wrong conduct. It is a transgression of some
established and definite rule of action, a forbidden act, a dereliction of duty, willful in character, and
implies wrongful intent and not mere error in judgment. For misconduct or improper behavior to be a just
cause for dismissal, the following elements must concur: (a) the misconduct must be serious; (b) it must
relate to the performance of the employee’s duties showing that the employee has become unfit to
continue working for the employer; and (c) it must have been performed with wrongful intent.

The respondents’ infraction amounts to serious misconduct within the terms of Article 282 (now
Article296) of the Labor Code justifying their dismissal.

After due consideration, we find the NLRC legally correct and well within its jurisdiction when it affirmed
the validity of the respondents’ dismissal on the ground of serious misconduct.

Sexual acts and intimacies between two consenting adults belong, as a principled ideal, to the realm of
purely private relations. Whether aroused by lust or inflamed by sincere affection, sexual acts should be
carried out at such place, time and circumstance that, by the generally accepted norms of conduct, will
not offend public decency nor disturb the generally held or accepted social morals. Under these
parameters, sexual acts between two consenting adults do not have a place in the work environment.

Indisputably, the respondents engaged in sexual intercourse inside company premises and during work
hours which are already punishable misconduct. The respondents did not only disregard company rules
but flaunted their disregard in a manner that could reflect adversely on the status of ethics and morality in
the company. Additionally, the respondents engaged in sexual intercourse in an area where co-
employees or other company personnel have ready and available access. The respondents likewise
committed their act at a time when the employees were expected to be and had, in fact, been at their
respective posts, and when they themselves were supposed to be, as all other employees had in fact
been, working.

Under these factual premises and in the context of legal parameters we discussed, we cannot help but
consider the respondents’ misconduct to be of grave and aggravated character so that the company was
justified in imposing the highest penalty available ― dismissal. Their infraction transgressed the bounds
of socially and morally accepted human public behavior, and at the same time showed brazen disregard
for the respect that their employer expected of them as employees. By their misconduct, the respondents,
in effect, issued an open invitation for others to commit the same infraction, with like disregard for their
employer’s rules, for the respect owed to their employer, and for their co-employees’ sensitivities. Taken
together, these considerations reveal a depraved disposition that the Court cannot but consider as a valid
cause for dismissal. In ruling as we do now, we considered the balancing between the respondents’
tenurial rights and the petitioner’s interests – the need to defend their management prerogative and to
maintain as well a high standard of ethics and morality in the workplace. Unfortunately for the
respondents, in this balancing under the circumstances of the case, we have to rule against their tenurial
rights in favor of the employer’s management rights.

All told, the respondents’ misconduct,under the circumstances of this case, fell within the terms of Article
282 (now Article 296) of the Labor Code. Consequently, we reverse the CA’s decision for its failure to
recognize that no grave abuse of discretion attended the NLRC’s decision to support the respondents’
dismissal for serious misconduct and reinstate the decision dated December 24, 2008 of the National
Labor Relations Commission in NLRC CA No. 043915-05 (NLRC Case No. RAB IV-12-1661-02-L). SO
ORDERED.

24. Leus vs. St. Scholasticas College vs. Westgrove, G.R No. 187226, January 28, 2015

FACTS:

Cheryll Santos Leus (petitioner) was hired by St. Scholastica's College Westgrove (SSCW), a Catholic
educational institution, as a non-teaching personnel, engaged in pre-marital sexual relations, got pregnant
out of wedlock, married the father of her child, and was dismissed by SSCW, in that order.

The petitioner filed a complaint for illegal dismissal with the Regional Arbitration Branch of the NLRC in
Quezon City against SSCW and Sr. Quiambao (respondents).

Contention of petitioner: the petitioner claimed that SSCW gravely abused its management prerogative
as there was no just cause for her dismissal. She maintained that her pregnancy out of wedlock cannot
be considered as serious misconduct since the same is a purely private affair and not connected in any
way with her duties as an employee of SSCW. Further, the petitioner averred that she and her boyfriend
eventually got married even prior to her dismissal.

Contention of respondent: SSCW claimed that there was just cause to terminate the petitioner's
employment with SSCW and that the same is a valid exercise of SSCW's management prerogative. They
maintained that engaging in pre-marital sex, and getting pregnant as a result thereof, amounts to a
disgraceful or immoral conduct, which is a ground for the dismissal of an employee under the 1992
MRPS.

They pointed out that SSCW is a Catholic educational institution, which caters exclusively to young girls;
that SSCW would lose its credibility if it would maintain employees who do not live up to the values and
teachings it inculcates to its students. SSCW further asserted that the petitioner, being an employee of a
Catholic educational institution, should have strived to maintain the honor, dignity and reputation of
SSCW as a Catholic school.

Ruling of the LA: there was a valid ground for petitioner’s dismissal; that her pregnancy out of wedlock is
considered disgraceful and immoral conduct. Thus, the complaint filed was dismissed. Petitioner
appealed to the NLRC

Ruling of the NLRC: affirmed the decision of LA. The NLRC held that the petitioner's pregnancy out of
wedlock is a "disgraceful or immoral conduct" within the contemplation of Section 94(e) of the 1992
MRPS and, thus, SSCW had a valid reason to terminate her employment. Petitioner filed a petition for
certiorari with the CA alleging that the NLRC gravely abused its discretion in ruling that there was a valid
ground for her dismissal.

Ruling of the CA: denied the petition for certiorari

Hence, petitioner filed a petition for review on certiorari under Rule 45.

ISSUE:

WON the petitioner's pregnancy out of wedlock constitutes a valid ground to terminate her employment.

RULING:

The court grants the petition.

The court finds no substantial evidence to support the conclusion arrived at by the labor tribunals. The
fact of the petitioner's pregnancy out of wedlock, without more, is not enough to characterize the
petitioner's conduct as disgraceful or immoral. There must be substantial evidence to establish that pre-
marital sexual relations and, consequently, pregnancy out of wedlock, are indeed considered disgraceful
or immoral.

In Chua-Qua v. Clave, the Court stressed that to constitute immorality, the circumstances of each
particular case must be holistically considered and evaluated in light of the prevailing norms of conduct
and applicable laws. Otherwise stated, it is not the totality of the circumstances surrounding the conduct
per se that determines whether the same is disgraceful or immoral, but the conduct that is generally
accepted by society as respectable or moral. If the conduct does not conform to what society generally
views as respectable or moral, then the conduct is considered as disgraceful or immoral. Tersely put,
substantial evidence must be presented, which would establish that a particular conduct, viewed in light of
the prevailing norms of conduct, is considered disgraceful or immoral. Thus, the determination of whether
a conduct is disgraceful or immoral involves a two-step process: first, a consideration of the totality of the
circumstances surrounding the conduct; and second, an assessment of the said circumstances visà-vis
the prevailing norms of conduct, i.e., what the society generally considers moral and respectable.

That the petitioner was employed by a Catholic educational institution per se does not absolutely
determine whether her pregnancy out of wedlock is disgraceful or immoral. There is still a
necessity to determine whether the petitioner's pregnancy out of wedlock is considered
disgraceful or immoral in accordance with the prevailing norms of conduct.

When the law speaks of immoral or, necessarily, disgraceful conduct, it pertains to public and secular
morality; it refers to those conducts which are proscribed because they are detrimental to conditions upon
which depend the existence and progress of human society.

Thus, the proscription against "disgraceful or immoral conduct" under Section 94(e) of the 1992 MRPS,
which is made as a cause for dismissal, must necessarily refer to public and secular morality. The Court
does not find any circumstance in this case which would lead the Court to conclude that the petitioner
committed a disgraceful or immoral conduct. It bears stressing that the petitioner and her boyfriend, at the
time they conceived a child, had no legal impediment to marry. Indeed, even prior to her dismissal, the
petitioner married her boyfriend, the father of her child. As the Court held in Radam, there is no law which
penalizes an unmarried mother by reason of her sexual conduct or proscribes the consensual sexual
activity between two unmarried persons; that neither does such situation contravene any fundamental
state policy enshrined in the Constitution.

In sum, the Court finds that the petitioner was illegally dismissed as there was no just cause for the
termination of her employment. SSCW failed to adduce substantial evidence to establish that the
petitioner's conduct, i.e., engaging in premarital sexual relations and conceiving a child out of wedlock,
assessed in light of the prevailing norms of conduct, is considered disgraceful or immoral. The labor
tribunals gravely abused their discretion in upholding the validity of the petitioner's dismissal as the
charge against the petitioner lay not on substantial evidence, but on the bare allegations of SSCW. In
turn, the CA committed reversible error in upholding the validity of the petitioner's dismissal, failing to
recognize that the labor tribunals gravely abused their discretion in ruling for the respondents.

The respondent, St. Scholastica's College Westgrove, is hereby declared guilty of illegal dismissal and is
hereby ORDERED to pay the petitioner, Cheryll Santos Leus, the following: (a) separation pay in lieu of
actual reinstatement equivalent to one (1) month pay for every year of service, with a fraction of at least
six (6) months considered as one (1) whole year from the time of her dismissal up to the finality of this
Decision; (b) full backwages from the time of her illegal dismissal up to the finality of this Decision; and (c)
attorney's fees equivalent to ten percent (10%) of the total monetary award. The monetary awards herein
granted shall earn legal interest at the rate of six percent (6%) per annum from the date of the finality of
this Decision until fully paid. The case is REMANDED to the Labor Arbiter for the computation of
petitioner's monetary awards.

25. St. Lukes Medical Center vs. Sanchez, G.R. NO. 212054, March 11, 2015

FACTS:

On June 29, 2009, Sanchez was hired by petitioner St. Luke's Medical Center, Inc. (SLMC) as a Staff
Nurse, and was eventually assigned at SLMC, Quezon City's Pediatric Unit until her termination on July 6,
2011 for her purported violation of SLMC's Code of Discipline, particularly Section 1, Rule 1 on Acts of
Dishonesty, i.e., Robbery, Theft, Pilferage, and Misappropriation of Funds.

Records reveal that at the end of her shift on May 29, 2011, Sanchez passed through the SLMC
Centralization Entrance/Exit where she was subjected to the standard inspection procedure by the
security personnel. In the course thereof, the Security Guard on-duty, Jaime Manzanade (SG
Manzanade), noticed a pouch in her bag and asked her to open the same. When opened, said pouch
contained the following assortment of medical stocks which were subsequently confiscated.

She was brought to the SLMC In-House Security Department (IHSD) where she was directed to write an
Incident Report explaining why she had the questioned items in her possession. She complied with the
directive and also submitted an undated handwritten letter of apology.

An initial investigation was also conducted by the SLMC Division of Nursing which thereafter served
Sanchez a notice to explain. Consequently, Sanchez was placed under preventive suspension effective
June 3, 2011 until the conclusion of the investigation by SLMC's Employee and Labor Relations
Department (ELRD) which, thereafter, required her to explain why she should not be terminated from
service for "acts of dishonesty" due to her possession of the questioned items in violation of Section 1,
Rule I of the SLMC possession of the questioned items in violation of Section 1, Rule I of the SLMC Code
of Discipline.

After hearing her side, SLMC, on July 4, 2011, informed Sanchez of its decision to terminate her
employment effective closing hours of July 6, 2011

Sanchez filed a complaint for illegal dismissal before the NLRC.

Contention of Sanchez: Sanchez maintained her innocence, claiming that she had no intention of
bringing outside the SLMC's premises the questioned items since she merely inadvertently left the pouch
containing them in her bag as she got caught up in work that day. She further asserted that she could not
be found guilty of pilferage since the questioned items found in her possession were neither SLMC's nor
its employees' property. She also stressed the fact that SLMC did not file any criminal charges against
her. Anent her supposed admission in her handwritten letter, she claimed that she was unassisted by
counsel when she executed the same and, thus, was inadmissible for being unconstitutional.

Contention of SLMC: Sanchez was validly dismissed for just cause as she had committed theft in
violation of Section 1,[28] Rule I of the SLMC Code of Discipline, which punishes acts of dishonesty, i.e.,
robbery, theft, pilferage, and misappropriation of funds, with termination from service.

Ruling of LA: Sanchez was validly dismissed for intentionally taking the property of SLMC's clients for
her own personal benefit, which constitutes an act of dishonesty as provided under SLMC's Code of
Discipline. According to the LA, Sanchez's act of theft was evinced by her attempt to bring the questioned
items that did not belong to her out of SLMC's premises; this was found to be analogous to serious
misconduct which is a just cause to dismiss her. Sanchez appealed to NLRC.

Ruling of NLRC: reversed and set aside the decision of the labor arbiter and held that Sanchez was
illegally dismissed. SLMC moved for reconsideration which was denied. Thus, it filed a petition for
certiorari before the CA.

Ruling of the CA: the CA upheld the NLRC, ruling that the latter did not gravely abuse its discretion in
finding that Sanchez was illegally dismissed. SLMC sought for reconsideration but was denied in a
resolution. Hence, this petition.

ISSUE:

WON Sanchez was illegally dismissed by SLMC.

RULING:

The petition is meritorious.

The Court finds that Sanchez was validly dismissed by SLMC for her willful disregard and disobedience
of Section 1, Rule I of the SLMC Code of Discipline, which reasonably punishes acts of dishonesty, i.e.,
"theft, pilferage of hospital or co-employee property, x x x or its attempt in any form or manner from the
hospital, co-employees, doctors, visitors, [and] customers (external and internal)" with termination from
employment. Such act is obviously connected with Sanchez's work, who, as a staff nurse, is tasked with
the proper stewardship of medical supplies. Significantly, records show that Sanchez made a categorical
admission in her handwritten letter i.e., "[k]ahit alam kong bawal ay nagawa kong [makapag-uwi] ng
gamit" that despite her knowledge of its express prohibition under the SLMC Code of Discipline, she still
knowingly brought out the subject medical items with her. It is apt to clarify that SLMC cannot be faulted in
construing the taking of the questioned items as an act of dishonesty (particularly, as theft, pilferage, or its
attempt in any form or manner) considering that the intent to gain may be reasonably presumed from the
furtive taking of useful property appertaining to another. Note that Section 1, Rule 1 of the SLMC Code of
Discipline is further supplemented by the company policy requiring the turn-over of excess medical
supplies/items for proper handling and providing a restriction on taking and bringing such items out of the
SLMC premises without the proper authorization or "pass" from the official concerned, which Sanchez
was equally aware thereof. Nevertheless, Sanchez failed to turn-over the questioned items and, instead,
"hoarded" them, as purportedly practiced by the other staff members in the Pediatric Unit. As it is clear
that the company policies subject of this case are reasonable and lawful, sufficiently known to the
employee, and evidently connected with the latter's work, the Court concludes that SLMC dismissed
Sanchez for a just cause.

Finally, the Court finds it inconsequential that SLMC has not suffered any actual damage. W hile damage
aggravates the charge, its absence does not mitigate nor negate the employee's liability. Neither is
SLMC's non-filing of the appropriate criminal charges relevant to this analysis. An employee's guilt or
innocence in a criminal case is not determinative of the existence of a just or authorized cause for his or
her dismissal. It is well-settled that conviction in a criminal case is not necessary to find just cause for
termination of employment, as in this case. Criminal and labor cases involving an employee arising from
the same infraction are separate and distinct proceedings which should not arrest any judgment from one
to the other.

15. SUSPENSION OF BUSINESS OPERATIONS

1. Lopez vs. Irvine Construction Corp. GR No. 207253, August 20, 2014

FACTS:

Petitioner Lopez has been employed by Respondent as a laborer since November 1994, and designated
as guard of its warehouse in 2000, working from 7 in to the morning to 4 in the afternoon without any rest
day. In December 18, 2005, Lopez was purportedly terminated, whereupon he was told “Ikaw ay lay-off
muna.” On January 10, 2006, Lopez filed a complaint for Illegal Dismissal.

Irvine refuted Lopez’ claim and alleged that he was only employed as a laborer who sometimes doubles
as a guard. His duty was only to carry construction materials from the supplier’s vehicles to the company
warehouse whenever there is a project in Cavite. In addition, Irvine argued that Lopez was not prevented
from returning to work nor was he deprived of any work assignments or duties. A Return to Work order
dated June 5, 2006 was also sent to Lopez whereupon respondent argues that Lopez was not terminated
from employment, but was rather temporarily laid-off due to bona fide suspension of operation of business
under Article 286 of the Labor Code.

ISSUES:

1. WON Lopez is project or a regular employee.

2. Was there a case of temporary lay-off or Illegal dismissal.
RULING:

1. Lopez is a regular employee. The Supreme Court stated that “project employees” are those who
are assigned to carry out a specific project or undertaking, the scope and duration of which were
specified at the time the employees were engaged for that project. In this case, both the LA and
the NLRC agreed that no substantial evidence had been presented by Irvine to show that Lopez
was assigned to carry out a specific project or undertaking, the duration and scope of which were
specified at the time of the engagement. Citing article 280 of the Labor Code, the SC ruled that
Lopez was already a regular employee as he was employed by Irvine for more than ten years up
to the time that he was purportedly laid-off.

2. Lopez was illegally dismissed. According to the Supreme Court, in invoking article 286 of the
Labor Code, the paramount consideration should be the dire exigency of the business of the
employer that compels it to put some of its employees temporarily out of work. This means that
the employer should be able to prove that it is faced with clear and compelling economic reason
which reasonably forces it to shut down its business operations or particular undertaking,
incidentally resulting to the temporary lay-off of its employees. Due to the grim economic
consequences to the employee, case law states that the employer should also bear the burden of
proving that there are no posts available to which the employee temporarily out of work can be
assigned.

As already discussed, Lopez was a regular employee. Hence, his employment should not be
dependent on the continuation of the Cavite project alone. Moreover, the records do not show
that there was a lack of available post after his last assignment. Irvine also failed to prove that
there exists a dire exigency in its business to warrant the temporary lay-off of Lopez. With Irvine
failing to prove such compliance, the conclusion is that Lopez was constructively dismissed.
There being no valid cause or due process, such dismissal was ruled as illegal.

2. Exocet Security & Allied Services Corp., vs. Serrano, GR No. 198538, Sept. 29, 2014

FACTS:

Petitioner entered into a contract with JG Summit Holdings, whereby respondent, as employee of the
petitioner, would be assigned as “close-in” security of JG Summit’s corporate officers in September 1994.
After 8 years, he was reassigned as close-in security of Lance Gokongwei, and then to his wife. In 2006,
Serrano was relieved by JG Summit. For more than 6 months, he reported back to Exocet without any
assignment. Thus, in 2007, he filed a complaint for illegal dismissal with the NLRC.
In its defense, Exocet denied dismissing Serrano. It alleged that since there were no VIP assignments
available after Serrano was relieved from JG Summit, the latter was temporarily assigned to general
security service. It added that it was Serrano who refused to accept these assignments as he was not
used to being a regular security guard.

ISSUE:

Whether or not Serrano was constructively dismissed.

RULING:

The petition is meritorious.

There is no specific provision of law which treats of a temporary retrenchment or lay-off and provides for
the requisites in effecting it or a period or duration therefor. These employees cannot forever be
temporarily laid-off. To remedy this situation or fill the hiatus, Article 286 [now 292] may be applied but
only by analogy to set a specific period that employees may remain temporarily laid-off or in floating
status. Six months is the period set by law that the operation of a business or undertaking may be
suspended thereby suspending the employment of the employees concerned. The temporary lay-off
wherein the employees likewise cease to work should also not last longer than six months. After six
months, the employees should either be recalled to work or permanently retrenched following the
requirements of the law, and that failing to comply with this would be tantamount to dismissing the
employees and the employer would thus be liable for such dismissal.

When a security guard is placed on a "floating status," he does not receive any salary or financial benefit
provided by law. Due to the grim economic consequences to the employee, the employer should bear the
burden of proving that there are no posts available to which the employee temporarily out of work can be
assigned.

In this case however, there is no showing that Exocet was in bad faith when it placed Serrano in floating
status for more than 6 months. Serrano’s lack of assignment cannot be attributed to the petitioner. On the
contrary, in as early was one month after Serrano was relieved, Exocet had already offered him general
security service assignment as there were no available VIP contracts, their availability being not wholly
within Exocet’s control.

SC ruled that a security guard’s security of tenure does not give him a vested right to the position as
would deprive the company of its prerogative to change the assignment of, or transfer the security guard
to a station where his services would be most beneficial to the client. Thus, it is manifestly unfair and
unacceptable to immediately declare the mere lapse of the six-month period of floating status as a case of
constructive dismissal, without looking into the peculiar circumstances that resulted in the security guard’s
failure to assume another post. This is especially true in the present case where the security guard’s own
refusal to accept a non-VIP detail was the reason that he was not given an assignment within the six-
month period. The security agency, Exocet, should not then be held liable.

16. DISEASE AS GROUND FOR TERMINATION

1. Deoferio vs. Intel Technology Phils., GR No. 202996, June 18, 2014

FACTS:

On February 1, 1996, respondent Intel Technology Philippines, Inc. (Intel)employed Deoferio as a product
quality and reliability engineer with a monthly salary of P9,000.00. In July2001, Intel assigned him to the
United States as a validation engineer for an agreed period of two years and with a monthly salary of
US$3,000.00. On January 27, 2002, Deoferio was repatriated to the Philippines after being confined at
Providence St. Vincent Medical Center for major depression with psychosis. In the Philippines, he worked
as a product engineer with a monthly salary of P23,000.00.

Deoferio underwent a series of medical and psychiatric treatment at Intel’s expense after his confinement
in the United States. After several consultations, Dr. Lee issued a psychiatric report dated January
17,2006 concluding and stating that Deoferio’s psychotic symptoms are not curable within a period of six
months and "will negatively affect his work and social relation with his co-worker[s]." Pursuant to these
findings, Intel issued Deoferio a notice of termination on March 10, 2006.

Deoferio responded to his termination of employment by filing a complaint for illegal dismissal with prayer
for money claims against respondents Intel and Mike Wentling (respondents). He argued that Intel
violated his statutory right to procedural due process when it summarily issued a notice of termination.
Deoferio also prayed for backwages, separation pay, moral and exemplary damages, as well as
attorney’s fees.

ISSUE:

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

RULING:

We find the petition partly meritorious.

Intel had an authorized cause to dismiss Deoferio from employment. Concomintant to the employer’s right
to freely select and engage an employee is the employer’s right to discharge the employee for just and/or
authorized causes. To validly effect terminations of employment, the discharge must be for a valid cause
in the manner required by law. The purpose of these two-pronged qualifications is to protect the working
class from the employer’s arbitrary and unreasonable exercise of its right to dismiss. In concrete terms,
these qualifications embody the due process requirement in labor cases - substantive and procedural due
process. Substantive due process means that the termination must be based on just and/or authorized
causes of dismissal. On the other hand, procedural due process requires the employer to effect the
dismissal in a manner specified in the Labor Code and its IRR.

The present case involves termination due to disease – an authorized cause for dismissal under Article
284 of the Labor Code. As substantive requirements, the Labor Code and its IRR require the presence of
the following elements:

(1) An employer has been found to be suffering from any disease.

(2) His continued employment is prohibited by law or prejudicial to his health, as well as to the health of
his co-employees.
(3) A competent public health authority certifies that the disease is of such nature or at such a stage that it
cannot be cured within a period of six months even with proper medical treatment. With respect to the first
and second elements, the Court liberally construed the phrase "prejudicial to his health as well as to the
health of his co-employees" to mean "prejudicial to his health or to the health of his co-employees." We
did not limit the scope of this phrase to contagious diseases for the reason that this phrase is preceded by
the phrase "any disease" under Article 284 of the Labor Code, to wit:

Art. 284. Disease as ground for termination. – An employer may terminate the services of an employee
who has been found to be suffering from any disease and whose continued employment is prohibited by
law or is prejudicial to his health as well as to the health of his co-employees: Provided, That he is paid
separation pay equivalent to at least one (1) month salary or to one-half (1/2) month salary for every year
of service, whichever is greater, a fraction of at least six (6) months being considered as one (1) whole
year.

In the current case, we agree with the CA that Dr. Lee’s psychiatric report substantially proves that
Deoferio was suffering from schizophrenia, that his disease was not curable within a period of six months
even with proper medical treatment, and that his continued employment would be prejudicial to his mental
health. This conclusion is further substantiated by the unusual and bizarre acts that Deoferio committed
while at Intel’s employ.

The twin-notice requirement applies to terminations under Article 284 of the Labor Code.
The Labor Code and its IRR are silent on the procedural due process required in terminations due to
disease. Despite the seeming gap in the law, Section 2, Rule 1, Book VI of the IRR expressly states that
the employee should be afforded procedural due process in all cases of dismissals.

We award Deoferio the sum of P30,000.00 as nominal damages for violation of his statutory right to
procedural due process. In so ruling, we take into account Intel’s faithful compliance with Article 284 of
the Labor Code and Section 8, Rule 1, Book 6 of the IRR.

Deoferio is not entitled to salary differential, backwages, separation pay, moral and exemplary damages,
as well as attorney's fees

Deoferio's claim for salary differential is already barred by prescription. Under Article 291 of the Labor
Code, all money claims arising from employer-employee relations shall be filed within three years from
the time the cause of action accrued. In the current case, more than four years have elapsed from the
pre-termination of his assignment to the United States until the filing of his complaint against the
respondents. Deoferio is not entitled to salary differential, backwages, separation pay, moral and
exemplary damages, as well as attorney's fees
Deoferio's claim for salary differential is already barred by prescription. Under Article 291 of the Labor
Code, all money claims arising from employer-employee relations shall be filed within three years from
the time the cause of action accrued. In the current case, more than four years have elapsed from the
pre-termination of his assignment to the United States until the filing of his complaint against the
respondents. Intel Technology Philippines, Inc. is ordered to pay petitioner Marlo A. Deoferio nominal
damages in the amount of P30,000.00.

17. OTHER CAUSES OF SEVERANCE OF EMPLOYMENT RELATION

1. Hechanova Bugay Vilchez Lawyers vs. Atty Matore, GR No. 198261, Oct. 16, 2013

FACTS:

Atty. Leny (Matorre) was hired by the HBV Law Firm as a Senior Associate Attorney on August 1, 2008,
and immediately put regular employment status. She was placed under the supervision of the managing
partner, Atty. Editha (Hechanova). On August 11, 2008, Atty. Leny expressed her feeling of being
harassed by Atty. Editha due to the latter’s alleged irritability, such that she is afraid to approach Atty.
Edtha for instructions because the latter always scolded her in front of the other associates. A meeting
between her and Atty. Editha took place on August 19, 2008, where Atty. Leny told Atty. Editha that since
she was not satisfied with her work and were frequently arguing, it would be best for Atty. Leny to resign,
and requested that it be made effective September 30, 2008 so she can look for other work. Thinking that
the date was too far off, Atty. Editha accepted the resignation, with the condition that it be made effective
September 15, 2008. Atty. Leny thus received a letter from Atty. Editha on September 1, 2008 accepting
her resignation. When she received the letter, Atty. Editha’s secretary Gladys attested that she merely
received the letter and said “okay” without displaying any sign of protest. On the same day, Leny filed a
complaint for illegal dismissal against the law firm. In their position papers, Leny admitted resigning,
while the law firm insisted that Leny voluntarily resigned on August 19, which was accepted by Editha,
and insisted that the resignation take effect on September 15, 2008, not September 30, 2008 as Leny
requested.

The Labor Arbiter ruled in favour of the law firm and held that Leny voluntarily resigned from her
employment, citing jurisprudence that “[o]nce resignation is accepted, the employee no longer has any
right to the job. It, therefore, goes without saying that resignation terminates the employer-employee
relationship.”

On appeal to the NLRC, the latter reversed the LA ruling. It held that in view of the surrounding
circumstances, Leny did not voluntarily resign but was illegally terminated, seen in the light of the
continuing harassments against her and the refusal of Atty. Editha to give her assignments, and assigning
a subordinate to perform Leny’s work all constitute constructive dismissal.

The Court of Appeals also dismissed the petition for certiorari filed by the law firm. There was
constructive dismissal of Leny due to the following reasons: first, Atty. Hechanova belittled Atty. Matorre
regarding her work performance thus causing her emotional strain; second, when Atty. Matorre allegedly
tendered her resignation, HBV Law Firm moved the period of effectivity thereof to an earlier date, thus
making it more difficult for Atty. Matorre to find employment elsewhere; and third, the refusal of HBV Law
Firm to give assignments to Atty. Matorre while she was still at the office is indicative of harassment on
their part.

The law firm thus elevated their case to the Supreme Court by way of petition for review on certiorari,
arguing that no constructive dismissal of Leny took place.

ISSUE:

WON Atty. Leny Matorre was constructively dismissed by the law firm.

RULING:

We find the petition meritorious. The resignation of Atty. Matorre was voluntary and she was not
constructively dismissed.

Atty. Matorre failed to prove that her resignation was not voluntary, and that Atty. Hechanova and other
members of HBV Law Firm committed acts against her that would constitute constructive dismissal.

Atty. Matorre was not able to prove her allegations of harassment, insults, and verbal abuse on the part of
Atty. Hechanova.
The case of Vicente v. Court of Appeals (Former 17th Div.)⁠1 is instructive on this matter. In the case at
bar and in Vicente, the fact of resignation is not disputed, but only the voluntariness thereof. In Vicente,
the employee alleged that her employer forced her to resign. The Court held that she voluntarily resigned
and was not constructively dismissed. The Court said,

Hence, petitioner cannot take refuge in the argument that it is the employer who bears the burden of proof
that the resignation is voluntary and not the product of coercion or intimidation. Having submitted a
resignation letter, it is then incumbent upon her to prove that the resignation was not voluntary
but was actually a case of constructive dismissal with clear, positive, and convincing evidence.
Petitioner failed to substantiate her claim of constructive dismissal.

xxxx

We agree with the Court of Appeals that it was grave error on the part of the NLRC to rely on the
allegation that Mr. Tecson threatened and forced petitioner to resign. Other than being unsubstantiated
and self- serving, the allegation does not suffice to support the finding of force, intimidation, and ultimately
constructive dismissal.

Bare allegations of constructive dismissal, when uncorroborated by the evidence on record,

cannot be given credence.

Digitel Telecommunications Philippines, Inc. v. Soriano is similarly enlightening. In that case, the
employee, a Director for Market and Communications, claimed that her employers harassed her to
compel her to resign. This Court found that the employee failed to present a single witness to substantiate
her claims of harassment and that her narration of events was unbelievable and contrary to human
experience. It was then held that she failed to prove that she was constructively dismissed.

In relation to the two abovementioned decided cases, in the case of Atty. Matorre, she also presented no
evidence of constructive dismissal, apart from her self-serving and uncorroborated allegations.

First, Atty. Matorre was not able to present a single witness to corroborate her claims of verbal abuse and
insults from Atty. Hechanova. She was only able to adduce transcriptions of what she claims were
conversations between her and Atty. Hechanova, and nothing more. These are indeed self-serving and
uncorroborated and should not be given evidentiary weight.

On the other hand, the body of evidence presented by HBV Law Firm would show affidavits
demonstrating that the other personnel in the said law firm neither heard nor saw any inappropriate
behavior on the part of Atty. Hechanova towards Atty. Matorre.

The Affidavit of Gladies Nepomuceno, the secretary of HBV Law Firm, states that the said affiant did “not
believe that Atty. Matorre was treated like a slave” by the firm, as Atty. Matorre argued.

The Affidavit of Gladys C. Vilchez, a partner at HBV Law Firm, states that Atty. Vilchez, whose room was
near Atty. Matorre’s, never heard Atty. Hechanova shout at Atty. Matorre nor speak to her in an offensive
manner.

Second, the act of HBV Law Firm of moving the effectivity date of Atty. Matorre’s resignation from
September 30, 2008 to September 15, 2008 is not an act of harassment, as Atty. Matorre would have us
believe. The 30- day notice requirement for an employee’s resignation is actually for the benefit of the
employer who has the discretion to waive such period. Its purpose is to afford the employer enough time
to hire another employee if needed and to see to it that there is proper turn-over of the tasks which the
resigning employee may be handling. As one author⁠7 puts it,

x x x The rule requiring an employee to stay or complete the 30- day period prior to the effectivity of his
resignation becomes discretionary on the part of management as an employee who intends to resign
may be allowed a shorter period before his resignation becomes effective. (Emphasis supplied.)
Moreover, the act of HBV Law Firm of moving the effectivity date of Atty. Matorre’s resignation to an
earlier date cannot be seen as a malicious decision on the part of the firm in order to deprive Atty. Matorre
of an opportunity to seek new employment. This decision cannot be viewed as an act of harassment but
rather merely the exercise of the firm’s management prerogative. Surely, we cannot expect employers to
maintain in their employ employees who intend to resign, just so the latter can have continuous work as
they look for a new source of income.

Third, the fact that HBV Law Firm was no longer assigning new work to Atty. Matorre after her resignation
is not an act of harassment, but is also an exercise of management prerogative.

Expecting that Atty. Matorre would no longer be working for HBV Law Firm after three to four weeks, she
was no longer given additional assignments to ensure a smooth turn-over of duties and work. Indeed,
having an employee focus on her remaining tasks and not assigning new ones to her would be beneficial
on the part of HBV Law Firm as there would in fact be less tasks to be turned over to Atty. Matorre’s
replacement. Said actuation is well within the ambit of the firm’s management prerogative, and is certainly
not an act of harassment.

To reiterate, in line with settled jurisprudence,⁠8 since Atty. Matorre admittedly resigned, it was incumbent
upon her to prove that her resignation was not voluntary, but was actually a case of constructive
dismissal, with clear, positive, and convincing evidence.

As shown above, Atty. Matorre failed to present any evidence of constructive dismissal, such as proof of
the alleged harassment, insults, and verbal abuse she allegedly received during her stay at HBV Law
Firm that led her to terminate her employment. Thus, it can be concluded that she resigned voluntarily.

Since Atty. Matorre failed to prove that she was illegally or constructively dismissed, there is no need to
discuss the issue of her monetary claims due to her lack of entitlement thereto.
WHEREFORE, the petition is GRANTED.

2. Intel Technology Phils Inc. vs. NLRC et al., GR No. 200575, February 5, 2014

FACTS:

Private respondent Jeremias Cabiles (Cabiles) was hired by petitioner Intel Technology Philippines, Inc.
(Intel Phil) in April 16, 1997. Throgh the years, Cabiles was promoted several times and was also
assigned to Intel Arizona and Intel Chengdu. He later applied for a position in Intel Hong Kong (Intel HK).
In December of 2006, Cabiles received an offer by Intel HK for the position of Finance Manager. Before
accepting such offer, Cabiles inquired with Intel Phil through an email as to the consequences of him
accepting the offer, specifically on his retirement benefits from Intel Phil. Intel Phil, through Penny
Gabronino, replied to Cabiles that he is not yet eligible for the retirement plan as he has not reached the
minimum 10 years of service with them (just over 9 years of service) and such counting of the period will
be suspended if he does indeed transfer to Intel HK but will be continued if he decides to work for Intel
Phil again in the future. Despite such, Cabiles signed the job offer on January 31, 2007.

On March 8, 2007, Intel Phil issued his “Intel Final Pay Separation Voucher” to which he accepted and
executed a Waiver and Quitclaim in favor of Intel Phil. On September8, 2007, after 7 months of
employment in Intel HK, he resigned. About 2 years after, or on August 18, 2009, he filed a Complaint for
non-payment of retirement benefits against Intel Phil before the NLRC RAB-IV.

The LA ordered Intel Phil to pay the retirement pay to Cabiles holding that he did not sever his
employment with Intel Phil when he moved to Intel HK, similar to when he was assigned at Intel Arizona
and Intel Chengdu. The NLRC affirmed the LA decision. The CA affirmed the findings of the NLRC.

ISSUE:

WON the transfer of Cabiles to Intel HK was tantamount to resignation from Intel Phil.

RULING:

The petition is granted and the decision of the CA is reversed and set aside and Cabiles is ordered to
restitute to petitioner whatever amount he has received.

Resignation is the formal relinquishment of an office, the overt act of which is coupled with an intent to
renounce. This intent could be inferred from the acts of the employee before and after the alleged
resignation.

In this case, Cabiles, while still on a temporary assignment in Intel Chengdu, was offered by Intel HK the
job of a Finance Manager. The words he used in his inquiry email — local hire, close, clearance —
denote nothing but his firm resolve to voluntarily disassociate himself from Intel Phil. and take on new
responsibilities with Intel HK. Despite a non-favorable reply as to his retirement concerns, Cabiles still
accepted the offer of Intel HK. His acceptance of the offer meant letting go of the retirement benefits he
now claims as he was informed through email correspondence that his 9.5 years of service with Intel Phil.
would not be rounded off in his favor.

The continuity, existence or termination of an employer-employee relationship in a typical secondment

contract or any employment contract for that matter is measured by the following yardsticks:
1. The selection and engagement of the employee;
2. The payment of wages;
3. The power of dismissal; and
 4. The employer's power to control the employee's conduct.

As applied, all of the above benchmarks ceased upon Cabiles' assumption of duties with Intel HK on
February 1, 2007. Intel HK became the new employer. It provided Cabiles his compensation. Cabiles
then became subject to Hong Kong labor laws, and necessarily, the rights appurtenant thereto, including
the right of Intel HK to fire him on available grounds. Lastly, Intel HK had control and supervision over him
as its new Finance Manager. Evidently, Intel Phil. no longer had any control over him.

Although in various instances, his move to Hong Kong was referred to as an "assignment," it bears
stressing that it was categorized as a "permanent transfer." In Sta. Maria v. Lopez, the Court held that
"no permanent transfer can take place unless the officer or employee is first removed from the
position held, and then appointed to another position." Undoubtedly, Cabiles' decision to move to
Hong Kong required the abandonment of his permanent position with Intel Phil. in order for him to assume
a position in an entirely different company. Clearly, the "transfer" was more than just an assignment.
It constituted a severance of Cabiles' relationship with Intel Phil., for the assumption of a position with a
different employer, rank, compensation and benefits.

3. Sutherland & Global Services Phils Inc., vs. Labrador, GR No. 193107, March 24, 2014

FACTS:

In August 2006, Sutherland hired Labrador as one of its call center agents with the main responsibility of
answering carious queries and complaints through phoned-in calls. In his two years of working at
Sutherland, Labrador committed several infractions. But it was only on June 17, 2008 that Labrador was
finally charged with violation for transgressing the "Non-Compliance Sale Attribute" policy clause stated in
the Employee Handbook. Labrador created a second account for a customer which charged the same
customer twice by using the credit card number given supposedly only for verification purposes.

Under Sutherland's Employee Handbook, Labrador's action is classified as an act of dishonesty or fraud.
On May 24, 2008, Sutherland sent Labrador a Notice to Explain in writing why he should not be held
administratively liable. On May 28, 2008, an administrative hearing was conducted that took into
consideration Labrador's past infractions. After investigation, a recommendation was issued finding
Labrador guilty of violating the Employee Handbook due to gross or habitual neglect of duty.

On June 17, 2008, Labrador submitted his resignation letter. On October 27, 2008, Labrador filed a
complaint for constructive/illegal dismissal before the NLRC.

On February 27, 2009, the LA dismissed the complaint for lack of merit. The LA found just cause to
terminate Labrador's employment, and that his resignation letter had been voluntarily executed. The
NLRC reversed the LA's ruling on May 21, 2009.

The CA affirmed the NLRC’s finding of illegal dismissal. It ruled that Sutherland's decision to terminate
Labrador's services was the proximate cause of his resignation; the resignation letter was submitted
solely for the purpose of avoiding any derogatory record that would adversely affect his future
employment. In effect, he cannot be deemed to have voluntarily resigned because he was forced to
relinquish his position in order to avoid the inevitable termination of employment.

ISSUE:

WON Labrador’s resignation was a valid termination of his employment.

RULING:

The appeal is granted and the decision of the CA is reversed and set aside and the complaint for illegal
dismissal is dismissed.

In the evidence leading to Labrador's dismissal — evidence that Labrador had acknowledged to have
received, thus binding him to its terms — no dispute exists that Labrador committed several infractions. In
fact, the final infraction that brought on his termination was actually a repetition of the first offense.

The first offense (committed on September 24, 2007) already gave rise to a "Last Written Warning" with
the statement that it was a serious offense, constituting neglect of duty for deviating from the
program/department's standard operating procedures. Under this clear warning, a second similar
offense would necessarily lead to his dismissal; otherwise the purpose of a "Last Written
Warning" would have been negated.
The failure to faithfully comply with the company rules and regulations is considered to be a just
cause in terminating one's employment, depending on the nature, severity and circumstances of non-
compliance. "An employer 'has the right to regulate, according to its discretion and best judgment, all
aspects of employment, including work assignment, working methods, processes to be followed, working
regulations, transfer of employees, work supervision, lay-off of workers and the discipline, dismissal and
recall of workers.'"

It was within Sutherland's prerogative to terminate Labrador's employment when he committed a serious
infraction and, despite a previous warning, repeated it. To Sutherland's credit, it duly complied with the
procedural requirement in dismissing an employee; it clearly observed both substantive and procedural
due process. Its action was based on a just and authorized cause, and the dismissal was effected after
due notice and hearing. But before Sutherland could finally pronounce its verdict, Labrador
submitted his resignation letter, impelled no doubt, as Sutherland alleged, by the need to protect
his reputation and his future employment chances.

The issue of whether the resignation letter was voluntarily executed is now moot. Even if Labrador had
not submitted his resignation letter, Sutherland could still not be held liable for constructive
dismissal given the existing just cause to terminate Labrador's employment.

4. Chiang Kai Shek College et al., vs. Torres, GR No. 189456, April 2, 2014

FACTS:

Respondent had been employed as a grade school teacher of the school from July 1970 until 31 May
2003. She was accused of leaking a copy of a special quiz given to Grade 5 students in HEKASI
(Heograpiya, Kasaysayan at Sibika (Geography, History and Civics)). Ms. Benabese narrated that after
giving a special quiz, she borrowed the book of one of her students, Aileen Regine M. Anduyan (Aileen),
for the purpose of making an answer key. When she opened Aileen's book, a piece of paper fell. Said
paper turned out to be a copy of the same quiz she had just given and the same already contained
answers.

Ms. Benabese informed the school's Assistant Supervisor Mrs. Gloria Caneda (Mrs. Caneda) about the
incident. Mrs. Caneda conferred with Assistant Supervisor Encarnacion Koo (Mrs. Koo), who was in
charge of the HEKASI area, and Supervisor Luningning Tibi (Ms. Tibi). Mrs. Koo confronted respondent,
who had initially denied leaking the test paper but later on admitted that she gave the test paper to Mrs.
Teresita Anduyan (Mrs. Anduyan), her co-teacher and the mother of Aileen. Respondent and Mrs.
Anduyan were both directed to submit their written statement on the incident.

On 5 August 2002, Mrs. Koo, Mrs. Caneda and Ms. Tibi executed a written statement stating that when
confronted by Mrs. Koo, respondent initially denied leaking a copy of the quiz but later on admitted to
doing the same. An administrative hearing was conducted on 28 August 2002 wherein respondent and
Mrs. Anduyan were asked questions by the Investigating Committee relative to the leakage of test paper.
On 30 August 2002, the Investigating Committee held a meeting and found respondent and Mrs. Anduyan
guilty of committing a grave offense of the school policies by leaking a special quiz. As shown in the
Minutes of the Meeting on 30 August 2002, the Committee decided to impose the penalty of one-month
suspension without pay on respondent and forfeiture of all the benefits scheduled to be given on
Teacher's Day.

The Investigating Committee had actually decided to terminate respondent and had in fact prepared a
memorandum of termination, but respondent allegedly pleaded for a change of punishment in a short
letter dated 5 September 2002, to wit: “Request for change of punishment from termination to suspension
and I am resigning at the end of the school year. - Mrs. Rosalinda M. Torres” Petitioners acceded to the
request and suspended respondent and Mrs. Anduyan effective 16 September to October 2002. The duo
was directed to report to work on 4 November 2002. Respondent continued her employment from 4
November 2002 until the end of the school year on 26 March 2003.

However, respondent filed on February 14, 2003 a complaint with the tenor of accusing petitioner school
of constructive dismissal alleging that she was forced and pressured to submit the written request for a
change of penalty and commitment to resign at the end of the school year.
The LA dismissed the complaint for lack of merit. The LA deemed respondent's suspension coupled with
petitioner's allowance of respondent's resignation at the end of the school year as generous acts
considering the offense committed. The LA held that there was no constructive dismissal because
respondent was not coerced nor pressured to write her resignation letter. The NLRC affirmed the LA's
findings but ordering petitioners to pay respondent separation pay equivalent to one-half (1/2) month
salary for every year of service on the grounds of equity and social justice.
The CA reversed the NLRC decision and held that respondent was constructively dismissed as there was
no voluntary resignation.

ISSUE:

WON the school's act of imposing the penalty of suspension instead of immediate dismissal from service
at the request of the erring employee, in exchange for the employee's resignation at the end of the school
year, constitutes constructive dismissal.

RULING:

Petition is granted and the decision of the CA is reversed and set aside and the NLRC decision
reinstated.

Resignation is the voluntary act of an employee who is in a situation where one believes that personal
reasons cannot be sacrificed for the favor of employment, and opts to leave rather than stay employed. 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.

Respondent had admitted to leaking a copy of the HEKASI 5 special quiz. On 30 August 2002, the
Investigating Committee found respondent guilty of leaking a copy of the special quiz. Based on this
infraction alone, Chiang Kai Shek College would have been justified to validly terminate respondent from
service. Before the Investigating Committee could formalize respondent's dismissal, respondent
handwrote a letter requesting that the penalty be lowered from dismissal to suspension in
exchange for respondent's resignation at the end of the school year.

There is nothing irregular with respondent's handwritten letter. The letter came about because
respondent was faced with an imminent dismissal and opted for an honorable severance from
employment. That respondent voluntarily resigned is a logical conclusion.

Given the indications of voluntary resignation, therefore there is no constructive dismissal in this case.
There was here no discrimination committed by petitioners. While respondent did not tender her
resignation wholeheartedly, circumstances of her own making did not give her any other option.
With due process, she was found to have committed the grave offense of leaking test questions.
Dismissal from employment was the justified equivalent penalty. Having realized that, she asked for, and
was granted, not just a deferred imposition of, but also an acceptable cover for the penalty.

Respondent should not be rewarded for reneging on her promise to resign at the end of the school year.
Otherwise, employers placed in similar situations would no longer extend compassion to employees.
Compromise agreements, like that in the instant case, which lean towards desired liberality that favor
labor, would be discouraged.

5. Grace Christian High School vs. Lavandera, GR No. 177845, August 20, 2014

FACTS:

Filipinas was employed by petitioner Grace Christian High School (GCHS) as high school teacher since
June1977, with a monthly salary of 18,662.00 as of May 31, 2001.

On August 30, 2001,5 Filipinas filed a complaint for illegal (constructive) dismissal, non-payment of
service incentive leave (SIL) pay, separation pay, service allowance, damages, and attorney’s fees
against GCHS6 and/or its principal,7 Dr. James Tan. She alleged that on May 11, 2001, she was
informed that her serviceswere to be terminated effective May 31, 2001, pursuant to GCHS’ retirement
plan which gives the school the option to retire a teacher who has rendered at least 20 years of service,
regardless of age, with a retirement pay of one-half (½) month for every year of service. At that time,
Filipinas was only 58 years old and still physically fit to work. She pleaded with GCHS toallow her to
continue teaching but her services were terminated,8 contrary to the provisions of Republic Act No. (RA)
7641,9 otherwise known as the "Retirement Pay Law."

For their part, GCHS denied that they illegally dismissed Filipinas. They asserted that the latter was
considered retired on May 31, 1997 after having rendered 20 years of service pursuant to GCHS’
retirement plan and that she was duly advised that her retirement benefits in the amount of 136,210.00
based on her salary atthe time of retirement, i.e., 13,621.00, had been deposited to the trustee-bank in
her name. Nonetheless, her services were retained on a yearly basis until May 11, 2001 when she was
informed that her year-to-year contract would no longer be renewed.
ISSUE:

1. WON there was constructive dismissal of Filipinas.

2. WON the CA committed reversible error in using the multiplier "22.5 days" in computing the
Retirement pay differentials of Filipinas.

RULING:

1. In a Decision11 dated March 26, 2002, the Labor Arbiter (LA) dismissed the illegal dismissal complaint
for lack of merit.

The LA found that GCHS has a retirement plan for its faculty and non-faculty members which pertinently
provides:

ARTICLE X
RETIREMENT DATES12
Section 1. Normal Retirement Date– For qualified members of the Plans, the normal retirement date shall
be the last day of the month during which he attains age sixty (60) regardless of length of service or upon
completion of 20 years of service unless extended at the option of the School. Such extension is subject
tothe approval of the School on a case to case and year to year basis. The School reserves the right to
require an employee before it approves his application for an extension of service beyond the normal
retirement date, to have a licensed physician appointed by the School, certify that the employee
concerned has no physical and/or mental impediments which will prevent the employee from performing
the duties in the School.13 (Emphasis supplied)

Consequently, the LA ruled that Filipinas was not terminated from employment but was considered
retired14 as of May 31, 1997 after rendering 20 years of service15 and was only allowed by GCHS to
continue teaching on a year-to-year basis (until May 31, 2001)in the exercise of its option to do so under
the aforementioned retirement plan until she was informed that her contract would not be renewed.

2. The petition is bereft of merit.

RA 7641, which was enacted on December 9, 1992, amended Article 287 of the Labor Code, providing
for the rules on retirement pay to qualified private sector employees in the absence of any retirement plan
in the establishment. The said law32 states that "an employee’s retirement benefits under any collective
bargaining [agreement (CBA)] and other agreements shall not be less than those provided" under the
same – that is, at least onehalf (1/2) month salary for every year of service, a fraction of at least six (6)
months being considered as one whole year – and that "[u]nless 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."

The foregoing provision is applicable where (a) there is no CBA or other applicable agreement providing
for retirement benefits to employees, or (b) there is a CBA or other applicable agreement providing for
retirement benefits but it is below the requirement set by law.33 Verily, the determining factor in choosing
which retirement scheme to apply is still superiority in terms of benefits provided. 34

In the present case, GCHS has a retirement plan for its faculty and non-faculty members, which gives it
the option to retire a teacher who has rendered at least 20 years of service, regardless of age, with a
retirement pay of one-half (1/2) month for every year of service. Considering, however, that GCHS
computed Filipinas’ retirement pay without including one-twelfth (1/12) of her 13th month pay and the
cash equivalent of her five (5) days SIL, both the NLRC and the CA correctly ruled that Filipinas’
retirement benefits should be computed in accordance with Article 287 of the Labor Code, as amended by
RA 7641, being the more beneficent retirement scheme. They differ, however, in the resulting benefit
differentials due to divergent interpretations of the term "one-half (1/2) month salary" as used under the
law.

The Court, in the case of Elegir v. Philippine Airlines,Inc., 35 has recently affirmed that "one-half (1/2)
month salary means 22.5 days: 15 days plus 2.5 days representing one-twelfth (1/12) of the 13th month
pay and the remaining 5 days for [SIL]."36 The Court sees no reason to depart from this interpretation.
GCHS’ argument37 therefore that the 5 days SIL should be likewise pro-rated to their 1/12 equivalent must
fail.1âwphi1

Nonetheless, the Court finds that the award of legal interest at the rate of 6% per annum on the amount
ofP68,150.00 representing the retirement pay differentials due Filipinas should be reckoned from the
rendition of the LA's Decision on March 26, 2002 and not from the filing of the illegal dismissal complaint
as ordered by the CA,40 in accordance with the ruling in Eastern Shipping Lines, Inc. v. CA 41 (Eastern
Shipping). Unlike in MLQU v. NLRC, where the retired teachers sued for the payment of the deficiency in
their retirement benefits, Filipinas' complaint was for illegal (constructive) dismissal, and the obligation to
provide retirement pay was only determined upon the rendition of the LA's Decision, which also found the
same to be deficient vis-a-vis those provided under RA 7641. As such, it is only from the date of the LA's
Decision that GCHS' obligation to pay Filipinas her retirement pay differentials may be deemed to have
been reasonably ascertained and its payment legally adjudged to be due, although the actual base for the
computation of legal interest shall be on the amount finally adjudged. As held in the Eastern Shipping
case:42

When an obligation, not constituting a loan or forbearance of money, is breached, an interest on the
amount of damages awarded may be imposed at the discretion of the court at the rate of 6% per annum.
No interest, however, shall be adjudged on unliquidated claims or damages except when or until the
demand can be established with reasonable certainty. Accordingly, where the demand is established with
reasonable certainty, the interest shall begin to run from the time the claim is made judicially or
extrajudicially (Art. 1169, Civil Code) but when such certainty cannot be so reasonably established at the
time the demand is made, the interest shall begin to run only from the date the judgment of the court is
made (at which time the quantification of damages may be deemed to have been reasonably
ascertained). The actual base for the computation of legal interest shall, in any case, be on the amount
finally adjudged.

6. Goodyear Philippines Inc. vs. Angus, GR No. 185449, November 12, 2014

FACTS:

Angus was employed by Goodyear on November 16, 1966 and occupied the position of Secretary to the
Manager of Quality and Technology.

In order to maintain the viability of its operations in the midst of economic reversals, Goodyear
implemented cost-saving measures which included the streamlining of its workforce. Consequently, on
September 19, 2001, Angus received from Ramos, the Human Resources Director of Goodyear, a letter
which reads as follows:

September 18, 2001

xxxx

Dear Ms. Angus:

Please be advised that, based on a thorough study made by Management, the position of Secretary to
the Manager of Quality & Technology is already redundant or is no longer necessary for its effective
operation and is to be abolished effective today, September 18, 2001.

In view of the above, we regret to inform you that your services, as Secretary to the Manager of Quality &
Technology, will be terminated effective October 18, 2001. Your last day of work, however, will be
effective today, September 18, 2001, to give you a month's time to look for another employment.

As Company practice, termination due to redundancy or retrenclunent is paid at 45 days' pay per year of
service. Considering, that you have rendered 34.92 years of service to the Company as of October 18,
2001, and have reached the required minimum age of 55 to qualify for early retirement, Management has
decided to grant you early retirement benefit at 47 days' per year of service.

The Company will pay you the following termination benefits on October 18, 2001: 47 days' gay per year
of service (which will come from the Pension Fund), fractions of 13th and 14th months pay, longevity pay,
emergency leave and any earned and unused vacation and/or sick leave. The refund of your contributions
to the Goodyear Savings Plan, as well as the Company's share will be handled separately by Security
Bank Corporation, the Administrator of said Plan.

Should the Company find in the future that your services are again needed, it shall inform you of the
opportunity so you can apply. The Company will try to assist you find new work elsewhere, and you may
use Goodyear as a reference, if needed.

We thank you for your 34.92 years of loyal service with Goodyear Philippines, and we wish you success
in your future endeavours.
Very truly yours,

GOODYEAR PHILIPPINES INC.

(signed)
LUIS J. ISON
Manager-Quality & Technology
(signed)
REMIGIO M. RAMOS
Hwnan Resources Director6

Upon receipt, Angus responded through a letter of even date, viz:

Dear Sirs:

With reference to the attached letter dated September 18, 2001, I accept Management decision to avail
early retirement benefit. However, I do not agree on the terms stated therein. I suggest I be given a
premiwn of additional 3 days for every year of service which is only 6.3% or a total of 50 days. I gathered
it is Philippine industry's practice to give premiwn to encourage employees to avail of the early retirement
benefit.

Acceptance of this proposal will make my separation from Goodyear pleasant.

Very truly yours,

(signed)
MARINA L. ANGUS7

Meanwhile and in connection with the retrenchment of Angus, an Establishment Termination Report 8 was
filed by Goodyear with the Department of Labor and Employment (DOLE).

On November 20, 2001, Angus accepted the checks which covered payment of her retirement benefits
computed at 4 7 days' pay per year of service and other company benefits. However, she put the
following annotation in the acknowledgement receipt thereof:

Received under protest - amount is not acceptable. Acceptance is on condition that I will be given a
premiwn of additional 3 days for every year of service.

Since my service was tenninated due to redundancy, I now claim my separation pay as mandated by law.
This is a separate claim from my early retirement benefit.

(Signed)
Marina L. Angus
11-20-019

Allegedly because of the above-quoted annotation, and also of Angus' refusal to sign a Release and
Quitclaim, petitioners took back the checks.10

In response to Angus' protest, Ramos wrote her a letter 11 dated November 29, 2001 explaining that the
company has already offered her the most favorable separation benefits due to redundancy, that is, 47
days' pay per year of service instead of the applicable rate of 45 days' pay per year of service. And based
on the Retirement Plan under the Collective Bargaining Agreement (CBA) and the parties' Employment
Contract, Angus is entitled to only one of the following kinds of separation pay: (1) normal retirement
which is payable at 47 days' pay per year of service; (2) early retirement at a maximum of 47 days' pay
per year of service; (3) retrenchment, redundancy, closure of establishment at 45 days' pay per year of
service; (4) medical disability at 45 days' pay per year of service; or (5) resignation at 20 days' pay per
year of service. Because of these, Ramos informed Angus that the company cannot anymore entertain
any of her additional claims.

In reply,12 Angus reiterated her claim for both termination pay and early retirement benefits. She also
demanded that she be given a copy of the Notice of Redundancy filed with the DOLE and a copy of the
specific provisions in the Retirement Plan, CBA and Employment Contract which could justify the
prohibition against the grant of both to a separated employee as asserted by petitioners. However,
Ramos merely reminded Angus to claim her checks and brushed aside her demands in a letter 13 dated
December 19, 2001.

On January 17, 2002, Angus finally accepted a check in the amount of P1,958,927.89 purportedly
inclusive of all termination benefits computed at 47 days' pay per year of service. She likewise executed a
Release and Quitclaim 14 in favor of Goodyear.

On February 5, 2002, Angus fil.ed with the Labor Arbiter a complaint for illegal dismissal with claims for
separation pay, damages and attorney's fees against petitioners.

In her Position Paper,15 Angus claimed that her termination by reason of redundancy was effected in
violation of the Labor Code for it was not timely reported to the DOLE and no separation pay was given to
her; that the separation pay to which she is entitled by law is entirely different from the retirement benefits
that she received; that nothing in the company's Retirement Plan under the CBA, the CBA itself or the
Employment Contract prohibits the grant of more than one kind of separation pay; and, that she was only
forced to sign a quitclaim after accepting her retirement benefits.

On the other hand, petitioners asseverated in their Position Paper 16 that Angus was validly dismissed for
an authorized cause; that she voluntarily accepted her termination benefits and freely executed the
corresponding quitclaim; that her receipt of early retirement benefits equivalent to 4 7 days' pay for every
year of service, which amount is higher than the regular separation pay, had effectively barred her from
recovering separation pay due to redundancy; and, that the following Section 1, Article XI of the last
company CBA supports the grant of only one benefit:

It is hereby understood that the availment of the retirement benefits herein provided for shall exclude
entitlement to any separation pay, termination pay, redundancy pay, retrenchment pay or any other
severance pay.

The parties finally agree that an employee shall be entitled to only one (1) benefit, whichever is higher. 17
In her Rejoinder,18 Angus disputed the existence of the aforesaid provision in the company's CBA. She
presented a copy of the latest CBA19 between Goodyear and Unyon ng mga Manggagawa sa Goma sa
Goodyear Phils., Inc. effective for the period July 25, 2001 to July 24, 2004, to show that the provisions
alluded to by the petitioners do not exist. In contrast, she pointed to Section 5, Article VIII of the latest
CBA which she claimed to be the one applicable to her case, viz:

ISSUES:

1. WON the CA erred when it ordered the payment of separation pay to respondent on top of the
retirement pay despite the fact that it is very clear in the collective bargaining agreement that
respondent is entitled to only one type of benefit, either separation pay or retirement benefit,
whichever is higher.
2. WON the CA erred when it ordered the payment of moral damages and attorney's fees
notwithstanding that the complaint for illegal dismissal and money claims lacked merit

RULING:

1. The Petition is devoid of merit.

Angus is entitled to both separation pay and early retirement benefit due to the absence of a
specific provision in the CEA prohibiting recovery of both.

In Aquino v. National Labor Relations Commission,33 citing Batangas Laguna Tayabas Bus
Company v. Court of Appeals34 and University of the East v. Hon. Minister of Labor,35 the Court
held that an employee is entitled to recover both separation pay and retirement benefits in the
absence of a specific prohibition in the Retirement Plan or CBA. Concomitantly, the Court ruled
that an employee's right to receive separation pay in addition to retirement benefits depends upon
the provisions of the company's Retirement Plan and/or CBA. 36

Here, petitioners allege that there is a provision in the last CBA against the recovery of both
retirement benefits and separation pay.1âwphi1 To support their claim, petitioners submitted a
copy of what appears to be a portion of the company CBA entitled "Retirement Plan, Life
Insurance, Physical Disability Pay and Resignation Pay." Section 1, Article XI thereof provides
that the availment of retirement benefits precludes entitlement to any separation pay. The same,
however, can hardly be considered as substantial evidence because it does not appear to be an
integral part of Goodyear's CBA. Even assuming that it is, it would still not suffice as there is no
showing if the CBA under which the said provision is found was the one in force at the time
material to this case. On the other hand, Angus presented the parties' 2001-2004 CBA and upon
examination of the same, the Court agrees with her that it does not contain any restriction on the
availment of benefits under the company's Retirement Plan and of separation pay. Indeed, the
Labor Arbiter and the NLRC erred in ignoring this material piece of evidence which is decisive of
the issue presented before them. The CA, thus, committed no error in reversing the Decisions of
the labor tribunals when it ruled in favor of Angus' entitlement to both retirement benefits and
separation pay.

Moreover, the Court agrees with the CA that the amount Angus received from petitioners
represented only her retirement pay and not separation pay. A cursory reading of petitioners'
September 18, 2001 letter notifying Angus of her termination from employment shows that they
granted her early retirement benefits pegged at 4 7 days' pay per year of service. This rate was
arrived at after petitioners considered respondent's length of service with the company, as well as
her age which qualified her for early retirement. In fact, petitioners were even explicit in stating in
the said letter that the amount she was to receive would come from the company's Pension Fund,
 which, as correctly asserted by Angus, was created to cover retirement benefit payment of
employees. In addition, the document37 showing a detailed account of Angus' termination benefits
speaks for itself as the same is entitled "Sununary of Retirement Pay and other Company
Benefits." In view therefore of the clear showing that what petitioners decided to grant Angus was
her early retirement benefits, they cannot now be permitted to deny having paid such benefit.

Petitioners further argue that Angus is not entitled to retirement pay because she does not meet
the requirements enumerated in the Retirement Plan provision of the CBA. The Court disagrees.
While it is obvious that Angus is not entitled to compulsory retirement as she has not yet reached
the age of 60, there is no denying, however, that she is qualified for early retirement. Under the
provision of the Retirement Plan of the CBA as earlier quoted, a worker who is at least 50 years
old and with at least 15 years of service, and who has been recommended by the President of the
Union for early retirement and duly approved by the Human Resources Director, shall be entitled
to lump sum retirement benefits. At the time of her tennination, Angus was already 57 years of
age and had been in the service for more than 34 years. The exchange of correspondence
between Angus and Ramos also shows that the latter, as Goodyear's Human Resources
Director, offered, recommended and approved the grant of early retirement in favor of the former.
Clearly, all the requirements for Angus' availment of early retirement under the Retirement Plan of
CBA were substantially complied with.

It is worthy to mention at this point that retirement benefits and separation pay are not mutually
exclusive.38Retirement benefits are a form of reward for an employee's loyalty and service to an
employer39 and are earned under existing laws, CBAs, employment contracts and company
policies.40 On the other hand, separation pay is that amount which an employee receives at the
time of his severance from employment, designed to provide the employee with the wherewithal
during the period that he is looking for another employment and is recoverable only in instances
enumerated under Articles 283 and 284 of the Labor Code or in illegal dismissal cases when
reinstatement is not feasible.41 In the case at bar, Article 28342 clearly entitles Angus to
separation pay apart from the retirement benefits she received from petitioners.

2. Angus is entitled to moral damages and attorney's fees.

The Court likewise finds no cogent reason to overturn the CA's award of moral damages in the
amount ofP5,000.00 and attorney's fees. Moral damages is awarded when fraud and bad faith
have been established,46 as in this case. Petitioners' false contention over what has been paid to
Angus suggests an attempt to feign compliance with their legal obligation to grant their employee
all the benefits provided for by agreement and law. Their bad faith is evident in the intent to
circumvent this legal mandate. And as Angus was then forced to litigate her just claims when
petitioners refused to heed her demands for the payment of separation pay, the award of
attorney’s fees equivalent to 10% of the amount of separation pay is also in order.

19. JURISDICTION OF THE LABOR ARBITER

1. Amecos Innovations Inc. et al., vs. Lopez, GR No. 178055, July 2, 2014

FACTS:

Amecos Inc. is a corporation engaged in selling products made by its President and Antonio Mateo.
Amecos received a subpoena in connection with a complaint filed by the SSS for alleged delingquency in
the remittance of contributions in violation of Sec 22a and 22d in relation to Sec 28e of the SSS law.
Amecos explained that it was respondent Eliza Lopez who is at fault. That upon hiring, respondent to
refuse to provide the corp. her SSS number and to be deducted SSS contributions that is why Amecos no
longer enrolled Lopez with the SSS neither did it deduct for contributions until she was terminated. The
corporation settled with SSS.

Thereafter, Amecos demanded respondent Lopez for an amount representing her share in the SSS
contributions. Since Lopez did not comply with the demand, Amecos filed a complaint for sum of money
and damages in the MeTC. Respondent on the other hand, filed an Answer with a motion to dismiss, on
the ground that the court do not have jurisdiction over the issue for it arose out of their employer-
employee relationship.

MeTC dismissed the case.

Appealed to the RTC. The RTC affirmed the view taken by the MeTC that under Article 217(a)(4) of the
Labor Code, claims for actual, moral, exemplary and other forms of damages arising from employer-
employee relationship are under the jurisdiction of the Labor Arbiters or the National Labor Relations
Commission (NLRC); that since petitioners and respondent were in an employer-employee relationship at
the time, the matter of SSS contributions was thus an integral part of that relationship; and as a result,
petitioners’ cause of action for recovery of damages from respondent falls under the jurisdiction of the
Labor Arbiters, pursuant to Article 217(a)(4) of the Labor Code. Petitioners filed a Motion for
Reconsideration which the RTC denied

Court of Appeals dismissed the appeal.

ISSUES:

WON the regular civil court and not the labor arbiter or the national labor relations commission has
jurisdiction over claim[s] for reimbursement arising from employer-employee relations.

RULING:

This Court holds that as between the parties, Article 217(a)(4) of the Labor Code is applicable. Said
provision bestows upon the Labor Arbiter original and exclusive jurisdiction over claims for damages
arising from employer-employee relations. The observation that the matter of SSS contributions
necessarily flowed from the employer-employee relationship between the parties – shared by the lower
courts and the CA – is correct; thus, petitioners’ claims should have been referred to the labor tribunals. In
this connection, it is noteworthy to state that "the Labor Arbiter has jurisdiction to award not only the
reliefs provided by labor laws, but also damages governed by the Civil Code.

2. Indophil Textile Mills Inc. vs. Engr. Adviento, GR No. 171212, August 4, 2014

FACTS:

Salvador Adviento is a civil engineer employed by Indophil Textile. He was diagnosed with Chronic Poly
Sinusitis, and allergic rhinitis. He averred that it is because the Emloyer turn a deaf ear to their plight of
health hazards attendant in his office. He tried to apply in another company but when they learn of his
condition, they turn him down.

He then filed a case of illegal dismissal with payment of backwages with the NLRC. He also filed a case
for damages in the RTC. Respondent alledged that it was by reason of gross negligence of petitioner that
he acquired such occupational disease. A motion to dismiss was filed by the Indophil Textile on the
ground that: (1) the RTC has no jurisdiction over the subject matter of the complaint because the same
falls under the original and exclusive jurisdiction of the Labor Arbiter (LA) under Article 217(a)(4) of the
Labor Code; and (2) there is another action pending with the Regional Arbitration Branch III of the NLRC
in San Fernando City, Pampanga, involving the same parties for the same cause.

The RTC held that petitioner’s alleged failure to provide its employees with a safe, healthy and workable
environment is an act of negligence, a case of quasi-delict. As such, it is not within the jurisdiction of the
LA under Article 217 of the Labor Code. On the matter of dismissal based on lis pendencia, the RTC ruled
that the complaint before the NLRC has a different cause of action which is for illegal dismissal and
prayer for backwages, actual damages, attorney’s fees and separation pay due to illegal dismissal while
in the present case, the cause of action is for quasi-delict.

Petitioner then filed a Petition for Certiorariwith the CA on the ground that the RTC committed grave
abuse of discretion amounting to lack or excess of jurisdiction in upholding that it has jurisdiction over the
subject matter of the complaint despite the broad and clear terms of Article 217 of the Labor Code, as
amended. However, the CA ruled that it was the regular courts that has jurisdiction

In its attempt to overturn the assailed Decision and Resolution of the CA, Indophil argues that
respondent’s claim for damages is anchored on the alleged gross negligence of petitioner as an employer
to provide its employees, including herein respondent, with a safe, healthy and workable environment;
hence, it arose from an employer-employee relationship. The fact of respondent’s employment with
petitioner as a civil engineer is a necessary element of his cause of action because without the same,
respondent cannot claim to have a right to a safe, healthy and workable environment. Thus, exclusive
jurisdiction over the same should be vested in the Labor Arbiter and the NLRC pursuant to Article
217(a)(4) of the Labor Code of the Philippines.

ISSUE:

WON the regular courts has jurisdiction on damages resulting from gross negligence of employe

RULING:

The jurisdiction of the LA and the NLRC is outlined in Article 217 of the Labor Code.
While we have upheld the present trend to refer worker-employer controversies to labor courts in light of
the aforequoted provision, we have also recognized that not all claims involving employees can be
resolved solely by our labor courts, specifically when the law provides otherwise. For this reason, we have
formulated the "reasonable causal connection rule," wherein if there is a reasonable causal connection
between the claim asserted and the employer-employee relations, then the case is within the jurisdiction
of the labor courts; and in the absence thereof, it is the regular courts that have jurisdiction. The pivotal
question to Our mind is whether or not the Labor Code has any relevance to the reliefs sought by the
plaintiffs. For if the Labor Code has no relevance, any discussion concerning the statutes amending it and
whether or not they have retroactive effect is unnecessary.

It is obvious from the complaint that the plaintiffs have not alleged any unfair labor practice. Theirs is a
simple action for damages for tortious acts allegedly committed by the defendants. Such being the case,
the governing statute is the Civil Code and not the Labor Code. It results that the orders under revieware
based on a wrong premise.

Not all disputes between an employer and his employees fall within the jurisdiction of the labor tribunals
suchthat when the claim for damages is grounded on the "wanton failure and refusal" without just cause
of an employee to report for duty despite repeated notices served upon him of the disapproval of his
application for leave of absence, the same falls within the purview of Civil Law. We differentiated between
abandonment per se and the manner and consequent effects of such abandonment and ruled that the
first, is a labor case, while the second, is a civil law case.

Indeed, jurisprudence has evolved the rule that claims for damages under Article 217(a)(4) of the Labor
Code, to be cognizable by the LA, must have a reasonable causal connection with any of the claims
provided for in that article. Only if there is such a connection with the other claims can a claim for
damages be considered as arising from employer-employee relations.

In the case at bench, we find that such connection is nil.

True, the maintenance of a safe and healthy workplace is ordinarily a subject of labor cases. More, the
acts complained of appear to constitute matters involving employee-employer relations since respondent
used to be the Civil Engineer of petitioner. However, it should be stressed that respondent’s claim for
damages is specifically grounded on petitioner’s gross negligence to provide a safe, healthy and workable
environment for its employees −a case of quasi-delict.

When, as here, the cause of action is based on a quasi-delict or tort, which has no reasonable causal
connection with any of the claims provided for in Article 217, jurisdiction over the action is with the regular
courts.

3. Honda Car Phils vs. Honda cars Technical Specialist & Supervisors Union GR No.
204142, Nov. 19 2014

FACTS:

Prior to April 1, 2005, the union members were receiving a transportation allowance of 3,300.00 a month.
On September 3, 2005, the company and the union entered into a Memorandum of Agreement5 (MOA)
converting the transportation allowance into a monthly gasoline allowance starting at 125 liters effective
April 1,2005. Accordingly, the company deducted from the union members’ salaries the withholding tax
corresponding to the conversion to cash of their unused gasoline allowance. The union, on the other
hand, argued that the gasoline allowance for its members is a "negotiated item" under Article XV, Section
15 of the new CBA on fringe benefits. It thus opposed the company’s practice of treating the gasoline
allowance, that, when converted into cash, is considered as compensation income that is subject to
withholding tax. The disagreement between the company and the union on the matter resulted in a
grievance which they referred to the CBA grievance procedure for resolution. As it remained unsettled
there, they submitted the issue to a panel of voluntary arbitrators as required by the CBA. The issues
raised before the Panel of Voluntary Arbitrators are: (1) whether the cash conversion of the gasoline
allowance shall be subject to fringe benefit tax or the graduated income tax rate on compensation; and (2)
whether the company wrongfully withheld income tax on the converted gas allowance.

ISSUE:

WON the Panel of Voluntary Arbitrators has jurisdiction over the case or issues raised therein.

RULING:
The Voluntary Arbitrator has no competence to rule on the taxability of the gas allowance and on the
propriety of the withholding of tax. These issues are clearly tax matters, and do not involve labor disputes.
To be exact, they involve tax issues within a labor relations setting as they pertain to questions of law on
the application of Section 33 (A) of the NIRC. They do not require the application of the Labor Code or the
interpretation of the MOA and/or company personnel policies. Furthermore, the company and the union
cannot agree or compromise on the taxability of the gas allowance. Taxation is the State’s inherent
power; its imposition cannot be subject to the will of the parties.

4. Montero vs. Times Transportation GR No. 1980828, March 16, 2015  BOP2x

FACTS:

Respondent Times Transportation Co., Inc., (TTCI) is a company engaged in the business of land
transportation for passengers and goods. TTCI employed the herein 21 petitioners as bus drivers,
conductors, mechanics, welders, security guards and utility personnel. Rank-and-file employees of TTCI
formed a union named as Times Employees Union (TEU).

As a result of its unabated increase of the cost of operations and losses. It adopted a company-wide
retrenchment program.

TEU declared a strike against TTCI, for disregarding the said return-to-work order, TTCI terminated some
workers and employees on November 1997.

On May 14, 1998, petitioners filed several complaints against TTCI. However, this case was withdrawn on
March 4, 1999 upon motion by the TEU’s counsel. Four years later, several complaints for unfair labor
practice, illegal dismissal with money claims, damages and attorney’s fees were filed against TTCI.

ISSUE:

The main issue in this case is whether or not the petitioners’ complaints for illegal dismissal have already
prescribed.

RULING:

Prescriptive period continues even after the withdrawal of the case as though no action has been filed at
all. While the filing of the complaint for illegal dismissal before the LA interrupted the running of the
prescriptive period, its voluntary withdrawal left the petitioners in exactly the same position as though no
complaint had been filed at all. The withdrawal of their complaint effectively erased the tolling of the
reglementary period. Consequently, when the petitioners filed their complaint for illegal dismissal,
separation pay, retirement benefits, and damages in 2002, their claim, clearly, had already been barred
by prescription.

2011 NLRC RULES OF PROCEDURE OF THE NLRC

1. Nacar vs Gallery Frames

2. Mcbernie vs Ganzon

3. Bergonio, Jr Vs. South East Asian Airlines And Irene Dornier, G.R. No. 195227, April 21,
2014

FACTS:

Proceedings before LA:

Petitioners filed before the LA a complaint for illegal dismissal and illegal suspension with prayer for
reinstatement against respondents South East Asian Airlines (SEAIR) and Irene Dornier as SEAIR’s
President.

LA: petitioners illegally dismissed and ordered the respondents, among others, to immediately reinstate
the petitioners with full backwages. Petitioners filed before the LA a Motion for issuance of Writ of
Execution for their immediate reinstatement.

The respondents filed an opposition to the petitioners’ motion for execution. 7 They claimed that the
relationship between them and the petitioners had already been strained because of the petitioners’
threatening text messages, thus precluding the latter’s reinstatement. Respondents issued a
Memorandum11 directing the petitioners to report for work but petitioners failed to report for work on the
appointed date

Proceedings before the NLRC

Dismissed the respondents’ appeal for non-perfection, denied the respondents’ motion for recon,
respondents filed before the CA a petition for certiorari

The NLRC issued an Entry of Judgment on declaring its November 29, 2006 resolution final and
executory. The LA also issued another writ of execution.14 A Notice of Garnishment was thereafter issued
to the respondents’ depositary bank.

Proceedings before the CA

Dismissal valid and awarded them P30,000.00 as nominal damages for the respondents’ failure to
observe due process reinstatement aspect of the LA’s decision is immediately executory even pending
appeal, such that the employer is obliged to reinstate and pay the wages of the dismissed employee
during the period of appeal until the decision (finding the employee illegally dismissed including the
reinstatement order) is reversed by a higher court.

ISSUE(S):

WON the CA erred in ruling that the NLRC committed grave abuse of discretion in this case.

RULING:

1. We GRANT the petition. Preliminary considerations: jurisdictional limitations of the Court’s

Rule 45 review of the CA’s Rule 65 decision in labor cases

In a Rule 45 petition for review on certiorari, what we review are the legal errors that the CA may have
committed in the assailed decision, in contrast with the review for jurisdictional errors that we undertake in
an original certiorari action.

Within this narrow scope of our Rule 45 review, the question that we ask is: Did the CA correctly
determine whether the NLRC committed grave abuse of discretion in ruling on the case? 20

In addition, the Court’s jurisdiction in a Rule 45 petition for review on certiorari is limited to resolving only
questions of law.

CASE AT BAR: – whether the petitioners may recover the accrued wages prior to the CA’s reversal of the
LA’s May 31, 2005 decision?

Resolution of this question of law, however, is inextricably linked with the largely factual issue of
whether the accrued wages should be computed until December 17, 2008 when the CA reversed the
illegal dismissal findings of the LA or only until February 24, 2006 when the petitioners were supposed to
report for work per the February 21, 2006 Memorandum. In either case, the determination of this factual
issue presupposes another factual issue, i.e., whether the delay in the execution of the reinstatement
order was due to the respondents’ fault. As questions of fact, they are proscribed by our Rule 45
jurisdiction; we generally cannot address these factual issues except to the extent necessary to
determine whether the CA correctly found the NLRC in grave abuse of discretion in affirming the
release of the garnished amount

The jurisdictional limitations of our Rule 45 review of the CA’s Rule 65 decision in labor cases,
notwithstanding, we resolve this petition’s factual issues for we find legal errors in the CA’s
decision.

2. Nature of the reinstatement aspect of the LA’s decision on a finding of illegal dismissal
Otherwise stated, a dismissed employee whose case was favorably decided by the LA is entitled to
receive wages pending appeal upon reinstatement, which reinstatement is immediately
executory.24 Unless the appellate tribunal issues a restraining order, the LA is duty bound to implement
the order of reinstatement and the employer has no option but to comply with it.25

Moreover, and equally worth emphasizing, is that an order of reinstatement issued by the LA is self-
executory, i.e., the dismissed employee need not even apply for and the LA need not even issue a writ of
execution to trigger the employer’s duty to reinstate the dismissed employee.

In short, therefore, with respect to decisions reinstating employees, the law itself has determined a
sufficiently overwhelming reason for its immediate and automatic execution even pending
appeal.29 The employer is duty-bound to reinstate the employee, failing which, the employer is liable
instead to pay the dismissed employee’s salary. The Court’s consistent and prevailing treatment and
interpretation of the reinstatement order as immediately enforceable, in fact, merely underscores the right
to security of tenure of employees that the Constitution 30 protects.

3. The employer is obliged to pay the dismissed employee’s salary if he refuses to reinstate until
actual reinstatement or reversal by a higher tribunal; circumstances that may bar an
employee from receiving the accrued wages
After the LA’s decision is reversed by a higher tribunal, the employer’s duty to reinstate the dismissed
employee is effectively terminated. This means that an employer is no longer obliged to keep the
employee in the actual service or in the payroll. The employee, in turn, is not required to return the wages
that he had received prior to the reversal of the LA’s decision.31
The reversal by a higher tribunal of the LA’s finding (of illegal dismissal), notwithstanding, an employer,
who, despite the LA’s order of reinstatement, did not reinstate the employee during the pendency of the
appeal up to the reversal by a higher tribunal may still be held liable for the accrued wages of the
employee, i.e., the unpaid salary accruing up to the time the higher tribunal reverses the decision. 32

GENERAL RULE: employee may still recover the accrued wages up to and despite the reversal by
the higher tribunal. This entitlement of the employee to the accrued wages proceeds from the immediate
and self-executory nature of the reinstatement aspect of the LA’s decision.

EXCEPTION: an employee may be barred from collecting the accrued wages if shown that the delay
in enforcing the reinstatement pending appeal was without fault on the part of the employer.
To determine whether an employee is thus barred, two tests must be satisfied:
(1) actual delay or the fact that the order of reinstatement pending appeal was not executed prior to its
reversal; and
(2) the delay must not be due to the employer’s unjustified act or omission. Note that under the second
test, the delay must be without the employer’s fault. If the delay is due to the employer’s unjustified
refusal, the employer may still be required to pay the salaries notwithstanding the reversal of the LA’s
decision.

FIRST TEST: THERE WAS actual delay and the order of reinstatement pending appeal was not
executed prior to its reversal
From the time the respondents received copy of the LA’s decision, and the issuance of the writ of
execution, until the CA reversed this decision on December 17, 2008, the respondents had not
reinstated the petitioners, either by actual reinstatement or in the payroll.

SECOND TEST: delay was not due to the employer’s unjustified act or omission
Respondents filed several pleadings to suspend the execution of the LA’s reinstatement order. It shows a
determined effort on the respondents’ part to prevent or suspend the execution of the reinstatement
pending appeal.
2005 Revised Rules of Procedure of the NLRC (2005 NLRC Rules), 34 employers are required to
submit a report of compliance within ten (10) calendar days from receipt of the LA’s decision,
noncompliance with which signifies a clear refusal to reinstate.
Arguably, the 2005 NLRC Rules took effect only on January 7, 2006; hence, the respondents could not
have been reasonably expected to comply with this duty that was not yet in effect when the LA rendered
its decision (finding illegal dismissal) and issued the writ of execution in 2005. Nevertheless, when the LA
issued the February 16, 2006 alias writ of execution and the April 24, 2007 writ of execution, the
2005 NLRC Rules was already in place such that the respondents had become duty-bound to
submit the required compliance report; their noncompliance with this rule all the more showed a clear
and determined refusal to reinstate.

4. Arabit Et. Al Vs Jardine Pacific Finance Inc.

FACTS:

Petitioners were former regular employees of respondent Jardine Pacific Finance, Inc. (formerly MB
Finance) (Jardine). The petitioners were also officers and members of MB Finance Employees
Association-FFW Chapter (the Union), a legitimate labor union and the sole exclusive bargaining agent of
the employees of Jardine. On the claim of financial losses, Jardine decided to reorganize and implement
a redundancy program among its employees. The petitioners were among those affected by the
redundancy program. Jardine thereafter hired contractual employees to undertake the functions these
employees used to perform.

The Union filed a notice of strike with the National Conciliation and Mediation Board (NCMB), questioning
the termination of employment of the petitioners who were also union officers. The Union alleged unfair
labor practice on the part of Jardine, as well as discrimination in the dismissal of its officers and members.
They reached a settlement but In the settlement, the petitioners accepted their redundancy pay without
prejudice to their right to question the legality of their dismissal with the NLRC. Jardine paid the
petitioners a separation package composed of their severance pay, plus their grossed up transportation
allowance.

ISSUE:

WON the petitioners was illegally dismissed because of the implementation of the redundancy program

RULING:

Yes, we cannot accept Jardine’s shallow understanding of the concepts of redundancy and retrenchment
in determining the validity of the severance of an employer-employee relationship. These rulings
appropriately clarify that redundancy does not need to be always triggered by a decline in the business.
Primarily, employers resort to redundancy when the functions of an employee have already become
superfluous or in excess of what the business requires. Thus, even if a business is doing well, an
employer can still validly dismiss an employee from the service due to redundancy if that employee’s
position has already become in excess of what the employer’s enterprise requires.

From this perspective, it is illogical for Jardine to terminate the petitioners’ employment and replace them
with contractual employees. The replacement effectively belies Jardine’s claim that the petitioners’
positions were abolished due to superfluity. Redundancy could have been justified if the functions of the
petitioners were transferred to other existing employees of the company. To dismiss the petitioners and
hire new contractual employees as replacements necessarily give rise to the sound conclusion that the
petitioners’ services have not really become in excess of what Jardine’s business requires.

Guidelines in implementing redundancy

This Court laid down the principle that the employer must use fair and reasonable criteria in the selection
of employees who will be dismissed from employment due to redundancy. Such fair and reasonable
criteria may include the following, but are not limited to: (a) less preferred status (e.g. temporary
employee); (b) efficiency; and (c) seniority. The presence of these criteria used by the employer shows
good faith on its part and is evidence that the implementation of redundancy was painstakingly done by
the employer in order to properly justify the termination from the service of its employees (Golden Thread
Knitting Industries vs NLRC). For the implementation of a redundancy program to be valid, the
employer must comply with the following requisites:

(1) written notice served on both the employees and the Department of Labor and
Employment at least one month prior to the intended date of retrenchment;
(2) payment of separation pay equivalent to at least one month pay or at least one month pay
for every year of service, whichever is higher;
(3) good faith in abolishing the redundant positions; and
(4) fair and reasonable criteria in ascertaining what positions are to be declared redundant
and accordingly abolished (Asian Alcohol vs NLRC).
The first level, based on Asian Alcohol, is broader as the case recognized distinctions on a per position
basis. At this level, Jardine failed to explain why among all of the existing positions in its organization,
Jardine chose the petitioners’ posts as the ones which have already become redundant and terminable.

The second level, derived from Golden Thread, is more specific. Here the distinction narrows down to the
particular employees occupying the same positions which were already declared to be redundant. At this
level, Jardine’s lapse is shown by its failure to explain why among all of its employees whose positions
were determined to be redundant, the petitioners were the ones selected to be dismissed from the
service.

5. Mirant (Philippines) Corporation And Edgardo A. Bautista, Petitioners,

Vs. Joselito A. Caro, G.R. No. 181490 April 23, 2014

FACTS:

CARO filed a complaint10 for illegal dismissal and money claims for 13th and 14th month pay, bonuses
and other benefits, as well as the payment of moral and exemplary damages and attorney’s fees.

He was hired as its Logistics Officer and was assigned at Mirant’s corporate office in Pasay City. There
was a random drug test conducted in the company but Caro did not submit himself Because he averred
that at around 11:30 a.m. of the same day, he received a phone call from his wife’s colleague who
informed him that a bombing incident occurred near his wife’s work station in Tel Aviv, Israel where his
wife was then working as a caregiver.
He immediately called up Cecilia, a member of Drug Watch Committee to explain the reasons for his
failure to submit himself to the random drug test that day. He also proposed that he would submit to a
drug test the following day at his own expense. He never heard from Cecilia again.

CARO received a Show Cause Notice15 from corporation through Jaime Dulot (Dulot), his immediate
supervisor, requiring him to explain in writing why he should not be charged with "unjustified refusal to
submit to random drug testing." The investigating Panel issued an Investigating Report 18 finding
respondent guilty of "unjustified refusal to submit to random drug testing" and recommended a penalty of
four working weeks suspension without pay.

1. LA: NO JUST CAUSE TO TEMRINATE.

- the quitclaim purportedly executed by respondent was not a bona fide quitclaim.
- Order: reinstatement and backwages and P3,000,000.00 as and by way of moral and exemplary
damages, and to pay complainant the amount equivalent to ten percent (10%) of the total awards
as and by way of attorney’s fees.

CARO’S omission merely resulted to a "failure" to submit to the said drug test – and not an "unjustified
refusal."

2. NLRC:
- UNJUSIFIED REFUSAL TO SUBMIT TO DRUG TEST
- CARO submitted a facsimile which he allegedly received from his wife's colleague confirming that
she called and informed him of the bombing incident. However, a perusal of said facsimile x x x
reveals that the same cannot be given any probative value because, as correctly observed by
[petitioners], it can barely be read and upon inquiry with PLDT, the international area code of
Israel which is 00972 should appear on the face of the facsimile if indeed said facsimile originated
from Israel
- CARO could not present proof of his presence at the Israel Embassy on said time and date.
- BUT granted financial assistance to respondent on equitable grounds:10 years of service with
petitioner corporation without any record of violation of company policies, the NLRC ordered
petitioner corporation to pay respondent financial assistance equivalent to one-half (1/2) month
pay for every year of service.

NLRC DENIED BOTH MR’S OF THE PARTIES

3. CERTIORARI BEFORE CA:

- The award of moral and exemplary damages is without basis due to lack of bad faith on the part
of the corporation which merely acted within its management prerogative.
- CA denied petitioners’ motion for reconsideration for lack of merit. It ruled that the arguments in
the motion for reconsideration were already raised in their past pleadings.

ISSUE:

1. WON the petition for certiorari filed by CARO with the CA should have been summarily
dismissed as it lacked the requisite verification and certification against forum shopping under
Sections 4 and 5, Rule 7 of the Rules.
2. WON petition for certiorari before the CA should have been considered moot as respondent
had already previously executed a quitclaim discharging petitioner corporation from all his
monetary claims.

RULING:

CONTENTION OF MIRANT: failure to subscribe the Verification and Certification of Non-Forum Shopping
before a Notary Public, it cannot be considered to have been made under oath. Accordingly, such
omission is fatal to the entire petition for not being properly verified and certified.

I. SC: This jurisdiction has adopted in the field of labor protection a liberal stance towards the construction
of the rules of procedure in order to serve the ends of substantial justice.
If we sustain the argument of petitioners in the case at bar that the petition for certiorari should have been
dismissed outright by the CA, the NLRC decision would have reached finality and respondent would have
lost his remedy and denied his right to be protected against illegal dismissal under the Labor Code, as
amended.

II. SC: Quitclaims executed by laborers are ineffective to bar claims for the full measure of their legal
rights, especially in this case where the evidence on record shows that the amount stated in the quitclaim
exactly corresponds to the amount claimed as unpaid wages by respondent under Annex A of his
Reply filed with the Labor Arbiter.
Prima facie, this creates a false impression that respondent’s claims have already been settled by
petitioner corporation – discharging the latter from all of respondent’s monetary claims. In truth and in
fact, however, the amount paid under the subject quitclaim represented the salaries of respondent that
remained unpaid at the time of his termination – not the amounts being claimed in the case at bar. The
quitclaim was undated and not even notarized although signed

WHEREFORE, the petition for review on certiorari is DENIED. The assailed Decision dated June 26,
2007 and the Resolution dated January 11, 2008 in CA-G.R. SP No. 96153 are AFFIRMED with the
MODIFICATION that only petitioner corporation is found GUILTY of the illegal dismissal of
respondent Joselito A. Caro. Petitioner Edgardo A. Bautista is not held personally liable as then President
of Petitioner Corporation at the time of the illegal dismissal.

6. Castro Jr Vs Ateneo De Naga University Et. Al, Gr No. 175293, July 23, 2014

FACTS:

The petitioner started his employment with respondent Ateneo de Naga University (University) in the first
semester of school year 1960-1961. At the time of his dismissal, he was a regular and full-time faculty
member of the University's Accountancy Department in the College of Commerce. Allegedly, he received
on February 22, 2000 a letter from respondent Fr. Joel Tabora, SJ., the University President, informing
him that his contract (which was set to expire on May 31, 2000) would no longer be renewed. After
several attempts to discuss the matter with Fr. Tabora in person, and not having been given any teaching
load or other assignments effective June 2000, he brought his complaint for illegal dismissal.

The University denied the allegation of illegal dismissal, and maintained that the petitioner was a
participant and regular contributor to the Ateneo de Naga Employees Retirement Plan (Plan); that upon
reaching the age of 60 years on June 26, 1999, he was deemed automatically retired under the Plan; and
that he had been allowed to teach after his retirement only on contractual basis.

Labor Arbiter (LA) ruled in favor of the petitioner declaring the dismissal of complainant to be illegal,
ordering respondents to reinstate complainants to his former position without loss of seniority rights or
other privileges, or at respondents' option, payroll reinstatement; payment of full backwages, damages
and attorney’s fees.

LA later on ordered the respondents to exercise the option of either actual or payroll reinstatement of the
petitioner.

On June 26, 2004, the petitioner executed a receipt and quitclaim in favor of the University respecting his
claim for the benefits under the Plan.

Meanwhile, the NLRC rendered a decision DISMISSING the complaint for lack of merit.

NLRC held that his execution of the receipt and quitclaim respecting his benefits under the Plan estopped
the petitioner from pursuing other claims arising from his employer-employee relationship with the
University.

ISSUE(S):

Whether or not the petitioner's claim for the payment of accrued salaries and benefits for the period that
he was not reinstated was rendered moot and academic by:
(a) His receipt of the retirement benefits and execution of the corresponding receipt and quitclaim in favor
of the respondents; and
(b) The dismissal of his complaint for illegal dismissal by the NLRC

RULING:

Execution of the receipt and quitclaim was not a settlement of the petitioner's claim for accrued salaries.

The NLRC held that the petitioner was estopped from pursuing his complaint for illegal dismissal upon his
receipt of the benefits and his execution of the receipt and quitclaim. however, the payment the petitioner
had received in protest pertained only to his retirement benefits.

The text of the receipt and quitclaim was clear and straightforward, and it was to the effect that the sum
received by the petitioner represented ''full payment of benefits ... pursuant to the Employee's retirement
plan." The quitclaim related only to the settlement of the retirement benefits, which benefits could not be
confused with the reliefs related to the complaint for illegal dismissal.
Worthy to stress is that retirement is of a different species from the reliefs awarded to an illegally
dismissed employee. Retirement is a form of reward for an employee's loyalty and service to the
employer, and is intended to help the employee enjoy the remaining years of his life, and to lessen the
burden of worrying about his financial support or upkeep.
In contrast, the reliefs awarded to an illegally dismissed employee are in recognition of the continuing
employer-employee relationship that has been severed by the employer without just or authorized cause,
or without compliance with due process.

Claim for accrued benefits should be sustained despite dismissal of the petitioner's complaint.

Article 279 of the Labor Code, as amended, entitles an illegally dismissed employee to reinstatement.
Article 223 of the Labor Code requires the reinstatement to be immediately executory even pending
appeal. The law mandates the prompt reinstatement of the dismissed or separated employee, without
need of any writ of execution. The provision of Article 223 is clear that an award for reinstatement shall be
immediately executory even pending appeal and the posting of a bond by the employer shall not stay the
execution for reinstatement. The legislative intent is quite obvious, i.e., to make an award of reinstatement
immediately enforceable, even penoing appeal. In ruling that an order or award for reinstatement does not
require a writ of execution, the Court is simply adhering and giving meaning to this rule. Henceforth, we
rule that an award or order for reinstatement is selfexecutory. After receipt of the decision or resolution
ordering the employee's reinstatement, the employer has the right to choose whether to re-admit the
employee to work under the same terms and conditions prevailing prior to his dismissal or to reinstate the
employee in the payroll. In either instance, the employer has to inform the employee of his choice. The
notification is based on practical considerations for without notice, the employee has no way of knowing if
he has to report for work or not.

Hence, for as long as the employer continuously fails to actually implement the reinstatement aspect of
the decision of the LA, the employer's obligation to the employee for his accrued backwages and other
benefits continues to accumulate.
.
The Court holds that the order of reinstatement of the petitioner was not rendered moot and academic. He
remained entitled to accrued salaries from notice of the LA's order of reinstatement until reversal thereof.
The employee could be barred from claiming accrued salaries only when the failure to reinstate him was
without the fault of the employer.

Considering that the respondents reinstated the petitioner only in November 2002, and that their inability
to reinstate him was without valid ground, they were liable to pay his salaries accruing from the time of the
decision of the LA (i.e., September 3, 2001) until his reinstatement in November 2002. It did not matter
that the respondents had yet to exercise their option to choose between actual or payroll reinstatement at
that point because the order of reinstatement was immediately executory.

7. PHIL. TOURISTERS INC. ET AL, vs MAS TRANSIT WORKERS UNION-ANGLO-KMU, GR No.

201237, Sept. 3, 2014

FACTS:

On June 14, 2000, Respondent Samahan ng Manggagawa sa Mas Transit-Anglo-KMU (the Union) – a
union organized through the affiliation of certain MTI bus drivers/conductors with the Alliance of
Nationalist and Genuine Labor Organizations – filed a petition for certification election before the DOLE.
The DOLE granted the Union’s petition, prompting MTI to file a motion for reconsideration which was,
however, denied.

On September 15, 2000, MTI decided to sell its passenger buses together with its Certificate of Public
Convenience (CPC) issued by LTFRB to PTI. The sale of 50 passenger buses together with MTI’s CPC
was approved by the LTFRB. As such, PTI was issued a new CPC authorizing it to operate using the
passenger buses that were sold.

MTI then issued a "Patalastas" apprising all of its employees of the sale and transfer of its operations to
PTI, and the former’s intention to pay them separation benefits in accordance with law and based on the
resources available. The employees were also advised to apply anew with PTI should they be interested
to transfer. MTI sent each of the individual respondents a Memorandum informing them of their
termination from work, effective on said date, in line with the cessation of its business operations caused
by the sale of the passenger buses to the new owners.

Claiming that the sale was intended to frustrate their right to self-organization and that there was no
actual transfer of ownership of the passenger buses as the stockholders ofMTI and PTI are one and the
same, the Union,filed a complaint for illegal dismissal, unfair labor practice, i.e., illegal lock out, and
damages against MTI and/or Tomas Alvarez (Alvarez), and PTI and Yague (petitioners), before the
NLRC.

In their defense,MTI and Alvarez denied that the individual respondents were illegally dismissed or locked
out, contending that the closure of its business operations was valid and justified. They claimed that the
company was forced to sell its passenger buses to PTI as it was already suffering from serious financial
reverses; and that since there was nothing more to operate, it had no choice but to cease operations.
They further added that the required Establishment Termination Report was submitted to the DOLE on
March 29, 2001, whileseveral employees – including some of the individual respondents – were paid their
separation benefits. Hence, they contended that the claims for reinstatement and backwages were
without factual and legal bases. Finally, they sought the dismissal of the complaint against some of the
respondents since they had executed a "Sinumpaang Salaysay Para sa Pag-uurong ng Demanda" where
they categorically moved for the withdrawal of their complaint.

For their part, petitioners PTI denied any liability to the respondents considering that no employer-
employee relationship existed between them and that petitioners were impleaded just because PTI
happened to be the buyer of some of MTI’s passenger buses. They further pointed out that PTI is not the
predecessor-in-interest of MTI as the sale involved the passenger buses only and did not include the
latter’s other assets.

ISSUE(S):

WON the CA erred in ascribing grave abuse of discretion on the part of the NLRC when the latter gave
due course to petitioners’ appeal and consequently issued a modified Decision absolving petitioners from
liability

RULING:

For an appeal from the LA’s ruling to the NLRC to be perfected, Article 223 (now Article 229) of the Labor
Code requires the posting of a cash or surety bond in an amount equivalent to the monetary award in the
judgment appealed from.

Petitioners filed an appeal memorandum and complied with the other requirements for perfecting an
appeal, save for the posting of the full amount equivalent to the monetary award of P12,833,210.00.
Instead, petitioners filed a motion to reduce bond claiming that they were suffering from liquidity problems
and, in support of their claim, submitted PTI’s AFS which showed a deficit in income. Since this claim was
not amply controverted by respondents, and considering further the significance of petitioners’ argument
raised in their appeal, i.e., that there exists no employer-employee relationship between PTI and the
individual respondents, on the basis of which lies their non-liability, the Court deems that the NLRC did
not gravely abuse its discretion in deciding that these circumstances constitute meritorious grounds for
the reduction of the bond. The absence of grave abuse of discretion in this case is bolstered by the fact
that petitioners’ motion to reduce bond was accompanied by a P5,000,000.00 surety bond which was
seasonably posted within the reglementary period to appeal. In this relation, it must be clarified that while
the partial bond was initially tainted with defects, i.e., that it was initially issued in favor of MTI and not
PTI, and that the bonding company, SSSICI, had no authority to transact business in all courts of the
Philippines at that time, these defects had already been cured by the petitioners’ posting of Supersede as
Bond, in the full amount of P12,833,000.00, issued on November 8, 2004 by the Far Eastern Surety &
Insurance Company, Inc., in timely compliance with the NLRC’s September 30, 2004 Order. Verily, the
subsequent completion of the bond, in addition to the reasons above-stated, behooves this Court to hold
that the NLRC actually had sound bases to take cognizance of petitioners’ appeal. As the Court sees it,
the NLRC’s reinstatement of petitioners’ appeal in this case was merely impelled by the doctrine that
letter-perfect rules must yield to the broader interest of substantial justice, as well as the Labor Code’s
mandate to "use every and all reasonable means to ascertain the facts in each case speedily and
objectively, without regard to technicalities of law or procedure, all in the interest of due process." An act
of a court or tribunal can only be considered to be tainted with grave abuse of discretion when such act is
done in a capricious or whimsical exercise of judgment as is equivalent to lack of jurisdiction, which
clearly is not extant with respect to the NLRC’s cognizance of petitioners’ appeal before it. Thus, the CA’s
ruling granting the certiorari petition on this score must be reversed and set aside. However, considering
that there were other issues raised in the said petition relating to the substantial merits of the case which
were left undecided, a remand of the case for the CA’s resolution of these substantive issues remains in
order, in line with the doctrine of hierarchy of courts as espoused in the St. Martin Funeral Home v. NLRC
ruling.

8. Am-Phil Food Concepts Vs Padilla, Gr No. 188753, October 1, 2014

FACTS:
Petitioner Azuela was employed with Respondent ZAMECO as a maintenance worker. Sometime in
March 2006, Azuelo filed with the Regional Arbitration Branch (RAB) of the NLRC in San Fernando City,
Pampanga a Complaint for Illegal Dismissal and non-payment of benefits against ZAMECO. The
complaint was assigned to Labor Arbiter (LA) Bactin, who after several mediations, ordered the parties to
submit their respective position papers on July 14, 2006. On said date, instead of filing his position paper,
Azuelo moved for the submission of his position paper to be extended to August 4, 2006, which was
granted by LA Bactin. When said date arrived, Azuelo field to submit his position paper, which prompted
LA Bactin to direct Azuelo to submit his position paper on August 22, 2006. On said date, instead of
submitting his positin paper, Azuelo moved for an order directing ZAMECO to furnish him with a complete
copy of the investigation report as regards his dismissal, which the latter opposed asserting that such was
already furnished him. On November 6, 2006, LA Bactin issued an order, which reads:

“Record shows that respondent has already filed its position paper while complainant,
despite ample opportunity given him, filed to file his[,] leaving this office no option but to
dismiss this case for lack of interest.

WHEREFORE, let this case be, as it is hereby dismissed for lack of [merit].

SO ORDERED.”

On November 21, 2006, Azuelo again filed a complaint with the RAB of the NLRC in San Fernando
City, Pampanga for illegal dismissal with money claims against ZAMECO, containing the same
allegations in his first complaint. The second complaint was assigned to LA Abdon. ZAMECO filed
a Motion to Dismiss on the ground of res judicata, averring that Azuelo should have appealed from
LA Bactin’s Order dated November 6, 2006 instead of filing a complaint for illegal dismissal anew.
Azuelo opposed the motion to dismiss alleging that the dismissal of the first complaint was without
prejudice, explaining that his failure to submit a position paper was due to the refusal of ZAMECO
to furnish him with the complete documents pertaining to his dismissal. He claims that as the
dismissal was without prejudice, his remedy was either to file a motion for reconsideration or to re-
file the case within 10 days from receipt of the order of dismissal. LA Abdon dismissed the second
complaint on the ground of res judicata, as the dismissal of the first complaint was with prejudice.
The NLRC, when the case was elevated, affirmed the dismissal stating that his failure to prosecute
his action for unreasonable length of time indeed warranted the dismissal of his first complaint,
which his deemed to be with prejudice, unless otherwise stated. As the November 6, 2006 Order
did not qualify the nature of the dismissal of the first complaint, it is opined that the same was with
prejudice. The Court of Appeals (CA) upheld the NLRC decision.

ISSUE(S):

WON the dismissal of the first complaint for illegal dismissal due to the unreasonable failure of the
complainant to submit his position paper amounts to a dismissal with prejudice, barring the filing of
another complaint on the same ground based on the same allegation by res judicata.

RULING:

The CA did not commit reversible error in upholding the dismissal of the second complaint on the ground
of res judicata. The NLRC did not abuse its discretion in ruling that the Order issued by LA Bactin,
dismissing the first complaint was adjudication on the merits.

The Order dated November 6, 2006, which dismissed Azuelo’s first complaint due to his unreasonable
failure to submit his position paper is unqualified. It is thus considered as an adjudication on the merits
and with prejudice to filing of another complaint.

The 2005 Revised Rules of Procedure of the NLRC (2005 Revised Rules), the rules applicable at the time
of the controversy is silent as to the nature of the dismissal of a complaint on the ground of unreasonable
failure to submit a position paper by the complainant. Nevertheless, the 2005 Revised Rules, provide for
the suppletory application of the Rules of Court to arbitration proceedings before the Las and the NLRC in
the absence of any applicable provisions therein.

The unjustified failure of a complainant in arbitration proceedings before the LA to submit his position
paper is akin to the case of a complainant's failure to prosecute his action for an unreasonable length of
time in ordinary civil proceedings. In both cases, the complainants are remiss, sans reasonable cause, to
prove the material allegations in their respective complaints. Accordingly, the Court sees no reason not to
apply the rules relative to unreasonable failure to prosecute an action in ordinary civil proceedings to the
unjustified failure of a complainant to submit his position paper in arbitration proceedings before the LA.
The dismissal of a case for failure to prosecute has the effect of adjudication on the merits, and is
necessarily understood to be with prejudice to the filing of another action, unless otherwise provided in
the order of dismissal.

Under the rule of res judicata, a final judgment or decree on the merits by a court of competent jurisdiction
is conclusive of the rights of the parties or their privies, in all later suits and on all points and matters
determined in the previous suit. The term literally means a 'matter adjudged, judicially acted upon, or
settled by judgment.' The principle bars a subsequent suit involving the same parties, subject matter, and
cause of action. The rationale for the rule is that 'public policy requires that controversies must be settled
with finality at a given point in time.

Petition DENIED. CA decision affirmed.

9. AZUELO vs ZEMACO II ELECTRIC COOPERATIVE, INC., GR No. 192573, October 22, 2014

FACTS:

Padilla was a regular employee of Am-Phil, engaged in the restaurant business. Sometime in March
2004, the latters officers informed Padilla that Am-Phil would be implementing a retrenchment program
that would be affecting 3 of its employee, with him being one of them. The retrenchment program was
allegedly on account of serious and adverse business conditions. Padilla filed a complaint for illegal
dismissal questioning the choice to retrench him. Labor Arbiter (LA) Chuanico was assigned the
complaint. On May 9, 2005, LA Chuanico rendered the decision finding Padilla illegally dismissed. Among
others, he noted that Am-Phil failed to substantiate its claim of serious business losses and that it failed to
comply with the procedural requirement for a proper retrenchment. Am-Phil filed a motion for leave to file
supplemental rejoinder dated May 20, 2005 but filed only on May 31, 2005. Am-Phil filed an appeal with
the NLRC claiming that LA Chuanico was in error in deciding the case despite the pendency of its motion
for leave to file supplemental rejoinder. Through this supplemental rejoinder, Am-Phil supposedly
intended to submit its audited financial statements for the years 2001 to 2004 and, thereby, prove that it
had suffered business losses.

The NLRC affirmed the decision of LA Chuanico. The Court of Appeals further affirmed the decision
dismissing the petition for certiorari filed before it.

ISSUE:

WON it was proper for LA Chuanico to have ruled that Padilla was illegally dismissed despite Am-Phil’s
pending motion for leave to file supplemental rejoinder to submit its audited financial statements for the
years 2001 to 2004.

RULING:

The motion for leave to file the supplemental order was filed after the promulgated decision. Common
sense dictates that as the motion for leave to file supplemental rejoined was filed after the rendition of the
decision, the decision could not have possibly taken into consideration the motion. Giving consideration to
a motion filed after the promulgation of the decision is not only unreasonable, it is impossible.

Even if we were to ignore the curious fact that the motion was filed after the rendition of the decision, LA
Chuanico was under no obligation to admit the supplemental rejoinder.

Rule V of the 2002 NLRC Rules of Procedure, then in effect, provides : xxx These verified position
papers to be submitted shall cover only those claims and causes of action raised in the complaint
excluding those that may have been amicably settled, and shall be accompanied by all supporting
documents including the affidavits of their respective witnesses which shall take the place of the latter’s
direct testimony. The parties shall thereafter not be allowed to allege facts, or present evidence to
prove facts, not referred to and any cause or causes of action not included in the complaint or
position papers, affidavits and other documents. (Emphasis supplied)

From the provisions of the 2002 Rules, it is clear that a supplemental rejoinder, as correctly ruled by the
National Labor Relations Commission, is not a pleading which a labor arbiter is duty-bound to accept.
Even following changes to the National Labor Relations Commission Rules of Procedure in 2005 and
2011, a rejoinder has not been recognized as a pleading that labor arbiters must necessarily admit. The
2005 and 2011 National Labor Relations Commission Rules of Procedure only go so far as to recognize
that a reply “may” be filed by the parties.

Thus, LA Chuanico was under no obligation to grant Am-Phil’s motion for leave to admit supplemental
rejoinder and, thereby, consider the supplemental rejoinder’s averments and annexes. That Am-Phil had
to file a motion seeking permission to file its supplemental rejoinder (i.e., motion for leave to file) is proof
of its own recognition that the labor arbiter is under no compulsion to accept any such pleading and that
the supplemental rejoinder’s admission rests on the labor arbiter’s discretion.

Am-Phil’s three (3) pleadings having been allowed, Am-Phil had no shortage of opportunities to plead its
claims and to adduce its evidence. It has no basis for claiming that it was not “afforded [a] fair and
reasonable opportunity to explain [its side] of the controversy.” The filing of its motion for leave to admit
supplemental rejoinder represents nothing more than a belated and procedurally inutile attempt at
resuscitating its case.

10. UNIVERSITY OF PANGASINAN vs FERNANDEZ, GR No. 211228, Nov. 12, 2014

FACTS:

Florentino and Nilda Fernandez (Fernandez) filed an illegal dismissal case against University of
Pangasinan Inc.(“UPI” for brevity) with Labor Arbiter Gambito (LA Gambito). LA Gambito ruled in favor of
Fernandez and awarded them separation pay in lieu of reinstatement, and backwages from May 9,
2000(date of illegal dismissal) up to November 6, 2000, the promulgation of judgment. UPI appealed to
the NLRC to no avail however the NLRC reversed it’s decision in a Motion for Reconsideration filed by
UPI. Fernandez filed a Petition for Certiorari in the Court of Appeals(CA) assailing the decision of the
NLRC. The CA ruled in favor of Fernandez and reinstated LA Gambito’s earlier decision. UPI appealed to
the Supreme Court but denied and it’s Motion for Reconsideration was likewise denied thus prompting
the Supreme Court to issue an Entry of Judgment making its resolution final and executory as of July 11,
2005.

Fernandez then moved for the re-computation of their award of backwages and other benefits from the
finality of LA Gambito’s decision up to July 11, 2005 and also prayed for the issuance of a Motion for
Execution. This was questioned by UPI. LA Flores issued a Motion for Execution which included the re-
computation prayed for by Fernandez. UPI filed a Motion for Reconsideration but was denied by LA
Flores being in violation of the NLRC Rules of Procedure. UPI appealed the same to the NLRC which
reversed the decision of LA Flores. Fernandez then filed a Petition for Certiorari in the CA. The CA ruled
in favor of Fernandez.

ISSUE(S):

WON re-computing the awards to include the period of time from LA Gambito’s decision up to the finality
of the Supreme Courts decision (July 11, 2005) is violative of the principle of immutability of a final and
executory judgment.

RULING:

Updating the computation of awards to include as well backwages and separation pay corresponding to
the period after the rendition of LA Gambito's decision on November 6, 2000 up to its finality on July 11,
2005 is not violative of the principle of immutability of a final and executory judgment.

No essential change is made by a re-computation as this step is a necessary consequence that flows
from the nature of the illegality of dismissal declared in that decision. A re-computation (or an original
computation, if no previous computation has been made) is a part of the law—specifically, Article 279 of
the Labor Code and the established jurisprudence on this provision—that is read into the decision. By the
nature of an illegal dismissal case, the reliefs continue to add on until full satisfaction, as expressed under
Article 279 of the Labor Code. The re-computation of the consequences of illegal dismissal upon
execution of the decision does not constitute an alteration or amendment of the final decision being
implemented. The illegal dismissal ruling stands; only the computation of monetary consequences of this
dismissal is affected and this is not a violation of the principle of immutability of final judgments.

That the amount the petitioner shall now pay has greatly increased is a consequence that it cannot avoid
as it is the risk that it ran when it continued to seek recourses against the labor arbiter's decision. Article
279 provides for the consequences of illegal dismissal in no uncertain terms, qualified only by
jurisprudence in its interpretation of when separation pay in lieu of reinstatement is allowed. When that
happens, the finality of the illegal dismissal decision becomes the reckoning point instead of the
reinstatement that the law decrees.

11. METROGUARDS SECURITY AGENCY vs HILONGO, GR No. 215630, March 9, 2015

FACTS:
In his decision in April 30, 2010, the Labor Arbiter (LA) found that Hilongo was illegally dismissed by
petitioner. Petitioner was ordered to pay backwages from the date of the illegal dismissal up to the date of
said decision and also awarded him separation pay. The computation of awards of the LA was P170,520.
Petitioner appealed to the NLRC who revered the decision. Hilongo filed a petition for certiorari with the
CA who ruled in favor of him. Petitioner filed a Motion for Reconsideration, which was denied with finality
in its Resolution dated March 26, 2013. Petitioners no longer appealed the decision of the CA prompting
Hilongo to file a motion for Entry of Judgment and a motion for clarification of decision/resolution praying
that the March 26, 2013 Resolution of the CA include the amount of the award as stated in the Labor
Arbiter’s Decision dated April 30, 2010 and additional award computed from May 1, 2010 to March 26,
2013.

In its Resolution dated June 11, 2013, the CA granted the motion for entry of judgment and noted
Hilongo’s motion for clarification of decision/resolution. The CA held that when an appellate court affirms
the Labor Arbiter’s ruling, it is understood that awards due to the illegally dismissed employee shall be
recomputed in order to account for the period of time that has lapsed from the rendition of the Labor
Arbiter’s decision up to its finality. The case was then remanded to the Labor Arbiter which however ruled
that the computation in the April 30, 2010 prevails. Hilongos filed for extraordinary remedy with the NLRC
which was dismissed and his Motion for Reconsideration also being denied, he filed a petition for
certiorari with the CA. The CA granted Hilongo’s petition.
ISSUE(S):
Whether the CA in re-computing the monetary awards in favor of Hilongo has violated the
principle of immutability of final and executory judgments..
RULING:
The re- computation of the consequences of illegal dismissal upon execution of the decision does
not constitute an alteration or amendment of the final decision being implemented. The illegal dismissal
ruling stands; only the computation of monetary consequences of this dismissal is affected, and this is not
a violation of the principle of immutability of final judgments.
Said CA Decision dated September 7, 2012 became final and executory on April 26, 2013. Thus,
the April 30, 2010 Decision of the Labor Arbiter which ordered the payment of separation pay in lieu of
reinstatement, effectively ended the employment relationship of the parties on April 26, 2013, the date the
CA decision became final. Since the Labor Arbiter’s computation of Hilongo’s monetary award was up to
the date of his April 30, 2010 Decision only, the CA properly decreed the computation of additional back
wages and separation pay.
However, the CA incorrectly concluded that the April 30, 2010 Decision of the Labor Arbiter
became final on June 11, 2013, contrary to its own finding that it became final and executory on April 26,
2013. This led to its erroneous computation of the additional back wages and separation pay of Hilongo,
as well as reckoning the date of the 12% legal interest. Following the teaching of Nacar v. Gallery Frames
that the computation of the monetary consequences (back wages and separation pay) of the illegal
dismissal decision should be reckoned from its finality, the additional back wages and separation pay of
Hilongo should be computed from May 1, 2010 to April 26, 2013. Further, the payment of legal interest of
12% per annum should also be from April 26, 2013 up to June 30, 2013. Thereafter, in accordance with
Bangko Sentral ng Pilipinas Monetary Board’s Circular No. 799, series of 2013, the legal interest
computed from July 1, 2013 until the monetary awards were fully satisfied will be 6% per annum.

12. SEACREST MARTIME MANAGEMENT vs PICAR, G.R. No. 209383, March 11, 2015

FACTS:

Mauricio Picar, Jr. was employed by Sealion Shipping Limited-United Kingdom through its local manning
agent Seacrest Maritime Management, Inc., as Chief Cook continuously for several contracts from April
2005 until his last employment contract in 2010, on board the vessel, “MV Toisa Paladin.” The last
contract was for a fixed duration of three (3) months which commenced on September 5, 2010 with a
basic salary of USD630.00 exclusive of overtime pay and other benefits.

On September 24, 2010, Picar experienced high fever, chilling, lumbar back pain, and difficulty in
urinating accompanied with blood. He was referred for medical treatment to the Maritime Medical Center
(MMC) in Singapore. He was diagnosed with Urinary Tract Infection (UTI) and Renal Calculus. After his
check-up, he was required to go back to the vessel and take a rest. On September 28, 2010, he was
brought back back to MMC where he was confined until October 1, 2010. On October 2, 2010, he was
repatriated.

Upon his arrival in Manila, Picar was referred to Dr. Alegre. He underwent sonography of his kidney and
urinary bladder, which showed “renal cyst on his right kidney; calyceal lithiasis, right; and normal urinary
bladder; slightly enlarged prostate gland was noted.” Dr. Alegre repeatedly recommended that he
undergo extracorporeal shockwave lithotripsy for the dissolution of his right kidney stone.
On February 23, 2011, Picar consulted Dr. Vicaldo who also diagnosed him to be suffering from Right
Renal Calculus, Essential Hypertension. Dr. Vicaldo considered his illness as work aggravated/related
and declared him unfit to resume work as a seafarer in any capacity.

Picar then filed a complaint for permanent disability compensation, balance of sick wages, reimbursement
of medical expenses, moral and exemplary damages, and attorney’s fees.

The Labor Arbiter rendered judgment in favor of Picar. The LA found that his illness was work-related and
that the nature of his work as a chief cook contributed to the aggravation of his condition.

On appeal, the NLRC affirmed in toto the decision of the LA. The NLRC ruled that Picar’s disability was
permanent as he was totally unable to perform his job for more than 120 days from his repatriation.

Petitioners elevated the matter to the CA, while Picar moved for the execution of the LA decision. On July
3, 2012, the LA issued a Writ of Execution for the enforcement and full satisfaction of its decisions.
Consequently, petitioners paid the judgment award as evidenced by the Satisfaction of Judgment
pursuant to a Writ of Execution with Acknowledgment Receipt executed by the NLRC-NCR Sheriff on
August 31, 2012.

The CA, in its assailed decision, dated May 2, 2013, dismissed the petition. The CA, citing Career
Philippines Ship Management, Inc. vs. Madjus, ruled that the payment by petitioners of the judgment
award constituted an amicable settlement that had rendered the petition moot and academic.

ISSUE(S):

WON the petition for certiorari before the CA became moot and academic by the satisfaction of the
judgment award

RULING:

No. The petition for certiorari before the CA was not rendered moot and academic by the petitioner’s
satisfaction of the judgment award in compliance with the writ of execution rendered by the Labor Arbiter.

Petitioners were correct in contending that the settlement of the judgment award was by virtue of a writ of
execution duly issued and was effected specifically without prejudice to further recourse before the CA.
There was nothing voluntary about the satisfaction of the judgment award made in strict and compulsory
compliance with Rule XI, Section 8 of the 2011 NLRC Rules of Procedure. The terms of the settlement
were fair to both the employer and employee.

The case cited by the Court of Appeals, Career Philippines vs. Madjus, finds no application in the present
case. In the said case, while petitioner employer had the luxury of having other remedies available to it
such as its petition for certiorari pending before the CA and an eventual appeal to the SC, respondent
seafarer could no longer pursue other claims, including interests that may accrue during the pendency of
the case. Thus it was there held that the LA and the CA could not be faulted for interpreting petitioner’s
“conditional settelement” to be tantamount to an amicable settlement of the case resulting in the
mootness of the petition for certiorari.

In the present case, no such document was executed between the parties. The payment of the judgment
award without prejudice by petitioners required no obligations whatsoever on the part of Picar.

Petitioners satisfied the judgment award in strict compliance with the duly issued writ of execution and
pursuant to terms fair to both parties. The equitable ruling in Career Philippines vs. Madjus would
certainly be unfair to petitioners in this case as they still have a remedy under the rules. The CA,
therefore, was in error in dismissing the petition for being moot and academic.

13. WATERFRONT CEBU CITY CASINO HOTEL Vs LEDESMA, G.R. No. 197556, March 25, 2015

FACTS:

Debrando Ledesma was employed as a House Detective at Waterfront. He was dismissed on the basis of
the complaints filed before Waterfront by Christe Mandal, a supplier of a concessionaire of Waterfron, and
Rosanna Lofranco, who was seeking a job at the same hotel. It was found, based on the affidavits and
testimonies of Mandal and Lofranco during the administrative hearings conducted by Waterfront, that
Ledesma kissed and mashed the breasts of Mandal inside the hotel’s elevator, and exhibited his penis
and asked Lofranco to masturbate him at the conference room of the hotel.

On August 12, 2008, Ledesma filed a complaint for illegal dismissal.

The Labor Arbiter found that the allegations leveled against Ledesma are mere concoctions, and
concluded that Ledesma was illegally dismissed. The LA ordered the Waterfront to reinstate him to his
former position without loss of seniority right and with full backwages reckoned from the date of the
suspension up to actual reinstatement. It further required the respondent to pay Ledesma his service
incentive leave amounting to 3,910.50.

On appeal, the NLRC reversed the ruling of the LA and held that Ledesma’s act of sexual overtures to
Christe Mandal and Rosanna Lofranco constituted grave misconduct justifying his dismissal from
employment.

The NLRC denied Ledesma’s motion for reconsideration in a Resolution dated February 22, 2010. A copy
of such Resolution was received by Atty. Abellana, Ledesma’s consel of record, on March 15, 2010.

On May 17, 2010, or 63 days after Atty. Abellana received a copy of the NLRC’s Resolution denying the
motion for reconsideration, said counsel filed before the CA a petition for certiorari under Rule 65 of the
Rules of Court.

On August 5, 2010, Ledesma, now assisted by a new counsel, filed a motion for leave to file amended
petition, and sought the admission of his Amended Petition for Certiorari. In the amended petition, he
contended that his receipt on March 24, 2010 (and not the receipt on March 15, 2010 by Atty. Abellana),
is the reckoning date of the 60-day reglementary period within which to file the petition. Hence, Ledesma
claims that the petition was timely filed on May 17, 2010.

ISSUE(S):

WON the petition for certiorari was timely filed with the Court of Appeals

RULING:

The unjustified failure of Ledesma to file his petition for certiorari before the CA within the 60-day period is
a ground for the outright dismissal of said petition.

Atty. Abellana, Ledesma’s counsel, admittedly received a copy of the NLRC Resolution denying the
Motion for Reconsideration on March 15, 2010 while Ledesma received his copy on March 24, 2010. The
last day to file his petition for certiorari is on May 14, 2010, a Friday. Ledesma therefore belatedly filed his
petition on May 17, 2010. When a party to a suit appears by counsel, service of every judgment and all
orders of the court must be sent to the counsel. This is so because notice to counsel is an effective notice
to the client, while notice to the client and not his counsel is not notice in law. Receipt of notice by the
counsel of record is the reckoning point of the reglementary period.

The negligence of Atty. Abellana in the computation of the 60-day period, and reckoning such period from
the party’s receipt of the assailed resolution were similar arguments rejected in Labao vs. Flores. In the
Labao case, the respondents meaintained that they should not suffer the negligence of their counsel in
the late filing of their petition for certiorari, and the 60-day period be reckoned from their own notice of the
NLRC’s denial of their MR. The Supreme Court, however, said that the general rule is: a client is bound
by the acts, even mistakes, of his counsel in the realm of procedural technique.

With the expiration of the 60-day period to file a petition for certiorari, a review of the Resolution of the
NLRC will be beyond the jurisdiction of any court. No longer assailable, the NLRC Resolution could not be
altered or modified. In Labao vs. Flores, the Supreme Court has said that the NLRC’s resolution became
final ten days after counsel’s receipt, and the respondents’ failure to file the petition within the required 60-
day period rendered it impervious to any attack through a Rule 65 petition for certiorari. Thus, no court
can exercise jurisdiction to review the resolution.

The relaxation of procedural rules may be allowed only when there are exceptional circumstances to
justify the same. There should be an effort on the part of the party invoking liberality to advance a
reasonable or meritorious explanation for his/her failiure to comply with the rules.

Both in his petition and amended petition, Ledesma never invoked the liberality of the CA nor endeavored
to justify the belated filing of his petition. Absent valid and compelling reasons for the procedural lapse,
the desired leniency cannot be accorded to him.

Assuming for a moment that the petition for certiorari was timely filed with the CA, said recourse should
suffer the same fate of dismissal for lack of merit. Otherwise stated, there is no substantial justice that
may be served here in disregarding the procedural flaw committed by Ledesma because the NLRC
correctly found him guilty of misconduct or improper behavior in committing lascivious conduct and
demanding sexual favors from Christe Mandal and Rosanna Lofranco.
 14. MANILA MINING CORP vs AMOR, G.R. No. 182800 April 20, 2015

FACTS:

Respondents were regular employees of petitioner Manila Mining Corporation. Petitioner temporarily shut
down its mining operations pending approval of its application to increase said facilty’s capacity by
theDENR-EMB, Butuan City.

Petitioner served a notice, informing its employees and DOLE of the temporary suspension of its
operations for six months and the temporary lay-off of two-thirds of its employees. After the lapse of said
period, petitioner notified the DOLE on 11 December 2001 that it was extending the temporary shutdown
of its operations for another six months. Adversely affected by petitioner’s continued failure to resume its
operations, respondents filed the complaint for constructive dismissal and monetary claims before the
Regional Arbitration Branch No. XIII of the NLRC. On 25 October 2004, Executive Labor Arbiter rendered
a Decision holding petitioner liable for constructive dismissal in view of the suspension of its operations
beyond the six-month period allowed under Article 286.

Aggrieved, petitioner filed its memorandum of appeal before the NLRC11 and moved for the reduction of
the appeal bond to P100,000.00, on the ground that its financial losses in the preceding years had
rendered it unable to put up one in cash and/or surety equivalent to the monetary award. In opposition,
respondents moved for the dismissal of the appeal in view of the fact that, despite receipt of the appealed
decision on 24 November 2004, petitioner mailed their copy of the memorandum of appeal only on 7
February 2005. Respondents also argued that the appeal bond tendered by petitioner was so grossly
disproportionate to monetary award for the same to be considered substantial compliance with the
requirements for the perfection of an appeal from a Labor Arbiter’s decision. Without addressing the
procedural issues raised by respondents, however, the NLRC Fifth Division went on to render a
Resolution reversing the appealed decision and dismissing the complaint for lack of merit.

Respondents filed the Rule 65 petition for certiorari before the Mindanao Station of the CA. Insisting that
petitioner’s memorandum of appeal was filed 65 days after the lapse of reglementary period for appeal,
respondents called attention to the fact that, as grossly inadequate as it already was vis-à-vis the
P2,138,190.02 monetary award adjudicated in their favor, the check in the sum of P100,000.00 deposited
by petitioner by way of appeal bond was dishonored upon presentment for payment.

CA then rendered decision granting respondents’ petition and nullifying the NLRC’s Resolution.
Petitioner’s motion for reconsideration of the foregoing decision was denied for lack of merit. Hence, this
Rule 45 petition for review on certiorari.

ISSUE(S):

1. WON the petitioner’s appeal filed with the national labor relations commission was fatally defective.
2. WON the bond posted was valid.

RULING:

Time and again, it has been held that the right to appeal is not a natural right or a part of due process; it is
merely a statutory privilege, and may be exercised only in the manner and in accordance with the
provisions of law.

Having received the Labor Arbiter’s Decision on 24 November 2004, petitioner had ten (10) calendar days
or until 4 December 2004 within which to perfect an appeal. Considering that the latter date fell on a
Saturday, petitioner had until the next working day, 6 December 2004, within which to comply with the
requirements for the perfection of its appeal. Our perusal of the record shows that, despite bearing the
date 3 December 2004, petitioner’s memorandum of appeal was subscribed before Notary Public Ronald
Rex Recidoro only on 6 December 2004. Without proof as to the actual date of filing of said pleading
being presented by both parties, the CA discounted the timeliness of its filing in light of the established
fact that the copy thereof intended for respondents was only served by registered mail on 7 February
2005. Since proof of service of the memorandum on appeal is required for the perfection of an appeal
from the decision of the Labor Arbiter, the CA ruled that "respondents filed its appeal not earlier than 07
February 200[5], which is way beyond the ten-day reglementary period to appeal."

As allegation is not evidence, however, the rule is settled that the burden of evidence lies with the party
who asserts the affirmative of an issue. As the parties claiming the non-perfection of petitioner’s appeal, it
was, therefore, respondents who had the burden of proving that said memorandum of appeal was,
indeed, filed out of time. By and of itself, the fact that the copy of memorandum of appeal intended for
respondents was served upon them by registered mail only on 7 February 2005 does not necessarily
mean that petitioner’s appeal from the Labor Arbiter’s decision was filed out of time. On the principle that
justice should not be sacrificed for technicality, it has been ruled that the failure of a party to serve a copy
of the memorandum to the opposing party is not a jurisdictional defect and does not bar the NLRC from
entertaining the appeal. Considering that such an omission is merely regarded as a formal lapse or an
excusable neglect, the CA reversibly erred in ruling that, under the circumstances, petitioner could not
have filed its appeal earlier than 7 February 2005.

2. Furthermore, on the matter of the filing and acceptance of motions to reduce appeal bond, as provided
in Section 6, Rule VI of the 2011 NLRC Rules of Procedure, the Court hereby RESOLVES that
henceforth, the following guidelines shall be observed:

(a) The filing of a motion to reduce appeal bond shall be entertained by the NLRC subject to the following
conditions: (1) there is meritorious ground; and (2) a bond in a reasonable amount is posted;

(b) For purposes of compliance with condition no. (2), a motion shall be accompanied by the posting of a
provisional cash or surety bond equivalent to ten percent (10), of the monetary award subject of the
appeal, exclusive of damages and attorney's fees;

(c) Compliance with the foregoing conditions shall suffice to suspend the running of the 10-day
reglementary period to perfect an appeal from the labor arbiter's decision to the NLRC;

(d) The NLRC retains its authority and duty to resolve the motion to reduce bond and determine the final
amount of bond that shall be posted by the appellant, still in accordance with the standards of meritorious
grounds and reasonable amount; and

(e) In the event that the NLRC denies the motion to reduce bond, or requires a bond that exceeds the
amount of the provisional bond, the appellant shall be given a fresh period of ten (10) days from notice of
the NLRC order within which to perfect the appeal by posting the required appeal bond.39

In this case, we see that with no proof to substantiate its claim, petitioner moved for a reduction of the
appeal bond on the proferred basis of serious losses and reverses it supposedly sustained in the years
prior to the rendition of the Labor Arbiter's decision.

The first condition may be left for the nonce. As to the second condition, we may consider that the amount
of P100,000.00 supposedly posted was provisional bond sufficient to suspend the running of the 10-day
reglementary period to perfect an appeal from the Labor Arbiter's decision. That would however not
improve petitioner's position one bit.

Respondent correctly called attention to the fact that the check submitted by petitioner was dishonored
upon presentment for payment, thereby rendering the tender thereof ineffectual. Although the NLRC
chose not to address the issue of the perfection of the appeal as well as the reduction of the bond in its
Resolution dated 25 April 2005, the record shows that petitioner only manifested its deposit of the funds
for the check 24 days before the resolution of its appeal or 116 days after its right to appeal the Labor
Arbiter’s decision had expired. Having filed its motion and memorandum on the very last day of the
reglementary period for appeal, moreover, petitioner had no one but itself to blame for failing to post the
full amount pending the NLRC’s action on its motion for reduction of the appeal bond. If redundancy be
risked it must be emphasized that the posting of a bond is indispensable to the perfection of an appeal in
cases involving monetary awards from the decision of the Labor Arbiter. Since it is the posting of a cash
or surety bond which confers jurisdiction upon the NLRC,the rule is settled that non-compliance is fatal
and has the effect of rendering the award final and executory.

21. RIGHT TO SELF-ORGANIZATION

22. RIGHTS OF LEGITIMATE LABOR ORGANIZATIONS

1. TAKATA (PHILIPPINES) CORPORATION, Petitioner, vs. BUREAU OF LABOR

RELATIONS and SAMAHANG LAKAS MANGGAGAWA NG TAKATA (SALAMAT),
Respondents., G.R. No. 196276 June 4, 2014

FACTS:

Petitioner filed with the DOLE Regional Office a Petition for Cancellation of the Certificate of Union
Registration of Respondent Samahang Lakas Manggagawa ng Takata (SALAMA1) on the ground that the
latter is guilty of misrepresentation, false statement and fraud with respect to the number of those who
participated in the organizational meeting, the adoption and ratification of its Constitution and By-Laws,
and in the election of its officers. It contended that in the May 1, 2009 organizational meeting of
respondent, only 68 attendees signed the attendance sheet, and which number comprised only 17% of
the total number of the 396 regular rank- and-file employees which respondent sought to represent, and
hence, respondent failed to comply with the 20% minimum membership requirement. Petitioner insisted
that the document "Pangalan ng mga Kasapi ng Unyon" bore no signatures of the alleged 119 union
members; and that employees were not given sufficient information on the documents they signed; that
the document "Sama-Samang Pahayag ng Pagsapi" was not submitted at the time of the filing of
respondent's application for union registration; that the 119 union members were actually only 117; and,
that the total number of petitioner's employees as of May 1, 2009 was 470, and not 396 as respondent
claimed.

Respondent denied the charge and claimed that the 119 union members were more than the 20%
requirement for union registration. The document "Sama-Samang Pahayag ng Pagsapi sa Unyon" which
it presented in its petition for certification election supported their claim of 119 members. Respondent also
contended that petitioner was estopped from assailing its legal personality as it agreed to a certification
election and actively participated in the pre-election conference of the certification election
proceedings.Respondent argued that the union members were informed of the contents of the documents
they signed and that the 68 attendees to the organizational meeting constituted more than 50% of the
total union membership, hence, a quo rumexisted for the conduct of the said meeting.

ISSUE:

WON the application for registration of SAMAHANG LAKAS MANGGAGAWA SA TAKATA (SALAMAT)
was compliant with the law.

RULING:

As to the second issue, petitioner seeks the cancellation of respondent's registration on grounds offraud
and misrepresentation bearing on the minimum requirement of the law as to its membership, considering
the big disparity in numbers, between the organizational meeting and the list of members, and so
misleading the BLR that it obtained the minimum required number of employees for purposes of
organization and registration.

We find no merit in the arguments.

Art. 234 of the Labor Code provides:

ART. 234. Requirements of Registration. - A federation, national union or industry or trade union center or
an independent union shall acquire legal personality and shall be entitled to the rights and privileges
granted by law to legitimate labor organizations upon issuance of the certificate of registration based on
the following requirements:

(a) Fifty pesos (P50.00)registration fee;

(b) The names of its officers, their addresses, the principal address of the labor organization, the minutes
of the organizational meetings and the list of the workers who participated in such meetings;
(c) In case the applicant is an independent union, the names of all its members comprising at least twenty
percent (20%) of all the employees in the bargaining unit where it seeks to operate;
(d) If the applicant union has been in existence for one or more years, copies of its annual financial
reports; and
(e) Four copies of the constitution and by-laws of the applicant union, minutes of its adoption or
ratification, and the list of the members who participated in it."

And after the issuance of the certificate of registration, the labor organization's registration could be
assailed directly through cancellation of registration proceedings in accordance with Articles 238 and 239
of the Labor Code. And the cancellation of union certificate of registration and the grounds thereof are as
follows:

ART. 238. Cancellation of Registration. - The certificate of registration of any legitimate labor
organization, whether national or local, may be cancelled by the Bureau, after due hearing, only on the
grounds specified in Article 239 hereof.

ART. 239. Grounds for Cancellation of Union Registration. - The following may constitute grounds for
cancellation of union registration:

(a) Misrepresentation, false statement or fraud in connection with the adoption or ratification of the
constitution and by-laws or amendments thereto, the minutes of ratification, and the list of members who
took part in the ratification;
(b) Misrepresentation, false statements or fraud in connection with the election of officers, minutes of the
election of officers, and the list of voters;
(c) Voluntary dissolution by the members.
Petitioner's charge that respondent committed misrepresentation and fraud in securing its certificate of
registration is a serious charge and must be carefully evaluated. Allegations thereof should be
compounded with supporting circumstances and evidence. We find no evidence on record to support
petitioner's accusation.

Petitioner's allegation of misrepresentation and fraud is based on its claim that during the organizational
meeting on May 1, 2009, only 68 employees attended, while respondent claimed that it has 119 members
as shown in the document denominated as "Pangalan ng mga Kasapi ng Unyon;" hence, respondent
misrepresented on the 20% requirement of the law as to its membership.

We do not agree.

It does not appear in Article 234 (b) of the Labor Code that the attendees in the organizational meeting
must comprise 20% of the employees in the bargaining unit. In fact, even the Implementing Rules and
Regulations of the Labor Code does not so provide. It is only under Article 234 (c) that requires the
names of all its members comprising at least twenty percent (20%) of all the employees in the bargaining
unit where it seeks to operate. Clearly, the 20% minimum requirement pertains to the employees’
membership in the union and not to the list of workers who participated in the organizational meeting.
Indeed, Article 234 (b) and (c) provide for separate requirements, which must be submitted for the union's
registration, and which respondent did submit. Here, the total number of employees in the bargaining unit
was 396, and 20% of which was about 79. Respondent submitted a document entitled "Pangalan ng Mga
Kasapi ng Unyon" showing the names of 119 employees as union members, thus respondent sufficiently
complied even beyond the 20% minimum membership requirement. Respondent also submitted the
attendance sheet of the organizational meeting which contained the names and signatures of the 68
union members who attended the meeting. Considering that there are 119 union members which are
more than 20% of all the employees of the bargaining unit, and since the law does not provide for the
required number of members to attend the organizational meeting, the 68 attendees which comprised at
least the majority of the 119 union members would already constitute a quorum for the meeting to
proceed and to validly ratify the Constitution and By-laws of the union. There is, therefore, no basis for
petitioner to contend that grounds exist for the cancellation of respondent's union registration. For fraud
and misrepresentation to be grounds for cancellation of union registration under Article 239 of the Labor
Code, the nature of the fraud and misrepresentation must be grave and compelling enough to vitiate the
consent of a majority of union members.

Petitioner's claim that the alleged union members signed documents without adequate information is not
persuasive. The one who alleges a fact has the burden of proving it and a mere allegation is not
evidence. In fact, we note that not one of those listed in the document denominated as "Pangalan ng Mga
Kasaping Unyon" had come forward to deny their membership with respondent. Notably, it had not been
rebutted that the same union members had signed the document entitled "Sama-Samang Pahayag ng
Pagsapi," thus, strengtheningtheir desire to be members of the respondent union.

Petitioner claims that in the list of members, there was an employee whose name appeared twice and
another employee who was merely a project employee. Such could not be considered a
misrepresentation in the absence of showing that respondent deliberately did so for the purpose of
increasing their union membership. In fact, even if those two names were not included in the list of union
members, there would still be 117 members which was still more than 20% of the 396 rank-and-file
employees.

As to petitioner's argument that the total number of its employees as of May 1, 2009 was 470, and not396
as respondent claimed, still the 117 union members comprised more than the 20% membership
requirement for respondent's registration.

In Mariwasa Siam Ceramics v. Secretary of the Department of Labor and Employment,we said:

For the purpose of de-certifying a union such as respondent, it must be shown that there was
misrepresentation, false statement or fraud in connection with the adoption or ratification of the
constitution and by-laws or amendments thereto, the minutes of ratification; or, in connection with the
election of officers, the minutes of the election of officers, the list of voters, or failure to submit these
documents together with the list of the newly elected-appointed officers and their postal addresses to the
BLR.

The bare fact that two signatures appeared twice on the list of those who participated in the organizational
meeting would not, to our mind, provide a valid reason to cancel respondent’s certificate of registration.
The cancellation of a union’s registration doubtless has an impairing dimension on the right of labor to
self-organization. For fraud and misrepresentation to be grounds for cancellation of union registration
under the Labor Code, the nature of the fraud and misrepresentation must be grave and compelling
enough to vitiate the consent of a majority of union members.
In this case, we agree with the BLR and the CA that respondent could not have possibly committed
misrepresentation, fraud, or false statements. The alleged failure of respondent to indicate with
mathematical precision the total number of employees in the bargaining unit is of no moment, especially
as it was able to comply with the 20% minimum membership requirement. Even if the total number of
rank-and-file employees of petitioner is 528, while respondent declared that it should only be 455, it still
cannot be denied that the latter would have more than complied with the registration requirement.

24. UNFAIR LABOR PRACTICE

1. Phil Electric Corp., vs. Court of Appeals, GR No. 168612, Dec. 10, 2014

FACTS:

Philippine Electric Corporation (PHILEC) is a domestic corporation engaged in the manufacture and
repairs of high voltage transformers. PHILEC Workers' Union (PWU) is a legitimate labor organization
and the exclusive bargaining representative of PHILEC's rank-and-file employees. Among its rank-andfile
employees were Eleodoro V. Lipio (Lipio) and Emerlito C. Ignacio, Sr. (Ignacio), former members of the
PWU.

PHILEC and its rank-and-file employees were governed by collective bargaining agreements (CBA) from
June 1, 1989 to May 31, 1997. Said CBA provided for the step increases in an employee's basic salary in
case of promotion.

On August 18, 1997, PHILEC selected Lipio for promotion from Machinist to Foreman I. Ignacio, then DT-
Assembler was likewise selected for training for the position of Foreman I. Both their training agreements
contained a schedule of allowance for their 4 months training.

On September 17, 1997, PHILEC and PWU entered into a new CBA, effective retroactively on June 1,
1997 and expiring on May 31, 1999. The new CBA contained a new step increase schedule as well as a
provision for training allowance.

Claiming that the schedule of training allowance stated in the memoranda served on Lipio and Ignacio did
not conform to Article X, Section 4 of the June 1, 1997 collective bargaining agreement, PWU submitted
the grievance to the grievance machinery.

PWU and PHILEC failed to amicably settle their grievance. Thus, on December 21, 1998, the parties filed
a submission agreement with the National Conciliation and Mediation Board (NCMB).

For PHILEC's failure to apply the schedule of step increases under Article X of the June 1, 1997 collective
bargaining agreement, PWU argued that PHILEC committed an unfair labor practice under Article 248 of
the Labor Code.

PHILEC emphasized that it promoted Lipio and Ignacio while it was still negotiating a new collective
bargaining agreement with PWU. Since PHILEC and PWU had not yet negotiated a new collective
bargaining agreement when PHILEC selected Lipio and Ignacio for training, PHILEC applied the
"Modified SGV" pay grade scale in computing Lipio's and Ignacio's training allowance.

This "Modified SGV" pay grade scale, which PHILEC and PWU allegedly agreed to implement beginning
on May 9, 1997, covered both rank-and-file and supervisory employees. To preserve the hierarchical
wage structure within PHILEC's enterprise, PHILEC and PWU allegedly agreed to implement the uniform
pay grade scale under the "Modified SGV" pay grade system.

Voluntary Arbitrator Ramon T. Jimenez held in the decision dated August 13, 1999, that PHILEC violated
its collective bargaining agreement with PWU. The provisions of the collective bargaining agreement
being the law between the parties, PHILEC should have computed Lipio's and Ignacio’s training
allowance based on Article X, Section 4 of the June 1, 1997 collective bargaining agreement.

As to PHILEC's claim that applying Article X, Section 4 would result in salary distortion within PHILEC's
enterprise, Voluntary Arbitrator Jimenez ruled that this was "a concern that PHILEC could have
anticipated and could have taken corrective action" before signing the collective bargaining agreement.

However, he dismissed PWU's claim of unfair labor practice. According to him, PHILEC's acts "cannot be
considered a gross violation of the CBA nor a flagrant and/or malicious refusal to comply with the
economic provisions of the agreement."
PHILEC received a copy of Voluntary Arbitrator Jimenez's decision on August 16, 1999. On August 26,
1999, it filed a motion for partial reconsideration of Voluntary Arbitrator Jimenez's decision.

In the resolution dated July 7, 2000, Voluntary Arbitrator Jimenez denied PHILEC's motion for partial
reconsideration for lack of merit. PHILEC received a copy of the July 7, 2000 resolution on August 11,
2000.

It was on August 29, 2000, PHILEC filed a petition for certiorari before the Court of Appeals (CA), alleging
that Voluntary Arbitrator Jimenez gravely abused his discretion in rendering his decision. The CA affirmed
Voluntary Arbitrator Jimenez's decision and dismissed PHILEC's petition for certiorari for lack of merit.
The CA also denied PHILEC’s motion for reconsideration in the resolution dated June 23, 2005.

On August 3, 2005, PHILEC filed its petition for review on certiorari before the Supreme Court (SC).

ISSUES:
1. Was the petition for certiorari under Rule 65 of the Rules of Court filed by PHILEC the proper
remedy?
2. Was PHILEC correct in implementing the Modified SGV pay grade scale?

RULING:

1. The petition for certiorari under Rule 65 of the Rules of Court was not the proper remedy

The proper remedy to reverse or modify a Voluntary Arbitrator's or a panel of Voluntary Arbitrators'
decision or award is to appeal the award or decision before the Court of Appeals under Rule 43 of the
Rules of Court.

As to the period to appeal, the Court ruled that the Voluntary Arbitrator's decision must be appealed
before the Court of Appeals within 10 calendar days from receipt of the decision as provided in the Labor
Code.

Article 262-A of the Labor Code provides that the award or decision of the Voluntary Arbitrator "shall be
final and executory after ten (10) calendar days from receipt of the copy of the award or decision by the
parties. Although Rule 43, Section 4 of the Rules of Court provides for a 15-day reglementary period for
filing an appeal, the Statute shall prevail, appeal being a statutory privilege which may be exercised only
in the manner and in accordance with the provisions of the law.

Furthermore, under Article VIII, Section 5(5) of the Constitution, this court "shall not diminish, increase, or
modify substantive rights" in promulgating rules of procedure in courts.The 10-day period to appeal under
the Labor Code being a substantive right, this period cannot be diminished, increased, or modified
through the Rules of Court.

A petition for certiorari is a special civil action "adopted to correct errors of jurisdiction committed by the
lower court or quasi-judicial agency, or when there is grave abuse of discretion on the part of such court
or agency amounting to lack or excess of jurisdiction”An extraordinary remedy, a petition for certiorari
may be filed only if appeal is not available. If appeal is available, an appeal must be taken even if the
ground relied upon is grave abuse of discretion.

There being no appeal seasonably filed in this case, Voluntary Arbitrator Jimenez's decision became final
and executory after 10 calendar days from PHILEC's receipt of the resolution denying its motion for partial
reconsideration

2. No, PHILEC should have computed the training allowance based on the June 1, 1997 CBA.

A collective bargaining agreement is "a contract executed upon the request of either the employer or the
exclusive bargaining representative of the employees incorporating the agreement reached after
negotiations with respect to wages, hours of work and all other terms and conditions of employment,
including proposals for adjusting any grievances or questions arising under such agreement."

PHILEC allegedly applied the "Modified SGV" pay grade scale to prevent any salary distortion within
PHILEC's enterprise. This, however, does not justify PHILEC's non-compliance with the June 1, 1997
collective bargaining agreement. This pay grade scale is not provided in the collective bargaining
agreement.

Had PHILEC wanted the "Modified SGV" pay grade scale applied within its enterprise, "it could have
requested or demanded that the 'Modified SGV' scale be incorporated in the collective bargaining
agreement." PHILEC had "the means under the law to compel PWU to incorporate this specific economic
proposal in the collective bargaining agreement."

It must be noted that Lipio and Ignacio remained rank-and-file employees and were not transferred out of
the bargaining unit when they were selected for training. Their selection for training was done during the
effectivity of the June 1, 1997 rank-and-file collective bargaining agreement. PHILEC cannot choose
when and to whom to apply the provisions of its collective bargaining agreement. The provisions of a
collective bargaining agreement must be applied uniformly and complied with in good faith.

Voluntary Arbitrator Jimenez's decision having become final and executory on August 22, 2000, PHILEC
is liable for legal interest equal to 12% per annum from finality of the decision until full payment as this
court.

25. OTHER IMPORTANT LABOR PROVISIONS

A. CONTRACTING ARRANGEMENT

1. Vigilla et al., vs. Phil. College of Criminology Inc., G.R. No. 200094, June 10, 2013

FACTS:

Respondent Philippine College of Criminology (PCCr) is a non-stock educational institution, while

petitioners were janitors, janitresses, and supervisor in the Maintenance of PCCr. Petitioners were made
to understand, upon application with respondent school, that they were under the Metropolitan Building
Services, Inc (MBMSI).

Sometime in 2008, PCCr discovered that the Certificate of Incorporation of MBMSI had been revoked as
of July 2, 200, thus on March 2009, PCCr terminated its relationship with MBMSI, resulting in the
dismissal of the petitioners. Petitioners then filed their complaints for illegal dismissal, reinstatement, back
wages, and separation pay, and other benefits.

When the case reached the NLRC, they ruled that MBMSI was a labor-only contractor and PCCr was the
petitioners’ real principal employer, PCCR acted in bad faith in dismissing the petitioners, but declared
that the claims of the petitioners were settled amicably because of the releases, waivers and quitclaims
they had executed in favor of MBMSI. This ruling was affirmed by the Court of appeals.

ISSUES:

1. WON a solidary liability exists between the labor-only contractor and the employer.
2. WON a quit claim executed in favor of labor-only contractor redounds to the benefit of the
employer/principal

RULING:

If a labor-only contractor is solidarily liable with the employer, then the releases, waivers and quitclaims in
favor of MBMSI will redound to the benefit of PCCr. On the other hand, if a labor-only contractor is not
solidarily liable with the employer, the latter being directly liable, then the releases, waivers and quitclaims
in favor of MBMSI will not extinguish the liability of PCCr.

In this case, There exists a solidary liability between the labor-only contractor and the employer.

The NLRC and the CA correctly ruled that the releases, waivers and quitclaims executed by petitioners in
favor of MBMSI redounded to the benefit of PCCr pursuant to Article 1217 of the New Civil Code. The
reason is that MBMSI is solidarily liable with the respondents for the valid claims of petitioners pursuant to
Article 109 of the Labor Code. SI

As correctly pointed out by the respondents, the basis of the solidary liability of the principal with those
engaged in labor-only contracting is the last paragraph of Article 106 of the Labor Code, which in part
provides: "In such cases [labor-only contracting], the person or intermediary shall be considered merely
as an agent of the employer who shall be responsible to the workers in the same manner and extent as if
the latter were directly employed by him."

Considering that MBMSI, as the labor-only contractor, is solidarily liable with the respondents, as the
principal employer, then the NLRC and the CA correctly held that the respondents' solidary liability was
already expunged by virtue of the releases, waivers and quitclaims executed by each of the petitioners in
favor of MBMSI pursuant to Article 1217 of the Civil Code which provides that "payment made by one of
the solidary debtors extinguishes the obligation."
In light of these conclusions, the Court holds that the releases, waivers and quitclaims executed by
petitioners in favor of MBMSI redounded to the respondents' benefit. The liabilities of the respondents to
petitioners are now deemed extinguished.

2. BPI Employees Union-Davao city-FUBU vs. Bank of the Phil Islands et al., G.R. No.
174912, July 24, 2013

FACTS:

BOMC, which was created pursuant to Central Bank Circular No. 1388, Series of 1993 (CBP Circular No.
1388, 1993), and primarily engaged in providing and/or handling support services for banks and other
financial institutions, is a subsidiary of the Bank of Philippine Islands (BPI) operating and functioning as
an entirely separate and distinct entity.

A service agreement between BPI and BOMC was initially implemented in BPI's Metro Manila branches.
In this agreement, BOMC undertook to provide services such as check clearing, delivery of bank
statements, fund transfers, card production, operations accounting and control, and cash servicing,
conformably with the BSP Ciruclar. Not a single BPI employee was displaced and those performing the
functions, which were transferred to BOMC, were given other assignments. S

On January 1, 1996, the service agreement was likewise implemented in Davao City. Later, a merger
between BPI and Far East Bank and Trust Company(FEBTC) took effect on April 10, 2000 with BPI as
the surviving corporation. Thereafter, BPI's cashiering function and FEBTC's cashiering, distribution and
bookkeeping functions were handled by BOMC. Consequently, twelve (12) former FEBTC employees
were transferred to BOMC to complete the latter's service complement.

BPI Davao's rank and file collective bargaining agent, BPI Employees Union-Davao City-FUBU (Union),
objected to the transfer of the functions and the twelve (12) personnel to BOMC contending that the
functions rightfully belonged to the BPI employees and that the Union was deprived of membership of
former FEBTC personnel who, by virtue of the merger, would have formed part of the bargaining unit
represented by the Union pursuant to its union shop provision in the CBA

The Union claims that a union shop agreement is stipulated in the existing CBA. It is unfair labor practice
for employer to outsource the positions in the existing bargaining unit, citing the case of Shell Oil Workers'
Union v. Shell Company of the Philippines.

ISSUE:

WON the act of BPI to outsource the cashiering, distribution and bookkeeping functions to BOMC is ULP.

RULING:

The Union's reliance on the Shell Case is misplaced. The rule now is covered by Article 261 of the Labor
Code

Clearly, only gross violations of the economic provisions of the CBA are treated as ULP. Otherwise, they
are mere grievances.
In the present case, the alleged violation of the union shop agreement in the CBA, even assuming it was
malicious and flagrant, is not a violation of an economic provision in the agreement. The provisions relied
upon by the Union were those articles referring to the recognition of the union as the sole and exclusive
bargaining representative of all rank-and-file employees, as well as the articles on union security,
specifically, the maintenance of membership in good standing as a condition for continued employment
and the union shop clause. It failed to take into consideration its recognition of the bank's exclusive rights
and prerogatives, likewise provided in the CBA, which included the hiring of employees, promotion,
transfers, and dismissals for just cause and the maintenance of order, discipline and efficiency in its
operations.

It is incomprehensible how the "reduction of positions in the collective bargaining unit" interferes with the
employees' right to self-organization because the employees themselves were neither transferred nor
dismissed from the service.

BPI stresses that not a single employee or union member was or would be dislocated or terminated from
their employment as a result of the Service Agreement.Neither had it resulted in any diminution of salaries
and benefits nor led to any reduction of union membership.
As far as the twelve (12) former FEBTC employees are concerned, the Union failed to substantially prove
that their transfer, made to complete BOMC's service complement, was motivated by ill will, anti-unionism
or bad faith so as to affect or interfere with the employees' right to self-organization.
It is to be emphasized that contracting out of services is not illegal per se. It is an exercise of business
judgment or management prerogative. Absent proof that the management acted in a malicious or arbitrary
manner, the Court will not interfere with the exercise of judgment by an employer. In this case, bad faith
cannot be attributed to BPI because its actions were authorized by CBP Circular No. 1388, Series of
1993 issued by the Monetary Board of the then Central Bank of the Philippines (now Bangko Sentral ng
Pilipinas).

A finding of ULP necessarily requires the alleging party to prove it with substantial evidence.
Unfortunately, the Union failed to discharge this burden

3. Alilin et al., vs. Petron Corp., GR No. 177592, June 9, 2014

FACTS:

Petron is a domestic corporation engaged in the oil business. In one of its bulk plants located in Mandaue,
it outsources its manpower services mostly for utility work with Romualdo D. Gindang Contractor and
RDG. Petitioners were among those recruited by Romualdo D. Gindang Contractor and RDG to work in
the premises of Petron’s Mandaue Bulk Plant to perform utility services.

When their service contract was no longer renewed after two prior extensions to the contract term, they
filed a complaint with the labor arbiter for illegal dismissal, underpayment of wages, damages and
attorney’s fees against Petron and RDG; alleging that they were barred from continuing their services.

Petitioners did not deny that RDG hired them and paid their salaries. They, however, claimed that the
latter is a labor-only contractor, which merely acted as an agent of Petron, their true employer. They
asseverated that their jobs, which are directly related to Petron's business, entailed them to work inside
the premises of Petron using the required equipment and tools furnished by it and that they were subject
to Petron's supervision. Claiming to be regular employees, petitioners thus asserted that their dismissal
allegedly in view of the expiration of the service contract between Petron and RDG is illegal.

Petron, on the other hand, maintained that RDG is an independent contractor and the real employer of
the petitioners. It was RDG which hired and selected petitioners, paid their salaries and wages, and
directly supervised their work

ISSUE:

WON RDG is a legitimate job contractor.

RULING:

"Permissible job contracting or subcontracting refers to an arrangement whereby a principal agrees to

farm out with a contractor or subcontractor the performance of a specific job, work, or service within a
definite or predetermined period, regardless of whether such job, work or, service is to be performed or
completed within or outside the premises of the principal. Under this arrangement, the following
conditions must be met: (a) the contractor carries on a distinct and independent business and undertakes
the contract work on his account under his own responsibility according to his own manner and method,
free from the control and direction of his employer or principal in all matters connected with the
performance of his work except as to the results thereof; (b) the contractor has substantial capital or
investment; and (c) the agreement between the principal and contractor or subcontractor assures the
contractual employees' entitlement to all labor and occupational safety and health standards, free
exercise of the right to self-organization, security of tenure, and social welfare benefits."

Labor-only contracting, on the other hand, is a prohibited act, defined as "supplying workers to an
employer who does not have substantial capital or investment in the form of tools, equipment,
machineries, work premises, among others, and the workers recruited and placed by such person are
performing activities which are directly related to the principal business of such employer.""[I]n
distinguishing between prohibited labor-only contracting and permissible job contracting, the totality of the
facts and the surrounding circumstances of the case shall be considered."

Generally, the contractor is presumed to be a labor-only contractor, unless such contractor overcomes the
burden of proving that it has the substantial capital, investment, tools and the like. However, where the
principal is the one claiming that the contractor is a legitimate contractor, as in the present case, said
principal has the burden of proving that supposed status. It is thus incumbent upon Petron, and not upon
petitioners as Petron insists, to prove that RDG is an independent contractor.
However the facts of the case tells us that Petron failed to discharge the burden of proving that RDG is a
legitimate contractor. While Petron was able to establish that RDG was financially capable as a legitimate
contractor at the time of the execution of the service contract in 2000, it nevertheless failed to establish
the financial capability of RDG at the time when petitioners actually started to work for Petron in 1968,
1979, 1981, 1987, 1990, 1992 and 1993.

Petron's power of control over petitioners exists in this case

[A] finding that a contractor is a 'labor-only' contractor is equivalent to declaring that there is an employer-
employee relationship between the principal and the employees of the supposed contractor." In this case,
the employer-employee relationship between Petron and petitioners
becomes all the more apparent due to the presence of the power of control
on the part of the former over the latter.

One manifestation of the power of control is the power to transfer employees from one work assignment
to another. Here, Petron could order petitioners to do work outside of their regular "maintenance/utility"
job. Also, petitioners were required to report for work everyday at the bulk plant, observe an 8:00 a.m. to
5:00 p.m. daily work schedule, and wear proper uniform and safety helmets as prescribed by the safety
and security measures being implemented within the bulk plant. All these imply control. In an industry
where safety is of paramount concern, control and supervision over sensitive operations, such as those
performed by the petitioners, are inevitable if not at all necessary

In sum, the Court finds that RDG is a labor-only contractor. As such, it is considered merely as an agent
of Petron. Consequently, the employer-employee relationship which the Court finds to exist in this case is
between petitioners as employees and Petron as their employer. Petron therefore, being the principal
employer and RDG, being the labor-only contractor, are solidarily liable for petitioners' illegal dismissal
and monetary claims.

4. Exocet Security & Allied Services Corp., vs. Serrano, GR No. 198538, Sept. 29, 2014

FACTS:

Petitoner Exocet Security is engaged in the service of providing security personnel and had a contract
with JG Summit Holdings Inc. Exocet assigned respondent Serrano on September 24, 1994 as “close-in”
or VIP security personnel for JG Summit’s corporate officers. He served as VIP security for other
corporate officers until JG Summit relieved him on August 15, 2006. On March 15, 2007, Serrano filed a
complaint for illegal dismissal against Exocet with the NLRC for not having received reassignment for
more than six months.

For its defense, Exocet denied dismissing Serrano alleging that, after August 15, 2006, Serrano no longer
reported for duty assignment as VIP security for JG Summit, and that on September 2006, he was
demanding for VIP Security detail to another client. Exocet maintained that it was Serrano who declined
the assignment on the ground that he is not used to being a regular security guard, and Serrano refused
to report for immediate duty, as we was not given a VIP security assignment.

ISSUE:

WON Serrano was constructively dismissed.

RULING:

No, he was not constructively dismissed.

While there is no specific provision in the Labor Code which governs the "floating status" or temporary
"off-detail" of security guards employed by private security agencies, this situation was considered by this
Court in several cases as a form of temporary retrenchment or lay-off

It must be emphasized, however, that although placing a security guard on "floating status" or a
temporary "off-detail" is considered a temporary retrenchment measure, there is similarly no provision in
the Labor Code which treats of a temporary retrenchment or lay-off. Neither is there any provision which
provides for its requisites or its duration. Nevertheless, since an employee cannot be laid-off indefinitely,
the Court has applied Article 292 (previously Article 286) of the Labor Code by analogy to set the specific
period of temporary lay-off to a maximum of six (6) months.

In accordance with the aforementioned ruling, the Department of Labor and Employment (DOLE) issued
Department Order No. 14, Series of 2001 (DO 14-01), entitled "Guidelines Governing the Employment
and Working Conditions of Security Guards and Similar Personnel in the Private Security Industry,"
Section 6.5, in relation to Sec. 9.3, of which states that the lack of service assignment for a continuous
period of six (6) months is an authorized cause for the termination of the employee, who is then entitled to
a separation pay equivalent to half month pay for every year of service.

In the controversy now before the Court, there is no question that the security guard, Serrano, was placed
on floating status after his relief from his post as a VIP security by his security agency's client. Yet, there
is no showing that his security agency, petitioner Exocet, acted in bad faith when it placed Serrano on
such floating status..

Clearly, Serrano's lack of assignment for more than six months cannot be attributed to petitioner Exocet.
On the contrary, records show that, as early as September 2006, or one month after Serrano was relieved
as a VIP security, Exocet had already offered Serrano a position in the general security service because
there were no available clients requiring positions for VIP security. Notably, even though the new
assignment does not involve a demotion in rank or diminution in salary, pay, or benefits, Serrano
declined the position because it was not the post that suited his preference, as he insisted on
being a VIP Security.

To repeat for emphasis, the security guard's right to security of tenure does not give him a vested right to
the position as would deprive the company of its prerogative to change the assignment of, or transfer the
security guard to, a station where his services would be most beneficial to the client. Indeed, an employer
has the right to transfer or assign its employees from one office or area of operation to another, or in
pursuit of its legitimate business interest, provided there is no demotion in rank or diminution of salary,
benefits, and other privileges, and the transfer is not motivated by discrimination or bad faith, or effected
as a form of punishment or demotion without sufficient cause.

Thus, it is manifestly unfair and unacceptable to immediately declare the mere lapse of the six-month
period of floating status as a case of constructive dismissal, without looking into the peculiar
circumstances that resulted in the security guard's failure to assume another post. This is especially true
in the present case where the security guard's own refusal to accept a non-VIP detail was the reason that
he was not given an assignment within the six-month period. The security agency, Exocet, should not
then be held liable.

5. FVR Skills & Services Exponents Inc. et al., vs. Seva, et al., GR No. 200857, Oct. 22,
2014

FACTS:

The twenty-eight (28) respondents in this case were employees of petitioner FVR Skills and Services
Exponents, Inc. (petitioner), an independent contractor engaged in the business of providing janitorial and
other manpower services to its clients. As early as 1998, some of the respondents had already been
under the petitioner's employ.

The petitioner entered into a Contract of Janitorial Service 8 (service contract) with Robinsons Land
Corporation (Robinsons). Both agreed that the petitioner shall supply janitorial, manpower and sanitation
services to Robinsons Place Ermita Mall for a period of one year (Jan. – Dec. 2008). Pursuant to this, the
respondents were deployed to Robinsons.

Halfway through the service contract, the petitioner asked the respondents to execute individual contracts
which stipulated that their respective employments shall end on December 31, 2008, unless earlier
terminated.

The petitioner and Robinsons no longer extended their contract of janitorial services. Consequently, the
petitioner dismissed the respondents as they were project employees whose duration of employment was
dependent on the petitioner's service contract with Robinsons.

The respondents responded to the termination of their employment by filing a complaint for illegal
dismissal with the NLRC on the ground that they were not project employees; but rather, they are regular
employees. To add more ground to their allegations, respondents stated that they have been in the
employ of the petitioner even before the contract they executed from 1998 – 2007.

Petitioner argues to the contrary that respondents were mere project employees. Moreover, the contracts
were not merely fixed term, but were also dependent on the continued existence of the Robinsons’
service contract.

ISSUE:
WON the respondents are regular employees or project employees?

RULING:

The respondents are regular employees, not project employees. We conclude that the respondents'
work as janitors, service crews and sanitation aides, are necessary or desirable to the petitioner's
business of providing janitorial and manpower services to its clients as an independent contractor.

Also, the respondents had already been working for the petitioner as early as 1998. Even before the
service contract with Robinsons, the respondents were already under the petitioner's employ. They had
been doing the same type of work and occupying the same positions from the time they were hired and
until they were dismissed in January 2009. The petitioner did not present any evidence to refute the
respondents' claim that from the time of their hiring until the time of their dismissal, there was no gap in
between the projects where they were assigned to. The petitioner continuously availed of their services by
constantly deploying them to its clients.

Lastly, under Department Order (DO) 18-02, the applicable labor issuance to the petitioner's case, the
contractor or subcontractor is considered as the employer of the contractual employee for purposes of
enforcing the provisions of the Labor Code and other social legislation.

DO 18-02 grants contractual employees all the rights and privileges due a regular employee, including the
following: (a) safe and healthful working conditions; (b) labor standards such as service incentive leave,
rest days, overtime pay, holiday pay, 13th month pay and separation pay; (c) social security and welfare
benefits; (d) self-organization, collective bargaining and peaceful concerted action; and (e) security of
tenure.

In this light, we thus conclude that although the respondents were assigned as contractual employees to
the petitioner's various clients, under the law, they remain to be the petitioner's regular employees, who
are entitled to all the rights and benefits of regular employment.

The respondents' employment contracts, which were belatedly signed, are voidable.
The records show that at the time of the respondents' dismissal, they had already been continuously
working for the petitioner for more than a year. Despite this, they never signed any employment
contracts with the petitioner, except the contracts they belatedly signed when the petitioner's own
contract of janitorial services with Robinsons neared expiration.

As already discussed, for an employee to be validly categorized as a project employee, it is necessary

that the specific project or undertaking had been identified and its period and completion date determined
and made known to the employee at the time of his engagement. We find the timing of the execution of
the respondents' respective employment contracts to be indicative of the petitioner's calculated plan to
evade the respondents' right to security of tenure, to ensure their easy dismissal as soon as the
Robinsons' contract expired. The attendant circumstances cannot but raise doubts as to the petitioner's
good faith.

If the petitioner really intended the respondents to be project employees, then the contracts should have
been executed right from the time of hiring, or when the respondents were first assigned to Robinsons,
not when the petitioner's service contract was winding up.

6. Fonterra Brand Phils vs. Largado, GR No. 205300, March 18, 2015

FACTS:

Petitioner Fonterra contracted the services of Zytron for the marketing and promotion of its milk and dairy
products. Pursuant to the contract, Zytron provided Fonterra with trade merchandising representatives
(TMRs), including respondents Largado and Estrellado.

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

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

ISSUES:
1. WON Zytron was a mere labor-only contractor?
2. WON petitioners adduced sufficient evidence to prove that respondents were not illegally dismissed?

RULING:

The CA correctly found that A.C. Sicat is engaged in legitimate job contracting. It duly noted that A.C.
Sicat was able to prove its status as a legitimate job contractor for having presented the following
evidence, to wit
:
1. Certificate of Business Registration;
2. Certificate of Registration with the Bureau of Internal Revenue;
3. Mayor's Permit;
4. Certificate of Membership with the Social Security System;
5. Certificate of Registration with the Department of Labor and Employment;
6. Company Profile; and
7. Certifications issued by its clients.

The respondents were not illegally dismissed.

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

In short, respondents voluntarily terminated their employment with Zytron by refusing to renew their
employment contracts with the latter, applying with A.C. Sicat, and working as the latter's employees,
thereby abandoning their previous employment with Zytron.

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

B. WORKER'S PREFERENCE

C. ATTORNEY'S FEES & APPEARANCE OF LAWYERS

1. Malvar vs. Kraft Food Phils Inc. et al., G.R. No. 183952, Sept. 9, 2013

FACTS:

The case initially concerned the execution of a final decision of the CA in a labor litigation, but has
mutated into a dispute over attorney's fees between the winning employee and her attorney after she
entered into a compromise agreement with her employer under circumstances that the attorney has
bewailed as designed to prevent the recovery of just professional fees.

On August 1, 1988, KFPI hired Malvar as its Corporate Planning Manager. From then on, she gradually
rose from the ranks, becoming in 1996 the Vice President for Finance in the Southeast Asia Region of
Kraft Foods International (KFI), KFPI's mother company. On November 29, 1999, respondent Bienvenido
S. Bautista, as Chairman of the Board of KFPI and concurrently the Vice President and Area Director for
Southeast Asia of KFI, sent Malvar a memo directing her to explain why no administrative sanctions
should be imposed on her for possible breach of trust and confidence and for willful violation of company
rules and regulations. Ultimately, on March 16, 2000, she was served a notice of termination.

The Labor Arbiter found and declared her suspension and dismissal illegal, and ordered her
reinstatement, and the payment of her full backwages, inclusive of allowances and other benefits, plus
attorney's fees. The NLRC affirmed the decision of the Labor Arbiter but additionally ruled that Malvar
was entitled to "any and all stock options and bonuses she was entitled to or would have been entitled to
had she not been illegally dismissed from her employment," as well as to moral and exemplary damages.
The CA reversed the order of reinstatement and instead directed the payment of separation pay. This
judgment became final and executory on March 14, 2006 and Malvar moved for execution. The
Reasearch and Computation Unit of the NLRC computed the award to which both parties to the NLRC for
allegedly being erroneous. Respondents filed a petition for certiorari with the CA which was granted and a
new computation was ordered to be done. This was appealed to the SC by Malvar.

Pending such appeal, the parties entered into a compromise agreement. Thereafter, Malvar filed an
undated Motion to Dismiss/Withdraw Case, praying that the appeal be immediately dismissed/withdrawn
in view of the compromise agreement, and that the case be considered closed and terminated. Before the
Court could act on Malvar's Motion to Dismiss/Withdraw Case, the Court received on February 15, 2011 a
so-called Motion for Intervention to Protect Attorney's Rights from The Law Firm of Dasal, Llasos and
Associates, through its of Counsel Retired Supreme Court Associate Justice Josue N. Bellosillo 18
(Intervenor), whereby the Intervenor sought, among others, that both Malvar and KFPI be held and
ordered to pay jointly and severally the Intervenor's contingent fees.

It appears that in July 2009, to the Intervenor's surprise, Malvar unceremoniously and without any
justifiable reason terminated its legal service and required it to withdraw from the case. The Intervenor
indicated that Malvar's precipitate action had baffled, shocked and even embarrassed the Intervenor,
because it had done everything legally possible to serve and protect her interest. It added that it could not
recall any instance of conflict or misunderstanding with her, for, on the contrary, she had even
commended it for its dedication and devotion to her case through her following letter to Justice Bellosillo.

According to the Intervenor, it was certain that the compromise agreement was authored by the
respondents to evade a possible loss of P182,000,000.00 or more as a result of the labor litigation, but
considering the Intervenor's interest in the case as well as its resolve in pursuing Malvar's interest, they
saw the Intervenor as a major stumbling block to the compromise agreement that it was then brewing with
her. Obviously, the only way to remove the Intervenor was to have her terminate its services as her legal
counsel.

ISSUE:

WON the Motion for Intervention to protect attorney's rights can prosper, and, if so, how much
could it recover as attorney's fees.

RULING:

A client has the absolute right to terminate the attorney-client relationship at any time with or without
cause. But this right of the client is not unlimited because good faith is required in terminating the
relationship. The right is also subject to the right of the attorney to be compensated.

On considerations of equity and fairness, the Court disapproves of the tendencies of clients compromising
their cases behind the backs of their attorneys for the purpose of unreasonably reducing or completely
setting to naught the stipulated contingent fees. 39 Thus, the Court grants the Intervenor's Motion for
Intervention to Protect Attorney's Rights as a measure of protecting the Intervenor's right to its stipulated
professional fees that would be denied under the compromise agreement.

Nonetheless, the claim for attorney's fees does not void or nullify the compromise agreement between
Malvar and the respondents. There being no obstacles to its approval, the Court approves the
compromise agreement.

We hold that the contingent fee of 10% of P41,627,593.75 and 10% of the value of the stock option was
reasonable. Her subsequent change of mind on the amount sought from the respondents as reflected in
the compromise agreement should not negate or bar the Intervenor's recovery of the agreed attorney's
fees. Fairness and justice demand that the Intervenor be accorded full recognition as her counsel who
discharged its responsibility for Malvar's cause to its successful end.

In the absence of the lawyer's fault, consent or waiver, a client cannot deprive the lawyer of his just fees
already earned in the guise of a justifiable reason.

The letter Malvar addressed to Retired Justice Bellosillo, who represented the Intervenor, debunked her
allegations of unsatisfactory legal service because she thereby lavishly lauded the Intervenor for its
dedication and devotion to the prosecution of her case and to the protection of her interests.

A client who employs a law firm engages the entire law firm; hence, the resignation, retirement or
separation from the law firm of the handling lawyer does not terminate the relationship, because the law
firm is bound to provide a replacement.
The respondents were complicit in Malvar's move to deprive the Intervenor of its duly earned contingent
fees. The unusual timing of Malvar's letter terminating the Intervenor's legal representation of her and of
the execution of compromise agreement manifested her desire to evade her legal obligation to pay to the
Intervenor its attorney's fees for the legal services rendered.

The respondents suddenly turned around from their strong stance of berating her demand as offensive to
all precepts of justice and fair play and as a form of unjust enrichment for her to a surprisingly generous
surrender to her demand, allowing to her through their compromise agreement the additional amount of
P40,000,000.00 on top of the P14,252,192.12 already received by her in August 2008. The softening
unavoidably gives the impression that they were now categorically conceding that Malvar deserved much
more. Her rush to settle because of her financial concerns could have led her to accept the respondents'
offer, which offer could be further reduced by the Intervenor's expected demand for compensation.
Thereby, she and the respondents became joint tort-feasors who acted adversely against the interests of
the Intervenor.

2. Our Haus Realty Development Corp., vs. Parian et al., GR No. 204651, August 6, 2014

FACTS:

Respondents were all laborers working for petitioner Our Haus Realty Development Corporation (Our
Haus), a company engaged in the construction business. Sometime in May 2010, Our Haus experienced
financial distress. To alleviate its condition, Our Haus suspended some of its construction projects and
asked the affected workers, including the respondents, to take vacation leaves. Eventually, the
respondents were asked to report back to work but instead of doing so, they filed with the LA a complaint
for underpayment of their daily wages.

The respondents argued that the value of their meals should not be considered in determining their
wages' total amount since the requirements set under Section 4 of DOLE Memorandum Circular No. 2
were not complied with. The respondents pointed out that Our Haus never presented any proof that they
agreed in writing to the inclusion of their meals' value in their wages. Also, Our Haus failed to prove that
the value of the facilities it furnished was fair and reasonable. Finally, instead of deducting the maximum
amount of 70% of the value of the meals, Our Haus actually withheld its full value (which was Php290.00
per week for each employee).

The LA ruled in favor of Our Haus. The NLRC reversed the LA’s ruling. It noted that the respondents did
not authorize Our Haus in writing to charge the values of their board and lodging to their wages. Thus, the
same cannot be credited. The CA dismissed Our Haus' certiorari petition and affirmed the NLRC rulings
in toto.

ISSUE:

WON the CA gravely abused its discretion when it affirmed the awarding of attorney’s fees despite the
fact that respondents availed of the free services of the PAO.

RULING:

The SC ruled that respondents are entitled to attorney's fees. The assertion of Our Haus that
respondents' availment of free legal services from the PAO disqualifies them from such award is
untenable.

It is settled that in actions for recovery of wages or where an employee was forced to litigate and, thus,
incur expenses to protect his rights and interest, the award of attorney's fees is legally and morally
justifiable. Moreover, under the PAO Law or Republic Act No. 9406, the costs of the suit, attorney's fees
and contingent fees imposed upon the adversary of the PAO clients after a successful litigation shall be
deposited in the National Treasury as trust fund and shall be disbursed for special allowances of
authorized officials and lawyers of the PAO.

Thus, the respondents are still entitled to attorney's fees. The attorney's fees awarded to them shall be
paid to the PAO. It serves as a token recompense to the PAO for its provision of free legal services to
litigants who have no means of hiring a private lawyer.

26. MISCELLANEOUS PROVISIONS

A. SPECIAL TYPES OF WORKERS

 B. EMPLOYMENT OF WOMEN

C. EMPLOYMENT OF CHILDREN

D. EMPLOYMENT OF HOUSEHELPER

E. EMPLOYMENT OF HOMEWORKERS

F. EMPLOYMENT OF NON-RESIDENT ALIENS

G. EMPLOYMENT OF STUDENTS & WORKING SCHOLAR

H. EMPLOYMENT OF ACADEMIC/NON-ACADEMIC PERSONNEL IN PRIVATE

EDUCATIONAL INSTITUTION

1. University of the East et al., vs. Pepanio, G.R. No. 193897, Jan. 23, 2013

FACTS:

In 1992, the Department of Education, Culture and Sports (DECS) issued the Revised Manual of
Regulations for Private Schools,1ςrνl1 Article IX, Section 44, paragraph l(a), of which requires college
faculty members to have a master's degree as a minimum educational qualification for acquiring regular
status.2ςrνl1

In 1994 petitioner University of the East (UE) and the UE Faculty Association executed a five-year CBA
with effect up to 1999 which provided, among others, that UE shall extend only semester-to-semester
appointments to college faculty staffs who did not possess the minimum qualifications. Those with such
qualifications shall be given probationary appointments and their performance on a full-time or full-load
basis shall be reviewed for four semesters.3ςrνl1

Meantime, on February 7, 1996 several concerned government agencies issued DECS-CHED-TESDA-

DOLE Joint Order 14ςrνl1 which reiterated the policy embodied in the Manual of Regulations that
"teaching or academic personnel who do not meet the minimum academic qualifications shall not acquire
tenure or regular status." In consonance with this, the UE President issued a University Policy stating
that, beginning the School Year 1996-1997, it would hire those who have no postgraduate units or
master's degree for its college teaching staffs, in the absence of qualified applicants, only on a semester-
to-semester basis.

UE hired Bueno in 1997 and Pepanio in 2000, both on semester-to-semester basis to teach in its college
because they could not qualify for probationary or regular status, lacking postgraduate degrees.

In 2001 UE and the UE Faculty Association entered into a new CBA7ςrνl1 that would have the school
extend probationary full-time appointments to full-time faculty members who did not yet have the required
postgraduate degrees provided that the latter comply with such requirement within their probationary
period. The CBA granted UE, however, the option to replace these appointees during their probationary
period if a qualified teacher becomes available at the end of the semester.8

Pursuant to the new CBA, UE extended probationary appointments to Bueno and Pepanio. Two years
later, the Dean sent notices to probationary faculty members, reminding them of the expiration of the
probationary status of those lacking in postgraduate qualification by the end of the first semester of the
School Year 2003-2004. Pepanio replied that she was enrolled at the Polytechnic University of the
Philippines Graduate School. Bueno, on the other hand, replied that she was not interested in acquiring
tenure as she was returning to her province.

Dean Javier subsequently issued a memorandum, stating that she would recommend the extension of the
probationary appointees for two more semesters for those who want it based on the wishes of the
University President. Respondent Pepanio requested a three-semester extension but Dean Javier denied
this request and directed Pepanio to ask for just a two-semester extension. The records do not show if
Bueno submitted a request for extension. At any rate, the school eventually wrote respondents, extending
their probationary period but neither Pepanio nor Bueno reported for work.

Bueno later wrote UE, demanding that it consider her a regular employee based on her six-and-a-half-
year service on a full-load basis, given that UE hired her in 1997 when what was in force was still the
1994 CBA. Pepanio made the same demand, citing her three-and-a-half years of service on a full-load
basis.10ςrνl1 When UE did not heed their demands, respondents filed cases of illegal dismissal against
the school before the Labor Arbiter's (LA) office.

ISSUE:
WON there was illegal dismissal.

RULING:

No illegal dismissal.

Respondents were each given only semester-to-semester appointments from the beginning of their
employment with UE precisely because they lacked the required master's degree. It was only when UE
and the faculty union signed their 2001 CBA that the school extended petitioners a conditional
probationary status subject to their obtaining a master's degree within their probationary period. It is clear,
therefore, that the parties intended to subject respondents' permanent status appointments to the
standards set by the law and the university.

UE gave respondents Bueno and Pepanio more than ample opportunities to acquire the postgraduate
degree required of them. But they did not take advantage of such opportunities. Justice, fairness, and due
process demand that an employer should not be penalized for situations where it had little or no
participation or control.

Respondents argue that UE hired them in 1997 and 2000, when what was in force was the 1994 CBA
between UE and the faculty union. Since that CBA did not yet require a master's degree for acquiring a
regular status and since respondents had already complied with the three requirements of the CBA,
namely, (a) that they served full-time; (b) that they rendered three consecutive years of service; and (c)
that their services were satisfactory,18Ï‚ they should be regarded as having attained permanent or
regular status.

But the policy requiring postgraduate degrees of college teachers was provided in the Manual of
Regulations as early as 1992. Indeed, recognizing this, the 1994 CBA provided even then that UE was
to extend only semester-to-semester appointments to college faculty staffs, like respondents, who did not
possess the minimum qualifications for their positions.

In 1994 the legislature transferred the power to prescribe such qualifications to the CHED. CHED's
charter authorized it to set minimum standards for programs and institutions of higher learning.21Ï The
Manual of Regulations continued to apply to colleges and universities and suppletorily, the Joint Order
until 2010 when CHED issued a Revised Manual of Regulations which specifically applies only to
institutions involved in tertiary education.

Citing Escorpizo vs. University of Baguio, the Court ruled that a school CBA must be read in conjunction
with statutory and administrative regulations governing faculty qualifications. Such regulations form part of
a valid CBA without need for the parties to make express reference to it. The right to contract is still
subject to the limitation that the agreement must not be contrary to law or public policy.

The requirement of a masteral degree for tertiary education teachers is not unreasonable. The operation
of educational institutions involves public interest. The government has a right to ensure that only
qualified persons, in possession of sufficient academic knowledge and teaching skills, are allowed to
teach in such institutions.

2. Colegio Del Santisimo Rosario et al., vs. Rojo, G.R. No. 170388, Sept. 4, 2013 citing
2010 Mercado

I. MEDICAL, DENTAL AND OCCUPATIONAL SAFETY

1. Indophil Textile Mills Inc. vs. Engr. Adviento, GR No. 171212, August 4, 2014

FACTS:

Petitioner Indophil Textile Mills, Inc. is a domestic corporation engaged in the business of manufacturing
thread for weaving. On August 21, 1990, petitioner hired respondent Engr. Salvador Adviento as Civil
Engineer to maintain its facilities in Lambakin, Marilao, Bulacan. On August 7, 2002, respondent
consulted a physician due to recurring weakness and dizziness. Few days later, he was diagnosed with
Chronic Poly Sinusitis, and thereafter, with moderate, severe and persistent Allergic Rhinitis. Accordingly,
respondent was advised by his doctor to totally avoid house dust mite and textile dust as it will transmute
into health problems.

Adviento filed a complaint against Indophil before the NLR for alleged illegal dismissal and for the
payment of backwages, separation pay, actual damages and attorney’s fees. Subsequently, he also filed
another Compaint before the RTC, alleging that he contracted such occupational disease by reason of the
gross negligence of petitioner to provide him with a safe, healthy and workable environment.

In his Complaint, respondent alleged that as part of his job description, he conducts regular maintenance
check on petitioner’s facilities including its dye house area, which is very hot and emits foul chemical odor
with no adequate safety measures introduced by petitioner.

According to respondent, the air washer dampers and all roof exhaust vests are blown into open air,
carrying dust thereto. Concerned, respondent recommended to management to place roof insulation to
minimize, if not, eradicate the health hazards attendant in the work place. However, said recommendation
was turned down by management due to high cost.

Respondent further suggested to petitioner’s management that the engineering office be relocated
because of its [dust-prone] location, such that even if the door of the office is sealed, accumulated dust
creeps in outside the office.This was further aggravated by the installation of new filters fronting the office.
However, no action was taken by management.

According to respondent, these health hazards have been the persistent complaints of most, if not all,
workers of petitioner. Nevertheless, said complaints fell on deaf ears as petitioner callously ignored the
health problems of its workers and even tended to be apathetic to their plight, including respondent.

Respondent averred that, being the only breadwinner in the family, he made several attempts to apply for
a new job, but to his dismay and frustration, employers who knew of his present health condition
discriminated against him and turned down his application. By reason thereof, respondent suffered
intense moral suffering, mental anguish, serious anxiety and wounded feelings, praying for the recovery
of the following: (1) Five Million Pesos (P5,000,000.00) as moral damages; (2) Two Million Pesos
(P2,000,000.00) as exemplary damages; and (3) Seven Million Three Thousand and Eight Pesos
(P7,003,008.00) as compensatory damages. Claiming to be a pauper litigant, respondent was not
required to pay any filing fee.

In reply, petitioner filed a Motion to Dismiss on the ground that: (1) the RTC has no jurisdiction over the
subject matter of the complaint because the same falls under the original and exclusive jurisdiction of the
Labor Arbiter (LA) under Article 217(a)(4) of the Labor Code; and (2) there is another action pending with
the Regional Arbitration Branch III of the NLRC in San Fernando City, Pampanga, involving the same
parties for the same cause.

RTC denied the aforesaid Motion and sustained its jurisdiction over the instant case. It held that
petitioner’s alleged failure to provide its employees with a safe, healthy and workable environment is an
act of negligence, a case of quasi-delict. As such, it is not within the jurisdiction of the LA under Article
217 of the Labor Code. On the matter of dismissal based on lis pendencia, the RTC ruled that the
complaint before the NLRC has a different cause of action which is for illegal dismissal and prayer for
backwages, actual damages, attorney’s fees and separation pay due to illegal dismissal while in the
present case, the cause of action is for quasi-delict.

ISSUE:

WON the RTC has jurisdiction over the subject matter of respondent’s complaint praying for moral
damages, exemplary damages, compensatory damages, anchored on petitioner’s alleged gross
negligence in failing to provide a safe and healthy working environment for respondent.

RULING:

Yes. RTC has jurisdiction.

While we have upheld the present trend to refer worker-employer controversies to labor courts in light of
Art 217 LC (jurisdiction of the LA), we have also recognized that not all claims involving employees can
be resolved solely by our labor courts, specifically when the law provides otherwise.

For this reason, we have formulated the "reasonable causal connection rule," wherein if there is a
reasonable causal connection between the claim asserted and the employer-employee relations, then the
case is within the jurisdiction of the labor courts; and in the absence thereof, it is the regular courts that
have jurisdiction.

Here, there is no reasonable causal connection between the case and any of the claims provided for in
Article 217 of the LC. Only if there is such a connection with the other claims can a claim for damages be
considered as arising from employer-employee relations.
True, the maintenance of a safe and healthy workplace is ordinarily a subject of labor cases. More, the
acts complained of appear to constitute matters involving employee-employer relations since respondent
used to be the Civil Engineer of petitioner. However, it should be stressed that respondent’s claim for
damages is specifically grounded on petitioner’s gross negligence to provide a safe, healthy and workable
environment for its employees −a case of quasi-delict. This is easily ascertained from a plain and cursory
reading of the Complaint, which enumerates the acts and/or omissions of petitioner relative to the
conditions in the workplace.

Thus, to sustain a claim liability under quasi-delict, the following requisites must concur: (a) damages
suffered by the plaintiff; (b) fault or negligence of the defendant, or some other person for whose acts he
must respond; and (c) the connection of cause and effect between the fault or negligence of the
defendant and the damages incurred by the plaintiff.

In the case at bar, respondent alleges that due to the continued and prolonged exposure to textile dust
seriously inimical to his health, he suffered work-contracted disease which is now irreversible and
incurable, and deprived him of job opportunities. Clearly, injury and damages were allegedly suffered by
respondent, an element of quasi-delict. Secondly, the previous contract of employment between petitioner
and respondent cannot be used to counter the element of "no pre-existing contractual relation" since
petitioner’s alleged gross negligence in maintaining a hazardous work environment cannot be considered
a mere breach of such contract of employment, but falls squarely within the elements of quasi-delict under
Article 2176 of the Civil Code since the negligence is direct, substantive and independent.

It also bears stressing that respondent is not praying for any relief under the Labor Code of the
Philippines. He neither claims for reinstatement nor backwages or separation pay resulting from an illegal
termination. The cause of action herein pertains to the consequence of petitioner’s omission which led to
a work-related disease suffered by respondent, causing harm or damage to his person. Such cause of
action is within the realm of Civil Law, and jurisdiction over the controversy belongs to the regular courts.

The Court cited the Portillo case wherein it held that while Portillo’s (the employee’s) claim for unpaid
salaries is a money claim that arises out of or in connection with an ER-EE relationship, jurisdiction over
which is vested in the LA, Lietz Inc’s (the employer’s) claim against Portillo for violation of the goodwill
clause in their employment contract is a money claim based on an act done after the cessation of the
employment relationship, jurisdiction over which rests on the regular courts.

J. MIGRANT WORKER'S ACT/RECRUITMENT AND PLACEMENT

1. Hon. Sto Tomas vs. Salac et al., G.R. Nos. 156642 & 152710, Nov. 13, 2012, En banc

2. APQ Shipmanagement Co. Ltd., et al., vs. Casenas, GR No. 197303, June 4, 2014

FACTS:

On June 2004, Respondent Casenas was hired by APQ, acting for and in behalf of its principal, Crew
Management, as Chief Mate for vessel MV Perseverance for a period of eight (8) months starting from
June 16, 2004 to February 16, 2005, with a basic monthly salary of US$840.00, for forty-eight (48) hours
a week, with US$329.00 as overtime pay.

In his Position Paper, Casenas alleged that on June 16, 2004, he left Manila to join his assigned vessel in
Miami, Florida, USA, though the vessel could not leave the Florida port because of its incomplete
documents for operation; that consequently, he was transferred to another vessel, MV HAITIEN PRIDE,
which was in Haiti, although again because of incomplete documents, the vessel could not leave the port
and remained at Cap Haitien. He suffered extreme stress and anxiety because of the uncertainty of the
situation; that his employment contract was extended by APQ from the original eight (8) months to twenty-
six (26) months. He was then repatriated due to his condition and he arrived in the Philippines on August
30, 2006; that within three (3) days thereafter, he reported to APQ for post-employment medical
examination where the company-designated physician later diagnosed him with Ischemic Heart Disease.
He was declared "unfit for sea service and as a result, he was not able to work for more than 120 days
from his repatriation. He demanded payment of permanent total disability benefits, sickness allowance
and medical expenses to which he was entitled under the POEA Standard Employment Contract (POEA-
SEC), but APQ refused to pay.

APQ, on the other hand, alleged in its Position Paper that upon expiration of the contract, Caseñas
refused to return to the Philippines until he finally did on August 30, 2006. Caseñas demanded payment
of his wages, overtime and vacation pay for the alleged extended portion of the contract; that it could not
be held liable for claims pertaining to the extended portion of the contract for it did not consent to it.
The Labor Arbiter (LA) rendered the Decision12 dismissing Caseñas' complaint. He was of the view that
the employment contract was not extended pursuant to the terms and conditions of the contract.

On June 22, 2009, the NLRC resolved the appeal by reversing and setting aside the LA decision.
However, On October 14, 2009, the NLRC, acting on the motion for reconsideration filed by APQ,
reconsidered and set aside the June 22, 2009 NLRC Resolution. It explained that the documentary
evidence presented only proved the extension of contract but not the consent given to it by APQ.

The CA reinstated the earlier June 22, 2009 NLRC Resolution.

ISSUE:

WON the employment contract of Caseñas was extended with the consent of APQ/Crew Management.

RULING:

Yes. Employment contracts of seafarers on board foreign ocean-going vessels are not ordinary contracts.
They are regulated and an imprimatur by the State is necessary. While the seafarer and his employer are
governed by their mutual agreement, the POEA Rules and Regulations require that the POEA-SEC be
integrated in every seafarer’s contract. In this case, there is no dispute that Caseñas’ employment
contract was duly approved by the POEA and that it incorporated the provisions of the POEA-SEC.

APQ’s primary argument revolves around the fact of expiration of Caseñas’ employment contract, which it
claims was not extended as it was without its consent. While the contract stated that any extension must
be made by mutual consent of the parties, it, however, incorporated Department Order (DO)No. 4 and
Memorandum Circular No. 09, both series of 2000, which provided for the Standard Terms and
Conditions Governing the Employment of Filipino Seafarers on Board Ocean Going Vessels. Sections 2
and 18 thereof provide:

SECTION 2. COMMENCEMENT/ DURATION OF CONTRACT

A. The Employment contract between the employer and the seafarer shall commence upon actual
departure of the seafarer from the airport or seaport in the point of hire and with a POEA approved
contract. It shall be effective until the seafarer’s date of arrival at the point of hire upon termination of his
employment pursuant to Section 18 of this Contract.

B. The period of employment shall be for a period mutually agreed upon by the seafarer and the employer
but not to exceed 12 months. Any extension of the contract shall be subject to the mutual consent of both
parties.

SECTION 18. TERMINATION OF EMPLOYMENT

A. The employment of the seafarer shall cease when the seafarer completes his period of contractual
service aboard the vessel, signs off from the vessel and arrives at the point of hire.

B. The employment of the seafareris also terminated when the seafarer arrives at the point of hire for any
of the following reasons:

1. When the seafarer signs off and is disembarked for medical reasons pursuant to Section 20 (B)[5] of
this Contract.

xxxxxxxxxxxxxxxxx

In a nutshell, there are three (3) requirements necessary for the complete termination of the employment
contract: 1. termination due to expiration or other reasons/causes; 2. signing off from the vessel; and 3.
arrival at the point of hire. In this case, there was no clear showing that Caseñas signed off from the
vessel upon the expiration of his employment contract, which was in February or April 2005. He did not
arrive either in Manila, his point of hire, because he was still on board the vessel MV Haitien Pride on the
supposed date of expiration of his contract. It was only on August 14, 2006 that he signed off from MV
Haitien Pride and arrived in Manila on August 30, 2006. APQ cannot now feign ignorance of any
extension of the contract and claim that it did not consent to it. As it had knowledge of the extended
contract, APQ is solidarily liable with Crew Management for Caseñas’ claims. Caseñas is, therefore,
entitled to the unpaid wages during the extended portion of his contract.

As to his claim for medical and other benefits, there is no dispute that the symptoms of Caseñas’ illness
began to manifest during the term of his employment contract. The fact that the manifestations of the
illness only came about in August 2006 will not bar a conclusion that he contracted the ailment while the
contract was subsisting. The overall state and condition that he was exposed to over time was the very
cause of his illness. Thus, the CA was correct in reinstating the NLRC resolution awarding sickness
allowance as well as disability benefits in favor of Caseñas.

3. Sameer Overseas Placement Agency vs. Cabiles, GR No. 170139, August 3, 2014, En
Banc

27. SOCIAL LEGISLATION

1. SSS Et Al., vs. Alba G.R. No. 165482, July 23, 2008

FACTS:

Apolonio Lamboso filed a claim for retirement benefit before the Social Security System (SSS) but was
denied on the ground that he could not qualify for monthly pension under RA 1161 as he had only thirty-
nine (39) paid contributions, His employment record reveals that he was employed by Far Alba from 1960
to 1973 in Hd. La Roca and by Ramon Benedicto in Hdas. Alibasao and Kamandag from 1973 to 1984. It
was contended by Far Alba that he has no obligation to remit SSS contributions prior to 1970 because at
that time he cannot be considered as an employer of Lamboso being only an administrator of the family-
owned hacienda, he is not an employer under Section 8 (c) of the Social Security Act of 1954 who carries
on a "trade or business, industry, undertaking or activity of any kind and uses the services of another
person who is under his orders as regards the employment", unlike under Article 212 (e) of the Labor
Code which defines an employer as, among others, any person acting directly or indirectly in the interest
of the employer. Moreover, since it was Arturo Alba Sr., Far Alba’s father, who had failed to remit SSS
contributions prior to 1970, Lamboso should have asserted his claim before the estate proceedings of his
deceased employer.

ISSUES:

WON an administrator can be considered as an employer within the scope of the Social Security Act of
1994.

RULING:

YES. Evidence showed that that Far Alba was indeed Lambosos’s employer from 1965 to 1970 or at the
very least, he had served as the hacienda administrator before 1970. First, Far Alba was no ordinary
administrator as he was the son of the hacienda’s owner. He more than just acted in the interests of his
father as employer, and could himself pass off as the employer, the one carrying on the undertaking.
Second, applying the control test which is used to determine the existence of employer-employee
relationship for purposes of compulsory coverage under the SSS law, Far Alba is technically Lamboso's
employer. Third, Art. 167 (f) of the Labor Code defines employer as "any person, natural or juridical,
employing the services of the employee." It also defines a person as "any individual, partnership, firm,
association, trust, corporation or legal representative thereof". Plainly, Far Alba, as
the hacienda administrator, acts as the legal representative of the employer and is thus an employer
within the meaning of the law liable to pay the SS contributions. Fourth, the Court believes that Section 8
(c) of the Social Security Act of 1954 is broad enough to include those persons acting directly or indirectly
in the interest of the employer.

Finally, remittance of SS monthly contributions is not a type of money claim which needs to be filed
against the estate proceedings. Employers are required to remit the contributions to the SSS by mandate
of law. As such, actions of this type should be treated in much the same way as taxes — that they are not
required to be filed against the estate and that they be claimed against the heirs of the errant decedent.

2. Rodrin vs Gsis Et Al G.R. No. 162837, July 28, 2008

FACTS:

Marlene L. Rodrin filed a claim for compensation benefits under Presidential Decree 626, as amended,
relative to the death of her husband SPO1 Felixberto M. Rodrin before the GSIS but was denied on the
ground that the death of SPO1 Felixberto M. Rodrin did not arise out nor was it in the course of his
employment. It appeared that Felixberto Rodrin, who was then conducting an intelligence mission, was
shot to death by a subdivision security guard after a heated altercation. The wife questioned the denial of
the claim considering that she was able to submit various documents evidencing that her husband died in
the line of duty or that his death arose from or happened during the course of his employment.
ISSUES:

WON the compensation benefit claim is meritorious

RULING:

YES. For the compensability of an injury to an employee which results in his disability or death, Section 1
(a), Rule III of the Amended Rules on Employees' Compensation imposes the following conditions:

1. The employee must have been injured at the place where his work required him to be;
2. The employee must have been performing his official functions; and
3. If the injury was sustained elsewhere, the employee must have been executing an order of the
employer.

The conditions have been met since members of the national police, unless they are on official leave, are,
by the nature of their functions, technically on duty 24 hours a day, because policemen are subject to call
at any time and may be asked by their superiors or by any distressed citizen to assist in maintaining the
peace and security of the community. Being specifically assigned to conduct intelligence work in Carmona
and Biñan, SPO1 Rodrin is presumed to have been performing his official duty when he was shot to death
by a security guard while trying to pass though the Las Villas de Manila subdivision in Brgy. San
Francisco, Biñan, Laguna.

With respect to the contention that San Pedro, Laguna was a place which was not covered by the subject
Letter-Orders, the Court takes cognizance of the fact that the nature of work of a police officer who is an
intelligence operative does not confine him to specific places and hours, more so with respect to a police
officer involved in intelligence work. His actions may not be compartmentalized, as they depend to a large
extent on the exigencies of the assignment given him. Thus, in the absence of contrary evidence, SPO1
Rodrin is presumed to be in the performance of his official duties at the time of his death.

3. GSIS vs. Casco G.R. No. 173430, July 28, 2008

FACTS:

Respondent Casco was employed as a teacher of the Department of Education, Culture and
Sports(DECS) wherein he taught Filipino at Mandaluyong East High School.

Casco was diagnosed to be hypertensive and was admitted in the hospital. He suffered another attack
and was confined in the hospital. This forced him to retire from government service at an early age.
Casco then applied for disability benefits under PD 626 in which petitioner GSIS granted him 38 months
of permanent partial disability(PPD).

The latest physical examination of Casco reveals that he still experiences chest pain, limping
accompanied by lapse of memory and vertigo. Thus, he requested GSIS to convert his permanent partial
disability to permanent total disability(PTD), but the same was denied.

On appeal, the Employee’s Compensation Commission(ECC) affirmed the decision of GSIS. The CA on
appeal reversed the ECC’s decision and resolved the case in favor of Casco.

ISSUES:

WON respondent’s claim for conversion of his PPD benefits to PTD benefits should be granted.

RULING:

YES.

There is nothing in the law which prohibits the conversion of PPD benefit to PTD benefit if it is shown that
the employee's ailment qualifies as such. The grant of PTD benefit to an employee who was initially
compensated for PPD but is found to be suffering from PTD would not be prejudicial to the government to
give it reason to deny the claim.

Disability should be understood not singly through its medical significance but, more importantly, in terms
of a person's loss of earning capacity. Total disability does not require that the employee be absolutely
disabled, or totally paralyzed. What is necessary is that the injury must be such that he cannot pursue his
usual work and earn therefrom.

By denying respondent, who had rendered more than 21 years of service but was forced to retire due to
his ailment, the PTD benefits to which he is indisputably entitled would be contrary to the spirit of P.D. No.
626 and the social justice principle enshrined in our Constitution.

4. SSS vs. De Los Santos G.R. No 164790, August 29, 2008

FACTS:

Antonio de los Santos and respondent Gloria de los Santos, both Filipinos, were married in 1964. Gloria
left Antonio, less than a year after and contracted another marriage with a certain Domingo Talens.
Sometime in 1969, Gloria went back to Antonio and lived with him until 1983.

In 1983, Gloria once again left Antonio and went to the United States. While in the US, Gloria filed for
divorce against Antonio and executed a document waiving all her rights to their conjugal properties and
other matters. Gloria then remarried Larry Constant an American citizen.

In 1987, Antonio married Cirila de los Santos, he then amended his record with the petitioner SSS naming
Cirila as his beneficiary. Antonio retired from his employment and began receiving his monthly pension.
Upon his death, Cirila applied for and began receiving his SSS pension benefits.

Gloria filed a claim for Antonio’s death benefits which was denied by petitioner SSS because she was not
a qualified beneficiary of Antonio, stating that the Social Security Law(SS Law) specifically defines
beneficiaries as "the dependent spouse, until he or she remarries, the dependent legitimate, legitimated
or legally adopted and illegitimate children who shall be the primary beneficiary."

Gloria elevated her claim to the Social Security Commission(SSC) contending that her marriage to
constant was not the subsequent marriage contemplated under the SS Law that would disqualify her as a
beneficiary and that the decree of divorce issued by a foreign state involving Filipino citizens has no
validity and effect under Philippine law. The SSC deemed that Gloria abandoned Antonio when she
obtained a divorce against him abroad and subsequently married another man. She thus failed to satisfy
the requirement of dependency required of primary beneficiaries under the law.

On appeal, the CA agreed with the SSC in its determination that the marriage of Gloria and Antonio
subsisted until his death and the subsequent marriages contracted by both of them were void for being
bigamous. But contrary to findings of the SSC, the CA found that being the legal wife, Gloria was entitled
by law to receive support from her husband. Thus, her status qualified Gloria to be a dependent and a
primary beneficiary under the law.

ISSUES:

WON the respondent is still qualified as a beneficiary of the deceased SSS member.

RULING:

NO.

To recall, the Court ruled in Dycaico vs. SSS that the proviso “as of the date of retirement” in Sec. 12-B(d)
of RA 8282 which qualifies the term “primary beneficiaries”, is unconstitutional for it violates the due
process and equal protection clauses.

SEC. 12-B. Retirement Benefits. — (a) A member who has paid at least one hundred twenty
(120) monthly contributions prior to the semester of retirement and who (1) has reached the age
of sixty (60) years and is already separated from employment or has ceased to be self-employed
or (2) has reached the age of sixty-five (65) years, shall be entitled for as long as he lives to the
monthly pension; Provided, That he shall have the option to receive his first eighteen (18) monthly
pensions in lump sum discounted at a preferential rate of interest to be determined by the SSS.

xxx xxx xxx

(d) Upon the death of the retired member, his primary beneficiaries as of the date of his
retirement shall be entitled to receive the monthly pension; Provided, That if he has no primary
beneficiaries and he dies within sixty (60) months from the start of his monthly pension, his
 secondary beneficiaries shall be entitled to a lump sum benefit equivalent to the total monthly
pensions corresponding to the balance of the five-year guaranteed period, excluding the
dependents' pension.

In the case of Dycaico, the Court held that the death benefits should not be denied to the wife who was
married to the deceased retiree only after the latter’s retirement.

The abovementioned proviso was intended to prevent sham marriages or those contracted by persons
solely to enable one spouse to claim benefits upon the anticipated death of the other spouse. However,
classifying dependent spouses and determining their entitlement to survivor’s pension based on whether
the marriage was contracted before or after the retirement of the other spouse, regardless of the duration
of the said marriage, bears no relation to the achievement of the policy objective of the law.

The reckoning point in determining the beneficiaries of the deceased member should be the time of his
death.

The SS Law clearly and expressly provides who the qualified beneficiaries are, that are entitled to receive
benefits from the deceased:

Section 8. Terms Defined. — For the purposes of this Act, the following terms shall,
unless the context indicates otherwise, have the following meanings:
xxx xxx xxx
(e) Dependents — The dependents shall be the following:
(1) The legal spouse entitled by law to receive support from the member;
xxx xxx xxx

However, although respondent was the legal spouse of the deceased member, the Court held that she
was still disqualified to be his primary beneficiary under the SS Law since she failed to fulfill the
requirement of dependency upon her deceased husband.

The Court decision in SSS vs. Aguas is instructive in determining the required “dependency” under the
SS Law. The Court held that although a husband and wife are obliged to support each other, whether one
is actually dependent for support upon the other cannot be presumed from the fact of marriage alone. a
wife who left her family until her husband died and lived with other men, was not dependent upon her
husband for support, financial or otherwise, during the entire period.

The Court defined a dependent as "one who derives his or her main support from another. A wife who is
already separated de facto from her husband cannot be said to be "dependent for support" upon the
husband, absent any showing to the contrary. Conversely, if it is proved that the husband and wife were
still living together at the time of his death, it would be safe to presume that she was dependent on the
husband for support, unless it is shown that she is capable of providing for herself.

5. Becmen Service Exporter and Promotion Inc. vs. Cuaresma, GR No. 182978-79, April
7, 2009

FACTS:

On January 6, 1997, Jasmin Cuaresma (Jasmin) was deployed by Becmen Service Exporter and
Promotion, Inc. (Becmen) to serve as assistant nurse in Al-Birk Hospital in the Kingdom of Saudi Arabia
(KSA), for a contract duration of three years, with a corresponding salary of US$247.00 per month. Over a
year later, she died allegedly of poisoning. Jessie Fajardo, a co-worker of Jasmin, narrated that on June
21, 1998, Jasmin was found dead by a female cleaner lying on the floor inside her dormitory room with
her mouth foaming and smelling of poison.

Based on the police report and the medical report of the examining physician of the Al-Birk Hospital, who
conducted an autopsy of Jasmin’s body, the likely cause of her death was poisoning.

Jasmin’s body was repatriated to Manila on September 3, 1998. The following day, the City Health Officer
of Cabanatuan City conducted an autopsy and the resulting medical report indicated that Jasmin died
under violent circumstances, and not poisoning as originally found by the KSA examining physician. The
toxicology report of the NBI, however, tested negative for non-volatile, metallic poison and insecticides.

Simplicio and Mila Cuaresma (the Cuaresmas), Jasmin’s parents and her surviving heirs, received from
the Overseas Workers Welfare Administration (OWWA) the following amounts: P50,000.00 for death
benefits; P50,000.00 for loss of life; P20,000.00 for funeral expenses; and P10,000.00 for medical
reimbursement.
On November 22, 1999, the Cuaresmas filed a complaint against Becmen and its principal in the KSA,
Rajab & Silsilah Company (Rajab), claiming death and insurance benefits, as well as moral and
exemplary damages for Jasmin’s death, Jasmin’s death was work-related, having occurred at the
employer’s premises; that under Jasmin’s contract with Becmen, she is entitled to “iqama insurance”
coverage; that Jasmin is entitled to compensatory damages in the amount of US$103,740.00, which is the
sum total of her monthly salary of US$247.00 per month under her employment contract, multiplied by 35
years (or the remaining years of her productive life had death not supervened at age 25, assuming that
she lived and would have retired at age 60).

In their position paper, Becmen and Rajab insist that Jasmin committed suicide, citing a prior
unsuccessful suicide attempt sometime in March or April 1998 and relying on the medical report of the
examining physician of the Al-Birk Hospital. They likewise deny liability because the Cuaresmas already
recovered death and other benefits totaling P130,000.00 from the OWWA. They insist that the
Cuaresmas are not entitled to “iqama insurance” because this refers to the “issuance” – not insurance –
of iqama, or residency/work permit required in the KSA. On the issue of moral and exemplary damages,
they claim that the Cuaresmas are not entitled to the same because they have not acted with fraud, nor
have they been in bad faith in handling Jasmin’s case.

While the case was pending, Becmen filed a manifestation and motion for substitution alleging that Rajab
terminated their agency relationship and had appointed White Falcon Services, Inc. (White Falcon) as its
new recruitment agent in the Philippines. Thus, White Falcon was impleaded as respondent as well, and it
adopted and reiterated Becmen’s arguments in the position paper it subsequently filed.

ISSUE:

1. WON the Cuaresmas are entitled to monetary claims, by way of benefits and damages, for the
death of their daughter Jasmin.
2. WON Jasmin’s death be considered as work-connected and thus compensable even while she
was not on duty;
.
RULING:

1. Article 19 of the Civil Code provides that every person must, in the exercise of his rights and in
the performance of his duties, act with justice, give everyone his due, and observe honesty and
good faith. Article 21 of the Code states that any person who wilfully causes loss or injury to
another in a manner that is contrary to morals, good customs or public policy shall compensate
the latter for the damage. And, lastly, Article 24 requires that in all contractual, property or other
relations, when one of the parties is at a disadvantage on account of his moral dependence,
ignorance, indigence, mental weakness, tender age or other handicap, the courts must be vigilant
for his protection.

Clearly, Rajab, Becmen and White Falcon’s acts and omissions are against public policy because
they undermine and subvert the interest and general welfare of our OFWs abroad, who are
entitled to full protection under the law. They set an awful example of how foreign employers and
recruitment agencies should treat and act with respect to their distressed employees and workers
abroad. Their shabby and callous treatment of Jasmin’s case; their uncaring attitude; their
unjustified failure and refusal to assist in the determination of the true circumstances surrounding
her mysterious death, and instead finding satisfaction in the unreasonable insistence that she
committed suicide just so they can conveniently avoid pecuniary liability; placing their own
corporate interests above of the welfare of their employee’s – all these are contrary to morals,
good customs and public policy, and constitute taking advantage of the poor employee and her
family’s ignorance, helplessness, indigence and lack of power and resources to seek the truth
and obtain justice for the death of a loved one.

Giving in handily to the idea that Jasmin committed suicide, and adamantly insisting on it just to
protect Rajab and Becmen’s material interest – despite evidence to the contrary – is against the
moral law and runs contrary to the good custom of not denouncing one’s fellowmen for alleged
grave wrongdoings that undermine their good name and honor.

Whether employed locally or overseas, all Filipino workers enjoy the protective mantle of
Philippine labor and social legislation, contract stipulations to the contrary notwithstanding. This
pronouncement is in keeping with the basic public policy of the State to afford protection to labor,
promote full employment, ensure equal work opportunities regardless of sex, race or creed, and
regulate the relations between workers and employers. This ruling is likewise rendered imperative
by Article 17 of the Civil Code which states that laws which have for their object public order,
public policy and good customs shall not be rendered ineffective by laws or judgments
promulgated, or by determinations or conventions agreed upon in a foreign country.
 The relations between capital and labor are so impressed with public interest,and neither shall act
oppressively against the other, or impair the interest or convenience of the public. In case of
doubt, all labor legislation and all labor contracts shall be construed in favor of the safety and
decent living for the laborer.

The grant of moral damages to the employee by reason of misconduct on the part of the
employer is sanctioned by Article 2219 (10) of the Civil Code, which allows recovery of such
damages in actions referred to in Article 21.

Thus, in view of the foregoing, the Court holds that the Cuaresmas are entitled to moral damages,
which Becmen and White Falcon are jointly and solidarily liable to pay, together with exemplary
damages for wanton and oppressive behavior, and by way of example for the public good.

2. On the second issue: While the “employer’s premises” may be defined very broadly not only to
include premises owned by it, but also premises it leases, hires, supplies or uses, we are not
prepared to rule that the dormitory wherein Jasmin stayed should constitute employer’s premises
as would allow a finding that death or injury therein is considered to have been incurred or
sustained in the course of or arose out of her employment. There are certainly exceptions, but
they do not appear to apply here. Moreover, a complete determination would have to depend on
the unique circumstances obtaining and the overall factual environment of the case, which are
here lacking.
WHEREFORE, Rajab & Silsilah Company, White Falcon Services, Inc., Becmen Service Exporter
and Promotion, Inc., and their corporate directors and officers are found jointly and solidarily
liable and ORDERED to indemnify the heirs of Jasmin Cuaresma, spouses Simplicio and Mila
Cuaresma, the following amounts:
(1) TWO MILLION FIVE HUNDRED THOUSAND PESOS (P2,500,000.00) as moral
damages;
(2) TWO MILLION FIVE HUNDRED THOUSAND PESOS (P2,500,000.00) as exemplary
damages;
(3) Attorney’s fees equivalent to ten percent

6. GSIS vs. De Castro, GR No. 185035, July 15, 2009

FACTS:

Respondent Salvador De Castro (De Castro) rendered service in the Philippine Air Force (PAF) from April
1, 1974 until his retirement on March 2, 2006. On December 22, 2004, De Castro was admitted at the V.
Luna General Hospital, AFP Medical Center due to chest pains. On August 15, 2005, De Castro was
confined in the same hospital and was diagnosed to be suffering from (1) 41X-D21 – Coronary artery
disease and (2) 400-533 – Hypertensive cardiovascular disease. De Castro retired from the service on
March 2, 2006 with a "Certificate of Disability Discharge."4 On this basis, he filed a claim for permanent
total disability benefits with the GSIS. In a decision dated June 20, 2006, the GSIS denied De Castro’s
claim based on the finding that De Castro's illnesses were non-occupational. De Castro appealed to the
Employees’ Compensation Commission (ECC).

At its meeting on June 11, 2007, the ECC Board affirmed the GSIS ruling and dismissed De Castro's
claim for lack of merit.5 The ECC, however, also held that, contrary to the ruling of the GSIS, CAD is a
form of cardiovascular disease included in the list of occupational diseases. The ECC still denied the
claim despite this observation because of "the presence of factors which are not work-related, such as
smoking and alcohol consumption. The CA granted the petition.8 It noted that, as found by the ECC itself,
De Castro’s illnesses are listed as occupational diseases in Annex "A" of the Amended Rules of the
Employees’ Compensation Commission (Amended ECC Rules). It explained that under the same rules,
the sickness must be the result of an occupational disease under Annex "A" in order for the illness and
the resulting disability or death to be compensable. 9

ISSUE:

WON De Castro proved that his heart ailments are work-related and/or have been precipitated by his
duties with the Armed Forces of the Philippines (AFP) which would give a just cause for his claim for
permanent total disability benefits with the GSIS.
RULING:

Yes, De Castro’s heart ailments are work-related /or have been precipitated by his duties with the Armed
Forces of the Philippines (AFP) and are, therefore, compensable.

Other than the given facts, another undisputed aspect of the case is the status of the ailments that
precipitated De Castro’s separation from the military service – CAD and hypertensive cardiovascular
disease. These are occupational diseases.26 No less than the ECC itself confirmed the status of these
ailments when it declared that "Contrary to the ruling of the System, CAD is a form of cardiovascular
disease which is included in the list of Occupational Diseases."27 Essential hypertension is also listed
under Item 29 in Annex "A" of the Amended ECC Rules as an occupational disease.

The ECC itself, in its decision,30 recites that CAD is caused, among others, by atherosclerosis of the
coronary arteries that in turn, and lists the following major causes: increasing age; male gender; cigarette
smoking; lipid disorder due to accumulation of too much fats in the body; hypertension or high blood
pressure; insulin resistance due to diabetes; family history of CAD. The minor factors are: obesity;
physical inactivity; stress; menopausal estrogen deficiency; high carbohydrate intake; and alcohol. To be
sure, the causes of CAD and hypertension that the ECC listed and explained in its decision cannot be
denied; smoking and drinking are undeniably among these causes. However, they are not the sole
causes of CAD and hypertension and, at least, not under the circumstances of the present case. For this
reason, we fear for the implication of the ECC ruling if it will prevail and be read as definitive on the effects
of smoking and drinking on compensability issues, even on diseases that are listed as occupational in
character. The ruling raises the possible reading that smoking and drinking, by themselves, are factors
that can bar compensability.

We ask the question of whether these factors can be sole determinants of compensability as the ECC has
apparently failed to consider other factors such as age and gender from among those that the ECC itself
listed as major and minor causes of atherosclerosis and, ultimately, of CAD. While age and gender are
characteristics inherent in the person (and thereby may be considered non-work related factors), they
also do affect a worker’s job performance and may in this sense, together with stresses of the job,
significantly contribute to illnesses such as CAD and hypertension. In any determination of
compensability, the nature and characteristics of the job are as important as raw medical findings and a
claimant’s personal and social history. This is a basic legal reality in workers’ compensation law.

The military’s disability certification clearly states that De Castro’s ailments were: (1) aggravated by active
service, (2) incident to service, (3) not incurred while on AWOL, (4) never existed prior to entry to military
service, (5) not due to misconduct, (6) not incurred by private avocation and, (7) in line of duty. De Castro
further stated in the course of this case that he occupied positions and tasks whose urgency and
sensitivity resulted in job stress. The health of De Castro upon entry into the service and how his work
affected his health are very relevant facts that should not have been disregarded in favor of singled out
facts that the GSIS and the ECC considered as conclusive indicators of incompensability. The ECC and
the GSIS, in short, did not seriously look at all the relevant factors determinative of compensability and
thereby decided De Castro’s case based on incomplete, if not wrong, considerations. This is a reversible
error that requires rectification.

Intoxication which does not incapacitate the employee from following his occupation is not sufficient to
defeat the recovery of compensation, although intoxication may be a contributory cause to his injury.
While smoking may contribute to the development of a heart ailment, heart ailment may be cause by
other factors such as working and living under stressful conditions. Thus, the peremptory presumption
that petitioner’s habit of smoking heavily was the wilfull act which causes his illness and resulting
disability, without more, cannot suffice to bar petitioner’s claim for disability benefits. 32

We consider it significant that De Castro entered military service as a fit and healthy new soldier. We
note, too, De Castro’s service record and the medals, awards, and commendations he earned,33 all
attesting to 32 years of very active and productive service in the military. Thus, the CAD and the
hypertension came while he was engaged in these endeavors. We close by reiterating that what the law
requires is a reasonable work connection and not direct causal relation. 35 Probability, not the ultimate
degree of certainty, is the test of proof in compensation proceedings. 36For, in interpreting and carrying out
the provisions of the Labor Code and its Implementing Rules and Regulations, the primordial and
paramount consideration is the employee's welfare. To safeguard the worker's rights, any doubt on the
proper interpretation and application must be resolved in favor of labor.37

We reiterate these same principles in the present case. Accordingly, we hold that De Castro's ailments –
CAD and hypertensive cardiovascular disease – are work-connected under the circumstances of the
present case and are, therefore, compensable.
 7. Great Southern Maritime Service Corp., et al., vs. Surigao, GR No. 183646, Sept. 18,
2009 (citing 2009 Becmen Service Exporter & Promotions, Inc.)

FACTS:

[Respondent Leonila Surigao’s] husband, the late Salvador M. Surigao, was hired as Fitter by [petitioner]
Great Southern Maritime Services Corporation, for and in behalf of [co-petitioner] IMC Shipping Co. Pte.,
Ltd. (Singapore) for a period of ten (10) months. In his pre-employment medical examination, he was
found fit for sea duty. Thus, on April 29, 2001, he commenced his work aboard MV Selendang Nilam.

However, on August 22, 2001, as per Ship Master’s advice, a doctor was sent on board the vessel to
medically attend to Salvador due to complaints of extensive neuro dermatitis, neck region viral, aetiology,
urticaria, maculo popular, rash extending to the face, chest and abdomen. He was confined at the Seven
Hills Hospital. Not long thereafter, the Ship Master decided to sign him off from the vessel on August 25,
2001 for treatment in the hospital and for repatriation upon certification of the doctor that he was fit to
travel.

Prior to his repatriation, though, or on August 26, 2001, at around seven o’clock in the morning, Salvador
was found dead inside the bathroom of his hospital room. Later, his body was transferred to a
government hospital, the Ling George Hospital Mortuary Hall, for post-mortem examination. The Post-
Mortem Certificate issued by the Department of Forensic Medicine, Visakhapatnam City, stated that the
cause of death of Salvador was asphyxia due to hanging.

As an heir of the deceased seaman, petitioner, for in behalf of her minor children, filed for death
compensation benefits under the terms of the standard employment contract, but her claims were denied
by the [petitioners]. Since efforts to settle the case amicably proved futile, the Labor Arbiter directed the
parties to submit their respective position papers. On October 28, 2003, the Labor Arbiter rendered his
decision, ordering the [petitioners] Great Southern Maritime Services Corporation and/or IMC Shipping
Co., PTE LTD., Singapore to pay complainants Leonila S. Surigao, Miriam Surigao and Kaye Angeli
Surigao the amount of $71,500.00 or its equivalent in Philippine pesos at the prevailing rate of exchange
at the time of actual payment representing the death benefits, burial expenses of the deceased Salvador
M. Surigao and attorney’s fees.

The pertinent provisions of the Standard Terms and Conditions Governing the Employment of Filipino
Seafarers On-Board Ocean-Going Vessels, or the POEA Standard Employment Contract, which Salvador
and the petitioners incorporated into their contract, provide that:

SECTION 20. COMPENSATION AND BENEFITS

A. COMPENSATION AND BENEFITS FOR DEATH
1. In case of death of the seafarer during the term of his contract, the employer shall pay his
beneficiaries the Philippine Currency equivalent to the amount of Fifty Thousand US dollars
(US$50,000) and an additional amount of Seven Thousand US dollars (US$7,000) to each child
under the age of twenty-one (21) but not exceeding four (4) children at the exchange rate
prevailing during the time of payment.

xxxx

D. No compensation and benefits shall be payable in respect of any injury, incapacity, disability or
death of the seafarer resulting from his willful or criminal act or intentional breach of his duties,
provided however, that the employer can prove that such injury, incapacity, disability or death is
directly attributable to the seafarer.

Petitioners insist that respondents are not entitled to death benefits because Salvador committed suicide.
As proof, they presented the Death Certificate issued by Dr. Butchi Raju stating that Salvador was
suspected to have committed suicide; the post-mortem examination results stating that the deceased
appeared to have died of "ASPHYXIA DUE TO HANGING"; the Indian Police Inquest Report also stating
that he died due to hanging; the affidavit of the nurse on duty of Seven Hills hospital, Ms. P. V.
Ramanamma, wherein she stated that as the entrance doors to the bathroom main room was bolted from
the inside and no other person was in the near physical vicinity of the deceased, it was concluded that
seafarer committed suicide; as well as photos taken immediately after the discovery of the body with a
belt around his neck. They contend that the appellate court erred in disregarding these pieces of evidence
which convincingly rule out suspicions of foul play.

ISSUE:
WON Salvador’s beneficiaries are entitled to the grant of death benefits.

RULING:

The beneficiaries of Salvador are not entitled to death benefits because evidence shown that the cause of
Salvador’s death was suicide.

We find the foregoing ratiocination anchored on pure guesswork and speculation. In stark contrast, we
find the foregoing circumstances as constituting substantial evidence supporting a conclusion that
Salvador’s death was attributable to himself:

1. Salvador was last seen alive by the attending nurse in Room No. 1619 at about 4:00 a.m. of
August 26, 2001;10
2. At 6:30 a.m. of the same day, when no one answered to the repeated knocks of the attending
nurse, the hospital staff forcibly opened the main door of the room;11
3. Things inside the room were found in order;12
4. The bathroom door was locked from inside and the hospital staff gained entrance therein only
through a closed door with a mesh leading to the ceiling of the bathroom;13
5. The window in the bathroom has grills;14
6. Salvador was found dead inside with a belt tied around his neck; 15
7. A broken pipe and showerhead were found near the body; 16 and
8. The post-mortem examination result stating an opinion on the cause of death as Asphyxia due to
hanging.17

The post-mortem examination conclusively established that the true cause of death was asphyxia or
suffocation. The appellate court’s ruling that while it may be consistent with the theory that the deceased
hanged himself but it does not rule out the possibility that he might have died of other causes, 18 does not
persuade. Aside from being purely speculative, we find it hard to believe that someone strangled Salvador
inside the bathroom then locked the door thereof on his way out undetected. As shown by the evidence
presented by the petitioners, the bathroom door was locked or bolted from the inside and could not be
opened from outside. In order to gain entrance, the hospital staff had to pass through a closed door with a
mess leading to the ceiling of the bathroom. Entry could not likewise be effected through the bathroom
window as it has grills.

Moreover, the conclusion that Salvador could not have hanged himself to the showerhead as he was
found lying on the floor with a belt tied around his neck; or that he could not have died since the pipe
broke down and he fell therefrom,19 are based on speculations and hypothetical in nature. This confusion
could have been avoided had both the Court of Appeals and the Labor Arbiter considered the most logical
possibility that Salvador died hanging on the showerhead before the pipe broke down due to his body
weight, and thus, explaining why he was found on the floor with the belt still on his neck and broken pipe
and showerhead near his lifeless body. That the post-mortem examination, the Certification of Dr. Raju
and the police inquest report, all stated that Salvador’s cause of death was asphyxia due to hanging, and
not due to any other injury, lead to a fair and just conclusion that Salvador was already dead before the
showerhead broke.1avvphi1

Indeed, we are not unaware of our ruling in Becmen Service Exporter and Promotion, Inc. v.
Cuaresma,20 where we held that Jasmin Cuaresma, also an overseas Filipino worker, did not commit
suicide; that Filipinos are resilient people, willing to take on sacrifices for the good of their family; and that
we do not easily succumb to hardships and difficulties. Nevertheless, the circumstances prevailing in said
case are totally different from this case. In Becmen, the postmortem examination and the police report did
not state with specificity that poisoning or suicide was the cause of Jasmin’s death. In fact, both reports
mentioned that the cause of death of Jasmin was still under investigation. In contrast, the postmortem
examination and the police report in this case, categorically mentioned that Salvador died of asphyxia due
to hanging. It was also shown that no other individual could have caused the death of Salvador because
the bathroom door was locked or bolted from the inside and could not be opened from outside. In
Mabuhay Shipping Services, Inc. v. National Labor Relations Commission, 21 the Court held that the death
of a seaman even during the term of employment does not automatically give rise to compensation.

The circumstances which led to the death as well as the provisions of the contract, and the right and
obligation of the employer and the seaman must be taken into consideration, in consonance with the due
process and equal protection clauses of the Constitution. It is true that the beneficent provisions of the
Standard Employment Contract are liberally construed in favor of Filipino seafarers and their
dependents.22 We commiserate with respondents for the unfortunate fate that befell their loved one;
however, we find that the factual circumstances in this case do not justify the grant of death benefits as
prayed for by them as beneficiaries of Salvador.
 8. Kestrel Shipping Co., Et Al. vs. Munar, G.R. No. 198501, January 30, 2013

FACTS:

On March 23, 2006, petitioner Kestrel Shipping, Inc., on behalf of its principal, petitioner Atlantic Manning,
Ltd., and respondent Francisco Munar forged a six-month employment contract designating Munar as
pump man for M/V Southern Unity.

A few months after Munar assumed his duties as pump man, he started to limp and experience severe
pain in his lumbar region. He was admitted at a hospital in South Africa. The attending physician issued a
medical report stating that Munar’s spine was shown to have degenerative changes which required him to
undergo physiotherapy and if he would not register a positive response thereto, he must undergo surgery.
Munar was declared medically unfit to perform his usual sea duties.

On October 28, 2006, Munar was repatriated. He was admitted at the Chinese General Hospital. For two
weeks, he underwent intensive physiotherapy and was attended to by the following doctors: Dr. Lim, a
spine surgeon; Dr. Periquet, a specialist on physical rehabilitation medicine; and Dr. Chua to whom
Kestrel referred his case for evaluation.

In his medical report, Dr. Chua diagnosed Munar as suffering from herniated disc. Munar had surgical
intervention and while the surgery was successful, he continued to undergo his physiotherapy sessions at
Lorma Medical Center. On May 3, 2007, Dr. Chua issued a medical report where he enumerated the
findings of Dr. Periquet and Dr. Lim and rated Munar’s impediment as Grade 8. Per Dr. Chua’s medical
report, petitioner offered to pay Munar the benefit corresponding to Grade 8 disabilities or $16,795.00.

Meantime, on April 17, 2007, Munar filed a complaint for total and permanent disability benefits. He
claimed that the mere fact that his medical condition, which incapacitated him to engage in any gainful
employment, persisted for more than 120 days automatically entitles him to total and permanent disability
benefits. Munar rejected petitioners’ offer and maintained that his disability should be rated as Grade 1.
He relied on the following assessment made by Dr. Chiu, an orthopedic surgeon at Lorma Medical
Center, in a medical certificate the latter issued on May 21, 2007.

The Labor Arbiter ruled in favour of Munar and awarded him with total and permanent disability benefits in
the amount of US$60,000.00 and attorney’s fees equivalent to ten percent (10%) of the former. On appeal
by petitioners, the NLRC affirmed the Labor Arbiter’s but reduced the amount of attorney’s fees. The
NLRC held that Dr. Chiu’s categorical and definite assessment should prevail over that of Dr. Chua, which
failed to approximate the period needed by Munar to fully recover and lacked clear basis. By way of the
assailed decision, the CA found no grave abuse of discretion on the part of the NLRC and ruled that
Munar’s continued inability to perform his usual sea duties, which is attributable to his medical condition
that is work-related, despite surgery and seven (7) months of physical therapy, conclusively indicate that
he is totally and permanently disabled.

Petitioners insist on the correctness of the grade assigned by their doctors on Munar’s disability.
Petitioners further posit that the nature of disability and the benefits attached thereto are determined by
the manner they are graded or classified under the POEA and not by the number of days that a seafarer
is under treatment. If a seafarer has an injury or medical condition that is not considered a Grade 1
impediment under the POEA-SEC, then he cannot claim that he is totally or permanently disabled. To
allow the contrary would render naught the schedule of disabilities under the POEA-SEC.

ISSUE:

Whether private respondent’s injury can be classified as total and permanent disability thus entitling him
to the amount of benefit awarded.

RULING:

Affirmative.

Under Section 32 of the POEA-SEC, only those injuries or disabilities that are classified as Grade 1 may
be considered as total and permanent. However, if those injuries or disabilities with a disability grading
from 2 to 14, hence, partial and permanent, would incapacitate a seafarer from performing his usual sea
duties for a period of more than 120 or 240 days, depending on the need for further medical treatment,
then he is, under legal contemplation, totally and permanently disabled.
It is settled that the provisions of the Labor Code and Amended Rules on Employee Compensation
(AREC) implementing Title II, Book IV of the Labor Code on disabilities are applicable to the case of
seafarers such that the POEA-SEC is not the sole issuance that governs their rights in the event of work-
related death, injury or illness. In other words, an impediment should be characterized as partial and
permanent not only under the Schedule of Disabilities found in Section 32 of the POEA-SEC but should
be so under the relevant provisions of the Labor Code and AREC.

In Vergara v. Hammonia Maritime Services, Inc., this Court read the POEA-SEC in harmony with the
Labor Code and the AREC in interpreting in holding that: (a) the 120 days provided under Section 20-B(3)
of the POEA-SEC is the period given to the employer to determine fitness to work and when the seafarer
is deemed to be in a state of total and temporary disability; (b) the 120 days of total and temporary
disability may be extended up to a maximum of 240 days should the seafarer require further medical
treatment; and (c) a total and temporary disability becomes permanent when so declared by the
company-designated physician within 120 or 240 days, as the case may be, or upon the expiration of the
said periods without a declaration of either fitness to work or permanent disability and the seafarer is still
unable to resume his regular seafaring duties.

As we outlined above, a temporary total disability only becomes permanent when so declared by the
company physician within the periods he is allowed to do so, or upon the expiration of the maximum 240-
day medical treatment period without a declaration of either fitness to work or the existence of a
permanent disability.

Consequently, if after the lapse of the stated periods, the company-designated physician had not yet
declared him fit to work or permanently disabled, whether total or permanent, the conclusive presumption
that the latter is totally and permanently disabled arises. On the other hand, if the company-designated
physician declares the seaman fit to work within the said periods, such declaration should be respected
unless the physician chosen by the seaman and the doctor selected by both the seaman and his
employer declare otherwise.

As provided under Section 20-B(3) of the POEA-SEC, a seafarer may consult another doctor and in case
the latter’s findings differ from those of the company-designated physician, the opinion of a third doctor
chosen by both parties may be secured and such shall be final and binding. The same procedure should
be observed in case a seafarer, believing that he is totally and permanently disabled, disagrees with the
declaration of the company-designated physician that he is partially and permanently disabled.

In Vergara, as between the determinations made by the company-designated physician and the doctor
appointed by the seaman, the former should prevail absent any indication that the above procedure was
complied with. In this case, the following are undisputed: (a) when Munar filed a complaint for total and
permanent disability benefits on April 17, 2007, 181 days had lapsed from the time he signed-off from M/V
Southern Unity on October 18, 2006; (b) Dr. Chua issued a disability grading on May 3, 2007 or after the
lapse of 197 days; and (c) Munar secured the opinion of Dr. Chiu on May 21, 2007; (d) no third doctor
was consulted by the parties; and (e) Munar did not question the competence and skill of the company-
designated physicians and their familiarity with his medical condition.

It may be argued that these provide sufficient grounds for the dismissal of Munar’s complaint. Considering
that the 240-day period had not yet lapsed when the NLRC was asked to intervene, Munar’s complaint is
premature and no cause of action for total and permanent disability benefits had set in. While beyond the
120-day period, Dr. Chua’s medical report dated May 3, 2007 was issued within the 240-day period.
Moreover, Munar did not contest Dr. Chua’s findings using the procedure outlined under Section 20-B(3)
of the POEA-SEC. For being Munar’s attending physicians from the time he was repatriated and given
their specialization in spine injuries, the findings of Dr. Periquet and Dr. Lim constitute sufficient bases for
Dr. Chua’s disability grading. As Munar did not allege, much less, prove the contrary, there exists no
reason why Dr. Chiu’s assessment should be preferred over that of Dr. Chua.

It must be noted, however, that when Munar filed his complaint, Dr. Chua had not yet determined the
nature and extent of Munar’s disability. Also, Munar was still undergoing physical therapy and his spine
injury had yet been fully addressed. Furthermore, when Munar filed a claim for total and permanent
disability benefits, more than 120 days had gone by and the prevailing rule then was that enunciated by
this Court in Crystal Shipping, Inc. v. Natividad that total and permanent disability refers to the seafarer’s
incapacity to perform his customary sea duties for more than 120 days. Particularly:

Permanent disability is the inability of a worker to perform his job for more than 120 days, regardless of
whether or not he loses the use of any part of his body. As gleaned from the records, respondent was
unable to work from August 18, 1998 to February 22, 1999, at the least, or more than 120 days, due to his
medical treatment. This clearly shows that his disability was permanent.

Total disability, on the other hand, means the disablement of an employee to earn wages in the same
kind of work of similar nature that he was trained for, or accustomed to perform, or any kind of work which
a person of his mentality and attainments could do. It does not mean absolute helplessness. In disability
compensation, it is not the injury which is compensated, but rather it is the incapacity to work resulting in
the impairment of one’s earning capacity.

It is of no consequence that respondent was cured after a couple of years. The law does not require that
the illness should be incurable. What is important is that he was unable to perform his customary work for
more than 120 days which constitutes permanent total disability. Consequently, that after the expiration of
the 120-day period, Dr. Chua had not yet made any declaration as to Munar’s fitness to work and Munar
had not yet fully recovered and was still incapacitated to work sufficed to entitle the latter to total and
permanent disability benefits.

In addition, that it was by operation of law that brought forth the conclusive presumption that Munar is
totally and permanently disabled, there is no legal compulsion for him to observe the procedure
prescribed under Section 20-B(3) of the POEA-SEC. A seafarer’s compliance with such procedure
presupposes that the company-designated physician came up with an assessment as to his fitness or
unfitness to work before the expiration of the 120-day or 240-day periods. Alternatively put, absent a
certification from the company-designated physician, the seafarer had nothing to contest and the law
steps in to conclusively characterize his disability as total and permanent.

WHEREFORE, premises considered, the petition is DENIED.

9. Sy vs. Philippine Transmarine Carriers, Inc., G.R. No. 191740, February 11, 2013

FACTS:

On June 23, 2003, Alfonso N. Sy was hired by respondent Philippine Transmarine Carriers Incorporated
for and in behalf of its foreign principal, co-respondent SSC Ship Management Pte. Ltd. In their contract
of employment Sy was assigned to work as Able Seaman (AB) on board the vessel M/V Chekiang.

On October 1, 2005, while the vessel was at the Port of Jakarta, Indonesia, AB Sy went on shore leave
and left the vessel. Consequently, the vessel's agent received an advice from the local police that one of
the vessel's crew members died ashore. The cadaver was confirmed to be that of AB Sy. A forensic
pathologist certified that AB Sy's death was an accident due to drowning, and that there was "alcohol
20mg%" in his urine.

AB Sy's body was repatriated to the Philippines. The Medico-Legal Officer of the NBI conducted a post-
mortem examination on AB Sy's body and certified that the cause of death was Asphyxia by drowning.

Petitioner Susana R. Sy, widow of AB Sy, demanded from respondents payment of her husband's death
benefits and compensation. Respondents denied such claim, since AB Sy's death occurred while he was
on a shore leave, hence, his death was not work-related and, therefore, not compensable. As her
repeated demands were denied, petitioner filed, on March 1, 2006, a complaint against respondents for
death benefits, burial assistance, moral and exemplary damages, and attorney's fees.

The Labor Arbiter rendered a Decision ordering respondent to pay complainant the Philippine Currency
equivalent of $50,000.00 as death benefit and S$1,000.00 as burial expenses. The LA found that AB Sy
was still under the respondents' employ at the time he drowned although he was on shore leave; that
while on shore leave, he was still under the control and supervision of the master or captain of the vessel.

The NLRC rendered its Resolution dismissing respondent’s appeal.

Respondents filed a petition for certiorari with the CA. The appellate court reversed the NLRC and held
that AB Sy's death is not work-related. The CA noted that under Section 20 (A) of POEA Memorandum
Circular No. 9, series of 2000, it was not sufficient to establish that AB Sy's death had occurred during the
term of his contract, but there must be a causal connection between his death and the work for which he
had been contracted. In this case, when AB Sy died, he was on a shore leave and left the vessel, and his
death neither occurred at his workplace nor while performing an act within the scope of his employment.

ISSUE:

WON petitioner is entitled to death compensation benefits from respondents.

RULING:
Negative.

The terms and conditions of a seafarer's employment is governed by the provisions of the contract he
signs with the employer at the time of his hiring, and deemed integrated in his contract is a set of standard
provisions set and implemented by the POEA, called the Standard Terms and Conditions Governing the
Employment of Filipino Seafarers on Board Ocean-Going Vessels, which provisions are considered to be
the minimum requirements acceptable to the government for the employment of Filipino seafarers on
board foreign ocean-going vessels. Section 20 (A) of the Contract provides:

SECTION 20. COMPENSATION AND BENEFITS

A. COMPENSATION AND BENEFITS FOR DEATH
1. In the case of work-related death of the seafarer during the term of his contract, the employer shall pay
his beneficiaries the Philippine Currency equivalent to the amount of Fifty Thousand US dollars
(US$50,000) and an additional amount of Seven Thousand US dollars (US$7,000) to each child under the
age of twenty-one (21) but not exceeding four (4) children, at the exchange rate prevailing during the time
of payment.

Clearly, to be entitled for death compensation benefits from the employer, the death of the seafarer (1)
must be work-related; and (2) must happen during the term of the employment contract.

Under the 2000 POEA Amended Employment Contract, work-related injury is defined as an injury(ies)
resulting in disability or death arising out of and in the course of employment. Thus, there is a need to
show that the injury resulting to disability or death must arise (1) out of employment, and (2) in the course
of employment.

As a matter of general proposition, an injury or accident is said to arise "in the course of employment"
when it takes place within the period of the employment, at a place where the employee reasonably may
be, and while he is fulfilling his duties or is engaged in doing something incidental thereto.

AB Sy was hired as a seaman on board M/V Chekiang on June 23, 2005 and was found dead on October
1, 2005, with drowning as the cause of death. Notably, at the time of the accident, AB Sy was on shore
leave and there was no showing that he was doing an act in relation to his duty as a seaman or engaged
in the performance of any act incidental thereto. It was not also established that, at the time of the
accident, he was doing work which was ordered by his superior ship officers to be done for the
advancement of his employer's interest. On the contrary, it was established that he was on shore leave
when he drowned and because of the 20% alcohol found in his urine upon autopsy of his body, it can be
safely presumed that he just came from a personal social function which was not related at all to his job
as a seaman. Consequently, his death could not be considered work-related to be compensable.

Petitioner argues that AB Sy's death happened in the course of employment, because if not for
his employment he could be somewhere else and was not on shore leave.

We are not persuaded. While AB Sy's employment relationship with respondents did not stop but
continues to be in force even when he was on shore leave, their contract clearly provides that it is not
enough that death occurred during the term of the employment contract, but must be work-related to be
compensable. There is a need to show the connection of AB Sy's death with the performance of his duty
as a seaman. As we found, AB Sy was not in the performance of his duty as a seaman, but was doing an
act for his own personal benefit at the time of the accident. The cause of AB Sy’s death at the time he
was on shore leave which was drowning, was not brought about by a risk which was only peculiar to his
employment as a seaman.

WHERFORE, the petition is DENIED.

10. Nazareno vs. Maersk Filipinas Crewing Inc., G.R. No. 168703, February 26, 2013

FACTS:

On February 16, 2001, petitioner Ramon G. Nazareno was hired by Maersk Filipinas Crewing Inc. (MCI)
as Chief Officer for and in behalf of its foreign principal Elite Shipping A/S (Elite) on board its vessel M/V
Artkis Hope for a period of six (6) months with a basic salary of US$1,129.00.

On March 25, 2001, the vessel was berthed at Port Belem, Brazil to load timber. While petitioner was
checking the last bundle of timber to be loaded, he suddenly lost his balance and fell at a height of two (2)
meters. He landed on the timber and injured his right shoulder. Due to the pain he felt in his right
shoulder, he was later examined at Philadelphia, U.S.A. and was considered not fit for work. It was
recommended that petitioner should be confined for thorough evaluation and further tests, such as MRI.
Petitioner was also advised to see an Orthopedic Surgeon and/or a Neurologist.3 However, petitioner was
not permitted to disembark as there was no one available to replace him.

On August 8, 2001, at Ulsan, South Korea, petitioner was brought at the Ulsan Hyundai Hospital where
he was treated and given medication for his "frozen right shoulder."4 He was also advised to undergo
physical therapy. Consequently, petitioner was declared unfit to work and was recommended to be signed
off from duty.

On August 10, 2001, petitioner was repatriated to Manila. He then reported to MCI which referred him to
the Medical Center Manila (MCM) where he underwent a physical therapy program under Dr. Antonio O.
Periquet (Dr. Periquet) three times a week. On October 31, 2001, Dr. Emmanuel C. Campana (Dr.
Campana) issued a Medical Certificate5 stating that petitioner has been under their medical care since
August 13, 2001 and that after treatment and physical therapy, petitioner was fit for work as of October
21, 2001.

However, after almost two (2) months of therapy, petitioner did not notice any improvement. He informed
Dr. Periquet that when he was in Philadelphia, U.S.A., he was advised to consult a neurologist and
undergo MRI. When Dr. Periquet ignored him, he consulted another doctor. Thus, from October 23, 2001
to December 1, 2001, petitioner underwent a series of treatment for his "frozen shoulder of the right arm"
from Dr. Johnny G. Tan, Jr. (Dr. Tan) in his Chiropractic Clinic.

On December 27, 2001, petitioner consulted Dr. Cymbeline B. Perez- Santiago (Dr. Santiago), a
Neurologist at the Makati Medical Center, and was subjected to neurologic examinations. In her
Neurologic Summary7 dated February 28, 2002, Dr. Santiago concluded that petitioner will no longer be
able to function as in his previous disease-free state and that his condition would hamper him from
operating as chief officer of a ship.

Meanwhile, petitioner was also examined by Dr. Efren R. Vicaldo who, in a Medical Certificate8 dated
January 29, 2002, diagnosed petitioner to be suffering from Parkinson’s disease and a frozen right
shoulder (secondary), with an "Impediment Grade VII (41.8%). He concluded that petitioner is unfit to
work as a seafarer.

On the basis of the findings of his doctors, petitioner sought payment of his disability benefits and medical
allowance from respondents, but was refused. Petitioner therefore instituted the present Complaint9
against the respondents docketed as NLRC OFW Case No. (M) 02-03-0660-00

The Labor Arbiter and NLRC decided in favor of Petitioner Ramon Nazareno.

Respondent Maersk appealed to the Court of Appeals and obtained a favorable decision.

In ruling in favor of the respondents, the CA opined that petitioner is covered by the 1996 POEA Standard
Employment Contract (POEA-SEC) and under Section 20 of the said POEA-SEC, the disability of a
seafarer can only be assessed by the company-designated physician and not by the seafarer’s own
doctor.

Hence, the petition.

ISSUE:

WON the disability of a seafarer can only be assessed by the company-designated physician and not by
the seafarer’s own doctor.

RULING:

The petition is meritorious.

In the recent case of Daniel M. Ison v. Crewserve, Inc., et al.,30 although ruling against the claimant
therein, the Court upheld the abovecited view and evaluated the findings of the seafarer’s doctors vis-à-
vis the findings of the company-designated physician. A seafarer is, thus, not precluded from consulting a
physician of his choice. Consequently, the findings of petitioner’s own physician can be the basis in
determining whether he is entitled to his disability claims.

Verily, the courts should be vigilant in their time-honored duty to protect labor, especially in cases of
disability or ailment. When applied to Filipino seamen, the perilous nature of their work is considered in
determining the proper benefits to be awarded. These benefits, at the very least, should approximate the
risks they brave on board the vessel every single day.31

Accordingly, if serious doubt exists on the company-designated physician's declaration of the nature of a
seaman's injury and its corresponding impediment grade, resort to prognosis of other competent medical
professionals should be made. In doing so, a seaman should be given the opportunity to assert his claim
after proving the nature of his injury. These pieces of evidence will in turn be used to determine the
benefits rightfully accruing to him.

To recapitulate, it bears to reiterate the general rule under Department Order No. 33, Series of 1996
and Memorandum Circular No. 55, Series of 1996, that it is the company-designated physician who
determines the fitness or disability of a seafarer who suffered or is suffering from an injury or
illness. However, considering the unanimity of the findings not only of petitioner's independent
physicians here in the Philippines, but also those who were consulted abroad by petitioner's employer,
that petitioner is indeed not fit for duty as a seafarer by reason of the injury he sustained during
his fall, the instant case should be considered as an exception to the general rule abovestated.

The Court has applied the Labor Code concept of disability to Filipino seafarers in keeping with the
avowed policy of the State to give maximum aid and full protection to labor, it holding that the notion of
disability is intimately related to the worker’s capacity to earn, what is compensated being not his injury or
illness but his inability to work resulting in the impairment of his earning capacity, hence, disability should
be understood less on its medical significance but more on the loss of earning capacity.38

To be sure, the POEA-SEC for Seamen was designed primarily for the protection and benefit of Filipino
seamen in the pursuit of their employment on board ocean-going vessels. Its provisions must be
construed and applied fairly, reasonably and liberally in their favor. Only then can its beneficent provisions
be fully carried into effect

11. Philippine Journalists, Inc. vs. Journal Employees Union (Jeu), G.R. No. 192601, June
3, 2013

FACTS:

Respondent Michael L. Alfante alleged that he started to work with Petitioner PIJ as computer technician
at Management Information System under manager Neri Torrecampo on 16 May 2000; that on 15 July
2001, he was regularized receiving a monthly salary of P9,070.00 plus other monetary benefits; that
sometime in 2001, Rico Pagkalinawan replaced Torrecampo, which was opposed by complainant and
three other co-employees; that Pagkalinawan took offense of their objection; that on 22 October 2002,
complainant Alfante received a memorandum from Pagkalinawan regarding his excessive tardiness; that
on 10 June 2003, complainant Alfante received a memorandum from Executive Vice-President Arnold
Banares, requiring him to explain his side on the evaluation of his performance submitted by manager
Pagkalinawan; that one week after complainant submitted his explanation, he was handed his notice of
dismissal on the ground of "poor performance"; and that complainant was dismissed effective 28 July
2003.

Respondent Alfante submitted that he was dismissed without just cause. He also had a claim for the
alleged non-adjustment of longevity pay and burial aid for the death of his parent.

In case of Respondent Alfante, Petitioner averred in defense that complainant was dismissed for "poor
performance" after an evaluation by his superior, and after being forewarned that complainant may be
removed if there was no showing of improvement in his skills and knowledge on current technology.

With respect to the alleged non-adjustment of longevity pay and burial aid, Petitioner PJI pointed out that
it complies with the provisions of the CBA . Petitioner alleged that under the CBA, if the employee was
already married, his/her parent will not anymore be considered as a "legal dependent" for the purpose of
this benefit. Alfante is not entitled to the burial aid because the legal dependent who died was his parent.

The Labor Arbiter and NLRC dismissed Alfante's Case for lack of Merit

Alfante went to CA and his petition was PARTLY GRANTED.

His dismissal was affirmed by CA. NLRC's decision was MODIFIED ONLY insofar as the funeral or
bereavement aid is concerned, which was GRANTED, but only after submission of conclusive proofs that
the deceased is a parent, either father or mother, of the employees concerned, as well as the death
certificate to establish the fact of death of the deceased legal dependent.

PJI alleged that hi deceased parent is not covered by the term "legal dependent" under the law because
he was already married and that the persons covered by the term "legal dependent" are only his spouse
and children.

ISSUE:
WON the term "legal dependent" in connection with the grant of funeral and bereavement aid to a regular
employee under the CBA should include the employee's parents even if the said employee's civil status
was married.

RULING:

The petition for review lacks merit.

The nature and force of a CBA are delineated in Honda Phils., Inc. v. Samahan ng Malayang
Manggagawa sa Honda,20 thuswise:

A collective bargaining agreement (or CBA) refers to the negotiated contract between a legitimate labor
organization and the employer concerning wages, hours of work and all other terms and conditions of
employment in a bargaining unit. As in all contracts, the parties in a CBA may establish such stipulations,
clauses, terms and conditions as they may deem convenient provided these are not contrary to law,
morals, good customs, public order or public policy. Thus, where the CBA is clear and unambiguous, it
becomes the law between the parties and compliance therewith is mandated by the express policy of the
law.

Accordingly, the stipulations, clauses, terms and conditions of the CBA, being the law between the
parties, must be complied with by them. The literal meaning of the stipulations of the CBA, as with every
other contract, control if they are clear and leave no doubt upon the intention of the contracting parties.22

Here, a conflict has arisen regarding the interpretation of the term legal dependent in connection with the
grant of funeral and bereavement aid to a regular employee under Section 4, Article XIII of the CBA,23
which stipulates as follows:

SECTION 4. Funeral/Bereavement Aid. The COMPANY agrees to grant a funeral/bereavement aid in the
following instances:

a. Death of a regular employee in line of duty – P50,000

b. Death of a regular employee not in line of duty – P40,000

c. Death of legal dependent of a regular employee – P15,000. (Emphasis supplied)

Petitioner insists that notwithstanding the silence of the CBA, the term legal dependent should follow the
definition of it under Republic Act (R.A.) No. 8282 (Social Security Law),24 so that in the case of a
married regular employee, his or her legal dependents include only his or her spouse and children, and in
the case of a single regular employee, his or her legal dependents include only his or her parents and
siblings, 18 years old and below; and that the term dependents has the same meaning as beneficiaries as
used in Section 5, Article XIII of the CBA.

We cannot agree with petitioner’s insistence.

Social legislations contemporaneous with the execution of the CBA have given a meaning to the term
legal dependent. First of all, Section 8(e) of the Social Security Law provides that a dependent shall be
the following, namely: (a) the legal spouse entitled by law to receive support from the member; (b) the
legitimate, legitimated, or legally adopted, and illegitimate child who is unmarried, not gainfully employed
and has not reached 21 of age, or, if over 21 years of age, is congenitally or while still a minor has been
permanently incapacitated and incapable of self-support, physically or mentally; and (c) the parent who is
receiving regular support from the member. Secondly, Section 4(f) of R.A. No. 7875, as amended by R.A.
No. 9241,25 enumerates who are the legal dependents, to wit: (a) the legitimate spouse who is not a
member; (b) the unmarried and unemployed legitimate, legitimated, illegitimate, acknowledged children
as appearing in the birth certificate; legally adopted or step-children below 21 years of age; (c) children
who are 21 years old and order but suffering from congenital disability, either physical or mental, or any
disability acquired that renders them totally dependent on the member of our support; and (d) the parents
who are 60 years old or older whose monthly income is below an amount to be determined by the
Philippine Health Insurance Corporation in accordance with the guiding principles set forth in Article I of
R.A. No. 7875. And, thirdly, Section 2(f) of Presidential Decree No. 1146, as amended by R.A. No.
8291,dependent for support upon the member or pensioner; (b) the legitimate, legitimated, legally
adopted child, including the illegitimate child, who is unmarried, not gainfully employed, not over the age
of majority, or is over the age of majority but incapacitated and incapable of self-support due to a mental
or physical defect acquired prior to age of majority; and (c) the parents dependent upon the member for
support

It is clear from the statutory definitions of dependent that the civil status of the employee as either married
or single is not the controlling consideration in order that a person may qualify as the employee’s legal
dependent. What is rather decidedly controlling is the fact that the spouse, child, or parent is actually
dependent for support upon the employee.

Considering that existing laws always form part of any contract, and are deemed incorporated in each and
every contract, the definition of legal dependents under the aforecited social legislations applies herein in
the absence of a contrary or different definition mutually intended and adopted by the parties in the CBA.
Accordingly, the concurrence of a legitimate spouse does not disqualify a child or a parent of the
employee from being a legal dependent provided substantial evidence is adduced to prove the actual
dependency of the child or parent on the support of the employee.

The coverage of the term legal dependent as used in a stipulation in a collective bargaining agreement
(CBA) granting funeral or bereavement benefit to a regular employee for the death of a legal dependent, if
the CBA is silent about it, is to be construed as similar to the meaning that contemporaneous social
legislations have set. This is because the terms of such social legislations are deemed incorporated in or
adopted by the CBA.

Pursuant to Article 100 of the Labor Code, petitioner as the employer could not reduce, diminish,
discontinue or eliminate any benefit and supplement being enjoyed by or granted to its employees. This
prohibition against the diminution of benefits is founded on the constitutional mandate to protect the rights
of workers and to promote their welfare and to afford labor full protection.

12. Mitsubishi Motors Philippines Salaried Employees Union (MMPSEU) vs. Mitsubishi
Motors Philippines Corporation, G.R. No. 175773, June 17, 2013

FACTS:

MMPC paid The parties’ CBA5 covering the period August 1, 1996 to July 31, 1999 provides for the
hospitalization insurance benefits for the covered dependents.

Each employee shall pay one hundred pesos (P100.00) per month through salary deduction as his share
in the payment of the insurance premium for the above coverage with the balance of the premium to be
paid by the COMPANY. If the COMPANY is self-insured the one hundred pesos (P100.00) per employee
monthly contribution shall be given to the COMPANY which shall shoulder the expenses subject to the
above level of benefits and subject to the same limitations and restrictions provided for in Annex "B"
hereof.

The hospitalization expenses must be covered by actual hospital and doctor’s bills and any amount in
excess of the above mentioned level of benefits will be for the account of the employee.

For purposes of this provision, eligible dependents are the covered employees’ natural parents, legal
spouse and legitimate or legally adopted or step children who are unmarried, unemployed who have not
attained twenty-one (21) years of age and wholly dependent upon the employee for support.

This provision applies only in cases of actual confinement in the hospital for at least six (6) hours.
Maternity cases are not covered by this section but will be under the next succeeding section on maternity
benefits.6

When the CBA expired on July 31, 1999, the parties executed another CBA 7 effective August 1, 1999 to
July 31, 2002 incorporating the same provisions on dependents’ hospitalization insurance benefits but in
the increased amount of P50,000.00. The room and board expenses, as well as the doctor’s call fees,
were also increased toP375.00.

On separate occasions, three members of MMPSEU, namely, Ernesto Calida (Calida), Hermie Juan
Oabel (Oabel) and Jocelyn Martin (Martin), filed claims for reimbursement of hospitalization expenses of
their dependents.

Only a portion of their hospitalization insurance claims, not the full amount. In the case of Calida, his wife,
Lanie, was confined at Sto. Tomas University Hospital from September 4 to 9, 1998 due to
Thyroidectomy. The medical expenses incurred totalled P29,967.10. Of this amount, P9,000.00
representing professional fees was paid by MEDICard Philippines, Inc. (MEDICard) which provides health
maintenance to Lanie.8 MMPC only paid P12,148.63.9 It did not pay the P9,000.00 already paid by
MEDICard and the P6,278.47 not covered by official receipts. It refused to give to Calida the difference
between the amount of medical expenses ofP27,427.1010 which he claimed to be entitled to under the
CBA and the P12,148.63 which MMPC directly paid to the hospital.
In the case of Martin, his father, Jose, was admitted at The Medical City from March 26 to 27, 2000 due to
Acid Peptic Disease and incurred medical expenses amounting to P9,101.30.14 MEDICard
paid P8,496.00.15Consequently, MMPC only paid P288.40,16 after deducting from the total medical
expenses the amount paid by MEDICard and the P316.90 discount given by the hospital.

Claiming that under the CBA, they are entitled to hospital benefits amounting to P27,427.10, P6,769.35
andP8,123.80, respectively, which should not be reduced by the amounts paid by MEDICard and by
Prosper, Calida, Oabel and Martin asked for reimbursement from MMPC. However, MMPC denied the
claims contending that double insurance would result if the said employees would receive from the
company the full amount of hospitalization expenses despite having already received payment of portions
thereof from other health insurance providers.

This prompted the MMPSEU President to write the MMPC President17 demanding full payment of the
hospitalization benefits. Alleging discrimination against MMPSEU union members, she pointed out that
full reimbursement was given in a similar claim filed by Luisito Cruz (Cruz), a member of the Hourly
Union. In a letter-reply,18 MMPC, through its Vice-President for Industrial Relations Division, clarified that
the claims of the said MMPSEU members have already been paid on the basis of official receipts
submitted. It also denied the charge of discrimination and explained that the case of Cruz involved an
entirely different matter since it concerned the admissibility of certified true copies of documents for
reimbursement purposes, which case had been settled through voluntary arbitration.

On August 28, 2000, MMPSEU referred the dispute to the National Conciliation and Mediation Board and
requested for preventive mediation.19

Proceedings before the Voluntary Arbitrator.

The Voluntary Arbitrator held that the employees may demand simultaneous payment from both
the CBA and their dependents’ separate health insurance without resulting to double insurance,
since separate premiums were paid for each contract. He also noted that the CBA does not
prohibit reimbursement in case there are other health insurers.
Meanwhile, the parties separately sought for a legal opinion from the Insurance Commission
relative to the issue at hand. In its letter23 to the Insurance Commission, MMPC requested for
confirmation of its position that the covered employees cannot claim insurance benefits for a loss
that had already been covered or paid by another insurance company. However, the Office of the
Insurance Commission opted not to render an opinion on the matter as the same may become
the subject of a formal complaint before it.24 On the other hand, when queried by MMPSEU,25the
Insurance Commission, through Atty. Richard David C. Funk II (Atty. Funk) of the Claims
Adjudication Division, rendered an opinion contained in a letter
Proceedings before the Court of Appeals
On March 31, 2006, the CA found merit in MMPC’s Petition. It ruled that despite the lack of a
provision which bars recovery in case of payment by other insurers, the wordings of the subject
provision of the CBA showed that the parties intended to make MMPC liable only for expenses
actually incurred by an employee’s qualified dependent. In particular, the provision stipulates that
payment should be made directly to the hospital and that the claim should be supported by actual
hospital and doctor’s bills. These mean that the employees shall only be paid amounts not
covered by other health insurance and is more in keeping with the principle of indemnity in
insurance contracts. Besides, a contrary interpretation would "allow unscrupulous employees to
unduly profit from the x x x benefits" and shall "open the floodgates to questionable claims x x
x."30

Hence, this Petition.

ISSUE:

1. WON the collateral source rule was applied correctly.

2. WON allowing reimbursement of amounts paid under other insurance policies shall constitute
double recovery.

RULING:

The Petition has no merit.

1. No, it was not applied correctly. The collateral source rule was originally applied to tort cases
wherein the defendant is prevented from benefiting from the plaintiff’s receipt of money from other
sources. Under this rule, if an injured person receives compensation for his injuries from a
source wholly independent of the tortfeasor, the payment should not be deducted from the
damages which he would otherwise collect from the tortfeasor. In a recent Decision by the Illinois
Supreme Court, the rule has been described as “an established exception to the general rule that
 damages in negligence actions must be compensatory.” The Court went on to explain that
although the rule appears to allow a double recovery, the collateral source will have a lien or
subrogation right to prevent such a double recovery.

The collateral source rule applies in order to place the responsibility for losses on the party
causing them. Its application is justified so that “the wrongdoer should not benefit from the
expenditures made by the injured party or take advantage of contracts or other relations that may
exist between the injured party and third persons.” Thus, it finds no application to cases involving
no-fault insurances under which the insured is indemnified for losses by insurance companies,
regardless of who was at fault in the incident generating the losses. Here, it is clear that MMPC is
a no-fault insurer. Hence, it cannot be obliged to pay the hospitalization expenses of the
dependents of its employees which had already been paid by separate health insurance
providers of said dependents.

2. Yes, to allow reimbursement of amounts paid under other insurance policies shall constitute
double recovery which is not sanctioned by law.

MMPSEU insists that MMPC is also liable for the amounts covered under other insurance
policies; otherwise, MMPC will unjustly profit from the premiums the employees contribute
through monthly salary deductions.

This contention is unmeritorious.

To constitute unjust enrichment, it must be shown that a party was unjustly enriched in the sense
that the term unjustly could mean illegally or unlawfully. 50 A claim for unjust enrichment fails when
the person who will benefit has a valid claim to such benefit.51
The CBA has provided for MMPC’s limited liability which extends only up to the amount to be paid
to the hospital and doctor by the employees’ dependents, excluding those paid by other insurers.
Consequently, the covered employees will not receive more than what is due them; neither is
MMPC under any obligation to give more than what is due under the CBA.

Moreover, since the subject CBA provision is an insurance contract, the rights and obligations of
the parties must be determined in accordance with the general principles of insurance
law.52 Being in the nature of a non-life insurance contract and essentially a contract of indemnity,
the CBA provision obligates MMPC to indemnify the covered employees’ medical expenses
incurred by their dependents but only up to the extent of the expenses actually incurred.53 This is
consistent with the principle of indemnity which proscribes the insured from recovering greater
than the loss.54 Indeed, to profit from a loss will lead to unjust enrichment and therefore should
not be countenanced. As aptly ruled by the CA, to grant the claims of MMPSEU will permit
possible abuse by employees.

WHEREFORE, the Petition is DENIED. The Decision dated March 31, 2006 and Resolution
dated December 5, 2006 of the Court of Appeals in CA-G.R. SP No. 75630, are AFFIRMED.

13. Philman Marine Agency, Inc. (Now Dohle-Philman Manning Agency, Inc.) vs.
Cabanban, G.R. No. 186509, July 29, 2013

Lesson to be learned: “The doctor who has had personal knowledge of the actual medical condition,
having closely, meticulously and regularly monitored and actually treated the seafarer’s illness, is more
qualified to assess the seafarer’s disability”

FACTS:

On September 15, 2002, Armando entered into a nine-month contract of employment7 with DOHLE,
through its local agent PTCI. He was assigned to work as a 2nd mate on board the vessel "INGA-S." His
basic monthly salary was US$966.00 on a 48-hour workweek, with a fixed overtime pay of US$581.00 a
month and vacation leave pay of US$161.00 for five days per month.

On September 9, 2002, Armando underwent the requisite pre-employment medical examination (PEME)
at PTCI’s accredited medical clinic,8 which found him fit for sea service.9 During his medical examination,
he declared that he had no history of high blood pressure and heart trouble, and had not previously
consulted any doctor relative to any disease.10 Armando was deployed on October 14, 2002.

On February 9, 2003, while on board the vessel "INGA-S," Armando felt dizzy and complained of chest
pain. He was immediately brought to the Fujairah Port Clinic, UAE, and was admitted to the Coronary
Care Unit after an initial diagnosis of "Unstable Angina."11 On February 13, 2003, Armando was
discharged from the hospital but was re-admitted four days after due to recurrent angina at rest. On
February 21, 2003, Dr. Mohamed Dipti Ranjan, the Chief Medical Officer of Fujairah Port Clinic, UAE,
stated in Armando’s medical report that "[h]e is a known case of HT, on atenolol 50 mg od for five
years."12

On February 22, 2003, Armando underwent Cardiac Catheterisation and Angiography to check for
damages to his coronary arteries. The result of the angiography indicated "essentially normal coronary
arteries with good left ventricular function."13

The petitioners repatriated Armando on medical ground. Armando arrived in the Philippines on February
23, 2003 and upon instruction, he proceeded to PTCI’s companydesignated physician, Dr. Natalio Alegre
II, at the St. Luke’s Medical Center. Dr. Alegre treated Armando and monitored his condition for three
months. During the course of the treatment, Armando underwent several laboratory tests, 15which included
an ECG, CR-M, Troponin, spirometry and cardiac imaging. After the three-month close monitoring,
treatment and consultation with the attending cardiologist, Dr. Marietta Crisostomo, Dr. Alegre declared
Armando "fit to work" on May 12, 2003.16

Despite the certification of Dr. Alegre as to Armando’s fitness to resume work, Armando nevertheless
claimed otherwise. In a letter17 dated June 25, 2003, Armando demanded from PTCI payment of
permanent disability benefits under the Philippine Overseas Employment Agency Standard Employment
Contract (POEA-SEC).

The petitioners did not heed Armando’s demand, prompting Armando to file, on July 4, 2003, a
complaint18against the petitioners for injury/illness compensation benefit under a disability grade of 7,
according to the POEASEC, in the amount of US$20,900.00.

On August 11, 2003, Armando went to the UST Hospital and consulted Dr. Patrick Gerard L. Moral
(Internal Medicine, Pulmonary Disease and Sleep Breathing Disorders). Dr. Moral issued a medical
certificate20 diagnosing Armando with "Coronary Heart Disease, Hypertension and Dyslipidemia," and
gave him a disability grade of "7" based on the POEA disability grading schedule under the POEA-SEC.

In their position paper24 and amended position paper,25 the petitioners denied any liability to Armando for
disability benefits under the POEA-SEC. They pointed out that Dr. Alegre has already declared him fit to
work following the "normal" results of his laboratory tests.
The petitioners also disagreed with Armando’s computation of his sickness allowance at 120 days
The NLRC dismissed Armando’s appeal for lack of merit. The CA reversed the NLRC’s decision and
ordered the petitioners to pay Armando

ISSUE:

1. WON Armando is entitled to total and permanent disability benefits

2. WON Armando the company physician’s opinion is necessary before Armando can be entitled to
sickness allowance.

RULING:

1. No, Armando is not entitled to total and permanent disability benefits.

The entitlement of a seafarer on overseas employment to disability benefits is governed by the
medical findings, by law and by the parties’ contract. 44 By law, the governing provisions are
Articles 191 to 193, Chapter VI (Disability Benefits) of the Labor Code, in relation to Section 2,
Rule X of the Rules and Regulations Implementing Book IV of the Labor Code. By contract, the
provisions of the POEA-SEC incorporating Department Order No. 4, series of 2000 of the
Department of Labor and Employment (the POEA-SEC) govern.45

Since the present controversy centers on Armando’s claim for total permanent disability, we find it
necessary to define total and permanent disability as provided under Article 192(3)(1) of the
Labor Code:
(3) The following disabilities shall be deemed total and permanent:
(1) Temporary total disability lasting continuously for more than one hundred twenty days,
except as otherwise provided for in the Rules. [emphasis ours]
In relation to this Labor Code provision, we also refer to Section 2, Rule X of the Rules and
Regulations Implementing Book IV of the Labor Code:
SEC. 2. Period of entitlement – (a) The income benefit shall be paid beginning on the first
day of such disability. If caused by an injury or sickness it shall not be paid longer than
120 consecutive days except where such injury or sickness still requires medical
attendance beyond 120 days but not to exceed 240 days from onset of disability in which
case benefit for temporary total disability shall be paid. However, the System may declare
 the total and permanent status at any time after 120 days of continuous temporary total
disability as may be warranted by the degree of actual loss or impairment of physical or
mental functions as determined by the System. [emphases ours]

By contract, pertinent to the issue of compensability in the event of the seafarer’s illness or
disability is Section 20-B of the POEA-SEC. It reads:
SECTION 20. COMPENSATION AND BENEFITS
xxxx

B. COMPENSATION AND BENEFITS FOR INJURY OR ILLNESS

The liabilities of the employer when the seafarer suffers work-related injury or illness during the
term of his contract are as follows:
xxxx

3. Upon sign-off from the vessel for medical treatment, the seafarer is entitled to sickness
allowance equivalent to his basic wage until he is declared fit to work or the degree of
permanent disability has been assessed by the company-designated physician but in no
case shall this period exceed one hundred twenty (120) days.
For this purpose, the seafarer shall submit himself to a post-employment medical
examination by a company-designated physician within three working days upon his
return except when he is physically incapacitated to do so, in which case, a written notice
to the agency within the same period is deemed as compliance. Failure of the seafarer to
comply with the mandatory reporting requirement shall result in his forfeiture of the right
to claim the above benefits.

If a doctor appointed by the seafarer disagrees with the assessment, a third doctor may
be agreed jointly between the Employer and the seafarer. The third doctor’s decision
shall be final and binding on both parties. [emphases ours]

The seafarer is not, of course, irretrievably bound by the findings of the company-designated
physician as the above provisions allow him to seek a second opinion and consult a doctor of his
choice. In case of disagreement between the findings of the company-designated physician and
the seafarer’s appointed physician, the parties shall jointly agree to refer the matter to a third
doctor whose findings shall be final and binding on both.

In the present petition, the petitioners’ designated physician – Dr. Alegre – declared Armando fit
for sea service on May 12, 2003 or 92 days from the time he disembarked or signed off from the
vessel on February 10, 2003. As defined under Article 192(c)(1) of the Labor Code, total and
permanent disability means total temporary disability lasting for more than 120 days (unless the
seafarer is still under treatment up to a maximum period of 240 days as the Court held in Vergara
v. Hammonia Maritime Services, Inc.).46 While Armando was initially under temporary total
disability, Dr.Alegre declared him fit to work well within the 120-day mark. Viewed in this light, we
find the LA and the NLRC legally correct when they refused to recognize any disability on
Armando’s part as the petitioners’ designated physician had already declared his fitness to
resume work. Consequently, absent any disability after his temporary disability was dealt with, he
is therefore not entitled to compensation benefits under Section 20 of the POEA-SEC.
Armando, acting well within his rights, disagreed with the assessment of the company-designated
physician and sought the opinion of four private physicians who arrived at a contrary finding. We
note, however, that he did so only after he had already filed his complaint with the LA. Thus,
Armando, in fact, had no ground for a disability claim at the time he filed his complaint, as he did
not have any sufficient evidentiary basis to support his claim.

More than this, the disagreement between the findings of the company-designated physician and
Armando’s chosen physicians was never referred to a third doctor chosen by both the petitioners
and Armando, following the procedure outlined in Section 20-B, paragraph 3 of the POEASEC.
Had this been done, Armando’s medical condition could have been easily clarified and finally
determined.

Considering the absence of findings coming from a third doctor, we sustain the findings of the
NLRC and hold that the certification of the company-designated physician should prevail. We do
so for the following reasons:

First, the records show that the medical certifications issued by Armando’s chosen
physician were not supported by such laboratory tests and/or procedures that would
sufficiently controvert the "normal" results of those administered to Armando at the St.
Luke’s Medical Center. And
 Second, majority of these medical certificates were issued after Armando consulted these
private physicians only once.

In contrast, the medical certificate of the petitioners’ designated physician was issued after three
months of closely monitoring Armando’s medical condition and progress, and after careful
analysis of the results of the diagnostic tests and procedures administered to Armando while in
consultation with Dr. Crisostomo, a cardiologist. The extensive medical attention that Dr. Alegre
gave to Armando enabled him to acquire a more accurate diagnosis of Armando’s medical
condition and fitness for work resumption compared to Armando’s chosen physicians who were
not privy to his case from the beginning.

In several cases, we held that the doctor who have had a personal knowledge of the actual
medical condition, having closely, meticulously and regularly monitored and actually treated the
seafarer’s illness, is more qualified to assess the seafarer’s disability.47

Thus, in the absence of adequate diagnostic tests and procedures and reasonable findings to
support the assessments of the four private physicians, their certifications on Armando’s alleged
disability simply cannot be taken at face value, particularly in light of the overwhelming evidence
supporting the findings of Dr. Alegre. The rule is still that whoever claims entitlement to disability
benefits must prove such entitlement by substantial evidence.51The burden of proof rested on
Armando to establish, by substantial evidence, the causal link between his work as a 2nd mate
and his alleged disability to serve as basis for the grant of relief. 52 Unfortunately, he failed to
discharge this burden.

Consequently, the CA erroneously imputed grave abuse of discretion on the part of the NLRC in
giving greater evidentiary weight to the medical certificate issued by Dr. Alegre over those issued
by Armando’s physicians.

In this light, we find it unnecessary to discuss whether Armando’s alleged CAD, hypertension,
hyperlipidemia, obesity and alcoholism were work-related and arose during the term of his
contract so as to entitle him to disability benefits.

Even if we were to address the matter, our consideration of the records will lead us to the same
conclusion that Armando is not entitled to disability benefits. Primarily, other than his bare
assertions, Armando did not specifically describe in detail the nature of his work, the working
conditions, the risks attendant to the nature of his work with which he was allegedly exposed to,
as well as how and to what degree the nature of his work caused or contributed to his alleged
medical conditions. To recall, all of the diagnostic tests and procedures administered on Armando
yielded "normal" results for which the company-designated physician declared him fit to work.

These definitions of the imputed medical conditions plainly do not indicate work-relatedness; by
their nature, they are more the result of poor lifestyle choices and health habits for which disability
benefits are improper.

Under Section 20-D of the POEA-SEC, no compensation and benefits are due in respect of any
disability resulting from the seafarer’s willful act.65

2. Yes, Armando is entitled to sickness allowance only until the company- designated physician
declared him fit to work

The petitioners question the CA’s computation of the balance of Armando’s sickness allowance at
120 days. We find that the CA seriously erred in arriving at this computation.
To recall, the company-designated physician declared Armando fit to work on May 12, 2003.
Armando disembarked or signed/off from the vessel on February 10, 2003. Thus, following our
discussion above and pursuant to Section 20-B, paragraph 3 of the POEA-SEC, Armando’s
sickness allowance should be counted only at 92 days, that is from February 10, 2003 when he
disembarked form the vessel, until May 12, 2003 when Dr. Alegre declared him fit to work.

In sum, we hold that the CA seriously erred in finding that the NLRC committed grave abuse of
discretion in denying Armando’s claim for disability benefits.
As a final note, while the Court adheres to the principle of liberality in favor of the seafarer in
construing the POEA-SEC, it cannot allow claims for compensation based on surmises. 66 Liberal
construction is not a license to disregard the evidence on record or to misapply our laws.67

WHEREFORE, premises considered, we hereby GRANT the petition and accordingly REVERSE
and SET ASIDE the decision dated December 10, 2008 and the resolution dated February 18,
2009 of the Court of Appeals in CA-G.R. SP No. 105079, and REINSTATE the decision dated
February 29, 2008 of the NLRC affirming the December 29, 2004 decision of Labor Arbiter Fedri
 14. Bartlome vs. SSS, GR No. 192531, November 12, 2014

FACTS:

Petitioner Bernardina P. Bartolome initiated a claim for death benefits under PD 626 with the Social
Security System (SSS) at San Fernando City, La Union, over the death of her son John Colcol (John),
who she gave up for adoption, and alleged that she was the sole remaining beneficiary. Previously, John
was employed as electrician by Defendant Scanmar Maritime Services, Inc., on board the vessel Maersk
Danville. He was covered by the government’s Employees’ Compensation Program (ECP). Unfortunately,
he met an accident on board the vessel wherein steel plates fell on him resulting in his death. When
petitioner filed her claim, the SSS denied it stating that she was no longer the parent of John as he was
legally adopted by Cornelio Colocol based on the documentary evidence submitted by petitioner herself.
On appeal, the Employees’ Compensation Commission (ECC) affirmed the SSS ruling through a decision
dated 17 March 17 2010 citing Rule XV, Sec. 1(c)(1) of the Amended Rules on Employees’
Compensation.

ISSUE:

WON petitioner, as biological mother of the deceased, is entitled to claim the death benefits.

RULING:

Petitioner was entitled to receive the claim for death benefits. “Based on Cornelio’s death certificate, it
appears that John’s adoptive father died on October 26, 1987, or only less than three (3) years since the
decree of adoption on February 4, 1985, which attained finality. As such, it was error for the ECC to have
ruled that it was not duly proven that the adoptive parent, Cornelio, has already passed away. The ECC
Rule limiting death benefit claims to the legitimate parents is contrary to law. “Rule XV, Sec. 1(c)(1) of the
Amended Rules on Employees’ Compensation deviates from the clear language of Art. 167 (j) of the
Labor Code, as amended…” Hence, it was held that “Rule XV of the Amended Rules on Employees’
Compensation is patently a wayward restriction of and a substantial deviation from Article 167 (j) of the
Labor Code when it interpreted the phrase ‘dependent parents’ to refer to ‘legitimate parents.'” As the law
does not define “dependent parents”, it should be understood to have a general and inclusive scope.
Thus, “the term ‘parents’ in the phrase ‘dependent parents’ in the afore-quoted Article 167 (j) of the Labor
Code is used and ought to be taken in its general sense and cannot be unduly limited to ‘legitimate
parents’ as what the ECC did. The phrase ‘dependent parents’ should, therefore, include all parents,
whether legitimate or illegitimate and whether by nature or by adoption. When the law does not
distinguish, one should not distinguish. Plainly, ‘dependent parents’ are parents, whether legitimate or
illegitimate, biological or by adoption, who are in need of support or assistance. “Moreover, the same
Article 167 (j), as couched, clearly shows that Congress did not intend to limit the phrase ‘dependent
parents’ to solely legitimate parents. At the risk of being repetitive, Article 167 provides that ‘in their
absence, the dependent parents and subject to the restrictions imposed on dependent children, the
illegitimate children and legitimate descendants who are secondary beneficiaries.’ Had the lawmakers
contemplated ‘dependent parents’ to mean legitimate parents, then it would have simply said
descendants and not ‘legitimate descendants.’ The manner by which the provision in question was crafted
undeniably show that the phrase ‘dependent parents’ was intended to cover all parents – legitimate,
illegitimate or parents by nature or adoption.” The law is clear that “the biological parents retain their rights
of succession to the estate of their child who was the subject of adoption. While the benefits arising from
the death of an SSS covered employee do not form part of the estate of the adopted child, the pertinent
provision on legal or intestate succession at least reveals the policy on the rights of the biological parents
and those by adoption vis-à-vis the right to receive benefits from the adopted.” As a result, it was held that
“Cornelio’s death at the time of John’s minority resulted in the restoration of petitioner’s parental authority
over the adopted child.” “Moreover, John, in his SSS application, named petitioner as one of his
beneficiaries for his benefits under RA 8282, otherwise known as the ‘Social Security Law.’ While RA
8282 does not cover compensation for work-related deaths or injury and expressly allows the designation
of beneficiaries who are not related by blood to the member unlike in PD 626, John’s deliberate act of
indicating petitioner as his beneficiary at least evinces that he, in a way, considered petitioner as his
dependent. Consequently, the confluence of circumstances – from Cornelio’s death during John’s
minority, the restoration of petitioner’s parental authority, the documents showing singularity of address,
and John’s clear intention to designate petitioner as a beneficiary – effectively made petitioner, to Our
mind, entitled to death benefit claims as a secondary beneficiary under PD 626 as a dependent parent.”
In sum, “the Decision of the ECC dated March 17, 2010 is bereft of legal basis. Cornelio’s adoption of
John, without more, does not deprive petitioner of the right to receive the benefits stemming from John’s
death as a dependent parent given Cornelio’s untimely demise during John’s minority. Since the parent
by adoption already died, then the death benefits under the Employees’ Compensation Program shall
accrue solely to herein petitioner, John’s sole remaining beneficiary.”