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FACTS:
ISSUES:
RULING:
RATIO:

"PART I - FUNDAMENTAL PRINCIPLES AND CONCEPTS"

A. LABOR LAW AND SOCIAL LEGISLATIONS IN GENERALuno

Rivera v. Genesis Transport Service, Inc., G.R. No. 215568, August 3, 2015

Facts:
Rivera was employed by Genesis as a bus conductor in June 2002. Moises is Genesis’
president and general manager. In his Position Paper before the Labor Arbiter, Rivera
acknowledged that he was dismissed by Genesis on account of a discrepancy in the
amount he declared on bus ticket receipts. He alleged that on June 10, 2010, he
received a Memorandum giving him 24 hours to explain why he should not be
sanctioned for reporting and remitting the amount of P198 instead of the admittedly
correct amount of P394 worth of bus ticket receipts. He responded that it was an honest
mistake, which he was unable to correct "because the bus encountered mechanical
problems. According to Genesis’ inspector Villaseran he conducted a "man to man"
inspection on the tickets held by the passengers on board Bus No. 8286 who had
transferred from Bus No. 1820 in San Fernando, Pampanga. (Bus No. 1820 broke
down.) In the course of his inspection, he noticed that Ticket No. 723374 VA had a
written corrected amount of P394. However, the amount marked by perforations made
on the ticket, which was the amount originally indicated by the bus conductor, was only
P198. Upon inquiring with the passenger holding the ticket, Villaseran found out that the
passenger paid P500 to Rivera, who gave her change in the amount of P106. Upon
verification, it was found that Rivera only remitted P198. On July 20, 2010, Genesis
served on Rivera a written notice informing him that a hearing of his case was set for
July 23, 2010. Despite his explanations, Rivera's services were terminated through a
written notice dated July 30, 2010. Contending that this termination was arbitrary and
not based on just causes for terminating employment, he filed the Complaint[15] for
illegal dismissal, which is the subject of this Petition. Respondents: Rivera’s act =
serious misconduct, fraud, and willful breach of trust justifying his dismissal. LA: agreed
with respondents. Dismissed Rivera’s complaint. NLRC: affirmed LA. Denied Rivera’s
MR. CA: (Rule 65) sustained LA and NLRC decisions and denied Rivera’s MR.
Issue:
Whether or not Rivera was dismissed for just cause.

Ruling:
NO, illegal and unjust termination
No serious misconduct. It is not enough for an employee to be found to have engaged
in improper or wrongful conduct. To justify termination of employment, misconduct must
be so severe as to make it evident that no other penalty but the termination of the
employee's livelihood is viable. Misconduct is defined as the "transgression of some
established and definite rule of action, a forbidden act, a dereliction of duty, willful in
character, and implies wrongful intent and not mere error in judgment."

For serious misconduct to justify dismissal, the following requisites must be present:
(a) it must be serious;
(b) it must relate to the performance of the employee's duties; and
(c) it must show that the employee has become unfit to continue working for the
employer. (Yabut v. Manila Electric Co.)

No willful breach of trust. Among the just causes for termination is the employer's loss of
trust and confidence in its employee. Article 296 (c) (formerly Article 282 [c]) of the
Labor Code provides that an employer may terminate the services of an employee for
fraud or willful breach of the trust reposed in him. But in order for the said cause to be
properly invoked, certain requirements must be complied with namely:
(1) the employee concerned must be holding a position of trust and confidence and
(2) there must be an act that would justify the loss of trust and confidence.

2 classes of positions of trust:

1. managerial employees whose primary duty consists of the management of the
establishment in which they are employed or of a department or a subdivision thereof,
and to other officers or members of the managerial staff;

2. fiduciary rank-and-file employees, such as cashiers, auditors, property custodians, or

those who, in the normal exercise of their functions, regularly handle significant
amounts of money or property.

These employees, though rank-and-file, are routinely charged with the care and custody
of the employer's money or property, and are thus classified as occupying positions of
trust and confidence. The position an employee holds is not the sole criterion. More
important than this formalistic requirement is that loss of trust and confidence must be
justified. As with misconduct as a basis for terminating employment, breach of trust
demands that a degree of severity attend the employee's breach of trust. For loss of
trust and confidence to be a valid ground for the dismissal of employees, it must be
substantial and not arbitrary, whimsical, capricious or concocted. Irregularities or
malpractices should not be allowed to escape the scrutiny of this Court. Solicitude for
the protection of the rights of the working class of prime importance. Although this is not
[al license to disregard the rights of management, still the Court must be wary of the
ploys of management to get rid of employees it considers as undesirable. (China City
Restaurant Corporation v. NLRC)

Ratio:
Laws on labor are pieces of social legislation.
They have been adopted pursuant to the constitutional recognition of "labor as a
primary social economic force" and to the constitutional mandates for the state to
"protect the rights of workers and promote their welfare" and for Congress to "give
highest priority to the enactment of measures that protect and enhance the right of all
the people to human dignity and reduce social, economic, and political inequalities."

Pampanga Bus, Co. v. Pambusco Employees Union, Inc., 68 Phil. 541 (1939)

Facts:
The case involves a dispute between Pampanga Bus Company, Inc. and Pambusco
Employees Union, Inc. On May 31, 1939, the Court of Industrial Relations issued an
order directing the petitioner to recruit new employees or laborers from the respondent
union to replace any union members who may be dismissed from the company. The
order also stated that if the union fails to provide employees with the necessary
qualifications, the company may hire any other persons it desires. The petitioner argues
that this order compels the company to employ union members against its will.

Issue:
Whether or not the right of the employer to select its employees was violated.

Held: Yes.
The Supreme Court holds that the Court of Industrial Relations has no authority to issue
such a compulsory order. The general right to make a contract in relation to one's
business is an essential part of the liberty of the citizens protected by the due-process
clause of the Constitution. The right of the laborer to sell his labor to such a person as
he may choose is, in its essence, the same as the right of an employer to purchase
labor from any person whom it chooses. The employer and the employee have thus an
equality of right guaranteed by the Constitution. "If the employer can compel the
employee to work against the latter's will, this is servitude. If the employee can compel
the employer to give him work against the employer's will, this is oppression." (Mills vs.
United States Printing Co., 99 App. Div., 605; 91 N.Y.S., 185, 189-192.). Section of
Commonwealth Act No. 213 confers upon labor organizations the right "to collective
bargaining with employers for the purpose of seeking better working and living
conditions, fair wages, and shorter working hours for laborers, and, in general, to
promote the material, social and moral well-being of their members." The term
"collective bargaining" denotes, in common usage as well as in legal terminology,
negotiations looking toward a collective agreement.

This provision in granting to labor unions merely the right of collective bargaining,
impliedly recognizes the employer's liberty to enter or not into collective agreements
with them. Indeed, we know of no provision of the law compelling such agreements.

Such a fundamental curtailment of freedom, if ever intended by law upon grounds of

public policy, should be effected in a manner that is beyond all possibility of doubt. The
supreme mandates of the Constitution should not be loosely brushed aside. As held by
the Supreme Court of the United States in Hitchman Coal & Co. vs. Mitchell (245 U. S.,
229; 62 Law. ed., 260, 276): . . .

“Whatever may be the advantages of "collective bargaining," it is not bargaining at all, in

any just sense, unless it is voluntary on both sides. The same liberty which enables men
to form unions, and through the union to enter into agreements with employers willing to
agree, entitles other men to remain independent of the union, and other employers to
agree with them to employ no man who owes any allegiance or obligation to the union.
In the latter case, as in the former, the parties are entitled to be protected by the law in
the enjoyment of the benefits of any unlawful agreements they make. This court
repeatedly has held that the employer is as free to make non-membership in a union a
condition or employment, as the working man is free to join the union, and that this is a
part of the constitutional rights of personal liberty and private property, not to be taken
away by legislation, unless through some proper exercise of the paramount police
power.

Thus considered, the order appealed from was reversed, with costs against the
respondent Pambusco Employees' Union, Inc.

Ratio:
The general right to make a contract in relation to one’s business is an essential part of
the liberty of the citizens protected by the due process clause of the constitution. The
employer and the employee have an equality of right guaranteed by the constitution.
The freedom of contract may be limited by law through a proper exercise of the
paramount police power, but any such curtailment should be effected in a manner that is
beyond all possibility of doubt.
B. LEGAL BASIS

1. Police Power

People v. Reyes, G.R. No. 45748, April 5, 1939

Facts:
The defendant was charged in the Court of First Instance of Manila by the assistant city
fiscal with a violation of Act No. 2549, as amended by Acts Nos. 3085 and 3958. The
information alleged that from September 9 to October 28, 1936, and for the some time
after, the accused, in his capacity as president and general manager of the
Consolidated Mines, having engaged the services of Severa Velasco de Vera as
stenographer, at an agreed salary of P35 a month willfully and illegally refused to pay
the salary of said stenographer corresponding to the abovementioned period of time,
which was long due and payable, in spite of her repeated demands. The accused
interposed a demurrer on the ground that the facts alleged in the information do not
constitute any offense, and that even if they did, the laws penalizing it are
unconstitutional. After the hearing, the court sustained the demurrer, declaring
unconstitutional the last part of section 1 of Act No. 2549 as last amended by Act No.
3958 for the reason that it violates the constitutional prohibition against imprisonment for
debt, and dismissed the case. The last part of Section 1 of Act No. 2549, as last
amended by section 1 of Act No. 3958 considers as illegal the refusal of an employer to
pay when he can do so, the salaries of his employers or laborers on the 15th or last day
of every month or on Saturday of every week, with only two days extension, and the
non-payment of the salary within the period specified is considered as a violation of the
law. The same act exempts from criminal responsibility the employer who, having failed
to pay the salary, should prove satisfactorily that it was impossible to make such
payment. The fiscal appealed from said order. In this appeal the Solicitor-General
contends that the court erred in declaring Act No. 3958 unconstitutional, and in
dismissing the cause.

Issue:
Whether or not the last part of Sec. 1 of Act No. 2594 as amended by Act No. 3958 is
constitutional and valid.

Ruling:
We hold that the last part of section 1 of Act No. 2549, as last amended by section 1 of
Act No. 3958, is valid. We do not believe that this constitutional provision has been
correctly applied in this case. A close perusal of the last part of section 1 of Act No.
2549, as amended by section 1 of Act No. 3958, will show that its language refers only
to the employer who, being able to make payment, shall abstain or refuse to do so,
without justification and to the prejudice of the laborer or employee. An employer so
circumstanced is not unlike a person who defrauds another, by refusing to pay his just
debt. In both cases deceit or fraud is the essential element constituting the offense. The
first case is a violation of Act No. 3958, and the second is estafa punished by the
Revised Penal Code. In either case the offender cannot certainly invoke the
constitutional prohibition against imprisonment for debt.

Police power is the power inherent in a government to enact laws, within constitutional
limits, to promote the order, safety, health, morals, and general welfare of society. In the
exercise of this power the Legislature has ample authority to approve the disputed
portion of Act No. 3958 which punishes the employer who, being able to do so, refuses
to pay the salaries of his laborers or employers in the specified periods of time.
Undoubtedly, one of the purposes of the law is to suppress possible abuses on the part
of employers who hire laborers or employees without paying them the salaries agreed
upon for their services, thus causing them financial difficulties. Without this law, the
laborers and employees who earn meager salaries would be compelled to institute civil
actions which, in the majority of cases, would cost them more than that which they
would receive in case of a decision in their favor.

Ratio:
Police power is the power inherent in a government to enact laws, within constitutional
limits, to promote the order, safety, health, morals, and general welfare of society. (12 C.
J., P. "04.) In the exercise of this power the Legislature has ample authority to approve
the disputed portion of Act No. 3958 which punishes the employer who, being able to do
so, refuses to pay the salaries of his laborers or employees in the specified periods of
time. Undoubtedly, one of the purposes of the law is to suppress possible abuses on the
part of employers who hire laborers or employees without paying them the salaries
agreed upon for their services, thus causing them financial difficulties. Without this law,
the laborers and employees who earn meager salaries would be compelled to institute
civil actions which, in the majority of cases, would cost them more than that which they
would receive in case of a decision in their favor.

Union of FiliproEmployees v. Nestlé Philippines, Inc., G.R.Nos. 88710-13, December

19, 1990
Facts: UFE-DFA-KMU was the sole and exclusive bargaining agent of the rank-and-file
employees of Nestlé belonging to the latter’s Alabang and Cabuyao plants. On 4 April
2001, as the existing collective bargaining agreement (CBA) between Nestlé and
UFE-DFA-KMU4 was to end on 5 June 2001,5 the Presidents of the Alabang and
Cabuyao Divisions of UFE-DFA-KMU informed Nestlé of their intent to "open [our] new
Collective Bargaining Negotiation for the year 2001-2004 as early as June 2001.On 29
May 2001 letter to the UFE-DFA-KMU (Cabuyao Division only)7 , Nestlé claimed that
"unilateral grants, one-time company grants, company-initiated policies and programs
which include, but are not limited to the Retirement Plan, and others Incidental Straight
Duty Pay and Calling Pay Premium, are by their very nature not proper subjects of CBA
negotiations and therefore shall be excluded therefrom."Despite fifteen (15) meetings
between them, the parties failed to reach any agreement on the proposed CBA. FIRST -
Union filed a Notice of Strike on 31 October 2001 with the NCMB, complaining, in
essence, of a bargaining deadlock pertaining to economic issues, i.e., “retirement
(plan), panel composition, costs and attendance, and CBA. SECOND - On 07
November 2001 Another Notice of Strike was filed by the union, this time predicated on
Nestlé’s alleged unfair labor practices, that is, bargaining in bad faith by setting
pre-conditions in the ground rules and/or refusing to include the issue of the Retirement
Plan in the CBA negotiations. Nestlé filed with the DOLE a Petition for Assumption of
Jurisdiction, praying for the Secretary of the DOLE, Hon. Patricia A. Sto. Tomas, to
assume jurisdiction over the current subject of labor dispute. DOLE ordered: (1) the
members of union to return- to-work within twenty-four (24) hours from receipt of such
Order; (2) Nestlé to accept back all returning workers under the same terms and
conditions existing preceding to the strike; (3) both parties to cease and desist from
committing acts inimical to the on-going conciliation proceedings leading to the further
deterioration of the situation; and (4) the submission of their respective position papers
within ten (10) days from receipt thereof. However, the members of union continued with
their strike, thus, prompting Sec. Sto. Tomas to seek the assistance of the Philippine
National Police (PNP) for the enforcement of said order. UFE-DFA-KMU filed a Petition
for Certiorari before the Court of Appeals, alleging that Sec. Sto. Tomas committed
grave abuse of discretion and another seeking to annul its decision. Petitioner’s union
contention: UFE-DFA-KMU argues therein that Nestlé’s "refusal to bargain on a very
important CBA economic provision constitutes unfair labor practice." It explains that
Nestlé set as a precondition the non-inclusion of the issue of Retirement Plan for the
holding of collective bargaining negotiations. The Court of Appeals - entirely in favor of
UFE-DFA-KMU. Both parties appealed the aforequoted ruling. Nestlé essentially
assailed that part of the decision finding the DOLE Secretary to have gravely abused
her discretion amounting to lack or excess of jurisdiction when she ruled that the
Retirement Plan was not a valid issue to be tackled during the CBA negotiations;
UFE-DFA-KMU, in contrast, questioned the appellate court’s decision finding Nestlé free
and clear of any unfair labor practice. MOTIONS FOR RECONSIDERATION OF BOTH
PARTIES WERE DENIED BY THE COURT OF APPEALS IN a joint Resolution dated
27 June 2003, UFE-DFA-KMU and Nestlé separately filed the instant Petitions for
Review on Certiorari under Rule 45 of the Rules of Court, as amended. Issue: Is Nestle
guilty of unfair labor practice for violating the duty to bargain collectively Ruling: The
court answered in negative, The purpose of collective bargaining is the reaching of an
agreement resulting in a contract binding on the parties; but the failure to reach an
agreement after negotiations have continued for a reasonable period does not establish
a lack of good faith. The duty to bargain does not include the obligation to reach an
agreement.For a charge of unfair labor practice to prosper, it must be shown that Nestlé
was motivated by ill will, "bad faith, or fraud, or was oppressive to labor, or done in a
manner contrary to morals, good customs, or public policy, and, of course, that social
humiliation, wounded feelings, or grave anxiety resulted in disclaiming unilateral grants
as proper subjects in their collective bargaining negotiations.

Facts:
This petition assails the decision of the NLRC, dated November 2, 1988 on the
consolidated appeals of petitioners, the dispositive portion of which provides as follows:
"1. In NLRC Case No. NCR-12-4007-85 and NLRC Case No. NCR-1-295-86 —
a. Declaring the strike illegal;
b. Declaring the following respondent union officers, namely; M.L. Sarmiento, B.M. et. al
to have lost their employment status;
c. Ordering the reinstatement of the following respondents-appellants: Juanito Capili, et
al, to their former or equivalent positions without loss of seniority rights but without
backwages;
d. Declaring the union (UFE) guilty of unfair labor practice; and
e.Dismissing the union complaint for unfair labor practice.

UFE filed a notice of strike on November 14, 1985, (BLR-NS-11-344-85) with the
Bureau of Labor Relations against Filipro (now Nestle Philippines, Inc.). On December
4, 1988, UFE filed a complaint for Unfair Labor Practice (ULP) against Nestle and its
officials for violation of the Labor Code (Art. 94) on Holiday Pay, non-implementation of
the CBA provisions (Labor Management Corporation scheme), Financial Assistance
and other unfair labor practice petitioner Union of Filipro Employees and 70 union
officers and a member ("UFE") maintain that public respondent NLRC had acted with
grave abuse of discretion in its affirmance of the decisions of the Labor Arbiters a quo,
declaring illegal the strikes staged by UFE.

Notwithstanding the automatic injunction against any concerted activity, and an absence
of a restraining order, the union members, at the instigation of its leaders, and in clear
defiance of Minister Ople's Order of December 11, 1986, staged a strike and continued
to man picket lines at the Makati Administrative Office and all of Nestle's factories and
warehouses at Alabang, Muntinlupa, Cabuyao, Laguna, and Cagayan de Oro City.
Likewise, the union officers and members distributed leaflets to employees and
passersby advocating a boycott of company products. On January 23, 1986, Nestle filed
a petition to declare the strike illegal (NCR-1-295-86) premised on violation of the CBA
provisions on "no strike/no lockout" clause and the grievance machinery provisions on
settlement of disputes. Despite receipt of the second order dated January 30, 1986, and
knowledge of a notice caused to be published by Nestle in the Bulletin on February 1,
1986, advising all workers to report to work not later than February 3, 1986, the officers
and members of UFE continued with the strike.

On November 13, 1987, after trial on the merits, Labor Arbiter Eduardo G. Magno
issued his decision, disposing as follows:
"WHEREFORE, judgment is hereby rendered:
1. Declaring the strike illegal
2. Declaring all the respondent union officers to have lost their employment status.
3. Declaring the union guilty of unfair labor practice; and
4. Dismissing the Union complaint for unfair labor practice."
On the issue of the legality of the strike committed, UFE seeks to absolve itself by
pointing out qualifying factors such as motives, good faith, absence of findings on
specific participation and/or liability, and limiting the no-strike provision to economic
strikes. UFE, it is claimed, premised their strike on a violation of the labor standard laws
or non-payment of holiday pay, which is, in effect, a violation of the CBA

Issue:
Whether the strike was illegal

Ruling: YES
The NLRC correctly upheld the illegality of the strikes and the corresponding dismissal
of the individual complainants because of their "brazen disregard of successive lawful
orders of then Labor Ministers Blas F. Ople, Augusto Sanchez and Labor Secretary
Franklin Drilo The NLRC also gave the following reasons:

1. The strike was staged in violation of the existing CBA provisions on "No Strike/No
Lockout Clause" stating that a strike, which is in violation of the terms of the collective
bargaining statement, is illegal, especially when such terms provide for a conclusive
arbitration clause. (Liberal Labor Union vs. Phil. Can Co., 91 Phil. 72; Phil. Airlines vs.
PAL Employees Association) The main purpose of such an agreement is to prevent a
strike and it must, therefore, be adhered to strictly and respected if their ends are to be
achieved.
2. Instead of exhausting all the steps provided for in the grievance machinery provided
for in the collective bargaining agreement to resolve the dispute amicably and
harmoniously within the plant level, UFE went on strike.
3. The prescribed mandatory cooling-off period and then 7-day strike and after
submission of the report of strike vote at Nestle's Makati Offices and Muntinlupa and
Cabuyao Plants were not complied with, while no notice of strike was filed by
respondents when they staged the strike at Nestle's Cagayan de Oro Plant contrary to
the pertinent provision of Articles 263 and 264 of the Labor Code, emphasizing that "the
mandatory character of these cooling-off periods has already been categorically ruled
upon by the Supreme Court". Petition denied.

Ratio:
It must be noted that Articles 263 (g) and 264 of the Labor Code have been enacted
pursuant to the police power of the State, which has been defined as the power inherent
in a Government to enact laws, within constitutional limits, to promote the order, safety,
health, morals and general welfare of society (People vs. Vera Reyes, 67 Phil. 190).
The police power, together with the power of eminent domain and the power of taxation,
is an inherent power of government and does not need to be expressly conferred by the
Constitution. Thus, it is submitted that the argument of petitioners that Articles 263 (g)
and 264 of the Labor Code do not have any constitutional foundation is legally
inconsequential."
Provincial Bus Operators Association of the Philippines v. DOLE, G.R. No. 202275, July
17, 2018

Facts:
To ensure road safety and address the risk-taking behavior of bus drivers as its
declared objective, the LTFRB issued Memorandum Circular No. 2012-001 requiring "all
Public Utility Bus (PUB) operators to secure Labor Standards Compliance Certificates"
under pain of revocation of their existing certificates of public convenience or denial of
an application for a new certificate. Five (5) days later or on January 9, 2012, the DOLE
issued Department Order No. 118-12, elaborating on the
part-fixed-part-performance-based compensation system referred to in the LTFRB
Memorandum Circular No. 2012-001. Department Order No. 118-12, among others,
provides for the rule for computing the fixed and the performance-based component of a
public utility bus driver's or conductor's wage.

On January 28, 2012, Atty. Emmanuel A. Mahipus, on behalf of the Provincial Bus
Operators Association of the Philippines, Integrated Metro Manila Bus Operators
Association, Inter City Bus Operators Association, the City of San Jose Del Monte Bus
Operators Association, and Pro-Bus, wrote to then Secretary of Labor and Employment
Rosalinda Dimapilis-Baldoz, requesting to defer the implementation of Department
Order No. 118-12. The request, however, was not acted upon.
Meanwhile, on February 27, 2012 and in compliance with Rule III, Section 3 of
Department Order No. 118-12, the National Wages and Productivity Commission issued
NWPC Guidelines No. 1 to serve as Operational Guidelines on Department Order No.
118-12. NWPC Guidelines No. 1 suggested formulae for computing the fixed-based and
the performance-based components of a bus driver or conductor's wage.

On July 4, 2012, petitioners filed before this Court a Petition with Urgent Request for
Immediate Issuance of a Temporary Restraining Order and/or a Writ of Preliminary
Injunction, impleading the DOLE and the LTFRB as respondents. Petitioners assert the
constitutionality of Department Order No. 118-12 and Memorandum Circular No.
2012-001, arguing that these issuances violate petitioners' rights to non-impairment of
obligation of contracts, due process of law, and equal protection of the laws. Particularly
with respect to Department Order No. 118-12, its provisions on the payment of
part-fixed-part-performance based wage allegedly impair petitioners' obligations under
their existing collective bargaining agreements where they agreed with their bus drivers
and conductors on a commission or boundary basis. Respondents counter that
petitioners have no legal standing to file the present Petition considering that
Department Order No. 118-12 and Memorandum Circular No. 2012-001 are directed
against bus operators, not against associations of bus operators such as petitioners.

Issue:
1. Whether or not the DOLE D.O. No. 118-12 and LTFRB M.C. N. 2012-001 deprive
public utility bus operators of their right to due process of law

Ruling:
D.O. No. 118-12 and M.C. No. 2012-001 are not violative of due process, either
procedural or substantive.

Said issuances were issued in the exercise of quasi-legislative powers of the DOLE and
the LTFRB, and are in the nature of social legislations to enhance the economic status
of bus drivers and conductors and to promote the general welfare of the riding public.
As such, notice and hearing are not required for their validity.

In any case, it is undisputed that the DOLE created a Technical Working Group that
conducted several meetings and consultations with interested sectors before
promulgating D.O. No. 11812. Among those invited were bus drivers, conductors, and
operators with whom officials of the DOLE conducted focused group discussions. The
conduct of these discussions more than complied with the requirements of procedural
due process.
Neither the D.O. and M.C. offensive of substantive due process. Both are
reasonable and are valid police power issuances. The pressing need for D.O. No.
118-12 is obvious considering petitioners’ admission that the payment schemes prior to
the Order’s promulgation consisted of the “payment by result,” the “commission basis,”
or the boundary system. These payment schemes do not guarantee the payment of
minimum wages to bus drivers and conductors. There is also no mention of payment of
social welfare benefits to bus drivers and conductors under these payment schemes
which have allegedly been in effect since “time immemorial.”

There can be no meaningful implementation of D.O. No. 118-12 if violating it has no

consequence. As such, the LTFRB was not unreasonable when it required bus
operators to comply with the part-fixed-part-performance-based payment scheme under
pain of revocation of their certificates of public convenience. The LTFRB has required
applicants or current holders of franchises to comply with labor standards as regards
their employees, and bus operators must be reminded that certificates of public
convenience are not property, subject to amendment, repeal, or cancellation. Additional
requirements may be added for their issuance, and there can be no violation of due
process when a franchise is cancelled for non-compliance with the new requirement.

An equally important reason for the issuance of the D.O. and M.C. is to ensure “road
safety” by eliminating the “risk-taking behaviors” of bus drivers and conductors. The
boundary system puts drivers in a “scarcity mindset” that creates a tunnel vision where
bus drivers are nothing but focused on meeting the boundary required and will do so by
any means possible and regardless of risks. They stop for passengers even outside of
the designated bus stops, impeding traffic flow. They compete with other bus drivers for
more income without regard to speed limits and bus lanes. Some drivers even take in
performance-enhancing drugs just to get additional trips. This scarcity mindset is
eliminated by providing drivers with a fixed income plus variable income based on
performance. The fixed income equalizes the playing field, so that competition and
racing among bus drivers are prevented. The variable pay provided in the DOLE D.O. is
based on safety parameters, incentivizing prudent driving.

Ratio:
Department Order No. 118-12 and Memorandum Circular No. 2012-001 were issued
"[to promote and protect] the welfare of the public utility bus drivers and conductors" and
"[to ensure] road safety" by imposing a wage system where public utility bus drivers do
not have to compete with one another and drive recklessly for additional income.
Department Order No. 118-12 and Memorandum Circular No. 2012-001 are social
legislations and police power measures to which petitioners' right against impairment of
obligation of contracts must yield.
GMA Network, Inc. v. Pabriga, G.R. No. 176419, November 27, 2013

Facts:
In July 1999, due to the miserable working conditions, private respondents (who were
television technicians) were forced to file a complaint against the petitioner before the
NLRC Arbitration Branch in Cebu. After receiving a notice of hearing of the complaint,
the petitioner's engineering manager confronted the private respondents. The latter
were summoned to the office of the Area Manager, and they were made to explain why
they filed the complaint. The next day, respondents were barred from entering and
reporting for work without any notice. Head of personnel relations admitted nonpayment
of benefits but did not mention the request of the respondents to be allowed to return to
work. Sent another letter, but their request was still ignored. Filed a complaint for unfair
labor practice, illegal dismissal, and damages Futile mandatory conference filing of
position papers
The labor arbiter dismissed the complaint for illegal dismissal and unfair labor practice
but held the petitioner liable for 13th month pay.

They filed an appeal to the NLRC and the decision was reversed by the labor arbiter.
All complainants are regular employees with respect to the particular activity to which
they were assigned, until it ceased to exist.

Issue:
WON the respondents are regular employees and not project employees.

Ruling: YES.
Their jobs and undertakings are clearly within the regular or usual business of the
employer company and are not identifiably distinct or separate from the other
undertakings of the company.

There is no denying that the manning of the operations center to air commercials, acting
as transmitter/VTR men, maintaining the equipment, and acting as cameramen are not
undertakings separate or distinct from the business of a broadcasting company.
Petitioner’s allegation that respondents were merely substitutes or what they call pinch
hitters (which means that they were employed to take the place of regular employees of
petitioner who were absent or on leave) does not change the fact that their jobs cannot
be considered projects within the purview of the law. Jurisprudence abounds with the
consistent rule that the failure of an employer to report to the nearest Public
Employment Office the termination of its workers’ services every time a project or a
phase thereof is completed indicates that said workers are not project employees. In the
extant case, petitioner should have filed as many reports of termination as there were
projects actually finished if private respondents were indeed project employees,
considering that the latter were hired and again rehired from 1996 up to 1999. Its failure
to submit reports of termination cannot but sufficiently convince us further that private
respondents are truly regular employees.

The Supreme Court ruled that a project employee or a member of a work pool may
acquire the status of a regular employee when the following concur:
1) There is a continuous rehiring of project employees even after cessation of a project;
and
2) The tasks performed by the alleged project employee are vital, necessary and
indispensable to the usual business or trade of the employer.

Ratio:
We should note that the nature of the employment is determined by law, regardless of
any contract expressing otherwise. The supremacy of the law over the nomenclature of
the contract and the stipulations contained therein is to bring to life the policy enshrined
in the Constitution to afford full protection to labor. Labor contracts, being imbued with
public interest, are placed on a higher plane than ordinary contracts and are subject to
the police power of the State.
Euro-Linea, Phils., Inc. v. NLRC, G.R. No. 75782, December 1, 1987

Facts:
Petitioner hired Jimmy Pastoral as shipping expediter on a probationary basis for a
period of six months ending February 18, 1984. However, prior to hiring by petitioner,
Pastoral had been employed by Fitscher Manufacturing Corporation also as shipping
expediter for more than one and a half years. Pastoral was absorbed by petitioners but
under a probationary basis. Pastoral received a memorandum dated January 31, 1984
terminating his probationary employment effective on February 4, 1984 in view of his
failure to meet the performance standards set by the company. To contest his dismissal,
Pastoral filed a complaint for illegal dismissal against the petitioner. The Labor Arbiter
found the petitioner guilty of illegal dismissal. Petitioner appealed the decision to the
NLRC but the appeal was dismissed.

Issue:
Whether the NLRC erred in ruling against the dismissal of the respondent, a temporary
or probationary employee, by his employer.

Ruling: No.
Although a probationary or temporary employee has a limited tenure, he still enjoys the
constitutional protection of security of tenure. During his tenure of employment or before
his contract expires, he cannot be removed except for cause as provided for by law
(Manila Hotel Corp. v. NLRC, 141 SCRA 169 [1986]). This brings us to the issue of
whether or not the private respondent's dismissal was justifiable. Petitioner not only
failed to present sufficient evidence to substantiate the cause of private respondent's
dismissal, but likewise failed to cite particular acts or instances to show the latter's poor
performance. Furthermore, what makes the dismissal highly suspicious is the fact that
while petitioner claims that respondent was inefficient, it retained his services until the
last remaining two weeks of the six months probationary employment. It must be
emphasized that the prerogative of management to dismiss or lay- off an employee
must be done without abuse of discretion, for what is at stake is not only the petitioner's
position but also his means of livelihood.

The right of an employer to freely select or discharge his employees is subject to

regulation by the State, basically in the exercise of its paramount police power.
This is so because the preservation of the lives of the citizens is a basic duty of the
State, more vital than the preservation of corporate profits.

Finally, it is significant to note that in the interpretation of the protection to labor and
social justice provisions of the constitution and the labor laws and rules and regulations
implementing the constitutional mandate, the Supreme Court has always adopted the
liberal approach which favors the exercise of labor rights. In the instant case, it is
evident that the NLRC correctly applied Article 282:

ARTICLE 282. Termination by employer. - An employer may terminate an employment

for any of the following causes:
(a) Serious misconduct or willful disobedience by the employee of the lawful orders of
his employer or representative in connection with his work;
(b) Gross and habitual neglect by the employee of his duties;
(c) Fraud or willful breach by the employee of the trust reposed in him by his employer
or duly authorized representative;
(d) Commission of a crime or offense by the employee against the person of his
employer or any immediate member of his family or his duly authorized representatives;
and
(e) Other causes analogous to the foregoing.

Ratio:
It must be emphasized that the prerogative of management to dismiss or lay-off an
employee must be done without abuse of discretion, for what is at stake is not only the
petitioner's position but also his means of livelihood. (Remerco Garments Manufacturing
vs. Minister of Labor, 135 SCRA 137 [1985]). The right of an employer to freely select or
discharge his employees is subject to regulation by the State, basically in the exercise
of its paramount police power (PAL, Inc. vs. PALEA, 57 SCRA 489 [1974]). This is so
because the preservation of the lives of the citizens is a basic duty of the State, more
vital than the preservation of corporate profits.
St. Luke’s Medical Center Employee’s Association-AFW v. NLRC, G.R. No. 162053,
March 7, 2007

Facts:

Petitioner Maribel S. Santos was hired as X-Ray Technician in the Radiology

department of private respondent St. Lukes Medical Center, Inc. (SLMC) on October
13, 1984, Congress passed and enacted Republic Act No. 7431 known as the,
Radiologic Technology Act of 1992. Said law requires that no person shall practice or
offer to practice as a radiology and/or x-ray technologist in the Philippines without
having obtained the proper certificate of registration from the Board of Radiologic
Technology.

On March 4, 1997, the Director of the Institute of Radiology issued a final notice to
petitioner Maribel S. Santos requiring the latter to comply with Republic Act. No. 7431
by taking and passing the forthcoming examination scheduled in June 1997; otherwise,
private respondent SLMC may be compelled to retire her from employment should there
be no other position available where she may be absorbed.

On January 6, 1999, the Personnel Manager of private respondent SLMC again issued
a Notice of Separation from the Company to petitioner Maribel S. Santos effective
February 5, 1999 after the latter failed to present/submit her appeal for rechecking to
the Professional Regulation Commission (PRC) of the recent board examination which
she took and failed.

Issue:
1. Whether or not petitioner Santos was illegally dismissed by private respondent SLMC

on the basis of her inability to secure a certificate of registration from the Board of

Radiologic Technology?

Held:

No, while the right of workers to security of tenure is guaranteed by the Constitution, its
exercise may be reasonably regulated pursuant to the police power of the State to
safeguard health, morals, peace, education, order, safety, and the general welfare of the
people.

The Court quotes with approval the disquisition of public respondent NLRC in its
decision dated August 23, 2002:

The enactment of R.A. (Nos.) 7431 and 4226 are recognized as an exercise of the
States inherent police power. It should be noted that the police power embraces the
power to prescribe regulations to promote the health, morals, educations, good order,
safety or general welfare of the people. The state is justified in prescribing the specific
requirements for x-ray technicians and/or any other professions connected with the
health and safety of its citizens. Respondent appellee being engaged in the hospital and
health care business, is a proper subject of the cited law; thus, having in mind the legal
requirements of these laws, the latter cannot close its eyes and complainant-appellants
private interest override public interest.

Ratio:

The enactment of R.A. (Nos.) 7431 and 4226 are recognized as an exercise of the
States inherent police power. It should be noted that the police power embraces the
power to prescribe regulations to promote the health, morals, educations, good order,
safety or general welfare of the people.
2. 1987 Constitution [Art. II, S9, 10, 18, 20; Art. III, S1, 4, 8, 10, 11, 16, 18(2); Art. XIII,
S1, 2, 3, 13, 14]

3. Civil Code (Arts. 1700-1703)

Servidad v. NLRC, G.R. No. 128682, March 18, 1999

Facts:

Petitioner Joaquin T. Servidad was employed on May 9, 1994 by respondent

INNODATA as a Data Control Clerk, under a contract of employment Section 2 of which,
reads:

Section 2. This Contract shall be effective for a period of 1 year commencing on May
10, 1994, until May 10, 1995 unless sooner terminated pursuant to the provisions
hereof.

From May 10, 1994 to November 10, 1994, or for a period of six (6) months, the
EMPLOYEE shall be contractual during which the EMPLOYER can terminate the
EMPLOYEEÊs services by serving written notice to that effect. Such termination shall
be immediate, or at whatever date within the six-month period, as the EMPLOYER may
determine. Should the EMPLOYEE continue his employment beyond November 10,
1994, he shall become a regular employee upon demonstration of sufficient skill in the
terms of his ability to meet the standards set by the EMPLOYER. If the EMPLOYEE
fails to demonstrate the ability to master his task during the first six months he can be
placed on probation for another six (6) months after which he will be evaluated for
promotion as a regular employee.

On November 9, 1995, or after working for six (6) months, he was made to sign a
three-month probationary employment and later, an extended three-month probationary
employment good until May 9, 1995.On July 7, 1994, the petitioner was given an overall
rating of 100% and 98% in the work evaluations conducted by the company. In another
evaluation, petitioner received a rating of 98.5% given by the private respondent.On
May 9, 1995, petitioner was dismissed from the service on the ground of alleged
termination of contract of employment.Such happening prompted petitioner to institute a
case for illegal dismissal against the private respondent.

Issue:

1. Whether or not the the contract of employment entered into is valid and enforceable?

2. Whether or not, NLRC acted with grave abuse of discretion in adjudging subject

contract of employment of petitioner to be for a definite or fixed period?

Held:

1. Decisively in point is Article 1377 of the Civil Code, which provides:

Art. 1377. The interpretation of obscure words or stipulations in a contract shall not
favor the party who caused the obscurity.

Certainly, favorable interpretation of the contract in the case under scrutiny should be
for petitioner and not for the private respondent which caused the preparation of said
contract.

If the contract was really for a fixed term, the private respondent should not have been
given the discretion to dismiss the petitioner during the one year period of employment
for reasons other than the just and authorized causes under the Labor Code. Settled is
the rule that an employer can terminate the services of an employee only for valid and
just causes which must be shown by clear and convincing evidence.

It was not brought to light that the petitioner was duly informed at the start of his
employment, of the reasonable standards under which he could qualify as a regular
employee. The rudiments of due process demand that an employee should be apprised
before hand of the conditions of his employment and the basis for his advancement.

The language of the contract in dispute is truly a double- bladed scheme to block the
acquisition of the employee of tenurial security. Thereunder, private respondent has two
options. It can terminate the employee by reason of expiration of contract, or it may use
failure to meet work standards as the ground for the employee’s dismissal. In either
case, the tenor of the contract jeopardizes the right of the worker to security of tenure
guaranteed by the Constitution.

2. Indeed, the NLRC gravely abused its discretion in construing the contract sued upon
as one with a fixed term. To uphold such a finding would be to concede to the private
respondent an advantage arising from its own mistake.

The public respondent overlooked the undisputed satisfactory ratings of the

performance of petitioner in the two job evaluations conducted by the respondent
company. Even granting, therefore, that the contract litigated upon is valid; still, the
petitioner, who was permitted to work beyond six months could not be dismissed on the
ground of failure to meet the standards of Innodata. By the provisions of the very
contract itself, petitioner has become a regular employee of private respondent.
Therein, it is stipulated that: „x x x Should the EMPLOYEE continue employment
beyond November 10, 1994, he shall become a regular employee upon demonstration
of sufficient skill in the terms of his ability to meet the standards set by the EMPLOYER.

The private respondent sought to alternatively avail of probationary employment and

employment for a fixed term so as to preclude the regularization of the status of
petitioner. The utter disregard of public policy by the contract in question negates the
ruling of NLRC that said contract is the law between the parties. The private agreement
of the parties cannot prevail over Article 1700 of the Civil Code:

Art. 1700. The relation 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 special laws on labor unions, collective
bargaining, strikes and lockouts, closed shops, wages, working conditions, hours of
labor and similar subjects.

Ratio:
1. Art. 1377 NCC. The interpretation of obscure words or stipulations in a contract shall
not favor the party who caused the obscurity.

2. Art. 1700 NCC. The relation 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 special laws on labor unions,
collective bargaining, strikes and lockouts, closed shops, wages, working conditions,
hours of labor and similar subjects.

Asia World Recruitment, Inc. v. NLRC, G.R. No. 113363, August 24, 1999

Facts:

Petitioner Asia World Recruitment is a domestic corporation with authority granted by

the POEA to recruit and deploy Filipino overseas contract workers abroad. Private
respondent Philip Medel, Jr., is a Filipino who entered into an employment contract with
petitioner to work as a Security Officer in its diamond mine in Cafunfo, Angola, for a
period of twelve (12) months commencing upon his departure from the Philippines, with
a salary rate of US $800.00 a month, plus 50% of the salary by way of bonus or a total
of US$1,200.00 a month. During his employment, private respondent elevated the
grievances of his Filipino co-workers to the management, which apparently strained
relations between him and management.

On March 10, 1989, private respondent received a letter of termination dated March 1,
1989 signed by General Manager A.J. Smith, who informed him that the company was
not satisfied with his performance within the three- month trial period, and that his
employment with the company would be terminated on March 13, 1989. The records
show, however, that private respondent was repatriated to the Philippines on March 12,
1989, barely two (2) days after he received the notice of termination.

Aggrieved by his precipitate termination, private respondent filed on October 18, 1989,
a complaint for illegal dismissal, cancellation of petitionerÊs license, refund of
placement fee plus interest, payment of salary differentials, reimbursement of amounts
illegally deducted from his monthly salary, payment of salaries for the unexpired portion
of the contract, damages and attorneyÊs fees against petitioner and its principal, Roan
Selection Trust International Ltd.
Issue:

1. Whether or not Medel is entitled for a security of tenure being a fixed term contract
employee?

2. Whether or not the employer is liable for damages for illegal dismissal?

3. Whether or not public respondent NLRC committed grave abuse of discretion when it
affirmed the decision of the POEA finding that private respondent was illegally
dismissed with the modification that salary differential, overtime pay and attorneys fees
should be allowed?

Held:

1. Yes, as a party to this contract, he enjoys security of tenure, for the period of time his
contract is in effect.

2. Yes, we have ruled, however, that the employer may be so liable if, in terminating the
employment, it also committed an antisocial and oppressive abuse of its right to
investigate and dismiss its employee in violation of Article 1701 of the Civil Code.

3. Wherefore, finding no grave abuse of discretion committed by public respondent

NLRC, the assailed Decision dated September 13, 1993 and Resolution dated October
29, 1993 are hereby AFFIRMED, with the MODIFICATION.

Ratio:

1. The records clearly show that private respondent was an employee with a fixed
period of twelve (12) months. Private respondent, therefore, was an employee hired for
a fixed term whose employment was to end only at the expiration of the period
stipulated in his contract. Thus, this is not a simple case of illegal dismissal of an
employee whose employment is without a definite period, rather, we find that the
principal cause of action in private respondentÊs complaint is breach of contract of
employment for a definite period.

2. The employer may be liable for damages if, in terminating the employment, it also
committed an antisocial and oppressive abuse of its right to investigate and dismiss the
employee in violation of Article 1701 of the Civil Code. As for moral damages, we hold
the said respondent liable therefor under the provisions of Article 2220 of the Civil Code
providing for damages for breaches of contract where the defendant acted fraudulently
or in bad faith. Hence, we now hold that private respondent is entitled to moral damages
amounting to TWENTY-FIVE THOUSAND PESOS (P25,000.00), considering that his
dismissal was marked by precipitate dispatch and utter disregard of due process.

Quisaba v. Sta. Ines-Melale Veneer & Plywood, Inc., G.R. No. L-38088, August 30,
1974

Facts:

On February 5, 1973 the petitioner Jovito N. Quisaba filed with the Court of First
Instance of Davao a complaint for moral damages, exemplary damages, termination
pay and attorneys fees against the Sta. Ines-Melale Veneer & Plywood, Inc. and its
vice-president Robert Hyde. The complaint avers that Quisaba, for eighteen years prior
to his dismissal, was in the employ of the defendant corporation. that on January 11,
1973 the respondent Robert Hyde instructed him to purchase logs for the company’s
plant; that he refused on the ground that the work of purchasing logs is inconsistent with
his position as internal auditor; that on the following day Hyde informed him of his
temporary relief as internal auditor so that he could carry out immediately the
instructions thus given, and he was warned that his failure to comply would be
considered a ground for his dismissal; that on January 16, 1973 he responded with a
plea for fairness and mercy as he would be without a job during an economic crisis; that
he was demoted from a position of dignity to a servile and menial job; that the
defendants did not reconsider their clever and subterfugial dismissal of him which for all
purposes constituted a constructive discharge and that because of the said acts of the
defendants, he suffered mental anguish, serious anxiety, besmirched reputation,
wounded feelings, moral shock and social humiliation. The complaint does not pray for
reinstatement or payment of backwages.
Issue:

Whether or not a complaint for moral damages, exemplary damages, termination pay
and attorneys fees, arising from an employers constructive dismissal of an employee, is
exclusively cognizable by the regular courts of justice or by the National Labor Relations
Commission created by Presidential Decree No. 21, promulgated on October 14, 1972?

Held:

The jurisdiction of the National Labor Relations Commission is defined by section 2 of

Presidential Decree No. 21 which reads:

SEC. 2. The Commission shall have original and exclusive jurisdiction over the
following:

1. All matters involving employee-employer relations including all disputes and

grievances which may otherwise lead to strikes and lockouts under Republic Act No.
875;

2. All strikes overtaken by Proclamation No. 1081; and

3. All pending cases in the Bureau of Labor Relations.

Quisabas dismissal was the severance of a pre-existing employee-employer relation,

his complaint is grounded not on his dismissal per se, as in fact he does not ask for
reinstatement or backwages, but on the manner of his dismissal and the consequent
effects of such dismissal.

Civil law consists of that mass of precepts that determine or regulate the relations that
exist between members of a society for the protection of private interests. The right of
the respondents to dismiss Quisaba should not be confused with the manner in which
the right was exercised and the effects flowing therefrom. If the dismissal was done
anti-socially or oppressively, as the complaint alleges, then the respondents violated
article 1701 of the Civil Code which prohibits acts of oppression by either capital or
labor against the other, and article 21, which makes a person liable for damages if he
wilfully causes loss or injury to another in a manner that is contrary to morals, good
customs or public policy, the sanction for which, by way of moral damages, is provided
in article 2219, no. 10.

Art. 2219. Moral damages may be recovered in the following and analogous cases:

Acts and actions referred to in articles 21, x x x x.

The case at bar is intrinsically concerned with a civil (not a labor) dispute; it has to do
with an alleged violation of Quisabas rights as a member of society, and does not
involve an existing employee-employer relation within the meaning of section 2(1) of
Presidential Decree No. 21. The complaint is thus properly and exclusively cognizable
by the regular courts of justice, not by the National Labor Relations Commission.

Ratio:

1. Art. 1701 NCC. – Neither capital nor labor shall act oppressively against the other, or
impair the interest or convenience of the public.

2. Art. 2219 NCC – Moral damages are recoverable in the following and analogous
cases 1. A criminal offense resulting in physical injuries, 2. Quasi delicts, 3. Seduction,
abduction, rape or other lascivious acts, 4. Adultery or concubinage, 5. Illegal or
arbitrary detention or arrest x x x.

Centro Project Management Services Corporation v. Naluis, G.R. No. 160123, June, 17,
2015

Facts:

Petitioner Centro Project Manpower Services Corp a local recruitment agency engage
Naluis to work abroad as a plumber in Saipan, Commonwealth of Northern Marianas.
The work was covered by the primary Employment Contract, whereby his employment
would last for 12 months, and would commence upon his arrival in Northern Marianas.
On June 3, 1997, the Department of Labor and Immigration of Northern Mariana Islands
issued an Authorization for Entry (AE) in his favor. On September 3, 1997, Centro
Project and Naluis executed an addendum to the primary Employment Contract to make
the start of his employment effective from his departure at the point of origin instead of
his arrival in Northern Marianas.

Naluis left for Northern Marianas on September 13, 1997, the date of his actual
deployment, and his employment continued until his repatriation to the Philippines on
June 3, 1998 allegedly due to the expiration of the employment contract. Not having
completed 12 months of work, he filed a complaint for illegal dismissal against Centro
Project.

Issue:

Whether or not the expiration date contained in the AE issued by the Department of
Labor and Immigration of Northern Mariana Islands validly cut short Naluis stay and
thus justified the pre termination of his work?

Held:

We submit that an authorization of entry is different from a limitation of stay in the

country visited, which is not indicated in any of the documents submitted by the
respondent.

We concur with the CA. The burden of proof to show that the employment contract had
been validly terminated pertained to the employer. To discharge its burden, the
employer must rely on the strength of its own evidence. However, Centro Projects
reliance on the AE limiting stay was unwarranted, and, worse, it did not discharge its
burden of proof as the employer to show that Naluis repatriation had been justified.

It is fundamental that in the interpretation of contracts of employment, doubts are

generally resolved in favor of the worker. It is imperative to uphold this rule herein. Any
doubt or vagueness in the provisions of the contract of employment should have been
interpreted and resolved in favor of Naluis.
Thus, Centro Project was in bad faith in not taking any action when the Philippine
immigration authorities supposedly inserted the handwritten date of expiration of the
contract.

The AE could not be used as a valid cause for pre-terminating the employment of
Naluis.

RATIO:

Art. 1702 NCC – 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.

Philippine Daily Inquirer, Inc. v. Magtibay, Jr., G.R. No. 164532, July 27, 2007

Facts:

On February 7, 1995, PDI hired Magtibay, on contractual basis, to assist, for a period of
five months from February 17, 1995, the regular phone operator. Before the expiration
of Magtibays contractual employment, he and PDI agreed to a fifteen-day contract
extension, or from July 17, 1995 up to July 31, 1995, under the same conditions as the
existing contract. After the usual interview for the second telephone operator slot, PDI
chose to hire Magtibay on a probationary basis for a period of six (6) months.

On March 13, 1996, or a week before the end the agreed 6month probationary period,
PDI officer Benita del Rosario handed Magtibay his termination paper, grounded on his
alleged failure to meet company standards. Aggrieved, Magtibay immediately filed a
complaint for illegal dismissal and damages before the Labor Arbiter. PDIEU later joined
the fray by filing a supplemental complaint for unfair labor practice.

Issue:
1. WHETHER OR NOT THE COURT OF APPEALS COMMITTED GRAVE ERROR IN
FINDING THAT A PROBATIONARY EMPLOYEEÊS FAILURE TO FOLLOW AN
EMPLOYERS RULES AND REGULATIONS CANNOT BE DEEMED FAILURE BY SAID
EMPLOYEE TO MEET THE STANDARDS OF HIS EMPLOYER THUS
EMASCULATING PETITIONERÊS RIGHT TO CHOOSE ITS EMPLOYEES.

2. WHETHER OR NOT THE COURT OF APPEALS COMMITTED A GRAVE ERROR

IN REFUSING TO FIND THAT PROCEDURAL DUE PROCESS AS LAID DOWN IN
SECTION 2, RULE XXIII OF THE IMPLEMENTING RULES OF THE LABOR CODE
HAD BEEN OBSERVED BY THE PETITIONER.

Held:

1. PDI invokes the second ground under the premises. In claiming that it had
adequately apprised Magtibay of the reasonable standards against which his
performance will be gauged for purposes of permanent employment, PDI cited the
one-on-one seminar between Magtibay and its Personnel Assistant, Ms. Rachel
Isip-Cuzio. PDI also pointed to Magtibays direct superior, Benita del Rosario, who
diligently briefed him about his responsibilities in PDI. These factual assertions were
never denied nor controverted by Magtibay. Neither did he belie the existence of a
specific rule prohibiting unauthorized persons from entering the telephone operators
booth and that he violated that prohibition. This notwithstanding, the NLRC and the CA
proceeded nonetheless to rule that the records of the case are bereft of any evidence
showing that these rules and regulations form part of the so-called company standards.

We do not agree with the appellate court when it cleared the NLRC of commission of
grave abuse of discretion despite the latter’s disregard of clear and convincing evidence
that there were reasonable standards made known by PDI to Magtibay during his
probationary employment. It is on record that Magtibay committed obstinate infractions
of company rules and regulations, which in turn constitute sufficient manifestations of
his inadequacy to meet reasonable employment norms. The suggestion that Magtibay
ought to have been made to understand during his briefing and orientation that he is
expected to obey and comply with company rules and regulations strains credulity for
acceptance. The CAs observation that nowhere can it be found in the list of Basic
Responsibility and Specific Duties and Responsibilities of respondent Magtibay that he
has to abide by the duties, rules and regulations that he has allegedly violated is a
strained rationalization of an unacceptable conduct of an employee. Common industry
practice and ordinary human experience do not support the CA’s posture. All
employees, be they regular or probationary, are expected to comply with company
imposed rules and regulations, else why establish them in the first place. Probationary
employees unwilling to abide by such rules have no right to expect, much less demand,
permanent employment.

2. PDI was only exercising its statutory hiring prerogative when it refused to hire
Magtibay on a permanent basis upon the expiration of the six-month probationary
period. This was established during the proceedings before the labor arbiter and borne
out by the records and the pleadings before the Court. When the NLRC disregarded the
substantial evidence establishing the legal termination of Magtibays probationary
employment and rendered judgment grossly and directly contradicting such clear
evidence, the NLRC commits grave abuse of discretion amounting to lack or excess of
jurisdiction. It was, therefore, reversible error on the part of the appellate court not to
annul and set aside such void judgment of the NLRC.

Ratio:

All employees, be they regular or probationary, are expected to comply with company
imposed rules and regulations, else why establish them in the first place. Probationary
employees unwilling to abide by such rules have no right to expect, much less demand,
permanent employment.

4. Labor Code (Labor Code, Art. 6; Const., Art. IXB, S2[1])

PNOC-EDC v. Leogardo, G.R. No. L-58494, July 5, 1989

Facts:

Petitioner PNOC-EDC is a subsidiary of the Philippine National Oil Company (PNOC).

On 20 January 1978, it filed with the Ministry of Labor and Employment, Regional Office
No. VII, Cebu City (MOLE), a clearance application to dismiss/ terminate the services of
private respondent, Vicente D. Ellelina, a contractual employee.
The application for clearance was premised on Ellelina’s alleged commission of a crime
(Alarm or Public Scandal) during a Christmas party on 19 December 1977 at petitioner’s
camp in Uling, Cebu, when, because of the refusal of the raffle committee to give him
the prize corresponding to his lost winning ticket, he tried to grab the armalite rifle of the
PC Officer outside the building despite the warning shots fired by the latter. Clearance
to dismiss was initially granted by MOLE but was subsequently revoked and petitioner
was ordered to reinstate Ellelina to his former position, without loss of seniority rights,
and with back wages from 1 February 1978 up to his actual reinstatement.

Issue:

1. Whether or not public respondent committed grave abuse of discretion in holding that
petitioner is governed by the Labor Code?

2. Whether or not Ellelina’s dismissal was justified.

Held:

1. NO, under the laws then in force, employees of government- owned and/or controlled
corporations were governed by the Civil Service Law and not by the Labor Code. Thus,
Article 277 of the Labor Code (PD 442) then provided:

The terms and conditions of employment of all government employees, including

employees of government-owned and controlled corporations shall be governed by the
Civil Service Law, rules and regulations x x x.

Thus, under the present state of the law, the test in determining whether a
government-owned or controlled corporation is subject to the Civil Service Law is the
manner of its creation such that government corporations created by special charter are
subject to its provisions while those incorporated under the general corporation Law are
not within its coverage. We hold, therefore, that the PNOC-EDC, having been
incorporated under the general corporation law, is a government-owned or controlled
corporation whose employees are subject to the provisions of the Labor Code.

2. In so far as Ellelina is concerned, we hold that the reinstatement ordered by public

respondent, without loss of seniority rights, is proper. However, consistent with the
rulings of the Court, back wages should be limited to three years from 1 February 1978.
The dismissal ordered by petitioner was a bit too harsh considering the nature of the act
which he had committed and that it was his first offense.

Ratio:

1. Article 277 of the Labor Code (PD 442) then provided:

The terms and conditions of employment of all government employees, including

employees of government-owned and controlled corporations shall be governed by the
Civil Service Law, rules and regulations x x x.

LRTA v. Venus, Jr., G.R. No. 163782, March 24, 2006

RATIO: Classification of government corporation/ employer employee relationship

Section 2 (1), Article IX – B, 1987 Constitution "[t]he civil service embraces all
branches, subdivisions, instrumentalities, and agencies of the Government,
including government-owned or controlled corporations with original charters."

FACTS: LRTA is a government owned corporation with its original charter while METRO
is a corporation registered in the SEC. To efficiently deliver public service, LRTA entered
into a 10-year management contract with METRO. Pursuant to the above Agreement,
petitioner METRO hired its own employees, including herein private respondents who
are part of the Union - Pinag-isang Lakas ng Manggagawa sa METRO, Inc. LRTA took
over upon the expiration of the agreement. The Union then filed for a petition to strike
which hampered the operation of LRT. The leaders of the Union were dismissed. The
NLRC ordered that they be reinstated.

Petitioner LRTA contends that it is a government-owned and controlled corporation with

an original charter, Executive Order No. 603, Series of 1980, as amended, and thus
under the exclusive jurisdiction only of the Civil Service Commission, not the NLRC.

Private respondent workers, however, submit that petitioner METRO was not only
fully-owned by petitioner LRTA, but all aspects of its operations and administration were
also strictly controlled, conducted and directed by petitioner LRTA. And since petitioner
METRO is a mere adjunct, business conduit, and alter ego of petitioner LRTA, their
respective corporate veils must be pierced to satisfy the money claims of the illegally
dismissed private respondent employees.

ISSUE: W/N the employees of PIGLAS-METRO, INC. – NFL – KMU are covered by
DOLE and has the right to strike

RULING: YES. The Union employees were employed by METRO and METRO
employees are not covered by the prohibition against strikes applicable to employees
embraced in the Civil Service.

METRO is covered by the Labor Code despite its later acquisition by petitioner LRTA.
Petitioner METRO was originally organized under the Corporation Code, and only
became a government-owned and controlled corporation after it was acquired by
petitioner LRTA. Even then, petitioner METRO has no original charter, hence, it is the
Department of Labor and Employment, and not the Civil Service Commission, which
has jurisdiction over disputes arising from the employment of its workers. Consequently,
the terms and conditions of such employment are governed by the Labor Code and not
by the Civil Service Rules and Regulations.

GSISFamilyBankEmployeesUnionv.Villanueva,G.R.No.210773,January23,2019

RATIO: Charted and Uncharted GOCC and the application of RA No. 10149

Section 3(o) of Republic Act No. 10149 - Government-Owned or -Controlled

Corporation (GOCC) refers to any agency organized as a stock or nonstock corporation,
vested with functions relating to public needs whether governmental or proprietary in
nature, and owned by the Government of the Republic of the Philippines directly or
through its instrumentalities either wholly or, where applicable as in the case of stock
corporations, to the extent of at least a majority of its outstanding capital stock:
Provided, however, That for purposes of this Act, the term "GOCC" shall include
GICP/GCE and GFI as defined herein.

FACTS: The GSIS family bank is formerly a private corporation that was acquired by
the GSIS. However, an issuance of the BSP provides that GSIS Family Bank could not
be categorized as a government bank because it was not enacted with a charter.

GSIS Union alleged that Republic Act No. 10149 does not apply to GSIS Family Bank,
as it was a private bank created and established under the Corporation Code. It
asserted that even if the Government Service Insurance System owned a majority of
GSIS Family Bank's outstanding capital stock, the change in ownership of shares did
not automatically place the bank under the operation of Republic Act No. 10149.

They stressed that as a private corporation established under the Corporation Code,
GSIS Family Bank and its employees are covered by the applicable provisions of the
Labor Code, not the Civil Service Law. Thus, the Collective Bargaining Agreement
between petitioner and GSIS Family Bank cannot be impaired by Republic Act No.
10149.

ISSUE: W/N GSIS Family Bank, a non-chartered government-owned or controlled

corporation, can enter into a collective bargaining agreement with its employees and are
covered by the Compensation and Position Classification System

RULING: NO. A government-owned or controlled corporation is: (1) established by

original charter or through the general corporation law; (2) vested with functions relating
to public need whether governmental or proprietary in nature; and (3) directly owned by
the government or by its instrumentality, or where the government owns a majority of
the outstanding capital stock. Possessing all three (3) attributes is necessary to be
classified as a government-owned or controlled corporation.

Officers and employees of government-owned or controlled corporations without original

charters are covered by the Labor Code, not the Civil Service Law. However,
non-chartered government-owned or controlled corporations are limited by law in
negotiating economic terms with their employees. This is because the law has provided
the Compensation and Position Classification System, which applies to all
government-owned or controlled corporations, chartered or non-chartered.

Alejandrino v. COA, G.R. No. 245400, November 12, 2019

RATIO: GOCC Governance Act of 2011 Government-owned or controlled corporation
refers to any agency organized as a stock or non-stock corporation, vested with
functions relating to public needs whether governmental or proprietary in nature, and
owned by the Government directly or through its instrumentalities either wholly, or,
where applicable as in the case of stock corporations, to the extent of at least fifty-one
(51) percent of its capital stock.

FACTS: Sometime in 2011, PNCC engaged the legal services of four private lawyers,
namely, Attys. Eusebio P. Dulatas, Henry Salazar, Stephen Ivan Salinas as members of
the PNCC Corporate Legal Division, and Atty. Alex Almario as Corporate Secretary.
Consequently, salaries were paid to them. The COA Audit Team issued Notice of
Disallowance dated August 9, 2012 addressed to Atty. Luis F. Sison, President and
Chief Executive Officer of PNCC, stating that the amount of P911,580.96, representing
the salaries of the four lawyers, is disallowed in audit because their hiring was without
the written conformity and acquiescence of the OGCC as well as the written
concurrence of the COA

The Petitioners asserted that PNCC is a government-acquired asset corporation and

not a government-owned and controlled corporation, thus, the COA acted with grave
abuse of discretion in disallowing in audit the payment of salaries to three lawyers of the
PNCC Corporate Legal Division and one lawyer as corporate secretary. They maintain
that the hiring of said lawyers and the payment of salaries under the service contracts
was within the power and authority of the management of PNCC.

ISSUE: W/N PNCC is a GOCC and needs to abide by the Audit the budgeting and
finance regulation of COA

RULING: YES. PNCC is a GOCC under the direct supervision of the Office of the
President. Thus, being a GOCC, PNCC is under the audit jurisdiction of the COA.

The Constitution vests in the COA audit jurisdiction over 'government-owned and
controlled corporations with original charters' as well as 'government-owned or
controlled corporations' without original charters. GOCCs with original charters are
subject to COA pre-audit, while GOCCs without original charters are subject to COA
post-audit. GOCCs without original charters refer to corporations created under the
Corporation Code but are owned and controlled by the government. The nature or
purpose or the corporation is not material in determining COA's audit jurisdiction.
Neither is the manner of creation or a corporation, whether under a general or special
law.

Philippine Mining Development Corporation v. Aguinaldo, G.R. No. 245273, July 27,
2021
RATIO: GOCC is one that is "(1) established by original charter or through the general
corporation law; (2) vested with functions relating to public need whether governmental
or proprietary in nature; and (3) directly owned by the government or by its
instrumentality, or where the government owns a majority of the outstanding capital
stock." PMDC clearly complies with the elements in GSIS.

FACTS: PMDC issued a Notice of Award to Fortune Medicare, Inc. (FortuneCare) to

"provide preventive, diagnostic, and treatment services from accredited hospitals,
medical centers, and clinics" for the benefit of its officers and employees. COA
assessed the amount and disallowed it for being contrary to Section 8, Article IX-B of
the 1987 Constitution. The disallowance prompted PMDC to file an appeal stating that
Section 8, Article IX-B of the 1987 Constitution is only applicable to GOCCs with original
charter.

Their appeals were denied and COA ruled that petitioners were mistaken in their
interpretation of Article IX-B of the Constitution, particularly Section 5 thereof. It
observed that the provision merely directed the Congress to provide the standardization
of compensation of government officials and employees, including those in GOCCs with
original charters. Subsequent standardization laws enacted by Congress, such as
Republic Act No. 6758 (RA 6758) or the "Compensation and Classification Act of 1989"
and the Senate and the House of Representatives Joint Resolution No. 4, also known
as SSL III, which was approved in 2009, did not serve to repeal PD 1597. PMDC,
regardless of its creation, still remained within the ambit of the President's power of
control since its incorporation was sanctioned by the President, while its Board of
Directors are likewise appointed at the discretion of the President. Hence, PMDC must
continue to abide by PD 1597 by seeking executive approval in order to undertake any
procurement, which it manifestly failed to do.

ISSUE: W/N COA gravely abused its discretion when it disallowed PMDC's payment of
membership fees for the health care program provided to its officers and employees for
calendar year 2012.

RULING: NO. PMDC falls within the broad coverage of Section 2, without coming within
the limited exceptions thereunder, it must consequently subject all allowances,
honoraria, and other fringe benefits to the approval of the President and upon the
recommendation of the Department of Budget and Management (DBM) pursuant to
Section 5 of the law.
GOCC is one that is "(1) established by original charter or through the general
corporation law; (2) vested with functions relating to public need whether governmental
or proprietary in nature; and (3) directly owned by the government or by its
instrumentality, or where the government owns a majority of the outstanding capital
stock." PMDC clearly complies with the elements in GSIS.

While Sections 2 and 5, Article IX-B of the Constitution refers to GOCCs with original
charter, there arises no implication that GOCCs without original charters should be
exempt from any requirement that Congress may impose. PD 1597 continues to be in
force and covers government-owned and controlled corporations with or without original
charter; thus, PMDC necessarily falls within its provisions.

C. STATE POLICY TOWARDS LABOR

1. Social Justice (Const., Art. XIII, S3)

Calalang v. Williams, 70 Phil. 726 (1940)

Del Rosario v. De los Santos, G.R. Nos. 20589-90, March 21, 1968

Philippine Airlines, Inc. v. Santos, Jr., G.R. No. 77875, February 4, 1993

De Vera v. NLRC, G.R. No. 93212, November 22, 1990

Visayan Electric Company Employees Union-ALU-TUCP v. Visayan Electric Company,

Inc., G.R. No. 205575, July 22, 2015

Agabon v. NLRC, G.R. No. 158693, November 17, 2004

Antolino v. Hanseatic Shipping Phils., Inc., G.R. No. 245917, February 26, 2020

Sime Darby Pilipinas, Inc. v. NLRC (2nd Division), G.R. No. 119205, April 15, 1998

Facts:
Sime Darby Pilipinas, Inc., a company engaged in manufacturing automotive tires and
other rubber products, faced a legal challenge when it revised the work schedule of its
factory-based employees and removed their paid lunch break. Initially, employees
worked from 7:45 AM to 3:45 PM with a 30-minute paid “on call” lunch break. On 14
August 1992, Sime Darby issued a memorandum changing the schedule to 7:45 AM to
4:45 PM, removing the paid lunch break but introducing a one-hour lunch break from
12:00 NN to 1:00 PM and maintaining 10-minute coffee breaks. The change prompted
Sime Darby Salaried Employees Association to file a complaint for unfair labor practice,
which was dismissed by the Labor Arbiter citing it as a valid management prerogative
and not diminishing benefits since the new schedule complied with an 8-hour workday.
Upon appeal, the National Labor Relations Commission (NLRC) reversed its decision
after reconsideration, seeing the change as a diminution of benefits against the Labor
Code. Sime Darby then petitioned to the Supreme Court.

Issues:

1. Whether management’s revision of work schedule and removal of paid lunch break
constitutes unfair labor practice.
2. Whether there was a diminution of benefits due to the elimination of the 30-minute
paid lunch break.
3. The significance of the earlier Sime Darby case in relation to management’s
prerogative to modify work schedules.

Ruling:

The Supreme Court ruled in favor of Sime Darby Pilipinas, Inc. The Court highlighted
that the prerogative to fix work schedules lies with the employer, especially if it is for
business efficiency. The change was deemed not to constitute unfair labor practice as it
applied to all factory workers equally and did not interfere with the right to
self-organization. It did not consider the revision as a diminution of benefits since the
new one-hour lunch break without required work was equitable. Furthermore, the Court
differentiated the present case from the prior Sime Darby case, emphasizing on different
contexts and clarifying management’s right to adjust work schedules.

Ratio:

The management’s right to regulate work aspects including schedules is upheld unless
such prerogatives are exercised in bad faith or to undermine employees’ rights.

Changes in work schedule that apply to all similarly situated employees and do not
contravene legal working hours do not constitute unfair labor practice or diminution of
benefits.
Beralde v. Lapanday Agricultural and Development Corporation (Guihing Plantation
Operations), G.R. Nos. 205685-86, June 22, 2015

Facts:

Lapanday Agricultural and Development Corporation (Lapanday) is engaged in the

business of Banana plantation and exporting of the same to its clientele abroad.
Beralde, et al, are employees in the said corporation.

Between the years 1992-1994, Lapanday retrenched and paid separation pay to some
of its employees in a downsizing effort. Thereafter, Lapanday allegedly re-hired some of
their former employees with a promise that the land they worked on will be eventually
turned-over to them, since the land was covered by the Comprehensive Agrarian
Reform Program (CARP). The employees including several of the Beralde, et al. agreed
to be retrenched and re-hired. Sometime in 1999, Lapanday again retrenched all its
employees and offered to pay separation pay for their years of service. Meanwhile, the
land was not turned-over to them as promised since the Department of Agrarian Reform
(DAR) issued an Order Dated February8, 1999, exempting said land from the coverage
of the CARP.

On March 29, 1999, Lapanday and the employees, including Beralde, et al., signed a
new employment contract. However, upon learning of the DAR's order of exemption, the
employees filed a petition to revoke said order. On January 4, 2008, Lapanday issued a
Notice of Termination to all its employees, including herein Beralde, et al. In the said
notice of termination, it was stated that the company is instituting a retrenchment
program pursuant to Section 5, Article 1 of the Collective Bargaining Agreement (CBA)
to prevent losses as a result of the dramatical increase in production costs and lower
productivity. The termination date for all employees was effective February 4, 2008.

Several employees signed the notice, in the hopes of getting their separation pay and
other benefits. Beralde, et al., however, claimed that their separation pay was not given
to them. They further alleged that those who refused to sign the notice were not allowed
to enter the work premises unless they would sign the notice. Lapanday, on the other
hand, claimed that despite its financial predicament, separation pay was offered to its
employees. Hence, without any recourse, Beralde, et al. filed a complaint for illegal
dismissal.

Lapanday claimed that in 2006, it was beset with financial reverses due to very low
productivity, an onslaught of banana diseases, the adverse effects of the imposition of
the aerial spraying ban, the reduction of leased areas due to CARP, the refusal of the
landowners to renew Beralde, et al.'s lease contracts, increase in production costs, and
the extraordinary fluctuation in foreign exchange. They averred to have implemented
numerous saving measures; however, its financial condition continued to decline, thus,
they opted to implement a retrenchment program. Lapanday further claimed that it
consulted with the employee's union (Samahan Manggagawa ng Lapanday
Guihing-SAMALAG), and filed the required notice with the Department of Labor and
Employment (DOLE) before the implementation of said program.

The Labor Arbiter (LA) rendered a Decision:

1. Dismissing the complaint for illegal dismissal and unfair labor practice;

2. Declaring that the retrenchment is valid; and

3. Ordering respondent LAPANDAY AGRICULTURAL AND DEVELOPMENT

CORPORATION to pay complainants the sum of EIGHT MILLION TWO HUNDRED
EIGHTY-SIX THOUSAND ONE HUNDRED SEVENTY-FOUR AND 53/100 PESOS
(P8,286,174.53) representing their separation pays

Undaunted, before the National Labor Relation Commission (NLRC), Beralde, et al.
insisted that they were illegally dismissed.

On September 22, 2009, the NLRC reversed and set aside the appealed decision.

ISSUE:

Whether or not Beralde, et al. dismissal due to retrenchment was a mere ploy to ease
them out from their employment.

RULING:

NO. Lapanday's financial condition before and at the time of the retrenchment clearly
paints a picture of a losing business.

An independent auditor confirmed its claim of financial losses, finding that is suffered a
net loss of Php26,297,297. in 2006 as compared to its net income of Php14,128,589. in
2005. This net loss ballooned to Php72,363,879. in 2007. To be sure, these financial
statements cannot be whimsically assailed as self-serving, as these documents were
prepared and signed by SGV & Co., a firm of reputable independent external auditors.
Lapanday instituted a retrenchment program as a result of the management's decision
to limit its operation and streamline positions and personnel requirements and arrest its
increasing financial losses by downsizing its workforce. Lapanday then was justified in
implementing a retrenchment program since it was undergoing financial reverses, not
only for a single fiscal year, but for several years prior to and even after the program.
We likewise quote the Labor Arbiter's findings: Per audit report of Sycip, Gorres Velayo
& Co (SGV), an independent accounting firm and credible external auditor, dated April
17, 2007, for 2006 Financial Statement of Lapanday Agriculture and Development
Corporation, it shows that respondent's revenue for sales of bananas in 2005 was
PhP724,200,596.00. In 2006, it dropped to Php607,186,264.00. A difference or loss of
Php117,013,332.00 was incurred by the respondent company. Also, per audit report
dated March 28, 2008 of same accounting firm x x x for the year 2007, it shows that
respondent's revenue for sales of bananas from Php607,186,264.00 further went down
to PhP539,979,711.00 or a loss of P67,207,753.00.

The law acknowledges the right of every business entity to reduce its work force if such
measure is made necessary or compelled by economic factors that would otherwise
endanger its stability or existence. In exercising its right to retrench employees, the firm
may choose to close all, or a part of, its business to avoid further losses or mitigate
expenses.

The fact that Lapanday chose to continue its business does not automatically make the
retrenchment illegal. The Court reiterated that in retrenchment, the goal is to prevent
impending losses or further business reversals- it therefore does not require that there
is an actual closure of the business. Thus, when the employer satisfactorily proved
economic or business losses with sufficient supporting evidence and have complied
with the requirements mandated under the law to justify retrenchment, as in this case, it
cannot be said that the subsequent acts of the employer to re-hire the retrenched
employees or to hire new employees constitute bad faith. It could have been different if
from the beginning the retrenchment was illegal and the employer subsequently hired
new employees or rehired some of the previously dismissed employees because that
would have constituted bad faith. Consequently, when Lapanday continued its
operation, it was merely exercising its prerogative to streamline its operations, and to
re-hire or hire only those who are qualified to replace the services rendered by the
retrenched employees in order to effect more economic and efficient methods of
production and to forestall business losses. The rehiring or reemployment of retrenched
employees does not necessarily negate the presence or imminence of losses which
prompted Lapanday to retrench. Share this document Download

Ratio:

Retrenchment is a valid management prerogative. It is, however, subject to faithful

compliance with the substantive and procedural requirements laid down by law and
jurisprudence. In the discharge of these requirements, it is the employer who bears the
onus, being in the nature of affirmative defense.

Gelos v. CA, G.R. No. 86186, May 8, 1992

Facts:
The subject land is a 25,000 square meter farmland situated in Cabuyao, Laguna, and
belonging originally to private respondent Ernesto Alzona and his parents in equal
shares. On July 5, 1970, they entered into a written contract with petitioner Gelos
employing him as their laborer on the land at the stipulated daily wage of P5.00.

The contract of employment dated July 5, 1970, written in Tagalog and entitled
"Kasunduan ng Upahang Araw," provides that "ang Ikalawang Panig (meaning Gelos)
ay may ibig na magpaupa sa paggawa sa halagang P5.00 sa bawa't araw, walong oras
na trabaho" (The Second Party desires to lease his services at the rate of P5.00 per
day, eight hours of work) and that"Ipinatatanto ng Ikalawang Panig na siya ay hindi
kasama sa bukid kundi upahan lamang na binabayaran sa bawa't araw ng kanyang
paggawa sa bukid na nabanggit.'' (The Second Party makes it known that he is not a
farm tenant but only a hired laborer who is paid for every day of work on the said farm.)

On September 4, 1973, after Alzona had bought his parents' share and acquired full
ownership of the land, he wrote Gelos to inform him of the termination of his services
and to demand that he vacate the property. Gelos refused and continued working on the
land.

On October 1, 1973, Gelos went to the Court of Agrarian Relations and asked for the
fixing of the agricultural lease rental on the property. He later withdrew the case and
went to the Ministry of Agrarian Reform, which granted his petition.

For his part, Alzona filed a complaint for illegal detainer against Gelos in the Municipal
Court of Cabuyao, but this action was declared "not proper for trial" by the Ministry of
Agrarian Reform because of the existence of a tenancy relationship between the
parties. Alzona was rebuffed for the same reason when he sought the assistance of the
Ministry of Labor and later when he filed a complaint with the Court of Agrarian
Relations for a declaration of non-tenancy and damages against Gelos. On appeal to
the Office of the President, however, the complaint was declared proper for trial and so
reinstated.

RTC found Gelos to be a tenant of the subject property and entitled to remain thereon
as such.

CA reversed RTC decision.

Issue:
Whether or not petitioner is a tenant of the private respondent and entitled to the
benefits of tenancy laws and not only a hired laborer whose right to occupy the subject
land ended with the termination of their contract of employment
Ruling:
No. It is not the nature of the work involved but the intention of the parties that
determines the relationship between them.

The indications of an employer-employee relationship are:

1. the selection and engagement of the employee;

2. the payment of wages;

3. the power of dismissal; and

4. the power to control the employee's conduct –– although the latter is the most
important element.

Ratio:

Tenancy relationship is distinguished from farm employer-farm worker relationship in

that: "In farm employer-farm worker relationship, the lease is one of labor with the
agricultural laborer as the lessor of his services and the farm employer as the lessee
thereof. In tenancy relationship, it is the landowner who is the lessor, and the tenant the
lessee of agricultural land. The agricultural worker works for the farm employer and for
his labor be receives a salary or wage regardless of whether the employer makes a
profit. On the other hand, the tenant derives his income from the agricultural produce or
harvest."

Here, the private respondent, instead of receiving payment of rentals or sharing in the
produce of the land, paid the petitioner lump sums for specific kinds of work on the
subject lot or gave him vales, or advance payment of his wages as laborer thereon.

Central Azucarerade Bais v. Heirs of Zuelo Apostol, G.R.No.215314,March 14,2018

Facts:

March 1, 1982- Zuelo Apostol (respondent)commenced his 20 years of employment

with petitioner Central Azucarera de Bais

- Motor Pool Over

-All Repairs Supervisor

- was in charge of repairing company vehicles

- (a) assigning the personnel and equipment for each and every repair job, and(b) taking
custody of all repair equipment and materials owned by CAB

- one of the pre-requisites accorded to the respondent was the enjoyment of a company
house where the respondent could live so long as he remains as a CAB employee.

February 2, 2002-harmonious working relationship was disturbed

-inspection of Tomasito A. Rosel (Rosel), one of CAB's security guards: he reported

that:

-respondent "was using his company house, as well as other company equipment to
repair privately owned vehicles

-Mr. Franciso Sabanal was the one actually doing the repair work on the LANCER CAR
which was assigned to Mr. Zuelo Apostol

-he saw Mr. Sabanal cutting with scissors metal sheets from the sheets that were there
at the place, to repair the LANCER CAR.

-Roberto Y. Dela Rosa (CAB resident manager) issued a memorandum dated February
04,2002, addressed to the respondent for violating Rule 9 of CAB’s Rules of Discipline

Memorandum: Submit Within 24 hours-explanation in writing-why you should not be

subjected to our Rules of Discipline for the following acts-repairs done in CAB housing
unit area assigned to you in Paper Village one car and one pick-up for body repairs
using oxygen and acetylene tanks with cutting accessories as well as steel plates for
the repairs, all of which are assumed to be company property there being no clearance
or permit obtained from the Company to bring in personal equipment to undertake
repairs-Note, while giving you a chance to explain your side, you are put on preventive
suspension effective immediately .

Response:-respondent submitted a handwritten explanation in the local dialect-“Dear

Nonoy Steven, I am asking for a thousand apologies, I did not use electric welding,
compressor and grinder. What I used was a trouble light and my personal acetylene and
oxygen.

Feb. 9, 2002-respondent received a copy of the termination letter dated February

8,2002-signed by CAB’S president, herein petitioner Antonio Steven Tan-respondent
vacated the company house.
Feb. 12, 2002-respondent filed a complaint before the sub-regional arbitration branch
No. VII of Dumaguete City for constructive dismissal, illegal suspension, unfair labor
practice

RULING OF THE LABOR ARBITER

May 30, 2002-Dismissed the respondent’s submissions for lack of merit based on:

A. The allegations of unfair labor practice was not discussed in the respondent’ position
paper, let alone substantiated

B. CAB was well within its rights to impose preventive suspension upon the respondent.

RULING OF THE NLRC:

A. The respondent should have been given the opportunity to be heard andto defend
himself through a hearing

B. The respondent did not commit serious misconduct because his contrite and
remorseful explanation belies any willfulness and wrongful intent to violate the company
policy.

C. While the respondent did indeed violate the company rules, the ultimate penalty of
dismissal should not have been meted out to him.

RULING OF THE CA:

Affirmed the NLRC decision.

While CAB was compliant with the twin notice requirement, the respondent's violation
"cannot be considered as so grave as to be characterized either as serious misconduct
or could lead to a loss of trust and confidence."

ISSUES:

1.Whether or not there was a substantive due process which was observed in the
termination of the respondent’s employment with CAB

2.Whether or not the penalty meted out was commensurate to the violation

3.Whether or not the respondent is entitled to the payment of back wages and
separation pay.

RULING:
1.The CAB complied with the twin requirement of due process by furnishing the
respondent two written notices. It is undisputed that Apostol received two notices.

The first notice (Feb.4 2002)

Informed him of his violation and required him to submit his written explanation on the
matter. Thereafter, he received another notice communicating to him that his
employment with CAB was being severed by the company due to his violation of
its company’s Rules of Discipline.

Perez v. Philippine Telegraph and Telephone Company

- The hearing requirement in dismissal cases is that there should be an “ample

opportunity to be heard” means any meaningful opportunity (verbal or written) given to
the employee to answer the charges against him.

A FORMAL HEARING OR CONFERENCE BECOMES MANDATORY

.2. The respondent did indeed violate company rules and regulations when he used
company equipment and materials for his personal vehicles. Article 297( c ) formerly
Article 282 ( c ) of the Labor Code provides that an employer may terminate the
services of an employee for fraud or willful breach of the trust reposed to him.

Top Form Mfg. Co., Inc. v. NLRC

“an employer has a distinct prerogative to dismiss an employee if the former has ample
reason to distrust the latter or if there is sufficient evidence to show that the employee
has been guilty of breach of trust.”

In Alaska Milk Corporation, and the Estate of Wilfred Uytengsu v.Ernesto L. Ponce
where the court ruled that in order to invoke this cause, certain requirements must be
complied with

A. The employee concerned must be holding a position of trust and confidence

B. There must be an act that would justify the loss of trust and confidence.

Juliet B. Sta. Ana v. Manila Jockey Club, Inc. included as a requirement that such loss
of trust related to the employee’s performance of duties.

In the present case, the respondent herein occupies a position of responsibility, where
he is entrusted with confidence on delicate matters such as the custody, handling or
care and protection of CAB’s properties.
3.Having thus related on the validity of the dismissal of the respondent then it
necessarily follows that he is not entitled to both backwages and separation pay.

Sosito v. Aguinaldo Development Corporation, G.R. No. 48926, December 14, 1987

Facts:

Petitioner Manuel Sosito was employed in 1964 by private respondent, being in charge
of logging importation. On Jan. 16, 1976, petitioner went on indefinite leave with
consent of the employer. On July 20, 1976, private respondent through its president
announced a retrenchment program and offered separation pay to employees in the
active service as of June 30, 1976 who would tender their resignations not later than
July 31, 1976 due to financial losses suffered by the company in the past two years.
Petitioner decided to accept this offer and filed a resignation letter on July 29, 1976 but
the same was not acted upon and he did not receive the separation pay. Petitioner
complained to the Department of Labor who ordered the company to pay petitioner his
salary for 6 and a half months. On appeal with the NLRC, decision was reversed and
held petitioner was not covered by the retrenchment program.

Issue:

Is petitioner covered by the retrenchment program?

Ruling:

No, it is clear from the Memorandum private respondent released on July 20, 1976 that
only those who are in active service as of June 30, 1976 are eligible for the
retrenchment program, and petitioner, being on indefinite leave since Jan. 16, 1976, is
thereby not qualified to avail of the same. It is noteworthy that although Art. 272 (a) of
the Labor Code, then in force, did not grant separation pay if a company reduces its
labor force due to financial reverses, herein respondent did in fact offer a separation
pay. However, being that petitioner was on indefinite leave and could therefore choose
to come back or not, at his discretion, is lopsided in favor of petitioner in that he could
choose the best of both worlds, seek another employment and yet avail of the benefits
given by herein respondent. To grant petitioner’s request would not be in the interest of
fair play and would in fact violate the rights of the employer.

Ratio:

Labor disputes aren’t necessarily immediately tipped in favor of labor. The Management
also has its own rights, which must also be afforded the same protection as that of
labor. Justice is in every case for the deserving, to be dispensed in the light of the
established facts and the applicable law and doctrine.”

2. Protection to Labor/Level of Protection to Labor (Const., Art. II, S18; Art. XIII, S3;
Labor Code, Art. 3)

Philippine Airlines, Inc. v. Santos, Jr., G.R. No. 77875, February 4, 1993

Facts:

Santos, Jr., Magadia, Antonio, and Duran (SMAD) are all Port Stewards of Catering
Sub-Department, Passenger Services Department of Philippine Airlines, Inc (PAL.) On
various occasions, several deductions/charges were made from their salary in lieu of
losses of inventoried items and mishandling of company properties. SMAD refuted
these allegations, thus, with the help of their employees Philippine Airlines Employees
Association (PALEA), they made a formal notice to PAL. As there was no action taken
by PAL, SMAD and PALEA filed a formal grievance on November 4, 1984 pursuant to
their Collective Bargaining Agreement (CBA) with PAL. After several attempts to have
their grievance resolved, SMAD had a meeting with Mr. Abad, Manager for Catering of
PAL. The latter claimed that amidst non-conduction of inventor works, SMAD were still
penalized with 1/10 of the selling price of the missing items. SMAD and PALEA argues
that the aforementioned meeting must not hold as the delay of Abad to hear their
grievances was tantamount to a resolution of SMAD's case in the latter's favor (See
CBA at the end of the digest.) Unfortunately, suspension ranging from 7 days to 30
days. SMAD and PALEA then filed a complaint for illegal suspension before the Labor
Arbiter (LA) against PAL and ruled in favor of the latter (upholding the suspension.) The
National Relations Commission (NLRC), upon the appeal of SMAD and PALEA,
reversed the LA, setting aside the dismissal of the case. A motion for reconsideration
was filed by PAL but to no avail.

Issue(s):

WoN NRC acted with grave abuse of discretion amounting to lack of jurisdiction in
reversing the dismissal of the LA?

Whether the NLRC was correct in upholding the stipulation in the CBA granting a ruling
in favor of complainants in cases where the division head fails to act within the
reglementary period?

Ruling:
SC: The SC denies the appeal of PAL, and orders the payment of salaries during the
time of their suspension and the removal of the penalty from their records, primarily on
the ground that the laborers properly observed their right to the CBA stipulation.

With regards to the CBA stipulation:

a. PAL misinterpreted the stipulation when it said that having not completed the
grievance machinery process of the CBA, status quo must be observed.
b. It alleged that the employees were wrong in reckoning their date of submission of
their grievance to Abad's secretary as the start of the 5-day reglementary period,
for the reason that the latter was on leave. They stipulate that there are two
concurrent requirements for the reglementary period to run, to wit: i. presentment
of the grievance, and ii. discussion between the shop steward and the division
head.
c. The Supreme Court resolves that PAL was incorrect in interpreting the
aforementioned CBA on the ground that the Constitutional mandate dictates to
favor the laboring classes, not just for sympathy but to level the playing field of
the employer and the employee. Social Justice dictates that those with less
privileges in life should have more privilege in law.
d. The information of Abad, the division head, being on leave was not known to the
employees when they filed their grievances. The NLRC, as echoed by the SC,
reiterates that it is to be expected that someone has to be left to attend to the
division head's duties, for the duties were not personal to Abad, but to his
capacity. Such excuse of leave would be against public policy granting laborers
the right to resolution of their grievances.

Ratio:

The Court, in accordance to the Constitution and to the doctrine of Social Justice, must
weigh in favor of the laborers, not just for mere sympathy, but to level the playing field in
ascertaining the rights of employers and employees.

Jaculbe v. Silliman University, G.R. No. 156934, March 16, 2007

Facts:

Fifty-seven-year-old petitioner has been working for Silliman University for 35 years,
and informed the petitioner that she was due for automatic retirement pursuant to
respondent's retirement plan which provided that its members could be automatically
retired upon reaching the age of 63 or after 35 years of uninterrupted service.

Petitioner insisted that the compulsory retirement under the plan was tantamount to a
dismissal and be allowed to work until the age of 60 because this was the minimum age
at which she could qualify for SSS pension. Respondent however did not listen to her
case, and stood firm on its decision to retire her, citing "company policy".

Labor Arbiter: respondent guilty of illegal dismissal

NLRC: Reversed and dismissed the case for lack of merit

CA: Affirmed

Issue:

Whether or not respondent's retirement plan imposing automatic retirement after 35

years of service contravene the security of tenure clause in the Constitution and Labor
Code.

RULING:

Yes. the rules and regulations of respondent's retirement plan runs afoul of the
constitutional guarantee of security of tenure contained in Art. XIII, also known as the
provision on Social Justice and Human Rights.

The contract fixing for the scheme provided for in the private respondent compulsorily
retired the petitioner not based on the CBA but on the retirement scheme provided for in
the private respondent's retirement plan. The contract fixing for retirement age as
allowed under Art. 287 of the Labor Code does not exclusively refer to CBA which
provides for an agreed retirement age. The said provision explicitly allows, as well, other
applicable employment contract to fix retirement age.

Moreover, from the language of the respondent's plan rules, the compulsory nature of
both membership in an contribution to the plan debunked CBA theory that petitioner's
voluntary contributions were evidence of her willing participation therein. It was through
no voluntary act of her own that petitioner become a member of the plan.

Neither the respondent cited any agreement to justify its imposition of early retirement
age in its retirement plan. Not only was the petitioner still a good eight years away from
the compulsory retirement age but she was also still fully capable f discharging her
duties as shown by the fact that respondent's board of trustees seriously considered
rehiring her after the effectivity of her compulsory retirement.
Lopez v. MWSS, G.R. No. 154472, June 30, 2005

Facts:

By virtue of an Agreement, petitioners were engaged by the MWSS as

collectors-contractors, wherein the former agreed to collect from the concessionaires of
MWSS, charges, fees, assessments of rents for water, sewer and/or plumbing services
which the MWSS bills from time to time.

In 1997, MWSS entered into a Concession Agreement with Manila Water Service, Inc.
and Benpress-Lyonnaise, wherein the collection of bills was transferred to said private
concessionaires, effectively terminating the contracts of service between petitioners and
MWSS.

Regular employees of the MWSS were paid their retirement benefits, but not petitioners.
Instead, they were refused said benefits.

Issue: WON petitioners are entitled to the benefits – Yes

Ruling & Ratio:

Yes, they are entitled to the benefits.

Petitioners are indeed regular employees of the MWSS. The primary standard of
determining 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. Likewise, the repeated and continuing need for the performance of the job has
been deemed sufficient evidence of the necessity, if not indispensability of the activity to
the business. Some of the petitioners had rendered more than two decades of service
to the MWSS. The continuous and repeated rehiring of these bill collectors indicates the
necessity and desirability of their services, as well as the importance of the role of bill
collectors in the MWSS.

The Court has invariably affirmed that it will not hesitate to tilt the scales of
justice to the labor class for no less than the Constitution dictates that “the State
. . . shall protect the rights of workers and promote their welfare.”
It is committed to this policy and has always been quick to rise to defense in the rights
of labor, as in this case. Protection to labor, it has been said, extends to all of
labor—local and overseas, organized and unorganized, in the public and private
sectors. Besides, there is no reason not to apply this principle in favor of workers in the
government. The government, including government-owned and controlled
corporations, as employers, should set the example in upholding the rights and interests
of the working class.

Philippine Association of Service Exporters, Inc. v. Drilon, G.R. No. 81958, June 30,
1988

Facts:

Petitioner, Philippine Association of Service Exporters, Inc. (PASEI), a firm "engaged

principally in the recruitment of Filipino workers, male and female, for overseas
placement," challenges the constitutional validity of Department Order No. 1, Series of
1988, of the Department of Labor and Employment: "GUIDELINES GOVERNING THE
TEMPORARY SUSPENSION OF DEPLOYMENT OF FILIPINO DOMESTIC AND
HOUSEHOLD WORKERS.”

Specifically, the measure is assailed for "discrimination against males or females"

because it "does not apply to all Filipino workers but only to domestic helpers and
females with similar skills" and that it is violative of the right to travel. It is held likewise
to be an invalid exercise of the lawmaking power, police power being legislative, and not
executive, in character.

Issue: WON the Department Order violates the State’s duty under Article 3 of the Labor
Code to “Protection to Labor” – No

Ruling & Ratio:

No, it does not violate “Protection to Labor” because “Protection to Labor” does not
signify the promotion of employment alone.

The Constitutional guaranty of worker participation in policy and decision-making

processes affecting their rights and benefits must be submitted to the demands and
necessities of the State's power of regulation.
"Protection to labor" does not signify the promotion of employment alone. What
concerns the Constitution more paramountly is that such an employment be above all,
decent, just, and humane. The Government is duty-bound to insure that our toiling
expatriates have adequate protection, personally and economically, while away
from home.

In this case, the Government has evidence of the lack or inadequacy of such protection,
and as part of its duty, it has precisely ordered an indefinite ban on deployment.

Fuji Television Network, Inc. v. Espiritu, G.R. Nos. 204944-45, December 3, 2014

Note: Topic is not the issue in this case but used only to support the ruling on the issue.
Read GMA v. Pabriga first before this one.

Doctrines related to the topic: Contracts of employment are different and have a
higher level of regulation because they are impressed with public interest. Article XIII,
Section 3 of the 1987 Constitution provides full protection to labor.

The level of protection to labor should vary from case to case; otherwise, the state might
appear to be too paternalistic in affording protection to labor.

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.

Facts:

In 2005, Arlene S. Espiritu was engaged by Fuji Television Network, Inc. as a news
correspondent/producer. 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.

In January 2009, Arlene was diagnosed with lung cancer. She informed Fuji about her
condition. Although Arlene insisted that she was “still fit to work as certified by her
attending physician,” Arlene and Fuji signed a non-renewal contract where it was
stipulated that her contract would no longer be renewed after its expiration on May 31,
2009. Arlene affixed her signature on the non-renewal contract with the initials “U.P.” for
“under protest.”

Arlene filed a complaint for illegal dismissal and attorney’s fees with the NCR Arbitration
Branch of the NLRC. She alleged that she was forced to sign the non-renewal contract
because Fuji withheld her salaries and other benefits. It was only upon signing that she
was given her salaries and bonuses, in addition to separation pay equivalent to four
years.

The Labor Arbiter dismissed the complaint for illegal dismissal and held that Arlene was
not Fuji’s employee but an independent contractor. The NLRC reversed and held that
Arlene was a regular employee.

On appeal, the CA basically affirmed the NLRC decision finding that Arlene was a
regular employee and, having been illegally dismissed, she is entitled to reinstatement,
backwages, damages and attorney's fees. The CA held that the successive renewals of
her fixed-term contract resulted in regular employment.

Issue: WON Arlene was a regular employee with a fixed term contract – Yes

Ruling & Ratio:

Yes, Arlene was a regular employee with a fixed term contract.

The test for determining regular employment is whether there is a reasonable

connection between the employee’s activities and the usual business of the employer.
Article 280 provides that the nature of work must be “necessary or desirable in the usual
business or trade of the employer” as the test for determining regular employment.

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.

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.

Arlene’s contract indicating a fixed term did not automatically mean that she could never
be a regular employee. This is precisely what Article 280 seeks to avoid. The ruling in
Brent remains as the exception rather than the general rule.
Further, an employee can be a regular employee with a fixed-term contract.

The law does not preclude the possibility that a regular employee may opt to have a
fixed-term contract for valid reasons. This was recognized in Brent: 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.

Arlene was a regular employee with a fixed term contract.

GMA Network, Inc. v. Pabriga, G.R. No. 176419, November 27, 2013

Note: Same as above case, topic is not the issue in this case but used only to support
the ruling on the issue.

Facts:

Private respondents were engaged as Television technicians by Petitioner GMA. Their

duties include manning of the technical operation center, acting as transmitter, acting as
maintenance staff, and acting as cameramen.

On July 19, 1999, private respondents filed a complaint before the NLRC against GMA
for miserable working conditions. After GMA received the notice for hearing, the
engineering manager of GMA, Villacastin, confronted the private respondents.

Sometime later, private respondents were summoned to the office of GMA's area
manager, Susan Alino. They were made to explain why they filed the complaint. The
day after, private respondents were barred from going to work.

Through counsel, private respondents wrote to Alino requesting they be allowed to

return to work. It was the head of Personnel and Labor relations, Bienvenido Bustria
who replied admitting the non-payment of benefits but no mention of the request to
return to work.

Private respondents then filed an amended complaint raising the issues of Unfair labor
practice, illegal dismissal, and damages and Atty’s fees.

A mandatory conference was set but there was no amicable settlement. The parties
were ordered to file their position papers. The LA dismissed the case for illegal
dismissal and unfair labor practice but upheld the private respondents’ entitlement to
13th month pay.

The NLRC reversed the LA decision. GMA brought the case to the CA but the CA
denied the case for lack of merit.
Issue: WON the private respondents are regular employees – Regular

Ruling & Ratio:

Yes, they are regular employees.

The SC finds it unjustifiable to allow petitioners to hire and rehire workers on fixed
terms, depending upon its needs, never attaining regular employment status.

Plainly, respondents cannot be considered to be on equal footing as

petitioner-corporation in the negotiation of their employment contract. The Brent
doctrine is not applicable in this case.

(Note: See explanation below to understand Brent Doctrine)

Brent Doctrine

Criteria:
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.

If any of this is present, Brent doctrine will apply, the fixed-term employment is valid.

However, the Brent doctrine is 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.
(Note: Level of Protection to Labor only mentioned here)

Regala v. Manila Hotel Corporation, G.R. No. 204684, October 5, 2020

Note: Same as above case, topic is not the issue in this case but used only to support
the ruling on the issue.

Facts:

Regala was hired by MHC sometime in February 2006 as one of its waiters. He was
later assigned as cook helper during the period from October 18, 2004 to June 26,
2006. In the course of his employment as waiter/cook helper, Regala worked for six (6)
days every week, and was paid a daily salary of P382.00 until sometime in December
2009. MHC also remitted contributions in Regala's behalf to the Social Security System
(SSS) and Philippine Health Insurance Corporation (PhilHealth).

From October 2008 to May 2009, Regala was made to attend and participate in hotel
trainings for Basic Food Safety Strategies, Food Safety Awareness, and Customer
Service Awareness.

Regala alleged that he was not recognized as a regular rank-and-file employee despite
having rendered services to MHC for several years.
Regala also claimed that MHC constructively dismissed him from employment when it
allegedly reduced his regular work days to two (2) days from the normal five (5)-day
work week starting December 2, 2009, which resulted in the diminution of his take home
salary.

On the other hand, Manila Hotel Corporation denied Regala as its regular employee.
and claimed that he is a mere freelance or "extra waiter" engaged by MHC on a short
term basis. It explained that it employs extra waiters at fixed and/or determinable
periods particularly when there are temporary spikes in the volume of its business. It is
during these specific periods when management is forced to supplement the hotel's
regular staff of waiters with temporary fixed-term employees, such as Regala, in order to
meet increases in business activities in its food and beverage functions, special events
and banquets. In engaging extra or temporary waiters, MHC relies on loose referrals
from its employees and on a list of waiters who have expressed interest in part-time or
temporary engagements.

Issue: WON Regala is a regular employee – Regular

Ruling & Ratio:

Yes, Regala is a regular employee of MHC.

MHC has not categorically denied in its pleadings before the labor tribunals that Regala
was employed by it as early as February 2000. On this point, the records of the case
are bereft of evidence that Regala was duly informed of the nature and status of his
engagement with the hotel.

Notably, in the absence of a clear agreement or contract, whether written or otherwise,

which would clearly show that Regala was properly informed of his employment status
with MHC, Regala enjoys the presumption of regular employment in his favor.

In this case, Regala and the hotel were not on equal footing and the former had no
power to negotiate the same.

Applying Brent Doctrine, it is regular employment and not fixed-term employment.

3. Security of Tenure (Const., Art. XIII, S3; Labor Code, Arts. 3, 292(b) [277(b)], 294)

Distribution & Control Products, Inc. v. Santos, G.R. No. 212616, July 10, 2017

Facts:

Distribution & Control Products, Inc. is a corporation engaged in selling and distributing
electrical products and equipment with Vincent M. Tiamsic (Petitioner) as its president.
Jeffrey E. Santos (Respondent), on the other hand, was employed as the petitioner’s
company driver whose job included delivery of items purchased by customers, receipt
documentation, recording of previously purchased items, coordination with the company
warehouseman in accounting products.

Respondent has been working as the petitioner’s company driver since April 5, 2005.
On December 5, 2010, Respondent received a notice informing him that he was being
placed under preventive suspension for a period of 30 days beginning December 17,
2010. He was one of the employees suspected in the unlawful taking of circuit breakers
and electrical products of petitioners. A criminal complaint was filed against him
together with several persons for Qualified Theft. He inquired with the HR Department
of the company, but to no avail, he was never given an opportunity to explain his side
before his suspension. The same department did not give him any concrete explanation
as to why they had come up of the Respondent’s suspension. After the lapse of his
30-day suspension, he was no longer allowed to return to work without any justification
for such disallowance.
Thus, a complaint was filed by the Respondent before the NLRC for constructive illegal
dismissal. On January 30, 2012, the Labor Arbiter (LA) handling the case rendered a
decision in favor of the Respondent; finding him to be illegally terminated from his
employment. Petitioner was ordered to reinstate Respondent and payment of his
backwages. The LA ruled that the Petitioner failed to prove that the dismissal of the
respondent was valid and with just cause. Petitioner filed an appeal to the NLRC, but
the previous decision was only affirmed and modified that the reinstatement be replaced
with payment of separation pay. A Motion for Reconsideration was filed, but it was
denied.

Petitioner filed a petition for certiorari before the CA but it was likewise denied, and the
CA affirmed the previous decision rendered by the NLRC. Thus, this petition.

Issue: WON the dismissal is proper – No

Ruling & Ratio:

No, the dismissal is not proper.

Our constitution, statutes, and jurisprudence uniformly guarantee to every

employee or worker tenurial security. This means that an employer shall not dismiss
an employee except for a just or authorized cause only after due process is observed.
The Petitioner raised that the termination of the respondent was based on their loss of
trust and confidence and hiring him would be inimical to them.

Loss of trust and confidence is a just cause for dismissal under Art. 282 of the Labor
Code. However, the petitioner failed to satisfy the two conditions to properly invoke the
said ground.

The right of an employee to dismiss an employee on the ground of loss of trust and
confidence must not be exercised arbitrarily and without just cause. Unsupported by
sufficient proof, loss of confidence without basis and may not be successfully invoked
as a ground for dismissal as it is subject to abuse because of its subjective nature. It
must be founded on clearly established facts sufficient to warrant the employees
separation from work. Thus, the breach of trust or loss of confidence in this case not
borne by clearly established facts, dismissal on the said ground may not be invoked.

It is true that respondent may indeed be considered as one who occupies a position of
trust and confidence as he is one of those who were entrusted with the handling of a
significant amount or portion of petitioners' products for sale. However, records show
that petitioners failed to present substantial evidence to support their allegations that
respondent had, in any way, participated in the theft of the company's stolen items and
that after his preventive suspension he no longer reported for work. In other words,
petitioners were not able to establish the existence of an act justifying their alleged loss
of trust and confidence in the respondent.

Imasen Philippine Manufacturing Corporation v. Alcon, G.R. No. 194884, October 22,
2014

Facts:

Imasen Philippine Manufacturing Corporation (Imasen Corp.) is a domestic corporation

engaged in the manufacture of auto seat-recliners and slide-adjusters. It hired
Ramonchito Alcon and Joann Papa (Respondents) as manual welders in 2001.

Respondents reported for work on the night shift. At around 12:40 AM, Cyrus Altiche,
Imasen Corp’s security guard, went on patrol around the premises. When Altiche
reached the Press Area, he heard the sound of a running industrial fan. Intending to turn
it off, he followed the sound, which led him to the “Tool and Die” section.

At the “Tool and Die” section, Altiche saw respondents having sexual intercourse on the
floor using a carton as a mattress. Altiche reported this to Danilo Ogana, another
security guard.

Danila Ogana went to make a follow-up inspection and saw several employees,
including respondents, already leaving the area. He notices, however, that Alcon picked
up the carton that Altiche claimed was used as a mattress, and returned it where the
cartons were kept. Altiche then reported such to Imasen’s management.

Imasen informed the respondents of Altiche’s report and directed them to submit their
individual explanation. The respondents compied, claiming that they were merely
sleeping. They claimed that other employees were also near the area, making it
impossible to commit the act.

Imasen then conducted a formal hearing, with respondents present, on the

administrative charge against them. After two months, Imasen terminated the services
of respondents, finding them guilty of the act charged, considering it “gross misconduct
against the policies, rules and regulations”.
Respondents filed before the LA a complaint for illegal dismissal. LA dismissed the
complaint, finding the dismissal to be valid. LA gave weight to Altiche’s account, which
Ogana corroborated, over respondent’s mere denial.

NLRC affirmed the LA decision, declaring that Imasen substantially and convincingly
proved the dismissal is of just cause.

CA partially agreed with the labor tribunals’ ruling, but held that the repsondents’ act,
while provoked by “reckless passion in an inviting environment and time”, was not done
with wrongful intent or with grave/aggravated character. Hence, CA reduced the penalty
to a three month suspension, and ordered Imasen to reinstate respondents and pay
backwages.

Hence, this present petition. Imasen argues that the act of sexual intercourse inside
company premises during work hours is serious misconduct by whatever standard, as it
is an affront to its core values and high ethical work standards. Imasen points out that
CA, in prescribing a lower penalty, substituted its own judgment with Imasen’s own
legally protected management prerogatives. Also, Imasen argues that the award for
backwages would make respondents virtually GAIN from the infraction as they would be
paid 8 years of wages without rendering any service.

Respondents argue that the elements of serious misconduct that justifies an employee’s
dismissal are absent.

Issue: WON the respondents’ infraction amounts to a valid cause for dismissal – Yes

Ruling & Ratio:

Yes, respondent’s infraction amounts to a valid cause for dismissal.

Law and jurisprudence guarantee to every employee security of tenure. Courts

will not hesitate to strike down any invalid act of the employer to undermine
workers’ tenurial security, in accordance with social justice principles.

The law, however, does not authorize the oppression of the employer.
Constitutional and legal protection equally recognize the empoyer’s right and
prerogative to manage its operation according to reasonable standards and norms for
fair play.
Accordingly, an employer is free to regulate, according to his own judgement and
discretion, all aspects of employment, including hiring, working methods, processes,
working regulations, the discipline, dismissal of workers, etc. As a general proposition,
an employer has free reign over every aspect of its business, as long as the exercise of
management prerogative is done reasonably, in good faith, and in a manner not
otherwise intended to defeat or circumvent the rights of workers.

In this light, the Court’s task is to balance such conflicting rights of the respondent’s
security of tenure, and Imasen’s management prerogative.

Realda v. New Age Graphics, Inc., G.R. No. 192190, April 25, 2012

FACTS:
New Age Graphics Inc.(respondent) former machine operator Billy Realda (petitioner)
filed a petition for review under Rule 45 of the Rules of Court pertaining to the Court of
Appeals decision and resolution of the NLRC which found the petitioner illegally
dismissed.

During the petitioner’s tenure in the company, it was found that he had a number of
violations committed during the period such as; habitual tardiness, repeated
absenteesim, absence without leave, failure to observe the company’s work standards
and willful disobedience to a reasonable order from his employer (rendering of
overtime). Of which he failed to answer in memoranda issued to him.

Finally, upon issuance of warning to him regarding his AWOLs during the month of April
and May, instead of reporting to the company to deny or to refute the basis for
recommendation for dismissal, he absented himself from June 15 to July 15, 2004
which prompted the termination of his employment.

Petitioner was not accorded due process when respondent issued and served to the
former the written notice of dismissal dated June 15, 2004. A careful perusal of the
records will show that the notice issued by the employer gives the employee only 24
hours to answer and put up his defenses against the accusations laid upon him by the
company.

Undoubtedly, Graphics Inc. complied with the substantive requirements of due process
in effecting employee dismissal. However, the same cannot be said insofar as the
procedural requirements are concerned. Furthermore, there is no indication that
Graphics Inc. decided to terminate the petitioner’s employment after he ceased
reporting from work from the time he received the memorandum requiring him to explain
and subsequent to his failure to submit a written explanation. However, there is nothing
on record showing that Graphics, Inc. placed its decision to dismiss in writing and that a
copy thereof was sent to the petitioner.
ISSUES: Whether the Respondent complied with procedural requirements in
terminating the services of its employee.

RULING:

Nonetheless, while the CA finding that the petitioner is entitled to nominal damages as
his right to procedural due process was not respected despite the presence of just
causes for his dismissal is affirmed, this Court finds the CA to have erred in fixing the
amount that the Company is liable to pay. The CA should have taken cognizance of the
numerous cases decided by this Court where the amount of nominal damages was
fixed at P30,000.00 if the dismissal was for a just cause.

Wherefore, premises considered, the petition is DENIED. The Decision of the Court of
Appeals in CA-G.R. SP NO. 106928 is AFFIRMED with MODIFICATION in that
respondent New Age Graphics, Inc. is hereby ordered to pay petitioner Billy M. Realda
nominal damages in the amount of Thirty Thousand Pesos.

SO ORDERED.

Sagales v. Rustan’s Commercial Corporation, G.R. No. 166554, November 27, 2008

FACTS:

Julito Sagales (Petitioner) Chief Cook, a longtime and decorated employee of Rustan’s
Commercial Corporation (Respondent) is planning to retire after his 31 years of service
with the company. Before reaching his target date of retirement, he was caught by the
company security guard carrying a plastic bag filled with 1.3kg of squid heads
amounting to P50.00, upon initial investigation of the Senior Guard, the petitioner
claimed that he misplaced his receipt for the squid heads, and later was revealed that
he called the Branch Manager and apologized for the incident and begged that he
would just pay for the squid heads.

Petitioner was placed under preventive suspension and was informed that a formal
investigation by the Legal Department will be conducted. Respondent did not find merit
in the explanation of the petitioner and thus, petitioner was dismissed from service on
July 26, 2001.
Legal proceedings ensued and the petitioner filed a complaint for illegal dismissal.
Decisions came from the Labor Arbiter, NLRC and CA overturning and affirming each
decision. The nature of responsibility by the petitioner was highlighted and was put into
question whether he is in the rank and file position or in a supervisory role as to which
he will be in violation of trust and confidence.

ISSUES:

Did the Court of Appeals commit grave abuse of discretion amounting to lack of
Jurisdiction when it concluded that the Doctrine of Trust and Confidence applies against
the petitioner to justify his dismissal from employment for being contradictory to the
evidence on record and was the dismissal proper?

RULING:

Thus, in lieu of reinstatement, it but proper to award petitioner separation pay computed
at one-month salary for every year of service, a fraction of at least six (6) months
considered as one whole year. In the computation of separation pay, the period where
backwages are awarded must be included.

WHEREFORE, the appealed Decision of the Court of Appeals is REVERSED and SET
ASIDE. The Decision of the National Labor Relations Commission is REINSTATED with
the MODIFICATION that petitioner is granted separation pay and backwages in lieu of
reinstatement.

SO ORDERED.
4. Due Process (Const., Art. III, S1; Labor Code, 292(b) [277], 294 [279], 296 [281], 297
[282], 298 [283], 299 [284] & 300 [285]; DO 147-15)

Sagales v. Rustan’s Commercial Corporation, G.R. No. 166554, November 27, 2008

FACTS:

Julito Sagales (Petitioner) Chief Cook, a longtime and decorated employee of Rustan’s
Commercial Corporation (Respondent) is planning to retire after his 31 years of service
with the company. Before reaching his target date of retirement, he was caught by the
company security guard carrying a plastic bag filled with 1.3kg of squid heads
amounting to P50.00, upon initial investigation of the Senior Guard, the petitioner
claimed that he misplaced his receipt for the squid heads, and later was revealed that
he called the Branch Manager and apologized for the incident and begged that he
would just pay for the squid heads.

Petitioner was placed under preventive suspension and was informed that a formal
investigation by the Legal Department will be conducted. Respondent did not find merit
in the explanation of the petitioner and thus, petitioner was dismissed from service on
July 26, 2001.

Legal proceedings ensued and the petitioner filed a complaint for illegal dismissal.
Decisions came from the Labor Arbiter, NLRC and CA overturning and affirming each
decision. The nature of responsibility by the petitioner was highlighted and was put into
question whether he is in the rank and file position or in a supervisory role as to which
he will be in violation of trust and confidence.

ISSUES:

Did the Court of Appeals commit grave abuse of discretion amounting to lack of
Jurisdiction when it concluded that the Doctrine of Trust and Confidence applies against
the petitioner to justify his dismissal from employment for being contradictory to the
evidence on record and was the dismissal proper?

RULING:
Thus, in lieu of reinstatement, it but proper to award petitioner separation pay computed
at one-month salary for every year of service, a fraction of at least six (6) months
considered as one whole year. In the computation of separation pay, the period where
backwages are awarded must be included.

WHEREFORE, the appealed Decision of the Court of Appeals is REVERSED and SET
ASIDE. The Decision of the National Labor Relations Commission is REINSTATED with
the MODIFICATION that petitioner is granted separation pay and backwages in lieu of
reinstatement.

SO ORDERED.

Agabon v. NLRC, G.R. No. 158693, November 17, 2004

FACTS:

Jenny and Virgilio Agabon (petitioners), gypsum board and cornice installers at the
Riviera Home Improvements Inc. (respondents) was dismissed for abandonment of
work. Petitioners then filed a complaint for illegal dismissal and payment for money
claims and on December 28, 1999, the Labor Arbiter rendered a decision declaring the
dismissals illegal and ordered private respondent to pay monetary claims.

On appeal, the NLRC reversed the Labor Arbiter because it found that the petitioners
had abandoned their work and began to do subcontracting for another company.
Petitioners assert that they were dismissed because the private respondent refused to
give them assignments unless they agreed to work on a pakyawan basis when they
reported for duty on February 23, 1999. They did not agree on this arrangement
because it would mean losing benefits as SSS members. Petitioners also claimed that
private respondent did not comply with the twin requirements of notice and hearing.

The dismissal should be upheld because it was established that the petitioners
abandoned their jobs to work for another company. Private respondent, however, did
not follow the notice requirements and instead argued that sending notices to the last
known addresses would have been useless because they did not reside there anymore.
Unfortunately for the private respondent, this is not a valid excuse because the law
mandates the twin notice requirements to the employee’s last known address. Thus, it
should be held liable for non-compliance with the procedural requirements of due
process.
The rule thus evolved: where the employer had a valid reason to dismiss an employee
but did not follow the due process requirement, the dismissal may be upheld but the
employer will be penalized to pay an indemnity to the employee. This became known as
the Wenphil or Belated Due Process Rule.

ISSUES: Whether the petitioners were illegally dismissed

RULING:

WHEREFORE, in view of the foregoing, the petition is DENIED. The decision of the
Court of Appeals dated January 23, 2003, in CA-G.R. No. 63017, finding that petitioners
Jenny and Virgilio Agabon abandoned their work, and ordering private respondent to
pay each of the petitioners holiday pay for four regular holidays from 1996 to 1998, in
the amount of P6,520, service incentive leave pay for the same period in the amount of
P3,255.00 and the balance of Virgilio Agabon’s thirteenth month pay for 1998 in the
amount of P2,150.00 is AFFIRMED with the MODIFICATION that private respondent
Riviera Home Improvements, Inc. is further ORDERED to pay each of the petitioners
the amount of P30,000 as nominal damages for non-compliance with statutory due
process.

No costs.

SO ORDERED.

Jaka Food Processing Corporation v. Pacot, G.R. No. 151

FACTS:
On August 29, 1997, the employment of namely: Darwin Pacot, Robert Parohinog,
David Bisnar, Marlon Domingo, Rhoel Lescano and Jonathan Cagabcab (Respondents)
was terminated by Jaka Food Processing Corporation (Petitioners) because the
petitioner was in dire financial straits. It is not disputed, however, that the termination
was effected without Jaka complying with the requirement under Article 283 of the
Labor Code regarding the service of a written notice upon the employees and the
Department of Labor and Employment at least one (1) month before the intended date
of termination.

The Labor Arbiter rendered a decision declaring the termination illegal and ordering
JAKA and its HRD Manager to reinstate respondents with full backwages, and
separation pay if reinstatement is not possible.

JAKA went on to appeal to the NLRC, which, in a decision dated August 30, 1999,
affirmed in toto that of the Labor Arbiter. JAKA filed for a motion for reconsideration. The
NLRC came out with another decision, modifying and setting aside the awards of
backwages, service incentive leave pay.

ISSUES: Was the dismissal of the employees legal and did the respondents complied
with due process

RULING:

WHEREFORE, the instant petition is GRANTED. Accordingly, the assailed decision and
resolution of the Court of Appeals respectively dated November 16, 2001, and January
8, 2002 are hereby SET ASIDE and a new one entered upholding the legality of the
dismissal but ordering petitioner to pay each of the respondents the amount of P50,000,
representing nominal damages for non-compliance with statutory due process.

SO ORDERED.
Deoferio v. Intel Technology Philippines, Inc., G.R. No. 202996, June 18, 2014

FACTS:

Marlo Deoferio (Petitioner) was employed by Intel Technology Philippines, Inc.

(Respondents) as a product quality and reliability engineer. In July 2001, he was
assigned the the United States as a validation engineer for an agreed period of two
years. 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.

Deoferio underwent a series of medical and psychiatric treatment at Intel’s expense

after his confinement in the United States. In 2002, he was ultimately diagnosed with
schizophrenia. He was later given a psychiatric report 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-workers.

Pursuant to these findings, Intel issued Deoferio a notice of termination on March 10,
2006. Petitioner then responded to his termination of employment by filing a complaint
for illegal dismissal with prayer for money claims against respondents Intel and Mike
Wentling. Arguing that he satisfactorily performed his duties as a product engineer, and
that Intel violated his statutory right to procedural due process when it summarily issued
a notice of termination.

In defense, the respondents argued that the petitioner’s dismissal was based on the
psychiatric report. And insisted that Deofrio’s presence at Intel’s premises would pose
an actual harm to his co-employees as shown by his previous acts. On January 18,
2005, he cut the mouse cables, stepped on the keyboards, and disarranged the desk of
his co-employees. It was also highlighted that Deoferio incurred numerous absences
from work due to his mental condition.

The respondents further asserted that the twin-notice requirement in dismissals does
not apply to terminations under Article 284 of the Labor Code.

ISSUES: Did the Company complied with the twin-notice requirement on due process

RULING:

Labor Arbitration ruled that Deoferio had been validly dismissed, giving weight to Dr.
Lee’s certification that petitioner had been suffering from schizophrenia and was not fit
for employment. The LA further held that the Labor Code and its IRR do not require the
employer to comply with the twin-notice requirement in dismissals due to disease. It was
also found unmeritorious the money claims against Intel. Upon petitioner’s appeal to
NLRC, the NLRC wholly affirmed LA’s ruling, denying also petitioner’s motion for
reconsideration, prompting him to seek relief from the CA through a petition for
Certiorari.

The CA affirmed the decision of the NLRC, concurring also that the respondent was
justified in not paying Deoferio separation pay as required by Article 284 of the Labor
Code because this obligation had already been offset by the matured car loan that
Deoferio owed Intel.

The Court’s Ruling

We find the petition partly meritorious.
Intel had an authorized cause to dismiss Deoferio from employment.

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 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.

Deoferio is entitled to nominal damages for violation of his right to statutory procedural
due process.

With respect to Article 284 of the Labor Code, terminations due to disease do not entail
any wrongdoing on the part of the employee. It also does not purely involve the
employer’s will;ful and voluntary exercise of management prerogative, a function
associated with the employer’s inherent right to control and effectively manage its
enterprise. Rather, terminations due to disease are occasioned by matters generally
beyond the worker and the employer’s control.

WHEREFORE, premises considered, we partially grant the petition; the assailed

February 24, 2012 decision and the August 2, 2012 resolution of the Court of Appeals
stand but respondent Intel Technology Philippines, Inc. is ordered to pay petitioner
Marlo A. Deoferio nominal damages in the amount of P30,000.00. We totally deny the
petition with respect to respondent Mike Wentling.

SO ORDERED.
Abbott Laboratories, Philippines v. Alcaraz, G.R. No. 192571, July 23, 2013

FACTS:

Abbott (Petitioner) employed Alcaraz (respondent) as Regulatory Affairs Manager.

Respondent then received an employment contract which stated that she was to be
placed on probation for a period of six (6) months. During her tenure, Hospira ALSU will
spin off from Abbott and was officially known as Hospira, Philippines. In the interim,
Hospira ALSU operations will still be under Abbott’s management, excluding the
technical aspects of the operations which is under the control and supervision of Walsh.
For this purpose, all those involved in Hospira ALSU are required to use two
identification cards both to identify them as employees of Abbott and Hospira.

On March 3, 2005, Abbott’s HR Director sent respondent an e-mail which contained an

explanation of the procedure for evaluating the performance of probationary employees
and further indicated that Abbott had only one evaluation system for all of its
employees. Abbott’s PPSE procedure mandates that the job performance of a
probationary employee should be formally reviewed and discussed with the employee at
least twice: first on the third month and second on the fifth month from the date of
employment.

The necessary Performance Improvement Plan should also be made during the
third-month review in case of a gap between the employee’s performance and the
standards set. These performance standards should be discussed in detail with the
employee within the first two (2) weeks on the job. It was equally required that a signed
copy of the PPSE form must be submitted to Abbott’s Human Resources Department
(HRD) and shall serve as documentation of the employee’s performance during his/her
probationary period. This shall form the basis for recommending the confirmation or
termination of the probationary employment.

During the course of her employment, Alcaraz noticed that some of the staff had
disciplinary problems. Thus, she would reprimand them for their unprofessional
behavior such as non-observance of the dress code, moonlighting, and disrespect of
Abbott officers. However, Alcaraz’s method of management was considered by Walsh to
be "too strict." Alcaraz approached Misa to discuss these concerns and was told to "lie
low" and let Walsh handle the matter. Misa even assured her that Abbott’s HRD would
support her in all her management decisions.

On April 2005, petitioner accidentally saw a printed copy of Walsh’s query regarding her
job performance. On May 2005, respondent was called to a meeting with Walsh and
Terrible where she was informed that she failed to meet the regularization standards for
the position of Regulatory Affairs Manager. Respondent was requested to tender her
resignation, else they be forced to terminate her services. She was also told that,
regardless of her choice, she should no longer report for work and was asked to
surrender her office identification cards.

ISSUES: Did the Company failed to inform the employee of their regularization
standards and was the dismissal in compliance with due process

RULING:

The Labor Arbiter ruling rejected the respondent’s argument that she was not informed
of the reasonable standards to qualify as a regular employee considering her admission
that she was briefed during her pre-employment orientation meeting. The LA found that
there was no evidence to conclude that Abbott’s officers and employees acted in bad
faith in terminating Alcaraz’s employment.

The NLRC Ruling, annulling and setting aside the LA’s ruling, finding Abbott having
committed illegal dismissal and ordering Abbott to immediately reinstate complainant to
her former position without loss of seniority rights and to pay backwages, moral
damages, and exemplary damages.

The CA Ruling affirmed the ruling of the NLRC and held that the latter did not commit
any grave abuse of disrection in finding that Alcaraz was illegally dismissed.

The Court’s Ruling. Considering the totality of the above-stated circumstances, it

cannot, therefore, be doubted that Alcaraz was well-aware that her regularization would
depend on her ability and capacity to fulfill the requirements of her position as
Regulatory Affairs Manager and that her failure to perform such would give Abbott a
valid cause to terminate her probationary employment.

Verily, basic knowledge and common sense dictate that the adequate performance of
one’s duties is, by and of itself, an inherent and implied standard for a probationary
employee to be regularized; such is a regularization standard which need not be literally
spelled out or mapped into technical indicators in every case. In this regard, it must be
observed that the assessment of adequate duty performance is in the nature of a
management prerogative which when reasonably exercised – as Abbott did in this case
– should be respected. This is especially true of a managerial employee like Alcaraz
who was tasked with the vital responsibility of handling the personnel and important
matters of her department.
In fine, the Court rules that Alcaraz’s status as a probationary employee and her
consequent dismissal must stand. Consequently, in holding that Alcaraz was illegally
dismissed due to her status as a regular and not a probationary employee, the Court
finds that the NLRC committed a grave abuse of discretion.

WHEREFORE, the petition is GRANTED. The Decision dated December 10, 2009 and
Resolution dated June 9, 2010 of the Court of Appeals in CA-G.R. SP No. 101045 are
hereby REVERSED and SET ASIDE. Accordingly, the Decision dated March 30, 2006
of the Labor Arbiter is REINSTATED with the MODIFICATION that petitioner Abbott
Laboratories, Philippines be ORDERED to pay respondent Pearlie Ann Alcaraz nominal
damages in the amount of P30,000.00 on account of its breach of its own company
procedure.

SO ORDERED.

5. Equal Protection (Const., Art. II, S14 & 18, Art. III, S1, Art. XIII, S3)

Pampanga Bus, Co. v. Pambusco Employees Union, Inc., 68 Phil. 541 (1939)

FACTS:

On May 31, 1939, the Court of Industrial Relations issued an order, directing the
petitioner herein, Pampanga Bus Company, Inc., to recruit from the respondent,
Pambusco Employees' Union, Inc., new employees or laborers it may need to replace
members of the union who may be dismissed from the service of the company, with the
proviso that, if the union fails to provide employees possessing the necessary
qualifications, the company may employ any other persons it may desire. This order, in
substance and in effect, compels the company, against its will, to employ preferentially,
in its service, the members of the union.

ISSUE:

Whether or not the right of the employer to select its employees was violated.

HELD:

Yes. The Supreme Court hold that the Court of Industrial Relations has no authority to
issue such compulsory order. The general right to make a contract in relation to one's
business is an essential part of the liberty of the citizens protected by the due-process
clause of the Constitution. The right of the laborer to sell his labor to such person as he
may choose is, in its essence, the same as the right of an employer to purchase labor
from any person whom it chooses. The employer and the employee have thus an
equality of right guaranteed by the Constitution. "If the employer can compel the
employee to work against the latter's will, this is servitude. If the employee can compel
the employer to give him work against the employer's will, this is oppression." (Mills vs.
United States Printing Co., 99 App. Div., 605; 91 N.Y.S., 185, 189-192.)

Section of Commonwealth Act No. 213 confers upon labor organizations the right "to
collective bargaining with employers for the purpose of seeking better working and living
conditions, fair wages, and shorter working hours for laborers, and, in general, to
promote the material, social and moral well-being of their members." The term
"collective bargaining" denotes, in common usage as well as in legal terminology,
negotiations looking toward a collective agreement. This provision in granting to labor
unions merely the right of collective bargaining, impliedly recognizes the employer's
liberty to enter or not into collective agreements with them. Indeed, we know of no
provision of the law compelling such agreements. Such a fundamental curtailment of
freedom, if ever intended by law upon grounds of public policy, should be effected in a
manner that is beyond all possibility of doubt. The supreme mandates of the
Constitution should not be loosely brushed aside. As held by the Supreme Court of the
United States in Hitchman Coal & Co. vs. Mitchell (245 U. S., 229; 62 Law. ed., 260,
276):

. . . Whatever may be the advantages of "collective bargaining," it is not bargaining at

all, in any just sense, unless it is voluntary on both sides. The same liberty which
enables men to form unions, and through the union to enter into agreements with
employers willing to agree, entitles other men to remain independent of the union, and
other employers to agree with them to employ no man who owes any allegiance or
obligation to the union. In the latter case, as in the former, the parties are entitled to be
protected by the law in the enjoyment of the benefits of any unlawful agreements they
make. This court repeatedly has held that the employer is as free to make
non-membership in a union a condition or employment, as the working man is free to
join the union, and that this is a part of the constitutional rights of personal liberty and
private property, not to be taken away by legislation, unless through some proper
exercise of the paramount police power.

Thus considered, the order appealed from was reversed, with costs against the
respondent Pambusco Employees' Union, Inc.

JMM Promotion and Management, Inc. v. CA, G.R. No. 120095, August 5, 1996

FACTS:

Due to the death of one Maricris Sioson in 1991, President Aquino banned the
deployment of performing artists to Japan and other destinations. This was relaxed
however with the introduction of the Entertainment Industry Advisory Council which later
proposed a plan to POEA to screen and train performing artists seeking to go abroad.

The Federation of Entertainment Talent Managers of the Philippines (FETMOP for

brevity) filed a class suit on January 27, 1995 assailing Department Order No. 3, which
establishes various procedures and requirements for screening performing artists under
a new system of training, testing, certification and deployment. FETMOP contended that
the said orders,

1.) violated the constitutional right to travel;

2.) abridged existing contracts for employment; and

 3.) deprived individual artists of their licenses without due process of law.

FETMOP also averred that the issuance of the Artist Record Book (ARB) was
discriminatory and illegal and in gross violation of the constitutional right to life liberty
and property. FETMOP prayed for the issuance of the writ of preliminary injunction
against the orders.

JMM Promotion and Management, Inc. (JMM for brevity) and Kary International, Inc.
(Kary for brevity) filed a motion for intervention in the civil case which was granted by
the trial court on February 15, 1995. However, on February 21, 1995, the trial court
issued an order denying petitioner’s prayer for writ of preliminary injunction and
dismissed the compliant. An appeal was made to the trial court regarding its decision
but it was also however, dismissed. As a consequences, ARB requirement was issued.
The Court of Appeals upheld the trial court’s decision and concluded that the said
issuance constituted a valid exercise of Police power.

ISSUE:

WON the assailed department issuances constituted a valid exercise by the state of the
police power

RULING:

The latin maxim salus populi est suprema lex embodies the character of the entire
spectrum of public laws aimed at promoting the general welfare of the people under the
State’s police power. As an inherent attribute of sovereignty which virtually “extends to
all public needs,” this “least limitable” of governmental powers grants a wide panoply of
instruments through which the state, as parens patriae gives effect to a host of its
regulatory powers. Describing the nature and scope of the police power, Justice
Malcolm, in the early case of Rubi v. Provincial Board of Mindoro (89 Phil. 660, 708,
[1919]) wrote: “The police power of the State,” one court has said . . . ‘is a power
coexistensive with self-protection, and is not inaptly termed ‘the law of overruling
necessity.’ It may be said to be that inherent and plenary power in the state which
enables it to prohibit all things hurtful to the comfort, safety and welfare of society.”
Carried onward by the current of legislature. The judiciary rarely attempts to dam the
onrushing power of legislative discretion, provided the purposes of the law do not go
beyond the great principles that mean security for the public welfare or do not arbitrarily
interfere with the right of the individual.”

Thus, police power concerns government enactments which precisely interfere with
personal liberty or property in order to promote the general welfare or the common
good. As the assailed Department Order enjoys a presumed validity, it follows that the
burden rests upon petitioners to demonstrate that the said order, particularly, its ARB
requirement, does not enhance the public welfare or was exercised arbitrarily or
unreasonably.

A thorough review of the facts and circumstances leading to the issuance of the
assailed orders compels us to rule that the Artist Record Book requirement and the
questioned Department Order related to its issuance were issued by the Secretary of
Labor pursuant to a valid exercise of the police power.

OTHER DOCTRINES:

THE PROPER REGULATION OF A PROFESSION, CALLING, BUSINESS OR TRADE

IS A VALID EXERCISE THEREOF. — Nevertheless, no right is absolute, and the proper
regulation of a profession, calling business or trade has always been upheld as a
legitimate subject of a valid exercise of the police power by the state particularly when
their conduct affects either the execution of legitimate governmental functions, the
preservation of the State, the public health and welfare and public morals. According to
the maxim, sic utere tuo ut alienum non laedas, it must of course be within the
legitimate range of legislative action to define the mode and manner in which every one
may so use his own property so as not to pose injury to himself or others.

WHERE THE LIBERTY CURTAILED AFFECTS AT MOST THE RIGHT TO PROPERTY,

THE PERMISSIBLE SCOPE OF REGULATORY MEASURES IS MUCH WIDER. — In
any case, where the liberty curtailed affects at most the rights of property, the
permissible scope of regulatory measures is certainly much wider. To pretend that
licensing or accreditation requirements violates the due process clause is to ignore the
settled practice, under the mantle of the police power, of regulating entry to the practice
of various trades or professions. Professionals leaving for abroad are required to pass
rigid written and practical exams before they are deemed fit to practice their trade.
Seamen are required to take tests determining their seamanship. Locally, the
Professional Regulation Commission has began to require previously licensed doctors
and other professionals to furnish documentary proof that they had either re-trained or
had undertaken continuing education courses as a requirement for renewal of their
licenses. It is not claimed that these requirements pose an unwarranted deprivation of a
property right under the due process clause. So long as professionals and other
workers meet reasonable regulatory standards no such deprivation exists.

CONSTITUTIONAL LAW; STATE POLICIES; THE STATE SHALL AFFORD FULL

PROTECTION TO LABOR; ELUCIDATED. — Protection to labor does not indicate
promotion of employment alone. Under the welfare and social justice provisions of the
Constitution, the promotion of full employment, while desirable, cannot take a backseat
to the government’s constitutional duty to provide mechanisms for the protection of our
work-force, local or overseas. As this Court explained in Philippine Association of
Service Exporters (PASEI) v. Drilon, in reference to the recurring problems faced by our
overseas workers: what concerns the Constitution more paramountly is that such an
employment be above all, decent, just, and humane. It is bad enough that the country
has to send its sons and daughters to strange lands because it cannot satisfy their
employment needs at home. Under these circumstances, the Government is
duty-bound to insure that our toiling expatriates have adequate protection, personally
and economically, while away from home. A profession, trade or calling is a property
right within the meaning of our constitutional guarantees. One cannot be deprived of the
right to work and the right to make a living because these rights are property rights, the
arbitrary and unwarranted deprivation of which normally constitutes an actionable
wrong.

BILL OF RIGHTS; NON-IMPAIRMENT OF OBLIGATIONS OF CONTRACTS; MUST

YIELD TO THE STATE’S POLICE POWER. — It is a futile gesture on the part of
petitioners to invoke the non-impairment clause of the Constitution to support their
argument that the government cannot enact the assailed regulatory measures because
they abridge the freedom to contract. In Philippine Association of Service Exporters, Inc.
vs. Drilon, we held that “(t)he non-impairment clause of the Constitution . . . must yield
to the loftier purposes targeted by the government.” Equally important, into every
contract is read provisions of existing law, and always, a reservation of the police power
for so long as the agreement deals with a subject impressed with the public welfare.

EQUAL PROTECTION CLAUSE; MERELY REQUIRES THAT ALL PERSONS BE

TREATED ALIKE UNDER LIKE CONDITIONS. — The equal protection clause is
directed principally against undue favor and individual or class privilege. It is not
intended to prohibit legislation which is limited to the object to which it is directed or by
the territory in which it is to operate. It does not require absolute equality, but merely
that all persons be treated alike under like conditions both as to privileges conferred and
liabilities imposed. We have held, time and again, that the equal protection clause of the
Constitution does not forbid classification for so long as such classification is based on
real and substantial differences having a reasonable relation to the subject of the
particular legislation. If classification is germane to the purpose of the law, concerns all
members of the class, and applies equally to present and future conditions, the
classification does not violate the equal protection guarantee.

Sameer Overseas Placement Agency, Inc. v. Cabiles, G.R. No. 170139, August 5, 2014

FACTS:

Respondent Joy Cabiles was hired by Wacoal Taiwan, Inc., through petitioner agency
Sameer Overseas Placement Agency as a cutter. Subsequently, Cabiles was informed
that her services are already terminated and that she must report to their head office for
her immediate repatriation. Because of this, Cabiles filed a complaint for illegal
dismissal against Sameer and Wacoal. The Labor Arbiter ruled in favor of Sameer and
held that there was no illegal dismissal that took place because the termination of the
services of Cabiles was for a just cause. It gave credence to the contention of Sameer
that Cabiles was terminated from service because of her inefficiency. On appeal, the
NLRC ruled in favor of Cabiles and held that she is illegally dismissed. The Court of
Appeals affirmed the ruling of NLRC. Hence, the current petition.
Sameer reiterates that there was just cause for termination because there was a finding
of Wacoal that respondent was inefficient in her work. Therefore, it claims that
respondent’s dismissal was valid.

ISSUE:

Whether or not respondent Cabiles was illegally dismissed.

RULING:

Yes. The Supreme Court affirmed the decision of the Court of Appeals and ruled that
the respondent was illegally dismissed. Sameer Overseas Placement Agency failed to
show that there was just cause for causing Joy’s dismissal. The employer, Wacoal, also
failed to accord her due process of law. Indeed, employers have the prerogative to
impose productivity and quality standards at work. They may also impose reasonable
rules to ensure that the employees comply with these standards. Failure to comply may
be a just cause for their dismissal. Certainly, employers cannot be compelled to retain
the services of an employee who is guilty of acts that are inimical to the interest of the
employer. While the law acknowledges the plight and vulnerability of workers, it does
not “authorize the oppression or self-destruction of the employer.” Management
prerogative is recognized in law and in our jurisprudence.

This prerogative, however, should not be abused. It is “tempered with the employee’s
right to security of tenure.” Workers are entitled to substantive and procedural due
process before termination. They may not be removed from employment without a valid
or just cause as determined by law and without going through the proper procedure.

Security of tenure for labor is guaranteed by our Constitution. Employees are not
stripped of their security of tenure when they move to work in a different jurisdiction.
With respect to the rights of overseas Filipino workers, we follow the principle of lex loci
contractus. First, established is the rule that lex loci contractus (the law of the place
where the contract is made) governs in this jurisdiction. There is no question that the
contract of employment in this case was perfected here in the Philippines. Therefore,
the Labor Code, its implementing rules and regulations, and other laws affecting labor
apply in this case. Furthermore, settled is the rule that the courts of the forum will not
enforce any foreign claim obnoxious to the forum’s public policy. Herein the Philippines,
employment agreements are more than contractual in nature.

Sameer’s allegation that respondent was inefficient in her work and negligent in her
duties may, therefore, constitute a just cause for termination under Article 282(b), but
only if petitioner was able to prove it.

The burden of proving that there is just cause for termination is on the employer. “The
employer must affirmatively show rationally adequate evidence that the dismissal was
for a justifiable cause.” Failure to show that there was valid or just cause for termination
would necessarily mean that the dismissal was illegal.

To show that dismissal resulting from inefficiency in work is valid, it must be shown that:

1) the employer has set standards of conduct and workmanship against which
the employee will be judged;

2) the standards of conduct and workmanship must 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, Sameer merely alleged that Cabiles failed to comply with her foreign
employer’s work requirements and was inefficient in her work. No evidence was shown
to support such allegations. Sameer did not even bother to 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 Cabiles 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. The bare allegations of petitioner are not sufficient to support a claim that
there is just cause for termination. There is no proof that respondent was legally
terminated.

A valid dismissal requires both a valid cause and adherence to the valid procedure of
dismissal. The employer is required to give the charged employee at least two written
notices before termination. One of the written notices must inform the employee of the
particular acts that may cause his or her dismissal. The other notice must “[inform] the
employee of the employer’s decision.” Aside from the notice requirement, the employee
must also be given “an opportunity to be heard.”

Sameer failed to comply with the twin notices and hearing requirements.

Respondent started working on June 26, 1997. She was told that she was terminated
on July 14, 1997 effective on the same day and barely a month from her first workday.
She was also repatriated on the same day that she was informed of her termination.
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.

DOCTRINE:

The Sameer alleges that the respondent was not illegally dismissed. The Supreme
Court ruled that a valid dismissal requires both a valid cause and adherence to the valid
procedure of dismissal. The employer is required to give the charged employee at least
two written notices before termination. One of the written notices must inform the
employee of the particular acts that may cause his or her dismissal. The other notice
must “[inform] the employee of the employer’s decision.” Aside from the notice
requirement, the employee must also be given “an opportunity to be heard.

Yrasuegui v. Philippine Airlines, Inc., G.R. No. 168081, October 17, 2008

FACTS:
 Armando G. Yrasuegui, a former international flight steward of Philippine Airlines, Inc.
(PAL), was dismissed due to his failure to meet the company’s prescribed weight
standards. Despite repeated opportunities and advisories from PAL to manage his
weight, Yrasuegui was unable to comply, leading to his eventual termination.

Yrasuegui was advised as early as 1984 to address his weight concerns. Despite brief
periods of compliance, his weight problem persisted. PAL’s consistent efforts to
encourage Yrasuegui to meet the weight requirements included placing him on leave
without pay, issuing formal requests for weight loss, scheduling regular weight checks,
and even personal visits to assess his progress. Notwithstanding a series of directives
and extended periods intended to allow Yrasuegui to reach his ideal weight, he
remained significantly overweight. Yrasuegui’s subsequent failure to report for
scheduled weight checks further strained his standing with the company. After almost
five years of attempts to have Yrasuegui meet the weight standard, and his invariable
failure to do so, PAL terminated his employment in 1993.

A legal battle ensued, beginning with Yrasuegui filing a complaint for illegal dismissal
against PAL. The Labor Arbiter initially ruled in his favor, a decision partially modified by
the NLRC upon appeal. However, the Court of Appeals (CA) reversed these findings,
holding that Yrasuegui was legally dismissed due to his inability to comply with PAL’s
reasonable and lawful weight requirements.

ISSUES:

1. Whether the Court of Appeals erred in concluding Yrasuegui’s obesity as a valid

ground for dismissal under Article 282(e) of the Labor Code.
2. Applicability of the bona fide occupational qualification (BFOQ) defense on
Yrasuegui’s dismissal.
3. Whether the Court of Appeals erred in its assessment of discrimination against
Yrasuegui in the termination process.
4. The contention over claims for reinstatement wages being moot and academic.

RULING:
 1. Obesity as Ground for Dismissal: The Supreme Court affirmed the CA’s decision that
Yrasuegui’s failure to meet PAL’s weight standards constitutes a valid ground for
dismissal under Article 282(e) of the Labor Code. The Court clarified that PAL’s weight
standards serve as continuing qualifications for employment, adherence to which is
imperative for operational safety and efficiency.

2. BFOQ Defense: The Court recognized the BFOQ defense in Yrasuegui’s case,
highlighting the critical role of weight standards in ensuring flight safety. The necessity
for cabin crew to maintain specific weight standards stems from practical safety
considerations vital for emergency responses.

3. Allegations of Discrimination: The Court found no substantial evidence to support

Yrasuegui’s claim of discriminatory treatment by PAL in enforcing its weight standards
among the cabin crew. Without concrete evidence, Yrasuegui’s allegations were
deemed insufficient to establish discrimination.

4. Reinstatement and Wages: Yrasuegui’s claims for reinstatement and wages were
considered moot due to the legal validation of his dismissal. Moreover, the Court
highlighted that he failed to demonstrate compliance with PAL’s directive to return to
work, which affected his claims for back wages.

DOCTRINE:

Bona Fide Occupational Qualification (BFOQ): This case reiterates the principle that
employment standards, when reasonably applied to perform the job safely and
efficiently, are lawful even if they result in termination. Employers may set and enforce
legitimate, safety-oriented employment qualifications as BFOQs.

Class Notes:
Article 282 of the Labor Code: Provides grounds for lawful termination by the employer,
including “other causes analogous” to those explicitly listed.
BFOQ Defense: Justifies employment discrimination when it is reasonably necessary
for the business’s normal operation.

Evidence in Discrimination Claims: The burden of proving discrimination lies with the
claimant, requiring substantial evidence to support allegations.

Historical Background:
This case highlights the evolving understanding of employment standards within the
airline industry, particularly the balance between personal rights and operational safety
requirements. It underscores the judiciary’s role in adjudicating disputes where safety
concerns intersect with individual employment rights, reinforcing the principles of
reasonable employment qualifications and the necessity for evidence in discrimination
claims.

6. Equal Work Opportunities and No Discrimination Policy (Const., Art. XIII, S3; Labor
Code, Art. 3; RA 10911 [Anti-Age Discrimination in Employment Act]; RA 11166
[Philippine HIV and AIDS Policy Act]; RA 7277 [Magna Carta for Persons with
Disability], as amended; RA 11036 [Mental Health Act]; RA 9710 [The Magna Carta of
Women]; RAs 7432, 9257, 9994, 10645 [Expanded Senior Citizen Act of 2010])

Star Paper Corporation v. Simbol, G.R. No. 164774, April 12, 2006

FACTS:

Simbol was employed by the company and met a coemployee and they eventually had
a relationship and got married. Prior to the marriage, the manager advise the couple
that should they decide to get married, one of them should resign pursuant to a
company policy:
1) new applicant will not be allowed to be hired if he/she has a relative, up to 3rd degree
of consanguinity, already employed by the company.

2) if the two employees got married, one of them should resign to preserve the policy
stated first. Simbol resigned.

ISSUE:

Whether or not the policy of the employer banning spouse from working in the same
company, a valid exercise of management prerogative.

RULING:

No, it is not a valid exercise of management prerogative and violates the rights of
employees under the constitution. The case at bar involves Article 136 of the Labor
Code which provides “it shall be unlawful for an employer to require as a condition of
employment or continuation of employment that a woman employee shall not get
married, or to stipulate expressly or tacitly that upon getting married, a woman
employee shall be deemed resigned or separated , or to actually dismiss, discharge ,
discriminate or otherwise prejudice a woman employee merely by reason of her
marriage.” The company policy of Star Paper, to be upheld, must clearly establish the
requirement of reasonableness. In the case at bar, there was no reasonable business
necessity. Petitioners failed to show how the marriage of Simbol, then a Sheeting
Machine Operator, to Alma Dayrit, then an employee of the Repacking Section, could
be detrimental to its business operations. The questioned policy may not facially violate
Article 136 of the Labor Code but it creates a disproportionate effect and under the
disparate impact theory, the only way it could pass judicial scrutiny is a showing that it is
reasonable despite the discriminatory, albeit disproportionate, effect. Lastly, the absence
of a statute expressly prohibiting marital discrimination in our jurisdiction cannot benefit
the petitioners.
Yrasuegui v. Philippine Airlines, Inc., G.R. No. 168081, October 17, 2008

FACTS:

Armando G. Yrasuegui, a former international flight steward of Philippine Airlines, Inc.

(PAL), was dismissed due to his failure to meet the company’s prescribed weight
standards. Despite repeated opportunities and advisories from PAL to manage his
weight, Yrasuegui was unable to comply, leading to his eventual termination.

Yrasuegui was advised as early as 1984 to address his weight concerns. Despite brief
periods of compliance, his weight problem persisted. PAL’s consistent efforts to
encourage Yrasuegui to meet the weight requirements included placing him on leave
without pay, issuing formal requests for weight loss, scheduling regular weight checks,
and even personal visits to assess his progress. Notwithstanding a series of directives
and extended periods intended to allow Yrasuegui to reach his ideal weight, he
remained significantly overweight. Yrasuegui’s subsequent failure to report for
scheduled weight checks further strained his standing with the company. After almost
five years of attempts to have Yrasuegui meet the weight standard, and his invariable
failure to do so, PAL terminated his employment in 1993.

A legal battle ensued, beginning with Yrasuegui filing a complaint for illegal dismissal
against PAL. The Labor Arbiter initially ruled in his favor, a decision partially modified by
the NLRC upon appeal. However, the Court of Appeals (CA) reversed these findings,
holding that Yrasuegui was legally dismissed due to his inability to comply with PAL’s
reasonable and lawful weight requirements.

ISSUES:

1. Whether the Court of Appeals erred in concluding Yrasuegui’s obesity as a valid

ground for dismissal under Article 282(e) of the Labor Code.
2. Applicability of the bona fide occupational qualification (BFOQ) defense on
Yrasuegui’s dismissal.
3. Whether the Court of Appeals erred in its assessment of discrimination against
Yrasuegui in the termination process.
4. The contention over claims for reinstatement wages being moot and academic.

RULING:

1. Obesity as Ground for Dismissal: The Supreme Court affirmed the CA’s decision that
Yrasuegui’s failure to meet PAL’s weight standards constitutes a valid ground for
dismissal under Article 282(e) of the Labor Code. The Court clarified that PAL’s weight
standards serve as continuing qualifications for employment, adherence to which is
imperative for operational safety and efficiency.

2. BFOQ Defense: The Court recognized the BFOQ defense in Yrasuegui’s case,
highlighting the critical role of weight standards in ensuring flight safety. The necessity
for cabin crew to maintain specific weight standards stems from practical safety
considerations vital for emergency responses.

3. Allegations of Discrimination: The Court found no substantial evidence to support

Yrasuegui’s claim of discriminatory treatment by PAL in enforcing its weight standards
among the cabin crew. Without concrete evidence, Yrasuegui’s allegations were
deemed insufficient to establish discrimination.

4. Reinstatement and Wages: Yrasuegui’s claims for reinstatement and wages were
considered moot due to the legal validation of his dismissal. Moreover, the Court
highlighted that he failed to demonstrate compliance with PAL’s directive to return to
work, which affected his claims for back wages.

DOCTRINE:

Bona Fide Occupational Qualification (BFOQ): This case reiterates the principle that
employment standards, when reasonably applied to perform the job safely and
efficiently, are lawful even if they result in termination. Employers may set and enforce
legitimate, safety-oriented employment qualifications as BFOQs.

Class Notes:
Article 282 of the Labor Code: Provides grounds for lawful termination by the employer,
including “other causes analogous” to those explicitly listed.

BFOQ Defense: Justifies employment discrimination when it is reasonably necessary

for the business’s normal operation.

Evidence in Discrimination Claims: The burden of proving discrimination lies with the
claimant, requiring substantial evidence to support allegations.

Historical Background:
This case highlights the evolving understanding of employment standards within the
airline industry, particularly the balance between personal rights and operational safety
requirements. It underscores the judiciary’s role in adjudicating disputes where safety
concerns intersect with individual employment rights, reinforcing the principles of
reasonable employment qualifications and the necessity for evidence in discrimination
claims.

Capin-Cadizv.BrentHospitalandColleges,Inc.,G.R.No.187417,February24,2016

FACTS:

· Cadiz was the Human Resource Officer of Brent Hospital and Colleges,
Inc.

· Brent is an institution of the Episcopal Church in the Philippines.

· She was suspended from employment in 2006 on the grounds of

Unprofessionalism and Unethical Behavior resulting to Unwed Pregnancy.
 · The suspension will be lifted upon her marriage to her boyfriend.

· The Labor Tribunal ruled that there was just cause for her dismissal. She
was not entitled to reinstatement until the marriage, as well as to backwages and
vacation/sick leave pay. She could only receive her 13th month pay (April 12,
2007).

· Cadiz appealed to the National Labor Relations Commission (NLRC),

which affirmed the LA decision (December 10, 2007).

· The Court of Appeals also dismissed her petition due to technical defects
in the petition (July 22, 2008).

ISSUES:

Whether Cadiz’s premarital relations with her boyfriend and the resulting pregnancy

out of wedlock constitute immorality.

No. The foregoing circumstances do not readily equate to disgraceful and immoral
conduct. Brent’s Policy Manual and Employee’s Manual of Policies do not define what
constitutes immorality. As laid down in the case of Leus v. St. Scholastica’s College
Westgrove, a disgraceful conduct should be detrimental to conditions upon which
depend the existence and progress of human society. The fact that a particular act does
not conform to the traditional moral views of a certain sectarian institution is not
sufficient reason to qualify such act as immoral unless it, likewise, does not conform to
public and secular standards. More importantly, there must be substantial evidence to
establish that premarital sexual relations and pregnancy out of wedlock

DOCTRINE:

Equality of employment opportunities considering marriages

Provisions: Art. 136 of the Labor Code of the Philippines

Stipulation against marriage. It shall be unlawful for an employer to require as a
condition of employment or continuation of employment that a woman employee shall
not get married, or to stipulate expressly or tacitly that upon getting married, a woman
employee shall be deemed resigned or separated, or to actually dismiss, discharge,
discriminate or otherwise prejudice a woman employee merely by reason of her
marriage.

Republic Act No. 9710 (Magna Carta of Women)

protects women against discrimination in all matters relating to marriage and family
relations, including the right to choose freely a spouse and to enter into marriage only
with their free and full consent.

is considered disgraceful or immoral. The fact that Brent is a sectarian

institution does not automatically subject Cadiz to its religious standard
of morality.
1. Whether marriage can be a condition for reinstatement.
No. It is true that the doctrine of management prerogative gives an
employer the right to regulate, according to his own discretion and
judgment, all aspects of employment. However, there are statutory laws
that protect labor and promote equal opportunity in employment which
may contravene this prerogative. In consideration of Art. 136 of the
Labor Code and RA No. 9710, Brent’s condition is coercive, oppressive,
and discriminatory. Brent failed to prove that the said marriage is an
employment qualification that is reasonably related to the essential
operation of the job involved and that the absence of said condition will
result to Cadiz’ inability to properly perform the duties of the job. The
imposition of such condition deprives her of her freedom to choose her
status.

Notes (issue of backwage and separation pay computation):

 - Where reinstatement is no longer viable as an option, separation pay
should be awarded as an alternative and as a form of financial assistance. In
the computation of separation pay, the Court stresses that it should not go
beyond the date an employee was deemed to have been actually separated
from employment, or beyond the date when reinstatement was rendered
impossible. (P 36, 434.80)
- Cadiz is only entitled to limited backwages. It is computed from the time
of dismissal until the finality of the decision ordering separation pay. 62 The
Court notes that at the time of Cadiz's indefinite suspension from employment,
Leus was yet to be decided by the Court. Moreover, Brent was acting in good
faith and on its honest belief that Cadiz's pregnancy out of wedlock constituted
immorality. Thus, fairness and equity dictate that the award of backwages shall
only be equivalent to one (1) year or P109,304.40.
Ruling:

WHEREFORE, the petition is GRANTED. The Resolutions dated July 22, 2008
and February 24, 2009 of the Court of Appeals in CA-G.R. SP No. 02373-M1N are
REVERSED and SET ASIDE, and a NEW ONE ENTERED finding petitioner
Christine Joy Capin-Cadiz to have been dismissed without just cause.

Concurring Opinion (Jardeleza, J.):

The Constitution protects personal autonomy as part of the Due Process

Clause in the Bill of Rights. Indeed, the Bill of Rights cannot be invoked against
private employers. However, the values expressed in the Constitution cannot be
completely ignored in the just adjudication of labor cases. In ascertaining whether
an act is moral or immoral, a due consideration of constitutional values must be
made. In Christine Joy's case, her decision to continue her pregnancy outside of
wedlock is a constitutionally protected right. It is therefore not only moral, it is also
a constitutional value that this Court is duty bound to uphold.

National Federation of Labor Unions v. NLRC, G.R. No. 90739, October 3, 1991

Facts:

The case involves the National Federation of Labor Unions (NAFLU) and Florante
Ongbueco as petitioners, against the National Labor Relations Commission (NLRC) and
Union Ajinomoto, Inc. (Ajinomoto) as respondents. Florante Ongbueco, who served as
an Officer-in-Charge (OIC) and First Production Staff Engineer 1 at Ajinomoto, was
appointed as the company's Energy Manager in December 1983. This appointment
followed a directive from the Bureau of Energy Utilization (BEU) under B.P. 73, the
Omnibus Energy Conservation Law. Ongbueco's new role included responsibilities such
as designing and implementing energy conservation programs, organizing committees,
and submitting reports to the BEU. Despite these additional duties, Ajinomoto did not
grant Ongbueco a salary increase, arguing that his designation did not entail additional
responsibilities beyond what he was already performing. In 1986, Ongbueco filed a
complaint with the NLRC, claiming underpayment of salary from December 1983 and
seeking a salary increase commensurate with his new role. The Labor Arbiter ruled in
Ongbueco's favor, ordering Ajinomoto to adjust his salary. However, the NLRC's Fourth
Division affirmed this decision, which was subsequently reversed by the NLRC's
Second Division, leading to the dismissal of Ongbueco's complaint. Ongbueco then filed
a special civil action for certiorari, challenging the NLRC's decision.

Issue:

1. Is Florante Ongbueco entitled to a salary increase upon his appointment as

Energy Manager?
2. Does the Labor Arbiter have jurisdiction over Ongbueco's claim for a salary
increase?

Ruling:

1. The court ruled that Florante Ongbueco is not entitled to a salary increase upon
his appointment as Energy Manager.
2. The court affirmed that the Labor Arbiter has jurisdiction over money claims of
workers, including underpayment of wages.

Ratio:

The Supreme Court emphasized that labor laws do not authorize interference with an
employer's judgment in the conduct of its business, including decisions on hiring, firing,
promotion, and salary increases. These are considered management prerogatives
unless there is unlawful discrimination or a specific provision in the law. In Ongbueco's
case, there was no evidence of discrimination or legal provision mandating a salary
increase for his role as Energy Manager. The court noted that Ongbueco's appointment
was a lateral move rather than a promotion, as it did not elevate him to a managerial
position with additional powers and prerogatives. Even if it were considered a
promotion, a salary increase is not automatically warranted. The court cited previous
rulings, such as Millares vs. Subido and Dosch vs. NLRC, which clarified that
promotions do not necessarily entail salary increases.

Regarding jurisdiction, the court agreed that the Labor Arbiter and the NLRC have
jurisdiction over money claims exceeding P5,000, as stipulated in Article 217 of the
Labor Code. However, for these claims to be valid, they must be based on law or an
appropriate agreement. In Ongbueco's case, there was no legal basis or agreement
justifying his demand for a salary increase. The court also dismissed the argument that
B.P. 73's failure to specify a salary for the Energy Manager created an ambiguity that
should be resolved in favor of labor. The law's silence on salary matters left it to the
employer's discretion, consistent with existing jurisprudence. The court concluded that
there was no grave abuse of discretion by the NLRC in dismissing Ongbueco's
complaint.

Philippine Telegraph and Telephone Company v. NLRC, G.R. No. 118978, May 23, 1997

Facts:

In the case of Philippine Telegraph and Telephone Co. v. National Labor Relations
Commission (G.R. No. 118978), decided on May 23, 1997, the petitioner is the
Philippine Telegraph and Telephone Company (PT&T), and the respondents are the
National Labor Relations Commission (NLRC) and Grace de Guzman. Grace de
Guzman was initially hired by PT&T as a reliever for fixed periods in 1990 and 1991. On
September 2, 1991, she was employed as a probationary employee for 150 days.
During her employment, she concealed her marital status, indicating she was single
despite being married on May 26, 1991. PT&T had a policy against employing married
women, which led to her dismissal on January 29, 1992. De Guzman contested her
dismissal, filing a complaint for illegal dismissal and non-payment of cost of living
allowances (COLA) before the Regional Arbitration Branch of the NLRC in Baguio City.
The Labor Arbiter ruled in her favor, declaring her dismissal illegal and ordering her
reinstatement with back wages and COLA. PT&T appealed to the NLRC, which upheld
the Labor Arbiter's decision but imposed a three-month suspension on de Guzman for
dishonesty. PT&T's subsequent motion for reconsideration was denied, leading to this
special civil action.

Issue:

1. Was PT&T's policy of not accepting married women for employment

discriminatory and against public policy?
2. Was Grace de Guzman's dismissal justified on the grounds of dishonesty and
loss of confidence?
3. Did Grace de Guzman gain regular employment status at the time of her
dismissal?

Ruling:

1. Yes, PT&T's policy of not accepting married women for employment was
discriminatory and against public policy.
2. No, Grace de Guzman's dismissal was not justified on the grounds of dishonesty
and loss of confidence.
3. Yes, Grace de Guzman had gained regular employment status at the time of her
dismissal.

Ratio:

The Supreme Court ruled that PT&T's policy of not accepting married women for
employment violated Article 136 of the Labor Code, which prohibits discrimination
against women on the basis of marriage. This policy was also against good morals and
public policy, as it deprived women of the freedom to choose their marital status. The
Court emphasized that while employers have management prerogatives, these should
not be exercised in a manner that is discriminatory or contrary to law. The Court found
that de Guzman's concealment of her marital status was not willful or in bad faith but
was compelled by PT&T's illegal policy. The Court also noted that de Guzman had
gained regular employment status by the time of her dismissal, as she was about to
complete her probationary period. Therefore, her dismissal was illegal, and she was
entitled to reinstatement with full back wages, inclusive of allowances and other
benefits. However, the Court upheld the three-month suspension imposed by the NLRC
to sanction her act of dishonesty, albeit under compulsion.

International School Alliance of Educators v. Quisumbing, G.R. No. 128845, June 1,

2000

Facts:

The case involves the International School Alliance of Educators (ISAE) as the
petitioner and several respondents, including Hon. Leonardo A. Quisumbing, Secretary
of Labor and Employment, Hon. Cresenciano B. Trajano, Acting Secretary of Labor and
Employment, Dr. Brian Maccauley, Superintendent of International School-Manila, and
International School, Inc. The dispute arose from the salary disparity between foreign
and local hires at the International School, Inc., a domestic educational institution
established primarily for the dependents of foreign diplomatic personnel and other
temporary residents. The school classified its faculty into foreign-hires and local-hires,
with foreign-hires receiving certain benefits such as housing, transportation, shipping
costs, taxes, and home leave travel allowance, which were not accorded to local-hires.
Additionally, foreign-hires were paid a salary rate 25% higher than local-hires. The
school justified this difference based on two "significant economic disadvantages" faced
by foreign-hires: the "dislocation factor" and limited tenure. In June 1995, during
negotiations for a new collective bargaining agreement, ISAE contested the salary
disparity, leading to a deadlock. The Department of Labor and Employment (DOLE)
assumed jurisdiction over the dispute and issued an order in favor of the school. ISAE's
motion for reconsideration was denied, prompting the petition to the Supreme Court.

Issue:

1. Is the point-of-hire classification used by the International School, Inc. to justify

the salary disparity between foreign and local hires valid?
2. Should foreign-hires be included in the same bargaining unit as local-hires?

Ruling:

1. The Supreme Court ruled that the point-of-hire classification employed by the
International School, Inc. to justify the salary disparity between foreign and local
hires is invalid.
2. The Supreme Court agreed that foreign-hires should not be included in the same
bargaining unit as local-hires.

Ratio:

The Supreme Court found that the point-of-hire classification used by the International
School, Inc. to justify the salary disparity between foreign and local hires was
discriminatory and invalid. The Court emphasized that there is no reasonable distinction
between the services rendered by foreign-hires and local-hires. The practice of paying
higher salaries to foreign-hires contravenes public policy and violates the principle of
"equal pay for equal work," which is enshrined in both the Philippine Constitution and
international law. The Court noted that the dislocation factor and limited tenure of
foreign-hires are already compensated by additional benefits such as housing,
transportation, shipping costs, taxes, and home leave travel allowance, and should not
justify a higher salary rate.
Regarding the issue of whether foreign-hires should be included in the same bargaining
unit as local-hires, the Court agreed with the lower court's decision that they should not
be grouped together. The Court highlighted that foreign-hires have limited tenure and
receive certain benefits not granted to local-hires, which justifies their exclusion from the
same bargaining unit. The Court also noted that the collective bargaining history of the
school showed that these groups were always treated separately, and including
foreign-hires in the same bargaining unit as local-hires would not assure either group
the exercise of their respective collective bargaining rights.

The Supreme Court reversed and set aside the orders of the Secretary of Labor and
Employment insofar as they upheld the practice of the International School, Inc. of
according higher salaries to foreign-hires than local-hires.

MICTSI v. MICTSILU-FDLO, G.R.No.245918, November 29, 2022 (Inrelationtowage

distortion)

Facts:

The case involves Mindanao International Container Terminal Services, Inc. (MICTSI)
as the petitioner and the Mindanao International Container Terminal Services, Inc.
Labor-Union-Federation of Democratic Labor Organization (MICTSILU-FDLO) along
with several individual respondents, namely Jeffrey L. Chavez, Lourven E. Lucagbo,
Isagani L. Llanes, Jorge S. Salarda, Jerry M. Salentes, Rian C. Baniel, Lyle L. Cajoles,
Sylvester Tuareg V. Dagus, Allan A. Pablo, and Tommy S. Vacalares, represented by
their legal counsel and Federation President, Atty. Gregorio A. Pizarro. The dispute
arose from a Collective Bargaining Agreement (CBA) effective from March 20, 2015, to
March 20, 2020, which included provisions on promotion and salary rates. The
respondents, who were promoted to higher positions, claimed they should receive the
highest salary rate for their new positions, citing the principle of equal pay for equal
work. MICTSI argued that the promoted employees should receive the entry-level salary
for their new positions, with salary differences justified by factors such as length of
service, performance, and merit increases. The Accredited Voluntary Arbitrator (AVA)
dismissed the respondents' complaint, but the Court of Appeals (CA) reversed this
decision, ordering MICTSI to pay the salary differentials. MICTSI then appealed to the
Supreme Court.

Issue:

1. Did MICTSI violate the principle of equal pay for equal work by giving different
salaries to employees holding the same position?
2. Is the award of attorney's fees to the respondents justified?

Ruling:

1. The Supreme Court ruled that MICTSI did not violate the principle of equal pay
for equal work by giving different salaries to employees holding the same
position.
2. The award of attorney's fees to the respondents was not justified.

Ratio:

The Supreme Court found that the principle of equal pay for equal work allows for
exceptions based on reasonable factors such as length of service, performance, and
merit increases. The Court emphasized that wage distortion, as defined under Article
124 of the Labor Code, pertains to wage adjustments due to prescribed laws or wage
orders, which was not the case here. Instead, the differences in salaries were due to
MICTSI's management prerogative and valid classification criteria, including seniority
and performance incentives. The Court noted that the CBA did not explicitly require that
promoted employees receive the highest salary for their new positions, and it
recognized the employer's right to impose different salaries based on reasonable
factors. The Court also highlighted that the CBA provisions should be interpreted in
conjunction with each other, allowing for distinctions based on seniority and other
criteria. Consequently, the Supreme Court reinstated the AVA's decision dismissing the
respondents' complaint and set aside the CA's decision.

7. Right to Self-Organization and Collective Bargaining (Const., Art. III, S4 & 8, Art. IXB,
S2(1)(5), Art. XIII, S3; Universal Declaration of Human Rights, UN General Assembly,
December 10, 1948, Art. 23; Labor Code, Arts. 253 [243], 254 [244], 255 [245], 256
[245-A] & 257 [246]; PD 603 [The Child and Youth Welfare Code], Art. 111; RA 10911
[Anti-Age Discrimination in Employment Act of 2016], S5[c])

Samahan ng Manggagawa sa Hanjin Shipyard v. BLR, G.R. No. 211145, October 14,
2015

Facts:

The case "Samahan ng Manggagawa sa Hanjin Shipyard v. Bureau of Labor Relations"

revolves around the registration of a workers' association. On February 16, 2010,
Samahan ng Manggagawa sa Hanjin Shipyard (Samahan), represented by its President
Alfie Alipio, submitted an application for registration to the Department of Labor and
Employment (DOLE). The application included a list of officers and members,
signatures from a meeting held on February 7, 2010, and copies of their Constitution
and By-laws, indicating a total of 120 members. On February 26, 2010, DOLE Regional
Office No. 3 in Pampanga issued a certificate of registration to Samahan. However, on
March 15, 2010, Hanjin Heavy Industries and Construction Co., Ltd. Philippines (Hanjin)
filed a petition with DOLE-Pampanga to cancel Samahan's registration. Hanjin argued
that Samahan's members did not fall under the categories of workers allowed to form a
workers' association under Article 243 (now Article 249) of the Labor Code. Hanjin
claimed that one-third of Samahan's members had definite employers and that the
association's existence would harm the company's goodwill. Additionally, Hanjin alleged
misrepresentation in Samahan's application. On April 20, 2010, DOLE Regional Director
Ernesto Bihis ruled in favor of Hanjin, canceling Samahan's registration. Samahan
appealed to the Bureau of Labor Relations (BLR), which reversed the Regional
Director's decision on September 6, 2010, allowing Samahan to remain registered but
directing it to remove "Hanjin Shipyard" from its name. The Court of Appeals (CA) later
reinstated the Regional Director's decision, leading Samahan to file a petition for review
on certiorari with the Supreme Court.
Issue:

1. Can Samahan form a workers' association of employees in Hanjin, or should they

have formed a union, thus warranting the cancellation of their registration?
2. Should the words "Hanjin Shipyard" be removed from the association's name due
to the company's property rights over the name "Hanjin"?

Ruling:

1. The Supreme Court ruled that Samahan can form a workers' association and that
their registration should not be canceled.
2. The Supreme Court upheld the directive to remove the words "Hanjin Shipyard"
from the association's name.

Ratio:

The Supreme Court emphasized that the right to self-organization is not limited to
unionism and includes the formation of workers' associations for mutual aid and
protection. The 1987 Philippine Constitution guarantees this right, and the Labor Code
supports it. The Court found that the CA erred in concluding that Samahan should have
formed a union instead of a workers' association. The choice to form a union or an
association lies with the workers themselves. The Court also found no deliberate or
malicious misrepresentation by Samahan in using the phrase "KAMI, ang mga
Manggagawa sa HANJIN Shipyard" in their constitution and by-laws. However, the
Court agreed with the BLR that the words "Hanjin Shipyard" should be removed from
the association's name to avoid misleading the public and to respect the company's
property rights over the name "Hanjin." The removal of these words does not infringe on
Samahan's right to self-organization. The Court thus reinstated the BLR's decision,
allowing Samahan to remain a legitimate workers' association but without using "Hanjin
Shipyard" in its name.

Reyes v. Trajano, G.R. No. 84433, June 2, 1992

Facts:

In the case of "Reyes v. Trajano," the petitioners, Alexander Reyes, Alberto M. Nera,
Edgardo M. Geca, and 138 other employees, all members of the religious group Iglesia
ni Kristo (INK), were employed by Tri-Union Industries Corporation. On October 20,
1987, a certification election was conducted by the Bureau of Labor Relations among
the employees of Tri-Union Industries Corporation to determine the exclusive bargaining
representative. The competing unions were the Tri-Union Employees Union-Organized
Labor Association in Line Industries and Agriculture (TUEU-OLALIA) and the Trade
Union of the Philippines and Allied Services (TUPAS). Out of 348 initially qualified
voters, only 240 participated, including the 141 INK members. The ballots provided
three choices: TUPAS, TUEU-OLALIA, and "NO UNION." The final tally showed 1 vote
for TUPAS, 95 for TUEU-OLALIA, 1 for "NO UNION," 1 spoiled ballot, and 141
challenged votes cast by the INK members. The challenged votes were excluded based
on an agreement between the competing unions that the INK members should not vote
because they were not union members and had not participated in previous certification
elections. The INK employees protested, filing a petition to cancel the election, which
was opposed by TUEU-OLALIA. The Med-Arbiter dismissed the petition and certified
TUEU-OLALIA as the exclusive bargaining agent. The petitioners appealed to the
Bureau of Labor Relations, which upheld the Med-Arbiter's decision. The petitioners
then filed a special civil action of certiorari with the Supreme Court, arguing that their
exclusion was a grave abuse of discretion.

Issue:

1. Were the petitioners, as members of the Iglesia ni Kristo, legally disqualified from
voting in the certification election?
2. Did the exclusion of the petitioners' votes constitute a grave abuse of discretion
by the Med-Arbiter and the Bureau of Labor Relations?

Ruling:

1. No, the petitioners were not legally disqualified from voting in the certification
election.
2. Yes, the exclusion of the petitioners' votes constituted a grave abuse of discretion
by the Med-Arbiter and the Bureau of Labor Relations.

Ratio:

The Supreme Court ruled that the right to self-organization, as guaranteed by the Labor
Code of the Philippines, includes the right to form, join, or assist labor organizations, as
well as the right not to join or assist any labor organization. This right is extended to all
employees, including those in religious, charitable, medical, or educational institutions.
The Court emphasized that the right to self-organization also includes the right to refuse
to join or be represented by any labor organization. The Court found that the exclusion
of the INK members' votes was based on a misinterpretation of the law, as neither the
Labor Code nor its implementing rules require that only employees affiliated with a labor
organization may vote in a certification election. The Court also noted that the
petitioners' failure to participate in previous certification elections did not constitute a
forfeiture of their right to vote. The Court concluded that the Med-Arbiter and the Bureau
of Labor Relations had exercised their discretion whimsically, capriciously, and
oppressively, thereby gravely abusing their discretion. Consequently, the Court annulled
and set aside the decisions of the Med-Arbiter and the Bureau of Labor Relations,
declaring that the petitioners had legally exercised their right to vote and ordering that
their ballots be canvassed and counted.

General Rubber and Footwear Corporation v. BLR, G.R. No. L-74262, October 29, 1987

Facts:

The case of General Rubber and Footwear Corp. v. Bureau of Labor Relations involves
a labor dispute between General Rubber and Footwear Corporation (petitioner) and the
National Association of Trade Union of Monthly Paid Employees (NATU) (respondent).
Petitioner is a company engaged in manufacturing rubber products. In 1985, the
daily-paid rank and file employees formed their own union called Samahang
Manggagawa sa General Rubber Corporation ANGLO for collective bargaining.
However, the monthly-paid employees of the petitioner formed their own collective
bargaining unit, NATU, and filed a petition for direct certification with the Bureau of
Labor Relations. The Med-Arbiter issued an order for the holding of a certification
election, which was affirmed by the Bureau of Labor Relations. Petitioner filed a petition,
arguing that the Bureau of Labor Relations committed serious errors of law and grave
abuse of discretion in allowing the creation of a new bargaining unit and in allowing
managerial employees to form and join a labor organization.

Issue:

The main issues raised in the case are as follows:

1. Whether the Bureau of Labor Relations committed serious errors of law and
grave abuse of discretion in ordering the creation of a new bargaining unit,
 despite the existence of an already existing bargaining unit represented by
Samahang Manggagawa sa General Rubber Corporation-ANGLO.
2. Whether the Bureau of Labor Relations committed serious errors of law in
allowing managerial employees to form and join a labor organization and be
members of the new bargaining unit.
3. Whether the Bureau of Labor Relations committed grave abuse of discretion in
allowing supervisors, employees performing managerial, confidential and
technical functions, and office personnel to form and join a labor organization and
be members of the new bargaining unit.

Ruling:

The Supreme Court ruled in favor of the Bureau of Labor Relations and NATU. The
Court held that the members of NATU were not managerial employees but rank-and-file
employees who have the right to self-organization and to be heard through a duly
certified collective bargaining union. The Court found that the supervisory power of the
members of NATU was limited to recommending managerial actions in disciplinary
cases and did not meet the definition of managerial employees. Therefore, they were
not prohibited from forming their own collective bargaining unit. The Court also noted
that petitioner had sought to suppress the members of NATU's right to self-organization
since 1963, which was a violation of labor laws. The Court dismissed the petition for
lack of merit and ordered the monthly-paid rank-and-file employees to be allowed to join
the union of the daily-paid rank-and-file employees or to form their own rank-and-file
union, without prejudice to the certification election that had been ordered.

Ratio:

The Court based its decision on the interpretation of labor laws and the definition of
managerial employees. The Court determined that the members of NATU were not
managerial employees because their supervisory power was limited to recommending
managerial actions in disciplinary cases. As rank-and-file employees, they had the right
to self-organization and to be heard through a duly certified collective bargaining union.
The Court also considered the history of the case, noting that petitioner had been
suppressing the members of NATU's right to self-organization since 1963. This violation
of labor laws further supported the Court's decision to dismiss the petition and allow the
monthly-paid rank-and-file employees to join the union of the daily-paid rank-and-file
employees or form their own rank-and-file union. The Court emphasized the importance
of protecting the rights of employees to self-organization and collective bargaining, as
provided for by labor laws.

Knitjoy Manufacturing, Inc. v. Ferrer-Calleja, G.R. No. 81883, September 23, 1992

Facts: Knitjoy has a CB agreement with the Federation of Filipino Workers which
covered only the regular rank-and-file employees paid on a daily or piece-rate basis
which expired on June 15,1987. The Trade Union of the Philippines and Allied Services
filed a petition for the holding of certification election among KNITJOY's regular
rank-and-file employees paid on a daily or piece-rate basis excluding the regular
rank-and-file employees paid on a monthly basis. CW emerged as the winner and
thereafter, CBA negotiations between CFW and KNITJOYcommenced.Knitjoy
Monthly Employees Union filed a petition for certification election among the regular
rank-and-file monthly paid employees during the pendency of the said negotiation.The
petition was dismissed by the med-arbiter. On motion for reconsideration (appeal),
DirectorPura Ferrer-Calleja of BLR reversed the decision of the med-arbiter granting the
petition forcertification election filed by KMEU.

Issue: WON Knitjoy's monthly-paid regular rank-and-file employees can constitute a

bargaining unitseparate from the existing unit composed of employees paid on a daily or
piece-rate basis.

Held: Yes. Art. 245 of the Labor Code allows supervisory employees who
are not performingmanagerial functions to join, assist or form their separate union but
bars them from membershipin a labor organization of the rank and file employees. This
provision allows more than oneunion in a company. The one company-one union policy
must yield to the right of employees toform unions or associations for purposes not
contrary to law, to self-organization and to enterinto collective bargaining negotiations,
among others, which the constitution guarantees.The record discloses that in the
certification election solicited by TUPAS and during theelections which
followed thereafter, the monthly paid employees were expressly
excluded.Clearly therefore, KNITJOY and CFW recognize that insofar as the monthly
paid employees areconcerned, the latter's constituting a separate bargaining unit with
the appropriate union as solebargaining representative, can neither be prevented nor
avoided without infringing on theseemployees' rights to form union and to enter into
collective bargaining negotiations.

Katipunan ng mga Manggagawa sa Daungan v. Ferrer-Calleja, G.R. No. 104692,

September 5, 1997

FACTS: Petitioner claims to be the sole and exclusive bargaining agent for the entire
workers in Ocean Terminal Services Inc. After a certification election, it concluded a
collective bargaining agreement with the company. Then the respondent union, also
comprising Ocean Technical Services Inc. workers was registered. KAMADA filed a
case to cancel the registration of Respondent’s union, contending that the members
were already covered by the existing CBA. On the other hand, private respondent
claimed that its existence as a union could not be disturbed, as its registration was
made during the freedom period when there was no CBA concluded yet. The
med-arbiter cancelled respondent’s registration.

ISSUE: Whether or not there was already an existing certified bargaining agreement
when the private respondent’s registration was obtained.

RULING: The court stressed the present laws on union registration which are; 1)
nowhere does the law contemplates that once a union of a bargaining unit has
registered with DOLE, it will prevent all other would-be union from registering; and 2) in
order to establish order and effectively exercise this right, policies have been instituted
that application for union registration is not valid if filed within one (1) year from
certification election and/or is done during the effectivity of a CBA unless filed within the
freedom period. Hence, the respondent's registration is not covered by the prohibition.
Hence further, there was yet no certified bargaining agent when the private respondent
was registered as a union.

Pan American World Airways, Inc. v. Pan American Employees Association, G.R. No.
L-25094, April 29, 1969

Doctrine: Art. XIII, Sec. 3 par 2. LABOR xxx It shall guarantee the rights of all workers to
self-organization, collective bargaining and negotiations, and peaceful concerted
activities, including the right to strike in accordance with law. They shall be entitled to
security of tenure, humane conditions of work, and a living wage. They shall also
participate in policy and decision-making processes affecting their rights and benefits as
may be provided by law. xxx

Facts: Respondent, PAEA union filed a notice of strike with the Department of Labor
and declared a strike against petitioner PAWA. Later on, the President of the Philippines
certified the strike to respondent Court of Industrial Relations as an industrial dispute
affecting the national interest, the parties are then called to a conference. After several
conferences, the union is in the position that they will return to work if the officers of said
union are included in the return-to-work order. On the other hand, petitioner agrees for
the workers to return, excluding the 5 officials of the union. The Judge of respondent
Court ordered petitioner to accept the 5 union officers. Petitioner sought for a motion for
reconsideration but was denied. Hence, the petition to the SC.

Issue: (1) Whether the CIR committed grave abuse of discretion, consisting in the failure
to grant petitioner's rather unorthodox demand. NO. (2) Whether the return to work
order for the 5 union officers is valid.NO.

Ruling: (1) The Supreme Court, speaking through Justice Sanchez, emphasized: "The
overwhelming implication from the quoted text of Section 10 is that CIR is granted great
breadth of discretion in its quest for a solution to a labor problem so certified." Hence, as
was announced at the outset of this opinion, there can be no legal objection to the mode
of exercise of authority in such fashion by respondent Court of Industrial Relations. The
allegation as to the grave abuse of discretion is clearly devoid of merit. (2) The record
does not show any danger, from their return to work. Necessarily, the union officials
have the right to feel offended by the fact that, while they will be paid their salaries in the
meanwhile they would not be considered as fit persons to perform the duties pertaining
to the positions held by them. Far from being generous such an offer could rightfully, be
considered insulting. The greater offense is to the labor movement itself, more
specifically to the right of self-organization. There is both a constitutional and statutory
recognition that laborers have the right to form unions to take care of their interests
vis-a-vis their employers. Their freedom organizations would be rendered nugatory if
they could not choose their own leaders to speak on their behalf and to bargain for
them. Respondent Court was aware of such an unwarranted demand, the effect of
which would have been to deprive the rank and file of their freedom of choice as to who
should represent them. For what use are leaders so undeserving of the minimum
confidence. To that extent then, their constitutional and statutory right to freedom of
association suffers an impairment hardly to be characterized as inconsequential. Hence,
the petition was denied.
Union of Supervisors (RB) NATU v. Secretary of Labor, G.R. No. L-39889, March 29,
1984

Doctrine: Section 4, Rule 1, Book VI of the implementing Rules and Regulations of the
Labor Code states, to wit: "An employee who is separated from work without just cause
should be reinstated to his former position, unless such position no longer exists, at the
time of reinstatement, in which case he shall be given a substantially equivalent position
in the same establishment without loss of seniority rights"

Facts: Employee: Norberto Luna Employer: Republic Bank into Republic Planters Bank
The complaint for unfair labor practice was filed as early as 1974, before substantial
change in the corporate structure of Republic Bank into Republic Planters Bank. In
1981, the Court found that the management of Republic Bank was guilty of unfair labor
practice committed against the complainant and awarded him with reinstatement and
payment of back wages without qualification. However, pursuant to the organizational
set up of the present management of Republic Planters Bank, the new management
claimed that to substitute Norberto Luna to the present incumbent will necessarily cause
an undue disturbance in the chain of command under the present management vis-a-vis
branch operation and the incumbent branch manager thereof will himself be dislocated
if the decision will be pursued without exception. Instead of reinstatement to previous
position, they asked the court if the order be qualified by allowing respondent Republic
Planters Bank to reinstate Norberto Luna if still possible to his old position, and if not, he
be given an equivalent position.

Issue: WON it’s proper to allow respondent to place Luna in an equivalent position if his
post prior to unjust dismissal is still existing.

Ruling: YES. The Labor Code provision on reinstatement is aimed to restore the
situation as nearly as possible to status quo ante the unfair labor practice. This requires
that those deprived of a recognized and protected interest by violations of the law
should be made whole so as to prevent the violator from profiting from his misdeeds
(N.L.R.B. v. Coats and Clark, Inc. 241 F2d 556; N.L.R.B. v. J. H. Rutter-Rex
Manufacturing Co., 245 F2d594). Yet the reinstatement remedy must always be
adapted to economic-business conditions (N.L.R.B. v. R.C. Can Co.,, 328 F2d 974, 980;
N.L.R.B. v. American Aggregate Co., 305 F2d 599, 563-565). There is no question that
the Republic Planters Bank is the successor of the Republic Bank. This is not disputed
by the respondent Republic Planters Bank as can be shown in its reply to petitioner's
comment, as follows: "While respondent does not dispute the fact that the corporate
personality of the old Republic Bank is continued by the present Republic Planters
Bank, yet, as a matter of equity, it feels that it should not be made to bear the
consequences of an unfair labor practice committed by the old management against
complainant Luna." But, in order to keep the respondent Republic Planters Bank on its
feet once again, it had to undergo innovations to ensure recovery. The respondent
Republic Planters Bank actually changed its methods of operation and this change was
motivated by economic factors. Considering these "economic-business conditions"
together with the economic crisis WE are in now, it is inevitable that these be reflected
in the desire for efficient and productive management. This honest intention can only be
effectuated if the complainant Norberto Luna is reinstated to a substantially equivalent
position without loss of seniority rights and the incumbent manager who is now holding
the position formerly held by herein complainant be allowed to continue with his "tested"
competence and integrity in the management of the San Juan Branch of the Republic
Planters Bank.

Mendoza v. Officers of Manila Water Employees Union, G.R.No. 201595, January 25,
2016

Facts: Petitioner Allan Mendoza was a member of the Manila Water Employees Union
(MWEU),a DOLE-registered labor organization consisting of rank-and-file employees
within ManilaWater Company (MWC) while the respondents were MWEU officers. - In
2007, MENDOZA were approved to be suspended for 30 days by the MWEU
ExecutiveBoard's through a "unanimous approval" due to the non-payment of union
dues. - Due Notice was made to the petitioners to attend a scheduled hearing.
Petitioners have repeatedly indicated their intention to appeal the same to the General
MembershipAssembly ; however, petitioner’s appeal had been repeatedly denied. -
Meanwhile, MWEU scheduled an election of officers. Petitioner filed his certificate of
candidacy for Vice-President, but he was disqualified for not being a member in good
standing on account of his suspension. In addition, the petitioner was charged with
non-payment of union dues for the third time. He did not attend the scheduled
hearing;hence, he was later on expelled from the union. - In 2008, during the freedom
period and negotiations for a new CBA with MWC, petitioner joined another union, the
Workers Association for Transparency, Empowerment andReform, All-Filipino Workers
Confederation (WATER-AFWC). He was elected unionPresident. Other MWEU
members were inclined to join WATER-AFWC, but MWEUdirector Torres threatened
that they would not get benefits from the new CBA. TheMWEU leadership submitted a
proposed CBA which contained provisions to the effect that in the event of
retrenchment, non-MWEU members shall be removed first, and that upon the signing of
the CBA, only MWEU members shall receive a signing bonus - .On 13 October 2008,
petitioner filed a Complaint against respondents for unfair labor practices, damages,
and attorney's fees and accused the respondents of illegal termination from MWEU in
connection with the events relative to his non-payment of union dues; unlawful
interference, coercion, and violation of the rights of MWCemployees to self-organization
in connection with the proposed CBA submitted byMWEU leadership, which petitioner
claims contained provisions that discriminate against non-MWEU members. - Petitioner
claims that he was suspended and expelled from MWEU illegally as a result of the
denial of his right to appeal his case to the general membership assembly in
accordance with the union’s constitution and by -laws. - On the other hand, respondents
counter that such charge is intra-union in nature, and that petitioner lost his right to
appeal when he failed to petition to convene the general assembly through the required
signature of 30% of the union membership in good standing.

ISSUE: - W/N the Respondents are guilty of unfair labor practice under Article 249 (a)
and (b) ofthe Labor Code

RULING: - Yes. Respondents are guilty of unfair labor practices under Article 249 (a)
and (b) that is, violation of petitioner’s right to self -organization, unlawful discrimination,
and illegal termination of his union membership. - Guaranteed to all employees or
workers is the ‘right to self -organization and to form, join, or assist labor organizations
of their own choosing for purposes of collective bargaining.’ - The right of
self-organization includes the right to organize or affiliate with a labor union or
determine which of two or more unions in an establishment to join, and to engage in
concerted activities with coworkers for purposes of collective bargaining through
representatives of their own choosing, or for their mutual aid and protection, i.e., the
protection, promotion, or enhancement of their rights and interests - .As members of the
governing board of MWEU, respondents are presumed to know, observe, and apply the
union’s constitution and by -laws. - Thus, their repeated violations thereof and their
disregard of petitioner’s rights as a union member – their inaction on his two appeals
which resulted in his suspension, disqualification from running as MWEUofficer, and
subsequent expulsion without being accorded the full benefits of due process connote
willfulness and bad faith, a gross disregard of his rights thus causing untold suffering,
oppression and, ultimately, ostracism from MWEU. "Bad faith implies breach of faith and
willful failure to respond to plain and well understood obligation." - WHEREFORE,
PETITION IS PARTIALLY GRANTED.

Kiok Loy v. NLRC, G.R. No. L-54334, January 22, 1986

Facts: The Pambansang Kilusan ng Paggawa (KILUSAN), a legitimate labor federation,
was certified as the sole and exclusive bargaining agent for the rank-and-file employees
of the Sweden Ice Cream Plant (owned by Kiok Loy) on November 29, 1978, after
winning a certification election on October 3, 1978. The Company’s motion for
reconsideration was denied on January 25, 1978. On December 7, 1978, KILUSAN
requested the Company to engage in collective bargaining and submitted a proposed
collective bargaining agreement (CBA). After receiving no response, KILUSAN
reiterated their request, which was again ignored by the company. Consequently,
KILUSAN filed a “Notice of Strike” due to unresolved economic issues in bargaining on
February 14, 1979. The Bureau of Labor Relations initiated conciliation proceedings,
which failed, leading to compulsory arbitration by the National Labor Relations
Commission (NLRC). The labor arbiter’s hearings were characterized by various
postponements and lack of response from the Company. Despite being given
opportunities to submit its position paper and counter proposals, the Company failed to
engage meaningfully in the bargaining process. The NLRC, on July 20, 1979, declared
the Company guilty of unjustified refusal to bargain and adopted KILUSAN’s draft CBA
as the governing agreement between the parties.

Issues: 1. Whether the Company was guilty of unfair labor practice due to unjustified
refusal to bargain. 2. Whether the NLRC acted within its jurisdiction in adopting
KILUSAN’s draft CBA as the governing collective bargaining agreement. 3. Whether the
Company’s right to procedural due process was violated.

Ruling: The Supreme Court upheld the NLRC’s decision, affirming that the Company
was guilty of unjustified refusal to bargain. The Court noted that the Union was a duly
certified agent, that it had made a clear request for bargaining, and that the Company
failed to respond or make counterpropositions. The Company’s conduct indicated a lack
of sincere desire to negotiate, constituting unfair labor practice under Article 249 (g) of
the Labor Code. Furthermore, the Court dismissed the Company’s claim of violation of
procedural due process, citing the repeated postponements and failures to submit
required documentation as sufficient opportunities given to the Company to present its
case. The Supreme Court held that the NLRC had jurisdiction and acted within it in
adopting the CBA, emphasizing that the labor arbiter and the NLRC are mandated to
resolve labor disputes, including the determination of the reasonableness of the terms
and conditions of employment.

Doctrine: This case reiterates the doctrine that companies are under a legal obligation
to bargain in good faith with the duly certified bargaining agent of their employees.
Failure to respond to requests for collective bargaining and to engage in the process
constitutes unfair labor practice. The decision also highlights the broad discretionary
power of the NLRC in resolving labor disputes and enforcing labor laws, including the
approval and adoption of collective bargaining agreements.

Union of Filipro Employees-Drug, Food and Allied Industries Unions-Kilusang Mayo

Facts: UFE-DFA-KMU was the sole and exclusive bargaining agent of the rank-and-file
employees of Nestlé belonging to the latter’s Alabang and Cabuyao plants. On 4 April
2001, as the existing collective bargaining agreement (CBA) between Nestlé and
UFE-DFA-KMU4 was to end on 5 June 2001,5 the Presidents of the Alabang and
Cabuyao Divisions of UFE-DFA-KMU informed Nestlé of their intent to "open [our] new
Collective Bargaining Negotiation for the year 2001-2004 as early as June 2001.On 29
May 2001 letter to the UFE-DFA-KMU (Cabuyao Division only)7 , Nestlé claimed that
"unilateral grants, one-time company grants, company-initiated policies and programs
which include, but are not limited to the Retirement Plan, and others Incidental Straight
Duty Pay and Calling Pay Premium, are by their very nature not proper subjects of CBA
negotiations and therefore shall be excluded therefrom."Despite fifteen (15) meetings
between them, the parties failed to reach any agreement on the proposed CBA. FIRST -
Union filed a Notice of Strike on 31 October 2001 with the NCMB, complaining, in
essence, of a bargaining deadlock pertaining to economic issues, i.e., “retirement
(plan), panel composition, costs and attendance, and CBA. SECOND - On 07
November 2001 Another Notice of Strike was filed by the union, this time predicated on
Nestlé’s alleged unfair labor practices, that is, bargaining in bad faith by setting
pre-conditions in the ground rules and/or refusing to include the issue of the Retirement
Plan in the CBA negotiations. Nestlé filed with the DOLE a Petition for Assumption of
Jurisdiction, praying for the Secretary of the DOLE, Hon. Patricia A. Sto. Tomas, to
assume jurisdiction over the current subject of labor dispute. DOLE ordered: (1) the
members of union to return- to-work within twenty-four (24) hours from receipt of such
Order; (2) Nestlé to accept back all returning workers under the same terms and
conditions existing preceding to the strike; (3) both parties to cease and desist from
committing acts inimical to the on-going conciliation proceedings leading to the further
deterioration of the situation; and (4) the submission of their respective position papers
within ten (10) days from receipt thereof. However, the members of union continued with
their strike, thus, prompting Sec. Sto. Tomas to seek the assistance of the Philippine
National Police (PNP) for the enforcement of said order. UFE-DFA-KMU filed a Petition
for Certiorari before the Court of Appeals, alleging that Sec. Sto. Tomas committed
grave abuse of discretion and another seeking to annul its decision. Petitioner’s union
contention: UFE-DFA-KMU argues therein that Nestlé’s "refusal to bargain on a very
important CBA economic provision constitutes unfair labor practice." It explains that
Nestlé set as a precondition the non-inclusion of the issue of Retirement Plan for the
holding of collective bargaining negotiations. The Court of Appeals - entirely in favor of
UFE-DFA-KMU. Both parties appealed the aforequoted ruling. Nestlé essentially
assailed that part of the decision finding the DOLE Secretary to have gravely abused
her discretion amounting to lack or excess of jurisdiction when she ruled that the
Retirement Plan was not a valid issue to be tackled during the CBA negotiations;
UFE-DFA-KMU, in contrast, questioned the appellate court’s decision finding Nestlé free
and clear of any unfair labor practice. MOTIONS FOR RECONSIDERATION OF BOTH
PARTIES WERE DENIED BY THE COURT OF APPEALS IN a joint Resolution dated
27 June 2003, UFE-DFA-KMU and Nestlé separately filed the instant Petitions for
Review on Certiorari under Rule 45 of the Rules of Court, as amended.

Issue: Is Nestle guilty of unfair labor practice for violating the duty to bargain collectively

Ruling: The court answered in negative, The purpose of collective bargaining is the
reaching of an agreement resulting in a contract binding on the parties; but the failure to
reach an agreement after negotiations have continued for a reasonable period does not
establish a lack of good faith. The duty to bargain does not include the obligation to
reach an agreement.For a charge of unfair labor practice to prosper, it must be shown
that Nestlé was motivated by ill will, "bad faith, or fraud, or was oppressive to labor, or
done in a manner contrary to morals, good customs, or public policy, and, of course,
that social humiliation, wounded feelings, or grave anxiety resulted in disclaiming
unilateral grants as proper subjects in their collective bargaining negotiations.

Uno v. Nestlé Philippines, Incorporated, G.R. Nos. 158930-31, March 3, 2008

FACTS:

· Before impending expiration of the existing CBA between Nestlé and

UFE-DFA KMU, a letter of intent, informed nestle of their intent to open new
collective bargaining negotiation for the next 3 years.

· Nestlé acknowledged receipt of the letter and informed that it was

preparing its own counter-proposal. In another letter, Nestlé underscored its
position that “unilateral grants, one-time company grants,

· Company initiated policies and programs, which include, but are not
limited to the Retirement plan
 · Incidental Straight Duty Pay and Calling Pay Premium, are by their very
nature not proper subjects of CBA negotiations and therefore shall be excluded
therefrom.” On despite 15 meetings between them, the parties failed to reach any
agreement on the proposed CBA. So, the company requested the NCMB to
conduct preventive mediation proceedings between them. Conciliation
proceedings nevertheless proved ineffective.

· The union argued that Nestlé’s “refusal to bargain on a very important

CBA economic provision constitutes unfair labor practice” when it allegedly set as
a precondition for the holding of collective bargaining negotiations the
non-inclusion of the issue of Retirement Plan.

ISSUE:

· Whether or not a company is guilty of unfair labor practice when it

considers some economic benefits as unilaterally granted and therefore excluded
from CBA negotiations.

RULING:

· No. The Court affirmed the Court of Appeals in holding Nestlé free and clear
from any unfair labor practice. It is not enough that the union believed that the
employer committed acts of unfairlabor practice when the circumstances clearly
negate even a prima facie showing to warrant such a belief. In its letter to the
union, though Nestlé underscored its position that “unilateral grants, one-time
company grants,

· companyinitiated policies and programs, which include, but are not limited
to the Retirement Plan, Incidental Straight Duty Pay and Calling Pay Premium,
are by their very nature not proper subjects of CBA negotiations and therefore
shall be excluded therefrom,” such attitude is not tantamount to refusal to
bargain. This is especially true when it is viewed in the light of the fact that eight
out of nine bargaining units have allegedly agreed to treat the Retirement Plan as
a unilateral grant. Nestlé, therefore, cannot be faulted for considering the same
benefit as unilaterally granted. To be sure, it must be shown that Nestlé was
motivated by ill will, “bad faith, or fraud, or was oppressive to labor, or done in a
manner contrary to morals, good customs, or public policy, and, of course, that
social humiliation, wounded feelings, or grave anxiety resulted x x x” in
 disclaiming unilateral grants as proper subjects in their collective bargaining
negotiations.

· Employers are accorded rights and privileges to assure their

selfdetermination and independence and reasonable return of capital. This mass
of privileges comprises the socalled management prerogatives. In this
connection, the rule is that good faith is always presumed. As long as the
company’s exercise of the same is in good faith to advance its interest and not
for purpose of defeating or circumventing the rights of employees under the law
or a valid agreement, such exercise will be upheld.

General Milling Corp. v. CA, G.R. No. 146728, February 11, 2004

FACTS:

In its two plants located at Cebu City and Lapu-Lapu City, petitioner General Milling
Corporation (GMC) employed 190 workers. They were all members of private
respondent General Milling Corporation Independent Labor Union. On April 28, 1989,
GMC and the union concluded a collective bargaining agreement (CBA) which included
the issue of representation effective for a term of three years. The day before the
expiration of the CBA, the union sent GMC a proposed CBA, with a request that a
counter-proposal be submitted within ten (10) days. However, GMC had received
collective and individual letters from workers who stated that they had withdrawn from
their union membership, on grounds of religious affiliation and personal differences.
Believing that the union no longer had standing to negotiate a CBA, GMC did not send
any counter-proposal.

On December 16, 1991, GMC wrote a letter to the union’s officers, Rito Mangubat and
Victor Lastimoso. The letter stated that it felt there was no basis to negotiate with a
union which no longer existed, but that management was nonetheless always willing to
dialogue with them on matters of common concern and was open to suggestions on
how the company may improve its operations. In answer, the union officers wrote a
letter dated December 19, 1991 disclaiming any massive disaffiliation or resignation
from the union and submitted a manifesto, signed by its members, stating that they had
not withdrawn from the union.

NLRC held that the action of GMC in not negotiating was ULP.
ISSUE:

WON the company (GMC) should have entered into collective bargaining with the union

HELD:

The law mandates that the representation provision of a CBA should last for five years.
The relation between labor and management should be undisturbed until the last 60
days of the fifth year. Hence, it is indisputable that when the union requested for a
renegotiation of the economic terms of the CBA on November 29, 1991, it was still the
certified collective bargaining agent of the workers, because it was seeking said
renegotiation within five (5) years from the date of effectivity of the CBA on December 1,
1988. The union’s proposal was also submitted within the prescribed 3-year period from
the date of effectivity of the CBA, albeit just before the last day of said period. It was
obvious that GMC had no valid reason to refuse to negotiate in good faith with the
union. For refusing to send a counter-proposal to the union and to bargain anew on the
economic terms of the CBA, the company committed an unfair labor practice under
Article 248 of the Labor Code.
ART. 253-A. Terms of a collective bargaining agreement. – Any Collective Bargaining
Agreement that the parties may enter into shall, insofar as the representation aspect is
concerned, be for a term of five (5) years. No petition questioning the majority status of
the incumbent bargaining agent shall be entertained and no certification election shall
be conducted by the Department of Labor and Employment outside of the sixty-day
period immediately before the date of expiry of such five year term of the Collective
Bargaining Agreement. All other provisions of the Collective Bargaining Agreement shall
be renegotiated not later than three (3) years after its execution….

ART. 248. Unfair labor practices of employers. – It shall be unlawful for an employer to
commit any of the following unfair labor practice:

(g) To violate the duty to bargain collectively as prescribed by this Code;

Under Article 252 abovecited, both parties are required to perform their mutual
obligation to meet and convene promptly and expeditiously in good faith for the purpose
of negotiating an agreement. The union lived up to this obligation when it presented
proposals for a new CBA to GMC within three (3) years from the effectivity of the
original CBA. But GMC failed in its duty under Article 252. What it did was to devise a
flimsy excuse, by questioning the existence of the union and the status of its
membership to prevent any negotiation.
ART. 250. Procedure in collective bargaining. – The following procedures shall be
observed in collective bargaining:

(a) When a party desires to negotiate an agreement, it shall serve a written notice upon
the other party with a statement of its proposals. The other party shall make a reply
thereto not later than ten (10) calendar days from receipt of such notice.
GMC’s failure to make a timely reply to the proposals presented by the union is
indicative of its utter lack of interest in bargaining with the union. Its excuse that it felt
the union no longer represented the workers, was mainly dilatory as it turned out to be
utterly baseless.

Failing to comply with the mandatory obligation to submit a reply to the union’s
proposals, GMC violated its duty to bargain collectively, making it liable for unfair labor
practice.

Social Security System Employees Association v. CA, G.R. No. 85279, July 28, 1989

FACTS:

In 1987, the officers and members of Social Security System Employees Association
(SSSEA) staged a strike and barricaded the entrances to the SSS Building, preventing
non-striking employees from reporting for work and SSS members from transacting
business with the SSS. The strike was reported to the Public Sector Labor –
Management Council, which ordered the strikers to return to work but the strikers
refused to return to work. As a result of the strike, SSS suffered damages.

ISSUES:

1. Do the employees of the Social Security System (SSS) have the right to strike? – NO

2. Does the Regional Trial Court have jurisdiction to hear the case initiated by the SSS
and to enjoin the strikers from continuing with the strike and to order them to return to
work? – YES

RULING:

Right to Self-Organization; The rights of all workers to self-organization, collective

bargaining and negotiations and peaceful concerted activities including the right to strike
in accordance with law is guaranteed.
Right to strike; – While there is no question employees to organize, it is silent as to
whether such recognition also includes the right to strike.

– Framers of the organic law intended to limit the right to the formation of unions or
associations only without including the right to strike.

– Strikes by employees of the government exercising propriety functions recognized

under the Industrial Peace Act. No similar provision is found in the Labor Code.

– At present, in the absence of any legislation allowing government employees to strike,

recognizing their right to do so, or regulating the exercise of the right, they are
prohibited from striking by express provision of Memorandum Circular No. 6 and as
implied in E.O. No. 180.

– Employees of the SSS are part of the civil service and are covered by the Civil
Service Commission’s Memorandum prohibiting strikes. This being the case, the strike
staged by the employees of the SSS was illegal.

What is the rationale for distinguishing between workers in the private sector and
government employees with regard to the right to strike?

—The general rule in the past and up to the present is that “the terms and conditions of
employment in the Government, including any political subdivision or instrumentality
thereof are governed by law” (Section 11, the Industrial Peace Act, R.A. No. 875, as
amended and Article 277, the Labor Code, P.D. No. 442, as amended). Since the terms
and conditions of government employment are fixed by law, government workers cannot
use the same weapons employed by workers in the private sector to secure
concessions from their employers. The principle behind labor unionism in private
industry is that industrial peace cannot be secured through compulsion by law.
Relations between private employers and their employees rest on an essentially
voluntary basis. Subject to the minimum requirements of wage laws and other labor and
welfare legislation, the terms and conditions of employment in the unionized private
sector are settled through the process of collective bargaining. In government
employment, however, it is the legislature and, where properly given delegated power,
the administrative heads of government which fix the terms and conditions of
employment. And this is effected through statutes or administrative circulars, rules, and
regulations, not through collective bargaining agreements.

– The terms and conditions of employment in the government including any political
subdivision or instrumentality thereof and government-owned and controlled
corporations with original charters are governed by law and employees therein shall not
strike for the purpose of securing changes thereof.
Jurisdiction; – The Labor Code itself provides that terms and conditions of employment
of government employees shall be governed by the Civil Service Law, rules and
regulations; NLRC clearly has no jurisdiction over the dispute at bar. Regional Trial
Court is not precluded from assuming jurisdiction over the SSS’s complaint for damages
and issuing the injunctive writ prayed for.

Bangalisan v. CA, G.R. No. 124678, July 31, 1997

FACTS:

Petitioners were among the 800 public school teachers who staged “mass actions” on
September 17 to 19, 1990 to dramatize their grievances concerning the alleged failure
of the public authorities to implement in a just and correct manner certain laws and
measures intended for their material benefit.

On September 17, 1990, the Secretary of the Department of Education, Culture and
Sports (DECS) issued a Return-to-Work Order. Petitioners failed to comply with said
order, hence they were charged by the Secretary with “grave misconduct; gross neglect
of duty; gross violation of Civil Service law, rules and regulations and reasonable office
regulations; refusal to perform official duty; gross insubordination; conduct prejudicial to
the best interest of the service; and absence without official leave in violation of PD 807,
otherwise known as the Civil Service Decree of the Philippines.” They were
simultaneously placed under preventive suspension.

Thereafter, the DECS Secretary rendered a decision finding petitioners guilty as

charged and dismissing them from the service effective immediately.

Acting on the motions for reconsideration filed by some of the petitioners the Secretary
subsequently modified the penalty of dismissal to suspension for nine months without
pay. The other petitioners also filed individual appeals to the MSPB, but all of their
appeals were dismissed for lack of merit. Petitioners then appealed to the Civil Service
Commission (CSC) where it ruled that respondents were guilty of conduct prejudicial to
the best interest of the service. It, however, modified the penalty of nine months
suspension previously meted to them to six months suspension with automatic
reinstatement in the service but without payment of back wages.

All the petitioners moved for reconsideration of the CSC resolutions but these were all
denied, except that of petitioner Rodolfo Mariano who was found guilty only of a
violation of reasonable office rules and regulations because of his failure to inform the
school of his intended absence and to file an application for leave therefor. This
petitioner was accordingly given only a reprimand.

On appeal, the Court of Appeals dismissed the petition for lack of merit

ISSUE:

Whether or not the Court of Appeals committed grave abuse of discretion when it
upheld the resolutions of the CSC that penalized petitioners whose only offense was to
exercise their constitutional right to peaceably assemble and petition the government for
redress of grievances

HELD:

No, the CA did not commit grave abuse of discretion.

It is the settled rule in this jurisdiction that employees in the public service may not
engage in strikes. While the Constitution recognizes the right of government employees
to organize, they are prohibited from staging strikes, demonstrations, mass leaves,
walk-outs and other forms of mass action which will result in temporary stoppage or
disruption of public services. The right of government employees to organize is limited
only to the formation of unions or associations, without including the right to strike.

It is an undisputed fact that there was a work stoppage and that petitioners’ purpose
was to realize their demands by withholding their services. The fact that the
conventional term “strike” was not used by the striking employees to describe their
common course of action is inconsequential, since the substance of the situation, and
not its appearance, will be deemed to be controlling.

The ability to strike is not essential to the right of association. To grant employees of the
public sector the right to strike, there must be a clear and direct legislative authority
therefor. In the absence of any express legislation allowing government employees to
strike, recognizing their right to do so, or regulating the exercise of the right, employees
in the public service may not engage in strikes, walkouts and temporary work stoppages
like workers in the private sector

“It is not the exercise by the petitioners of their constitutional right to peaceably
assemble that was punished, but the manner in which they exercised such right which
resulted in the temporary stoppage or disruption of public service and classes in various
public schools in Metro Manila. For, indeed, there are efficient but non-disruptive
avenues, other than the mass actions in question, whereby petitioners could petition the
government for redress of grievances.”
It bears stressing that suspension of public services, however temporary, will inevitably
derail services to the public, which is one of the reasons why the right to strike is denied
government employees. It may be conceded that the petitioners had valid grievances
and noble intentions in staging the “mass actions,” but that will not justify their absences
to the prejudice of innocent school children. Their righteous indignation does not
legalize an illegal work stoppage. The right of the sovereign to prohibit strikes or work
stoppages by public employees was clearly recognized at common law.

GSIS Family Bank Employees Union v. Villanueva, G.R. No. 210773, January 23, 2019

On July 22, 1969, Royal Savings Bank was organized and incorporated as a thrift bank.
It began operating on February 8, 1971, with former Cavite Representative Renato
Dragon as its President and Board Chairman.
Royal Savings Bank filed an application with the Central Bank of the Philippines
(Central Bank) for the appointment of a conservator. The Central Bank denied Royal
Savings Bank's application for conservatorship, prohibited it from doing business, and
placed it under receivership
On September 7, 1984, Royal Savings Bank and Commercial Bank of Manila entered
into a Memorandum of Agreement to rehabilitate and infuse capital into Royal Savings
Bank. Royal Savings Bank was renamed Comsavings Bank.
Government Service Insurance System effectively owned 99.55% of Comsavings
Bank's outstanding shares of stock, Comsavings Bank changed its name to GSIS
Family Bank.
On June 6, 2011, President Aquino signed into law Republic Act No. 10149, or the
GOCC Governance Act of 2011.
Counsel for the GSIS Union sent GSIS Family Bank a demand letter for the payment of
Christmas bonus to its members, as stipulated in their Collective Bargaining Agreement.
GSIS Union accused GSIS Family Bank of evading its contractual obligation to its
employees by invoking the Governance Commission's opinion that it was no longer
authorized to grant incentives and other benefits to its employees, unless authorized by
the President of the Philippines. GSIS Union alleged that Republic Act No. 10149 does
not apply to GSIS Family Bank, as it was a private bank created and established under
the Corporation Code. It asserted that even if the Government Service Insurance
System owned a majority of GSIS Family Bank's outstanding capital stock, the change
in ownership of shares did not automatically place the bank under the operation of
Republic Act No. 10149.
For GSIS Family Bank's refusal to negotiate a new collective bargaining agreement, the
GSIS Union filed a Complaint before the National Conciliation and Mediation Board, and
later, a Notice of Strike. Some bank employees also filed their own Complaints before
the National Labor Relations Commission and the Department of Labor and
Employment. They aimed to compel GSIS Family Bank to abide by the provisions of
their existing Collective Bargaining Agreement. Petitioner GSIS Union filed before this
Court a Petition for Certiorari, asserting that GSIS Family Bank is a private bank; thus, it
is not covered by the provisions of Republic Act No. 10149.
Issues:
Whether or not GSIS Family Bank, a non-chartered government-owned or controlled
corporation, can enter into a collective bargaining agreement with its employees.
Ruling:
Petitioner asserts that the Governance Commission committed grave abuse of
discretion amounting to lack or excess of jurisdiction when it prevented respondents
Benitez and Atty. Berberabe-Martinez, as the bank's President and Chairperson of the
Board of Directors, respectively, from negotiating the economic provisions of the
Collective Bargaining Agreement between petitioner and the bank. Petitioner claims that
in filing its Petition for Certiorari under Rule 65, it has "no plain, speedy, and adequate
remedy in the ordinary course of law which will promptly and immediately relieve them
from the injurious effects of the unconstitutional and patently unwarranted and illegal
acts of the Respondents." Petitioner is mistaken.
Thus, a writ of certiorari may only be issued when the following are alleged in the
petition and proven: (1) the writ is directed against a tribunal, a board, or any officer
exercising judicial or quasi-judicial functions; (2) such tribunal, board, or officer has
acted without or in excess of jurisdiction, or with grave abuse of discretion amounting to
lack or excess of jurisdiction; and (3) there is no appeal or any plain, speedy, and
adequate remedy in the ordinary course of law.
The Governance Commission was created under Republic Act No. 10149. It is attached
to the Office of the President and is the "central advisory, monitoring, and oversight
body with authority to formulate, implement, and coordinate policies" relative to
government-owned and controlled corporations. It has no judicial or quasi-judicial
authority, as evidenced by its powers and functions under the law.
Finally, it has not escaped this Court's attention that petitioner only impleaded
respondent Villanueva in his capacity as chairperson of the Governance Commission,
and not the four (4) other members of the Governance Commission.
As a collegial body, all members of the Governance Commission should have been
impleaded as indispensable parties in the Petition, since no final determination of the
action can be reached without them. As it is, petitioner's failure to implead all members
of the Governance Commission should lead to the outright dismissal of this Petition as
their non-inclusion is debilitating since this Court cannot exercise its juridical power
when an indispensable party is not impleaded
Nonetheless, even if all the requirements for the issuance of a writ of certiorari were
alleged and proven, and even if all the indispensable parties were impleaded, the
closure of GSIS Family Bank has rendered the Petition moot.
Right of workers to self-organization, collective bargaining, and negotiations is
guaranteed by the Constitution under Article XIII, Section 3: the right to self-organization
is not limited to private employees and encompasses all workers in both the public and
private sectors, as shown by the clear declaration in Article IX (B), Section 2(5) that "the
right to self- organization shall not be denied to government employees." Article III,
Section 8 of the Bill of Rights likewise states, "the right of the people, including those
employed in the public and private sectors, to form unions, associations, or societies for
purposes not contrary to law shall not be abridged." While the right to self-organization
is absolute, the right of government employees to collective bargaining and negotiation
is subject to limitations.
Collective bargaining is a series of negotiations between an employer and a
representative of the employees to regulate the various aspects of the
employer-employee relationship such as working hours, working conditions, benefits,
economic provisions, and others. Relations between private employers and their
employees are subject to the minimum requirements of wage laws, labor, and welfare
legislation. Beyond these requirements, private employers and their employees are at
liberty to establish the terms and conditions of their employment relationship. In contrast
with the private sector, the terms and conditions of employment of government workers
are fixed by the legislature; thus, the negotiable matters in the public sector are limited
to terms and conditions of employment that are not fixed by law, instead of a collective
bargaining agreement or negotiation, government employees must course their petitions
for a change in the terms and conditions of their employment through the Congress for
the issuance of new laws, rules, or regulations to that effect: Government employees
may, therefore, through their unions or associations, either petition the Congress for the
betterment of the terms and conditions of employment which are within the ambit of
legislation or negotiate with the appropriate government agencies for the improvement
of those which are not fixed by law.
Republic Act No. 10149 defines a non-chartered government-owned or controlled
corporation as a government-owned or controlled corporation that was organized and is
operating under the Corporation Code. It does not differentiate between chartered and
non-chartered government-owned or controlled corporations; thus, considering the
existing law at the time, GSIS Family Bank could not be faulted for refusing to enter into
a new collective bargaining agreement with petitioner as it lacked the authority to
negotiate economic terms with its employees. Unless directly challenged in the
appropriate case and with a proper actual controversy, the constitutionality and validity
of Republic Act No. 10149, as it applies to fully government-owned and controlled
non-chartered corporations, prevail.
WHEREFORE, premises considered, the Petition is DENIED. SO ORDERED.
Principles:
Officers and employees of government-owned or controlled corporations without original
charters are covered by the Labor Code, not the Civil Service Law. However,
non-chartered government-owned or controlled corporations are limited by law in
negotiating economic terms with their employees. This is because the law has provided
the Compensation and Position Classification System, which applies to all
government-owned or controlled corporations, chartered or non-chartered.
The Governance Commission possesses neither judicial nor quasi judicial powers; thus,
it cannot review or settle actual controversies or conflicting rights between dueling
parties and enforce legally demandable rights. It is not a tribunal or board exercising
judicial or quasi-judicial functions that may properly be the subject of a petition for
certiorari.
Alejandrino v. COA, G.R. No. 245400, November 12, 2019

FACTS:

Petitioners are former executive officers of Philippine National Construction Corporation

(PNCC). PNCC engaged the legal services of 4 private lawyers as members of the
PNCC Corporate Legal Division. Consequently, salaries were paid to them. Sometime
later, the COA Audit Team issued Notice of Disallowance addressed to the President
and CEO of PNCC, stating that the mount of P911,580.96, representing the salaries of
the four lawyers is disallowed in audit because their hiring was without the written
conformity and acquiescence of the OGCC as well as the written concurrence of the
COA, in violation of the provisions of COA Circular no. 95-011 and Office of the
President Memorandum Circular no. 9. Six corporate officers of PNCC and the four
lawyer-payees were held liable and were directed to settle the amount disallowed.

They filed an Appeal Memorandum with the COA Director for Corporate Government
Sector (COA-CGS) – Cluster 4 assailing the Notice of Disallowance. They argued that
the COA Audit Team Leader erred when it assumed that PNCC is under the full audit
authority of COA. They asserted that since PNCC is a corporation created in
accordance with the general corporation law, it remains a private corporation
notwithstanding that majority of its stocks are owned by the National Government. They
asserted that PNCC is a government-acquired asset corporation and not a GOCC, thus,
the COA acted with grave abuse of discretion in disallowing in audit the payment of
salaries of its 4 lawyers.

ISSUE:

Whether or not PNCC is a GOCC under the audit jurisdiction of COA.

RULING:

Yes, PNCC is a GOCC. PNCC, originally named Construction and Development

Corporation of the Philippines (CDCP), had contracted loan obligations from various
Government Financing Institutions (GFIs). Unable to pay, the debts of CDCP with the
GFIs were converted into shares of stock. By virtue of the debt-to-equity conversion of
CDCP loans, CDCPs Articles of Incorporation and By-Laws were later amended to
change its corporate name from CDCP to PNCC to emphasize the National
Government’s shareholdings. Former Pres. Macapagal-Arroyo issued EO no. 331
placing PNCC under the Department of Trade and Industry.

Under the Administrative Code and the GOCC Governance Act of 2011, a GOCC is
refers to any agency organized as a stock or non-stock corporation, vested with
functions relating to public needs whether governmental or proprietary in nature, and
owned by the Government directly or through its instrumentalities either wholly, or,
where applicable as in the case of stock corporations, to the extent of at least fifty-one
(51) percent of its capital stock. PNCC, being a government-owned corporation under
the direct supervision of the Office of the President, is clearly subject to COA’s audit
authority. The Constitution vests in the COA audit jurisdiction over GOCCs with or
without original charters. GOCCs with original charters are subject to COA post-audit.
GOCCs without original charters refer to corporations created under the Corporation
Code but owned and controlled by the government. Based on the foregoing, we rule
that PNCC is a GOCC without original charter but under the audit jurisdiction of COA

8. Construction in Favor of Labor/Applies Only When There Is Doubt (Labor Code, Art.
4; Civil Code, Art. 1702)

Hubilla v. HSY Marketing, Ltd., Co., G.R. No. 207354, January 10, 2018
Facts:

HSY Marketing Ltd., Co., Wantofree Oriental Trading, Inc., Coen Fashion House and
General Merchandise, Asia Consumer Value Trading, Inc., Fabulous Jeans & Shirt &
General Merchandise, LSG Manufacturing Corporation, Unite General Merchandise,
Rosario Q. Co, Lucia Pun Lin Yeung, and Alexander Arqueza (respondents) are
engaged in manufacturing and selling goods under the brand Novo Jeans & Shirt &
General Merchandise (Novo Jeans).

These employees claimed that they were not allowed to enter the Novo Jeans branches
they were employed in. They further averred that while Novo Jeans sent them a show
cause letter the next day, they were in truth already dismissed from employment. They
sent a demand letter to amicably settle the case before the Department of Labor and
Employment but no settlement was reached. They alleged that upon learning that the
Department of Labor and Employment was not the proper forum to address their
grievances, they decided to file a notice of withdrawal and file their complaint with the
Labor Arbiter.

On the other hand, Novo Jeans claimed that these employees voluntarily severed their
employment but that they filed complaints later with the Department of Labor and
Employment. They alleged that the employees' notice of withdrawal was not actually
granted by the Department of Labor and Employment but that the employees
nonetheless filed their complaints before the Labor Arbiter.

On May 31, 2011, Labor Arbiter Arden S. Anni rendered a Decision dismissing the
complaints. The National Labor Relations Commission rendered a Decision reversing
that of the Labor Arbiter and finding that the employees were illegally dismissed.

Court of Appeals rendered a Decision reversing the Decision of the National Labor
Relations Commission and reinstating the Labor Arbiter Decision.

Issues:

Whether or not petitioners were illegally dismissed by respondents

Ruling:

In illegal dismissal cases, the burden of proof is on the employer to prove that the
employee was dismissed for a valid cause and that the employee was afforded due
process prior to the dismissal. Respondents allege that there was no dismissal since
they sent petitioners a First Notice of Termination of Employment, asking them to show
because why they should not be dismissed for their continued absence from work.
However, petitioners argue that this evidence should not be given weight since there is
no proof that they received this Notice. Indeed, no evidence has been presented
proving that each and every petitioner received a copy of the First Notice of Termination
of Employment. There are no receiving copies or acknowledgement receipts. What
respondents presented were "Sample Letters of Respondents" and not the actual
Notices that were allegedly sent out. While petitioners admitted that the Notices may
have been sent, they have never actually admitted to receiving any of them

Where both parties in a labor case have not presented substantial evidence to prove
their allegations, the evidence is considered to be in equipoise. In such a case, the
scales of justice are tilted in favor of labor. Thus, petitioners are hereby considered to
have been illegally dismissed.

However, there not being sufficient proof that the dismissal was meant to suppress
petitioners' constitutional rights, this Court is constrained to limit its conclusions to that
of illegal dismissal under the Labor Code

An employee who is found to have been illegally dismissed is entitled to reinstatement

without loss of seniority rights and other privileges. If reinstatement proves to be
impossible due to the strained relations between the parties, the illegally dismissed
employee is entitled instead to separation pay.

WHEREFORE, the Petition is GRANTED, employee who is found to have been illegally
dismissed is entitled to reinstatement without loss of seniority rights and other
privileges.

Principles:

When the evidence of the employer and the employee are in equipoise, doubts are
resolved in favor of labor. This is in line with the policy of the State to afford greater
protection to labor.
There is likewise no proof that petitioners abandoned their employment. To constitute
abandonment, the employer must prove that "first, the employee must have failed to
report for work or must have been absent without valid or justifiable reason; and
second, [that] there must have been a clear intention on the part of the employee to
sever the employer-employee relationship manifested by some overt act.

Oikonomos Int’l. Resources Corporation (formerly Hilton Cebu Resort and Spa) v.
Navaja, Jr., G.R. No. 214915, December 7, 2015
FACTS:

On December 27, 2004, Oikonomos, then known as Hilton Cebu Resort and Spa, hired
Navaja as a room attendant. Navaja performed housekeeping and cleaning duties in the
hotel and reported for a graveyard shift from 11:00 o'clock in the evening up to 7:00
o'clock in the morning. On September 24, 2010, Navaja received the memorandum from
Oikonomos dismissing him from the service after he was found guilty of theft and
dishonesty which were violations of company rules and regulations. Oikonomos
asserted that, prior to the incident of August 25, 2010, Navaja had a history of
committing infractions, as follows:

January 18, 2008 - Lost and found items were retrieved from Navaja's pantry. He was
verbally reprimanded.

March 21, 2008 - Lost and found items were retrieved from inside his cart. Navaja was
issued a written warning.

March 23, 2009 - Acts of inefficiency and incompetence on the part of Navaja which
resulted in the complaints from guests. He was suspended for 15 days.

July 9, 2009 - Insubordination for which he was suspended for 7 days.

On August 25, 2010, at around 7:30 o'clock in the morning, the hotel received a call
from a guest, who just checked-out, informing it that she left a white Nike jacket in
Room 1202. The said room was examined but the jacket was not found. The hotel's
closed circuit television camera (CCTV) footage showed Navaja entering Room 1202
twice after the guests had left. After coming out from the room the second time, he
acted suspiciously and made an effort to hide his back from the view of the CCTV

On August 26, 2010, at around 1:30 o'clock in the morning, the hotel security office
asked him about his work details and whereabouts in his previous shift. Navaja,
however, never mentioned that he found a white Nike jacket in Room 1202. It was only
around 8:00 o'clock of the same morning that he handed the jacket to the security office
and issued another statement.

The Labor Arbiter Ruling

The Labor Arbiter (LA) found that Navaja was validly dismissed because he committed
an act of theft or dishonesty. The CCTV footage and his deliberate failure to report the
missing item showed his intention to appropriate the jacket. The LA opined that Navaja's
defense of simple forgetfulness was not a credible excuse to refute the evidence
presented by Oikonomos. In deciding against Navaja, the LA also considered his past
infractions.
The NLRC Ruling

In its decision, dated December 29, 2011, the NLRC declared that Navaja's dismissal
was valid. The labor tribunal recognized the employer's right to dismiss an employee for
violating company rules. Navaja clearly failed to follow company procedure on reporting
lost items. He also provided false information even when he was given the opportunity
to disclose the occurrences regarding the missing item. The NLRC also noted that the
previous infractions of Navaja were relevant matters in determining the imposable
penalty by Oikonomos.

The CA Ruling

In its assailed decision, the CA nullified and set aside the December 29, 2011 Decision
and the February 29, 2012 Resolution of the NLRC. The appellate court opined that
Navaja was able to justify the delay in reporting the missing jacket. The CA stated that
Navaja, based on the statements of his co-employees, did not intentionally conceal it.
The element of intent to take was absent because Navaja did not bring the item outside
the hotel premises.

ISSUE:

W/N THE DISMISSAL OF NAVAJA BASED ON A JUST CAUSE OF SERIOUS

MISCONDUCT WAS PROVEN BY OIKONOMOS WITH SUBSTANTIAL EVIDENCE.

RULING:

YES. Serious misconduct was proven with substantial evidence. The just causes for
dismissing an employee are provided under Article 282 of the Labor Code. In Article
282 (a), serious misconduct by the employee justifies the employer in terminating his or
her employment. Misconduct is defined as improper and wrongful conduct. It is the
transgression of some established and definite rule of action, a forbidden act, a
dereliction of duty, willful in character, and implies wrongful intent and not mere error in
judgment. Ordinary misconduct would not justify the termination of the services of an
employee as the law is explicit that the misconduct should be serious. It is settled that in
order for the misconduct to be considered serious, it must be of such grave and
aggravated character and not merely trivial or unimportant. As amplified by
jurisprudence, the misconduct must (1) be serious; (2) relate to the performance of the
employee's duties; and (3) show that the employee has become unfit to continue
working for the employer.

First, it was undisputed that Navaja took the jacket from Room 1202 on August 25,
2010. From the time he obtained the said item, he began to perform certain acts to
willfully conceal the same. Second, Navaja had several opportunities to report the
missing item to the management. The first instance was when Navaja accomplished his
daily report at the housekeeping office before he went home on August 25, 2010. Third,
Navaja violated company policy regarding their lost and found procedure. The hotel
required its employee to immediately report lost and found items to the security or front
office. To recapitulate, Navaja had several encounters with the security and front office
before he belatedly reported the jacket. Fourth, the Court finds itself unable to agree
with the CA that there was no intent to take because Navaja did not bring the jacket
outside the hotel premises. In the landmark case of Valenzuela v. People,it was stated
that "[t]he ability of the offender to freely dispose of the property stolen is not a
constitutive element of the crime of theft." Consequently, as intent to dispose is not an
integral element of theft, it is of no moment that Navaja failed to bring the stolen item
outside the premises. As discussed, there was substantial evidence that Navaja had the
intent to take the missing item.

RATIO:

"While it is true that compassion and human consideration should guide the disposition
of cases involving termination of employment, since that it affects one's source or
means of livelihood, it should not be overlooked that the benefits accorded to labor do
not include compelling an employer to retain the services of an employee who has been
shown to be a gross liability to the employer. The law, in protecting the rights of the
employees, authorizes neither oppression nor self-destruction of the employer. It should
be made clear that when the law tilts the scale of justice in favor of labor, it is but a
recognition of the inherent economic inequality between labor and management. The
intent is to balance the scale of justice; to put the two parties on relatively equal
positions. There may be cases where the circumstances warrant favoring labor over the
interests of management but never should the scale be so tilted if the result is an
injustice to the employer. Justitia nemini neganda est. (Justice is to be denied to none.)"

PNB v. Bulatao, G.R. No. 200972, December 11, 2019

FACTS:

Respondent Manuel C. Bulatao (Bulatao) was formerly the Senior Vice-President (SVP)
of the Information Technology (IT) Group of Petitioner Philippine National Bank (PNB).
Bulatao's appointment as SVP was evidenced by a letter dated October 3, 1996, which
indicated that the Board of Directors (Board) of PNB approved his appointment by
Board Resolution No. 27, dated September 4, 1996. The same letter specified that his
appointment shall take effect on September 16, 1996. Bulatao averred that he accepted
the appointment as reflected in the conforme portion of the letter he signed on October
7, 1996. Bulatao alleged that on October 1, 1999, Mr. Benjamin Palma Gil (Mr. Palma
Gil), then PNB's President, and a certain Mr. Samit Roy (Mr. Roy), an Indian national,
hosted a dinner meeting for PNB's IT staff to announce the conclusion of a Joint
Venture Agreement (JVA) between PNB and Mr. Roy. During dinner Mr. Roy announced
that not all of the IT staff would be retained since everyone had to undergo an
International Competitive Test as a prerequisite for absorption. Those who would not be
absorbed would be offered retirement packages instead. Bulatao contended that the
conduct of the International Competitive Test was a ploy to force IT personnel who were
not supportive of the project to leave the bank. Notably, Bulatao objected to the JVA.

In a letter dated November 1999, Respondent manifested his intent to retire, informing
the group of petitioners of the following matters:

● The working environment has made it difficult for him to be productive

● Against the decision to implement JVA and refused to endorse the project to his
colleagues, The JVA, with an Indian base, is contrary to the functions expected,
which would be their partner given their track record of managing the venture at
the Bank of Scotland.
● Respondent made an appointment with Mr. Roy to discuss sensitive issues
verbally brought to his and his partners’ attention.

Meanwhile, Bulatao alleged that he met with Mr. Lucio Tan (Mr. Tan), a member of the
Board, who asked him to reconsider his decision to retire and join Mr. Tan's
management team. Because of this, Bulatao alleged that he returned to work on
January 1, 2000. Around that time, aware that the Board had yet to act on his
application for retirement, Bulatao withdrew the application in a Memorandum
addressed to Feliciano L. Miranda, Jr., then Officer-in-Charge/Chief Executive Officer of
PNB. Four days after his Memorandum, Bulatao received a call from the SVP of the
Human Resource Division. He was informed not to report for work in February 2000 as
the Board already accepted his "resignation." For this reason, Bulatao stopped reporting
for work. He filed a petition with NLRC on grounds of illegal dismissal.

NLRC DECISION

The Complaint filed by Bulatao with the NLRC was dismissed due to a lack of
jurisdiction. The NLRC held that since Bulatao was an appointed officer of a
corporation, the Regional Trial Court (RTC) has jurisdiction over the case.

RTC DECISION
 The RTC opined that his actions in leaving the bank with haste and needing to be
accounted for quite some time left much to be desired for a senior bank official
like him. It interpreted Bulatao's memorandum withdrawing his application for
retirement as an afterthought, given his actions before the filing thereof,
especially when he did not return to work after filing a notice of retirement.
Hence, the RTC dismissed Bulatao's Complaint for lack of merit.

CA DECISION

The CA noted that even if Bulatao's application for retirement is treated as a

resignation letter, the circumstances under which he manifested his desire to
leave work rendered the same involuntary. The appellate court found that
Bulatao went on official leave immediately after filing his application for retirement
but returned to work on January 1, 2000, until he was verbally informed on
January 29, 2000, not to report for work starting February 2000. Bulatao returned
to work without any notice from PNB, so he could not return; hence, there was no
basis for the abandonment charge.

ISSUE: W/N the CA gravely erred when it manifestly overlooked the evidence on
record of the respondent’s clear intention and demand to sever his employment ties with
PNB, coupled with his actual act of abandonment

RULING:

NO. Given the attendant circumstances, Bulatao could not be considered as having
abandoned his employment. To establish abandonment, the employer must prove that:
"First, the employee must have failed to report for work or must have been absent
without valid or justifiable reason; and second, [that] there must have been a clear
intention on the employee to sever the employer-employee relationship manifested by
some overt act."

In this case, it was clear in Bulatao's letter dated November 10, 1999, that he was taking
an official leave of absence following his statement that he was taking the bank's offer to
retire. Thus, there was the reason for Bulatao's absence at the time, which we have
already noted as accepted and approved due to PNB's undeniable inaction. Moreover,
while Bulatao intended to take up the offer to retire, which would have led to the
severance of the employer-employee relationship, it should be considered that the JVA
influenced the circumstances surrounding such a decision with the "Indian" group, X,
which Bulatao disagreed with. It is also important to note that filing an illegal dismissal
case is inconsistent with abandonment, as Bulatao prayed for reinstatement in his
complaint with the RTC.
RATIO: Indeed, "[a]n employee who loses no time in protesting his layoff cannot by any
reasoning be said to have abandoned his work, for it is already a well-settled doctrine
that the filing by an employee of a complaint for illegal dismissal with a prayer for
reinstatement is proof enough of his desire to return to work, thus negating the
employer's charge of abandonment."Additionally, PNB did not convincingly disprove
Bulatao's claim that the real reason behind his filing for early retirement was his
dissatisfaction with the agreement with the "Indian" group, even if the said agreement
did not materialize. Given these observations and findings, PNB failed to prove by
convincing evidence that there was just or authorized cause for terminating Bulatao
from employment. Moreover, jurisprudence states that "[w]hen the evidence of the
employer and the employee are in equipoise, doubts are resolved in favor of labor. This
is in line with the policy of the State to afford greater protection to labor."

Asian Transmission Corporation v. CA, G.R. No. 144664, March 15, 2004

FACTS:

The Department of Labor and Employment (DOLE), issued an Explanatory Bulletin

wherein it clarified, inter alia, that employees are entitled to 200% of their basic wage on
April 9, 1993, whether unworked, which, apart from being Good Friday and, therefore, a
legal holiday, is also Araw ng Kagitingan which is also a legal holiday. April 9, 1998 was
both Maundy Thursday and Araw ng Kagitingan. Despite the explanatory bulletin,
petitioner [Asian Transmission Corporation] opted to pay its daily paid employees only
100% of their basic pay on April 9, 1998. Respondent Bisig ng Asian Transmission
Labor Union (BATLU) protested. The Office of the Voluntary Arbitrator rendered a
decision directing petitioner to pay its covered employees "200% and not just 100% of
their regular daily wages for the unworked April 9, 1998 which covers two regular
holidays, namely, Araw ng Kagitignan and Maundy Thursday." Subject of interpretation
in the case at bar is Article 94 of the Labor Code which 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 ten (10) workers; (b) The employer may require an employee to work on any
holiday but such employee shall be paid a compensation equivalent to twice his regular
rate; and (c) As used in this Article, "holiday" includes: New Year’s Day, Maundy
Thursday, Good Friday, the ninth of April, the first of May, the twelfth of June, the fourth
of July, the thirtieth of November, the twenty-fifth and thirtieth of December and the day
designated by law for holding a general election,

The Court of Appeals further held that "in the absence of an explicit provision in law
which provides for [a] reduction of holiday pay if two holidays happen to fall on the same
day, any doubt in the interpretation and implementation of the Labor Code provisions on
holiday pay must be resolved in favor of labor."

ISSUE:

W/N THE SECRETARY OF THE DEPARTMENT OF LABOR AND EMPLOYMENT

(DOLE) BY ISSUING EXPLANATORY BULLET. IN THE GUISE OF PROVIDING
GUIDELINES ON ART. 94 OF THE LABOR CODE, COMMITTED GRAVE ABUSE OF
DISCRETION, AS IT LEGISLATED AND INTERPRETED LEGAL PROVISIONS IN
SUCH A MANNER AS TO CREATE OBLIGATIONS WHERE NONE ARE INTENDED
BY THE LAW?

RULING:

NO. The petition is devoid of merit. Holiday pay is a legislated benefit enacted as part of
the Constitutional imperative that the State shall afford protection to labor. Its purpose is
not merely "to prevent diminution of the monthly income of the workers on account of
work interruptions. In other words, although the worker is forced to take a rest, he earns
what he should earn, that is, his holiday pay." It is also intended to enable the worker to
participate in the national celebrations held during the days identified as with great
historical and cultural significance.

Art. 94 of the Labor Code, as amended, affords a worker the enjoyment of ten paid
regular holidays. The provision is mandatory, regardless of whether an employee is paid
on a monthly or daily basis. Unlike a bonus, which is a management prerogative,
holiday pay is a statutory benefit demandable under the law. Since a worker is entitled
to the enjoyment of ten paid regular holidays, the fact that two holidays fall on the same
date should not operate to reduce to nine the ten holiday pay benefits a worker is
entitled to receive.

RATIO:

It is elementary, under the rules of statutory construction, that when the language of the
law is clear and unequivocal, the law must be taken to mean exactly what it says. In the
case at bar, there is nothing in the law which provides or indicates that the entitlement to
ten days of holiday pay shall be reduced to nine when two holidays fall on the same
day.

In any event, Art. 4 of the Labor Code provides that all doubts in the implementation and
interpretation of its provisions, including its implementing rules and regulations, shall be
resolved in favor of labor. For the working man’s welfare should be the primordial and
paramount consideration.

Moreover, Sec. 11, Rule IV, Book III of the Omnibus Rules to Implement the Labor Code
provides that "Nothing in the law or the rules shall justify an employer in withdrawing or
reducing any benefits, supplements or payments for unworked regular holidays as
provided in existing individual or collective agreement or employer practice or policy."

Land and Housing Development Corporation v. Esquillo, G.R.No.152012, September

30, 2005

FACTS:

Marianito C. Esquillo was hired as a structural engineer by [Petitioner] ABV Rock Group
('ABV') based in Jeddah, Kingdom of Saudi Arabia. He commenced employment on
July 27, 1989, with an initial monthly salary of US$1,000.00 that was gradually
increased because of his good performance and the annual renewal of his employment
contract until it reached US$1,300.00. Private respondent Land & Housing
Development Corporation ('LHDC'), a local placement agency, facilitated employment
papers. Although [respondent's] employment contract was supposed to be valid until
July 26, 1995, it was pre-terminated through an Inter-Office Memo on Notice of
Termination, dated November 17, 1994, allegedly, for a reason, 'reduction of force.'
Petitioner, however, claims that the reason adduced was 'negated by the fact that many
transferees from other sites were taken in and promotions and re-classifications in the
lower ranks were done. He further claimed that [Petitioner] ABV maliciously confiscated
his 'iqama' or resident visa even though it was [respondent's] previous employer, FEAL
IBC., which secured his 'iqama.' Consequently, [respondent] was prevented from
getting another job in Jeddah. [Respondent] subsequently received the amount of
twenty-three thousand, one hundred fifty-three Saudi Riyals (SR23,153.00) from
[Petitioner] ABV as a final settlement of his claims and was issued an exit visa that
required him to go back to the Philippines immediately.

As a result of the foregoing, [respondent] filed a complaint for breach of contract and/or
illegal dismissal before the Philippine Overseas Employment Administration, which was
referred to the National Labor Relations Commission.

Labor Arbiter Decision

Labor Arbiter ordered the petitioners jointly and severally to pay his salaries
corresponding to the unexpired portion of his contract, in the amount of NINE
 THOUSAND FOUR HUNDRED FORTY-SEVEN U.S. Dollars and ten percent of
his monetary award as attorney’s fees both in Philippine currency to be
computed at the prevailing rate at the time of payment.

NLRC Decision

The NLRC, in a Decision dated May 30, 1997, reversed the aforecited decision
and dismissed the [respondent's] complaint for lack of merit. [Respondent's]
motion for reconsideration was denied.

CA Decision

The Court of Appeals ruled that despite the absence of a written categorical
objection to the sufficiency of the payment received as consideration for the
execution of the quitclaim, jurisprudence supported the right of the respondent to
demand what was rightfully his under our labor laws. Hence, he should have
been allowed to recover the difference between the amount he had received and
the amount he should have received.

ISSUE - W/N Respondent, despite having executed a QuitClaim, is entitled to a grant of

his additional money claims

RULING

YES. In the present case, the labor arbiter found the respondent's dismissal illegal and
devoid of any just or authorized cause. The factual findings of the NLRC and the CA on
this matter were not contradictory. Hence, the Court finds no reason to deviate from its
factual finding that the respondent was dismissed without legal cause.

RATIO: To determine whether the Release and Quitclaim are valid, one important factor
must be considered is the consideration accepted by the respondent; the amount must
constitute a "reasonable settlement." It is relevant to point out, however, that the
respondent was dismissed before the effectivity of RA 8042. As discussed at the
outset, he is entitled to the salaries corresponding to the unexpired portion of his
Contract. This amount excludes the SR23,153 he received based on the November 29,
1994 Final Settlement. The latter amount comprised overtime pay, vacation pay,
indemnity, contract reward, and notice pay -- items that were due him under his
employment Contract. For these reasons, the consideration stated in the Release and
Quitclaim cannot be deemed a reasonable settlement; hence, that agreement must be
set aside. That respondent is a professional structural engineer did not make him less
susceptible to disadvantageous financial offers, faced as he was with the prospect of
unemployment in a country not his own.
Metropolitan Bank and Trust Company v. NLRC, G.R. No. 152928, June 18, 2009

FACTS:

Respondents Felipe Patag (Patag) and Bienvenido Flora (Flora) were former
employees of petitioner Metropolitan Bank and Trust Company (Metrobank). Both
respondents availed of the bank’s compulsory retirement plan in accordance with the
1995 Officers’ Benefits Memorandum. Patag and Flora wrote a letter to the bank
requesting that their retirement benefits be computed at the new rate should there be an
increase thereof in anticipation of possible changes in officers’ benefits after the signing
of the new CBA with the rank and file. Metrobank did not reply to their requests. The
Memorandum was signed by then Metrobank President Antonio S. Abacan, Jr.
Pertinently, the compulsory retirement benefit for officers was increased from 185% to
200% effective January 1, 1998, but with the condition that the benefits shall only be
extended to those who remain in service as of June 15, 1998. On June 29, 1998, Flora
again wrote a letter, asking Metrobank for a reconsideration of its condition that the new
officers’ benefits shall apply only to those officers still employed as of June 15, 1998.
Metrobank denied this request on July 17, 1998.

Patag and Flora, through their counsel, wrote a letter to Metrobank demanding the
payment of their unpaid retirement benefits amounting to ₱284,150.00 and
₱448,050.00, respectively, representing the increased benefits they should have
received under the 1998 Officers’ Benefits Memorandum. On September 25, 1998,
Patag and Flora filed with the Labor Arbiter their consolidated complaint against
Metrobank. On June 8, 1999, Labor Arbiter Geobel A. Bartolabac rendered a decision,
dismissing the complaint of Patag and Flora.Then Patag and Flora filed an appeal with
the NLRC; NLRC partially granted the appeal and directed Metrobank to pay Patag and
Flora their unpaid beneficial improvements under the 1998 Officers’ Benefits
Memorandum. Aggrieved with the ruling of the NLRC, Metrobank elevated the matter to
the CA by way of a petition for certiorari. The CA promulgated its assailed decision
dismissing Metrobank’s petition and affirming the resolution of the NLRC. Petitioner’s
subsequent motion for reconsideration was denied by the CA in its Resolution dated
April 9, 2002. Petitioner contends that respondents Patag and Flora, having qualified for
compulsory retirement under the 1995 Officers’ Benefits Memorandum, cannot now
claim to be eligible to higher retirement benefits under the 1998 Improved Benefits
Memorandum.

ISSUE:
W/N THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS ERROR IN
AFFIRMING THE NLRC’S DECISION AND RESOLUTION BY RULING THAT THE
PRIVATE RESPONDENTS ARE ENTITLED TO THEIR BELATED CLAIM FOR
ADDITIONAL (RETIREMENT) BENEFITS EVEN AFTER THEY EFFECTIVELY
CEASED THEIR EMPLOYMENT WITH PETITIONER?

RULING:

NO. It was the NLRC’s finding, as affirmed by the CA, that there is a company practice
of paying improved benefits to petitioner bank’s officers effective every January 1 of the
same year the improved benefits are granted to rank and file employees in a CBA. We
find that the NLRC’s and CA’s factual conclusions were fully supported by substantial
evidence on record. Respondents were able to prove that for the period 1986-1997,
Metrobank issued at least four (4) separate memoranda, coinciding with the approval of
four (4) different CBAs with the rank and file, wherein bank officers were granted
benefits, including retirement benefits, that were commensurate or superior to those
provided for in Metrobank’s CBA with its rank and file employees.

In the case at bar, petitioner Metrobank favorably adjusted its officers’ benefits,
including retirement benefits, after the approval of each CBA with the rank and file
employees, to be effective every January 1st of the same year as the CBA’s approval,
and without any condition regarding the date of employment of the officer, from 1986 to
1997 or for about eleven (11) years. This constitutes voluntary employer practice which
cannot be unilaterally withdrawn or diminished by the employer without violating the
spirit and intent of Art. 100 of the Labor Code, to wit: Art. 100. Prohibition against
elimination or diminution of benefits.– Nothing in this Book shall be construed to
eliminate or in any way diminish supplements, or other employee benefits being enjoyed
at the time of promulgation of this Code. Anent petitioner’s line of reasoning that it had
no obligation under Article 287 of the Labor Code or the express terms of the retirement
plan to grant improved benefits to employees who are no longer in the service at the
time of the grant, it appears to us that petitioner is deliberately missing the point.
Ordinarily, an employee would have no right to demand benefits that the employer was
not obligated by law or contract to give. However, it is the jurisprudential rule that where
there is an established employer practice of regularly, knowingly and voluntarily granting
benefits to employees over a significant period of time, despite the lack of a legal or
contractual obligation on the part of the employer to do so, the grant of such benefits
ripens into a vested right of the employees and can no longer be unilaterally reduced or
withdrawn by the employer. It is worth reiterating that the condition requiring bank
officers to be still employed as of June 15, 1998 to be eligible to the adjusted benefits,
was included by Metrobank for the first time in the 1998 Officers’ Benefits Memorandum
dated June 10, 1998.
RATIO:

It is a time-honored rule that in controversies between a laborer and his master, doubts
reasonably arising from the evidence or in the interpretation of agreements and writings
should be resolved in the former’s favor. The policy is to extend the applicability to a
greater number of employees who can avail of the benefits under the law, which is in
consonance with the avowed policy of the State to give maximum aid and protection to
labor. This principle gives us even greater reason to affirm the findings of the CA.

Leoncio v. MST Marine Services (Phils.), Inc., G.R. No. 230357, December 6, 2017

FACTS

Private respondent MST Marine Services (Phils.), Inc. (MST Marine) is a domestic
manning agency with private respondent Thome Ship Management Pte. Ltd (Thome) as
one of its principals. Starting May 5, 1996, and for a period of more than eighteen (18)
years thereafter, MST Marine repeatedly hired Leoncio to work for its principals,
including Thome. The petitioner disembarked from M/V Golden Stream, owned by one
of the respondent's principals, and was repatriated to be treated for his Coronary Artery
Disease/Hypertensive Cardio-Vascular Disease (CAD/HCVD) by the
company-designated physician. For two months, he received a sickness allowance and
was in the care and management of the company-designated physician. Thereafter,
respondents declared him "fit to work" and redeployed him, albeit with a demotion in
rank. After several more deployments from 2005, respondents employed petitioner
Leoncio. Before his embarkation, he underwent a pre-employment medical examination
(PEME) and was declared "fit for sea duty." While performing his duties on board M/V
Knossos on May 25, 2014, Leoncio suddenly felt heavy chest pains, shortness of
breath, numbness of the left portion of his face, and a hypertensive reaction. The
Master of the Vessel allowed him to rest and take medicine when Leoncio reported his
condition. However, in June 2014, Leoncio again experienced the same symptoms.
Leoncio was admitted to the Geelong Hospital in Australia, where he was diagnosed
with "unstable angina" and subsequently underwent "PCI in due course; Leoncio was
medically repatriated to the Philippines. Two days later, he was referred to the
company-designated physician for post-employment medical examination and
treatment. While undergoing treatment, respondent MST Marine inquired regarding
Leoncio's condition. In particular, MST Marine asked the doctor to check or confirm
whether Leoncio had previously undergone stenting procedures. On October 4, 2014,
Dr. Nolasco confirmed that Leoncib had undergone a stenting procedure. Based on this
information, MST Marine cut off the medical and sickness allowances provided to
Leoncio on the grounds of his failure to declare during the PEME that he underwent a
stenting procedure.

The latter issued a medical certificate declaring Leoncio unfit for work. Therefore, upon
evaluation of his cardiovascular history, he is labeled as UNFIT for further sea duty and
therefore compensable with Grade 1 impediment, the basis for which is IT IS
WORK-RELATED. He was declared as FIT from his PEME based on his NORMAL
STRESS ECHO, and the lesions that underwent angioplasty are new and not of the
previous PCI. On account of the doctors' findings that the lesions found in 2014 were
new and not connected with the previous stents, Leoncio filed a complaint for
permanent and total disability benefits against the private respondents.

Labor Arbiter Decision

The Labor Arbiter noted, as the petitioner has insisted, that the respondents were
already aware of the existence of Leoncio's coronary artery disease
(CAD/HCVD) since 2001 but nonetheless reemployed and redeployed him to
work for several more years. Thus,' for the Labor Arbiter, the petitioner's failure to
disclose the stenting procedure in 2009 cannot bar his claim for permanent and
total disability benefits.

NLRC Decision

NLRC held that Leoncio's concealment of the stenting procedure during the
PEME is a misrepresentation that bars his right to any disability compensation or
illness benefit under the POEA-SEC.20 The NLRC paid no heed to Leoncio's
argument that the respondent already knew of his coronary artery disease since
2001, when he was first medically repatriated on account thereof. The NLRC
believed that "a previous illness before the 2008 medical procedure should not
be used as proof of [petitioner's] illness.

CA Decision

Adopting the NLRC's recitation of facts and likewise citing Status Maritime v.
Spouses Delalamon, the legal conclusions reached by the NLRC were likewise
adhered to by the CA in holding that Leoncio's concealment of the stenting
procedure during the PEME bars his right to disability benefit under the
POEA-SEC. Besides a brief statement of Leoncio's argument that the
respondents knew of his condition given his medical repatriation in 2001, this fact
was lost in the appellate court's discussion.
ISSUE - W/N the petitioner committed a fraudulent misrepresentation that bars his
recovery of total disability benefits

RULING

NO. In this case, nothing can be plainer than the meaning of the word "illness," referring
to a disease or injury afflicting a person's body. By the doctrine of noscitor a sociis,
"condition" likewise refers to one's health. Neither of these words refers to a medical
procedure undergone by a seafarer in connection with an "illness or condition" already
known to the employer as far back as 2001. For this, the Court extends its full
concurrence to the conclusion reached by the Labor Arbiter that the employer cannot
validly decry his supposed concealment and fraudulent misrepresentation of Leoncio's
illness due to the non-disclosure of the stenting procedure.

The rule is that where the law speaks in clear and categorical language, there is no
room for interpretation; there is only room for application. Only when the law is
ambiguous or of doubtful meaning may the court interpret or construe its true intent.

RATIO: Even then, Article 4 of the Labor Code is explicit that "all doubts in the
implementation and interpretation of the provisions of the Labor Code, including its
implementing rules and regulations, shall be resolved in favor of labor." This liberal
interpretation of labor laws and rules has been applied to employment contracts by
Article 1702 of the New Civil Code, which mandates that ''all labor contracts" shall
likewise be construed in favor of the laborer.

Most importantly, the record is undisputed that the complainant was first medically
repatriated in 2001 due to Hypertension and Angina Pectoris, where he was declared
"Fit for Sea Duty" after undergoing treatment by the company-designated physician. He
was initially demoted for one contract after said medical repatriation but reverted to his
old position as Chief Cook on subsequent deployments. Respondents cannot claim
there was misrepresentation by the complainant because of his medical repatriation in
2001, which contradicts their alleged lack of knowledge of said pre-existing illnesses of
the complainant. These circumstances indubitably establish respondents' awareness of
the complainant's impaired medical condition despite being considered fit to work.
Hence, the allegations of fraudulent misrepresentation by the respondents cannot be
given credence.

Coca-Cola Bottlers Philippines, Inc. v. Iloilo Coca-Cola Plant Employees Labor Union,
G.R. No. 195297, December 5, 2018
FACTS:

Petitioner Coca-Cola Bottlers Philippines, Inc. (CCBPI) is a domestic corporation

engaged in the business of manufacturing and selling of leading non-alcoholic products
and other beverages. It operates a manufacturing plant in Ungka, Pavia, Iloilo City,
where the aggrieved former employees herein, as represented by respondent Iloilo
Coca-Cola Plant Employees Labor Union (respondent), worked as regular route drivers
and helpers. The conflict arose due to the CCBPI's policy involving Saturday work. In
the said policy, several of CCBPI's employees were required to report for work on
certain Saturdays to perform a host of activities, usually involving maintenance of the
facilities. This prerogative was supposedly consistent with the pertinent provisions in the
Collective Bargaining Agreement (CBA) between CCBPI and its employees, which
stated that management had the sole option to schedule work on Saturdays on the
basis of operational necessity. CCBPI later on informed the respondent that, starting
July 2, 2005, Saturday work would no longer be scheduled, with CCBPI citing
operational necessity as the reason for the decision. As a result of the foregoing, the
respondent submitted to CCBPI its written grievance, stating therein that CCBPI's act of
disallowing its employees to report during Saturday is a violation of the CBA provisions.
Respondent thus brought its grievances to the office of the National Conciliation and
Mediation Board, and on June 9, 2006, the parties pursuant to the provisions of their
CBA submitted the case for voluntary arbitration. The panel comprised of three (3)
voluntary arbitrators (the Panel of Arbitrators), was charged with resolving two issues:
First, whether or not members of the respondent were entitled to receive their basic pay
during Saturdays under the CBA even if they would not report for work, and second,
whether or not CCBPI could be compelled by the respondent to provide work to its
members during Saturdays under the CBA; the Panel of Arbitrators ruled in favor of
CCBPI. On the second issue, the PANEL, rules that [CCBPI] cannot be compelled by
the Complainant Union to provide works to its members during Saturdays under the
CBA, for lack of legal and factual basis.

Respondent's Motion for Reconsideration to the Panel of Arbitrators' ruling was denied
for lack of merit. Unwilling to accept the findings of the Panel of Arbitrators, the
respondent elevated its case to the CA via a Petition for Review under Rule 43 of the
Rules of Court. After a review of the same, the CA subsequently rendered a Decision
dated June 23, 2010 granting the respondent's Petition for Review and reversing the
decision of the Panel of Arbitrators. CCBPI disagrees with the CA that the scheduling of
work on a Saturday had ripened into a company practice and that the withdrawal of
Saturday work constitutes a prohibited diminution of wages. CCBPI maintains that work
on a Saturday does not amount to a benefit as a result of a long-established practice.

ISSUE:
W/N scheduling Saturday work has ripened into a company practice, the removal of
which constituted a diminution of benefits, to which CCBPI is likewise liable to the
affected employees for, including the corresponding wage for the Saturday work which
was not performed pursuant to the policy of the Company to remove Saturday work
based on operational necessity?

RULING:

NO. The Supreme Court disagrees with the CA ruling. To note, the CBA under Article
11, Section 1(c), clearly provides that CCBPI has the option to schedule work on
Saturdays based on operational necessity. There is no ambiguity to the provision, and
no other interpretation of the word "work" other than the work itself and not the working
hours. If the parties had truly intended that the option would be to change only the
working hours, then it would have so specified that the whole term "working hours" be
used, as was done in other provisions of the CBA. By comparison, there is a provision
in Article 10 that states: SECTION 2. Changes in Work Schedule. The present regular
working hours shall be maintained for the duration of this Agreement. However, it is
hereby agreed that the COMPANY may change the prevailing working hours, if in its
judgment, it shall find such change or changes advisable or necessary either as a
permanent or temporary measure, provided at least twelve (12) hours notice in advance
is given of such change or changes, and provided, further, that they are in accordance
with law. Here, hours are specified as that which can be changed regarding the work
schedule. The Court compares this to Article 11, where it is expressly stated' that
management has the option to schedule work on Saturdays on the basis of operational
necessity. To emphasize, if it is only the hours that management may amend, then it
would have been so stated, with that specific term used instead of just merely "work," a
more general term.

For the Court, the phrase "schedule work on Saturdays based on operational necessity,"
by itself, is union recognition that there are times when exigencies of the business will
arise requiring a manning complement to suffer work for four additional hours per week.
Necessarily, when no such exigencies exist, the additional hours of work need not be
rendered. As such, the provisions' tenor and plain meaning give company management
the right to compel its employees to suffer work on Saturdays. This necessarily includes
the prerogative not to schedule work.

In the decision of the CA, it was held that the fact that CCBPI had been providing work
to its employees every Saturday for several years, a circumstance that proved Saturday
was part of the regular work week, made the grant of Saturday work ripen into company
practice. CCBPI stresses that since overtime work does not fall within the definition of
benefits, the same is not protected by Article 100 of the Labor Code which proscribes
the diminution of benefits. To wit: First. respondents assert that Article 100 of the Labor
Code prohibits the elimination or diminution of benefits. However, contrary to the nature
of benefits, petitioners did not freely give the payment for overtime work to respondents.
Petitioners paid respondents overtime pay as compensation for services rendered in
addition to the regular work hours. . The requirement of rendering additional service
differentiates overtime pay from benefits such as thirteenth month pay or yearly merit
increase. These benefits do not require any additional service from their beneficiaries.
Thus, overtime pay does not fall within the definition of benefits under Article 100 of the
Labor Code.

Even assuming arguendo that the Saturday work involved in this case falls within the
definition of a "benefit" protected by law, the fact that it was made subject to a condition
(i.e., the existence of operational necessity) negates the application of Article 100
pursuant to the established doctrine that when the grant of a benefit is made subject to
a condition and such condition prevails, the rule on non-diminution finds no application.
Otherwise stated, if Saturday work and its corresponding premium pay were granted to
CCBPI's employees without qualification, then the company's policy of permitting its
employees to suffer work on Saturdays could have perhaps ripened into company
practice protected by the non-diminution rule.

RATIO:

On a final note, the Court cannot emphasize enough that its primary role as the
vanguard of constitutional guarantees charges it with the solemn duty of affording full
protection to labor. It is, in fact, well-entrenched in the deluge of our jurisprudence on
labor law and social legislation that the scales of justice usually tilt in favor of the
working man. Such favoritism, however, has not blinded the Court to the rule that justice
is, in every case for the deserving, to be dispensed in the light of the established facts
and applicable law and doctrine. The law does not authorize the oppression or
self-destruction of the employer. Management also has its own rights, which, as such,
are entitled to respect and enforcement in the interest of simple fair play. After all, social
justice is, in the eloquent words of Associate Justice Jose P. Laurel, "the humanization
of laws and the equalization of social and economic forces by the State so that justice in
its rational and objectively secular conception may at least be approximated."

Loadstar International Shipping, Inc. v. Erispe,J r., G.R.No. 221227, February 19, 2020

Facts:
Loadstar hired Erispe as a cook on board its vessel. Erispe claimed that he
was illegally dismissed and sought various monetary claims including
overtime pay, vacation leave benefits, and refund of medical expenses.
 Loadstar denied the allegations and Erispe disembarked for personal
reasons, and that his employment contract has expired. The Labor Arbiter
ruled in favor of Erispe and ordered Loadstar to pay him amount equivalent
to the unexpired portion of his contract. The NLRC granted Erispe’s appeal
and modified the Labor Arbiter’s decision by awarding additional overtime
pay, vacation leave with pay and refund of his medical expense. Both parties
appealed to CA. However, the CA denied both petitions.

Issue:
Whether Erispe is entitled to overtime pay, sick and vacation leave benefits,
and refund of medical expenses.

Ruling:
The SC held that as to vacation leave, Erispe is entitled in view of the finding
of illegal dismissal equivalent to his VL credits for the unexpired portion of his
contract. As regards the medical expenses, Erispe is not entitled for failure
to comply with the provisions under his employment contract. Finally, as to
overtime pay, Erispe is not entitled for failure to submit proof that overtime
work was actually performed.

Doctrine:
While the court adheres to the principle of liberality in favor of the seafarer in
construing the POEA-SEC, liberal construction is not a license to misapply
our laws. There are circumstances that warrant favoring labor over interests
of management but the scale should not be so tilted as to result in an
injustice because the law, in protecting the rights of the labor, authorizes
neither oppression nor self-destruction of management.

9. Burden of Proof/Quantum of Evidence

JR Hauling Services v. Solamo, G.R. No. 214294, September 30, 2020

Facts:
 JR Hauling Services is a domestic corporation engaged in hauling and
delivery of broiler chickens. The respondents are drivers/helpers oft the
corporation tasked to transport live chickens from broiler farms to processing
plants. Respondents were required to secure additional broilers from farms
to replace those that died during transport. The corporation alleged that the
respondents incurred shortages in broiler deliveries and were involved in
unauthorized sale of excess broilers and crates. The corporation presented
a summary of short broiler deliveries and affidavits of its manager, helper,
and respondent’s co-employees to support its allegations. Respondents
denied the allegations and claimed that they were dismissed w/o due
process.

Issue:
Whether there is substantial evidence to prove that the respondents were
validly dismissed from employment.

Ruling:
Yes. The SC held that the affidavits of respondent’s co-employees, who
admitted their involvement in the unauthorized sale of excess broilers and
crates, constitute substantial evidence to establish respondent’s participation
in the anomalous transaction. Respondent’s act amount to serious
misconduct, fraud, and breach or trust which are causes for dismissal under
the Labor Code.

Doctrine:
In labor cases, the quantum of proof required is substantial evidence, which
is lower than the standard of proof beyond reasonable doubt in criminal
cases. Substantial evidence is “such relevant evidence as a reasonable
mind might accept as adequate to support a conclusion, even if other minds,
equally reasonable, might conceivably opine otherwise”. In the hierarchy of
evidence, it is the least demanding. Proof beyond reasonable doubt—Clear
and convincing—preponderance of evidence—substantial evidence.

9.1 Termination Cases

Roxas v. Baliwag Transit, Inc., G.R. No. 231859, February 19, 2020

Facts:
 Roxas was employed as a bus driver by BTI. In 2012, the bus to which
Roxas was assigned was phased out due to a government regulation. As a
result, his work assignment was reduced from 3 to 2 weeks per month.
Roxas filed a complaint for constructive dismissal and other labor-related
claims against BTI. During the proceedings, BTI terminated Roxas for
alleged misconduct, insubordination, and abandonment. AS basis for
dismissal, BTI gave Roxas an assignment which fell on the date of his
hearing before the NLRC and charged him of filing labor cases against the
company w/o basis.

Issue:
Whether Roxas’ termination was justified.

Ruling:
No, the SC held that BTI failed to prove by substantial evidence that Roxas’
filing of complaints and his refusal to comply with directives constituted
misconduct, insubordination, or abandonment.

Doctrine:
Mere absence or failure to report to work is not tantamount to abandonment.
The absence must be accompanied by overt acts unerringly pointing to the
fact that the employee simply does not want to work anymore, and the
burden of proof to show that there was unjustified refusal to go back to work
rests upon the employer.

9.2 Fact of Dismissal

Doctor v. NII Enterprises, G.R. No. 194001, November 22, 2017

Facts:
Doctor and Lao were employed by NII Enterprises owned by Ignacio. Doctor
and Ignacio had a serious argument, prompting Doctor to file a complaint for
slander and threat against Ignacio. Efforts to amicably settle the dispute
failed. Doctor then filed a complaint for illegal dismissal against NII
Enterprises because allegedly, they were suddenly prohibited from entering
the premises of NII enterprises and expressly told not to report for work
anymore.
 The labor arbiter ruled in favor of Doctor and awarded separation pay instead
of backwages, in view of the restrained relationship between Doctor and
Ignacio. The latter appealed before the NLRC. The NLRC partially granted
the motion and reduced the monetary awards.

Ignacio appealed to the CA. The CA ruled in favor of Ignacio and held that
while the employer has the burden in illegal dismissal cases of proving that
the termination was for valid or authorized cause, the employee must first
establish by substantial evidence the fact of dismissal from service which the
petitioners failed to do so. Petitioners appealed before the SC.

Issue:
Whether CA erred in reversing the decision of the NLRC finding that the
petitioners were not illegally dismissed.

Ruling:
No, the SC held that the CA did not err in reversing the decision of NLRC.
The petitoner’s bare allegation that they were dismissed from employment by
respondents, unsubstantiated by impartial and independent evidence, is
insufficient to establish such fact of dismissal.

Doctrine:
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, there can be no question as
to the legality or illegality thereof. The evidence to prove the fact of the
employee’s termination from employment must be clear, positive, and
convincing.

9.3 Constructive Dismissal and Resignation

Gan v. Galderma Philippines, Inc., G.R. No. 177167, January 17, 2013

Facts:
Gan was hired by Galderama Phil. In. as product manager for its consumer
products division in 2001. Due to his exemplary performance, his
responsibilities were later expanded to include the Locetar and Benzac
brands. Gan alleged that Galderama’s President, Veneracion, committed
acts of harassment against him such as questioning his competence, asking
him to reconsider his stay in the company, and revising his incentive scheme.
On April 11, 2002, Gan submitted a resignation letter effective July 15, 2002,
which was accepted by his immediate superior. Gan claimed that Veneracion
forced him to resign, giving him the option of either resigning or being
terminated in 15 days. Galderama denied forcing Gan’s resignation and
stated that Gan requested a grace period to either find a new job or start his
own business.

Labor Arbiter Manansala dismissed the complaint for constructive dismissal.

He noted that Gan’s separation from Galderama was voluntarily initiated. On
appeal, the NLRC upheld the decision of the Labor Arbiter stating that Gan’s
resignation letter is more determinative in the present controversy as it
distinctly speaks of his reasons for resigning. Gan appealed to CA but his
appeal was denied. Gan appealed to the SC.

Issue:
The CA erred in finding that Gan was not constructively dismissed as
evidence solely by the tenor of his resignation letter.

Ruling:
No, the SC held that the CA did not err in finding that Gan was not
constructively dismissed as evidence by his resignation letter. Since Gan
submitted a resignation letter, it is incumbent upon him to prove with clear,
positive, and convincing evidence that his resignation was not voluntary but
was actually a case of constructive dismissal; it is a product of coercion or
intimidation.

Doctrine:
Constructive dismissal is defined as quitting or cessation of word because
continued employment is rendered impossible, unreasonable, or unlikely;
when there is a demotion in rank or a diminution of pay and other benefits. It
exists 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. There is
involuntary resignation due to harsh, hostile, and unfavorable conditions set
by the employer. The test of constructive dismissal is whether a reasonable
person in the employee’s position would have felt compelled to give up his
employment/position under the circumstances.
 Resignation is the voluntary act of an employee who is in a situation where
one believes that his personal reasons cannot be sacrificed in favor of the
exigency of service, and one has no other choice but to dissociate oneself
from employment.

Doble, Jr. v. ABB, Inc., G.R. No. 215627, June 5, 2017

Facts:
Doble was a long-time employee of ABB Inc., holding the position of
Vice-President and Local Division Manager of the Power System Division.
On March 2, 2012, Doble received an unsatisfactory rating for 2011. On
March 13, 2012, he was called to meeting by ABB Inc., President Nitin Desai,
who informed him that the Global and Regional Management demanded a
change in leadership due to losses and discontent in the division. Desai
gave Doble the option to resign, and Doble negotiated for a higher separation
pay. Doble submitted a resignation letter and letter of intent to purchase his
service vehicle. On March 23, 20212, Doble met with the HR Manager
outside the company premises, signed a waiver and quitclaim, and received
his separation benefits. On March 26, 2012, Doble filed a complaint for
illegal dismissal, alleging that he was constructively dismissed and forced to
resign.

Issue:
Whether Doble was constructively dismissed or voluntarily resigned.

Ruling:
The SC ruled that Doble voluntarily resigned and was not constructively
dismissed. The Court found that Doble’s intent to relinquish his employment
concurred with the overt act of relinquishment, as evidence by his negotiation
for a higher separation pay, submission of a resignation letter and letter of
intent to purchase his service vehicle, execution of a waiver and quitclaim,
and receipt of separation benefits. The Court further held that Doble’s
allegations of coercion and intimidation were not supported by clear, positive,
and convincing evidence, and his actions before and after his resignation
showed his clear intention to sever his employment with ABB, Inc.

Doctrine:
 In illegal dismissal, the fundamental rule is that when an employer interposes
the defense of resignation, the burden to prove that the employee indeed
voluntarily resigned necessarily rests upon the employer. However, since
Doble claims to have been forced to submit a resignation letter, it is
incumbent upon him to prove with clear and convincing evidence that his
resignation was not voluntary, but was actually a case of constructive
dismissal—a product of coercion or intimidation. Even if the option to resign
originated from the employer, what is important for resignation to be deemed
voluntary is that the employee’s intent to relinquish must concur with the
overt act of relinquishment.

Cokia Industries Holdings Managements, Inc. v. Bug-os, G.R. No. 236322, November
27, 2019

Facts:
Bug-os was employed as an accounting personnel of CIHMI. Her task
consisted primarily of salary payrolls, vouchers, contributions, and processing
of loan and other remittances to government agencies. She was accused of
participating in irregularities involving forgeries and falsification of loan and
remittances to PAG-IBIG. George—Company President, issued her notice to
explain her involvement in the irregularities. While Bug-os denied
participation in the irregularities, she submitted and handwritten resignation
letter and later filed a complaint for illegal dismissal. The Labor Arbiter
dismissed her complaint. On appeal, the NLRC affirmed the dismissal, but
later granted Bug-os’ motion for reconsideration and found her dismissal to
be illegal. The CA affirmed the NLRC’s ruling.

Issue:
Whether Bug-os’ was constructively dismissed or she voluntarily resigned.

Ruling:
The SC held that Bug-os was not constructively dismissed and thus,
voluntarily resigned, because of lack of evidence to support her claim of
constructive dismissal. Her resignation letter did not indicate coercion and
she falied to provide sufficient evidence of harassment or hostile treatment.
Moreover, Bug-os’ action of authorizing her cousin to withdraw her monetary
benefits supports the conclusion that she intended to severe her
employement.
St. Paul College, Pasig v. Mancol, G.R. No. 222317, January 24, 2018

Facts: Mancol and Valera respectively took medical leaves; Mancol took a fertility test in
Canada while Valera had a scoliosis operation. Upon returning, both constantly
attempted to report back to work and submitted proof of their respective medical leaves,
such as medical certificate stating fitness to work. However, St. Paul College, Pasig
employed means which prevented Mancol and Valera to report back to work, such
preventing Mancol to teaching and entering her class, being introduced to students,
preparing class materials, and preventing from going to other offices, while Valera was
given the choice of taking a one-year leave of absence or taking a class in a higher
level. Because of the acts of St. Paul College, Pasig, both Mancol and Valera were
forced to sever their ties with the school resulting in constructive dismissal. St. Paul
College, Pasig insisted that they were not constructively dismissed but in fact
abandoned their work.

Issue: WON Mancol and Valera were not constructively dismissed but they abandoned
their work

Ruling: No. The Court ruled that St. Paul College, Pasig failed to discharge their burden
proving the existence of the element of abandonment of work. For a termination of
employment on the ground of abandonment of work to be valid, the employer
must prove by substantial evidence, the concurrence of the employee’s failure to
report for wok for no valid reason and his categorical intention to discontinue
employment. There was no proof that Mancol and Valera abandoned their work,
instead, evidence show that they wanted to return to work but was prevented by the
school.

9.4 Existence of Employment Relationship

Valenciav.ClassiqueVinylProductsCorporation,G.R.No.206390,January30,2017

Facts: Valencia filed a complaint for underpayment of salary against Classique Vinyl and
Cantingas Manpower Services (CMS). In Valencia’s Sinumpaang Salaysay, he alleged
that he applied for work with Classiqe Vinyl but was told by the latter’s personnel to
proceed to CMS, a local manpower agency, and therein submit the requirement for
employment. His application was received and processed by CMS which required him
to submit the necessary requirements for employment. It is CMS that caused him to
sign the employment contract which is actually between CMS and Valencia. After being
engaged as contractual employee of CMS, he was deployed to Classique Vinyl.

Issue: WON there exist an employer-employee relationship between Valencia and

Classique Vinyl

Ruling: No. Burden proof rests upon the party who asserts the affirmative of an
issue. Substantial evidence must be shown by Valencia to prove the existence of
employment relationship. The elements of employment relationship are: (1) the
selection and engagement of the employee; (2) the payment of wages; (3) the power of
dismissal; and (4) the power of control. Moreover, any competent and relevant evidence
to prove the relationship may be admitted. In the case at bar, Valencia failed to present
competent evidence to support his claimed employer-employee relationship between
him and Classique Vinyl. He presented merely factual assertions unsupported by proof.

9.5 Monetary Claims

Asentista v. Jupp & Company, Inc., G.R. No. 229404, January 24, 2018

Facts: Asentista was provided with a service vehicle by Jupp & Company, Inc.,
ownership of which was retained by the Company. Jupp & Company allowed her to use
the company vehicle to further the performance of her function as a sales agent.
However, without her consent, Jupp & Company deducted car participation and
amortization payment to Asentista’s unpaid sales commission, to the latter’s prejudice.
Asentista tendered her resignation and returned the service vehicle. Thereafter, she
filed a claim for unpaid commission and refund for a car plan deduction. The Company
refused to pay on the ground that the burden of proof to substantiate the unpaid
commission and car participation refund rests upon her. Further, the Company allege
that the employment agreement signed by Asentista did not include any remuneration
for a sales commission and car participation plan.

Issue: WON Asentisa is not entitled to sales commissions in view of the absence of any
specific provision in her employment agreement.

Ruling: No. Silence of the employment agreement including sales commission as part of
remuneration does not affect her entitlement. It is a settled labor doctrine that in
cases involving non-payment of monetary claims of employees, the employer has
the burden of proving that the employees did receive their wages and benefits
and that the same were paid in accordance with law. The rule is based on the fact
that the accessibility over the employment records, pertinent personnel files, payroll,
remittances, and other similar documents which will show that overtime, differentials,
service incentive leave, and other claims have been paid to the employee is exclusively
within the custody and absolute control of the employer. Thus, the Court reversed the
decision of the Court of Appeals and reinstated the resolution of the NLRC, ordering
Jupp & Company to pay Asentista.

De Guzman v. NLRC, G.R. No. 167701, December 12, 2007

Facts: Petitioner De Guzman was employed as a bus conductor by private respondent

Philippine Rabbit Bus Line Company. De Guzman filed application for leave of absence
since he was experiencing chronic pain from the gunshot wound, he sustained when he
tried to defend the earnings of the company from brigands. Because of his leave of
absence, he was placed under preventive suspension. Subsequently, he was given the
“run-around” treatment by the Company. De Guzman filed a complaint against the
Respondent company for illegal dismissal, underpayment/non-payment of overtime pay,
premium pay for holiday and rest day and service incentive leave pays, as well as moral
and exemplary damages. The Labor Arbiter rendered a decision dismissing the
complaint on the ground that an unacted application for leave has the effect oof
abandonment if an employee begins to enjoy a leave of absence even before its
approval. The Labor dismissed the monetary claim for failure of De Guzman to
substantiate the same. The claims for moral and exemplary damages were also denied
as there was no allegation of malice or ill will in the dismissal of petitioner.

Issue: WON De Guzman is entitled to payment of overtime pay and other money claims
and damages.

Ruling: Yes. General rule is that the burden rests on the defendant to prove
payment, rather than on the plaintiff to prove nonpayment. Moreover, it is a rule
that moral damages are recoverable where the dismissal of the employee was
attended by bad faith or fraud or constituted an act oppressive to labor, or was
done in a manner contrary to morals, good customs, or public policy. Exemplary
damages are proper when the dismissal was affected in a wanton, oppressive or
malevolent manner, and public policy requires that these acts must be
suppressed and discouraged. Respondent company failed to discharge the burden to
prove payment by presenting, as its sole evidence, the CBA between the Union and the
Respondent company. Even if the Labor Arbiter took judicial notice of the CBA, it does
not prove by substantial evidence that petitioner was indeed paid of what was provided
therein. He is likewise entitled to moral and exemplary damages since the dismissal
was procedurally defective without just cause.

Powerhouse Staffbuilders International, Inc. v. Rey, G.R. No. 190203, November 7,

2016
Facts: Powerhouse hired the respondent employees as operators for its foreign
principal, Catcher Technical Co. Ltd/Catcher Industrial Co. Ltd. After a year of
deployment, Catcher informed the respondent employees that they would be reducing
their working days due to financial difficulties. The respondent employees filed
separate complaints for illegal dismissal, refund of placement fees, moral and
exemplary damages, as well as attorney’s fees, against Powerhouse and Catcher.
During the proceedings before the Labor Arbiter, Powerhouse moved to implead JEJ
International Manpower Services as respondent on account of the alleged transfer to
the latter of Catcher’s accreditation. JEJ argued that the supposed transfer of
accreditation to it did not affect the joint and solidary liability of Powerhouse in favor of
respondent employees.

Issue: WON the transfer of accreditation to another recruitment and placement agency,
as well as the assumption of any liability as a consequence of this transfer, relieved the
original recruitment and placement agency from any liability.

Ruling: No. The liability of the principal/employer and the recruitment/placement

agency for any and all claims under Sec. 10 of R.A. No. 8042 shall be joint and
several. If the recruitment/placement agency is a juridical being, the corporate
officers and directors and partners, as the case may be, shall themselves be
jointly and solidarily liable with the corporation or partnership for the aforesaid
claims and damages. Such liabilities shall continue during the entire period or
duration of the employment contract and shall not be affected by any
substitution, amendment or modification made locally or in a foreign country of
the said contract. In the instant case, even if there was a transfer of accreditation by
Cather from Powerhouse to JEJ, Powerhouse’s liability to respondent employees
remained intact because respondent employees are not privy to such contract, and in
their overseas employment contract approved by POEA, Powerhouse is the
recruitment agency of Catcher. To relieve Powerhouse from liability arising from the
approved overseas employment contract is to change the contract without the consent
from respondent employees.

Minsola v. New City Builders, Inc., G.R. No. 207613, January 31, 2018

Facts: New City hired Minsola as a laborer for the structural phase of its Avida Tower 3
Project. The employment contract stated that the duration of Minsola’s employment will
last until the completion of the structural phase. Minsola received a notice of termination
upon completion of the structural phase. Minsola was rehired as a mason for the
architectural phase of the project. However, upon reviewing of Minsola’s employment
record, New City noticed that Minsola had no appointment paper as a mason for the
architectural phase. New City instructed Minsola to update his employment record to
which he ignored. When Minsola was summoned to the office New City to sign his
appointment papers, Minsola refused to comply with the directive. He never reported
back for work. After some time, Minsola filed a complaint for illegal dismissal,
underpayment of salary, non-payment of 13th month pay, separation pay, and refund of
cash bond.

Issue: WON Minsola is entitled to his monetary claims consisting of his salary
differential, service incentive leave pay differential, holiday pay and 10% attorney’s fees.

Ruling: In determining the employee’s entitlement to monetary claim, the burden of

proof is shifted from the employer or the employee, depending on the monetary claim
sought. In claims for payment of salary differential, service incentive leave,
holiday pay and 13th month pay, the burden rests on the employer to prove
because it follows the basic rule that in all illegal dismissal cases, the burden
rests on the defendant to prove payment rather than on the plaintiff to prove
non-payment. On the other hand, for overtime pay, premium pays for holidays
and rest days, the burden is shifted to the employee, as these monetary claims
are not incurred in the normal course of business. In the instant case, Minsola is
entitled to service incentive leave pay differential, 13th month pay differential and holiday
pay. However, Minsola’s claims for premium pay for holiday and rest day, as well as
night shift differential are denied since Minsola failed to specify the dates when he
worked during special days, or rest days. Minsola is likewise awarded the attorney’s
fees, as the case includes claim for unlawfully withheld wages.

D. EMPLOYER-EMPLOYEE RELATIONSHIP

1. Definition of Employer and Employee (Labor Code, Arts. 97[b][c], 173 [f][g], 219 [e][f];
DO 147- 15, S4[g][h])

2. Tests to Determine Employer-Employee Relationship

2.1 Four-Fold Test

Felicilda v. Uy, G.R. No. 221241, September 14, 2016

Ruling: To ascertain the existence of an employer-employee relations, jurisprudence

has invariably adhered to the four-fold test:
 a. The selection and engagement of employee
b. The payment of wages
c. The power of dismissal
d. The power of control (“control-test”) – The power of the employer to control the
work of the employee is considered the most significant determinant of the
existence of an employer-employee relationship. This is premised on whether the
person for whom the services are performed reserves the right to control both the
end achieved and the manner and means used to achieve that end. It must,
however, be stressed that the “control test” merely calls for the existence of the
right to control, and not necessarily the exercise thereof. To be clear, the test
does not require that the employer actually supervises the performance of duties
of the employee.

Royale Homes Marketing Corporation v. Alcantara, G.R. No. 195190, July 28, 2014

Facts:

Royale Homes a corporation involved in marketing real estates, selected Alcantara as

its Marketing Director for a fixed period of one year. His work entailed mainly of
marketing Royale Homes' real estate inventories on an exclusive basis. Additionally,
Alcantara was reappointed for several years by the petitioner where he held the position
of Division 5 Vice-President Sales.

However, Alcantara filed a complaint alleging that he was illegally dismissed by the
Corporation. Alcantara claimed that he is a regular employee of the petitioner since he
is performing tasks that are necessary and desirable to its business purpose. Moreover,
he alleged that he was dismissed from work without any valid or just cause and in gross
disregard of the proper procedure for dismissing employees by the Corporate Officers.

Royale Homes, on one hand, denied that Alcantara is its employee. Its main argument
revolves around the notion that they only engaged in the services of the respondent nor
he never received any benefits from the Corporation per se.

Labor Arbiter ruled in favor of Alcantara contending he is an employee of Royale

Homes. While the National Labor Relations Commission rendered the decision that
Alcantara is an independent contractor of Royale Homes and not an employee. Finally,
the Court of Appeals promulgated its decision reversing NLRC decision applying the
four-fold and economic reality tests. Hence this petition.

Issue:

Whether or not Alcantara was an employee of Royale Homes.

Ruling:

No, the Court Disagrees. In determining the existence of an employer-employee

relationship, this Court has generally relied on the four-fold test, to wit: (1) the selection
and engagement of the employee; (2) the payment of wages; (3) the power of dismissal;
and (4) the employer’s power to control the employee with respect to the means and
methods by which the work is to be accomplished. In concluding that Alcantara is an
employee of Royale Homes, the CA ratiocinated that since the performance of his tasks
is subject to company rules, regulations, code of ethics, and periodic evaluation, the
element of control is present.

The Court held that 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, the rules imposed by the hiring party on the hired party do not amount
to the labor law concept of control that is indicative of employer-employee relationship.

In Insular Life Assurance Co., Ltd. v. National Labor Relations Commission35 it

was pronounced that:

Logically, the line should be drawn between rules that merely serve as guidelines
towards the achievement of the mutually desired result without dictating the
means or methods to be employed in attaining it, and those that control or fix the
methodology and bind or restrict the party hired to the use of such means. The
first, which aim only to promote the result, create no employer-employee
relationship unlike the second, which address both the result and the means
used to achieve it.

In this case, the Court agrees with Royale Homes that the rules, regulations, code of
ethics, and periodic evaluation alluded to by Alcantara do not involve control over the
means and methods by which he was to perform his job. Understandably, Royale
Homes has to fix the price, impose requirements on prospective buyers, and lay down
the terms and conditions of the sale, including the mode of payment, which the
independent contractors must follow. It is also necessary for Royale Homes to allocate
its inventories among its independent contractors, determine who has priority in selling
the same, grant commission or allowance based on predetermined criteria, and
regularly monitor the result of their marketing and sales efforts. But to the mind of this
Court, these do not pertain to the means and methods of how Alcantara was to perform
and accomplish his task of soliciting sales. They do not dictate upon him the details of
how he would solicit sales or the manner as to how he would transact business with
prospective clients.

Ratio:

WHEREFORE, the instant Petition is hereby GRANTED. The June 23, 2010 Decision of
the Court of Appeals in CA-G.R. SP No. 109998 is REVERSED and SET ASIDE. The
February 23, 2009 Decision of the National Labor Relations Commission is
REINSTATED and AFFIRMED. SO ORDERED.

2.2 Two-Tiered Test

Francisco v. NLRC, G.R. No. 170087, August 31, 2006

Facts:

The petitioner was hired in 1995 by Kosei Corporation during its incorporation stage.
She was selected to the position of Accountant, Corporate Secretary, and Liaison
Officer to secure the accounting needs, business permits, construction permits, and
other licenses. Although she was designated as Corporate Secretary, she was not
entrusted with the corporate documents nor prepared any legal document of the
Corporation; neither did she attend any board meeting nor required to do so. The
petitioner was also designated as Acting Manager and then was replaced. However, on
a convened meeting, the treasurer stated that she was still connected with the
Corporation as Technical Assistant to Seiji Kamura and all BIR matters. Therefore,
Kasei Corporation reduced her salary by P2,500.00 a month beginning January up to
September 2001 for a total reduction of P22,500.00 as of September 2001. Petitioner
was not paid her mid-year bonus allegedly because the company was not earning well
and as well as she did not receive her salary from the company. She made repeated
follow-ups with the company cashier but she was advised that the company was not
earning well. Lastly, the rest of officers informed her that she was not connected to the
Corporation anymore.

Petitioner filed an action for constructive dismissal before the Labor Arbiter.
Subsequently, the Labor Arbiter found out that she was illegally dismissed. The NLRC
then affirmed the decision of Labor Arbiter with modification. The Court of Appeals then
reversed the decision of NLRC. Thus this petition.

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

Ruling:

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

By applying the control test, there is no doubt that petitioner is an employee of Kasei
Corporation because she was under the direct control and supervision of Seiji Kamura,
the corporation’s Technical Consultant. She reported for work regularly and served in
various capacities as Accountant, Liaison Officer, Technical Consultant, Acting Manager
and Corporate Secretary, with substantially the same job functions, that is, rendering
accounting and tax services to the company and performing functions necessary and
desirable for the proper operation of the corporation such as securing business permits
and other licenses over an indefinite period of engagement.

Under the broader economic reality test, the petitioner can likewise be said to be an
employee of respondent corporation because she had served the company for six years
before her dismissal, receiving check vouchers indicating her salaries/wages, benefits,
13th month pay, bonuses and allowances, as well as deductions and Social Security
contributions.

In conclusion, based on the foregoing, there can be no other conclusion that petitioner
is an employee of respondent Kasei Corporation.

Ratio:

WHEREFORE, the petition is GRANTED. The Decision and Resolution of the Court of
Appeals dated October 29, 2004 and October 7, 2005, respectively, in CA-G.R. SP No.
78515 are ANNULLED and SET ASIDE. The Decision of the National Labor Relations
Commission dated April 15, 2003 in NLRC NCR CA No. 032766-02, is REINSTATED.
The case is REMANDED to the Labor Arbiter for the recomputation of petitioner
Angelina Francisco’s full backwages from the time she was illegally terminated until the
date of finality of this decision, and separation pay representing one-half month pay for
every year of service, where a fraction of at least six months shall be considered as one
whole year.

Wahing v. Spouses Daguio, G.R. No. 219755, April 18, 2022

Facts:

Richard N. Wahing, Ronald L. Calago, and Pablo P. Mait (rubber tree tappers) were
employed by the respondents, Spouses Amador and Esing Daguio. Mait was instructed
to stop tapping rubber trees on October 15, 2006, followed by Wahing and Calago on
February 6, 2007. As a result, Petitioners filed for illegal dismissal, seeking
reinstatement or separation pay, underpayment of wages, labor standards benefit,
damages, and attorney's fees.

Consequently, Labor Arbiter ruled in dismissing the complain due to the reason of
finding a landlord-tenant relationship rather than employer-employee. The NLRC then
remanded the case for further evidence. Labor Arbiter then ruled in favor of Petitioners
leading to the appeal of Daguio spouses. The NLRC once again remanded the case to
the Labor Arbiter for the admission of Daguio’s evidence. Then the petitioner filed a
petition for Certiorari to the Court of Appeals then the CA concluded that there is no
employer-employee relationship exists. Hence this petition.

Issue:

Whether or not the employment of Wahing, et al. constitutes an employer-employee

relationship.

Ruling:

Yes. The Supreme Court held that there was an employer-employee relationship.
Contrary to the Court of Appeals' findings, respondents employed petitioners as farm
workers and are, thus, subject to the rules governing an employer-employee
relationship.

Testimonies from petitioners' colleagues, who were similarly asked to leave the
plantation, illustrate that they: (1) were required to work at set hours per day; (2) were
paid a set rate per day of work; (3) worked under the respondents' constant supervision;
and (4) could be dismissed for violating the work standards set by respondents.

As to the element of control, rubber tapping does not lend itself to the usual standard of
assessing an employer's control over the "means and methods" of an employee's work.
As discussed in the Court of Appeals Decision, petitioners’ work only required the
collection of"rubber lumps from the 'bagol’ or small containers attached to the trunk" and
their placement in another container.

The "economic reality" test discussed in Francisco requires proof of the "the totality of
economic circumstances of the worker. Here, the testimonies submitted by petitioners
establish the totality of economic circumstances required by Francisco's economic
reality test. Petitioners perform services integral to respondents' business of running a
rubber plantation. While there was no proof on record of petitioners' investment in their
own work tools and facilities, the simplicity of the physical labor involved in their work
renders this element inconclusive.

The foregoing circumstances, when applied to the two-tier test in Francisco, show that
respondents exercised control over petitioners' hours, means, and methods of work.
Petitioners were also shown to be economically dependent upon respondents for their
livelihood. Thus, there exists an employer-employee relationship between the parties.

Ratio:

WHEREFORE, the Petition for Review on Certiorari is GRANTED. The Court of

Appeals' January 23, 2015 Decision, and its July 7, 2015 Resolution, are hereby
REVERSED and SET ASIDE.

The September 28, 2010 Decision of the Labor Arbiter finding the existence of the
employer-employee relationship and petitioners' illegal dismissal, and awarding back
wages and other benefits is hereby REINSTATED, subject to the possibility of
reinstatement in lieu of separation pay. Petitioners are likewise entitled to Attorney's
Fees at the rate of ten percent (10%) of the entire monetary award.

SO ORDERED.

3. Kinds/Classifications of Employment

GMA Network, Inc. v. Pabriga, G.R. No. 176419, November 27, 2013

Brent School, Inc. v. Zamora, G.R. No. L-48494, February 5, 1990

3.1 Regular (Labor Code, Arts. 295 [280], 296 [281])

Inocentes v. R. Syjuco Construction, Inc., G.R. No. 237020, July 29, 2019
De Leon v. NLRC, G.R. No. 70705, August 21, 1989

3.2 Project (Labor Code, Art. 295 [280])

Freyssinet Filipinas Corporation v. Amado R. Lapuz, G.R. No. 226722, March 18,
2019

Facts:

Respondent Lapuz worked as a warehouse supervisor for petitioner Freyssinet Filipinas

Corporation (FFC), now Frey-Fil Corporation, a domestic corporation engaged in the
business of general construction, pre-stressed, and post-tensioning.

According to the respondent, he commenced work for FFC since 199\ under the latter’s
previous company names, particularly:

· 1977 to 1982 – FF Interior

· 1982 to 1999 – Freyssinet Post Tensioning System Philippines

· 2006 to 2012 – FFC

Respondent averred that he was verbally informed of his termination from work by the
project manager but he continued to report at the project site until he received a notice
of termination in 2012 directing him to secure a clearance from the HR Department.
Then. He filed a complaint for illegal dismissal against the petitioners.

Issue:

Whether the respondent is a regular employee of the petitioner.

Ruling:

YES. The Court explained that an employee is said to be under a project employment
when he is hired under a contract which specifies that the employment will last only for
a specific project or undertaking the completion or termination of which is determined at
the time of his engagement. Thus, for an employee to be considered project-based, it is
incumbent upon the employer to prove 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 the employee was
engaged for such project.

In this case, respondent was supposedly engaged by FFC as warehouse supervisor for
its various projects. For the first three (3) projects that his services were employed,
petitioners failed to show that respondent was hired on a project basis and that he was
informed of the duration and scope of his work. In fact, no employment contracts for the
said projects were presented to substantiate their claim.

In addition, no termination reports for each completed projects were shown to have
been submitted by petitioners to the DOLE as mandated under Section 2 (2.2) (e) of
Department Order No. 19-93 and, in fact, it was only during respondent's last
assignment that they complied with the directive. It bears stressing that the failure of an
employer to file a termination report with the DOLE every time a project or a phase
thereof is completed indicates that the workers hired were not project employees. The
Court cited the case of Tomas Lao Construction v. NLRC, where it ruled that the report
of termination is one of the indicators of project employment.

Respondent's successive re-hiring in order to perform the same kind of work for the
same project, contract after contract, most of which were for a duration of one month
only, reasonably shows that respondent's project employment contracts were merely
used by petitioners to circumvent the law on tenurial security.

The Court concluded that the private respondent is a regular employee of the
corporation after considering that:

ü the function of a warehouse supervisor is necessary and desirable to the construction

business of petitioners, and

ü it has been sufficiently shown that respondent's work as such for the latter's various
projects without interruption since 2007 is necessary and desirable to petitioners'
construction business.

In sum, the Court held that where the employment of project employees is extended
long after the supposed project has been finished, the employees are removed from the
scope of project employees and are considered regular employees.
Serrano v. Loxon Philippines, Inc., G.R. No. 249092, September 30, 2020

Facts:
Armando N. Serrano, a regular employee of Loxon Philippines, Inc., filed a complaint for
illegal dismissal. Armando had been continuously employed by Loxon for 21 years as a
Helper Service Technician. Loxon required Armando and other employees to sign a
document stating that their contract would expire at the end of December 2015 and they
would be re-hired upon signing another contract valid for three months. Armando
refused to sign the new contract, claiming that he is a regular employee.

Armando filed a complaint for illegal dismissal when he was not assigned to any work or
project despite reporting to the office. The Labor Arbiter dismissed the complaint, ruling
that Armando's contract simply expired and Loxon offered him another employment
contract.

The NLRC affirmed the dismissal, considering Armando a project employee.

The CA also denied Armando's petition, upholding the NLRC's ruling.

Issue:
Whether or not Armando is a regular employee.

Ruling:
Yes. Armando is a regular employee of Loxon and cannot be considered a project
employee. The periods indicated in the project employment contract should be struck
down as contrary to public policy. Armando's dismissal was illegal.

Employers claiming their workers are project employees should prove not only the
duration and scope of employment but also the project where the employee has been
assigned. Armando's tasks were not distinct, separate, and identifiable from the usual
undertakings of Loxon. His work as a service technician was necessary and
indispensable to the regular business of Loxon. Armando's periodic contracts of
employment were used to prevent him from becoming a regular employee. An
employment contract indicating a fixed term does not automatically mean that the
employee cannot be a regular employee.
ENGINEERING & CONSTRUCTION CORPORATION OF ASIA VS. PALLEG.R. No.
201247, July 13, 2020

Principle: The principal test for determining whether particular employees are properly
characterized as 'project employees' as distinguished from 'regular employees,' is
whether or not the 'project employees' were assigned to carry out a 'specific project or
undertaking,' the duration and scope of which were specified at the time the employees
were engaged for that project

Facts:

Engineering & Construction Corporation of Asia (ECCA) claimed that respondents, as

project employees, were validly terminated in view of the project's completion. It pointed
out that respondents were not regular employees, but merely project employees since
they were hired for a specific project or undertaking, the termination of which was
determined at the time they were hired. Respondents mainly argued that they were not
project employees but were regular employees of ECCA. They claimed that ECCA hired
them on different dates to perform tasks which were necessary and desirable in its
construction business. Moreover, respondents asserted that although they may have
signed employment contracts for some of ECCA's projects, they were asked to work in
new projects or transferred to other existing projects without the benefit of
corresponding employment contracts.

Furthermore, respondents claim that ECCA's failure to report the termination of their
employment to the Department of Labor and Employment (DOLE) every time that the
company completed a project proved that respondents were not project employees but
its regular employees.

Issue:

Are the respondents considered as regular employees?

Ruling:
YES. The Labor Code provides the following definition of regular and project employees
in Art. 295, 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.

On the other hand, DOLE's Department Order No. 19, series of 1993 (D.O. No. 19),
otherwise known as the Guidelines Governing the Employment of Workers in the
Construction Industry, provides:

Section 2. EMPLOYMENT STATUS 2.3 Project completion and rehiring of workers. b.)
Upon completion of the project or a phase thereof, the project employee may be rehired
for another undertaking provided, however, that such rehiring conforms with the
provisions of law and this issuance. In such case, the last day of service with the
employer in the preceding project should be indicated in the employment agreement.

Thus, based on the foregoing provisions, an employment is generally deemed 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, subject to
exceptions, such as when one is a fixed, project or seasonal employee; or (ii) the
employee has been engaged for at least a year, with respect to the activity he or she is
hired, and the employment of such employee remains while such activity exists.

However, the Court finds that ECCA: (1) Failed to present substantial evidence to show
that it informed respondents of the duration and scope of their work at the time of their
hiring. (2) Failed to present other evidence or other written contracts to show that it
informed respondents of the duration and scope of their work. (3) Did submit a report
with the DOLE of the termination of respondents' employment every time a project is
completed, which is an indication that the workers were not project employees but
regular ones.
MARAGUINOT v. NLRC GR No. 120969 January 22, 1998

Facts:

Petitioners Maraguinot and Enero were hired by private respondents as part of the
filming crew. Sometime in May 1992, the petitioners sought the assistance of their
supervisor to facilitate their request that their salary be adjusted in accordance with the
minimum wage law.

On June, 1992, Mrs. Cesario, their supervisor, told them that Mr. Vic Del Rosario would
agree to their request only if they sign a blank employment contract. Petitioners refused
to sign such document. After which, Mr. Enero was forced to go on leave on the same
month and refused to take him back when he reported for work. Mr. Maraguinot on the
other hand was dropped from the payroll but was returned days after. He was again
asked to sign a blank employment contract but when he refused, he was terminated.

In the instant case, the evidence on record shows that petitioner Enero was employed
for a total of two (2) years and engaged in at least eighteen (18) projects, while
petitioner Maraguinot was employed for some three (3) years and worked on at least
twenty-three (23) projects. Moreover, as petitioners' tasks involved, among other
chores, the loading, unloading and arranging of movie equipment in the shooting area
as instructed by the cameramen, returning the equipment to the Viva Films' warehouse,
and assisting in the "fixing" of the lighting system, it may not be gainsaid that these
tasks were vital, necessary and indispensable to the usual business or trade of the
employer. As regards the underscored phrase, it has been held that this is ascertained
by considering the nature of the work performed and its relation to the scheme of the
particular business or trade in its entirety.

Issue:

Whether or not the petitioners being members of the work pool are considered regular
employees, hence, illegally dismissed.

Held:

In closing then, as petitioners had already gained the status of regular employees, their
dismissal was unwarranted, for the cause invoked by private respondents for petitioners'
dismissal, viz.: completion of project, was not, as to them, a valid cause for dismissal
under Article 282 of the Labor Code.
Respondents also admit that the petitioners were part of a work pool wherein they
attained the status of regular employees because of the ff. requisites: (a) There is a
continuous rehiring of project employees even after cessation of a project; (b) The tasks
performed by the alleged “project employees” are vital, necessary and indispensable to
the usual business or trade of the employer; and (c) However, the length of time which
the employees are continually re-hired is not controlling but merely serves as a badge of
regular employment.

Truly, the cessation of construction activities at the end of every project is a foreseeable
suspension of work. Of course, no compensation can be demanded from the employer
because the stoppage of operations at the end of a project and before the start of a new
one is regular and expected by both parties to the labor relations. Similar to the case of
regular seasonal employees, the employment relation is not severed by merely being
suspended. The employees are, strictly speaking, not separated from services but
merely on leave of absence without pay until they are reemployed.

RUBEN CARPIO vs. MODAIR MANILA CO. LTD., INC.G.R. No. 239622 June 21,
2021

Facts:

Per Certificate of Employment dated May 23, 2013, petitioner Ruben Carpio has
been employed as Electrician 3 by respondent Modair Manila Co. Ltd., Inc. Said
employment was on a per project basis from October 1998 to April 2013. In a
Memorandum dated August 1, 2008, Modair informed Carpio that the Back End
Expansion Project will soon cease operation due to its project completion, for which
Carpio’s services will be terminated and that he will be notified accordingly for
re-contract if his services will again be needed. Identical language is found in a
Memorandum dated November 30, 2009, terminating his services for the PIL Green
Project; and a Memorandum dated September 25, 2010, terminating his services for the
UTIL. Works Project. Apart from the foregoing, Modair also engaged Carpio for the
Ibiden CPU Project, for which Modair issued a Memorandum dated July 25, 2012,
terminating his services effective August 10, 2012. Modair submitted an Establishment
Employment Report to the DOLE Makati City Field Office, informing said office of the
completion of the Ibiden CPU Project. Accordingly, Carpio executed an Affidavit of
Release and Quitclaim, acknowledging that his project employment ceased upon
termination of the project, stating that he had no claims against Modair. Modair again
hired Carpio for the NYK Project, effective August 26, 2012 with scheduled date of
completion on March 25, 2013 or upon the completion of the phase of the work for
which he is assigned. Modair issued a Memorandum dated March 25, 2013, with
language similar to those above-enumerated, informing Carpio of the termination of his
services effective April 10, 2013. Modair also submitted an Establishment Employment
Report to the DOLE Makati City Field Office, informing such office of the completion of
the NYK Project. Subsequently, Carpio signed his Final Release of Pay, which
incorporated a Quit Claim whereby he waived any claims against Modair and confirmed
the full payment of everything due him from the NYK Project. He also executed an
Affidavit of Release and Quitclaim, similar to that for the Ibiden CPU Project.

Despite executing the above instruments, Carpio filed against Modair a

Complaint for illegal dismissal and regularization before the NLRC. The Labor Arbiter
found that, not being covered then by any project employment contract, Carpio’s service
from 1998 was in the nature of regular employment, which, however, was interrupted
when Carpio submitted the Resignation Letter. Since then, Carpio’s employment had
been covered by project-based contracts, making him a project-based employee who
was not illegally dismissed, but whose engagement concluded following the completion
of the respective projects. The NLRC reversed the Labor Arbiter’s ruling. The purported
resignation is contradicted by the Certificate of Employment, attesting to Carpio’s
continuous employment from October 1998 to April 2013. On appeal, the Court of
Appeals ruled that Carpio is a project employee, considering that he signed the NYK
Project Agreement knowing that it covered only a specific project for a definite duration;
and despite successive re-hiring, length of time is not decisive on whether an employee
is project-based or regular.

Issue:

Whether Carpio is a project-based or regular employee of Modair.

Ruling:

The Court enunciated the following principles for the guidance of workers,
employers, labor tribunals, the bench, bar, and public:

First, a worker is presumed a regular employee, unless the employer establishes

that (1) the employee was hired under a contract specifying that the employment will
last only for a specific undertaking, the termination of which is determined at the time of
engagement; (2) there was indeed a project undertaken; and (3) the parties bargained
on equal terms, with no vices of consent.
 Second, if considered a regular employee at the outset, security of tenure
already attaches, and the subsequent execution of project employment contracts cannot
undermine such security, but will simply be considered a continuation in the regular
engagement of such employee.

Third, even if initially engaged as a project employee, such nature of

employment may ripen into regular status if (1) there is a continuous rehiring of project
employees even after cessation of a project; and (2) the tasks performed by the alleged
"project employee” are vital, necessary and indispensable to the usual business or trade
of the employer. Conversely, project-based employment will not ripen into regularity if
the construction worker was truly engaged as a project-based employee, and between
each successive project, the employer made no manifestations of any intent to treat the
worker as a continuing resource for the main business.

Fourth, regularized construction workers are subject to the "no work, no pay"
principle, such that the employer is not obligated to pay them a salary when "on leave."
In case of an oversupply of regularized construction workers, then the employer can
exercise management prerogative to decide whom to engage for the limited projects
and whom to consider as still "on leave."

Finally, submission of termination reports to the DOLE Field Office may be

considered only as an indicator of project employment; conversely, non-submission
does not automatically grant regular status. By themselves, such circumstances do not
determine the nature of employment.

Applying these principles to the case at bar, the Court ruled that Carpio is a
regular employee of Modair for the entire duration of his service. While conclusive
details on the nature of Carpio's engagement from 1998 to 2008 are unavailable, the
existence of an employer-employee relationship during such period stood unrebutted.
The Certificate of Employment indicated that Carpio served as Modair’s Electrician 3
since 1998, which Modair did not deny. Since Modair failed to present evidence showing
his purported project employment during such time, he is presumed to be Modair’s
regular employee. True, Modair managed to present project employment contracts
covering the tail-end of Carpio’s engagement. Still, the Court finds that, by this time,
Carpio’s successive service as Electrician 3 in numerous construction projects
manifested the vitality and indispensability of his work to the construction business of
Modair. Very revealing also are the terms of Modair’s Memoranda, which state that
Carpio “will be notified accordingly for re-contract if his services will again be needed.”
Such language discloses Modair’s continuing reliance on Carpio’s services, for which he
would naturally make himself available at Modair’s disposal. In sum, Carpio’s
engagement, if it were at all project-based at the outset; had already ripened to regular
status.

INNODATA KNOWLEDGE SERVICES, INC. vs. INTING G.R. No. 211892

FACTS:

Petitioner Innodata Knowledge Services, Inc. (IKSI) is a company engaged in data

processing, encoding, indexing, abstracting, typesetting, imaging, and other processes
in the capture, conversion, and storage of data and information. At one time, Applied
Computer Technologies (ACT), a company based in the United States of America, hired
IKSI to review various litigation documents and required IKSI to hire lawyers, or at least,
law graduates, to review various litigation documents, classify said documents into the
prescribed categories, and ensure that outputs are delivered on time. For this purpose,
IKSI engaged the services of respondents as senior and junior reviewers with a contract
duration of five (5) years.

However, respondents received a Notice of Forced Leave from IKSI informing them that
they shall be placed on indefinite forced leave effective that same day due to changes in
business conditions, client requirements, and specifications. Hence, respondents filed a
complaint for illegal dismissal, reinstatement or payment of separation pay, backwages,
and damages against IKSI.

The Labor Arbiter (LA), in the consolidated cases and declared that there was no illegal
dismissal which was affirmed by the NLRC.

On appeal, the CA reversed the decision of the NLRC.

ISSUE:

Whether or not the CA committed an error when it reversed the NLRC, which declared
that respondent employees, as mere project employees, were validly placed on floating
status and, therefore, were not illegally dismissed.

RULING:

No. The Court ruled that Innodata’s legal document reviewers were illegally dismissed.
While the contracts stated they were hired to work on legal review project for ACT , the
employees were made to work as “ case classifiers “ on another project called
Bloomberg project, without signing a new contract for that purpose, it was already
outside of the scope of the particular undertaking for which they were hired; it was
beyond the scope of their employment contracts.

The employment status of a person is defined and prescribed by law and not by what
the parties say it should be. Equally important to consider is that a contract of
employment is impressed with public interest such that labor contracts must yield to the
common good. Thus, provisions of applicable statutes are deemed written into the
contract, and the parties are never at liberty to insulate themselves and their
relationships from the impact of labor laws and regulations by simply entering into
contracts with each other.

3.3 Seasonal (Labor Code, Art. 295 [280])

Espinav.HighlandsCamp/RawlingsFoundation,Inc.,G.R.No.220935,July28,2020

DOCTRINE:

Regular employees cannot be terminated from employment without any just and/or
authorized cause. The petitioners are entitled to the rights and benefits due to illegally
dismissed employees under Article 294 of the Labor Code.

FACTS:

On March 24, 2011, two (2) groups of employees filed separate complaints for illegal
dismissal, non-payment of overtime pay, holiday pay, and 13th month pay, with claims
for moral and exemplary damages against respondents Highlands Camp/Rawlings
Foundation, Inc. and Jayvelyn Pascal.

Petitioners essentially averred that in 2000, Highlands hired them as cooks, cook
helpers, utility workers, and service crew in its camping site in Iba, Zambales. For ten
(10) years, they regularly reported for work from January to June. They were on call
from July to September. They were required in October to report daily as it was the peak
season for campers. In November or December, they were also on call. But Highlands'
business was open to the public the whole year round. Every year, employees are
required to submit their biodata, medical clearances, health card, and Social Security
number. In 2011, after submitting the requirements for rehiring, Highlands informed
them they will be called once the campers arrive. But Highlands never did as they
employed new employees.
The petitioners alleged that their annual rehiring since 2001 and the services they
rendered, which were necessary and desirable to Highlands' business, conferred them
the status of regular employees. Thus, Highlands' failure to rehire them in 2011 without
valid cause constituted illegal dismissal.

On the other hand, the respondent contended that Highlands' camp operations were not
a whole year-round business. Petitioners were seasonal employees whose work was
only for a specific season. Moreover, Petitioners cannot be considered regular seasonal
employees because their employment was terminated after every seasonal year. To be
reemployed, they had to apply anew. The petitioners also contended that their services
as cooks, cook helpers, etc., were not necessary and desirable, and were not directly
related to its main purpose of evangelization as it can continue to operate even without
it

The Labor Arbiter ruled that the petitioners were regular employees, not mere seasonal
workers, as Highlands did not totally stop its operations during off-season. The
petitioners were still on-call during off-season and were not separated from the service.
Upon appeal to the NLRC, it affirmed the LA’s decisions as Highlands failed to present
petitioners’ employment contracts which raised a serious question whether they were
properly informed of their employment status.

The respondents appealed to the CA wherein it reversed both the decisions of LA and
NLRC. It ruled that the petitioners were seasonal employees whose tenure of work was
for a specific season only as the employees only worked for an average of less than
three (3) months in a given year. The petitioners now seek this Court’s discretion.

ISSUES:

WON the petitioners are seasonal or regular employees.

WON their dismissal was valid.

RULING:

The Court finds merit in the petition.

On this issue of the employment status of the petitioners

The Court finds that the petitioners are regular employees of Highlands. Records show
that Highlands’ business is not seasonal. Highlands may have high or low market
encounters within a year, or by its own terms, "peak and lean seasons", but its camping
site does not close at any given time or season. The Court emphasized that an
employer's continuous operation throughout the year negates the claim that its business
is seasonal in nature.

Moreover, the petitioners did not perform work or services that are seasonal in nature,
nor for just a specific period. They served as cooks, cook helpers, utility workers, and
service crew in Highlands' camping site regardless if it was the peak or lean season for
campers. In addition, records are bereft of any evidence showing that petitioners freely
entered into an agreement with Highlands to perform services for a specific period or
season only. Highlands failed to present petitioners' employment contracts, employee
files, payrolls, and other similar documents to prove they hired petitioners as seasonal
employees and they rendered services for a specific season only.

The fact that Highlands required petitioners to apply for reemployment every year does
not bar them from being regularized. Their repeated hiring for the same services for the
past ten (10) years confers upon them the status of regular employment. It is
undisputed that respondents repeatedly hiring is testament to their necessity and
desirability in its business.

On the issue of illegal dismissal

As regular employees, petitioners cannot be terminated from employment without any

just and/or authorized cause. The petitioners are entitled to the rights and benefits due
to illegally dismissed employees under Article 294 of the Labor Code. We, therefore,
uphold the labor tribunals' award of full backwages to petitioners. We likewise affirm the
award of 13th month pay due to them for respondents' failure to show that the same had
been paid.

Universal Robina Sugar Milling Corporation v. Acibo, G.R. No. 186439, January 15,
2014

FACTS:

The complainants were employees of URSUMCO. They were hired on various dates
and on different capacities, i.e., drivers, crane operators, bucket hookers, welders,
mechanics,laboratory attendants and aides, steel workers, laborers, carpenters and
masons, among others. The complainants signed contracts of employment for a period
of one month or for a given season. URSUMCO repeatedly hired them to perform the
same duties and, for every engagement, required them to sign new employment
contracts for the same duration of one month or a given season.

On August 23, 2002, the complainants filed before the LA complaints for regularization,
entitlement to the benefits under the CBA, and attorney’s fees. The LA dismissed the
complaint and held that the complainants were seasonal or project workers and not
regular employees. 7 out 22 complainants filed for an appeal before the NLRC. The
NLRC reversed the ruling. It declared the complainants as regular employees and
granted their monetary claims under the CBA. The petitioners elevated the case to the
CA.

The CA granted in part the petition; it affirmed the NLRC’s ruling finding the
complainants to be regular employees of URSUMCO, but deleted the grant of
monetary benefits under the CBA. The CA ruled that they were not entitled. The CA
pointed out that while the complainants were considered regular, albeit seasonal,
workers, the CBA-covered regular employees of URSUMCO were performing tasks
needed by the latter for the entire year with no regard to the changing sugar milling
season.

ISSUE:
Whether the respondents are contractual or project/seasonal employees and not regular
employees of URSUMCO.

RULING:
No, the respondents are regular seasonal employees of URSUMCO.

First, the respondents were tasked to perform duties regularly and habitually needed in
URSUMCO’s operations during the milling season. The respondents’ duties as loader
operators, hookers, crane operators and drivers were necessary to haul and transport
the sugarcane from the plantation to the mill; laboratory attendants, workers and
laborers to mill the sugar; and welders, carpenters and utility workers to ensure the
smooth and continuous operation of the mill for the duration of the milling season, as
distinguished from the production of the sugarcane which involves the planting and
raising of the sugarcane until it ripens for milling. The production of sugarcane, it must
be emphasized, requires a different set of workers who are experienced in farm or
agricultural work. Needlessto say, they perform the activities that are necessary and
desirable in sugarcane production. As in the milling of sugarcane, the plantation workers
perform their duties only during the planting season.

Second, the respondents were regularly and repeatedly hired to perform the same tasks
year after year. This regular and repeated hiring of the same workers for two separate
seasons has put in place, principally through jurisprudence, the system of regular
seasonal employment in the sugar industry and other industries with a similar nature of
operations. Under the system, the plantation workers or the mill employees do not work
continuously for one whole year but only for the duration of the growing of the
sugarcane or the milling season. Their seasonal work, however, does not detract from
considering them in regular employment since in a litany of cases, this Court has
already settled that seasonal workers who are called to work from time to time and are
temporarily laid off during the off-season are not separated from the service in said
period, but are merely considered on leave until re-employment.

Be this as it may, regular seasonal employees should not be confused with the regular
employees such as the administrative or office personnel who perform their tasks for the
entire year regardless of the season. The NLRC, therefore, gravely erred when it
declared the respondents regular employees of URSUMCO without qualification.

Third, while the petitioners assert that the respondents were free to work elsewhere
during the off-season, the records do not support this assertion. There is no evidence
on record showing that after the completion of their tasks at URSUMCO, the
respondents sought and obtained employment elsewhere.

3.4 Casual (Labor Code, Art. 295 [280])

Del Rosario v. ABS-CBN Broadcasting Corporation, G.R. No. 202481, September 8,

2020

FACTS:
Upon their engagement, the workers were required to undergo various training
seminars and workshops to equip them with the skills and knowledge necessary in their
respective fields. They were assigned to render services in the self-produced,
co-produced, and live-coverage programs. Their presence was strictly required in each
program. The workers were tasked to perform numerous functions and were
continuously re-hired to film new programs, upon the conclusion of the shows they
were initially engaged in. In exchange for the services they rendered, the workers were
paid salaries twice a month.
ABS-CBN adopted a system known as the Internal Job Market (IJM) System, a
database which provided the user with a list of accredited technical or creative
manpower and/or talents who offered their services for a fee. The IJM scheme led to
the creation of a work pool of accredited technical or creative manpower. Under this
system, the workers were regarded as independent contractors, not regular
employees. Due to the creation of the IJM System, the workers were asked to sign a
contract that would place them under the IJM Work Pool. They were included in the
pool without their consent or over their vehement objections. Clamoring for better
rights, the workers formed the ABS-CBN IJM Workers' Union and started demanding
recognition as regular employees. ABS-CBN maintained that an accreditation under
the IJM system did not create an employment relationship between it and the
"talent".

ISSUE:
Whether or not the workers are regular employees of ABS-CBN.

RULING:
Yes, the workers are regular employees of ABS-CBN.

Just like in Begino case, the fact that the workers signed a "Talent Contract and/or
Project Assignment Form" does not ipso facto make them talents. It is settled that a
talent contract does not necessarily prevent an employee from acquiring a regular
employment status. The nature of the employment does not depend on the will or word
of the employer or on the procedure for hiring and the manner of designating the
employee, but on the activities performed by the employee in relation to the employer's
business.

Notably, an essential characteristic of regular employment as defined in Article 280 of

the Labor Code is the performance by the employee of activities considered necessary
and desirable to the overall business or trade of the employer. The necessity of the
functions performed by the workers and their connection with the main business of an
employer shall be ascertained "by considering the nature of the work performed and its
relation to the scheme of the particular business or trade in its entirety." The principal
test is whether or not the project employees were assigned to carry out a specific
project or undertaking, the duration and scope of which were specified at the time the
employees were engaged for that project.

The workers all played an indispensable role in the production and re-production of
shows, as well as post-production services. The workers even played a role in
ABS-CBN's business of obtaining commercial revenues. The necessary jobs required
in the production of such shows were performed by the workers herein.

The workers are not project/program employees under Policy Instruction No. 40.
Essentially, in a project-based employment, the employee is assigned to a particular
project or phase, which begins and ends at a determined or determinable time.
Consequently, the services of the project employee may be lawfully terminated upon
the completion of such project or phase. For employment to be regarded as
project-based, it is incumbent upon the employer to prove that (i) the employee was
hired to carry out a specific project or undertaking,and (ii) the employee was notified of
the duration and scope of the project. Here, ABS-CBN failed to adduce any evidence to
establish that the requirements for project employment were complied with.

Kimberly Independent Labor Union For Solidarity, Activism And Nationalism- Organized
Labor Association In Line Industries And Agriculture v. Drilon, G.R. No. 77629, May 9,
1990

FACTS:
Kimberly-Clark Philippines, Inc. (KIMBERLY) executed a three-year CBA with United
Kimberly-Clark Employees Union-Philippine Transport and General Workers'
Organization (UKCEU-PTGWO) which expired on June 30, 1986. Within the 60-day
freedom period prior to the expiration of and during the negotiations for the renewal,
some members of the bargaining unit formed another union called Kimberly
Independent Labor Union for Solidarity, Activism and Nationalism-Organized Labor
Association in Line Industries and Agriculture (KILUSAN-OLALIA).

KILUSAN-OLALIA filed a petition for certification election. KIMBERLY and

UKCEU-PTGWO did not object to the holding of a certification election but objected to
the inclusion of the so-called contractual workers whose employment with KIMBERLY
was coursed through an independent contractor, Rank Manpower Company (RANK),
as among the qualified voters.

Pending resolution of the petition for certification election, KILUSAN-OLALIA filed a

notice of strike, charging KIMBERLY with unfair labor practices. Conciliation
proceedings proved futile, and KILUSAN-OLALIA declared a strike at KIMBERLY's
premises in San Pedro, Laguna. Finding that the labor dispute would adversely affect
national interest, then Minister Augusto S. Sanchez issued an assumption order.
KILUSAN-OLALIA terminated its strike and picketing activities after a compliance
agreement was entered into by it with KIMBERLY.
During the pre-election conference, 64 casual workers were challenged by KIMBERLY
and UKCEU-PTGWO on the ground that they are not employees of KIMBERLY but of
RANK. It was agreed by all the parties that the 64 voters shall be allowed to cast their
votes but that their ballots shall be segregated and subject to challenge proceedings.
The certification election was conducted on July 1, 1986, with the following results:
1. ILUSAN-OLALIA = 246 votes 4. SPOILED BALLOTS = 4 votes
2. (UKCEU-PTGWO) = 266 votes 5. CHALLENGED BALLOTS = 64 votes
3. NO UNION = 1 vote

KILUSAN-OLALIA filed with the med-arbiter a "Protest and Motion to Open and Count
Challenged Votes" on the ground that the 64 workers are employees of KIMBERLY
within the meaning of Article 212(e) of the Labor Code. KIMBERLY filed an opposition
to the protest and motion, asserting that there is no employer-employee relationship
between the casual workers and the company.

ISSUE:
Whether or not the employees not performing janitorial and yard maintenance services
are regular employees.

RULING:
Yes, they are regular employees of KIMBERLY.

The Labor Code defines who are regular employees, as follows:

Art. 280. Regular and Casual Employment. — The provisions of written agreement to
the contrary notwithstanding and regardless of the oral agreements 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 under 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 exists.

Owing to their length of service with the company, these workers became regular
employees, by operation of law, one year after they were employed by KIMBERLY
through RANK. It is more in keeping with the intent and spirit of the law to rule that the
status of regular employment attaches to the casual worker on the day immediately
after the end of his first year of service. As long as the employee has rendered at least
one year of service, he becomes a regular employee with respect to the activity in
which he is employed. The law does not provide the qualification that the employee
must first be issued a regular appointment or must first be formally declared as such
before he can acquire a regular status.

Consequently, the votes cast by those employees not performing janitorial and yard
maintenance service, which form part of the 64 challenged votes, should be opened,
counted and considered for the purpose of determining the certified bargaining
representative.

E. Ganzon, Inc. (EGI) v. Ando, Jr., G.R. No. 214183, February 20, 2017

FACTS:
Fortunato B. Ando, Jr. filed a complaint against EGI for illegal dismissal and money
claims. He alleged that he was a regular employee working as a finishing carpenter; he
was repeatedly hired until he was terminated without prior notice and hearing; his daily
salary was below the amount required by law; and wage deductions were made without
his consent.

EGI countered that, as proven by the three (3) project employment contract, Ando was
engaged as a project worker in Bahay Pamulinawen Project in Laoag, Ilocos Norte from
June 1, 2010 to September 30, 2010 and from January 3, 2011 to February 28, 2011 as
well as in EGI-West Insula Project in Quezon City, Metro Manila from February 22, 2011
to March 31, 2011; he was paid the correct salary based on the Wage Order applicable
in the region; he already received the 13th month pay for 2010 but the claim for 2011
was not yet processed at the time the complaint was filed; and he voluntarily agreed to
pay ₱500.00 monthly for the cost of the barracks, beds, water, electricity, and other
expenses of his stay at the job site.

The Labor Arbiter declared Ando a project employee of EGI but granted some of his
money claims. Both parties elevated the case to the NLRC which dismissed the appeals
filed and sustained the ruling of the Labor Arbiter. The CA ruled that NLRC gravely
abused its discretion when it sustained the LA’s finding that Ando is not a regular
employee but a project employee of EGI.

ISSUE:
Whether Ando is a regular or project employee of EGI.
RULING:
Ando is a project employee of EGI.

Under Art. 280, project employment is one which "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. To be considered as project-based, the employer
has the burden of proof to show 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 the employee was
engaged for such project or undertaking.

It must be proved that the particular work/service to be performed as well as its

duration are defined in the employment agreement and made clear to the employee
who was informed thereof at the time of hiring. The activities of project employees may
or may not be usually necessary or desirable in the usual business or trade of the
employer. In ALU-TUCP v. NLRC, two (2) categories of project employees were
distinguished:

"Project" could refer to one or the other of at least two (2) distinguishable types of
activities. Firstly, a project could refer to a particular job or undertaking that is within
the regular or usual business of the employer company, but which is distinct and
separate, and identifiable as such, from the other undertakings of the company.
Such job or undertaking begins and ends at determined or determinable times. The
typical example of this first type of project is a particular construction job or project
of a construction company. x x x. Employees who are hired for the carrying out of
one of these separate projects, the scope and duration of which has been
determined and made known to the employees at the time of employment, are
properly treated as "project employees," and their services may be lawfully
terminated at completion of the project.

The term "project" could also refer to, secondly, a particular job or undertaking that
is not within the regular business of the corporation. Such a job or undertaking
must also be identifiably separate and distinct from the ordinary or regular business
operations of the employer. The job or undertaking also begins and ends at
determined or determinable times. x x x

As the assigned project or phase begins and ends at determined or determinable

times, the services of the project employee may be lawfully terminated at its
completion. His employment was for a specific project or undertaking because the
nature of EGI's business is one which will not allow it to employ workers for an
indefinite period. As a corporation engaged in construction and residential projects, EGI
depends for its business on the contracts it is able to obtain. Since work depends on
the availability of such contracts, necessarily the duration of the employment of its work
force is not permanent but coterminous with the projects to which they are assigned
and from whose payrolls they are paid.

The fact that Ando was required to render services necessary or desirable in the
operation of EGI's business for more than a year does not in any way impair the validity
of his project employment contracts. Time and again, we have held that the length of
service through repeated and successive rehiring is not the controlling determinant of
the employment tenure of a project employee. The rehiring of construction workers on
a project-to-project basis does not confer upon them regular employment status as it is
only dictated by the practical consideration that experienced construction workers are
more preferred.

Finally, the second paragraph of Article 280, stating that an employee who has
rendered service for at least one (1) year shall be considered a regular employee, is
applicable only to a casual employee and not to a project or a regular employee
referred to in paragraph one thereof.

3.5 Fixed-Term

Brent School, Inc. v. Zamora, G.R. No. L-48494, February 5, 1990

FACTS:
Doroteo R. Alegre was engaged as athletic director by Brent School, Inc. The contract
fixed a specific term for its existence, 5 years. Some three months before the expiration
of the stipulated period, Alegre was given a copy of the report filed by Brent School
with the Department of Labor advising of the termination of his services effective on
July 16, 1976. The ground for the termination was "completion of contract, expiration of
the definite period of employment."

At the investigation conducted by a Labor Conciliator of said report of termination,

Alegre protested. He argued that although his contract did stipulate that the same
would terminate, since his services were necessary and desirable in the usual business
of his employer, and his employment had lasted for 5 years, he had acquired the status
of a regular employee and could not be removed except for valid cause.

ISSUE:
Whether or not a voluntary agreement on a fixed-term or period would be valid where
the employee has been engaged to perform activities which are usually necessary or
desirable in the usual business or trade of the employer.

RULING:
Yes, it is valid. From the premise — that the duties of an employee entail "activities
which are usually necessary or desirable in the usual business or trade of the
employer" — the conclusion does not necessarily follow that the employer and
employee should be forbidden to stipulate any period of time for the performance of
those activities.

Logically, the decisive determinant in term employment should not be the activities
that the employee is called upon to perform, but the day certain agreed upon by the
parties for the commencement and termination of their employment relationship, a day
certain being understood to be "that which must necessarily come, although it may not
be known when."

Under the Civil Code, fixed-term employment contracts are not limited to those by
nature seasonal or for specific projects with pre-determined dates of completion; they
also include those to which the parties by free choice have assigned a specific date of
termination. There can of course be no quarrel with the proposition that where from the
circumstances it is apparent that periods have been imposed to preclude acquisition of
tenurial security by the employee, they should be struck down or disregarded as
contrary to public policy, morals, etc.

Respondent Alegre's employment was terminated upon the expiration of his last
contract with Brent School on July 16, 1976 without the necessity of any notice. The
advance written advice given the Department of Labor with copy to said petitioner was
a mere reminder of the impending expiration of his contract, not a letter of termination,
nor an application for clearance to terminate which needed the approval of the
Department of Labor to make the termination of his services effective. In any case,
such clearance should properly have been given, not denied.

Del Rosario v. ABS-CBN Broadcasting Corporation, G.R. No. 202481, September 8,

2020

FACTS:
Upon their engagement, the workers were required to undergo various training
seminars and workshops to equip them with the skills and knowledge necessary in their
respective fields. They were assigned to render services in the self-produced,
co-produced, and live-coverage programs. Their presence was strictly required in each
program. The workers were tasked to perform numerous functions and were
continuously re-hired to film new programs, upon the conclusion of the shows they
were initially engaged in. In exchange for the services they rendered, the workers were
paid salaries twice a month.

ABS-CBN adopted a system known as the Internal Job Market (IJM) System, a
database which provided the user with a list of accredited technical or creative
manpower and/or talents who offered their services for a fee. The IJM scheme led to
the creation of a work pool of accredited technical or creative manpower. Under this
system, the workers were regarded as independent contractors, not regular
employees. Due to the creation of the IJM System, the workers were asked to sign a
contract that would place them under the IJM Work Pool. They were included in the
pool without their consent or over their vehement objections. Clamoring for better
rights, the workers formed the ABS-CBN IJM Workers' Union and started demanding
recognition as regular employees. ABS-CBN maintained that an accreditation under
the IJM system did not create an employment relationship between it and the
"talent".

ISSUE:
Whether or not the workers are regular employees of ABS-CBN.

RULING:
Yes, the workers are regular employees of ABS-CBN.

Just like in Begino case, the fact that the workers signed a "Talent Contract and/or
Project Assignment Form" does not ipso facto make them talents. It is settled that a
talent contract does not necessarily prevent an employee from acquiring a regular
employment status. The nature of the employment does not depend on the will or word
of the employer or on the procedure for hiring and the manner of designating the
employee, but on the activities performed by the employee in relation to the employer's
business.

The Labor Code classifies four (4) kinds of employees, as follows: (i) regular
employees, or those who have been engaged to perform activities which are usually
necessary or desirable in the usual business or trade of the employer; (ii) project
employees, or those whose employment has been fixed for a specific project or
undertaking,the completion or termination of which has been determined at the time of
the employees' engagement; (iii)seasonal employees, or those who perform services
which are seasonal in nature, and whose employment lasts during the duration of the
season; and (iv) casual employees, or those who are not regular, project, or seasonal
employees. Jurisprudence added a fifth kind — fixed-term employees, or those hired
only for a definite period of time.
Notably, an essential characteristic of regular employment as defined in Article 280 of
the Labor Code is the performance by the employee of activities considered necessary
and desirable to the overall business or trade of the employer. The necessity of the
functions performed by the workers and their connection with the main business of an
employer shall be ascertained "by considering the nature of the work performed and its
relation to the scheme of the particular business or trade in its entirety." The principal
test is whether or not the project employees were assigned to carry out a specific
project or undertaking, the duration and scope of which were specified at the time the
employees were engaged for that project.

The workers all played an indispensable role in the production and re-production of
shows, as well as post-production services. The workers even played a role in
ABS-CBN's business of obtaining commercial revenues. The necessary jobs required
in the production of such shows were performed by the workers herein.

Regala v. Manila Hotel Corporation, G.R. No. 204684, October 5, 2020

FACTS:
Regala was hired by MHC in February 2000 as one of its waiters. He was later assigned
as cook helper. In the course of his employment as waiter/cook helper, Regala worked
for 6 days every week. MHC also remitted contributions in Regala's behalf to the SSS
and PhilHealth. Regala alleged that he was not recognized as a regular rank-and-file
employee despite having rendered services to MHC for several years. Regala also
claimed that MHC constructively dismissed him from employment when it allegedly
reduced his regular work days to 2 days, which resulted in the diminution of his take
home salary.

MHC denied outright that Regala is its regular employee, and claimed that he is a mere
freelance or "extra waiter" engaged by MHC on a short term basis. It explained that it
employs extra waiters at fixed and/or determinable periods particularly when there are
temporary spikes in the volume of its business. It is during these specific periods when
management is forced to supplement the hotel's regular staff of waiters with temporary
fixed-term employees, such as Regala, in order to meet increases in business
activities.

MHC contended that prior to engaging the services of extra waiters, applicant waiters,
MHC execute fixed-term service contracts and agree on a specific duration of
engagement depending on the requirement of the hotel in a given period. MHC argued
that there can be no illegal dismissal to speak of since the expiration of the period under
Regala's Service Agreements simply caused the natural cessation of his fixed-term
employment with MHC.

ISSUE:
Whether or not Regala is a fixed-term employee of MHC.

RULING:
No, Regala is a regular employee of MHC.

First, Regala is performing activities which are usually necessary or desirable in the
business or trade of MHC. This connection can be determined by considering the nature
of the work performed by Regala and its relation to the nature of the particular business
or trade of MHC in its entirety. Second, the continuing need for his services for the past
several years is also sufficient evidence of the indispensability of his duties as waiter to
MHC's business. The Service Agreements and fixed-term service contracts executed
between MHC and Regala are invalid and are not true fixed-term employment contracts.

A fixed-term employment, while not expressly mentioned in the Labor Code, has been
recognized by this Court as a type of employment embodied in a contract specifying that
the services of the employee shall be engaged only for a definite period, the termination
of which occurs upon the expiration of said period irrespective of the existence of just
cause and regardless of the activity the employee is called upon to perform. The
fixed-term character of employment essentially refers to the period agreed upon
between the employer and the employee. Accordingly, the decisive determinant in term
employment should not be the activities that the employee is called upon to perform, but
the day certain agreed upon by the parties for the commencement and termination of
their employment relationship. Specification of the date of termination is significant
because an employee's employment shall cease upon termination date without need of
notice.

In other words, a fixed-term employment contract which otherwise fails to specify the
date of effectivity and the date of expiration of an employee's engagement cannot, by
virtue of jurisprudential pronouncement, be regarded as such despite its nomenclature
or classification given by the parties.

While this Court has recognized the validity of fixed-term employment contracts, it has
consistently held that they are the exception rather than the general rule. A fixed-term
employment is valid only under certain circumstances. We thus laid down in Brent
School, Inc. v. Zamora parameters or criteria under which a "term employment"
cannot be said to be in circumvention of the law on security of tenure, namely:

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 Service Agreements signed by Regalado do not even prove that he knowingly
agreed to be hired by MHC for a fixed-term way back in February 2000. The sample
fixed-term service contract presented by MHC readily shows that they were entirely
prepared by its Personnel Department. On this premise, it appears that they are
contracts of adhesion. To be clear, a fixed-term employment agreement should result
from bona fide negotiations between the employer and the employee. As such, they
must have dealt with each other on an arm's length basis where neither of the parties
have undue ascendancy and influence over the other.

Labayog v. M.Y. San Biscuits, Inc., G.R. No. 148102, July 11, 2006

FACTS:

On various dates in 1992, petitioners entered into contracts of employment with

respondent company as mixers, packers and machine operators for a fixed term. On the
expiration of their contracts, their services were terminated. Forthwith, they each
executed a quitclaim.

Petitioners filed complaints for illegal dismissal, among others. The labor arbiter ruled
their dismissal to be illegal on the ground that they had become regular employees who
performed duties necessary and desirable in respondent company's business and
ordered for their reinstatement.

The NLRC reversed the ruling, which the CA eventually affirmed.

ISSUE: Whether the fixed term contract of petitioners was valid.

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

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

In this case, there was no allegation of vitiated consent. Respondents did not exercise
moral dominance over petitioners. The contracts were mutually advantageous to the
parties.

While their employment as mixers, packers and machine operators was necessary and
desirable in the usual business of respondents, they were employed temporarily only,
during periods when there was heightened demand for production. Consequently, there
could have been no illegal dismissal when their services were terminated on expiration
of their contracts. There was even no need for notice of termination because they knew
exactly when their contracts would end. Contracts of employment for a fixed period
terminate on their own at the end of such period.

RATIO:

Employment with a Fixed Period; Article 280 does not proscribe or prohibit an
employment contract with a fixed period provided it is not intended to circumvent the
security of tenure; Criteria to Validate a Contract of Employment with a Fixed
Period.—Where the duties of the employee consist of activities which are necessary or
desirable in the usual business of the employer, the parties are not prohibited from
agreeing on the duration of employment. Article 280 does not proscribe or prohibit an
employment contract with a fixed period provided it is not intended to circumvent the
security of tenure. Two criteria validate a contract of employment with a fixed period: (1)
the fixed period of employment was knowingly and voluntarily agreed upon by the
parties without any force, duress or improper pressure being brought to bear on the
employee and without any circumstances vitiating consent or, (2) it satisfactorily
appears that the employer and employee dealt with each other on more or less equal
terms with no moral dominance whatever being exercised by the former on the latter.
Against these criteria, petitioners’ contracts of employment with a fixed period were
valid.

Claret School of Quezon City v. Sinday, G.R. No. 226358, October 9, 2019

FACTS:

In February 2014, Madelyn I. Sinday filed a complaint for illegal dismissal against Claret
School of Quezon City, her employer. Sinday’s employment journey with Claret began in
April 2010 as a releasing clerk for the school’s book sale. Subsequently, she
transitioned into a role at the Human Resources Department as a filing clerk in July
2010, then returned to the releasing clerk position in April 2011, serving until July 14,
2011. Prior to the expiration of her position as a releasing clerk, Sinday took up
employment at Claret’s Technical-Vocational Training Center (Claretech) starting July
15, 2011, as a secretary. In January 2013, Sinday was classified as a regular employee
by Fr. Renato B. Manubag, Director of Claretech, and was made to sign a Probationary
Employment Contract set from January 16, 2013, to July 15, 2013. However, upon the
contract’s expiration, Sinday was informed that her tenure was terminated due to
administrative changes and cost-cutting measures. Desperate for work, she accepted a
substitute teacher aide position from August 1, 2013, to October 25, 2013. Sinday then
unsuccessfully sought reinstatement. In contrast, Claret maintained that Sinday was
only a part-time fixed-term contractual employee, not a regular employee. The school
argued her employment was contingent on temporary needs and was not a regular
feature of the school’s operations. The Labor Arbiters’ decision favored Sinday, ruling
her a regular employee and finding her illegal dismissal. The National Labor Relations
Commission (NLRC), however, reversed this decision, accepting Claret’s assertion of
Sinday as a part-time contract worker. The Court of Appeals later found Sinday to be
illegally dismissed and reinstated the Labor Arbiter’s decision but ordered separation
pay instead of reinstatement due to the time lapse.

ISSUE:

Whether Madelyn I. Sinday considered a regular employee of Claret School of Quezon

City?

RULING:

YES. The Supreme Court ruled in favor of Sinday, holding that she was a regular
employee and was illegally dismissed. The Court elucidated that neither criterion under
the Brent doctrine applied, recognizing Sinday’s economic disadvantage and
dependence on Claret for employment. Substantial evidence suggested that Sinday’s
roles were usually necessary and desirable to Claret’s operations, qualifying her as a
regular employee. Additionally, Claret’s failure to comply with due process requirements
for termination further entrenched the Court’s decision on illegal dismissal.

RATIO:

Fixed-term employment is not illegal per se or against public policy.—Fixed-term

employment is not illegal per se or against public policy. Nevertheless, before this Court
recognizes its validity, the criteria in Brent must first be sufficiently established. Aware
that this form of employment was repeatedly used to circumvent security of tenure, this
Court has been consistently circumspect in resolving issues on fixed-term employment.
The validity of a fixed-term employment is an exception, not the general rule. Here,
petitioner failed to show that either of the two (2) criteria is present and, quite the
contrary, the case records reveal that petitioner and respondent did not deal with each
other in more or less equal terms. Thus, this Court holds that respondent is a regular
employee who is entitled to security of tenure.

GMA Network, Inc. v. Pabriga, G.R. No. 176419, November 27, 2013

FACTS:

Respondents are employed by petitioner to man the Technical Operations Center and
act as transmitter/VTR men, maintenance staff and cameramen. Due to the miserable
working conditions private respondents were forced to file a complaint against petitioner.
After a few days, respondents were barred from entering and reporting for work without
any notice stating the reasons therefor. They sent letters to the petitioner’s Area
Manager requesting that they be recalled back to work. Receiving no feedback,
respondents filed an amended complaint raising the following additional issues: 1)
Unfair Labor Practice; 2) Illegal dismissal; and 3) Damages and Attorney’s fees.

Respondents claim that they are regular employees of petitioner GMA Network, Inc.
The latter, on the other hand, interchangeably characterize respondents’ employment as
project and fixed period/fixed term employment because they were merely hired as
pinch-hitters. It further argues respondents cannot attain regular status due to
continuous rehiring because of the fixed period designated in employment contracts and
reflected in vouchers.
ISSUE:

Whether the respondents are considered as project and fixed-term employees.

RULING:

NO. The respondents are regular employees. Article 280 speaks of the four out of five
types of employment. Employees performing activities which are usually necessary or
desirable in the employer’s usual business or trade can either be regular, project or
seasonal employees, while, as a general rule, those performing activities not usually
necessary or desirable in the employer’s usual business or trade are casual employees.
The fifth class is the fixed term employment mentioned in Brent School, Inc. v. Zamora .
Only employers who constantly need the specified tasks to be performed can be
justifiably charged to uphold the constitutionally protected security of tenure of the
corresponding workers.

The respondents cannot be considered as project employees. The principal test for
determining whether particular employees are properly characterized as "project
employees" as distinguished from "regular employees," is whether or not the "project
employees" were assigned to carry out a "specific project or undertaking," the duration
(and scope) of which were specified at the time the employees were engaged for that
project. For project employees, 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 (like a construction company; same routine, different projects); or (2) a
particular job or undertaking that is not within the regular business of the corporation. If
the particular job or undertaking is within the regular or usual business of the employer
company and it is not identifiably distinct or separate from the other undertakings of the
company, there is clearly a constant necessity for the performance of the task in
question, and therefore said job or undertaking should not be considered a project.
Here, there is no denying that the manning of the operations center to air commercials,
acting as transmitter/VTR men, maintaining the equipment, and acting as cameramen
are not undertakings separate or distinct from the business of a broadcasting company.
Also, nowhere in the records is there any showing that petitioner reported the
completion of its projects and the dismissal of private respondents in its finished
projects to the nearest Public Employment Office as per Policy Instruction No. 20.
Jurisprudence abounds with the consistent rule that the failure of an employer to report
to the nearest Public Employment Office the termination of its workers’ services
everytime a project or a phase thereof is completed indicates that said workers are not
project employees.

Important to note is the fact that private respondents had rendered more than one (1)
year of service at the time of their dismissal which overturns petitioner’s allegations that
private respondents were hired for a specific or fixed undertaking for a limited period of
time. Be that as it may, a project employee may also attain the status of a regular
employee if there is a continuous rehiring of project employees after the stoppage of a
project; and the activities performed are usual [and] customary to the business or trade
of the employer. The Supreme Court ruled that a project employee or a member of a
work pool may acquire the status of a regular employee when the following concur:

1. There is a continuous rehiring of project employees even after cessation of a

project; and

2. The tasks performed by the alleged project employee are vital, necessary and
indispensable to the usual business or trade of the employer.

RATIO:

Petitioner interchangeably characterizes respondents’ service as project and fixed term

employment. These types of employment, however, are not the same. While the former
requires a project as restrictively defined above, the duration of a fixed-term
employment agreed upon by the parties may be any day certain, which is understood to
be "that which must necessarily come although it may not be known when." The
decisive determinant in fixed-term employment is not the activity that the employee is
called upon to perform but the day certain agreed upon by the parties for the
commencement and termination of the employment relationship.

The following are the indications or criteria under which "term employment" cannot be
said to be in circumvention of the law on security of tenure, namely:

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.28 (Citation omitted.)

Here, respondents were repeatedly rehired in several fixed term contracts from 1996 to
1999. To prove the alleged contracts, petitioner presented cash disbursement vouchers
signed by respondents, stating that they were merely hired as pinch-hitters. It is
apparent that respondents were in no position to refuse to sign these vouchers, as such
refusal would entail not getting paid for their services. Plainly, respondents as
"pinch-hitters" cannot be considered to be in equal footing as petitioner corporation in
the negotiation of their employment contract.

Since petitioner failed to prove any just or authorized cause for their termination, the
court affirmed the findings of the NLRC and the Court of Appeals that they were illegally
dismissed.

Fuji Television Network, Inc. v. Espiritu, G.R. Nos. 204944-45, December 3, 2014

FACTS:

In 2005, 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." Arlene's employment contract initially provided
for a term of 1 year but was successively renewed on a yearly basis with salary
adjustment upon every renewal.

Sometime in January 2009, Arlene was diagnosed with lung cancer. 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" since it would be
difficult for her to perform her job. She "insisted that she was still fit to work as certified
by her attending physician."

After several verbal and written communications, Arlene 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 expiration. The contract also provided that the parties release each
other from liabilities and responsibilities under the employment contract.
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." However, Arlene affixed
her signature on the non-renewal contract with the initials "U.P." for "under protest."

The day after Arlene signed the non-renewal contract, she filed a complaint for illegal
dismissal with the NCR Arbitration Branch of NLRC. Arlene claimed that she was left
with no other recourse but to sign the non-renewal contract.

Labor Arbiter Corazon C. Borbolla dismissed Arlene's complaint saying that she was an
independent contractor. The National Labor Relations Commission reversed the Labor
Arbiter's decision. It held that Arlene was a regular employee.

In the assailed decision, the CA affirmed the NLRC with the modification that Fuji
immediately reinstate Arlene to her position as News Producer without loss of seniority
rights, and pay her backwages, 13th-month pay, mid-year and year-end bonuses, sick
leave and vacation leave with pay until reinstated, moral damages, exemplary
damages, attorney's fees, and legal interest of 12% per annum of the total monetary
awards.

ISSUE:

Whether Arlene was a regular employee and whether she was illegally dismissed or not.

RULING:

Arlene is a regular employee and was illegally dismissed by Fuji.

Fuji had the power to dismiss Arlene, as provided for in her contract. Her contract also
indicated that Fuji had control over her work because she was required to work for 8
hours from Monday to Friday, although on flexible time.

On the power to control, Arlene alleged that Fuji gave her instructions on what to report.
Even the mode of transportation in carrying out her functions was controlled by Fuji.
Thus, Arlene was not an independent contractor.

The test for determining regular employment is whether there is a reasonable

connection between the employee's activities and the usual business of the employer.
Article 280 provides that the nature of work must be "necessary or desirable in the usual
business or trade of the employer" as the test for determining regular employment.
Arlene's tasks included monitoring and getting news stories, reporting interviewing
subjects in front of a video camera," "the timely submission of news and current events
reports pertaining to the Philippines, and traveling to Fuji's regional office in Thailand."
She also had to report for work in Fuji's office in Manila from Mondays to Fridays, 8
hours per day. She had no equipment and had to use the facilities of Fuji to accomplish
her tasks.

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.

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. Due process must still be
observed in the pre-termination of fixed-term contracts of employment.

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. It did not ask her how her condition would affect her work. 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.

For failure of Fuji to comply with due process, Arlene was illegally dismissed.

Tuppil, Jr. v. LBP Service Corporation, G.R. No. 228407, June 10, 2020

Facts:

LBP Service Corporation had an agreement with Land Bank of the Philippines to deploy
janitors, messengers, and utility personnel across its Metro Manila branches. Upon
contract expiration in 2014, affected employees, including Tuppil et al. and Borja et al.,
were recalled. Tuppil et al. resigned following their recall notices, whereas Borja et al.
did not. Both groups claimed illegal dismissal, asserting they were regular employees
performing crucial business services for LBP Service Corporation. The company
rebutted, stating the return of Borja et al. was anticipated for reassignment and that
Tuppil et al. had voluntarily resigned.

The Labor Arbiter dismissed the complaint, ruling both sets of employees were
fixed-term and not illegally dismissed. Borja et al. were asked to report back to work
without backwages, as no illegal dismissal was found. This decision was affirmed on
appeal by the NLRC and later by the Court of Appeals, identifying both groups as
contractual employees whose employment ceased when the contract with Land Bank
concluded.

Issue:

Whether Tuppil et al. and Borja et al. qualify as regular employees.

Ruling:

The Supreme Court denied the petition, upholding the CA’s decision. It clarified its role
does not extend to reviewing evidence for factual correctness when lower courts’
findings are consistent. The rule permitting fixed-term employment was not violated as
the employment contracts were voluntarily entered without evidence of undue pressure.
The Court cited the criteria for valid fixed-term employment, stating there was no
intention to circumvent security of tenure laws and that the contracts clearly stipulated
the employment period. Tuppil et al. and Borja et al. were not regular employees
because the legality of fixed-term contracts does not depend solely on the nature of the
employee’s duties. The Court emphasized that a contractually stipulated term governs
employment relationships, and the termination of Tuppil et al. and Borja et al.’s
contracts was a consequence of the contractual term’s expiry, not an act of illegal
dismissal.

Ratio:

The Supreme Court reiterated the doctrine set in Pure Foods Corporation vs. NLRC,
outlining the validity of fixed-term employment. Employment contracts for a fixed term
are lawful if entered without duress and if there’s no evidence of intent to circumvent
laws on security of tenure. Additionally, the decision underscored that performing tasks
necessary and desirable for the employer’s business does not automatically render an
employee regular if a fixed-term employment agreement exists.
University of St. La Salle v. Glaraga, G.R. No. 224170, June 10, 2020

Facts:

Petitioner University of St. La Salle engaged respondents as probationary full-time

faculty, each with a teaching load 24 to 25 units. Beginning in the first semester of
2010-2011, respondents were engaged as probationary part-time faculty members each
with a teaching load of 5 units. The letter notifying respondents of the reduction in load
and schedule merely cites decline in enrolment as the underlying reason.

In the summer and first semester of 2011, respondents were not offered any teaching
load, and they were not issued any new documents of agreement. Thus, they filed a
complaint for illegal dismissal, salary differential due to diminution of benefits, damages
and attorneys' fees

The Labor Arbiter ruled in favor of respondents. The National Labor Relations
Commission reversed the decision of the Labor Arbiter.

The Court of Appeals reversed the NLRC. Hence, this petition.

Issues and Ruling:

Whether the Labor Code provision on the general probationary period of six months
apply to teachers?

NO. Indeed, the Court has resolved the question of the probationary period of teachers
who, given the nature of their profession, can only render service during fixed academic
terms. The Court has held that the Labor Code provision on the general probationary
period of six months does not apply to teachers; rather, special regulations of the
Department of Education provide that, unless a shorter period is expressly adopted by
their institution, the probationary period of teachers will be for a maximum of three
years, even if within that period they render service under fixed short-term contracts.
The probationary period has been further clarified to mean fulltime teaching for three
consecutive academic rather than calendar years or six consecutive regular semesters
or nine consecutive trimesters.

Whether part-time teachers qualify for probationary status?

NO. Though not raised as an issue, the Court deems it necessary to address the point
of whether respondents are merely part-time teachers. We have held in Spouses Lim v.
Legazpi Hope Christian School and De La Salle Araneta University, Inc. v. Dr. Eloisa G.
Magdurulang, that part-time teachers do not even qualify for probationary status. In
contrast, in this case, the starting point of respondents' employment are that of full-time
probationary teachers. Even as respondents are given part-time schedules and reduced
teaching loads, they are not advised by petitioner that their fulltime probationary status
are being materially altered. Rather, the letter of petitioner advising them of their
reduced loads and part-time schedules merely state that this was due to "the impending
decline in enrolment." More importantly, petitioner expressly alleges that this
arrangement is intended to be temporary or until the university's enrolment picks up.

Ratio:

The rule on probationary period and fixed-term contract.

The three-year probationary period of teachers has been reconciled with the fixed
short-terms of their employment contracts. If the main object of the employment contract
of a teacher is a fixed term, as when the latter is merely a substitute teacher, then the
non-extension of the contract validly terminates the latter's employment; the rules on
probationary employment are not relevant. However, if the fixed term is intended to run
simultaneously with the probationary period of employment, then the fixed term is not to
be considered the probationary period, unless a shorter probationary period is expressly
adopted by the institution. In this situation, if the non-renewal of the fixed term
employment contract takes place after the expiration of the probationary period, then
the termination of employment can be characterized as a dismissal, for which the Labor
Code provisions on just and authorized causes shall apply. Likewise, if the nonrenewal
takes place prior to the expiration of the probationary period, then the termination of
employment is characterized as a dismissal for which the same provisions of the Labor
Code on just and authorized causes shall apply. It is only when the non-renewal of the
fixed term employment contract coincides with the expiration of the probationary period
that the termination of employment is deemed an exercise of management prerogative
of the institution not to regularize the probationary teacher for failure to meet established
standards.

While the parties are at liberty to agree to a short probationary period, the decision to do
so must be unmistakable, otherwise the presumption is that a three-year period was
adopted. In this case, in view of the vagueness in the parties' documents of
agreements, the CA was justified in relying on the presumption that the probationary
period was for three years as set by law.

Brazil v. STI Education Services Group, Inc., G.R. No. 233314, November 21, 2018

Facts:

Petitioner Luningning Z. Brazil was first employed by STI College-Legazpi on June 3,

1997 as a part-time faculty member. Petitioner Salvacion L. Garcera and petitioner Rita
S. De Mesa were next hired in June 2000 and June 2001, respectively, also as part-time
faculty members by STI-Legazpi. The services of the petitioners continued until June
2011, for which they filed a Complaint for illegal constructive dismissal and non-payment
of salaries/wages, separation pay and 131h month pay, with claims for moral and
exemplary damages and attorney's fees before the National Labor Relations
Commission.

Brazil claimed that she was hired as a "full-load faculty member" of STI-Legazpi in June
2002, when she started receiving a fixed monthly salary. On February 1, 2004, she was
regularized as evidenced by STI-Legazpi's Personnel Action Form. Likewise, Garcera
claimed that in a written evaluation of her teaching performance, acknowledged by her
on October 12, 2004, STI-Legazpi categorized her employment status as regular.
Moreover, in an electronic mail correspondence dated April 24, 2008 with Joseluis
Geronimo of the STI Headquarters, the latter confirmed the status of Brazil and Garcera
as regular employees. De Mesa claimed that she was employed as a "full-load faculty
member" in 2003, as indicated in her faculty employment contract. She further
advanced that as of June 2009, she was already considered a regular employee as she
started to receive a fixed monthly salary for twelve months. Petitioners alleged that they
were required to submit letters of intent and to sign contracts with STI for each
semester. However, upon their alleged regularization, STI no longer required them to do
so. In addition, they enjoyed the same benefits granted to regular employees such as
full payment of salary and statutory benefits during summer, semestral and Christmas
breaks.

Thereafter, Lagatic, the school administrator, handed to the petitioners separate job
offers for the first semester of academic year 2011-2012. The job offers for Brazil and
De Mesa were for part-time faculty members, whereas the job offer for Garcera was for
a probationary faculty member. Petitioners refused to sign the said job offers because
although the same stipulated a higher monthly salary, their security of tenure as regular
employees would be taken away from them. Upon inquiry, petitioners were informed by
Lagatic that their 201 files did not contain their appointment papers, and that they failed
to conform with the standards set out in the 2008 MORPHE .

Petitioners alleged that despite their repeated requests for the amendment of their
respective job offers on the basis of their belief that they are regular employees, Lagatic
still handed to them the same job offers. As they still refused to sign the said contracts,
they were replaced with six newly-hired faculty members on the following day. They also
did not receive any teaching load at the start of the school year, although they still
received their respective salaries for the period of June 1 to 15, 2011. Petitioners
averred that the addendum regarding the additional two years to comply with the CHED
requirement was absent in the job offers handed to them. The memorandum also came
late as classes have already started on June 13, 2011. Since they were placed in a
floating status and no longer received their salary for the period of June 16 to 30, 2011,
petitioners stopped reporting for work and filed complaints for illegal constructive
dismissal with monetary claims.

The LA declared petitioners as regular employees. Thus, respondents were found guilty
of illegal dismissal and were ordered to pay the petitioners their respective separation
pay in lieu of reinstatement as well as other monetary claims. The LA ratiocinated that
although the 2008 MORPHE applies in the determination of whether a faculty is a
regular employee or not, it does not apply in a case where regular employment status
has already been achieved or had already been granted to faculty members. TheNLRC,
affirmed the LA's finding of illegal dismissal except for De Mesa. The CA ruled that the
NLRC did not commit grave abuse of discretion in dismissing the petitioners' complaints
for illegal dismissal with money claims. Petitioners were merely separated from service
as a result of their stubborn refusal to sign their respective job offers which were made
in accordance with the 2008 MORPHE.

Issue:

Whether there was reversible error on the part of the CA?

Ruling:

The SC finds no reversible error on the part of the CA in ruling that the NLRC did not
commit any grave abuse of discretion when it dismissed the petitioners' complaints for
illegal dismissal with money claims. The Court do not intend to disturb the factual
antecedents of this case as found by the courts a quo. As aptly observed by the CA,
"the parties do not contest that, either expressly or impliedly, STI granted petitioners the
status of a regular faculty member.” As such, an examination of the evidence pertaining
to how the petitioners were granted a regular status by the STI is unnecessary.

Petitioners also do not question the applicability of the 1992 MO RPS and/or the 2008
MORPHE to them and their failure to qualify thereunder for lack of a master's degree.
They merely insist that despite the application of the 2008 MORPHE, an employer
educational institution that has granted or treated its employees as regular or
permanent employees can be held liable for illegal constructive dismissal, and
consequently liable to pay separation pay, back wages, etc. Subsequent compliance
with the MORPHE is not an available defense for employers in such cases.

Courts may resort to application of equity only when there is insufficiency or absence of
law. The principle of equity cannot prevail over the positive mandate of the law, such as
the 2008 MORPHE in this case. Application of equity "would be tantamount to
overruling or supplanting the express provisions of the law."

Ratio:

The practice of hiring teachers per semester or school year by educational institutions is
generally governed by the rules on fixed-term employment unless the circumstances
provide for either a probationary or a regular employment status.—In all, under a
fixed-term employment, the employer-employee relationship is severed upon the
expiration of the term or period stated under the contract without the necessity of any
notice to the employee. Nonrenewal of the contract, by no means, equate to dismissal.
In other words, there is no security of tenure in a fixed-term employment. As such, the
practice of hiring teachers per semester or school year by educational institutions is
generally governed by the rules on fixed-term employment unless the circumstances
provide for either a probationary or a regular employment status.

Under a fixed-term employment contract, nothing binds the parties to one another after
the expiration of the term of the contract.—We reiterate the rule that under a fixed-term
employment contract, nothing binds the parties to one another after the expiration of the
term of the contract. Thus, STI was not obliged to offer the said compliance program to
the petitioners. Further, to Our mind, if indeed the addendum is material to this case, the
petitioners should have communicated their interest to avail the same to STI. No
allegation to such effect was made by the petitioners.

Samonte v. La Salle Greenhills, Inc., G.R. No. 199683, February 10, 2016
FACTS: Petitioners were part of the Health Service Team (HST) at LSGI who
signed a One-page Contracts of Retainer, renewed annually from June to
March. After 15 years, LSGI opted not to renew the contracts for the
2004-2005 school year and decided to hire full-time medical professionals.

Petitioners filed a complaint for illegal dismissal with the National Labor
Relations Commission (NLRC) after their requests for separation pay were
denied.

ISSUES: WON petitioners are fixed-term employees thus legally dismissed

according to their signed Contracts of Retainer.

RULING: SC ruled that the petitioners are regular employees and were illegally
dismissed

RATIO: A fixed-term employment is allowable under the Labor Code only if the
term was voluntarily and knowingly entered into by the parties who must
have dealt with each other on equal terms, not one exercising moral
dominance over the other.

The uniform one-page Contracts of Retainer signed by petitioners were

prepared by LSGI alone. Petitioners, medical professionals as they were,
were still not on equal footing with LSGI as they obviously did not want to
lose their jobs that they had stayed in for fifteen (15) years. There is no
specificity in the contracts regarding terms and conditions of employment
that would indicate that petitioners and LSGI were on equal footing in
negotiating it. Notably, without specifying what are the tasks assigned to
petitioners, LSGI "may upon prior written notice to the retainer, terminate
the contract should the retainer fail in any way to perform his assigned
job/task to the satisfaction of La Salle Greenhills, Inc. or for any other just
cause."

While vague in its sparseness, the Contract of Retainer very clearly spelled
out that LSGI had the power of control over petitioners. Power of control
refers to the existence of the power and not necessarily to the actual
exercise thereof, nor is it essential for the employer to actually supervise
the performance of duties of the employee. It is enough that the employer
has the right to wield that power.

3.6 Probationary (Labor Code, Art. 296 [281])

Moral v. Momentum Properties Management Corporation, G.R. No. 226240, March 6,
2019

FACTS: Myra Moral was a leasing assistant hired by Momentum as a probationary

employee on June 26, 2013. At the end of her probationary employment
period (Dec 27, 2013), she was informed of her dismissal and was advised
to no longer report for work via text message. Upon inquiring for her
dismissal, she alleged that Momentum totally ignored her query and no
longer contacted her hence she filed for a case for illegal dismissal.

On the other hand, on Moral’s fifth month of probationary employment,

Momentum conducted a performance evaluation as what has been
discussed in the Employment Agreement and Moral failed to satisfactorily
meet the level of performance expected from her position. Due to being
unqualified for regularization purposes, petitioner was advised to report to
head office to discuss her poor evaluation scores to which she
disregarded.

ISSUES: WON Moral was illegally dismissed by her employer (Momentum).

RULING: SC ruled in favor of Momentum as having a valid cause to terminate

Moral’s probationary employment.

RATIO: Other than being terminated for a just or authorized cause, a probationary
employee may also be dismissed due to his or her failure to qualify in
accordance with the standards of the employer made known to him or her
at the time of his or her engagement.

Hence, the services of a probationary employee may be terminated for any

of the following: (1) a just cause; (2) an authorized cause; and (3) when he
or she fails to qualify as a regular employee in accordance with the
reasonable standards prescribed by the employer.

Petitioner was well-aware that her regularization would depend on her

ability and capacity to fulfill the requirements of her position as a Leasing
Assistant and that her failure to perform such would give respondent a
valid cause to terminate her probationary employment.

As long as the employer has made known to the employee the

regularization standards at the time of the employee's engagement, the
refusal of the former to regularize the latter, by reason of the latter's failure
to comply with the regularization standards, is within the ambit of the law.
 Moral was only awarded P30,000 for nominal damages due to procedural
infirmity where she was only informed of her dismissal via series of text
messages instead of formal written notice.

CALS Poultry Supply Corporation v. Roco, G.R. No.150660, July 30, 2002

FACTS: CALs, a corp engaged in business of selling dressed chicken and other
related products hired petitioners Alfredo Roco as driver and Candelaria
Roco as helper in the dressing room. Alfredo took a leave of absence on
Jan 14-18, 1996 and did not report back for work after the expiration of his
leave of absence prompting CAL to send him a letter inquiring if he still had
intentions of resuming his work. Candelaria was hired on May 16, 1995
and was terminated on Nov 15, 1995 due to poor work performance.

Both Alfredo and Candelaria filed for a complaint against CALs for illegal
dismissal which CA ordered for their reinstatement to their former positions
on the ground that Alfredo was not given of a written notice of termination
while with Candelaria, at the time of her services were terminated, she
had attained the status of a regular employee as the termination on
November 15, 1995 was affected four (4) days after the 6-month
probationary period had expired, hence, she is entitled to security of tenure
in accordance with Article 281 of the Labor Code.

ISSUES: WON petitioners were illegally dismissed as CA contends.

RULING: The SC agrees with the findings of Labor Arbiter and NLRC that both
petitioners were not dismissed as entitled of great weight.

RATIO: The Supreme Court viewed that Alfredo Roco had not established
convincingly that he was dismissed. No notice of termination was given to
him by CALS. There is no proof at all, except his self-serving assertion,
that he was prevented from working after the end of his leave of absence,
in fact, CALS notified him in a letter to resume his work.

With Candelaria, SC agreed with CALS' contention as upheld by both the

Labor Arbiter and the NLRC that Candelaria's services on November 15,
1995 was exactly on the last day of the 6-month period, and it was
terminated within and not beyond the 6-month probationary period. In
Cebu Royal v. Deputy Minister of Labor, our computation of the 6-month
probationary period is reckoned from the date of appointment up to
the same calendar date of the 6th month following.
Buiser v. Leogardo, Jr., G.R. No. L-63316, July 31, 1984

FACTS: Petitioners were employed by the private respondent General Telephone

Directory Company as sales representatives and charged with the duty of
soliciting advertisements for inclusion in a telephone directory.

Petitioners and the respondent company entered into an "Employment

Contract (on Probationary Status)" stating that as a telephone
representative on a probationary status for a period of eighteen (18)
months, it is understood that during the probationary period of
employment, the employee may be terminated without notice of
termination or the payment of termination pay.

Moreover, the employee recognizes the fact that the nature of the
telephone sales representative's job is such that the company would be
able to determine his true character, conduct and selling capabilities only
after the publication of the directory, and that it takes about eighteen (18)
months before his worth as a telephone saw representative can be fully
evaluated.

Failing to meet their respective sales quotas, the petitioners were

dismissed from the service by the respondent company and filed a
complaint for illegal dismissal on the ground that the Labor Code only
allows 6 months probationary period.

ISSUES: WON petitioner is correct in their contention that the probationary period is
restricted to 6 months.

RULING: The SC ruled in the negative.

RATIO: Generally, the probationary period of employment is limited to six (6)

months. The exception to this general rule is when the parties to an
employment contract may agree otherwise, such as when the same is
established by company policy or when the same is required by the nature
of work to be performed by the employee.

There was recognition of the exercise of managerial prerogatives in

requiring a longer period of probationary employment, such as in the
present case where the probationary period was set for eighteen (18)
months, i.e. from May, 1980 to October, 1981 inclusive, especially where
the employee must learn a particular kind of work such as selling or when
the job requires certain qualifications, skills, experience or training.
Mariwasa Manufacturing, Inc. v. Leogardo, Jr., G.R. No. 74246, January 26, 1989

FACTS: Private respondent Dequilla was hired on probation by petitioner Mariwasa

only as a general utility worker. Upon the expiration of the probationary
period of six months, Dequila was informed by his employer that his work
had proved unsatisfactory and had failed to meet the required standards.

To give him a chance to improve his performance and qualify for regular
employment, instead of dispensing with his service then and there, with his
written consent Mariwasa extended his probation period for another three
months. His performance, however, did not improve and on that account
Mariwasa terminated his employment at the end of the extended period.
Dequila thereupon filed a complaint for illegal dismissal.

ISSUES: WON Article 282 of the Labor Code notwithstanding, probationary

employment may validly be extended beyond the prescribed six-month
period by agreement of the employer and the employee.

RULING: The Court agrees that such an extension may lawfully be covenanted.

RATIO: The extension of Dequila's probation was ex gratia, an act of liberality on

the part of his employer affording him a second chance to make good after
having initially failed to prove his worth as an employee. Such an act
cannot now unjustly be turned against said employer's account to compel it
to keep on its payroll one who could not perform according to its work
standards. The law, surely, was never meant to produce such an
inequitable result.

By voluntarily agreeing to an extension of the probationary period, Dequila

in effect waived any benefit attaching to the completion of said period if he
still failed to make the grade during the period of extension. The Court
finds nothing in the law which by any fair interpretation prohibits such a
waiver. And no public policy protecting the employee and the security of
his tenure is served by prescribing voluntary agreements which, by
reasonably extending the period of probation, actually improve and further
a probationary employee's prospects of demonstrating his fitness for
regular employment.

*Difference between Buiser and this present case: that in the former
 involved an eighteen-month probationary period stipulated in the original
contract of employment, whereas the latter refers to an extension agreed
upon at or prior to the expiration of the statutory six-month period (such as
to warrant or even suggest a different ruling here.

Umali v. Hobbywing Solutions, Inc., G.R. No. 221356, March 14, 2018

FACTS: Umali started to work for Hobbywing on Jul 29, 2013 as Pitboss supervisor
in an online casino establishment. The petitioner is claiming that there was
no contract before the commencement of her employment and that she
was only asked to sign two employment contracts on January 19, 2013,
after having rendered seven months of service. The first employment
contract was for a period of five (5) months, the second contract was for a
period of three (3) months. She signed both contracts as directed.

She was terminated without cause on February 18, 2013 when she was
informed that the period of her probationary employment had already
ended and her services were no longer needed. She filed for a complaint
of illegal dismissal and claims that she had already attained the status of
regular employment after she suffered to work for more than six months of
probationary employment.

ISSUES: WON Umali was illegally dismissed for being terminated without just cause
after serving more than six months of probationary employment.

RULING: The Court ruled that the petitioner was illegally dismissed.

RATIO: General rule remains that an employee who has suffered to work for more
than the legal period of six (6) months of probationary employment or less
shall, by operation of law, become a regular employee.

At the time of the evaluation, the original period of probationary

employment had already lapsed on November 18, 2012 and the petitioner
was allowed to continuously render service without being advised that she
failed to qualify for regular employment. Clearly then, there is no reason to
justify the extension since the petitioner had a commendable rating and,
apart from this, there is no more period to be extended since the
probationary period had already lapsed.
 Having rendered service even after the lapse of the probationary period,
the petitioner had attained regular employment, with all the rights and
privileges pertaining thereto. Clothed with security of tenure, she may not
be terminated from employment without just or authorized cause and
without the benefit of procedural due process.

Robinsons Galleria/Robinsons Supermarket Corporation v. Ranchez, G.R. No. 177937,

January 19, 2011

FACTS: Respondent Irene was a probationary employee for five months, she was
hired as a cashier by Robinsons. Two weeks after she was hired, she
reported the loss of cash which she had placed in the company locker, she
offered to pay for the lost amount but the Robinson’s operations managers
had her strip-searched and reported her to the police even though they
had found nothing on Irene.

Irene was detained for two weeks for failure to post bail in an information
filed against her (qualified theft). Weeks later, she filed a complaint for
illegal dismissal and damages. A year later, Robinsons sent to respondent
by mail a notice of termination and/or notice of expiration of probationary
employment.

ISSUES: Whether the respondent was illegally terminated from employment by

petitioners.

RULING: SC ruled in the affirmative.

There is probationary employment when the employee upon his

RATIO:
engagement is made to undergo a trial period during which the employer
determines his fitness to qualify for regular employment based on
reasonable standards made known to him at the time of engagement.

A probationary employee, like a regular employee, enjoys security of

tenure. However, in cases of probationary employment, aside from just or
authorized causes of termination, an additional ground is provided under
Article 281 of the Labor Code, 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.23

Article 277(b) of the Labor Code mandates that subject to the constitutional
 right of workers to security of tenure and their right to be protected against
dismissal, except for just and authorized cause and without prejudice to
the requirement of notice under Article 283 of the same Code, the
employer shall furnish the worker, whose employment is sought to be
terminated, a written notice containing a statement of the causes of
termination, and shall afford the latter ample opportunity to be heard and to
defend himself with the assistance of a representative if he so desires, in
accordance with company rules and regulations pursuant to the guidelines
set by the DOLE.

Robinsons failed to accord Irene substantive and procedural due process.

The due process requirements under the Labor Code are mandatory and
may not be supplanted by police investigation or court proceedings. The
criminal aspect of the case is considered independent of the administrative
aspect. Thus, employers should not rely solely on the findings of the
Prosecutor’s Office. They are mandated to conduct their own separate
investigation, and to accord the employee every opportunity to defend
himself.

Respondent was constructively dismissed by petitioner, it was

unreasonable for petitioners to charge her with abandonment for not
reporting for work upon her release in jail. It would be the height of
callousness to expect her to return to work after suffering in jail for two
weeks. Work had been rendered unreasonable, unlikely, and definitely
impossible, considering the treatment that was accorded respondent by
petitioners.

Enchanted Kingdom, Inc. v. Verzo, G.R. No. 209559, December 9, 2015

FACTS

Miguel J. Verzo was hired by Enchanted Kingdom, Inc. as a Security Head -

Maintenance, Inspection, and Monitoring (SH-MIM) on August 19, 2009, on a
probationary basis for six months. Verzo was informed of his probationary status and
the standards for regularization in a letter dated August 26, 2009, which also included a
job description. Verzo signed both the probationary contract and the job description,
signifying his agreement. Verzo was evaluated for regularization on January 26, 2010,
and informed of the decision not to regularize him on February 15, 2010. Verzo filed a
complaint for illegal dismissal, claiming he was not informed of his probationary status
and the standards for regularization.

The Labor Arbiter (LA) and the National Labor Relations Commission (NLRC) dismissed
Verzo's complaint, finding that he was a probationary employee who failed to meet the
reasonable standards for regularization. The Court of Appeals (CA) reversed the LA and
NLRC decisions, finding that Verzo was illegally dismissed because he was not properly
informed of his probationary status and the standards for regularization.

ISSUE

Whether or not Verzo was a probationary employee who was validly dismissed for
failing to meet the reasonable standards for regularization.

RULING

Yes. The Supreme Court reversed the CA decision and upheld the findings of the LA
and NLRC.

The Court held that Verzo was a probationary employee who was validly dismissed for
failing to meet the reasonable standards for regularization. Verzo was informed of his
probationary status and the standards for regularization at the time of his engagement,
as evidenced by the signed probationary contract and job description. Notice and
hearing are not required for the termination of a probationary employee for failing to
meet the reasonable standards for regularization. Verzo's performance was evaluated
and that he failed to meet the reasonable standards set by Enchanted Kingdom, Inc.

Dusit Hotel Nikko v. Gatbonton, G.R. No. 161654, May 5, 2006

FACTS

Renato Gatbonton was hired as Chief Steward by Dusit Hotel Nikko on November 21,
1998, on a three-month probationary contract ending February 21, 1999. Gatbonton's
performance was allegedly unsatisfactory, leading to a recommendation for a two-month
extension of his probationary period. The hotel claimed to have extended Gatbonton's
probation until April 22, 1999, but Gatbonton disputed this claim. Gatbonton was
terminated on April 9, 1999, for failing to meet the standards for a Chief Steward.
Gatbonton filed a complaint for illegal dismissal and non-payment of wages, seeking
reinstatement, backwages, and damages.

ISSUE

Whether or not Gatbonton was a probationary employee at the time of his dismissal.

RULING

No. The Supreme Court ruled that Gatbonton was a regular employee at the time of his
dismissal.
The hotel failed to present substantial evidence proving that Gatbonton's probationary
period was validly extended. A probationary employee who works beyond the six-month
period (or any shorter period set by the employer) automatically becomes a regular
employee. The hotel failed to prove that Gatbonton was evaluated during his initial
three-month probationary period, making his dismissal for failing to meet performance
standards invalid.

The burden of proof for a valid termination of a probationary employee lies with the
employer. The employer must demonstrate that the probationary period was extended
in accordance with the law and the employment contract. The employer must also prove
that the employee was evaluated during the probationary period and failed to meet the
established standards. Working beyond the probationary period without a valid
extension automatically converts a probationary employee into a regular employee.

PNOC-EDC v. Buenviaje, G.R. Nos. 183200-01, June 29, 2016

FACTS

Amelyn A. Buenviaje was hired by PNOC-EDC as a Marketing Division Manager on

February 1, 2004. Her appointment letter stated that her appointment was subject to
confirmation by her immediate superior based on her performance during the next six
months. PNOC-EDC claimed that Buenviaje was a probationary employee and
dismissed her for failing to meet the company's standards. Buenviaje argued that she
was a regular employee and her dismissal was illegal.

ISSUE

Whether or not Buenviaje is a probationary employee.

RULING

No. The Supreme Court ruled that Buenviaje was a regular employee, not a
probationary one.

The appointment letter did not explicitly state that Buenviaje was a probationary
employee. The clause about confirmation based on performance was interpreted as a
means of evaluating her work, not as a condition for regularization. PNOC-EDC failed to
prove that they informed Buenviaje of the reasonable standards for regularization at the
time of her engagement. The standards were only discussed with her more than a
month after her appointment. The ambiguity in the appointment letter should be
resolved in favor of Buenviaje.

3.7 Floating Status (Labor Code, Art. 301 [286]; DO 215-20)

Seventh Fleet Security Services, Inc. v. Loque, G.R. No. 230005, January 22, 2020

FACTS

Rodolfo B. Loque was employed by Seventh Fleet Security Services, Inc. as a security
guard. Loque was placed on a 10-day suspension on December 27, 2013. After his
suspension ended on January 7, 2014, Loque was placed on floating status by Seventh
Fleet. Loque remained on floating status for over six months, until he filed a complaint
for constructive dismissal on July 28, 2014. Seventh Fleet claimed that they had
directed Loque to report to their office for posting within 48 hours through letters dated
May 14, 2014 and May 28, 2014. Loque claimed that he went to Seventh Fleet's office
on May 19, 2014 and July 11, 2014, but was barred from entering.

ISSUE

Whether or not Loque was constructively dismissed from employment due to being
placed on floating status for over six months.

RULING

Yes. The Court ruled that Loque was constructively dismissed.

The floating status of a security guard, in the absence of any available posts, is
analogous to temporary retrenchment or lay-off under Article 301 of the Labor Code.
The placement of an employee on floating status must not exceed six months,
otherwise, the employee may be considered constructively dismissed. Loque had been
in the service of Seventh Fleet for eight years prior to his dismissal and that he had
immediately filed a complaint for constructive dismissal after the lapse of his six-month
floating status, indicating his desire to return to work.

Placing an employee on floating status for more than six months without assigning them
to a specific post constitutes constructive dismissal, even if the employer claims to have
directed the employee to report for work.

AirborneMaintenanceandAlliedServices,Inc.v.Egos,G.R.No.222748,April3,2019

FACTS

Airborne Maintenance and Allied Services, Inc. hired Arnulfo M. Egos as a janitor in
1992. Egos was assigned to Meralco's Balintawak Branch, a client of Airborne.
Airborne's contract with Meralco was terminated, and Airborne claimed it placed Egos
on floating status due to the suspension of its business operations. Egos was not given
a new assignment despite following up with Airborne. Airborne sent letters to Egos
directing him to report for work, but these letters were returned with incomplete
addresses. Egos filed a complaint for constructive dismissal.

ISSUE

Whether or not Airborne's placement of Egos on floating status was a valid suspension
of its business operations under Article 301 of the Labor Code, thus justifying the
temporary layoff.

RULING
No. The Supreme Court ruled that Airborne failed to prove that the termination of its
contract with Meralco resulted in a bona fide suspension of its business operations.

Article 301 of the Labor Code states that the suspension of employment should not
exceed six months. Airborne failed to show compliance with the notice requirement to
the DOLE and Egos. Additionally, Airborne failed to prove that there were no available
posts to which Egos could be assigned. Airborne's actions, including the incomplete
addresses on the letters, were intended to make it appear as if Egos had not been
dismissed. The Court upheld the NLRC and CA's ruling that Egos was constructively
dismissed.

Telus International Philippines Services, Inc. v. De Guzman, G.R. No. 202676,

December 4, 2019

FACTS

Harvey De Guzman was a Quality Analyst at Telus International Philippines. He was

placed on floating status after being transferred to a new account, Bank of America, and
refusing to undergo a profiling interview. De Guzman was not paid during his floating
status and was told he would only be compensated once he passed the profiling
interview. Telus argued that the floating status was a valid exercise of management
prerogative due to the nature of the call center business and the need to transfer De
Guzman for operational purposes. De Guzman claimed that the floating status was a
form of constructive dismissal, as it was unreasonable, unfair, and prejudicial to him.

ISSUE

Whether or not the placement of De Guzman on floating status constituted constructive

dismissal.

RULING

Yes. The Supreme Court ruled that the placement of De Guzman on floating status did
constitute constructive dismissal.
Telus failed to provide any valid justification for placing De Guzman on floating status
and that there was no evidence of a deficit of accounts or company losses that would
justify such action. The Court rejected Telus' argument that the floating status was
comparable to off-detail or waiting to be posted in other industries, such as security
services or bus companies. The floating status principle applies when there are more
employees than work, which was not the case here. Telus continued to hire new
employees, indicating a surplus of work.

The Court held that Telus' actions in placing De Guzman on floating status without valid
reasons violated his security of tenure and resulted in unfavorable economic
consequences. This constituted constructive dismissal.

Superior Maintenance Services, Inc. v. Bermeo, G.R. No. 203185, December 5, 2018

FACTS

Carlos Bermeo was employed by Superior Maintenance Services, Inc. as a janitor in

1991. He was assigned to various clients, his last assignment being at Trinoma Mall
until March 30, 2008. On August 28, 2008, he was deployed to French Baker at SM
Marikina, but the client requested a replacement due to his age of 54 years old. On
September 5, 2008, Bermeo filed a complaint for constructive dismissal against
Superior Maintenance.

ISSUE

Whether or not Bermeo was constructively dismissed from work.

RULING

No. The Supreme Court ruled that Bermeo was not constructively dismissed.

The Court defined floating status as a period when security guards are in between
assignments or waiting for a new post after being relieved from a previous one. This
situation arises when clients decide not to renew contracts with the agency, resulting in
fewer available posts than guards on the roster. It also occurs when clients request
replacements for assigned guards, leaving the replaced guard on off-detail until a new
post becomes available.

The Court applied the concept of floating status to Bermeo's case, even though he was
a janitor and not a security guard. The principle applies to any industry where services
are legitimately farmed out by a client to an independent contractor.

There is no specific provision in the Labor Code governing floating status but that it is
considered a form of temporary retrenchment or lay-off, analogous to Article 301 of the
Labor Code. This article allows for a bona fide suspension of business operations for a
period not exceeding six months without terminating employment.

In this case, the Court found that Bermeo’s complaint for constructive dismissal was
premature because he had been on floating status for less than six months. Superior
Maintenance had contacted Bermeo for a new assignment even after he filed his
complaint. Bermeo was not constructively dismissed and reversed the Court of Appeals'
decision.

Ibon v. Genghis Khan Security Services, G.R. No. 221085, June 19, 2017

Padilla v. Airborne Security Service, Inc., G.R. No. 210080. November 22, 2017

FACTS:
Padilla was hired by respondent Airborne Security Service, Inc. as a security guard. He
was first assigned at an outlet of Trebel Piano along Ortigas Avenue Extension, Pasig
City. Padilla allegedly rendered continuous service until June 15, 2009, when he was
relieved from his post at City Advertising Ventures Corporation and was advised to wait
for his re-assignment order. Later, he received a letter from Airborne directing him to
report for assignment and deployment. He called Airborne's once but was told that he
had no assignment yet. He received another letter from Airborne asking him to report to
its office. He sent his reply letter and personally reported to the office to inquire on the
status of his deployment with Airborne's Director for Operations.

He was told that Airborne was having a hard time finding an assignment for him since
he was already over 38 years old. Padilla added that he was advised by Airborne's
personnel to resign, but he refused. Still not having deployed and re-assigned on
February 23, 2010, he filed a complaint for illegal dismissal. The Labor Arbiter
dismissed the complaint because Padilla failed to report for work despite the letter sent
to him and the NLRC affirmed the LA’s decision.

ISSUE:
Whether or not petitioner Macario S. Padilla was constructively dismissed from his
employment with respondent Airborne Security Service, Inc.

RULING:
Yes. Padilla was constructively dismissed from his employment. In Reyes v. Guardians
Security Agency, the court ruled that when the floating status lasts for more than 6
months, the employee shall be considered constructively dismissed. Security guard's
employer must give a new assignment to the employee within six (6) months. This
assignment must be to a specific or particular client. A general return-to-work order
does not suffice.

In the case at bar, Padilla received letters from the petitioner asking him to report to
office but still for more than 6 months of floating status, there is no new assignment for
him. He also personally reported to the office, however, the operations director told him
that they were having difficulty finding him a deployment because he was already old.

As a consequence of the finding of illegal dismissal, petitioner would ordinarily be

entitled to reinstatement, pursuant to Article 294 of the Labor Code. It is unreasonable
to deny employees their means of earning a living exclusively on the basis of age when
there is no other indication that they are incapable of performing their functions. It is true
that certain tasks require able-bodied individuals. Age, per se, is not a reliable indication
of physical stamina or mental rigor. What is crucial in determining capacity for
continuing employment is an assessment of an employee's state of health, not his or
her biological age.
Mobile Protective & Detective Agency v. Ompad, G.R. No. 159195, May 9, 2005

Facts:

Alberto G. Ompad, employed as a security guard by Mobile Protective & Detective

Agency, claimed he worked 12 hours daily since January 1990 without proper
compensation. Ompad alleged his wages were below minimum wage, and he was not
paid overtime, rest day, holiday pay, service incentive leave pay, or 13th month pay. In
June 1997, after inquiring about backwages, Ompad was relieved from his post and not
reassigned. On September 23, 1998, Ompad signed a resignation letter under duress in
exchange for promised money claims, but he only received an offer of P5,000, which he
rejected. The following day, Ompad filed a complaint for illegal dismissal, seeking
reinstatement with backwages or separation pay and other claims. The Agency denied
the allegations, claiming Ompad went AWOL after October 16, 1997, and voluntarily
resigned due to health issues. The Labor Arbiter dismissed Ompad's complaint, but the
NLRC reversed this, declaring the dismissal illegal and awarding separation benefits
and backwages. The Court of Appeals affirmed the NLRC's decision, leading to an
appeal to the Supreme Court.

Issue:
Whether or not Ompad was illegally dismissed.

Ruling:
Yes. The finding that respondent’s resignation was involuntary is further strengthened
by the fact that respondent filed the instant case the day after the alleged tender of
resignation. Respondent was placed in a floating status and it appears that petitioners
simply stopped giving respondent any assignment. Absent any dire exigency justifying
their failure to give respondent further assignment, the only logical conclusion is that
respondent was constructively dismissed.

In an illegal dismissal case, the onus probandi rests on the employer to prove that the
dismissal of an employee is for a valid cause. Having based their defense on
resignation, it is likewise incumbent upon petitioners, as employer, to prove that
respondent voluntarily resigned. From the totality of circumstances and the evidence on
record, it is clear that petitioners failed to discharge this burden. We have held that if the
evidence presented by the employer and the employee are in equipose, the scales of
justice must be tilted in favor of the latter. Accordingly, the finding of illegal dismissal
must be upheld.

3.8 Employment Subject to a Suspensive Condition (Civil Code, Art. 1181)

Sagunv.ANZGlobalServicesandOperations(Manila),Inc.,G.R.No.220399,August 22,
2016

Facts:

Petitioner Sagun was employed in HSBC-Electronic Data Processing PH when he

applied at respondent ANZ Global Services. After passing the interview and online
examination, he was offered the position of Customer Service Officer through a letter
that the petitioner accepted, subject to a satisfactory result of his pre-employment
screening. It was also stated that if in the opinion of ANZ, the results are not
satisfactory, ANZ may choose not to commence petitioner’s employment, or where
already started, to end his employment immediately, with no liability to pay
compensation. His appointment shall also take effect from the date of reporting on or
before July 11, 2011.

Accordingly, petitioner resigned from HSBC-EDP on July 11, 2011 and reported to ANZ.
He was however handed a letter of retraction informing him that the job offer had been
withdrawn on the ground that the company found material inconsistencies in his
declared information and documents provided after conducting a background check with
his previous employer, particularly at Siemens. The Labor Arbiter (LA) dismissed the
complaint, holding that there was no perfected employment contract between petitioner
and respondents since there was a valid cause for the withdrawal of the offer that was
made prior to the commencement of petitioner's service with the company. Aggrieved,
petitioner appealed to the NLRC. The NLRC affirmed the LA’s findings. The CA found
no grave abuse of discretion to have been committed by the NLRC in upholding the
dismissal of the complaint.

Issue:

Whether or not employer-employee relationship existed between petitioner and

respondent.

Ruling:

No. There was already a perfected contract of employment when petitioner signed
ANZ's employment offer and agreed to the terms and conditions that were embodied
therein. Nonetheless, the offer of employment extended to petitioner contained several
conditions before he may be deemed an employee of ANZ. Here, the subject
employment contract required a satisfactory completion of petitioner's background
check before he may be deemed an employee of ANZ. To reiterate, in a contract with a
suspensive condition, if the condition does not happen, the obligation does not come
into effect. Thus, until and unless petitioner complied with the satisfactory background
check, there exists no obligation on the part of ANZ to recognize and fully accord him
the rights under the employment contract.

4. Legitimate Contracting and Labor-Only Contracting (Labor Code, Arts. 106-109;

DO 174-17)

4.1 Definition of terms (DO 174-17, S3)

4.2 Distinction between legitimate job contractor and labor-only contractor

San Miguel Corporation v. MAERC Integrated Services, Inc., G.R. No. 144672, July 10,
2003

Facts:

Complainants are workers of SMC involved in the washing and segregating of various
kinds of empty bottles used by SMC to sell and distribute its beer beverages to the
consuming public. It appears that SMC entered into a contract with MAERC, engaging
the services of the latter, such contract being renewed from time to time. When the
service contract was terminated, the workers filed a complaint for illegal dismissal,
underpayment of wages and non-payment of other benefits. They claimed that SMC
was their real employer and that MAERC was merely used as a tool by SMC to avoid its
liability under the Labor Code. The Labor Arbiter dismissed the complaints for illegal
dismissal holding that MAERC is an independent contractor. The NLRC however, ruled
that MAERC was a labor-only contractor and that complainants were SMC employees.
This decision was affirmed by the CA.

Issue:

Whether or not MAERC is a labor-only contractor or an independent contractor

Ruling:

MAERC is a labor-only contractor. There is job contracting permissible under the Code
if the ff. conditions are met: (1) the contractor carries on an independent business and
undertakes to perform the job, service or task on its own account, under its own
responsibility and according to its 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, and (2) the contractor has substantial capital or
investment in the form of tools, equipment, machineries, work premises and other
materials which are necessary in the conduct of his business. In this case, while
MAERC’s investment in the form of buildings, tools and equipment amounted to more
than P4,000,000.00, the court cannot disregard the fact that it was SMC who required
that MAERC undertook such investment under the understanding that their relationship
would be on a long-term basis. Nor does the court believe that MAERC has an
independent business. Not only was it set-upped to specifically meet the pressing needs
of SMC which was having their labor problems in the segregation division, none of its
workers were also ever assigned to any other establishment. Therefore, SMC is a
labor-only contractor.

4.3 Contracting out services a management prerogative

Manila Electric Company v. Quisumbing, G.R. No. 127598, January 27, 1999

Facts:

In 1999, the SC promulgated a decision directing the parties to execute a CBA providing for an
increase in wages and retroactive application of Arbitral awards. Meralco filed this petition
arguing that an increase in wages will result in higher electricity rates which will be passed to
the consumers. The union likewise asked for a reconsideration from the Court’s decision which
denied the benefit of being granted a loan to set up a cooperative. It likewise questioned the
Court’s decision which granted Meralco the right to contract out jobs without consulting the
Union.

Issue:
Whether or not it is valid to contract out jobs without the need to consult the union.

Held:

The employer is allowed to contract out services for six months or more. However, the employer
should at least inform its employees of its decision or modes of action to attain a harmonious
labor-management relationship. While there should be mutual consultation, eventually hiring of
workers is a valid exercise of management prerogative subject only to special laws and
agreements on the matter and the fair standards of justice.
ManggagawasaKomunikasyonngPilipinasv.PLDT,Inc.,G.R.No.244695,February 14,
2024

FACTS:
On June 27, 2002, the labor organization Manggagawa ng Komunikasyon sa Pilipinas
(MKP), which represented the employees of PLDT, filed a notice of strike with the
NCMB. MKP charged PLDT with unfair labor practice for transferring several employees
of its Provisioning Support Division to Bicutan, Taguig, in violation of the duty to bargain
collectively in good faith. This was due to the redeployment measures done by PLDT to
accommodate employees from the abolition of certain divisions as part of its
redundancy program it implemented. PLDT declared only 323 employees as redundant
as it was able to redeploy 180 of the 503 affected employees to other positions.

On October 28, 2005, the NLRC dismissed MKP’s charges of unfair labor practices
against PLDT ruling that PLDT’s redundancy program in 2002 was valid and did not
constitute unfair legal practice. The redundancy program was due to the decline of
subscribers for long distance calls and to fixed line services produced by technological
advances in the communications industry. The NLRC ruled that the termination of
employment of PLDT’s employees due to redundancy was legal.

The CA affirmed the NLRC because PLDT was transparent and forthright in its
implementation of the redundancy program. PLDT also successfully redeployed 180 of
the 503 affected employees to other positions.
ISSUE:
Did PLDT commit unfair labor practice when it implemented its redundancy program?

RULING:

NO. Redundancy is one of the authorized causes for the termination of employment
provided for in Article 298 of the Labor Code. Redundancy exists when the services of
an employee are in excess of what is reasonably demanded by the actual requirements
of the enterprise.

While a declaration of redundancy is ultimately a management decision in exercising its

business judgment, and the employer is not obligated to keep in its payroll more
employees than are needed for its day to-day operations, management must not violate
the law nor declare redundancy without sufficient basis.

4.4 Core activities may be contracted out

Aliviado v. Procter & Gamble Philippines, Inc., G.R. No. 160506, March 9, 2010

Facts:
P&G is principally engaged in the manufacture and production of different consumer and health
products, which it sells on a wholesale basis to various supermarkets and distributors. To
enhance consumer awareness and acceptance of the products, P&G entered into contracts with
Promm-Gem and SAPS for the promotion and merchandising of its products. Aliviado and other
petitioners worked as P&G’s merchandisers, and individually signed employment contracts with
either Promm-Gem or SAPS for periods of more or less five months at a time. They were
assigned at different outlets, supermarkets, and stores where they handled all the products of
P&G, and received their wages from Promm-Gem or SAPS. Promm-Gem and SAPS imposed
disciplinary measures on erring merchandisers. In December 1991, petitioners filed a complaint
against P&G for regularization, service incentive leave pay, and other benefits, with damages.
The LA dismissed the case for lack of merit and ruled that there was no employer-employee
relationship between the petitioners and P&G. He found that the selection and engagement of the
petitioners, the payment of their wages, the power of dismissal and control with respect to the
means and methods by which their work was accomplished, were all done by
Promm-Gem/SAPS. He further found that Promm-Gem and SAPS were legitimate independent
job contractors. The NLRC and the CA subsequently affirmed the LA’s findings.

Issue:
Whether or not Promm-Gem and SAPS are legitimate job contractors.
Ruling:
Promm-Gem is a legitimate job contractor, while SAPS is a labor-only contractor. Therefore, the
employees of SAPS are the employees of P&G, SAPS being merely the agent of P&G.
Promm-Gem has shown evidence that it has substantial investment which relates to the work to
be performed, such as authorized stock of P1M and a paid-in capital, or capital available for
operations, of P500k; it has long-term assets worth over P400k and current assets worth over
P700k; it maintained its own warehouse and office space with a floor area of 870 square meters;
it had under its name three registered vehicles which were used for its
promotional/merchandising business; and it has clients aside from P&G. Promm-Gem also
supplied its complainant-workers with the relevant materials, such as markers, tapes, liners, and
cutters, necessary for them to perform their work. Promm-Gem also issued them uniforms. Also,
Promm-Gem already considered the complainants working under it as its regular, not merely
contractual or project, employees. This negates, on the part of Promm-Gem, bad faith and intent
to circumvent labor laws which factors have often been tipping points that lead the Court to
strike down the employment practice or agreement concerned as contrary to public policy,
morals, good customs, or public order. On the other hand, SAPS’ Articles of Incorporation shows
that it has a paid-in capital of only little over P31k. There is no other evidence presented to show
how much its working capital and assets are. Furthermore, there is no showing of substantial
investment in tools, equipment, or other assets. It failed to show that its paid-in capital is
sufficient for its 6-month contract period with P&G to generate its needed revenue to sustain its
operations independently. Instead, it could be readily seen that its capital is not even sufficient
for one month’s payroll, which is pegged at little over P44k. Furthermore, petitioners have been
charged with the merchandising and promotion of the products of P&G, an activity that has
already been considered by the Court as doubtlessly directly related to the manufacturing
business, which is the principal business of P&G. Considering that SAPS has no substantial
capital or investment and the workers it recruited are performing activities which are directly
related to the principal business of P&G, SAPS is engaged in “labor-only” contracting.
4.5 Test to determine independent contractorship

AFP Mutual Benefit Association, Inc. v. NLRC, G.R. No. 102199, January 28, 1997

Facts: The petitioner, AFP Mutual Benefit Association, Inc., entered into a Sales Agent's
Agreement with the respondent, Eutiquio Bustamante, in 1975. The agreement stated
that Bustamante would exclusively solicit business for the petitioner and would be
bound by the petitioner's policies, memo circulars, rules, and regulations. Bustamante
was compensated through commissions based on the premiums paid for the insurance
policies he sold. In 1989, the petitioner dismissed Bustamante for misrepresentation
and for simultaneously selling insurance for another company.At the time of his
dismissal, Bustamante was entitled to accrued commissions, but only a portion of it had
been paid to him. Bustamante filed a complaint with the Office of the Insurance
Commissioner, which advised him to file his complaint with the Department of Labor and
Employment. Bustamante filed a complaint with the Department of Labor, claiming
unpaid commissions and damages.

Issue: Whether or not there exist an employer-employee relationship thus vesting

jurisdiction overthe case to DOLE

Ruling: The existence of an employer-employee relationship is ultimately a question of

fact and thatthe findings thereon by the labor arbiter and the National Labor Relations
Commissionsshall be accorded not only repect but even finality when supported by
substantial evidence.The Court has applied the "four-fold" test in determining the
existence of employer-employee relationship. This tst considers the following elements:
(1) the power to dismiss;and (4) the power to control, the last being the most important
element.The fact that private respondent was required to solicit business exclusively for
petitionercould hardly be considered as control in labor jurisprudence. Thus, the
exclusivity restrictionclearly springs from a regulation issued by the Insurance
Commission, and not from anintention by petitioner to establish control over the method
and manner by which privaterespondent shall accomplish his work. This feature is not
meant to change the nature of therelationship between the parties, nor does it
necessarily imbue such relationship with thequality of control envisioned by the law.

Ratio: The significant factor in determining the relationship of the parties is the presence
or absence of supervisory authority to control the method and the details of
performance of the service being rendered, and the degree to which the principal may
intervene to exercise such control. The presence of such power of control is indicative
of an employment relationship, while absence thereof is indicative of independent
contractorship. In other words, the test to determine the existence of independent
contractorship is whether one claiming to be an independent contractor has contracted
to do the work according to his own methods and without being subject to the control of
the employer except only as to the result of the work. the "four-fold" test in determining
the existence of employer-employee relationship. This test considers the following
elements: (1) the power to hire; (2) the payment of wages; (3) the power to dismiss; and
(4) the power to control, the last being the most important element.

4.6 Permissible or legitimate job contracting/subcontracting (DO 174-17, S8)

San Miguel Foods, Inc. v. Rivera, G.R. No. 220103, January 31, 2018
Facts: San Miguel Foods, Inc. (SMFI) entered into a six-month invoicing services
contract with IMSHR Corporate Support, Inc. (ICSI) for the performance of invoicing
services. The contract was later extended on a month-to-month basis. ICSI assigned its
employees, including the respondents, to perform the invoicing services for SMFI. In
2009, SMFI decided to discontinue its invoicing operations at its head office and set up
a new one at its plants in San Fernando, Pampanga, and Nueva Ecija. The respondents
filed complaints for constructive dismissal, regularization, underpayment of salaries, and
other labor- related claims against SMFI.

Issue: ICSI is a legitimate service contractor?

Ruling: 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 persons are performing activities which are directly related to the
principal business of such employer. In such cases, the person or intermediary shall be
considered merely as an agent of the employer who shall be responsible to the workers
in the same manner and extent as if the latter were directly employed by him. The
permitted or permissible or legitimate job contracting or subcontracting is the one
allowed and permitted by law. It is an arrangement whereby a principal agrees to put out
or farm out with the contractor or subcontractor 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.

To determine its existence, these conditions must concur:

(a) the contractor carries on a distinct and independent business and partakes 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 the 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.
ManggagawasaKomunikasyonngPilipinasv.PLDT,Inc.,G.R.No.244695,February 14,
2024

FACTS:
On June 27, 2002, the labor organization Manggagawa ng Komunikasyon sa Pilipinas
(MKP), which represented the employees of PLDT, filed a notice of strike with the
NCMB. MKP charged PLDT with unfair labor practice for transferring several employees
of its Provisioning Support Division to Bicutan, Taguig, in violation of the duty to bargain
collectively in good faith. This was due to the redeployment measures done by PLDT to
accommodate employees from the abolition of certain divisions as part of its
redundancy program it implemented. PLDT declared only 323 employees as redundant
as it was able to redeploy 180 of the 503 affected employees to other positions.

On October 28, 2005, the NLRC dismissed MKP’s charges of unfair labor practices
against PLDT ruling that PLDT’s redundancy program in 2002 was valid and did not
constitute unfair legal practice. The redundancy program was due to the decline of
subscribers for long distance calls and to fixed line services produced by technological
advances in the communications industry. The NLRC ruled that the termination of
employment of PLDT’s employees due to redundancy was legal.

The CA affirmed the NLRC because PLDT was transparent and forthright in its
implementation of the redundancy program. PLDT also successfully redeployed 180 of
the 503 affected employees to other positions.

ISSUE: Whether the labor contraction is illegal

RULING: No. The court ruled that the law and its implementing rules allow contracting
arrangements for the performance of specific jobs, works or services. Indeed, it is
management prerogative to farm out any of its activities, regardless of whether
such activity is peripheral or core in nature. However, in order tor such outsourcing
to be valid, it must be made to an independent contractor because the current labor
rules expressly prohibit labor-only contracting.

There is labor-only contracting when the contractor or sub-contractor merely recruits,

supplies or places workers to perform a job, work or service for a principal and any of
the following elements are present:

i) The contractor or subcontractor does not have substantial

capital or investment which relates to the job, work or service
to be performed and the employees recruited, supplied or
placed by such contractor or subcontractor are performing
 activities which are directly related to the main business of the
principal; or

ii) The contractor does not exercise the right to control over e
performance of the work of the contractual employee.

Indeed, Article 106 of the Labor Code expressly allows an employer to engage in
legitimate labor contracting, which the DOLE implements through DO 18-A and DO
174-2017. An employer is not necessarily engaged, in labor-only contracting whenever
it farms out specific jobs, works, or services. We must distinguish between legitimate
labor contracting and labor-only contracting.

As will be discussed below, Sec. Bello's findings that PLDT engaged in labor-only
contracting must be anchored on substantial evidence

4.7 Requirement of substantial capital or investment in the form of tools, equipment,

machineries, work premises, etc. explained

Neri v. NLRC, G.R. Nos. 97008-09, July 23, 1993

Facts: Employees Virginia G. Neri and Jose Cabelin, hired by Building Care Corporation
(BCC), filed a complaint seeking recognition as regular employees of Far East Bank and
Trust Company (FEBTC) and payment of wages equivalent to those received by FEBTC
employees.

BCC, a corporation providing technical and specific services, established substantial

capitalization of P1 million.

The Labor Arbiter and the National Labor Relations Commission (NLRC) ruled that BCC
was engaged in job contracting, and the employees were not FEBTC's regular
employees.

The dispute revolved around whether BCC was involved in "labor-only" contracting,
making FEBTC the de facto employer.

Issue: Whether or Not BCC engaged in "labor-only" contracting, leading to the

classification of Neri and Cabelin as FEBTC's regular employees.?
Ruling: The Supreme Court held that BCC did not engage in "labor-only" contracting as
it had substantial capitalization.

The court emphasized that under Article 106 of the Labor Code, "labor-only" contracting
exists when the contractor lacks substantial capital and the workers' activities are
directly related to the principal business of the employer.

The court noted that BCC cannot be considered a "labor-only" contractor because it has
substantial capital. While there may be no evidence that it has investment in the form of
tools, equipment, machineries, work premises, among others, it is enough that it has
substantial capital, as was established before the Labor Arbiter as well as the NLRC. In
other words, the law does not require both substantial capital and investment in the form
of tools, equipment, machineries, etc. This is clear from the use of the conjunction "or".
If the intention was to require the contractor to prove that he has both capital and the
requisite investment, then the conjunction "and" should have been used. But, having
established that it has substantial capital, it was no longer necessary for BCC to further
adduce evidence to prove that it does not fall within the purview of "labor-only"
contracting. There is even no need for it to refute petitioners contention that the
activities they perform are directly related to the principal business of respondent bank.

The court rejected the employees' argument that they should be deemed FEBTC
employees through the "labor-only" contractor BCC, emphasizing that BCC was a
qualified independent contractor.

The court upheld the findings of the Labor Arbiter and the NLRC, stating that the
determination of employer-employee relationship involves factual findings, and absent
grave abuse of discretion, the court is bound by these findings.

San Miguel Foods, Inc. v. Rivera, G.R. No. 220103, January 31, 2018

Facts: San Miguel Foods, Inc. (SMFI) entered into a six-month invoicing services
contract with IMSHR Corporate Support, Inc. (ICSI) for the performance of invoicing
services. The contract was later extended on a month-to-month basis. ICSI assigned its
employees, including the respondents, to perform the invoicing services for SMFI. In
2009, SMFI decided to discontinue its invoicing operations at its head office and set up
a new one at its plants in San Fernando, Pampanga, and Nueva Ecija. The respondents
filed complaints for constructive dismissal, regularization, underpayment of salaries, and
other labor- related claims against SMFI.

Ruling: 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 persons 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.

Labor-only contracting is a prohibited act and it is not condoned by law. It is an

arrangement where the contractor not having substantial capital or investment in the
form of tools, equipment, machineries, work premises, among others, supplies workers
to an employer and the workers recruited are performing activities which are directly
related to the principal business of such employer.

The Rules Implementing Articles 106 to 109 of the Labor Code, as amended, to wit:

Section 5. Prohibition against labor-only contracting. - Labor-only contracting is hereby

declared prohibited. For this purpose, labor-only contracting shall refer to an
arrangement where the contractor or subcontractor merely recruits, supplies or places
workers to perform a job, work or service for a principal, and any of the following
elements are present:

(i) The contractor or subcontractor does not have substantial capital or investment
which relates to the job, work or service to be performed and the employees recruited,
supplied or placed by such contractor or subcontractor are performing activities which
are directly related to the main business of the principal; or

(ii) the contractor does not exercise the right to control over the performance of the work
of the contractual employee.

"Substantial capital or investment" refers to capital stocks and subscribed capitalization

in the case of corporations, tools, equipment, implements, machineries and work
premises, actually and directly used by the contractor or subcontractor in the
performance or completion of the job, work or service contracted out.
The "right to control" shall refer to the right reserved to the person for whom the
services of the contractual workers are performed, to determine not only the end to be
achieved, but also the manner and means to be used in reaching that end.

4.8 Proof that contractor carried on its own independent business

Alaska Milk Corporation vs. Paez, G.R. No. 237277, November 27, 2019

Facts: The case of Alaska Milk Corp. v. Paez involves the illegal dismissal of
respondents Ruben P. Paez, Florentino M. Combite, Jr., Sonny O. Bate, Ryan R.
Medrano, and John Bryan S. Oliver from their positions at Alaska Milk Corporation. The
respondents were originally members of Asiapro Multipurpose Cooperative, but Bate,
Combite, and Oliver transferred to 5S Manpower Services. Both Asiapro and 5S
provided personnel to Alaska through Joint Operating Agreements. The respondents
worked as production helpers at Alaska's San Pedro, Laguna milk manufacturing plant.
They were informed through separate memoranda in 2013 that their assignments at
Alaska were to be terminated. The respondents filed complaints for illegal dismissal,
regularization, and payment of money claims with the Labor Arbiter (LA). The LA
dismissed their complaints, ruling that Asiapro and 5S were engaged in legitimate
contracting operations and that the respondents were not employees of Alaska. The
respondents appealed to the National Labor Relations Commission (NLRC), but their
appeal was dismissed. They then filed a petition for certiorari before the Court of
Appeals (CA), which ruled in their favor, declaring them regular employees of Alaska
and finding that Asiapro and 5S were engaged in labor- only contracting. Alaska and
Asiapro filed a motion for reconsideration, which the CA denied. Hence, the petitions
before the Supreme Court.

Issue: Whether Asiapro and 5S are engaged in legitimate job contracting or proscribed
labor-only contracting

Ruling: The Court ruled in favor of the petitioner,

The Court is firmly convinced that Asiapro is a legitimate independent contractor. The
same, however, cannot be said of 5S. Article 106 of the Labor Code] defines labor-only
contracting as an arrangement where a person without substantial capital or investment
in the form of tools, equipment, machinery, or work premises, among other things,
supplies workers to an employer, and such workers perform activities directly related to
the principal business of the latter. In agreements of this nature, the contractor merely
acts as an agent in recruiting workers on account of the principal with the intent to
circumvent the constitutional and statutory rights of employees. There is no question
that the practice is inimical to the national interest and that it runs contrary to public
policy. As such, it is proscribed by law.

Nevertheless, not all forms of contracting are prohibited. Job contracting is the
permissible yet regulated practice of farming out a specific job or service to a contractor
for a definite or predetermined period of time, regardless of whether the contractor's
employees perform their assigned tasks within or outside the principal employer's
premises. In job contracting, the contractor carries out a business distinct and
independent from the principal's, and undertakes the work or service on its own
account, using its own manner and methods in doing so. Also, the contractor's
employees are free from the control of the principal employer, save only as to the result
thereof.

As mentioned, job contracting is a regulated practice. Accordingly, the law authorizes

the Secretary of Labor to promulgate administrative rules that distinguish between valid
job contracting and prohibited labor-only contracting, keeping with the fundamental state
policy of protecting labor. In view of this statutory directive, the Department of Labor and
Employment (DOLE) requires contractors to register themselves with the DOLE
Regional Office in which they operate so as to monitor their compliance with the law's
guiding principles. Failure to comply with the registration requirement gives rise to a
presumption that the contractor is engaged in labor-only contracting the failure of
Asiapro and 5S to register in accordance with the rules merely gave rise to a
presumption of labor-only contracting. Stated otherwise, the flaw was not conclusive as
to their status as contractors. After all, "in distinguishing between permissible job
contracting and prohibited labor-only contracting, the totality of the facts and the
surrounding circumstances of the case are to be considered, each case to be
determined by its own facts, and all the features of the relationship assessed to the
manner and means to be used in reaching that end.
ManggagawasaKomunikasyonngPilipinasv.PLDT,Inc.,G.R.No.244695,February 14,
2024

4.9 Principal’s right to control limited to the results

Mago v. Sun Power Manufacturing Limited, G.R. No. 210961, January 24, 2018

FACTS:

The case involves petitioners Leo V. Mago and Leilanie E. Colobong, who filed a
complaint for illegal dismissal against Sunpower Philippines Manufacturing Limited
(Sunpower). The petitioners were employees of Jobcrest Manufacturing, Incorporated
(Jobcrest), a company engaged in contracting management consultancy and services,
licensed by the Department of Labor and Employment (DOLE). Jobcrest and Sunpower
had a Service Contract Agreement, under which Jobcrest provided business process
services to Sunpower. The petitioners were trained by Jobcrest and assigned to
Sunpower's plant, with Leo working as a Production Operator in the Coinstacking
Station and Leilanie as a Production Operator in the Packaging Station. Jobcrest's
on-site Supervisor, Allan Dimayuga, supervised them during their assignment.

In October 2011, Sunpower conducted operational alignment, affecting some services

supplied by Jobcrest, including the segments where the petitioners worked. During this
period, Leo was on paternity leave and Leilanie on maternity leave. Upon returning to
work, Leo was informed by Jobcrest's Human Resource Manager, Noel J. Pagtalunan,
of a disciplinary charge for failing to disclose his relationship with Leilanie. Leilanie was
similarly informed of a charge when she reported back to work. Instead of complying
with Jobcrest's directives, the petitioners filed a complaint for illegal dismissal and
regularization with the National Labor Relations Commission (NLRC) on December 15,
2011.

The Labor Arbiter (LA) initially dismissed the complaint, declaring Jobcrest as a
legitimate contractor and the petitioners' statutory employer. The NLRC reversed this
decision, declaring the petitioners as regular employees of Sunpower and Jobcrest as a
labor-only contractor. The Court of Appeals (CA) subsequently reversed the NLRC's
decision, reinstating the LA's ruling. The petitioners then brought the case to the
Supreme Court, seeking to reverse the CA's decision.

ISSUE:

Whether or not Suncrest has the power of control over the petitioners’ conduct.
RULING:

No.

The element of control was defined under DOLE DO No. 18-02 as the right reserved to
the person for whom the services of the contractual workers are performed, to
determine not only the end to be achieved, but also the manner and means to be used
in reaching that end.

The fact that the petitioners were working within the premises of Sunpower, by itself,
does not negate Jobcrest's control over the means, method, and result of the
petitioners' work. Since Jobcrest was a provider of business process services, its
employees would necessarily work within the premises of its client companies in order
for Jobcrest to perform its contractual undertaking. Mere physical presence in
Sunpower's plant does not necessarily mean that Sunpower controlled the means and
method of the petitioners' work. The petitioners, despite working in Sunpower's plant for
most of the time, admit that whenever they file their leave application, or whenever
required by their supervisors in Jobcrest, they report to the Jobcrest office. Designated
on-site supervisors from Jobcrest were the ones who oversaw the performance of the
employees' work within the premises of Sunpower. As incontrovertibly established in
this case, the principal's right to control is limited to the results of the work of the
contractor's employees thereby proving that there is no employer-employee relationship
established between the petitioners and the respondent.

RATIO:

The control over the employees’ performance of the work is, as the Court ruled in some
cases, usually manifested through the power to hire, fire, and pay the contractor’s
employees, the power to discipline the employees and impose the corresponding
penalty, and more importantly, the actual supervision of the employees’ performance.

4.10 Trilateral relationship

Ortiz v. Forever Richsons Trading Corporation, G.R. No. 238289, January 20, 2021

FACTS:

Oscar S. Ortiz filed a complaint for illegal dismissal and monetary claims against
Forever Richsons Trading Corporation on June 28, 2013. Oscar was initially hired by
Forever Richsons in June 2011 under a 5-month employment contract with Workpool
Manpower Services. Despite the contract's expiration, Oscar continued working for the
respondents. In April 2013, respondents' paymaster, Paulino Tinoy, required workers to
sign new 5-month employment contracts, blank papers, and vouchers. Oscar and a few
others refused to sign, leading to his dismissal. Oscar claimed he was a regular
employee, having worked for two years post-contract expiration, performing tasks
essential to the respondents' plywood manufacturing business. He alleged illegal
dismissal for refusing to sign the new contract and sought reinstatement, backwages,
and other damages. Respondents argued that Oscar was an employee of Workpool
Manpower, a legitimate job contractor certified by the Department of Labor and
Employment (DOLE), and that his employment ended with the contract's expiration. The
Labor Arbiter (LA) dismissed Oscar's complaint for not impleading Workpool Manpower
as an indispensable party, a decision upheld by the National Labor Relations
Commission (NLRC) and the CA. Oscar then petitioned the Supreme Court, asserting
that Workpool Manpower was a labor-only contractor, making him a regular employee of
the respondents.

ISSUE:

Whether or not an employer-employee relationship exists between Ortiz and the

respondents.

RULING:

Yes.

There are three parties in a legitimate contracting relationship, namely: the principal, the
contractor, and the contractor's employees. In this trilateral relationship, the principal,
controls the contractor and his employees with respect to the ultimate results or output
of the contract; the contractor, on the other hand, controls his employees with respect,
not only to the results to be obtained, but with respect to the means and manner of
achieving this result. On the other hand, in a labor-only contracting situation, the
contractor simply becomes an agent of the principal.

The Court scrutinized the contracting arrangement and determined that Workpool
engaged in labor-only contracting, lacked substantial capital/investment, and did not
exercise proper control over its employees. As such, the real employer-employee
relationship was between Ortiz and the respondents. Ortiz, having performed tasks
essential to their plywood manufacturing business beyond his contractual period, was
deemed a regular employee. His dismissal, without just or authorized cause, was
declared illegal.

RATIO:
The case reiterated the criteria distinguishing between legitimate job contracting and
labor-only contracting, emphasizing on substantial capital, control over employees’
performance, and the roles performed by the contracted workers in relation to the
principal business.

4.11 Rights of the employees of the contractor/subcontractor (DO 174-17, S10)

4.12 Contracts required (DO 174-17, S11)

4.13 Effect of violation of the provisions on the rights of contractor’s employees and on
required contracts (DO 174-17, S12)

4.14 Effect of termination of employment (DO 174-17, S13; Labor Code, Arts. 297-299)

4.15 Labor-only contracting defined (Labor Code, Art. 106 [last par.]; DO 174-17, S3[h]
& 5)

Consolidated Building Maintenance , Inc. v. Asprec, Jr., G.R. No. 217301, June 6,2018

Facts:

Consolidated Building Maintenance, Inc. (CBMI) is a corporation engaged in providing

various services, including janitorial and kitchen services, to different entities. One of its
clients is Philippine Pizza, Inc.-Pizza Hut (PPI). CBMI had service contracts with PPI
from 2000 and from 2002 to 2010. Respondents Rolando Asprec, Jr. and Jonalen
Bataller claimed to be regular employees of PPI. They alleged that after their initial
contracts with PPI expired, they were advised to go on leave and were subsequently
re-hired through CBMI, continuing their previous roles. CBMI, however, asserted that
the respondents were its employees. On July 23, 2010, the respondents were
investigated for an alleged theft incident, leading to their suspension and eventual
dismissal. Consequently, they filed a complaint against CBMI and PPI for constructive
illegal dismissal, illegal suspension, and non-payment of separation pay. The Labor
Arbiter (LA) ruled in favor of the respondents, declaring them regular employees of PPI
and finding them illegally dismissed. The National Labor Relations Commission (NLRC)
modified the LA's decision, recognizing the respondents as regular employees of CBMI
and dropping PPI from the case. The Court of Appeals (CA) reinstated the LA's
decision, holding that CBMI was a labor-only contractor and that the respondents were
employees of PPI. CBMI then filed a petition for review on certiorari before the Supreme
Court.

Issue: Whether or not CBMI is a labor-only contractor.

Ruling:

No.

Labor-only contracting is defined by Article 106 of the Labor Code of the Philippines, as
an arrangement where a person, who does not have substantial capital or investment,
supplies workers to an employer to perform activities which are directly related to the
principal business of such employer.

The Supreme Court found that CBMI had substantial capital and operated
independently, which qualified it as an independent contractor, not a labor-only
contractor. The Court noted CBMI's Certificate of Registration with the DOLE and its
substantial assets as evidence of its legitimacy. The Court also recognized CBMI's
control over the respondents, including hiring, supervision, and disciplinary authority,
further supporting its status as an independent contractor.

Coca-Cola Bottlers Phils., Inc. v. Agito, G.R. No. 179546, February 13, 2009

Facts:

The respondents, who were salesmen assigned to the Lagro Sales Office of Coca-Cola
Bottlers Phils., Inc. (CCBPI), filed complaints before the National Labor Relations
Commission (NLRC) against Coca-Cola and several contractors, including Interserve
Management & Manpower Resources, Inc., for illegal dismissal, reinstatement with back
wages, regularization, nonpayment of 13th month pay, and damages. They claimed that
they had been working for CCBPI for years without being regularized. CCBPI argued
that the employees were actually employees of Interserve who were tasked to perform
contracted services in accordance with the provisions of the Contract executed between
petitioner and Interserve. Said Contract between petitioner and Interserve, constituted
legitimate job contracting, given that the latter was a bona fide independent contractor
with substantial capital or investment in the form of tools, equipment, and machinery
necessary in the conduct of its business.

Issue:
Whether or not Interserve is a labor-only contractor.

Ruling:

Yes.

Section 5 of the Rules Implementing Articles 106-109 of the Labor Code, as amended,
provides the guidelines in determining whether labor-only contracting exists: i) The
contractor or subcontractor does not have substantial capital or investment which
relates to the job, work, or service to be performed and the employees recruited,
supplied or placed by such contractor or subcontractor are performing activities which
are directly related to the main business of the principal; or ii) The contractor does not
exercise the right to control the performance of the work of the contractual employee.

The Supreme Court found that Interserve was a labor-only contractor, as it did not have
substantial capital or investment in the form of tools, equipment, and machinery
necessary for the services it was contracted to perform. The Court noted that
Interserve's capital and investments were insufficient to meet the demands of
Coca-Cola's daily soft drink deliveries. The Court also determined that Coca-Cola had
effective control over the means and method of respondents' work, as evidenced by
various documents and memoranda. The Court emphasized that the work performed by
the respondents was directly related and necessary to Coca-Cola's principal business of
manufacturing, distributing, and selling soft drinks. Consequently, the Court held that an
employer-employee relationship existed between Coca-Cola and the respondents,
making Coca-Cola solidarily liable for the employees' claims.

4.16 Totality of facts and circumstances to be considered

Petron Corporation v. Caberte, G.R. No. 182255, June 15, 2015

Facts:

In 1996, Petron engaged the service of ABC Contracting Services as a contractor

to provide utility and maintenance services to its Bacolod bulk tanks. In 1999, the
contract between Petron and ABC was terminated which led to the dismissal of the
respondents. Thus, they filed a complaint for illegal dismissal contending that ABC was
a mere labor-only contractor which had no substantial capital and investment, and had
no control over the manner and method on how they accomplished their work. Thus,
Petron is their true employer. Petron countered their contention saying that ABC was an
independent contractor which supplied the needed manpower for the maintenance and
utility of its bulk plant.

The Labor Arbiter and the NLRC both decided in favor of Petron stating that ABC was a
legitimate independent contractor and thus, the employer of the respondents. The CA
reversed the judgment of the NLRC and ordered the reinstatement of the respondents.

Issue: Whether or not ABC Contracting Services was a labor-only contractor of Petron.

Ruling:

Yes.

Under the law and jurisprudence, a contractor is deemed to be a labor-only

contractor if the following elements are present: (i) the contractor does not have
substantial capital or investment to actually perform the job, work or service under its
own account and responsibility; and (ii) the employees recruited, supplied or placed by
such contractor are performing activities which are directly related to the main business
of the principal.

To determine whether a contractor is engaged in labor-only contracting or

permissible job contracting, “the totality of the facts and the surrounding circumstances
of the case are to be considered.” In this case, Petron failed to show that ABC had
substantial capital or investment and that respondents were performing activities which
were not directly related to Petron’s principal business. The documentary evidence
presented by Petron were not conclusive evidence of ABC’s financial capacity to
operate and perform their business independently, including the performance bond
posted by ABC. It was also shown that ABC does not own basic tools, equipment and
machineries, and work premises needed to carry out their worker’s job. Moreover, the
Court found that the work rendered by the respondents were directly related or
necessary and desirable to the main business of Petron for they are vital as they are in
the manufacture and distribution of petroleum products. Petron’s power of control over
the work of the respondents was also found by the Court through its supervision over
their work in handling LPG products.

Therefore, Petron is declared to be the true employer of respondents who are

considered regular employees in view of the fact that they have been regularly
performing activities which are necessary and desirable to the usual business of Petron
for a number of years.

4.17 Burden of proof

Alilin v. Petron Corporation, G.R. No. 177592, June 9, 2014

Facts:

The petitioners were initially recruited by Romualdo D. Gindang Contractor and later by
Romeo D. Gindang Services (RDG) to work at Petron’s Mandaue Bulk Plant. They
performed various tasks such as utility work, tanker receiving, barge loading,
warehousing, and other maintenance duties from as early as 1968. On June 1, 2000,
Petron and RDG entered into a Contract for Services, which expired on September 30,
2002 and was not renewed. Subsequently, on October 16, 2002, the petitioners were
barred from continuing their services, prompting them to file complaints for illegal
dismissal and other monetary claims against Petron and RDG. The Labor Arbiter ruled
in favor of the petitioners, declaring them as regular employees of Petron and awarding
them separation pay and backwages. This decision was affirmed by the National Labor
Relations Commission (NLRC). However, the Court of Appeals (CA) reversed the
NLRC’s decision, finding no employer-employee relationship between the petitioners
and Petron and dismissing the complaint. The petitioners then brought the case to the
Supreme Court.

Issue:

1. Is RDG a legitimate job contractor or a labor-only contractor?

2. Does an employer-employee relationship exist between Petron and the
petitioners?

Ruling:

The Supreme Court ruled in favor of the petitioners, reversing the CA’s decision and
reinstating and affirming the NLRC’s decision. The Court found that RDG is a labor-only
contractor and that an employer-employee relationship exists between Petron and the
petitioners. Consequently, Petron is held liable for the illegal dismissal of the petitioners
and their monetary claims.

The Court emphasized that a contractor is presumed to be a labor-only contractor

unless it proves substantial capital, investment, tools, and the like. In this case, Petron
failed to discharge the burden of proving that RDG is a legitimate contractor. The
financial documents presented by Petron only established RDG’s financial capability for
the year 2000, not for the entire period during which the petitioners were employed. The
Court also found that the works performed by the petitioners were directly related to
Petron’s business, further negating RDG’s status as an independent contractor.
Additionally, the Court determined that Petron exercised control over the petitioners, a
key element in establishing an employer-employee relationship. The petitioners were
required to follow Petron’s work schedule, wear uniforms, and adhere to safety
measures, indicating Petron’s control over their work. The Court concluded that the
petitioners had attained regular status as employees of Petron due to their long years of
service and the nature of their work. Therefore, Petron could not terminate their services
based on the expiration of the service contract with RDG. Petron and RDG, being a
labor-only contractor, are solidarily liable for the illegal dismissal and monetary claims of
the petitioners.

San Miguel Foods, Inc. v. Rivera, G.R. No. 220103, January 31, 2018

Facts:

San Miguel Foods, Inc. (SMFI), a corporation engaged in the poultry business,
outsourced its invoicing services to IMSHR Corporate Support, Inc. (ICSI), an
independent contractor. The contract between SMFI and ICSI began on January 17,
2005, and was initially set for six months but continued on a month-to-month basis after
the initial term expired. ICSI assigned its employees, including the respondents, to
perform invoicing services for SMFI. In 2009, SMFI decided to discontinue its invoicing
operations at its head office and relocate them to its San Fernando, Pampanga, and
Nueva Ecija plants. This decision led to the respondents filing complaints for
constructive dismissal, regularization, and various monetary claims against SMFI before
the Labor Arbiter (LA). The LA dismissed the complaints, ruling that ICSI was a
legitimate service contractor and the respondents were its employees, not SMFI's. The
National Labor Relations Commission (NLRC) affirmed the LA's decision. However, the
Court of Appeals (CA) reversed the NLRC's decision, holding that an
employer-employee relationship existed between SMFI and the respondents, and
ordered their reinstatement with full benefits. SMFI then petitioned the Supreme Court
for review.

Issue:

Whether or not an employer-employee relationship exists between SMFI and the

respondents.

Ruling:

The Supreme Court ruled that no employer-employee relationship exists between SMFI
and the respondents.

Customarily, 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.—A finding of the existence of a labor-only contracting
would definitely give rise to: (1) the creation of an employer-employee relationship
between the principal and the employees of the contractor or subcontractor; and (2) the
solidary liability of the principal and the contractor to the employees in the event of any
violation of the Labor Code. To distinguish prohibited labor-only contracting from
permissible job contracting, the totality of the facts and the surrounding circumstances
of the case shall be considered.

The Court found that ICSI met the criteria for a legitimate job contractor: it was duly
registered with the Securities and Exchange Commission (SEC) and other relevant
agencies, had substantial capital, and carried on a distinct and independent business.
ICSI also exercised control over the respondents' work, including hiring, payment of
wages, and supervision. The Court noted that the interaction between SMFI and the
respondents was limited and that SMFI's involvement was primarily to ensure the
desired result of the invoicing services. The Court concluded that the respondents were
employees of ICSI, not SMFI, and therefore, SMFI could not be held liable for their
claims. The CA's decision to reinstate the respondents and grant them full benefits was
reversed, and the NLRC's decision was reinstated.

4.18 Other illicit forms of employment arrangements (DO 174-17, S6)

4.19 Effect of a finding that a contractor is engaged in labor-only contracting (Labor

Code, Art. 106 [last par., last sentence]; DO 174-17, S7)

Aboitiz Haulers, Inc. v. Dimapatoi, G.R. No. 148619, September 19, 2006

ABOITIZ HAULERS, INC., petitioner,

vs.
MONAORAI DIMAPATOI, CECILIA AGAWIN, EMMANUEL GUERRERO, RAUL
MAMATE, and GEMENIANO BIGAW, respondents.
G.R. No. 148619
September 19, 2006

Facts:
Petitioner Aboitiz Haulers, Inc. is a domestic corporation principally engaged in the
nationwide and overseas forwarding and distribution of cargoes. Private respondents
Monaorai Dimapatoi, Cecilia Agawin, Raul Mamate, Emmanuel Guerrero and
Gemeniano Bigaw worked as checkers in the Mega Warehouse, which is owned by the
petitioner. Petitioner claims that respondents are not its employees, rather they are the
employees of Grigio Security Agency and General Services (Grigio), a manpower
agency that supplies security guards, checkers and stuffers. It allegedly entered into a
Written Contract of Service with Grigio. By virtue of the aforementioned Written Contract
of Service, Grigio supplied petitioner with security guards, checkers and stuffers for
petitioner’s Mega Warehouse. The respondents were among the checkers that were
assigned to the petitioner’s warehouse. In which the petitioner also alleges that the
respondents left the warehouse and did not report to work thereafter. As a result of the
respondents’ sudden abandonment of their work, there was no orderly and proper
turnover of papers and other company property in connection with the termination of the
Written Contract for Services.

Respondents, on the other hand, claim that most of them worked as checkers in
petitioner’s warehouse even before 1 March 1994. Respondents maintain that during
their employment with the petitioner, they were not paid their regular holiday pay, night
shift differential, 5-day service incentive leave, and overtime premium. They also
averred that illegal deductions were being made on their wages. They also allege that
the petitioner dismissed them on the pretext that the Written Contract of Service
between Grigio and the petitioner had been terminated.

Raul Mamate, one of the respondent, filed a complaint before the Department of Labor
and Employment (DOLE) for nonpayment of wages and other benefits, as well as illegal
deductions against the petitioner.. The labor arbiter ruled that the complainants’ failure
to offer any evidence showing that Grigio had no substantial capital denotes that Grigio
was a legitimate independent job contractor. On appeal, the NLRC affirmed the findings
of the labor arbiter.

The Court of Appeals determined that Grigio was not an independent job contractor,
despite its claim that it has sufficient capital. After ruling that petitioner was the employer
of the respondents, the Court of Appeals resolved that the respondents were illegally
dismissed by the petitioner since the latter failed to comply with the procedural
requirements of notice and hearing. It affirmed the NLRC and the labor arbiter in
deciding that the respondents were not entitled to their claims for payment of holiday
pay, night shift differentials, overtime and illegal deductions as these claims were not
sufficiently proven.

Issues:
1. Whether or not Grigio is a "labor-only" contractor
2. Whether the respondents were lawfully dismissed due to abandonment.
Ruling:
Under Rule 45 of the 1997 Rules of Court, this Court’s review of decisions is confined to
questions of law. Generally, the findings of fact made by the labor arbiter and the NLRC,
as the specialized agencies presumed to have the expertise on matters within their
respective fields, are accorded much respect and even finality, when supported by
ample evidence.22 However, when the findings of the labor arbiter and the NLRC are
contrary to the evidence on record, this Court shall lay aside such erroneous findings .

1. YES. Article 106 of the Labor Code explains the relations which may arise between
an employer, a contractor and the contractor’s employees thus:
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.
In the event that the contractor or subcontractor fails to pay the wages of his
employees in accordance with this Code, the employer shall be jointly and
severally liable with his contractor or subcontractor to such employees to the
extent of the work performed under the contract in the same manner and extent
that he is liable to employees directly employed by him.

The Secretary of Labor 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.

The first two paragraphs of Art. 106 set the general rule that a principal is permitted by
law to engage the services of a contractor for the performance of a particular job, but
the principal, nevertheless, becomes solidarily liable with the contractor for the wages of
the contractor’s employees. The third paragraph empowers the Secretary of Labor to
make distinctions between permissible job contracting and "labor-only" contracting. 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.

In the case, the respondents’ work, as warehouse checkers, is directly related to the
principal business of the petitioner. Petitioner also exercises the right to control and
determines not only the end to be achieved, but also the manner and means to be used
in reaching that end. Lastly, petitioner failed to sufficiently prove that Grigio had
"substantial capital or investment."

The respondents, as checkers, were employed to check and inspect cargoes, a task
which is clearly necessary for the petitioner’s business of forwarding and distributing of
cargoes. The petitioner did not dispute the fact that the respondents were hired as
checkers as early as 1992. The fact that they were employed before the Written
Contract of Services indicates that the respondents’ work was indeed necessary for the
petitioner’s business.

Grigio did not undertake the performance of its service contract according to its own
manner and method, free from the control and supervision of its principal. The work
activities, work shifts, and schedules of the respondents, including the time allowed for
"recess" were set under the Written Contract of Services.

2. NO. Abandonment as a just and valid ground for dismissal requires the deliberate
and unjustified refusal of the employee to resume his employment. Mere absence of
failure to report for work, after notice to return, is not enough to amount to such
abandonment.

For a valid finding of abandonment, two factors must be present:

(1) the failure to report for work or absence without valid or justifiable reason;
(2) a clear intention to sever employer-employee relationship,

The burden of proof to show that there was unjustified refusal to return to work rests on
the employer. Petitioner failed to prove this. Even assuming there was abandonment,
petitioner did not comply with the statutory requirement of notice and hearing.
In the present case, the petitioner failed to serve the respondents either of the two
notices. Neither did petitioner afford the respondents an opportunity to contest their
dismissal. Having failed to establish the requirements of notice and hearing, the
dismissal of the respondents is tainted with illegality.

Wherefore, Petitioner is hereby ordered to reinstate respondents with full status and
rights of regular employees.

Allied Banking Corporation v. Calumpang, G.R. No. 219435, January 17, 2018

ALLIED BANKING CORPORATION, now merged with PHILIPPINE NATIONAL

BANK, petitioner
 vs.
REYNOLD CALUMPANG, respondent
G.R. No. 219435
January 17, 2018

Facts:
Petitioner Allied Banking Corporation and Race Cleaners, Inc. entered into a Service
Agreement whereby RCI will provide Allied with messengerial, janitorial,
communication, and maintenance services. On Sept. 28, 2003, respondent Reynold
Calumpang was hired as a janitor by RCI and was assigned at the bank’s Tanjay City
Branch.

Petitioner observed that whenever respondent went out on errands, it takes a long time
for him to return to the branch. It was eventually discovered that during these times,
respondent was also plying his pedicab and ferrying passengers. The Bank Manager
also found out that respondent has been borrowing money from several clients of the
branch. He was then told by the Bank Manager that his services was no longer needed.
Thereafter, respondent filed a complaint for illegal dismissal and underpayment of
wages against petitioner before the NLRC.

In his position paper, respondent asserted that the four-fold test of employer-employee
relationship is present between him and the bank. He averred that he was a regular
employee of the Bank assigned as a janitor of the branch with a salary P4,200 payable
every 15 days each month, and assigned such other tasks essential and necessary for
the Bank’s business. He alleged that petitioner engaged his services and exercised
direct control and supervision over him, through the Branch Head, not only as to the
result of his work but also as to the means and methods by which the same was to be
accomplished. As regards the payment of salary, respondent claimed that it was the
Branch that directly paid his salaries and wages. As for the power of dismissal,
respondent further alleged that it was petitioner Bank, through its Branch Head, who
terminated his services.

Petitioner denied the existence of any employer-employee relationship between itself

and respondent. It asserted that respondent was clearly an employee of RCI by virtue of
the Service Agreement which clearly indicated in Article XI thereof that there would be
no employer-employee relationship between RCI’s employees and the Bank. It further
averred that RCI is a qualified job contractor because of its capitalization and the fact
that it exercised control and supervision over its employees deployed at the branches of
the petitioner in accordance with Rule VIII-A, Sec. 4, pars. (d) & (e) of the Omnibus
Rules Implementing the Labor Code.
Issues:
Whether RCI is a labor-only contractor and whether there exists an employer-employee
relationship between the Bank and the respondent

Ruling:
Permissible job contracting or subcontracting has been distinguished from labor-only
contracting such that permissible job contracting or subcontracting refers to an
arrangement whereby a principal agrees to put out or farm out to 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, while labor-only
contracting, on the other hand, pertains to an arrangement where the contractor or
subcontractor merely recruits, supplies or places workers to perform a job, work or
service for a principal.

As a general rule, a 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.

In the present case, petitioner failed to establish that RCI is a legitimate labor contractor
as contemplated under the Labor Code. Except for the bare allegation of petitioner that
RCI had substantial capitalization, it presented no supporting evidence to show the
same. Aside from this, petitioner’s claim that RCI exercised control and supervision over
respondent is belied by the fact that petitioner admitted that its own Branch Manager
had informed respondent that his services would no longer be required at the Branch.
Moreover, respondent’s work is related to petitioner’s business and is characterized as
part of or in pursuit of its banking operations.

A finding that a contractor is a labor-only contractor, as opposed to permissible job

contracting, 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. In this
case, petitioner bank is the principal employer and RCI is the labor-only contractor.
Accordingly, petitioner and RCI are solidarily liable for the rightful claims of respondent.

Petron Corporation v. Caberte, G.R. No. 182255, June 15, 2015

PETRON CORPORATION, petitioner

vs.
 ARMZ CABERTE, ANTONIO CABERTE, JR., MICHAEL SERVICIO,* ARIEL
DEVELOS, ADOLFO GESTUPA, ARCHIE PONTERAS, ARNOLD BLANCO, DANTE
MARIANO,* VIRGILIO GALOROSA, and CAMILO TE,* Respondents
G.R. No. 182255
June 15, 2015

Facts:
Petron, a domestic corporation engaged in the manufacture and distribution to the
general public of various petroleum products, hired the respondents to work at Petron’s
Bulk Plant in San Patrick, Bacolod City, and Negros Occidental from 1979 to 1998.

For the periods from March 1, 1996 to February 28, 1999 and November 1, 1996 to
June 30, 1999, Petron and ABC, a labor contracting business owned and operated by
Caberte Sr., entered into a Contract for Services and a Contract for LPG Assistance
Services. Under both service contracts, ABC undertook to provide utility and
maintenance services to Petron in its Bacolod Bulk Plant.

On July 1, 1999, Petron no longer allowed them to enter and work in the premises of its
Bacolod Bulk Plant. Hence, eight respondents filed a complaint for illegal dismissal,
underpayment of wages and non-payment of allowances, 13 th month pay, overtime
pay, holiday pay, service incentive leave pay, moral and exemplary damages and
attorney's fees against Petron before the Labor Arbiter.

On March 7, 2002, LA Danilo C. Acosta held that ABC is an independent contractor that
has substantial capital and that respondents were its employees. He likewise ruled that
ABC's cessation of operation is a force majeure that justifies respondents' dismissal.
Hence, the petition is dismissed. The case was elevated to the NLRC, but the NLRC
affirmed the decision of the Labor Arbiter.

Thereafter, the respondents filed a petition for certiorari before the Court of Appeals. In
their decision, the CA ruled that ABC is engaged in labor-only contracting because: first,
it did not have substantial capital or investment in the form of tools, equipment,
implements, machineries and work premises, actually and directly used in the
performance or completion of the job it contracted out from Petron; second, the work
assigned to respondents were directly related to Petron's business; and, third, the
nature of Petron's business requires it to exercise control over the performance of
respondents' work.

Consequently, the CA declared respondents as Petron's regular employees. As a result,

the petitioner Petron filed a petition for review on certiorari before the Supreme Court.
Issue:
Whether the Court of Appeals seriously erred and decided a question of substance in a
manner not in accord with law and with applicable jurisprudence in finding that ABC
Contracting Services is a mere labor-only contractor and in holding that respondents are
thus regular employees of the company.

Ruling:
No. The Court of Appeals did not err in finding that ABC Contracting Services is a mere
labor-only contractor and holding that respondents are regular employees of the Petron.
Under Article 106 of the Labor Code, a contractor is deemed to be a labor-only
contractor if the following elements are present:
(i) the contractor does not have substantial capital or investment to actually perform the
job, work or service under its own account and responsibility;
(ii) and the employees recruited, supplied or placed by such contractor are performing
activities which are directly related to the main business of the principal.

The law presumes a contractor to be a labor-only contractor and the employees are not
expected to prove the negative fact that the contractor is a labor-only contractor.
Therefore, the Petron, principal, bears the burden of establishing that ABC is not a
labor-only contractor but a legitimate independent contractor.

In order to be a legitimate independent contractor, the following conditions concur:

a) the contractor carries on a distinct and independent business and partakes 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 the 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.

In the case at bar, Gestupa, Ponteras, Develos, Blanco and Mariano were LPG fillers
and maintenance crew; Caberte was an LPG operator supervisor; Te was a
warehouseman and utility worker; and Servicio and Galorosa were tanker receiving
crew and utility workers. Undoubtedly, the work they rendered were directly related to
Petron's main business, vital as they are in the manufacture and distribution of
petroleum products. Besides, it is clear that Petron failed to discharge its burden of
proving that ABC is not a labor-only contractor. Therefore, Petron is declared to be the
true employer of respondents who are considered regular employees in view of the fact
that they have been regularly performing activities which are necessary and desirable to
the usual business of Petron for a number of years.

WHEREFORE, the petition is DENIED. The November 14, 2007 Decision and the
March 4, 2008 Resolution of the Court of Appeals in CA-G.R. SP No. 82356 are
MODIFIED in that: (1) the Complaint of respondent Antonio Caberte, Jr. against
petitioner Petron Corporation is dismissed; and (2) petitioner Petron Corporation is
ordered to reinstate all of the respondents, except for Antonio Caberte, Jr., to their
former positions with the same rights and benefits and the same salary rates as its
regular employees, or if reinstatement is no longer feasible, to separation pay
equivalent to one month salary for every year of service and to pay them their full
backwages from July 1, 1999 until actual reinstatement or upon finality of this Decision
as the case may be, as well as attorney's fees equivalent to 10% of the monetary
award, with costs against Petron Corporation.

4.20 Extent of principal’s solidary liability with contractor (Labor Code, Arts. 106, 107 &
109; DO 174-17, S3[k] & 9)

San Miguel Corporation v. MAERC Integrated Services, Inc., G.R. No. 144672, July 10,
2003

SAN MIGUEL CORPORATION, petitioner

v.
MAERC INTEGRATED SERVICES, Inc., et.al., respondent
G.R. No. 144672
July 10, 2003

Facts:
There were 291 workers who filed their complaints against San Miguel Corporation and
Maerc Integrated Services, Inc, for illegal dismissal, underpayment of wages,
non-payment of service incentive leave pays and other labor standards benefits, and for
separation pays. The complainants alleged that they were hired by San Miguel
Corporation (SMC) through its agent or intermediary Maerc Integrated Services, Inc.
(MAERC) to work in 2 designated workplaces in Mandaue City. They washed and
segregated various kinds of empty bottles used by SMC to sell and distribute its beer
beverages to the consuming public. They were paid on a per piece or pakiao basis
except for a few who worked as checkers and were paid on daily wage basis.
Complainants alleged that long before SMC contracted the services of MAERC a
majority of them had already been working for SMC under the guise of being employees
of another contractor, Jopard Services, until the services of the latter were terminated
on 31 January 1988.

SMC denied liability for the claims and averred that the complainants were not its
employees but of MAERC, an independent contractor whose primary corporate purpose
was to engage in the business of cleaning, receiving, sorting, classifying, etc., glass and
metal containers.

In a letter dated 15 May 1991, SMC informed MAERC of the termination of their service
contract by the end of June 1991. SMC cited its plans to phase out its segregation
activities starting 1 June 1991 due to the installation of labor and cost-saving devices.

When the service contract was terminated, complainants claimed that SMC stopped
them from performing their jobs; that this was tantamount to their being illegally
dismissed by SMC who was their real employer as their activities were directly related,
necessary and desirable to the main business of SMC; and, that MAERC was merely
made a tool or a shield by SMC to avoid its liability under the Labor Code. MAERC
admitted that it recruited the complainants and placed them in the bottle segregation
project of SMC but maintained that it was only conveniently used by SMC as an
intermediary in operating the project.

The Labor Arbiter rendered a decision holding that MAERC was an independent
contractor. The National Labor Relations Commission (NLRC) ruled that MAERC was a
labor-only contractor and that complainants were employees of SMC.

Issue:
Whether the complainants are employees of petitioner SMC or of respondent MAERC.

Ruling:
Employees are those of SMC. In ascertaining an employer-employee relationship, the
following factors are considered:
(a) the selection and engagement of employee;
(b) the payment of wages;
(c) the power of dismissal; and,
(d) the power to control an employee's conduct.
Evidence discloses that petitioner played a large and indispensable part in the hiring of
MAERC's workers. It also appears that the majority of the complainants had already
been working for SMC long before the signing of the service contract between SMC and
MAERC in 1988.

In the case, the incorporators of MAERC admitted having supplied and recruited
workers for SMC even before MAERC was created. The NLRC also found that when
MAERC was organized into a corporation in February 1988, the complainants who were
then already working for SMC were made to go through the motion of applying for work
with Ms. Olga Ouano, President and General Manager of MAERC. As for the payment
of workers' wages, SMC assumed the responsibility of paying for the mandated
overtime, holiday and rest day pays of the MAERC workers. SMC also paid the
employer's share of the SSS and Medicare contributions, the 13th month pay, incentive
leave pay and maternity benefits. These lend credence to the complaining workers'
assertion that while MAERC paid the wages of the complainants, it merely acted as an
agent of SMC.

SMC maintained a constant presence in the workplace through its own checkers. The
responsibility of watching over the MAERC workers by MAERC personnel became
superfluous with the presence of additional checkers from SMC. Control of the premises
in which the contractor's work was performed was also viewed as another phase of
control over the work, and this strongly tended to disprove the independence of the
contractor. But the most telling evidence is a letter by Mr. Antonio Ouano,
Vice-President of MAERC addressed to Francisco Eizmendi, SMC President and Chief
Executive Officer, asking the latter to reconsider the phasing out of SMC's segregation
activities in Mandaue City. The letter attested to an arrangement entered into by the
two (2) parties which was not reflected in the Contract of Services. A peculiar
relationship mutually beneficial for a time but nonetheless ended in dispute when SMC
decided to prematurely end the contract leaving MAERC to shoulder all the obligations
to the workers. While MAERC's investments in the form of buildings, tools and
equipment amounted to more than P4 Million, one cannot disregard the fact that it was
the SMC which required MAERC to undertake such investments under the
understanding that the business relationship between petitioner and MAERC would be
on a long term basis.

Meralco Industrial Engineering Services Corporation v. NLRC, G.R. No. 145402, March
14, 2008

MERALCO INDUSTRIAL ENGINEERING SERVICES CORPORATION, petitioner

 V.
NLRC, respondent
G.R. No. 145402
March 14, 2008

Facts:
Petitioner Meralco Industrial Engineering Services Corporation (MIESCOR) is a
corporation and a client of private respondents. Private respondent Ofelia P. Landrito
General Services (OPLGS) is a business firm engaged in providing and rendering
general services, such as janitorial and maintenance work to its clients, while private
respondent Ofelia P. Landrito is the Proprietor and General Manager of OPLGS.
Petitioner and private respondents executed Contract Order No. 166-84, whereby the
latter would supply the petitioner janitorial services.

On 20 September 1989, however, the aforesaid 49 employees (complainants) lodged a

Complaint for illegal deduction, underpayment, non-payment of overtime pay, legal
holiday pay, premium pay for holiday and rest day and night differentials against the
private respondents before the Labor Arbiter. A decision was rendered by the Labor
Arbiter, dismissing the Complaint against the petitioner for lack of merit.

NLRC issued a Resolution affirming the Decision of the Labor Arbiter with the
modification that the petitioner was solidarily liable with the private respondents
reiterated that the complainants abandoned their work, so that private respondents
should not be liable for separation pay; and that petitioner, not private respondents,
should be liable for complainants' other monetary claims. NLRC rendered a Decision
modifying the Order of the Labor Arbiter. Court of Appeals rendered the assailed
Decision on 24 April 2000, modifying the Decision of the NLRC dated 30 January 1996
and holding the petitioner solidarily liable with the private respondents for the
satisfaction of the laborers' separation pay.

Issue:
Whether or not petitioners should be solidarily liable with private respondents.

Ruling:
No. The Court of Appeals indeed erred when it ruled that the petitioner was jointly and
solidarily liable with the private respondents as regards the payment of separation pay.
An indirect employer (as defined by Article 107) can only be held solidarily liable with
the independent contractor or subcontractor (as provided under Article 109) in the event
that the latter fails to pay the wages of its employees (as described in Article 106).
Hence, while it is true that the petitioner was the indirect employer of the complainants,
it cannot be held liable in the same way as the employer in every respect. The petitioner
may be considered an indirect employer only for purposes of unpaid wages. Further,
there is no question that private respondents are operating as an independent
contractor and that the complainants were their employees. There was no
employer-employee relationship that existed between the petitioner and the
complainants and, thus, the former could not have dismissed the latter from
employment. Only private respondents, as the complainants’ employer, can terminate
their services, and should it be done illegally, be held liable therefor. The only instance
when the principal can also be held liable with the independent contractor or
subcontractor for the backwages and separation pay of the latter’s employees is when
there is proof that the principal conspired with the independent contractor or
subcontractor in the illegal dismissal of the employees.

Rosewood Processing, Inc. v. NLRC, G.R. Nos. 116476-84, May 21, 1998

ROSEWOOD PROCESSING INC., petitioner

v.
NLRC, respondent
G.R. Nos. 116476-84
May 21, 1998

Facts:
Private respondents were security guards of Veterans Philippine Scout Security Agency.
Some were assigned to other companies and detailed to Rosewood, while others are
re-assigned to other companies from Rosewood, and still others were put on “floating”
status without assignment. Most were underpaid or their wages were never paid. All
these circumstances led to the filing of a complaint for illegal dismissal, underpayment
of wages, and for nonpayment of overtime pay, legal holiday pay, premium pay for
holiday and rest day, thirteenth month pay, cash bond deposit, unpaid wages and
damages was filed against Veterans Philippine Scout Security Agency and/or Sergio
Jamila IV (collectively referred to as the "security agency," for brevity). Thereafter,
petitioner Rosewood Processing, Inc. was impleaded as a third-party respondent by the
security agency. In due course, Labor Arbiter Ricardo C. Nora rendered a consolidated
Decision dated March 26, 1993 finding the security agency and Rosewood as solidarily
liable to pay the monetary benefits due the security guards.

Issue:
Whether or not petitioner Rosewood was solidarily liable with the security agency for the
nonpayment of wages, as provided in Articles 106, 107 and 109 of the Labor Code.
Ruling:
The Supreme Court held that while it is indisputable that by operation of the provisions
of Articles 106, 107 and 109, the Employer which is Rosewood has solidary liability for
payment of wage differentials, such liability however should only be to the extent of the
period when the respondent guards were under its employment. For the periods where
said guards were assigned somewhere else, the Supreme Court held that Rosewood
cannot be liable. The Supreme Court further held that since there was no evidence
presented pointing to the fact that Rosewood conspired with the security agency in
illegally dismissing the guards, it cannot be made liable to pay back wages as provided
in Article 109. Finally, since an order to pay back wages and separation pay is invested
with a punitive character, such that an indirect employer should not be made liable
without a finding that it had committed or conspired in the illegal dismissal, then
Rosewood, which was no longer the employer of the guards when they were dismissed,
should not be compelled to pay since it was clear that it took no part in the illegal
dismissal.

GSIS v. NLRC, G.R. No. 180045, November 17, 2010

GSIS, petitioner
v.
NLRC,respondent
G.R. No. 180045
November 17, 2010

Facts:
Respondents were employed as security guards by DNL Security Agency (DNL
Security). By virtue of the service contract, respondents were assigned to petitioner’s
Tacloban office and received a monthly salary of P1,400 which was later on increased
to P3000. In February 1993, DNL Security informed respondents that its service
contract with petitioner was terminated. This notwithstanding, DNL Security instructed
respondents to continue reporting for work to petitioner.

On June 15, 1995, respondents filed with the National Labor Relations Commission
(NLRC), Regional Arbitration Branch No. VIII, Tacloban City, a complaint against DNL
Security and petitioner for illegal dismissal, separation pay, salary differential, 13th
month pay, and payment of unpaid salary. The labor arbiter found that respondents
were not illegally terminated from employment because the employment of security
guards is dependent on the service contract between the security agency and its client.
However, Because DNL Security instructed respondents to continue working for
petitioner from February 1993 to April 20, 1993, DNL Security was also made to pay
respondents’ wages for the period. The LA further granted respondents’ claim of salary
differential, as they were paid wages below the minimum wage, as well as 13th month
pay. For these monetary awards, petitioner was made solidarily liable with DNL Security,
as the indirect employer of respondents.

NLRC treated DNL Security’s motion for reconsideration as an appeal, but dismissed
the same, as it was not legally perfected; while the CA affirmed the ruling of the NLRC .

Issue:
Whether GSIS should be held solidarily liable with DSL

Ruling:
The fact that there is no actual and direct employer- employee relationship between
petitioner and respondents does not absolve the former from liability for the latter’s
monetary claims. When petitioner contracted DNL Security’s services, petitioner
became an indirect employer of respondents, pursuant to Article 1071 of the Labor
Code.

After DNL Security failed to pay respondents the correct wages and other monetary
benefits, petitioner, as principal, became jointly and severally liable, as provided in
Articles 1062 and 1093 of the Labor Code. Rosewood Processing, Inc. v. NLRC: The
contractor or subcontractor is made liable by virtue of his or her status as a direct
employer, and the principal as the indirect employer of the contractor’s employees. This
liability facilitates, if not guarantees, payment of the workers’ compensation, thus, giving
the workers ample protection as mandated by the 1987 Constitution. Petitioner’s liability
covers the payment of respondents’ salary differential and 13th month pay during the
time they worked for petitioner. In addition, petitioner is solidarily liable with DNL
Security for respondents’ unpaid wages from February 1993 until April 20, 1993.

While it is true that respondents continued working for petitioner after the expiration of
their contract, based on the instruction of DNL Security, petitioner did not object to such
assignment and allowed respondents to render service. Thus, petitioner impliedly
approved the extension of respondents’ services. Accordingly, petitioner is bound by the
provisions of the Labor Code on indirect employment. It should be understood, though,
that the solidary liability of petitioner does not preclude the application of Article 1217 4
of the Civil Code.
ART. 107. Indirect employer. The provisions of the immediately preceding Article shall
likewise apply to any person, partnership, association or corporation which, not being an
employer, contracts with an independent contractor for the performance of any work,
task, job or project.

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.

In the event that the contractor or subcontractor fails to pay the wages of his employees
in accordance with this Code, the employer shall be jointly and severally liable with his
contractor or subcontractor to such employees to the extent of the work performed
under the contract, in the same manner and extent that he is liable to employees
directly employed by him.

ART. 109. Solidary liability.The provisions of existing laws to the contrary

notwithstanding, every employer or indirect employer shall be held responsible with his
contractor or subcontractor for any violation of any provision of this Code. For purposes
of determining the extent of their civil liability under this Chapter, they shall be
considered as direct employers.

Art. 1217. Payment made by one of the solidary debtors extinguishes the obligation. If
two or more solidary debtors offer to pay, the creditor may choose which offer to accept.
He who made the payment may claim from his co-debtors only the share which
corresponds to each, with the interest for the payment already made. If the payment is
made before the debt is due, no interest for the intervening period may be demanded.
When one of the solidary debtors cannot, because of his insolvency, reimburse his
share to the debtor paying the obligation, such share shall be borne by all his
co-debtors, in proportion to the debt of each.

Vigilla v. Philippine College of Criminology, Inc., G.R. No. 200094, June 10, 2013

TITLE Vigilla vs. Philippine College of Criminology, Inc.

G.R. No. Jun 10, THIRD MENDOZA, J.
200094 2013 DIVISION
NAME OF Petition for Review on Certiorari from CA decision
ACTION
FACTS - The petitioners are janitors, janitresses, and a
supervisor who worked at the Philippine College of
Criminology (PCCr). They were employed through
Metropolitan Building Services, Inc. (MBMSI), which
provided janitorial services.
Atty. Florante Seril, a senior vice president at PCCr, also
managed MBMSI.
- PCCr found out that MBMSI’s corporate
registration was revoked in 2003. In 2009, citing this
revocation, PCCr ended its contract with MBMSI,
leading to the dismissal of the maintenance staff.
- The dismissed employees filed complaints for
illegal dismissal and other claims against MBMSI, Atty.
Seril, PCCr, and Gregory Alan Bautista (PCCr's
president).
PAST Labor Arbiter: Ruled in favor of petitioners. Found PCCr as
RULINGS actual employer and MBMSI as labor-only contractor. Order
reinstatement of employees and to pay back wages and other
benefits.
NLRC: Affirmed the labor arbiter’s decision but found that
petitioner’s claims were settled because they signed
quitclaims, releases, and waivers
CA: Upheld the NLRC’s decisions
ISSUE/S 1. Whether MBMSI is solidarily liable with PCCr
2. Whether the releases, waivers, and quitclaims
signed by the petitioners in favor of MBMSI were valid
and binding
RULINGS 1. Yes. The court ruled that MBMSI, being a
labor-only contractor, and PCCr, as the principal
employer, are solidarily liable. PCCr was considered
the real employer because it had direct control over
the employees’ work, and MBMSI was deemed a
labor-only contractor, which did not have substantial
capital or investment in tools, equipment, or work
premises, and simply supplied workers to PCCR, merely
acting as an agent.
2. Yes. The court found the releases, waivers, and
quitclaims were valid and binding, and by extension, it
 redounded to the benefit of PCCr pursuant to Article
1217 of the New Civil Code.
DOCTRINE/ Article 106 of the Labor Code:
CITED - outlines that when there is labor-only
PROVISIONS contracting, the person or intermediary (labor-only
contractor) is considered an agent of the employer,
making the employer directly responsible to the workers
as if they were directly employed
Article 109 of the Labor Code:
- states the solidary liability of the employer and
the labor-only contractor, meaning they are jointly and
severally liable for any valid claims of the workers.
Article 1217 of the Civil Code:
- provides that payment made by one of the
solidary debtors extinguishes the obligation

Jurisprudence:
Philippine Bank of Communications v. NLRC
San Miguel Corporation v. MAERC Integrated Services,
Inc.,
- solidary liability between a labor-only
contractor and the principal employer for the rightful
claims of the employees.
Department Order No. 18-02 and Department Order No.
18-A from the Department of Labor and Employment
(DOLE)
- interpreted Articles 106-109 of the Labor
Code, affirming the solidary liability of the principal
employer with the labor-only contractor

Peak Ventures Corporation v. Secretary of Labor and Employment, G.R. No. 190509,
July 20, 2022

TITLE Peak Ventures Corp. vs. Secretary of Labor and Employment

G.R. No. Jul 20, 2022 SECOND LOPEZ, J., J.
190509 DIVISION
NAME OF 3 Petitions for Review on Certiorari
ACTION
FACTS - The respondents are a group of security
guards. They were employed with Club Filipino, Inc.
(CFI), through the contractor, Peak Ventures
Corporation (PVC), which provided CFI the security
services.
- The security guards filed a complaint with the
Department of Labor and Employment (DOLE) for
underpayment of wages and non-payment of other
benefits like holiday pay, premium pay on rest days,
13th-month pay, and emergency cost of living allowance
PAST DOLE Proceedings: Regional Director ruled in favor of
RULINGS respondents. Found that the workers were underpaid, and
ordered PVC and CFI to pay the wage and differentials.
Appeals by petitioner were denied by DOLE.
NLRC: Dismissed the petitioner’s appeal questioning DOLE,
and upheld the Regional Director’s jurisdiction
Secretary of DOLE: Initially held only PVC liable. After
reconsideration, found PVC and CFI solidarily liable.
CA: Upheld the DOLE decisions in three appeals
ISSUE/S 1. Whether PVC and CFI were solidarily liable
2. Whether the superseadeas bond negated CFI’s
responsibility
RULINGS 1. Yes. The Court ruled that both PVC and CFI
were solidarily liable under Articles 106, 107, and
109 of the Labor Code, meaning they were both
responsible for the unpaid wages and benefits.
2. No. The bond guaranteed that the security
guards would receive their due wages and benefits
regardless of the outcome of the appeals, however,
it did not relieve the CFI of its solidary responsibility
 DOCTRINE/ Article 106 of the Labor Code:
CITED - when there is labor-only contracting, the
PROVISIONS person or intermediary (labor-only contractor) is
considered an agent of the employer, making the
employer directly responsible to the workers as if they
were directly employed
Article 107 (Indirect Employer):
- applies the provisions of Article 106 to any
entity contracting with an independent contractor for
work.
Article 109 of the Labor Code:
- states the solidary liability of the employer and
the labor-only contractor, being jointly and severally
liable for any valid claims of the workers
Article 1207 (Solidary Obligations):
- solidary obligations can arise by agreement or
by law, allowing the creditor to demand entire
compliance from any of the debtors
Article 1217 of the Civil Code:
- payment made by one of the solidary debtors
extinguishes the obligation

Jurisprudence:
Republic Act No. 7730:
This act amended the Labor Code provisions related to the
jurisdiction of DOLE, removing the PHP 5,000 limit on the
recovery of wages and monetary claims.
The DOLE’s Regional Director had jurisdiction over the claims
because they arose during the existence of the
employer-employee relationship, despite the individual claims
exceeding PHP 5,000.

4.21 Mandatory registration of contractors, and registration requirements under DO

174-17; industries excluded from coverage (DO 174-17, S14-15; DC 1, Series of 2017)

4.22 Effect of failure to register as a legitimate contractor (DO 174-17, S14 [2nd par.])
4.23 Registration does not create a presumption that contractor is a legitimate
contractor, only presumption of regularity accorded to DOLE official

Mago v. Sun Power Manufacturing Limited, G.R. No. 210961, January 24, 2018

TITLE Mago vs. Sun Power Manufacturing Limited

G.R. No. Jan 24, 2018 SECOND REYES, JR.,
210961 DIVISION J:
NAME OF Petition for review on Certiorari on the decision of the CA
ACTION
FACTS The petitioners (Leo Mago and Leilani Colobong) are former
employees of Jobcrest. Jobcrest is a corporation engaged in
contracting management consultancy and services, licensed
by DOLE. Sunpower, which is a corporation engaged in
manufacturing automotive computer and electronic parts,
contracted Jobcrest for business process services.

Jobcrest trained and assigned petitioners to Sunpower as

production operators and they were supervised by Jobcrest’s
on-site supervisor.

In October 2011, Sunpower terminated certain service

segments affecting Jobcrest employees, including the
petitioners.
Petitioners filed a complaint with the NLRC for illegal dismissal
and regularization, where Jobcrest denied terminating their
employment and offered reinstatement
PAST Labor Arbiter: Dismissed the illegal dismissal complaint,
RULINGS found Jobcrest as the legitimate independent contractor in the
case and ordered that jobs of petitioners be reinstated
NLRC: Reversed the Labor Arbiter’s decision, declaring
Sunpower as the statutory employer and Jobcrest as a
labor-only contractor, ordered Sunpower to reinstate petitioners
CA: Overturned the NLRC and reinstated the Labor Arbiter’s
ruling
ISSUE/S 1. Whether Jobcrest was a legitimate contractor
2. Whether there exists an employer-employee
relationship between the petitioners and Jobcrest
 RULINGS 1. Yes. The Court cited provisions from the Labor
Code (Article 106) and DOLE (DO No. 18-02, 18-A) and
established a criteria for legitimate contracting. Jobcrest
demonstrated substantial capital through financial
statements which resolved the inquiry on their
legitimacy as an independent contractor
2. Yes. The Court also cited the four-fold test for
employer-employee relationship which Jobcrest has
fallen into as an employer of the petitioners.
DOCTRINE/
CITED 1. Labor Code Provisions on Contracting:
PROVISIONS
○ Article 106: Defines labor-only contracting and
establishes the criteria for legitimate contracting.
○ DOLE Department Orders (DO No. 18-02 and
DO No. 18-A): Provide regulations on substantial
capital and investment requirements for
contractors.

2. Four-Fold Test for Employer-Employee

Relationship:

○ Selection and engagement of the employee.

○ Payment of wages.
○ Power of dismissal.
○ Power of control over the employee’s conduct

4.24 Grounds for cancellation of registration (DO 174-17, S23)

4.25 Due process requirements in the cancellation of registration; appeal; and effect of
cancellation of registration (DO 174-17, S24-26)

4.26. Contracting/subcontracting in construction and other industries (DO 174-17, S33)

E. MANAGEMENT PREROGATIVE

1. Definition, Concept, and Legal Basis (Const., Art. III, Sec. 1, Art. XIII, Sec. 3 [last
par.])
St. Luke’s Medical Center, Inc. v. Sanchez, G.R. No. 212054, March 11, 2015

TITLE ST. LUKE’S MEDICAL CENTER, INC., PETITIONER, VS.

MARIA THERESA V. SANCHEZ, RESPONDENT.
G.R. No. March 11, FIRST PERLAS-BER
212054 2015 DIVISION NABE, J.:
NAME OF Petition for review on Certiorari on the decision of the CA
ACTION
FACTS The respondent, Maria Theresa V. Sanchez, was a former staff
nurse at St. Luke’s Medical Center (SLMC). On May 29, 2011,
after her shift, Sanchez was found with several medical items
(i.e., syringes, micropore, cotton balls, medical gloves, and
other supplies) in her bag during a standard security check at
SLMC.
She was brought to the security department of the hospital and
was asked to write an incident report and a letter of apology.
SLMC placed her under preventive suspension and conducted
an investigation.
SLMC terminated Sanchez on July 2011 citing acts of
dishonesty under their code of discipline.
Respondent Sanchez filed a complaint with the NLRC for
illegal dismissal
PAST Labor Arbiter: Dismissed the illegal dismissal complaint, found
RULINGS that SLMC validly dismissed Sanchez
NLRC: Reversed the Labor Arbiter’s decision, finding that the
dismissal was too harsh (as keeping excess medical supplies
was a common and tolerated practice among nurses at SLMC),
and ordered reinstatement of Sanchez and payment of back
wages
CA: Upheld NLRC, agreed that Sanchez’s offense did not
amount to serious misconduct, and noted there was no criminal
charge filed against Sanchez as the items were not SLMC
property, and that penalty of dismissal was disproportionate
ISSUE/S Whether SLMC validly dismissed Sanchez
RULINGS Yes. The Court found that Sanchez was validly dismissed. It
emphasized the concept of management prerogative, which
gives employers the right to regulate all aspects of
employment, including discipline, dismissal, and recall of
workers, so long as it was reasonable and lawful.
- The Court found Sanchez to have willfully
disregarded and disobeyed the reasonable and lawful
rules of SLMC, and her actions constituted acts of
dishonesty which SLMC’s Code of Discipline reasonably
punished with termination.
DOCTRINE/ Management prerogative
CITED - gives employers the right to regulate all
PROVISIONS aspects of employment, including the discipline,
dismissal, and recall of workers; underscores the
freedom of employers to exercise their best judgment in
managing their business and employees, provided their
actions are reasonable and lawful
Reasonable and Lawful Orders:
For an employee to be validly dismissed on the grounds of
willful disobedience, the employer's orders, regulations, or
instructions must be:
- Reasonable and lawful
- Sufficiently known to the employee
- In connection with the duties which the
employee has been engaged to discharge

Labor Code Provisions:

Article 296 (formerly Article 282) - Just causes for
termination by an employer, which includes:
- Serious misconduct
- Willful disobedience by the employee of the
lawful orders of the employer or its representative in
connection with the employee's work

Moya v. First Solid Rubber Industries, Inc., G.R. No. 184011, September 18, 2013
TITLE REYNALDO HAYAN MOYA, PETITIONER, VS. FIRST SOLID
RUBBER INDUSTRIES, INC., RESPONDENT.
G.R. No. September 18, SECOND PEREZ, J.
184011 2013 DIVISION

NAME OF Petition for review on Certiorari on the decision of the Special

ACTION Division of the CA
FACTS - The petitioner, Reynaldo Hayan Moya, former
head of the Tire Curing Department at First Solid
Rubber Industries, Inc. (First Solid). He was hired as a
machine operator in 1993, and later promoted as head.
- In October 2004, an incident occurred
involving the undercuring of tires, resulting in damage to
five tires.
- An investigation was conducted and Moya
attributed the incident to machine failure and denied
fault. First Solid terminated Moya on November 2004
despite his explanation, citing serious misconduct, gross
and habitual neglect of duty, and willful breach of truest
as reasons.
- Petitioner filed a complaint with the NLRC for
illegal dismissal, back wages, separation pay, and
damages
PAST Labor Arbiter: Found valid grounds for dismissal but ruled that
RULINGS penalty was too harsh, given that it was Moya’s first offense
and no willful intent to cause damage was proven, ordered
First Solid to pay Moya his separation pay instead of
reinstatement
NLRC: Affirmed the Labor Arbiter’s decision, highlighting
Moya’s length of service and the absence of malicious intent,
finding separation pay as justified based on social justice
CA: Reversed NLRC and LA, agreed that First Solid dismissed
Moya justifiably and that the breach of trust and dishonest act
justified dismissal without separation pay
ISSUE/S Whether Moya was entitled to separation pay due to his length
of service despite valid grounds for dismissal
RULINGS No. The Supreme Court ruled that Moya was not entitled to
separation pay. They emphasized that breach of trust and
dishonesty, especially for a supervisory position, negate
entitlement to separation pay; that social justice does not
 protect employees dismissed for serious misconduct or acts
reflecting moral character.
DOCTRINE/
CITED ● Management Prerogative: Employers have the right to
PROVISIONS discipline and dismiss employees for just causes,
including breach of trust and confidence.
● Breach of Trust: Moya's act of concealing the true
cause of the tire damage constituted a breach of trust,
justifying his dismissal.
● Separation Pay: Generally not granted to employees
dismissed for serious misconduct or acts involving moral
turpitude, unless mitigated by social justice, which was
not applicable in this case due to Moya's dishonest
conduct.
● Length of Service: While it may mitigate penalties, it
does not excuse serious offenses that breach the
employer’s trust.

Pampanga Bus, Co. v. Pambusco Employees Union, Inc., 68 Phil. 541 (1939)

TITLE Pampanga Bus Co., Inc. vs. Pambusco Employees Union, Inc.

G.R. No. Sep 23, 1939 MORAN, J.

46739
NAME OF Appeal from the order of the Court of Industrial Relations
ACTION
FACTS CIR issues order directing Pampanga Bus Co. to preferentially
hire from the Pampanga Bus Co. Employees Union
ISSUE/S Whether CIR could compel Pampanga Bus Co. to hire union
members preferentially
RULINGS No. The Court ruled that the CIR did not have the authority to
issue such order.
- It was emphasized that the employer has the
inherent right to select and hire employees (this is the
concept of management prerogative). This right is a
fundamental aspect of the freedom to contract,
protected by the due process clause of the Constitution.
DOCTRINE/ Management prerogative
CITED - gives employers the right to regulate all
PROVISIONS aspects of employment, including the discipline,
dismissal, and recall of workers; underscores the
freedom of employers to exercise their best judgment in
managing their business and employees, provided their
actions are reasonable and lawful
- affirmed in this case: an employer has the right
to make independent hiring decisions without undue
interference

Rural Bank of Cantilan, Inc. v. Julve, G.R. No. 169750, February 27, 2007

TITLE RURAL BANK OF CANTILAN, INC., AND WILLIAM

HOTCHKISS III, PETITIONERS, VS. ARJAY RONNEL H.
JULVE, RESPONDENT.
G.R. No. February 27, FIRST SANDOVAL-G
169750 2007 DIVISION UTIERREZ, J.

NAME OF Petition for review on Certiorari on the decision of the CA

ACTION
FACTS The respondent, Arjay Julve, was an employee of the Rural
Bank of Cantilan Inc. He was hired on August 1997 and later
promoted as planning and marketing officer.
In 2001, the bank’s president issued a memorandum abolishing
the positions of planning and marketing officer and remedial
officer as a part of their personnel streamlining program. Julve
was then appointed as bookkeeper I at another branch, with the
same salary. He initially agreed but later withdrew his
acceptance and did not report for work.
Respondent filed a complaint with the NLRC for constructive
dismissal
PAST Labor Arbiter: declared that Julve was constructively
RULINGS dismissed, ordered the bank for his reinstatement, back wages,
and awarded him moral and exemplary damages and
attorney’s fees.
NLRC: Reversed the Labor Arbiter’s decision, ruling that the
respondent was not constructively dismissed as his
reassignment was not a demotion and did not involve a
diminution in functions and pay
CA: Reinstated the LA’s decision, finding Julve was
constructively dismissed
ISSUE/S Whether Julve was constructively dismissed
RULINGS No. The Supreme Court ruled that Julve was not constructively
dismissed, reversed the CA, and affirmed NLRC.
- The court emphasized the doctrine of
management prerogative, allowing employers to
reorganize and reassign employees for legitimate
business purposes, and found that the respondent's new
position as bookkeeper I and assistant branch head
involved supervisory and administrative tasks, which did
not constitute a demotion; there was no decrease of his
pay; he was part of a broader Personnel Streamlining
Program.
- Despite the respondent's refusal to accept the
new appointment, the bank did not dismiss him. Instead,
the respondent chose to terminate his employment by
not reporting for work.
DOCTRINE/ Management Prerogative: Employers have the right to
CITED reorganize and reassign employees for legitimate business
PROVISIONS reasons.
Constructive Dismissal: Defined as when continued
employment becomes impossible, unreasonable, or involves a
demotion in rank and diminution of pay. In this case, the
respondent's reassignment did not meet this definition.
Manatad v.PhilippineTelegraphandTelephoneCorporation,G.R.NO.172363,March

FACTS:

Petitioner was employed by respondent Philippine Telegraph and Telephone

Corporation (PT&T) as junior clerk with a monthly salary of P3,839.74. She was later
promoted as Account Executive, the position she held until she was temporarily laid off
from employment.
Petitioner’s temporary separation from employment was pursuant to the Temporary
Staff Reduction Program adopted by respondent due to serious business reverses.
Petitioner received a letter from respondent inviting her to avail herself of its Staff
Reduction Program Package equivalent to one-month salary for every year of service,
one and one-half month salary, pro-rated 13th month pay, conversion to cash of unused
vacation and sick leave credits, and Health Maintenance Organization and group life
insurance coverage until full payment of the separation package. Petitioner did not opt
to avail herself of the said package. Petitioner received a Notice of Retrenchment from
respondent permanently dismissing her from employment.
Petitioner filed a Complaint for illegal dismissal against respondent before the Labor
Arbiter claiming the award of separation pay, damages and attorney’s fees. Petitioner
mainly alleged that the retrenchment program adopted by respondent was illegal for it
was gaining profits for the period of July 1997 to June 1998. Petitioner’s evidence
supposedly showed that it was still economically viable for respondent to continue its
business operations without downsizing its workforce. Respondent asserted that
petitioner was separated from service pursuant to a valid retrenchment implemented by
the company.
LA favored petitioner. Petitioner appealed to the NLRC. NLRC affirmed with modification
the LA’s Decision. CA reversed the NLRC and the LA’s Decisions and upheld the
validity of respondent’s retrenchment program. Petitioner filed MR, it was dismissed
hence this Petition.

ISSUE:

W/N the retrenchment program implemented by respondent was valid.

RULING:

YES. Retrenchment is the termination of employment initiated by the employer through

no fault of the employees and without prejudice to the latter, resorted to by management
during periods of business recession; industrial depression; or seasonal fluctuations,
during lulls occasioned by lack of orders, shortage of materials, conversion of the plant
for a new production program, or the introduction of new methods or more efficient
machinery or automation. Retrenchment is a valid management prerogative. It is,
however, subject to faithful compliance with the substantive and procedural
requirements laid down by law and jurisprudence. In the discharge of these
requirements, it is the employer who bears the onus, being in the nature of affirmative
defense.
For a valid retrenchment, the following requisites must be complied with: (a) the
retrenchment is necessary to prevent losses and such losses are proven; (b) written
notice to the employees and to the DOLE at least one month prior to the intended date
of retrenchment; and (c) payment of separation pay equivalent to one-month pay or at
least one- half month pay for every year of service, whichever is higher.
Firstly, the losses expected should be substantial and not merely de minimis in extent. If
the loss purportedly sought to be forestalled by retrenchment is clearly shown to be
insubstantial and inconsequential in character, the bonafide nature of the retrenchment
would appear to be seriously in question. Secondly, the substantial loss apprehended
must be reasonably imminent, as such imminence can be perceived objectively and in
good faith by the employer. There should be a certain degree of urgency for the
retrenchment, which is after all a drastic recourse with serious consequences for the
livelihood of the employees retired or otherwise laid-off. Because of the consequential
nature of retrenchment, it must, thirdly, be reasonably necessary and likely to effectively
prevent the expected losses. The employer should have taken other measures prior or
parallel to retrenchment to forestall losses, i.e., cut other costs than labor costs. To
impart operational meaning to the constitutional policy of providing “full protection” to
labor, the employer’s prerogative to bring down labor costs by retrenching must be
exercised essentially as a measure of last resort, after less drastic means – e.g.,
reduction of both management and rank-and-file bonuses and salaries, going on
reduced time, improving manufacturing efficiencies, trimming of marketing and
advertising costs, etc.—have been tried and found wanting.
Lastly, alleged losses if already realized, and the expected imminent losses sought to
be forestalled, must be proved by sufficient and convincing evidence. Any less exacting
standard of proof would render too easy the abuse of this ground for termination of
services of employees.
In the case at bar, respondent experienced serious financial crises as shown in the
financial statements audited by independent auditors, SGV & Co. and Alba Ledesma &
Co. It is unlikely therefore that respondent was just feigning business losses in order to
ease out employees. The financial statements reflect that respondent suffered
substantial loss in the amount of P558 Million by 30 June 1998. The Report of SGV &
Co. substantiates the alleged precarious financial condition of the respondent. The
financial statements audited by independent external auditors constitute the normal
method of proving the profit and loss performance of a company. It is necessary that the
employer also show that its losses increased through a period of time and that the
condition of the company is not likely to improve in the near future.
We find that respondent was fully justified in implementing a retrenchment program
since it was undergoing business reverses, not only for a single fiscal year, but for
several years prior to and even after the program.
In fact, even granting arguendo that respondent was not experiencing losses, it is still
authorized by Article 283 of the Labor Code to cease its business operations. Explicit in
the said provision is that closure or cessation of business operations is allowed even if
the business is not undergoing economic losses. The owner, for any bona fide reason,
can lawfully close shop anyone. Just as no law forces anyone to go into business, no
law can compel anybody to continue in it. It would indeed be stretching the intent and
spirit of the law if we were to unjustly interfere with the management’s prerogative to
close or cease its business operations, just because said business operations are not
suffering any loss or simply to provide the worker’s continued employment.
Respondent complied with the requisite notices to the employee and the DOLE to effect
a valid retrenchment. Petition DENIED.

Ratio:

Retrenchment is a valid management prerogative; It is however subject to faithful

compliance with the substantive and procedural requirements laid down by law and
jurisprudence. Retrenchment is the termination of employment initiated by the employer
through no fault of the employees and without prejudice to the latter, resorted to by
management during periods of business recession; industrial depression; or seasonal
fluctuations, during lulls occasioned by lack of orders, shortage of materials, conversion
of the plant for a new production program, or the introduction of new methods or more
efficient machinery or automation. Retrenchment is a valid management prerogative. It
is, however, subject to faithful compliance with the substantive and procedural
requirements laid down by law and jurisprudence. In the discharge of these
requirements, it is the employer who bears the onus, being in the nature of affirmative
defense.

Automatic Appliances, Inc. v. Deguidoy, G.R. No. 228088, December 4, 2019

Facts:

In 2013, AAI suffered a decline in sales and experienced economic difficulties.

Deguidoy, respondent, was reassigned from the Cubao branch to the Tutuban branch,
which she accepted. During her assignment, she was not able to meet the sales quota
and performed underwhelmingly, accumulating a total of 29 unexplained absences from
March to August 2013. During the counseling session, Deguidoy explained that her
dismal performance was attributable to her weight gain. In response, AAI suggested a
lateral transfer to a receptionist clerk or invoicing clerk so she could work on a desk but
this was refused by Deguidoy. She was then advised to transfer to another branch in
Ortigas, which she deemed a constructive dismissal.

ISSUE/S:

W/N Deguidoy was constructively dismissed by AAI

RULING:

No, the Court ruled that Management enjoys the prerogative to transfer its employees
and regulate their work assignment as long as it does not involve a demotion in rank,
diminution in pay or benefit, carried out in good faith, and justified by business
exigencies. The employer may, in accordance with its sound business judgment, assign
employees work assignments. This discretion to impose work assignments or transfer
employees shall be based on the employer's assessment of the qualifications,
aptitudes, and competence of its employees. In this case, it was duly justified to transfer
Deguidoy to the Ortigas branch given that she would be able to increase her sales
quota, and due to the lower number of customers, she wouldn’t be burdened by her
current weight condition.

DOCTRINE:

Doctrine of management prerogative, an employer possesses the inherent right to

regulate, according to its “own discretion and judgment, all aspects of employment,
including hiring, work assignments, working methods, the time, place and manner of
work, work supervision, transfer of employees, layoffs of workers, and discipline,
dismissal and recall of employees
Imasen Philippine Manufacturing Corporation v. Alcon, G.R. 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, the respondents reported for work on the second shift – from 8:00
pm to 5:00 am of the following day. At around 12:40am, Cyrus A. Altiche, Imasen’s
security guard on duty, went to patrol and inspect the production plant’s premises. When
Altiche reached Imasen’s Press Area, he heard the sound of a running industrial fan.
Intending to turn the fan off, he followed the sound that led him to the plant’s “Tool and
Die” section.
At the “Tool and Die” section, Altiche saw the respondents having sexual intercourse on
the floor, using a piece of carton as mattress. Altiche immediately went back to the
guard house and relayed what he saw to Danilo S. Ogana, another security guard on
duty.

On Altiche’s request, Ogana madea follow-up inspection. Ogana went to the “Tool and
Die” section and saw several employees, including the respondents, already leaving the
area. He noticed, however, 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.

On 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;
theyclaimed that they were merely sleeping in the “Tool and Die” section at the time of
the incident. They also claimed that other employees were near the area, making the
commission of the act charged impossible.

On December 4, 2002, Imasen issued the respondents separate interoffice memoranda

terminating their services. 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. The LA found the respondents’ dismissal valid, i.e., for the just cause of
gross misconduct and with due process.

In its December 24, 2008 decision, the NLRC dismissed the respondents’ appeal14 for
lack of merit.

In its June 9, 2010 decision, the CA nullified the NLRC’s ruling. To the CA, the penalty
of dismissal is not commensurate to the respondents’ act, considering especially that
the respondents had not committed any infraction in the past.

Imasen argues in this petition that the act of engaging in sexual intercourse inside
company premises during work hours is serious misconduct by whatever standard it is
measured. According to Imasen, the respondents’ infraction is an affront to its core
values and high ethical work standards, and justifies the dismissal.

The respondents argue in their comment that the elements of serious misconduct that
justifies an employee’s dismissal are absent in this case, adopting thereby the CA’s
ruling.

ISSUE:

W/N Imasen validly exercised its prerogative as employer to dismiss the

respondents-employees who, within company premises and during work hours,
engaged in sexual intercourse.

RULING:

Yes. 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.

To constitute a valid cause for the dismissal within the text and meaning of Article 282 of
the Labor Code, the employee’s misconduct must be serious, i.e., of such grave and
aggravated character and not merely trivial orunimportant.

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.

Dismissal situations (on the ground of serious misconduct) involving sexual acts,
particularly sexual intercourse committed by employeesinside company premises and
during work hours, are not usual violations and are not found in abundance under
jurisprudence. Thus, in resolving the present petition, we are largely guided by the
principles we discussed above, as applied to the totality of the circumstances that
surrounded the petitioners’ dismissal.

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. These circumstances, by themselves, are already punishable
misconduct. Added to these considerations, however, is the implication that 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 justifiedin 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 validcause for
dismissal.

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.

RATIO:

As a general proposition, 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.
2. Limitation

Maula v. Ximex Delivery Express, Inc., G.R. No. 207838, January 25, 2017

Facts:

Maula, petitioner, filed a complaint against Ximex Delivery Express Inc., respondent, for
illegal dismissal, underpayment of wages and benefits. He and other employees
questioned the document and aired their side, voicing their apprehensions against the
designation "For New Hires" since they were long time regular employees earning
monthly salary/wages and not daily wage earners. Due to this, conflicts ensued as he
was issued various numbers of memos asking him to explain his alleged lapses in his
performance of his work. He was assigned to another location and asked to train his
replacement in his previous position, which resulted in another conflict. Nonetheless, he
reported his reassignment to FTI Taguig. There he was served with the memorandum
suspending him from work for thirty (30) days, effective April 4, 2009, for alleged
"serious misconduct and willful disobedience by the employee of the lawful orders of his
employer or representative in connection with his work.”. He filed a case wherein the LA
ruled in favor of him and affirmed the NLRC. On appeal, the CA reversed the decision
and ruled in favor of the respondent.

ISSUE/S:

W/N the CA was correct in reversing the decision and the dismissal was within the
bounds of law?

RULING:

No, the Court ruled that Xymex failed to prove the alleged misconduct of the employee,
which resulted in the dismissal. The Court ruled that while an employer is given a wide
latitude of discretion in managing its own affairs, in the promulgation of policies, rules,
and regulations on work-related activities of its employees, and in the imposition of
disciplinary measures on them, the exercise of disciplining and imposing appropriate
penalties on erring employees must be practiced in good faith and for the advancement
of the employer’s interest and not for the purpose of defeating or circumventing the
rights of employees under special laws or under valid agreements.
In this case, the employer failed to prove the unsubstantiated suspicions, accusations,
and conclusions, which do not provide legal justification for dismissing the employee.
This Court finds the penalty of dismissal too harsh. Not every case of insubordination or
willful disobedience by an employee reasonably deserves the penalty of dismissal
because the penalty to be imposed on an erring employee must be commensurate with
the gravity of his or her offense.

RATIO:

While an employer is given a wide latitude of discretion in managing its own affairs, in
the promulgation of policies, rules, and regulations on work-related activities of its
employees, and in the imposition of disciplinary measures on them, the exercise of
disciplining and imposing appropriate penalties on erring employees must be practiced
in good faith and for the advancement of the employer’s interest, not for the purpose of
defeating or circumventing the rights of employees under special laws or under valid
agreements.

Morales v. Harbour Centre Port Terminal, Inc., G.R. No. 174208, January 25, 2012

FACTS:

Jonathan V. Morales was the Accountant and Acting Finance Officer of Harbour Centre
Port Terminal, Inc. (HCPTI) until he was promoted as the Division Manager of the
Accounting Department. After a few months, Morales was reassigned to Operations
Cost Accounting, tasked with the duty of "monitoring and evaluating all consumables
requests, gears and equipment" related to the corporation’s operations and of
interacting with its sub-contractor, Bulk Fleet Marine Corporation.

Morales protested his reassignment. However, the response he received is that it is a

management prerogative to reassign him and had "the right and responsibility to find the
perfect balance between the skills and abilities of employees to the needs of the
business.
It was the start of Morales absenteeism and tardiness that caused him to receive
warnings from the management. Morales also filed a complaint of constructive dismissal
against his employer. Meanwhile, HCPTI argued that Morales abandoned his
employment and claimed that it was not a constructive dismissal.

The Labor Arbiter ruled that Morales’ reassignment was a valid exercise of HCPTI’s
management prerogative which cannot be construed as constructive dismissal. NLRC
claimed that it was a demotion. Meanwhile, the CA Morales’ reassignment to
Operations Cost Accounting was a valid exercise of HCPTI’s prerogative to transfer its
employees as the exigencies of the business may require.

ISSUE/S:

W/N management prerogative is absolute?

RULING:

NO. Although jurisprudence recognizes said management prerogative, it has been

ruled that the exercise thereof, while ordinarily not interfered with, is not absolute
and is subject to limitations imposed by law, collective bargaining agreement,
and general principles of fair play and justice. Thus, an employer may transfer or
assign employees from one office or area of operation to another, provided there is no
demotion in rank or diminution of salary, benefits, and other privileges, and the action is
not motivated by discrimination, made in bad faith, or effected as a form of punishment
or demotion without sufficient cause. Indeed, having the right should not be confused
with the manner in which that right is exercised

RATIO:

The right of employees to security of tenure does not give them vested rights to
their positions to the extent of depriving management of its prerogative to change
their assignments or to transfer them.

Management prerogative is meant the right of an employer to regulate all aspects of

employment, such as the freedom to prescribe work assignments, working methods,
processes to be followed, regulation regarding transfer of employees, supervision of
their work, lay-off and discipline, and dismissal and recall of workers.
Employers enjoy a wide sphere of authority to regulate its own business, subject to
limitations imposed by labor laws and the principles of equality and substantial justice.

Unicorn Safety Glass, Inc. v. Basarte, G.R. No. 154689, November 25, 2004

FACTS:

Respondents Rodrigo Basarte, Jaimelito Flores, Teodolfo Lor, Ronnie Decio, Elmer
Sultora, and Joselito Decio were regular employees and union officers at Unicorn Safety
Glass, Inc., owned by Lily and Hilario Yulo. On March 2, 1998, Hilario Yulo issued a
memorandum reducing the respondents' workdays from six to three days a week, citing
economic reasons such as decreased sales and increased production costs. The
respondents protested, suspecting the reduction was retaliation for their union activities.
On April 13, 1998, they filed a complaint for constructive dismissal and unfair labor
practice with the National Labor Relations Commission (NLRC), seeking reinstatement
and backwages. The company sent telegrams and memoranda urging them to return to
work, which they ignored. The Labor Arbiter ruled in favor of the company, finding no
constructive dismissal, and ordered the company to pay unpaid service incentive leave
pay. The NLRC affirmed the Labor Arbiter's decision. The Court of Appeals reversed the
NLRC's ruling, ordering the reinstatement of three respondents with full backwages and
awarding attorney's fees and costs. The case was then brought before the Supreme
Court.

ISSUE:
W/N employees constructively dismissed by the company for reducing their work
rotation or work day every week?

RULING:

In the case at bar, the manner in which petitioners exercised their management
prerogative appears to be an underhanded circumvention of the law. Petitioners were
keen on summarily implementing the rotation plan, obviously singling out respondents
who were all union... officers. The management's apparent lack of interest in hearing
what the respondents had to say, created an uncertain situation where reporting for
work was tantamount to an acquiescence in an unjust situation.

Petitioners argued that they "exerted diligent and massive efforts" to make respondents
return to work, highlighting the telegrams and memoranda sent to respondents.

We do not agree. To be sure, the law looks with disfavor upon quitclaims and releases
by employees who are inveigled or pressured into signing them by unscrupulous
employers seeking to evade their legal responsibilities.

Article 279 of the Labor Code provides that an employee who is unjustly dismissed from
work is entitled to reinstatement without loss of seniority rights and other privileges, and
to his full backwages, inclusive of allowances, and to the other benefits or their
monetary... equivalent computed from the time of his actual reinstatement. However, if
reinstatement is no longer possible, the employer has the alternative of paying the
employee his separation pay in lieu of reinstatement.

The Supreme Court found that the company's implementation of the work rotation
schedule appeared to be an underhanded circumvention of the law and an attempt to
suppress the union. The Court noted that the company failed to prove that the rotation
scheme was a genuine business necessity and not meant to subdue the union. The
Court rejected the company's argument that the employees had abandoned their jobs,
as their filing of a complaint for constructive dismissal was inconsistent with the charge
of abandonment.

RATIO:

The exercise of management prerogative is not absolute. It must be exercised in good

faith and with due regard to the rights of the labor. While management would best know
its operational needs, the prerogative cannot be used to circumvent labor laws and
oppress employees.
East Cam Tech Corporation v. Fernandez, G.R. No. 222289, June 8, 2020

FACTS:

Fernandez, Delos Santos, Trinidad, and Manalansan were illegally dismissed in May
2022. Upon there reinstatement and return to the company, they were assigned to a
sample department, which is not the same department they were assigned when they
left. They were also given a quota, but the rest of the workers were not. The employees
avered the quota and went to the labor arbitrator.
East Cam Tech Corporation, on the other hand, stated that they used the Time and
Motion Study (TMS) for each product to achieve productivity and efficiency. That, The
Management and Employee Handbook states that a failure of an employee to meet the
prescribed quantity and quality standards is considered negligence of duty, punishable
by a written warning for the first offense, and dismissal from the service for the second
offense.
The company did not deny the quota and said that at the first instance, employees were
assigned to do a job order for 280 pieces of bags. Based on the TMS, four sewers can
finish the job in three days, with a target rate of 100 pieces per day or 25 pieces per
sewer per day. In the second instance, employees were assigned another job order for
315 pieces of bags. The target rate was 100 pieces per day to be done by four sewers.
The rate was later reduced to 88 pieces per day. Despite the reduced rate, the
respondents were unable to meet the production quota
Executive Labor Arbiter ruled that the management can regulate all aspects of
employment, such as work assignment, working methods, processes to be followed,
working regulations, transfer of employees, work supervision, lay-off, and discipline of
workers. The respondents' failure to meet the production quota and the quality
standards twice resulted to operational damage. This constitutes as negligence of duty,
which is punishable by dismissal from the service when committed for the second time
The NLRC upheld the decision of the Executive Labor Arbiter.
While the CA determined that the respondents were not guilty of gross and habitual
neglect of duty that would justify their termination from employment.
Furthermore, the quota imposed was not shown by East Cam to be done in good faith
and it is up to the corporation to show that the dismissal was for a good cause, which it
also failed to show.
The CA also observed that: (1) East Cam singled them out because they were given a
quota while the rest of the employees were not; (2) since the TMS was used for the first
time, the production output could not be reasonably quantified yet; and (3) the
respondents were assigned to the production line of mass producing items, which was a
task different from what they were accustomed to do in the sample line. As such, they
could not be expected to instantly adapt to the production line and meet the quota.
Thus, it was unjust to dismiss the respondents for failure to meet a new quota
requirement when its efficacy has yet to be proven.

ISSUE/S:

W/N the quota imposed for the two instances was done in good faith?

RULING:

No. Notably, based on the TMS for both job orders, the respondents must produce a
definite quota per day to attain the required production quota. But why is it that the
respondents' supervisor did not call their attention after one or more days of failing to
meet their daily production quota, considering that they were all previously warned of
being negligent for failing to meet the quota for the first job order? Surely, if East Cam
was interested in the efficiency of the respondents in meeting their production quotas, it
would be prudent for the management to monitor their daily production vis-à-vis the
required daily quota under the TMS. Based on the foregoing, there is substantial
evidence that respondents failed to meet their quotas under the TMS not because they
are negligent but simply because the quotas are not attainable. Hence, the CA correctly
overturned the NLRC's Decision.

RATIO:

Management prerogative means the right of an employer to regulate all aspects of

employment, such as the freedom to prescribe work assignments, working methods,
processes to be followed, regulation regarding transfer of employees, supervision of
their work, lay-off and discipline, and dismissal and recall of workers.

Cavite Apparel, Incorporated v. Marquez, G.R. No. 172044, February 6, 2013

FACTS:

Cavite Apparel, Incorporated, engaged in garment manufacturing, employed Michelle

Marquez as a regular employee in the Finishing Department on August 22, 1994.
Michelle was entitled to seven days each of vacation and sick leave annually.
Prior to her dismissal on June 8, 2000, Michelle committed several infractions: AWOL
on December 6, 1999, received a written warning. AWOL on January 12, 2000, received
a stern warning and three days suspension. AWOL on April 27, 2000, received six days
suspension.

On May 8, 2000, Michelle was absent due to illness and submitted a medical certificate,
which Cavite Apparel denied receiving. Michelle was absent again from May 15-27,
2000, due to illness and submitted necessary medical certificates upon her return.
Cavite Apparel suspended her for six days (June 1-7, 2000) and terminated her on June
8, 2000, for habitual absenteeism.

Michelle filed a complaint for illegal dismissal with the NLRC, Regional Arbitration
Branch No. IV, on July 4, 2000. Labor Arbiter Cresencio G. Ramos dismissed the
complaint on April 28, 2001, citing habitual absences as gross neglect of duty.

On appeal, the NLRC reversed the LA's decision on May 7, 2003, declaring Michelle's
dismissal illegal and ordering her reinstatement with backwages. The Court of Appeals
affirmed the NLRC's decision on January 23, 2006, and denied Cavite Apparel's motion
for reconsideration on March 23, 2006. Cavite Apparel filed a petition for review on
certiorari with the Supreme Court.

Issue: Whether or not Michelle’s four absences were habitual, thus warranting her
dismissal to be valid?

HELD:

The petition is unmeritorious.

Neglect of duty, to be a ground for dismissal under Article 282 of the Labor Code, must
be both gross and habitual. Gross negligence implies want of care in the performance of
one's duties. Habitual neglect imparts repeated failure to perform one’s duties for a
period of time, depending on the circumstances. Under these standards and the
circumstances obtained in the case, the Court agrees with the CA that Michelle is not
guilty of gross and habitual neglect of duties. Cavite Apparel’s contention, among others
that, the totality of Michelle’s had been cited for any infraction since he started her
employment with the company in 1994. Four absences in her six years of service
cannot be considered gross and habitual neglect of duty, especially so since the
absences were spread out over a six-month period.
3. Management Prerogative v. Security of Tenure

Imasen Philippine Manufacturing Corporation v. Alcon, G.R. No. 194884, October 22,
2014

Facts:

Imasen Philippine Manufacturing Corporation, a domestic corporation, hired

Ramonchito T. Alcon and Joann S. Papa as manual welders in 2001. On October 5,
2002, during their second shift from 8:00 pm to 5:00 am, security guard Cyrus A. Altiche
discovered the respondents engaging in sexual intercourse in the "Tool and Die"
section. Altiche reported the incident to another security guard, Danilo S. Ogana, who
corroborated the account. Imasen issued interoffice memoranda to the respondents,
directing them to explain the incident and later to attend a formal hearing. Despite the
respondents' denial and claim that they were merely sleeping, Imasen terminated their
services on December 4, 2002, citing gross misconduct. The respondents filed a
complaint for illegal dismissal, which the Labor Arbiter (LA) dismissed on December 10,
2004, finding the dismissal valid.

The National Labor Relations Commission (NLRC) affirmed the LA's decision on
December 24, 2008. The Court of Appeals (CA) nullified the NLRC's ruling on June 9,
2010, reducing the penalty to a three-month suspension and ordering reinstatement
with back wages. Imasen then filed a petition for review on certiorari with the Supreme
Court.

Issue: Whether the respondents’ infraction amounts to serious misconduct within the
terms of Article 296 (Art. 282 before) of the Labor Code justifying a valid cause for their
dismissal

Held: Yes. Respondent’s infraction amounts to a valid cause for dismissal. Preliminary
Considerations: Management Prerogatives

1. Law and jurisprudence guarantee to every employee security of tenure. Courts will
not hesitate to strike down any invalid act of the employer to undermine workers’
tenurial security, in accordance with social justice principles.

2. The law, however, does not authorize the oppression of the employer. Constitutional
and legal protection equally recognize the employer's right and prerogative to manage
its operation according to reasonable standards and norms for fair play.
3. Accordingly, an employer is free to regulate, according to his own judgment and
discretion, all aspects of employment, including hiring, working methods, processes,
working regulations, the discipline, dismissal of workers, etc. As a general proposition,
an employer has free reign over every aspect of its business, as long as the exercise of
management prerogative is done reasonably, in good faith, and in a manner not
otherwise intended to defeat or circumvent the rights of workers.

4. In this light, the Court’s task is to balance such conflicting rights of the respondent’s
security of tenure, and Imasen’s management prerogative. Elements of Serious
Misconduct for a Just Cause for Dismissal

5. According to Art. 296 of the labor Code, serious misconduct by the employee justifies
the employer terminating his or her employment.

6. Misconduct is defined as improper or wrong conduct. It implies wrongful intent, and

not mere error in judgement. To constitute a valid cause of dismissal under Art. 296, the
following elements must be present: a. the misconduct must be serious (of such grave
and aggravated character and not merely trivial or unimportant) b. it must relate to the
performance of the employer’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 Supreme Court’s Ruling

7. NLRC is correct in affirming the respondents’ dismissal.

8. Sexual acts between two consenting adults belong to the realm of purely private
relations. Whether aroused by lust or sincere affection, such acts should be carried out
when and where it will not offend public decency nor disturb accepted social morals. As
such, sexual acts between two adults have no place in the work environment.

9. The facts itself are already punishable by misconduct. 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.

10. Additionally, respondents engaged in sexual intercourse in an area where company

personnel have ready and available access, and when such personnel are, in fact,
working.

11. Hence, respondents’ misconduct are to be considered grave and aggravated in

character so the company was justified in imposing dismissal. By their misconduct, they
issued an open invitation for others to commit the same infraction. Taken together, these
considerations reveal a depraved disposition that the Court considered as a valid cause
for dismissal.
The petition is granted. The CA decision is reversed and the NLRC decision is
reinstated.

P.J. Lhuillier, Inc. v. Camacho, G.R. No. 223073, February 22, 2017

Facts:

On July 25, 2011, petitioner P.J. Lhuillier, Inc. (PJLI), the owner and operator of the
"Cebuana Lhuillier" chain of pawnshops, hired petitioner Feliciano Vizcarra (Vizcarra) as
PLJI's Regional Manager for Northern and Central Luzon pawnshop operations and
respondent Hector Oriel Cimagala Camacho (Camacho) as Area Operations Manager
(AOM) for Area 213, covering the province of Pangasinan. Camacho was assigned to
administer and oversee the operations of PJLI's pawnshop branches in the area.

On May 15, 2012, Vizcarra received several text messages from some personnel
assigned in Area 213, reporting that Camacho brought along an unauthorized person, a
non-employee, during the QTP operation (pull-out of "rematado" pawned items) from
the different branches of Cebuana Lhuillier Pawnshop in Pangasinan. On May 18, 2012,
Vizcarra issued a show cause memorandum directing Camacho to explain why no
disciplinary action should be taken against him for violating PJLI's Code of Conduct and
Discipline which prohibited the bringing along of non-employees during the QTP
operations. Camacho, in his Memorandum, apologized and explained that the violation
was an oversight on his part for lack of sleep and rest. With busy official schedules on
the following day, he requested his mother's personal driver, Jose Marasigan
(Marasigan) to drive him back to Pangasinan. He admitted that Marasigan rode with him
in the service vehicle during the QTP operations.

On June 14, 2012, the Formal Investigation Committee issued the Report of Formal
Investigation. The committee concluded that Camacho was guilty as charged.

Issue: Whether or not Hector Camacho was illegally dismissed.

Held:
To begin with, it is well to recognize the Court's discussion in Imasen Philippine
Manufacturing Corp., v. Alcon, on security of tenure viz-a-viz management prerogative,
to wit:

The law and jurisprudence guarantee to every employee security of tenure. This textual
and the ensuing jurisprudential commitment to the cause and welfare of the working
class proceed from the social justice principles of the Constitution that the Court
zealously implements out of its concern for those with less in life. Thus, the Court will
not hesitate to strike down as invalid any employer act that attempts to undermine
workers' tenurial security. All these the State undertakes under Article 279 (now Article
293) of the Labor Code which bars an employer from terminating the services of an
employee, except for just or authorized cause and upon observance of due process.

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.

Accordingly, except as limited by special law, an employer is free to regulate, according

to his own judgment and discretion, all aspects of employment, including hiring, work
assignments, working methods, time, place and manner of work, tools to be used,
processes to be followed, supervision of workers, working regulations, transfer of
employees, worker supervision, layoff of workers and the discipline, dismissal and recall
of workers. As a general proposition, 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.

Ratio:

Article 282(c) of the Labor Code authorizes the employer to dismiss an employee for
committing fraud or for willful breach of trust reposed by the employer on the employee.
Loss of confidence, however, is never intended to provide the employer with a blank
check for terminating its employees. "Loss of trust and confidence" should not be
loosely applied in justifying the termination of an employee. Certain guidelines must be
observed for the employer to cite loss of trust and confidence as a ground for
termination. Loss of confidence should not be simulated. It should not be used as a
subterfuge for causes which are improper, illegal, or unjustified.
Loss of confidence may not be arbitrarily asserted in the face of overwhelming evidence
to the contrary. It must be genuine, not a mere afterthought to justify earlier action taken
in bad faith." For loss of trust and confidence to be valid ground for termination, the
employer must establish that: (1) the employee holds a position of trust and confidence;
and (2) the act complained against justifies the loss of trust and confidence.

The law contemplates two (2) classes of positions of trust. The first class consists of
managerial employees. They are those who are vested with the power or prerogative to
lay down management policies and to hire, transfer, suspend, layoff, recall, discharge,
assign or discipline employees or effectively recommend such managerial actions. The
second class consists of cashiers, auditors, property custodians, etc. who, in the normal
and routine exercise of their functions, regularly handle significant amounts of money or
property.

He was primarily responsible for administering and controlling the operations of

branches in his assigned area, ensuring cost efficiency, manpower productivity and
competitiveness. He was also responsible for overseeing/monitoring the overall security
and integrity in the area, including branch personnel safety, in coordination with PJLI's
Security Services Division. In fact, as stated by the CA, his position required the utmost
trust and confidence as it entailed the custody, handling, or care and protection of PJLI's
property. Furthermore, as AOM, he was among those employees authorized to
participate in the QTP operations. He was tasked in overseeing the safe transport and
handling of company assets during the said operations.

Clearly from the foregoing, it can be deduced that Camacho held a managerial position
and, therefore, enjoyed the full trust and confidence of his superiors. As a managerial
employee, he was "bound by more exacting work ethics" and "should live up to this high
standard of responsibility."

Simply put, his act was without justification. For this transgression, petitioner P JLI was
placed in a difficult position of withdrawing the trust and confidence that it reposed on
respondent Camacho and eventually deciding to end his employment. "Unlike other just
causes for dismissal, trust in an employee, once lost, is difficult, if not impossible, to
regain." P JLI cannot be compelled to retain Camacho who committed acts inimical to
its interests. A company has the right to dismiss its employees if only as a measure of
self-protection.

Finally, although it may be true that PJLI did not sustain damage or loss on account of
Camacho's action, this is not reason enough to absolve him from the consequence of
his misdeed. The fact that an employer did not suffer pecuniary damage will not
obliterate the respondent's betrayal of trust and confidence reposed on him by his
employer.

Flight Attendants and Stewards Association of the Philippines v. Philippine Airlines, Inc.,
G.R. No. 178083, March 13, 2018

Facts:

At the outset, Philippine Airlines (PAL for brevity) incurred P 90 billion in liabilities during
the 1997 Asian Financial Crisis. As a cost-cutting measure, PAL retrenches 5,000 of its
employees, 1,400 of which are cabin crew personnel. The retrenchment program will
take effect on 15 July 1998. The Flight Stewards Association of the Philippines (FASAP
for brevity) filed a complaint against PAL and Patria Chiong, AVP for Cabin Services of
PAL, for illegal retrenchment at the National Labor Relations Commission (NLRC for
brevity). On 23 July 1998, a preliminary injunction was issued - stopping PAL from
implementing its retrenchment program. Position papers were both filed by FASAP and
PAL with the NLRC.

Labor Arbiter Jovencio Mayor ruled in favor of FASAP and ordered PAL to reinstate
retrenched employees of PAL. On 31 May 2004, NLRC reversed its decision due to lack
of merit. FASAP elevated the case to the Court of Appeals (CA for brevity). The CA
affirmed the decision of the NLRC and opined that PAL does not have to consult FASAP
for its criteria on retrenchment program as it was purely a management prerogative.
FASAP went to the court of last resort, the Supreme Court, to further argue the case.
The SC special third division took cognizance of the case. The SC ruled in favor of
FASAP and ordered PAL to reinstate the retrenched employees. The case was further
argued by the PAL in its motions for reconsideration.

Issue: Whether or not the retrenchment of 1,400 cabin crew personnel was valid.

Held:
Yes, the retrenchment of 1400 cabin crew personnel was valid. Retrenchment or
downsizing is a mode of terminating employment initiated by the employer through no
fault of the employee and without prejudice to the latter, resorted to by management
during periods of business recession, industrial depression or seasonal fluctuations or
during lulls over shortage of material. It is a reduction in manpower, a measure utilized
by an employer to minimize business losses incurred in the operation of its business.
Accordingly, the employer may resort to retrenchment in order to avert serious business
losses.

To justify such retrenchment, the following conditions must be present, to wit: 1. The
retrenchment must be reasonably necessary and likely to prevent business losses; 2.
the losses, if already incurred, are not merely de minimis, but substantial, serious,
actual and real, or if only expected, are reasonably imminent; 3. The expected or actual
losses must be proved by sufficient and convincing evidence; 4. the retrenchment must
be in good faith for the advancement of its interest and not to defeat or circumvent the
employees' right to security of tenure; and 5. There must be fair and reasonable criteria
ascertaining who would be dismissed and who would be retained among the
employees, such as status, efficiency, seniority, physical fitness, age, and financial
hardship for certain workers.

The SC held further that is quite notable that the matter of PAL's financial distress had
originated from the complaint filed by FASAP whereby it raised the sole issue of
"whether or not respondents committed unfair labor practice" •FASAP believed that
PAL, in terminating the 1,400 cabin crew personnel, had violated section 23, article VII
and section 31, article IX of 1995-2000 PAL-FASAP collective bargaining agreement.
FASAP averred in its position paper therein that it was not opposed to the retrenchment
program because it was not opposed to the retrenchment program because it
understood PAL's financial troubles; and that it was only questioning the manner and
lack of standard in carrying out the retrenchment. The employer is burdened to observe
good faith in implementing a retrenchment program. Good faith on its part exists when
the retrenchment is intended for the advancement of its interest and is not for the
purpose of defeating or circumventing the rights of the employee under special laws or
under valid agreements. The records show that the PAL and FASAP met on several
occasions to explore cost-cutting measures, including the implementation of the
retrenchment program. PAL could not have been motivated by ill will or bad faith when it
decided to implement the retrenchment program. According to SC, PAL exhausted all
the measures it had before it implemented the retrenchment program. Hence, PAL
validly implemented its retrenchment program.

4. Salient Management Prerogatives

4.1 Right to Hire

Pampanga Bus, Co. v. Pambusco Employees Union, Inc., 68 Phil. 541 (1939)

Facts:

On May 31, 1939, the Court of Industrial Relations sued an order, directing the
petitioner herein, Pampanga Bus Company, Inc., to recruit from the respondent,
Pambusco Employees' Union, Inc., new employees or laborers it may need to replace
members of the union who may be dismissed from the service of the company, with the
proviso that, if the union fails to provide employees possessing the necessary
qualifications, the company may employ any other persons it may desire. This order, in
substance and in effect, compels the company, against its will, to employ preferentially,
in its service, the members of the union.

Issue: WON the right of the employer to select its employees was violated.

Held: Yes.

The Supreme Court holds that the Court of Industrial Relations has no authority to issue
such a compulsory order. The general right to make a contract in relation to one's
business is an essential part of the liberty of the citizens protected by the due-process
clause of the Constitution. The right of the laborer to sell his labor to such a person as
he may choose is, in its essence, the same as the right of an employer to purchase
labor from any person whom it chooses. The employer and the employee have thus [an
equality of right guaranteed by the Constitution. "If the employer can compel the
employee to work against the latter's will, this is servitude. If the employee can compel
the employer to give him work against the employer's will, this is oppression." (Mills vs.
United States Printing Co., 99 App. Div., 605; 91 N.Y.S., 185, 189-192.) Section of
Commonwealth Act No. 213 confers upon labor organizations the right to collective
bargaining with employers for the purpose of seeking better working and living
conditions, fair wages, and shorter working hours for laborers, and, in general, to
promote the material, social and moral well-being of their members."

The term "collective bargaining" denotes, in common usage as well as in legal

terminology, negotiations looking toward a collective agreement. This provision in
granting to labor unions merely the right of collective bargaining, impliedly recognizes
the employer's liberty to enter or not into collective agreements with them. Indeed, we
know of no provision of the law compelling such agreements. Such a fundamental
curtailment of freedom, if ever intended by law upon grounds of public policy, should be
effected in a manner that is beyond all possibility of doubt. The supreme mandates of
the Constitution should not be loosely brushed aside. As held by the Supreme Court of
the United States in Hitchman Coal & Co. vs. Mitchell (245 U.S., 229; 62 Law. ed., 260,
276):. Whatever may be the advantages of "collective bargaining," it is not bargaining at
all, in any just sense, unless it is voluntary on both sides. The same liberty which
enables men to form unions, and through the union to enter into agreements with
employers willing to agree, entitles other men to remain independent. of the union, and
other employers to agree with them to employ no man who owes any allegiance or
obligation to the union. In the latter case, as in the former, the parties are entitled to be
protected by the law in the enjoyment of the benefits of any unlawful agreements they
make. This court repeatedly has held that the employer is as free to make
non-membership in a union a condition or employment, as the working man is free to
join the union, and that this is a part of the constitutional rights of personal liberty and
private property, not to be taken away by legislation, unless through some proper
exercise of the paramount police power. Thus considered, the order appealed from was
reversed, with costs against the respondent Pambusco Employees' Union, Inc.

Doctrine:
The freedom of contract guaranteed by the Constitution may be limited by law through a
proper exercise of the paramount police power. Thus, in order to promote industrial
peace, certain limitations to the employer's right to select his employees or to discharge
them, are provided in section 21 of Commonwealth Act No. 103 and section 5 of
Commonwealth Act No. 213, which reads as follows: It shall be unlawful for any
employer to discharge or to threaten to discharge, or in any other manner discriminate
against, any laborer or employee because such person has testified or is about to
testify, or because such employer believes that he may testify in any investigation,
proceeding or public hearing conducted by the Court or any board of inquiry. (Sec. 21,
Commonwealth Act No. 103.)
International Catholic Migration Commission v. NLRC, G.R. No. 72222, January 30,
1989

Facts:

Petitioner International Catholic Migration Commission (ICMC), a non-profit organization

dedicated to refugee service at the Philippine Refugee Processing Center in Morong,
Bataan engaged the services of private respondent Bernadette Galang on January 24,
1983 as a probationary cultural orientation teacher with a family salary of P2,000.00. 3
months thereafter, or on April 22, 1983, private respondent was informed, orally and in
writing, that her services were being terminated for her failure to meet the prescribed
standards of petitioner as reflected in the performance evaluation of her supervisors
during the teather evaluation program she underwent along with other newly-hired
personnel. Despite her termination, records show that private respondent did not leave
the ICMC refugee camp at Morong, Bataan, but instead stayed for a few days before
leaving for Manila, during which time, she was observed by petitioner to be allegedly
acting strangely. 2 days later, or on July 26, 1983, she was taken to her residence in
Manila abroad petitioner's service bus. Through a letter, her father expressed
appreciation to the petitioner for taking care of her daughter. On the same day, her
father received, on her behalf, the proportionate amount of her 13" month pay and
equivalent of her two week pay. On August 22, 1983, private respondent filed a
complaint for illegal dismissal, unfair labor practice and unpaid wages against petitioner
with the then Ministry of Labor and Employment, praying for reinstatement with back
wages, exemplary and moral damages.

Issue: Whether or not respondent Galang was legally dismissed.

Held: No. There is justifiable basis for the reversal of public respondent's award of
salary for unexpired 3 months period portion of private respondent six-month
probationary employment in the light of its express finding that there was no illegal
dismissal. There is no dispute that the private respondent was terminated during her
probationary period of employment for failure to qualify as a regular member terminated
during her probationary period of employment for failure to qualify as a regular member
of petitioner's teaching staff in accordance with its reasonable standards. Records show
that the private respondent was found by the petitioner to be deficient in classroom
management, teacher-student relationship and teaching techniques. Failure to qualify
as a regular employee in accordance with the reasonable standards of the employer is
a just cause for terminating a probationary employee specifically recognized under
Article 282 (now Article 281) of the labor Code.

A probationary employee, as understood under Article 282 (now Article 281) of the
Labor Code, is one who is on trial by an employer during which the employer
determines whether or not he is qualified for permanent employment.

Intertrod Maritime, Inc. v. NLRC, G.R. No. 81087, June 19, 1991

Facts: Ernesto was hired and proceeded to work as the Third Engineer of petitioner's
vessels. On 26 August 1982, while the ship was at Port Pylos, Greece, ERNESTO
requested for relief, due to "personal reasons." The Master of the ship approved his
request but informed the private respondent that repatriation expenses were for his
account and that he had to give thirty (30) days notice in view of Clause 5 of the
employment contract so that a replacement for him could be arranged. • On 30 August
1982, while the vessel was in Egypt and despite the fact that it was only four (4) days
after ERNESTO's request for relief, the Master "signed him off" and paid him in cash all
amounts due him less the amount of US$780.00 for his repatriation expenses.

On his return, Ernesto filed a complaint with the NSB/POEA charging petitioners for
breach of employment contract and violation of NSB rules and regulations. Ernesto
alleged that his request for relief was made in order to take care of a fellow Filipino who
was hospitalized in Greece. However, the Master of the ship refused to let him
immediately disembark in Greece so that the reason for his request for relief ceased to
exist. Hence, when the Master of the ship forced him to step out in Egypt despite his
protestations to the contrary, there being no more reason to request for relief, an illegal
dismissal occurred and he had no other recourse but to return to the Philippines at his
own expense. In its Answer, petitioners denied the allegations and averred that the
contract was cut short because of Ernesto's own request for relief so that it was only
proper that he should pay for his repatriation expenses in accordance with the
provisions of their employment contract.
The POEA initially dismissed the complaint, but on appeal, the NLRC reversed the
decision and ordered the employers to pay de la Cruz his repatriation expenses and
unearned salary.

Issue: Whether or not de la Cruz's termination was illegal.

Held:
The Supreme Court held that the employment contract required de la Cruz to pay his
own repatriation expenses and give thirty days' notice if he decided to terminate his
contract early. The Court emphasized that the approval of de la Cruz's request for relief
did not waive the provisions of the contract.

The Court rejected de la Cruz's argument that he was illegally dismissed, stating that his
resignation was already accepted by the Master of the ship, and he could not
unilaterally withdraw it.

Ratio:

Once an employee resigns and his resignation is accepted, he no longer has any right
to the job. If the employee later changes his mind, he must ask for approval of the
withdrawal of his resignation from his employer, as if he were re-applying for the job. It
will then be up to the employer to determine whether or not his service would be
continued. If the employer accepts said withdrawal, the employee retains his job. If the
employer does not, as in this case, the employee cannot claim illegal dismissal for the
employer has the right to determine who his employees will be. To say that an employee
who has resigned is illegally dismissed, is to encroach upon the right of employers to
hire persons who will be of service to them.

Philippine Daily Inquirer, Inc. v. Magtibay, Jr., G.R. No. 164532, July 27, 2007

Facts:
Respondent Magtibay was hired by PDI as a contractual employee at first but
later on was hired on a probationary basis for a new position. He was, however,
terminated after the probationary period for not meeting the company standards. He
filed a complaint for illegal dismissal and damages before the Labor Arbiter who ruled
that his dismissal was for a valid eason.
 Respondent appealed to the NLRC who ruled in his favor. According to the LRC,
Magribay’s probationary employment had ripened into a regular one.
Petitioner filed a petition for certiorari before the CA the CA affirmed the findings
of the NLRC.

Issue:
WON the CA committed a grave error in finding that a probationary employee's failure
to follow an employer’s rules and regulations cannot be deemed failure by said
employee to meet the standards of his employer thus emasculating the petitioner's right
to choose employees.

Ruling:
Yes.
The right of a laborer to sell his labor to such persons as he may choose is, in its
essence, the same as the right of an employer to purchase labor from any person whom
it chooses. The employer and the employee have thus an equality of right guaranteed
by the Constitution. If the employer can compel the employee to work against the
latter’s will, this is servitude. If the employee can compel the employer to give him work
against the employer’s will, this is oppression.
It is a well settled rule that the employer has the right or is at liberty to choose
who will be hired and who will be denied employment. In that sense, it is within the
exercise of the right to select his employees that the employer may set or fix a
probationary period within which the latter may test and observe the conduct of the
former before hiring him permanently.
PDI was only exercising its statutory hiring prerogative when it refused to hire
Magtibay on a permanent basis upon the expiration of the six-month probationary
period.

Ratio:
The Supreme Court emphasized the balance between an employer's prerogative
to choose its employees and an employee's right to security of tenure. Under Article 281
of the Labor Code, a probationary employee may be terminated for just cause or if they
fail to meet reasonable standards made known to them at the time of engagement.

Minsola v. New City Builders, Inc., G.R. No. 207613, January 31, 2018

Facts:
Petitioner Minsoal was a previous laborer of respondent Newy City Builder who
was rehired for the position of mason. However, during the contract, New City noticed
that Minsola had no appointment paper as a mason and he failed to update his
employment record despite New City’s instruction. When summoned to sign his
appointment paper, he refused, left and never reported back to work.
Minsola later on filed a Complaint for illegal Dismissal, Underpayment of Salary,
Non-Payment of 13th Month Pay, Separation Pay an dRefund of Cash Bond, claiming
that he was a regular employee who was constructively dismissed.
The LAbor Arbiter dismissed the complaint for illegal dismissal and ordered his
reinstatement in completion of the terms of his employment since he was never
terminated from work.
Minsola filed an appeal before the NLRC who ruled in favor of Minsola, finding
him to be a regular employee who was constructively dismissed.
New City filed a Motion for REconsideration before the CA. The CA ruled that
Minsola was a project employee and that he was not constructively dismissed.

Issue:
WON Minsola was constructively dismissed by New City.

Ruling:
No.
In Labor Law, constructive dismissal, also known as a dismissal in disguise,
exists “where there is cessation of work, because continued employment is rendered
impossible, unreasonable or unlikely, as an offer involving a demotion in rank or
diminution in pay” and other benefits, THere must be an act amounting to dismissal but
made to appear as if it were not. It may likewise, exist if an act of clear discrimination,
insensibility, or disdain by an employer becomes unbearable on the part of the
employee that it could foreclose any choice by him except to forego his continued
employment.
In the case at bar, Minsola failed to advert any particular act showing that he was
actually dismissed or terminated from his employment. Neither did he allege that his
continued employment with the New City was rendered impossible, unreasonable or
unlikely; nor was he demoted, nor made to suffer from any act of discrimination or
disdain. Neither was there any single allegation that he was prevented or barred from
returning to work. On the contrary, it was actually Minsola who stormed out of New
City’s office and refused to report for work.

Ratio:
The Supreme Court affirmed that Minsola was a project employee, as he was
hired for specific phases of the Avida 3 project with clear terms of employment duration.
His repeated rehiring and the nature of his work, being necessary for New City's
business, did not automatically convert his status to that of a regular employee.
4.2 Right to Discipline [To dismiss, impose a lighter penalty, or condone an offense];
Reasonable Exercise Tempered with Compassion and Understanding; Waiver of Such
Rights

Philippine Span Asia Carriers Corporation (formerly Sulpicio Lines, Inc.) v. Pelayo, G.R.
No. 212003, February 28, 2018

Facts:
Pelayo was tasked to receive statements and billings for processing of payments,
prepare vouchers and checks as accounting clerk of Sulpicio Lines Davao City Branch.
Several anomalies were later on discovered in the said branch.
During one of the interviews for the investigation, Pelayo walked out and claimed
that she was being coerced to admit complicity with Tan and Sobacio. LAter on she
was hospitalized due to depression and a nervous breakdown. She stopped reporting
to work.
Still waiting for Pelayo’s response in order to complete the investigation, Sulpicio
asked for the assistance of the NBI. Instead of a response, Pelayo filed a complaint for
constructive dismissal. The Labor Arbiter ruled in favor of Pelayo.
The NLRC, however, reversed the Labor Arbiter’s decision stating that the matter
of disciplining employees was a management prerogative. The CA found grave abuse
of discretion on the part of the NLRC in reversing the Labor Arbiter’s Decision.

Issue:
WON the investigation conducted by the petitioner on Pelayo amounted to constructive
dismissal.

Ruling:
No.
The validity of management prerogative in the discipline of employees was
sustained by this Court in Philippine Airlines v National Labor Relations Commission,
“In general, management has the prerogative to discipline its employees and to impose
appropriate penalties on erring workers pursuant to company rules and regulations.
We [the Court] have held that the standard for constructive dismissal is “whether
a reasonable person in the employee’s position would have felt compelled to give up his
employment under the circumstances.
The Court has, however, been careful to qualify that not every inconvenience,
disruption, difficulty, or disadvantage that an employee must endure sustains a finding of
constructive dismissal.
This Court fails to see how the petitioner’s investigation amounted to
respondent’s constructive dismissal.
Ratio:
The Supreme Court emphasized that an employer's right to investigate employee
wrongdoing is a legitimate exercise of management prerogative. The Court noted that
involvement in such investigations naturally entails some inconvenience and stress, but
this does not equate to constructive dismissal.

DelRosariov.CWMarketing&DevelopmentCorporation,G.R.No.211105,February 20,
2019

Facts:
Petitioner Del Rosario was employed by Respondent CW Marketing as a Sales
Supervisor. She was assigned a computer and was solely taught of its operations
although others were enabled to connect to it for printing purposes.
Later on, several questionable documents were traced back to CW Marketing’s
Balintawak Branch. Del Rosario denied any involvement with the documents. She said
that her colleagues have access to the computer.
After the investigations, THe CW Marketing found Del Rosario liable for three
violations of its Employee Handbook and was terminated from employment. She filed
before the Arbitration Branch of the NLRC for illegal dismissal and other causes of
action.
CW countered that the dismissal isa legitimate exercise of management
prerogative and emphasized Del Rosario.s sensitive position as a supervisor. The Labor
Arbiter ruled in favor of Del Rosario. On an appeal of both parties to the NLRC, the
NLRC ruled that there was no illegal dismissal. The CA affirmed NLRC’s ruling.

Issue:
WON CW Marketing had just cause to dismiss her.

Ruling:
Yes.
Two requisites must concur to constitute a valid dismissal from employment: (1)
the dismissal must be for any of the causes expressed in Article 297 of the Labor Code;
and (2) the employee must be given an opportunity to be heard and to defend himself.
The right to terminate employment based on just and authorized causes stems from a
similarly protected constitutional guarantee to employers of reasonable return on
investments.
We are not unaware that loss of trust and confidence, to be valid cause for
dismissal, ought to be work-related such as would show the employee concerned to be
unfit to continue working for the employer. THe loss of trust must be based on a willful
breach of trust and founded on clearly established facts. Such breach is willful if it is
done intentionally, knowingly, and purposely, without justifiable excuse as distinguished
from an act done carelessly, thoughtlessly, heedlessly, or inadvertently. The loss of trust
and confidence must spring from the voluntary or willful act of the employee, or by
reason of some blameworthy act or omission on the part of the employee.
Clearly, while the actions of Del Rosario do not point to her direct participation in
the fraudulent scheme, which negatively bore on CW Marketing’s reputation and credit
standing with banks, in general, and HSBC in particular, her actions evinced that she
knew fully well that some of her subordinates were falsifying documents using company
property.

Ratio:
Del Rosario deliberately kept silent over her subordinates’ actions resulting in
damage to CW Marketing. Moreover, her awareness of the identities of the culprits and
her insistence that she did not herself falsify documents demonstrate her sheer apathy
to CW Marketing not worthy of her position as Sales Supervisor.

Philippine Airlines v. NLRC, G.R. No. 115785, August 4, 2000

Facts:
Respondent Diamante is an Integrated Ticket Representative for Philippine
Airlines’ Bacolod City station. He was involved in an incident where he Pineda and his
group for their tickets plus 1,000 pesos in able to book their flight. Pineda, upon arrival
ain Manila executed an affidavit charging Diamante with bribery/corruption. Diamante
was charged by PAL’s manager with bribery/extortion and violation of PAL’s Code of
Discipline. An ad-hoc Committee on Administrative Investigation conducted hearings
where Diamante appeared. Ultimately, Diamante received a notice of his dismissal from
service.
Diamante filed with the NLRC, Regional Arbitration Branch a complaint against
PAL for illegal dismissal. The Labor Arbiter declared the dismissal legal and valid.
Upon appeal, the NLRC reversed the Arbiter’s decision ordering the reinstatement of
Diamante. PAL filed a motion for reconsideration but was denied.

Issue:
WON the respondent was illegally dismissed.

Ruling:
No.
Regarding the legality of respondent’s dismissal, we note that respondent was
found to have violated the Company Code of Discipline. We recognize the right of an
employer to regulate all aspects of employment, THis right, aptly called management
prerogative, gives employers the freedom to regulate, according to their discretion and
best judgment, all aspects of employment, including work assignment, working
methods, process to be followed, working regulations, transfer of employees, work
supervision, lay-off workers and the discipline, dismissal and recall of workers. In
general, management has the prerogative to discipline its employees and to impose
appropriate penalties on erring workers pursuant to company rules and regulations.

Ratio:
The Supreme Court recognized management prerogatives but stated they must
be exercised in good faith, without abuse of discretion, and with respect for employees'
rights.

Bicol Isarog Transport System, Inc. v. Relucio, G.R. No. 234725, September 16, 2020

Facts:
Respondent Roy Relucion was a bus driver previously employed by Petitioner
BIcol Isarog Transport System, Inc. Petitioner claims that when Relucion became a
regular employee, he repeatedly and willfully failed to submit the Trip Collection Report
and turnover the collection for charter buses which violated the company’s code of
discipline. While on probation for the offenses, Relucion insisted on making a trip from
Masbate to Manila with only five passengers when he was ordered not to. He was
asked to report but failed to do so, and after repeated trips to Relucion’s residence to
deliver his notice of termination, he was still out of reach.
Relucion alleged that he was illegally dismissed. In its Decision, the labor arbiter
dismissed the complaint for lack of merit. On appeal, the NLRC affirmed the arbiter’s
decision. The CA, however, ruled that Relucio was illegally dismissed since Bicol
Isarog failed to discharge its burden to prove just cause for his dismissal.

Issue:
WON the respondent was illegally dismissed

Ruling:
No.
Where the findings of the labor tribunals contradict that of the CA, this Court may
look into the records of the case and re-examine the questioned findings.
The burden of proving that the termination of an employee was for a just or
authorized cause lies with the employer. If the employer fails to meet this burden, the
conclusion would be that the dismissal was unjustified and therefore, illegal. To
discharge this burden, the employer must present substantial evidence, which is that
amount of relevant evidence which a reasonable mind might accept as adequate to
justify a conclusion, and not based on mere surmises or conjectures.
There is no doubt, an employer enjoys a wide latitude of discretion in the
promulgation of policies, rules and regulations on work-related activities of the
employees so long as they are exercised in good faith for the advancement of the
employer’s interest and not for the purpose of defeating or circumventing the rights of
the employees under special laws or under valid agreements. Company policies and
regulations are generally valid and binding on the parties and must be complied with
until finally revised or amended, unilaterally or preferably through negotiation, by
competent authority. Bicol Isarog’s Code of Conduct categorized insubordination and
failure to report for duty as a grave offense, which merits the penalty of dismissal.

Ratio:
The Supreme Court found just cause for Relucio's dismissal based on his willful
disobedience of lawful orders from his superiors, a valid ground for termination under
Article 297 of the Labor Code.

Mamaril v. The Red System Company, Inc., G.R. No. 229920, July 4, 2018

Facts:
Petitioner Mamaril was employed by Respondent Red System Company. It was
found out that the petitioner was involved in multiply accidents that caused damages to
the company’s properties the he concealed. Additionally, it was also discovered that
Mamaril had also committed several other infractions that were not reported to the
company, such as pilferage, tardiness and other violations of the company’s safety rules
despite the fact that a pre-employment orientation was participated by Mamaril. During
the Administrative hearings there were still cases of near-accident caused by Mamaril
thus, he was placed under preventive suspension.
After the completion of the administrative investigation, Red System found
Mamaril guilty of violating the Company Code of Conduct and was terminated for wilful
disobedience and willful breach of trust.
Mamaril filed a Complaint for illegal dismissal. He asserted that his termination
from employment was too harsh as it was manifestly disproportionate to his infractions.
The Labor Arbiter dismissed his complaint. The NLRC affirmed the LA’s decision. The
CA also affirmed the NLRC’s resolution.

Issue:
WON Mamaril was illegally dismissed.

Ruling:
 No.
Jurisprudence ordains that for an employee to be validly dismissed on the ground
of willful disobedience, the employer must prove by substantial evidence that: (1) “the
employee’s assailed conduct must have been willful or intentional, the willfulness being
characterized by a wrongful and perverse attitude; and (ii) the order violated must have
been reasonable, lawful, made known to the employee and must pertain to the duties
which he had been engaged to discharge.
In the case at bar, it bears noting that the lifeblood of Red System’s business is
the safe transport and delivery of Coca-Cola products from the warehouse to the
customers. As such, Red System imposed stringent guidelines to ensure the safe and
efficient delivery of all the products. Specifically, drivers were repeatedly reminded to
place a tire choke, shift the engine to first gear, and pull the hand brake, upon parking
the truck. Compliance with these safety measures was essential to prevent the sudden
movement of the ruck while parked and pushed by a forklift during loading and
unloading operations. Likewise, caution was necessary to avoid damage to the new
trucks, Moreover, extra-care was mandated in hauling Coca-cola products to avoid
accidents which would result in needless delays and unnecessary expenses and ruin
Red System’s good will.

Ratio:
The Supreme Court held that Mamaril's dismissal was justified due to his willful
disobedience of Red System's lawful and reasonable safety rules, which were essential
for the company's safe and efficient operation.

Maula v. Ximex Delivery Express, Inc., G.R. No. 207838, January 25, 2017

Facts:

Petitioner Leo T. Maula began his employment with Ximex Delivery Express, Inc. as an
Operation Staff on March 23, 2002. His responsibilities included documentation,
checking, dispatching, and coordinating airfreight, often requiring him to work graveyard
shift without night shift differential and overtime pay. Maula and other employees were
asked to sign a form titled "Personal Data for New Hires," which indicated a daily wage
instead of a monthly salary, which raised concerns among the employees. Following a
series of events, Maula filed a complaint with the National Conciliation and Mediation
Board (NCMB) on March 4, 2009. Despite an agreement that there would be no
retaliatory actions, Maula was blamed for a misrouted cargo and subsequently received
multiple memoranda accusing him of negligence and misconduct. He was reassigned
but faced conflicting instructions, leading to his refusal to perform his former duties
which resulted in a 30-day suspension. Maula filed another complaint with the NCMB,
but the respondents did not appear for the hearings. On May 4, 2009, Maula was
refused entry to the office and handed a dismissal letter. He then re-filed his complaint
with the National Labor Relations Commission (NLRC) on May 12, 2009. The Labor
Arbiter (LA) ruled in favor of Maula, declaring his dismissal illegal and awarding him
backwages and separation pay. The NLRC affirmed the LA's decision, but the Court of
Appeals (CA) reversed it, finding Maula's behavior constitutes serious misconduct.
Maula then petitioned the Supreme Court for review.

Issue:

W/O the dismissal of Leo T. Maula by Ximex Delivery Express, Inc. for serious
misconduct justified

Ruling:

The Supreme Court ruled that the dismissal of Leo T. Maula was not justified as the
alleged serious misconduct was not proven to be of such a grave and aggravated
character.

Ratio:

The Supreme Court held that for misconduct to be a just cause for dismissal, it must be
serious, related to the performance of the employee's duties, and show that the
employee has become unfit to continue working for the employer. In Maula's case, the
Court found that his outburst was an emotional reaction to what he perceived as
successive retaliatory actions by the employer, rather than a premeditated defiance of
authority.

Cavite Apparel, Incorporated v. Marquez, G.R. No. 172044, February 6, 2013

Facts:

Cavite Apparel, Incorporated hired Michelle Marquez as a regular employee in its

Finishing Department on August 22, 1994. Michelle was entitled to seven days each of
vacation and sick leave per annum. Prior to her dismissal on June 8, 2000, Michelle
committed several infractions: absence without leave (AWOL) which was penalized with
a written warning, AWOL which was penalized with a stern warning and three days
suspension, and AWOL on April 27, 2000 which was penalized with six days
suspension.

On May 8, 2000, Michelle was absent due to illness and submitted a medical certificate
upon her return, which Cavite Apparel denied receiving. Michelle was again absent from
May 15-27, 2000 due to illness and submitted the necessary medical certificates upon
her return.

Despite Michelle’s submission of pertinent documents to prove her illness, Cavite

Apparel suspended her for six days (June 1-7, 2000) and subsequently terminated her
employment on June 8, 2000 for habitual absenteeism.

Michelle filed a complaint for illegal dismissal with the National Labor Relations
Commission (NLRC), Regional Arbitration Branch No. IV, on July 4, 2000. Labor Arbiter
(LA) Cresencio G. Ramos dismissed the complaint on April 28, 2001, citing Michelle's
absences as habitual and constitutive of gross neglect of duty. On appeal, the NLRC
reversed the LA's decision on May 7, 2003, declaring Michelle's dismissal illegal and
ordering her reinstatement with backwages.

The Court of Appeals (CA) affirmed the NLRC's decision on January 23, 2006, and
denied Cavite Apparel's motion for reconsideration on March 23, 2006. Cavite Apparel
then filed a petition for review on certiorari with the Supreme Court.

Issue:

Did the Court of Appeals commit grave abuse of discretion in affirming the NLRC's
decision that Michelle Marquez was illegally dismissed?

Can Michelle Marquez's four absences over a six-month period be considered habitual?

Were the series of violations committed by Michelle Marquez already meted with the
corresponding penalties, thus precluding her dismissal?

Ruling:

The Supreme Court found no grave abuse of discretion on the part of the Court of
Appeals in affirming the NLRC's decision that Michelle Marquez was illegally dismissed.
The Supreme Court ruled that Michelle Marquez's four absences over a six-month
period were not habitual.

The Supreme Court held that the series of violations committed by Michelle Marquez
had already been penalized, and thus, her dismissal for the same infractions was
unjust.

Ratio:

The Supreme Court emphasized that neglect of duty, to be a ground for dismissal under
Article 282 of the Labor Code, must be both gross and habitual. Gross negligence
implies a want of care in the performance of one's duties, while habitual neglect imparts
repeated failure to perform one's duties over a period of time. In this case, Michelle
Marquez's four absences over six years of service could not be considered gross and
habitual neglect of duty.

The Court also noted that Michelle had already been penalized for her first three
absences, and her fourth absence was due to illness, for which she submitted a medical
certificate. The Court found the penalty of dismissal too harsh and disproportionate to
the infractions committed, especially considering Michelle's six years of service with no
other derogatory record.

The Court concluded that Cavite Apparel failed to prove that Michelle's dismissal was
for a lawful cause and affirmed the CA's decision to reinstate her with backwages.

Tabuk Multi-Purpose Cooperative, Inc. v. Duclan, G.R. No. 203005, March 14, 2016

Tabuk Multi-Purpose Cooperative, Inc. v. Duclan dismissed Magdalena Duclan, a

cashier at the cooperative, for willful disobedience. The cooperative had issued
resolutions declaring a moratorium on the approval and release of loans, but Duclan
continued to approve and release loans against these resolutions. This resulted in
financial losses for the cooperative and jeopardized its stability. Tabuk Multi-Purpose
Cooperative, Inc. (TAMPCO) is a registered cooperative based in Tabuk City, Kalinga.

Duclan was employed as a cashier at TAMPCO. In 2002, TAMPCO introduced Special

Investment Loans (SILs) to its members. The Board of Directors (BOD) issued
resolutions limiting the grant of SILs and eventually completely halting their grant.
However, Duclan continued to approve and release SILs to borrowers, resulting in
financial losses for the cooperative. Duclan was suspended and required to collect the
unauthorized SIL releases she made, but she failed to do so and was subsequently
dismissed from employment.

Issue:

The main issue in the case is whether Duclan's dismissal was justified based on her
willful disobedience of the cooperative's resolutions.

Ruling:

The ruling of the court is that Duclan's dismissal was justified. The court held that her
willful and repeated disregard of the cooperative's resolutions constituted willful
disobedience, which is a valid ground for dismissal under Article 282 of the Labor Code.
The court also found that Duclan's actions resulted in financial losses for the
cooperative and jeopardized its stability. Therefore, her dismissal was upheld.

Ratio:
The court's ratio is that willful disobedience to a reasonable and lawful order of the
employer is a valid ground for dismissal. In this case, Duclan willfully and repeatedly
defied the cooperative's resolutions, which were necessary, reasonable, and lawful. Her
actions resulted in financial losses for the cooperative and jeopardized its stability.
Therefore, her dismissal was justified under Article 282 of the Labor Code. The court
also found that due process was observed in the dismissal proceedings, as Duclan was
given the opportunity to explain her actions and the cooperative followed the proper
procedure prior to her dismissal.
Santos v. Integrated Pharmaceutical, Inc., G.R. No. 204620, July 11, 2016

Facts:
Integrated Pharmaceutical, Inc., a pharmaceutical company, and its employee, Rowena
A. Santos. Santos was hired by Integrated Pharma as a "Clinician" in 2005. In 2010,
she received a memorandum from her supervisor, Alicia Gamos, regarding her failure to
remit collections and return a demonstration unit. She was also accused of
overcharging her transportation expenses and insubordination for not following
instructions. Integrated Pharma attempted to serve her a memorandum, but she refused
to accept it. Later, she received a termination memorandum enumerating five infractions
that led to her dismissal. Santos filed a complaint for illegal dismissal, nonpayment of
salary, separation pay, and other claims.

Issue:
The main issue raised in the case is whether Santos was illegally dismissed and
whether Integrated Pharma complied with the two-notice requirement for termination.

Ruling:
The Supreme Court dismissed Santos' petition, stating that it does not analyze and
weigh the evidence presented before the lower tribunals. However, due to conflicting
findings, the Court made its own independent findings of fact. The Court found that
Santos was guilty of gross and habitual neglect of duty, insubordination, and dishonesty.
These offenses constituted just cause for termination under the Labor Code.

The Court also found that Integrated Pharma failed to comply with the two-notice
requirement for termination. The first written notice did not apprise Santos of an
impending termination, did not require her to submit a written explanation, and did not
specify the company rules violated or the cause of possible dismissal. The second
notice did not afford Santos ample opportunity to respond to the accusations and did not
schedule a hearing or conference. Therefore, Integrated Pharma violated Santos' right
to statutory due process, warranting the payment of nominal damages.

Ratio:
The Court found that Santos was guilty of gross and habitual neglect of duty for being
excessively tardy, insubordination for willfully disobeying reasonable and lawful orders,
and dishonesty for overstating her travel expenses. These offenses constituted just
cause for termination under the Labor Code.

However, the Court also found that Integrated Pharma failed to comply with the
two-notice requirement for termination. The first notice did not meet the requirements of
apprising Santos of an impending termination, requiring her to submit a written
explanation, and specifying the company rules violated or the cause of possible
dismissal. The second notice did not provide Santos with ample opportunity to respond
to the accusations and did not schedule a hearing or conference. Therefore, Integrated
Pharma violated Santos' right to statutory due process.

In conclusion, the Supreme Court affirmed the Court of Appeals' decision, denying
Santos' petition and ordering Integrated Pharma to pay her nominal damages of
P30,000.

4.3 Right to Impose Preventive Suspension

Maula v. Ximex Delivery Express, Inc., G.R. No. 207838, January 25, 2017

Facts:

Petitioner Leo T. Maula began his employment with Ximex Delivery Express, Inc. as an
Operation Staff on March 23, 2002. His responsibilities included documentation,
checking, dispatching, and coordinating airfreight, often requiring him to work graveyard
shift without night shift differential and overtime pay. Maula and other employees were
asked to sign a form titled "Personal Data for New Hires," which indicated a daily wage
instead of a monthly salary, which raised concerns among the employees. Following a
series of events, Maula filed a complaint with the National Conciliation and Mediation
Board (NCMB) on March 4, 2009. Despite an agreement that there would be no
retaliatory actions, Maula was blamed for a misrouted cargo and subsequently received
multiple memoranda accusing him of negligence and misconduct. He was reassigned
but faced conflicting instructions, leading to his refusal to perform his former duties
which resulted in a 30-day suspension. Maula filed another complaint with the NCMB,
but the respondents did not appear for the hearings. On May 4, 2009, Maula was
refused entry to the office and handed a dismissal letter. He then re-filed his complaint
with the National Labor Relations Commission (NLRC) on May 12, 2009. The Labor
Arbiter (LA) ruled in favor of Maula, declaring his dismissal illegal and awarding him
backwages and separation pay. The NLRC affirmed the LA's decision, but the Court of
Appeals (CA) reversed it, finding Maula's behavior constitutes serious misconduct.
Maula then petitioned the Supreme Court for review.

Issue:
W/O Ximex Delivery Express, Inc. comply with the procedural due process
requirements in dismissing Maula

Ruling:

The Supreme Court found that Ximex Delivery Express, Inc. did not comply with the
procedural due process requirements in dismissing Maula.

Ratio:

The Court noted that the employer failed to provide a detailed narration of facts and
circumstances in the memoranda, did not give Maula a reasonable period to submit a
written explanation, and did not conduct a fair and reasonable opportunity for Maula to
explain his side. Additionally, the Court found that the preventive suspension imposed
on Maula was not justified as there was no serious and imminent threat to the life or
property of the employer or co-workers. The Supreme Court emphasized the
importance of following proper procedures and considering the circumstances of the
employee in termination cases, in line with the constitutional guarantee of security of
tenure and the social justice policy of the 1987 Philippine Constitution.

Mamaril v. The Red System Company, Inc., G.R. No. 229920, July 4, 2018

Facts:
The case involves Samuel Mamaril, a delivery service representative employed by The
Red System Company, Inc. (Red System) on June 1, 2011, in Davao. Mamaril's job was
to transport Coca-Cola products from depots to end users. He received a daily wage of
Php301.00 and underwent orientation and safety seminars, which emphasized the
importance of safety rules such as using a tire choke, engaging the hand brake, and
shifting the transmission to first gear when parking the truck. Despite these instructions,
Mamaril failed to follow these safety measures on multiple occasions, resulting in
accidents and significant damage to company property. On November 9, 2011, during
an administrative hearing regarding fraudulent refueling charges, Mamaril admitted to a
previous accident caused by his failure to follow safety protocols, which he had
concealed. Following another similar incident on November 12, 2011, Red System
conducted an investigation and found Mamaril responsible for the damages.
Consequently, Mamaril was placed under preventive suspension and later terminated
for willful disobedience and breach of trust. Mamaril filed a complaint for illegal
dismissal, which was dismissed by the Labor Arbiter (LA) and affirmed by the National
Labor Relations Commission (NLRC) and the Court of Appeals (CA). The CA also
awarded Mamaril his 13th month pay and service incentive leave (SIL) pay due to Red
System's failure to prove payment. Mamaril then filed a Petition for Review on Certiorari
under Rule 45 of the Revised Rules of Court.

Issue:
Was Mamaril illegally dismissed by Red System, and is he consequently entitled to
reinstatement and full backwages?
Was the Red System guilty of imposing a double penalty against Mamaril?

Ruling:
The Supreme Court ruled that Mamaril was validly dismissed by the Red System.
The Court found that Red System was not guilty of imposing a double penalty against
Mamaril.

Ratio:
The Supreme Court held that Mamaril's dismissal was justified due to his willful
disobedience of Red System's lawful and reasonable safety rules, which were essential
for the safe and efficient operation of the company's business. Mamaril's repeated
violations of these safety protocols, coupled with his deliberate concealment of the
incidents, demonstrated a wrongful and perverse attitude inconsistent with proper
subordination. The Court emphasized that while the law protects employees' security of
tenure, it also upholds the employer's right to manage its operations and dismiss
employees who pose a threat to the company's interests. The preventive suspension
imposed on Mamaril was deemed necessary to protect the company's property and
personnel during the investigation of his offenses. The Court also affirmed the award of
13th month pay and SIL pay to Mamaril due to Red System's failure to prove payment.
The decision was based on the provisions of the 1987 Philippine Constitution and the
Labor Code, particularly Article 297, which allows for the termination of employment for
willful disobedience and breach of trust.
ConsolidatedBuildingMaintenance,Inc.v.Asprec,Jr.,G.R.No.217301,June6,2018

Facts:
Consolidated Building Maintenance, Inc. (CBMI) is a corporation engaged in providing
various services, including janitorial and kitchen services, to different entities. One of its
clients is Philippine Pizza, Inc.-Pizza Hut (PPI). CBMI had service contracts with PPI
from 2000 and from 2002 to 2010. Respondents Rolando Asprec, Jr. and Jonalen
Bataller claimed to be regular employees of PPI, with Asprec starting as a "Rider" in
January 2001 and Bataller as a "team member/slice cashier" in March 2008 at PAPI's
Pizza Hut branch in Marcos Highway, Marikina City. They alleged that after their initial
contracts with PPI expired, they were advised to go on leave and were subsequently
re-hired through CBMI, continuing their previous roles at the same branch. CBMI,
however, asserted that the respondents were its employees. On July 23, 2010, the
respondents were investigated for an alleged theft incident, leading to their suspension
and eventual dismissal. Consequently, they filed a complaint against CBMI and PPI for
constructive illegal dismissal, illegal suspension, and non-payment of separation pay.
The Labor Arbiter (LA) ruled in favor of the respondents, declaring them regular
employees of PPI and finding them illegally dismissed. The National Labor Relations
Commission (NLRC) modified the LA's decision, recognizing the respondents as regular
employees of CBMI and dropping PPI from the case. The Court of Appeals (CA)
reinstated the LA's decision, holding that CBMI was a labor-only contractor and that the
respondents were employees of PPI. CBMI and its Human Resource Manager Sarah
Delgado then filed a petition for review on certiorari before the Supreme Court.

Issue:
Whether CBMI is a labor-only contractor.
Whether the respondents were illegally dismissed.
Whether the award of backwages, moral damages, exemplary damages, and attorney's
fees to the respondents was proper.

Ruling:
The Supreme Court ruled that CBMI is an independent contractor.
The Court affirmed the NLRC's decision that the respondents were illegally dismissed.
The Court reinstated the NLRC's resolution, holding CBMI liable for the respondents'
monetary claims but reversed the CA's decision on moral and exemplary damages and
attorney's fees.

Ratio:
The Supreme Court found that CBMI had substantial capital and operated
independently, which qualified it as an independent contractor, not a labor-only
contractor. The Court noted CBMI's Certificate of Registration with the Department of
Labor and Employment (DOLE) and its substantial assets as evidence of its legitimacy.
The Court also recognized CBMI's control over the respondents, including hiring,
supervision, and disciplinary authority, further supporting its status as an independent
contractor. Regarding the respondents' dismissal, the Court held that CBMI failed to
justify the extended preventive suspension beyond the 30-day limit prescribed by law,
rendering it illegal. The Court also found that CBMI did not comply with the mandatory
notice requirement for temporary lay-off, and thus, the respondents were entitled to their
monetary claims. The Court awarded backwages and separation pay but did not uphold
the CA's award of moral and exemplary damages and attorney's fees, as there was no
sufficient basis for such awards.

Every Nation Language Institute v. Dela Cruz, G.R. No. 225100, February 19, 2020

Title EVERY NATION LANGUAGE INSTITUTE (ENLI) AND RALPH MARTIN

LIGON, PETITIONERS,
VS. MARIA MINELLIE DELA CRUZ, RESPONDENT.
Facts Enli engaged in teaching local and international students hired Dela Cruz
as marketing officer (managing daily operations, fixing the schedule of
teachers, and handling of attendance sheets, cash disbursements,
payroll, and financial reports. She was also responsible for closing the
branch after business hours), received complaints of:

● calls and messages went unanswered

● manager arriving late
● financial reports of Calamba branch not submitted even after
ordered to comply disregarded ENLI directive

Also found out:

● Dela Cruz committed non-issuance of OR, insubordination, gross

disrespect to authorities, and frequent absences
● Received check of 100k issued in her name instead of ENLI

Notice to Suspend issued to Dela Cruz, required to explain the

above infractions, place under Temporary Suspension 30days but
refused to acknowledge the receipt of notice.
Ligon took the branch, and met with students advised by Dela Cruz
that she would instead someone to teach them in their house. 30-day
suspension period lapsed but Dela Cruz did not report back for work.
Petitioners argued that Dela Cruz was not dismissed but was only
preventively suspended, since she had access to all confidential reports
and financial documents which she can alter to cover her infractions
Labor Arbiter dismissed Dela Cruz's complaint she was
terminated only after she filed her complaint show that at the time the
 complaint was filed on June 5, 2012, she was not yet dismissed but
merely suspended. She had no cause of action for underpayment of
salary.
NLRC held that petitioners failed to present more convincing
evidence other than the letters executed by ENLI's employees which the
NLRC regarded as merely self-serving. Found Dela Cruz to have been
illegally dismissed
Issue/s The Court of Appeals erroneously sustained the National Labor
Relations Commission's Decision despite failure to muster the quantum
of proof required in administrative proceedings, i.e., substantial evidence.
Legality of her dismissal which issue was not raised in
petitioners' certiorari petition before the CA
Ruling The Labor Arbiter was correct insofar as he ruled that, at the
time Dela Cruz filed her complaint on June 5, 2012, she was not yet
terminated from service as she was placed under preventive suspension
only on June 22, 2012.
Placing an employee under preventive suspension is allowed
under Section 8, Rule XXIII, Book V of the Omnibus Rules
Implementing the Labor Code
Section 8. Preventive suspension. The employer may place the worker
concerned under preventive suspension only if his continued
employment poses a serious and imminent threat to the life or property
of the employer or of his co-workers.
Not a penalty but a disciplinary measure to protect life or property
of the employer or the co-worker’s pending investigation of any alleged
infraction committed by the employee
Justified only when the employee's continued employment
poses a serious and imminent threat to the employer's or co-workers' life
or property. When justified, the preventively suspended employee is not
entitled to the payment of his salaries and benefits for the period of
suspension.
Section 9 of the Omnibus Rules Implementing the Labor Code limits
the duration of the preventive suspension to a maximum of 30 days
When the period of preventive suspension exceeds the
maximum period allowed without reinstating the employee actually or
through payroll, or when the preventive suspension is for an indefinite
period, constructive dismissal sets in “placing the employee under
preventive suspension in excess of the 30-day limit was a predetermined
effort to dismiss the latter from service in the guise of preventive
 suspension; and where the employer failed to recall the employee to
work after the expiration of the suspension taken together with the
employer's precondition that the employee withdraw the complaints
against it”
The expiration of the preventive suspension on July 22, 2012,
constructive dismissal had set in. SC ruled in favor of Dela Cruz such
that the computation thereof should be reckoned from July 22, 2012.

Premiere Development Bank v. NLRC, G.R. No. 114695, July 23, 1998

Title PREMIERE DEVELOPMENT BANK, PROCOPIO C. REYES, PACITA

M. ARAOS and RENATO DIONISIO, petitioners,
vs. NATIONAL LABOR RELATIONS COMMISSION and TEODORA
LABANDA, respondents.
Facts Ramon T. Ocampo, a depositor of petitioner bank, issued a
check in favor of and for deposit to the account of CBISCO a depositor
of petitioner bank. After the check and the deposit slip were presented
to Labanda as teller at petitioner's Taytay Branch turned over to the
Branch cashier for verification and the same was confirmed and
accepted by Labanda.
Instead of posting it to CSISCO's account, the same was
posted to the account of Ocampo treating it as "On-Us Check," that is,
drawn against the Taytay Branch where the check was deposited
wife of Ocampo, together with the auditor from CBISCO
complained to petitioner Dr. Procopio C. Reyes “It was only then that
petitioner bank discovered the misposting of the check issued by
Ocampo. The overstatement remained undetected until Ocampo
withdrew the money from the bank.”
Pacita M. Araos sent a demand letter to private respondent
surrounding the incident within three (3) days from receipt in case she
fails to do so, necessary action shall be taken against her. Auditors
came out with a report finding private respondent Labanda and
bookkeeper Torio primarily liable for the incident.
Labanda was placed under preventive suspension pending
investigation of the incident. She was requested to report on April 4,
 1986 so that she can present her side of the story. Labanda executed a
statement that she will not sign any of the preliminary statements she
made unless the same is with the consent and advice of her husband.
Dates of the hearing were rescheduled by petitioners several
times. Petitioners received a letter from private respondent through her
counsel demanding payment of actual damages.
8 months from the finality of the Court of Appeals' decision and
two years from the alleged termination of her employment, respondent
Labanda filed an illegal dismissal case.
Labor Arbiter dismissed the labor case ruling that:
“With the filing of the complaint with the Regional Trial Court,
complainant on her own, terminated her employment with the Bank.”
NLRC:
Reversed the decision of the Labor Arbiter ruling that private
respondent's indefinite preventive suspension amounted to constructive
dismissal.
Issue/s Is the filing of an action for damages against one's employer
tantamount to abandonment of job?
Ruling Private respondent's preventive suspension is without valid cause
since she was outrightly suspended by petitioner. The date of her
preventive suspension on March 13, 1986 until the date when the last
investigation was rescheduled on April 23, 1986, more than 30 days
had expired.
To constitute abandonment, two elements must concur: (1) the
failure to report for work or absence without valid or justifiable reason,
and (2) a clear intention to sever the employer-employee relationship,
with the second element as the more determinative factor and being
manifested by some overt acts.
Abandoning one's job means the deliberate, unjustified refusal of
the employee to resume his employment and the burden of proof is on
the employer to show a clear and deliberate intent on the part of the
employee to discontinue employment.
The twin requirements of notice and hearing constitute the essential
elements of due process which are set out in Rule XIV, Book V of the
Omnibus Rules Implementing the Labor Code in this wise:
Sec. 2. Notice of Dismissal. — Any employer who seeks to dismiss a
worker shall furnish him a written notice stating the particular acts or
omission(s) constituting the grounds for his dismissal. In cases of
 abandonment of work, notice shall be served at the worker's last known
address.
Sec. 5. Answer and Hearing. — The worker may answer the
allegations as stated against him in the notice of dismissal within a
reasonable period from receipt of such notice. The employer shall
afford the worker ample opportunity to be heard and to defend himself
with the assistance of his representative, if he so desires.
Sec. 6. Decision to Dismiss. — The employer shall immediately notify
a worker in writing of a decision to dismiss him stating clearly the
reasons therefor.
Sec. 7. Right to contest dismissal. — Any decision taken by the
employer shall be without prejudice to the right of the worker to contest
the validity or legality of his dismissal by filing a complaint with the
Regional Arbitration Branch of the Commission.
Considering that respondent Labanda has been in the service
of petitioner bank for the past 10 years and nowhere in the records
does it appear that she committed any previous infractions of company
rules and regulations, we find that the decision of respondent NLRC
ordering her reinstatement with three-year back wages is just and
equitable.

4.4 Right to Reassign Pending Investigation

Endico v. Quantum Foods Distribution Center, G.R. No. 161615, January 30, 2009

Title ARNULFO O. ENDICO, Petitioner,

vs QUANTUM FOODS DISTRIBUTION CENTER, Respondent.
Facts Quantum Foods hired Endico as Field Supervisor of Davao City
with a service vehicle on the understanding that after five years of
continuous service to the company and upon payment of 10% of the
vehicle’s book value, would turn over possession and ownership of the
vehicle to him.
Endico was transferred to Cebu, promoted as Area Manager.
Due to the economic slowdown and to save on operational costs
Endico’s merchandisers were reduced from twelve to five. Sent in fax
message Quantum instructed Acuros and Endico’s immediate
supervisor, to immediately relieve Endico from his position and handle
vacated position by Acuros himself, was likewise ordered to advise
Endico to report to the head office which Endico complied.
Quantum Foods asked Endico to explain why no administrative
action should be taken against him because of "serious misconduct due
to mismanagement of sales area resulting to lost sales and goodwill with
number one major account.", denied and said that he properly
coordinated all his actions with Acuros.
Endico added that Quantum did not accord him due process
because he was immediately relieved without being given the
opportunity to explain his side. Quantum recalled Endico’s application for
leave of absence and required him to report to the head office.
Endico, believing that Quantum Foods intended to ease him out
of the company, filed a complaint20 for constructive illegal dismissal.
Endico also prayed for the payment of separation pay, backwages, other
monetary benefits, damages, attorney’s fees and recovery of the service
vehicle.
Ruling of the Labor Arbiter : declaring as illegal the constructive
dismissal of complainant and ordering the respondent Quantum Foods,
Inc. to pay him. Endico was given neither a copy of the order for his
relief nor the reason for his immediate relief.
Ruling of the National Labor Relations Commission : Endico was not
just recalled but was immediately transferred to the head office, which
was tantamount to dismissal. The NLRC ruled that Quantum Foods
failed to observe the twin requirements of notice and hearing.
Ruling of the Court of Appeals : NLRC gravely abused its discretion
when it ruled that Endico was constructively dismissed, Quantum Foods
acted in good faith and was in the legitimate pursuit of its best interests
when it transferred Endico from Cebu to the head office. Concluded that
Endico filed the complaint in anticipation of what he perceived to be the
final outcome of the administrative investigation.
 Issue/s 1. Whether he was constructively dismissed;
2. Whether he is entitled to separation pay, backwages, other monetary
benefits, damages and attorney’s fees; and
3. Whether he is entitled to acquire the service vehicle.
Ruling Labor laws also discourage interference with an employer’s
judgment in the conduct of its business. The Court often declines to
interfere in legitimate business decisions of employers. The law must
protect not only the welfare of employees, but also the right of
employers.
This privilege is inherent in the right of employers to control and
manage their enterprises effectively. The right of employees to security
of tenure does not give them vested rights to their positions to the extent
of depriving management of its prerogative to change their assignments
or to transfer them.
Test for determining the validity of the transfer of employees:
The employer must be able to show that the transfer is not
unreasonable, inconvenient or prejudicial to the employee; nor does it
involve a demotion in rank or a diminution of his salaries, privileges and
other benefits. Should the employer fail to overcome this burden of
proof, the employee’s transfer shall be tantamount to constructive
dismissal, which has been defined as a quitting because continued
employment is rendered impossible, unreasonable or unlikely; as an
offer involving a demotion in rank and diminution in pay. Likewise,
constructive dismissal exists when an act of clear discrimination,
insensibility or disdain by an employer has become so unbearable to the
employee leaving him with no option but to forego with his continued
employment.
Reassignments made by management pending investigation of
violations of company policies and procedures allegedly committed by
an employee fall within the ambit of management prerogative, valid
exercise of management prerogative to discipline its employees.
Quantum Foods, considering the declining sales and the loss of a
major account in Cebu, was acting in the legitimate pursuit of what it
considered its best interest in deciding to transfer Endico to the head
office.

Mariano v. Martinez Memorial Colleges, Inc., G.R. No. 194119, April 13, 2016
Title SONIA F. MARIANO, Petitioner, v. MARTINEZ MEMORIAL COLLEGES,
INC., AND/OR FERDINAND A. MARTINEZ/ DR. ELIZABETH M. DEL
RIO, Respondents.
Facts MMC private educational institution Martinez as the College
incumbent President and Del Ri as the College Executive
Vice-President. Petitioner was MMC's Assistant in service for 32 years.
Part of her job was to accept payments and issue receipts and deposit
slips to MMC students.
Petitioner went on a one month authorized leave of absence with
husband Dario the Director of Finance of MMC vacationing in the US.
When reported back to work, she received a Memorandum stating that in
line with the streamlining activities of MMC, the petitioner would be
transferred from the Cashier's Office to the OVP for Finance, her
husband's office.
Petitioner alleged that the copies of memorandum were
distributed to all concerned after the respondents signed it while she and
her husband were still on vacation. Dario in the special meeting of the
Board of Directors of MMC requested for the petitioner's reinstatement to
the Cashier's Office, however, denied his request. Dario then advised the
petitioner to file an extended leave of absence was granted.
Petitioner went to MMC to file another application for leave as she
was not feeling well but this was denied by the Muman Resources
"Extension disapproved until further notice due to on-going audit."
Muallil asked to conduct an audit review of MMC's Finance
Department, showed the petitioner's improper handling of cash accounts
of MMC. A separate account called "non-essential accounts" in which
some collections of MMC were deposited and diverted from MMC's
general fund was likewise discovered.
Petitioner filed with the NLRC a Complaint17 for constructive
dismissal against MMC Dario received a letter addressed to the
petitioner, where the latter was asked to explain in writing, within five
days, her possible involvement in the diversion of MMC's funds.
LA found the petitioner's dismissal as illegal for failure of the
respondents to prove lawful or just cause for the termination of her
employment and for their failure to accord her due process
NLRC and found that the System Review Report prepared by Muallil
provided sufficient grounds for MMC to terminate the petitioner from
employment for serious or gross dishonesty.
 CA agreed, petitioner was the Assistant Cashier who performs the duties
of a cashier, position that requires a high degree of trust and confidence,
and her infraction reasonably taints the trust and confidence reposed
upon her by her employer.
Issue/s WON petitioner was illegally dismissed; that the respondents were not
able to comply with the twin requirements of notice and hearing as
mandated by law; that her transfer rests merely on Martinez's
arbitrariness, whims, caprices or suspicion; and that the loss of trust and
confidence cannot be used against her as there exist no solid and
substantial grounds against her but merely suspicion.
Ruling CA correctly ruled that MMC's act of transferring the petitioner
from the Cashier's Office to the OVP for Finance is a valid exercise of
management prerogative, within MMC's discretion to allow husband and
wife to be in one department and there is no express prohibition on this
matter.
“Reassignments made by management pending investigation of
violations of company policies and procedures allegedly committed by
an employee fall within the ambit of management prerogative.”
Article 296(c) (formerly Article 282[c]) of the Labor Code
Just and valid causes for the dismissal of an employee, viz.: (a) serious
misconduct or willful disobedience by the employee of the lawful orders
of his employer or representative in connection with her work; (b) gross
and habitual neglect by the employee of her duties; (c) fraud or willful
breach by the employee of the trust reposed in her by her employer or
duly authorized representative; (d) commission of a crime or offense by
the employee against the person of her employer or any immediate
member of her family or her duly authorized representatives; and (e)
other causes analogous to the foregoing.
It is sufficient that there is some basis for the same or that the
employer has a reasonable ground to believe that the employee is
responsible for the misconduct, thus making him unworthy of the trust
and confidence reposed in him. Courts cannot justly deny the employer
the authority to dismiss him for employers are allowed wider latitude in
dismissing an employee for loss of trust and confidence
Two written notices before termination of employment can be
effected: a first written notice that informs the employee of the
particular acts or omissions for which his or her dismissal is sought, and
a second written notice which informs the employee of the employer's
decision to dismiss him. In considering whether the charge in the first
 notice is sufficient to warrant dismissal under the second notice, the
employer must afford the employee ample opportunity to be heard.
A hearing does not strictly mean a personal or face-to-face
confrontation. It is sufficient that an employee has the meaningful
opportunity to controvert the charges against him and to submit evidence
in support thereof.

4.5 Right to Transfer

Tinio v. CA, G.R. No. 171764, June 8, 2007

Title ALBERT O. TINIO, petitioner,

vs. COURT OF APPEALS, SMART COMMUNICATIONS, INC., ALEX O.
CAEG and ANASTACIO MARTIREZ, respondents.
Facts SMART employed Tinio as General Manager of (VISMIN) Sales
and Operations based in Cebu, informed petitioner of his new
assignment as Sales Manager for Corporate Sales in SMART’s Head
Office in Makati City. Petitioner deferred action on his assignment until he
had been apprised of the duties and responsibilities of his new position
and the terms and conditions of his relocation. Caeg informed petitioner
that his transfer was for the greater business interest of the company; that
petitioner is expected to meet at least 80% of his sales and collection
targets.
Petitioner did not report for work. He instead filed a complaint for
constructive dismissal with claims for moral and exemplary damages and
attorney’s fees against SMART and private respondents Caeg and
Martirez. Caeg required petitioner to explain his continuing refusal to
transfer to his new assignment, but referred Caeg to his complaint for
constructive dismissal.
 Labor Arbiter rendered judgment finding that petitioner was not
constructively or illegally dismissed.
NLRC reversed the Labor Arbiter’s decision and declared that petitioner
was illegally dismissed, awarded him full backwages, including the
corresponding 13th month pay, moral and exemplary damages
Court of Appeals reversed and set aside the Decision of the NLRC and
reinstated the Decision of the Labor Arbiter dismissing the complaint for
lack of merit
Issue/s (1) whether private respondents’ act of transferring petitioner to its Head
Office in Makati was a valid exercise of management prerogative
(2) whether petitioner was constructively dismissed
Ruling Court will not interfere with an employer’s prerogative to regulate
all aspects of employment which include among others, work assignment,
working methods and place and manner of work. Labor laws discourage
interference with an employer’s judgment in the conduct of his business.
“based on its assessment and perception of its employees’ qualifications,
aptitudes and competence, to move them around in the various areas of
its business operations in order to ascertain where they will function with
maximum benefit to the company.”
The employer must be able to show that the transfer is not
unreasonable, inconvenient, or prejudicial to the employee; nor does it
involve a demotion in rank or a diminution of his salaries, privileges, and
other benefits. Should the employer fail to overcome this burden of proof,
the employee’s transfer shall be tantamount to constructive dismissal,
which has been defined as a quitting because continued employment is
rendered impossible, unreasonable or unlikely; as an offer involving a
demotion in rank and diminution of pay.
Transfer from Cebu to Makati does not represent a demotion in
rank or diminution of salaries, benefits and other privileges. It was a
lateral transfer with the same salaries, benefits and privileges.
Petitioner’s deliberate and unjustified refusal to resume his
employment, a form of neglect of duty, despite attempts by the company
to hear out his grievances, constitutes abandonment. Petitioner’s failure
to report for work, or absence without valid or justifiable reason, coupled
with a clear intention to sever employer-employee relationship, leads us
to no other conclusion than that he abandoned his work

Peckson v. Robinsons Supermarket Corporation, G.R. No. 198534, July 3, 2013

Title JENNY F. PECKSON, Petitioner,
vs. ROBINSONS SUPERMARKET CORPORATION, JODY GADIA,
ROENA SARTE, and RUBY ALEX, Respondents.
Facts Petitioner first joined RSC as a Sales Clerk, holding the position of
Category Buyer Sarte, RSC’s Assistant Vice-President for Merchandising,
reassigned her to the position of Provincial Coordinator,
RSC demanded an explanation from her within 48 hours for her
refusal to accept her new assignment despite written and verbal
demands. Sarte cited a company rule, Offenses Subject to Disciplinary
Action No. 4.07, which provided that "[d]isobedience, refusal or failure to
do assigned task or to obey superior’s/official’s orders/instructions, or to
follow established procedures or practices without valid reason" would be
meted the penalty of suspension. ignored the 48-hour deadline to explain
imposed by Sarte. “she could not accept the position of Provincial
Coordinator since she saw it as a demotion”
Sarte issued an instruction to the petitioner to report to RSC’s
Metroeast Depot & instruction, citing the need for certain tasks from the
petitioner in preparation for the coming Christmas holidays she did not
obey as instructed. There are records of habitual tardiness, as well as
poor performance rating "below expectation," the petitioner was found to
be tardy for the entire 2005, 57 times; that she was suspended twice for
20 instances of tardiness and absences.
LA : ruled that job reassignment or classification is a strict prerogative of
the employer, and that the petitioner cannot refuse her transfer from
Category Buyer to Provincial Coordinator since both positions
commanded the same salary structure, high degree of responsibility and
impeccable honesty and integrity.
NLRC : agreed that the lateral transfer of the petitioner from Category
Buyer to Provincial Coordinator was not a demotion amounting to
constructive dismissal, since both positions belonged to Job Level 5 and
between them there is no significant disparity in terms of the requirements
of skill, experience and aptitude. Contrary to the petitioner’s assertion
CA: found no basis to deviate from the oft-repeated tenet that the
findings of fact and conclusions of the NLRC
Issue/s WON the lateral transfer from Category Buyer to Provincial Coordinator
was a demotion amounting to constructive dismissal because her
reassignment was not a valid exercise of management prerogative, but
was done in bad faith and without due process
Ruling Settled rule that management may transfer an employee from one
office to another within the business establishment, provided there is no
demotion in rank or diminution of salary, benefits, and other privileges,
and the action is not motivated by discrimination or bad faith or effected
as a form of punishment without sufficient cause.
Every employer has the inherent right to regulate, according to his
own discretion and judgment, all aspects of employment, including hiring,
work assignments, working methods, the time, place and manner of work,
work supervision, transfer of employees, lay-off of workers, and discipline,
dismissal, and recall of employees. The only limitations to the exercise of
this prerogative are those imposed by labor laws and the principles of
equity and substantial justice.
Concerning the transfer of employees, these are the following
jurisprudential guidelines: (a) a transfer is a movement from one position
to another of equivalent rank, level or salary without break in the service
or a lateral movement from one position to another of equivalent rank or
salary; (b) the employer has the inherent right to transfer or reassign an
employee for legitimate business purposes
(c) a transfer becomes unlawful where it is motivated by discrimination or
bad faith or is effected as a form of punishment or is a demotion without
sufficient cause
(d) the employer must be able to show that the transfer is not
unreasonable, inconvenient, or prejudicial to the employee.

Symex Security Services, Inc. v. Rivera, Jr., G.R. No. 202613, November 8, 2017

Title SYMEX SECURITY SERVICES, INC. AND RAFAEL Y. ARCEGA,

Petitioners, v. MAGDALINO O. RIVERA, JR. AND ROBERTO B. YAGO,
Respondents.
Facts Respondents employed as security guards assigned at the offices
and premises of Guevent by petitioner Symex its President and
Chairman of the Board is petitioner Arcega. Tasked to guard the
entrance and the exit of the building, and check the ingress and egress
of the visitors' vehicles going through the building.
Required to report for work during legal holidays, but they were
not paid holiday premium pay, filed a complaint for nonpayment of
holiday pay, premium for rest day, 13th month pay, illegal deductions and
damages.
The day after, Cura told them that they would be relieved from the
post because Guevent reduced the number of guards on duty, and that
they would not be given a duty assignment unless they withdrew the
complaint they filed before the LA. Made to choose between resignation
or forcible leave.
LA dismissed respondents' amended complaint for illegal
dismissal but ordered petitioner Symex to pay respondents' their
proportionate 13th month pay “LA also ruled that the pay slips presented
by respondents themselves showed that they were not underpaid”.
NLRC respondents were illegally dismissed by Capt. Cura, the
Operations Manager of petitioner Symex, who told them that unless they
withdrew their complaint for money claims pending before the LA, their
services would be terminated.
CA sufficiently ruled on respondents' money claims. It ruled that
once the employee has set out with particularity in his complaint, position
paper, affidavits and other documents the labor standard benefits he is
entitled to, and which the employer allegedly failed to pay him, it
becomes the employer's burden to prove that it has paid these money
claims
Issue/s whether or not
(a) the CA correctly ruled that the NLRC did not gravely abuse its
discretion, and consequently, held that respondents were illegally
dismissed
(b) petitioners are liable to respondents for backwages, service incentive
leave pay, 13th month pay, separation pay, moral damages, exemplary
damages and attorney's fees
Ruling Respondents were illegally dismissed.
The rule is that one who alleges a fact has the burden of proving it;
thus, petitioners were burdened to prove their allegation that
respondents dismissed them from their employment.
CA also found that petitioner Symex used its prerogative to
re-assign its security guards as leverage in the withdrawal of the labor
complaint filed against petitioners by respondents
There can be no abandonment on their part as they even
immediately amended their complaint to include illegal dismissal when
they were given a condition to withdraw their complaint first before they
could be given assignment. Such condition is illegal and unwarranted.
Respondents are not guilty of abandonment.
Article 282 [now Article 297] of the Labor Code
To constitute abandonment, however, there must be a clear and
deliberate intent to discontinue one's employment without any intention
of returning. In this regard, two elements must concur: (1) failure to
report for work or absence without valid or justifiable reason, and (2) a
clear intention to sever the employer-employee relationship, with the
second element as the more determinative factor and being manifested
by some overt acts.

Marsman & Company, Inc. v. Sta. Rita, G.R. No. 194765, April 23, 2018

Bognot v. Pinic International (Trading) Corporation/CD-R King, G.R. No. 212471, March
11, 2019

Automatic Appliances, Inc. v. Deguidoy, G.R. No. 228088, December 4, 2019

4.6 Right to Prescribe Reasonable Rules and Regulations [valid until amended by
competent authority]

St. Luke’s Medical Center, Inc. v. Sanchez, G.R. No. 212054, March 11, 2015

Lagatic v. NLRC, G.R. No. 121004, January 28, 1998

Aparente, Sr. v. NLRC, G.R. No. 117652, April 27, 2000

Bicol Isarog Transport System, Inc. v. Relucio, G.R. No. 234725, September 16, 2020
4.7 Right to Determine the Qualifications and Fitness of Workers [for hiring and firing,
promotion, or reassignment]

Hongkong and Shanghai Banking Corporation Employees Union v. NLRC, G.R. No.
125038, November 6, 1997

FACTS:

The case involves the Hongkong & Shanghai Banking Corporation Employees Union
(Union) and its members against the National Labor Relations Commission (NLRC) and
the Hongkong & Shanghai Banking Corporation, Ltd. (HSBC). The Union represented
HSBC's rank-and-file employees and had a collective bargaining agreement (CBA)
effective from April 1, 1990, to March 31, 1993, for economic aspects, and until March
31, 1995, for representational aspects. On January 18, 1993, HSBC announced a job
evaluation program (JEP), which the Union opposed as an unfair labor practice (ULP).
The Union members began picketing on January 22, 1993, and continued their
concerted activities for 11 months. On December 19, 1993, the Union conducted a
strike vote, and on December 22, 1993, the Union's officers and members walked out
and gathered outside HSBC's offices, blocking entry and exit points. HSBC filed a
complaint to declare the strike illegal and issued return-to-work notices, which only 25
employees complied with. HSBC then terminated the individual petitioners on
December 27, 1993. The Labor Arbiter declared the strike illegal for non-compliance
with procedural requirements and deemed the Union members and officers to have lost
their employment status. The NLRC modified the ruling, declaring the dismissal of 18
Union members unlawful for lack of procedural due process. The Court of Appeals (CA)
affirmed the NLRC's decision with modifications, ordering HSBC to pay back wages and
separation pay to the 18 employees. The case was then brought to the Supreme Court
for review.

ISSUE:

Whether or not HSBC had the right to introduce the job evaluation program (JEP) as a
means to assess employee performance and qualifications, which was challenged by
the Union as an unfair labor practice.

RULING:

The Supreme Court ruled that HSBC had the right to implement the job evaluation
program (JEP) as part of its management prerogative to assess employee performance
and qualifications. However, the Court found that HSBC failed to comply with the
procedural due process requirements mandated by Article 277(b) of the Labor Code.

Article 277(b) requires that, before terminating an employee, the employer must provide
a written notice stating the grounds for termination and afford the employee ample
opportunity to be heard and defend themselves. This includes a detailed explanation of
the charges and a reasonable period for the employee to prepare their defense. The
Court emphasized that the failure to adhere to these procedural requirements rendered
the dismissals illegal.

In the case of HSBC, the failure to issue the proper notices and provide adequate
opportunity for employees to respond resulted in two types of illegal dismissals:

1. Dismissals without both substantive and procedural due

process: This included the terminations of certain
employees who were dismissed without any valid grounds or
procedural fairness.

2. Dismissals with valid grounds but lacking procedural due

process: This included employees who were terminated for
valid reasons but did not receive the proper notice or
opportunity to contest their dismissal.

The Court held that the employees dismissed without both substantive and procedural
due process were entitled to reinstatement with full back wages and other benefits from
the time of their wrongful dismissal until their reinstatement. For those dismissed with
valid grounds but without procedural due process, the Court awarded separation pay in
lieu of reinstatement due to the lengthy time since the strike.

Specifically, the 18 employees identified by the NLRC, who were dismissed without both
substantive and procedural due process, were entitled to full back wages and
separation pay. The remaining petitioners, who were involved in the strike, were entitled
to back wages excluding the period of the strike and separation pay equivalent to one
month per year of service.

Additionally, the Court awarded nominal damages of PHP 30,000.00 each to the
petitioners who were dismissed without procedural due process, as a form of indemnity
for the non-compliance with procedural safeguards.

Galang v. Boie Takeda Chemicals, Inc., G.R. No. 183934, July 20, 2016

FACTS:
Ernesto Galang and Ma. Olga Jasmin Chan were long-time employees of Boie Takeda
Chemicals, Inc. (BTCI). Galang joined the company in 1983 as a Medical
Representative and was promoted to District Sales Manager in 1988, while Chan
started in 1987 as a Medical Representative and later became a Professional Sales
Representative in 1990. Both held key roles and were responsible for managing sales
territories and expanding the company's client base. In 1999, BTCI faced financial
challenges due to the Asian financial crisis, leading them to implement a retrenchment
program to cut costs and streamline operations. On January 27, 1999, BTCI terminated
several employees, including Galang and Chan, citing redundancy and financial
difficulties. However, the petitioners argued that BTCI's financial situation was not as
dire as claimed, pointing out that the company continued hiring new employees and
launching products during this period. They alleged that the retrenchment was a pretext
for unjust termination, lacking valid cause and violating procedural due process. The
petitioners were not given prior notice of their retrenchment or any specific performance
issues that could have justified their termination. They filed a complaint for illegal
dismissal, claiming that their termination amounted to constructive dismissal.

ISSUE:

Whether the petitioners, Ernesto Galang and Ma. Olga Jasmin Chan, were
constructively dismissed from service by Boie Takeda Chemicals, Inc.

RULING:

The Supreme Court denied the petition for review on certiorari and ruled that the
petitioners, Ernesto Galang and Ma. Olga Jasmin Chan, were not constructively
dismissed by Boie Takeda Chemicals, Inc. The Court held that BTCI had validly
exercised its management prerogative to implement a retrenchment program due to
genuine financial difficulties. It found that the evidence presented by BTCI, including
financial statements and records, substantiated its claim of financial distress, justifying
the retrenchment. The Court noted that retrenchment is a recognized management
prerogative and a legitimate business decision in times of economic hardship, provided
that it is executed in good faith and with compliance to the requirements of law.

The Court determined that BTCI had complied with the procedural requirements
mandated by Article 283 of the Labor Code, which includes providing written notice to
the affected employees and the Department of Labor and Employment (DOLE) at least
one month before the retrenchment. Furthermore, the Court emphasized that the mere
hiring of new employees and product launches did not negate BTCI's financial
difficulties, as such actions were necessary for the company's survival and restructuring.
The Supreme Court concluded that the petitioners failed to prove that their dismissal
was attended by bad faith or was a mere pretext for illegal termination.

4.8 Right to Reorganize

Arrieta v. NLRC, G.R. No. 126230, September 18, 1997

FACTS:

Carmen Arrieta was employed as an Executive Secretary at Central Negros Electric

Cooperative, Inc. (CENECO) starting January 16, 1988, with a salary of P2,360.00. By
April 16, 1988, her position was upgraded to Executive Secretary with a salary of
P3,325.00. On August 28, 1989, she was detailed to the Engineering Department and
on April 19, 1991, her rank was upgraded to 9-1 with a monthly salary of P4,947.00.
However, on December 18, 1991, CENECO’s Board of Directors passed a resolution
abolishing all positions under the 1987 plantilla and adopted a new plantilla aimed at
reorganizing and streamlining operations. Under the new plantilla, Arrieta's position was
abolished, and she was appointed as Secretary in the Engineering Department with a
new grade of 6-5 but retained a similar salary. Arrieta refused to accept the new
assignment and filed a complaint claiming constructive dismissal.

ISSUE:

Whether or not the reorganization was a valid exercise of management prerogatives or

an unjust maneuver to dismiss Arrieta.

RULING:

The Supreme Court ruled that the reorganization undertaken by CENECO, including the
abolition of Arrieta's position, was a legitimate exercise of management prerogatives.
The Court emphasized that reorganization is within the rights of management and does
not necessarily constitute constructive dismissal as long as it is carried out in good faith
and without intent to unjustly dismiss employees. It was found that the reorganization
was applied to all employees and not aimed solely at Arrieta. The Court noted that
despite changes in her position and salary, Arrieta's basic monthly rate was maintained
through differentials, and there was no evidence of bad faith or arbitrary action by the
management. Consequently, Arrieta's claim of constructive dismissal was rejected, and
the decision of the National Labor Relations Commission (NLRC) affirming the validity of
her dismissal was upheld.

RATIO:
 ● The abolition of the position of Executive Secretary and Arrieta's subsequent
appointment to the Engineering Department was a valid exercise of management
prerogative.
● Management has the right to conduct its business affairs, including reorganizations and
the abolition of positions deemed unnecessary, provided there is no malice or bad faith.

Pantranco North Express, Inc. v. NLRC, G.R. No. 106516, September 21, 1999

FACTS
Pantranco North Express, Inc., a government-owned transportation corporation, faced
significant financial losses starting in 1972, despite attempts at rehabilitation and
management changes. By 1985, ownership had transferred to North Express Transport
Inc. (NETI), but financial difficulties continued. In 1986, the Presidential Commission on
Good Government (PCGG) sequestered the company’s assets and later lifted the
sequestration in 1988, leading to a privatization process. The company’s financial
situation remained dire, with unpaid liabilities and worsening losses. In 1992, Pantranco
applied for a management committee under the Securities and Exchange Commission
(SEC), which approved a rehabilitation program and ordered a suspension of all claims
against the company.

As part of the reorganization, the company implemented a job classification program in

April 1987, which involved reclassifying salaries and positions. Alfonso Ayento, who had
been employed with Pantranco since 1958 and was the Head of the Registration
Section with a Salary Grade of 11, was reclassified to a lower position of Registration
Assistant with Salary Grade 9. His new role came with reduced responsibilities, fewer
benefits, and a lower overall compensation compared to his previous position. Ayento
filed a complaint in January 1990, alleging unfair labor practices due to his demotion
and the reduction of his salary and benefits.

ISSUE:
Whether or not the reorganization undertaken by Pantranco, which led to the abolition of
Ayento’s position and his subsequent reclassification to a lower role, was a valid
exercise of management prerogative?

RULING:
The Supreme Court ruled in favor of Pantranco North Express, Inc. It determined that
the reorganization, including the abolition of Ayento’s position and his reclassification,
was a legitimate exercise of management prerogative, aimed at addressing the
company's severe financial problems. The Court found that the reorganization was
conducted in good faith and not to remove Ayento arbitrarily or replace him with favored
employees. It was concluded that Ayento’s position was genuinely abolished as part of
a necessary cost-cutting measure and that his lower position, although involving
reduced responsibilities and benefits, was a lawful result of the company’s
reorganization efforts. The Court set aside the NLRC’s resolutions that had favored
Ayento and dismissed his complaint, affirming that the actions taken by the company
were within its management rights and not indicative of bad faith or improper motive.

RATIO:

● The Court found no evidence of bad faith or arbitrary action by Pantranco, and the
management has the prerogative to reorganize and abolish positions as long as it is done
in good faith and without malice.
● The reorganization was implemented to address the company's financial difficulties, not
to ease out Ayento or replace him with a favored employee.

Smart Communications, Inc. v. Astorga, G.R. No. 148132, January 28, 2008

FACTS:

The case involves three consolidated petitions for review under Rule 45 of the Rules of
Court. At the heart of the issue is the dismissal of Regina M. Astorga from Smart
Communications, Inc. (SMART) and the related dispute over the ownership of a
company vehicle. Astorga worked as a District Sales Manager for SMART, earning a
monthly salary of P33,650.00 along with additional benefits. In February 1998, SMART
reorganized and outsourced its marketing and sales functions to a joint venture,
SMART-NTT Multimedia, Inc. (SNMI), leading to the abolition of Astorga's division, the
Corporate Sales Marketing Group/Fixed Services Division (CSMG/FSD). Despite her
performance evaluation placing her last, SMART offered Astorga a lower-ranked
position, which she declined. As a result, SMART issued a termination notice on March
3, 1998, effective April 3, 1998, citing redundancy.

Astorga contested the dismissal, arguing that the abolition of her division was illegal and
violated her right to security of tenure. SMART defended the dismissal as lawful, based
on redundancy, and filed a replevin suit for the recovery of a company vehicle given to
Astorga under a car plan. The Labor Arbiter initially ruled the dismissal illegal, but the
National Labor Relations Commission (NLRC) reversed this decision, upholding
SMART’s actions. The Court of Appeals (CA) later upheld the NLRC decision but
required SMART to pay indemnity for failing to provide proper notice.

ISSUE:
Whether or not SMART's reorganization and subsequent dismissal of Astorga were
lawful, specifically if the reorganization that led to Astorga’s dismissal was a valid
exercise of management prerogative and if the termination adhered to legal
requirements.

RULING:

The Supreme Court ruled that SMART's reorganization and the subsequent termination
of Astorga were valid, asserting that the reorganization was a legitimate exercise of
management prerogative aimed at improving efficiency. The Court held that SMART's
decision to declare Astorga’s position redundant was within its rights as an employer.
However, the Court noted that SMART failed to comply with the mandatory one-month
notice requirement before termination, which was a procedural deficiency. As a result,
while the dismissal was deemed not illegal, SMART was ordered to pay Astorga
indemnity for the notice violation. Additionally, the Court affirmed that the replevin case
involving the recovery of the company vehicle was a civil matter and properly within the
jurisdiction of the regular courts, not the labor tribunal.

RATIO:

The reorganization undertaken by SMART is for no purpose other than its declared
objective – as a labor and cost savings device.

Pantoja v. SCA Hygiene Products Corporation, G.R. No. 163554, April 23, 2010

FACTS:

Dannie M. Pantoja was employed by SCA Hygiene Products Corporation as a utility

man and later as a back tender at Paper Mill No. 4. On March 27, 1999, the company
announced a reorganization plan due to financial difficulties caused by low sales and
orders for industrial paper products. The plan included the closure of Paper Mill No. 4,
which was set to shut down on May 5, 1999. SCA offered Pantoja a transfer to Paper
Mill No. 5 with the same terms and conditions of employment. Pantoja rejected this
transfer offer, leading to his termination due to redundancy, as his position at Paper Mill
No. 4 was made redundant by the closure. He received separation pay amounting to
₱356,335.20, signed a release and quitclaim, and his termination was officially reported
to the Department of Labor and Employment (DOLE) along with a list of other
terminated employees. Pantoja later filed a complaint for illegal dismissal on June 20,
2000, alleging that Paper Mill No. 4 continued to operate and that the quitclaim was
signed under duress, making his dismissal unlawful.

ISSUE:
Whether or not the reorganization and subsequent termination were done in bad faith or
if the company had a valid basis for the redundancy and the termination of Pantoja’s
employment.

RULING:

The Supreme Court upheld the decision of the Court of Appeals, which had reinstated
the Labor Arbiter’s ruling. The Court found that SCA Hygiene Products Corporation
exercised its management prerogative in good faith. The reorganization, which included
the closure of Paper Mill No. 4 and the offer of a transfer to Paper Mill No. 5, was
deemed a legitimate business decision driven by financial necessity. The Court rejected
Pantoja’s claim of illegal dismissal, noting that his voluntary acceptance of separation
pay and refusal of the transfer offer negated his argument of unlawful termination.
Furthermore, the Court determined that the subsequent resumption of operations at
Paper Mill No. 4 in 2000 did not invalidate the initial reorganization decision of 1999.
The ruling affirmed that the quitclaim was valid, as it was executed voluntarily and with
reasonable consideration. The Court concluded that there was no evidence of bad faith
or arbitrary action on the part of the employer.

RATIO:

The respondent's exercise of management prerogative in streamlining operations and offering the
petitioner a transfer or separation option was done for the advancement of its interest and not to
defeat the lawful rights of the employee.

4.9 Right to Contract-Out Services

Manila Electric Company v. Quisumbing, G.R. No. 127598, February 22, 2000

FACTS:

Manila Electric Company (Meralco), a major utility provider, aimed to contract out
specific services to third-party providers as part of its strategy to improve efficiency and
reduce costs. The Secretary of Labor issued an order mandating that Meralco consult
with the employees' union before proceeding with any contracting out arrangement
lasting six months or more. This requirement was intended to ensure that the union was
aware of and could address potential impacts on employees’ job security and working
conditions.

Meralco opposed the consultation requirement, arguing that it infringed upon the
company's management prerogative. The company maintained that the decision to
contract out services was a strategic business decision that should be within its
discretion without additional procedural constraints. Meralco asserted that such a
requirement would limit its operational flexibility and affect its ability to make necessary
business decisions efficiently.

The union supported the Secretary’s order, emphasizing that consultation was essential
for maintaining transparency and addressing employee concerns regarding the potential
effects of contracting out services. The dispute raised questions about the balance
between management’s rights to make operational decisions and the need to protect
employee interests through consultation processes.

ISSUE:

Whether or not the Secretary of Labor's requirement for Meralco to consult with the
union before contracting out services for six months or more was valid and consistent
with management's prerogative to make business decisions.

RULING:

The Court invalidated the Secretary of Labor’s requirement that Meralco must consult
with the union before contracting out services for six months or more. The Court
acknowledged that while employers should inform employees about significant changes
affecting their job security and working conditions, the imposition of mandatory
consultation for management decisions such as contracting out services was excessive.

The Court recognized contracting out services as an exercise of management

prerogative, essential for maintaining operational efficiency and economic viability. It
stressed that while transparency and communication with employees are important for
fostering good labor-management relations, the ultimate decision-making power
regarding business operations should remain with management. The Court underscored
that unless there is evidence of management acting in bad faith or arbitrarily, it would
not interfere with management's business judgment.

The ruling reinforced that contracting out services falls within the employer’s inherent
freedom to regulate its operations. The decision to contract out should not be unduly
constrained by additional procedural requirements such as mandatory consultations
with the union. Instead, the Court emphasized that management's decisions should be
made in good faith and within the bounds of existing laws and fair practices, ensuring
that any issues arising from such decisions are addressed through appropriate legal
channels if necessary.

RATIO:
“Contracting out of services is an exercise of business judgment or management
prerogative. Absent proof that management acted in a malicious or arbitrary manner,
the Court will not interfere with the exercise of judgment by an employer”

Bankard, Inc. v. NLRC-First Division, G.R. No. 171664, March 6, 2013

Facts:

On June 26, 2000, the Bankard Employees Union-AWATU (Union) filed a Notice of
Strike against Bankard, Inc. (Bankard), accusing it of unfair labor practices related to job
contractualization, outsourcing, and manpower rationalization. The Union's allegations
centered on Bankard’s implementation of a Manpower Rationalization Program (MRP)
in December 1999, which led to a reduction in regular employees through voluntary
resignations and severance packages. Subsequently, Bankard contracted out some of
these positions to an independent agency, which the Union argued was a tactic to
reduce union membership and interfere with their right to self-organization.

Issue:

Whether Bankard’s decision to contract out services previously performed by union

members constituted an unfair labor practice under Article 248(c) of the Labor Code.

Ruling:

The National Labor Relations Commission (NLRC) initially ruled that Bankard’s actions
did constitute unfair labor practices, as they effectively reduced union membership and
impaired the Union’s ability to organize. The Court of Appeals upheld this decision,
agreeing that Bankard’s actions had unfairly interfered with the Union’s rights.

However, the Supreme Court reversed the lower courts' decisions. It concluded that the
Union failed to provide substantial evidence that Bankard’s outsourcing was intended to
undermine union membership or obstruct the employees' right to self-organization. The
Court emphasized that contracting out services is generally within the management
prerogative, and without evidence of malicious intent or discrimination, such actions do
not constitute unfair labor practices. Consequently, the Court declared that Bankard had
not committed any unfair labor practices under the Labor Code.

Aliviado v. Procter & Gamble Philippines, Inc., G.R. No. 160506, March 9, 2010
Facts:

The petitioners worked as merchandisers for P&G, with employment periods varying
from 1982 to 1993. They were hired under successive short-term contracts with
Promm-Gem or SAPS, working at various retail outlets to promote and merchandise
P&G products. Their wages were paid by Promm-Gem or SAPS, which also imposed
disciplinary measures on them.

P&G, primarily engaged in manufacturing and selling consumer products, contracted

Promm-Gem and SAPS to handle the promotion and merchandising of its products. In
December 1991, the petitioners filed a complaint against P&G, claiming they should be
regular employees entitled to benefits and challenging their subsequent dismissal.

Issue:

Whether P&G was the true employer of the petitioners and whether their dismissals
were lawful.

Ruling:

The Labor Arbiter dismissed the petitioners' complaint, finding no employer-employee

relationship between the petitioners and P&G. The NLRC upheld this decision, and the
Court of Appeals affirmed the NLRC's ruling but modified it to grant service incentive
leave pay.

The Supreme Court reviewed the case, focusing on the legality of the contracting
arrangements. It determined that Promm-Gem was a legitimate independent contractor,
given its substantial capital and independent operations. Conversely, SAPS was found
to be a labor-only contractor due to its minimal capital and lack of substantial
investment, thus making P&G the employer for those petitioners placed by SAPS.

The Court ruled that the petitioners who worked through SAPS were employees of P&G
and were illegally dismissed, as P&G did not prove the legality of the dismissals. For
those employed by Promm-Gem, the Court found no valid cause for their dismissal and
thus deemed it illegal as well. The petitioners were entitled to reinstatement with full
back wages, service incentive leave pay, and other benefits. Additionally, moral
damages and attorney's fees were awarded to those dismissed by P&G due to the
oppressive manner of their termination.

Mejila v. Wrigley Philippines, Inc., G.R. No. 199469, September 11, 2019
Facts:

WPI, a company engaged in the manufacturing and marketing of chewing gum,

employed Gertrudes D. Mejila as an occupational health practitioner starting in April
2002. Her status was initially contractual but became regular as of January 1, 2007. On
October 26, 2007, WPI informed Mejila that her position was being abolished due to a
manpower rationalization program aimed at improving cost efficiency. WPI's decision
included engaging an external contractor, Activeone Health, Inc., to manage clinic
operations starting November 1, 2007. Despite Mejila receiving separation pay and
other benefits, she contested the dismissal as illegal and claimed that WPI failed to
comply with procedural due process.

Issues:

1. Whether WPI's dismissal of Mejila on grounds of redundancy was justified.

2. Whether WPI properly observed the procedural requirements mandated by labor
laws, specifically concerning the notice of termination to both the affected
employee and the Department of Labor and Employment (DOLE).

Ruling:

The Court of Appeals affirmed the findings of the National Labor Relations Commission
(NLRC) that WPI's dismissal of Mejila was not illegal, supporting the company's
rationale for the redundancy and its business decision to outsource clinic operations.
The CA and NLRC found that WPI had provided a valid cause for redundancy and that
the decision to outsource was a legitimate business judgment aimed at enhancing
operational efficiency. However, the CA also determined that WPI failed to comply with
procedural due process because the notice of termination was improperly served to the
DOLE Rizal Field Office instead of the Regional Office. This failure led to the awarding
of nominal damages to Mejila. The Court upheld the CA's decision but modified it by
deleting the award of attorney's fees, as no unlawful withholding of wages was proven.

The case underscores the principle that while employers have the right to contract out
services and manage redundancies based on business needs, they must strictly adhere
to procedural requirements to ensure the legality of terminations.

4.10 Right to Reasonable Returns on Investment and To Expansion and Growth

Manatad v. Philippine Telegraph and Telephone Corporation, G.R.No. 172363,

March 7, 2008
Facts:

Juvy M. Manatad was employed by the Philippine Telegraph and Telephone Corporation
(PT&T) as a junior clerk in September 1988 and was later promoted to Account
Executive. On September 1, 1998, PT&T temporarily laid off Manatad due to a
Temporary Staff Reduction Program implemented in response to significant business
reverses. On November 16, 1998, Manatad was offered a separation package by PT&T,
which she declined. On February 26, 1999, she received a Notice of Retrenchment,
officially terminating her employment effective February 16, 1999. Manatad then filed a
complaint for illegal dismissal, claiming that the retrenchment was unjustified since
PT&T was reportedly making profits during the relevant period.

PT&T countered that the retrenchment was necessary due to substantial financial
losses, providing audited financial statements as evidence. The Labor Arbiter ruled that
the retrenchment was invalid, which was affirmed with modifications by the NLRC. The
Court of Appeals, however, reversed these decisions, supporting the validity of the
retrenchment.

Issue:

Whether the retrenchment program implemented by PT&T was valid and lawful under
the Labor Code, given Manatad’s claim that the company was not suffering significant
financial losses.

Ruling:

The Supreme Court affirmed the Court of Appeals' decision, ruling that the retrenchment
program was valid. The Court found that PT&T had indeed experienced serious
financial losses, as demonstrated by the audited financial statements, which justified the
retrenchment. The Court also noted that PT&T had complied with the necessary legal
requirements for retrenchment, including providing proper notice and an adequate
separation package. Consequently, Manatad's dismissal was deemed lawful, and she
was not entitled to backwages but was entitled to the separation pay as outlined in
PT&T's separation package.

Del Rosario v. CW Marketing & Development Corporation, G.R. No. 211105,

February 20, 2019

Facts:
Ruby C. Del Rosario worked for CW Marketing & Development Corporation from 2007,
progressing from Sales Consultant to Sales Supervisor. She was stationed at the Home
Depot, Balintawak Branch, and was provided a computer connected to a shared
network, including a printer/scanner. This setup allowed other employees to use her
computer for printing and scanning.

In October 2010, CW Marketing received a report from HSBC regarding falsified

payslips and identification cards purportedly issued by their branch. An internal
investigation traced these documents to Del Rosario’s computer. She was issued a
notice to explain her alleged role in the falsifications, but denied involvement, admitting
only to allowing others to use her computer. Despite this, CW Marketing issued another
notice citing her negligence and unauthorized use of company property.

Del Rosario’s employment was terminated on November 30, 2010. She then filed a
complaint for illegal dismissal, non-payment of wages, and other claims. The Labor
Arbiter initially ruled in her favor, declaring her dismissal illegal. However, both CW
Marketing and Del Rosario appealed this decision.

Issue:

Whether CW Marketing had just cause to dismiss Del Rosario based on loss of trust
and confidence, particularly in light of her role as a supervisor and the alleged misuse of
company property under her watch.

Ruling:

The NLRC and subsequently the Court of Appeals affirmed the validity of Del Rosario’s
dismissal. They found that, as a Sales Supervisor, she held a position of trust and was
responsible for the proper use of company property. Her admission of allowing others to
use her computer and her awareness of the misuse demonstrated negligence and
failure to protect the company’s assets. The CA concluded that CW Marketing’s
decision to terminate Del Rosario was justified due to her breach of trust, which had a
detrimental impact on the company's reputation and operational integrity. The ruling
emphasized the employer's right to ensure that employees act in ways that protect
company investments and support its growth, validating the dismissal as a reasonable
exercise of management prerogative.

4.11 Right to Grant Bonus

Eastern Telecommunications Philippines, Inc. v. Easter Telecoms Employees
Union, G.R. No. 185665, February 8, 2012

Facts:

Eastern Telecommunications Philippines, Inc. (ETPI), which provides

telecommunications services and employs around 400 people, had a collective
bargaining agreement (CBA) with Eastern Telecoms Employees Union (ETEU), its
certified union. The CBA, including a Side Agreement effective from 2001 to 2004,
stipulated the payment of 14th, 15th, and 16th month bonuses. However, in 2003, ETPI
planned to defer these bonuses, citing financial struggles that began in 2000. Despite
negotiating a deferred payment schedule, ETPI later declared it would not pay the
bonuses until a compulsory arbitration resolved the dispute. ETEU challenged this
decision, claiming it was an unfair labor practice and arguing that the bonuses were
contractual obligations, not discretionary.

Issue:

Whether ETPI was bound to pay the 14th, 15th, and 16th month bonuses for 2003 and
the 14th month bonus for 2004, as stipulated in the CBA and Side Agreement, despite
its financial difficulties.

Ruling:

The Court of Appeals ruled in favor of ETEU, determining that ETPI was contractually
obligated to pay the bonuses as specified in the CBA Side Agreements. The Court held
that these bonuses had become a contractual obligation and part of the employees'
benefits due to long-standing company practice. It rejected ETPI’s argument that
financial distress could excuse it from this obligation, emphasizing that the bonuses
were not contingent on the company's profitability. The ruling affirmed that such benefits
could not be unilaterally withdrawn, as this would violate labor laws protecting
employees' rights to benefits they have regularly received.

The decision underscores the principle that once a company practice or benefit
becomes established through a contractual agreement or long-term practice, it cannot
be arbitrarily discontinued, even in the face of financial hardship.

Mega Magazines Publications, Inc. v. Defensor, G.R. No. 162021, June 16, 2014
Facts:

Margaret A. Defensor was initially hired by MMPI in 1996 and promoted to Group
Publisher with a monthly salary of ₱60,000. In February 1999, she proposed a year-end
commission structure and a special incentive plan for herself and the Sales Department.
Her proposal included specific commission percentages and incentive bonuses tied to
the company's revenue. MMPI’s Executive Vice-President, Sarita V. Yap, responded
with counter-proposals, revising the schedule of commissions and incentives. Yap’s
response, dated December 8, 1999, formalized the approval of a revised incentive
scheme.

Defensor resigned in October 1999, and after leaving MMPI, she filed a complaint in
May 2000 seeking payment for commissions and incentive bonuses she believed were
due. The Labor Arbiter dismissed her claim, ruling that there was no agreement on the
incentive terms and that MMPI’s documented revenue did not meet the targets required
for the bonuses.

Issue:

Whether Defensor was entitled to the commissions and special incentive bonuses she
claimed, based on MMPI’s actual revenue for 1999.

Ruling:

The Court found that while bonuses and incentives are generally considered
management prerogatives and not guaranteed entitlements, MMPI had effectively
agreed to the incentive scheme by negotiating the terms and issuing a formal approval
memorandum. The Court agreed with the CA’s view that MMPI’s actions indicated an
acknowledgment of the incentive scheme, though the specific details remained
contested. The CA's decision to remand the case to the NLRC for further evidence was
reversed by the Supreme Court, which found sufficient evidence in the form of Tabingo's
memorandum and affidavit to support Defensor’s claims. Thus, the Court ruled in favor
of Defensor, granting her the commissions and bonus based on the achieved revenue
targets. MMPI was ordered to pay Defensor a total of ₱189,583.12 for her commissions
and bonus.

4.12 Right to Prohibit Employees from Marrying Employees of Competitor Company

Duncan Association of Detailman-PTGWO v. Glaxo Wellcome Philippines, Inc., G.R.

No. 162994, September 17, 2004
FACTS: Petitioner, Pedro Tecson was hired by respondent Glaxo Wellcome Philippines,
Inc. as a medical representative. Upon employment, petitioner signed a contract of
Glaxo’s Employee Code of Conduct agreeing to disclose management any existing or
future relationships with co-employees or employees of competing drug companies and
to transfer or resign if such relationships posed a conflict of interest. Petitioner was
assigned to the Camarines Sur-Camarines Norte sales area. He subsequently entered
into a romantic relationship and eventually got married with Bettsy, an employee as a
branch coordinator of Astra Pharmaceuticals in Albay which is a competitor of Glaxo.
Thereafter, Petitioner was transferred to the Butuan City-Surigao City-Agusan del Sur
sales area, which he contested. Despite reminders from his superiors about the conflict
of interest, Glaxo's Grievance Committee and later to voluntary arbitration, where the
National Conciliation and Mediation Board upheld Glaxo's policy and transfer decision.
Petitioner was not able to resolve the issue and led to his alleged constructive
dismissal.

ISSUE: Whether or not Glaxo’s policy prohibiting its employees from marrying an
employee of a competitor’s company is valid

RATIO: The challenged company policy does not violate the equal protection clause of
the Constitution. It is a settled principle that the commands of the equal protection
clause are addressed only to the state or those acting under color of its authority.

An employment contract providing for disclosure to management of any existing or

future relationships with competitor companies is a valid exercise of management
prerogatives.

RULING: Yes. The Supreme Court ruled that Glaxo's policy is valid. The prohibition
aimed at preventing a competitor company from gaining access to its secrets,
procedures and policies and protecting its trade secrets, manufacturing formulas,
marketing strategies, and other confidential information from competitors. The policy
does not prohibit marriage per se but only prescribes existing or future relationships with
employees of competitor companies. It is also reasonable given the highly competitive
nature of the pharmaceutical industry and the potential conflict of interest. The Supreme
Court upheld the validity of Glaxo's policy prohibiting employees from marrying
employees of competitor companies, ruling that it does not violate the equal protection
clause.

Star Paper Corporation v. Simbol, G.R. No. 164774, April 12, 2006

FACTS: Petitioner Star Paper Corporation engaged in trading principally of paper

products. The company’s Manager of the Personnel and Administration Department is
Josephine Ongsitco while its Managing Director is Sebastian Chua. The respondents
Ronaldo D. Simbol, Wilfreda N. Comia and Lorna E. Estrella were all regular employees
of the company. Simbol met Alma Dayrit, also an employee of the company, whom he
married. Simbol resigned as it was advised by Ongsitco that one must resign should
they decide to get married pursuant to the company policy. Later on, Comia met Howard
Comia, a co-employee, whom she married. Ongsitco likewise reminded them that
pursuant to company policy, Comia resigned. Estrella met Luisito Zuñiga, also a
co-worker. Petitioners stated that Zuñiga, a married man, got Estrella pregnant. The
respondents each signed a Release and Confirmation Agreement. Estrella met with an
accident and was hospitalized for twenty-one days. When she returned to work, found
out that her name was on-hold at the gate, and she was being dismissed for immoral
conduct. Respondents later filed a complaint for unfair labor practice, constructive
dismissal, separation pay and attorney’s fees. They averred that the aforementioned
company policy is illegal and contravenes Article 136 of the Labor Code. The Labor
Arbiter dismissed the complaint for lack of merit. The NLRC affirmed the decision of the
Labor Arbiter. However, the Court of Appeals reversed the NLRC decision.

ISSUE: Whether or not petitioner’s policy was a valid exercise of management

prerogative

RATIO: The policy contravened Article 136 of the Labor Code, which prohibits
employers from requiring a woman employee to resign upon getting married.

Article 136 of the Labor Code which provides: It shall be unlawful for an employer to
require as a condition of employment or continuation of employment that a woman
employee shall not get married, or to stipulate expressly or tacitly that upon getting
married a woman employee shall be deemed resigned or separated, or to actually
dismiss, discharge, discriminate or otherwise prejudice a woman employee merely by
reason of her marriage.

RULING: The Supreme Court ruled that the company policy banning spouses from
working in the same company is discriminatory and invalid. The policy violated the
constitutional rights of the employees under the 1987 Philippine Constitution, which
affirms labor as a primary social economic force and mandates the State to protect the
rights of workers and promote their welfare. The courts also found the lack of
justification that the policy was not justified by any reasonable business necessity. The
failure of petitioners to prove a legitimate business concern in imposing the questioned
policy cannot prejudice the employee’s right to be free from arbitrary discrimination. The
Supreme Court found that the respondents' resignations were not voluntary, as they
were compelled by the illegal policy.

4.13 Non-Compete Clause

Dai-Chi Electronics Manufacturing Corporation v. Villarama, G.R. No. 112940,
November 21, 1994

FACTS: The petitioner, Dai-Chi Electronics Manufacturing Corporation, filed a complaint

for damages against former employee Adonis C. Limjuco. The complaint was filed in the
RTC of Pasig, Metro Manila, Branch 156, on July 29, 1993. Limjuco allegedly violated a
clause in their Contract of Employment dated August 27, 1990, which prohibited him
from working for a competitor for two years post-resignation. Limjuco resigned on
January 30, 1992, but subsequently joined Angel Sound Philippines Corporation, a
competitor, within the restricted period. Dai-Chi sought liquidated damages of
P100,000.00 as stipulated in the contract. The RTC dismissed the complaint on
September 20, 1993, citing lack of jurisdiction, stating the matter fell under the
jurisdiction of the Labor Arbiter as per Article 217(4) of the Labor Code. Dai-Chi's motion
for reconsideration was denied on November 29, 1993. Dai-Chi then filed a petition for
review on certiorari under Rule 45 of the Revised Rules of Court, arguing the jurisdiction
issue.

ISSUE: Whether or not petitioner’s claim for damages one arising from
employer-employee relations?

RATIO: No. The Supreme Court held that the claim for damages did not arise from
employer-employee relations but from a breach of a contractual obligation, a civil
dispute. The claim was based on a post-employment contractual provision, falling within
Civil Law.

Article 217 of the Labor Code, amended by R.A. No. 6715, was cited, which grants
Labor Arbiters jurisdiction over claims arising from employer-employee relations. The
Court clarified that for a claim to be under the Labor Arbiter's jurisdiction, it must have a
reasonable causal connection with claims under Article 217.

RULING: The Supreme Court ruled in favor of Dai-Chi Electronics Manufacturing

Corporation. The Orders of the RTC dated September 20, 1993, and November 29,
1993, were set aside.

Rivera v. Solidbank Corporation, G.R. No. 163269, April 19, 2006

FACTS: Petitioner Rolando C. Rivera was employed by Solidbank Corporation since

July 1, 1977. He held various positions and eventually became Manager of the Credit
Investigation and Appraisal Division of the Consumer's Banking Group. In December
1994, Solidbank offered two retirement programs: the Ordinary Retirement Program
(ORP) and the Special Retirement Program (SRP). Rivera, then 45 years old, was
ineligible for the ORP but qualified for the SRP, entitling him to P1,045,258.95 in
benefits.

Rivera opted for early retirement under the SRP to focus on a poultry business he
co-owned in Cavite. Solidbank approved his application, and he received a net amount
of P963,619.28 after deductions. Rivera signed an undated Release, Waiver, and
Quitclaim, and an Undertaking, promising not to seek employment with a competitor
bank for one year from February 28, 1995. On May 1, 1995, Rivera joined Equitable
Banking Corporation as Manager of its Credit Investigation and Appraisal Division.
Solidbank demanded the return of the retirement benefits, alleging Rivera breached the
Undertaking. When Rivera refused, Solidbank filed a complaint for a sum of money with
a prayer for a writ of preliminary attachment before the Regional Trial Court (RTC) of
Manila. The RTC issued a summary judgment in favor of Solidbank, ordering Rivera to
return the P963,619.28 with 12% interest per annum. Rivera appealed to the Court of
Appeals (CA), which partially granted the appeal by discharging the attachment on
Rivera's family home but upheld the summary judgment. Rivera then brought the case
to the Supreme Court.

ISSUE: Whether or not the post-retirement competitive employment ban is reasonable.

RATIO: The post-retirement competitive employment ban is unreasonable because it

has no geographical limits. The Supreme Court held restrictive covenants must be
reasonable in terms of time, space, and the types of activity prescribed. Thus, in
determining whether the contract is reasonable or not, the trial court should consider the
following factors: (a) whether the covenant protects a legitimate business interest of the
employer; (b) whether the covenant creates an undue burden on the employee; (c)
whether the covenant is injurious to the public welfare; (d) whether the time and
territorial limitations contained in the covenant are reasonable; and (e) whether the
restraint is reasonable from the standpoint of public policy.

RULING: The Supreme Court granted the petition. The decision of the Court of Appeals
was set aside.

Tiu v. Platinum Plans Phil., Inc., G.R. No. 163512, February 28, 2007

Facts: Respondent, a domestic corporation engaged in the pre-need industry, re-hired

petitioner as Senior Assistant Vice-President and Territorial Operations Head in charge
of its Hongkong and Asean operations. The parties executed a contract of employment
valid for five years. 2 years after petitioner stopped reporting for work. She later became
Vice-President for Sales of another pre-need corporation. Respondent filed a case
against petitioner violating the non-involvement clause in her contract of employment.
Petitioner argued that the non-involvement clause was unenforceable for being against
public order or public policy. She further claims that at the time she was recruited she
already possessed the knowledge and expertise required in the pre-need industry and
respondent benefited tremendously from it. Court of Appeals and trial court ruled
against Tiu. It reasoned that petitioner entered into the contract on her own will and
volition. Thus, she bound herself to fulfill not only what was expressly stipulated in the
contract, but also all its consequences that were not against good faith, usage, and law.
The appellate court also ruled that the stipulation prohibiting non-employment for two
years was valid and enforceable considering the nature of respondent’s business.

Issue: Whether or not the non-involvement clause constitutes a valid waiver.

Held: Yes. Article 1159 of the Civil Code provides that obligations arising from contracts
have the force of law between the contracting parties and should be complied with in
good faith. Courts cannot stipulate for the parties nor amend their agreement where the
same does not contravene law, morals, good customs, public order or public policy, for
to do so would be to alter the real intent of the parties, and would run contrary to the
function of the courts to give force and effect thereto. Not being contrary to public policy,
the non-involvement clause, which petitioner and respondent freely agreed upon, has
the force of law between them, and thus, should be complied with in good faith. Thus,
as held by the trial court and the Court of Appeals, petitioner is bound to pay respondent
P100,000 as liquidated damages. While we have equitably reduced liquidated damages
in certain cases, we cannot do so in this case, since it appears that even from the start,
petitioner had not shown the least intention to fulfill the non-involvement clause in good
faith. Thus, as held by the trial court and the Court of Appeals, petitioner is bound to pay
respondent P100,000 as liquidated damages. While we have equitably reduced
liquidated damages in certain cases, we cannot do so in this case, since it appears that
even from the start, petitioner had not shown the least intention to fulfill the
non-involvement clause in good faith. Thus, as held by the trial court and the Court of
Appeals, petitioner is bound to pay respondent P100,000 as liquidated damages. While
we have equitably reduced liquidated damages in certain cases, we cannot do so in this
case, since it appears that even from the start, petitioner had not shown the least
intention to fulfill the non-involvement clause in good faith.The petition is DENIED for
lack of merit.

Century Properties, Inc. v. Babiano, G.R. No. 220978, July 5, 2016

FACTS: Century Properties, Inc. (CPI) hired Edwin J. Babiano on October 2, 2002, as
Director of Sales, later promoting him to Vice President for Sales effective September 1,
2007. Babiano's employment contract included a "Confidentiality of Documents and
Non-Compete Clause," barring him from disclosing confidential information and working
for competitors during his employment and for one year post-resignation or termination.

Emma B. Concepcion was initially hired as a Sales Agent and later promoted to Project
Director on September 1, 2007. Concepcion's contract, titled "Contract of Agency for
Project Director," stated no employer-employee relationship existed between her and
CPI. Both Babiano and Concepcion resigned in February 2009, with Babiano joining a
competitor, First Global BYO Development Corporation, as Vice President.

CPI terminated Babiano for breaching the non-compete clause and being absent
without official leave (AWOL). Both respondents filed a complaint for unpaid
commissions and damages before the National Labor Relations Commission, which
ruled in their favor, awarding them unpaid commissions. CPI contested the NLRC's
decision, leading to a series of appeals culminating in the Court of Appeals (CA)
affirming the NLRC's ruling with modifications. CPI then petitioned the Supreme Court
for review.

ISSUE: Whether the “Confidentiality of Documents and Non-Compete Clause” in

Babiano’s contract justified the forfeiture of his commissions.

RATIO: Yes. The Supreme Court emphasized that the Confidentiality of Documents and
Non-Compete Clause in Babiano's contract was clear and unambiguous, applying
during and after his employment. Babiano's actions of seeking and accepting a position
with a competitor while still employed by CPI constituted a breach of this clause,
justifying the forfeiture of his commissions. The Supreme Court partly granted the
petition, finding the “Confidentiality of Documents and Non-Compete Clause” clear and
applicable during Babiano’s employment, justifying the forfeiture of his commissions due
to his violation of this clause. The Court acknowledged an employer-employee
relationship between Concepcion and CPI, supported by CPI’s control and power over
Concepcion, her regular remuneration labeled as “subsidy,” and the company’s power to
hire and fire her. It found no merit in CPI’s contention against the CA’s recomputation of
Concepcion’s unpaid commissions, emphasizing that the recomputation was necessary
to provide full justice and not impair Concepcion’s substantive rights.

RULING : The Supreme Court partly granted CPI's petition, modifying the CA's decision
to deem Babiano's commissions forfeited. The Court ruled that Babiano's commissions
were properly forfeited due to his breach of the non-compete clause. The Court affirmed
the existence of an employer-employee relationship between Concepcion and CPI,
validating the labor tribunals' jurisdiction over her claims.
4.14 Right to Close establishment and Reduce Personnel

Installation of Labor-Saving Devices - Magnolia Dairy Products Corp. v. NLRC, G.R. No.
114952, January 29, 1996

Redundancy - Coca-Cola Femsa Philippines v. Macapagal, G.R. No. 232669, July 29,
2019

Topic: Redundancy
Case Title: Coca-Cola Femsa Philippines v. Macapagal, G.R. No. 232669, July 29,
2019

Facts

Thirteen respondents were employed by Coca-Cola Femsa Philippines, Inc. at its

manufacturing plant in San Fernando City, Pampanga, as part of the Product Availability
Group (PAG). In January 2011, the Company announced plans to abolish PAG, its
warehouses, and related positions, outsourcing remaining functions to The Redsystem
Company, Inc. (TRCI). Respondents were terminated due to redundancy effective
March 1, 2011, and filed a complaint for illegal dismissal, claiming the redundancy
program was in bad faith and TRCI was not an independent contractor but a
wholly-owned subsidiary.

The Company argued that the redundancy was a legitimate business decision to
improve efficiency by outsourcing to TRCI. Notices were provided to both the
employees and the Department of Labor and Employment (DOLE), and separation pay
was given, with respondents signing notarized Deeds of Receipt, Waiver, and Quitclaim.
The Company was surprised by the illegal dismissal complaint filed nearly two years
later, emphasizing that the redundancy affected all logistics operations positions
nationwide.

Issue

Whether or not the CA correctly reversed the NLRC's ruling upholding the validity of the
redundancy program?

Ruling

No. Redundancy is an authorized cause for termination of employment under Article

298 (formerly, Article 283) of the Labor Code. It exists when "the services of an
employee are in excess of what is reasonably demanded by the actual requirements of
the enterprise." It can be due to "a number of factors, such as the overhiring of workers,
a decrease in the volume of business or the dropping of a particular line or service
previously manufactured or undertaken by the enterprise." The determination of whether
the employees' services are no longer necessary or sustainable, and therefore, properly
terminable for redundancy, is an exercise of business judgment. In making such
decision, however, management must not violate the law nor declare redundancy
without sufficient basis. To ensure that the dismissal is not implemented arbitrarily,
jurisprudence requires the employer to prove, among others, its good faith in abolishing
the redundant positions as well as the existence of 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, but are not limited to: (a) less preferred
status, i.e., temporary employee; (b) efficiency; and (c) seniority.

The Labor Arbiter (LA) initially found that the redundancy program by Coca-Cola Femsa
Philippines, Inc. was implemented in bad faith, resulting in illegal dismissal, and ordered
the reinstatement of the employees with backwages and other benefits. The National
Labor Relations Commission (NLRC) later reversed this ruling, stating the redundancy
was conducted in good faith to achieve a more cost-effective operation, thus upholding
the dismissals. However, the Court of Appeals (CA) overturned the NLRC's decision,
arguing that the company failed to demonstrate fair and reasonable criteria for selecting
positions to be abolished. Ultimately, the Supreme Court ruled in favor of the NLRC,
concluding that the redundancy program was valid, executed in good faith, and based
on a legitimate business decision to streamline operations. The Court reinstated the
NLRC's decision, acknowledging the legality of the dismissals and the validity of the
quitclaims.

The Court found that the termination of the respondents was due to the simplification of
the company's distribution systems. Despite improved sales volumes, the company's
operating income remained negative, prompting a review of distribution channels to
reduce costs and enhance efficiency. As a result, all positions under PAG, including
those held by the respondents, were abolished. The Court ruled that the CA erred in
requiring the company to select which employees to dismiss based on fair and
reasonable criteria, as all PAG positions were eliminated.

Retrenchment - International Management Services v. Logarta, G.R. No. 163657, April

18, 2012
Topic: Retrenchment
Case Title: International Management Services v. Logarta, G.R. No. 163657, April
18, 2012

Facts

In 1997, International Management Services (IMS), operated by Marilyn C. Pascual,

sent Roel P. Logarta to work for Petrocon Arabia Limited in Saudi Arabia. Logarta was
employed as a Piping Designer until June 1998 when Petrocon, facing a 40% reduction
in work from Saudi Aramco, terminated his contract. Petrocon provided him with a
30-day notice, final paycheck, and a letter of intent for future employment. Upon
returning to the Philippines, Logarta filed a complaint with the NLRC and sought to
recover his unearned salaries covering the unexpired portion of his employment
contract with Petrocon on the ground that he was illegally dismissed. The Labor Arbiter
ruled in his favor, awarding him US$5,600, later reduced to US$4,800 by the NLRC.
IMS contested this decision, arguing proper retrenchment procedures were followed,
but the Court of Appeals dismissed the petition, affirming the NLRC's decision.

Issues

1. Whether or not the retrenchment of Roel P. Logarta by his employer, Petrocon Arabia
Limited (Petrocon), through the recruitment agency, International Management Services
(IMS) was valid?

2. Whether or not proper notice to the DOLE within 30 days prior to the intended date of
retrenchment is necessary and must be complied with despite the fact that respondent
is an overseas Filipino worker?

3. Having not complied with the notice requirement, whether or not the absence of
proper notice to DOLE should nullify the retrenchment or render it illegal or ineffectual?

Ruling

1. Yes. The retrenchment of Roel P. Logarta was valid, therefore, he was not illegally
dismissed.

Retrenchment is the reduction of work personnel usually due to poor financial returns,
aimed to cut down costs for operation particularly on salaries and wages. It is one of the
economic grounds to dismiss employees and is resorted by an employer primarily to
avoid or minimize business losses.
Retrenchment programs are purely business decisions within the purview of a valid and
reasonable exercise of management prerogative. It is one way of downsizing an
employer’s workforce and is often resorted to by the employer during periods of
business recession, industrial depression, or seasonal fluctuations, and during lulls in
production occasioned by lack of orders, shortage of materials, conversion of the plant
for a new production program, or introduction of new methods or more efficient
machinery or automation. It is a valid management prerogative, provided it is done in
good faith and the employer faithfully complies with the substantive and procedural
requirements laid down by law and jurisprudence.

In the case at bar, despite the fact that respondent was employed by Petrocon as an
OFW in Saudi Arabia, still both he and his employer are subject to the provisions of the
Labor Code when applicable. The basic policy in this jurisdiction is that all Filipino
workers, whether employed locally or overseas, enjoy the protective mantle of
Philippine labor and social legislations

Philippine Law recognizes retrenchment as a valid cause for the dismissal of a migrant
or overseas Filipino worker under Article 283 of the Labor Code.

Thus, retrenchment is a valid exercise of management prerogative subject to the strict

requirements set by jurisprudence, to wit:

(1) That the retrenchment is reasonably necessary and likely to prevent business
losses which, if already incurred, are not merely de minimis, but substantial, serious,
actual and real, or if only expected, are reasonably imminent as perceived objectively
and in good faith by the employer;

(2) That the employer served written notice both to the employees and to the
Department of Labor and Employment at least one month prior to the intended date of
retrenchment;

(3) That the employer pays the retrenched employees separation pay equivalent to one
month pay or at least ½ month pay for every year of service, whichever is higher;

(4) That the employer exercises its prerogative to retrench employees in good faith for
the advancement of its interest and not to defeat or circumvent the employees' right to
security of tenure; and
(5) That the employer used fair and reasonable criteria in ascertaining who would be
dismissed and who would be retained among the employees, such as status, x x x
efficiency, seniority, physical fitness, age, and financial hardship for certain workers.

Applying the above-stated requisites for a valid retrenchment in the case at bar, it is
apparent that the first, fourth and fifth requirements were complied with by respondent’s
employer. However, the second and third requisites were absent when Petrocon
terminated the services of respondent.

As aptly found by the NLRC and justly sustained by the CA, Petrocon exercised its
prerogative to retrench its employees in good faith and the considerable reduction of
work allotments of Petrocon by Saudi Aramco was sufficient basis for Petrocon to
reduce the number of its personnel.

2. Yes. Proper notice to the DOLE within 30 days prior to the intended date of
retrenchment is necessary and must be complied with despite the fact that respondent
is an overseas Filipino worker.

As for the notice requirement, contrary to petitioner’s contention, proper notice to the
DOLE within 30 days prior to the intended date of retrenchment is necessary and must
be complied with despite the fact that respondent is an overseas Filipino worker. In the
present case, although respondent was duly notified of his termination by Petrocon 30
days before its effectivity, no allegation or proof was advanced by petitioner to establish
that Petrocon ever sent a notice to the DOLE 30 days before the respondent was
terminated. Thus, this requirement of the law was not complied with.

3. No. The absence of proper notice to DOLE should not nullify the retrenchment or
render it illegal or ineffectual.

In the case at bar, notwithstanding the fact that respondent’s termination from his
employment was procedurally infirm, having not complied with the notice requirement,
nevertheless the same remains to be for a just, valid and authorized cause, i.e.,
retrenchment as a valid exercise of management prerogative. To stress, despite the
employer’s failure to comply with the one-month notice to the DOLE prior to
respondent’s termination, it is only a procedural infirmity which does not render the
retrenchment illegal. Instead, the employer should indemnify the employee for violation
of his statutory rights.

"Closure - Veterans Federation of the Philippines v. Montenejo, G.R. No. 184819,

November 29, 2017
Topic: Closure
Case Title: Veterans Federation of the Philippines v. Montenejo, G.R. No. 184819,
November 29, 2017

Facts

The Veteran's Federation of the Philippines (VFP) is a national organization established

in 1960 to manage and develop lands, including the VFP Industrial Area (VFPIA) in
Taguig. In 1991, VFP entered into a management agreement with VFP Management
and Development Corporation (VMDC), giving VMDC control over the VFPIA in
exchange for 40% of the lease rentals. This agreement was initially set for five years,
extended to 1998, and later continued month-to-month until VFP terminated it in
December 1999. VMDC complied, ending its management and dismissing its
employees on January 31, 2000, with separation pay. Employees Montenejo, et al. filed
a complaint for illegal dismissal against both VMDC and VFP, claiming their terminations
lacked cause and due process. VMDC defended the terminations as lawful due to the
business closure resulting from the agreement's termination, while VFP argued it was
not liable as it was not the direct employer of the employees.

Issues

1. Whether or not the dismissals of Montenejo, et al, were effected without cause and
observance of due process or were invalid?

2. Whether or not VMDC’s closure of business as an authorized cause for the

termination of employment was genuine or bona fide?

3. Whether or not the failure of VMDC to file a Notice of Closure with the DOLE
invalidated the dismissals of Montenejo, et al?

Ruling

1. No. The dismissals of Montenejo, et al, were valid.

The NLRC and the CA erred in ruling that Montenejo, et al. were illegally dismissed.
Montenejo, et al. were dismissed as a result of the closure of VMDC. Contrary to the
ruling of the NLRC and the CA, there is ample support from the records to establish that
VMDC did, in fact, close its operations. VMDC's closure, more importantly, qualifies as a
bona fide cessation of operations or business as contemplated under Article 298 of the
Labor Code. The dismissals of Montenejo, et al. were, therefore, premised on an
authorized cause. Being so, such dismissals are valid.

2. Yes. The VMDC’s closure of business as an authorized cause for the termination of
employment was genuine or bona fide.

One of the authorized causes for dismissal recognized under the Labor Code is the
bona fide cessation of business or operations by the employer. Article 298 of the Labor
Code explicitly sanctions terminations due to the employer's cessation of business or
operations-as long as the cessation is bona fide or is not made ''for the purpose of
circumventing the [employees' right to security of tenure]"

To unmask the true intent of an employer when effecting a closure of business, it is

important to consider not only the measures adopted by the employer prior to the
purported closure but also the actions taken by the latter after the fact.

The employer's subsequent acts of suddenly reviving a business it had just closed or
surreptititiously continuing with its operation after announcing a shutdown are telltale
badges that the employer had no real intent to cease its business or operations and
only seeks an excuse to terminate employees capriciously.

Though not proclaimed in any formal document, the closure of VMDC was still duly
proven in this case. The closure can be inferred from other facts that were established
by the records and/or were not refuted by the parties.

The confluence of the above facts, to our mind, indicates that VMDC indeed closed
shop or ceased operations following the termination of its management agreement with
VFP. The acts of VMDC in relinquishing all properties required for its operations and in
dismissing its entire workforce would have indubitably compromised its ability to
continue on with its operations and are, thus, the practical equivalents of a business
closure. Hence, in these regards, we hold that the closure of VMDC had been
established.

The validity of the closure of VMDC necessarily validates the dismissals of Montenejo,
et al. that resulted therefrom. The dismissals cannot be regarded as illegal because
they were predicated upon an authorized cause recognized by law.

3. No. The failure of VMDC to file a Notice of Closure with the DOLE did not invalidate
the dismissals of Montenejo, et al.
Failure of VMDC to file a Notice of Closure with the DOLE did not invalidate the
Dismissals of Montenejo, et al. which were based on an authorized cause. Such
procedural lapse only gives rise to liability for nominal damages, on top of the
separation pay they already received.

To recall, Agabon laid out the rule that when a dismissal is based on a just cause but is
implemented without observance of the statutory notice requirements, the dismissal
should be upheld as valid but the employer must thereby pay an indemnity to the
employee.

Manila Polo Club Employees’ Union (MPCEU) FUR-TUCP v. Manila Polo Club, Inc.,
G.R. No. 172846, July 24, 2013

Topic: Closure
Case Title: Manila Polo Club Employees’ Union (MPCEU) FUR-TUCP v. Manila
Polo Club, Inc., G.R. No. 172846, July 24, 2013

Facts

The Manila Polo Club Employees Union (MPCEU), affiliated with FUR-TUCP,
challenged the decision of Manila Polo Club, Inc., a non-profit organization, to terminate
its Food and Beverage (F&B) operations (except the Last Chukker) due to financial
losses. The Board of Directors cited recurring losses, high manpower costs, and
inefficiencies as reasons for the closure. As a result, 123 employees were retrenched.
The respondent sent notices to the petitioner and affected employees via registered
mail and submitted an Establishment Termination Report to the DOLE on March 22,
2002. The notice informed about the retrenchment of the employees in the F&B
Division, the discontinuance of F&B operations effective March 25, 2002, termination of
employment on April 30, 2002, and continued salary payment despite the directive not
to report to work. Unaware of the termination notice, employees were surprised to be
barred from entering the Club premises and discovered that the F&B operations had
been outsourced to Makati Skyline, Inc. Suspecting union-busting disguised as
retrenchment, the petitioner filed a Step II grievance and requested a meeting with
management. After management refused, the petitioner filed a Notice of Strike with the
NCMB for illegal dismissal, CBA violations, union busting, and unfair labor practices.
The notice was withdrawn on April 9, 2002, after the respondent declined to arbitrate.
On May 10, 2002, the petitioner filed another Notice of Strike amid CBA negotiations. A
month later, the parties agreed to refer the issue of retrenching 117 union members to a
Voluntary Arbitrator, allowing affected employees to receive separation packages
without releasing claims. On June 17, 2002, they agreed to have VA Diamonon
determine the legality of the retrenchment. On August 28, 2002, VA Diamonon
dismissed the complaint but ruled that affected employees should still receive
separation pay. The petitioner’s motion for reconsideration was denied.

Issues

1. Whether this case involves closure of business or retrenchment?

2. Whether the closure or cessation of an employer’s business as an authorized cause

to terminate employees be based solely on serious business losses or imminent
reversal of the employer's fortune?

3. Whether or not the termination of employees due to closure or cessation of business

was done in bad faith?

Ruling

1. It is apparent from the records that this case involves a closure of business
undertaking, not retrenchment. The legal requirements and consequences of these two
authorized causes in the termination of employment are discernible. While retrenchment
and closure of a business establishment or undertaking are often used interchangeably
and are interrelated, they are actually two separate and independent authorized causes
for termination of employment.

Retrenchment is the reduction of personnel for the purpose of cutting down on costs of
operations in terms of salaries and wages resorted to by an employer because of losses
in operation of a business occasioned by lack of work and considerable reduction in the
volume of business.

Closure of a business or undertaking due to business losses is the reversal of fortune of

the employer whereby there is a complete cessation of business operations to prevent
further financial drain upon an employer who cannot pay anymore his employees since
business has already stopped.

One of the prerogatives of management is the decision to close the entire establishment
or to close or abolish a department or section thereof for economic reasons, such as to
minimize expenses and reduce capitalization.
2. Closure or cessation of business is the complete or partial cessation of the operations
and/or shut-down of the establishment of the employer. It is carried out to either stave
off the financial ruin or promote the business interest of the employer.

Unlike retrenchment, closure or cessation of business, as an authorized cause of

termination of employment, need not depend for validity on evidence of actual or
imminent reversal of the employer's fortune. Article 283 authorizes termination of
employment due to business closure, regardless of the underlying reasons and
motivations therefore, be it financial losses or not.

A reading of the foregoing law shows that a partial or total closure or cessation of
operations of establishment or undertaking may either be due to serious business
losses or financial reverses or otherwise. Under the first kind, the employer must
sufficiently and convincingly prove its allegation of substantial losses, while under the
second kind, the employer can lawfully close shop anytime as long as cessation of or
withdrawal from business operations was bona fide in character and not impelled by a
motive to defeat or circumvent the tenurial rights of employees, and as long as he pays
his employees their termination pay in the amount corresponding to their length of
service. Just as no law forces anyone to go into business, no law can compel anybody
to continue the same. It would be stretching the intent and spirit of the law if a court
interferes with management's prerogative to close or cease its business operations just
because the business is not suffering from any loss or because of the desire to provide
the workers continued employment.

3. No. It was not done in bad faith. While petitioner did not sufficiently establish
substantial losses to justify closure of its F & B Department on this ground, there is
basis for its claim that the continued maintenance of said department had become more
expensive through the years. An evaluation of the financial figures appearing in the
audited financial statements prepared by the SGV & Co. shows that ninety-one to
ninety-six (91%-96%) percent of the actual revenues earned by the F & B Department
comprised the costs and expenses in maintaining the department. Petitioner's decision
to place its F & B operations under a concessionaire must then be respected, absent a
showing of bad faith on its part.

In fine, management's exercise of its prerogative to close a section, branch, department,

plant or shop will be upheld as long as it is done in good faith to advance the employer's
interest and not for the purpose of defeating or circumventing the rights of employees
under the law or a valid agreement.
There is nothing on record to indicate that the closure of respondent’s F & B
Department was made in bad faith. It was not motivated by any specific and clearly
determinable union activity of the employees; rather, it was truly dictated by economic
necessity. Despite petitioner’s allegations, no convincing and credible proofs were
presented to establish the claim that such closure qualifies as an act of union-busting
and ULP. No evidence was shown that the closure is stirred not by a desire to avoid
further losses but to discourage the workers from organizing themselves into a union for
more effective negotiations with the management. Allegations are not proofs and it is
incumbent upon petitioner to substantiate the same.

4.15 Right to Impose Productivity Standards to Workers/Fix Quota

Leonardo v. NLRC, G.R. No. 125303, June 16, 2000

Topic: Right to Impose Productivity Standards to Workers/Fix Quota

Case Title: Leonardo v. NLRC, G.R. No. 125303, June 16, 2000

Facts

This case is the consolidated complaints for illegal dismissal filed by employees hired by
Reynaldo Marketing Corporation

In August 11, 1981, Aurelio Fuerte was employed by Reynaldo Marketing Corporation
as muffler specialist and a supervisor in 1988. On January 3, 1992, he was informed by
the personnel manager that he would be transferred to its Sucat plant due to his failure
to meet his sales quota and his supervisor’s allowance was withdrawn. For sometime,
he reported for work, however, he protested on his transfer. Hence, he filed a complaint
for illegal dismissal.

In March 4, 1988, Danilo Leonardo was hired by Reynaldo Marketing Corporation as an

auto-aircon mechanic. On April 22, 1992, he was informed by the personnel manager
that his services were no longer needed. He then filed a complaint for illegal dismissal.

According to the employer, it did not terminate petitioners’ services. In Fuerte’s case, he
was demoted pursuant to company policy intended to foster competition among its
employees. He failed to meet his quota for a number of consecutive months. He is to be
re-appointed supervisor and his allowance is restored when the employee concerned
succeeds in meeting the quota again.
With regard to Leonardo, the company did not sever his employment but it was
Leonardo who abandoned his post following an investigation wherein he was asked to
explain an alleged sideline where a certain driver of a red Corolla arrived one night at
the shop looking for Leonardo saying that it was prearranged that he was to pick up
Leonardo who would perform a private service on a vehicle. When the management
confronted him and asked his explanation, Leonardo gave contradictory excuses
claiming that it was for an aunt. When he was pressed to present his aunt, it was then
that he stopped working and filed for illegal dismissal after 10 months from his alleged
termination.

Issues

Whether or not the petitioners were illegally dismissed?

Ruling
No. They were not illegally dismissed.

Fuerte’s Case

Court held that Fuerte may not be deemed to have abandoned his job and neither was
he constructively dismissed by private respondent. Further, there was substantial proof
that respondent complied with the procedural requisite of giving the employee the
opportunity to refute or contest the employer’s grounds or reasons for said transfer or
demotion.

While due process required by law is applied on dismissals, the same is also applicable
to demotions as demotions likewise affect the employment of a worker whose right to
continued employment, under the same terms and conditions, is also protected by law.
Moreover, considering that demotion is, like dismissal, also a punitive action, the
employee being demoted should as in cases of dismissals, be given a chance to
contest the same.

An employer acts well within its rights in transferring an employee as it sees fit provided
that there is no demotion in rank or diminution in pay. Demotion in rank or diminution in
pay are badges in bad faith and constitute constructive dismissal.

Constructive dismissal is defined an involuntary resignation resorted to when continued

employment becomes impossible, unreasonable, or unlikely; when there is a demotion
in rank or diminution in pay; or when a clear discrimination, insensibility or disdain by an
employer becomes unbearable to the employee .
On the other hand, the practice of a company in laying off workers because they failed
to make the work quota has been recognized in this jurisdiction. Failure to observe
prescribed standards of work, or to fulfill reasonable work assignments due to
inefficiency may constitute just cause for dismissal. Such work quotas, either by failing
to complete the same within the allotted reasonable period, or by producing
unsatisfactory results. This management prerogative of requiring standards may be
availed of so long as they are exercised in good faith for the advancement of the
employer’s interest. This arrangement is an allowable exercise of company rights. An
employer is entitled to impose productivity standards for its workers, and in fact,
non-compliance may be visited with a penalty even more severe than demotion.

In the case of abandonment, it can be a ground for illegal dismissal when there is (1)
failure to report for work or absence without valid or justifiable reason; and (2) a clear
intention, as manifested by some overt acts, to sever the employer-employee
relationship. Filing of a complaint for illegal dismissal is inconsistent with a charge of
abandonment.

Accordingly, given that Fuerte may not be deemed to have abandoned his job, and
neither was he constructively dismissed by private respondent, the Commission did not
err in ordering his reinstatement but without backwages. In a case where the
employee’s failure to work was occasioned neither by his abandonment nor by a
termination, the burden of economic loss is not rightfully shifted to the employer; each
party must bear his own loss.

Leonardo’s Case

Based on evidence on record, it was sufficiently established that Leonardo abandoned

his work. After being pressed by the respondent company to present the customer
regarding his unauthorized solicitation of sideline work from the latter and whom he
claims to be his aunt, he never reported back to work anymore. This finding is bolstered
by the fact that after he left the respondent company, he got employed with Dennis
Motors Corporation as Air-Con Mechanic. Leonardo never alleges any reason why
respondents would want him to ease him out from his job and it took him 10 long
months to file his case. All the above facts clearly point that the filing of his case is a
mere afterthought on the part of complainant Leonardo.

For abandonment to constitute a valid cause for termination of employment, there must
be a deliberate unjustified refusal of the employee to resume his employment. This
refusal must be clearly shown, mere absence is not sufficient, it must be accompanied
by overt acts unerringly pointing to the facts that the employee simply does not want to
work anymore.

Leonardo cannot protest that he was not given due process. He was never terminated
but only became a subject of an investigation. He refused to sign the memorandum
asking him to explain the incident in question. In a similar case, the Court has held that
an employee’s refusal to sign the minutes of an investigation cannot negate the fact that
he was accorded due process.

Aliling v. Feliciano, G.R. No. 185829, April 25, 2012

Topic: Right to Impose Productivity Standards to Workers/Fix Quota

Case Title: Aliling v. Feliciano, G.R. No. 185829, April 25, 2012

Facts

On June 2, 2004, Wide Wide World Express Corporation (WWWEC) offered Armando
Aliling a position as "Account Executive (Seafreight Sales)" with a compensation
package including a monthly salary of PhP 13,000, allowances, and a conditional
14th-month pay. The offer included a six-month probationary period, with regularization
based on performance. On June 11, 2004, Aliling and WWWEC signed an employment
contract that stated regular status would depend on work performance, and termination
could occur for just cause.

Aliling was initially assigned to the Seafreight Sales role but was instead tasked with
marketing a new product, Ground Express (GX). Shortly after, WWWEC's Sales and
Marketing Director, Manuel F. San Mateo III, expressed dissatisfaction with Aliling's
performance. On September 25, 2004, WWWEC's HR Manager, Joseph R. Lariosa,
asked Aliling to explain an absence without leave (AWOL) accusation, which Aliling
denied, providing proof of his attendance.

On September 27, 2004, Aliling tendered his resignation, alleging it was coerced.
WWWEC did not act on the resignation, and Aliling later demanded reinstatement and a
written apology, claiming San Mateo forced him to resign. On October 6, 2004, Lariosa
informed Aliling of his termination due to "non-satisfactory performance." Aliling
subsequently filed a complaint for illegal dismissal and nonpayment of salaries, claiming
he was not informed of the standards for regularization.

The Labor Arbiter found Aliling's dismissal unjustified and ordered WWWEC to pay
salaries for the unexpired contract period, 13th-month pay, and attorney's fees. Both
parties appealed to the NLRC, which affirmed the Labor Arbiter's decision. The Court of
Appeals (CA) upheld the NLRC's decision with modifications, ordering WWWEC and its
officers to pay Aliling PhP 42,333.50 as the total money judgment, PhP 4,233.35 as
attorney’s fees, and additional separation pay. The CA held that WWWEC failed to
prove gross and habitual neglect and that Aliling was a regular employee from the start
due to the lack of communicated performance standards. The strained relationship
between the parties made reinstatement inappropriate. Aliling's motion for
reconsideration was denied.

Issues

1. Whether or not the petitioner was illegally dismissed?

2. Whether or not inefficiency is considered as an analogous just cause for termination

of employment under Article 282 of the Labor Code?
Ruling

1. Yes. To justify fully the dismissal of an employee, the employer must, as a rule, prove
that the dismissal was for a just cause and that the employee was afforded due process
prior to dismissal. As a complementary principle, the employer has the onus of proving
with clear, accurate, consistent, and convincing evidence the validity of the dismissal.
WWWEC had failed to discharge its twin burden in the instant case. First off, the
attendant circumstances in the instant case aptly show that the issue of petitioner’s
alleged failure to achieve his quota, as a ground for terminating employment, strikes the
Court as a mere afterthought on the part of WWWEC. Consider: Lariosa’s letter of
September 25, 2004 already betrayed management’s intention to dismiss the petitioner
for alleged unauthorized absences. Aliling was in fact made to explain and he did so
satisfactorily. But, lo and behold, WWWEC nonetheless proceeded with its plan to
dismiss the petitioner for non-satisfactory performance, although the corresponding
termination letter dated October 6, 2004 did not even specifically state Aliling’s
"non-satisfactory performance," or that Aliling’s termination was by reason of his failure
to achieve his set quota. What WWWEC considered as the evidence purportedly
showing it gave Aliling the chance to explain his inability to reach his quota was a
purported September 20, 2004 memo of San Mateo addressed to the latter. However,
Aliling denies having received such letter and WWWEC has failed to refute his
contention of non-receipt. In net effect, WWWEC was at a loss to explain the exact just
reason for dismissing Aliling.
2. In Lim v. National Labor Relations Commission, the Court considered inefficiency as
an analogous just cause for termination of employment under Article 282 of the Labor
Code:

We cannot but agree with PEPSI that "gross inefficiency" falls within the purview of
"other causes analogous to the foregoing," this constitutes, therefore, just cause to
terminate an employee under Article 282 of the Labor Code. One is analogous to
another if it is susceptible of comparison with the latter either in general or in some
specific detail; or has a close relationship with the latter. "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. In Buiser vs.
Leogardo, this Court ruled that failure to observed prescribed standards to inefficiency
may constitute just cause for dismissal. (Emphasis supplied.)

It did so anew in Leonardo v. National Labor Relations Commission on the following

rationale:

An employer is entitled to impose productivity standards for its workers, and in fact,
non-compliance may be visited with a penalty even more severe than demotion. Thus,

[t]he practice of a company in laying off workers because they failed to make the work
quota has been recognized in this jurisdiction. (Philippine American Embroideries vs.
Embroidery and Garment Workers, 26 SCRA 634, 639). In the case at bar, the
petitioners' failure to meet the sales quota assigned to each of them constitute a just
cause of their dismissal, regardless of the permanent or probationary status of their
employment. Failure to observe prescribed standards of work, or to fulfill reasonable
work assignments due to inefficiency may constitute just cause for dismissal. Such
inefficiency is understood to mean failure to attain work goals or work quotas, either by
failing to complete the same within the allotted reasonable period, or by producing
unsatisfactory results. This management prerogative of requiring standards may be
availed of so long as they are exercised in good faith for the advancement of the
employer's interest. (Emphasis supplied.)

In fine, an employee’s failure to meet sales or work quotas falls under the concept of
gross inefficiency, which in turn is analogous to gross neglect of duty that is a just cause
for dismissal under Article 282 of the Code. However, in order for the quota imposed to
be considered a valid productivity standard and thereby validate a dismissal,
management’s prerogative of fixing the quota must be exercised in good faith for the
advancement of its interest. The duty to prove good faith, however, rests with WWWEC
as part of its burden to show that the dismissal was for a just cause. WWWEC must
show that such quota was imposed in good faith. This WWWEC failed to do, perceptibly
because it could not.

Employers must be reminded that while probationary employees do not enjoy

permanent status, they enjoy the constitutional protection of security of tenure. They
can only be terminated for cause or when they otherwise fail to meet the reasonable
standards made known to them by the employer at the time of their engagement.37
Respondent WWWEC miserably failed to prove the termination of petitioner was for a
just cause nor was there substantial evidence to demonstrate the standards were made
known to the latter at the time of his engagement. Hence, petitioner’s right to security of
tenure was breached.

East Cam Tech Corporation v. Fernandez, G.R. No. 222289, June 8, 2020

Topic: Right to Impose Productivity Standards to Workers/Fix Quota

Case Title: East Cam Tech Corporation v. Fernandez, G.R. No. 222289, June 8,
2020
Facts

East Cam Tech Corporation (East Cam), a bag manufacturer, hired respondents
Fernandez, Delos Santos, Trinidad, and Manalansan as sewers in May 2002. These
employees previously filed an illegal dismissal complaint against East Cam, resulting in
their reinstatement. Upon returning, they were assigned to the sample department with
old and worn-out machines, unlike others who had access to special machines. They
felt discriminated against as they were the only ones required to meet a production
quota and submit hourly reports. They claimed that the Department of Labor and
Employment (DOLE) did not approve these unreasonable quotas and that they were
assigned tasks outside their job descriptions.

On January 12, 2010, East Cam charged them with negligence for not meeting the
production quota. The employees were advised by their supervisor not to respond to the
charge, which he promised to resolve. However, on February 27, 2010, they were
dismissed for failing to answer the charge, prompting them to file a complaint for illegal
dismissal, seeking reinstatement, backwages, other money claims, damages, and
attorney's fees.

East Cam defended its actions by stating that it used a Time and Motion Study (TMS) to
enhance productivity and efficiency, with the expectation that employees comply to
avoid operational damage. According to the company's Management and Employee
Handbook, failing to meet prescribed quantity and quality standards is considered
negligence, warranting a written warning for the first offense and dismissal for the
second.

East Cam alleged that the respondents failed to meet production quotas for two
separate job orders. The first job required 280 pieces of bags, which should have been
completed in three days by four sewers at a rate of 25 pieces per sewer per day.
However, the respondents did not meet the target and received a written warning. In the
second job, they were required to produce 315 pieces of bags with a reduced target of
88 pieces per day. Despite the lowered quota, it took the respondents seven days with
an additional sewer to complete the order. Their failure to meet the quota led to their
dismissal for gross and habitual neglect of duty under Article 282 of the Labor Code of
the Philippines.

Issues

1. Whether or not the respondents committed gross and habitual neglect of duty when
they all failed to meet their production quotas as sewers?

2. Whether or not East Cam’s management's prerogative to fix the production quota
was exercised in good faith?

Ruling

1. No. East Cam avers that the respondents committed gross and habitual neglect of
duty when they all failed to meet their production quotas as sewers. The Court finds that
there is substantial evidence to the contrary. East Cam did not dispute that the
respondents were reinstated after they were illegally dismissed. They were reassigned
from the production line to the sample line. And yet, they were required to perform tasks
for the production line. Such transfer is suspicious because the respondents appear to
be singled out for having previously won an illegal dismissal case against East Cam. All
of them were transferred as a team and were assigned the same production tasks and
quotas.

The Court further observes that before they were transferred, the respondents had no
previous record of negligence in their eight years of tenure with East Cam. But as East
Cam asserts, the respondents became habitually negligent after they were assigned to
do work for the production line, because they all failed to meet the production quotas
and the quality standards in accordance with East Cam's TMS and company
requirements. However, it appears that the production quotas based on the TMS are
unattainable. Even East Cam recognized this when they assigned another sewer to help
the respondents meet the quota for the second job order. As the respondents claim,
they are singled out by East Cam when they were given quotas based on the TMS,
which is not East Cam's previous practice.

2. No. Here, East Cam, as the employer, has the right to impose production quotas in its
production line based on its TMS for job orders one and two. However, East Cam failed
to prove that it acted in good faith when it did not adduce any evidence that its TMS
were attainable based on the quantity it wanted to produce for a given time, quality of
the product to be produced, the machines they have, and the skill sets of their
employees. Further, East Cam failed to rebut the respondents' allegations that: (1) the
machines assigned to them were old and worn out, (2) they were stationed at a place
far from the sample room where all the special machines are located, and (3) they were
the only ones required to meet a production quota and to submit hourly reports.

The Court only upholds management prerogative as long as it is exercised in good faith
for the advancement of the employer's interest and not for the purpose of defeating or
circumventing the employees' rights under special laws and valid agreements.

4.16 Right to Change Work Schedule

Sime Darby Pilipinas, Inc. v. NLRC, G.R. No. 119205, April 15, 1998

RATIO: The right to fix the work schedules of the employees rests principally on their
employer.

FACTS: Sime Darby Pilipinas, Inc., petitioner, is engaged in the manufacture of

automotive tires, tubes and other rubber products. Sime Darby Salaried Employees
Association (ALU-TUCP), private respondent, is an association of monthly salaried
employees of petitioner at its Marikina factory. Prior to the present controversy, all
company factory workers in Marikina including members of private respondent union
worked from 7:45 a.m. to 3:45 p.m. with a 30-minute paid "on call" lunch break. The
new schedule removes the 30-minute on call lunch break into a 1-hour unpaid lunch
break.

ISSUE: W/N the management has the right to manage the working schedule of its
employees

RULING: YES. The management retains the prerogative, whenever exigencies of the
service so require, to change the working hours of its employees. So long as such
prerogative is exercised in good faith for the advancement of the employer's interest
and not for the purpose of defeating or circumventing the rights of the employees under
special laws or under valid agreements, this Court will uphold such exercise.

With the new work schedule, the employees are now given a one-hour lunch break
without any interruption from their employer. For a full one-hour undisturbed lunch
break, the employees can freely and effectively use this hour not only for eating but also
for their rest and comfort which are conducive to more efficiency and better
performance in their work. Since the employees are no longer required to work during
this one-hour lunch break, there is no more need for them to be compensated for this
period.

4.17 Right to Reduce Work Assignment

Roxas v. Baliwag Transit, Inc., G.R. No. 231859, February 19, 2020

RATIO: Constructive Dismissal and Management Prerogative

Constructive dismissal is defined as quitting or cessation of work because continued

employment is rendered impossible, unreasonable or unlikely; when there is a demotion
in rank or a diminution of pay and other benefits. It exists 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. There is involuntary resignation due to the harsh, hostile, and
unfavorable conditions set by the employer. The test of constructive dismissal is
whether a reasonable person in the employee's position would have felt compelled to
give up his employment/position under the circumstances.

FACTS: Roxas was employed as bus driver by BTI since March 24, 1998 and paid on
commission basis. In 2012, the bus to which Roxas was assigned was phased out
pursuant to Land Transportation Franchising and Regulatory Board (LTFRB) Resolution
No. 2013-01.6 For this reason, he became a reliever for BTI's other remaining buses
and his work assignment was reduced from his regular three (3) weeks work duty to
only two (2) weeks per month.

Feeling aggrieved by the change in his work duty assignment, Roxas, on June 5, 2014,
filed a complaint for constructive dismissal, non-payment of holiday pay, holiday
premium, service incentive leave (SIL), and 13th month pay, illegal suspension, moral
and exemplary damages, and attorney's fees against BTI and its owner Joselito S.
Tengco

ISSUE: W/N Roxas’ reduction of work hours is justiciable exercise of management

prerogative

RULING: YES. The exercise of BTI's management prerogative appears to have been
done in good faith, and hence, should be upheld. Roxas's reduced work assignment did
effectively result in the diminution of his pay and other benefits, the same did not
amount to a clear act of discrimination, insensibility or disdain on the part of BTI so as to
force him out of employment. This is because the reason for the said work reduction
was due to the phase out of BTI's old buses as imposed by a government regulation,
leading BTI to, in the exercise of its management prerogative, adjust the previous work
assignments of its employees assigned to the affected buses.

4.18 Right to (or not to) Schedule Work/Floating Status

Coca-Cola Bottlers Philippines, Inc. v. Iloilo Coca-Cola Plant Employees Labor Union,
G.R. No. 195297, December 5, 2018

RATIO: Management also has its own rights, which, as such, are entitled to respect and
enforcement in the interest of simple fair play. After all, social justice is, in the eloquent
words of Associate Justice Jose P. Laurel, "the humanization of laws and the
equalization of social and economic forces by the State so that justice in its rational and
objectively secular conception may at least be approximated."

FACTS: Petitioner Coca-Cola Bottlers Philippines, Inc. (CCBPI) is a domestic

corporation engaged in the business of manufacturing and selling of leading
non-alcoholic products and other beverages. The conflict arose due to the CCBPI's
policy involving Saturday work. In the said policy, several of CCBPI's employees were
required to report for work on certain Saturdays to perform a host of activities, usually
involving maintenance of the facilities. CCBPI later on informed the respondent that,
starting July 2, 2005, Saturday work would no longer be scheduled, with CCBPI citing
operational necessity as the reason for the decision.

The discontinuance of Saturday reporting were pushed through despite opposition of

the Union.
ISSUE: W/N the CBA between the parties, scheduling Saturday work for CCBPI's
employees is mandatory on the part of the Company.

RULING: NO. The provisions' tenor and plain meaning give company management the
right to compel its employees to suffer work on Saturdays. This necessarily includes the
prerogative not to schedule work. Whether or not work will be scheduled on a given
Saturday is made to depend on operational necessity. The CBA therefore gives CCBPI
the management prerogative to provide its employees with Saturday work depending on
the exigencies of the business.

If Saturday was part of the regular work week and not dependent on management's
decision to schedule work, there would be no need to give additional compensation to
employees who report to work on that day. Futher, CCBPI's employees were not illegally
prevented from working on Saturdays. The company was simply exercising its option
not to schedule work pursuant to the CBA provision which gave it the prerogative to do
so. It therefore follows that the principle of "no work, no pay" finds application in the
instant case.

Samillano v. Valdez Security and Investigation Agency, Inc., G.R. No. 239396, June 23,
2020

RATIO: Temporary "off-detail" or "floating status" is the period of time when security
guards are in between assignments or when they are made to wait after being relieved
from a previous post until they are transferred to a new one. It takes place when the
security agency's clients decide not to renew their contracts with the agency, resulting in
a situation where the available posts under its existing contracts are less than the
number of guards in its roster.

It does not constitute a dismissal, as the assignments primarily depend on the contracts
entered into by the security agencies with third parties, so long as such status does not
continue beyond a reasonable time. When such a "floating status" lasts for more than
six (6) months, the employee may be considered to have been constructively dismissed.

FACTS: Petitioner was relieved from his post upon the request of Sister Christina
Maguyo, a representative of Mornesse. The request was made after petitioner and his
co-security guard Nilo Mamigo (Mamigo) impleaded Mornesse in the complaint for
money claims against the respondent company and its president and general manager
Emma V. Licuanan (Licuanan). On the same date, Mamigo was also relieved from his
post due to abandonment of work when he went on absence without leave (AWOL).
Petitioner was informed that he will be relieved from his post on account of a client's
request and that he will be deployed or transferred to another client. The respondents
stressed that petitioner's refusal to follow their lawful order to report to their head office
for re-assignment or deployment constitutes insubordination.

Petitioner and Mamigo asserted that they were dismissed from service without just
cause and that no valid reason was given to justify their unceremonious dismissal.
Further, the respondent company did not furnish them a notice of termination in wanton
disregard of law. The respondents maintained in their Position Paper that there was no
dismissal, much less illegal dismissal, since petitioner and Mamigo went on AWOL,
abandoned their work and refused to report to work without justifiable reason.

ISSUE: W/N the petitioner was illegally dismissed

RULING: NO. Petitioner was not dismissed from service but was merely placed on
temporary "off-detail" or floating status. It bears stressing that on December 14, 2013,
the respondent company sent a Notice to petitioner notifying him that he has been on
AWOL status since December 5, 2013. He was directed to report to the head office of
the respondent company to determine if he is still interested to work for it. He was also
informed of a new assignment at Anaconda Metal Fastener, Inc. in Pasig City, contrary
to his claim that a new assignment was offered only during the mediation proceeding.
The notice was sent to the address appearing on petitioner's 201 files via registered
mail as evidenced by the registry receipt.

Telus International Philippines, Inc. v. De Guzman, G.R. No. 202676, December 4, 2019

RATIO: Our labor laws and the Constitution afford security of tenure to employees that
one may have a reasonable expectation that they are secured in their work and that
management prerogative, although unilaterally wielded, will not harm them . Employees
are guaranteed that they can only be terminated from service for a valid cause and
when supported by substantial evidence after due process.

FACTS: Telus received an escalation complaint[8] from Jeanelyn Flores (Flores), Team
Captain of DELL APoS, charging De Guzman of disrespect and ridicule towards a
person. De Guzman who was among the QAs who received 'the message, replied: "that
is good, you can now do your huddle for your team." Flores was offended when the
other QAs exited the conversation and by De Guzman's reply as she felt that he was
implying that she has no time for her team. D Guzman was placed in preventive
suspension and was directed to submit a written explanation to answer the charges on
or before August 7, 2008. De Guzman complied and submitted his written explanation.

De Guzman was then forced to apply for a vacation leave, while Sy was still looking for
an account for them. In his desire to keep his job and to receive his salary, he
exhausted his earned vacation leaves and used up 26 days from August 22 to
September 26, 2008. He was then placed on floating status without just reasons.

ISSUE: W/N Telus’s decision to put De Guzman on floating status valid

RULING: NO. Contrary to the stance of Telus, the floating status principle does not find
application in the instant case. While it may be argued that the nature of the call center
business is such that it is subject to seasonal peaks and troughs because of client
pullouts, changes in clients' requirements and demands, and a myriad other factors,
still, the necessity to transfer De Guzman to another practice/account does not depend
on Telus' third party-client/contracts. When the controversy arose, Telus had several
clients in its roster to which it can easily assign De Guzman as Quality Analyst without
any hindrance. As earlier admitted by Telus, profiling interviews were not a condition
precedent to the transfer. Moreover, as established before the Labor Arbiter, after the
lifting of the preventive suspension of De Guzman by Telus, the company had several
job vacancy postings for the position of Quality Analysts, the very position previously
occupied by De Guzman.

To say that Telus merely exercised its rights and that any inconvenience or injury that
De Guzman may have suffered resulted merely in damnum absque injuria which cannot
legally give rise to a cause of action for constructive dismissal, is abhorrent considering
the fact that his being placed on a "floating status" without valid reasons violated his
security of tenure and resulted in unfavorable economic consequences to De Guzman.

"PART II

RECRUITMENT AND PLACEMENT"

A. DEFINITION

1. Recruitment and Placement (Labor Code, Art. 13[b])

People v. Panis, G.R. Nos. L-58674-77, July 11, 1986

2. Accreditation (IRR-RA 11641, RII-S3[a])

3. Ethical Recruitment (RA 11641, S3[b])

4. License (RA 11641, S3[d])

5. Overseas Filipino Worker (RA 11641, S3[g])

6. Recruitment Agency (RA 11641, S3[h])

7. Manning Agency (RA 11641, S3[e])

8. Recruitment Agency (RA 11641, S3[h])

9. Reintegration Program (RA 11641, S3[i])

10. Seafarer (RA 11641, S3[j])

11. Special Recruitment Authority (DMW-DC 1, PI-RII[48])

B. JURISDICTION OF THE DEPARTMENT OF MIGRANT WORKERS (RA 11641, S6)

C. ILLEGAL RECRUITMENT AND PROHIBITED PRACTICES (Local Employment –

Labor Code,

Arts. 34, 38 & 39; DOLE-DO 141-14 [Revised Rules and Regulations Governing
Recruitment and Placement for Local Employment] S42; Overseas Employment – Labor
Code, Arts. 34, 38 & 39; RA 8042, as amended by RAs 10022 & 11227, S6-7; Omnibus
Rules [Omnibus Rules and Regulations Implementing the Migrant Workers and
Overseas Filipinos Act of 1995, as amended by Republic Act No. 10022] RIV, S1; RA
11641; IRR-RA 11641; DMW-DC 1, Series of 2023 [2023 DMW Rules and Regulations
Governing the Recruitment and Employment of Landbased Overseas Filipino Workers];
2016 POEA Rules and Regulations Governing the Recruitment and Employment of
Seafarers)

1. Definition
People v. Dela Cruz, G.R. No. 214500, June 28, 2017

People v. Sison, G.R. No. 187160, August 9, 2017

People v. Estrada, G.R. No. 225730, February 28, 2018 0

People v. Espiritu, G.R. No. 226140, February 26, 2020

People v. Bautista, G.R. No. 218582, September 3, 202

2. Types of Illegal Recruitment—Simple and Illegal Recruitment Constituting Economic

Sabotage: Syndicated and Large Scale—and Elements (Labor Code, Art. 38[b]; RA
8042, S6; Omnibus Rules, RIV, S1)

People v. Dela Cruz, G.R. No. 214500, June 28, 2017

People v. Sison, G.R. No. 187160, August 9, 2017

People v. Estrada, G.R. No. 225730, February 28, 2018

3. Illegal Recruitment v. Estafa

People v. Dela Cruz, G.R. No. 214500, June 28, 2017

People v. Racho, G.R. No. 227505, October 2, 2017

People v. Espiritu, G.R. No. 226140, February 26, 2020

People v. Bautista, G.R. No. 218582, September 3, 2020

D. LIABILITY OF LOCAL RECRUITMENT AGENCY, FOREIGN EMPLOYER,

DIRECTORS, AND OFFICERS

1. Criminal/Civil Liabilities (RA 8042, S6 & 7; RPC, Arts. 100 & 104; Omnibus Rules,
RIV)
People v. Velasco, G.R. No. 195668, June 25, 2014

2. Administrative Liability (RA 8042, S7, 10, 23[c.6], 37-A; Omnibus Rules, RIV, S5; Id.,
RVI, S15; Id., RVII, S6; Id., RX, S10; Id., RXII, S2; Id., RXVI, S12; DMW-DC 1, PVI)

3. Solidary Liability of Principal/Employer and Recruitment/Placement Agency for

Money Claims (RA 8042, S10; Omnibus Rules, RII, S1[s], and RVII, S3)

4. Liability of Corporate Directors and Officers (RA 8042, S6, 10; Omnibus Rules, RIV,
S4)

Meco Manning & Crewing Services, Inc. v. Cuyos, G.R. No. 222939, July 3, 2019

Cuartocruz v. Active Works, Inc., G.R. No. 209072, July 24, 2019

Prime Stars International Promotion Corporation v. Baybayan, G.R. No. 213961,

January 22, 2020

Joint Ship Manning Group, Inc. v. SSS, G.R. No. 247471, July 7, 2020

E. THEORY OF IMPUTED KNOWLEDGE

Sunace International Management Services, Inc. v. NLRC, G.R. No. 161757, January
25, 2006

APQ Shipmanagement Co., Ltd. v. Caseñas, G.R. No. 197303, June 4, 2014

F. TERMINATION OF CONTRACT OF MIGRANT WORKER WITHOUT JUST OR

VALID CAUSE (RA 8042, S10 & 37-A[d])

1. Rationale of RA 8042/Protection of OFWs/Security of Tenure/Due Process

Prieto v. NLRC, G.R. No. 93699, September 10, 1993