January 2010 Philippine Supreme Court Decisions on Labor Law and ProcedureLabor LawAcceptance of Benefits, render moot claim under other policies. As in the case of Capili v. National Labor Relations Commission [273 SCRA 576], a claim for benefit under the company’s retirement plan becomes moot when the employee accepts retirement benefits on the basis of Article 287 of the Labor Code. By Yuson’s acceptance of her retirement benefits through a compromise agreement entered into with her employer, she is deemed to have opted to retire under Article 287. Korean Air Co., Ltd and Suk Kyoo Kim v. Adelina A.S. Yuson, G.R. No. 170369, June 16, 2010.Approval for company’s early retirement program; management prerogative. Approval of applications for the early retirement program (“ERP”) is within the employer’s management prerogatives. The exercise of management prerogative is valid as long as it is not done in a malicious, harsh, oppressive, vindictive, or wanton manner. In the present case, the Court sees no bad faith on the part of the employer. The 21 August 2001 memorandum clearly states that petitioner, on its discretion, was offering ERP to its employees. The memorandum also states that the reason for the ERP was to prevent further losses. Petitioner did not abuse its discretion when it excluded respondent in the ERP because the latter is already about to retire. To allow respondent to avail of the ERP would have been contrary to the purpose of the program. Korean Air Co., Ltd and Suk Kyoo Kim v. Adelina A.S. Yuson, G.R. No. 170369, June 16, 2010.

Agency; principle of apparent authority. There is ample evidence that the hospital held out to the patient that the doctor was its agent. The two factors that determined apparent authority in this case were: first, the hospital’s implied manifestation to the patient which led the latter to conclude that the doctor was the hospital’s agent; and second, the patient’s reliance upon the conduct of the hospital and the doctor, consistent with ordinary care and prudence.It is of record that the hospital required a “consent for hospital care” to be signed preparatory to the surgery of the patient. The form reads: “Permission is hereby given to the medical, nursing and laboratory staff of the Medical City General Hospital to perform such diagnostic procedures and to administer such medications and treatments as may be deemed necessary or advisable by the physicians of this hospital for and during the confinement of xxx.”By such statement, the hospital virtually reinforced the public impression that the doctor was a physician of its hospital, rather than one independently practicing in it; that the medications and treatments he prescribed were necessary and desirable; and that the hospital staff was prepared to carry them out. Professional Services, Inc. vs. The Court of Appeals, et al./Natividad (substituted by her children Marcelino Agana III, Enrique Agana, Jr. Emma Agana-Andaya, Jesus Agana and Raymund Agana and Errique Agana) vs. The Court of Appeals and Juan Fuentes Miguel Ampil vs. Natividad and Enrique Agana, G.R. Nos. 126297/G.R. No. 126467/G.R. No. 127590, February 2, 2010.

Cancellation of union registration. Art. 234(c) of the Labor Code requires the mandatory minimum 20% membership of rank-and-file employees in the employees’ union. Twenty percent (20%) of 112 rank-and-file employees in Eagle Ridge would require a union membership of at least 22 employees (112 x 205 = 22.4). When the EREU filed its application for registration on December 19, 2005, there were clearly 30 union members. Thus, when the certificate of registration was granted, there is no dispute that the Union complied with the mandatory 20% membership requirement. Accordingly, the retraction of six union members who later severed and withdrew their union membership cannot cause the cancellation of the union’s registration.Besides, it cannot be argued that the affidavits of retraction retroacted to the time of the application for union registration or even way back to the organizational meeting. Before their withdrawal, the six employees in question were bona fide union members. They never disputed affixing their signatures beside their handwritten names during the organizational meetings. While they alleged that they did not know what they were signing, their affidavits of retraction were not re-affirmed during the hearings of the instant case rendering them of little, if any, evidentiary value. In any case, even with the withdrawal of six union members, the union would

still be compliant with the mandatory membership requirement under Art. 234(c) since the remaining 24 union members constitute more than the 20% membership requirement of 22 employees. Eagle Ridge Gold & Country Club vs. Court of Appeals, et al., G.R. No. 178989, March 18, 2010 .

CBA; coverage. As regular employees, petitioners fall within the coverage of the bargaining unit and are therefore entitled to CBA benefits as a matter of law and contract. Under the terms of the CBA, petitioners are members of the appropriate bargaining unit because they are regular rank-and-file employees and do not belong to any of the excluded categories. Most importantly, the labor arbiter’s decision of January 17, 2002 – affirmed all the way to the CA – ruled against the company’s submission that they are independent contractors. Thus, as regular rank-and-file employees, they fall within the CBA coverage. And, under the CBA’s express terms, they are entitled to its benefits.CBA coverage is not only a question of fact, but of law and contract. The factual issue is whether the petitioners are regular rank-and-file employees of the company. The tribunals below uniformly answered this question in the affirmative. From this factual finding flows legal effects touching on the terms and conditions of the petitioners’ regular employment. Farley Fulache, et al. vs. ABS-CBN Broadcasting Corporation, G.R. No. 183810, January 21, 2010.

Cessation of operations; financial assistance. Based on Article 283, in case of cessation of operations, the employer is only required to pay his employees a separation pay of one month pay or at least one-half month pay for every year of service, whichever is higher. That is all that the law requires.In the case at bar, petitioner paid respondents the following: (a) separation pay computed at 150% of their gross monthly pay per year of service; and (b) cash equivalent of earned and accrued vacation and sick leaves. Clearly, petitioner had gone over and above the requirements of the law. Despite this, however, the Labor Arbiter ordered petitioner to pay respondents an additional amount, equivalent to one month’s salary, as a form of financial assistance.

The award of financial assistance is bereft of legal basis and serves to penalize petitioner who had complied with the requirements of the law. The Court also point out that petitioner may, as it has done, grant on a voluntary and ex gratia basis, any amount more than what is required by the law, but to insist that more financial assistance be given is certainly something that the Court cannot countenance. Moreover, any award of additional financial assistance to respondents would put them at an advantage and in a better position than the rest of their co-employees who similarly lost their employment because of petitioner’s decision to cease its operations. SolidBank Corporation vs. National Labor Relations Commission, et al., G.R. No. 165951, March 30, 2010 .

Compensable illness. Since cholecystolithiasis or gallstone has been excluded as a compensable illness under the applicable standard contract for Filipino seafarers that binds the seafarer and the vessel’s foreign owner, it was an error for the CA to treat such illness as “work-related” and, therefore, compensable. The standard contract precisely did not consider gallstone as compensable illness because the parties agreed, presumably based on medical science, that such affliction is not caused by working on board ocean-going vessels.Nor is there any evidence to prove that the nature of the seafarer’s work on board a ship aggravated his illness. No one knows if he had gallstone at the time he boarded the vessel. By the nature of this illness, it is highly probable that he already had it when he boarded his assigned ship although it went undiagnosed because he had yet to experience its symptoms. Bandila Shipping, Inc. et al. vs. Marcos C. Abalos, G.R. No. 177100, February 22, 2010 . Compensable illness; work related. Melanoma is not listed as an occupational disease under Annex “A” of the Rules on Employees Compensation. Hence, respondent has the burden of proving, by substantial evidence, the causal relationship between her illness and her working conditions.Substantial evidence means such relevant evidence as a reasonable mind might accept to support a conclusion.The Court in this case agreed with the petitioner and the ECC that respondent was not able to positively prove that her ailment was caused by her employment and that the risk of contracting the disease was increased by her working conditions. While the law requires only a reasonable work-connection and not a direct causal relation, respondent still failed to show that her illness was really brought about by the wound she sustained

during the supervised gardening activity in school. The CA accepted the allegation that the mole appeared right on the spot where respondent sustained the injury without any further proof that the mole appeared because of the injury. The CA further ruled that “the risk of acquiring the said ailment increased by the nature of [respondent’s] work in going to school and in returning to her residence during school days x x x.” However, the CA failed to consider that in a tropical country like the Philippines, exposure to sunlight is common. Unlike farmers, fishermen or lifeguards, it was not shown that respondent had chronic long-term exposure to the sun considered necessary for the development of melanoma. Thus, the Court did not find the risk of contracting the disease to have been heightened by respondent’s exposure to sunlight in going to work and returning to her residence. Government Service Insurance System vs. Rosalinda A. Bernadas, G.R. No. 164731, February 11, 2010

Compensable illness. Jurisprudence provides that to establish compensability of a non-occupational disease, reasonable proof of work-connection and not direct causal relation is required. Probability, not the ultimate degree of certainty, is the test of proof in compensation proceedings.In this case, the Court sustained the Labor Arbiter and the NLRC in granting total and permanent disability benefits in favor of Villamater, as it was sufficiently shown that his having contracted colon cancer was, at the very least, aggravated by his working conditions, taking into consideration his dietary provisions on board, his age, and his job as Chief Engineer, who was primarily in charge of the technical and mechanical operations of the vessels to ensure voyage safety. Leonis Navigation Co., Inc. and World Marine Panama, S.A. vs. Catalino U. Villamater, et al., G.R. No. 179169, March 3, 2010 . Compensable illness; entitlement. For disability to be compensable under Section 20 (B) of the 2000 POEA-SEC, two elements must concur: (1) the injury or illness must be work-related; and (2) the work-related injury or illness must have existed during the term of the seafarer’s employment contract. In other words, to be entitled to compensation and benefits under this provision, it is not sufficient to establish that the seafarer’s illness or injury has rendered him permanently or partially disabled; it must also be shown that there is a causal connection between the seafarer’s illness or injury and the work for which he had been contracted.The 2000 POEA-SEC defines “work-related injury” as “injury(ies) resulting in disability or death arising out of and in the course of employment” and “work-related illness” as “any sickness resulting to disability or death as a result of an occupational disease listed under Section 32-A of this contract with the conditions set therein satisfied.”

Under Section 20 (B), paragraphs (2) and (3) of the 2000 POEA-SEC, it is the company-designated physician who is entrusted with the task of assessing the seaman’s disability.

While it is true that medical reports issued by the company-designated physicians do not bind the courts, the Court’s examination of Dr. Ong-Salvador’s Initial Medical Report have led it to agree with her findings. Dr. Ong-Salvador was able to sufficiently explain her basis in concluding that the respondent’s illness was not work-related: she found the respondent not to have been exposed to any carcinogenic fumes, or to any viral infection in his workplace. Her findings were arrived at after the respondent was made to undergo a physical, neurological and laboratory examination, taking into consideration his past medical history, family history, and social history. In addition, the respondent was evaluated by a specialist, a surgeon and an oncologist. The series of tests and evaluations show that Dr. Ong-Salvador’s findings were not arrived at arbitrarily; neither were they biased in the company’s favor.

The respondent, on the other hand, did not adduce proof to show a reasonable connection between his work as an assistant housekeeping manager and his lymphoma. There was no showing how the demands and nature of his job vis-à-vis the ship’s working conditions increased the risk of contracting lymphoma. The non-work relatedness of the respondent’s illness is reinforced by the fact that under the Implementing Rules and Regulations of the Labor Code (ECC Rules), lymphoma is considered occupational only when contracted by operating room personnel due to exposure to anesthetics. The records do not show that the respondent’s work as an assistant housekeeping manager exposed him to anesthetics.

Accordingly, the Court held that the respondent is not entitled to total and permanent disability benefits on account of his failure to refute the company-designated physician’s findings that: (1) his illness was not work-related; and (2) he was fit to resume sea duties. Magsaysay Maritime Corporation and/or Cruise Ships Catering Services International N.V. vs. National Labor Relations Commissions, et al., G.R. No. 186180, March 22, 2010 .

Cost of living allowance. COLA is not in the nature of an allowance intended to reimburse expenses incurred by officials and employees of the government in the performance of their official functions. It is not payment in consideration of the fulfillment of official duty. As defined, cost of living refers to “the level of prices relating to a range of everyday items” or “the cost of purchasing those goods and services which are included in an accepted standard level of consumption.” Based on this premise, COLA is a benefit intended to cover increases in the cost of living. Thus, it is and should be integrated into the standardized salary rates.In the present case, the Court is not persuaded that the continued grant of COLA to the uniformed personnel to the exclusion of other national government officials run afoul the equal protection clause of the Constitution. The fundamental right of equal protection of the laws is not absolute, but is subject to reasonable classification. If the groupings are characterized by substantial distinctions that make real differences, one class may be treated and regulated differently from another. The classification must also be germane to the purpose of the law and must apply to all those belonging to the same class.

The Court found valid reasons to treat the uniformed personnel differently from other national government officials. Being in charge of the actual defense of the State and the maintenance of internal peace and order, they are expected to be stationed virtually anywhere in the country. They are likely to be assigned to a variety of low, moderate, and high-cost areas. Since their basic pay does not vary based on location, the continued grant of COLA is intended to help them offset the effects of living in higher cost areas. Victoria C. Gutierrez, et al. vs. Department of Budget and Management, et al./Estrellita C. Amponin, et al. vs. Commission on Audit, et al./Augusto R. Nieves, et al. vs. Department of Budget and Management, et al./Kapisanan ng mga Manggagawa sa Bureau of Agricultural Statistic (KMB), et al. vs. Department of Budget and Management, et al./National Housing Authority vs. Epifanio P. Recana, et al./ Insurance Commission Officers and Employees, et al. vs. Department of Budget and Management, et al./Fiber Industry Development Authority Employees Association (FIDAEA),et al. vs. Department of Budget and Management, et al./Bureau of Animal Industry Employees Association (BAIEA), et al. vs. Department of Budget and Management, et al./Re: Request of Sandiganbayan for authority to use their savings to pay their Cola Differential from July 1, 1989 to March 16, 1999, G.R. No. 153266/G.R. No. 159007/G.R. No. 159029/G.R. No. 170084/G.R. No. 172713/G.R. No. 173119/G.R. No. 176477/G.R. No. 177990/A.M. No. 06-4-02-SB. March 18, 2010 .

Constructive dismissal. In constructive dismissal cases, the employer has the burden of proving that its conduct and action or the transfer of an employee are for valid and legitimate grounds such as genuine business necessity. Particularly, for a transfer not to be considered a constructive dismissal, the employer must be able to show that such transfer is not unreasonable, inconvenient, or prejudicial to the employee. Failure of the employer to overcome this burden of proof taints the employee’s transfer as a constructive dismissal.In the present case, the employer failed to discharge this burden. The combination of harsh actions taken by the bank rendered the employment condition of the employee hostile and unbearable for the following reasons: First, there is no showing of any urgency or genuine business necessity to transfer the employee to the Makati Head Office. The bank’s stated reason that the employee had to undergo branch head training because of his gross inefficiency was not supported by any proof that the employee had a record of gross inefficiency. Second, the employee’s transfer from Dumaguete to Makati City is clearly unreasonable, inconvenient and oppressive, since the respondent and his family are residents of Dumaguete City. Third, the employer failed to present any valid reason why it had to require the employee to go to the Makati Head Office to undergo branch head training when it could have just easily required the latter to undertake the same training in the VISMIN area. Finally, there was nothing in the order of transfer indicating the position which the employee would occupy after his training; thus, the employee was effectively placed in a “floating” status. The bank’s contention that the employee was assigned to a sensitive position in the DUHO Task Force is suspect when

considered with the fact that he was made to undergo branch head training which is totally different from a position that entails reconciling book entries of all branches of the former. Reconciling book entries is essentially an accounting task.

The test of constructive dismissal is whether a reasonable person in the employee’s position would have felt compelled to give up his position under the circumstances. Based on the factual considerations in the present case, the Court held that the hostile and unreasonable working conditions of the bank justified the finding of the NLRC and the CA that the employee was constructively dismissed. Philippine Veterans Bank vs. National Labor Relations Commission, et al., G.R. No. 188882, March 30, 2010 .

Disability benefits; entitlement. The seafarer, upon sign-off from his vessel, must report to the company-designated physician within three working days from arrival for diagnosis and treatment. Applying Section 20(B), paragraph (3) of the 2000 Amended Standard Terms and Conditions Governing the Employment of Filipino Seafarers on Board Ocean-Going Vessels, petitioner is required to undergo post-employment medical examination by a company-designated physician within three working days from arrival, except when he is physically incapacitated to do so, in which case, a written notice to the agency within the same period would suffice. In Maunlad Transport, Inc. v. Manigo, Jr., [G.R. No.161416, 13 June 2008, 554 SCRA 446, 459] this Court explicitly declared that it is mandatory for a claimant to be examined by a company-designated physician within three days from his repatriation. The unexplained omission of this requirement will bar the filing of a claim for disability benefits. Alex C. Cootauco vs. MMS Phil. Maritime Services, Inc. Ms. Mary C. Maquilan, and/or MMS Co. Ltd., G.R. No. 184722, March 15, 2010.

Dismissal; due process. The essence of due process is the opportunity to be heard; it is the denial of this opportunity that constitutes violation of due process of law. The employee was given the opportunity to be heard when a proper notice of investigation was sent to him, although the notice did not reach him for reasons outside the employer’s control. The employee was not also totally unheard on the matter as he was able to explain his side through the two (2) explanation letters he submitted. These letters are clear indications that he intimately knew of the matter for which he was being investigated. If he was denied due process at all, the denial was with respect to the charges of extortion, tardiness and absenteeism, which are grounds invoked separately from loss of trust and confidence. These grounds were not serious considerations in the dismissal that followed, and therefore, were not considered by the Court as material to the present case. Bibiana Farms and Mills, Inc. vs. Arturo Lado, G.R. No. 157861, February 2, 2010 . Dismissal; due process. In an unlawful dismissal case, the employer has the burden of proving the lawful cause sustaining the dismissal of the employee. The employer must affirmatively show rationally adequate evidence that the dismissal was for a justifiable cause. The employee’s behavior constituted just cause. However, the company cannot deny that it failed to observe due process. The law requires that the employer must furnish the worker sought to be dismissed with two written notices before termination of employment can be legally effected: (1) notice which apprises the employee of the particular acts or omissions for which his dismissal is sought; and (2) the subsequent notice which informs the employee of the employer’s decision to dismiss him. Violation of the employee’s right to statutory due process, even if the dismissal was for a just cause, warrants the payment of indemnity in the form of nominal damages. This indemnity is not intended to penalize the employer but to vindicate or recognize the employee’s right to statutory due process, which was violated by the employer in the present case. Hilton Heavy Equipment Corporation and Peter Lim vs. Ananias Dy, G.R. No. 164860, February 2, 2010 . Dismissal; due process. Failure to observe due process in the termination of employment for a just cause does not invalidate the dismissal but makes the company liable for non-compliance with the procedural requirements of due process. The violation of the employee’s right to statutory due process warrants the payment of nominal damages, the amount of which is addressed to the sound discretion of the court, taking into account the relevant circumstances. In the instant case, considering that the company already suffered financially because of poor sales performance under the employee’s watch, it is proper to reduce the amount of nominal damages awarded to petitioner to Thirty Thousand Pesos (P30,000.00). The amount of nominal damages awarded is not intended to enrich the employee, but to deter employers from future violations of the

statutory due process rights of employees. Rolando P. Ancheta vs. Destiny Financial Plans, Inc. and Arsenio Bartolome,G.R. No. 179702, February 16, 2010 Dismissal; due process. In the dismissal of employees, it has been consistently held that the twin requirements of notice and hearing are essential elements of due process. The employer must furnish the worker with two written notices before termination of employment can be legally effected: (1) a notice apprising the employee of the particular acts or omissions for which his dismissal is sought, and (2) a subsequent notice informing the employee of the employer’s decision to dismiss him. With regard to the requirement of a hearing, the essence of due process lies simply in an opportunity to be heard, and not that an actual hearing should always and indispensably be held.Likewise, there is no requirement that the notices of dismissal themselves be couched in the form and language of judicial or quasi-judicial decisions. What is required is for the employer to conduct a formal investigation process, with notices duly served on the employees informing them of the fact of investigation, and subsequently, if warranted, a separate notice of dismissal. Through the formal investigatory process, the employee must be accorded the right to present his or her side, which must be considered and weighed by the employer. The employee must be sufficiently apprised of the nature of the charge, so as to be able to intelligently defend himself or herself against the charge. Wilfredo M. Baron, et al. vs. National Labor Relations Commission, et al., G.R. No. 182299, February 22, 2010 .

Dismissal; gross neglect of duties. Article 282 (b) imposes a stringent condition before an employer may terminate an employment due to gross and habitual neglect by the employee of his duties. To sustain a termination of employment based on this provision of law, the negligence must not only be gross but also habitual.In the present case, the employer asserts that the employees failed to regularly undertake a monthly physical inventory of the outlet’s merchandise. The Court was not persuaded as it found that inventory preparation and reporting did not fall on the employees’ shoulders since they were to “assist the [stock] clerk” only. Kulas Ideas & Creations, et al. vs. Juliet Alcoseba, et al., G.R. No. 180123, February 18, 2010 . Dismissal; loss of trust and confidence. In Fungo v. Lourdes School of Mandaluyong, we restated the guidelines for the application of loss of trust and confidence as a just cause for dismissal of an employee from the service, thus: “a) loss of confidence should not be simulated; b) it should not be used as subterfuge for causes which are improper, illegal or unjustified; c) it may not be arbitrarily asserted in the face of overwhelming evidence to the contrary; and d) it must be genuine, not a mere afterthought to justify earlier action taken in bad faith.” In the present case, the employee, who was a warehouseman, held a position of trust and confidence and was given access to and authority over company property with clear tasks and guidelines laid down very early in his employment. Like any business entity, the company has every right to protect itself from actual threats to the viability of its operations. The employee, caught red-handed in a scheme to spirit off unpaid company sacks, not only violated his fiduciary duty as custodian of company property resulting in the company’s loss of trust and confidence in him; he had also become a threat to the viability of company operations. To rule that he should be reinstated would be oppressive to the company. The law, in protecting the rights of the employee, authorizes neither the oppression nor the self-destruction of the employer. Bibiana Farms and Mills, Inc. vs. Arturo Lado, G.R. No. 157861, February 2, 2010 . Dismissal; loss of trust and confidence. The doctrine of loss of confidence requires the concurrence of the following: (1) loss of confidence should not be simulated; (2) it should not be used as a subterfuge for causes which are improper, illegal, or unjustified; (3) it may not be arbitrarily asserted in the face of overwhelming evidence to the contrary; (4) it must be genuine, not a mere afterthought to justify an earlier action taken in bad faith; and (5) the employee involved holds a position of trust and confidence. Loss of confidence, as a just cause for termination of employment, is premised on the fact that the employee concerned holds a position of responsibility, trust and confidence. He must be invested with confidence on delicate matters, such as the custody, handling, care, and protection of the employer’s property and/or funds. In order to constitute a just cause for dismissal, the act complained of must be “work-related” such as would show the employee concerned to be unfit to continue working for the employer.The subject employee in this case is a managerial employee holding a highly sensitive position. Being the Head of the Marketing Group of the company, he was in charge, among others, of the over-all production

and sales performance of the company. Thus, as aptly pointed out by the CA, his performance was practically the lifeblood of the corporation, because its earnings depended on the sales of the marketing group, which he used to head. The position held by the employee required the highest degree of trust and confidence of his employer in the former’s exercise of managerial discretion insofar as the conduct of the latter’s business was concerned. The employee’s inability to perform the functions of his office to the satisfaction of his employer and the former’s poor judgment as marketing head caused the company huge financial losses. If these were not timely addressed and corrected, the company could have collapsed, to the detriment of its policy holders, stockholders, employees, and the public in general. Rolando P. Ancheta vs. Destiny Financial Plans, Inc. and Arsenio Bartolome, G.R. No. 179702, February 16, 2010 Dismissal; loss of trust and confidence. The Court found convincing evidence that a pattern of concealment and dishonesty marred the purchase of paper materials for the Women’s Journal’s special project, with the employee playing the principal and most active role. There is no question that the employee failed to make a reasonable canvass of the prices of the paper materials required by a company’s special project, resulting in substantial losses to the company. That a rush job was involved, is no excuse as canvassing could be done even in a day’s time as shown by the audit department’s canvass. That the employee was responsible for concealment and omissions also appears clear to us; he failed, under dubious circumstances, to seasonably disclose to his employer material information with financial impact on the purchase transaction.Thus, the Court cannot but conclude that substantial evidence exists justifying the employee’s dismissal for a just cause – loss of trust and confidence. For loss of trust and confidence to be a ground for dismissal, the law requires only that there be at least some basis to justify the dismissal. The fact that the employee had been with the company for 25 years cannot change the conclusion that he had become a liability to the company whose interests he miserably failed to protect. Philippine Journalist, Inc. vs. Leozar Dela Cruz y Balobal, G.R. No. 187120, February 16, 2010 .

Dismissal; just cause; loss of trust and confidence. Loss of trust and confidence, as a cause for termination of employment, is premised on the fact that the employee concerned holds a position of responsibility or of trust and confidence. As such, he must be invested with confidence on delicate matters, such as custody, handling or care and protection of the property and assets of the employer. And, in order to constitute a just cause for dismissal, the act complained of must be work-related and must show that the employee is unfit to continue to work for the employer. In the instant case, the petitioners-employees of Promm-Gem have not been shown to be occupying positions of responsibility or of trust and confidence. Neither is there any evidence to show that they are unfit to continue to work as merchandisers for Promm-Gem. Joeb Aliviado, et al. vs. Procter & Gamble Philippines, Inc., et al., G.R. No. 160506, March 9, 2010 . Dismissal; just cause; misconduct. Misconduct has been defined as improper or wrong conduct; the transgression of some established and definite rule of action, a forbidden act, a dereliction of duty, unlawful in character implying wrongful intent and not mere error of judgment. The misconduct to be serious must be of such grave and aggravated character and not merely trivial and unimportant. To be a just cause for dismissal, such misconduct (a) must be serious; (b) must relate to the performance of the employee’s duties; and (c) must show that the employee has become unfit to continue working for the employer. In other words, in order to constitute serious misconduct which will warrant the dismissal of an employee under paragraph (a) of Article 282 of the Labor Code, it is not sufficient that the act or conduct complained of has violated some established rules or policies. It is equally important and required that the act or conduct must have been performed with wrongful intent. In the instant case, petitioners-employees of Promm-Gem may have committed an error of judgment in claiming to be employees of P&G, but it cannot be said that they were motivated by any wrongful intent in doing so. As such, the Court found them guilty of simple misconduct only, for assailing the integrity of Promm-Gem as a legitimate and independent promotion firm. A misconduct which is not serious or grave, as that existing in the instant case, cannot be a valid basis for dismissing an employee. Joeb Aliviado, et al. vs. Procter & Gamble Philippines, Inc., et al., G.R. No. 160506, March 9, 2010 . Dismissal; just cause; union security clause. In terminating the employment of an employee by enforcing the union security clause, the employer is required only to determine and prove that: (1) the union security clause is applicable; (2) the union is requesting for the enforcement of the union security provision in the CBA; and (3) there is sufficient evidence to support the decision of the union to expel the employee from the union.

These requisites constitute just cause for terminating an employee based on the union security provision of the CBA.It is the third requisite that appears to be lacking in this case. It is apparent from the identical termination letters that GMC terminated Casio, et al., by relying upon the resolutions of the union, which made no mention at all of the evidence supporting the decision of the union to expel Casio, et al. from the union. GMC never alleged nor attempted to prove that the company actually looked into the evidence of the union for expelling Casio, et al. and made a determination on the sufficiency thereof. Without such a determination, GMC cannot claim that it had terminated the employment of Casio, et al. for just cause. The failure of GMC to make a determination of the sufficiency of evidence supporting the decision of the union constitutes non-observance by GMC of procedural due process in the dismissal of employees. General Milling Corporation vs. Ernesto Casio, et al. and Virgilio Pino, et al., G.R. No. 149552, March 10, 2010 .

Dismissal; requirements. Under the Labor Code, the requirements for the lawful dismissal of an employee are two-fold, consisting of substantive and procedural aspects. Not only must the dismissal be for a just or authorized cause; the basic requirements of procedural due process – notice and hearing – must likewise be observed before an employee may be dismissed. The burden of proof rests on the employer to show that the employee’s dismissal has met these due process requirements. The case of the employer must stand or fall on its own merits and not on the weakness of the employee’s defense. Bibiana Farms and Mills, Inc. vs. Arturo Lado, G.R. No. 157861, February 2, 2010 . Dismissal; separation pay. Under Article 279 of the Labor Code, an illegally dismissed employee “shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his compensation was withheld from him up to the time of his actual reinstatement.” In addition to full backwages, the Court has also repeatedly ruled that in cases where reinstatement is no longer feasible due to strained relations, then separation pay may be awarded instead of reinstatement. In Mt. Carmel College v. Resuena, the Court reiterated that the separation pay, as an alternative to reinstatement, should be equivalent to one (1) month salary for every year of service. Sargasso Construction and Development Corporation vs. National Labor Relations Commission (4th Division) and Gorgonio Mongcal, G.R. No. 164118, February 9, 2010 . Dismissal; serious misconduct. Misconduct has been defined as improper or wrong conduct. It is the transgression of some established and definite rule of action, a forbidden act, a dereliction of duty, willful in character, and implies wrongful intent and not mere error of judgment. The misconduct to be serious must be of such grave and aggravated character and not merely trivial and unimportant. Such misconduct, however serious, must nevertheless be in connection with the employee’s work to constitute just cause for his separation.In the present case, the Court found substantial evidence to prove that a serious misconduct has been committed to justify termination from employment. The Certified Public Accountant and Corporate Finance Manager of the company submitted a report dated February 19, 2000 stating that in spite of management’s memorandum, the keys to the office and filing cabinets were not surrendered. It was likewise stated in the report that petitioner Wilfredo Baron pulled out some records without allowing a representative from the internal audit team to inspect them. He noticed Wilfredo Baron deleting some files from the computer, which could no longer be retrieved. Moreover, a member of the audit team saw Cynthia Junatas (another petitioner) carrying some documents, including a Daily Collection Report. When asked to present the documents for inspection, Junatas refused and tore the document.

In addition, the audit team discovered that MSI incurred an inventory shortage of One Million Thirty Thousand Two Hundred Fifty-Eight Pesos and Twenty-One Centavos (P1,030,258.21). It found that Wilfredo Baron, the operations manager, in conspiracy with the other petitioners, orchestrated massive irregularities and grand scale fraud, which could no longer be documented because of theft of company documents and deletion of computer files. Unmistakably, the unauthorized taking of company documents and files, failure to pay unremitted collections, failure to surrender keys to the filing cabinets despite earlier instructions, concealment of shortages, and failure to record inventory transactions pursuant to a fraudulent scheme are acts of grave

misconduct, which are sufficient causes for dismissal from employment. Wilfredo M. Baron, et al. vs. National Labor Relations Commission, et al., G.R. No. 182299, February 22, 2010 .

Dismissal; fraud and serious misconduct . In this case, the Court found that Pastoril was as actively involved as Escoto and Omela in the sale of the Toyota Town Ace that resulted in a loss to the company. All three participated in making the company believe that Aquino bought the Toyota Town Ace for P190,000.00 when in fact, Aquino paid P200,000.00 for the vehicle. Thus, Pastoril acted in concert with Escoto and Omela in the transaction that defrauded their employer in the amount of P10,000.00. Pastoril prepared and issued the deed of sale indicating that the vehicle was sold for P190,000.00, although she knew that the buyer was being charged P200,000.00 for the vehicle. Escoto, Omela and Pastoril helped themselves to the price difference and tried to silence Rodriguez (who got wind of the anomaly) by giving him P1,000.00 and passing the P10,000.00 price difference off as the approved discount Aquino asked for. The Court held that there was a conspiracy between and among the three employees, where every participant had made significant contributory acts. White Diamond Trading Corporation and/or Jerry Uy vs. National Labor Relations Commission, et al., G.R. No. 186019. March 29, 2010 .

Dismissal; backwages. Article 279 of the Labor Code provides that “an employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his compensation was withheld from him up to the time of his actual reinstatement.”Thus, a number of cases holds that an illegally dismissed employee is entitled to two reliefs: backwages and reinstatement. The two reliefs are separate and distinct. In instances where reinstatement is no longer feasible because of strained relations between the employee and the employer, separation pay is granted. In effect, an illegally dismissed employee is entitled to either reinstatement, if viable, or separation pay if reinstatement is no longer viable, and backwages.

The normal consequences of respondents’ illegal dismissal, then, are reinstatement without loss of seniority rights, and payment of backwages computed from the time compensation was withheld up to the date of actual reinstatement. Where reinstatement is no longer viable as an option, separation pay equivalent to one (1) month salary for every year of service should be awarded as an alternative. The payment of separation pay is in addition to the payment of backwages.

Since reinstatement is no longer feasible in the present case, the award of separation pay in lieu of reinstatement is in order. Petitioner’s prayer for the award of backwages is meritorious, it, and the award of separation pay not being mutually exclusive. Ferdinand A. Pangilinan vs. Wellmade Manufacturing Corporation, G.R. No. 187005, April 7, 2010 .Dismissal; backwages. Reprimand being the appropriate imposable penalty for respondent’s actuations from the very beginning, the Court finds that respondent was unfairly denied from reporting for work and earning his keep, thus, entitling him to the payment of backwages.The Court is not unmindful of our previous pronouncements in similar cases involving suspension or dismissal from service, wherein the penalty imposed was reduced, but the award of backwages was denied.

Given the circumstances of the case, however, where the proper penalty should only be a reprimand, the Court finds the aforementioned cases to be inapplicable herein. On this note, the Court deems it proper to distinguish between the penalties of dismissal or suspension and reprimand and their respective effects on the grant or award of backwages. When an employee is dismissed or suspended it is but logical that since he is barred from reporting to work the same negates his right to be paid backwages. He has no opportunity to work during the period he was dismissed or suspended and, therefore, he has no salary to expect. However, the same does not hold true for an employee who is reprimanded. A reprimand usually carries a warning that a repetition of the same or similar act will be dealt with more severely. Under normal circumstances, an employee who is reprimanded is never prevented from reporting to work. He continues to work despite the warning. Thus, in the

case at bar, since respondent’s penalty should only be a reprimand, the Court deems it proper and equitable to affirm the Court of Appeals’ (CA’s) award of backwages.

In two instances, the Court granted the award of backwages during the period the employees were prevented from reporting to work despite concluding that the employee concerned violated reasonable office rules and regulations and imposing the penalty of reprimand.

In Jacinto v. Court of Appeals [G.R. No. 124540, November 14, 1997, 281 SCRA 657], the Court awarded petitioner Jacinto backwages after finding that she was only culpable of violating reasonable office rules and regulations for not having asked permission from school authorities to leave the school premises and seek medical attention and for not filing an application for sick leave for approval by the school authorities.Also, in Bangalisan v. Court of Appeals [G.R. 124678, July 31, 1997, 276 SCRA 619, 633], after affirming the findings that one of the petitioners, Rodolfo Mariano, is only liable for his violation of reasonable office rules and regulations for attending the wake and internment of his grandmother without the benefit of an approved leave of absence and the imposition of the penalty of reprimand, the Court still granted him backwages.Consistent with the Court’s rulings in Bangalisan and Jacinto, the grant of backwages to respondent is but proper. It is to be stressed that when imposing penalties, it must not only be made within the parameters of the law, but it should also satisfy the basic tenets of equity, justice, and fairplay. National Power Corporation vs. Alan Olandesca, G.R. No. 171434, April 23, 2010. Dismissal; dishonesty. In Philippine Amusement and Gaming Corporation v. Rilloroza [G.R. No. 141141, June 25, 2001], dishonesty is defined as the disposition to lie, cheat, deceive, or defraud; untrustworthiness; lack of integrity; lack of honesty, probity or integrity in principle; lack of fairness and straightforwardness; disposition to defraud, deceive or betray.It is not disputed that respondent took several materials and supplies from petitioner’s warehouse without the approved WRS. However, this should not be construed as dishonesty on the part of respondent that would warrant his dismissal from the service for the following reasons: First, the withdrawals of the supplies were duly recorded in the security guard’s logbook. If respondent intended to defraud petitioner, he could have easily taken items from the warehouse without having them recorded as he was then the Supervising Property Officer who had free access to the supplies. Second, right after withdrawing the items, respondent replaced them on his own initiative, without anyone instructing him to do so. This act negates his intent to defraud petitioner. Third, there is no clear showing that respondent misappropriated or converted the items for his own personal use or benefit. Fourth, the Graft Investigation Officer of the Office of the Ombudsman, in its Resolution dated February 5, 1999, in OMB-1-98-2011, dismissed a complaint for qualified theft filed by Teodulo V. Largo, Section Chief, Power Generation Group of petitioner against respondent as there was no competent and sufficient evidence on record to show that there was intent to gain on the part of the respondent, considering that the materials and supplies taken by him were used in fencing the watershed and reservation area of petitioner company. Likewise, there was no basis to charge him for malversation of public property as there was no misappropriation of the supplies for his personal use and that the same were for general purpose and not for any specific use.

Nonetheless, although the respondent did not commit an overt act of dishonesty, he is not exonerated from liability. It was an established company procedure that before materials can be taken out from the warehouse, the issuance of a WRS is an indispensable requirement. In fact, there was even a warning posted at the door of the property office that states: “BAWAL MAGLABAS NG GAMIT O MAGKARGA NG GASOLINA NG WALANG APRUBADONG WRS.” Being the Supervising Property Officer, respondent knows fully well that taking items from the warehouse without the required WRS is against the company rules and regulations. It is the paramount duty of respondent to protect the properties in the warehouse and to ensure that none shall be taken away without proper documentation.

The Machiavellian principle that “the end justifies the means” has no place in government service, which thrives on the rule of law, consistency and stability. Respondent, by taking the said properties without the

approved WRS, violated reasonable office rules and regulations as provided in Section 52 (C), (3), Rule IV of Civil Service Commission Memorandum Circular No. 19, series of 1999 (Uniform Rules on Administrative Cases in the Civil Service). Since this is respondent’s first offense in his more than 16 years of service, the appropriate penalty to be imposed against him is reprimand. National Power Corporation vs. Alan Olandesca, G.R. No. 171434, April 23, 2010.Dismissal; lost of trust and confidence. To terminate the services of an employee for loss of trust and confidence, two requisites must concur: (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.In the present case, respondent failed to justify its loss of trust and confidence on Consolacion even as it imputed to him, via Notice of Formal Investigation of April 14, 2003, non-compliance with (a) established non-written procedures and standards; (b) established written procedures and standards, and (c) verbal orders and/or instructions. These alleged acts of non-compliance are too general and can encompass just about any malfeasance. Nowhere in the Notice was there a detailed narration of the facts and circumstances that would serve as bases to terminate Consolacion, thus leaving to surmise what those procedures, standards and orders were. Anabel Benjamin, et al. vs. Amellar Corporation., G.R. No. 183383, April 5, 2010.Dismissal; management prerogative. Respondent’s right of management prerogative was exercised in good faith. Respondent presented evidence of the low volume of sales and orders for the production of industrial paper in 1999, which inevitably resulted to the company’s decision to streamline its operations. This fact was corroborated by respondent’s VP-Tissue Manufacturing Director and was not disputed by petitioner. Exercising its management prerogative and sound business judgment, respondent decided to cut down on operational costs by shutting down one of its paper mill. As held in International Harvester Macleod, Inc. v. Intermediate Appellate Court [233 Phil. 655,655-666 (1987)] the determination of the need to phase out a particular department and consequent reduction of personnel and reorganization as a labor and cost saving device is a recognized management prerogative which the courts will not generally interfere with.In this case, shutting down Paper Mill No. 4 was undoubtedly a business judgment arrived at in the face of the low demand for the production of industrial paper at the time. Despite an apparent reason to implement a retrenchment program as a cost-cutting measure, respondent, did not dismiss the workers affected by the closure of Paper Mill No. 4 outright but gave them an option to be transferred to posts of equal rank and pay. Retrenchment was given only as an option in case the affected employee did not want to be transferred. The Court viewed this as an indication of good faith on respondent’s part since it exhausted other possible measures before retrenchment. Besides, the employer’s prerogative to bring down labor costs by retrenchment must be exercised essentially as a measure of last resort, after less drastic means have been tried and found wanting. Giving the workers an option to be transferred without any diminution in rank and pay belie petitioner’s allegation that the streamlining scheme was implemented as a ploy to ease out employees. Apparently, respondent implemented its streamlining or reorganization plan in good faith, not in an arbitrary manner and without violating the tenurial rights of its employees. Dannie M. Pantoja vs. SCA Hygiene Products Corporation, G.R. No. 163554, April 23, 2010.Dismissal; retrenchment. The CA committed no reversible error in affirming the NLRC ruling that Talam was validly dismissed on the ground of retrenchment. The Supreme Court came to this conclusion based on the following considerations:First, the decision to retrench had a basis; it was not simulated nor resorted to for the purpose of getting rid of employees. The decision was upon the recommendation of the company’s external auditor. Second, the cost-cutting measure recommended involved reduction of TSFI’s payroll expense account which, as the auditor found, makes up 41% of the company’s total operating expenses. Third, Talam was dismissed due to a cause authorized by law – retrenchment to prevent losses. At the time of Talam’s dismissal, TSFI’s financial condition, as found by the external auditor, showed that it was not just expecting losses, it already suffered a net income loss of P2,474,418.00 and retained earnings deficit of P7,424,250.00 for the period ending December 31, 2002. Fourth, TSFI resorted to other measures to abate its losses. It claimed that during the crises period, it used as an office a small-room (a mere cubicle) with only a two-person support staff in the persons of Grapilon and Hermle; it reduced the salaries of its employees by as much as 30%. This submission by the company is substantiated by the schedule of Operating Expenses for the year ended December 31, 2002 and September 30, 2002. A quick glance at the schedule readily shows a reduction of TSFI’s operating expenses across the board. The schedule indicates a substantial decrease in operating expenses, from

P5,733,735.00 in September 2002 to P1,698,552.36 as of the end of December 2002. Francis Ray Talam vs. National Labor Relations Commission, 4th Division, Cebu City, et al., G.R. No. 175040, April 6, 2010.Dismissal; serious misconduct. The findings of the CA and National Labor Relations Commission (NLRC) establish the following: (1) Agad’s request for withdrawal of the 190 cylinders of LPG as stated in a Memorandum dated 12 February 1992 cannot be given credence since the Memorandum pertains to the replacement of the scrap materials due to Boy Bato consisting of 3,000 kilograms of black iron plates and not to the subject LPG cylinders; (2) Agad did not observe Caltex’s rules and regulations when he transferred the said cylinders to Millanes’ compound without the RMRD form as required under Caltex’s Field Accounting Manual; (3) Agad gave specific instructions to Millanes to sell the cylinders without bidding to third parties in violation of company rules; (4) Agad failed to submit the periodic inventory report of the LPG cylinders to the accounting department; (5) Agad did not remit the proceeds of the sale of the LPG cylinders; and (6) even if considered as scrap materials, the LPG cylinders still had monetary value which Agad cannot appropriate for himself without Caltex’s consent.Considering these findings, it is clear that Agad committed a serious infraction amounting to theft of company property. This act is akin to serious misconduct or willful disobedience by the employee of the lawful orders of his employer in connection with his work, a just cause for termination of employment recognized under Article 282(a) of the Labor Code.

Misconduct has been defined as 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 be serious, the misconduct must be of such grave and aggravated character. Caltex (Philippines), Inc., et. al. vs. Hermie G. Abad, et. al., G.R. No. 163554, April 23, 2010.Due Process; termination. The records belie Amular’s claim of denial of procedural due process. He chose not to present his side at the administrative hearing. In fact, he avoided the investigation into the charges against him by filing his illegal dismissal complaint ahead of the scheduled investigation. These facts show that the employee was given the opportunity to be heard and he cannot now come to the Court protesting that he was denied this opportunity. To belabor a point the Court has repeatedly made in employee dismissal cases, the essence of due process is simply an opportunity to be heard; it is the denial of this opportunity that constitutes violation of due process of law. Technol Eight Philippines Corporation vs. National Labor Relations Commission, et al.,G.R. No. 187605. April 13, 2010.

Dismissal; theft; degree of evidence. The long-standing rule is that the existence of a conspiracy must be proved by clear, direct and convincing evidence. In Fernandez v. National Labor Relations Commission, The Court expounded on the degree of evidence required to establish the existence of a conspiracy in this wise: “While it is true that in conspiracy, direct proof is not essential, it must however, be shown that it exists as clearly as the commission of the offense itself. There must at least be adequate proof that the malefactors had come to an agreement concerning the commission of a felony and decided to commit it. x x x For conspiracy to exist, it is essential that there must be conscious design to commit an offense. Conspiracy is not the product of negligence but of intentionality on the part of the cohorts.”Verily, there was a dearth of evidence directly linking the employee to the commission of the crime of theft, as his mere act of loading the dump truck with aggregates did not show that he knew of the other person’s plan to deliver the load to a place other than the company’s construction site. The only conclusion, therefore, is that the company had illegally dismissed the employee in the present case. Sargasso Construction and Development Corporation vs. National Labor Relations Commission (4th Division) and Gorgonio Mongcal, G.R. No. 164118, February 9, 2010 .

Employer-employee relationship; control test. This Court still employs the “control test” to determine the existence of an employer-employee relationship between hospital and doctor. In Calamba Medical Center, Inc. v. National Labor Relations Commission, et al., the Court held that: “Under the “control test”, an employment relationship exists between a physician and a hospital if the hospital controls both the means and the details of the process by which the physician is to accomplish his task. x x x That petitioner exercised control over respondents gains light from the undisputed fact that in the emergency room, the operating room, or any

department or ward for that matter, the doctor’s work is monitored through the hospital’s nursing supervisors, charge nurses and orderlies. Without the approval or consent of the hospital or its medical director, no operations can be undertaken in those areas. For the control test to apply, it is not essential for the employer to actually supervise the performance by the employee of his duties, it being enough that it has the right to wield the power.” Professional Services, Inc. vs. The Court of Appeals, et al./Natividad (substituted by her children Marcelino Agana III, Enrique Agana, Jr. Emma Agana-Andaya, Jesus Agana and Raymund Agana and Errique Agana) vs. The Court of Appeals and Juan Fuentes Miguel Ampil vs. Natividad and Enrique Agana, G.R. Nos. 126297/G.R. No. 126467/G.R. No. 127590, February 2, 2010.

Employer employee relationship . The elements to determine the existence of an employment relationship are: (1) selection and engagement of the employee; (2) the payment of wages; (3) the power of dismissal; and (4) the employer’s power to control the employee’s conduct. In filing a complaint for illegal dismissal, it is incumbent upon Abueva to prove the relationship by substantial evidence.In this regard, Abueva claims that he has worked with respondent hacienda for more than a year already and that he was allowed to stay inside the hacienda. As such, he is a regular employee entitled to monetary claims. However, petitioners have not presented competent proof that respondents engaged the services of Abueva; that respondents paid his wages or that respondents could dictate what his conduct should be while at work. In other words, Abueva’s allegations did not establish that his relationship with respondents had the attributes of an employer-employee relationship based on the four-fold test. Abueva was not able to discharge the burden of proving the existence of an employer-employee relationship. Moreover, Abueva was not able to refute respondents’ assertion that he hires other men to perform weeding job in the hacienda and that he is not exclusively working for respondents. Romeo Basay, et al. vs. Hacienda Consolation, et al., G.R. No. 175532, April 19, 2010.

Employee benefits; permanent disability benefits. In accordance with the avowed policy of the State to give maximum aid and full protection to labor, the Court applied the Labor Code concept of permanent total disability to Filipino seafarers. The Court held that the notion of disability is intimately related to the worker’s capacity to earn. What is compensated is not the employee’s injury or illness but his inability to work resulting in the impairment of his earning capacity; hence, disability should be understood less on its medical significance but more on the loss of earning capacity.In the present case, petitioner was able to secure a “fit to work” certification from a doctor only after more than five months from the time he was medically repatriated due to a finding that his disability is considered permanent and total. Significantly, petitioner remained unemployed even after he filed on February 26, 2002 his complaint to recover permanent total disability compensation and despite the August 31, 2005 Decision of the NLRC which was affirmed by the Court of Appeals, ordering respondents to “allow complainant to resume sea duty.”

That petitioner was not likely to fully recover from his disability is mirrored by the Labor Arbiter’s finding that his illness would possibly recur once he resumes his sea duties. This could very well be the reason why petitioner was not re-deployed by respondents. Petitioner’s disability being then permanent and total, he is “entitled to 100% compensation, i.e., US$80,000 for officers,” as stipulated in par. 20.1.7 of the parties’ CBA. Rizaldy M. Quitoriano vs. Jebsens Maritime, Inc./Ma. Theresa Gutay and/or Atle Jebsens Management A/S, G.R. No. 179868, January 21, 2010. Employee benefit; bonus. By definition, a “bonus” is a gratuity or act of liberality of the giver. It is something given in addition to what is ordinarily received by or strictly due the recipient. A bonus is granted and paid to an employee for his industry and loyalty which contributed to the success of the employer’s business and made possible the realization of profits. A bonus is also granted by an enlightened employer to spur the employee to greater efforts for the success of the business and realization of bigger profits.Generally, a bonus is not a demandable and enforceable obligation. For a bonus to be enforceable, it must have been promised by the employer and expressly agreed upon by the parties. Given that the bonus in this case is integrated in the CBA, the same partakes the nature of a demandable obligation. Verily, by virtue of its

incorporation in the CBA, the Christmas bonus due to respondent Association has become more than just an act of generosity on the part of the petitioner but a contractual obligation it has undertaken.

All given, business losses are a feeble ground for petitioner to repudiate its obligation under the CBA. The rule is settled that any benefit and supplement being enjoyed by the employees cannot be reduced, diminished, discontinued or eliminated by the employer. The principle of non-diminution of benefits is founded on the constitutional mandate to protect the rights of workers and to promote their welfare and to afford labor full protection. Hence, absent any proof that the employer’s consent was vitiated by fraud, mistake or duress, it is presumed that it entered into the CBA voluntarily and had full knowledge of the contents thereof and was aware of its commitments under the contract. Lepanto Ceramics, Inc. vs. Lepanto Ceramics Employees Association, G.R. No. 180866, March 2, 2010 .

Employee; monetary award. The law and the rules are consistent in stating that the employment permit must be acquired prior to employment. The Labor Code states: “Any alien seeking admission to the Philippines for employment purposes and any domestic or foreign employer who desires to engage an alien for employment in the Philippines shall obtain an employment permit from the Department of Labor.” Section 4, Rule XIV, Book 1 of the Implementing Rules and Regulations provides: “No alien seeking employment, whether as a resident or non-resident, may enter the Philippines without first securing an employment permit from the Ministry. If an alien enters the country under a non-working visa and wishes to be employed thereafter, he may only be allowed to be employed upon presentation of a duly approved employment permit.”Galera worked in the Philippines without a proper work permit but now wants to claim employee’s benefits under Philippine labor laws. She cannot come to this Court with unclean hands. To grant Galera’s prayer is to sanction the violation of the Philippine labor laws requiring aliens to secure work permits before their employment. WPP Marketing Communications, Inc. et al. vs. Jocelyn M. Galera/Jocelyn M. Galera Vs. WPP Marketing Communications, Inc. et al., G.R. No. 169207/G.R. No. 169239, March 25, 2010 .

Employee; recovery of personal contributions. May a government employee, dismissed from the service for cause, be allowed to recover the personal contributions he paid to the Government Service Insurance System (GSIS)? The answer is yes.Section 11(d) of Commonwealth Act No. 186, as amended, provides: “Upon dismissal for cause or on voluntary separation, he shall be entitled only to his own premiums and voluntary deposits, if any, plus interest of three per centum per annum, compounded monthly.” This provision continues to govern cases of employees dismissed for cause and their claims for the return of their personal contributions.

Also, it should be remembered that the GSIS laws are in the nature of social legislation, to be liberally construed in favor of the government employees. The money, subject of the employee’s request, consists of personal contributions made by him, premiums paid in anticipation of benefits expected upon retirement. The occurrence of a contingency, i.e., his dismissal from the service prior to reaching retirement age, should not deprive him of the money that belongs to him from the outset. To allow forfeiture of these personal contributions in favor of the GSIS would condone undue enrichment. Carmelita Lledo vs. Atty. Cesar V. Lledo, Branch Clerk of Court, Regional Trial Court, Branch 94, Quezon City, A.M. No. P-95-1167, February 9, 2010 .

Employee expenses; in-service training.

In the present case, Article XXI, Section 6 of the CBA provides that “All expenses of security guards in securing /renewing their licenses shall be for their personal account.” A reading of the provision would reveal that it encompasses all possible expenses a security guard would pay or incur in order to secure or renew his license. In-service training being a requirement for the renewal of a security guard’s license, expenses incurred therefore are claimed to be for the security guard’s personal account. However, the 1994 Revised Rules and Regulations Implementing the Private Security Agency Law (Republic Act No. 5487) provides that it shall be the primary responsibility of the operators of private security agency and company security forces to maintain and upgrade the standards of efficiency, discipline, performance and competence of their personnel. It further

provides that “[T]o maintain and/or upgrade the standard of efficiency, discipline and competence of security guards and detectives, company security force and private security agencies upon prior authority shall conduct-in-service training … The cost of training shall be pro-rated among the participating agencies/private companies.”Since it is the primary responsibility of operators of company security forces to maintain and upgrade the standards of efficiency, discipline, performance and competence of their personnel, it follows that the expenses to be incurred therein shall be for the account of the company. Further, the intent of the law to impose upon the employer the obligation to pay for the cost of its employees’ training is manifested in the aforementioned provision of law. While the law mandates pro-rating of expenses because it would be impracticable and unfair to impose the burden of expenses suffered by all participants on only one participating agency or company, if there is no centralization, there can be no pro-rating, and therefore, the company that has its own security forces must shoulder the entire cost for such training. If the intent of the law were to impose upon individual employees the cost of training, the provision on the pro-rating of expenses would not have found print in the law. Prior to the signing of the CBA, it was the company providing for the in-service training of the guards. Thus, implicit from the company’s actuations was its acknowledgment of its legally mandated responsibility to shoulder the expenses for in-service training. PNCC Skyway Traffic Management and Security Division Workers Organization (PSTMSWDO), represented by its President, Rene Soriano vs. PNCC Skyway Corporation), G.R. No. 171231, February 17, 2010

Employee vs. corporate officer. Corporate officers are given such character either by the Corporation Code or by the corporation’s by-laws. Under Section 25 of the Corporation Code, the corporate officers are the president, secretary, treasurer and such other officers as may be provided in the by-laws. Other officers are sometimes created by the charter or by-laws of a corporation, or the board of directors may be empowered under the by-laws of a corporation to create additional offices as may be necessary.An examination of WPP’s by-laws resulted in a finding that Galera’s appointment as a corporate officer (Vice-President with the operational title of Managing Director of Mindshare) during a special meeting of WPP’s Board of Directors is an appointment to a non-existent corporate office. WPP’s by-laws provided for only one Vice-President. At the time of Galera’s appointment on 31 December 1999, WPP already had one Vice-President in the person of Webster. Galera cannot be said to be a director of WPP also because all five directorship positions provided in the by-laws are already occupied. Finally, WPP cannot rely on its Amended By-Laws to support its argument that Galera is a corporate officer. The Amended By-Laws provided for more than one Vice-President and for two additional directors. Even though WPP’s stockholders voted for the amendment on 31 May 2000, the SEC approved the amendments only on 16 February 2001. Galera was dismissed on 14 December 2000. WPP, Steedman, Webster, and Lansang did not present any evidence that Galera’s dismissal took effect with the action of WPP’s Board of Directors.

Additionally, the following provisions in her employment contract are convincing indicators that Galera was an employee and not a corporate officer: (1) it mandates where and how often she is to perform her work; (2) the wages she receives are completely controlled by WPP; (3) she is subject to the regular disciplinary procedures of WPP; (4) section 14 thereof clearly states that she is a permanent employee — not a Vice-President or a member of the Board of Directors; (5) the intellectual property rights created or discovered by petitioner during her employment shall automatically belong to private respondent WPP [Under the Intellectual Property Code, this condition prevails if the creator of the work subject to the laws of patent or copyright is an employee of the one entitled to the patent or copyright]; and (6) the disciplinary procedure states that her right of redress is through Mindshare’s Chief Executive Officer for the Asia-Pacific. This last circumstance implies that she was not even under the disciplinary control of WPP’s Board of Directors, and therefore, she could not have been a WPP corporate officer as only the WPP Board of Directors could appoint and terminate its own corporate officer. WPP Marketing Communications, Inc. et al. vs. Jocelyn M. Galera/Jocelyn M. Galera vs. WPP Marketing Communications, Inc. et al., G.R. No. 169207/G.R. No. 169239, March 25, 2010 .

Illegal dismissal; backwages. The basis for the payment of backwages is different from that for the award of separation pay. Separation pay is granted where reinstatement is no longer advisable because of strained relations between the employee and the employer. Backwages represent compensation that should have been

earned but were not collected because of the unjust dismissal. The basis for computing backwages is usually the length of the employee’s service while that for separation pay is the actual period when the employee was unlawfully prevented from working.As to how both awards should be computed, Macasero v. Southern Industrial Gases Philippines [G.R. No. 178524, January 30, 2009] instructs that the award of separation pay is inconsistent with a finding that there was no illegal dismissal, for under Article 279 of the Labor Code and as held in a catena of cases, an employee who is dismissed without just cause and without due process is entitled to backwages and reinstatement or payment of separation pay in lieu thereof. Thus, an illegally dismissed employee is entitled to two reliefs: backwages and reinstatement. The two reliefs provided are separate and distinct. Golden Ace Builders and Arnold U. Azur vs. Jose A. Talde,G.R. No. 187200, May 5, 2010.Illegal dismissal; doctrine of strained relations. Under the doctrine of strained relations, the payment of separation pay is considered an acceptable alternative to reinstatement when the latter option is no longer desirable or viable. On one hand, such payment liberates the employee from what could be a highly oppressive work environment. On the other hand, it releases the employer from the grossly unpalatable obligation of maintaining in its employ a worker it could no longer trust.Strained relations must be demonstrated as a fact, however, to be adequately supported by evidence— substantial evidence to show that the relationship between the employer and the employee is indeed strained as a necessary consequence of the judicial controversy.In the present case, the Labor Arbiter found that actual animosity existed between petitioner Azul and respondent as a result of the filing of the illegal dismissal case. Such finding, especially when affirmed by the appellate court as in the case at bar, is binding upon the Court, consistent with the prevailing rules that the Court will not try facts anew and that findings of facts of quasi-judicial bodies are accorded great respect, even finality. Golden Ace Builders and Arnold U. Azul vs. Jose A. Talde, G.R. No. 187200, May 5, 2010.Illegal dismissal; separation pay. In instances where reinstatement is no longer feasible because of strained relations between the employee and the employer, separation pay is granted. In effect, an illegally dismissed employee is entitled to either reinstatement, if viable, or separation pay if reinstatement is no longer viable, and backwages. The normal consequences of respondents’ illegal dismissal, then, are reinstatement without loss of seniority rights, and payment of backwages computed from the time compensation was withheld up to the date of actual reinstatement. Where reinstatement is no longer viable as an option, separation pay equivalent to one (1) month salary for every year of service should be awarded as an alternative. The payment of separation pay is in addition to payment of backwages.The accepted doctrine is that separation pay may avail in lieu of reinstatement if reinstatement is no longer practical or in the best interest of the parties. Separation pay in lieu of reinstatement may likewise be awarded if the employee decides not to be reinstated. Golden Ace Builders and Arnold U. Azur vs. Jose A. Talde, G.R. No. 187200, May 5, 2010.

Illegal dismissal. Under Republic Act No. 6715, employees who are illegally dismissed are entitled to full backwages, inclusive of allowances and other benefits or their monetary equivalent, computed from the time their actual compensation was withheld from them up to the time of their actual reinstatement but if reinstatement is no longer possible, the backwages shall be computed from the time of their illegal termination up to the finality of the decision.The employees in this case are entitled to backwages and separation pay, considering that reinstatement is no longer possible because the positions they previously occupied are no longer existing. General Milling Corporation vs. Ernesto Casio, et al. and Virgilio Pino, et al., G.R. No. 149552, March 10, 2010.Illegal dismissal. WPP’s dismissal of Galera lacked both substantive and procedural due process. Apart from Steedman’s letter dated 15 December 2000 to Galera, WPP failed to prove any just or authorized cause for Galera’s dismissal. The law also requires that the employer must furnish the worker sought to be dismissed with two written notices before termination of employment can be legally effected: (1) notice which apprises the employee of the particular acts or omissions for which his dismissal is sought; and (2) the subsequent notice which informs the employee of the employer’s decision to dismiss him. Failure to comply with these requirements taints the dismissal with illegality. WPP’s acts clearly show that Galera’s dismissal did not comply with the two-notice rule. WPP Marketing Communications, Inc. et al. vs. Jocelyn M. Galera/Jocelyn

M. Galera Vs. WPP Marketing Communications, Inc. et al., G.R. No. 169207/G.R. No. 169239, March 25, 2010.Illegal dismissal; abandonment. Petitioner was, for five times, notified in writing by respondent to resume teaching for the second semester of school year 2003-2004 following the service of her suspension during the first semester. She was advised that a teaching load had already been prepared for her. Respondent never replied to those notices. Petitioner’s justification for her failure to respond to the notices was that her acceptance of the offer could be construed as a waiver of her claims. The Court held that petitioner’s justification is not a valid excuse.Petitioner contends that her filing of a complaint for illegal dismissal was a manifestation of her desire to return to her job and negated any intention to sever the employer-employee relationship. Petitioner forgets that her complaint for “illegal dismissal” which she filed on June 5, 2003 sprang, not from her dismissal on December 6, 2003 due to abandonment, but from her suspension during the first semester of school year 2003-2004. While the filing of a complaint with a prayer for reinstatement negates an intention to sever the employer-employee relationship, the same contemplates an action taken subsequent to dismissal and not after an employee, by all indications, abandoned her job. Evangeline C. Cobarrubias vs. Saint Louis University, Inc., G.R. No. 176717, March 17, 2010.Illegal dismissal; monetary awards. Clearly, the law intends the award of backwages and similar benefits to accumulate past the date of the Labor Arbiter’s decision until the dismissed employee is actually reinstated. But if, as in this case, reinstatement is no longer possible, this Court has consistently ruled that backwages shall be computed from the time of illegal dismissal until the date the decision becomes final.Separation pay, on the other hand, is equivalent to one month pay for every year of service, a fraction of six months to be considered as one whole year. Here that would begin from January 31, 1994 when petitioner Belen began his service. Technically the computation of his separation pay would end on the day he was dismissed on August 20, 1999 when he supposedly ceased to render service and his wages ended. But, since Belen was entitled to collect backwages until the judgment for illegal dismissal in his favor became final, here on September 22, 2008, the computation of his separation pay should also end on that date.

Further, since the monetary awards remained unpaid even after it became final on September 22, 2008 because of issues raised respecting the correct computation of such awards, it is but fair that respondent Javellana be required to pay 12% interest per annum on those awards from September 22, 2008 until they are paid. The 12% interest is proper because the Court treats monetary claims in labor cases the equivalent of a forbearance of credit. It matters not that the amounts of the claims were still in question on September 22, 2008. What is decisive is that the order to pay the monetary awards had long become final. Daniel P. Javellana, Jr. vs. Albino Belen/Albino Belen Vs. Daniel P. Javellana, Jr. and Javellana Farms, Inc., G.R. No. 181913/G.R. No. 182158, March 5, 2010 .

Illegal dismissal . Contrary to the CA’s perception, the Court finds a work-connection in Amular’s and Ducay’s assault on Mendoza. As the CA itself noted, the underlying reason why Amular and Ducay confronted Mendoza was to question him about his report to De Leon – Technol’s PCD assistant supervisor – regarding the duo’s questionable work behavior. The motivation behind the confrontation was rooted on workplace dynamics as Mendoza, Amular and Ducay interacted with one another in the performance of their duties.Under these circumstances, Amular undoubtedly committed misconduct or exhibited improper behavior that constituted a valid cause for his dismissal under the law and jurisprudential standards. The circumstances of his misdeed rendered him unfit to continue working for Technol. Thus, Amular was not illegally dismissed; he was dismissed for cause. Technol Eight Philippines Corporation vs. National Labor Relations Commission, et al., G.R. No. 187605. April 13, 2010.Illegal Dismissal . If the school were to apply the probationary standards (as in fact it says it did in the present case), these standards must not only be reasonable but must have also been communicated to the teachers at the start of the probationary period, or at the very least, at the start of the period of application of the said standards. These terms, in addition to those expressly provided by the Labor Code, would serve as the just cause for the termination of the probationary contract. As explained above, the details of this finding of just cause must be communicated to the affected teachers as a matter of due process.

AMACC, by its submissions, admits that it did not renew the petitioners’ contracts because they failed to pass the Performance Appraisal System for Teachers (PAST) and other requirements for regularization that the school implements to maintain its high academic standards. The evidence is unclear on the exact terms of the standards, although the school also admits that these were standards under the Guidelines on the Implementation of AMACC Faculty Plantilla put in place at the start of school year 2000-2001.

While the Court can grant that the standards were duly communicated to the petitioners and could be applied beginning the 1st trimester of the school year 2000-2001, glaring and very basic gaps in the school’s evidence still exist. The exact terms of the standards were never introduced as evidence; neither does the evidence show how these standards were applied to the petitioners. Without these pieces of evidence (effectively, the finding of just cause for the non-renewal of the petitioners’ contracts), the Court has nothing to consider and pass upon as valid or invalid for each of the petitioners. Inevitably, the non-renewal (or effectively, the termination of employment of employees on probationary status) lacks the supporting finding of just cause that the law requires and, hence, is illegal. Yolanda M. Mercado, et al. vs. Ama Computer College, Parañaque City, G.R. No. 183572, April 13, 2010.Illegal dismissal. The Court is not unmindful of the rule in labor cases that the employer has the burden of proving that the termination was for a valid or authorized cause; however, it is likewise incumbent upon the employees that they should first establish by competent evidence the fact of their dismissal from employment. The one who alleges a fact has the burden of proving it and the proof should be clear, positive and convincing. In this case, aside from mere allegations, no evidence was proffered by the petitioners that they were dismissed from employment. The records are bereft of any indication that petitioners were prevented from returning to work or otherwise deprived of any work assignment by respondents.In Abad v. Roselle Cinema [G.R. No. 141371, March 24, 2006, 485 SCRA 262, 272], the Court ruled that the substantial evidence proffered by the employer that it had not terminated the employee should not be ignored on the pretext that the employee would not have filed the complaint for illegal dismissal if he had not really been dismissed. The Court held that such non sequitur reasoning cannot take the place of the evidence of both the employer and the employee. Romeo Basay, et al. vs. Hacienda Consolation, et al., G.R. No. 175532, April 19, 2010.Illegal Dismissal. The Court views with approval the observation of the CA and the NLRC that the employer cannot justify the defense of abandonment as it failed to prove that indeed the employee had abandoned her work. It did not even bother to send a letter to her last known address requiring her to report for work and explain her alleged continued absences.The ratiocination of the NLRC on this score merits the Court’s imprimatur, viz: The law clearly spells out the manner by which an unjustified refusal to return to work by an employee may be established. Thus, respondent should have given complainant a notice with warning concerning her alleged absences (Section 2, Rule XIV, Book V, Implementing Rules and Regulations of the Labor Code). The notice requirement actually consists of two parts to be separately served on the employee to wit: (1) notice to apprise the employee of his absences with a warning concerning a possible severance of employment in the event of an unjustified excuse therefor, and (2) subsequent notice of the decision to dismiss in the event of an employee’s refusal to pay heed to such warning. Only after complying with those requirements can it be reasonably concluded that the employee actually abandoned his job. In the present case, more than two (2) months had already lapsed since the employee allegedly started to absent herself when she instituted her action for illegal dismissal. During the said period of time, no action was taken by the company regarding the employee’s alleged absences, something which is quite peculiar had her employment not been severed at all. Accordingly, the Court found no merit in the company’s defense of abandonment in view of an utter lack of evidence to support the same. Hence, the employee’s charge of illegal dismissal stands uncontroverted. Diversified Security, Inc. vs. Alicia V. Bautista. G.R. No. 152234, April 15, 2010.

Project employee. The test for distinguishing a “project employee” from a “regular employee” is whether or not he has been assigned to carry out a “specific project or undertaking,” with the duration and scope of his engagement specified at the time his service is contracted. Here, it is not disputed that petitioner company contracted respondent Trinidad’s service by specific projects with the duration of his work clearly set out in his

employment contracts. He remained a project employee regardless of the number of years and the various projects he worked for the company.Generally, length of service provides a fair yardstick for determining when an employee initially hired on a temporary basis becomes a permanent one, entitled to the security and benefits of regularization. But this standard will not be fair, if applied to the construction industry, simply because construction firms cannot guarantee work and funding for its payrolls beyond the life of each project. And getting projects is not a matter of course. Construction companies have no control over the decisions and resources of project proponents or owners. There is no construction company that does not wish it has such control but the reality, understood by construction workers, is that work depended on decisions and developments over which construction companies have no say.

In this case, respondent Trinidad’s series of employments with petitioner company were co-terminous with its projects. When its Boni Serrano-Katipunan Interchange Project was finished in December 2004, Trinidad’s employment ended with it. He was not dismissed. His employment contract simply ended with the project for which he had signed up. His employment history belies the claim that he continuously worked for the company. Intervals or gaps separated one contract from another. William Construction Corp. and/or Teresita Uy and William Uy vs. Jorge R. Trinidad, G.R. No. 183250, March 12, 2010 . Reinstatement; reimbursement. An employee cannot be compelled to reimburse the salaries and wages he received during the pendency of his appeal, notwithstanding the reversal by the NLRC of the LA’s order of reinstatement. The pertinent law on the matter is not concerned with the wisdom or propriety of the LA’s order of reinstatement, for if it was, then it should have provided that the pendency of an appeal should stay its execution. After all, a decision cannot be deemed irrefragable unless it attains finality. College of the Immaculate Concepcion vs. National Labor Relations Commission and Atty. Marius F. Carlos, Ph.D, G.R. No. 167563, March 22, 2010 .

Labor Code; interpretation . Another basic principle is that expressed in Article 4 of the Labor Code – that all doubts in the interpretation and implementation of the Labor Code should be interpreted in favor of the workingman. This principle has been extended by jurisprudence to cover doubts in the evidence presented by the employer and the employee. The petitioner has, at very least, shown serious doubts about the merits of the company’s case, particularly in the appreciation of the clinching evidence on which the NLRC and CA decisions were based. In such contest of evidence, the Court applied Article 4 as basis to rule in favor of the employee. In this case, the Court held that petitioner was constructively dismissed given the hostile and discriminatory working environment he found himself in, particularly evidenced by the escalating acts of unfairness against him that culminated in the appointment of another HRD manager without any prior notice to him. Where no less than the company’s chief corporate officer was against him, petitioner had no alternative but to resign from his employment.The Court also gave significance to the fact that petitioner sought almost immediate official recourse to contest his separation from service through a complaint for illegal dismissal, and held that this is not the act of one who voluntarily resigned; his immediate filing of a complaint characterizes him as one who deeply felt that he had been wronged. Manolo A. Peñaflor vs. Outdoor Clothing Manufacturing Corporation, et al., G.R. No. 177114, January 21, 2010.Labor only contracting. 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 for 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 the performance of the work of the contractual employee.In the instant case, the financial statements of Promm-Gem show that it has authorized capital stock of P1 million and a paid-in capital, or capital available for operations, of P500,000.00 as of 1990. It also has long term assets worth P432,895.28 and current assets of P719,042.32. Promm-Gem has also proven that it

maintained its own warehouse and office space with a floor area of 870 square meters. It also had under its name three registered vehicles, which were used for its promotional/merchandising business. Promm-Gem also has other clients aside from P&G. Under the circumstances, we find that Promm-Gem has substantial investment, which relates to the work to be performed. Under these circumstances, Promm-Gem cannot be considered a labor-only contractor.

On the other hand, the Articles of Incorporation of SAPS show that it has a paid-in capital of only P31,250.00. There is no other evidence to prove how much its working capital and assets are. Furthermore, there is no showing of substantial investment in tools, equipment or other assets.

SAPS’ lack of substantial capital is highlighted by the records which show that its payroll for its merchandisers alone for one month would already total P44,561.00. It had 6-month contracts with P&G. Yet SAPS failed to show that it could complete the 6-month contracts using its own capital and investment. Its capital is not even sufficient for one month’s payroll. SAPS failed to show that its paid-in capital of P31,250.00 is sufficient for the period required for it to generate revenues to sustain its operations independently. Substantial capital refers to capitalization used in the performance or completion of the job, work or service contracted out. In the present case, SAPS has failed to show substantial capital.

Furthermore, the employees in this case performed merchandising and promotion of the products of P&G, which are activities that the Court has considered directly related to the manufacturing 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, we find that SAPS is engaged in “labor-only contracting”. Joeb Aliviado, et al. vs. Procter & Gamble Philippines, Inc., et al., G.R. No. 160506, March 9, 2010 .

Dismissal pursuant to union security clause; separate notice and haring required. GMC illegally dismissed Casio, et al. because not only did GMC fail to make a determination of the sufficiency of evidence to support the union’s decision to expel Casio, et al., it also failed to accord the expelled union members procedural due process, i.e., notice and hearing, prior to the termination of their employment.GMC, by its own admission, did not conduct a separate and independent investigation to determine the sufficiency of the evidence supporting the union’s expulsion of Casio, et al. It simply acceded to the union’s demand. Consequently, GMC cannot insist that it has no liability for the payment of backwages and damages to Casio, et al., and that the liability for such payment should fall only upon the union officers and board members who expelled Casio, et al. GMC completely missed the point that the expulsion of Casio, et al. by the union and the termination of employment of the same employees by GMC, although related, are two separate and distinct acts. Despite a closed shop provision in the CBA, law and jurisprudence impose upon GMC the obligation to accord Casio, et al. substantive and procedural due process before complying with the union’s demand to dismiss the expelled union members from service. The failure of GMC to carry out this obligation makes it liable for illegal dismissal of Casio, et al. General Milling Corporation vs. Ernesto Casio, et al. and Virgilio Pino, et al., G.R. No. 149552, March 10, 2010 .

. Management prerogatives; contract of perpetual employment. The Court cannot countenance the employee’s claim that a contract of perpetual employment was ever constituted. While the Constitution recognizes the primacy of labor, it also recognizes the critical role of private enterprise in nation-building and the prerogatives of management. A contract of perpetual employment deprives management of its prerogative to decide whom to hire, fire and promote, and renders inutile the basic precepts of labor relations. While management may validly waive it prerogatives, such waiver should not be contrary to law, public order, public policy, morals or good customs. An absolute and unqualified employment for life in the mold of petitioner’s concept of perpetual employment is contrary to public policy and good customs, as it unjustly forbids the employer from terminating the services of an employee despite the existence of a just or valid cause. It likewise compels the employer to retain an employee despite the attainment of the statutory retirement age, even if the employee has

became a “non-performing asset” or, worse, a liability to the employer. Ronilo Sorreda vs. Cambridge Electronics Corporation, G.R. No. 172927, February 11, 2010 .

Quitclaim; elements. It is true that the law looks with disfavor on quitclaims and releases by employees who have been inveigled or pressured into signing them by unscrupulous employers seeking to evade their legal responsibilities and frustrate just claims of employees. In certain cases, however, the Court has given effect to quitclaims executed by employees if the employer is able to prove the following requisites, to wit: (1) the employee executes a deed of quitclaim voluntarily; (2) there is no fraud or deceit on the part of any of the parties; (3) the consideration of the quitclaim is credible and reasonable; and (4) the contract is not contrary to law, public order, public policy, morals or good customs, or prejudicial to a third person with a right recognized by law. Goodrich Manufacturing Corporation & Mr. Nilo Chua Goy vs. Emerlina Ativo, et al., G.R. No. 188002, February 1, 2010.Quitclaim; validity. In the case at bar, both the Labor Arbiter and the NLRC ruled that the employees executed their quitclaims without any coercion from the company following their voluntary resignation from the company. The contents of the quitclaim documents are simple, clear and unequivocal. The records of the case are bereft of any substantial evidence to show that the employees did not know that they were relinquishing their right short of what they had expected to receive and contrary to what they have so declared. Put differently, at the time they were signing their quitclaims, respondents honestly believed that the amounts received by them were fair and reasonable settlements of the amounts, which they would have received had they refused to voluntarily resign from the said company. Goodrich Manufacturing Corporation & Mr. Nilo Chua Goy vs. Emerlina Ativo, et al., G.R. No. 188002, February 1, 2010.Vacation leave; scheduling. Although the preferred vacation leave schedule of employees should be given priority, they cannot demand, as a matter of right, for their request to be automatically granted by the company. If the employees were given the exclusive right to schedule their vacation leave then said right should have been incorporated in the CBA. In the absence of such right and in view of the mandatory provision in the CBA giving the company the right to schedule the vacation leave of its employees, the CBA prevails.In the grant of vacation leave privileges to an employee, the employer is given the leeway to impose conditions on the entitlement to and commutation of the same, as the grant of vacation leave is not a standard of law, but a prerogative of management. It is a mere concession or act of grace of the employer and not a matter of right on the part of the employee. It is, therefore, well within the power and authority of an employer to impose certain conditions, as it deems fit, on the grant of vacation leaves, such as having the option to schedule the same. PNCC Skyway Traffic Management and Security Division Workers Organization (PSTMSWDO), represented by its President, Rene Soriano vs. PNCC Skyway Corporation), G.R. No. 171231, February 17, 2010

Preventive Suspension; Process. What the Rules require is that the employer act on the suspended worker’s status of employment within the 30-day period by concluding the investigation either by absolving him of the charges, or meting the corresponding penalty if liable, or ultimately dismissing him. If the suspension exceeds the 30-day period without any corresponding action on the part of the employer, the employer must reinstate the employee or extend the period of suspension, provided the employee’s wages and benefits are paid in the interim.In the present case, petitioner company had until May 20, 2002 to act on Taroy’s case. It did by terminating him through a notice dated May 10, 2002, hence, the 30-day requirement was not violated even if the termination notice was received only on June 4, 2002, absent any showing that the delayed service of the notice on Taroy was attributable to Genesis Transport. Genesis Transport Service, Inc. et al. vs. Unyon ng Malayang Manggagawa ng Genesis (UMMGT), et al., G.R. No. 182114, April 5, 2010.Preventive Suspension; Process. What the Rules require is that the employer act on the suspended worker’s status of employment within the 30-day period by concluding the investigation either by absolving him of the charges, or meting the corresponding penalty if liable, or ultimately dismissing him. If the suspension exceeds the 30-day period without any corresponding action on the part of the employer, the employer must reinstate the employee or extend the period of suspension, provided the employee’s wages and benefits are paid in the interim.

In the present case, petitioner company had until May 20, 2002 to act on Taroy’s case. It did by terminating him through a notice dated May 10, 2002, hence, the 30-day requirement was not violated even if the termination notice was received only on June 4, 2002, absent any showing that the delayed service of the notice on Taroy was attributable to Genesis Transport. Genesis Transport Service, Inc. et al. vs. Unyon ng Malayang Manggagawa ng Genesis (UMMGT), et al., G.R. No. 182114, April 5, 2010.

Project employee. The test for distinguishing a “project employee” from a “regular employee” is whether or not he has been assigned to carry out a “specific project or undertaking,” with the duration and scope of his engagement specified at the time his service is contracted. Here, it is not disputed that petitioner company contracted respondent Trinidad’s service by specific projects with the duration of his work clearly set out in his employment contracts. He remained a project employee regardless of the number of years and the various projects he worked for the company.Generally, length of service provides a fair yardstick for determining when an employee initially hired on a temporary basis becomes a permanent one, entitled to the security and benefits of regularization. But this standard will not be fair, if applied to the construction industry, simply because construction firms cannot guarantee work and funding for its payrolls beyond the life of each project. And getting projects is not a matter of course. Construction companies have no control over the decisions and resources of project proponents or owners. There is no construction company that does not wish it has such control but the reality, understood by construction workers, is that work depended on decisions and developments over which construction companies have no say.

In this case, respondent Trinidad’s series of employments with petitioner company were co-terminous with its projects. When its Boni Serrano-Katipunan Interchange Project was finished in December 2004, Trinidad’s employment ended with it. He was not dismissed. His employment contract simply ended with the project for which he had signed up. His employment history belies the claim that he continuously worked for the company. Intervals or gaps separated one contract from another. William Construction Corp. and/or Teresita Uy and William Uy vs. Jorge R. Trinidad, G.R. No. 183250, March 12, 2010 . Reinstatement; reimbursement. An employee cannot be compelled to reimburse the salaries and wages he received during the pendency of his appeal, notwithstanding the reversal by the NLRC of the LA’s order of reinstatement. The pertinent law on the matter is not concerned with the wisdom or propriety of the LA’s order of reinstatement, for if it was, then it should have provided that the pendency of an appeal should stay its execution. After all, a decision cannot be deemed irrefragable unless it attains finality. College of the Immaculate Concepcion vs. National Labor Relations Commission and Atty. Marius F. Carlos, Ph.D, G.R. No. 167563, March 22, 2010 . Separation pay; termination for cause. Separation pay is only warranted when the cause for termination is not attributable to the employee’s fault, such as those provided in Articles 283 and 284 of the Labor Code, as well as in cases of illegal dismissal in which reinstatement is no longer feasible. It is not allowed when an employee is dismissed for just cause, such as serious misconduct.Jurisprudence has classified theft of company property as a serious misconduct and denied the award of separation pay to the erring employee. In this case, the Court saw no reason why this same rule should not be similarly applied in the case of Capor. She attempted to steal the property of her long-time employer. For committing such misconduct, she is definitely not entitled to an award of separation pay.

Capor’s argument that despite the finding of theft, she should still be granted separation pay in light of her long years of service with the Company did not persuade the Court. Indeed, length of service and a previously clean employment record cannot simply erase the gravity of the betrayal exhibited by a malfeasant employee. Length of service is not a bargaining chip that can simply be stacked against the employer. After all, an employer-employee relationship is symbiotic where both parties benefit from mutual loyalty and dedicated service. If an employer had treated his employee well, has accorded him fairness and adequate compensation as determined by law, it is only fair to expect a long-time employee to return such fairness with at least some respect and honesty. Thus, it may be said that betrayal by a long-time employee is more insulting and odious for a fair employer. While we sympathize with Capor’s plight, being of retirement age and having served

petitioners for 39 years, we cannot award any financial assistance in her favor because it is not only against the law but also a retrogressive public policy. Reno Foods, Inc., and/or Vicente Khu vs. Nagkakaisang Lakas ng Manggagawa (NLM) – Katipunan on behalf of its member, Nenita Capor, G.R. No. 164016, March 15, 2010

Suspension; leave without prior authority. While it is true that the union and its members have been granted union leave privileges under the CBA, the grant cannot be considered separately from the other provisions of the CBA, particularly the provision on management prerogatives where the CBA reserved for the company the full and complete authority in managing and running its business. The Court, in the present case, saw nothing in the language of the union leave provision that removes from the company the right to prescribe reasonable rules and regulations to govern the manner of availing of union leaves, particularly the prerogative to require its prior approval. In fact, prior notice is expressly required under the CBA so that the company can appropriately respond to the request for leave. In this sense, the rule requiring prior approval only made express what is implied from the terms of the CBA.Despite management’s disapproval of his requested leave, the employee still went on leave, in open disregard of his superior’s orders. This rendered the employee open to the charge of insubordination, separately from his absence without official leave. Malayan Employees Association-FFW and Rodolfo Mangalino vs. Malayan Insurance Company, Inc., G.R. No. 181357, February 2, 2010.Representation and Transportation Allowance; entitlement. Statutory law, as implemented by administrative issuances and interpreted in decisions, has consistently treated RATA as distinct from salary. Unlike salary, which is paid for services rendered, RATA belongs to a basket of allowances to defray expenses deemed unavoidable in the discharge of office. Hence, RATA is paid only to certain officials who, by the nature of their offices, incur representation and transportation expenses.At any rate, the denial of RATA must be grounded on relevant and specific provision of law. By insisting that, as requisite for her receipt of RATA, respondent must discharge her office as Bacnotan’s treasurer while on reassignment at the La Union treasurer’s office, the DBM effectively punishes respondent for acceding to her reassignment. Surely, the law could not have intended to place local government officials like respondent in the difficult position of having to choose between disobeying a reassignment order or keeping an allowance. Department of Budget and Management (DBM) vs. Olivia D. Leones, G.R. No. 169726, March 18, 2010 . Reinstatement. Given the period that has lapsed and the inevitable change of circumstances that must have taken place in the interim in the academic world and at AMACC, which changes inevitably affect current school operations, the Court holds that – in lieu of reinstatement – the petitioners should be paid separation pay computed on a trimestral basis from the time of separation from service up to the end of the complete trimester preceding the finality of this Decision. The separation pay shall be in addition to the other awards, properly recomputed, that the LA originally decreed. Yolanda M. Mercado, et al. vs. Ama Computer College, Parañaque City, G.R. No. 183572, April 13, 2010.

Release, Waiver and Quitclaim . Talam was not an unlettered employee; he was an information technology consultant and must have been fully aware of the consequences of what he was entering into. The quitclaim was a voluntary act as there is no showing that he was coerced into executing the instrument; he received a valuable consideration for his less than two years of service with the company. Thus, from all indications, the release and quitclaim was a valid and binding undertaking that should have been recognized by the labor authorities and the CA.While the law frowns upon releases and quitclaims executed by employees who are inveigled or pressured into signing them by unscrupulous employers seeking to evade their legal responsibilities, a legitimate waiver representing a voluntary settlement of a laborer’s claims should be respected by the courts as the law between the parties. In the Court’s view, Talam’s release and quitclaim fall into the category of legitimate waivers as defined by the Court.

With Talam’s voluntary execution of the release and quitclaim, the Court found the filing of the illegal dismissal case tainted with bad faith. Neither can TSFI be made to answer for failure to afford Talam procedural due process. The release and quitclaim, in the Court’s mind, erased whatever infirmities there might have been in the notice of termination as Talam had already voluntarily accepted his

dismissal through the release and quitclaim. As such, the written notice became academic; the notice, after all, is merely a protective measure put in place by law and serves no useful purpose after protection has been assured. The Court thus finds no basis for the conclusion that TSFI violated procedural due process and should pay nominal damages. Francis Ray Talam vs. National Labor Relations Commission, 4th Division, Cebu City, et al., G.R. No. 175040, April 6, 2010.

Resignation of Employee. While the letter states that Peñaflor’s resignation was irrevocable, it does not necessarily signify that it was also voluntarily executed. Precisely because of the attendant hostile and discriminatory working environment, Peñaflor decided to permanently sever his ties with Outdoor Clothing. This falls squarely within the concept of constructive dismissal that jurisprudence defines, among others, as involuntarily resignation due to the harsh, hostile, and unfavorable conditions set by the employer. It arises when a clear discrimination, insensibility, or disdain by an employer exists and has become unbearable to the employee. The gauge for constructive dismissal is whether a reasonable person in the employee’s position would feel compelled to give up his employment under the prevailing circumstances. With the appointment of Buenaobra to the position he then still occupied, Peñaflor felt that he was being eased out and this perception made him decide to leave the company.The fact of filing a resignation letter alone does not shift the burden of proving that the employee’s dismissal was for a just and valid cause from the employer to the employee. In Mora v. Avesco [G.R. No. 177414, November 14, 2008, 571 SCRA 226], the Court ruled that should the employer interpose the defense of resignation, it is still incumbent upon the employer to prove that the employee voluntarily resigned. Manolo A. Peñaflor vs. Outdoor Clothing Manufacturing Corp., et al., G.R. No. 177114, April 13, 2010.

March 2010 Philippine Supreme Court Decisions on Labor Law and ProcedurePosted on April 26, 2010 by Leslie C. Dy • Posted in Labor Law • Tagged compensable illness, constructive dismissal,estoppel, illegal dismissal, jurisdiction, labor-only contracting, parties, POEA, project employee •Here are selected March 2010 rulings of the Supreme Court of the Philippines on labor law and procedure:

Labor law

April 2010 Philippine Supreme Court Decisions on Labor Law and Procedure.

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Posted on May 19, 2010 by Leslie C. Dy • Posted in Labor Law • Tagged backwages, certiorari, dishonesty, due process,illegal dismissal, loss of trust and confidence, misconduct, reinstatement, res judicata, resignation, retrenchment, serious misconduct, suspension, waiver •Here are selected April 2010 rulings of the Supreme Court of the Philippines on labor law and procedure:

Labor LawReinstatement. Given the period that has lapsed and the inevitable change of circumstances that must have taken place in the interim in the academic world and at AMACC, which changes inevitably affect current

school operations, the Court holds that – in lieu of reinstatement – the petitioners should be paid separation pay computed on a trimestral basis from the time of separation from service up to the end of the complete trimester preceding the finality of this Decision. The separation pay shall be in addition to the other awards, properly recomputed, that the LA originally decreed. Yolanda M. Mercado, et al. vs. Ama Computer College, Parañaque City, G.R. No. 183572, April 13, 2010.

May 2010 Philippine Supreme Court Decisions on Labor Law and ProcedurePosted on June 22, 2010 by Leslie C. Dy • Posted in Labor Law • Tagged backwages, illegal dismissal, judgment •Here are selected May 2010 rulings of the Supreme Court of the Philippines on labor law and procedure:

Labor law

June 2010 Philippine Supreme Court Decisions on Labor Law and ProcedureConstructive dismissal; definition; transfer as management prerogative. Constructive dismissal is defined as a quitting because continued employment is rendered impossible, unreasonable or unlikely, or when there is a demotion in rank or a diminution of pay. It 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.Here, there was no diminution of petitioner’s salary and other benefits. There was no evidence that she was harassed or discriminated upon, or that respondents made it difficult for her to continue with her other duties. Absent any evidence of bad faith, it is within the exercise of respondents’ management prerogative to transfer some of petitioner’s duties, if, in their judgment, this would be more beneficial to the corporation. Estrella Velasco vs. Transit Automotive Supply, Inc. and Antonio de Dios, G.R. No. 171327, June 18, 2010.Constructive dismissal; off-detailing; resignation; notice requirement . The company evidently placed petitioner on floating status after being relieved of her position. But, as the Court has repeatedly ruled, such act of “off-detailing” does not amount to a dismissal so long as the floating status does not continue beyond a reasonable time. In this case, the employee’s floating status ran up to more than six months as of August 16, 2002. For this reason, the company may be considered to have constructively dismissed the employee from work as of that date. Hence, petitioner’s purported resignation on October 15, 2002 could not have been legally possible.The company claims that it gave petitioner notices on August 23, 2002 and September 2, 2002, asking her to explain her failure to report for work and informing her that the company would treat such failure as lack of interest in her continued employment. But these notices cannot possibly take the place of the notices required by law as they came more than six months after the company placed her on floating status, at which time, the employee is already deemed to have been constructively dismissed her from work. Elsa S. Mali-on v. Equitable General Services Inc., G.R. No. 185269, June 29, 2010.Death benefits; entitlement . In order to avail of death benefits, the death of the employee should occur during the term of the employment contract. For emphasis, we reiterate that the death of a seaman during the term of employment contract makes the employer liable to his heirs for death benefits, but if the seaman dies after his contract of employment has expired, his beneficiaries are not entitled to the death benefits. Southeastern Shipping, Southeastern Shipping Group, Ltd. vs. Federico U. Navarra, Jr., G.R. No. 167678, June 22, 2010.Death benefits; post-medical examination; inadvertence of employer. In the cases of Philippines., Inc. v. Joaquin [437 SCRA 608] and Rivera v. Wallem Maritime Services, Inc.[474 SCRA 714], the Supreme Court stressed the importance of a post-employment medical examination or its equivalent for the award of death benefits to seafarers and/or their representatives in compliance with POEA Memorandum Circular No. 055-96 and Department Order No. 33, Series of 1996, which provide that the seafarer must report to his employer for a

post-employment medical examination within three working days from the date of arrival, otherwise, benefits under the POEA standard employment contract would be nullified. However, in the present case, the absence of a post-employment medical examination cannot be used to defeat respondent’s claim since the failure to subject the seafarer to this requirement was not due to the seafarer’s fault but to the inadvertence or deliberate refusal of petitioners. Interorient Maritime Enterprises, Inc. et al. v. Leonora S. Remo, G.R. No. 181112, June 29, 2010.Dismissal; breach of trust; lack of loss not a defense. The acts of the employee revealed a mind that was willing to disregard bank rules and regulations when other branch officers concurred. Her defense that the bank suffered no loss is of no moment. The focal point is that she betrayed the trust of the bank. Hence, the bank rightfully terminated the services of the employee for willful breach of the trust that it reposed in her. Luzviminda A. Ang vs. Philippine National Bank, G.R. No. 178762, June 16, 2010.Dismissal; burden of proof. In termination cases, the burden of proof rests upon the employer to show that the dismissal of the employee is for just cause and failure to do so would mean that the dismissal is not justified. This is in consonance with the guarantee of security of tenure in the Constitution, and elaborated in the Labor Code. A dismissed employee is not required to prove his innocence to the charges leveled against him by his employer. The determination of the existence and sufficiency of a just cause must be exercised with fairness and in good faith and after observing due process. Lima Land, Inc., Leandro Javier, Sylvia Duque and Premy Ann Beloy vs. Marlyn Cuavas, G .R. No. 169523, June 16, 2010 .Dismissal; exercised with compassion and understanding; doubts resolved in favor of employee. While an employer has its own interest to protect, and pursuant thereto, it may terminate a managerial employee for a just cause, such prerogative to dismiss or lay off an employee must be exercised without abuse of discretion. Its implementation should be tempered with compassion and understanding. The employer should bear in mind that, in the exercise of the said prerogative, what is at stake is not only the employee’s position, but his very livelihood, his very breadbasket. Indeed, the consistent rule is that if doubts exist between the evidence presented by the employer and the employee, the scales of justice must be tilted in favor of the latter. The employer must affirmatively show rationally adequate evidence that the dismissal was for justifiable cause. Thus, when the breach of trust or loss of confidence alleged is not borne by clearly established facts, as in this case, such dismissal on the cited grounds cannot be allowed. Lima Land, Inc., Leandro Javier, Sylvia Duque and Premy Ann Beloy vs. Marlyn Cuavas, G .R. No. 169523, June 16, 2010 .Dismissal; gross neglect of duty; duty to family is no defense. Dr. Estampa’s defense is not acceptable. A person’s duty to his family is not incompatible with his job-related commitment to come to the rescue of victims of disasters. Disasters do not strike every day. Besides, knowing that his job as senior medical health officer entailed the commitment to make a measure of personal sacrifice, he had the choice to resign from it when he realized that he did not have the will and the heart to respond. Dr. Edilberto Estampa, Jr. vs. Government of Davao, G.R. No. 190681, June 21, 2010.Dismissal; loss of confidence not entitled to separation pay . It is significant to stress that for there to be a valid dismissal based on loss of trust and confidence, the breach of trust must be willful, meaning it must be done intentionally, knowingly, and purposely, without justifiable excuse. The basic premise for dismissal on the ground of loss of confidence is that the employee concerned holds a position of trust and confidence. It is the breach of this trust that results in the employer’s loss of confidence in the employee.In the case of Aromin v. NLRC [553 SCRA 273], the assistant vice-president of BPI was validly dismissed for loss of trust and confidence. The Court disallowed the payment of separation pay on the ground that he was found guilty of willful betrayal of trust, a serious offense akin to dishonesty.Bank of the Philippine Islands and BPI Family Bank vs. Hon. National Labor Relations Commission (1st Division) and Ma. Rosario N. Arambulo, G.R. No. 179801. June 18, 2010.Dismissal; loss of trust and confidence; managerial employees. Loss of trust and confidence, as a just cause for termination of employment, is premised on the fact that an employee concerned holds a position where greater trust is placed by management and from whom greater fidelity to duty is correspondingly expected. This includes managerial personnel entrusted with confidence on delicate matters, such as the custody, handling, or care and protection of the employer’s property. The betrayal of this trust is the essence of the offense for which an employee is penalized.It must be noted, however, that in a plethora of cases, the Supreme Court has distinguished the treatment of managerial employees from that of rank-and-file personnel, insofar as the application of the doctrine of loss of

trust and confidence is concerned. Thus, with respect to rank-and-file personnel, loss of trust and confidence, as ground for valid dismissal, requires proof of involvement in the alleged events in question, and that mere uncorroborated assertions and accusations by the employer will not be sufficient. But as regards a managerial employee, the mere existence of a basis for believing that such employee has breached the trust of his employer would suffice for his dismissal. Hence, in the case of managerial employees, proof beyond reasonable doubt is not required, it being sufficient that there is some basis for such loss of confidence, such as when the employer has reasonable ground to believe that the employee concerned is responsible for the purported misconduct, and the nature of his participation therein renders him unworthy of the trust and confidence demanded of his position. Lima Land, Inc., Leandro Javier, Sylvia Duque and Premy Ann Beloy vs. Marlyn Cuavas, G .R. No. 169523, June 16, 2010 .Dismissal; mere negligence or carelessness not sufficient ground for loss of confidence. Respondent’s negligence or carelessness in her duties, however, are not justifiable grounds for petitioners’ loss of trust and confidence in her, especially in the absence of any malicious intent or fraud on respondent’s part. Loss of trust and confidence stems from a breach of trust founded on a dishonest, deceitful or fraudulent act. In the case at bar, respondent did not commit any act which was dishonest or deceitful. She did not use her authority as the Finance and Administration Manager to misappropriate company property nor did she abuse the trust reposed in her by petitioners with respect to her responsibility to implement company rules. The most that can be attributed to respondent is that she was remiss in the performance of her duties. This, though, does not constitute dishonest or deceitful conduct which would justify the conclusion of loss of trust and confidence. Lima Land, Inc., Leandro Javier, Sylvia Duque and Premy Ann Beloy vs. Marlyn Cuavas, G .R. No. 169523, June 16, 2010.Dismissal for just cause, separation pay allowed in exceptional cases. While as a general rule, an employee who has been dismissed for any of the just causes enumerated under Article 282 of the Labor Code is not entitled to separation pay, the Court has allowed in numerous cases the grant of separation pay or some other financial assistance to an employee dismissed for just causes on the basis of equity.In the leading case of Philippine Long Distance Telephone Co. v. NLRC [164 SCRA 671] the Court stated that separation pay shall be allowed as a measure of social justice only in those instances where the employee is validly dismissed for causes other than serious misconduct or those reflecting on his moral character. In granting separation pay to respondent, the NLRC and Court of Appeals both adhered to this jurisprudential precept and cleared respondent of bad faith. Bank of the Philippine Islands and BPI Family Bank vs. Hon. National Labor Relations Commission (1st Division) and Ma. Rosario N. Arambulo, G.R. No. 179801, June 18, 2010.Employee benefit; total disability construed. It has been held that disability is intimately related to one’s earning capacity. It should be understood less on its medical significance but more on the loss of earning capacity. Total disability does not mean absolute helplessness. In disability compensation, it is not the injury, which is compensated, but rather the incapacity to work resulting in the impairment of one’s earning capacity. Thus, permanent disability is the inability of a worker to perform his job for more than 120 days, regardless of whether or not he loses the use of any part of his body. Oriental Ship Management Co., Inc. vs. Romy B. Bastol, G.R. No. 186289, June 29, 2010.Employer-Employee Relationship; agents of insurance companies; exception to the Insular case; Our ruling in the first Insular case [Insular Insurance v. NLRC, 179 SCRA 459] case did not foreclose the possibility of an insurance agent becoming an employee of an insurance company; if evidence exists showing that the company promulgated rules or regulations that effectively controlled or restricted an insurance agent’s choice of methods or the methods themselves in selling insurance, an employer-employee relationship would be present. The existence of an employer-employee relationship is thus determined on a case-to-case basis depending on the evidence on record.Gregorio V. Tongko v. The Manufacturers Life Insurance Co. (Phils) and Renato A. Vergel De Dios, G.R. No. 167622, June 29, 2010.Nature of employer; privatization; entitlement to benefits. Although the transformation of the PNB from a government-owned corporation to a private one did not result in a break in its life as juridical person, the same idea of continuity cannot be said of its employees. Section 27 of Presidential Proclamation 50 provided for the automatic termination of employer-employee relationship upon privatization of a government-owned and controlled corporation. Further, such privatization cannot deprive the government employees involved of their accrued benefits or compensation.

As for possible benefits accruing after privatization, the same should be deemed governed by the Labor Code since the PNB that rehired the employee has become a private corporation. Under the Omnibus Rules Implementing the Labor Code, Book VI, Rule I, Section 7, the employee’s separation from work for a just cause does not entitle her to termination pay. Luzviminda A. Ang vs. Philippine National Bank, G.R. No. 178762, June 16, 2010.Nature of employer; privatization no defense; continuity of offense . The offense for which petitioner was removed took place when the government still owned PNB and she was then a government employee. But while PNB began as a government corporation, it did not mean that its corporate being ceased and was subsequently reestablished when it was privatized. It remained the same corporate entity before, during, and after the change over with no break in its life as a corporation. Consequently, the offenses that were committed against the bank before its privatization continued to be offenses against the bank after the privatization. Luzviminda A. Ang vs. Philippine National Bank, G.R. No. 178762, June 16, 2010.Prescription of labor claims; overseas contract workers. The employment of seafarers, including claims for death benefits, is governed by the contracts they sign every time they are hired or rehired; and as long as the stipulations therein are not contrary to law, morals, public order or public policy, they have the force of law between the parties.In Cadalin v. POEA’s Administrator [238 SCRA 721, 764] we held that Article 291 of the Labor Code covers all money claims from employer-employee relationship. “It is not limited to money claims recoverable under the Labor Code, but applies also to claims of overseas contract workers”.Article 291 of the Labor Code is the law governing prescription of money claims of seafarers, a class of overseas contract workers. This law prevails over Section 28 of the Standard Employment Contract for Seafarers, which provides for claims to be brought only within one year from the date of the seafarer’s return to the point of hire. Thus, for the guidance of all, Section 28 of the Standard Employment Contract for Seafarers, insofar as it limits the prescriptive period for the filing of money claims by seafarers, is hereby declared null and void. The applicable provision is Article 291 of the Labor Code, it being more favorable to the seafarers and more in accord with the State’s declared policy to afford full protection to labor, which provides for a three-year prescriptive period. Southeastern Shipping, Southeastern Shipping Group, Ltd. vs. Federico U. Navarra, Jr., G.R. No. 167678, June 22, 2010.Quitclaims; general rule; requirements for validity; instances when it was annulled. As a rule, quitclaims, waivers, or releases are looked upon with disfavor and are largely ineffective to bar claims for the measure of a worker’s legal rights. To be valid, a Deed of Release, Waiver and/or Quitclaim must meet the following requirements: (1) that there was no fraud or deceit on the part of any of the parties; (2) that the consideration for the quitclaim is credible and reasonable; and (3) that the contract is not contrary to law, public order, public policy, morals or good customs, or prejudicial to a third person with a right recognized by law.Courts have stepped in to annul questionable transactions, especially where there is clear proof that a waiver, for instance, was obtained from an unsuspecting or a gullible person; or where the agreement or settlement was unconscionable on its face. A quitclaim is ineffective in barring recovery of the full measure of a worker’s rights, and the acceptance of benefits therefrom does not amount to estoppel. Moreover, a quitclaim in which the consideration is scandalously low and inequitable cannot be an obstacle to the pursuit of a worker’s legitimate claim. Interorient Maritime Enterprises, Inc. et al. v. Leonora S. Remo, G.R. No. 181112, June 29, 2010.Retirement benefits; does not include allowances. Executive Order No. 756 temporary measure; statutory construction. Section 6 of Executive Order No. 756 (“E.O. 756”), which provides for the computation of retirement proceeds including allowances, does not provide for a permanent retirement plan, as against the prohibition of Section 28, Subsection (b) of Commonwealth Act No. 186 (“C.A. 186”), as amended. The E.O. 756 should be read adjunct to its mandate of reorganizing the Philippine International Trading Corporation. The increased benefit under E.O. 756 was clearly meant as an incentive for employees who retire, resign or are separated from service during or as a consequence of the reorganization. As a temporary measure, it cannot be interpreted as an exception to the general prohibition against separate or supplementary insurance and/or retirement or pension plans under C.A. 186, as amended.In reconciling E.O. 756 with C.A.186, as amended, uppermost in the mind of the Court is the fact that the best method of interpretation is that which makes laws consistent with other laws which are to be harmonized rather

than having one considered repealed in favor of the other. Philippine International Trading Corporation vs. Commission on Audit, G.R. No. 183517, June 22, 2010.Resignation; burden of proof. The rule in termination cases is that the employer bears the burden of proving that he dismissed his employee for a just cause. And, when the employer claims that the employee resigned from work, the burden is on the employer to prove that he did so willingly. Whether that is the case would largely depend on the circumstances surrounding such alleged resignation. Those circumstances must be consistent with the employee’s intent to give up work.Elsa S. Mali-on v. Equitable General Services Inc., G.R. No. 185269, June 29, 2010.Solidary liability of employers; proof of bad faith. Based on MAM Realty Development Corporation v. NLRC [244 SCRA 797], for corporate officers to be held solidarily liable in labor disputes there must be evidence of bad faith or malice. Querubin L. Alba and Rizalinda D. De Guzman vs. Robert L. Yupangco, G.R. No. 188233, June 29, 2010..

July 2010 Philippine Supreme Court Decisions on Labor Law and ProcedurePosted on August 27, 2010 by Leslie C. Dy • Posted in Labor Law • Tagged due process, employee benefits, employer-employee relationship, illegal dismissal, intra-union dispute, jurisdiction, labor-only contracting, NLRC, redundancy,retirement, retrenchment, suspension •Here are selected July 2010 rulings of the Supreme Court of the Philippines on labor law and procedure:

Labor LawAssumption of jurisdiction by Secretary of Labor; authority to decide on legality of dismissals arising from strike. The assumption of jurisdiction powers granted to the Labor Secretary under Article 263(g) is not limited to the grounds cited in the notice of strike or lockout that may have preceded the strike or lockout; nor is it limited to the incidents of the strike or lockout that in the meanwhile may have taken place. As the term “assume jurisdiction” connotes, the intent of the law is to give the Labor Secretary full authority to resolve all matters within the dispute that gave rise to or which arose out of the strike or lockout, including cases over which the labor arbiter has exclusive jurisdiction.In the present case, what the Labor Secretary refused to rule upon was the dismissal from employment of employees who violated the return to work order and participated in illegal acts during a strike. This was an issue that arose from the strike and was, in fact, submitted to the Labor Secretary, through the union’s motion for the issuance of an order for immediate reinstatement of the dismissed officers and the company’s opposition to the motion. The dismissal issue was properly brought before the Labor Secretary and he was mistaken in ruling that the matter is legally within the exclusive jurisdiction of the labor arbiter to decide. Bagong Pagkakaisa ng Manggagawa ng Triumph International, et al. vs. Secretary of Department of Labor and Employment, et al./Triumph International (phils.), Inc. vs. Bagong Pagkakaisa ng Manggagawa ng Triumph International, et al., G.R. No. 167401, July 5, 2010.Bargaining deadlock; award; findings of Secretary of Labor. Unless there is a clear showing of grave abuse of discretion, the Court cannot, and will not, interfere with the expertise of the Secretary of Labor. The award granted by the Labor Secretary in resolving the bargaining deadlock, drawn as they were from a close examination of the submissions of the parties, do not indicate any legal error, much less any grave abuse of discretion, and should not be disturbed. Bagong Pagkakaisa ng Manggagawa ng Triumph International, et al. vs. Secretary of Department of Labor and Employment, et al./Triumph International (phils.), Inc. vs. Bagong Pagkakaisa ng Manggagawa ng Triumph International, et al., G.R. No. 167401, July 5, 2010.Dismissal of employees; just cause. Theft committed by an employee is a valid reason for his dismissal by the employer. Although as a rule this Court leans over backwards to help workers and employees continue with their employment or to mitigate the penalties imposed on them, acts of dishonesty in the handling of company property, petitioner’s income in this case, are a different matter. Maribago Bluewater Beach Resort, Inc. vs. Nito Dual, G.R. No. 180660, July 20, 2010.

Dismissal of employees; requirements. The validity of an employee’s dismissal from service hinges on the satisfaction of the two substantive requirements for a lawful termination. These are, first, whether the employee was accorded due process the basic components of which are the opportunity to be heard and to defend himself. This is the procedural aspect. And second, whether the dismissal is for any of the causes provided in the Labor Code of the Philippines. This constitutes the substantive aspect. Erector Advertising Sign Group, Inc. and Arch Jimy C. Amoroto vs. Expedito Cloma, G.R. No. 167218, July 2, 2010.Dismissal of employees; procedural due process. Furnishing the employee with a suspension order prior to his notice of termination does not satisfy the requirement of a first notice. It implies that the employer has already decided, for the reasons stated therein, to suspend the employee from work in the company, and the wording of the order in the present case gives no indication that the employee is being given an opportunity to submit his defense or explanation. Erector Advertising Sign Group, Inc. and Arch Jimy C. Amoroto vs. Expedito Cloma, G.R. No. 167218, July 2, 2010.Dismissal of employees; procedural due process. In order to validly dismiss an employee, he must be accorded both substantive and procedural due process by the employer. Procedural due process requires that the employee be given a notice of the charge against him, an ample opportunity to be heard, and a notice of termination. Even if the aforesaid procedure is conducted after the filing of the illegal dismissal case, the legality of the dismissal, as to its procedural aspect, will be upheld provided that the employer is able to show that compliance with these requirements was not a mere afterthought. New Puerto Commercial and Richard Lim vs. Rodel Lopez and Felix Gavan,G.R. No. 169999, July 26, 2010.Employee benefits; 13th month pay; definition of basic salary. The term “basic salary” of an employee for the purpose of computing the thirteenth-month pay was interpreted to include all remuneration or earnings paid by the employer for services rendered, but does not include allowances and monetary benefits which are not integrated as part of the regular or basic salary, such as the cash equivalent of unused vacation and sick leave credits, overtime, premium, night differential and holiday pay, and cost-of-living allowances. However, these salary-related benefits should be included as part of the basic salary in the computation of the thirteenth-month pay if, by individual or collective agreement, company practice or policy, the same are treated as part of the basic salary of the employees. Central Azucarera De Tarlac vs. Central Azucarera De Tarlac Labor Union-NLU, G.R. No. 188949, July 26, 2010Employee benefits; 13th month pay; company policy or practice. The practice of petitioner in giving 13th-month pay based on the employees’ gross annual earnings which included the basic monthly salary, premium pay for work on rest days and special holidays, night shift differential pay and holiday pay continued for almost thirty (30) years and has ripened into a company policy or practice which cannot be unilaterally withdrawn. The petitioner cannot claim that the practice arose from an erroneous application of the law since no doubtful or difficult question of law is involved in this case. The guidelines set by the law are not difficult to decipher. Central Azucarera De Tarlac vs. Central Azucarera De Tarlac Labor Union-NLU, G.R. No. 188949, July 26, 2010Employee benefits; death benefits. For the death of a seafarer to be compensable under the 1996 POEA Standard Employment Contract, the death must occur during the term of his contract of employment. In this case, the seaman died 2 years after he was repatriated to the Philippines due to medical reasons, hence the claimants are not entitled to receive death benefits under the contract. The decedent’s heirs claimed that the death should be compensable since the nature of his work as a seaman triggered the illnesses that eventually led to his death. However, the Court noted that though the immediate cause of the seaman’s death was pneumonia, the underlying cause of death was advanced HIV (AIDS). Since the claimants failed to prove that the decedent acquired HIV during his 2-month employment aboard the respondents’ vessel, their claim for death benefits was denied. Lydia Escarcha vs. Leonis Navigation Co., Inc., et al., G.R. No. 182740, July 5, 2010.Employees; government agency. The Armed Forces of the Philippines Commissary and Exchange Services (AFPCES) is a government agency performing proprietary functions. By clear implication of law, all AFPCES personnel should therefore be classified as government employees and any complaint for illegal dismissal involving such employees should be filed with the CSC and not the NLRC. Such fact cannot be negated by the failure of AFPCES to follow appropriate civil service rules in the hiring, appointment, discipline and dismissal of employees. Neither can it be denied by the fact that AFPCES chose to enroll its employees in the SSS instead of the GSIS. Such considerations cannot be used against the CSC to deprive it of its jurisdiction.

Hence, the Labor Arbiter’s decision in the illegal dismissal case filed by AFPCES employees is a total nullity for having been rendered without jurisdiction. Magdalena Hidalgo, et al. vs. Republic of the Philippines, G.R. No. 179793, July 5, 2010.Employer-employee relationship; evidence. Any doubt arising from the evaluation of evidence as between the employer and the employee must be resolved in favor of the latter. It is settled jurisprudence that the burden of proving payment of monetary claims rests on the employer. It was entirely within the company’s power to present personnel files, payrolls, remittances, and other similar documents which would have proven payment of respondent’s money claims as these documents should necessarily be in its possession; hence, failure to present such evidence must be taken against it. Dansart Security Force & Allied Services Company and Danilo A. Sarte vs. Ms. Jean O. Bagoy, G.R. No. 168495, July 2, 2010.Government agencies; reorganization. A reorganization is valid provided it is done in good faith. As a general rule, the test of good faith lies in whether the purpose of the reorganization is for economy or to make the bureaucracy more efficient. Removal from office as a result of reorganization must, thus, pass the test of good faith. A demotion in office is tantamount to removal if no cause is shown for it. Consequently, before a demotion may be effected pursuant to a reorganization, the observance of the rules on bona fide abolition of public office is essential.Virginia D. Bautista vs. Civil Service Commission and Dev’t. Bank of the Philippines, G.R. No. 185215, July 22, 2010.Government agencies; reorganization; personal liability of local official. The RTC of Cadiz declared void a resolution that reorganized the city government and effectively purged the city government of Cadiz of all employees who opposed the mayor politically or disagreed with him in his policies. The RTC ordered the payment of moral damages to the workers, but it was not clear if the payment was to be made by the city government or by Mayor Valera, in his personal capacity. The Court held that Varela is personally liable to pay moral damages. Settled is the principle that a public official may be liable in his personal capacity for whatever damage he may have caused by his act done with malice and in bad faith or beyond the scope of his authority or jurisdiction. In the complaint, the employees stated that, “due to the illegal acts of the Defendant, Plaintiffs suffered mental torture and anguish, sleepless nights, wounded feelings, besmirched reputation and social humiliation.” The State can never be the author of illegal acts. The complaint merely identified Varela as the mayor of Cadiz City. It did not categorically state that Varela was being sued in his official capacity. The identification and mention of Varela as the mayor of Cadiz City did not automatically transform the action into one against Varela in his official capacity. The allegations in the complaint determine the nature of the cause of action. Eduardo Valera vs. Ma. Daisy Revalez, G.R. No. 171705, July 29, 2010.Illegal dismissal; burden of proof; filing of complaint not sufficient to disprove abandonment. In illegal dismissal cases, the employer bears the burden of proving that the termination was for a valid or authorized cause. However, before the employer is asked to prove that the dismissal was legal, the employee must first establish by substantial evidence the fact of his dismissal from service. Logically, if there is no dismissal, then there can be no question as to its legality or illegality.Under normal circumstances, an employee’s act of filing an illegal dismissal complaint against his employer is inconsistent with abandonment. However, the courts should not use that one act to conclude that an employee was constructively dismissed when substantial evidence proves otherwise. In this case, substantial evidence proves that Pulgar was not constructively dismissed, and that he had abandoned his duties in order to avoid an investigation being conducted by his employer. Philippine Rural Reconstruction vs. Virgilio Pulgar, G.R. No. 169227. July 5, 2010.Illegal dismissal; misrepresentation of cause is an act of bad faith. The complainant, Rio Remo, was dismissed from service on the ground of retrenchment. However, the records show that Sentinel hired a replacement soon after Remo’s dismissal, proving that Sentinel’s financial distress was not as serious as it claimed, and that retrenchment was not the real reason for Remo’s dismissal. Sentinel concealed its true intention and committed misrepresentation when it claimed that Remo’s dismissal was due to serious financial losses. This act of misrepresentation is an act of active bad faith that fatally tainted Remo’s dismissal and rendered it illegal. Sentinel Integrated Services, Inc. vs. Rio Jose Remo, G.R. No. 188223, July 5, 2010.Illegal dismissal; relief available to employee. An illegally dismissed employee is entitled to reinstatement without loss of seniority rights and other privileges and to full backwages, inclusive of allowances, and to her other benefits or their monetary equivalent, computed from the time the compensation was withheld up to the time of actual reinstatement. Where reinstatement is no longer feasible, separation pay equivalent to at least

one month salary or one month salary for every year of service, whichever is higher, a fraction of at least six months being considered as one whole year, should be awarded to respondent. An award for moral and exemplary damages cannot be justified unless the employer had acted in bad faith. The award of moral and exemplary damages cannot be justified solely upon the premise that the employer dismissed his employee without authorized cause and due process. Lambert Pawnbrokers and Jewelry corporation and Lambert Lim vs. Helen Binamira, G.R. No. 170464. July 12, 2010.Labor-only contracting. Despite the fact that the service contracts contain stipulations which are earmarks of independent contractorship, they do not make it legally so. The language of a contract is neither determinative nor conclusive of the relationship between the parties. The parties cannot dictate, by a declaration in a contract, the character of the contractor’s business as a labor-only contractor or a legitimate job contractor, which should be determined by the criteria set by statute. Here, a closer look at AMPCO’s actual status and participation regarding the employment of the complainants clearly belie the contents of the written service contract. San Miguel Corporation vs. Vicente Semillan, et al., G.R. No. 164257, July 5, 2010.Labor-only contracting; evidence. A Certificate of Registration as an Independent Contractor is not conclusive evidence of such status. 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. San Miguel Corporation vs. Vicente Semillan, et al., G.R. No. 164257, July 5, 2010.Liability of officers for illegal dismissal. Corporate officers are only solidarily liable with the corporation for the illegal termination of services of employees if they acted with malice or bad faith. In Philippine American Life and General Insurance v. Gramaje, bad faith is defined as a state of mind affirmatively operating with furtive design or with some motive of self-interest or ill will or for ulterior purpose. It implies a conscious and intentional design to do a wrongful act for a dishonest purpose or moral obliquity. The lack of authorized or just cause to terminate one’s employment and the failure to observe due process do not ipso facto mean that the corporate officer acted with malice or bad faith. There must be independent proof of malice or bad faith which is lacking in the present case. Lambert Pawnbrokers and Jewelry corporation and Lambert Lim vs. Helen Binamira, G.R. No. 170464. July 12, 2010.Preventive suspension. Preventive suspension is justified where the employee’s continued employment poses a serious and imminent threat to the life or property of the employer or of the employee’s co-workers. Without this kind of threat, preventive suspension is not proper. Jose P. Artificio vs. National Labor Relations Commission, RP Guardians Security Agency, Inc. Juan Victor K. Laurilla, Alberto Aguirre, and Antonio A. Andres, G.R. No. 172988, July 26, 2010Public employees; demotion. There is demotion when an employee is appointed to a position that results in a diminution in duties, responsibilities, status or rank which may or may not involve a reduction in salary. Where an employee is appointed to a position with the same duties and responsibilities with a rank and salary higher than those he enjoyed in his previous position, there is no demotion and the appointment is valid. Virginia D. Bautista vs. Civil Service Commission and Devt. Bank of the Philippines, G.R. No. 185215, July 22, 2010.Public employees; downgrading of employees. The summary reallocation of Go’s position to a lower degree resulting in the corresponding downgrading of his salary infringed the policy of non-diminution of pay which the Court recognized and applied in Philippine Ports Authority v. Commission on Audit, as well as in the subsequent sister cases involving benefits of government employees. Running through the gamut of these cases is the holding that the affected government employees shall continue to receive benefits they were enjoying as incumbents upon the effectivity of RA 6758. Relevant to the critical issue at hand is Sec. 15 (b) of PD 985 which, as amended by Sec. 13 (a) of RA 6758, pertinently reads: Sec. 13. Pay Reduction — If an employee is moved from a higher to a lower class, he shall not suffer a reduction in salary: Provided, That such movement is not the result of a disciplinary action or voluntary demotion. Gonzalo S. Go, Jr. vs. CA and Office of the President, G.R. No. 172027. July 29, 2010Redundancy; definition; requisites. Redundancy exists when the service capability of the workforce is in excess of what is reasonably needed to meet the demands of the enterprise. A redundant position is one rendered superfluous by any number of factors, such as over hiring of workers, decreased volume of business, dropping of a particular product line previously manufactured by the company, or phasing out of a service activity previously undertaken by the business. Under these conditions, the employer has no legal obligation to keep in its payroll more employees than are necessary for the operation of its business.

For a valid implementation of a redundancy program, the employer must comply with the following requisites: (1) written notice served on both the employees and the DOLE at least one month prior to the intended date of termination of employment; (2) payment of separation pay equivalent to at least one month pay for every year of service; (3) good faith in abolishing the redundant positions; and (4) fair and reasonable criteria in ascertaining what positions are to be declared redundant and accordingly abolished. Lambert Pawnbrokers and Jewelry corporation and Lambert Lim vs. Helen Binamira, G.R. No. 170464. July 12, 2010.Retirement; retirement age. The retirement age is primarily determined by the existing agreement or employment contract. Absent such an agreement, the retirement age under Article 287 of the Labor Code will apply. Amelia R. Obusan vs. Philippine National Bank, G.R. No. 181178, July 26, 2010.Retirement; retirement plan. Retirement plans allowing employers to retire employees who have not yet reached the compulsory retirement age of 65 years are not per se repugnant to the constitutional guaranty of security of tenure. By its express language, the Labor Code permits employers and employees to fix the applicable retirement age at 60 years or below, provided that the employees’ retirement benefits under any CBA and other agreements shall not be less than those provided by law. Amelia R. Obusan vs. Philippine National Bank, G.R. No. 181178, July 26, 2010.Retrenchment; definition; requisites. Retrenchment is the termination of employment initiated by the employer through no fault of and without prejudice to the employees. It is resorted to during periods of business recession, industrial depression, seasonal fluctuations, or during lulls occasioned by lack of orders, shortage of materials, conversion of the plant to a new production program, or automation. It is a management prerogative resorted to avoid or minimize business losses.To effect a valid retrenchment, the following elements must be present: (1) the retrenchment is reasonably necessary and likely to prevent business losses which, if already incurred, are not merely de minimis, but substantial, serious and real, or only if expected, are reasonably imminent as perceived objectively and in good faith by the employer; (2) the employer serves written notice both to the employee/s concerned and the DOLE at least one month before the intended date of retrenchment; (3) the employer pays the retrenched employee separation pay in an amount prescribed by law; (4) the employer exercises its prerogative to retrench in good faith; and (5) the employer uses fair and reasonable criteria in ascertaining who would be retrenched or retained. Lambert Pawnbrokers and Jewelry corporation and Lambert Lim vs. Helen Binamira, G.R. No. 170464. July 12, 2010Retrenchment; decrease in income is not business loss. A sharp drop in income from P1million to only P665,000.00 is not the kind of business losses contemplated by the Labor Code that would justify a valid retrenchment. A mere decline in gross income cannot in any manner be considered as serious business losses. It should be substantial, sustained and real. Lambert Pawnbrokers and Jewelry corporation and Lambert Lim vs. Helen Binamira, G.R. No. 170464. July 12, 2010.Separation pay; as equitable relief. Having determined that the imposition of preventive suspension was proper and that the complainant was not illegally dismissed, the Court found no basis to grant backwages. However, given the attendant circumstances of the case — that complainant had been working with the company for a period of sixteen (16) years without any previous derogatory record – the Court held that the ends of social and compassionate justice would be served if the employee is given some equitable relief in the form of separation pay. Jose P. Artificio vs. National Labor Relations Commission, RP Guardians Security Agency, Inc. Juan victor K. Laurilla, Alberto Aguirre, and Antonio A. Andres, G.R. No. 172988, July 26, 2010

August 2010 Philippine Supreme Court Decisions on Labor Law and ProcedurePosted on September 16, 2010 by Leslie C. Dy • Posted in Labor Law • Tagged abandonment, backwages, breach of trust,burden of proof, damages, employee benefits, illegal dismissal, illegal strike, labor-only contracting, loss of trust and confidence, merger, negligence, NLRC, probationary employment, project employee, rehabilitation, reinstatement,retirement, security of tenure, serious misconduct, union •Here are selected August 2010 rulings of the Supreme Court of the Philippines on labor law and procedure:

Labor LawDismissal; abandonment. Time and again, the Supreme Court has held that abandonment is totally inconsistent with the immediate filing of a complaint for illegal dismissal, more so if the same is accompanied by a prayer for reinstatement. In the present case, however, petitioner filed his complaint more than one year after his alleged termination from employment. Moreover, petitioner did not ask for reinstatement in the complaint form, which he personally filled up and filed with the NLRC. The prayer for reinstatement is made only in the Position Paper that was later prepared by his counsel. This is an indication that petitioner never had the intention or desire to return to his job. Elpidio Calipay vs. National Labor Relations Commission, et al., G.R. No. 166411, August 3, 2010.Dismissal; burden of proof. In termination cases, the employer has the burden of proving, by substantial evidence that the dismissal is for just cause. If the employer fails to discharge the burden of proof, the dismissal is deemed illegal. In the present case, BCPI failed to discharge its burden when it failed to present any evidence of the alleged fistfight, aside from a single statement, which was refuted by statements made by other witnesses and was found to be incredible by both the Labor Arbiter and the NLRC. Alex Gurango vs. Best Chemicals and Plastic, Inc., et al., G.R. No. 174593, August 25, 2010.Dismissal; burden of proof. The law mandates that the burden of proving the validity of the termination of employment rests with the employer. Failure to discharge this evidentiary burden would necessarily mean that the dismissal was not justified and, therefore, illegal. Unsubstantiated suspicions, accusations, and conclusions of employers do not provide for legal justification for dismissing employees. In case of doubt, such cases should be resolved in favor of labor, pursuant to the social justice policy of labor laws and the Constitution. Century Canning Corporation, Ricardo T. Po, Jr., et al. vs. Vicente Randy R. Ramil, G.R. No. 171630, August 8, 2010.Dismissal; due process. In termination proceedings of employees, procedural due process consists of the twin requirements of notice and hearing. The employer must furnish the employee with two written notices before the termination of employment can be effected: (1) the first apprises the employee of the particular acts or omissions for which his dismissal is sought; and (2) the second informs the employee of the employer’s decision to dismiss him. The requirement of a hearing is complied with as long as there was an opportunity to be heard, and not necessarily that an actual hearing was conducted. Pharmacia and Upjohn, Inc., et al. vs. Ricardo P. Albayda, Jr., G.R. No. 172724, August 23, 2010.Dismissal; due process. The Labor Code recognizes the right to due process of all workers, without distinction as to the cause of their termination, even if the cause was their supposed involvement in strike-related violence. In the present case, PHIMCO sent a letter to the affected union members/officers, directing them to explain within 24 hours why they should not be dismissed for the illegal acts they committed during the strike; three days later, the union members/officers were informed of their dismissal from employment. We do not find this company procedure to be sufficient compliance with due process. It does not appear from the evidence that the union officers were specifically informed of the charges against them. Also, the short interval of time between the first and second notice shows that a mere token recognition of the due process requirements was made, indicating the company’s intent to dismiss the union members involved, without any meaningful resort to the guarantees accorded them by law. PHIMCO Industries, Inc. vs. PHIMCO Industries Labor Association (PILA), et al., G.R. No. 170830, August 11, 2010.Dismissal; employee’s past infractions. A previous offense may be used as valid justification for dismissal from work only if the past infractions are related to the subsequent offense upon which the basis of termination is decreed. The respondent’s previous incidents of tardiness in reporting for work were entirely separate and distinct from his latest alleged infraction of forgery. Hence, the same could no longer be utilized as an added justification for his dismissal. Besides, respondent had already been sanctioned for his prior infractions. To consider these offenses as justification for his dismissal would be penalizing respondent twice for the same offense. Century Canning Corporation, Ricardo T. Po, Jr., et al. vs. Vicente Randy R. Ramil, G.R. No. 171630, August 8, 2010.Dismissal; feng shui; breach of trust and confidence. The Court finds that the complainant’s allegations are more credible and that she was dismissed from her employment because the Feng Shui master found that complainant’s Chinese Zodiac Sign was a mismatch to that of respondents. This is not a just and valid cause for an employee’s dismissal.

In contrast, respondent’s pleadings and evidence suffer from several inconsistencies and the affidavits presented by respondents only pertain to petty matters that are not sufficient to support respondent’s alleged loss of trust and confidence. To be a valid cause for termination of employment, the act or acts constituting breach of trust must have been done intentionally, knowingly, and purposely; and they must be founded on clearly established facts. Wensha Spa Center, inc. and/or Xu Zhi Jie ,vs. Loreta T. Yung, G.R. No. 185122, August 16, 2010.Dismissal; gross negligence and loss of confidence. Gross negligence connotes “want of care in the performance of one’s duties.” Petitioner’s failure on 3 separate occasions to require clients to sign the requisite documents constituted gross negligence. Furthermore, it has been held that if the employees are cashiers, managers, supervisors, salesmen or other personnel occupying positions of responsibility, the employer’s loss of trust and confidence in said employees may justify the termination of their employment. As the Bank’s Personal Banking Manager, petitioner’s failure to comply with basic banking policies and procedures were inimical to the interests of the bank, making his dismissal based on loss of confidence justified. Jesus E. Dycoco, Jr.vs. Equitable PCI Bank (now Banco de Oro), Rene Bunaventura and Siles Samalea, G.R. No. 188271, August 16, 2010.Dismissal; loss of trust and confidence. Employers are allowed a wider latitude of discretion in terminating the services of employees who perform functions which by their nature require the employers’ full trust and confidence and the mere existence of basis for believing that the employee has breached the trust of the employer is sufficient. However, this does not mean that the said basis may be arbitrary and unfounded. Loss of trust and confidence, to be a valid cause for dismissal, must be based on a willful breach of trust and founded on clearly established facts. The basis for the dismissal must be clearly and convincingly established. It must rest on substantial grounds and not on the employer’s arbitrariness, whim, caprice or suspicion; otherwise, the employee would eternally remain at the mercy of the employer. Century Canning Corporation, Ricardo T. Po, Jr., et al. vs. Vicente Randy R. Ramil, G.R. No. 171630, August 8, 2010.Dismissal; probationary employment . Though the acts charged against de Castro took place when he was still under probationary employment, the records show that de Castro was dismissed on the ninth month of his employment with LBNI. By then, he was already a regular employee by operation of law. As a regular employee, de Castro was entitled to security of tenure and his illegal dismissal from LBNI justified the awards of separation pay, backwages, and damages Carlos De Castro vs. Liberty Broadcasting Network, Inc. and Edgardo Quigue, G.R. No. 165153. August 25, 2010.Dismissal; project employees; damages. Prior or advance notice of termination is not part of procedural due process if the termination of a project employee is brought about by the completion of the contract or phase thereof. This is because completion of the work or project automatically terminates the employment, in which case, the employer is, under the law, only obliged to render a report to the DOLE. Therefore, failing to give project employees advance notice of their termination is not a violation of procedural due process and cannot be the basis for the payment of nominal damages. D.M. Consunji, Inc. vs. Antonio Gobres, et al., G.R. No. 169170, August 8, 2010.Dismissal; separation pay and backwages. The awards of separation pay and backwages are not mutually exclusive and both may be given to the respondent. The normal consequences of a finding that an employee has been illegally dismissed are, firstly, that the employee becomes entitled to reinstatement to his former position without loss of seniority rights and, secondly, the payment of backwages corresponding to the period from his illegal dismissal up to actual reinstatement. These are two separate and distinct remedies granted to the employee and the inappropriateness or non-availability of one does not carry with it the inappropriateness or non-availability of the other. Under the doctrine of strained relations, the payment of separation pay has been considered an acceptable alternative to reinstatement when the latter option is no longer desirable or viable. The grant of separation pay is a proper substitute only for reinstatement; it cannot be an adequate substitute for both reinstatement and backwages. Century Canning Corporation, Ricardo T. Po, Jr., et al. vs. Vicente Randy R. Ramil, G.R. No. 171630, August 8, 2010.Dismissal; serious misconduct. 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 under the law, “(a) it must be serious, (b) must relate to the performance of the employee’s duties; and (c) must show that the employee has become unfit to continue working for the employer.”

It is noteworthy that prior to this incident, there had been several cases of theft and vandalism involving both respondent company’s property and personal belongings of other employees. In order to address this issue of losses, respondent company issued two memoranda implementing an intensive inspection procedure and reminding all employees that those who will be caught stealing and performing acts of vandalism will be dealt with in accordance with the company’s Code of Conduct. Despite these reminders, complainant took the packing tape and was caught during the routine inspection. All these circumstances point to the conclusion that it was not just an error of judgment, but a deliberate act of theft of company property. Nagkakaisang Lakas ng Manggagawa sa Keihin (NLMK-OLALIA-KMU) and Helen Valenzuela vs. Keihin Philippines Corporation, G.R. No. 171115, August 9, 2010.Dismissal; union security. In terminating the employment of an employee by enforcing the union security clause, the employer needs to determine and prove that: (1) the union security clause is applicable; (2) the union is requesting for the enforcement of the union security provision in the CBA; and (3) there is sufficient evidence to support the decision of the union to expel the employee from the union. These requisites constitute just cause for terminating an employee based on the union security provision of the CBA.The petitioner failed to satisfy the third requirement since nothing in the records would show that respondents failed to maintain their membership in good standing in the union. Significantly, petitioner’s act of dismissing respondents stemmed from the latter’s act of signing an authorization letter to file a petition for certification election as they signed it outside the freedom period. The mere signing of an authorization letter before the freedom period is not sufficient ground to terminate the employment of respondents inasmuch as the petition itself was actually filed during the freedom period. The court emphasizes anew that the employer is bound to exercise caution in terminating the services of his employees especially so when it is made upon the request of a labor union pursuant to the Collective Bargaining Agreement. Picop Resources Incorporated (PRI) vs. Anacleto L. Tañeca, et al., G.R. No. 160828, August 9, 2010.Dimissal; use of illegal drugs. The law is clear that drug tests shall be performed only by authorized drug testing centers. In this case, Sulpicio Lines failed to prove that S.M. Lazo Clinic is an accredited drug testing center nor did it deny the complainant’s allegation that S.M. Lazo Clinic was not accredited. Also, only a screening test was conducted to determine if the complainant was guilty of using illegal drugs. Sulpicio Lines did not confirm the positive result of the screening test with a confirmatory test as required by R.A. 9165. Hence, Sulpicio Lines failed to indubitably prove that Nacague was guilty of using illegal drugs and failed to clearly show that it had a valid and legal cause for terminating Nacague’s employment. When the alleged valid cause for the termination of employment is not clearly proven, as in this case, the law considers the matter a case of illegal dismissal. Jeffrey Nacague vs. Sulpicio Lines, Inc., G.R. No. 172589, August 8, 2010.Dismissal; validity. The company did not adduce any evidence to prove that Siazar’s dismissal had been for a just or authorized cause, as in fact it had been its consistent stand that it did not terminate him and that he quit on his own. But given the findings of the Court that the company had indeed dismissed Siazar and that such dismissal has remained unexplained, there can be no other conclusion but that the dismissal was illegal. Agricultural and Industrial Supplies Corporation, et al. vs. Jueber P. Siazar, et al., G.R. No. 177970, August 25, 2010.Due process; decision rendered without due process. The violation of a party’s right to due process raises a serious jurisdictional issue that cannot be glossed over or disregarded at will. Where the denial of the fundamental right to due process is apparent, a decision rendered in disregard of that right is void for lack of jurisdiction. This rule is equally true in quasi-judicial and administrative proceedings, for the constitutional guarantee that no man shall be deprived of life, liberty, or property without due process is unqualified by the type of proceedings (whether judicial or administrative) where he stands to lose the same. Winston F. Garcia vs. Mario I. Molina, et al./Winston F. Garcia Vs. Mario I. Molina, et al., G.R. No. 157383/G.R. No. 174137, August 10, 2010.Employee; evaluation and promotion. The fact that employees were re-classified from Job Grade Level 1 to Job Grade Level 2 as a result of a job evaluation program does not automatically entail a promotion or grant them an increase in salary. Of primordial consideration is not the nomenclature or title given to the employee, but the nature of his functions. What transpired in this case was only a promotion in nomenclature. The employees continued to occupy the same positions they were occupying prior to the job evaluation. Moreover, their job titles remained the same and they were not given additional duties and responsibilities. SCA Hygiene

Products Corporation Employees Association-FFW vs. SCA Hygiene Products Corporation, G.R. No. 182877, August 9, 2010.Employee; security of tenure. A worker’s security of tenure is guaranteed by the Constitution and the Labor Code. Under the security of tenure guarantee, a worker can only be terminated from his employment for cause and after due process. For a valid termination by the employer: (1) the dismissal must be for a valid cause as provided in Article 282, or for any of the authorized causes under Articles 283 and 284 of the Labor Code; and (2) the employee must be afforded an opportunity to be heard and to defend himself. A just and valid cause for an employee’s dismissal must be supported by substantial evidence, and before the employee can be dismissed, he must be given proper notice of such cause/s and an adequate opportunity to be heard. In the process, the employer bears the burden of proving that the dismissal of an employee was for a valid cause. Its failure to discharge this burden renders the dismissal unjustified and, therefore, illegal. Wensha Spa Center, Inc. and/or Xu Zhi Jie vs. Loreta T. Yung, G.R. No. 185122, August 16, 2010.Employee benefit; time of death. The death should be deemed compensable under the ECC since Henry was on his way back to Manila in order to be on time and be ready for work the next day when his accidental death occurred. He should already be deemed en route to the performance of his duty at the time of the accident. It should be noted that Henry’s superior allowed him to travel to La Union to visit his ailing mother on the condition that that he return the next day. Under these facts, Henry was in the course of complying with his superior’s order when he met his fatal accident. To be sure, he was not in an actual firefighting or accident situation when he died, but returning to work as instructed by his superior is no less equivalent to compensable performance of duty under Section 1, Rule III of the ECC Rules. Government Service Insurance System vs. Felicitas Zarate, as substituted by her heirs, namely Melanie Zarate, et al., G.R. No. 170847, August 3, 2010.Illegal dismissal; effect of rehabilitation proceedings. The existence of the Stay Order – which would generally authorize the suspension of judicial proceedings – could not have affected the Court’s action on the present case due to the petitioner’s failure to raise the pendency of the rehabilitation proceedings in its memorandum to the Court. At any rate, a stay order simply suspends all actions for claims against a corporation undergoing rehabilitation; it does not work to oust a court of its jurisdiction over a case properly filed before it. Thus, the Court’s ruling on the principal issue of the case stands. Nevertheless, with LBNI’s manifestation that it is still undergoing rehabilitation, the Court resolves to suspend the execution of our Decision until the termination of the rehabilitation proceedings. Carlos De Castro vs. Liberty Broadcasting Network, Inc. and Edgardo Quigue, G.R. No. 165153. August 25, 2010.Job contracting. In permissible job contracting, the principal agrees to put out or farm out with a 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. The test is whether the independent contractor has contracted to do the work according to his own methods and without being subject to the principal’s control except only as to the results, he has substantial capital, and he has assured 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 and welfare benefits. Spic n’ Span Services Corp. vs. Gloria Paje, et al., G.R. No. 174084, August 25, 2010.Management prerogative; transfer of employees. Jurisprudence recognizes the exercise of management prerogative to transfer or assign employees from one office or area of operation to another, provided there is no demotion in rank or diminution of salary, benefits, and other privileges, and the action is not motivated by discrimination, made in bad faith, or effected as a form of punishment or demotion without sufficient cause. To determine the validity of the transfer of employees, the employer must 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. Pharmacia and Upjohn, Inc., et al. vs. Ricardo P. Albayda, Jr., G.R. No. 172724, August 23, 2010.Merger; employee terms and conditions. That BPI is the same entity as FEBTC after the merger is but a legal fiction intended as a tool to adjudicate rights and obligations between and among the merged corporations and the persons that deal with them. Although in a merger it is as if there is no change in the personality of the employer, there is in reality a change in the situation of the employee. Once an FEBTC employee is absorbed, there are presumably changes in his condition of employment even if his previous tenure and salary rate is

recognized by BPI. It is reasonable to assume that BPI would have different rules and regulations and company practices than FEBTC and it is incumbent upon the former FEBTC employees to obey these new. Not the least of these changes is the fact that prior to the merger FEBTC employees were employees of an unorganized establishment and after the merger they became employees of a unionized company that had an existing CBA with the certified union. Thus, although in a sense BPI is continuing FEBTC’s employment of these absorbed employees, BPI’s employment of these absorbed employees will not be under exactly the same terms and conditions as stated in the latter’s employment contracts with FEBTC. Bank of the Philippine Islands vs. BPI Employees Union-Davao Chapter-Federation of Unions in BPI Unibank, G.R. No. 164301, August 10, 2010.Reinstatement of employee; doctrine of strained relations. Under the doctrine of strained relations, the payment of separation pay has been considered an acceptable alternative to reinstatement when the latter option is no longer desirable or viable. On the one hand, such payment liberates the employee from what could be a highly oppressive work environment. On the other, the payment releases the employer from the grossly unpalatable obligation of maintaining in its employ a worker it could no longer trust. Wensha Spa Center, Inc. and/or Xu Zhi Jie vs. Loreta T. Yung,G.R. No. 185122, August 16, 2010.Retirement pay; applicability to employees on commission basis. Even if the petitioner as bus conductor was paid on commission basis, he falls within the coverage of R.A. 7641 and its implementing rules. Thus, his retirement pay should include the cash equivalent of 5-days SIL and 1/12 of 13th month pay. The NLRC’s reliance on the case of R & E Transport, Inc. as a basis for ruling that bus conductors are not covered by the law on SIL and 13th month pay is erroneous since that involved a taxi driver who was paid according to the “boundary system.” There is a difference between drivers paid under the “boundary system” and conductors who are paid on commission basis. In practice, taxi drivers do not receive fixed wages and retain only those sums in excess of the “boundary” or fee they pay to the owners or operators of the vehicles. Conductors, on the other hand, are paid a certain percentage of the bus’ earnings for the day. Rodolfo J. Serrano vs. Severino Santos Transit and/or Severino Santos, G.R. No. 187698, August 9, 2010.Separation pay. In those instances where an employee has been validly dismissed for causes other than serious misconduct or those reflecting on his moral character, separation pay may still be granted after giving considerable weight to his long years of employment. In this case, equity considerations dictate that respondent’s tenure be computed from 1978, the year when respondent started working for Upjohn, and not only from 1996, when the merger of Pharmacia and Upjohn took place. Pharmacia and Upjohn, Inc., et al. vs. Ricardo p. Albayda, Jr., G.R. No. 172724, August 23, 2010.Strike; validity of strike. Despite the validity of the purpose of a strike and the union’s compliance with the procedural requirements, a strike may still be held illegal where the means employed are illegal. While the strike had not been marred by actual violence and patent intimidation, the picketing that respondent PILA officers and members undertook as part of their strike activities effectively blocked the free ingress to and egress from PHIMCO’s premises, thus preventing non-striking employees and company vehicles from entering the PHIMCO compound. In this manner, the picketers violated Article 264(e) of the Labor Code and tainted the strike with illegality. PHIMCO Industries, Inc. vs. PHIMCO Industries Labor Association (PILA), et al., G.R. No. 170830, August 11, 2010.Union; eligibility of confidential employees to join. Confidential employees are defined as those who (1) assist or act in a confidential capacity, (2) to persons who formulate, determine, and effectuate management policies in the field of labor relations. The two criteria are cumulative, and both must be met if an employee is to be considered a confidential employee – that is, the confidential relationship must exist between the employee and his supervisor, and the supervisor must handle the prescribed responsibilities relating to labor relations. In the present case, there is no showing that the secretaries/clerks and checkers assisted or acted in a confidential capacity to managerial employees and obtained confidential information relating to labor relations policies. And even assuming that they had exposure to internal business operations of the company, as respondent claims, this is not per se ground for their exclusion in the bargaining unit of the rank-and-file employees. Tunay na Pagkakaisa ng Manggagawa sa Asia Brewery vs. Asia Brewery, Inc., G.R. No. 162025, August 3, 2010.Union; liability for invalid strike. The effects of illegal strikes, outlined in Article 264 of the Labor Code, make a distinction between participating workers and union officers. The services of an ordinary striking worker cannot be terminated for mere participation in an illegal strike; proof must be adduced showing that he or she committed illegal acts during the strike. The services of a participating union officer, on the other hand, may be

terminated, not only when he actually commits an illegal act during a strike, but also if he knowingly participates in an illegal strike.PHIMCO Industries, Inc. vs. PHIMCO Industries Labor Association (PILA), et al., G.R. No. 170830, August 11, 2010.Union shop; effect of merger. All employees in the bargaining unit covered by a Union Shop Clause in their CBA with management are subject to its terms. However, under law and jurisprudence, the following kinds of employees are exempted from its coverage, namely, (1) employees who at the time the union shop agreement takes effect are bona fide members of a religious organization which prohibits its members from joining labor unions on religious grounds; (2) employees already in the service and already members of a union other than the majority at the time the union shop agreement took effect; (3) confidential employees who are excluded from the rank and file bargaining unit; and (4) employees excluded from the union shop by express terms of the agreement. In the absence of any of these recognized exceptions, there is no basis to conclude that the terms and conditions of employment under a valid CBA in force in the surviving corporation should not be made to apply to the absorbed employees. Bank of the Philippine Islands vs. BPI Employees Union-Davao Chapter-Federation of Unions in BPI Unibank, G.R. No. 164301, August 10, 2010.

October 2010 Philippine Supreme Court Decisions on Labor Law and ProcedurePosted on November 22, 2010 by Leslie C. Dy • Posted in Labor Law • Tagged appeal, backwages, damages, employer-employee relationship, evidence, illegal dismissal, jurisdiction, labor-only contracting, loss of confidence, negligence,probationary employment, redundancy, reinstatement, retirement, separa, serious misconduct •Here are selected October 2010 rulings of the Supreme Court of the Philippine on labor law and procedure:

Compensable illness. Respondent is entitled to sickness wages because the shooting pain in his right foot is an injury which he suffered during the course of his employment. This is in consonance with the Standard Terms and Conditions Governing the Employment of Filipino Seafarers On Board Ocean-Going Vessels of the Department of Labor and Employment. Applying the said provisions of this standard contract, respondent is entitled to receive sickness wages covering the maximum period of 120 days. Moreover, petitioners violated the contract when it failed to provide continuous treatment for respondent in accordance with the recommendation of their company physician. Because of this failure, respondent was forced to seek immediate medical attention at his own expense. Thus, he is also entitled to reimbursement of his medical expenses. Varorient Shipping Co., Inc., et al. vs. Gil Flores, G.R. No. 161934, October 6, 2010Compensable illness. For an injury or illness to be duly compensated under the terms of the Philippine Overseas Employment Administration-Standard Employment Contract (POEA-SEC), there must be a showing that the injury or illness and the ensuing disability occurred during the effectivity of the employment contract. Moreover, all of these conditions must be satisfied — 1.) The seafarer’s work must involve the risks described in the POEA-SEC; 2.) The disease was contracted as a result of the seafarer’s exposure to the described risks; 3.) The disease was contracted within a period of exposure and under such other factors necessary to contract it; and 4.) There was no notorious negligence on the part of the seafarer. Specifically, with respect to mental diseases, the POEA-SEC requires that it must be due to traumatic injury to the head which did not occur in this case. In fact, respondent claimed that he became depressed due to the frequent verbal abuse he received from his German superiors. However, he failed to show concrete proof that, if indeed he was subjected to abuse, it directly resulted in his depression. Philippine Transmarine Carriers, Inc., Global Navigation, Ltd. vs.. Silvino A. Nazam, G.R. No. 190804. October 11, 2010.Constructive dismissal; transfer. It is management prerogative to transfer or assign employees from one office or area of operation to another. However, the employer must show that the transfer is not unreasonable, inconvenient or prejudicial to the employee, or that it does not involve a demotion in rank or a diminution of his salaries, privileges and other benefits. Should the employer fail to overcome this burden, the employee’s transfer shall be tantamount to constructive dismissal. In the instant case, Del Villar’s demotion is readily

apparent in his new designation as a mere Staff Assistant to the Corporate Purchasing and Materials Control Manager from being Transportation Services Manager. The two posts are not of the same weight in terms of duties and responsibilities. Moreover, while Del Villar’s transfer did not result in the reduction of his salary, there was a diminution in his benefits because as a mere Staff Assistant, he could no longer enjoy the use of a company car, gasoline allowance, and annual foreign travel, which he previously enjoyed as Transportation Services Manager. Thus, Del Villar was clearly constructively dismissed.Coca Cola Bottlers Philippines, Inc. vs. Angel U. Del Villar, G.R. No. 163091, October 6, 2010.Dismissal; closure of business. Petitioner terminated the employment of respondents on the ground of closure or cessation of operation of the establishment which is an authorized cause for termination under Article 283 of the Labor Code. While it is true that a change of ownership in a business concern is not proscribed by law, the sale or disposition must be motivated by good faith as a condition for exemption from liability. In the instant case, however, there was, in fact, no change of ownership. Petitioner did not present any documentary evidence to support its claim that it sold the same to ALPS Transportation. On the contrary, it continuously operates under the same name, franchises and routes and under the same circumstances as before the alleged sale. Thus, no actual sale transpired and, as such, there is no closure or cessation of business that can serve as an authorized cause for the dismissal of respondents. Peñafrancia Tours and Travel Transport, Inc. vs. Joselito P. Sarmiento and Ricardo S. Catimbang, G.R. No. 178397, October 20, 2010.Dismissal; constructive dismissal. There is constructive dismissal if an act of clear discrimination, insensibility, or disdain by an employer becomes so unbearable on the part of the employee that it would foreclose any choice by him except to forego his employment. It also exists where there is cessation of work because continued employment is rendered impossible, unreasonable or unlikely, such as when an offer involves a demotion in rank and a diminution in pay. In the present case, what made it impossible, unreasonable or unlikely for respondent to continue working for SHS was the unlawful withholding of his salary. He then lost no time in submitting his resignation letter and eventually filing a complaint for illegal dismissal just a few days after his salary was withheld. These circumstances are inconsistent with voluntary resignation and bolster the finding of constructive dismissal. SHS Perforated Materials, Inc., et al. vs. Manuel F. Diaz, G.R. No. 185814, October 13, 2010.Dismissal; corporate officer. It is not the nature of the services performed, but on the manner of creation of the office that distinguishes corporate officers who may be ousted from office at will and ordinary corporate employees who may only be terminated for just cause. Under Section 25 of the Corporation Code, a position must be expressly mentioned in the By-Laws in order to be considered as a corporate office. Thus, the creation of an office pursuant to a By-Law provision giving a president the power to create an office does not qualify as a By-Law position. In the present case, the position of Vice President for Finance and Administration which respondent held was merely created by Matling’s President pursuant to the company’s By-Laws. It is not a corporate office or By-Law position, and therefore, respondent was not a corporate officer who could be ousted from office at will. Matling Industrial and Commercial Corp., et al. vs. Ricardo R. Coros, G.R. No. 157802, October 13, 2010.Dismissal; gross and habitual neglect. Under Article 282 (b) of the Labor Code, an employer may terminate an employee for gross and habitual neglect of duties. Gross negligence connotes want of care in the performance of one’s duties. Habitual neglect implies repeated failure to perform one’s duties for a period of time, depending upon the circumstances. A single or isolated act of negligence does not constitute a just cause for the dismissal of the employee. Assuming arguendo that respondent was negligent, although the Court found otherwise, the lapse or inaction could only be regarded as a single or isolated act of negligence that cannot be categorized as habitual and, hence, not a just cause for his dismissal. St. Luke’s Medical Center, Inc. and Robert Kuan vs. Estrelito Nazario, G.R. No. 152166, October 20, 2010.Dismissal; loss of confidence. Loss of confidence as a just cause for termination of employment is premised on the fact that the employee concerned holds a position of trust and confidence. This situation holds where a person is entrusted with confidence on delicate matters, such as the custody, handling, or care and protection of the employer’s property. However, in order to constitute a just cause for dismissal, the act complained of must be “work-related” such as would show the employee concerned to be unfit to continue working for the employer. In the instant case, the Resolution of the PAL Board of Directors, underscored respondent’s acts of mismanagement and gross incompetence which resulted in huge financial losses for petitioner. As a general rule, employers are allowed wider latitude of discretion in terminating the employment of managerial

personnel or those who, while not of similar rank, perform functions which by their nature require the employer’s full trust and confidence. This must be distinguished from the case of ordinary rank and file employees, whose termination on the basis of these same grounds requires a higher proof of involvement in the events in question. Philippine Airlines, Inc. vs. National Labor Relations Commission and Aida M. Quijano, G.R. No. 123294, October 20, 2010Dismissal; probationary employee . Although respondent was a probationary employee, he is nonetheless entitled to security of tenure. Section 3 (2) Article 13 of the Constitution guarantees that right. In using the expression “all workers,” the Constitution puts no distinction between a probationary and a permanent or regular employee. This means that probationary employees cannot be dismissed except for cause or for failure to qualify as regular employees (i.e., to meet the performance standards set by the company to be eligible for regular employment). SHS Perforated Materials, Inc., et al. vs. Manuel F. Diaz, G.R. No. 185814, October 13, 2010.Dismissal; requirement. In dismissing an employee, the employer must furnish him with two written notices: the first notice apprises the employee of the particular acts or omissions for which his dismissal is sought, and the second is a subsequent notice, which informs the employee of the employer’s decision to dismiss him. An administrative hearing must likewise be held in order to give the employee a further opportunity to be heard. Petitioner hospital failed to comply with the rule on twin notice and hearing as it merely required respondent to give his written explanation and, thereafter, ordered his dismissal. St. Luke’s Medical Center, Inc. and Robert Kuan vs. Estrelito Nazario, G.R. No. 152166, October 20, 2010.Dismissal; serious misconduct. Serious misconduct as a valid cause for the dismissal of an employee is defined simply as improper or wrongful 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 of judgment. To be serious, the misconduct must be of such grave and aggravated character and not merely trivial or unimportant. Moreover, it must be related to the performance of the employee’s duties such as would show him to be unfit to continue working for the employer. On the other hand, moral turpitude has been defined as “everything which is done contrary to justice, modesty, or good morals; an act of baseness, vileness or depravity in the private and social duties which a man owes his fellowmen, or to society in general, contrary to justice, honesty, modesty, or good morals. In the case at bar, the transgressions imputed to private respondent have never been firmly established as deliberate and willful acts. At the very most, they can only be characterized as unintentional, albeit major, lapses in professional judgment. Philippine Airlines, Inc. vs. National Labor Relations Commission and Aida M. Quijano, G.R. No. 123294, October 20, 2010.Employer-employee relationship. That complainants were employees of SIP is clear from the fact that SIP paid their salary. When complainants charged SIP of underpayment, SIP even interposed the defense of free board and lodging given to complainants. Furthermore, the IDs issued to complainants bear the signature of Alejandro C. Pablo, proprietor of SIP. Likewise, the memoranda issued to complainants regarding their absences without leave were signed by Pablo. All these clearly show that SIP is the employer of complainants. Although GMPC engaged the services of SIP to operate a canteen, SIP and its proprietors could not be considered as labor-only contractors or mere agents of GMPC because they exercised the essential elements of an employment relationship with the complainants such as hiring, payment of wages and the power of control.S.I.P. Food House and Mr. and Mrs. Alejandro Pablo Vs. Restituto Batolina, et al., G.R. No. 192473, October 11, 2010.Employer-employee relationship; test. The elements to determine the existence of an employment relationship are: (a) the selection and engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and (d) the employer’s power to control the employee’s conduct. The most important of these elements is the employer’s control of the employee’s conduct, not only as to the result of the work to be done, but also as to the means and methods to accomplish it. It should be remembered that the control test merely calls for the existence of the right to control, and not necessarily the exercise thereof. Based on this four-fold test, Manila Water emerges as the employer of respondent collectors. Respondent bill collectors were individually hired by the contractor, but were under the direct control and supervision of Manila Water. This control is manifested in the fact that respondent bill collectors reported daily to the branch offices of Manila Water to remit their collections with the specified monthly targets and comply with the collection reporting procedures prescribed by the latter. Accordingly, respondent bill collectors are employees of petitioner Manila Water. Manila Water Company, Inc. vs. Jose J. Dalumpines, et al., G.R. No. 175501, October 4, 2010.

Evidentiary doubts construed in favor of labor. Although it cannot be determined with certainty whether respondent worked for the entire period from November 16 to November 30, 2005, the consistent rule is that if doubt exists between the evidence presented by the employer and that by the employee, the scales of justice must be tilted in favor of the latter in line with the policy mandated by Articles 2 and 3 of the Labor Code to afford protection to labor and construe doubts in favor of labor. In view of petitioners’ failure to satisfy their burden of proof, respondent is presumed to have worked during the period in question and is, accordingly, entitled to his salary. Therefore, the withholding of respondent’s salary by petitioners is contrary to Article 116 of the Labor Code and, thus, unlawful. SHS Perforated Materials, Inc., et al. vs. Manuel F. Diaz, G.R. No. 185814, October 13, 2010.Illegal dismissal; full backwages and reinstatement. Under Republic Act No. 6715, employees who are illegally dismissed are entitled to full backwages, inclusive of allowances and other benefits or their monetary equivalent, computed from the time their actual compensation was withheld from them up to the time of their actual reinstatement. If reinstatement is no longer possible, the backwages shall be computed from the time of their illegal termination up to the finality of the decision. Coca Cola Bottlers Philippines, Inc. vs. Angel U. Del Villar, G.R. No. 163091, October 6, 2010.Illegal dismissal; moral and exemplary damages. Award of moral and exemplary damages for an illegally dismissed employee is proper where the employee had been harassed and arbitrarily terminated by the employer. Moral damages may be awarded to compensate one for injuries such as mental anguish, besmirched reputation, wounded feelings, and social humiliation occasioned by the employer’s unreasonable dismissal of the employee. The award of such damages is based not on the Labor Code but on the Civil Code. These damages, however, are not intended to enrich the illegally dismissed employee. Thus, the Court found it proper to reduce the award of moral damages from P500,000 to P100,000.00 and exemplary damages from P500,000 to P50,000.00. The reduced amounts are deemed sufficient to assuage the sufferings experienced by Del Villar and to set an example for the public good. Coca Cola Bottlers Philippines, Inc. vs. Angel U. Del Villar, G.R. No. 163091, October 6, 2010.Illegal dismissal; reinstatement and full backwages. Probationary employees who are unjustly dismissed during the probationary period are entitled to reinstatement and payment of full backwages and other benefits and privileges from the time they were dismissed up to their actual reinstatement. Respondent is, thus, entitled to reinstatement without loss of seniority rights and other privileges as well as to full backwages, inclusive of allowances and other benefits or their monetary equivalent computed from the time his compensation was withheld up to the time of actual reinstatement. SHS Perforated Materials, Inc., et al. vs. Manuel F. Diaz, G.R. No. 185814, October 13, 2010.Illegal dismissal; reinstatement and payment of backwages. Petitioners’ lack of just cause and non-compliance with the procedural requisites in terminating respondent’s employment renders them guilty of illegal dismissal. Consequently, under Article 279 of the Labor Code, as amended, respondent is entitled to reinstatement to his former position without loss of seniority rights and payment of backwages inclusive of allowances and other benefits, or their monetary equivalent computed from the time the compensation was not paid up to the time of actual reinstatement. St. Luke’s Medical Center, Inc. and Robert Kuan vs. Estrelito Nazario, G.R. No. 152166, October 20, 2010.Illegal dismissal; separation pay in lieu of reinstatement. If reinstatement proves impracticable, and hardly in the best interest of the parties, perhaps due to the lapse of time since the employee’s dismissal, or if the employee decides not to be reinstated, respondent should be awarded separation pay in lieu of reinstatement. In the present case, since reinstatement is no longer feasible due to the long passage of time, petitioners are required to pay respondent his separation pay equivalent to one (1) month’s pay for every year of service. Petitioners are thus ordered to pay respondent his backwages and separation pay. The awards of separation pay and backwages are not mutually exclusive and both may be given to respondent. St. Luke’s Medical Center, Inc. and Robert Kuan vs. Estrelito Nazario, G.R. No. 152166, October 20, 2010.Job contracting; conditions. Job contracting is permissible only if the following conditions are met: 1) the contractor carries on an independent business and undertakes the contract work on his own account under his own responsibility according to his own manner and method, free from the control and direction of his employer or principal in all matters connected with the performance of the work except as to the results thereof; and 2) the contractor has substantial capital or investment in the form of tools, equipment, machineries, work premises, and other materials which are necessary in the conduct of the business.

“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” refers 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. Manila Water Company, Inc. vs. Jose J. Dalumpines, et al., G.R. No. 175501, October 4, 2010.Jurisdiction; dismissal. Pursuant to Article 217 (a) 2 of the Labor Code, as amended, the illegal dismissal of an officer or other employee of a private employer is properly cognizable by the labor arbiter. However, where the complaint for illegal dismissal concerns a corporate officer, the controversy is considered an intra-corporate dispute and falls under the jurisdiction of the Securities and Exchange Commission (SEC). This jurisdiction of the SEC, however, was transferred to the RTC, pursuant to RA No. 8799 which became effective on August 8, 2000. Considering that the respondent’s complaint for illegal dismissal was commenced on August 10, 2000, the appropriate jurisdiction lie with the RTC should it turn out that the respondent was a corporate, not a regular, officer of Matling. Matling Industrial and Commercial Corp., et al. vs. Ricardo R. Coros, G.R. No. 157802, October 13, 2010.Jurisdiction; labor dispute vs. intra-corporate dispute. Given Locsin’s status as a corporate officer, the RTC, not the Labor Arbiter or the NLRC, has jurisdiction to hear the legality of the termination of his relationship with Nissan. In a number of cases it has been held that a corporate officer’s dismissal is always a corporate act, or an intra-corporate controversy so that the RTC should exercise jurisdiction. Locsin was undeniably Chairman and President, and was elected to these positions by the Nissan board pursuant to its By-laws. As such, he was a corporate officer, not an employee. Even as Executive Vice-President/Treasurer, Locsin already acted as a corporate officer because the position of Executive Vice-President/Treasurer is provided for in Nissan’s By-Laws. Arsenio Z. Locsin vs. Nissan Lease Phils. Inc. and Luis Banson, G.R. No. 185567, October 20, 2010.Labor-only contracting; elements. The Labor Code expressly prohibits “labor-only” contracting which refers 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 the performance of the work of the contractual employee. Using the above criteria, it is clear that FCCSI is a labor-only contractor while the principal Manila Water is the real employer. FCCSI does not have substantial capital or investment to qualify as an independent contractor as shown by the fact that although it has an authorized capital stock of P400,000.00, only P100,000.00 of which is actually paid-up. Also, it was Manila Water that provided the equipment and service vehicles needed in the performance of the contracted service. Manila Water Company, Inc. vs. Jose J. Dalumpines, et al., G.R. No. 175501, October 4, 2010.Loss of confidence; distinction between managerial personnel and rank and employees . As a general rule, employers are allowed wider latitude of discretion in terminating the employment of managerial personnel or those who, while not of similar rank, perform functions which by their nature require the employer’s full trust and confidence. This must be distinguished from the case of ordinary rank and file employees, whose termination on the basis of these same grounds requires a higher proof of involvement in the events in question; mere uncorroborated assertions and accusations by the employer will not suffice. Leandro M. Alcantara vs. The Philippine Commercial and International Bank, G.R. No. 151349, October 20, 2010.Motion to dismiss; appeal. Petitioner Locsin’s submission that the NCLPI improperly elevated the Labor Arbiter’s denial of the Motion to Dismiss to the CA is correct. A denial of a motion to dismiss is an interlocutory order and hence, cannot be appealed until a final judgment on the merits of the case is rendered. As a general rule, an aggrieved party’s proper recourse to the denial is to file his position paper, interpose the grounds relied upon in the motion to dismiss – such as lack of jurisdiction in the present case – before the labor arbiter, and actively participate in the proceedings. Thereafter, the labor arbiter’s decision can be appealed to the NLRC, not to the CA. This NLRC rule is similar to the general rule observed in civil procedure. Under the Rules of Court, the only other recourse of the aggrieved party is to file an appropriate special civil action under Rule 65 but only when there is no appeal, or any plain, speedy, and adequate remedy in the ordinary course of law. In the labor law setting, a plain, speedy and adequate remedy in the form of the corrective power

of the NLRC is still open to the aggrieved party when a labor arbiter denies a motion to dismiss. Arsenio Z. Locsin vs. Nissan Lease Phils. Inc. and Luis Banson, G.R. No. 185567, October 20, 2010.Petition; failure to attach documents. Failure to attach all pleadings and documents, by itself, is not a sufficient ground to dismiss a petition. The courts may liberally construe procedural rules in order to meet and advance the cause of substantial justice. Procedural lapses will be overlooked when they do not involve public policy, when they arose from an honest mistake or unforeseen accident, and when they have not prejudiced the adverse party or deprived the court of its authority. These conditions are present in the instant case. Furthermore, after petitioner’s receipt of the Court of Appeals Resolution dismissing his petition for failure to attach documents, he filed a Motion for Reconsideration along with the documents deemed by the Court of Appeals as lacking in his original petition. Such subsequent submission should be deemed substantial compliance as supported by jurisprudence. In these cases, the reasons behind the failure of the petitioners to comply with the required attachments were no longer scrutinized. Clearly, the Court of Appeals erred in dismissing petitioner’s special civil action for certiorari despite subsequent substantial compliance with the rules on procedure. Leandro M. Alcantara vs. The Philippine Commercial and International Bank, G.R. No. 151349, October 20, 2010.Private recruitment agencies; solidary liability. Republic Act No. 8042 provides for the joint and solidary liability of private recruitment agencies with their foreign principals in any and all money claims against them. Such provision is automatically incorporated by law in the contract for overseas employment and is a condition precedent for its approval. This is to afford the OFWs immediate and sufficient payment of what is due them. Moreover, such obligation is not coterminous with the agreement between the local agent and its foreign principal so that if either or both of the parties decide to end the agreement, the responsibilities of such parties towards the contracted employees under the agreement do not at all end, but the same extends up to and until the expiration of the employment contracts of the employees recruited and employed pursuant to the said recruitment agreement. Thus, to allow petitioners to simply invoke the immunity from suit of its foreign principal or to wait for the judicial determination of the foreign principal’s liability before petitioner can be held liable renders the law on joint and solidary liability inutile. ATCI Overseas Corporation, et al. vs. Ma. Josefa Echin, G.R. No. 178551. October 11, 2010Redundancy. Redundancy is one of the authorized causes for the dismissal of an employee under Article 283 of the Labor Code. Redundancy, exists where the services of an employee are in excess of what is reasonably demanded by the actual requirements of the enterprise. Such superfluity may be due to overhiring of workers, decreased volume of business, or dropping of a particular product line or service activity previously manufactured or undertaken by the enterprise. The determination of redundancy is an exercise of business judgment of the employer the soundness of which is not subject to discretionary review of the Labor Arbiter and the NLRC, provided there is no violation of law and no showing that it was prompted by an arbitrary or malicious act. Thus, a company must not merely declare that it has become overmanned, it must also produce adequate proof of such redundancy. Coca-Cola failed to overcome this burden in the instant case. Instead, it offered proof of Del Villar’s poor performance which is irrelevant in relation to the issue on redundancy. Coca Cola Bottlers Philippines, Inc. vs. Angel U. Del Villar, G.R. No. 163091, October 6, 2010.Reinstatement; doctrine of strained relations. Under the doctrine of strained relations, the payment of separation pay is considered an acceptable alternative to reinstatement when the latter option is no longer desirable or viable. Payment liberates the employee from what could be a highly oppressive work environment, and at the same time releases the employer from the obligation of keeping in its employ a worker it no longer trusts. In the instant case, respondent’s reinstatement is no longer feasible as antagonism has caused a severe strain in his working relationship with petitioners. Therefore, a more equitable disposition would be an award of separation pay equivalent to at least one month pay, in addition to his full backwages, allowances and other benefits. SHS Perforated Materials, Inc., et al. vs. Manuel F. Diaz, G.R. No. 185814, October 13, 2010.Release and quitclaim; validity. Quitclaims executed by the employees are commonly frowned upon as contrary to public policy. Thus, for quitclaims to be valid the following requisites must be complied with: (a) that there was no fraud or deceit on the part of any of the parties; (b) that the consideration of the quitclaim is credible and reasonable; and (c) that the contract is not contrary to law, public order, public policy, morals or good customs, or prejudicial to a third person with a right recognized by law. Varorient Shipping Co., Inc., et al. vs. Gil Flores, G.R. No. 161934, October 6, 2010

Retirement; compulsory. Article 287 of the Labor Code, as amended by R.A. No. 7641, pegs the age for compulsory retirement at 65 years, while the minimum age for optional retirement is set at 60 years. An employer is, however, free to impose a retirement age earlier than the foregoing mandates provided that the prerogative is exercised pursuant to a mutually instituted early retirement plan. In the present case, not even an iota of voluntary acquiescence to UNIPROM’s early retirement age option is attributable to petitioner. UNIPROM’s Employees’ Non-Contributory Retirement Plan was unilaterally and compulsorily imposed on them. Petitioner was forced to participate in the plan, and the only way she could have rejected the same was to resign or lose her job. Such passive acquiescence on the part of employees cannot equate to voluntary acceptance which must be explicit, voluntary, free, and uncompelled. Having terminated petitioner merely on the basis of a provision in the retirement plan which was not freely assented to by her, UNIPROM is guilty of illegal dismissal. Lourdes A. Cercado vs. Uniprom, Inc., G.R. No. 188154. October 13, 2010.Rule on appeal from denial of motion to dismiss; exception. As a general rule, a Labor Arbiter’s denial of the Motion to Dismiss on the ground of lack of jurisdiction is appealable to the NLRC and not to the CA by way of Rule 65. However, we take exception to this general rule in the present case because a strict implementation of these rules would cause substantial injustice to NCLPI. After all, the parties have sufficiently ventilated their positions on the disputed employer-employee relationship and have, in fact, submitted the matter for the CA’s consideration. Moreover, the CA correctly ruled that Locsin was a corporate officer, not an employee and therefore jurisdiction lies with the RTC and not the Labor Arbiter. Arsenio Z. Locsin vs. Nissan Lease Phils. Inc. and Luis Banson,G.R. No. 185567, October 20, 2010.Seaman as a contractual employee; disability claims. A seaman is a contractual and not a regular employee. Thus, in claims of seamen for compensation and disability benefits, the Court cannot just disregard the provisions of the POEA Standard Employment Contract (POEA SEC). In order to claim disability benefits under the POEA SEC, it is the ‘company-designated’ physician who must proclaim that the seaman suffered a permanent disability, due to either injury or illness, during the term of the latter’s employment. In this case, the findings of respondents’ designated physician that petitioner has been suffering from brief psychotic disorder and that it is not work-related must be respected. While it is true that labor contracts are impressed with public interest and the provisions of the POEA SEC must be construed logically and liberally in favor of Filipino seamen in the pursuit of their employment on board ocean-going vessels, the rule is that justice is, in every case, only for the deserving; it is to be dispensed with in the light of established facts, the applicable law, and existing jurisprudence. Edgardo M. Panganiban vs. Tara Trading Ship Management Inc. and Shinline SDN BHD, G.R. No. 187032, October 18, 2010Separation pay; equity. In exceptional cases, this Court has granted separation pay to a legally dismissed employee as an act of “social justice” or based on “equity.” In both instances, it is required that the dismissal (1) was not for serious misconduct; and (2) does not reflect on the moral character of the employee or would involve moral turpitude. There should be no question that where it comes to such valid but not iniquitous causes as failure to comply with work standards, the grant of separation pay to the dismissed employee may be both just and compassionate, particularly if he has worked for some time with the company. Philippine Airlines, Inc. vs. National Labor Relations Commission and Aida M. Quijano, G.R. No. 123294, October 20, 2010.Termination; loss of confidence. Loss of confidence as a just cause for termination of employment applies when the employee concerned holds a position of trust and confidence. However, in order to constitute a just cause for dismissal, the act complained of must be “work-related” such as would show the employee concerned to be unfit to continue working for the employer. Petitioner, who, as Branch Manager of the respondent bank undoubtedly held a position of trust and confidence, admitted that he personally processed the two Certificates of Time Deposit (CTDs) at issue, despite his knowledge that they were unfunded. By doing so, he exposed his employer to great risk. Moreover, by issuing those CTDs, he was in effect certifying the existence of time deposits in his branch that were actually fictitious. Thus, it can be said that his obvious laxity or negligence in the issuance of the said CTDs was even tainted with dishonesty. Respondent bank was thus justified in terminating petitioner’s employment on the ground of loss of trust and confidence. Leandro M. Alcantara vs. The Philippine Commercial and International Bank, G.R. No. 151349, October 20, 2010.Termination; procedural due process. Notice and hearing constitute the essential elements of due process in the dismissal of employees. The employer must furnish the employee with two written notices before termination of employment can be legally effected. With regard to the requirement of a hearing, the essence of due process

lies simply in an opportunity to be heard; an actual trial-type hearing is not indispensable. In this case, respondent acted in accordance with procedural due process when it gave petitioner considerable leeway with regard to the submission of his written explanation by allowing multiple extensions of time to submit the same and by furnishing him the documents used in respondent’s investigation. Even assuming that petitioner was not fully heard during the employer’s investigation, it was his fault because of his misguided insistence on having a trial-type hearing. Leandro M. Alcantara vs. The Philippine Commercial and International Bank, G.R. No. 151349, October 20, 2010.Termination; solidary liability of corporate directors and officers. Corporate directors and officers are only solidarily liable with the corporation for termination of employment of corporate employees if such is effected with malice or in bad faith. Bad faith does not connote bad judgment or negligence; it imports dishonest purpose or some moral obliquity and conscious doing of wrong; it means breach of known duty through some motive or interest or ill will; it partakes of the nature of fraud. To sustain such a finding, there should be evidence on record that an officer or director acted maliciously or in bad faith in terminating the employee. In the instant case, petitioners withheld respondent’s salary in the sincere belief that respondent did not work for the period in question. Thus, although they unlawfully withheld respondent’s salary, it cannot be concluded that such was made in bad faith. Accordingly, corporate officers, Hartmannshenn and Schumacher, cannot be held personally liable for the corporate obligations of SHS. SHS Perforated Materials, Inc., et al. vs. Manuel F. Diaz, G.R. No. 185814, October 13, 2010.Wages; deduction by employer. The free board and lodging SIP furnished the employees cannot operate as a set-off for the underpayment of their wages. It was held in Mabeza v. National Labor Relations Commission that the employer cannot simply deduct from the employee’s wages the value of the board and lodging without satisfying the following requirements: (1) proof that such facilities are customarily furnished by the trade; (2) voluntary acceptance in writing by the employees of the deductible facilities; and (3) proof of the fair and reasonable value of the facilities charged. It is clear from the records that SIP failed to comply with these requirements.S.I.P. Food House and Mr. and Mrs. Alejandro Pablo Vs. Restituto Batolina, et al., G.R. No. 192473, October 11, 2010.Wages, withholding. Management prerogative does not include the right to temporarily withhold wages without the consent of the employee. Such an interpretation would be contrary to Article 116 of the Labor Code, which provides that it shall be unlawful for any person, directly or indirectly, to withhold any amount from the wages of a worker or induce him to give up any part of his wages by force, stealth, intimidation, threat or by any other means without the worker’s consent. Withholding of wages is allowed only in the form of wage deductions under the circumstances provided in Article 113 of the Labor Code such as: (a) In cases where the worker is insured with his consent by the employer, and the deduction is to recompense the employer for the amount paid by him as premium on the insurance; (b) For union dues, in cases where the right of the worker or his union to check-off has been recognized by the employer or authorized in writing by the individual worker concerned; and (c) In cases where the employer is authorized by law or regulations issued by the Secretary of Labor. In the present case, the withholding of complainant’s wages does not fall under the exceptions provided in Article 113 and is thus unlawful. SHS Perforated Materials, Inc., et al. vs. Manuel F. Diaz, G.R. No. 185814, October 13, 2010.Work-related illness; substantial evidence. Working conditions cannot be accepted to have caused or at least increased the risk of contracting the disease – in this case, brief psychotic disorder- in the absence of substantial evidence. The evidence must be real and substantial, and not merely apparent. In sum, petitioner failed to establish by substantial evidence that his brief psychotic disorder was caused by the nature of his work as oiler of the company-owned vessel. In fact, he failed to elaborate on the nature of his job as oiler of respondent company. The Court, therefore, has difficulty in finding any link between his position as oiler and his illness. Petitioner points out that his “brief psychotic disorder” which was caused by a family problem is work-related simply because had it been a land-based employment, petitioner would have easily gone home and attended to the needs of his family. This is not the “work-related” instance contemplated by the provisions of the employment contract in order to be entitled to the benefits. Otherwise, every seaman would automatically be entitled to compensation because the nature of his work is not land-based. Edgardo M. Panganiban vs. Tara Trading Ship Management Inc. and Shinline SDN BHD, G.R. No. 187032, October 18, 2010.

Writ of habeas data; labor disputes. Respondent questions her transfer and, through the extraordinary remedy of habeas data, seeks the disclosure of the reasons behind it. However, since her real objective is to be spared from complying with MERALCO’s Memorandum directing her reassignment, respondent should instead lodge her complaint with the NLRC and the Labor Arbiters which have jurisdiction over such concerns. The writ of habeas data is a remedy available only to a person whose right to privacy in life, liberty or security is violated or threatened by an unlawful act or omission of a public official or employee or of a private individual or entity engaged in the gathering, collecting or storing of data or information regarding the person, family, home and correspondence of the aggrieved party. Petitioners’ refusal to disclose the contents of reports which form the basis of respondent’s transfer does not amount to a violation of her right to privacy.Manila Electric Company, Alexander S. Deyto and Ruben A. Sapitula vs. Rosario Gopez Lim, G.R. No. 184769, October 5, 2010.

November 2010 Philippine Supreme Court Decisions on Labor Law and ProcedurePosted on December 13, 2010 by Leslie C. Dy • Posted in Labor Law • Tagged appeal, compensable illness, constructive dismissal, employer-employee relationship, evidence, forum shopping, illegal dismissal, illegal strike, jurisdiction, labor-only contracting, reinstatement, retirement, unfair labor practice •Here are selected November 2010 rulings of the Supreme Court of the Philippines on labor law and procedure:

Appeal; determination of date of filing. Under Section 3, Rule 13 of the Rules of Court, where the filing of pleadings, appearances, motions, notices, orders, judgments, and all other papers with the court/tribunal is made by registered mail, the date of mailing, as shown by the post office stamp on the envelope or the registry receipt, shall be considered as the date of filing. Thus, the date of filing is determinable from two sources: from the post office stamp on the envelope or from the registry receipt, either of which may suffice to prove the timeliness of the filing of the pleadings. If the date stamped on one is earlier than the other, the former may be accepted as the date of filing. In this case, to prove that it mailed the notice of appeal and appeal memorandum on October 27, 1997, instead of October 28, 1997, as shown by the stamped date on the envelope, petitioner presented Registry Receipt No. 34581 bearing the earlier date. Government Service Insurance System vs. National Labor Relations Commission (NLRC), Dionisio Banlasan, et al., G.R. No. 180045, November 17, 2010.Appeal; filed out of time; exceptional cases. An appeal must be perfected within the statutory or reglementary period. This is not only mandatory, but also jurisdictional. Failure to perfect the appeal on time renders the assailed decision final and executory and deprives the appellate court or body of the legal authority to alter the final judgment, much less entertain the appeal. However, in exceptional cases, a belated appeal may be given due course if greater injustice will be visited upon the party should the appeal be denied. This is to serve the greater principles of substantial justice and equity. Technical rules are not binding in labor cases and are not to be applied strictly if the result would be detrimental to the working man. In the instant case, even if the appeal was filed one day late, the same should have been entertained by the NLRC. Government Service Insurance System vs. National Labor Relations Commission (NLRC), Dionisio Banlasan, et al., G.R. No. 180045, November 17, 2010.Compensable illness; work-relatedness. Granting arguendo that petitioner’s illness was not pre-existing, he still had to show that his illness not only occurred during the term of his contract but also that it resulted from a work-related injury or illness, or at the very least aggravated by the conditions of the work for which he was contracted for. Petitioner failed to discharge this burden, however. That the exact and definite cause of petitioner’s illness is unknown cannot be used to justify grant of disability benefits, absent proof that there is any reasonable connection between work actually performed by petitioner and his illness. Jerry M. Francisco, vs. Bahia Shipping Services, Inc. and/or Cynthia C. Mendoza, and Fred Olsen Cruise Lines, Ltd., G.R. No. 190545, November 22, 2010 .Dismissal; illegal strike; distinction between union officers and mere members. The liabilities of individuals who participate in an illegal strike must be determined under Article 264 (a) of the Labor Code which makes a distinction between union officers and mere members. The law grants the employer the option of declaring a

union officer who knowingly participated in an illegal strike as having lost his employment. However, a worker merely participating in an illegal strike may not be terminated from employment if he does not commit illegal acts during a strike. Hence, with respect to respondents who are union officers, their termination by petitioners is valid. Being fully aware that the proceedings before the Secretary of Labor were still pending as in fact they filed a motion for reconsideration, they cannot invoke good faith as a defense. For the rest of the individual respondents who are union members, they cannot be terminated for mere participation in the illegal strike. Solid Bank Corp. Ernesto U. Gamier, et al. and Solid Bank Corp., et al. vs. Solid Bank Union and its Dismissed Officers and Members, et al. G.R. No. 159460 and G.R. No. 159461, November 15, 2010.Dismissal; misconduct; substantial evidence. The general rule is that where the findings of the administrative body are amply supported by substantial evidence, such findings are accorded not only respect but also finality, and are binding on the Court. The standard of substantial evidence is satisfied when there is reasonable ground to believe that a person is responsible for the misconduct complained of, even if such evidence might not be overwhelming or even preponderant. In the present case, the testimonies of the witnesses, the statements during the preliminary investigation, and the findings of the PNP Crime Lab on its examination of the signatures, amounted to substantial evidence that adequately supported the conclusion that petitioner Nacu was guilty of the acts complained of. Nacu was rightfully found guilty of grave misconduct, dishonesty, and conduct prejudicial to the best interest of the service, and penalized with dismissal. Irene K. Nacu, Substituted By Benjamin M. Nacu, Ervin K. Nacu, and Nejie N. De Sagun vs. Civil Service Commission and Philippine Economic Zone Authority, G.R. No. 187752, November 23, 2010.Employer-employee relationship. Generally, in a business establishment, IDs are issued to identify the holder as a bona fide employee of the issuing entity. While petitioner Teng alleged that it was the maestros who hired the respondent workers, it was his company that issued to the respondent workers IDs bearing their names as employees and Teng’s signature as the employer. For the 13 years that the respondent workers worked for Teng, they received wages on a regular basis, in addition to their shares in the fish caught. More importantly, the element of control – which we have ruled in a number of cases to be a strong indicator of the existence of an employer-employee relationship – is present in this case. Teng not only owned the tools and equipment, he directed how the respondent workers were to perform their job as checkers. Albert Teng vs. Alfredo S. Pahagac, et al., G.R. No. 169704, November 17, 2010.Forum shopping; elements. By forum shopping, a party initiates two or more actions in separate tribunals, grounded on the same cause, hoping that one or the other tribunal would favorably dispose of the matter. The elements of forum shopping are: (1) identity of parties, or at least such parties as would represent the same interest in both actions; (2) identity of rights asserted and relief prayed for, the relief being founded on the same facts; and (3) identity of the two preceding particulars such that any judgment rendered in the other action will, regardless of which party is successful, amount to res judicata in the action under consideration. In the instant case, petitioner CABEU-NFL merely raised the fact of the pendency of two cases without demonstrating any similarity in the causes of action between the said cases and the present case. In the absence of such evidence to show that the issues involved in these cases are the same, the Court cannot give credence to petitioner’s claim of forum shopping. Central Azucarera De Bais Employees Union-NFL, represented by its President, Pablito Saguran vs. Central Azucarera De Bais, Inc., represented by its President, Antonio Steven L. Chan, G.R. No. 186605, November 17, 2010.Illegal strike. Under Article 264 (a) of the Labor Code, as amended, a strike that is undertaken despite the issuance by the Secretary of Labor of an assumption order and/or certification is illegal. So is a declaration of a strike during the pendency of cases involving the same grounds for the strike. In the present case, there is no dispute that when respondents conducted their mass actions on April 3 to 6, 2000, the proceedings before the Secretary of Labor were still pending as both parties filed motions for reconsideration of the March 24, 2000 Order. Clearly, respondents knowingly violated the aforesaid provision by holding a strike in the guise of mass demonstration. Solid Bank Corp. Ernesto U. Gamier, et al. and Solid Bank Corp., et al. vs. Solid Bank Union and its Dismissed Officers and Members, et al. G.R. No. 159460 and G.R. No. 159461, November 15, 2010.Illegal strike; proof of illegal acts. To justify termination of a union member who participated in an illegal strike, there must be proof that he or she committed illegal acts during a strike. Substantial evidence available under the attendant circumstances, which may justify the imposition of the penalty of dismissal, may suffice. Petitioners have not adduced evidence on such illegal acts committed by each of the individual respondents who are union members. The dismissal of respondent-union members are therefore unjustified in the absence

of a clear showing that they committed specific illegal acts during the mass actions and concerted work boycott. Solid Bank Corp. Ernesto U. Gamier, et al. and Solid Bank Corp., et al. vs. Solid Bank Union and its Dismissed Officers and Members, et al. G.R. No. 159460 and G.R. No. 159461, November 15, 2010.Illegal dismissal; backwages. The award of backwages is a legal consequence of a finding of illegal dismissal. However, assuming that respondent-union members have indeed reported back to work at the end of the concerted mass actions but were soon terminated by petitioners who found their explanation unsatisfactory, they are not entitled to backwages in view of the illegality of the said strike. Under the circumstances, respondents’ reinstatement without backwages suffices for the appropriate relief. Solid Bank Corp. Ernesto U. Gamier, et al. and Solid Bank Corp., et al. vs. Solid Bank Union and its Dismissed Officers and Members, et al. G.R. No. 159460 and G.R. No. 159461, November 15, 2010.Illegal dismissal; lack of substantive due process. The dismissal of an employee, which the employer must validate, has a two-fold requirement: one is substantive, the other is procedural. Not only must the dismissal be for a just or an authorized cause, as provided by law; the rudimentary requirements of due process – the opportunity to be heard and to defend oneself – must be observed as well. The employer has the burden of proving that the dismissal was for a just cause; failure to show this, as in the present case, would necessarily mean that the dismissal was unjustified and, therefore, illegal. The respondent worker’s allegation that Teng summarily dismissed them on suspicion that they were not reporting to him the correct volume of the fish caught in each fishing voyage was never denied by Teng. Unsubstantiated suspicion is not a just cause to terminate one’s employment under Article 282 of the Labor Code. Albert Teng vs. Alfredo S. Pahagac, et al., G.R. No. 169704, November 17, 2010.Illegal dismissal; separation pay in lieu of reinstatement. Since reinstatement is no longer possible given the lapse of considerable time from the occurrence of the strike, not to mention the fact that Solidbank had long ceased its banking operations, the award of separation pay of one (1) month salary for each year of service, in lieu of reinstatement, is in order. Solid Bank Corp. Ernesto U. Gamier, et al. and Solid Bank Corp., et al. vs. Solid Bank Union and its Dismissed Officers and Members, et al. G.R. No. 159460 and G.R. No. 159461, November 15, 2010.Illness; when deemed pre-existing and not compensable. Petitioner’s illness already existed when he commenced his fourth contract of employment with respondents, hence, not compensable. Given that the employment of a seafarer is governed by the contract he signs every time he is rehired and his employment is terminated when his contract expires, petitioner’s illness during his previous contract with respondents is deemed pre-existing during his subsequent contract. That petitioner was subsequently rehired by respondents despite knowledge of his seizure attacks does not make the latter a guarantor of his health. Jerry M. Francisco, vs. Bahia Shipping Services, Inc. and/or Cynthia C. Mendoza, and Fred Olsen Cruise Lines, Ltd., G.R. No. 190545, November 22, 2010 . Indirect employer; solidary liability. 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 respondent security guards, pursuant to Article 107 of the Labor Code. Thus, after the contractor 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 106 and 109 of the Labor Code. It should be understood, though, that the solidary liability of petitioner does not preclude the application of Article 1217 of the Civil Code on the right of reimbursement from its co-debtor. Government Service Insurance System vs. National Labor Relations Commission (NLRC), Dionisio Banlasan, et al., G.R. No. 180045, November 17, 2010.Indirect employer; solidary liability; coverage. Petitioner’s liability as indirect employer covers the payment of respondents’ salary differential and 13th month pay during the time they worked for petitioner. Petitioner’s liability, however, cannot extend to the payment of separation pay. An order to pay separation pay is invested with a punitive character, such that an indirect employer should not be made liable without a finding that it had conspired in the illegal dismissal of the employees.Government Service Insurance System vs. National Labor Relations Commission (NLRC), Dionisio Banlasan, et al., G.R. No. 180045, November 17, 2010.Inefficiency of employee; condonation by employer. While it is acknowledged that petitioner Gregorio’s service record shows that his performance as a security guard was below par, respondent Gulf Pacific never issued any memo citing him for the alleged repeated errors, inefficiency, and poor performance while on duty, and instead continued to assign him to various posts. This amounts to condonation by Gulf Pacific of

whatever infractions Gregorio may have committed. Even assuming the reasons for relieving Gregorio of his position were true, it was incumbent upon Gulf Pacific to be vigilant in its compliance with labor laws. Bebina G. Salvaloza vs. National Labor Relations Commission, Gulf Pacific Security Agency, Inc., and Angel Quizon, G.R. No. 182086, November 24, 2010.Jurisdiction; Secretary of Labor. It is well-settled that the Secretary of Labor, in the exercise of his power to assume jurisdiction over a labor dispute under Art. 263 (g) [11] of the Labor Code, may resolve all issues involved in the controversy including the award of wage increases and benefits. In the instant case, the fact that the award was higher than that which was purportedly agreed upon in the MOA between management and the labor union is of no moment because the Secretary, in resolving the CBA deadlock, is not limited to considering the MOA as basis in computing the wage increases. He could, as he did, consider the financial documents submitted by respondent as well as the parties’ bargaining history and respondent’s financial outlook and improvements as stated in its website. Cirtek Employees Labor Union-Federation of Free Workers vs. Cirtek Electronics, Inc., G.R. No. 190515, November 15, 2010.Jurisdiction; divestment. It bears noting that the filing and submission of the MOA did not have the effect of divesting the Secretary of his jurisdiction, or of automatically disposing the controversy. Thus, neither should the provisions of the MOA restrict the Secretary’s leeway in deciding the matters before him. Cirtek Employees Labor Union-Federation of Free Workers vs. Cirtek Electronics, Inc.,G.R. No. 190515, November 15, 2010.Labor-only contracting. Section 5 of the DO No. 18-02, which implements Article 106 of the Labor Code, provides that, ”… 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. In the present case, Teng admitted that he solely provided the capital and equipment, while the maestros supplied the workers. Also, the power of control over the respondent workers was lodged not with the maestros but with Teng. Moreover, they performed tasks that were necessary and desirable in Teng’s fishing business. Taken together, these incidents confirm the existence of a labor-only contracting which is prohibited in our jurisdiction. Accordingly, a finding that the maestros are labor-only contractors is equivalent to a finding that an employer-employee relationship exists between Teng and the respondent workers. Albert Teng vs. Alfredo S. Pahagac, et al., G.R. No. 169704, November 17, 2010Mootness; amicable settlement as final satisfaction of judgment award. The “conditional” settlement of the judgment award insofar as it operates as a final satisfaction thereof renders the case moot and academic. In the case at bar, the settlement grants the petitioner the luxury of having other remedies available to it such as its petition for certiorari pending before the appellate court, and an eventual appeal to the Court. On the other hand, respondent employee could no longer pursue other claims, including interests that may accrue during the pendency of the case. The Labor Arbiter and the appellate court may not thus be faulted for interpreting petitioner’s “conditional settlement” to be tantamount to an amicable settlement of the case resulting in the mootness of the petition for certiorari. Career Philippines Ship Management, Inc., vs. Geronimo Madjus,G.R. No. 186158, November 22, 2010.Motion for reconsideration. As amended, Article 263 is now Article 262-A in which the word “unappealable” from Article 263 has been deleted. Thus, although Art. 262-A makes the voluntary arbitration award final and executory after ten calendar days from receipt of the copy of the award or decision by the parties, the decision may still be reconsidered by the Voluntary Arbitrator on the basis of a motion for reconsideration duly filed during that period. The absence of a categorical language in Article 262-A does not preclude the filing of a motion for reconsideration of the VA’s decision within the 10-day period. Therefore, petitioners’ allegation that the VA’s decision had become final and executory by the time the respondent workers filed an appeal with the CA fails. It is consequently ruled that the respondent workers seasonably filed a motion for reconsideration of the VA’s judgment, and the VA erred in denying the motion. Albert Teng vs. Alfredo S. Pahagac, et al.,G.R. No. 169704, November 17, 2010.Off-detail or Floating status. 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. It

takes place when the security agency’s clients decide not to renew their contracts with the agency. It also happens in instances where contracts for security services stipulate that the client may request the agency for the replacement of the guards assigned to it, such that the replaced security guard may be placed on temporary “off-detail” if there are no available posts under the agency’s existing contracts. 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 period. Bebina G. Salvaloza vs. National Labor Relations Commission, Gulf Pacific Security Agency, Inc., and Angel Quizon, G.R. No. 182086, November 24, 2010.Off-detail or Floating status; when deemed constructive dismissal. When a “floating status” lasts for more than six (6) months, the employee may be considered to have been constructively dismissed. In the present case, of the three instances when petitioner Gregorio was temporarily “off-detailed,” the last two already ripened into constructive dismissal. Although it could have been difficult for respondent Gulf Pacific to post Gregorio given his age and his service record, still the agency should not have allowed him to wait indefinitely for an assignment if its clients were in truth less likely to accept him. If, indeed, Gregorio was undesirable as an employee, Gulf Pacific could have dismissed him for cause. The unreasonable length of time that Gregorio was not posted inevitably resulted in his being constructively dismissed from employment. Bebina G. Salvaloza vs. National Labor Relations Commission, Gulf Pacific Security Agency, Inc., and Angel Quizon, G.R. No. 182086, November 24, 2010.Parol evidence; application in labor cases. The appellate court’s brushing aside of the “Paliwanag” and the minutes of the meeting because they were not verified and notarized, thus violating, so the appellate court reasoned, the rules on parol evidence, does not lie. Like any other rule on evidence, parol evidence should not be strictly applied in labor cases. Cirtek Employees Labor Union-Federation of Free Workers vs. Cirtek Electronics, Inc., G.R. No. 190515, November 15, 2010.Petition; service on counsel. Section 1, Rule 65 in relation to Section 3, Rule 46 of the Rules of Court, clearly provides that in a petition filed originally in the CA, the petitioner is required to serve a copy of the petition on the adverse party before its filing. If the adverse party appears by counsel, service shall be made on such counsel pursuant to Section 2, Rule 13. Thus, in the instant case, petitioner CABEU-NFL’s insistence that service of the copy of the CA petition should have been made to it, rather than to its counsel, is unavailing. Central Azucarera De Bais Employees Union-NFL, represented by its President, Pablito Saguran vs. Central Azucarera De Bais, Inc., represented by its President, Antonio Steven L. Chan, G.R. No. 186605, November 17, 2010.Reinstatement; when not granted. Petitioner Gregorio’s position paper did not pray for reinstatement, but only sought payment of money claims. Likewise, the strained relations between the parties make reinstatement impracticable. What is more, even during the time of the LA’s decision, reinstatement was no longer legally feasible since Gregorio was past the age qualification for a security guard license. Section 5[33] of R.A. 5487, enumerating the qualifications for a security guard, provides that the person should not be less than 21 nor over 50 years of age. And as previously mentioned, as early as June 13, 2002, Gregorio was no longer in possession of a valid license. Thus, separation pay should be paid in lieu of reinstatement. Bebina G. Salvaloza vs. National Labor Relations Commission, Gulf Pacific Security Agency, Inc., and Angel Quizon, G.R. No. 182086, November 24, 2010.Retirement laws; liberal construction. Retirement laws are liberally construed in favor of the retiree because their objective is to provide for the retiree’s sustenance and, hopefully, even comfort, when he no longer has the capability to earn a livelihood. The liberal approach aims to achieve the humanitarian purposes of the law in order that efficiency, security, and well-being of government employees may be enhanced. Indeed, retirement laws are administered in favor of the persons intended to be benefited, and all doubts are resolved in their favor. In this case, as adverted to above, respondent was able to establish that he has a clear legal right to the reinstatement of his retirement benefits. Government Service Insurance System vs. Fernando P. De Leon, G.R. No. 186560, November 17, 2010.Retirement benefit; entitlement. Respondent’s disqualification from receiving retirement benefits under R.A. No. 910 does not mean that he is disqualified from receiving any retirement benefit under any other existing retirement law. Prior to R.A. No. 8291, retiring government employees who were not entitled to the benefits under R.A. No. 910 had the option to retire under either of two laws: Commonwealth Act No. 186, as amended, or P.D. No. 1146. In his Comment, respondent implicitly indicated his preference to retire under P.D.

No. 1146, since this law provides for higher benefits. Because respondent had complied with the requirements under the said law at the time of his retirement, a fact which GSIS does not dispute, he is entitled to receive the benefits provided under the same law. Government Service Insurance System vs. Fernando P. De Leon, G.R. No. 186560, November 17, 2010.Strike; definition. Article 212 of the Labor Code, as amended, defines strike as any temporary stoppage of work by the concerted action of employees as a result of an industrial or labor dispute. A labor dispute includes any controversy or matter concerning terms and conditions of employment or the association or representation of persons in negotiating, fixing, maintaining, changing or arranging the terms and conditions of employment, regardless of whether or not the disputants stand in the proximate relation of employers and employees. The term “strike” shall also include slowdowns, mass leaves, sitdowns, attempts to damage, destroy or sabotage plant equipment and facilities and similar activities. In the instant case, about 712 employees absented themselves from work in a concerted fashion for three continuous days. Considering that these mass actions stemmed from a bargaining deadlock and an order of assumption of jurisdiction had already been issued by the Secretary of Labor to avert an impending strike, all the elements of strike are evident in the Union-instigated mass actions. Solid Bank Corp. Ernesto U. Gamier, et al. and Solid Bank Corp., et al. vs. Solid Bank Union and its Dismissed Officers and Members, et al. G.R. No. 159460 and G.R. No. 159461, November 15, 2010.Unfair labor practice. For a charge of unfair labor practice to prosper, it must be shown that respondent CAB’s suspension of negotiation with CABEU-NFL and its act of concluding a CBA with CABELA, another union in the bargaining unit, were 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…” However, the facts show that CAB believed that CABEU-NFL was no longer the representative of the workers. It just wanted to foster industrial peace by bowing to the wishes of the overwhelming majority of its rank and file workers and by negotiating and concluding in good faith a CBA with CABELA.” Such actions of CAB are nowhere tantamount to anti-unionism, the evil sought to be punished in cases of unfair labor practices. Central Azucarera De Bais Employees Union-NFL, represented by its President, Pablito Saguran vs. Central Azucarera De Bais, Inc., represented by its President, Antonio Steven L. Chan, G.R. No. 186605, November 17, 2010.Unfair labor practice; burden of proof. Basic is the principle that good faith is presumed and he who alleges bad faith has the duty to prove the same. By imputing bad faith to the actuations of CAB, CABEU-NFL has the burden to present substantial evidence to prove the allegation of unfair labor practice. Apparently, CABEU-NFL refers only to the execution of the supposed CBA between CAB and CABELA and the request to suspend the negotiations, to conclude that bad faith attended CAB’s actions. The Court is of the view that CABEU-NFL, in simply relying on the said circumstances, failed to substantiate its claim of unfair labor practice to rebut the presumption of good faith.Central Azucarera De Bais Employees Union-NFL, represented by its President, Pablito Saguran vs. Central Azucarera De Bais, Inc., represented by its President, Antonio Steven L. Chan, G.R. No. 186605, November 17, 2010.

December 2010 Philippine Supreme Court Decisions on Labor Law and ProcedurePosted on January 24, 2011 by Leslie C. Dy • Posted in Labor Law, Philippines - Cases, Philippines - Law • Tagged certiorari,due process, evidence, illegal dismissal, jurisdiction, labor-only contracting, loss of trust and confidence, reinstatement •Here are selected December 2010 rulings of the Supreme Court of the Philippines on labor law and procedure:

Dismissal; due process; trial-type hearing is not essential . The essence of due process is an opportunity to be heard or, as applied to administrative proceedings, an opportunity to explain one’s side. Records show that Aboc was duly notified through a letter asking him to explain why his services should not be terminated. In fact, he replied to the same by submitting a written explanation. He was likewise duly afforded ample opportunity to defend himself during a conference conducted. Aboc’s contention that the conference he

attended cannot substitute the hearing mandated by the Labor Code is bereft of merit. A formal trial-type hearing is not at all times and in all instances essential to due process. It is enough that the parties are given a fair and reasonable opportunity to explain their respective sides of the controversy and to present supporting evidence on which a fair decision can be based. Antonio A. Aboc vs. Metropolitan Bank And Trust Company / Metropolitan Bank And Trust Company vs. Antonio A. Aboc, G.R. Nos. 170542-43 and G.R. No. 176460, December 13, 2010.Dismissal; due process; trial-type hearing is not essential. In dismissal cases, the essence of due process is a fair and reasonable opportunity to be heard, or as applied to administrative proceedings, an opportunity to explain one’s side. A formal or trial type hearing is not at all times and in all instances essential. Neither is it necessary that the witnesses be cross-examined. In the instant case, there was a proceeding where the respondent was apprised of the charges against him as well as of his rights. Thereafter, he was notified of the formal charges against him and was required to explain in writing why he should not be dismissed for serious misconduct. A formal hearing was conducted and subsequently, respondent received a Notice of Termination informing him that after a careful evaluation, he was found liable as charged and dismissed from the service due to gross misconduct. Clearly, respondent was afforded ample opportunity to air his side and defend himself. Hence, there was due process. Philippine Long Distance Telephone Company, vs. Eusebio M. Honrado, G.R. No. 189366, December 8, 2010.Dismissal; due process. Respondent harps on the fact that his dismissal was preconceived because there was already a decision to terminate him even before he was given the show cause memorandum. Contrary to respondent’s allegations, he was given more than enough opportunity to defend himself. The audit committee’s conclusion to dismiss respondent from the service was merely recommendatory. It was not conclusive upon the petitioner company. This is precisely the reason why the petitioner still conducted further investigations. To reiterate, respondent was properly informed of the charges and had every opportunity to rebut the accusations and present his version. Respondent was not denied due process of law for he was adequately heard as the very essence of due process is the opportunity to be heard. Equitable PCI Bank (Now Banco De Oro Unibank, Inc.), vs. Castor A. Dompor, G.R. Nos. 163293 & 163297, December 8, 2010.Dismissal; loss of confidence; guidelines for application. The Court has set the guidelines for the application of the doctrine of loss of confidence as follows: (a) Loss of confidence should not be simulated; (b) It should not be used as a subterfuge for causes which are improper, illegal or unjustified; (c) It may not be arbitrarily asserted in the face of overwhelming evidence to the contrary; and (d) It must be genuine, not a mere afterthought to justify earlier action taken in bad faith. In the case at bar, no mention was made regarding petitioner’s alleged loss of trust and confidence in respondent. Neither was there any explanation nor discussion of the alleged sensitive and delicate position of respondent requiring the utmost trust of petitioner. Because of its subjective nature, the Court has been very scrutinizing in cases of dismissal based on loss of trust and confidence. Thus, when the breach of trust or loss of confidence is not clearly established by facts, as in the instant case, such dismissal on the ground of loss and confidence cannot be countenanced. The Coca-Cola Export Corporation, vs. Clarita P. Gacayan, G.R. No. 149433, December 15, 2010 .Dismissal; serious misconduct; wrongful intent required. For misconduct or improper behavior to be a just cause for dismissal, (a) it must be serious; (b) must relate to the performance of the employee’s duties; and (c) must show that the employee has become unfit to continue working for the employer. In the present case, the alleged infractions of respondent could hardly be considered serious misconduct. In order to constitute serious misconduct which will warrant the dismissal of an employee, it is not sufficient that the act or conduct complained of has violated some established rules or policies. It is equally important and required that the act or conduct must have been done with wrongful intent. Such is, however, lacking in the instant case. The Coca-Cola Export Corporation, vs. Clarita P. Gacayan, G.R. No. 149433, December 15, 2010 .Dismissal; substantial evidence. The quantum of proof required in determining the legality of an employee’s dismissal is only substantial evidence. In a similar case, the Court held that the standard of substantial evidence is met where the employer, as in this case, has reasonable ground to believe that the employee is responsible for the misconduct and his participation in such misconduct makes him unworthy of the trust and confidence demanded by his position. In the present case, petitioner has sufficiently established that respondent solicited, collected and received the P1,500.00 down payment illegally from the spouses Mueda. Taken together, the petitioner has discharged its burden of establishing the serious misconduct committed by respondent. Such

misconduct makes him unworthy of the trust and confidence demanded by his position. Philippine Long Distance Telephone Company, vs. Eusebio M. Honrado, G.R. No. 189366, December 8, 2010.Dismissal; substantial evidence. The burden of proof rests on the employer to show that the dismissal was for a just cause or authorized cause. Dismissal due to serious misconduct and loss of trust and confidence must be supported by substantial evidence which is that amount of 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 present case, evidence clearly shows that the acts of Aboc in helping organize the credit unions and in the operations thereof constituted serious misconduct or breach of trust and confidence. His participation in the credit unions is highly irregular and clearly in conflict with Metrobank’s business. Aboc claimed that he was only an “unwilling participant” doing a ministerial job. The investigation, however, showed otherwise. Antonio A. Aboc vs. Metropolitan Bank And Trust Company / Metropolitan Bank And Trust Company vs. Antonio A. Aboc, G.R. Nos. 170542-43 and G.R. No. 176460, December 13, 2010 .Dismissal; two-notice rule. The requirements of procedural due process were complied with when petitioner sent a memo to respondent informing him of the specific charges and giving him opportunity to air his side. Subsequently, in a letter, respondent was informed that on the basis of the results of the investigation conducted, his written explanation, the written explanation of other employees as well as the audit report, the management has decided to terminate him. The two-notice requirement, which includes a written notice of the cause of dismissal to afford the employee ample opportunity to be heard and defend himself, and written notice of the decision to terminate him which states the reasons therefor, was thus complied with. Equitable PCI Bank (Now Banco De Oro Unibank, Inc.), vs. Castor A. Dompor, G.R. Nos. 163293 & 163297, December 8, 2010.Dismissal; willful disobedience. To justify willful disobedience or insubordination as a valid ground for termination, the employee’s assailed conduct must have been willful or characterized by a wrongful or perverse attitude and the order violated must have been reasonable, lawful, made known to the employee, and must pertain to the duties which he had been engaged to discharge. In the case at bar, while petitioner’s manual of procedures does not absolutely prohibit the negotiation or acceptance of second-endorsed checks for deposits, it expressly disallows the acceptance of checks endorsed by corporations, societies, firms, etc. and checks with unusual endorsements. As shown by the records, this explicit policy was transgressed by respondent intentionally and willfully. Respondent was instructed by management to stop the transgression but he did not stop. Respondent admittedly disobeyed not only his superiors’ directives but also simple bank rules. Equitable PCI Bank (Now Banco De Oro Unibank, Inc.), vs. Castor A. Dompor, G.R. Nos. 163293 & 163297, December 8, 2010.Dismissal; willful breach of trust. Willful breach of trust requires that the loss of confidence must not be simulated; it should not be used as a subterfuge for causes which are illegal, improper or unjustified; it may not be arbitrarily asserted in the face of overwhelming evidence to the contrary; it must be genuine, not a mere afterthought to justify earlier action taken in bad faith; and, the employee involved holds a position of trust and confidence. Respondent, as bank manager, has the duty to ensure that bank rules are strictly complied with to serve the best interest of the bank as he holds a position of trust and confidence. Any negligence in the exercise of his responsibilities can be sufficient ground for loss of trust and confidence. As held in one case, the mere existence of a basis for believing that a managerial employee has breached the trust of his employer would suffice for his dismissal. Proof beyond reasonable doubt is not required. In the case at bar, respondent’s wanton violation of bank policies equates to abuse of authority and, therefore, abuse of the trust reposed in him. Such is enough for his dismissal from service. Equitable PCI Bank (Now Banco De Oro Unibank, Inc.), vs. Castor A. Dompor, G.R. Nos. 163293 & 163297, December 8, 2010.Illegal dismissal; reinstatement and backwages. Under Article 279 of the Labor Code, an employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his compensation was withheld from him up to the time of his actual reinstatement. Respondent is entitled to such award. The Coca-Cola Export Corporation, vs. Clarita P. Gacayan, G.R. No. 149433, December 15, 2010 .Job contracting; conditions. Permissible job contracting or subcontracting refers to an arrangement whereby a principal agrees to farm out to the contractor the performance of a specific work, or service within a predetermined period, regardless of whether such work, or service is to be performed within or outside the

premises of the principal. Thus, the following conditions must concur: (a) The contractor carries on a distinct and independent business and undertakes the contract work on his account under his own responsibility according to his own manner and method, free from the control and direction of his 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 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, BMSI is engaged in labor-only contracting for LSC. First, petitioners worked at LSC’s premises, and nowhere else. There was no evidence that BMSI exercised control over them. Second, there is no proof that BMSI had substantial capital. The equipment used by BMSI was merely rented from LSC. Third, petitioners performed activities which were directly related to the main business of LSC. Lastly, BMSI had no other client except for LSC. Emmanuel Babas, Danilo T. Banag, Arturo V. Villarin, Sr., Edwin Javier, Sandi Bermeo, Rex Allesa, Maximo Soriano, Jr., Arsenio Estorque, And Felixberto Anajao, vs. Lorenzo Shipping Corporation, G.R. No. 186091, December 15, 2010.Jurisdiction of Supreme Court; errors of fact; exceptions. The Court has stressed that its jurisdiction in a petition for review on certiorari under Rule 45 of the Rules of Court is limited to reviewing only errors of law, not of fact, unless the findings of fact complained of are devoid of support by the evidence on record, or the assailed judgment is based on the misapprehension of facts. In previous rulings, the Court has declared that when there is enough basis on which a proper evaluation of the merits can be made, it may dispense with the time-consuming procedure in order to prevent further delays in the disposition of the case. However, in the case at bar, based on the nature of the two remaining issues which involve factual issues, and given the inadequacy of the records, pleadings, and other evidence available before the Court to properly resolve those questions, it is constrained to refrain from passing upon them. South Cotabato Communications Corporation and Gauvain J. Benzonan vs. Hon. Patricia A. Sto. Tomas, Secretary Of Labor And Employment, Rolando Fabrigar, Merlyn Velarde, Vince Lamboc, Felipe Galindo, Leonardo Miguel, Julius Rubin, Edel Roderos, Merlyn Coliao And Edgar Jopson, G.R. No. 173326, December 15, 2010. Labor-only contracting and job contracting; how determined. The character of a business, that is, whether as labor-only contractor or as job contractor, should be determined in terms of the criteria set by statute. In one case the Court has explained that despite the fact that the service contracts contain stipulations which are earmarks of independent contractorship, they do not make it legally so. The language of a contract is neither determinative nor conclusive of the relationship between the parties. The parties cannot dictate, by a declaration in a contract, the character of a business. Thus, in distinguishing between the prohibited labor-only contracting and permissible job contracting, the totality of the facts and the surrounding circumstances of the case are to be considered. Emmanuel Babas, Danilo T. Banag, Arturo V. Villarin, Sr., Edwin Javier, Sandi Bermeo, Rex Allesa, Maximo Soriano, Jr., Arsenio Estorque, And Felixberto Anajao, vs. Lorenzo Shipping Corporation,G.R. No. 186091, December 15, 2010.Labor-only contracting; elements. Labor-only contracting, a prohibited act, is an arrangement where the contractor or subcontractor merely recruits, supplies, or places workers to perform a job, work, or service for a principal. In labor-only contracting, the following elements are present: (a) the contractor or subcontractor does not have substantial capital or investment to actually perform the job, work, or service under its own account and responsibility; and (b) the employees recruited, supplied, or placed by such contractor or subcontractor perform activities which are directly related to the main business of the principal. Emmanuel Babas, Danilo T. Banag, Arturo V. Villarin, Sr., Edwin Javier, Sandi Bermeo, Rex Allesa, Maximo Soriano, Jr., Arsenio Estorque, And Felixberto Anajao, vs. Lorenzo Shipping Corporation, G.R. No. 186091, December 15, 2010.Labor-only contracting; workers are regular employees of principal. Indubitably, BMSI can only be classified as a labor-only contractor. Consequently, the workers that BMSI supplied to its principal LSC became regular employees of the latter. Having gained regular status, petitioners were entitled to security of tenure and could only be dismissed for just or authorized causes and after they had been accorded due process. The termination of LSC’s Agreement with BMSI cannot be considered a just or an authorized cause for petitioners’ dismissal. Emmanuel Babas, Danilo T. Banag, Arturo V. Villarin, Sr., Edwin Javier, Sandi Bermeo, Rex Allesa, Maximo Soriano, Jr., Arsenio Estorque, And Felixberto Anajao, vs. Lorenzo Shipping Corporation, G.R. No. 186091, December 15, 2010.

Payroll reinstatement; effect of reversal on appeal. Since Metrobank chose payroll reinstatement for Aboc, he then became a reinstated regular employee. This means that he was restored to his previous position as a regular employee without loss of seniority rights and other privileges appurtenant thereto. His payroll reinstatement put him on equal footing with the other regular employees insofar as entitlement to the benefits given under the Collective Bargaining Agreement is concerned. The fact that the decision of the LA was reversed on appeal has no controlling significance. The rule is that even if the order of reinstatement of the LA is reversed on appeal, it is obligatory on the part of the employer to reinstate and pay the wages of the dismissed employee during the period of appeal until final reversal by the higher court. Antonio A. Aboc vs. Metropolitan Bank And Trust Company / Metropolitan Bank And Trust Company vs. Antonio A. Aboc, G.R. Nos. 170542-43 and G.R. No. 176460, December 13, 2010 .Petition for certiorari; period for filing; retroactive application of amendments. By virtue of the latest amendment of Section 4, Rule 65 of the 1997 Rules of Civil Procedure introduced by Circular No. 56-2000, the 60-day period to file a petition for certiorari should be reckoned from the date of receipt of the notice of the denial of the motion for reconsideration or new trial, if one was filed. Being a curative statute, Circular No. 56-2000 has been applied by Court retroactively in a number of cases. Given the above, respondent had a fresh 60-day period from the date she received a copy of the NLRC Resolution denying her motion for reconsideration within which to file the petition for certiorari. Thus, the Court ruled that respondent seasonably filed the petition within the reglementary period provided. The Coca-Cola Export Corporation, vs. Clarita P. Gacayan, G.R. No. 149433, December 15, 2010 .Registration as independent contractor; effect of. The CA erred in considering BMSI’s Certificate of Registration as sufficient proof that it is an independent contractor. In the case of San Miguel Corporation v. Vicente B. Semillano, et. al., the Court has held that a Certificate of Registration issued by the Department of Labor and Employment is not conclusive evidence of such status. The fact of registration simply prevents the legal presumption of being a mere labor-only contractor from arising. Emmanuel Babas, Danilo T. Banag, Arturo V. Villarin, Sr., Edwin Javier, Sandi Bermeo, Rex Allesa, Maximo Soriano, Jr., Arsenio Estorque, And Felixberto Anajao, vs. Lorenzo Shipping Corporation,G.R. No. 186091, December 15, 2010.Reinstatement; immediately executory pending appeal. Under Article 223 of the Labor Code, the decision of the Labor Arbiter reinstating a dismissed or separated employee, insofar as the reinstatement aspect is concerned, shall be immediately executory pending appeal. The employee shall either be admitted back to work under the same terms and conditions prevailing prior to his dismissal or separation or, at the option of the employer, merely reinstated in the payroll. The posting of a bond by the employer shall not stay the execution for reinstatement provided herein. In the case at bench, it cannot be denied that Metrobank opted to reinstate Aboc in its payroll.Antonio A. Aboc vs. Metropolitan Bank And Trust Company / Metropolitan Bank And Trust Company vs. Antonio A. Aboc, G.R. Nos. 170542-43 and G.R. No. 176460, December 13, 2010 .Separation pay as a measure of social justice; when awarded. In several instances the Court has awarded separation pay as a measure of social justice. However, the matter has been clarified in PLDT Co. v. NLRC where the Court categorically declared that separation pay shall be allowed as a measure of social justice only in those instances where the employee is validly dismissed for cause other than serious misconduct. In another case, the Court ruled that in addition to serious misconduct, separation pay should not be conceded to an employee who was dismissed based on willful disobedience. In the case at bar, it was established that the infractions committed by the respondent constituted serious misconduct or willful disobedience resulting to loss of trust and confidence. Clearly therefore, even based on equity and social justice, respondent does not deserve the award of separation pay. Equitable PCI Bank (Now Banco De Oro Unibank, Inc.), vs. Castor A. Dompor, G.R. Nos. 163293 & 163297, December 8, 2010.Termination; grounds. Under the requirement of substantial due process, the grounds for termination of employment must be based on just or authorized causes. Article 282 of the Labor Code enumerates the just causes for the termination of employment, thus: (a) Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or representative in connection with his work; (b) Gross and habitual neglect by the employee of his duties; (c) Fraud or willful breach by the employee of the trust reposed in him by his employer or duly authorized representative; (d) Commission of a crime or offense by the employee against the person of his employer or any immediate member of his family or his duly authorized representative; and (e) Other causes analogous to the foregoing. The Coca-Cola Export Corporation, vs. Clarita P. Gacayan, G.R. No. 149433, December 15, 2010 .

Verification and certification; effect of failure to sign. A petition satisfies the formal requirements only with regard to those who signed the petition, but not the co-petitioners who did not sign nor authorize the other petitioners to sign it on their behalf. In the case at bar, only seven (7) of the nine petitioners signed the verification and certification against forum shopping. Thus, the other petitioners who did not sign cannot be recognized as petitioners and have no legal standing before the Court. The petition should be dismissed outright with respect to such non-conforming petitioners. Emmanuel Babas, Danilo T. Banag, Arturo V. Villarin, Sr., Edwin Javier, Sandi Bermeo, Rex Allesa, Maximo Soriano, Jr., Arsenio Estorque, And Felixberto Anajao, vs. Lorenzo Shipping Corporation,G.R. No. 186091, December 15, 2010.Verification and certification; “substantial compliance” rule. The requirement of the certification of non-forum shopping is rooted in the principle that a party-litigant shall not be allowed to pursue simultaneous remedies in different fora. However, the Court has relaxed the rule under justifiable circumstances, considering that, although it is obligatory, it is not jurisdictional. Not being jurisdictional, it can be relaxed under the rule of substantial compliance. In the case at bar, the Court holds that there has been substantial compliance on the petitioners’ part in consonance with our ruling in one case that the President of a petitioner-corporation is in a position to verify the truthfulness and correctness of the allegations in the petition. Petitioner Benzonan clearly satisfies the aforementioned jurisprudential requirement because he is the President of petitioner-corporation. Moreover, he is also named as co-respondent of petitioner-corporation in the labor case which is the subject matter of the special civil action. South Cotabato Communications Corporation and Gauvain J. Benzonan vs. Hon. Patricia A. Sto. Tomas, Secretary Of Labor And Employment, Rolando Fabrigar, Merlyn Velarde, Vince Lamboc, Felipe Galindo, Leonardo Miguel, Julius Rubin, Edel Roderos, Merlyn Coliao And Edgar Jopson, G.R. No. 173326, December 15, 2010. Verification and certification; who can sign for the company without need of board resolution. In previous cases, the Court has held that the following can sign the verification and certification against forum shopping without need of a board resolution: (1) the Chairperson of the Board of Directors, (2) the President of a corporation, (3) the General Manager or Acting General Manager, (4) Personnel Officer, and (5) an Employment Specialist in a labor case. While the above cases do not provide a complete listing of authorized signatories, the determination of the sufficiency of the authority was done on a case to case basis. In the foregoing cases the authority of said corporate representatives to sign the verification or certificate is justified in their being in a position to verify the truthfulness and correctness of the allegations in the petition. However, the better procedure is still to append a board resolution to the complaint or petition to obviate questions regarding the authority of the signatory of the verification and certification. South Cotabato Communications Corporation and Gauvain J. Benzonan vs. Hon. Patricia A. Sto. Tomas, Secretary Of Labor And Employment, Rolando Fabrigar, Merlyn Velarde, Vince Lamboc, Felipe Galindo, Leonardo Miguel, Julius Rubin, Edel Roderos, Merlyn Coliao And Edgar Jopson, G.R. No. 173326, December 15, 2010.

January 2011 Philippine Supreme Court Decisions on Labor Law and ProcedurePosted on February 18, 2011 by Leslie C. Dy • Posted in Labor Law • Tagged backwages, compensable illness, complaint,constructive dismissal, due process, employee benefits, employer-employee relationship, illegal dismissal, illegal recruitment, jurisdiction, NLRC •Here are selected January 2011 rulings of the Supreme Court of the Philippines on labor law and procedure:

Apprenticeship agreement; validity. The apprenticeship agreements did not indicate the trade or occupation in which the apprentice would be trained; neither was the apprenticeship program approved by the Technical Education and Skills Development Authority (TESDA). These were defective as they were executed in violation of the law and the rules. Moreover, with the expiration of the first agreement and the retention of the employees, the employer, to all intents and purposes, recognized the completion of their training and their acquisition of a regular employee status. To foist upon them the second apprenticeship agreement for a second skill which was not even mentioned in the agreement itself, is a violation of the Labor Code’s implementing rules and is an act manifestly unfair to the employees. Atlanta Industries, Inc. and/or Robert Chan vs. Aprilito R. Sebolino, et al., G.R. No. 187320, January 26, 2011.Complaint; reinstatement. Petitioners question the order to reinstate respondents to their former positions, considering that the issue of reinstatement was never brought up before the Court of Appeals and respondents never questioned the award of separation pay to them. Section 2 (c), Rule 7 of the Rules of Court provides that a pleading shall specify the relief sought, but may add a general prayer for such further or other reliefs as may be deemed just and equitable. Under this rule, a court can grant the relief warranted by the allegation and the evidence even if it is not specifically sought by the injured party; the inclusion of a general prayer may justify the grant of a remedy different from or in addition to the specific remedy sought, if the facts alleged in the complaint and the evidence introduced so warrant. The prayer in the complaint for other reliefs equitable and just in the premises justifies the grant of a relief not otherwise specifically prayed for. Therefore, the court may grant relief warranted by the allegations and the proof even if no such relief is prayed for. In the instant case, aside from their specific prayer for reinstatement, respondents, in their separate complaints, prayed for such reliefs which are deemed just and equitable. Prince Transport, Inc. and Mr. Renato Claros vs. Diosdado Garcia, et al., G.R. No. 167291, January 12, 2011.Collection of accrued wages; two-fold test. After the Labor Arbiter’s decision is reversed by a higher tribunal, the employee may be barred from collecting the accrued wages, if it is shown that the delay in enforcing the reinstatement pending appeal was without fault on the part of the employer. The two-fold test in determining whether an employee is barred from recovering his accrued wages requires that — (1) there must be actual delay or that the order of reinstatement pending appeal was not executed prior to its reversal; and (2) the delay must not be due to the employer’s unjustified act or omission. If the delay is due to the employer’s unjustified refusal, the employer may still be required to pay the salaries notwithstanding the reversal of the Labor Arbiter’s Decision. Social Security System vs. Efren Capada, et al., G.R. No. 168501, January 31, 2011.Disciplinary measures; management prerogative. The policy of suspending drivers pending payment of arrears in their boundary obligations is reasonable. It is acknowledged that an employer has free rein and enjoys a wide latitude of discretion to regulate all aspects of employment, including the prerogative to instill discipline on his employees and to impose penalties, including dismissal, if warranted, upon erring employees. This is a management prerogative. Indeed, the manner in which management conducts its own affairs to achieve its purpose is within the management’s discretion. The only limitation on the exercise of management prerogative is that the policies, rules, and regulations on work-related activities of the employees must always be fair and reasonable, and the corresponding penalties, when prescribed, commensurate to the offense involved and to the degree of the infraction. Primo E. Caong, Jr., et al. vs. Avelino Regualos, G.R. No. 179428, January 26, 2011.Dismissal; constructive dismissal. Respondent was suspended for one year after being charged with and found liable for AWOL. After serving her suspension, respondent was allowed to return to work. Respondent cannot be considered to have been constructively dismissed by the petitioner during her period of suspension. Constructive dismissal occurs when there is cessation of work because continued employment is rendered impossible, unreasonable, or unlikely as 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 leaving the latter with no other option but to quit. In this case, there was no cessation of employment relations between the parties. It is unrefuted that respondent promptly resumed teaching at the university right after the expiration of the suspension period. In other words, respondent never quit. Hence, she cannot claim to have been left with no choice but to quit, a crucial element in a finding of constructive dismissal. The University of the Immaculate Conception, et al. vs. NLRC, et al., G.R. No. 181146, January 26, 2011.Dismissal; due process. Respondent employee reported to the petitioner employer the loss of cash which she placed inside the company locker. Immediately, petitioner ordered that she be strip-searched by the company guards. However, the search on her and her personal belongings yielded nothing. The petitioner also reported

the matter to the police and requested the Prosecutor’s Office for an inquest. Respondent was constrained to spend two weeks in jail for failure to immediately post bail. The Court ruled that petitioners failed to accord respondent substantive and procedural due process. 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 Department of Labor and Employment. 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. Robinsons Galleria/Robinsons Supermarket Corp. and/or Jess Manuel vs. Irene R. Ranchez, G.R. No. 177937, January 19, 2011.Dismissal; neglect of duty. Neglect of duty, to be a ground for dismissal, must be both gross and habitual. Gross negligence connotes want of care in the performance of one’s duties. Habitual neglect implies repeated failure to perform one’s duties for a period of time, depending upon the circumstances. A single or isolated act of negligence does not constitute a just cause for the dismissal of the employee. Hospital Management Services – Medical Center Manila vs. Hospital Management Services, Inc. – Medical Center Manila Employees Association-AFW., G.R. No. 176287, January 31, 2011.Dismissal; negligence in patient management. Negligence is defined as the failure to exercise the standard of care that a reasonably prudent person would have exercised in a similar situation. The Court emphasizes that the nature of the business of a hospital requires a higher degree of caution and exacting standard of diligence in patient management and health care as what is involved are lives of patients who seek urgent medical assistance. An act or omission that falls short of the required degree of care and diligence amounts to serious misconduct which constitutes a sufficient ground for dismissal. Hospital Management Services – Medical Center Manila vs. Hospital Management Services, Inc. – Medical Center Manila Employees Association-AFW., G.R. No. 176287, January 31, 2011.Employee benefits; compensable illness. The degree of proof required under P.D. 626 is merely substantial evidence, which means such relevant evidence as a reasonable mind might accept as adequate to support a conclusion. Accordingly, the claimant must show, at least by substantial evidence that the development of the disease was brought about largely by the conditions present in the nature of the job. What the law requires is a reasonable work connection, not a direct causal relation. Alexander B. Gatus vs. Social Security System, G.R. No. 174725, January 26, 2011.Employer-employee relationship; jeepney driver. It is already settled that the relationship betweenjeepney owners/operators and jeepney drivers under the boundary system is that of employer-employee and not of lessor-lessee. The fact that the drivers do not receive fixed wages but only get the amount in excess of the so-called “boundary” that they pay to the owner/operator is not sufficient to negate the relationship between them as employer and employee. Primo E. Caong, Jr., et al. vs. Avelino Regualos, G.R. No. 179428, January 26, 2011.Employer-employee relationship; primary element. Control over the performance of the task of one providing service – both with respect to the means and manner, and the results of the service – is the primary element in determining whether an employment relationship exists. Petitioner asserts that his employer Manulife’s control over him was demonstrated (1) when it set the objectives and sales targets regarding production, recruitment and training programs; and (2) when it prescribed the Code of Conduct for Agents and the Manulife Financial Code of Conduct to govern his activities. However, the court ruled that all these appear to speak of control by the insurance company over its agents. There are built-in elements of control specific to an insurance agency, which do not amount to the elements of control that characterize an employment relationship governed by the Labor Code. They are, however, controls aimed only at specific results in undertaking an insurance agency, and are, in fact, parameters set by law in defining an insurance agency and the attendant duties and responsibilities an insurance agent must observe and undertake. They do not reach the level of control into the means and manner of doing an assigned task that invariably characterizes an employment relationship as

defined by labor law. To reiterate, guidelines indicative of labor law “control” do not merely relate to the mutually desirable result intended by the contractual relationship; they must have the nature of dictating the means and methods to be employed in attaining the result. Petitioner is an insurance agent not an employee. Gregorio V. Tongko vs. The Manufacturers Life Insurance Co. (Phils.), Inc. and Renato A. Vergel de Dios, G.R. No. 167622, January 25, 2011.Employer-employee relationship; probationary employment. 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, i.e., the probationary employee may also be terminated for failure to qualify as a regular employee in accordance with reasonable standards made known by the employer to the employee at the time of the engagement. Thus, the services of an employee who has been engaged on probationary basis may be terminated for any of the following: (1) a just or (2) an authorized cause; and (3) when he fails to qualify as a regular employee in accordance with reasonable standards prescribed by the employer. Robinsons Galleria/Robinsons Supermarket Corp. and/or Jess Manuel vs. Irene R. Ranchez, G.R. No. 177937, January 19, 2011.Employer-employee relationship; regular employment. The respondent employees were already rendering service to the company when they were made to undergo apprenticeship. The respondent were regular employees because they occupied positions such as machine operator, scaleman and extruder operator – tasks that are usually necessary and desirable in petitioner employer’s usual business or trade as manufacturer of plastic building materials. These tasks and their nature characterized the respondents as regular employees under Article 280 of the Labor Code. Thus, when they were dismissed without just or authorized cause, without notice, and without the opportunity to be heard, their dismissal was illegal under the law. Atlanta Industries, Inc. and/or Robert Chan vs. Aprilito R. Sebolino, et al., G.R. No. 187320, January 26, 2011.Illegal dismissal; strained relations. Article 279 of the Labor Code provides that an employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges, to full backwages, inclusive of allowances, and to other benefits or their monetary equivalent computed from the time his compensation was withheld from him up to the time of his actual reinstatement. However, due to the strained relations of the parties, the payment of separation pay has been considered an acceptable alternative to reinstatement, when the latter option is no longer desirable or viable. On the one hand, such payment liberates the employee from what could be a highly oppressive work environment. On the other, the payment releases the employer from the grossly unpalatable obligation of maintaining in its employ a worker it could no longer trust. Thus, as an illegally or constructively dismissed employee, respondent is entitled to: (1) either reinstatement, if viable, or separation pay, if reinstatement is no longer viable; and (2) backwages. These two reliefs are separate and distinct from each other and are awarded conjunctively. Robinsons Galleria/Robinsons Supermarket Corp. and/or Jess Manuel vs. Irene R. Ranchez,G.R. No. 177937, January 19, 2011.Illegal recruitment; elements. Recruitment and placement refers to the act of canvassing, enlisting, contracting, transporting, utilizing, hiring or procuring workers, and includes referrals, contract services, promising or advertising for employment, locally or abroad, whether for profit or not. When a person or entity, in any manner, offers or promises for a fee employment to two or more persons, that person or entity shall be deemed engaged in recruitment and placement. Article 38(a) of the Labor Code, as amended, specifies that recruitment activities undertaken by non-licensees or non-holders of authority are deemed illegal and punishable by law. And when the illegal recruitment is committed against three or more persons, individually or as a group, then it is deemed committed in large scale and carries with it stiffer penalties as the same is deemed a form of economic sabotage. But to prove illegal recruitment, it must be shown that the accused, without being duly authorized by law, gave complainants the distinct impression that he had the power or ability to send them abroad for work, such that the latter were convinced to part with their money in order to be employed. It is important that there must at least be a promise or offer of an employment from the person posing as a recruiter, whether locally or abroad. People of the Philippines vs. Teresita “Tessie” Laogo, G.R. No. 176264, January 10, 2011.Illegal dismissal; execution of waiver and quitclaim. An employee’s execution of a final settlement and receipt of amounts agreed upon does not foreclose his right to pursue a claim for illegal dismissal. Thus, an employee illegally retrenched is entitled to reinstatement without loss of seniority rights and privileges, as well as to payment of full backwages from the time of her separation until actual reinstatement, less the amount which

he/she received as retrenchment pay.Bernadeth Londonio and Joan Corcoro vs. Bio Research, Inc. and Wilson Y. Ang, G.R. No. 191459, January 17, 2011.Jurisdiction; labor arbiter. Petitioner was removed from his position as a manager through a Board Resolution. Petitioner filed a complaint for illegal dismissal before the labor arbiter. Respondents claimed that petitioner is both a stockholder and a corporate officer of respondent corporation, hence, his action against respondents is an intra-corporate controversy over which the Labor Arbiter has no jurisdiction. The Court ruled that this is not an intra-corporate controversy but a labor case cognizable by the labor arbiter. To determine whether a case involves an intra-corporate controversy that is to be heard and decided by the branches of the RTC specifically designated by the Court to try and decide such cases, two tests must be applied: (a) the status or relationship test, and (2) the nature of the controversy test. The first test requires that the controversy arise out of intra-corporate or partnership relations among the stockholders, members or associates of the corporation, partnership or association, between any or all of them and the corporation, partnership or association of which they are stockholders, members or associates; between such corporation, partnership, or association and the public or between such corporation, partnership, or association and the State insofar as it concerns its franchise, license or permit to operate. The second test requires that the dispute among the parties be intrinsically connected with the regulation of the corporation. The Court in this case held that petitioner is not a corporate officer because he was not validly appointed by the Board, thus, failing the relationship test, and that this is a case of employment termination which is a labor controversy and not an intra-corporate dispute, thus failing the nature of the controversy test. Renato Real vs. Sangu Philippines, Inc. et al.,G.R. No. 168757. January 19, 2011.Jurisdiction; labor dispute. Article 217 of the Labor Code states that unfair labor practices and termination disputes fall within the original and exclusive jurisdiction of the Labor Arbiter. As an exception, under Article 262 the Voluntary Arbitrator, upon agreement of the parties, shall also hear and decide all other labor disputes including unfair labor practices and bargaining deadlocks. For the exception to apply, there must be agreement between the parties clearly conferring jurisdiction to the voluntary arbitrator. Such agreement may be stipulated in a collective bargaining agreement. However, in the absence of a collective bargaining agreement, it is enough that there is evidence on record showing the parties have agreed to resort to voluntary arbitration. The University of the Immaculate Conception, et al. vs. NLRC, et al., G.R. No. 181146, January 26, 2011.NLRC; factual findings. Factual findings of labor officials, who are deemed to have acquired expertise in matters within their jurisdiction, are generally accorded not only respect but even finality by the courts when supported by substantial evidence, i.e., the amount of relevant evidence which a reasonable mind might accept as adequate to justify a conclusion. But these findings are not infallible. When there is a showing that they were arrived at arbitrarily or in disregard of the evidence on record, they may be examined by the courts. The CA can grant the petition forcertiorari if it finds that the NLRC, in its assailed decision or resolution, made a factual finding not supported by substantial evidence. Thus, it is within the jurisdiction of the CA to review the findings of the NLRC. Prince Transport, Inc. and Mr. Renato Claros vs. Diosdado Garcia, et al., G.R. No. 167291, January 12, 2011.Petition; certificate of non-forum shopping. While the general rule is that the certificate of non-forum shopping must be signed by all the plaintiffs in a case and the signature of only one of them is insufficient, the Court has stressed that the rules on forum shopping, which were designed to promote and facilitate the orderly administration of justice, should not be interpreted with such absolute literalness as to subvert its own ultimate and legitimate objective. Strict compliance with the provision regarding the certificate of non-forum shopping underscores its mandatory nature in that the certification cannot be altogether dispensed with or its requirements completely disregarded. It does not, however, prohibit substantial compliance therewith under justifiable circumstances, considering especially that although it is obligatory, it is not jurisdictional. In a number of cases, the Court has consistently held that when all the petitioners share a common interest and invoke a common cause of action or defense, the signature of only one of them in the certification against forum shopping substantially complies with the rules. Prince Transport, Inc. and Mr. Renato Claros vs. Diosdado Garcia, et al., G.R. No. 167291, January 12, 2011.Petition; failure to attach documents. The respondent workers sought that the petition be dismissed outright for the petitioners’ failure to attach to the petition a copy of the Production and Work Schedule and a copy of the compromise agreement allegedly entered into — material portions of the record that should accompany and

support the petition, pursuant to Section 4, Rule 45 of the Rules of Court. In Mariners Polytechnic Colleges Foundation, Inc. v. Arturo J. Garchitorena the Court held that the phrase “of the pleadings and other material portions of the record xxx as would support the allegation of the petition clearly contemplates the exercise of discretion on the part of the petitioner in the selection of documents that are deemed to be relevant to the petition. The crucial issue to consider then is whether or not the documents accompanying the petition sufficiently supported the allegations therein.” The failure to attach copy of the subject documents is not fatal as the challenged CA decision clearly summarized the labor tribunal’s rulings. Atlanta Industries, Inc. and/or Robert Chan vs. Aprilito R. Sebolino, et al., G.R. No. 187320, January 26, 2011.Petition; verification. The verification requirement is deemed substantially complied with when some of the parties who undoubtedly have sufficient knowledge and belief to swear to the truth of the allegations in the petition had signed the same. Such verification is deemed a sufficient assurance that the matters alleged in the petition have been made in good faith or are true and correct, and not merely speculative. In any case, the settled rule is that a pleading which is required by the Rules of Court to be verified, may be given due course even without a verification if the circumstances warrant the suspension of the rules in the interest of justice. Indeed, the absence of a verification is not jurisdictional, but only a formal defect, which does not of itself justify a court in refusing to allow and act on a case. Hence, the failure of some of the respondents to sign the verification attached to their Memorandum of Appeal filed with the NLRC is not fatal to their cause of action. Prince Transport, Inc. and Mr. Renato Claros vs. Diosdado Garcia, et al., G.R. No. 167291, January 12, 2011.Regional director; review of decision. Petitioner appealed an adverse decision to the BLR. BLR Director inhibited himself from the case because he had been a former counsel of respondent. In view of the inhibition, DOLE Secretary took cognizance of the appeal. Jurisdiction to review the decision of the Regional Director lies with the BLR. Once jurisdiction is acquired by the court, it remains with it until the full termination of the case. Thus, jurisdiction remained with the BLR despite the BLR Director’s inhibition. When the DOLE Secretary resolved the appeal, she merely stepped into the shoes of the BLR Director and performed a function that the latter could not himself perform. She did so pursuant to her power of supervision and control over the BLR. The Heritage Hotel Manila, acting through its owner, Grand Plaza Hotel, Corp. vs. National Union of Workers in the Hotel, Restaurant and Allied Industries-Heritage Hotel Manila Supervisors Chapter (NUWHRAIN-HHMSC), G.R. No. 178296, January 12, 2011.Union registration; cancellation. The amendment introduced by RA 9481 sought to strengthen the workers’ right to self-organization and enhance the Philippines’ compliance with its international obligations as embodied in the International Labour Organization (ILO) Convention No. 87, pertaining to the non-dissolution of workers’ organizations by administrative authority. ILO Convention No. 87 provides that “workers’ and employers’ organizations shall not be liable to be dissolved or suspended by administrative authority.” The ILO has expressed the opinion that the cancellation of union registration by the registrar of labor unions, which in our case is the BLR, is tantamount to dissolution of the organization by administrative authority when such measure would give rise to the loss of legal personality of the union or loss of advantages necessary for it to carry out its activities, which is true in our jurisdiction. Although the ILO has allowed such measure to be taken, provided that judicial safeguards are in place, i.e., the right to appeal to a judicial body, it has nonetheless reminded its members that dissolution of a union, and cancellation of registration for that matter, involve serious consequences for occupational representation. It has, therefore, deemed it preferable if such actions were to be taken only as a last resort and after exhausting other possibilities with less serious effects on the organization. It is undisputed that appellee failed to submit its annual financial reports and list of individual members in accordance with Article 239 of the Labor Code. However, the existence of this ground should not necessarily lead to the cancellation of union registration. At any rate, the Court in this case took note of the fact that on 19 May 2000, appellee had submitted its financial statement for the years 1996-1999. With this submission, appellee has substantially complied with its duty to submit its financial report for the said period. The Heritage Hotel Manila, acting through its owner, Grand Plaza Hotel, Corp. vs. National Union of Workers in the Hotel, Restaurant and Allied Industries-Heritage Hotel Manila Supervisors Chapter (NUWHRAIN-HHMSC), G.R. No. 178296, January 12, 2011.Wages; payment pending reinstatement. Employees are entitled to their accrued salaries during the period between the Labor Arbiter’s order of reinstatement pending appeal and the resolution of the National Labor Relations Commission (NLRC) overturning that of the Labor Arbiter. Otherwise stated, even if the order of

reinstatement of the Labor Arbiter is reversed on appeal, the employer is still obliged to reinstate and pay the wages of the employee during the period of appeal until reversal by a higher court or tribunal. On the other hand, if the employee has been reinstated during the appeal period and such reinstatement order is reversed with finality, the employee is not required to reimburse whatever salary he received for he is entitled to such, more so if he actually rendered services during the period. Social Security System vs. Efren Capada, et al.,G.R. No. 168501, January 31, 2011.

February 2011 Philippine Supreme Court Decisions on Labor Law and ProcedurePosted on March 18, 2011 by Leslie C. Dy • Posted in Labor Law, Philippines - Cases, Philippines - Law • Taggedabandonment, burden of proof, certiotari, constructive dismissal, due process, execution, illegal dismissal, jurisdiction,project employee, quitclaim, redundancy, retrenchment, unfair, union •Here are selected February 2011 rulings of the Supreme Court of the Philippines on labor law and procedure:

Abandonment; elements. Respondents filed an illegal dismissal case against the petitioner-corporation. For its defense, petitioner-corporation alleged that the respondents abandoned their work and were not dismissed, and that it sent letters advising respondents to report for work, but they refused. The Court held that for abandonment to exist, it is essential (a) that the employee must have failed to report for work or must have been absent without valid or justifiable reason; and (b) that there must have been a clear intention to sever the employer-employee relationship manifested by some overt acts. The employer has the burden of proof to show the employee’s deliberate and unjustified refusal to resume his employment without any intention of returning. Mere absence is not sufficient. There must be an unequivocal intent on the part of the employee to discontinue his employment. Based on the evidence presented, the reason why respondents failed to report for work was because petitioner-corporation barred them from entering its construction sites. It is a settled rule that failure to report for work after a notice to return to work has been served does not necessarily constitute abandonment. The intent to discontinue the employment must be shown by clear proof that it was deliberate and unjustified. Petitioner-corporation failed to show overt acts committed by respondents from which it may be deduced that they had no more intention to work. Respondents’ filing of the case for illegal dismissal barely four (4) days from their alleged abandonment is totally inconsistent with the known concept of what constitutes abandonment. E.G. & I. Construction Corporation and Edsel Galeos v. Ananias P. Sato, et al., G.R. No. 182070, February 16, 2011.Certification election; petition for cancellation of union registration. Respondent union filed a petition for certification election. Petitioner moved to dismiss the petition for certification election alleging the pendency of a petition for cancellation of the union’s registration. The DOLE Secretary ruled in favor of the legitimacy of the respondent as a labor organization and ordered the immediate conduct of a certification election. Pending appeal in the Court of Appeals, the petition for cancellation was granted and became final and executory. Petitioner argued that the cancellation of the union’s certificate of registration should retroact to the time of its issuance. Thus, it claimed that the union’s petition for certification election and its demand to enter into collective bargaining agreement with the petitioner should be dismissed due to respondent’s lack of legal personality. The Court ruled that the pendency of a petition for cancellation of union registration does not preclude collective bargaining, and that an order to hold a certification election is proper despite the pendency of the petition for cancellation of the union’s registration because at the time the respondent union filed its petition, it still had the legal personality to perform such act absent an order cancelling its registration. Legend International Resorts Limited v. Kilusang Manggagawa ng Legenda, G.R. No. 169754, February 23, 2011.Certiorari under Rule 65; review of facts by the Court of Appeals. While it is true that factual findings made by quasi-judicial and administrative tribunals, if supported by substantial evidence, are accorded great respect and even finality by the courts, this general rule admits of exceptions. When there is a showing that a palpable and

demonstrable mistake that needs rectification has been committed or when the factual findings were arrived at arbitrarily or in disregard of the evidence on record, these findings may be examined by the courts. In the present case, the Court of Appeals found itself unable to completely sustain the findings of the NLRC thus, it was compelled to review the facts and evidence and not limit itself to the issue of grave abuse of discretion. Nelson A. Culili v. Eastern Telecommunications Philippines, Inc., et al. G.R. No. 165381, February 9, 2011.Construction Industry; project employees. Petitioner is a duly licensed labor contractor engaged in painting houses and buildings. Respondents, former painters of the petitioner, filed an illegal dismissal case against petitioner. Petitioner alleged that the respondents abandoned their job and were not dismissed by the petitioner. The Labor Arbiter ruled that there was neither illegal dismissal nor abandonment of job and that the respondents should be reinstated but without any backwages. On appeal, petitioner alleged that the reinstatement of respondents to their former positions, which were no longer existing, is impossible, highly unfair and unjust. It further alleged that the project they were working on at the time of their alleged dismissal was already completed. Having completed their tasks, their positions automatically ceased to exist. Thus, there were no more positions where they can be reinstated as painters. The Court ruled that there are two types of employees in the construction industry. The first is referred to as project employees or those employed in connection with a particular construction project or phase thereof and such employment is coterminous with each project or phase of the project to which they are assigned. The second is known as non-project employees or those employed without reference to any particular construction project or phase of a project. Respondents belonged to the second type and are classified as regular employees of petitioner. It is clear from the records of the case that when one project is completed, respondents were automatically transferred to the next project awarded to petitioners. There was no employment agreement given to respondents which clearly spelled out the duration of their employment and the specific work to be performed and there is no proof that they were made aware of these terms and conditions of their employment at the time of hiring. Thus, it is now too late for petitioner to claim that respondents are project employees whose employment is coterminous with each project or phase of the project to which they are assigned. Nonetheless, assuming that respondents were initially hired as project employees, a project employee may acquire the status of a regular employee when the following factors 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. In this case, the evidence on record shows that respondents were employed and assigned continuously to the various projects of petitioners. As painters, they performed activities which were necessary and desirable in the usual business of petitioner, which was engaged in subcontracting jobs for painting of residential units, condominium and commercial buildings. As regular employees, respondents are entitled to be reinstated without loss of seniority rights. Exodus International Construction Corporation, et al. v. Guillermo Biscocho, et al., G.R. No. 166109, February 23, 2011.Constructive Dismissal; security guards. Respondent was hired by petitioner, a security agency, as a security guard. He was assigned at the Philippine Heart Center until his relief on January 30, 2006. Respondent was not given any assignment thereafter. Thus, on August 2, 2006, he filed a complaint for constructive dismissal and nonpayment of 13th month pay, with prayer for damages against petitioner. To refute the claim, petitioner alleged that respondent was not constructively or illegally dismissed, but had voluntarily resigned. The Court held that respondent was constructively dismissed. In cases involving security guards, a relief and transfer order in itself does not sever employment relationship between a security guard and his agency. An employee has the right to security of tenure, but this does not give him a vested right to his position as would deprive the company of its prerogative to change his assignment or transfer him where his service, as security guard, will be most beneficial to the client. Temporary “off-detail” or the period of time security guards are made to wait until they are transferred or assigned to a new post or client does not constitute constructive dismissal, so long as such status does not continue beyond six months. Theonus of proving that there is no post available to which the security guard can be assigned rests on the employer. In the instant case, the failure of petitioner to give respondent a work assignment beyond the reasonable six-month period makes it liable for constructive dismissal. Nationwide Security and Allied Services, Inc. v. Ronald P. Valderama, G.R. No. 186614, February 23, 2011.Constructive dismissal; defense of abandonment. Respondent filed an illegal dismissal case against the petitioner. Petitioner alleged that respondent abandoned his job and was not dismissed. The Court held that

respondent was illegally dismissed. The jurisprudential rule on abandonment is constant. It is a matter of intention and cannot lightly be presumed from certain equivocal acts. 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 intent, manifested through overt acts, to sever the employer-employee relationship. In this case, petitioner failed to establish clear evidence of respondent’s intention to abandon his employment. Except for petitioner’s bare assertion that respondent did not report to the office for reassignment, no proof was offered to prove that respondent intended to sever the employer-employee relationship. Besides, the fact that respondent filed the instant complaint negates any intention on his part to forsake his work. It is a settled doctrine that the filing of a complaint for illegal dismissal is inconsistent with the charge of abandonment, for an employee who takes steps to protest his dismissal cannot by logic be said to have abandoned his work. Nationwide Security and Allied Services, Inc. v. Ronald P. Valderama, G.R. No. 186614, February 23, 2011.Constructive dismissal; defense of resignation. Respondent, a security guard, filed an illegal dismissal case against the petitioner. To refute the claim, petitioner alleged that respondent was not constructively or illegally dismissed, but had voluntarily resigned. Petitioner alleged that respondent’s resignation is evident from his withdrawal of his cash and firearm bonds. Resignation is the voluntary act of an employee who is in a situation where one believes that personal reasons cannot be sacrificed in favor of the exigency of the service, and one has no other choice but to dissociate oneself from employment. It is a formal pronouncement or relinquishment of an office. The intent to relinquish must concur with the overt act of relinquishment. Thus, the acts of the employee before and after the alleged resignation must be considered in determining whether, he or she, in fact, intended to sever his or her employment. Should the employer interpose the defense of resignation, it is incumbent upon the employer to prove that the employee voluntarily resigned. On this point, the Court held that petitioner failed to discharge its burden. Moreover, the filing of a complaint belies petitioner’s claim that respondent voluntarily resigned. Nationwide Security and Allied Services, Inc. v. Ronald P. Valderama, G.R. No. 186614, February 23, 2011.Execution of Judgment; properties covered. Premier Allied and Contracting Services, Inc. (PACSI) and its President, the petitioner, were held liable to pay the respondents separation pay and attorney’s fees. To execute this judgment, the NLRC sheriff issued a Notice of Sale of a property with a TCT in the name of the petitioner and his wife. The Court ruled that the Notice of Sale is null and void. The power of the NLRC, or the courts, to execute its judgment extends only to properties unquestionably belonging to the judgment debtor alone. A sheriff, therefore, has no authority to attach the property of any person except that of the judgment debtor. Likewise, there is no showing that the sheriff ever tried to execute on the properties of the corporation. The TCT of the property bears out that, indeed, it belongs to petitioner and his wife. Thus, even if we consider petitioner as an agent of the corporation – and, therefore, not a stranger to the case – such that the provision on third-party claims will not apply to him, the property was registered not only in the name of petitioner but also of his wife. She stands to lose the property subject of execution without ever being a party to the case. This will be tantamount to deprivation of property without due process. Paquito V. Ando v. Andresito Y. Campo, et al., G.R. No. 184007, February 16, 2011.Illegal dismissal; burden of proof. Respondents filed an illegal dismissal case against petitioner. Petitioner alleged that the respondents abandoned their work and were never dismissed by the petitioner. NLRC ruled that the respondents were not illegally dismissed since they failed to present a written notice of termination. This was however reversed by the Court of Appeals. The Court held that a written notice of dismissal is not a pre-requisite for a finding of illegal dismissal. Petitioner failed to prove that respondents were dismissed for a just or authorized cause. 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. E.G. & I. Construction Corporation and Edsel Galeos v. Ananias P. Sato, et al., G.R. No. 182070, February 16, 2011.Illegal dismissal; burden of proof. Respondents filed an illegal dismissal case against the petitioners. Petitioners, in their defense, alleged that the respondents abandoned their work and were not dismissed by the petitioners. Although In cases of illegal dismissal, the employer bears the burden of proof to prove that the termination was for a valid or authorized cause, the employee must first establish by substantial evidence the fact that he was dismissed. If there is no dismissal, then there can be no question as to the legality or illegality thereof. In the present case, the Court held that there was no evidence that respondents were dismissed or that they were prevented from returning to their work. It was only respondents’ unsubstantiated conclusion that they were dismissed. As a matter of fact, respondents could not name the particular person who effected their

dismissal and under what particular circumstances. Absent any showing of an overt or positive act proving that petitioners had dismissed respondents, the latters’ claim of illegal dismissal cannot be sustained. Exodus International Construction Corporation, et al. v. Guillermo Biscocho, et al., G.R. No. 166109, February 23, 2011.Illegal dismissal; final and executory judgment. Respondent employee filed an illegal dismissal case against the petitioner-company and Tom Madula, its operations manager. The case was dismissed by the labor arbiter and the dismissal was affirmed by NLRC. On August 29, 2002, the Court of Appeals reversed and set aside the NLRC decision and resolution. The CA ordered the petitioner company to pay respondent separation pay, moral and exemplary damages, and attorney’s fees. The decision became final and executory on February 27, 2004, and consequently a writ of execution was issued. Petitioner-company filed a Motion to Quash Writ of Execution. The Labor Arbiter granted the Motion and exonerated the petitioner company from paying backwages and held that it was petitioner Madula who should be liable to pay backwages. Respondent then filed before the CA a Very Urgent Motion for Clarification of Judgment. On December 10, 2004, CA granted the Motion and held that petitioner-company is solely liable for the judgment award. As a general rule, final and executory judgments are immutable and unalterable, except under these recognized exceptions, to wit: (a) clerical errors; (b) nunc pro tunc entries which cause no prejudice to any party; and (c) void judgments. The underlying reason for the rule is two-fold: (1) to avoid delay in the administration of justice and thus make orderly the discharge of judicial business, and (2) to put judicial controversies to an end, at the risk of occasional errors, inasmuch as controversies cannot be allowed to drag on indefinitely and the rights and obligations of every litigant must not hang in suspense for an indefinite period of time. What the CA rendered on December 10, 2004 was a nunc pro tunc order clarifying the decretal portion of its August 29, 2002 Decision. The object of a judgment nunc pro tunc is not the rendering of a new judgment and the ascertainment and determination of new rights, but is one placing in proper form on the record, the judgment that had been previously rendered, to make it speak the truth, so as to make it show what the judicial action really was. It is not to correct judicial errors, such as to render a judgment anew in place of the one it rendered, nor to supply nonaction by the court, however erroneous the judgment may have been. Filipinas Palmoil Processing, Inc. and Dennis T. Villareal v. Joel P. Dejapa, represented by his Attorney-in-Fact Myrna Manzano, G.R. No. 167332, February 7, 2011.Illegal dismissal; liability of corporate officers. Petitioner filed a complaint against respondent company and its officers for illegal dismissal, unfair labor practice, and money claims. Petitioner alleged that the officers should be held personally liable for the acts of company which were tainted with bad faith and arbitrariness. As a general rule, a corporate officer cannot be held liable for acts done in his official capacity because a corporation, by legal fiction, has a personality separate and distinct from its officers, stockholders, and members. To pierce this fictional veil, it must be shown that the corporate personality was used to perpetuate fraud or an illegal act, or to evade an existing obligation, or to confuse a legitimate issue. In illegal dismissal cases, corporate officers may be held solidarily liable with the corporation if the termination was done with malice or bad faith. Moral damages are awarded only where the dismissal was attended by bad faith or fraud, or constituted an act oppressive to labor, or was done in a manner contrary to morals, good customs or public policy. Exemplary damages may avail if the dismissal was effected in a wanton, oppressive or malevolent manner. In the present case, the Court held that petitioner failed to prove that his dismissal was orchestrated by the individual respondents and their acts were attended with bad faith or were done oppressively. Nelson A. Culili v. Eastern Telecommunications Philippines, Inc., et al. G.R. No. 165381, February 9, 2011 .Illegal dismissal; redundancy. Respondent-company, due to business troubles and losses, implemented a Right-Sizing Program which entailed a company-wide reorganization involving the transfer, merger, absorption or abolition of certain departments of the company. As a result, respondent-company terminated the services of petitioner on account of redundancy. Petitioner filed a complaint against respondent-company and its officers for illegal dismissal, unfair labor practice, and money claims. The Court ruled that petitioner was validly dismissed. There is redundancy when the service capability of the workforce is greater than what is reasonably required to meet the demands of the business enterprise. A position becomes redundant when it is rendered superfluous by any number of factors such as over-hiring of workers, decrease in volume of business, or dropping a particular product line or service activity previously manufactured or undertaken by the enterprise. The Court has been consistent in holding that the determination of whether or not an employee’s services are still needed or sustainable properly belongs to the employer. Provided there is no violation of law or a

showing that the employer was prompted by an arbitrary or malicious act, the soundness or wisdom of this exercise of business judgment is not subject to the discretionary review of the Labor Arbiter and the NLRC. However, an employer cannot simply declare that it has become overmanned and dismiss its employees without producing adequate proof to sustain its claim of redundancy. Among the requisites of a valid redundancy program are: (1) the good faith of the employer in abolishing the redundant position; and (2) fair and reasonable criteria in ascertaining what positions are to be declared redundant, such as but not limited to: preferred status, efficiency, and seniority. The Court also held that the following evidence may be proffered to substantiate redundancy: adoption of a new staffing pattern, feasibility studies/ proposal on the viability of the newly created positions, job description and the approval by the management of the restructuring. Nelson A. Culili v. Eastern Telecommunications Philippines, Inc., et al. G.R. No. 165381, February 9, 2011.Labor Union; collateral attack on legal personality. . Petitioner moved to dismiss the petition for certification election filed by respondent union by questioning the validity of the respondent’s union registration. The Court held that legitimacy of the legal personality of respondent cannot be collaterally attacked in a petition for certification election proceeding but only through a separate action instituted particularly for the purpose of assailing it. The Implementing Rules stipulate that a labor organization shall be deemed registered and vested with legal personality on the date of issuance of its certificate of registration. Once a certificate of registration is issued to a union, its legal personality cannot be subject to a collateral attack. It may be questioned only in an independent petition for cancellation in accordance with Section 5 of Rule V, Book V of the Implementing Rules. Legend International Resorts Limited v. Kilusang Manggagawa ng Legenda, G.R. No. 169754 , February 23, 2011 .Money claims; burden of proof. Respondents alleged that petitioner-corporation failed to pay them their full compensation. The Labor Arbiter granted their monetary claims but the NLRC reversed the award considering that the petitioner-corporation submitted copies of payrolls, which it annexed to its memorandum on appeal, showing full payment. The general rule is that the burden rests on the employer to prove payment, rather than on the employee to prove non-payment. The reason for the rule is that the pertinent personnel files, payrolls, records, remittances, and other similar documents — which will show that overtime, differentials, service incentive leave, and other claims of the worker have been paid — are not in the possession of the worker but in the custody and absolute control of the employer. In this case, the submission by petitioner-corporation of the time records and payrolls only when the case was on appeal before the NLRC is contrary to the elementary precepts of justice and fair play. Respondents were not given the opportunity to check the authenticity and correctness of the evidence submitted on appeal. Thus, the Supreme Court held that the monetary claims of respondents should be granted. It is a time-honored principle that if doubts exist between the evidence presented by the employer and the employee, the scales of justice must be tilted in favor of the latter. It is the rule in controversies between a laborer and his master that doubts reasonably arising from the evidence, or in the interpretation of agreements and writing, should be resolved in the former’s favor. E.G. & I. Construction Corporation and Edsel Galeos v. Ananias P. Sato, et al., G.R. No. 182070 ,February 16, 2011.National Labor Relations Commission; jurisdiction. Respondents filed an illegal dismissal case against Premier Allied and Contracting Services, Inc. (PACSI) and its President, the petitioner. PACSI and the petitioner were held liable to pay the respondents separation pay and attorney’s fees. To execute this judgment, NLRC sheriff issued a Notice of Sale of a property with TCT in the name of the petitioner and his wife. Petitioner filed an action for prohibition and damages with prayer for the issuance of a temporary restraining order (TRO) before the Regional Trial Court (RTC). The Court ruled that the RTC lacks jurisdiction to resolve the matter. The Court has long recognized that regular courts have no jurisdiction to hear and decide questions which arise from and are incidental to the enforcement of decisions, orders, or awards rendered in labor cases by appropriate officers and tribunals of the Department of Labor and Employment. To hold otherwise is to sanction splitting of jurisdiction which is obnoxious to the orderly administration of justice. The NLRC Manual on the Execution of Judgment deals specifically with third-party claims in cases brought before that body. It defines a third-party claim as one where a person, not a party to the case, asserts title to or right to the possession of the property levied upon. It also sets out the procedure for the filing of a third-party claim, to wit: “such person shall make an affidavit of his title thereto or right to the possession thereof, stating the grounds of such right or title and shall file the same with the sheriff and copies thereof served upon the Labor Arbiter or proper officer issuing the writ and upon the prevailing party.” In the present case, there is no doubt that petitioner’s complaint is a third-party claim within the cognizance of the NLRC. Petitioner may indeed be

considered a “third party” in relation to the property subject of the execution since there is no question that the property belongs to petitioner and his wife, and not to the corporation. It can be said that the property belongs to the conjugal partnership, and not to petitioner alone. At the very least, the Court can consider petitioner’s wife to be a third party within the contemplation of the law. Paquito V. Ando v. Andresito Y. Campo, et al., G.R. No. 184007, February 16, 2011.Placement Fee; proof of excessive collection. Petitioner filed a complaint against respondent for collection of excess placement fee defined in Article 34(a) of the Labor Code. Petitioner presented as her evidence a promissory note reflecting excessive fees and testified as to the deductions made by her foreign employer. On the other hand, respondent presented an acknowledgment receipt reflecting collection of an amount authorized by POEA. The Court held that the pieces of evidence presented by petitioner are not substantial enough to show that the respondent collected from her more than the allowable placement fee. In proceedings before administrative and quasi-judicial agencies, the quantum of evidence required to establish a fact is substantial evidence, or that level of relevant evidence which a reasonable mind might accept as adequate to justify a conclusion. The Court gave more credence to respondent’s evidence consisting of the acknowledgment receipt showing the amount paid by petitioner and received by respondent. A receipt is a written and signed acknowledgment that money or goods have been delivered. Although a receipt is not conclusive evidence, an exhaustive review of the records of the case fails to disclose any other evidence sufficient and strong enough to overturn the acknowledgment embodied in respondent’s receipt as to the amount it actually received from petitioner. Having failed to adduce sufficient rebuttal evidence, petitioner is bound by the contents of the receipt issued by respondent. The subject receipt remains as the primary or best evidence. The promissory note presented by petitioner cannot be considered as adequate evidence to show the excessive placement fee. It must be emphasized that a promissory note is a solemn acknowledgment of a debt and a formal commitment to repay it on the date and under the conditions agreed upon by the borrower and the lender. A person who signs such an instrument is bound to honor it as a legitimate obligation duly assumed by him through the signature he affixes thereto as a token of his good faith. The fact that respondent is not a lending company does not preclude it from extending a loan to petitioner for her personal use. As for the deductions purportedly made by petitioner’s foreign employer, the Court noted that there is no single piece of document or receipt showing that deductions have in fact been made, or is there any proof that these deductions from the salary formed part of the subject placement fee. To be sure, mere general allegations of payment of excessive placement fees cannot be given merit as the charge of illegal exaction is considered a grave offense which could cause the suspension or cancellation of the agency’s license. They should be proven and substantiated by clear, credible, and competent evidence. Avelina F. Sagun v. Sunace International Management Services, Inc., G.R. No. 179242, February 23, 2011.Procedural due process; notice requirements. Petitioner was dismissed by respondent-company due to redundancy. However, it failed to provide the Department of Labor and Employment with a written notice regarding petitioner’s termination. The notice of termination was also not properly served on the petitioner. Further, a reading of the notice shows that respondent-company failed to properly inform the petitioner of the grounds for his termination. There are two aspects which characterize the concept of due process under the Labor Code: one is substantive — whether the termination of employment was based on the provision of the Labor Code or in accordance with the prevailing jurisprudence; the other is procedural — the manner in which the dismissal was effected. There is a psychological effect or a stigma in immediately finding one’s self laid off from work. This is why our labor laws have provided for procedural due process. While employers have the right to terminate employees it can no longer sustain, our laws also recognize the employee’s right to be properly informed of the impending termination of his employment. Though the failure of respondent-company to comply with the notice requirements under the Labor Code did not affect the validity of the dismissal, petitioner is however entitled to nominal damages in addition to his separation pay. Nelson A. Culili v. Eastern Telecommunications Philippines, Inc., et al. G.R. No. 165381, February 9, 2011.Quitclaims; validity. Respondents were terminated from employment due to retrenchment implemented by petitioner. Upon their dismissal, the respondents signed individual “Release Waiver and Quitclaim.” The Court ruled that a waiver or quitclaim is a valid and binding agreement between the parties, provided that it constitutes a credible and reasonable settlement, and that the one accomplishing it has done so voluntarily and with a full understanding of its import. In this case, the respondents were sufficiently apprised of their rights under the waivers and quitclaims that they signed. Each document contained the signatures of the union

president and its counsel, which proved that respondents were duly assisted when they signed the waivers and quitclaims. Hence, the Court upheld the validity of the waivers and quitclaims signed by the respondents in this case. Plastimer Industrial Corporation and Teo Kee Bin v. Natalia C. Gopo, et al., G.R. No. 183390, February 16, 2011.Retrenchment; notice requirements. Petitioner issued a Memorandum informing all its employees of the decision of the company’s Board of Directors to downsize and reorganize its business operations due to the change of its corporate structure. Petitioner served the individual notice of termination on its employees on May 14, 2004 or 30 days before the effective date of their termination on 13 June 2004, while it submitted the notice of termination to the Department of Labor and Employment only on 26 May 2004, short of the one-month prior notice requirement under Article 283 of the Labor Code. The Court held that petitioners’ failure to comply with the one-month notice to the DOLE is only a procedural infirmity and does not render the retrenchment illegal. When the dismissal is for a just cause, the absence of proper notice will not nullify the dismissal or render it illegal or ineffectual. Instead, the employer should indemnify the employee for violation of his statutory rights. Plastimer Industrial Corporation and Teo Kee Bin v. Natalia C. Gopo, et al., G.R. No. 183390, February 16, 2011.Retrenchment; notice requirements. In 2004, the petitioner had to retrench and consequently terminate the employment of the respondents. Respondents questioned the validity of the retrenchment, and alleged that though petitioner’s financial statements in 2001 and 2002 reflected losses, it declared net income in 2003. The Court ruled that the fact that there was a net income in 2003 does mean that there was no valid reason for the retrenchment. Records showed that the net income of P6,185,707.05 in 2003 was not enough to allow petitioners to recover the loss ofP52,904,297.88 which it suffered in 2002. Article 283 of the Labor Code recognizes retrenchment to prevent losses as a right of the management to meet clear and continuing economic threats or during periods of economic recession to prevent losses. There is no need for the employer to wait for substantial losses to materialize before exercising ultimate and drastic option to prevent such losses. Plastimer Industrial Corporation and Teo Kee Bin v. Natalia C. Gopo, et al., G.R. No. 183390, February 16, 2011.Unfair Labor Practice; right to self-organize. Respondent-company implemented a company-wide reorganization which resulted in the abolition of petitioner’s position. Petitioner alleged that he was illegally dismissed and that respondent-company is guilty of unfair labor practice because his functions were outsourced to labor-only contractors. The Supreme Court held unfair labor practice refers to acts that violate the workers’ right to organize. The prohibited acts are related to the workers’ right to self-organization and to the observance of a CBA. Thus, an employer may be held liable for unfair labor practice only if it can be shown that his acts interfere with his employees’ right to self-organization. Since there is no showing that the respondent company’s implementation of the Right-Sizing Program was motivated by ill will, bad faith or malice, or that it was aimed at interfering with its employees’ right to self-organization, there is no unfair labor practice to speak of in this case. Nelson A. Culili v. Eastern Telecommunications Philippines, Inc., et al. G.R. No. 165381, February 9, 2011.

March 2011 Philippine Supreme Court Decisions on Labor Law and ProcedurePosted on April 14, 2011 by Leslie C. Dy • Posted in Labor Law •Here are selected March 2011 rulings of the Supreme Court of the Philippines on labor law and procedure:

Abandonment; elements. Respondent employee was dismissed by petitioners on the ground of alleged habitual absenteeism and abandonment of work. Jurisprudence provides for two essential requirements for abandonment of work to exist: (1) the failure to report for work or absence without valid or justifiable reason, and (2) clear intention to sever the employer-employee relationship manifested by some overt acts should both concur. Further, the employee’s deliberate and unjustified refusal to resume his employment without any

intention of returning should be established and proven by the employer. The Court held that petitioners failed to prove that it was respondent employee who voluntarily refused to report back for work by his defiance and refusal to accept the memoranda and the notices of absences sent to him. Petitioners failed to present evidence that they sent these notices to respondent employee’s last known address for the purpose of warning him that his continued failure to report would be construed as abandonment of work. Moreover, the fact that respondent employee never prayed for reinstatement and has sought employment in another company which is a competitor of petitioners cannot be construed as his overt acts of abandoning employment. Neither can the delay of four months be taken as an indication that the respondent employee’s filing of a complaint for illegal dismissal is a mere afterthought. Records show that respondent employee attempted to get his separation pay and alleged commissions from the company, but it was only after his requests went unheeded that he resorted to judicial recourse. Harpoon Marine Services, Inc., et al. v. Fernan H. Francisco, GR No. 167751, March 2, 2011.Corporate officer; solidary liability. Respondent employee filed an illegal dismissal case against the Petitioner Corporation and its President. Though the Court found that Respondent was illegally dismissed, it held that the President of the Petitioner Corporation should not be held solidarily liable with Petitioner Corporation. Obligations incurred by corporate officers, acting as such corporate agents, are not theirs but the direct accountabilities of the corporation they represent. Thus, they should not be generally held jointly and solidarily liable with the corporation. The general rule is grounded on the theory that a corporation has a legal personality separate and distinct from the persons comprising it. As exceptions to the general rule, solidary liability may be imposed: (1) When directors and trustees or, in appropriate cases, the officers of a corporation –(a) vote for or assent to [patently] unlawful acts of the corporation; (b) act in bad faith or with gross negligence in directing the corporate affairs; (c) are guilty of conflict of interest to the prejudice of the corporation, its stockholders or members, and other persons; (2) When the director or officer has consented to the issuance of watered stock or who, having knowledge thereof, did not forthwith file with the corporate secretary his written objection thereto; (3) When a director, trustee or officer has contractually agreed or stipulated to hold himself personally and solidarily liable with the corporation; (4) When a director, trustee or officer is made, by specific provision of law, personally liable for his corporate action. To warrant the piercing of the veil of corporate fiction, the officer’s bad faith or wrongdoing must be established clearly and convincingly as bad faith is never presumed. Harpoon Marine Services, Inc., et al. v. Fernan H. Francisco, GR No. 167751, March 2, 2011.Labor organization; collateral attack on legal personality. Respondent company questioned the legal personality of the petitioner union in a certification election proceeding. The Court ruled that the legal personality of the petitioner union cannot be collaterally attacked by respondent company. Except when it is requested to bargain collectively, an employer is a mere bystander to any petition for certification election; such proceeding is non-adversarial and merely investigative, considering that its purpose is to determine if the employees would like to be represented by a union and to select the organization that will represent them in their collective bargaining with the employer. The choice of their representative is the exclusive concern of the employees; the employer cannot have any partisan interest therein; it cannot interfere with, much less oppose, the process by filing a motion to dismiss or an appeal from it; not even the allegation that some employees participating in a petition for certification election are actually managerial employees will give an employer legal personality to block the certification election. The employer’s only right in the proceeding is to be notified or informed thereof. Samahang Manggagawa sa Charter Chemical Solidarity of Unions in the Philippines for Empowerment and Reforms [SMCC-SUPER], Zacarrias Jerry Victorio – Union President v. Charter Chemical and Coating Corporation, G.R. No. 169717, March 16, 2011 .Labor organization; membership of supervisory employees. Petitioner union filed a Petition for Certification Election among the regular rank-and-file employees of the respondent company. Respondent contends that petitioner union is not a legitimate labor organization because its composition is a mixture of supervisory and rank-and-file employees. The Court ruled that the inclusion of the supervisory employees in petitioner union does not divest it of its status as a legitimate labor organization. After a labor organization has been registered, it may exercise all the rights and privileges of a legitimate labor organization. Any mingling between supervisory and rank-and-file employees in its membership cannot affect its legitimacy for that is not among the grounds for cancellation of its registration, unless such mingling was brought about by misrepresentation, false statement or fraud under Article 239 of the Labor Code. Samahang Manggagawa sa Charter Chemical

Solidarity of Unions in the Philippines for Empowerment and Reforms [SMCC-SUPER], Zacarrias Jerry Victorio – Union President v. Charter Chemical and Coating Corporation,G.R. No. 169717, March 16, 2011 .Labor organization; registration. Petitioner union filed a Petition for Certification Election among the regular rank-and-file employees of the respondent company. Respondent company filed an Answer with Motion to Dismiss on the ground that petitioner union is not a legitimate labor organization because of its failure to comply with the documentary requirements set by law, i.e. non-verification of the charter certificate. The Court ruled that it was not necessary for the charter certificate to be certified and attested by the local/chapter officers. Considering that the charter certificate is prepared and issued by the national union and not the local/chapter, it does not make sense to have the local/chapter’s officers certify or attest to a document which they did not prepare. In accordance with this ruling, petitioner union’s charter certificate need not be executed under oath. Consequently, it validly acquired the status of a legitimate labor organization upon submission of (1) its charter certificate, (2) the names of its officers, their addresses, and its principal office, and (3) its constitution and by-laws— the last two requirements having been executed under oath by the proper union officials. Samahang Manggagawa sa Charter Chemical Solidarity of Unions in the Philippines for Empowerment and Reforms [SMCC-SUPER], Zacarrias Jerry Victorio – Union President v. Charter Chemical and Coating Corporation, G.R. No. 169717, March 16, 2011 .Reinstatement; accrued backwages. The Labor Arbiter and the NLRC held that petitioner employer illegally dismissed the respondent employee. On appeal, the Court of Appeals reversed the decision and ruled that the dismissal was valid. However, the Court of Appeals ordered petitioner employer to pay respondent employee her salary from the date of the Labor Arbiter’s decision ordering her reinstatement until the Court of Appeals rendered its decision declaring the dismissal valid. Petitioner employer questioned the order and refused to pay. The Court held that even if the order of reinstatement of the Labor Arbiter is reversed on appeal, it is obligatory on the part of the employer to reinstate and pay the wages of the dismissed employee during the period of appeal until reversal by the higher court. On the other hand, if the employee has been reinstated during the appeal period and such reinstatement order is reversed with finality, the employee is not required to reimburse whatever salary he received, more so, if he actually rendered services during the period. The payment of such wages cannot be deemed as unjust enrichment on respondent’s part. Pfizer, Inc., et al. v. Geraldine Velasco, G.R. No. 177467, March 9, 2011 .Reinstatement; immediately executory order. The Labor Arbiter held that petitioner employer illegally dismissed the respondent employee. Pending its appeal, petitioner employer failed to immediately admit respondent employee back to work despite of an order of reinstatement. The Court held that that the provision of Article 223 is clear that an award by the Labor Arbiter for reinstatement shall be immediately executory even pending appeal and the posting of a bond by the employer shall not stay the execution for reinstatement. The legislative intent is to make an award of reinstatement immediately enforceable, even pending appeal. To require the application for and issuance of a writ of execution as prerequisites for the execution of a reinstatement award would certainly betray the executory nature of a reinstatement order or award. In the case at bar, petitioner employer did not immediately admit respondent employee back to work which, according to the law, should have been done as soon as an order or award of reinstatement is handed down by the Labor Arbiter without need for the issuance of a writ of execution. Pfizer, Inc., et al. v. Geraldine Velasco, G.R. No. 177467, March 9, 2011 .Reinstatement; terms and conditions. Due to the order of reinstatement issued by the Labor Arbiter, petitioner employer sent a letter to the respondent employee to report back to work and assigned her to a new location. The Court held that such is not a bona fide reinstatement. Under Article 223 of the Labor Code, an employee entitled to reinstatement shall either be admitted back to work under the same terms and conditions prevailing prior to his dismissal or separation or, at the option of the employer, merely reinstated in the payroll. It is established in jurisprudence that reinstatement means restoration to a state or condition from which one had been removed or separated. The person reinstated assumes the position he had occupied prior to his dismissal. Reinstatement presupposes that the previous position from which one had been removed still exists, or that there is an unfilled position which is substantially equivalent or of similar nature as the one previously occupied by the employee. Applying the foregoing principle, it cannot be said that petitioner employer has a clear intent to reinstate respondent employee to her former position under the same terms and conditions nor to a substantially equivalent position. To begin with, the return-to-work order petitioner sent to respondent employee is silent with regard to the position it wanted the respondent employee to assume. Moreover, a

transfer of work assignment without any justification therefor, even if respondent employee would be presumably doing the same job with the same pay, cannot be deemed as faithful compliance with the reinstatement order. Pfizer, Inc., et al. v. Geraldine Velasco, G.R. No. 177467, March 9, 2011 .Termination by employer; willful disobedience. Petitioner employer ordered the respondent employee to prepare checks for payment of petitioner’s obligations. Respondent did not immediately comply with the instruction since petitioner employer has no sufficient funds to cover the checks. Petitioner employer dismissed respondent employee for willful disobedience. The Court held that respondent employee was illegally dismissed. The offense of willful disobedience requires the concurrence of two (2) requisites: (1) the employee’s assailed conduct must have been willful, that is characterized by a wrongful and perverse attitude; and (2) the order violated must have been reasonable, lawful, made known to the employee and must pertain to the duties which he had been engaged to discharge. Though there is nothing unlawful in the directive of petitioner employer to prepare checks in payment of petitioner’s obligations, respondent employee’s initial reluctance to prepare the checks, although seemingly disrespectful and defiant, was for honest and well intentioned reasons. Protecting the petitioner employer from liability under the Bouncing Checks Law was foremost in her mind. It was not wrongful or willful. Neither can it be considered an obstinate defiance of company authority. The Court takes into consideration that respondent employee, despite her initial reluctance, eventually did prepare the checks on the same day she was tasked to do it. Lores Realty Enterprises, Inc., Lorenzo Y. Sumulong III v. Virginia E. Pacia, G.R. No. 171189, March 9, 2011 .Wages; facilities and supplements. Respondent employees alleged underpayment of their wages. Petitioner employer claimed that the cost of food and lodging provided by petitioner to the respondent employees should be included in the computation of the wages received by respondents. The Court makes a distinction between “facilities” and “supplements.” Supplements constitute extra remuneration or special privileges or benefits given to or received by the laborers over and above their ordinary earnings or wages. Facilities, on the other hand, are items of expense necessary for the laborer’s and his family’s existence and subsistence so that by express provision of law, they form part of the wage and when furnished by the employer are deductible therefrom, since if they are not so furnished, the laborer would spend and pay for them just the same. In short, the benefit or privilege given to the employee which constitutes an extra remuneration above and over his basic or ordinary earning or wage is supplement; and when said benefit or privilege is part of the laborers’ basic wages, it is a facility. The distinction lies not so much in the kind of benefit or item (food, lodging, bonus or sick leave) given, but in the purpose for which it is given. In the case at bench, the items provided were given freely by petitioner employer for the purpose of maintaining the efficiency and health of its workers while they were working at their respective projects. Thus, the Court is of the view that the food and lodging, or the electricity and water allegedly consumed by respondents in this case were not facilities but supplements which should not be included in the computation of wages received by respondent employees. SLL International Cables Specialist and Sonny L. Lagon v. NLRC, Roldan Lopez, et al., G.R. No. 172161, March 2, 2011 .Wages; proof of payment. In an illegal dismissal case against the petitioner employer, respondent employees alleged that they were underpaid. In their defense, petitioner employer alleged that respondent employees actually received wages higher than the prescribed minimum. The Court held that as a general rule, a party who alleged payment of wages as a defense has the burden of proving it. Specifically with respect to labor cases, the burden of proving payment of monetary claims rests on the employer, the rationale being that the pertinent personnel files, payrolls, records, remittances and other similar documents — which will show that overtime, differentials, service incentive leave and other claims of workers have been paid — are not in the possession of the worker but in the custody and absolute control of the employer. In this case, petitioner employer, aside from bare allegations that respondent employees received wages higher than the prescribed minimum, failed to present any evidence, such as payroll or payslips, to support their defense of payment. Thus, petitioner employer utterly failed to discharge the onus probandi. SLL International Cables Specialist and Sonny L. Lagon v. NLRC, Roldan Lopez, et al., G.R. No. 172161, March 2, 2011 .Wages; value of facilities. Petitioner employer alleged that the cost of facilities must be included in the computation of wages paid. The Court held that before the value of facilities can be deducted from the employees’ wages, the following requisites must all be attendant: first, proof must be shown that such facilities are customarily furnished by the trade; second, the provision of deductible facilities must be voluntarily accepted in writing by the employee; and finally, facilities must be charged at reasonable value. Mere availment is not sufficient to allow deductions from employees’ wages. These requirements, however, have not

been met in this case. Petitioner employer failed to present any company policy or guideline showing that provisions for meals and lodging were part of the employee’s salaries. It also failed to provide proof of the employees’ written authorization, much less show how they arrived at their valuations. At any rate, it is not even clear whether respondent employees actually enjoyed said facilities. SLL International Cables Specialist and Sonny L. Lagon v. NLRC, Roldan Lopez, et al., G.R. No. 172161, March 2, 2011 .

April 2011 Philippine Supreme Court Decisions on Labor Law and ProcedurePosted on May 19, 2011 by Leslie C. Dy • Posted in Labor Law • Tagged certiorari, illegal dismissal, loss of trust and confidence •Here are selected April 2011 rulings of the Supreme Court of the Philippines on labor law and procedure:

Dismissal; breach of trust and confidence. Petitioner was employed as Assistant Vice-President of the Jewelry Department in respondent bank. His employment was terminated on the ground of willful breach of trust and confidence. Jurisprudence provides for two requisites for dismissal on the ground of loss of trust and confidence; (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. Loss of trust and confidence, to be a valid cause for dismissal, must be based on a willful breach of trust and founded on clearly established facts. The basis for the dismissal must be clearly and convincingly established but proof beyond reasonable doubt is not necessary. Furthermore, the burden of establishing facts as bases for an employer’s loss of confidence is on the employer. The court held that the termination of petitioner was without just cause and therefore illegal. Although the first requisite was present, the respondent failed to satisfy the second requisite. Respondent bank was not able to show any concrete proof that petitioner had participated in the approval of the questioned accounts. The invocation by respondent of the loss of trust and confidence as ground for petitioner’s termination has therefore no basis at all. James Ben L. Jerusalem v. Keppel Monte Bank, et al., G.R. No. 169564. April 6, 2011 .Breach of Trust and Confidence; duties of employee. Petitioner was employed as Assistant Vice-President in respondent bank. His employment was terminated on the ground of willful breach of trust and confidence for endorsing VISA card applicants who later turned out to be impostors resulting in financial losses to respondent bank. The court held that petitioner was illegally dismissed. As provided in Article 282 of the Labor Code, an employer may terminate an employee’s employment for fraud or willful breach of trust reposed in him. However, in order to constitute a just cause for dismissal, the act complained of must be ‘work-related’ such as would show the employee concerned to be unfit to continue working for the employer. The act of betrayal of trust, if any, must have been committed by the employee in connection with the performance of his function or position. The court found that the element of ‘work-connection’ was not present in this case since petitioner was assigned under the Jewelry department, and therefore had nothing to do with the approval of VISA Cards, which was under a different department altogether. James Ben L. Jerusalem v. Keppel Monte Bank, et al., G.R. No. 169564. April 6, 2011 .Certiorari under Rule 45; questions of law and exceptions . The Labor Arbiter and the NLRC found that respondent employer neglected to pay petitioner’s sickness allowance. However, on appeal, the Court of Appeals reversed such findings and held that petitioner already received his sickness allowance from respondent. Petitioner questioned the ruling of the Court of Appeals by filing a petition for review on certiorari under Rule 45. The Supreme Court held that, as a rule, only questions of law, not questions of fact, may be raised in a petition for review on certiorari under Rule 45. However, this principle is subject to recognized exceptions. In the labor law setting, the Court will delve into factual issues when conflict of factual findings exists among the labor arbiter, the NLRC, and the Court of Appeals. Considering that in the present case there were differing factual findings on the part of the Court of Appeals, on one hand, and the Labor Arbiter and the NLRC, on the other, the Supreme Court found it necessary to make an independent evaluation

of the evidence on record. Wilfredo Y. Antiquina v. Magsaysay Maritime Corporation and/or Masterbulk Pte., Ltd., G.R. No. 168922. April 13, 2011 .Rules of Procedure; liberal construction in favor of working class. Petitioner claimed disability benefits under a Collective Bargaining Agreement that the respondent employer entered into with a foreign union. The Court of Appeals refused to admit the evidence of petitioner showing his membership in the union on the ground that it was submitted only with the Motion for Reconsideration. The Supreme Court, in agreeing to examine the evidence belatedly submitted by petitioner, pointed out that technical rules of procedure shall be liberally construed in favor of the working class in accordance with the demands of substantial justice. Rules of procedure and evidence should not be applied in a very rigid and technical sense in labor cases in order that technicalities would not stand in the way of equitably and completely resolving the rights and obligations of the parties. Wilfredo Y. Antiquina v. Magsaysay Maritime Corporation and/or Masterbulk Pte., Ltd., G.R. No. 168922. April 13, 2011 .Disability Benefits; entitlement and burden of proof. Petitioner suffered a fractured arm while working on respondent’s vessel. He filed a complaint for permanent disability benefits, among others. Petitioner claims that he is entitled to the higher amount of disability benefits under the Collective Bargaining Agreement which respondent entered into with a union of which petitioner was a member. The Court of Appeals denied the petitioner’s claim. The Supreme Court, in upholding the Court of Appeals, held that the burden of proof rests upon the party who asserts the affirmative of an issue. And in labor cases, the quantum of proof necessary is substantial evidence, or such amount of relevant evidence which a reasonable mind might accept as adequate to justify a conclusion. Petitioner had the duty to prove by substantial evidence his own positive assertions. He did not discharge this burden of proof when he submitted photocopied portions of a different CBA with a different union. Wilfredo Y. Antiquina v. Magsaysay Maritime Corporation and/or Masterbulk Pte., Ltd., G.R. No. 168922. April 13, 2011 .Public office; casual employees. Respondent was a casual teller who was dismissed from service by petitioner without being formally charged. On appeal, the Civil Service Commission (CSC) upheld the dismissal and reasoned that respondent was a casual employee, and therefore her services may be terminated at any time, without need of a just cause. Upon review, both the Court of Appeals and the Supreme Court found that respondent was illegally terminated. The Supreme Court recognized its pronouncement in a recent case that “Even a casual or temporary employee enjoys security of tenure and cannot be dismissed except for cause enumerated in Sec. 22, Rule XIV of the Omnibus Civil Service Rules and Regulations and other pertinent laws.” However, the Court also went on to state that, despite this new ruling on casual employees, it is not the intention of the Court to make the status of a casual employee at par with that of a regular employee, who enjoys permanence of employment. The rule is still that casual employment will cease automatically at the end of the period unless renewed. Casual employees may also be terminated anytime though subject to certain conditions or qualifications with reference to the CSC Form No. 001. Thus, they may be laid-off anytime before the expiration of the employment period provided any of the following occurs: (1) when their services are no longer needed; (2) funds are no longer available; (3) the project has already been completed/finished; or (4) their performance are below par. Philippine Charity Sweepstakes Office Board of Directors and Reynaldo P. Martin v. Marie Jean C. Lapid, G.R. No. 191940. April 12, 2011 .Public office; security of tenure. Respondent was a casual teller who, having been found guilty of ‘Discourtesy in the Course of Official Duties’ and of ‘Grave Misconduct’, was dismissed from service by petitioner. On appeal, the Civil Service Commission (CSC) ruled that despite lapses in procedural due process committed by petitioner employer, the dismissal was proper since respondent belonged to the category of a casual employee which does not enjoy security of tenure. Hence, she may be separated from service at any time, there being no need to show cause. The Court of Appeals disagreed and declared the dismissal illegal. The Supreme Court affirmed the findings of the Court of Appeals. In doing so, the Court relied on Section 3(2), Article XIII of the Constitution which guarantees the rights of all workers to security of tenure. The Court also recognized its pronouncement in a recent case that “Even a casual or temporary employee enjoys security of tenure and cannot be dismissed except for cause enumerated in Sec. 22, Rule XIV of the Omnibus Civil Service Rules and Regulations and other pertinent laws.” Philippine Charity Sweepstakes Office Board of Directors and Reynaldo P. Martin v. Marie Jean C. Lapid, G.R. No. 191940. April 12, 2011 .Dismissal; due process. Respondent was dismissed from her post as casual teller. When respondent appealed her dismissal to the Civil Service Commission (CSC), the latter found that respondent was never formally

charged for the administrative offenses for which she was dismissed. However, despite finding that procedural due process was not complied with, the CSC nevertheless upheld the dismissal on the ground that being a casual employee, respondent enjoyed no security of tenure and can be dismissed anytime. The Court found that respondent was illegally terminated and ordered her reinstatement. Casual employees are entitled to due process especially if they are to be removed for more serious causes or for causes other than the reasons mentioned in CSC Form No. 001. This is pursuant to Section 2, Article IX(B) of the Constitution. Furthermore, Section 46 of the Civil Service Law provides that “no officer or employee in the Civil Service shall be suspended or dismissed except for cause as provided by law after due process.” The reason for this is that their termination from the service could carry a penalty affecting their rights and future employment in the government. Philippine Charity Sweepstakes Office Board of Directors and Reynaldo P. Martin v. Marie Jean C. Lapid, G.R. No. 191940. April 12, 2011 .

May 2011 Philippine Supreme Court Decisions on Labor Law and ProcedurePosted on June 21, 2011 by Leslie C. Dy • Posted in Constitutional Law, Labor Law • Tagged appeal, due process, equal protection, illegal dismissal, resignation •Here are selected May 2011 rulings of the Supreme Court of the Philippines on labor law and procedure:

Section 10, Republic Act No. 8042; unconstitutional. Petitioner Yap was employed as an electrician for respondent’s vessel under a 12-month contract. He was found to be illegally terminated with nine months remaining on his contract term. The Court of Appeals (CA) awarded petitioner salaries for three months as provided under Section 10 of Republic Act No. 8042. On certiorari, the Supreme Court reversed the CA and declared that petitioner was entitled to his salaries for the full unexpired portion of his contract. The Court has previously declared in Serrano v. Gallant Maritime Services, Inc. (2009) that the clause “or for three months for every year of the unexpired term, whichever is less” provided in the 5th paragraph of Section 10 of R.A. No. 8042 is unconstitutional for being violative of the rights of Overseas Filipino Workers (OFWs) to equal protection of the laws. The subject clause contains a suspect classification in that, in the computation of the monetary benefits of fixed-term employees who are illegally discharged, it imposes a 3-month cap on the claim of OFWs with an unexpired portion of one year or more in their contracts, but none on the claims of other OFWs or local workers with fixed-term employment. The subject clause singles out one classification of OFWs and burdens it with a peculiar disadvantage. Moreover, the subject clause does not state or imply any definitive governmental purpose; hence, the same violates not just petitioner’s right to equal protection, but also his right to substantive due process under Section 1, Article III of the Constitution. Claudio S. Yap vs. Thenamaris Ship’s Management and Intermare Maritime Agencies, Inc., G.R. No. 179532, May 30, 2011 Doctrine of Operative Fact; applied as a matter of equity and fair play. Petitioner Yap was employed on respondent’s vessel under a 12-month contract. Upon finding that he was illegally terminated, the Court of Appeals (CA) awarded petitioner salaries for three months as provided under Section 10 of Republic Act No. 8042 (RA 8042). While the case was pending in the Supreme Court, Section 10 of RA 8042 was declared unconstitutional. In deciding to award petitioner his salaries for the entire unexpired portion of his contract, the Supreme Court rejected the application of the operative fact doctrine. As an exception to the general rule, the doctrine applies only as a matter of equity and fair play. It recognizes that the existence of a statute prior to a determination of unconstitutionality is an operative fact and may have consequences which cannot always be ignored. The doctrine is applicable when a declaration of unconstitutionality will impose an undue burden on those who have relied on the invalid law. This case should not be included in the aforementioned exception. After all, it was not the fault of petitioner that he lost his job due to an act of illegal dismissal committed by respondents. To rule otherwise would be iniquitous to petitioner and other OFWs, and would, in effect, send a wrong signal that principals/employers and recruitment/manning agencies may violate an OFW’s security of tenure which an employment contract embodies and actually profit from such violation based on an

unconstitutional provision of law. Claudio S. Yap vs. Thenamaris Ship’s Management and Intermare Maritime Agencies, Inc., G.R. No. 179532, May 30, 2011 .Migrant workers; computation of salary award. Petitioner Yap was employed as an electrician for respondent’s vessel under a 12-month contract. He was found to be illegally terminated with nine months remaining on his contract term, and was declared to be entitled to his salaries for the balance of his contract. Respondents claim that the tanker allowance should be excluded from the definition of the term “salary.” The Supreme Court, after examining the relevant clauses of the contract, rejected respondent’s claim. The word salaries in Section 10 (5) does not include overtime and leave pay. For seafarers, DOLE Department Order No. 33, series 1996, provides a Standard Employment Contract of Seafarers, in which salary is understood as the basic wage, exclusive of overtime, leave pay and other bonuses. A close perusal of the contract reveals that the tanker allowance of US$130.00 was not categorized as a bonus but was rather encapsulated in the basic salary clause, hence, forming part of the basic salary of petitioner. If respondents intended it differently, the contract per se should have indicated that said allowance does not form part of the basic salary or, simply, the contract should have separated it from the basic salary clause. Claudio S. Yap vs. Thenamaris Ship’s Management and Intermare Maritime Agencies, Inc. G.R. No. 179532, May 30, 2011 .Termination for Just Cause; separation pay by way of financial assistance. Petitioner Juliet Apacible was employed as Assistant Area Sales Manager for respondent’s Cebu operations. She was informed that she would be transferred to the Pasig office on account of the ongoing reorganization. Petitioner’s repeated refusal to comply with the transfer order was treated by respondent as insubordination and grounds for her dismissal. The Labor Arbiter, the NLRC and the Court of Appeals all found that petitioner was justly dismissed from employment. The NLRC awarded separation pay as financial assistance, however, noting that petitioner’s obstinacy was upon the advice of her counsel and, therefore, there was a modicum of good faith on her part. On appeal, the Court of Appeals (CA) deleted the award of separation pay. The Supreme Court upheld the CA and declared that the award of financial assistance shall not be given to validly terminated employees, whose offenses are iniquitous or reflective of some depravity in their moral character. When the employee commits an act of dishonesty, depravity, or iniquity, the grant of financial assistance is misplaced compassion. In this case, petitioner’s adamant refusal to transfer, coupled with her failure to heed the order for her to return the company vehicle assigned to her and, more importantly, allowing her counsel to write letters couched in harsh language to her superiors unquestionably show that she was guilty of insubordination, hence, not entitled to the award of separation pay. Juliet G. Apacible vs. Multimed Industries, et al., G.R. No. 178903, May 30, 2011 .Appeal; posting of Appeal Bond; Government’s exemption from the same. Respondents are supervisory and rank and file employees of the DXWG-Iligan City radio station which is owned by petitioner Banahaw Broadcasting Corporation (BBC). Respondents filed a complaint for illegal dismissal, unfair labor practice, and reimbursement of unpaid Collective Bargaining Agreement (CBA) benefits against petitioner. The Labor Arbiter rendered a decision ordering petitioner BBC to pay the money claims. On appeal to the NLRC, petitioner BBC averred that since it is wholly owned by the Republic of the Philippines, it need not post an appeal bond. The NLRC dismissed the appeal of BBC for non-perfection. The Court of Appeals affirmed the NLRC. The Supreme Court, in sustaining the CA, held that as a general rule, the government and all the attached agencies with no legal personality distinct from the former are exempt from posting appeal bonds. The rationale is to protect the presumptive judgment creditor against the insolvency of the presumptive judgment debtor. When the State litigates, it is not required to put up an appeal bond because it is presumed to be always solvent. This exemption, however, does not, as a general rule, apply to government-owned and controlled corporations (GOCCs) for the reason that the latter has a personality distinct from its shareholders. In this case, BBC, though owned by the government, is a corporation with a personality distinct from the Republic or any of its agencies or instrumentalities, and therefore do not partake in the latter’s exemption from the posting of appeal bonds. Banahaw Broadcasting Corporation vs. Cayetano PACANa III, et al, G.R. No. 171673, May 30, 2011 .Appeal; posting of appeal bond within the 10-day period is mandatory and jurisdictional. Respondents filed a complaint for illegal dismissal, unfair labor practice, and reimbursement of unpaid Collective Bargaining Agreement (CBA) benefits against petitioner. The Labor Arbiter rendered a decision in favor of respondents and ordered petitioner BBC to pay the money claims. Petitioner appealed to the NLRC, and without posting the appeal bond, filed a Motion for the Re-computation of the Monetary Award in order that the appeal bond may be reduced. The NLRC denied the motion and dismissed the appeal of BBC for non-perfection. The Court

of Appeals and the Supreme Court both sustained the dismissal by the NLRC. The Motion for the Re-computation of the Monetary Award filed by BBC was tantamount to a motion for extension to perfect the appeal, which is prohibited by the rules. The payment of the appeal bond within the period provided by law is an indispensable and jurisdictional requisite and not a mere technicality of law or procedure. Hence, the failure on the part of BBC to perfect the appeal had the effect of rendering the judgment final and executory. Banahaw Broadcasting Corporation vs. Cayetano PACANa III, et al, G.R. No. 171673, May 30, 2011.Voluntary Resignation; financial assistance may be awarded on equity considerations. Petitioner filed a complaint for illegal dismissal against respondent. Finding instead that petitioner had voluntarily resigned, the Labor Arbiter dismissed the complaint against respondent, but ordered the latter to pay P18,000.00 by way of financial assistance. On appeal, the NLRC found petitioner to be illegally dismissed. The Court of Appeals reaffirmed the findings of the LA but deleted the award of financial assistance, ruling that the same may not be awarded in cases of voluntary resignation. The Supreme Court, in upholding the award of financial assistance, stated that while the rule is that financial assistance is allowed only in instances where the employee is validly dismissed for causes other than serious misconduct or those reflecting on his moral character, there are instances when financial assistance may be allowed as a measure of social justice and as an equitable concession. In this case, petitioner, who has served respondent for more than eight years without committing any infraction, may be granted such financial assistance on equity considerations. Rodolfo Luna vs. Allado Construction Company, Inc. and/or Ramon Allado, G.R. No. 175251, May 30, 2011 .National Labor Relations Commission; authority to review is limited to issues specifically brought before it on appeal. Petitioner filed a complaint for illegal dismissal against respondent. Finding that petitioner had voluntarily resigned, the Labor Arbiter dismissed the complaint against respondent, but ordered the latter to pay P18,000.00 by way of financial assistance. Respondents interposed an appeal with the National Labor Relations Commission (NLRC), purely for the purpose of questioning the validity of the grant of financial assistance made by the Labor Arbiter. Instead, the NLRC ruled that petitioner was illegally dismissed and was entitled to separation pay. The Court of Appeals (CA) held that it was grave abuse of discretion for the NLRC to rule on the issue of illegal dismissal when the only issue raised to it on appeal was the propriety of the award of financial assistance. The Supreme Court sustained the view of the CA, reasoning that Section 4(d), Rule VI of the 2005 Revised Rules of Procedure of the NLRC expressly provides that, on appeal, the NLRC shall limit itself only to the specific issues that were elevated for review. In the case at bar, the NLRC evidently went against its own rules of procedure when it passed upon the issue of illegal dismissal although this question was not raised by respondents in their appeal. Rodolfo Luna vs.Allado Construction Company, Inc. and/or Ramon Allado, G.R. No. 175251, May 30, 2011 .

June 2011 Philippine Supreme Court Decisions on Labor Law and ProcedurePosted on July 10, 2011 by Leslie C. Dy • Posted in Labor Law • Tagged appeal, collective bargaining agreement, damages,Department of Labor and Employment, dismissal, independent contractor, jurisdiction, labor-only contracting, loss of trust and confidence, misconduct •Here are selected June 2011 rulings of the Supreme Court of the Philippines on labor law and procedure:

Appeal; decision of DOLE Secretary. For petitioner’s refusal to comply with his deployment assignment, respondent manning agency filed a complaint against him for breach of contract before the Philippine Overseas Employment Administration (POEA). The POEA penalized petitioner with one year suspension from overseas deployment. The suspension was reduced to six months by the Secretary of Labor. Petitioner appealed the latter’s decision with the Office of the President (OP). The Supreme Court ruled that petitioner’s appeal was erroneous. The proper remedy to question the decisions or orders of the Secretary of Labor is via Petition for Certiorari under Rule 65. Appeals to the OP in labor cases have been eliminated, except those involving national interest over which the President may assume jurisdiction. The present case does not affect national interest. Hence, petitioner’s appeal to the OP did not toll the running of the period and the assailed decision of

the Secretary of Labor is deemed to have attained finality. Miguel Dela Pena Barairo vs. Office of the President and MST Marine Services (Phils.) Inc., G.R. No. 189314. June 15, 2011 . Appeal from decisions of labor arbiter; bond requirement for perfection of appeal may be relaxed in meritorious cases. The posting of a bond is indispensable to the perfection of an appeal in cases involving monetary awards from the decision of the labor arbiter. However, under Section 6, Rule VI of the NLRC’s Revised Rules of Procedure, the bond may be reduced albeit only (1) on meritorious grounds and (2) upon posting of a partial bond in a reasonable amount in relation to the monetary award. For this purpose, the NLRC is not precluded from conducting a preliminary determination of the employer’s financial capability to post the required bond, without necessarily passing upon the merits. In the present case, the NLRC gravely abused its discretion in denying petitioner’s motion to reduce bond peremptorily without considering the evidence presented by petitioner showing that it was under a state of receivership. Such circumstance constitutes meritorious grounds to reduce the bond. Moreover, the petitioner exhibited its good faith by posting a partial cash bond during the reglementary period. University Plans, Inc. vs. Belinda P. Solano, et al., G.R. No. 170416, June 22, 2011 Certiorari; substantial compliance. The three material dates which should be stated in the petition for certiorari under Rule 65 are the dates when the notice of judgment was received, when a motion for reconsideration was filed and when the notice of the denial of the motion for reconsideration was received. These dates should be reflected in the petition to enable the reviewing court to determine if the petition was filed on time. In the present case, the petition filed with the Court of Appeals failed to state when petitioner received the assailed NLRC Decision and when he filed his partial motion for reconsideration. However, this omission is not at all fatal because these material dates are reflected in petitioner’s Partial Motion for Reconsideration attached to the petition. The failure to state these two dates in the petition may be excused if the same are evident from the records of the case. The Court further stated that the more important material date which must be duly alleged in the petition is the date of receipt of the resolution of denial of the motion for reconsideration. Since petitioner has duly complied with this rule, there was substantial compliance with the requisite formalities. William Endeliseo Barroga vs. Data Center College of the Philippines, et al., G.R. No. 174158. June 27, 2011 Collective bargaining agreement; duty of parties to maintain status quo pending renegotiation. Article 253 of the Labor Code mandates the parties to keep the status quo and to continue in full force and effect the terms and conditions of the existing agreement during the 60-day period prior to the expiration of the old CBA and/or until a new agreement is reached by the parties. The law does not provide for any exception nor qualification on which economic provisions of the existing agreement are to retain its force and effect. Likewise, the law does not distinguish between a CBA duly agreed upon by the parties and an imposed CBA like the one in the present case. Hence, considering that no new CBA had been, in the meantime, agreed upon by respondent GMC and the Union, the provisions of the imposed CBA continues to have full force and effect until a new CBA is entered into by the parties. General Milling Corporation-Independent Labor Union [GMC-ILU] vs. General Milling Corporation/General Milling Corporation vs.General Milling Corporation-Independent Labor Union [GMC-ILU], et al., G.R. Nos. 183122/183889, June 15, 2011.Damages; fraud or bad faith for the award of moral damages. Moral and exemplary damages are recoverable where the dismissal of an employee was attended by bad faith or fraud, or constituted an act oppressive to labor, or were done in a manner contrary to morals, good customs or public policy. In the present case, P&G dismissed its employees in a manner oppressive to labor. The sudden and peremptory barring of petitioners from work, and from admission to the work place, after just a one-day verbal notice, and for no valid cause, constitutes oppression and utter disregard of the right to due process of the concerned petitioners. Hence, the Supreme Court held that an award of moral damages is called for under the circumstances. Joeb M. Aliviado, et al. vs. Procter and Gamble Phils., Inc., et al., G.R. No. 160506, June 6, 2011 .Dismissal; constructive dismissal. Petitioner was employed as an instructor of Data Center College located in Ilocos Norte. When the college proposed to transfer him to Abra, he filed a complaint alleging constructive dismissal since his re-assignment will entail an indirect reduction of his salary or diminution of pay considering that no additional allowance will be given to cover for board and lodging expenses. He claims that such additional allowance was given in the past and therefore cannot be discontinued and withdrawn without violating the prohibition against non-diminution of benefits. The Supreme Court affirmed the findings of the lower bodies and declared that petitioner’s re-assignment did not amount to constructive dismissal.

Constructive dismissal is quitting because continued employment is rendered impossible, unreasonable or unlikely, or because of a demotion in rank or a diminution of pay. It exists when there is a clear act of discrimination, insensibility or disdain by an employer which becomes unbearable for the employee to continue his employment. In the present case, the college’s right to transfer petitioner is based on contractual stipulation, particularly the condition laid down in petitioner’s employment contract that respondents have the prerogative to assign petitioner in any of its branches or tie-up schools as the necessity demands. In any event, it is management prerogative for employers to transfer employees on just and valid grounds such as genuine business necessity. Since respondents have shown that it was experiencing some financial constraints at the time, the re-assignment was not tainted with bad faith. Furthermore, petitioner failed to present evidence that respondents committed to provide the additional allowance or that they were consistently granting such benefit as to have ripened into a practice which cannot be peremptorily withdrawn. Hence, there is no violation of the rule against diminution of pay. William Endeliseo Barroga vs. Data Center College of the Philippines, et al., G.R. No. 174158. June 27, 2011 .Dismissal; elements for loss of trust or confidence. Petitioners were employees of Promm-Gem, a legitimate independent contractor, and were hired to work as merchandisers for respondent P&G. When petitioners filed a claim against P&G for regularization and other benefits, it likewise attacked Promm-Gem as being merely a labor-only contractor. The latter treated such move as an act of disloyalty against Promm-Gem and petitioners were dismissed on the ground of grave misconduct and breach of trust. The Supreme Court declared such termination illegal for being without valid cause. Loss of trust and confidence, as a cause for termination of employment, is premised on the fact that the employee concerned holds a position of responsibility or of trust and confidence. As such, he must be invested with confidence on delicate matters, such as custody, handling or care and protection of the property and assets of the employer. Moreover, in order to constitute a just cause for dismissal, the act complained of must be work-related and must show that the employee is unfit to continue to work for the employer. In the instant case, the petitioners have not been shown to be occupying positions of responsibility or of trust and confidence. Neither is there any evidence to show that they are unfit to continue to work as merchandisers for Promm-Gem. Joeb M. Aliviado, et al. vs. Procter and Gamble Phils., Inc., et al., G.R. No. 160506, June 6, 2011 .Dismissal; elements for serious misconduct. Petitioners were employees of Promm-Gem, a legitimate independent contractor. After several years of working as merchandisers for respondent P&G, petitioners filed a claim against P&G for regularization and other benefits, and asserted incidentally that Promm-Gem was merely a labor-only contractor. The latter treated such move as an act of disloyalty against Promm-Gem and petitioners were dismissed on the ground of grave misconduct and breach of trust. The Supreme Court declared such termination illegal for lack of a valid clause. To be a just cause for dismissal, such misconduct (a) must be serious; (b) must relate to the performance of the employee’s duties; and (c) must show that the employee has become unfit to continue working for the employer. In other words, in order to constitute serious misconduct under Article 282 (a) of the Labor Code, it is not sufficient that the act or conduct complained of has violated some established rules or policies. It is equally important and required that the act or conduct must have been performed with wrongful intent. In the instant case, petitioners may have committed an error of judgment in claiming to be employees of P&G, but it cannot be said that they were motivated by any wrongful intent in doing so. As such, the court found them guilty of simple misconduct only which does not warrant a dismissal. Joeb M. Aliviado, et al. vs. Procter and Gamble Phils., Inc., et al., G.R. No. 160506, June 6, 2011 .Dismissal; financial assistance based on equity . The award of separation pay is authorized under Article 283 and 284 of the Labor Code, and under Section 4 (b), Rule I, Book VI of the Implementing Rules and Regulations where there is illegal dismissal and reinstatement is no longer feasible. By way of exception, the courts have allowed grants of separation pay to stand as “a measure of social justice” where the employee is validly dismissed for causes other than serious misconduct or those reflecting on his moral character. However, there is no provision in the Labor Code which grants separation pay to voluntarily resigning employees. In fact, the rule is that an employee who voluntarily resigns from employment is not entitled to separation pay, except when it is stipulated in the employment contract or collective bargaining agreement (CBA), or it is sanctioned by established employer practice or policy. In the present case, neither the abovementioned provisions of the Labor Code nor the exceptions apply because petitioner was not dismissed from his employment nor is there any evidence to show that payment of separation pay is stipulated in his employment contract or sanctioned by established practice or policy of his employer. Nevertheless, the Court noted that

petitioner never had any derogatory record during his long years of service with respondent and that his employment was severed not by reason of any infraction on his part but because of his failing physical condition. Hence, as a measure of social and compassionate justice and as an equitable concession, the Court granted separation pay to petitioner by way of financial assistance. Romeo Villaruel vs. Yeo Han Guan, doing business under the name and style Yuhans Enterprises, G.R. No. 169191, June 1, 2011 .Dismissal; separation pay due to disease. Petitioner was employed as a machine operator until he stopped working when he suffered from an illness. After his recovery, petitioner was directed to report for work but he refused. Instead, he filed a case with the NLRC demanding his separation pay. The NLRC awarded him separation benefits under Article 284 of the Labor Code. However, the Court of Appeals (CA) deleted such award. On appeal, the Supreme Court stated that Article 284 presupposes that it is the employer who terminates the services of the employee found to be suffering from any disease and whose continued employment is prohibited by law or is prejudicial to his health as well as to the health of his co-employees. It does not contemplate a situation where it is the employee who severs his or her employment ties. This is precisely the reason why Section 8, Rule 1, Book VI of the Omnibus Rules Implementing the Labor Code, directs that an employer shall not terminate the services of the employee unless there is a certification by a competent public health authority that the disease is of such nature or at such a stage that it cannot be cured within a period of six (6) months even with proper medical treatment. In the present case, petitioner was not terminated from his employment and, instead, is deemed to have resigned therefrom, and therefore he is not entitled to separation pay under Article 284 of the Labor Code.Romeo Villaruel vs. Yeo Han Guan, doing business under the name and style Yuhans Enterprises, G.R. No. 169191, June 1, 2011 .DOLE assumption of jurisdiction; effects. A strike conducted after the Secretary of Labor has assumed jurisdiction over a labor dispute is illegal and any union officer who knowingly participates in the strike may be declared as having lost his employment. The present case involved a slowdown strike. Unlike other forms of strike, the employees involved in a slowdown do not walk out of their jobs to hurt the company. They need only to stop work or reduce the rate of their work while generally remaining in their assigned post. The Supreme Court upheld the finding that the union officers committed illegal acts that warranted their dismissal from work when they refused to work or abandoned their work to join union assemblies after the Labor Secretary assumed jurisdiction over the labor dispute. Yolito Fadriquelan, et al. vs. Monterey Foods Corporation/Monterey Foods Corporation v. Bukluran ng mga Manggagawa sa Monterey-ILAW, et al., G.R. No. 178409/G.R. No. 178434, June 8, 2011 .Independent job contracting; required substantial capital. Petitioners assert that they are employees of P&G and that Promm-Gem and SAPS are merely labor-only contractors providing manpower services to P&G. There is “labor-only” contracting where the person supplying workers to an employer does not have substantial capital or investment in the form of tools, equipment, machineries, work premises, among others, and the workers recruited and placed by such person are performing activities which are directly related to the principal business of such employer. In the instant case, the Supreme Court found that Promm-Gem has substantial investment which relates to the work to be performed. The financial statementsshow that it has authorized capital stock of P1 million and a substantial amount of paid-in capital and other assets to support its operations. Under the circumstances, Promm-Gem cannot be considered a labor-only contractor; it is in fact a legitimate independent contractor. On the other hand, the financial records of SAPS show that it has a paid-in capital of only P31,250.00. 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. 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 considered to be engaged in “labor-only contracting”. Joeb M. Aliviado, et al. vs. Procter and Gamble Phils., Inc., et al., G.R. No. 160506, June 6, 2011 .Labor law; labor-only contracting v. independent job contracting. The law allows contracting arrangements for the performance of specific jobs, works or services, regardless of whether such activity is peripheral or core in nature. However, in order for 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 principaland 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 of control on the performance of the work of the contractual employee. Where ‘labor-only’ contracting exists, the law establishes an employer-employee relationship between the employer and the employees of the ‘labor-only’ contractor. The statute establishes this relationship for a comprehensive purpose: to prevent a circumvention of labor laws. The contractor is considered merely an agent of the principal employer and the latter is responsible to the employees of the labor-only contractor as if such employees had been directly employed by the principal employer. In the present case, petitioners, who were recruited by Promm-Gem and SAPS to work as merchandisers of respondent P&G, filed a complaint against the latter for regularization, service incentive leave pay and other benefits on the ground that they were employees of P&G. With respect to the contractor Promm-Gem, it was found to be a legitimate independent job contractor; hence, there was no employer-employee relationship between its workers and P&G. On the other hand, SAPS was found to be engaged in labor-only contracting. Consequently, the petitioners who have been recruited and supplied by SAPSare considered to be the employees of P&G. Joeb M. Aliviado, et al. vs. Procter and Gamble Phils., Inc., et al., G.R. No. 160506, June 6, 2011 .Labor strikes; liability of union officers and participating workers. A distinction exists between the ordinary workers’ liability for illegal strike and that of the union officers who participated in it. The ordinary worker cannot be terminated for merely participating in the strike. There must be proof that he committed illegal acts during its conduct. On the other hand, a union officer can be terminated upon mere proof that he knowingly participated in the illegal strike. Moreover, the participating union officers have to be properly identified. In the present case, with respect to those union officers whose identity and participation in the strike having been properly established, the termination was legal. Yolito Fadriquelan, et al. vs. Monterey Foods Corporation/Monterey Foods Corporation v. Bukluran ng mga Manggagawa sa Monterey-ILAW, et al., G.R. No. 178409/G.R. No. 178434, June 8, 2011 .Secretary of Labor; power to give arbitral awards. The Secretary of Labor is empowered to give arbitral awards in the exercise of his authority to assume jurisdiction over labor disputes under Art. 263 (g) of the Labor Code. In the present case, the Supreme Court upheld the authority of the Secretary of Labor to impose arbitral awards higher than what was supposedly agreed upon in the Memorandum of Agreement (MOA) between the parties. The Court further stated that while an arbitral award cannot per se be categorized as an agreement voluntarily entered into by the parties because it requires the interference and imposing power of the State thru the Secretary of Labor when he assumes jurisdiction, the award can be considered as an approximation of a collective bargaining agreement which would otherwise have been entered into by the parties. Hence, it has the force and effect of a valid contract obligation between the parties. Cirtek Employees Labor Union-Federation of Free workers vs. Cirtek Electronics, Inc., G.R. No. 190515. June 6, 2011 .Termination of employment; resignation v. dismissal. Petitioner claims he was dismissed on the ground of illness and was therefore entitled to separation benefits under Article 284 of the Labor Code. The Supreme Court (SC) disagreed and instead found that petitioner was the one who initiated the severance of his employment relations on the ground that his health was failing. In fact, he rejected respondent’s offer for him to return to work. The SC declared that this is tantamount to resignation. Resignation is defined as the voluntary act of an employee who finds himself in a situation where he believes that personal reasons cannot be sacrificed in favor of the exigency of the service and he has no other choice but to disassociate himself from his employment. Romeo Villaruel vs. Yeo Han Guan, doing business under the name and style Yuhans Enterprises, G.R. No. 169191, June 1, 2011 .Unions; disaffiliation. A local union may disaffiliate at any time from its mother federation, absent any showing that the same is prohibited under its constitution or rules. Such disaffiliation, however, does not result in it losing its legal personality. A local union does not owe its existence to the federation with which it is affiliated. It is a separate and distinct voluntary association owing its creation to the will of its members. The mere act of affiliation does not divest the local union of its own personality, neither does it give the mother federation the license to act independently of the local union. It only gives rise to a contract of agency where the former acts in representation of the latter. In the present case, whether the FFW went against the will of its principal (the member-employees) by pursuing the case despite the signing of the MOA, is not for the Court, nor for respondent employer to determine, but for the Union and FFW to resolve on their own pursuant to their principal-agent relationship. Moreover, the issue of disaffiliation is an intra-union dispute which must be

resolved in a different forum in an action at the instance of either or both the FFW and the union or a rival labor organization, but not the employer as in this case. Cirtek Employees Labor Union-Federation of Free workers vs. Cirtek Electronics, Inc., G.R. No. 190515. June 6, 2011 .

August 2011 Philippine Supreme Court Decisions on Labor Law and ProcedurePosted on September 15, 2011 by Leslie C. Dy • Posted in Labor Law, Philippines - Cases, Philippines - Law •Here are selected August 2011 rulings of the Supreme Court of the Philippines on labor law and procedure:

Labor relations; appropriate bargaining unit. An appropriate bargaining unit is defined as “a group of employees of a given employer, comprised of all or less than all of the entire body of employees, which the collective interest of all the employees, consistent with equity to the employer, indicate to be best suited to serve the reciprocal rights and duties of the parties under the collective bargaining provisions of the law”. The test of grouping is community or mutuality of interest. In this case, there should be only one bargaining unit for the employees in the Cabuyao, San Fernando, and Otis plants of the Magnolia Poultry Products involved in “dressed” chicken processing and Magnolia Poultry Farms engaged in “live” chicken operations. Certain factors, such as specific line of work, working conditions, location of work, mode of compensation, and other relevant conditions do not affect or impede their commonality of interest. Although they seem separate and distinct from each other, the specific tasks of each division are actually interrelated and there exists mutuality of interests which warrants the formation of a single bargaining unit. San Miguel Foods, Inc. vs. San Miguel Corp. Supervisors and Exempt Union, G.R. No. 146206. August 1, 2011 .Labor organization; confidential employees. Confidential employees are defined as those who (1) assist or act in a confidential capacity, in regard (2) to persons who formulate, determine, and effectuate management policies in the field of labor relations. The two criteria are cumulative, and both must be met if an employee is to be considered a confidential employee. Confidential employees, such as accounting personnel, should be excluded from the bargaining unit, as their access to confidential information may become the source of undue advantage. However, such fact does not apply to the position of Payroll Master (as in this case) and the whole gamut of employees who has access to salary and compensation data. The CA correctly held that the position of Payroll Master does not involve dealing with confidential labor relations information in the course of the performance of his functions. In other words, since the nature of his work does not pertain to company rules and regulations and confidential labor relations, it follows that he cannot be excluded from the subject bargaining unit. San Miguel Foods, Inc. vs. San Miguel Corp. Supervisors and Exempt Union, G.R. No. 146206. August 1, 2011 .Labor organization; ineligibility to join. Although Article 245 of the Labor Code limits the ineligibility to join, form and assist any labor organization to managerial employees, jurisprudence has extended this prohibition to confidential employees. In this regard, the CA correctly ruled that the positions of Human Resource Assistant and Personnel Assistant belong to the category of confidential employees and, hence, are excluded from the bargaining unit, considering their respective positions and job descriptions. As Human Resource Assistant, the scope of one’s work necessarily involves labor relations, recruitment and selection of employees, access to employees’ personal files and compensation package, and human resource management. As regards a Personnel Assistant, one’s work includes the recording of minutes for management during collective bargaining negotiations, assistance to management during grievance meetings and administrative investigations, and securing legal advice for labor issues from the petitioner’s team of lawyers, and implementation of company programs. Therefore, in the discharge of their functions, both gain access to vital labor relations information which outrightly disqualifies them from union membership. San Miguel Foods, Inc. vs. San Miguel Corp. Supervisors and Exempt Union,G.R. No. 146206. August 1, 2011 .

Certification election; role of employers. The general rule is that an employer has no standing to question the process of certification election, since this is the sole concern of the workers. Law and policy demand that employers take a strict, hands-off stance in certification elections. The bargaining representative of employees should be chosen free from any extraneous influence of management. The only exception is where the employer itself has to file the petition pursuant to Article 258 of the Labor Code because of a request to bargain collectively. San Miguel Foods, Inc. vs.San Miguel Corp. Supervisors and Exempt Union, G.R. No. 146206. August 1, 2011 .Appeal of the decision of the labor arbiter; posting of bond. The posting of a bond is indispensable to the perfection of an appeal in cases involving monetary awards from the Decision of the Labor Arbiter. However, the Supreme Court, considering the substantial merits of the case, has on certain occasions relaxed this rule on, and excused the late posting of, the appeal bond when there are strong and compelling reasons for the liberality. In this case, the exception applies. The rule on the posting of an appeal bond cannot defeat the substantive rights of respondents to be free from an unwarranted burden of answering for an illegal dismissal for which they were never responsible since no employer-employee relationship existed between the two. Marticio Semblante and Dubrick Pilar vs. Court of Appeals, G.R. No. 196426. August 15, 2011 . Employer-employee relationship; four-fold test. Petitioners are not employees of respondents, since their relationship failed to pass the four-fold test of employment: (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, which is the most important element. As found by both the NLRC and the CA, respondents had no part in petitioners’ selection and management; petitioners’ compensation was paid out of the arriba (which is a percentage deducted from the total bets), not by petitioners; and petitioners performed their functions as masiador and sentenciadorfree from the direction and control of respondents. Marticio Semblante and Dubrick Pilar vs. Court of Appeals, G.R. No. 196426. August 15, 2011 . Labor; illegal recruitment in large scale. To prove illegal recruitment, it must be shown that appellant gave complainants the distinct impression that she had the power or ability to send complainants abroad for work such that the latter were convinced to part with their money in order to be employed. All eight private complainants in this case consistently declared that Ochoa offered and promised them employment overseas. Moreover, Ochoa can also be convicted for illegal recruitment based on Section 6 of Republic Act No. 8042, which clearly provides that any person, whether or not a licensee or holder of authority may be held liable for illegal recruitment for certain acts as enumerated in paragraphs (a) to (m). Among such acts is the “failure to reimburse expenses incurred by the worker in connection with his documentation and processing for purposes of deployment, in cases where the deployment does not actually take place without the worker’s fault.” In this case, Ochoa received placement and medical fees from private complainants and failed to reimburse the private complainants the amounts they had paid when they were not able to leave for Taiwan and Saudi Arabia, through no fault of their own. People of the Philippines vs. Rosario “Rose” Ochoa, G.R. No. 173792. August 31, 2011.Illegal recruitment; admissibility of POEA certification. Section 36, Rule 130 of the Revised Rules on Evidence, states that a witness can testify only to those facts which he knows of or comes from his personal knowledge, that is, which are derived from his perception. This is known as the hearsay rule. The law, however, provides for specific exceptions to the hearsay rule, and one of the exceptions refers to entries in official records made in the performance of duty by a public officer. Accordingly, in the case at bar, although Dir. Mateo was not presented in court or did not testify during the trial to verify the said certification, such certification is considered as prima facieevidence of the facts stated therein and is therefore presumed to be truthful, because Ochoa did not present any plausible proof to rebut its truthfulness. People of the Philippines vs. Rosario “Rose” Ochoa, G.R. No. 173792. August 31, 2011 .Illegal recruitment and estafa; may be charged separately. A person may be charged and convicted separately of illegal recruitment under Republic Act No. 8042, in relation to the Labor Code, and estafa under Article 315, paragraph 2(a) of the Revised Penal Code. The offense of illegal recruitment is malum prohibitum, while estafa is malum in se. In this case, therefore, Ochoa may also be charged and correspondingly held liable for estafa since all the elements for the crime are present in Criminal Case Nos. 98-77301, 98-77302, and 98-77303. Ochoa’s deceit was evident in her false representation to private complainants Gubat, Cesar, and Agustin that she possessed the authority and capability to send said private complainants to Taiwan/Saudi Arabia for employment as early as one to two weeks from completion of the requirements, among which were

the payment of placement fees and submission of a medical examination report. People of the Philippines vs.Rosario “Rose” Ochoa, G.R. No. 173792. August 31, 2011 .Floating status; validity. The rule is settled that “off-detailing” is not equivalent to dismissal, so long as such status does not continue beyond a reasonable time and that it is only when such a “floating status” lasts for more than six months that the employee may be considered to have been constructively dismissed. A complaint for illegal dismissal filed prior to the lapse of the six-month period and/or the actual dismissal of the employee is generally considered as prematurely filed. In this case, the evidence adduced a quo clearly indicates that petitioners were not in bad faith when they placed Leynes under floating status. Disgruntled by NHPI’s countermanding of her decision to bar Engr. Cantuba from the Project, Leynes twice signified her intention to resign from her position on 12 February 2002. In view of the sensitive nature of Leynes’ position and the critical stage of the Project’s business development, NHPI was constrained to hire Engr. Jose as Leynes’ replacement as a remedial measure. Nippon Housing Phil. Inc., et al. vs. Maiah Angela Leynes, G.R. No. 177816, August 3, 2011.Constructive dismissal; burden of proof. Constructive dismissal exists where there is cessation of work because continued employment is rendered impossible, unreasonable or unlikely, as an offer involving a demotion in rank and a diminution in pay. In constructive dismissal cases, the employer is, concededly, charged with the burden of proving that its conduct and action or the transfer of an employee are for valid and legitimate grounds such as genuine business necessity. The Supreme Court found that in this case, respondents have more than amply discharged this burden with proof of the circumstances surrounding Engr. Carlos’ employment as Property Manager for the Project and the consequent unavailability of a similar position for Leynes. Nippon Housing Phil. Inc., et al. vs. Maiah Angela Leynes, G.R. No. 177816, August 3, 2011.Pleading; verification. Verification of a pleading is a formal, not jurisdictional, requirement intended to secure the assurance that the matters alleged in a pleading are true and correct. It is deemed substantially complied with when one who has ample knowledge to swear to the truth of the allegations in the complaint or petition signs the verification, and when matters alleged in the petition have been made in good faith or are true and correct. In this case, the Supreme Court found that the petition’s verification substantially complied with the requirements of the rules. The SPA authorized Bello-Ona to represent Bello in the case from which the present petition with the Supreme Court originated. As the daughter of Bello, Bello-Ona is deemed to have sufficient knowledge to swear to the truth of the allegations in the petition, which are matters of record in the lower tribunals and the appellate court. Francis Bello, represented herein by his daughter and attorney-in-fact, Geraldine Bello-Ona vs. Bonifacio Security Services, Inc. and Samuel Tomas, G.R. No. 188086, August 3, 2011. Dismissal; constructive dismissal. Case law defines constructive dismissal as a cessation of work because continued employment has been rendered impossible, unreasonable, or unlikely, as when there is a demotion in rank or diminution in pay, or both, or when a clear discrimination, insensibility, or disdain by an employer becomes unbearable to the employee. In this case, other than his bare and self-serving allegations, Bello has not offered any evidence that he was promoted in a span of four months since his employment as traffic marshal in July 2001 to a detachment commander in November 2001. At most, the BSSI merely changed his assignment or transferred him to the post where his service would be most beneficial to its clients. The management’s prerogative of transferring and reassigning employees from one area of operation to another in order to meet the requirements of the business is generally not constitutive of constructive dismissal. This was what exactly occurred in this case. Francis Bello, represented herein by his daughter and attorney-in-fact, Geraldine Bello-Ona vs. Bonifacio Security Services, Inc. and Samuel Tomas,G.R. No. 188086, August 3, 2011. Procedural rules; failure to attach duplicate original or certified true copy of the assailed decision. The refusal of the Court of Appeals to consider the petition was the absence of a duplicate original or certified true copy of the assailed NLRC decision, in violation of Section 3, Rule 46 of the Rules of Court (in relation to Section 1, Rule 65). The company, however, corrected the procedural lapse by attaching a certified copy of the NLRC decision to its motion for reconsideration. The Supreme Court found that the CA precipitately denied the petition for certiorari based on an overly rigid application of the rules of procedure. In effect, it sacrificed substance to form in a situation where the petitioners’ recourse was not patently frivolous or meritless. Thus, the case was remanded to the NLRC for resolution of its appeal. Jobel Enterprises and/or Mr. Benedict Lim vs. NLRC and Eric Martinez, Sr., G.R. No. 194031, August 8, 2011.

Appeal; decision or resolution of NLRC. As was enunciated in the case of St. Martin Funeral Home v. NLRC, the special civil action of certiorari under Rule 65 of the Rules of Civil Procedure, which is filed before the CA, is the proper vehicle for judicial review of decisions of the NLRC. The petition should be initially filed before the Court of Appeals in strict observance of the doctrine on hierarchy of courts as the appropriate forum for the relief desired. Thus, respondent’s recourse to the CA was the proper remedy to question the resolution of the NLRC. Atok Big Wedge Company, Inc. vs. Jesus P. Gison, G.R. No. 169510, August 8, 2011. Employer-employee relationship; four-fold test. To ascertain the existence of an employer-employee relationship jurisprudence has invariably adhered to the four-fold test, to wit: (1) the selection and engagement of the employee; (2) the payment of wages; (3) the power of dismissal; and (4) the power to control the employee’s conduct, or the so-called “control test.” Applying the aforementioned test, an employer-employee relationship was found to be absent in the case at bar. Among other things, respondent was not required to report everyday during regular office hours of petitioner. Respondent’s monthly retainer fees were paid to him either at his residence or a local restaurant. More importantly, petitioner did not prescribe the manner in which respondent would accomplish any of the tasks in which his expertise as a liaison officer was needed; respondent was left alone and given the freedom to accomplish the tasks using his own means and method. Verily, the absence of the element of control on the part of the petitioner engenders a conclusion that he is not an employee of the petitioner. Atok Big Wedge Company, Inc. vs. Jesus P. Gison, G.R. No. 169510, August 8, 2011. Employment; regular employee. Article 280 of the Labor Code, in which the lower court used to buttress its findings that respondent became a regular employee of the petitioner, is not applicable in the case at bar. The Supreme Court has ruled that said provision is not the yardstick for determining the existence of an employment relationship because it merely distinguishes between two kinds of employees, i.e., regular employees and casual employees, for purposes of determining the right of an employee to certain benefits, to join or form a union, or to security of tenure; it does not apply where the existence of an employment relationship is in dispute. It is, therefore, erroneous on the part of the Court of Appeals to rely on Article 280 in determining whether an employer-employee relationship exists between respondent and the petitioner. Therefore, despite the fact that petitioner made use of the services of respondent as a part-time consultant on retainer basis for eleven years, he still cannot be considered as a regular employee of petitioner using only as basis Article 280 of the Labor Code. Atok Big Wedge Company, Inc. vs. Jesus P. Gison, G.R. No. 169510, August 8, 2011. Claim of disability benefits and sickness allowance; reporting requirements. Anent a seafarer’s entitlement to compensation and benefits for injury and illness, Section 20-B (3) of 2000 POEA-SEC provides that in order for the seafarer to claim the said benefits, he must submit himself to a post-employment medical examination by a company-designated physician within three working days upon his return, except when he is physically incapacitated to do so, in which case, a written notice to the agency within the same period is deemed as compliance. Failure of the seafarer to comply with the mandatory reporting requirement shall result in his forfeiture of the right to claim the above benefits. In this case, there was no dispute regarding the fact that Esguerra had altogether failed to comply with the mandatory reporting requirement. Esguerra also did not present any evidence to prove justification for his inability to submit himself to a post-employment medical examination by a company-designated physician. Self-serving and unsubstantiated declarations are insufficient to establish a case before quasi-judicial bodies where the quantum of evidence required in establishing a fact is substantial evidence. Coastal Safeway Marine Services vs. Esguerra,G.R. No. 185352, August 10, 2011.

September 2011 Philippine Supreme Court Decisions on Labor Law and ProcedurePosted on October 19, 2011 by Leslie C. Dy • Posted in Labor Law, Philippines - Cases, Philippines - Law •Here are selected September 2011 rulings of the Supreme Court of the Philippines on labor law and procedure:

Employee; probationary employee. Employment on probationary status of teaching personnel is not only governed by the Labor Code but also by the Manual of Regulations for Private Schools. Section 91 of the Manual of Regulations for Private Schools, states that: “Every contract of employment shall specify the designation, qualification, salary rate, the period and nature of service and its date of effectivity, and such other terms and condition of employment as may be consistent with laws and rules, regulations and standards of the school.” Thus, it is important that the contract of probationary employment specify the period or term of its effectivity. In this case, therefore, the letters sent by petitioner College Dean Sr. Racadio, which were devoid of specifics, cannot be considered as contracts. The closest they can resemble to are that of informal correspondence among the said individuals. As such, petitioner school has the right not to renew the contracts of the respondents, the old ones having expired at the end of their terms. Assuming,arguendo, that the employment contracts between the petitioner school and the respondent spouses were renewed, the SC found that there was a valid and just cause for their dismissal since petitioners have repeatedly violated several departmental and instructional policies, such as the late submission of final grades, failure to submit final test questions to the Program Coordinator, the giving of tests in essay form instead of the multiple choice format as mandated by the school and the high number of students with failing grades in the classes that he handled. St. Paul College Quezon City, et al. vs. Remigio Michael A. Ancheta II and Cynthia A. Ancheta, G.R. No. 169905. September 7, 2011.Employee; existence of employer-employee relationship. To determine the existence of an employer-employee relationship, case law has consistently applied the four-fold test. Respondents argue that the element of control is lacking in this case, making petitioner-referee an independent contractor and not an employee of respondents. The Supreme Court agreed as it found that there was no control over the means and methods by which petitioner performs his work as a referee officiating a PBA basketball game. The contractual stipulations in the retainer contracts do not pertain to, much less dictate, how and when petitioner will blow the whistle and make calls. On the contrary, they merely serve as rules of conduct or guidelines in order to maintain the integrity of the professional basketball league. Moreover, the following circumstances indicate that petitioner is an independent contractor: (1) the referees are required to report for work only when PBA games are scheduled, which is three times a week spread over an average of only 105 playing days a year, and they officiate games at an average of two hours per game; and (2) the only deductions from the fees received by the referees are withholding taxes. There are no deductions for contributions to the Social Security System, Philhealth or Pag-Ibig, which are the usual deductions from employees’ salaries. These undisputed circumstances buttress the fact that petitioner is an independent contractor, and not an employee of respondents. Jose Mel Bernante vs. Philippine Basketball Association, et al., G.R. No. 192084. September 14, 2011.Employee benefits; principle against diminution of benefits. The issue in this case was whether or not the change in the scheme of distribution of the incremental proceeds from tuition fee increase is a diminution of benefit. The Court held that it was not. Generally, employees have a vested right over existing benefits voluntarily granted to them by their employer. The principle against diminution of benefits, however, is applicable only if the grant or benefit is founded on an express policy or has ripened into a practice over a long period of time which is consistent and deliberate. In other words, the benefit must be characterized by regularity and the voluntary and deliberate intent of the employer to grant the benefits over a significant period of time. In the case at bench, contrary to UEEA’s claim, the distribution of the 70% incremental proceeds based on equal sharing scheme cannot be held to have ripened into a company practice since the practice has not been for a long period of time. The same could not also have ripened into a vested right because such grant was not a deliberate and voluntary act on the part of the petitioner. The Supreme Court held that the grant by an employer of benefits through an erroneous application of the law due to the absence of clear administrative guidelines is not considered a voluntary act which cannot be unilaterally discontinued. University of the East vs. University of the East Employees’ Association, G.R. No. 179593. September 14, 2011.Employment benefits; entitlement to vacation and sick leave. BPI contends that at the time of Uy’s dismissal, she was no longer functioning as a teller of the bank but as a low-counter staff and as such, Uy is not anymore entitled to the teller’s functional allowance pursuant to company policy. BPI further argues that Uy is neither entitled to the monetary conversion of vacation and sick leaves for failure to prove that she is entitled to these benefits at the time of her dismissal. The Supreme Court ruled that Uy is entitled to the teller’s functional allowance but not to the monetary conversion of vacation and sick leaves. Uy’s function as a teller at the time

of her dismissal was factually established and was never impugned by the parties during the proceedings held in the main case. Besides, BPI did not present any evidence to substantiate its allegation that Uy was assigned as a low-counter staff at the time of her dismissal. It is a hornbook rule that he who alleges must prove. As to the vacation and sick leave cash conversion benefit, the Supreme Court held that entitlement to the same should be necessarily proved since this privilege is not statutory or mandatory in character but only voluntarily granted. As such, the existence of this benefit as well as the employee’s entitlement thereto cannot be presumed but should be proved by the employee. In this case, however, the records failed to prove that Uy was receiving this benefit at the time of her dismissal on December 14, 1995. BPI Employees Union-Metro Manila, et al. vs. Bank of the Philippine Islands/Bank of the Philippine Islands vs. BPI Employees Union-Metro Manila, et al., G.R. Nos. 178699/178735. September 21, 2011.Termination; constructive dismissal. The concept of constructive dismissal is inapplicable to respondents in this case. Constructive dismissal occurs when there is cessation of work because continued employment is rendered impossible, unreasonable, or unlikely as 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 leaving the latter with no other option but to quit. That the respondents were indeed not constructively dismissed was found by the Supreme Court to be supported by substantial evidence. First, respondents Domingo and Remigio, even while their petition for certiorari was pending before the CA, remained employed at UNILAB. In those instances, there was actually no dismissal to speak of. Second, the respondents’ positions were not abolished, unlike its provincial depots where the employees therein were considered redundant employees. In this case, their accounting functions were merely consolidated under the Finance Division of Unilab pursuant to its Shared Services Policy (SSP). Respondents, who are accounting employees, cannot refuse their assignment to the Finance Division. The Supreme Court noted that it cannot accept the proposition that when an employee opposes his employer’s decision to transfer him to another work place, there being no bad faith or underhanded motives on the part of either party, that the employee’s wishes should be made to prevail. United Laboratories, Inc. vs.Jaime Domingo Substituted by his spouse Carmencita Punzalan Domingo, et al., G.R. No. 186209, September 21, 2011. Termination; loss of trust and confidence. Loss of confidence should ideally apply only to: (1) cases involving employees occupying positions of trust and confidence, or (2) situations where the employee is routinely charged with the care and custody of the employer’s money or property. As branch manager of the bank, Lopez occupied a “position of trust.” His hold on his position and his stay in the service depend on the employer’s trust and confidence in him and on his managerial services. In this case, the Supreme Court found that Lopez’s dismissal was justified. He betrayed the trust and confidence of the employer-bank when he issued the subject purchase orders without authority and despite the express directive of the bank to put the client’s application on hold. The bank had a genuine concern over the granted loan applications as it found through its credit committee that Hertz was a credit risk. Whether the credit committee was correct or not is immaterial as the bank’s direct order left Lopez without any authority to clear the loan application on his own. Elmer Lopez vs. Keppel Bank Philippines, Inc. et al., G.R. No. 176800. September 5, 2011.Termination; loss of trust and confidence. Jumuad was found to have willfully breached her duties as to be unworthy of the trust and confidence of Hi-Flyer. First, Jumuad was a managerial employee; she executed management policies and had the power to discipline the employees of KFC branches in her area. She recommended actions on employees to the head office. According to the Supreme Court, based on established facts, the mere existence of the grounds for the loss of trust and confidence justifies petitioner’s dismissal. In the present case, the CER’s reports of Hi-Flyer show that there were anomalies committed in the KFC branches managed by Jumuad. On the principle of respondeat superior or command responsibility alone, Jumuad may be held liable for negligence in the performance of her managerial duties. She may not have been directly involved in causing the cash shortages in KFC-Bohol, but her involvement in not performing her duty monitoring and supporting the day to day operations of the branches and ensure that all the facilities and equipment at the restaurant were properly maintained and serviced, could have prevented the whole debacle from occurring. Pamela Florentina P. Jumuad vs. Hi-Flyer Food, Inc. and/or Jesus R. Montemayor, G.R. No. 187887. September 7, 2011.Termination; illegal dismissal. In the case at bar, respondent security guards were relieved from their posts because they filed with the Labor Arbiter a complaint against their employer for money claims due to underpayment of wages. The Supreme Court found that this was not a valid cause for dismissal. The Labor

Code enumerates several just and authorized causes for a valid termination of employment. An employee asserting his right and asking for minimum wage is not among those causes. Alert Security and Investigation Agency, Inc., et al. vs. Saidali Pasawilan, et al., G.R. No. 182397. September 14, 2011.Termination; abandonment of work. Petitioners aver that respondents were merely transferred to a new post wherein the wages are adjusted to the current minimum wage standards. They maintain that the respondents voluntarily abandoned their jobs when they failed to report for duty in the new location. Assuming that this contention was true, the Supreme Court held that there was no abandonment of work. For there to be abandonment: first, there should be a failure of the employee to report for work without a valid or justifiable reason, and second, there should be a showing that the employee intended to sever the employer-employee relationship. The fact that petitioners filed a complaint for illegal dismissal is indicative of their intention to remain employed with private respondent. On the first element of failure to report for work, in this case, there was no showing that respondents were notified of their new assignments. Granting that the “Duty Detail Orders” were indeed issued, they served no purpose unless the intended recipients of the orders are informed of such. Therefore, the Court held that there was no abandonment of work in this case. Alert Security and Investigation Agency, Inc., et al. vs. Saidali Pasawilan, et al., G.R. No. 182397. September 14, 2011.Termination; gross and habitual neglect. Neglect of duty, to be a ground for dismissal, must be both gross and habitual. In this case, Respondent’s repeated failure to turn over his task of preparing the payroll of the petitioner’s employees to someone capable of performing the vital tasks which he could not effectively perform or undertake because of his heart ailment or condition constitutes gross neglect. However, although the dismissal was legal, respondent was still held to be entitled to a separation pay as a measure of compassionate justice, considering his length of service and his poor physical condition which was one of the reasons he filed a leave of absence. As a general rule, an employee who has been dismissed for any of the just causes enumerated under Article 282 of the Labor Code is not entitled to separation pay. By way of exception, however, the grant of separation pay or some other financial assistance may be allowed to an employee dismissed for just causes on the basis of equity. Nissan Motors Phils., Inc. vs. Victorino Angelo, G.R. No. 164181. September 14, 2011.Termination; award of backwages. The base figure in computing the award of back wages to an illegally dismissed employee is the employee’s basic salary plus regular allowances and benefits received at the time of dismissal, unqualified by any wage and benefit increases granted in the interim. The full backwages, as referred to in the body of the March 31, 2005 Supreme Court decision pertains to “backwages” as defined in Republic Act No. 6715. Under said law, and as provided in jurisprudence, “full backwages” means backwages without any deduction or qualification, including benefits or their monetary equivalent the employee is enjoying at the time of his dismissal. Consequently, any benefit or allowance over and above that allowed and provided by said law is deemed excluded under the said Supreme Court Decision. BPI Employees Union-Metro Manila, et al. vs. Bank of the Philippine Islands/Bank of the Philippine Islands vs. BPI Employees Union-Metro Manila, et al., G.R. Nos. 178699/178735. September 21, 2011.

November 2011 Philippine Supreme Court Decisions on Labor Law and ProcedurePosted on December 16, 2011 by Leslie C. Dy • Posted in Labor Law, Philippines - Cases, Philippines - Law •Here are selected November 2011 rulings of the Supreme Court of the Philippines on labor law and procedure:

Award of attorney’s fees; concepts. There are two commonly accepted concepts of attorney’s fees – the ordinary and extraordinary. In its ordinary concept, an attorney’s fee is the reasonable compensation paid to a lawyer by his client for the legal services the former renders; compensation is paid for the cost and/or results of legal services per agreement or as may be assessed. In its extraordinary concept, attorney’s fees are deemed indemnity for damages ordered by the court to be paid by the losing party to the winning party. This is payable not to the lawyer but to the client, unless the client and his lawyer have agreed that the award shall accrue to the lawyer as additional or part of his compensation. Article 111 of the Labor Code, as amended,

contemplates the extraordinary concept of attorney’s fees. Although an express finding of facts and law is still necessary to prove the merit of the award, there need not be any showing that the employer acted maliciously or in bad faith when it withheld the wages. Thus the SC concluded that the CA erred in ruling that a finding of the employer’s malice or bad faith in withholding wages must precede an award of attorney’s fees under Article 111 of the Labor Code. To reiterate, a plain showing that the lawful wages were not paid without justification is sufficient. Kaisahan at Kapatiran ng mga Manggagawa at Kawani sa MWC-East Zone Union and Eduardo Borela, etc. vs. Manila Water Company, Inc., G.R. No. 174179. November 16, 2011.Award of attorney’s fees; Article 111. One of the issues of this case involved the effect of the Memorandum of Agreement provision that attorney’s fees shall be deducted from the amelioration allowance (AA) and CBA receivables. In this regard, the CA held that the additional grant of 10% attorney’s fees by the NLRC violates Article 111 of the Labor Code, considering that the MOA between the parties already ensured the payment of 10% attorney’s fees deductible from the AA and CBA receivables of the Union’s members. In the present case, the Union bound itself to pay 10% attorney’s fees to its counsel under the MOA and also gave up the attorney’s fees awarded to the Union’s members in favor of their counsel. The award by the NLRC cannot be taken to mean an additional grant of attorney’s fees, in violation of the ten percent (10%) limit under Article 111 of the Labor Code since it rests on an entirely different legal obligation than the one contracted under the MOA. Simply stated, the attorney’s fees contracted under the MOA do not refer to the amount of attorney’s fees awarded by the NLRC; the MOA provision on attorney’s fees does not have any bearing at all to the attorney’s fees awarded by the NLRC under Article 111 of the Labor Code. Based on these considerations, it is clear that the CA erred in ruling that the LA’s award of attorney’s fees violated the maximum limit of ten percent (10%) fixed by Article 111 of the Labor Code. Kaisahan at Kapatiran ng mga Manggagawa at Kawani sa MWC-East Zone Union and Eduardo Borela, etc. vs. Manila Water Company, Inc., G.R. No. 174179. November 16, 2011.Disability benefits; compensable. In this case, respondent was diagnosed with Central Retinal Vein Occlusion of his left eye. Central retinal vein occlusion causes painless vision loss which is usually sudden, but it can also occur gradually over a period of days to weeks. This condition, despite numerous medical procedures undertaken, eventually led to a total loss of sight of respondent’s left eye. Loss of one bodily function falls within the definition of disability which is essentially “loss or impairment of a physical or mental function resulting from injury or sickness.” The disputable presumption that a particular injury or illness that results in disability, or in some cases death, is work-related stands in the absence of contrary evidence. In the case at bench, the said presumption was not overturned by the petitioners. Although, the employer is not the insurer of the health of his employees, he takes them as he finds them and assumes the risk of liability. Consequently, the Court concurred with the finding of the lower courts that respondent’s disability is compensable. Fil-star Maritime Corporation, et al. vs. Hanziel O. Resete, G.R. No. 192686. November 23, 2011.Disability benefits; total disability. A total disability does not require that the employee be completely disabled, or totally paralyzed. What is necessary is that the injury must be such that the employee cannot pursue his or her usual work and earn from it. On the other hand, a total disability is considered permanent if it lasts continuously for more than 120 days. What is crucial is whether the employee who suffers from disability could still perform his work notwithstanding the disability he incurred. Evidently, respondent was not able to return to his job as a seafarer after his left eye was declared legally blind. Records showed that the petitioners did not give him a new overseas assignment after his disability. This only proved that his disability effectively barred his chances to be deployed abroad as an officer of an ocean-going vessel. Hence, the Supreme Court found it fitting that respondent be entitled to permanent total disability benefits considering that he would not be able to resume his position as a maritime officer, and the probability that he would be hired by other maritime employers would be close to impossible. Fil-star Maritime Corporation, et al. vs. Hanziel O. Resete, G.R. No. 192686. November 23, 2011.Dismissal; gross and habitual neglect of duties. Gross negligence connotes want of care in the performance of one’s duties, while habitual neglect implies repeated failure to perform one’s duties for a period of time, depending on the circumstances. In the case at bench, Padao was accused of having presented a fraudulently positive evaluation of the business, credit standing/rating and financial capability of Reynaldo and Luzvilla Baluma and eleven other loan applicants. Some businesses were eventually found not to exist at all, while in other transactions, the financial status of the borrowers simply could not support the grant of loans in the approved amounts. Moreover, Padao over-appraised the collateral of spouses Gardito and Alma Ajero, and that

of spouses Ihaba and Rolly Pango. Padao’s repeated failure to discharge his duties as a credit investigator of the bank amounted to gross and habitual neglect of duties under Article 282 (b) of the Labor Code. He not only failed to perform what he was employed to do, but also did so repetitively and habitually, causing millions of pesos in damage to PNB. Thus, PNB acted within the bounds of the law by meting out the penalty of dismissal, which it deemed appropriate given the circumstances. Philippine National Bank vs. Dan Padao, G.R. Nos. 180849 and 187143. November 16, 2011.Dismissed employees; separation pay. Padao is not entitled to financial assistance. The rule regarding separation pay as a measure of social justice is that it shall be paid only in those instances where the employee is validly dismissed for causes other than serious misconduct, willful disobedience, gross and habitual neglect of duty, fraud or willful breach of trust, commission of a crime against the employer or his family, or those reflecting on his moral character. In this case, Padao was guilty of gross and habitual neglect of duties. Philippine National Bank vs. Dan Padao, G.R. Nos. 180849 and 187143. November 16, 2011.Employment of seafarers. The employment of seafarers, including claims for death benefits, is governed by the contracts they sign every time they are hired or rehired; and as long as the stipulations therein are not contrary to law, morals, public order or public policy, they have the force of law between the parties. While the seafarer and his employer are governed by their mutual agreement, the POEA rules and regulations require that the POEA Standard Employment Contract (POEA-SEC) be integrated in every seafarer’s contract. In this case, considering that petitioner executed an overseas employment contract with respondent company in November 1999, the 1996 POEA-SEC should govern. The 2000 POEA-SEC initially took effect on June 25, 2000. Thereafter, the Court issued the Temporary Restraining Order (TRO) which was later lifted on June 5, 2002. Thus, petitioner cannot simply rely on the disputable presumption provision mentioned in Section 20 (B)(4) of the 2000 POEA-SEC which states that: “Those illnesses not listed in Section 32 of this Contract are disputably presumed as work related.” Gilbert Quizora vs. Denholm Crew Management (Philippines), Inc., G.R. No. 185412. November 16, 2011.Employment of seafarers; disability compensation. Granting that the provisions of the 2000 POEA-SEC apply, the disputable presumption provision in Section 20 (B) does not allow petitioner to just sit down and wait for respondent company to present evidence to overcome the disputable presumption of work-relatedness of the illness. Contrary to his position, the seafarer still has to substantiate his claim in order to be entitled to disability compensation. He has to prove that the illness he suffered was work-related and that it must have existed during the term of his employment contract. For disability to be compensable under Section 20 (B) of the 2000 POEA-SEC, two elements must concur: (1) the injury or illness must be work-related; and (2) the work-related injury or illness must have existed during the term of the seafarer’s employment contract. In other words, to be entitled to compensation and benefits under this provision, it is not sufficient to establish that the seafarer’s illness or injury has rendered him permanently or partially disabled; it must also be shown that there is a causal connection between the seafarer’s illness or injury and the work for which he had been contracted. Unfortunately for petitioner, he failed to prove that his varicose veins arose out of his employment with respondent company. Gilbert Quizora vs. Denholm Crew Management (Philippines), Inc., G.R. No. 185412. November 16, 2011.Employee’s compensation; increased risk theory. For a sickness or resulting disability or death to be compensable, the claimant must prove either (1) that the employee’s sickness was the result of an occupational disease listed under Annex “A” of the Amended Rules on Employees’ Compensation, or (2) that the risk of contracting the disease was increased by his working conditions. Under the increased risk theory, there must be a reasonable proof that the employee’s working condition increased his risk of contracting the disease, or that there is a connection between his work and the cause of the disease. In this case, since Besitan’s ailment, End Stage Renal Disease secondary to Chronic Glomerulonephritis is not among those listed under Annex “A,” of the Amended Rules on Employees’ Compensation, he needs to show by substantial evidence that his risk of contracting the disease was increased by his working condition. Government Service Insurance System vs. Manuel P. Besitan, G.R. No. 178901. November 23, 2011.Employees’s Compensation; proceedings; quantum of proof. Direct and clear evidence, is not necessary to prove a compensable claim. Strict rules of evidence do not apply as PD No. 626 only requires substantial evidence. The SC found that Besitan has sufficiently proved that his working condition increased his risk of contracting Glomerulonephritis, which according to GSIS may be caused by bacterial, viral, and parasitic infection. When Besitan entered the government service in 1976, he was given a clean bill of health. In 2005,

he was diagnosed with End Stage Renal Disease secondary to Chronic Glomerulonephritis. It would appear therefore that the nature of his work could have increased his risk of contracting the disease. His frequent travels to remote areas in the country could have exposed him to certain bacterial, viral, and parasitic infection, which in turn could have caused his disease. Delaying his urination during his long trips to the provinces could have also increased his risk of contracting the disease. As a matter of fact, even the Bank Physician of Bangko Sentral ng Pilipinas, Dr. Gregorio Suarez II, agreed that Besitan’s working condition could have contributed to the weakening of his kidneys, which could have caused the disease. This Medical Certificate is sufficient to prove that the working condition of Besitan increased his risk of contracting Glomerulonephritis. In claims for compensation benefits, a doctor’s certification as to the nature of a claimant’s disability deserves full credence because no medical practitioner would issue certifications indiscriminately. Government Service Insurance System vs. Manuel P. Besitan, G.R. No. 178901. November 23, 2011.Illegal dismissal; employer-employee relationship. The elements to determine the existence of an employment relationship are: (a) the selection and engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and (d) the employer’s power to control the employee’s conduct. In this case, the documentary evidence presented by respondent to prove that he was an employee of petitioner are as follows: (a) a document denominated as “payroll” (dated July 31, 2001 to March 15, 2002) certified correct by petitioner, which showed that respondent received a monthly salary of P7,000.00 with the corresponding deductions due to absences incurred by respondent; and (2) copies of petty cash vouchers, showing the amounts he received and signed for in the payrolls. These documents showed that petitioner hired respondent as an employee and he was paid monthly wages of P7,000.00. Additionally, as to the existence of the power of control, it is not essential for the employer to actually supervise the performance of duties of the employee. It is sufficient that the former has a right to wield the power. In this case, petitioner even stated in his Position Paper that it was agreed that he would help and teach respondent how to use the studio equipment. In such case, petitioner certainly had the power to check on the progress and work of respondent. Cesar C. Lirio, doing business under the name and style of Celkor Ad Sonimix vs. Wilmer D. Genovia, G.R. No. 169757. November 23, 2011.Illegal recruitment; elements. The crime of illegal recruitment is committed when two elements concur, namely: (1) the offender has no valid license or authority required by law to enable one to lawfully engage in recruitment and placement of workers; and (2) he undertakes either any activity within the meaning of “recruitment and placement” defined under Article 13 (b), or any prohibited practices enumerated under Article 34 of the Labor Code. First, the petitioner was found not to have been issued a license as proven by the certification from the DOLE-Dagupan District Office stating that petitioner has not been issued any license by the POEA and neither is it a holder of an authority to engage in recruitment and placement activities. Second, from the testimonies of the private respondents, it is apparent that petitioner was able to convince the private respondents to apply for work in Israel after parting with their money in exchange for the services she would render. The said act of the petitioner, without a doubt, falls within the meaning of recruitment and placement as defined in Article 13 (b) of the Labor Code. Finally, the Supreme Court noted that in illegal recruitment cases, the failure to present receipts for money that was paid in connection with the recruitment process will not affect the strength of the evidence presented by the prosecution as long as the payment can be proved through clear and convincing testimonies of credible witnesses. Delia D. Romero vs. People of the Philippines, Romulo Padlan and Aruturo Siapno, G.R. No. 171644. November 23, 2011. Probationary employment; security of tenure. It is settled that even if probationary employees do not enjoy permanent status, they are accorded the constitutional protection of security of tenure. This means they may only be terminated for a just cause or when they otherwise fail to qualify as regular employees in accordance with reasonable standards made known to them by the employer at the time of their engagement. In this case, the justification given by the petitioners for Sy’s dismissal was her alleged failure to qualify by the company’s standard. Other than the general allegation that said standards were made known to her at the time of her employment, however, no evidence, documentary or otherwise, was presented to substantiate the same. Neither was there any performance evaluation presented to prove that indeed hers was unsatisfactory. Hence, for failure of the petitioners to support their claim of unsatisfactory performance by Sy, the SC held that Sy’s employment was unjustly terminated to prevent her from acquiring a regular status in circumvention of the law on security of tenure. Tamson’s Enterprises, Inc., et al. vs. Court of Appeals and Rosemarie L. Sy, G.R. No. 192881. November 16, 2011.

Probationary employment; termination. Even on the assumption that Sy indeed failed to meet the standards set by the petitioner-employer and made known to the former at the time of her engagement, still, the termination was flawed for failure to give the required notice to Sy. Section 2, Rule I, Book VI of the Implementing Rules provides that: “If the termination is brought about by the completion of a contract or phase thereof, or by failure of an employee to meet the standards of the employer in the case of probationary employment, it shall be sufficient that a written notice is served the employee, within a reasonable time from the effective date of termination.” Tamson’s Enterprises, Inc., et al. vs. Court of Appeals and Rosemarie L. Sy, G.R. No. 192881. November 16, 2011.Termination of employment; when company tolerated violation of company policy. The CA was correct in stating that when the violation of company policy or breach of company rules and regulations is tolerated by management, it cannot serve as a basis for termination. This principle, however, only applies when the breach or violation is one which neither amounts to nor involves fraud or illegal activities. In such a case, one cannot evade liability or culpability based on obedience to the corporate chain of command. In this case, Padao, in affixing his signature on the fraudulent reports, attested to the falsehoods contained therein. Moreover, by doing so, he repeatedly failed to perform his duties as a credit investigator. Thus, the termination of his employment is justified. Philippine National Bank vs. Dan Padao, G.R. Nos. 180849 and 187143. November 16, 2011.

January 2012 Philippine Supreme Court Decisions on Labor Law and ProcedurePosted on February 17, 2012 by Leslie C. Dy • Posted in Labor Law, Philippines - Cases •Here are selected January 2012 rulings of the Supreme Court of the Philippines on labor law and procedure:

Certiorari; effect of receipt of award. The prevailing party’s receipt of the full amount of the judgment award pursuant to a writ of execution issued by the labor arbiter does not close or terminate the case if such receipt is qualified as without prejudice to the outcome of the petition for certiorari pending with the Court of Appeals. Timoteo H. Sarona vs. National Labor Relations Commission, Royale Security Agency, et al., G.R. No. 185280, January 18, 2011.Constructive dismissal; change in position. Constructive dismissal 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 a diminution in pay” and other benefits. Aptly called a dismissal in disguise of an act amounting to dismissal but made to appear as if it were not,constructive dismissal may, likewise, exist if an act of clear discrimination, insensibility, or disdain by an employer becomes so unbearable on the part of the employee that it could foreclose any choice by him except to forego his continued employment.In cases of a transfer of an employee, the rule is settled that the employer is charged with the burden of proving that its conduct and action are for valid and legitimate grounds such as genuine business necessity and that the transfer is not unreasonable, inconvenient or prejudicial to the employee. If the employer cannot overcome this burden of proof, the employee’s transfer shall be tantamount to unlawful constructive dismissal.Jonathan V. Morales vs. Harbour Centre Port Terminal, Inc., G.R. No. 174208, January 25, 2011. Contract; novation. Novation is the extinguishment of an obligation by the substitution or change of the obligation by a subsequent one which extinguishes or modifies the first, either by changing the object or principal conditions, or, by substituting another in place of the debtor, or by subrogating a third person in the rights of the creditor. In order for novation to take place, the concurrence of the following requisites is indispensable: (1) There must be a previous valid obligation; (2) There must be an agreement of the parties concerned to a new contract; (3) There must be the extinguishment of the old contract; and (4) There must be the validity of the new contract. The parties impliedly extinguished the first contract by agreeing to enter into the second contract. The records also reveal that the 2nd contract extinguished the first contract by changing its

object or principal. These contracts were for overseas employment aboard different vessels. The first contract was for employment aboard the MV “Stolt Aspiration” while the second contract involved working in another vessel, the MV “Stolt Pride.” Petitioners and Madequillo, Jr. accepted the terms and conditions of the second contract. Undoubtedly, he was still employed under the first contract when he negotiated with petitioners on the second contract. Since Madequillo was still employed under the first contract when he negotiated with petitioners on the second contract, novation became an unavoidable conclusion. Stolt-Nielsen Transportation Group, Inc., et al. vs. Sulpecio Modequillo, G.R. No. 177498, January 18, 2011.Employee; money claims. On the issue of how the seafarer will be compensated by reason of the unreasonable non-deployment, the Supreme Court decreed the application of Section 10 of Republic Act No. 8042 (Migrant Workers Act) which provides for money claims by reason of a contract involving Filipino workers for overseas deployment. The law provides:Sec. 10. Money Claims. – Notwithstanding any provision of law to the contrary, the Labor Arbiters of the National Labor Relations Commission (NLRC) shall have the original and exclusive jurisdiction to hear and decide, within ninety (90) calendar days after the filing of the complaint, the claims arising out of an employer-employee relationship or by virtue of any law or contract involving Filipino workers for overseas deployment including claims for actual, moral, exemplary and other forms of damages. x x x (Underscoring supplied)Following the law, the claim is still cognizable by the labor arbiters of the NLRC under the second phrase of the provision. Applying the rules on actual damages, Article 2199 of the New Civil Code provides that one is entitled to an adequate compensation only for such pecuniary loss suffered by him as he has duly proved. Stolt-Nielsen Transportation Group, Inc., et al. vs. Sulpecio Modequillo, G.R. No. 177498, January 18, 2011.Employee; preventive suspension; penalty of suspension. Preventive suspension is a disciplinary measure resorted to by the employer pending investigation of an alleged malfeasance or misfeasance committed by an employee. The employer temporarily bars the employee from working if his continued employment poses a serious and imminent threat to the life or property of the employer or of his co-workers. On the other hand, the penalty of suspension refers to the disciplinary action imposed on the employee after an official investigation or administrative hearing is conducted. The employer exercises its right to discipline erring employees pursuant to company rules and regulations. In the present case, Henry Delada filed a grievance against Manila Pavilion Hotel (MPH). Failing to reach a settlement, Delada lodged a Complaint before the National Conciliation and Mediation Board, which was eventually referred to a panel of voluntary arbitrators (PVA). Meanwhile, citing security and safety reasons, MPH placed Delada on a 30-day preventive suspension and proceeded with the administrative case against him. MPH eventually found Delada liable for insubordination and willful disobedience of the transfer order and imposed upon him a penalty of 90-day suspension. The PVA ruled that there was no legal and factual basis to support MPH’s imposition of preventive suspension on Delada, and that the penalty of 90-day suspension imposed by MPH against Delada went beyond the 30-day period of preventive suspension prescribed by the Implementing Rules of the Labor Code. PVA also ruled that MPH lost its authority to continue with the administrative proceedings for insubordination and willful disobedience of the transfer order and to impose the penalty of 90-day suspension on Delada. According to the panel, it acquired exclusive jurisdiction over the issue when the parties submitted the aforementioned issues before it. The Supreme Court held that MPH did not lose its authority to discipline, and that MPH had the authority to continue with the administrative proceedings for insubordination and willful disobedience against Delada and to impose on him the penalty of suspension. Manila Pavilion Hotel, etc. vs. Henry Delada, G.R. No. 189947, January 25, 2011.Employee; release and quitclaim. While the law looks with disfavor upon releases and quitclaims by employees who are inveigled or pressured into signing them by unscrupulous employers seeking to evade their legal responsibilities, a legitimate waiver representing a voluntary settlement of a laborer’s claims should be respected by the courts as the law between the parties. Considering the petitioner’s claim of fraud and bad faith against Philcomsat to be unsubstantiated, the Supreme Court found the quitclaim in dispute to be a legitimate waiver. The Court of Appeals and the National Labor Relations Commission were unanimous in holding that the petitioner voluntarily executed the subject quitclaim. The Supreme Court is not a trier of facts, and this doctrine applies with greater force in labor cases. Factual questions are for the labor tribunals to resolve and whether the petitioner voluntarily executed the subject quitclaim is a question of fact. In this case, the factual issues have already been determined by the National Labor Relations Commission and its findings were

affirmed by the Court of Appeals. Judicial review by the Supreme Court does not extend to a reevaluation of the sufficiency of the evidence upon which the proper labor tribunal has based its determination. Hypte R. Aujero vs. Philippine Communications Satellite Corporation, G.R. No. 193484, January 18, 2011.Employee benefit; holiday pay, service incentive leave pay and proportionate 13 th month pay. Under the Labor Code, the employee is entitled to his regular rate on holidays even if he does not work. Likewise, express provision of the law entitles him to service incentive leave benefit if he has rendered service for more than a year already. Furthermore, under Presidential Decree No. 851, the employee should be paid his 13th month pay. The employer has the burden of proving that it has paid these benefits to its employees. AbdulJuahid R. Pigcaulan vs. Security and Credit Investigation, Inc. and/or Rene Amby Reyes, G.R. No. 173648, January 16, 2011. Employee benefit; overtime pay. In the absence of any concrete proof that additional service beyond the normal working hours and days had been rendered, overtime pay cannot be granted. Handwritten itemized computations are self-serving, unreliable and unsubstantiated evidence to sustain the grant of salary differentials, particularly overtime pay. Unsigned and unauthenticated as they are, there is no way of verifying the truth of the handwritten entries stated therein.AbdulJuahid R. Pigcaulan vs. Security and Credit Investigation, Inc. and/or Rene Amby Reyes, G.R. No. 173648, January 16, 2011. Employee benefit; permanent disability. The Supreme Court reiterated Remigio v. National Labor Relations Commission, G.R. No. 159887, April 12, 2006, which stated that: “Thus, the Court has applied the Labor Code concept of permanent total disability to the case of seafarers. In Philippine Transmarine Carriers v. NLRC, G.R. No. 123891, February 28, 2001, seaman Carlos Nietes was found to be suffering from congestive heart failure and cardiomyopathy and was declared as unfit to work by the company-accredited physician. The Court affirmed the award of disability benefits to the seaman, citing ECC v. Sanico, G.R. No. 134028, December 17, 1999, GSIS v. CA, G.R. No. 117572, January 29, 1998, GSIS v. CA, G.R. No. 116015, July 31, 1996 and Bejerano v. ECC, G. R. No. 84777, January 30, 1992, that “disability should not be understood more on its medical significance but on the loss of earning capacity. Permanent total disability means disablement of an employee to earn wages in the same kind of work, or work of similar nature that [he] was trained for or accustomed to perform, or any kind of work which a person of [his] mentality and attainment could do. It does not mean absolute helplessness.” It likewise cited Bejerano to reiterate that in a disability compensation, it is not the injury which is compensated, but rather it is the incapacity to work resulting in the impairment of one’s earning capacity. The Court also cited the more recent case ofCrystal Shipping, Inc. v. Natividad, G.R. No. 154798, October 20, 2005, applying the same principles, andGSIS v. Cadiz, G.R. No. 145093, July 8, 2003, and Ijares v. CA, G.R. No. 105854, August 26, 1999, which declared that “permanent disability is the inability of a worker to perform his job for more than 120 days, regardless of whether or not he loses the use of any part of his body.” Magsaysay Maritime Corporation, et al. vs. Oberto S. Lobusta, G.R. No. 177578, January 25, 2011.Employee dismissal; due process. Notice and hearing constitute the essential elements of due process in the dismissal of employees. The employer must furnish the employee with two written notices before termination of employment can be legally effected. The first apprises the employee of the particular acts or omissions for which dismissal is sought. The second informs the employee of the employer’s decision to dismiss him. With regard to the requirement of a hearing, the essence of due process lies simply in an opportunity to be heard, and not that an actual hearing should always and indispensably be held. These requirements were satisfied in this case. The first required notice was dated November 3, 2003, sufficiently notifying Yabut of the particular acts being imputed against him, as well as the applicable law and the company rules considered to have been violated. On November 17, 2003, Meralco conducted a hearing on the charges against the petitioner where he was accorded the right to air his side and present his defenses on the charges against him. Significantly, a high-ranking officer of the supervisory union of Meralco assisted him during the said investigation. His sworn statement that forms part of the case records even listed the matters that were raised during the investigation. Finally, Meralco served a notice of dismissal dated February 4, 2004 upon Yabut. Such notice notified the latter of the company’s decision to dismiss him from employment on the grounds clearly discussed therein.Norman Yabut vs. Manila Electric Company and Manuel M. Lopez, G.R. No. 190436, January 16, 2011.Employee dismissal; due process. Even if there is a just or valid cause for terminating an employee, it is necessary to comply with the requirements of due process prior to the termination. Lolita S. Concepcion vs. Minex Import Corporation/Minerama Corporation, et al., G.R. No. 153569, January 24, 2011.

Employee dismissal; gross negligence; habitual neglect. Gross negligence has been defined as the “want of care in the performance of one’s duties” and habitual neglect has been defined as “repeated failure to perform one’s duties for a period of time, depending upon the circumstances.” These are not overly technical terms, which, in the first place, are expressly sanctioned by the Labor Code of the Philippines, to wit: ART. 282. Termination by employer. – An employer may terminate an employment for any of the following causes: [xxx](b) Gross and habitual neglect by the employee of his duties; [xxx] Diosdado Bitara was dismissed from service due to habitual tardiness and absenteeism, and for having continued disregarding attendance policies despite his undertaking to report on time. His weekly time record for the first quarter of the year 2000 revealed that he came late 19 times out of the 47 times he reported for work. He also incurred 19 absences out of the 66 working days during the quarter. His absences without prior notice and approval from March 11-16, 2000 were considered to be the most serious infraction of all because of its adverse effect on business operations. The Supreme Court held that even in the absence of a written company rule defining gross and habitual neglect of duties, Bitara’s omissions qualify as such warranting his dismissal from the service. Mansion Printing Center and Clement Cheng vs. Diosdado Bitara, Jr., G.R. No. 168120, January 25, 2011.Employee dismissal; just cause; loss of confidence. To dismiss an employee, the law requires the existence of a just and valid cause. Article 282 of the Labor Code enumerates the just causes for termination by the employer: (a) serious misconduct or willful disobedience by the employee of the lawful orders of his employer or the latter’s representative in connection with the employee’s work; (b) gross and habitual neglect by the employee of his duties; (c) fraud or willful breach by the employee of the trust reposed in him by his employer or his duly authorized representative; (d) commission of a crime or offense by the employee against the person of his employer or any immediate member of his family or his duly authorized representative; and (e) other causes analogous to the foregoing.It is unfair to require an employer to first be morally certain of the guilt of the employee by awaiting a conviction before terminating him when there is already sufficient showing of the wrongdoing. Requiring that certainty may prove too late for the employer, whose loss may potentially be beyond repair. In the present case, no less than the DOJ Secretary found probable cause for qualified theft against Concepcion. That finding was enough to justify her termination for loss of confidence. Lolita S. Concepcion vs. Minex Import Corporation/Minerama Corporation, et al., G.R. No. 153569, January 24, 2011.Employee dismissal; loss of trust and confidence. For loss of trust and confidence to be a valid ground for dismissal, it must be based on a willful breach of trust and founded on clearly established facts. A breach is willful if it is done intentionally, knowingly and purposely, without justifiable excuse, as distinguished from an act done carelessly, thoughtlessly, heedlessly or inadvertently. In addition, loss of trust and confidence must rest on substantial grounds and not on the employer’s arbitrariness, whims, caprices or suspicion. Manila Electric Company (Meralco) vs. Ma. Luisa Beltran, G.R. No. 173774, January 30, 2011.Employee dismissal; misconduct. Article 282(a) provides that an employer may terminate an employment because of an employee’s serious misconduct, a cause that was present in this case in view of the petitioner’s violation of his employer’s code of conduct. 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. Installation of shunting wires is without doubt a serious wrong as it demonstrates an act that is willful or deliberate, pursued solely to wrongfully obtain electric power through unlawful means. The act clearly relates to the petitioner’s performance of his duties given his position as branch field representative who is equipped with knowledge on meter operations, and who has the duty to test electric meters and handle customers’ violations of contract. Instead of protecting the company’s interest, the petitioner himself used his knowledge to illegally obtain electric power from Meralco. His involvement in this incident deems him no longer fit to continue performing his functions for respondent-company.Norman Yabut vs. Manila Electric Company and Manuel M. Lopez, G.R. No. 190436, January 16, 2011.Employer-employee relationship; commencement. The POEA Standard Employment Contract provides that employment shall commence “upon the actual departure of the seafarer from the airport or seaport in the port of hire.” Distinction must be made between the perfection of the employment contract and the commencement of the employer-employee relationship. The perfection of the contract, which in this case coincided with the

date of execution thereof, occurred when petitioner and respondent agreed on the object and the cause, as well as the rest of the terms and conditions therein. The commencement of the employer-employee relationship would have taken place had petitioner been actually deployed from the point of hire. Stolt-Nielsen Transportation Group, Inc., et al. vs. Sulpecio Modequillo, G.R. No. 177498, January 18, 2011.Judgment; finality. The petition was brought only on behalf of Pigcaulan. The CA Decision has already become final and executory as to Canoy since he did not appeal from it. Canoy cannot now simply incorporate in his affidavit a verification of the contents and allegations of the petition as he is not one of the petitioners therein. AbdulJuahid R. Pigcaulan vs. Security and Credit Investigation, Inc. and/or Rene Amby Reyes, G.R. No. 173648, January 16, 2011.Judgment; res judicata. The doctrine of res judicata lays down two main rules which may be stated as follows: (1) The judgment or decree of a court of competent jurisdiction on the merits concludes the parties and their privies to the litigation and constitutes a bar to a new action or suit involving the same cause of action either before the same or any other tribunal; and (2) Any right, fact, or matter in issue directly adjudicated or necessarily involved in the determination of an action before a competent court in which a judgment or decree is rendered on the merits is conclusively settled by the judgment therein and cannot again be litigated between the parties and their privies whether the claim or demand, purpose, or subject matter of the two suits is the same or not. These two main rules mark the distinction between the principles governing the two typical cases in which a judgment may operate as evidence. In speaking of these cases, the first general rule, and which corresponds to paragraph (b) of Section 47 of Rule 39 of the Rules of Court is referred to as “bar by former judgment” while the second general rule, which is embodied in paragraph (c) of the same section, is known as “conclusiveness of judgment.” The present labor case is closely related to the civil case that was decided with finality. The acts and omissions alleged by the Bank in the civil case as basis of its counterclaim against Mauricio are the very same acts and omissions which were used as grounds to terminate his employment. Considering that it has already been conclusively determined with finality in the civil case that the questioned acts of Mauricio were well within his discretion as branch manager and approving officer of the Bank, and the same were sanctioned by the Head Office, the Supreme Court found that the Court of Appeals did not err in holding that there was no valid or just cause for the Bank to terminate Mauricio’s employment.Prudential Bank (now Bank of the Philippine Islands) vs. Antonio S.A. Mauricio, substituted by his legal heirs Maria Fe, Voltaire, Antonio, Jr., Antonio, Earl John, and Francisco Roberto all surnamed Mauricio,G.R. No. 183350, January 18, 2011.Jurisdiction; voluntary arbitrators. In Sime Darby Pilipinas, Inc. v. Deputy Administrator Magsalin, G.R. No. 90426, December 15, 1989, the Supreme Court ruled that the voluntary arbitrator had plenary jurisdiction and authority to interpret the agreement to arbitrate and to determine the scope of his own authority – subject only, in a proper case, to the certiorari jurisdiction of this Court. It was also held in that case that the failure of the parties to specifically limit the issues to that which was stated allowed the arbitrator to assume jurisdiction over the related issue. In Ludo & Luym Corporation v. Saornido, G.R. No. 140960, January 20, 2003, the Supreme Court recognized that voluntary arbitrators are generally expected to decide only those questions expressly delineated by the submission agreement; that, nevertheless, they can assume that they have the necessary power to make a final settlement on the related issues, since arbitration is the final resort for the adjudication of disputes. Thus, the Supreme Court ruled that even if the specific issue brought before the arbitrators merely mentioned the question of “whether an employee was discharged for just cause,” they could reasonably assume that their powers extended beyond the determination thereof to include the power to reinstate the employee or to grant back wages. In the same vein, if the specific issue brought before the arbitrators referred to the date of regularization of the employee, law and jurisprudence gave them enough leeway as well as adequate prerogative to determine the entitlement of the employees to higher benefits in accordance with the finding of regularization. Indeed, to require the parties to file another action for payment of those benefits would certainly undermine labor proceedings and contravene the constitutional mandate providing full protection to labor and speedy labor justice. Manila Pavilion Hotel, etc. vs. Henry Delada, G.R. No. 189947, January 25, 2011.Procedural rules; liberal application; when waived. Procedural rules may be waived or dispensed with in absolutely meritorious cases. The Supreme Court, in past cases, has adhered to the strict implementation of the rules and considered them inviolable when it is shown that the patent lack of merit of the appeals render liberal interpretation pointless and naught. The contrary obtains in this case as Philcomsat’s case is not entirely unmeritorious. Specifically, Philcomsat alleged that the petitioner’s execution of the subject quitclaim was

voluntary despite his claim that he did not do so. Philcomsat likewise argued that the petitioner’s educational attainment and the position he occupied in Philcomsat’s hierarchy militate against his claim that he was pressured or coerced into signing the quitclaim. The emerging trend in our jurisprudence is to afford every party-litigant the amplest opportunity for the proper and just determination of his cause free from the constraints of technicalities. Far from having gravely abused its discretion, the NLRC correctly prioritized substantial justice over the rigid and stringent application of procedural rules. In the present case, the Supreme Court held that the CA was correct in not finding grave abuse of discretion in the NLRC’s decision to give due course to Philcomsat’s appeal despite its being belatedly filed. Hypte R. Aujero vs. Philippine Communications Satellite Corporation, G.R. No. 193484, January 18, 2011.Public officers; reassignment; constructive dismissal. While a temporary transfer or assignment of personnel is permissible even without the employee’s prior consent, it cannot be done when the transfer is a preliminary step toward his removal, or a scheme to lure him away from his permanent position, or when it is designed to indirectly terminate his service, or force his resignation. Such a transfer would in effect circumvent the provision which safeguards the tenure of office of those who are in the Civil Service. Significantly, Section 6, Rule III of CSC Memorandum Circular No. 40, series of 1998, defines constructive dismissal as a situation when an employee quits his work because of the agency head’s unreasonable, humiliating, or demeaning actuations which render continued work impossible. Hence, the employee is deemed to have been illegally dismissed. This may occur although there is no diminution or reduction of salary of the employee. It may be a transfer from one position of dignity to a more servile or menial job. Republic of the Phil., represented by the Civil Service Commission vs. Minerva M.P. Pacheco, G.R. No. 178021, January 31, 2011.Reinstatement; not possible; backwages. In case separation pay is awarded and reinstatement is no longer feasible, backwages shall be computed from the time of illegal dismissal up to the finality of the decision should separation pay not be paid in the meantime. It is the employee’s actual receipt of the full amount of his separation pay that will effectively terminate the employment of an illegally dismissed employee. Otherwise, the employer-employee relationship subsists and the illegally dismissed employee is entitled to backwages, taking into account the increases and other benefits, including the 13th month pay, that were received by his co-employees who are not dismissed. It is the obligation of the employer to pay an illegally dismissed employee or worker the whole amount of the salaries or wages, plus all other benefits and bonuses and general increases, to which he would have been normally entitled had he not been dismissed and had not stopped working. Timoteo H. Sarona vs. National Labor Relations Commission, Royale Security Agency, et al., G.R. No. 185280, January 18, 2011.Reorganization; management prerogative. Admittedly, 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. By 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. 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. Jonathan V. Morales was hired by Harbour Centre Port Terminal, Inc. (HCPTI) as an Accountant and Acting Finance Officer, with a monthly salary of P18,000.00. Regularized on November 17, 2000, Morales was promoted to Division Manager of the Accounting Department, for which he was compensated a monthly salary ofP33,700.00, plus allowances starting July 1, 2002. Subsequent to HCPTI’s transfer to its new offices at Vitas, Tondo, Manila on January 2, 2003, Morales received an inter-office memorandum dated March 27, 2003, reassigning him 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. The memorandum was issued by HCPTI’s new Administration Manager, duly noted by its new Vice President for Administration and Finance, and approved by its President and Chief Executive Officer. Morales protested that his reassignment was a clear demotion since the position

to which he was transferred was not even included in HCPTI’s plantilla. In response to Morales’ grievance that he had been effectively placed on floating status, an inter-office memorandum was issued on April 4, 2003 to the effect that “transfer of employees is a management prerogative” and that HCPTI had “the right and responsibility to find the perfect balance between the skills and abilities of employees to the needs of the business.” However, the Supreme Court found that HCPTI did not even bother to show that it had implemented a corporate reorganization and/or approved a new plantilla of positions which included the one to which Morales was being transferred. Thus, the Court reinstated the NLRC’s July 29, 2005 Decision which found Morales’ reassignment to be a clear demotion despite lack of showing of diminution of salaries and benefits. Jonathan V. Morales vs. Harbour Centre Port Terminal, Inc., G.R. No. 174208, January 25, 2011.Rule 45; question of law. As a general rule, the Supreme Court is not a trier of facts and a petition for review on certiorari under Rule 45 of the Rules of Court must exclusively raise questions of law. Moreover, if factual findings of the National Labor Relations Commission and the Labor Arbiter have been affirmed by the Court of Appeals, the Supreme Court accords them the respect and finality they deserve. It is well-settled and oft-repeated that findings of fact of administrative agencies and quasi-judicial bodies, which have acquired expertise because their jurisdiction is confined to specific matters, are generally accorded not only respect, but finality when affirmed by the Court of Appeals.Nevertheless, the Supreme Court will not hesitate to deviate from what are clearly procedural guidelines and disturb and strike down the findings of the Court of Appeals and those of the labor tribunals if there is a showing that they are unsupported by the evidence on record or there was a patent misappreciation of facts. Indeed, that the impugned decision of the Court of Appeals is consistent with the findings of the labor tribunals does not per se conclusively demonstrate the correctness thereof. By way of exception to the general rule, the Supreme Court will scrutinize the facts if only to rectify the prejudice and injustice resulting from an incorrect assessment of the evidence presented. Timoteo H. Sarona vs. National Labor Relations Commission, Royale Security Agency, et al., G.R. No. 185280, January 18, 2011.

February 2012 Philippine Supreme Court Decisions on Labor Law and ProcedurePosted on March 5, 2012 by Leslie C. Dy • Posted in Labor Law, Philippines - Cases, Philippines - Law • Tagged appeal, Civil Service Commission, constructive dismissal, dismissal, employee benefits, employer-employee relationship, forum shopping, NLRC, probationary employment, reinstatement, res judicata, security of tenure •Here are select February 2012 rulings of the Supreme Court on labor law and procedure:

Appeal; factual finding of NLRC. Findings of fact of administrative agencies and quasi-judicial bodies, which have acquired expertise because their jurisdiction is confined to specific matters, are generally accorded not only respect but finality when affirmed by the Court of Appeals. Factual findings of quasi-judicial bodies like the NLRC, if supported by substantial evidence, are accorded respect and even finality by the Supreme Court, more so when they coincide with those of the Labor Arbiter. Such factual findings are given more weight when the same are affirmed by the Court of Appeals. In the present case, the Supreme Court found no reason to depart from these principles since the Labor Arbiter found that there was substantial evidence to conclude that Oasay had breached the trust and confidence of Palacio Del Gobernador Condominium Corporation, which finding the NLRC had likewise upheld. Sebastian F. Oasay, Jr. vs. Palacio del Gobernador Condominium Corporation and Omar T. Cruz, G.R. No. 194306, February 6, 2012.Civil Service; Clark Development Corporation. Clark Development Corporation (CDC) owes its existence to Executive Order No. 80 issued by then President Fidel V. Ramos. It was meant to be the implementing and operating arm of the Bases Conversion and Development Authority tasked to manage the Clark Special Economic Zone. Expressly, CDC was formed in accordance with Philippine corporation laws and existing rules and regulations promulgated by the Securities and Exchange Commission pursuant to Section 16 of

Republic Act 7227. CDC, a government owned or controlled corporation without an original charter, was incorporated under the Corporation Code. Pursuant to Article IX-B, Sec. 2(1) of the Constitution, the civil service embraces only those government owned or controlled corporations with original charter. As such, CDC and its employees are covered by the Labor Code and not by the Civil Service Law. Antonio B. Salenga, et al. vs. Court of Appeals, et al., G.R. No. 174941, February 1, 2012 .Dismissal; resignation vs. illegal dismissal; telex is not equivalent to tender of resignation. Article 285 of the Labor Code recognizes termination by the employee of the employment contract by “serving written notice on the employer at least one (1) month in advance.” Given that provision, the law contemplates the requirement of a written notice of resignation. In the absence of a written resignation, it is safe to presume that the employer terminated the seafarers. In this case, the Supreme Court found the dismissal of De Gracia, et al. to be illegal since Cosmoship merely sent a telex to Skippers, the local manning agency, claiming that De Gracia, et al. were repatriated because the latter voluntarily pre-terminated their contracts. Skippers United Pacific, Inc. and Skippers Maritime Services, Inc. Ltd. vs. Nathaniel Doza, et al., G.R. No. 175558. February 8, 2012 .Dismissal; substantive and procedural due process. For a worker’s dismissal to be considered valid, it must comply with both procedural and substantive due process. The legality of the manner of dismissal constitutes procedural due process, while the legality of the act of dismissal constitutes substantive due process. Procedural due process in dismissal cases consists of the twin requirements of notice and hearing. The employer must furnish the employee with two written notices before the termination of employment can be effected: (1) the first notice apprises the employee of the particular acts or omissions for which his dismissal is sought; and (2) the second notice informs the employee of the employer’s decision to dismiss him. Before the issuance of the second notice, the requirement of a hearing must be complied with by giving the worker an opportunity to be heard. It is not necessary that an actual hearing be conducted. Substantive due process, on the other hand, requires that dismissal by the employer be made based on a just or authorized cause under Articles 282 to 284 of the Labor Code. In this case, there was no written notice furnished to De Gracia, et al. regarding the cause of their dismissal. Cosmoship furnished a telex to Skippers, the local manning agency, claiming that De Gracia, et al. were repatriated because they voluntarily pre-terminated their contracts. This telex was given credibility and weight by the Labor Arbiter and NLRC in deciding that there was pre-termination of the employment contract “akin to resignation” and no illegal dismissal. However, as correctly ruled by the CA, the telex message is “a biased and self-serving document that does not satisfy the requirement of substantial evidence.” If, indeed, De Gracia, et al. voluntarily pre-terminated their contracts, then De Gracia, et al. should have submitted their written resignations. Skippers United Pacific, Inc. and Skippers Maritime Services, Inc. Ltd. vs. Nathaniel Doza, et al., G.R. No. 175558. February 8, 2012 .Employee benefits; right to bonus; diminution. From a legal point of view, a bonus is a gratuity or act of liberality of the giver which the recipient cannot demand as a matter of right. The grant of a bonus is basically a management prerogative which cannot be forced upon the employer who may not be obliged to assume the onerous burden of granting bonuses. However, a bonus becomes a demandable or enforceable obligation if the additional compensation is granted without any conditions imposed for its payment. In such case, the bonus is treated as part of the wage, salary or compensation of the employee. Particularly instructive is the ruling of the Court in Metro Transit Organization, Inc. v. National Labor Relations Commission (G.R. No. 116008, July 11, 1995) where the Court said:Whether or not a bonus forms part of wages depends upon the circumstances and conditions for its payment. If it is additional compensation which the employer promised and agreed to give without any conditions imposed for its payment, such as success of business or greater production or output, then it is part of the wage. But if it is paid only if profits are realized or if a certain level of productivity is achieved, it cannot be considered part of the wage. Where it is not payable to all but only to some employees and only when their labor becomes more efficient or more productive, it is only an inducement for efficiency, a prize therefore, not a part of the wage.

In this case, there is no dispute that Eastern Telecommunications Phils., Inc. and Eastern Telecoms Employees Union agreed on the inclusion of a provision for the grant of 14th, 15th and 16th month bonuses in the 1998-2001 CBA Side Agreement, as well as in their 2001-2004 CBA Side Agreement, which contained no qualification for its payment. There were no conditions specified in the CBA Side Agreements for the grant of the bonus. There was nothing in the relevant provisions of the CBA which made the grant of the bonus

dependent on the company’s financial standing or contingent upon the realization of profits. There was also no statement that if the company derives no profits, no bonus will be given to the employees. In fine, the payment of these bonuses was not related to the profitability of business operations. Consequently, the giving of the subject bonuses cannot be peremptorily withdrawn by Eastern Telecommunications Phils., Inc. without violating Article 100 of the Labor Code, which prohibits the unilateral elimination or diminution of benefits by the employer. The rule is settled that any benefit and supplement being enjoyed by the employees cannot be reduced, diminished, discontinued or eliminated by the employer. The principle of non-diminution of benefits is founded on the constitutional mandate to protect the rights of workers and to promote their welfare and to afford labor full protection. Eastern Telecommunications Philippines, Inc. vs. Eastern Telecoms Employees Union, G.R. No. 185665, February 8, 2012.Employee dismissal; constructive dismissal. In constructive dismissal cases, the employer has the burden of proving that the transfer of an employee is for just or valid ground, such as genuine business necessity. The employer must demonstrate that the transfer is not unreasonable, inconvenient, or prejudicial to the employee and that the transfer does not involve a demotion in rank or a diminution in salary and other benefits. “If the employer fails to overcome this burden of proof, the employee’s transfer is tantamount to unlawful constructive dismissal.” [Merck Sharp and Dohme (Philippines) v. Robles, G.R. No. 176506, November 25, 2009] Petitioners failed to satisfy the burden of proving that the transfer was based on just or valid ground. Petitioners’ bare assertions of imminent threat from the respondents are mere accusations which are not substantiated by any proof. The Supreme Court agreed with the Court of Appeals in ruling that the transfer of respondents amounted to a demotion. Julie’s Bakeshop and/or Edgar Reyes vs. Henry Arnaiz, et al., G.R. No. 173882, February 15, 2012.Employee dismissal; disease; dereliction of duties. With regard to disease as a ground for termination, Article 284 of the Labor Code provides that an employer may terminate the services of an employee who has been found to be suffering from any disease and whose continued employment is prohibited by law or is prejudicial to his health, as well as to the health of his co-employees. In order to validly terminate employment on this ground, Section 8, Rule I, Book VI of the Omnibus Rules Implementing the Labor Code requires that: (i) the employee be suffering from a disease and his continued employment is prohibited by law or prejudicial to his health or to the health of his co-employees, and (ii) a certification by a competent public health authority that the disease is of such nature or at such a stage that it cannot be cured within a period of six (6) months even with proper medical treatment. If the disease or ailment can be cured within the period, the employer shall not terminate the employee but shall ask the employee to take a leave. The employer shall reinstate such employee to his former position immediately upon the restoration of his normal health. In Triple Eight Integrated Services, Inc. v. NLRC (G.R. No. 129584, December 3, 1998),the Court held that the requirement for a medical certificate under Article 284 of the Labor Code cannot be dispensed with; otherwise, it would sanction the unilateral and arbitrary determination by the employer of the gravity or extent of the employee’s illness and, thus, defeat the public policy on the protection of labor.In this case, Ynson should have reported back to work or attended the investigations conducted by Wuerth Philippines, Inc. immediately upon being permitted to work by his doctors, knowing that his position remained vacant for a considerable length of time. However, he did not even show any sincere effort to return to work. Clearly, since there is no more hindrance for him to return to work and attend the investigations set by Wuerth Philippines, Inc., Ynson’s failure to do so was without any valid or justifiable reason. His conduct shows his indifference and utter disregard of his work and his employer’s interest, and displays his clear, deliberate, and gross dereliction of duties. The power to dismiss an employee is a recognized prerogative inherent in the employer’s right to freely manage and regulate his business. The law, in protecting the rights of the laborers, authorizes neither oppression nor self-destruction of the employer. The worker’s right to security of tenure is not an absolute right, for the law provides that he may be dismissed for cause. As a general rule, employers are allowed wide latitude of discretion in terminating the employment of managerial personnel. The mere existence of a basis for believing that such employee has breached the trust and confidence of his employer would suffice for his dismissal. Needless to say, an irresponsible employee like Ynson does not deserve a position in the workplace, and it is Wuerth Philippines, Inc.’s management prerogative to terminate his employment. To be sure, an employer cannot be compelled to continue with the employment of workers when continued employment will prove inimical to the employer’s interest. Wuerth Philippines, Inc. vs. Rodante Ynson, G.R. No. 175932, February 15, 2012.

Employee dismissal; due process. With respect to due process requirement, the employer is bound to furnish the employee concerned with two (2) written notices before termination of employment can be legally effected. One is the notice apprising the employee of the particular acts or omissions for which his dismissal is sought and this may loosely be considered as the proper charge. The other is the notice informing the employee of the management’s decision to sever his employment. This decision, however, must come only after the employee is given a reasonable period from receipt of the first notice within which to answer the charge, thereby giving him ample opportunity to be heard and defend himself with the assistance of his representative should he so desire. The requirement of notice, it has been stressed, is not a mere technicality but a requirement of due process to which every employee is entitled. Here, Palacio Del Gobernador Condominium Corporation complied with the “two-notice rule” stated above. Sebastian F. Oasay, Jr. vs. Palacio del Gobernador Condominium Corporation and Omar T. Cruz, G.R. No. 194306, February 6, 2012.Employee dismissal; due process. Cityland did not afford Galang the required notice before he was dismissed. As the Court of Appeals noted, the investigation conference Tupas called to look into the janitors’ complaints against Galang did not constitute the written notice required by law as he had no clear idea what the charges against him were. Romeo A. Galang vs. Citiland Shaw Tower, Inc. and Virgilio Baldemor, G.R. No. 173291, February 8, 2012.Employee dismissal; grounds. The validity of an employee’s dismissal from service hinges on the satisfaction of the two substantive requirements for a lawful termination. These are, first, whether the employee was accorded due process the basic components of which are the opportunity to be heard and to defend himself. This is the procedural aspect. And second, whether the dismissal is for any of the causes provided in the Labor Code of the Philippines. This constitutes the substantive aspect. On the substantive aspect, the Supreme Court found that Palacio Del Gobernador Condominium Corporation’s termination of the Oasay’s employment was for a cause provided under the Labor Code. In terminating Oasay’s employment, Palacio Del Gobernador Condominium Corporation invoked loss of trust and confidence. The first requisite for dismissal on the ground of loss of trust and confidence is that the employee concerned must be holding a position of trust and confidence. Here, it is indubitable that Oasay holds a position of trust and confidence. The position of Building Administrator, being managerial in nature, necessarily enjoys the trust and confidence of the employer. The second requisite is that there must be an act that would justify the loss of trust and confidence. Loss of trust and confidence, to be a valid cause for dismissal, must be based on a willful breach of trust and founded on clearly established facts. Palacio Del Gobernador Condominium Corporation had established, by clear and convincing evidence, Oasay’s acts which justified its loss of trust and confidence on the former. Sebastian F. Oasay, Jr. vs. Palacio del Gobernador Condominium Corporation and Omar T. Cruz, G.R. No. 194306, February 6, 2012.Employee dismissal; just cause. The Supreme Court found that Galang had become unfit to continue his employment. The evidence supports the view that he continued to exhibit undesirable traits as an employee and as a person, in relation to both his co-workers and his superiors, particularly Tupas, her immediate supervisor. Quoting the Court of Appeals’ decision with approval, the Supreme Court held: “Without offering any possible ill motive that might have impelled [the respondents] to summarily dismiss [Galang], who admitted having been absorbed by the former as janitor upon the termination of his contract with his agency, this Court is more inclined to give credence to the evidence pointing to the conclusion that [Galang’s] employment was actually severed for a just cause.” Romeo A. Galang vs. Citiland Shaw Tower, Inc. and Virgilio Baldemor, G.R. No. 173291, February 8, 2012. Employer; right to discipline employee. In Sagales v. Rustan’s Commercial Corporation (G.R. No. 166554, November 27, 2008), the Supreme Court ruled:Truly, while the employer has the inherent right to discipline, including that of dismissing its employees, this prerogative is subject to the regulation by the State in the exercise of its police power.

In this regard, it is a hornbook doctrine that infractions committed by an employee should merit only the corresponding penalty demanded by the circumstance. The penalty must be commensurate with the act, conduct or omission imputed to the employee and must be imposed in connection with the disciplinary authority of the employer. (Emphasis in the original.)In the case at bar, the penalty handed out by the petitioners was the ultimate penalty of dismissal. There was no warning or admonition for respondent’s violation of team rules, only outright termination of his services for

an act which could have been punished appropriately with a severe reprimand or suspension. Negros Slashers, Inc., Rodolfo C. Alvarez and Vicente Tan vs. Alvin L. Teng, G.R. No. 187122, February 22, 2012.Employer-employee relationship; onus probandi. The onus probandi falls on petitioner to establish or substantiate such claim by the requisite quantum of evidence. The issue of Javier’s alleged illegal dismissal is anchored on the existence of an employer-employee relationship between him and Fly Ace. As the records bear out, the Labor Arbiter and the Court of Appeals found Javier’s claim of employment with Fly Ace as wanting and deficient. Although Section 10, Rule VII of the New Rules of Procedure of the NLRC allows a relaxation of the rules of procedure and evidence in labor cases, this rule of liberality does not mean a complete dispensation of proof. Labor officials are enjoined to use reasonable means to ascertain the facts speedily and objectively with little regard to technicalities or formalities but nowhere in the rules are they provided a license to completely discount evidence, or the lack of it. The quantum of proof required, however, must still be satisfied. Hence, “when confronted with conflicting versions on factual matters, it is for them in the exercise of discretion to determine which party deserves credence on the basis of evidence received, subject only to the requirement that their decision must be supported by substantial evidence.” [Salvador Lacorte v. Hon. Amado G. Inciong, 248 Phil. 232 (1988)] Accordingly, Javier needs to show by substantial evidence that he was indeed an employee of the company against which he claims illegal dismissal. Bitoy Javier (Danilo P. Javier) vs. Fly Ace Corporation/Flordelyn Castillo, G.R. No. 192558, February 15, 2012.Employer-employee relationship; test. To determine the existence of an employer-employee relationship, the following are considered: (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. Of these elements, the most important criterion is whether the employer controls or has reserved the right to control the employee not only as to the result of the work but also as to the means and methods by which the result is to be accomplished. In this case, Javier was not able to persuade the Court that the above elements exist in his case. He could not submit competent proof that Fly Ace engaged his services as a regular employee; that Fly Ace paid his wages as an employee, or that Fly Ace could dictate what his conduct should be while at work. In other words, Javier’s allegations did not establish that his relationship with Fly Ace had the attributes of an employer-employee relationship on the basis of the above-mentioned four-fold test. Worse, Javier was not able to refute Fly Ace’s assertion that it had an agreement with a hauling company to undertake the delivery of its goods. It was also baffling to realize that Javier did not dispute Fly Ace’s denial of his services’ exclusivity to the company. In short, all that Javier laid down were bare allegations without corroborative proof. Bitoy Javier (Danilo P. Javier) vs. Fly Ace Corporation/Flordelyn Castillo, G.R. No. 192558, February 15, 2012.Employment contract; stages. Contracts undergo three distinct stages, to wit: negotiation; perfection or birth; and consummation. Negotiation begins from the time the prospective contracting parties manifest their interest in the contract and ends at the moment of agreement of the parties. Perfection or birth of the contract takes place when the parties agree upon the essential elements of the contract. Consummation occurs when the parties fulfill or perform the terms agreed upon in the contract, culminating in the extinguishment thereof. Under Article 1315 of the Civil Code, a contract is perfected by mere consent and from that moment the parties are bound not only to the fulfillment of what has been expressly stipulated but also to all the consequences which, according to their nature, may be in keeping with good faith, usage and law. An employment contract, like any other contract, is perfected at the moment (1) the parties come to agree upon its terms; and (2) concur in the essential elements thereof: (a) consent of the contracting parties, (b) object certain which is the subject matter of the contract and (c) cause of the obligation. In the present case, C.F. Sharp, on behalf of its principal, International Shipping Management, Inc., hired Agustin and Minimo as Sandblaster/Painter for a 3-month contract, with a basic monthly salary of US$450.00. Thus, the object of the contract is the service to be rendered by Agustin and Minimo on board the vessel while the cause of the contract is the monthly compensation they expect to receive. These terms were embodied in the Contract of Employment which was executed by the parties. The agreement upon the terms of the contract was manifested by the consent freely given by both parties through their signatures in the contract. Neither parties disavow the consent they both voluntarily gave. Thus, there is a perfected contract of employment. C.F. Sharp & Co. Inc. and John J. Rocha vs. Pioneer Insurance and Surety Corporation, et al.,G.R. No. 179469, February 15, 2012.Employment relationship; commencement. The commencement of an employer-employee relationship must be treated separately from the perfection of an employment contract. Santiago v. CF Sharp Crew Management, Inc., (G.R. No. 162419, 10 July 2007) is an instructive precedent on this point. In that case, the

Supreme Court made a distinction between the perfection of the employment contract and the commencement of the employer-employee relationship, thus:The perfection of the contract, which in this case coincided with the date of execution thereof, occurred when petitioner and respondent agreed on the object and the cause, as well as the rest of the terms and conditions therein. The commencement of the employer-employee relationship, as earlier discussed, would have taken place had petitioner been actually deployed from the point of hire. Thus, even before the start of any employer-employee relationship, contemporaneous with the perfection of the employment contract was the birth of certain rights and obligations, the breach of which may give rise to a cause of action against the erring party.Despite the fact that the employer-employee relationship has not commenced due to the failure to deploy Agustin and Minimo in this case, Agustin and Minimo are entitled to rights arising from the perfected Contract of Employment, such as the right to demand performance by C.F. Sharp of its obligation under the contract. C.F. Sharp & Co. Inc. and John J. Rocha vs. Pioneer Insurance and Surety Corporation, et al., G.R. No. 179469, February 15, 2012.Forum shopping; elements; res judicata. For forum shopping to exist, it is necessary that (a) there be identity of parties or at least such parties that represent the same interests in both actions; (b) there be identity of rights asserted and relief prayed for, the relief being founded on the same facts; and (c) the identity of the two preceding particulars is such that any judgment rendered in one action will, regardless of which party is successful, amount to res judicata in the other action. Petitioners are correct as to the first two requisites of forum shopping. First, there is identity of parties involved: Negros Slashers Inc. and respondent Teng. Second, there is identity of rights asserted i.e., the right of management to terminate employment and the right of an employee against illegal termination. However, the third requisite of forum shopping is missing in this case. Any judgment or ruling of the Office of the Commissioner of the Metropolitan Basketball Association will not amount to res judicata. Res judicata is defined in jurisprudence as to have four basic elements: (1) the judgment sought to bar the new action must be final; (2) the decision must have been rendered by a court having jurisdiction over the subject matter and the parties; (3) the disposition of the case must be a judgment on the merits; and (4) there must be as between the first and second action, identity of parties, subject matter, and causes of action. Here, although contractually authorized to settle disputes, the Office of the Commissioner of the Metropolitan Basketball Association is not a court of competent jurisdiction as contemplated by law with respect to the application of the doctrine of res judicata. At best, the Office of the Commissioner of the Metropolitan Basketball Association is a private mediator or go-between as agreed upon by team management and a player in the Metropolitan Basketball Association Player’s Contract of Employment. Any judgment that the Office of the Commissioner of the Metropolitan Basketball Association may render will not result in a bar for seeking redress in other legal venues. Hence, respondent’s action of filing the same complaint in the Regional Arbitration Branch of the NLRC does not constitute forum shopping. Negros Slashers, Inc., Rodolfo C. Alvarez and Vicente Tan vs. Alvin L. Teng, G.R. No. 187122, February 22, 2012.Jurisdiction; NLRC. It is clear from the NLRC Rules of Procedure that appeals must be verified and certified against forum-shopping by the parties-in-interest themselves. The purpose of verification is to secure an assurance that the allegations in the pleading are true and correct and have been filed in good faith. In the case at bar, the parties-in-interest are petitioner Salenga, as the employee, and respondent Clark Development Corporation as the employer. A corporation can only exercise its powers and transact its business through its board of directors and through its officers and agents when authorized by a board resolution or its bylaws. The power of a corporation to sue and be sued is exercised by the board of directors. The physical acts of the corporation, like the signing of documents, can be performed only by natural persons duly authorized for the purpose by corporate bylaws or by a specific act of the board. Absent the requisite board resolution, neither Timbol-Roman nor Atty. Mallari, who signed the Memorandum of Appeal and Joint Affidavit of Declaration allegedly on behalf of respondent corporation, may be considered as the “appellant” and “employer” referred to by the NLRC Rules of Procedure. As such, the NLRC had no jurisdiction to entertain the appeal. Antonio B. Salenga, et al. vs. Court of Appeals, et al., G.R. No. 174941, February 1, 2012 .Labor; effect if procedural due process not followed but with a valid cause for termination. It is required that the employer furnish the employee with two written notices: (1) a written notice served on the employee specifying the ground or grounds for termination, and giving to said employee reasonable opportunity within which to explain his side; and (2) a written notice of termination served on the employee indicating that upon due consideration of all the circumstances, grounds have been established to justify his termination. The twin

requirements of notice and hearing constitute the elements of due process in cases of employee’s dismissal. The requirement of notice is intended to inform the employee concerned of the employer’s intent to dismiss and the reason for the proposed dismissal. Upon the other hand, the requirement of hearing affords the employee an opportunity to answer his employer’s charges against him and accordingly, to defend himself therefrom before dismissal is effected. Obviously, the second written notice, as indispensable as the first, is intended to ensure the observance of due process. In this case, there was only one written notice which required respondents to explain within five (5) days why they should not be dismissed from the service. Alcovendas was the only one who signed the receipt of the notice. The others, as claimed by Lynvil, refused to sign. The other employees argue that no notice was given to them. Despite the inconsistencies, what is clear is that no final written notice or notices of termination were sent to the employees. Due to the failure of Lynvil to follow the procedural requirement of two-notice rule, nominal damages in the amount of P50,000 were granted to Ariola, et al. despite their dismissal for just cause. Lynvil Fishing Enterprises, Inc. vs. Andres G. Ariola, et al., G.R. No. 181974, February 1, 2012 .Labor; liability of officers if termination is attended with bad faith. In labor cases, the corporate directors and officers are solidarily liable with the corporation for the termination of employment of employees done with malice or in bad faith. Indeed, moral damages are recoverable when the dismissal of an employee is attended by bad faith or fraud or constitutes an act oppressive to labor, or is done in a manner contrary to good morals, good customs or public policy. The term “bad faith” contemplates a “state of mind affirmatively operating with furtive design or with some motive of self-interest or will or for ulterior purpose.” The Supreme Court agreed with the ruling of both the NLRC and the Court of Appeals when they pronounced that there was no evidence on record that indicates commission of bad faith on the part of De Borja, the general manager of Lynvil, who was tasked with the supervision of the employees and the operation of the business. There is no proof that he imposed on Ariola, et al. the “por viaje” provision for purpose of effecting their summary dismissal. Lynvil Fishing Enterprises, Inc. vs. Andres G. Ariola, et al., G.R. No. 181974, February 1, 2012 .Labor; nature of employment; security of tenure. In the context of these facts — (1) Ariola, et al. were doing tasks necessary to Lynvil’s fishing business with positions ranging from captain of the vessel to bodegero; (2) after the end of a trip, they will again be hired for another trip with new contracts; and (3) this arrangement continued for more than ten years – the Court believed that Lynvil intended to go around the security of tenure of Ariola, et al. as regular employees. The Court held that by the express provisions of the second paragraph of Article 280 which cover casual employment, Ariola, et al. had become regular employees of Lynvil. Lynvil Fishing Enterprises, Inc. vs. Andres G. Ariola, et al., G.R. No. 181974, February 1, 2012 .Labor; procedural and substantive due process; grounds for valid termination; breach of trust. Just cause is required for a valid dismissal. The Labor Code provides that an employer may terminate an employment based on fraud or willful breach of the trust reposed on the employee. Such breach is considered willful if it is done intentionally, knowingly, and purposely, without justifiable excuse, as distinguished from an act done carelessly, thoughtlessly, heedlessly or inadvertently. It must also be based on substantial evidence and not on the employer’s whims or caprices or suspicions otherwise, the employee would eternally remain at the mercy of the employer. Loss of confidence must not be indiscriminately used as a shield by the employer against a claim that the dismissal of an employee was arbitrary. And, in order to constitute a just cause for dismissal, the act complained of must be work-related and shows that the employee concerned is unfit to continue working for the employer. In addition, loss of confidence as a just cause for termination of employment is premised on the fact that the employee concerned holds a position of responsibility, trust and confidence or that the employee concerned is entrusted with confidence in delicate matters, such as the handling or care and protection of the property and assets of the employer. The betrayal of this trust is the essence of the offense for which an employee is penalized. The Supreme Court found that breach of trust is present in this case, when Ariola (the captain), Alcovendas (Chief Mate), Calinao (Chief Engineer), Nubla (cook), Bañez (oiler), and Sebullen (bodegero) conspired with one another and stole “pampano” and “tangigue” fish and delivered them to another vessel, to the prejudice of Lynvil. Lynvil Fishing Enterprises, Inc. vs. Andres G. Ariola, et al.,G.R. No. 181974, February 1, 2012 .Labor; public prosecutor’s decision not binding on the labor tribunal. The Supreme Court has held in Nicolas v. National Labor Relations Commission [327 Phil. 883, 886-887 (1996)] that a criminal conviction is not necessary to find just cause for employment termination. Otherwise stated, an employee’s acquittal in a criminal case, especially one that is grounded on the existence of reasonable doubt, will not preclude a

determination in a labor case that he is guilty of acts inimical to the employer’s interests. In the reverse, the finding of probable cause is not followed by automatic adoption of such finding by the labor tribunals. In other words, whichever way the public prosecutor disposes of a complaint, the finding does not bind the labor tribunal. Lynvil contends that the filing of a criminal case before the Office of the Prosecutor is sufficient basis for a valid termination of employment based on serious misconduct and/or loss of trust and confidence. The Supreme Court held that Lynvil cannot argue that since the Office of the Prosecutor found probable cause for theft, the Labor Arbiter must follow the finding as a valid reason for the termination of respondents’ employment. The proof required for purposes that differ from one and the other are likewise different. Lynvil Fishing Enterprises, Inc. vs. Andres G. Ariola, et al., G.R. No. 181974, February 1, 2012 .Labor; regular employee; fixed-contract agreement, requisites for validity. Prior Supreme Court decisions have laid two conditions for the validity of a fixed-contract agreement between the employer and employee: First, 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 Second, 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. Lynvil contends that Ariola, et al. were employed under a fixed-term contract which expired at the end of the voyage. Contrarily, Ariola, et al. contend that they became regular employees by reason of their continuous hiring and performance of tasks necessary and desirable in the usual trade and business of Lynvil. Textually, the provision in the contract between Lynvil and Ariola, et al. that: “NA ako ay sumasang-ayon na maglingkod at gumawa ng mga gawain sang-ayon sa patakarang “por viaje” na magmumula sa pagalis sa Navotas papunta sa pangisdaan at pagbabalik sa pondohan ng lantsa sa Navotas, Metro Manila” is for a fixed period of employment. In the context, however, of the facts that: (1) Ariola, et al. were doing tasks necessarily to Lynvil’s fishing business with positions ranging from captain of the vessel to bodegero; (2) after the end of a trip, they will again be hired for another trip with new contracts; and (3) this arrangement continued for more than ten years, the clear intention is to go around the security of tenure of Ariola, et al. as regular employees. As such, the Supreme Court found that Ariola, et al. are regular employees. Lynvil Fishing Enterprises, Inc. vs. Andres G. Ariola, et al., G.R. No. 181974, February 1, 2012 .Labor Code; maximum award of attorney’s fees in cases of recovery of wages. Article 111 of the Labor Code provides for a maximum award of attorney’s fees in cases of recovery of wages:a. In cases of unlawful withholding of wages, the culpable party may be assessed attorney’s fees equivalent to ten percent of the amount of wages recovered.

b. It shall be unlawful for any person to demand or accept, in any judicial or administrative proceedings for the recovery of wages, attorney’s fees which exceed ten percent of the amount of wages recovered.

Since De Gracia, et al. had to secure the services of the lawyer to recover their unpaid salaries and protect their interest, attorney’s fees in the amount of ten percent (10%) of the total claims was imposed. Skippers United Pacific, Inc. and Skippers Maritime Services, Inc. Ltd. vs. Nathaniel Doza, et al.,G.R. No. 175558. February 8, 2012.Labor contracting; elements. There is labor-only contracting where: (a) 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 (b) the workers recruited and placed by such person are performing activities which are directly related to the principal business of the employer. In the present case, the Supreme Court found that both the capitalization requirement and the power of control on the part of Requiño are wanting. Generally, the presumption is that the contractor is 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, though Garden of Memories is not the contractor, it has the burden of proving that Requiño has sufficient capital or investment since it is claiming the supposed status of Requiño as independent contractor. Garden of Memories, however, failed to adduce evidence purporting to show that Requiño had sufficient capitalization. Neither did it show that she invested in the form of tools, equipment, machineries, work premises and other materials which are necessary in the completion of the service contract.Garden of Memories Park and Life Plan, Inc., et al. vs. NLRC, 2nd Div., et al., G.R. No. 160278, February 8, 2012.

Migrant Workers; RA No. 8042; money claims in cases of unjust termination. Section 10 of Republic Act No. 8042 (Migrant Workers Act) provides for money claims in cases of unjust termination of employment contracts:In case of termination of overseas employment without just, valid or authorized cause as defined by law or contract, the workers shall be entitled to the full reimbursement of his placement fee with interest of twelve percent (12%) per annum, plus his salaries for the unexpired portion of his employment contract or for three (3) months for every year of the unexpired term, whichever is less.

The Migrant Workers Act provides that salaries for the unexpired portion of the employment contract or three (3) months for every year of the unexpired term, whichever is less, shall be awarded to the overseas Filipino worker, in cases of illegal dismissal. However, in 24 March 2009,Serrano v. Gallant Maritime Services and Marlow Navigation Co. Inc. (G.R. No. 167614), the Court, in an En Banc Decision, declared unconstitutional the clause “or for three months for every year of the unexpired term, whichever is less” and awarded the entire unexpired portion of the employment contract to the overseas Filipino worker. On 8 March 2010, however, Section 7 of Republic Act No. 10022 (RA 10022) amended Section 10 of the Migrant Workers Act, and once again reiterated the provision of awarding the unexpired portion of the employent contract or three (3) months for every year of the unexpired term, whichever is less. Nevertheless, since the termination occurred on January 1999 before the passage of the amendatory RA 10022, the Supreme Court applied RA 8042, without touching on the constitutionality of Section 7 of RA 10022. The declaration in March 2009 of the unconstitutionality of the clause “or for three months for every year of the unexpired term, whichever is less” in RA 8042 shall be given retroactive effect to the termination that occurred in January 1999 because an unconstitutional clause in the law confers no rights, imposes no duties and affords no protection. The unconstitutional provision is inoperative, as if it was not passed into law at all. Skippers United Pacific, Inc. and Skippers Maritime Services, Inc. Ltd. vs. Nathaniel Doza, et al.,G.R. No. 175558. February 8, 2012 .NLRC; contempt powers. Under Article 218 the Labor Code, the NLRC (and the labor arbiters) may hold any offending party in contempt, directly or indirectly, and impose appropriate penalties in accordance with law. The penalty for direct contempt consists of either imprisonment or fine, the degree or amount depends on whether the contempt is against the Commission or the labor arbiter. The Labor Code, however, requires the labor arbiter or the Commission to deal with indirect contempt in the manner prescribed under Rule 71 of the Rules of Court. Rule 71 of the Rules of Court does not require the labor arbiter or the NLRC to initiate indirect contempt proceedings before the trial court. This mode is to be observed only when there is no law granting them contempt powers. As is clear under Article 218(d) of the Labor Code, the labor arbiter or the Commission is empowered or has jurisdiction to hold the offending party or parties in direct or indirect contempt. Robosa, et al., therefore, have not improperly brought the indirect contempt charges against the respondents before the NLRC. Federico S. Robosa, et al. vs. National Labor Relations Commission (First Division), et al., G.R. No. 176085, February 8, 2012.NLRC; factual findings. It is a well-entrenched rule that findings of facts of the NLRC, affirming those of the Labor Arbiter, are accorded respect and due consideration when supported by substantial evidence. The Supreme Court, however, found that the doctrine of great respect and finality has no application to the case at bar. The Labor Arbiter dismissed Arnaiz, et al.’s complaints on mere technicality. The NLRC, upon appeal, then came up with three divergent rulings. At first, it remanded the case to the Labor Arbiter. However, in a subsequent resolution, it decided to resolve the case on the merits by ruling that Arnaiz, et al. were constructively dismissed. But later on, it again reversed itself in its third and final resolution of the case and ruled in favor of Julie’s bakeshop. Therefore, contrary to Reyes’s claim, the NLRC did not, on any occasion, affirm any factual findings of the Labor Arbiter. The Court of Appeals is thus correct in reviewing the entire records of the case to determine which findings of the NLRC is sound and in accordance with law. Besides, the Court of Appeals may still resolve factual issues by express mandate of the law despite the respect given to administrative findings of fact. Julie’s Bakeshop and/or Edgar Reyes vs. Henry Arnaiz, et al., G.R. No. 173882, February 15, 2012.Probationary employee; valid cause for dismissal but without procedural due process; employee entitled to nominal damages. Section 2, Rule I, Book VI of the Labor Code’s Implementing Rules and Regulations provides: “If the termination is brought about by the completion of a contract or phase thereof, or by failure of an employee to meet the standards of the employer in the case of probationary employment, it shall be

sufficient that a written notice is served the employee within a reasonable time from the effective date of termination.” Dalangin was hired by Canadian Opportunities as Immigration and Legal Manager, subject to a probationary period of six months. One month after hiring Dalangin, the company terminated his employment, declaring him “unfit” and “unqualified” to continue as Immigration and Legal Manager, for reasons which included obstinacy and utter disregard of company policies. Propensity to take prolonged and extended lunch breaks, shows no interest in familiarizing oneself with the policies and objectives, lack of concern for the company’s interest despite having just been employed in the company (Declined to attend company sponsored activities, seminars intended to familiarize company employees with Management objectives and enhancement of company interest and objectives), lack of enthusiasm toward work, and lack of interest in fostering relationship with his co-employees. The company contends that it complied with the rule on procedural due process when it asked Dalangin, through a Memorandum, to explain why he could not attend the seminar. When he failed to submit his explanation, the company served him a notice the following day terminating his employment. According to the Supreme Court, the notice to Dalangin was not served within a reasonable time from the effective date of his termination as required by the rules since he was dismissed on the very day the notice was given to him. However, because of the existence of a valid cause for termination, the Supreme Court did not invalidate his dismissal but penalized the company for its non-compliance with the notice requirement, and ordered the company to pay an indemnity, in the form of nominal damages amounting to P10,000. Canadian Opportunities Unlimited, Inc. vs. Bart Q. Dalangin, Jr., G.R. No. 172223, February 6, 2012.Probationary employee; valid dismissal even before 6 months. The essence of a probationary period of employment fundamentally lies in the purpose or objective of both the employer and the employee during the period. While the employer observes the fitness, propriety and efficiency of a probationer to ascertain whether he is qualified for permanent employment, the latter seeks to prove to the former that he has the qualifications to meet the reasonable standards for permanent employment. The “trial period” or the length of time the probationary employee remains on probation depends on the parties’ agreement, but it shall not exceed six (6) months under Article 281 of the Labor Code. The Supreme Court found substantial evidence indicating that the company was justified in terminating Dalangin’s probationary employment. Dalangin admitted in compulsory arbitration that the proximate cause for his dismissal was his refusal to attend the company’s “Values Formation Seminar” scheduled for October 27, 2001, a Saturday. He refused to attend the seminar after he learned that it had no relation to his duties, as he claimed, and that he had to leave at 2:00 p.m. because he wanted to be with his family in the province. When the Chief Operations Officer, insisted that he attend the seminar to encourage his co-employees to attend, he stood pat on not attending, arguing that marked differences exist between their positions and duties, and insinuating that he did not want to join the other employees. He also questioned the scheduled 2:00 p.m. seminars on Saturdays as they were not supposed to be doing a company activity beyond 2:00 p.m. He considers 2:00 p.m. as the close of working hours on Saturdays; thus, holding them beyond 2:00 p.m. would be in violation of the law. This incident reveals Dalangin’s lack of interest in establishing a good working relationship with his co-employees, especially the rank and file; he did not want to join them because of his view that the seminar was not relevant to his position and duties. It also betrays his arrogant and condescending attitude towards his co-employees, and a lack of support for the company objective. Dalangin also exhibited negative working habits, particularly with respect to the one hour lunch break policy of the company and the observance of the company’s working hours. Dalangin would take prolonged lunch breaks or would go out of the office – without leave of the company – and call the personnel manager later only to say that he would be unable to return to the office because of some personal matters he needs to attend to. Canadian Opportunities Unlimited, Inc. vs. Bart Q. Dalangin, Jr., G.R. No. 172223, February 6, 2012 .Procedural rules; liberal application. Ordinarily, rules of procedure are strictly enforced by courts in order to impart stability in the legal system. However, in not a few instances, the Supreme Court has relaxed the rigid application of the rules of procedure to afford the parties the opportunity to fully ventilate their cases on the merits. This is in line with the time honored principle that cases should be decided only after giving all the parties the chance to argue their causes and defenses. In that way, the ends of justice would be better served. For indeed, the general objective of procedure is to facilitate the application of justice to the rival claims of contending parties, bearing always in mind that procedure is not to hinder but to promote the administration of

justice. In Ong Lim Sing, Jr. v. FEB Leasing and Finance Corporation (G.R. No. 168115, June 8, 2007), the Supreme Court ruled:Courts have the prerogative to relax procedural rules of even the most mandatory character, mindful of the duty to reconcile both the need to speedily put an end to litigation and the parties’ right to due process. In numerous cases, this Court has allowed liberal construction of the rules when to do so would serve the demands of substantial justice and equity. x x x

Indeed the prevailing trend is to accord party litigants the amplest opportunity for the proper and just determination of their causes, free from the constraints of needless technicalities. In this case, besides the fact that a denial of the recourse to the Court of Appeals would serve more to perpetuate an injustice and violation of Teng’s rights under our labor laws, the Supreme Court found that as correctly held by the Court of Appeals, no intent to delay the administration of justice could be attributed to Teng. The Court of Appeals therefore did not commit reversible error in excusing Teng’s one-day delay in filing his motion for reconsideration and in giving due course to his petition for certiorari. Negros Slashers, Inc., Rodolfo C. Alvarez and Vicente Tan vs. Alvin L. Teng, G.R. No. 187122, February 22, 2012.Reinstatement; backwages. Employees who are illegally dismissed are entitled to full backwages, inclusive of allowances and other benefits or their monetary equivalent, computed from the time their actual compensation was withheld from them up to the time of their actual reinstatement. But if reinstatement is no longer possible, the backwages shall be computed from the time of their illegal termination up to the finality of the decision. Thus, when there is an order of reinstatement, the computation of backwages shall be reckoned from the time of illegal dismissal up to the time that the employee is actually reinstated to his former position. Pursuant to the order of reinstatement rendered by the Labor Arbiter, the Bank of Lubao sent Manabat a letter requiring him to report back to work on May 4, 2007. Notwithstanding the said letter, Manabat opted not to report for work. Thus, it is but fair that the backwages to be awarded to Manabat should be computed from the time that he was illegally dismissed until the time when he was required to report for work, i.e. from September 1, 2005 until May 4, 2007. Bank of Lubao, Inc. vs. Rommel J. Manabat, et al., G.R. No. 188722, February 1, 2012 .Reinstatement; doctrine of strained relations; when applicable. Under the law and prevailing jurisprudence, an illegally dismissed employee is entitled to reinstatement as a matter of right. However, if reinstatement would only exacerbate the tension and strained relations between the parties, or where the relationship between the employer and the employee has been unduly strained by reason of their irreconcilable differences, particularly where the illegally dismissed employee held a managerial or key position in the company, it would be more prudent to order payment of separation pay instead of reinstatement. Under the doctrine of strained relations, the payment of separation pay is considered an acceptable alternative to reinstatement when the latter option is no longer desirable or viable. On one hand, such payment liberates the employee from what could be a highly oppressive work environment. On the other hand, it releases the employer from the grossly unpalatable obligation of maintaining in its employ a worker it could no longer trust. In such cases, it should be proved that the employee concerned occupies a position where he enjoys the trust and confidence of his employer; and that it is likely that if reinstated, an atmosphere of antipathy and antagonism may be generated as to adversely affect the efficiency and productivity of the employee concerned. In the present case, the Supreme Court found that the relations between the parties had been already strained thereby justifying the grant of separation pay in lieu of reinstatement in favor of Manabat. Manabat’s reinstatement to his former position would only serve to intensify the atmosphere of antipathy and antagonism between the parties. Undoubtedly, Bank of Lubao’s filing of various criminal complaints against Manabat for qualified theft and the subsequent filing by the latter of the complaint for illegal dismissal against the former, taken together with the pendency of the instant case for more than six years, had caused strained relations between the parties. Considering that Manabat’s former position as bank encoder involves the handling of accounts of the depositors of the Bank of Lubao, it would not be equitable on the part of the Bank of Lubao to be ordered to maintain the former in its employ since it may only inspire vindictiveness on the part of Manabat. Also, the refusal of Manabat to return to work is in itself an indication of the existence of strained relations between him and the petitioner.Bank of Lubao, Inc. vs. Rommel J. Manabat, et al., G.R. No. 188722, February 1, 2012 .Seafarers; employment contract; perfection stage vs. commencement stage. An employment contract, like any other contract, is perfected at the moment (1) the parties come to agree upon its terms; and (2) concur in the essential elements thereof: (a) consent of the contracting parties, (b) object certain which is the subject matter

of the contract, and (c) cause of the obligation. The object of the contract was the rendition of service by Fantonial on board the vessel for which service he would be paid the salary agreed upon. In this case, the employment contract was perfected on January 15, 2000 when it was signed by the parties who entered into the contract in behalf of their principal. However, the employment relationship never commenced since Fantonial was not allowed to leave on January 17, 2000 and go on board the vessel M/V AUK in Germany on the ground that he was not yet declared fit to work on the day of his scheduled departure. But, even if no employer-employee relationship commenced, there was, contemporaneous with the perfection of the employment contract, the birth of certain rights and obligations, the breach of which may give rise to a cause of action against the erring party. Bright Maritime Corporation (BMC) / Desiree P. Tenorio vs. Ricardo B. Fantonial, G.R. No. 165935, February 8, 2012 .

March 2012 Philippine Supreme Court Decisions on Labor Law and ProcedurePosted on April 20, 2012 by Leslie C. Dy • Posted in Labor Law, Philippines - Cases, Philippines - Law • Tagged Department of Labor and Employment, dismissal, illegal strike, loss of trust and confidence, probationary employment, project employee •Here are select March 2012 rulings of the Supreme Court of the Philippines on labor law and procedure.

Dismissal; constructive dismissal. Constructive dismissal exists where there is cessation of work because continued employment is rendered impossible, unreasonable or unlikely, as an offer involving a demotion in rank and a diminution in pay. Constructive dismissal is a dismissal in disguise or an act amounting to dismissal but made to appear as if it were not. In constructive dismissal cases, the employer is, concededly, charged with the burden of proving that its conduct and action or the transfer of an employee are for valid and legitimate grounds such as genuine business necessity. In the instant case, the overt act relied upon by petitioner is not only a doubtful occurrence but is, if it did transpire, even consistent with the dismissal from employment posited by the respondent. The factual appraisal of the Court of Appeals is correct. Petitioner was displeased after incurring expenses for respondent’s medical check-up and, it is credible that, thereafter, respondent was prevented entry into the work premises. This is tantamount to constructive dismissal. The Supreme Court agreed with the Court of Appeals that the incredibility of petitioner’s submission about abandonment of work renders credible the position of respondent that she was prevented from entering the property. This was even corroborated by the affidavits of Siarot and Mendoza which were made part of the records of this case. Ma. Melissa A. Galang vs. Julia Malasuqui, G.R. No. 174173. March 7, 2012.Dismissal; loss of trust and confidence. The rule is long and well settled that, in illegal dismissal cases like the one at bench, the burden of proof is upon the employer to show that the employee’s termination from service is for a just and valid cause. The employer’s case succeeds or fails on the strength of its evidence and not on the weakness of that adduced by the employee, in keeping with the principle that the scales of justice should be tilted in favor of the latter in case of doubt in the evidence presented by them. Often described as more than a mere scintilla, the quantum of proof is substantial evidence which is understood as such relevant evidence as a reasonable mind might accept as adequate to support a conclusion, even if other equally reasonable minds might conceivably opine otherwise. Failure of the employer to discharge the foregoing onus would mean that the dismissal is not justified and therefore illegal.In the case at bar, the Supreme Court agreed with the petitioners that mere substantial evidence and not proof beyond reasonable doubt is required to justify the dismissal from service of an employee charged with theft of company property. However, the Court found no error in the CA’s findings that the petitioners had not adequately proven by substantial evidence that Arlene and Joseph indeed participated or cooperated in the commission of theft relative to the six missing intensifying screens so as to justify the latter’s termination from employment on the ground of loss of trust and confidence. Blue Sky Trading Company, Inc. et al. vs. Arlene P. Blas and Joseph D. Silvano,G.R. No. 190559. March 7, 2012.Dismissal; probationary employees. Gala insists that he cannot be sanctioned for the theft of company property on May 25, 2006. He maintains that he had no direct participation in the incident and that he was not aware

that an illegal activity was going on as he was at some distance from the trucks when the alleged theft was being committed. He adds that he did not call the attention of the foremen because he was a mere lineman and he was focused on what he was doing at the time. He argues that in any event, his mere presence in the area was not enough to make him a conspirator in the commission of the pilferage.Gala misses the point. He forgets that as a probationary employee, his overall job performance and his behavior were being monitored and measured in accordance with the standards (i.e., the terms and conditions) laid down in his probationary employment agreement. Under paragraph 8 of the agreement, he was subject to strict compliance with, and non-violation of the Company Code on Employee Discipline, Safety Code, rules and regulations and existing policies. Par. 10 required him to observe at all times the highest degree of transparency, selflessness and integrity in the performance of his duties and responsibilities, free from any form of conflict or contradicting with his own personal interest. Manila Electric Company vs. Jan Carlo Gala, G.R. No. 191288. March 7, 2012.Dismissal; relief of illegally dismissed employee. An illegally dismissed employee is entitled to two reliefs: back wages and reinstatement. The two reliefs provided are separate and distinct. In instances where reinstatement is no longer feasible because of strained relations between the employee and the employer, separation pay is granted. In effect, an illegally dismissed employee is entitled to either reinstatement if such is viable, or separation pay if reinstatement is no longer viable, and to back wages. The normal consequences of respondent’s illegal dismissal, then, are reinstatement without loss of seniority rights, and payment of back wages computed from the time compensation was withheld from him up to the date of actual reinstatement. Where reinstatement is no longer viable as an option, separation pay equivalent to one month salary for every year of service should be awarded as an alternative. The payment of separation pay is in addition to payment of back wages.Petitioners question the CA Resolution dated October 24, 2008, arguing that it modified its March 31, 2008 Decision which has already attained finality insofar as respondent is concerned. Such contention is misplaced. The CA merely clarified the period of payment of back wages and separation pay up to the finality of its decision (March 31, 2008) modifying the Labor Arbiter’s decision. In view of the modification of monetary awards in the Labor Arbiter’s decision, the time frame for the payment of back wages and separation pay is accordingly modified to the finality of the CA decision. Norkis Distribution, Inc., et al. vs. Delfin S. Descallar, G.R. No. 185255. March 14, 2012Employees; project vs. regular 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.In a number of cases, the Court has held that the length of service or the re-hiring of construction workers on a project-to-project basis does not confer upon them regular employment status, since their re-hiring is only a natural consequence of the fact that experienced construction workers are preferred. Employees who are hired for carrying out a separate job, distinct from the other undertakings of the company, the scope and duration of which has been determined and made known to the employees at the time of the employment are properly treated as project employees and their services may be lawfully terminated upon the completion of a project. Should the terms of their employment fail to comply with this standard, they cannot be considered project employees.

Applying the above disquisition, the Court agreed with the findings of the CA that petitioners were project employees. It is not disputed that petitioners were hired for the construction of the Cordova Reef Village Resort in Cordova, Cebu. By the nature of the contract alone, it is clear that petitioners’ employment was to carry out a specific project. Wilfredo Aro, Ronilo Tirol, et al. vs. NLRC, Fourth Division, et al., G.R. No. 174792. March 7, 2012.Jurisdiction; power of the DOLE to determine the existence of employer-employee relationship. If a complaint is filed with the DOLE, and it is accompanied by a claim for reinstatement, the jurisdiction is properly with the Labor Arbiter, under Art. 217(3) of the Labor Code, which provides that the Labor Arbiter has original and exclusive jurisdiction over those cases involving wages, rates of pay, hours of work, and other terms and conditions of employment, if accompanied by a claim for reinstatement.

In the present case, the finding of the DOLE Regional Director that there was an employer-employee relationship has been subjected to review by the Supreme Court, with the finding being that there was no employer-employee relationship between petitioner and private respondent, based on the evidence presented. The DOLE had no jurisdiction over the case, as there was no employer-employee relationship present. Thus, the dismissal of the complaint against petitioner is proper. People’s Broadcasting Service (Bombo Rado Phils., Inc.) vs. The Secretary of the Dept. of Labor & Employment, et al. G.R. No. 179652. March 6, 2012.Management prerogative; resignation of employees running for public office. The Supreme Court has consistently held that so long as a company’s management prerogatives 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, the Court will uphold them. In the instant case, ABS-CBN validly justified the implementation of Policy No. HR-ER-016. It is well within its rights to ensure that it maintains its objectivity and credibility and freeing itself from any appearance of impartiality so that the confidence of the viewing and listening public in it will not be in any way eroded. Even as the law is solicitous of the welfare of the employees, it must also protect the right of an employer to exercise what are clearly management prerogatives. The free will of management to conduct its own business affairs to achieve its purpose cannot be denied. Ernesto Ymbong vs. ABS-CBN Broadcasting Corporation, Veranda Sy & Dante Luzon, G.R. No. 184885. March 7, 2012.Separation pay; payment to those who participated in illegal strikes. Separation pay may be given as a form of financial assistance when a worker is dismissed in cases such as the installation of labor-saving devices, redundancy, retrenchment to prevent losses, closing or cessation of operation of the establishment, or in case the employee was found to have been suffering from a disease such that his continued employment is prohibited by law. It is a statutory right defined as the amount that an employee receives at the time of his severance from the service and is designed to provide the employee with the wherewithal during the period that he is looking for another employment. It is oriented towards the immediate future, the transitional period the dismissed employee must undergo before locating a replacement job. As a general rule, when just causes for terminating the services of an employee exist, the employee is not entitled to separation pay because lawbreakers should not benefit from their illegal acts. The rule, however, is subject to exceptions.Here, not only did the Court declare the strike illegal, rather, it also found the Union officers to have knowingly participated in the illegal strike. Worse, the Union members committed prohibited acts during the strike. Thus, as the Court has concluded in other cases it has previously decided, such Union officers are not entitled to the award of separation pay in the form of financial assistance. C. Alcantara & Sons, Inc. vs. Court of Appeals, et al./Nagkahiusang Mamumuo sa Alsons-SPFL, et al. vs. C. Alcantara & Sons, Inc., et al./Nagkahiusang Mamumuo sa Alsons-SPFL, et al. vs. C. Alcantara & Sons, Inc., et al. G.R. No. 155109/G.R. No. 155135/G.R. No. 179220. March 14, 2012.

April 2012 Philippine Supreme Court Decisions on Labor Law and ProcedurePosted on May 10, 2012 by Leslie C. Dy • Posted in Labor Law, Philippines - Cases, Philippines - Law • Tagged dismissal, due process, employer-employee relationship, probationary employment, project employee, retrenchment •Here are select April 2012 rulings of the Supreme Court of the Philippines on labor law and procedure:

Dismissal; due process. When the Labor Code speaks of procedural due process, the reference is usually to the two (2)-written notice rule envisaged in Section 2 (III), Rule XXIII, Book V of the Omnibus Rules Implementing the Labor Code. MGG Marine Services, Inc. v. NLRC tersely described the mechanics of what may be considered a two-part due process requirement which includes the two-notice rule, “x x x one, of the intention to dismiss, indicating therein his acts or omissions complained against, and two, notice of the decision to dismiss; and an opportunity to answer and rebut the charges against him, in between such notices.”Here, the first and second notice requirements have not been properly observed. The adverted memo would have had constituted the “charge sheet,” sufficient to answer for the first notice requirement, but for the fact

that there is no proof such letter had been sent to and received by him. Neither was there compliance with the imperatives of a hearing or conference. Suffice it to point out that the record is devoid of any showing of a hearing or conference having been conducted. And the written notice of termination itself did not indicate all the circumstances involving the charge to justify severance of employment. For violating petitioner’s right to due process, the Supreme Court ordered the payment to petitioner of the amount of P30,000 as nominal damages. Armando Ailing vs. Jose B. Feliciano, Manuel F. San Mateo III, et al., G.R. No. 185829. April 25, 2012.Dismissal; just cause. 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. The fact of the matter is that the alleged imposition of the quota was a desperate attempt to lend a semblance of validity to Aliling’s illegal dismissal. Armando Ailing vs. Jose B. Feliciano, Manuel F. San Mateo III, et al., G.R. No. 185829. April 25, 2012.Dismissal; retrenchment. 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.

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. As for the notice requirement, however, 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. 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 (citing Philippine National Bank v. Cabansag, G.R. No. 157010, June 21, 2005, 460 SCRA 514, 518 and Royal Crown Internationale v. NLRC, G.R. No. 78085, October 16, 1989, 178 SCRA 569.) International Management Services/Marilyn C. Pascual vs. Roel P. Logarta, G.R. No. 163657, April 18, 2012.Employee; probationary employee. The aforequoted Section 6 of the Implementing Rules of Book VI, Rule VIII-A of the Code specifically requires the employer to inform the probationary employee of such reasonable

standards at the time of his engagement, not at any time later; else, the latter shall be considered a regular employee. Thus, pursuant to the explicit provision of Article 281 of the Labor Code, Section 6(d) of the Implementing Rules of Book VI, Rule VIII-A of the Labor Code and settled jurisprudence, petitioner Aliling is deemed a regular employee as of June 11, 2004, the date of his employment contract.The letter-offer to Aliling states that the regularization standards or the performance norms to be used are still to be agreed upon by him and his supervisor. Moreover, Aliling was assigned to GX trucking sales, an activity entirely different to the Seafreight Sales for which he was originally hired and trained for. In the present case, there was no proof that Aliling was informed of the standards for his continued employment, such as the sales quota, at the time of his engagement. Armando Ailing vs. Jose B. Feliciano, Manuel F. San Mateo III, et al., G.R. No. 185829. April 25, 2012.Employee; separation package. Article 283 of the Labor Code provides only the required minimum amount of separation pay, which employees dismissed for any of the authorized causes are entitled to receive. Employers, therefore, have the right to create plans, providing for separation pay in an amount over and above what is imposed by Article 283. There is nothing therein that prohibits employers and employees from contracting on the terms of employment, or from entering into agreements on employee benefits, so long as they do not violate the Labor Code or any other law, and are not contrary to morals, good customs, public order, or public policy.Consequently, petitioners are not allowed to receive separation pay from both the Labor Code, on the one hand, and the New Gratuity Plan and the SSP, on the other, they would receive double compensation for the same cause (i.e., separation from the service due to redundancy). Ma. Corina C. Jiao, et al. vs. Global Business Bank, Inc., et al., G.R. No. 182331, April 18, 2012.Employer-employee relationship. In determining the presence or absence of an employer-employee relationship, the Court has consistently looked for the following incidents, to wit: (a) the selection and engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and (d) the employer’s power to control the employee on the means and methods by which the work is accomplished. The last element, the so-called control test, is the most important element.It can be deduced from the March 1996 affidavit of petitioner that respondents challenged his authority to deliver some 158 checks to SFC. Considering that petitioner contested respondents’ challenge by pointing to the existing arrangements between BCC and SFC, it should be clear that respondents did not exercise the power of control over petitioner, because he thereby acted for the benefit and in the interest of SFC more than of BCC. Charlie Jao vs. BCC Products Sales, Inc. and Terrance Ty, G.R. No. 163700, April 18, 2012.Project employee; conversion into regular employee. In all the 38 projects where DMCI engaged Jamin’s services, the tasks he performed as a carpenter were indisputably necessary and desirable in DMCI’s construction business. He might not have been a member of a work pool since DMCI insisted that it does not maintain a work pool, but his continuous rehiring in 38 projects over a period of 31 years and the nature of his work unmistakably made him a regular employee. In Maraguinot, Jr. v. NLRC, 348 Phil. 580 (1998), the Court held that once a project or work pool employee has been: (1) continuously, as opposed to intermittently, rehired by the same employer for the same tasks or nature of tasks; and (2) these tasks are vital, necessary and indispensable to the usual business or trade of the employer, then the employee must be deemed a regular employee.Surely, length of time is not the controlling test for project employment but it is vital in determining if the employee was hired for a specific undertaking or if it is tasked to perform functions vital, necessary and indispensable to the usual business or trade of the employer. Here, [private] respondent had been a project employee several times over. The nature of his employment ceased to be project-based when he was repeatedly re-hired due to the demands of petitioner’s business.D.M. Consunji, Inc. and/or David M. Consunji vs. Estelito, G.R. No. 192514, April 18, 2012.Dismissal; willful disobedience. For willful disobedience to be a valid cause for dismissal, these two elements must concur: (1) the employee’s assailed conduct must have been willful, that is, characterized by a wrongful and perverse attitude; and (2) the order violated must have been reasonable, lawful, made known to the employee, and must pertain to the duties which he had been engaged to discharge.The petitioner’s arbitrary defiance to Graphics, Inc.’s order for him to render overtime work constitutes willful disobedience. Because of his refusal to render overtime work, the company failed to meet its printing deadlines, resulting in losses to the company. The Supreme Court took into account the fact that petitioner was

inclined to absent himself and to report late for work despite being previously penalized, and affirmed the CA’s ruling that the petitioner is indeed utterly defiant of the lawful orders and the reasonable work standards prescribed by his employer. The Court reiterated its previous rulings stating that an employer has the right to require the performance of overtime service in any of the situations contemplated under Article 89 of the Labor Code and an employee’s non-compliance is willful disobedience. Realda v. New Age Graphics, Inc. et. al. G.R. No. 192190, April 25, 2012.Dismissal; inefficiency. The petitioner’s failure to observe Graphics, Inc.’s work standards constitutes inefficiency that is a valid cause for dismissal. 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 alloted reasonable period, or by producing unsatisfactory results. As the operator of Graphics, Inc.’s printer, he is mandated to check whether the colors that would be printed are in accordance with the client’s specifications and for him to do so, he must consult the General Manager and the color guide used by Graphics, Inc. before making a full run. The employee in this case failed to observe this simple procedure and proceeded to print without making sure that the colors were at par with the client’s demands. This resulted to delays in the delivery of output, client dissatisfaction, and additional costs to Graphics, Inc.. Realda v. New Age Graphics, Inc. et. al. G.R. No. 192190, April 25, 2012.Dismissal; due process. In King of Kings Transport, Inc. v. Mamac, this Court laid down the manner by which the procedural due requirements of due process can be satisfied:(1) The first written notice to be served on the employees should contain the specific causes or grounds for termination against them, and a directive that the employees are given the opportunity to submit their written explanation within a reasonable period. “Reasonable opportunity” under the Omnibus Rules means every kind of assistance that management must accord to the employees to enable them to prepare adequately for their defense. This should be construed as a period of at least five (5) calendar days from receipt of the notice to give the employees an opportunity to study the accusation against them, consult a union official or lawyer, gather data and evidence, and decide on the defenses they will raise against the complaint. Moreover, in order to enable the employees to intelligently prepare their explanation and defenses, the notice should contain a detailed narration of the facts and circumstances that will serve as basis for the charge against the employees. A general description of the charge will not suffice. Lastly, the notice should specifically mention which company rules, if any, are violated and/or which among the grounds under Art. 282 is being charged against the employees.(2) After serving the first notice, the employers should schedule and conduct a hearing orconference wherein the employees will be given the opportunity to: (a) explain and clarify their defenses to the charge against them; (b) present evidence in support of their defenses; and (c) rebut the evidence presented against them by the management. During the hearing or conference, the employees are given the chance to defend themselves personally, with the assistance of a representative or counsel of their choice. Moreover, this conference or hearing could be used by the parties as an opportunity to come to an amicable settlement.(3) After determining that termination of employment is justified, the employers shall serve the employees a written notice of termination indicating that: (1) all circumstances involving the charge against the employees have been considered; and (2) grounds have been established to justify the severance of their employment.Graphics, Inc. failed to afford the petitioner with a reasonable opportunity to be heard and defend itself. An administrative hearing set on the same day that the petitioner received the memorandum and the 24-hour period given to him to submit a written explanation is far from reasonable. Furthermore, there is no indication that Graphics, Inc. issued a second notice, informing the petitioner of his dismissal. Graphics, Inc. admitted that it decided to terminate the petitioner’s employment when he ceased to report for work after being served with 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. Notwithstanding the existence of a just cause to terminate petitioner’s employment, respondent was ordered to pay P30,000 as nominal damages for violation of the employee’s right to due process. Realda v. New Age Graphics, Inc. et. al. G.R. No. 192190, April 25, 2012.

Dismissal; willful disobedience. Willful disobedience requires the concurrence of two elements: (1) the employee’s assailed conduct must have been willful, that is, characterized by a wrongful and perverse attitude; and (2) the order violated must have been reasonable, lawful, made known to the employee, and must pertain to the duties which he had been engaged to discharge. Both elements are present in this case.First, at no point did the dismissed employees deny Kingspoint Express’ claim that they refused to comply with the directive for them to submit to a drug test or, at the very least, explain their refusal. This gives rise to the impression that their non-compliance is deliberate. The utter lack of reason or justification for their insubordination indicates that it was prompted by mere obstinacy, hence, willful thereby justifying their dismissal. Second, that the company’s order to undergo a drug test is necessary and relevant in the performance of petitioners’ functions as drivers of Kingspoint Express is obvious. As the NLRC correctly pointed out, drivers are indispensable to Kingspoint Express’ primary business of rendering door-to-door delivery services. It is common knowledge that the use of dangerous drugs has adverse effects on driving abilities that may render employees incapable of performing their duties. Not only are they acting against the interests of Kingspoint Express, they also pose a threat to the public. Kakampi and its members, et al. v. Kingspoint Express and Logistic and/or Mary Ann Co, G.R. No. 194813, April 25, 2012.Dismissal; procedural due process requirements. While Kingspoint Express had reason to sever petitioners’ employment, this Court finds its supposed observance of the requirements of procedural due process pretentious. While Kingspoint Express required the dismissed employees to explain their refusal to submit to a drug test, the two (2) days afforded to them to do so cannot qualify as “reasonable opportunity”, which the Court construed in King of Kings Transport, Inc. v. Mamac as a period of at least five (5) calendar days from receipt of the notice.Thus, even if a just cause exists for the dismissal of petitioners, Kingspoint Express is still liable to indemnify the dismissed employees, with the exception of Panuelos, Dizon and Dimabayao, who did not appeal the dismissal of their complaints, with nominal damages in the amount of P30,000.00.Kakampi and its members, et al. v. Kingspoint Express and Logistic and/or Mary Ann Co, G.R. No. 194813, April 25, 2012.

June 2012 Philippine Supreme Court Decisions on Labor Law and ProcedurePosted on July 20, 2012 by Leslie C. Dy • Posted in Labor Law • Tagged abandonment, appeal, attorney's fees, damages,dismissal, due process, independent contractor, jurisdiction, loss of trust and confidence, NLRC, reinstatement,retirement, retrenchment •Here are select June 2012 rulings of the Supreme Court of the Philippine on labor law and procedure:

Appeal; issue of employer-employee relationship raised for the first time on appeal. It is a fundamental rule of procedure that higher courts are precluded from entertaining matters neither alleged in the pleadings nor raised during the proceedings below, but ventilated for the first time only in a motion for reconsideration or on appeal. The alleged absence of employer-employee relationship cannot be raised for the first time on appeal. The resolution of this issue requires the admission and calibration of evidence and the LA and the NLRC did not pass upon it in their decisions. Petitioner is bound by its submissions that respondent is its employee and it should not be permitted to change its theory. Such change of theory cannot be tolerated on appeal, not on account of the strict application of procedural rules, but as a matter of fairness. Duty Free Philippines Services, Inc. vs. Manolito Q. Tria. G.R. No. 174809. June 27, 2012 .Dismissal; abandonment. Abandonment cannot be inferred from the actuations of respondent. When he discovered that his time card was off the rack, he immediately inquired from his supervisor. He later sought the assistance of his counsel, who wrote a letter addressed to Polyfoam requesting that he be re-admitted to work. When said request was not acted upon, he filed the instant illegal dismissal case. These circumstances clearly negate the intention to abandon his work. Polyfoam-RGC International, Corporation and Precilla A. Gramaje vs. Edgardo Concepcion. G.R. No. 172349, June 13, 2012 .Dismissal; due process. To meet the requirements of due process in the dismissal of an employee, an employer must furnish the worker with two written notices: (1) a written notice specifying the grounds for termination

and giving to said employee a reasonable opportunity to explain his side and (2) another written notice indicating that, upon due consideration of all circumstances, grounds have been established to justify the employer’s decision to dismiss the employee. The law does not require that an intention to terminate one’s employment should be included in the first notice. It is enough that employees are properly apprised of the charges brought against them so they can properly prepare their defenses. It is only during the second notice that the intention to terminate one’s employment should be explicitly stated.The guiding principles in connection with the hearing requirement in dismissal cases are the following:

1. “Ample opportunity to be heard” means any meaningful opportunity (verbal or written) given to the employee to answer the charges against him and submit evidence in support of his defense, whether in a hearing, conference or some other fair, just and reasonable way.

2. A formal hearing or conference becomes mandatory only when requested by the employee in writing or substantial evidentiary disputes exist or a company rule or practice requires it, or when similar circumstances justify it.

3. The “ample opportunity to be heard” standard in the Labor Code prevails over the “hearing or conference” requirement in the implementing rules and regulations.

The existence of an actual, formal “trial-type” hearing, although preferred, is not absolutely necessary to satisfy the employee’s right to be heard. Esguerra was able to present her defenses; and only upon proper consideration of it did Valle Verde send the second memorandum terminating her employment. Since Valle Verde complied with the two-notice requirement, no procedural defect exists in Esguerra’s termination. Dolores T. Esguerra vs. Valle Verde Country Club, Inc. and Ernesto Villaluna. G.R. No. 173012, June 13, 2012. Dismissal; loss of trust and confidence. There are two (2) classes of positions of trust. The first class consists of managerial employees, or those vested with the power to lay down management policies; and the second class consists of cashiers, auditors, property custodians or those who, in the normal and routine exercise of their functions, regularly handle significant amounts of money or property. Esguerra held the position of Cost Control Supervisor and had the duty to remit to the accounting department the cash sales proceeds from every transaction she was assigned to. This is not a routine task that a regular employee may perform; it is related to the handling of business expenditures or finances. For this reason, Esguerra occupies a position of trust and confidence – a position enumerated in the second class of positions of trust. Any breach of the trust imposed upon her can be a valid cause for dismissal.Loss of confidence as a just cause for termination of employment can be invoked when an employee holds a position of responsibility, trust and confidence. In order to constitute a just cause for dismissal, the act complained of must be related to the performance of the duties of the dismissed employee and must show that he or she is unfit to continue working for the employer for violation of the trust reposed in him or her. It was Esguerra’s responsibility to account for the cash proceeds; in case of problems, she should have promptly reported it, regardless of who was at fault. Instead, she settled the unaccounted amount only after the accounting department informed her about the discrepancy, almost one month following the incident. Esguerra’s failure to make the proper report reflects her irresponsibility in the custody of cash for which she was accountable. Dolores T. Esguerra vs. Valle Verde Country Club, Inc. and Ernesto Villaluna. G.R. No. 173012, June 13, 2012. Dismissal; serious misconduct and loss of trust and confidence. Dejan is liable for violation of Section 7, paragraphs 4 and 11 of the Company Code of Employee Discipline, constituting serious misconduct, fraud and willful breach of trust of the employer, which are just causes for termination of employment under the law. There is no dispute about the release of the meter sockets. Also, the persons involved were clearly identified – Dejan; Gozarin, a private electrician who received the meter sockets; Reyes, the owner of the jeep where the meter sockets were loaded by Gozarin; Duenas, a Meralco field representative; and Depante, another private electrician who purportedly owned the meter sockets. The release by Dejan of the meter sockets to Gozarin without the written authority or SPA from the customer or customers who applied for electric connection (as a matter of company policy) served as a key element in proving the private contracting activity for electric service connection being undertaken by Dejan and Duenas.

Moreover, it was bad enough that Dejan failed to ask for a written authorization from the customers for the release of the meter sockets as required by company policy, but the elaborate scheme pursued by Dejan in concert with Duenas, were all undertaken to defraud Meralco. Hence, Meralco had valid reasons for losing its trust and confidence in Dejan. He is no ordinary employee. As branch representative, he was principally charged with the function and responsibility to accept payment of fees required for the installation of electric service and facilitate issuance of meter sockets. The duties of his position require him to always act with the highest degree of honesty, integrity and sincerity, as the company puts it. In light of his fraudulent act, Meralco, an enterprise imbued with public interest, cannot be compelled to continue Dejan’s employment, as it would be inimical to its interest. Manila Electric Company (Meralco) vs. Herminigildo H. Dejan. G.R. No. 194106, June 18, 2012.Employee benefit; attorney’s fees. Lazaro must establish a legal basis – either by law, contract or other sources of obligations – to merit the receipt of the additional 10% attorney’s fees collected in the various foreclosure procedures he settled as the bank’s legal officer. Lazaro has not produced any contract or provision of law that would warrant the payment of the additional attorney’s fees. He is only entitled to his salaries as the bank’s legal officer, because the services he rendered in the foreclosure proceedings were part of his official tasks. Banco Filipino Savings and Mortgage Bank vs. Miguelito M. Lazaro/Miguelito M. Lazaro vs. Banco Filipino Savings and Mortgage Bank, et al. G.R. No. 185346 & G.R. No. 185442. June 27, 2012 .Employee benefit; retirement pay. Banco Filipino maintains that the seven-year period when it was under liquidation should not be credited in computing Lazaro’s retirement pay because, during that period, the bank was considered closed. The Supreme Court held that banks under liquidation retain their legal personality. In fact, even if they are prohibited from conducting regular banking business, it is necessary that debts owed to them be collected. Lazaro performed the duty of foreclosing debts in favor of Banco Filipino. It cannot rightfully disclaim Lazaro’s work that benefitted it.As found in the Implementing Rules of the Retirement Pay Law and in jurisprudence, only in the absence of an applicable retirement agreement shall Article 287 of the Labor Code apply. There is aproviso however, that an employee’s retirement benefits under any agreement shall not be less than those provided in the said article. The Rules of the Banco Filipino Retirement Fund do not provide for benefits lower than those in the Labor Code. In fact, the bank offers a retirement pay equivalent to one andone-half month salary for every year of service, a rate over and above the one-half month salary threshold provided by the law. Although the Rules of the Banco Filipino Retirement Fund do not grant a rounding off scheme, they nonetheless provide that prorated credit shall be given for incomplete years, regardless of the fraction of months in the retiree’s length of service. Notwithstanding the lack of a rounding-up provision, still, the higher retirement pay, together with the prorated crediting, cannot be deemed to be less favorable than that provided for by the law. Ultimately, the more important threshold to be considered in construing whether the retirement agreement provides less benefits, compared to those provided by the Retirement Pay Law, is that the retirement benefits in the said agreement should at least amount to one-half of the employee’s monthly salary. Banco Filipino Savings and Mortgage Bank vs. Miguelito M. Lazaro/Miguelito M. Lazaro vs. Banco Filipino Savings and Mortgage Bank, et al. G.R. No. 185346 & G.R. No. 185442. June 27, 2012 Employee dismissal. When the floating status of employees lasts for more than six (6) months, they may be considered to have been illegally dismissed from the service. “Floating status” means an indefinite period of time when one does not receive any salary or financial benefit provided by law. In this case, petitioners were actually reassigned to new posts, albeit in a different location from where they resided. Thus, there can be no floating status or indefinite period to speak of. Instead, petitioners were the ones who refused to report for work in their new assignment.In cases involving security guards, a relief and transfer order in itself does not sever the employment relationship between the security guards and their agency. Employees have the right to security of tenure, but this does not give them such a vested right to their positions as would deprive the company of its prerogative to change their assignment or transfer them where their services, as security guards, will be most beneficial to the client. An employer has the right to transfer or assign its employees from one office or area of operation to another in pursuit of its legitimate business interest, provided there is no demotion in rank or diminution of salary, benefits, and other privileges; and the transfer is not motivated by discrimination or bad faith, or effected as a form of punishment or demotion without sufficient cause. While petitioners may claim that their transfer to Manila will cause added expenses and inconvenience, absent any showing of bad faith or ill motive

on the part of the employer, the transfer remains valid. Salvador O. Mojar, et al. vs. Agro Commercial Security Service Agency, et al. G.R. No. 187188, June 27, 2012 .Employee dismissal; burden of proof. Under the law, the burden of proving that the termination of employment was for a valid or authorized cause rests on the employer. Failure to discharge this burden would result in an unjust or illegal dismissal. The company’s evidence on the respondents’ alleged infractions do not substantially show that they violated company rules and regulations to warrant their dismissal. It is obvious that the company overstepped the bounds of its management prerogative in the dismissal of Mauricio and Camacho. It lost sight of the principle that management prerogative must be exercised in good faith and with due regard to the rights of the workers in the spirit of fairness and with justice in mind. Philbag Industrial Manufacturing Corp. vs. Philbag Workers Union-Lakas at Gabay ng Manggagawang Nagkakaisa. G.R. No. 182486, June 20, 2012.Employee dismissal; due process. Retrenchment is subject to faithful compliance with the substantive and procedural requirements laid down by law and jurisprudence. For a valid retrenchment, the following elements must be present:

1. That 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 (1) 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, efficiency, seniority, physical fitness, age, and financial hardship for certain workers.

All these elements were successfully proven by petitioner. First, the huge losses suffered by the Club for the past two years had forced petitioner to close it down to avert further losses which would eventually affect the operations of petitioner. Second, all 45 employees working in the Club were served with notice of termination. The corresponding notice was likewise served to the DOLE one month prior to retrenchment. Third, the employees were offered separation pay, most of whom have accepted and opted not to join in this complaint. Fourth, the 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. Waterfront Cebu City Hotel vs. Ma. Melanie P. Jimenez, et al. G.R. No. 174214, June 13, 2012. Employee dismissal; due process. The following are the guiding principles in connection with the hearing requirement in dismissal cases:

1. “Ample opportunity to be heard” means any meaningful opportunity (verbal or written) given to the employee to answer the charges against him and submit evidence in support of his defense, whether in a hearing, conference or some other fair, just and reasonable way.

2. A formal hearing or conference becomes mandatory only when requested by the employee in writing or substantial evidentiary disputes exist or a company rule or practice requires it, or when similar circumstances justify it.

3. The “ample opportunity to be heard” standard in the Labor Code prevails over the “hearing or conference” requirement in the implementing rules and regulations.

Given that the petitioners expressly requested a conference or a convening of a grievance committee, such formal hearing became mandatory. After PGAI failed to affirmatively respond to such request, it follows that the hearing requirement was not complied with and, therefore, Vallota was denied his right to procedural due process. Prudential Guarantee and Assurance Employee Labor Union and Sandy T. Vallota vs. NLRC, Prudential Guarantee and Assurance Inc., and/or Jocelyn Retizos.G.R. No. 185335, June 13, 2012 .Employee dismissal; just cause. Article 282(e) of the Labor Code talks of other analogous causes or those which are susceptible of comparison to another in general or in specific detail as a cause for termination of employment. A cause analogous to serious misconduct is a voluntary and/or willful act or omission attesting to

an employee’s moral depravity. Theft committed by an employee against a person other than his employer, if proven by substantial evidence, is a cause analogous to serious misconduct. Previous infractions may be cited as justification for dismissing an employee only if they are related to the subsequent offense. However, it must be noted that such a discussion was unnecessary since the theft, taken in isolation from Fermin’s other violations, was in itself a valid cause for the termination of his employment. Cosmos Bottling Corp. vs. Wilson Fermin/Wilson Fermin vs. Cosmos Bottling Corp. and Cecilia Bautista. G.R. No. 193676 & G.R. No. 194303. June 20, 2012. Employee dismissal; loss of trust and confidence. The Labor Code recognizes that an employer, for just cause, may validly terminate the services of an employee for serious misconduct or willful disobedience of the lawful orders of the employer or representative in connection with the employee’s work. Fraud or willful breach by the employee of the trust reposed by the employer in the former, or simply loss of confidence, also justifies an employee’s dismissal from employment. Willful breach of trust or loss of confidence requires that the employee (1) occupied a position of trust or (2) was routinely charged with the care of the employer’s property. To warrant dismissal based on loss of confidence, there must be some basis for the loss of trust or the employer must have reasonable grounds to believe that the employee is responsible for the misconduct that renders the latter unworthy of the trust and confidence demanded by his or her position. For more than a month, the petitioners did not even inform PLDT of the whereabouts of the plant materials. Instead, he stocked these materials at his residence even if they were needed in the daily operations of the company. In keeping with the honesty and integrity demanded by his position, he should have turned over these materials to the plant’s warehouse. Thus, PLDT reasonably suspected petitioner of stealing the company’s property. At that juncture, the employer may already dismiss the employee since it had reasonable grounds to believe or to entertain the moral conviction that the latter was responsible for the misconduct, and the nature of his participation therein rendered him absolutely unworthy of the trust and confidence demanded by his position.Romeo E. Paulino vs. NLRC, Philippine Long Distance Co., Inc. G.R. No. 176184, June 13, 2012 .Employee dismissal; loss of trust and confidence. Loss of confidence as a just cause for dismissal was never intended to provide employers with a blank check for terminating their employees. It should ideally apply only to cases involving employees occupying positions of trust and confidence or to those situations where the employee is routinely charged with the care and custody of the employer’s money or property. To the first class belong managerial employees, i.e., those vested with the powers or prerogatives to lay down management policies and/or to hire, transfer, suspend, lay-off, recall, discharge, assign or discipline employees or effectively recommend such managerial actions; and to the second class belong cashiers, auditors, property custodians, etc., or those who, in the normal and routine exercise of their functions, regularly handle significant amounts of money or property.The first requisite for dismissal on the ground of loss of trust and confidence is that the employee concerned must be one holding a position of trust and confidence. The second requisite is that there must be an act that would justify the loss of trust and confidence. Vallota’s position as Junior Programmer is analogous to the second class of positions of trust and confidence. Though he did not physically handle money or property, he became privy to confidential data or information by the nature of his functions. At a time when the most sensitive of information is found not printed on paper but stored on hard drives and servers, an employee who handles or has access to data in electronic form naturally becomes the unwilling recipient of confidential information. There was no other evidence presented to prove fraud in the manner of securing or obtaining the files found in Vallota’s computer. The presence of the files would merely merit the development of some suspicion on the part of the employer, but should not amount to a loss of trust and confidence such as to justify the termination of his employment. Such act is not of the same class, degree or gravity as the acts that have been held to be of such character. Prudential Guarantee and Assurance Employee Labor Union and Sandy T. Vallota vs. NLRC, Prudential Guarantee and Assurance Inc., and/or Jocelyn Retizos. G.R. No. 185335, June 13, 2012.Employee dismissal; loss of trust and confidence. To validly dismiss an employee on the ground of loss of trust and confidence under Article 282 (c) of the Labor Code of the Philippines, the following guidelines must be observed: 1) loss of confidence should not be simulated; 2) it should not be used as subterfuge for causes which are improper, illegal or unjustified; 3) it may not be arbitrarily asserted in the face of overwhelming evidence to the contrary; and 4) it must be genuine, not a mere afterthought to justify earlier action taken in bad faith. More importantly, it must be based on a willful breach of trust and founded on clearly established

facts. The testimony of Lobitaña constitutes substantial evidence to prove that respondent, as the then Power Plant Manager, accepted commissions and/or “kickbacks” from suppliers, which is a clear violation of Section 2.04 of petitioner’s Company Rules and Regulations. Jurisprudence consistently holds that for managerial employees, the mere existence of a basis for believing that such employee has breached the trust of his employer would suffice for his dismissal. Respondent’s termination was for a just and valid cause. Apo Cement Corporation Vs. Zaldy E. Baptisma. G.R. No. 176671. June 20, 2012 .Employee dismissal; order of reinstatement. Article 223 of the Labor Code provides that in case there is an order of reinstatement, the employer must admit the dismissed employee under the same terms and conditions, or merely reinstate the employee in the payroll. The order shall be immediately executory. Thus, 3rd Alert cannot escape liability by simply invoking that Navia did not report for work. The law states that the employer must still reinstate the employee in the payroll. Where reinstatement is no longer viable as an option, separation pay equivalent to one (1) month salary for every year of service could be awarded as an alternative. 3rd Alert Security and Detective Services, Inc. vs. Romualdo Navia. G.R. No. 200653, June 13, 2012.Employee dismissal; retrenchment. Retrenchment is the termination of employment initiated by the employer through no fault of and without prejudice to the employees. It is resorted to during periods of business recession, industrial depression, or seasonal fluctuations or 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 of automation. It is an act of the employer of dismissing employees because of losses in the operation of a business, lack of work, and considerable reduction on the volume of his business. In this case, the closure of a department or division of a company constitutes retrenchment by, and not closure of, the company itself. Petitioner has not totally ceased its business operations. It merely ceased operations of a department. Waterfront Cebu City Hotel vs. Ma. Melanie P. Jimenez, et al. G.R. No. 174214, June 13, 2012 .Employee dismissal; willful breach of trust. The loss of trust and confidence must be based on willful breach of the trust reposed in the employee by his employer. Such breach is willful if it is done intentionally, knowingly, and purposely, without justifiable excuse, as distinguished from an act done carelessly, thoughtlessly, heedlessly or inadvertently. Moreover, it must be based on substantial evidence and not on the employer’s whims or caprices or suspicions otherwise, the employee would eternally remain at the mercy of the employer. The Supreme Court has laid down the guidelines for the application of the loss of trust and confidence doctrine: (1) loss of confidence should not be simulated; (2) it should not be used as a subterfuge for causes which are improper, illegal or unjustified; (3) it may not be arbitrarily asserted in the face of overwhelming evidence to the contrary; and (4) it must be genuine, not a mere afterthought, to justify an earlier action taken in bad faith. Villanueva worked for Meralco as a Branch Representative whose tasks included the issuance of Contracts for Electric Service after receipt of the amount due for service connection from customers. Obviously, he was entrusted not only with the responsibility of handling company funds but also to cater to customers who intended to avail of Meralco’s services. This is nothing but an indication that trust and confidence were reposed in him by the company, although his position was not strictly managerial by nature. Meralco’s loss of trust and confidence arising out of Villanueva’s act of misappropriation of company funds in the course of processing customer applications has been proven by substantial evidence, thus, justified. Verily, the issuance of additional receipts for excessive payments exacted from customers is a willful breach of the trust reposed in him by the company. Vicente Villanueva, Jr. vs.. The National Labor Relations Commission, Third Division, Manila Electric Company, Manuel Lopez, Chairman and CEO, and Francisco Collantes, Manager. G.R. No. 176893, June 13, 2012 .Employee suit; damages. To obtain moral damages, the claimant must prove the existence of bad faith by clear and convincing evidence, for the law always presumes good faith. It is not even enough that one merely suffered sleepless nights, mental anguish and serious anxiety as the result of the actuations of the other party. In this case, Lazaro did not state any moral anguish that he suffered. Neither did he substantiate his imputations of malice to Banco Filipino. He only made a sweeping declaration, without concrete proof, that the bank in refusing his claim maliciously damaged his property rights and interest. Accordingly, neither moral damages nor exemplary damage can be awarded to him.With respect to attorney’s fees, an award is proper only if that person was forced to litigate and incur expenses to protect one’s rights and interest by reason of an unjustified act or omission of the party for whom it is sought. Banco Filipino had a prima facie legitimate defense that, because it underwent liquidation proceedings,

it cannot be compelled to credit that period in the computation of the employee’s the retirement pay and profit shares. Considering that Banco Filipino’s refusal cannot be accurately characterized as unjustified, Lazaro cannot claim an award of attorney’s fees.Banco Filipino Savings and Mortgage Bank vs. Miguelito M. Lazaro/Miguelito M. Lazaro vs. Banco Filipino Savings and Mortgage Bank, et al. G.R. No. 185346 & G.R. No. 185442. June 27, 2012 .Independent contractor; tests. Permissible job contracting or subcontracting refers to an arrangement whereby a principal agrees to put out or farm out to a 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. A person is considered engaged in legitimate job contracting or subcontracting if the following conditions concur:(a) The contractor or subcontractor carries on a distinct and independent business and undertakes to perform the job, work or service on its own account and under its own responsibility according to its own manner and method, and 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;

(b) The contractor or subcontractor has substantial capital or investment; and

(c) The agreement between the principal and contractor or subcontractor assures the contractual employees entitlement to all labor and occupational safety and health standards, free exercise of the right to self-organization, security of tenure, and social welfare benefits.

In contrast, labor-only contracting, a prohibited act, is an arrangement where the contractor or subcontractor merely recruits, supplies or places workers to perform a job, work or service for a principal. In labor-only contracting, the following elements are present:

(a) The contractor or subcontractor does not have substantial capital or investment to actually perform the job, work or service under its own account and responsibility; and

(b) 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.

The test 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 results of the work.

Gramaje is not an independent job contractor, but a “labor-only” contractor. First, Gramaje has no substantial capital or investment. The presumption is that a contractor is a labor-only contractor unless he overcomes the burden of proving that it has substantial capital, investment, tools, and the like. Neither Gramaje nor Polyfoam presented evidence showing Gramaje’s ownership of the equipment and machineries used in the performance of the alleged contracted job.

Second, Gramaje did not carry on an independent business or undertake the performance of its service contract according to its own manner and method, free from the control and supervision of its principal, Polyfoam, its apparent role having been merely to recruit persons to work for Polyfoam. It is undisputed that respondent had performed his task of packing Polyfoam’s foam products in Polyfoam’s premises. As to the recruitment of respondent, petitioners were able to establish only that respondent’s application was referred to Gramaje, but that is all. Prior to his termination, respondent had been performing the same job in Polyfoam’s business for almost six (6) years. He was even furnished a copy of Polyfoam’s “Mga Alituntunin at Karampatang Parusa,”which embodied Polyfoam’s rules on attendance, the manner of performing the employee’s duties, ethical standards, cleanliness, health, safety, peace and order. These rules carried with them the corresponding penalties in case of violation. While it is true that petitioners submitted the Affidavit of Polyfoam’s supervisor,

claiming that the latter did not exercise supervision over respondent because the latter was not Polyfoam’s but Gramaje’s employee, said Affidavit is insufficient to prove such claim. Petitioners should have presented the person who they claim to have exercised supervision over respondent and their alleged other employees assigned to Polyfoam. It was never established that Gramaje took entire charge, control and supervision of the work and service agreed upon. Polyfoam-RGC International, Corporation and Precilla A. Gramaje vs. Edgardo Concepcion.G.R. No. 172349, June 13, 2012 .NLRC; jurisdiction over interpretation or implementation of the CBA. R.A. 8042 is a special law governing overseas Filipino workers. However, there is no specific provision thereunder which provides for jurisdiction over disputes or unresolved grievances regarding the interpretation or implementation of a CBA. Section 10 of R.A. 8042 simply speaks, in general, of “claims arising out of an employer-employee relationship or by virtue of any law or contract involving Filipino workers for overseas deployment including claims for actual, moral, exemplary and other forms of damages.” On the other hand, Articles 217(c) and 261 of the Labor Code are very specific in stating that voluntary arbitrators have jurisdiction over cases arising from the interpretation or implementation of collective bargaining agreements. In the present case, the basic issue raised by Merridy Jane in her complaint filed with the NLRC is: which provision of the subject CBA applies insofar as death benefits due to the heirs of Nelson are concerned. This issue clearly involves the interpretation or implementation of the said CBA. Thus, the specific or special provisions of the Labor Code govern.CBA is the law or contract between the parties. Article 13.1 of the CBA entered into by and between respondent GCI and AMOSUP provides that the Company and the Union agree that in case of dispute or conflict in the interpretation or application of any of the provisions of this Agreement, or enforcement of Company policies, the same shall be settled through negotiation, conciliation or voluntary arbitration. The provisions of the CBA are in consonance with Rule VII, Section 7 of the present Omnibus Rules and Regulations Implementing the Migrant Workers and Overseas Filipinos Act of 1995, as amended by Republic Act No. 10022, which states that for OFWs with collective bargaining agreements, the case shall be submitted for voluntary arbitration in accordance with Articles 261 and 262 of the Labor Code. With respect to disputes involving claims of Filipino seafarers wherein the parties are covered by a collective bargaining agreement, the dispute or claim should be submitted to the jurisdiction of a voluntary arbitrator or panel of arbitrators. It is only in the absence of a collective bargaining agreement that parties may opt to submit the dispute to either the NLRC or to voluntary arbitration. Estate of Nelson R. Dulay, represented by his wife Meddiry Jane P. Dulay vs. Aboitiz Jebsen Maritime, Inc. and General Charterers, Inc. G.R. No. 172642, June 13, 2012 .Service; proof of service. Petitioners allege that no affidavit of service was attached to the CA Petition. However, the Supreme Court noted that in the CA Resolution, the appellate court stated that their records revealed that Atty. Espinas, petitioners’ counsel of record at the time, was duly served a copy of the following: CA Resolution granting respondent’s Motion for Extension of Time to file the CA Petition; CA Resolution requiring petitioners to file their Comment on the CA Petition; and CA Resolution, submitting the case for resolution, as no comment was filed. Such service to Atty. Espinas was valid despite the fact he was already deceased at the time. If a party to a case has appeared by counsel, service of pleadings and judgments shall be made upon his counsel or one of them, unless service upon the party is specifically ordered by the court. It is not the duty of the courts to inquire, during the progress of a case, whether the law firm or partnership representing one of the litigants continues to exist lawfully, whether the partners are still alive, or whether its associates are still connected with the firm. Salvador O. Mojar, et al. vs. Agro Commercial Security Service Agency, et al. G.R. No. 187188, June 27, 2012 .

July 2012 Philippine Supreme Court Decisions on Labor Law and ProcedurePosted on August 8, 2012 by Leslie C. Dy • Posted in Labor Law, Philippines - Law • Tagged due process, employer-employee relationship, illegal dismissal, loss of trust and confidence, retirement •Here are select July 2012 rulings of the Supreme Court of the Philippines on labor law and procedure:

Dismissal; due process. Due process requirement is met when there is simply an opportunity to be heard and to explain one’s side even if no hearing is conducted. An employee may be afforded ample opportunity to be heard by means of any method, verbal or written, whether in a hearing, conference or some other fair, just and reasonable way. After receiving the first notice apprising him of the charges against him, the employee may submit a written explanation (which may be in the form of a letter, memorandum, affidavit or position paper) and offer evidence in support thereof, like relevant company records and the sworn statements of his witnesses. For this purpose, he may prepare his explanation personally or with the assistance of a representative or counsel. He may also ask the employer to provide him copy of records material to his defense. His written explanation may also include a request that a formal hearing or conference be held. In such a case, the conduct of a formal hearing or conference becomes mandatory, just as it is where there exist substantial evidentiary disputes or where company rules or practice requires an actual hearing as part of employment pre-termination procedure.Petitioner’s written response to the prerequisite notice provided her with an avenue to explain and defend her side and thus served the purpose of due process. That there was no hearing, investigation or right to appeal, which petitioner opined to be a violation of company policies, is of no moment since the record is bereft of any showing that there is an existing company policy that requires these procedures with respect to the termination of a CHR Director like petitioner or that company practice calls for the same. There was also no request for a formal hearing on the part of petitioner. As she was served with a notice apprising her of the charges against her and also a subsequent notice informing her of the management’s decision to terminate her services after respondents found her written response to the first notice unsatisfactory, petitioner was clearly afforded her right to due process. Flordeliza Maria Reyes-Rayel vs. Philippine Luen Thai Holdings Corporation, et al. G.R. No. 174893, July 11, 2012.Dismissal; loss of trust and confidence. An employer has a distinct prerogative and wider latitude of discretion in dismissing a managerial personnel who performs functions which by their nature require the employer’s full trust and confidence.As distinguished from a rank and file personnel, mere existence of a basis for believing that a managerial employee has breached the trust of the employer justifies dismissal. Loss of confidence as a ground for dismissal does not require proof beyond reasonable doubt as the law requires only that there be at least some basis to justify it.Petitioner was L&T’s CHR Director for Manufacturing, which is a managerial position saddled with great responsibility. As such, she was directly responsible for managing her own departmental staff. Because of this, petitioner must enjoy the full trust and confidence of her superiors. However, petitioner delivered dismal performance and displayed poor work attitude, which constitute sufficient reasons for an employer to terminate an employee on the ground of loss of trust and confidence. First, records show that petitioner indeed unreasonably failed to effectively communicate with her immediate superior. Second, the affidavits of petitioner’s co-workers revealed her negative attitude and unprofessional behavior towards them and the company. Lastly, petitioner displayed inefficiency and ineptitude in her job as a CHR Director. Taking all these circumstances collectively, the Court is convinced that respondents have sufficient and valid reasons for terminating the services of petitioner as her continued employment would be patently inimical to respondents’ interest. Flordeliza Maria Reyes-Rayel vs. Philippine Luen Thai Holdings Corporation, et al. G.R. No. 174893, July 11, 2012.Employee dismissal; validity of termination. Retrenchment is one of the authorized causes for the dismissal of employees recognized by the Labor Code. It is a management prerogative resorted to by employers to avoid or to minimize business losses. The Court has laid down the following standards that an employer should meet to justify retrenchment and to foil abuse, namely:(a) The expected losses should be substantial and not merely de minimis in extent;(b) The substantial losses apprehended must be reasonably imminent;

(c) The retrenchment must be reasonably necessary and likely to effectively prevent the expected losses; and

(d) The alleged losses, if already incurred, and the expected imminent losses sought to be forestalled must be proved by sufficient and convincing evidence

In termination cases, the burden of proving that the dismissal was for a valid or authorized cause rests upon the employer. The petitioner did not submit evidence of the losses to its business operations and the economic havoc it would thereby imminently sustain. It only claimed that respondent’s termination was due to its “present business/financial condition”. This bare statement fell short of the norm to show a valid retrenchment. Indeed, not every loss incurred or expected to be incurred by an employer can justify retrenchment. The employer must prove, among others, that the losses are substantial and that the retrenchment is reasonably necessary to avert such losses. Thus, by its failure to present sufficient and convincing evidence to prove that retrenchment was necessary, respondent’s termination due to retrenchment is not allowed. Legend Hotel [Manila], owned by Titatium Corporation, et al. vs. Hernani S. Realuyo, also known as Joey Roa. G.R. No. 153511, July 18, 2012.Employee training; reimbursement. The Supreme Court recognized the right of PAL to recoup the costs of a pilot’s training in the form of service for a period of at least three (3) years. By carrying over the same stipulation setting the age of fifty-seven (57) years as the reckoning point when a pilot becomes disqualified to bid for a higher position in the present CBA, both PAL and ALPAP recognized that the company’s effort in sending pilots for training abroad is an investment which necessarily expects a reasonable return in the form of service for a period of at least three (3) years. This stipulation had been repeatedly adopted by the parties in the succeeding renewals of their CBA, thus validating the impression that it is a reasonable and acceptable term to both PAL and ALPAP. Consequently, the petitioner cannot conveniently disregard this stipulation by simply raising the absence of a contract expressly requiring the pilot to remain within PAL’s employ within a period of 3 years after he has been sent on training. The supposed absence of contract being raised by the petitioner cannot stand as the CBA clearly covered the petitioner’s obligation to render service to PAL within 3 years to enable it to recoup the costs of its investment. Bibiano C. Elegir vs. Philippine Airlines, Inc. G.R. No. 181995, July 16, 2012.Employer-employee relationship; existence. The issue of whether or not an employer-employee relationship existed is essentially a question of fact. The factors that determine the issue include who has the power to select the employee, who pays the employee’s wages, who has the power to dismiss the employee, and who exercises control of the methods and results by which the work of the employee is accomplished. Although no particular form of evidence is required to prove the existence of the relationship, and any competent and relevant evidence to prove the relationship may be admitted, a finding that the relationship exists must nonetheless rest on substantial evidence, which is that amount of relevant evidence that a reasonable mind might accept as adequate to justify a conclusion.A review of the circumstances reveals that respondent was, indeed, petitioner’s employee. He was undeniably employed as a pianist in petitioner’s Restaurant. First of all, petitioner actually wielded the power of selection at the time it entered into the service contract with respondent. The power of selection was firmly evidenced by, among others, the express written recommendation by petitioner’s restaurant manager, for the increase of his remuneration. Secondly, there is no denying that the remuneration denominated as talent fees was fixed on the basis of his talent and skill and the quality of the music he played during the hours of performance each night, taking into account the prevailing rate for similar talents in the entertainment industry. Respondent’s remuneration, albeit denominated as talent fees, was still considered as included in the term wagein the sense and context of the Labor Code, regardless of how petitioner chose to designate the remuneration. Thirdly, the petitioner has the power to dismiss respondent. The memorandum informing respondent of the discontinuance of his service because of the present business or financial condition of petitioner showed that the latter had the power to dismiss him from employment. Lastly, 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 the so-called control test, and 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. Respondent performed his work as a pianist under petitioner’s supervision and control. Petitioner’s control of both the end achieved and the manner and means used to achieve that end was demonstrated by the following, to wit: (1)He could not choose the time of his performance, which petitioners had fixed from 7:00 pm to 10:00 pm, three to six times a week; (2)He could not choose the place of his performance; (3) The restaurant’s manager required him at certain times to perform only Tagalog songs or music, or to wear barong Tagalog to conform to the Filipiniana motif; and (4)He was subjected to the rules on employees’

representation check and chits, a privilege granted to other employees. Legend Hotel [Manila], owned by Titatium Corporation, et al. vs. Hernani S. Realuyo, also known as Joey Roa. G.R. No. 153511, July 18, 2012.Management prerogative; transfer of employees. An employer’s decision to transfer an employee, if made in good faith, is a valid exercise of a management prerogative, although it may result in personal inconvenience or hardship to the employee. Re-assignments made by management pending investigation of irregularities allegedly committed by an employee fall within the ambit of management prerogative. The purpose of reassignments is no different from that of preventive suspension which management could validly impose as a disciplinary measure for the protection of the company’s property pending investigation of any alleged malfeasance or misfeasance committed by the employee.As the executive assistant of the president, petitioner undeniably occupied a sensitive position that required her employer’s utmost trust and confidence. Having lost his trust and confidence in petitioner, respondent Delfin had the right to transfer her to ensure that she would no longer have access to the companies’ confidential files. Although it is true that petitioner has yet to be proven guilty, respondents had the authority to reassign her, pending investigation. When petitioner was assigned to Cavite, there was an ongoing investigation of the charges filed against her. It is undisputed that she refused to fill up, for no justifiable reasons, the questionnaire distributed by her employer to determine who among those who had access to the confidential files was responsible for their taking. Furthermore, a witness had executed an Affidavit claiming that she found the missing files, and that her husband told her that it was petitioner who handed those files to him. Lastly, the person who supposedly received these documents from petitioner did not deny or rebuke the statements made by his wife. Josephine Ruiz vs. Wendel Osaka Realty Corp., et al.G.R. No. 189082, July 11, 2012.Retirement Pay; collective bargaining agreement. Article 287 of the Labor Code provides that it is applicable only to a situation where (1) there is no CBA or other applicable employment contract providing for retirement benefits for an employee, or (2) there is a CBA or other applicable employment contract providing for retirement benefits for an employee, but it is below the requirement set by law. The rationale for the first situation is to prevent the absurd situation where an employee, deserving to receive retirement benefits, is denied to them through the nefarious scheme of employers to deprive employees of the benefits due them under existing labor laws. On the other hand, the second situation aims to prevent private contracts from derogating from the public law. The determining factor in choosing which retirement scheme to apply is still superiorityin terms of benefits provided. Thus, even if there is an existing CBA but the same does not provide for retirement benefits equal or superior to that which is provided under Article 287 of the Labor Code, the latter will apply.There are two retirement schemes at point in this case: (1) Article 287 of the Labor Code, and; (2) the PAL-ALPAP Retirement Plan and the PAL Pilots’ Retirement Benefit Plan. The two retirement schemes are alternative in nature such that the retired pilot can only be entitled to that which provides for superior benefits. Comparing the benefits under the two (2) retirement schemes, it can readily be perceived that the 22.5 days worth of salary for every year of service provided under Article 287 of the Labor Code cannot match the 240% of salary or almost two and a half worth of monthly salary per year of service provided under the PAL Pilots’ Retirement Benefit Plan, which will be further added to the ₱125,000.00 to which the petitioner is entitled under the PAL-ALPAP Retirement Plan. Clearly then, it is to the petitioner’s advantage that PAL’s retirement plans were applied in the computation of his retirement benefits. Bibiano C. Elegir vs. Philippine Airlines, Inc. G.R. No. 181995, July 16, 2012.Unjust enrichment. There is unjust enrichment when a person unjustly retains a benefit at the loss of another, or when a person retains the money or property of another against the fundamental principles of justice, equity and good conscience. Two conditions must concur: (1) a person is unjustly benefited; and (2) such benefit is derived at the expense of or with damages to another. The enrichment may consist of a patrimonial, physical, or moral advantage, so long as it is appreciable in money. It must have a correlative prejudice, disadvantage or injury to the plaintiff which may consist, not only of the loss of the property or the deprivation of its enjoyment, but also of the non-payment of compensation for a prestation or service rendered to the defendant without intent to donate on the part of the plaintiff, or the failure to acquire something that the latter would have obtained.PAL invested a considerable amount of money in sending the petitioner abroad to undergo training to prepare him for his new appointment as B747-400 Captain. In the process, the petitioner acquired new knowledge and skills which effectively enriched his technical know-how. As all other investors, PAL expects a return on

investment in the form of service by the petitioner for a period of 3 years, which is the estimated length of time within which the costs of the latter’s training can be fully recovered. The petitioner is, thus, expected to work for PAL and utilize whatever knowledge he had learned from the training for the benefit of the company. However, after only one (1) year of service, the petitioner opted to retire from service, leaving PAL stripped of a necessary manpower. Undeniably, the petitioner was enriched at the expense of PAL. After undergoing the training fully shouldered by PAL, he acquired a higher level of technical competence which, in the professional realm, translates to a higher compensation. Further, his training broadened his opportunities for a better employment as in fact he was able to transfer to another airline company immediately after he left PAL. To allow the petitioner to simply leave the company without reimbursing it for the proportionate amount of the expenses it incurred for his training will only magnify the financial disadvantage sustained by PAL. Reason and fairness dictate that he must return to the company a proportionate amount of the costs of his training. Bibiano C. Elegir vs. Philippine Airlines, Inc. G.R. No. 181995, July 16, 2012.

August 2012 Philippine Supreme Court Decisions on Labor Law and ProcedurePosted on September 10, 2012 by Leslie C. Dy • Posted in Labor Law, Philippines - Cases, Philippines - Law, Philippines - Regulation •Here are select rulings of the Philippine Supreme Court on labor law and procedure:

Disability benefits; entitlement. Entitlement of seafarers to disability benefits is governed not only by medical findings but also by contract and by law. By contract, Department Order No. 4, series of 2000, of the Department of Labor and Employment and the parties’ Collective Bargaining Agreement bind the seafarer and the employer. By law, the Labor Code provisions on disability apply with equal force to seafarers. The seafarer, upon sign-off from his vessel, must report to the company-designated physician within three (3) days from arrival for diagnosis and treatment. For the duration of the treatment but in no case to exceed 120 days, the seaman is on temporary total disability as he is totally unable to work. He receives his basic wage during this period until he is declared fit to work or his temporary disability is acknowledged by the company to be permanent, either partially or totally, as his condition is defined under the POEA Standard Employment Contract and by applicable Philippine laws. If the 120 days initial period is exceeded and no such declaration is made because the seafarer requires further medical attention, then the temporary total disability period may be extended up to a maximum of 240 days, subject to the right of the employer to declare within this period that a permanent partial or total disability already exists. The seaman may of course also be declared fit to work at any time such declaration is justified by his medical condition.From the time Tomacruz was repatriated on November 18, 2002, he submitted himself to the care and treatment of the company-designated physician. When the company-designated physician made a declaration on July 25, 2003 that Tomacruz was already fit to work, 249 days had already lapsed from the time he was repatriated. As such, his temporary total disability should be deemed total and permanent, pursuant to Article 192 (c)(1) of the Labor Code and its implementing rule.Philasia Shipping Agency Corporation, et al. vs. Andres G. Tomacruz. G.R. No. 181180, August 15, 2012.Employee dismissal; due process requirements. The following standards of due process shall be substantially observed for termination of employment based on just causes as defined in Article 282 of the Labor Code:(i) A written notice served on the employee specifying the ground or grounds for termination, and giving said employee reasonable opportunity within which to explain his side.

(ii) A hearing or conference during which the employee concerned, with the assistance of counsel if he so desires is given opportunity to respond to the charge, present his evidence or rebut the evidence presented against him.

(iii) A written notice of termination served on the employee, indicating that upon due consideration of all the circumstances, grounds have been established to justify his termination.

Petitioners’ evidence fails to prove their contention that they afforded Atencio with due process. The June 21, 1999 letter, which allegedly proves Atencio’s knowledge of the charges against him, and which allegedly constitutes Atencio’s explanation, clearly discusses an entirely different topic – which is the removal of his construction company from the Caltex project. As for the May 24, 1999 letter, which allegedly constitutes the notice of termination of Atencio’s employment as JARL’s chief operating manager, the said letter involves the termination of the subcontracting agreement between JARL and Atencio’s company, and not the termination of Atencio’s employment. For petitioners’ failure to observe the two-notice rule under Article 277(b) of the Labor Code, respondent is entitled to nominal damages. Jarl Construction and Armando K. Tejada vs. Simeon A. Atencio. G.R. No. 175969, August 1, 2012.Judgment; law of the case.The law of the case has been defined as the opinion delivered on a former appeal. It means that whatever is once irrevocably established as the controlling legal rule or decision between the same parties in the same case continues to be the law of the case, whether correct on general principles or not, so long as the facts on which such decision was predicated continue to be the facts of the case before the court.Both G.R. No. 168477 and this petition are offshoots of petitioner’s purported temporary measures to preserve its neutrality with regard to the perceived void in the union leadership. While these two cases arose out of different notices to strike, it is undeniable that the facts cited and the arguments raised by petitioner are almost identical. Inevitably, G.R. No. 168477 and this petition seek only one relief, that is, to absolve petitioner from respondent’s charge of committing an unfair labor practice. For this reason, we are constrained to apply the law of the case doctrine in light of the finality of our July 20, 2005 and September 21, 2005 resolutions in G.R. No. 168477. In other words, our previous affirmance of the Court of Appeals’ finding – that petitioner erred in suspending collective bargaining negotiations with the union and in placing the union funds in escrow considering the intra-union dispute between the Aliazas and Bañez factions was not a justification therefor — is binding in the present case. De la Salle University vs. De la Salle University Employees Association. G.R. No. 169254. August 23, 2012.Lien; unpaid wages. Under Republic Act No. 10142, otherwise known as the Financial Rehabilitation and Insolvency Act of 2010, the right of a secured creditor to enforce his lien during liquidation proceedings is retained. On the right of first preference as regards unpaid wages, a distinction should be made between a preference of credit and a lien. A preference applies only to claims which do not attach to specific properties. A lien creates a charge on a particular property. The right of first preference as regards unpaid wages recognized by Article 110 of the Labor Code does not constitute a lien on the property of the insolvent debtor in favor of workers. It is but a preference of credit in their favor, a preference in application. It is a method adopted to determine and specify the order in which credits should be paid in the final distribution of the proceeds of the insolvent’s assets. It is a right to a first preference in the discharge of the funds of the judgment debtor. Consequently, the right of first preference for unpaid wages may not be invoked in this case to nullify the foreclosure sales conducted pursuant to PNB’s right as a secured creditor to enforce its lien on specific properties of its debtor, ARCAM. Manuel D. Yngson, Jr., (in his capacity as the Liquidator of ARCAM & Co., Inc.) vs. Philippine National Bank. G.R. No. 171132, August 15, 2012.NLRC; jurisdiction. Although Republic Act No. 8042, through its Section 10, transferred the original and exclusive jurisdiction to hear and decide money claims involving overseas Filipino workers from the POEA to the Labor Arbiters, the law did not remove from the POEA the original and exclusive jurisdiction to hear and decide all disciplinary action cases and other special cases administrative in character involving such workers. The obvious intent of Republic Act No. 8042 was to have the POEA focus its efforts in resolving all administrative matters affecting and involving such workers. The NLRC had no appellate jurisdiction to review the decision of the POEA in disciplinary cases involving overseas contract workers.

Although, as a rule, all laws are prospective in application unless the contrary is expressly provided, or unless the law is procedural or curative in nature, there is no serious question about the retroactive applicability of Republic Act No. 8042 to the appeal of the POEA’s decision on petitioners’ disciplinary action against respondents. In a way, Republic Act No. 8042 was a procedural law due to its providing or omitting guidelines on appeal. Republic Act No. 8042 applies to petitioners’ complaint by virtue of the case being then still pending or undetermined at the time of the law’s passage, there being no vested rights in rules of procedure. They could not validly insist that the reckoning period to ascertain which law or rule should apply was the time when the disciplinary complaint was originally filed in the POEA in 1993. Moreover, Republic Act No. 8042 and its implementing rules and regulations were already in effect when petitioners took their appeal. When Republic Act No. 8042 withheld the appellate jurisdiction of the NLRC in respect of cases decided by the POEA, the appellate jurisdiction was vested in the Secretary of Labor in accordance with his power of supervision and control under Section 38(1), Chapter 7, Title II, Book III of the Revised Administrative Code of 1987. Eastern Mediterranean Maritime Ltd., et al. vs. Estanislao Surio, et al. G.R. No. 154213, August 23, 2012.Petition for review; question of fact. While generally, only questions of law can be raised in a petition for review on certiorari under Rule 45 of the Rules of Court, the rule admits of certain exceptions, namely: (1) when the findings are grounded entirely on speculations, surmises, or conjectures; (2) when the inference made is manifestly mistaken, absurd, or impossible; (3) when there is a grave abuse of discretion; (4) when the judgment is based on misappreciation of facts; (5) when the findings of fact are conflicting; (6) when in making its findings, the same are contrary to the admissions of both appellant and appellee; (7) when the findings are contrary to those of the trial court; (8) when the findings are conclusions without citation of specific evidence on which they are based; (9) when the facts set forth in the petition as well as in the petitioner’s main and reply briefs are not disputed by the respondent; and (10) when the findings of fact are premised on the supposed absence of evidence and contradicted by the evidence on record. The illegality of petitioner’s dismissal was an issue that was squarely raised before the NLRC. When the NLRC decision was reversed by the Court of Appeals, there was a situation where “the findings of facts are conflicting”. The petition for review filed by the Petitioner comes within the purview of exception (5) and by analogy, exception (7). Mylene Carvajal vs. Luzon Development Bank and/or Oscar Z. Ramirez. G.R. No. 186169, August 1, 2012.Probationary employee; security of tenure. 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, i.e., the probationary employee may also be terminated for failure to qualify as a regular employee in accordance with reasonable standards made known by the employer to the employee at the time of the engagement.Punctuality is a reasonable standard imposed on every employee, whether in government or private sector. As a matter of fact, habitual tardiness is a serious offense that may very well constitute gross or habitual neglect of duty, a just cause to dismiss a regular employee. Assuming that petitioner was not apprised of the standards concomitant to her job, it is but common sense that she must abide by the work hours imposed by the bank. Satisfactory performance is and should be one of the basic standards for regularization. Naturally, before an employer hires an employee, the former can require the employee, upon his engagement, 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.

It is evident that the primary cause of respondent’s dismissal from her probationary employment was her “chronic tardiness.” At the very start of her employment, petitioner already exhibited poor working habits. Even during her first month on the job, she already incurred eight (8) tardiness. Respondent also cited other infractions such as unauthorized leaves of absence, mistake in clearing of a check, and underperformance. All of these infractions were not refuted by petitioner.Mylene Carvajal vs. Luzon Development Bank and/or Oscar Z. Ramirez. G.R. No. 186169, August 1, 2012.Salaries; burden of proof of payment. When there is an allegation of nonpayment of salaries and other monetary benefits, it is the employer’s burden to prove its payment to its employee. The employer’s evidence must show, with a reasonable degree of certainty, that it paid and that the workers actually received the payment. The reason for the rule is that the pertinent personnel files, payrolls, records, remittances and other

similar documents are not in the possession of the worker but are in the custody and absolute control of the employer. In the case at bar, the two official receipts issued by Safemark, and offered as JARL’s evidence, only prove that JARL made a total partial payment of P1,891,509.50 to the said company for its “professional services.” Since JARL admits that the said company actually rendered services for JARL on its Caltex project, the payment can only be assumed as covering for the said services. There is nothing on the face of the receipts to support the conclusion that Atencio (and not his company) received it as payment for his service as a JARL employee. Jarl Construction and Armando K. Tejada vs. Simeon A. Atencio. G.R. No. 175969, August 1, 2012.Seafarers; contract. The employment of seafarers, and its incidents, including claims for death benefits, is governed by the contracts they sign every time they are hired or rehired. Such contracts have the force of law between the parties as long as their stipulations are not contrary to law, morals, public order or public policy. While the seafarers and their employers are governed by their mutual agreements, the POEA rules and regulations require that the POEA Standard Employment Contract, which contains the standard terms and conditions of the seafarers’ employment in foreign ocean-going vessels, be integrated in every seafarer’s contract. The pertinent provision of the 1996 POEA SEC, which was in effect at the time of Tanawan’s employment, was Section 20(B) – Compensation and Benefits. Wallem Maritime Services, Inc. vs. Ernesto C. Tanawan. G.R. No. 160444. August 29, 2012 .Seafarers; disability benefits. The one tasked to determine whether the seafarer suffers from any disability or is fit to work is the company-designated physician. As such, the seafarer must submit himself to the company-designated physician for a post-employment medical examination within three days from his repatriation. But the assessment of the company-designated physician is not final, binding or conclusive on the seafarer, the labor tribunals, or the courts. The seafarer may request a second opinion and consult a physician of his choice regarding his ailment or injury, and the medical report issued by the physician of his choice shall also be evaluated on its inherent merit by the labor tribunal and the court.Tanawan submitted himself to Dr. Lim, the company-designated physician, for a medical examination within the 3-day reglementary period from his repatriation. The medical examination conducted focused on Tanawan’s foot injury, the cause of his repatriation. Dr. Lim treated Tanawan for the foot injury from December 1, 1997 until May 21, 1998, when Dr. Lim declared him fit to work. Within that period that lasted 172 days, Tanawan was unable to perform his job, an indication of a permanent disability. Under the law, there is permanent disability if a worker is unable to perform his job for more than 120 days, regardless of whether or not he loses the use of any part of his body. Disability should be understood more on the loss of earning capacity rather than on the medical significance of the disability. Even in the absence of an official finding by the company-designated physician to the effect that the seafarer suffers a disability and is unfit for sea duty, the seafarer may still be declared to be suffering from a permanent disability if he is unable to work for more than 120 days. On the other hand, Tanawan’s claim for disability benefits due to the eye injury was already barred by his failure to report the injury and to have his eye examined by a company-designated physician. The rationale for the rule is that reporting the illness or injury within three days from repatriation fairly makes it easier for a physician to determine the cause of the illness or injury.

Under the 1996 POEA SEC, it was enough to show that the injury or illness was sustained during the term of the contract. The Court has declared that the unqualified phrase “during the term” found in Section 20(B) thereof covered all injuries or illnesses occurring during the lifetime of the contract. Whoever claims entitlement to the benefits provided by law should establish his right to the benefits by substantial evidence. Tanawan did not present any proof of having sustained the eye injury during the term of his contract. All that he submitted was his bare allegation that his eye had been splashed with some thinner while he was on board the vessel. Wallem Maritime Services, Inc. vs. Ernesto C. Tanawan. G.R. No. 160444. August 29, 2012 .

September 2012 Philippine Supreme Court Decisions on Labor Law and ProcedurePosted on October 8, 2012 by Leslie C. Dy • Posted in Labor Law •

Here are select September 2012 rulings of the Philippine Supreme Court on labor law and procedure:

Breach of contract; Contract substitution; Constructive dismissal; Illegal recruitment. The agency and its principal, Modern Metal, committed a prohibited practice and engaged in illegal recruitment when they altered or substituted the contracts approved by the Philippine Overseas Employment Administration (POEA). Article 34 (i) of the Labor Code provides: It shall be unlawful for any individual, entity, licensee, or holder of authority to substitute or alter employment contracts approved and verified by the Department of Labor from the time of actual signing thereof by the parties up to and including the period of expiration of the same without the approval of the Secretary of Labor. Meanwhile, Article 38 (i) of the Labor Code, as amended by R.A. 8042, defined “illegal recruitment” to include the substitution or alteration, to the prejudice of the worker, of employment contracts approved and verified by the Department of Labor and Employment from the time of actual signing thereof by the parties up to and including the period of the expiration of the same without the approval of the Department of Labor and Employment.Furthermore, the agency and Modern Metal committed breach of contract by providing substandard working and living arrangements, when the contract provided free and suitable housing. The living quarters were cramped as they shared them with 27 other workers. The lodging house was far from the jobsite, leaving them only three to four hours of sleep every workday because of the long hours of travel to and from their place of work, not to mention that there was no potable water in the lodging house which was located in an area where the air was polluted. They complained with the agency about the hardships that they were suffering, but the agency failed to act on their reports. Significantly, the agency failed to refute their claims.

Thus, with their original contracts substituted and their oppressive working and living conditions unmitigated or unresolved, the decision to resign is not surprising. They were compelled by the dismal state of their employment to give up their jobs; effectively, they were constructively dismissed. A constructive dismissal or discharge is “a quitting because continued employment is rendered impossible, unreasonable or unlikely, as, an offer involving a demotion in rank and a diminution in pay.”

Without doubt, continued employment with Modern Metal had become unreasonable. A reasonable mind would not approve of a substituted contract that pays a diminished salary – from 1350 AED a month in the original contract to 1,000 AED to 1,200 AED in the appointment letters, a difference of 150 AED to 250 AED (not just 50 AED as the agency claimed) or an extended employment (from 2 to 3 years) at such inferior terms, or a “free and suitable” housing which is hours away from the job site, cramped and crowded, without potable water and exposed to air pollution.

We thus cannot accept the agency’s insistence that the respondents voluntarily resigned since they personally prepared their resignation letters in their own handwriting. Pert/CPM Manpower Exponent Co., Inc. vs. Amando A. Vinuya, et al. G.R. No. 197528. September 5, 2012.Disability benefit. Deemed read and incorporated into the Contract of Employment between David and respondents are the provisions of the 2000 Philippine Overseas Employment Agency Standard Employment Contract (POEASEC). Sec. 20(B)(4) of the POEA-SEC clearly established a disputable presumption in favor of the compensability of an illness suffered by a seafarer during the term of his contract. Hence, unless contrary evidence is presented by the seafarer’s employer/s, this disputable presumption stands.In this case, David not only relies on this disputable presumption of the compensability of his illness but David has provided more than a reasonable nexus between the nature of his job and the disease that manifested itself on the sixth month of his last contract with respondents.

It is not necessary that the nature of the employment be the sole and only reason for the illness suffered by the seafarer. It is sufficient that there is a reasonable linkage between the disease suffered by the employee and his work to lead a rational mind to conclude that his work may have contributed to the establishment or, at the very least, aggravation of any pre-existing condition he might have had.

David showed that part of his duties as a Third Officer of the crude tanker M/T Raphael involved “overseeing the loading, stowage, securing and unloading of cargoes.” As a necessary corollary, David was frequently exposed to the crude oil that M/T Raphael was carrying. The chemical components of crude oil include, among others, sulfur, vanadium and arsenic compounds. Hydrogen sulfide and carbon monoxide may also be encountered, while benzene is a naturally occurring chemical in crude oil. It has been regarded that these hazardous chemicals can possibly contribute to the formation of cancerous masses.

In this case, David was diagnosed with MFH (now known as undifferentiated pleomorphic sarcoma [UPS]), which is a class of soft tissue sarcoma or an illness that account for approximately 1% of the known malignant tumors. As stated by Dr. Peña of the MMC, who was consulted by the company-designated physician, the etiology of soft tissue sarcomas are multifactorial. However, some factors are associated with a higher risk. These factors include exposure to chemical carcinogens like some of the chemical components of crude oil. Jessie V. David, represented by his wife, Ma. Theresa S. David, and children, Katherine and Kristina David vs. OSG Shipmanagement Manila, Inc. and/or Michaelmar Shipping Services. G.R. No. 197205. September 26, 2012.Dismissal; Unfair labor practice; Liability of corporate officers; Moral and exemplary damages. The requisites for a valid dismissal are: (a) the employee must be afforded due process, i.e., he must be given an opportunity to be heard and defend himself; and (b) the dismissal must be for a valid cause as provided in Article 282 of the Labor Code, or for any of the authorized causes under Articles 283 and 284 of the same Code. In the case before us, both elements are completely lacking. Respondents were dismissed without any just or authorized cause and without being given the opportunity to be heard and defend themselves. The law mandates that the burden of proving the validity of the termination of employment rests with the employer. Failure to discharge this evidentiary burden would necessarily mean that the dismissal was not justified and, therefore, illegal. Unsubstantiated suspicions, accusations, and conclusions of employers do not provide for legal justification for dismissing employees. In case of doubt, such cases should be resolved in favor of labor, pursuant to the social justice policy of labor laws and the Constitution.Anent the charge of unfair labor practice, Article 248 (a) of the Labor Code considers it an unfair labor practice when an employer interferes, restrains or coerces employees in the exercise of their right to self-organization or the right to form an association. In order to show that the employer committed unfair labor practice under the Labor Code, substantial evidence is required to support the claim. Substantial evidence has been defined as such relevant evidence as a reasonable mind might accept as adequate to support a conclusion. In the case at bar, respondents were indeed unceremoniously dismissed from work by reason of their intent to form and organize a union.

A corporation, being a juridical entity, may act only through its directors, officers and employees. Obligations incurred by them, while acting as corporate agents, are not their personal liability but the direct accountability of the corporation they represent. However, corporate officers may be deemed solidarily liable with the corporation for the termination of employees if they acted with malice or bad faith. In the present case, the lower tribunals unanimously found that Percy and Harbutt, in their capacity as corporate officers of Burgos, acted maliciously in terminating the services of respondents without any valid ground and in order to suppress their right to self-organization. Section 31 of the Corporation Code makes a director personally liable for corporate debts if he willfully and knowingly votes for or assents to patently unlawful acts of the corporation. It also makes a director personally liable if he is guilty of gross negligence or bad faith in directing the affairs of the corporation. Thus, Percy and Harbutt, having acted in bad faith in directing the affairs of Burgos, are jointly and severally liable with the latter for respondents’ dismissal.

The awards of moral and exemplary damages in favor of respondents are also in order. Moral damages may be recovered where the dismissal of the employee was tainted by bad faith or fraud, or where it constituted an act oppressive to labor, and done in a manner contrary to morals, good customs or public policy, while exemplary damages are recoverable only if the dismissal was done in a wanton, oppressive, or malevolent manner. The grant of attorney’s fees is likewise proper. Attorney’s fees may likewise be awarded to respondents who were illegally dismissed in bad faith and were compelled to litigate or incur expenses to protect their rights by

reason of the oppressive acts of petitioners. The unjustified act of petitioners had obviously compelled respondents to institute an action primarily to protect their rights and interests which warrants the granting of the award. Park Hotel, et al. vs. Manolo Soriano, et al. G.R. No. 171118. September 10, 2012.Employment termination; Substantive and procedural due process; Mass leave; Strike. Petitioners were illegally dismissed as they were not afforded substantive and procedural due process. To justify the dismissal of an employee on the ground of serious misconduct, the employer must first establish that the employee is guilty of improper conduct, that the employee violated an existing and valid company rule or regulation, or that the employee is guilty of a wrongdoing. In the instant case, Biomedica failed to even present a copy of the rules and to prove that petitioners were made aware of such regulations. The accusation is for engaging in a mass leave tantamount to an illegal strike. The phrase “mass leave” may refer to a simultaneous availment of authorized leave benefits by a large number of employees in a company. Here, only 5 employees were absent on the same day. They did not go on strike, which is a temporary stoppage of work by the concerted action of employees as a result of any industrial or labor dispute. “Concerted” is defined as “mutually contrived or planned” or “performed in unison”. In the case at bar, the 5 petitioners went on leave for various reasons. They were in different places to attend to their personal needs or affairs.The petitioners were charged with conducting an illegal strike, not a mass leave, without specifying the exact acts that the company considers as constituting an illegal strike or violative of company policies. Such allegation falls short of the requirement in King of Kings Transport, Inc. of “a detailed narration of the facts and circumstances that will serve as basis for the charge against the employees.” A bare mention of an “illegal strike” will not suffice. Further, while Biomedica cites the provisions of the company policy which petitioners purportedly violated, it failed to quote said provisions in the notice so petitioners can be adequately informed of the nature of the charges against them and intelligently file their explanation and defenses to said accusations.

Moreover, the period of 24 hours allotted to petitioners to answer the notice was severely insufficient and in violation of the implementing rules of the Labor Code. Under the implementing rule of Art. 277, an employee should be given “reasonable opportunity” to file a response to the notice.

In addition, Biomedica did not set the charges against petitioners for hearing or conference. While petitioners did not submit any written explanation to the charges, it is incumbent for Biomedica to set the matter for hearing or conference to hear the defenses and receive evidence of the employees. More importantly, Biomedica is duty-bound to exert efforts, during said hearing or conference, to hammer out a settlement of its differences with petitioners. These prescriptions Biomedica failed to satisfy. Lastly, Biomedica again deviated from the dictated contents of a written notice of termination as laid down in Sec. 2, Book V, Rule XIII of the Implementing Rules that it should embody the facts and circumstances to support the grounds justifying the termination. Alex Q. Naranjo, et al. vs. Biomedica Health Care, Inc., et al. G.R. No. 193789. September 19, 2012.Employee dismissal; Reinstatement. Following Article 279 of the Labor Code, 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 computed from the time he was illegally dismissed. However, considering that respondent Dakila was terminated one (1) day prior to his compulsory retirement on May 2, 2007, his reinstatement is no longer feasible. Accordingly, the NLRC correctly held him entitled to the payment of his retirement benefits pursuant to the CBA. On the other hand, his backwages should be computed only for days prior to his compulsory retirement which in this case is only a day. Consequently, the award of reinstatement wages pending appeal must be deleted for lack of basis. The New Philippine Skylanders, Inc. and/or Jennifer M. Eñano-Bote vs. Francisco N. Dakila.G.R. No. 199547. September 24, 2012Evidence; Constructive dismissal; Transfer; Substantial evidence. In labor cases, strict adherence with the technical rules is not required. This liberal policy, however, should still conform to the rudiments of equitable principles of law. For instance, belated submission of evidence may only be allowed if the delay is adequately justified and the evidence is clearly material to establish the party’s cause. Labor tribunals, such as the NLRC, are not precluded from receiving evidence submitted on appeal as technical rules are not binding in cases submitted before them. However, any delay in the submission of evidence should be adequately explained and

should adequately prove the allegations sought to be proven. In the present case, MORESCO II’s belated submission of evidence cannot be permitted. MORESCO II did not cite any reason why it had failed to file its position paper or present its cause before the Labor Arbiter despite sufficient notice and time given to do so. Only after an adverse decision was rendered did it present its defense and rebut the evidence of Cagalawan by alleging that his transfer was made in response to the letter-request of the area manager of the Ginoog sub-office asking for additional personnel to meet its collection quota. To our mind, however, the belated submission of the said letter-request without any valid explanation casts doubt on its credibility, especially so when the same is not a newly discovered evidence.The rule is that it is within the ambit of the employer’s prerogative to transfer an employee for valid reasons and according to the requirement of its business, provided that the transfer does not result in demotion in rank or diminution of salary, benefits and other privileges. This Court has always considered the management’s prerogative to transfer its employees in pursuit of its legitimate interests. But this prerogative should be exercised without grave abuse of discretion and with due regard to the basic elements of justice and fair play, such that if there is a showing that the transfer was unnecessary or inconvenient and prejudicial to the employee, it cannot be upheld. Here, while we find that the transfer of Cagalawan neither entails any demotion in rank since he did not have tenurial security over the position of head of the disconnection crew, nor result to diminution in pay as this was not sufficiently proven by him, MORESCO II’s evidence is nevertheless not enough to show that said transfer was required by the exigency of the electric cooperative’s business interest. Simply stated, the evidence sought to be admitted by MORESCO II is not substantial to prove that there was a genuine business urgency that necessitated the transfer.

When there is doubt between the evidence submitted by the employer and that submitted by the employee, the scales of justice must be tilted in favor of the employee. This is consistent with the rule that an employer’s cause could only succeed on the strength of its own evidence and not on the weakness of the employee’s evidence. Thus, MORESCO II cannot rely on the weakness of Ortiz’s certification in order to give more credit to its own evidence. Self-serving and unsubstantiated declarations are not sufficient where the quantum of evidence required to establish a fact is substantial evidence, described as more than a mere scintilla. The evidence must be real and substantial, and not merely apparent. MORESCO II has miserably failed to discharge the onus of proving the validity of Cagalawan’s transfer. Misamis Oriental II Electric Service Cooperative (MORESCO II) vs. Virgilio M. Cagalawan. G.R. No. 175170. September 5, 2012.Retirement benefits. While it is true that based on prevailing jurisprudence, disallowed benefits received in good faith need not be refunded, the case before us may be distinguished from those cases with that ruling because the monies involved here are retirement benefits. Retirement benefits belong to a different class of benefits. All the cases with that ruling involved benefits such as cash gifts, representation allowances, rice subsidies, uniform allowances, per diems, transportation allowances, and the like. The foregoing allowances or fringe benefits are given in addition to one’s salary, either to reimburse him for expenses he might have incurred in relation to his work, or as a form of supplementary compensation. On the other hand, retirement benefits are given to one who is separated from employment either voluntarily or compulsorily. Such benefits, subject to certain requisites imposed by law and/or contract, are given to the employee on the assumption that he can no longer work. They are also given as a form of reward for the services he had rendered. The purpose is not to enrich him but to help him during his non-productive years.Our Decision does not preclude the retirees from receiving retirement benefits provided by existing retirement laws. What they are prohibited from getting are the additional benefits under the GSIS RFP, which we found to have emanated from a void and illegal board resolution. To allow the payees to retain the disallowed benefits would amount to their unjust enrichment to the prejudice of the GSIS, whose avowed purpose is to maintain its actuarial solvency to finance the retirement, disability, and life insurance benefits of its members. Government Service Insurance System (GSIS), et al. vs. Commission on Audit (COA), et al. G.R. No. 162372. September 11, 2012.Release/Quitclaim; Separation pay. The release/quitclaim affidavits are invalid for being against public policy for two reasons: (1) the terms of the settlement are unconscionable; the separation pay for termination due to reorganization/restructuring was deficient by Php400,000.00 for each employee; they were given only half of the amount they were legally entitled to; and (2) the absence of voluntariness when the employees signed the document, it was their dire circumstances and inability to support their families that finally drove them to

accept the amount offered. Without jobs and with families to support, they dallied in executing the quitclaim instrument, but were eventually forced to sign given their circumstances. To be sure, a settlement under these terms is not and cannot be a reasonable one, given especially the respondent’s length of service – 25 years for Ybarola and 19 years for Rivera. Radio Mindanao Network, Inc. and Eric S. Canoy vs. Domingo Z. Ybarola, et al. G.R. No. 198662. September 12, 2012.Res judicata. “Res judicata means a matter adjudged; a thing judicially acted upon or decided; a thing or matter settled by judgment.” It denotes “that a final judgment or decree on the merits by a court of competent jurisdiction is conclusive of the rights of the parties or their privies in all latter suits on all points and matters determined in the former suit. For res judicata, in its concept as a bar by former judgment to apply, the following must be present:1. The former judgment or order is final;

2. It is rendered by a court having jurisdiction over the subject matter and the parties;

3. It is a judgment or an order on the merits; and,

4. There is between the first and the second identity of parties, identity of subject matter, and identity of cause of action.

The Decision of this Court in G.R. Nos. 159460 and 159461 became final and executory on May 20, 2011. It is a decision based on the merits of the case and rendered by this Court in the exercise of its appellate jurisdiction after the parties invoked its jurisdiction. There is also, between the two sets of consolidated cases, identity of the parties, subject matter and causes of action. The parties in G.R. No. 159460 and 159461 are also impleaded as parties in these consolidated cases. And while some of the parties herein are not included in G.R. Nos. 159460 and 159461, the same are only few. In any event, it is well-settled that only substantial, and not absolute, identity of the parties is required for res judicata to lie. “There is substantial identity of the parties when there is a community of interest between a party in the first case and a party in the second case albeit the latter was not impleaded in the first case.”

With regard to identity of cause of action, it has been held that there is identity of causes of action when the same evidence will sustain both actions or when the facts essential to the maintenance of the two actions are identical. Here, the bone of contention in both sets of consolidated cases boils down to the nature and consequences of complainants’ April 3, 2000 mass action. The antecedent facts that gave rise to all the cases were the same. Necessarily, therefore, the same evidence would sustain all actions. Such similarity in the evidence required to sustain all actions is also borne out by the identity of the issues involved in all these cases. While the parties have presented a plethora of arguments which we earlier discussed at length, the same nonetheless boil down to the same crucial issues formulated in G.R. Nos. 159460 and 159461.

It should be recalled that in G.R. No. 153799, the complainants assailed the Resolutions dated January 14, 2002 and February 20, 2002 of the CA’s Fourth Division granting Metrobank’s request for injunctive reliefs. They claimed that the reinstatement aspect of the Labor Arbiter’s Decision is immediately executory. Hence, they are entitled to backwages from the time the Labor Arbiter promulgated his Decision until it was reversed by the NLRC.

As discussed above, however, the November 15, 2010 Decision of this Court in G.R. Nos. 159460 and 159461 already adjudicated the respective rights and liabilities of the parties. Said Decision pronouncing the monetary awards to which the parties herein are entitled became final and executory on May 20, 2011. Under the rule on immutability of judgment, this Court cannot alter or modify said Decision. It is a well-established rule that once a judgment has become final and executory, it is no longer susceptible to any modification. Solidbank Union, et al. vs. Metropolitan Bank and Trust Company/Metropolitan Bank and Trust Company vs. Solidbank Union, et al./Solidbank Corporation, etc., et al. vs. Solidbank Union, et al./Solidbank Union, et al. vs.

Metropolitan Bank and Trust Company. G.R. No. 153799/G.R. No. 157169/G.R. No. 157327/G.R. No. 157506. September 17, 2012.Reinstatement; Strained relations. A determination of the applicability of the doctrine of strained relations is essentially a factual question and, thus, not a proper subject in this petition. This rule, however, admits of exceptions. In cases where the factual findings of the LA and the NLRC are conflicting, the Court, in the exercise if equity jurisdiction, may review and re-evaluate the factual issues and look into the records of the case and re-examine the questioned findings.As the records bear out, the LA found that patent animosity existed between ACMC and Bides considering the confrontation that took place between the latter and Matthew. The confrontation coupled with Bides’ refusal to be reinstated led to the LA’s finding of “strained relations” necessitating an award of separation pay in lieu of reinstatement. The NLRC, on the other hand, deleted the said award for lack of factual basis. The CA reinstated the LA’s finding of “strained relations” and explained that too much enmity had developed between ACMC and Bides that necessarily barred the latter’s reinstatement.

The Court is well aware that reinstatement is the rule and, for the exception of “strained relations” to apply, it should be proved that it is likely that, if reinstated, an atmosphere of antipathy and antagonism would be generated as to adversely affect the efficiency and productivity of the employee concerned.

Under the doctrine of strained relations, the payment of separation pay is considered an acceptable alternative to reinstatement when the latter option is no longer desirable or viable. On one hand, such payment liberates the employee from what could be a highly oppressive work environment. On the other hand, it releases the employer from the grossly unpalatable obligation of maintaining in its employ a worker it could no longer trust. Moreover, the doctrine of strained relations has been made applicable to cases where the employee decides not to be reinstated and demands for separation pay.

In the present case, Bides has consistently maintained, from the proceedings in the LA up to the CA, his refusal to be reinstated due to his fear of reprisal which he could experience as a consequence of his return. By doing so, Bides unequivocally foreclosed reinstatement as a relief.

Apo Chemical Manufacturing and Michael Cheng vs. Ronaldo A. Bides. G.R. No. 186002. September 19, 2012.Seafarers disability benefits; Attorney’s fees. In determining the disability benefits due a seafarer the POEA Standard Employment Contract (SEC), specifically its schedule of benefits, medical findings, Article 192 (c)(1) of the Labor Code, and Rule X, Section 2 of its implementing rules and regulations must be considered. The initial treatment period of 120 days may be extended up to a maximum of 240 days under the conditions prescribed by law.Under Article 2298 of the Civil Code, attorney’s fees can be recovered “[w]hen the defendant’s act or omission has compelled the plaintiff to litigate with third persons or to incur expenses to protect his interest.” This Court sees no reason why damages or attorney’s fees should be awarded to Penales. It is obvious that he did not give the petitioners’ company-designated physician ample time to assess and evaluate his condition, or to treat him properly for that matter. The petitioners had a valid reason for refusing to pay his claims, especially when they were complying with the terms of the POEA SEC with regard to his allowances and treatment. Pacific Ocean Manning Inc., et al. vs. Benjamin D. Penales. G.R. No. 162809. September 5, 2012.

January 2013 Philippine Supreme Court Decisions on Labor Law and ProcedurePosted on February 11, 2013 by Leslie C. Dy • Posted in Labor Law, Philippines - Cases, Philippines - Law • Tagged appeal,arbitration, backwages, forum shopping, NLRC, redundancy, reinstatement •Here are select January 2013 rulings of the Supreme Court of the Philippines on labor law and procedure:

Appeal to the National Labor Relations Commission (NLRC); Requisites for perfection of appeal; Joint declaration under oath accompanying the surety bond; Substantial compliance with procedural rules. There was substantial compliance with the NLRC Rules of Procedure when the respondents PAL Maritime Corporation and Western Shipping Agencies, Pte., Ltd. filed, albeit belatedly, the Joint Declaration Under Oath, which is required when an employer appeals from the Labor Arbiter’s decision granting a monetary award and posts a surety bond. Under the NLRC rules, the following requisites are required to perfect the employer’s appeal: (1) it must be filed within the reglementary period; (2) it must be under oath, with proof of payment of the required appeal fee and the posting of a cash or surety bond; and (3) it must be accompanied by typewritten or printed copies of the memorandum of appeal, stating the grounds relied upon, the supporting arguments, the reliefs prayed for, and a statement of the date of receipt of the appealed decision, with proof of service on the other party of said appeal. If the employer posts a surety bond, the NLRC rules further require the submission by the employer, his or her counsel, and the bonding company of a joint declaration under oath attesting that the surety bond posted is genuine and that it shall be in effect until the final disposition of the case.In the case at bar, the respondents posted a surety bond equivalent to the monetary award and filed the notice of appeal and the appeal memorandum within the reglementary period. When the NLRC subsequently directed the filing of a Joint Declaration Under Oath, the respondents immediately complied with the said order. There was only a late submission of the Joint Declaration. Considering that there was substantial compliance with the rules, the same may be liberally construed. The application of technical rules may be relaxed in labor cases to serve the demands of substantial justice. Rolando L. Cervantes vs. PAL Maritime Corporation and/or Western Shipping Agencies, Pte., Ltd. G.R. No. 175209. January 16, 2013.Completeness of service by registered mail; Exception to the general rule regarding a corporation’s verification and certification of non-forum shopping; Interpretation of school CBA. A school CBA must be read in conjunction with statutory and administrative regulations governing faculty qualifications. Such regulations form part of a valid CBA without need for the parties to make express reference to the same.In the case at bar, the University of the East (UE) repeatedly extended only semester-to-semester faculty appointments to the respondents Pepanio and Bueno, since they had not completed postgraduate degrees. The respondents, however, claimed that the 1994 CBA between UE and the faculty union did not yet require a master’s degree for a teacher to acquire regular status. Having rendered more than three consecutive years of full-time service to the school, the respondents insisted that UE should have given them permanent appointments.

The Supreme Court observed that the policy requiring college teachers to have postgraduate degrees was provided in the Manual of Regulations issued as early as 1992 by the Department of Education, Culture and Sports (DECS), now the Department of Education. In promulgating the Manual of Regulations, DECS exercised its power of regulation over educational institutions, which includes prescribing the minimum academic qualifications for teaching personnel. The legislature subsequently transferred the power to prescribe such qualifications for teachers in institutions of higher learning to the Commission on Higher Education (CHED). However, the 1992 Manual of Regulations issued by DECS continued to apply to colleges and universities until 2010, when CHED issued a Revised Manual of Regulations.

Thus, the requirement of a master’s degree for college teachers, as originally provided in the 1992 Manual of Regulations, was deemed incorporated in the 1994 CBA between UE and the faculty union. Furthermore, the

subsequent CBA in 2001, which provided for the extension of conditional probationary status to the respondents, subject to their obtaining a master’s degree within the probationary period, clearly showed that UE intended to subject the respondents’ appointments to the standards set by the law.

The requirement of a master’s degree for tertiary education teachers is not unreasonable, considering that the operation of educational institutions involves public interest. The government has a right to ensure that only qualified persons, in possession of sufficient academic knowledge and teaching skills, are allowed to teach in such institutions.

The Supreme Court also overruled the respondents’ contention that UE filed its appeal to the NLRC beyond the required ten (10)-day period. For completeness of service by registered mail, the reckoning period starts either from the date of actual receipt of the mail by the addressee or after five (5) days from the date he or she received the first notice from the postmaster. In this case, the respondents averred that, on March 17, 2005, the postmaster gave UE’s counsel a notice to claim the mail containing the Labor Arbiter’s decision. The respondents claimed that UE’s counsel was deemed in receipt of the decision 5 days after the giving of the notice, or on March 22, 2005. Thus, according to the respondents, when UE filed its appeal to the NLRC on April 14, 2005, the 10-day reglementary period had already lapsed. The Supreme Court, however, ruled that there must be conclusive proof that the registry notice was received by or at least served on the addressee. In this case, the records did not show that UE’s counsel in fact received the alleged registry notice requiring him to claim the mail. On the other hand, UE was able to present a registry return receipt showing that its counsel actually received a copy of the Labor Arbiter’s decision on April 4, 2005. Reckoned from this date, the 10-day reglementary period had not yet lapsed when UE filed its appeal to the NLRC on April 14, 2005.

Anent UE’s failure to comply with the general rule that the Board of Directors or Board of Trustees of a corporation must authorize the person who shall sign the verification and certification of non-forum shopping accompanying a petition, the Supreme Court held that such authorization is not necessary when it is self-evident that the signatory is in a position to verify the truthfulness and correctness of the allegations in the petition. The Supreme Court declared that Dean Eleanor Javier, who signed UE’s verification and certification, was in such a position, since she knew the factual antecedents of the case and she actually communicated with the respondents regarding the required postgraduate qualification. University of the East, et al. vs. Analiza F. Pepanio and Mariti D. Bueno. G.R. No. 193897. January 23, 2013.Disease as a ground for termination; Retirement under the Labor Code; Age and tenure requirements for retirement; Financial assistance. Under the Labor Code provision on disease as a ground for termination (formerly, Article 284, but now renumbered pursuant to Republic Act No. 10151), it must be the employer who initiates the termination of the employee’s services. The aforementioned provision cannot be applied in this case, considering that it was the late petitioner Padillo, and not the Rural Bank of Nabunturan, Inc. (Bank), who severed the employment relations. With his memory impaired after suffering a mild stroke due to hypertension, Padillo wrote a letter to the Bank, expressing his intention to avail of an early retirement package. The clear import of Padillo’s letter and the fact that he had stopped reporting for work even before sending the said letter shows that he voluntarily retired. Given the inapplicability of the Labor Code provision on disease as a ground for termination, it necessarily follows that Padillo’s claim for separation pay must be denied.As regards Padillo’s claim for retirement benefits, the provision of the Labor Code on retirement (formerly, Art. 287, but now renumbered pursuant to R.A. No. 10151) states that, in the absence of any applicable agreement, an employee who has served at least five (5) years in the company may retire upon reaching the age of sixty (60) years, but not beyond sixty-five (65) years, to be entitled to retirement pay equivalent to at least one-half (1/2) month salary for every year of service, with a fraction of at least six (6) months being considered as one whole year. Notably, the aforementioned age and tenure requirements are cumulative, and non-compliance with either negates the employee’s entitlement to the retirement pay under the Labor Code. In this case, the Bank did not have a retirement plan or any other contract with its employees, setting the terms and conditions for retirement. Padillo also served the Bank for twenty-nine (29) years, far more than the 5-year tenure requirement. Padillo, however, did not meet the age requirement, considering that he was only

fifty-five (55) years old, or less than 60 years of age, when he retired. Thus, Padillo’s claim for retirement pay must also be denied.

Nevertheless, the Supreme Court awarded Padillo financial assistance in the amount of P75,000, considering the length of time which had supervened before the disposition of this case and Padillo’s unblemished record of 29 years of service to the Bank. The award was in addition to the P100,000 benefit receivable under the Philam Life Plan that the Bank had procured in favor of Padillo. Eleazar S. Padillo vs. Rural Bank of Nabunturan, Inc., et al. G.R. No. 199338. January 21, 2013.Redundancy as an authorized cause for termination; Difference between retirement and termination due to redundancy; General rule regarding the factual findings of the NLRC and the exceptions thereto. Under the Labor Code, redundancy is one of the authorized causes for termination of employment. The following are the requisites for the valid implementation of a redundancy program: (a) the employer must serve a written notice to the affected employees and to the Department of Labor and Employment (DOLE) at least one month before the intended date of termination; (b) the employer must pay the employees separation pay equivalent to at least one month pay or at least one month pay for every year of service, whichever is higher; (c) the employer must abolish the redundant positions in good faith; and (d) the employer must set fair and reasonable criteria in ascertaining which positions are redundant and may be abolished. The Supreme Court has also held that a company cannot simply declare redundancy without basis. To exhibit its good faith and to show that there were fair and reasonable criteria in ascertaining redundant positions, a company claiming to be over manned must produce adequate proof of the same.In the case at bar, the General Milling Corporation (GMC) furnished respondent Viajar a written notice informing her of the termination of her services on the ground of redundancy. GMC also submitted to the DOLE an Establishment Termination Report, regarding the employees, including Viajar, whose positions were deemed redundant. Viajar and the DOLE received the respective notices one month before the effective date of the employees’ termination. Furthermore, GMC issued to Viajar two checks amounting to P440,253.02 and P21,211.35, representing her separation pay. However, the Supreme Court held that, notwithstanding compliance with the requirements on notice and the payment of separation pay, GMC is still considered to have illegally dismissed Viajar because the company failed to present substantial proof to support its general allegations of redundancy. GMC could have presented evidence to substantiate redundancy, such as a new staffing pattern or feasibility studies or proposals on the viability of newly created positions, job descriptions and the approval by management of the restructuring program, or the company’s audited financial reports. However, no such evidence was submitted by GMC.

On the other hand, Viajar presented proof negating GMC’s claim of redundancy and clearly showing GMC’s bad faith in implementing the redundancy program: (1) GMC had hired new employees before it terminated Viajar’s employment; (2) Vaijar was barred from entering the company premises even before the effectivity of her separation; and (3) Viajar was also forced to sign an “Application for Retirement and Benefits” so that she could avail of her separation pay. The last circumstance is significant, considering that there is a difference between voluntary retirement and forced termination of an employee. Retirement from service is contractual or based on a bilateral agreement of the employer and the employee, while termination of employment is statutory or governed by the Labor Code and other related laws. Voluntary retirement cuts employment ties, leaving no residual employer liability; involuntary retirement amounts to a discharge, rendering the employer liable for termination without cause. GMC’s demand that Viajar sign an Application for Retirement and Benefits, when she had already been informed of the termination of her services due to redundancy, shows that this case involves not a voluntary retirement, but an illegal termination.

While the Labor Arbiter and the NLRC both found that Viajar was validly dismissed, the general rule that the factual findings of the NLRC must be accorded respect and finality is not applicable in this case. One of the exceptions to the said rule covers instances when the findings of fact of the trial court, or of the quasi-judicial agencies concerned, are conflicting or contradictory with those of the Court of Appeals, as in the present case. Another exception to the general rule is when the said findings are not supported by substantial evidence or the inference or conclusion arrived at is manifestly erroneous. In the case at bar, the Supreme Court agreed with

the Court of Appeals that the NLRC’s conclusion that Viajar was legally dismissed is manifestly erroneous. General Milling Corporation vs. Violeta L. Viajar. G.R. No. 181738. January 30, 2013.Reinstatement; Backwages. It is basic in jurisprudence that illegally dismissed workers are entitled to reinstatement with backwages plus interest at the legal rate.This labor controversy started when the employer Automotive Engine Rebuilders, Inc. (AER) and the Progresibong Unyon ng mga Manggagawa sa AER (Union) filed charges against each other for violating labor laws. AER filed a complaint against the Union and eighteen (18) of its members for conducting an illegal strike. On the other hand, thirty-two (32) employees filed a complaint against AER for unfair labor practices, illegal dismissal, illegal suspension, and run-away shop. In a previous decision (G.R. No. 160138, July 13, 2011), the Supreme Court had held that both parties were at fault or in pari delicto; hence, the complaining employees should be reinstated but without backwages. The Motion for Partial Reconsideration filed by the Union is resolved in the present case.

The Supreme Court found that, of the 32 employees who filed the complaint against AER, only 18 had been charged by AER with illegal strike, leaving 14 excluded from the employer’s complaint. As no charges had been filed against the 14 workers, they cannot be found guilty of illegal strike. Neither can they be considered in pari delicto. However, of the 14 employees, five failed to write their names and affix their signatures in the Membership Resolution attached to their petition before the Court of Appeals, authorizing the union president to represent them. Thus, while these five employees will also be reinstated, they cannot be granted backwages. On the other hand, the nine workers who signed their names in the aforementioned Membership Resolution will be reinstated with backwages plus interest at the legal rate. Automotive Engine Rebuilders, Inc. (AER), et al. vs. Progresibong Unyon ng mga Manggagawa sa AER, et al. / Progresibong Unyon ng mga Manggagawa sa AER, et al. vs. Automotive Engine Rebuilders, Inc., et al. G.R. Nos. 160138 and 160192. January 16, 2013.Resignation; Resignation in relation to the subsequent filing of an illegal dismissal case. Petitioner Cervantes’s claim that he did not resign but was terminated from employment is untenable. Resignation is the voluntary act of an employee who finds himself in a situation where he believes that personal reasons cannot be sacrificed in favor of the exigency of the service, such that he has no other choice but to disassociate himself from his employment.In the present case, Cervantes’s employer merely informed him of the numerous complaints against him. It was Cervantes himself who opted to be relieved from his post and who initiated his repatriation to Manila. This is clear from the tenor of his telex message, which reads in part: “ANYHOW TO AVOID REPETITION [ON] MORE HARSH REPORTS TO COME. BETTER ARRANGE MY RELIEVER [AND] C/O BUSTILLO RELIEVER ALSO. UPON ARR NEXT USA LOADING PORT FOR THEIR SATISFACTION.” Cervantes’s message contains an unmistakable demand to be relieved of his assignment. His employer merely accepted his resignation. Thus, the rule that the filing of a complaint for illegal dismissal is inconsistent with resignation does not hold true in this case. The clear tenor of Cervantes’s resignation letter and the filing of this case one year after his alleged termination shows that the complaint for illegal dismissal was a mere afterthought. Rolando L. Cervantes vs. PAL Maritime Corporation and/or Western Shipping Agencies, Pte., Ltd. G.R. No. 175209. January 16, 2013.Voluntary Arbitration; Plenary authority and jurisdiction of a voluntary arbitrator; Concept and exercise of management prerogative; Limitations on the exercise of management prerogative; Nature of collective bargaining agreements (CBA). Goya, Inc.’s contention that the Voluntary Arbitrator (VA) exceeded his power in ruling on a matter not covered by the sole issue submitted for voluntary arbitration is untenable. In a prior case, the Supreme Court has ruled that, in general, the arbitrator is expected to decide those questions expressly stated and limited in the submission agreement. However, since arbitration is the final resort for the adjudication of disputes, the arbitrator can assume that he has the power to make a final settlement. The VA has plenary jurisdiction and authority to interpret the CBA and to determine the scope of his or her own authority. Subject to judicial review, this leeway of authority and adequate prerogative is aimed at accomplishing the rationale of the law on voluntary arbitration – speedy labor justice.In the case at bar, Goya, Inc. and Goya, Inc. Employees Union (Union) submitted for voluntary arbitration the sole issue of whether or not the company is guilty of an unfair labor practice in engaging the services of PESO, a third party service provider, under existing CBA, laws, and jurisprudence. The Union claimed that the hiring

of contractual workers from PESO violated the CBA provision that prescribes only three categories of workers in the company, namely: the probationary, the regular, and the casual employees. Instead of hiring contractual workers, Goya, Inc. should have hired probationary or casual employees, who could have become additional Union members, pursuant to the union security clause in the CBA. The VA ruled that while Goya, Inc. was not guilty of any unfair labor practice, it still committed a violation of the CBA, though such violation was not gross in character. The Supreme Court held that the VA’s ruling is interrelated and intertwined with the sole issue submitted for arbitration. The ruling was necessary to make a complete and final adjudication of the dispute between the parties.

Furthermore, Goya, Inc.’s assertion that its hiring of contractual workers was a valid exercise of management prerogative is erroneous. Declaring that a particular act falls within the concept of management prerogative is significantly different from acknowledging that such act is a valid exercise thereof. While the VA and the Court of Appeals ruled that the act of contracting out or outsourcing work is within the purview of management prerogative, they did not declare such act to be a valid exercise thereof. As repeatedly held, the exercise of management prerogative is not unlimited; it is subject to the limitations found in the law, CBA, or general principles of fair play and justice.

In this case, the CBA provision prescribing the categories of employees in the company and the union security clause are interconnected and must be given full force and effect. The parties in a CBA are free to establish such stipulations they may deem convenient, provided that the same are not contrary to law, morals, good customs, public order, or public policy. Where the CBA is clear and unambiguous, the literal meaning of its stipulations shall control. The CBA becomes the law between the parties, and compliance therewith is mandated by the express policy of the law. Goya, Inc. vs. Goya, Inc. Employees Union-FFW. G.R. No. 170054. January 21, 2013.

December 2013 Philippine Supreme Court Decisions on Labor LawPosted on January 17, 2014 by Leslie C. Dy • Posted in Labor Law, Philippines - Cases, Philippines - Law •Here are select December 2013 rulings of the Supreme Court of the Philippines on labor law:

Appeal; NLRC; accredited bonding company; revocation of authority is prospective in application. The respondents filed a surety bond issued by Security Pacific Assurance Corporation (Security Pacific) on June 28, 2002. At that time, Security Pacific was still an accredited bonding company. However, the NLRC revoked its accreditation on February 16, 2003. This subsequent revocation should not prejudice the respondents who relied in good faith on the then subsisting accreditation of Security Pacific. In Del Rosario v. Philippine Journalists, Inc. (G.R. No. 181516, August 19, 2009), it was held that a bonding company’s revocation of authority is prospective in application. Nonetheless, the respondents should post a new bond issued by an accredited bonding company in compliance with paragraph 4, Section 6, Rule 6 of the NLRC Rules of Procedure, which states that “[a] cash or surety bond shall be valid and effective from the date of deposit or posting, until the case is finally decided, resolved or terminated or the award satisfied.” Wilgen Loon, et al. v. Power Master, Inc., et al., G.R. No. 189404, December 11, 2013.Appeal; NLRC; bond; jurisdictional. Paragraph 2, Article 223 of the Labor Code provides that “[i]n case of a judgment involving a monetary award, an appeal by the employer may be perfected only upon the posting of a cash or surety bond issued by a reputable bonding company duly accredited by the NLRC in the amount equivalent to the monetary award in the judgment appealed from.” Contrary to the respondents’ claim, the issue of the appeal bond’s validity may be raised for the first time on appeal since its proper filing is a jurisdictional requirement. The requirement that the appeal bond should be issued by an accredited bonding company is mandatory and jurisdictional. The rationale of requiring an appeal bond is to discourage the employers from using an appeal to delay or evade the employees’ just and lawful claims. It is intended to

assure the workers that they will receive the money judgment in their favor if the employer’s appeal is dismissed. Wilgen Loon, et al. v. Power Master, Inc., et al., G.R. No. 189404, December 11, 2013.Appeal; NLRC; verification; formal requisite, not jurisdictional. Neither the laws nor the rules require the verification of the supplemental appeal. Furthermore, verification is a formal, not a jurisdictional, requirement. It is mainly intended to give assurance that the matters alleged in the pleading are true and correct and not of mere speculation. Also, a supplemental appeal is merely an addendum to the verified memorandum on appeal that was earlier filed in the case; hence, the requirement for verification has been substantially complied. Wilgen Loon, et al. v. Power Master, Inc., et al., G.R. No. 189404, December 11, 2013.Appeal; Rule 45; limited to review of questions of law. In this Rule 45 petition for review on certiorari, the Supreme Court (SC) reviewed the Court of Appeals’ (CA) decision of a Rule 65 petition for certiorari. The Supreme Court’s power of review in such case is limited to legal errors that the CA might have committed in issuing its assailed decision, in contrast with the review for jurisdictional errors which it undertakes in an original certiorari (Rule 65) action filed with it. The SC examines the CA decision based on how it determined the presence or absence of grave abuse of discretion in the manner by which the NLRC rendered its decision and not on the basis of whether the NLRC decision on the merits of the case was correct. Moreover, the Court’s power in a Rule 45 petition limits it to a review of questions of law raised against the assailed CA decision. Baguio Central University v. Ignacio Gallente, G.R. No. 188267, December 2, 2013.Attorney’s fees; when entitled. An employee is entitled to an award of attorney’s fees equivalent to ten percent (10%) of the amount of the wages in actions for unlawful withholding of wages pursuant to Article 111 of the Labor Code. Wilgen Loon, et al. v. Power Master, Inc., et al., G.R. No. 189404, December 11, 2013.Backwages; when entitled. In termination cases, the burden of proving just and valid cause for dismissing an employee from his employment rests upon the employer. The employer’s failure to discharge this burden in the instant case arising from their non-submission of evidence at the proceedings before the labor arbiter resulted in the finding that the dismissal is unjustified. Thus, the employees are entitled to the payment of backwages. Wilgen Loon, et al. v. Power Master, Inc., et al., G.R. No. 189404, December 11, 2013.Deeds of release and quitclaim; grounds to invalidate. As a rule, deeds of release and quitclaim cannot bar employees from demanding benefits to which they are legally entitled or from contesting the legality of their dismissal. The acceptance of those benefits would not amount to estoppel. To excuse respondents from complying with the terms of their waivers, any one of the following grounds must exist: (1) the employer used fraud or deceit in obtaining the waivers; (2) the consideration the employer paid is incredible and unreasonable; or (3) the terms of the waiver are contrary to law, public order, public policy, morals, or good customs or prejudicial to a third person with a right recognized by law. The Court concluded that the instant case falls under the first situation.As the ground for termination of employment was illegal, the quitclaims are deemed illegal because the employees’ consent had been vitiated by mistake or fraud. The law looks with disfavor upon quitclaims and releases by employees pressured into signing by unscrupulous employers minded to evade legal responsibilities. The circumstances show that petitioner’s misrepresentation led its employees, specifically respondents herein, to believe that the company was suffering losses which necessitated the implementation of the voluntary retirement and retrenchment programs, and eventually the execution of the deeds of release, waiver and quitclaim. The amounts already received by respondents as consideration for signing the releases and quitclaims, however, should be deducted from their respective monetary awards. Philippine Carpet Manufacturing Corporation, et al. v. Ignacio B. Tagyamon, et al., G.R. No. 191475, December 11, 2013.Disability benefits; principle of work-aggravation; concept of. Compensability may be established on the basis of the theory of work aggravation if, by substantial evidence, it can be demonstrated that the working conditions aggravated or at least contributed in the advancement of respondent’s cancer. As held in Rosario v. Denklav Marine, “the burden is on the beneficiaries to show a reasonable connection between the causative circumstances in the employment of the deceased employee and his death or permanent total disability.” In the present case, both parties failed to discharge their respective burdens – for petitioners, they failed to prove the non-work-relatedness of the disease; and for respondent, he failed to prove that his work aggravated his condition. Thus, the Court had to resolve the case on some other basis. The Court held that disability should be understood not more on its medical significance, but on the loss of earning capacity. Permanent total disability means disablement of an employee to earn wages in the same kind of work or work of similar nature that he was trained for or accustomed to perform, or any kind of work which a person of his mentality and attainment

could do. It does not mean absolute helplessness. Evidence of this condition can be found in a certification of fitness/unfitness to work issued by the company-designated physician. In this case, records reveal that the medical report issued by the company-designated oncologist was bereft of any certification that respondent remained fit to work as a seafarer despite his cancer. This is important, according to the Court, since the certification is the document that contains the assessment of his disability which can be questioned in case of disagreement as provided under Section 20 (B) (3) of the POEA-SEC. In the absence of any certification, the law presumes that the employee remains in a state of temporary disability. Should no certification be issued within 240 day maximum period, as in this case, the pertinent disability becomes permanent in nature. Accordingly, the Court affirmed respondent’s entitlement to permanent total disability benefits awarded to him. Jebsens Maritime, Inc., et al. v. Eleno A. Baol, G.R. No. 204076, December 4, 2013.Disability benefits; principle of work-relation; concept of. As a general rule, the principle of work-relation requires that the disease in question must be one of those listed as an occupational disease under Sec. 32-A of the POEA-SEC. Nevertheless, should it be not classified as occupational in nature, Section 20 (B) paragraph 4 of the POEA-SEC provides that such diseases are disputably presumed as work-related.In this case, it is undisputed that Nasopharyngeal Carcinoma (NPC) afflicted respondent while on board the petitioners’ vessel. As a non-occupational disease, it has the disputable presumption of being work-related. This presumption obviously works in the seafarer’s favor. Hence, unless contrary evidence is presented by the employers, the work-relatedness of the disease must be sustained. The Court held that the petitioners, as employers, failed to disprove the presumption of NPC’s work-relatedness. The petitioners primarily relied on the medical report issued by Dr. Co Pefia which, however, failed to make a categorical statement confirming the total absence of work relation. As the doctor opined only a probability, there was no certainty that his condition was not work related. There being no certainty, the Court will lean in favor of the seafarer consistent with the mandate of POEA-SEC to secure the best terms and conditions of employment for Filipino workers. Hence, the presumption of NPC’s work-relatedness stays. Jebsens Maritime, Inc., et al. v. Eleno A. Baol, G.R. No. 204076, December 4, 2013.Illegal dismissal; burden of proof. In termination cases, the burden of proving just and valid cause for dismissing an employee from his employment rests upon the employer. The employer’s failure to discharge this burden results in the finding that the dismissal is unjustified.Failing to prove just and valid cause for the dismissal, the Court held that the petitioners are entitled to salary differential, service incentive, holiday, and thirteenth month pays. As in illegal dismissal cases, the general rule is that the burden rests on the defendant to prove payment rather than on the plaintiff to prove non-payment of these money claims. However, the Court decided that they are not entitled to overtime and premium pays. The burden of proving entitlement to overtime pay and premium pay for holidays and rest days rests on the employee because these are not incurred in the normal course of business. In the present case, the petitioners failed to adduce any evidence that would show that they actually rendered service in excess of the regular eight working hours a day, and that they in fact worked on holidays and rest days. Wilgen Loon, et al. v. Power Master, Inc., et al., G.R. No. 189404, December 11, 2013.Labor cases; strict adherence to the technical rules of procedure is not required; when liberality allowed. In labor cases, strict adherence to the technical rules of procedure is not required. Time and again, the Court has allowed evidence to be submitted for the first time on appeal with the NLRC in the interest of substantial justice. Thus, it has consistently supported the rule that labor officials should use all reasonable means to ascertain the facts in each case speedily and objectively, without regard to technicalities of law or procedure, in the interest of due process. However, this liberal policy should still be subject to rules of reason and fairplay. The liberality of procedural rules is qualified by two requirements: (1) a party should adequately explain any delay in the submission of evidence; and (2) a party should sufficiently prove the allegations sought to be proven. The reason for these requirements is that the liberal application of the rules before quasi-judicial agencies cannot be used to perpetuate injustice and hamper the just resolution of the case. Neither is the rule on liberal construction a license to disregard the rules of procedure. In the present case, the Court held that the respondents failed to adequately explain their delay in the submission of evidence and prove the allegations sought to be proven. Wilgen Loon, et al. v. Power Master, Inc., et al., G.R. No. 189404, December 11, 2013.Labor; ground for valid dismissal; loss of trust and confidence; requisites. Loss of trust and confidence is a just cause for dismissal under Article 282(c) of the Labor Code. Article 282(c) provides that an employer may terminate an employment for “fraud or willful breach by the employee of the trust reposed in him by his

employer or duly authorized representative.” However, in order for the employer to properly invoke this ground, the employer must satisfy two conditions. First, the employer must show that the employee concerned holds a position of trust and confidence. Second, the employer must establish the existence of an act justifying the loss of trust and confidence. To be a valid cause for dismissal, the act that betrays the employer’s trust must be real, i.e., founded on clearly established facts, and the employee’s breach of the trust must be willful, i.e., it was done intentionally, knowingly and purposely, without justifiable excuse.In Lopez v. Keppel Bank Philippines, Inc. (G.R. No. 176800, September 5, 2011), the Court repeated the guidelines for the application of loss of confidence as follows: (1) loss of confidence should not be simulated; (2) it should not be used as a subterfuge for causes which are improper, illegal or unjustified; (3) it may not be arbitrarily asserted in the face of overwhelming evidence to the contrary; and (4) it must be genuine, not a mere afterthought to justify an earlier action taken in bad faith.

As applied to the dismissal of managerial employees, employers – as a rule – enjoy wider latitude of discretion. They are not required to present proof beyond reasonable doubt as the mere existence of a basis for believing that such employee has breached the trust of the employer would suffice for the dismissal. Thus, as long as the employer “has reasonable ground to believe that the employee concerned is responsible for the purported misconduct, and the nature of his participation therein renders him unworthy of the trust and confidence demanded of his position,” the dismissal on this ground is valid.

The Court held that there was sufficient basis to dismiss the respondent for loss of trust and confidence. First, the Court believed that the respondent held a position of trust and confidence because he was a managerial employee of the petitioner. As the Dean of two of the petitioner’s departments, he was tasked, among others, to assist the school head in all matters affecting the general policies of the entire institution, to direct and advise the students in their programs of study and to approve their subject load and exercise educational leadership among his faculty. These tasks involved the exercise of powers and prerogatives equivalent to managerial actions. Second, the Court ruled that the respondent committed wilful breach of trust sufficient to justify dismissal. The heart of the loss-of-trust charge is the employee’s betrayal of the employer’s trust. “Damage aggravates the charge but its absence does not mitigate nor negate the employee’s liability. The respondent betrayed his owed fidelity the moment he engaged in a venture that required him to perform tasks and make calculated decisions which his duty to the petitioner would have equally required him to perform or would have otherwise required him to oppose. The Court was convinced that actual conflict of interest existed when respondent sought to conduct review courses for nursing examination knowing that the petitioner was already offering similar classes. The respondent’s good intentions were beside the point. Ultimately, the determinant is his deliberate engagement in a venture that would have directly conflicted with the petitioner’s interests. If respondent merely intended to help the petitioner and its students in increasing their chances of passing the Civil Service Examination, he could have just offered, as part of the BCU’s course curriculum, review classes for the Civil Service Examination instead of altogether organizing a review center that obviously will offer the course to everyone minded to enroll. Baguio Central University v. Ignacio Gallente, G.R. No. 188267, December 2, 2013.Labor; valid dismissal; requisites. Our Constitution, statutes and jurisprudence uniformly guarantee to every employee or worker tenurial security. What this means is that an employer shall not dismiss an employee except for just or authorized cause and only after due process is observed. Thus, for an employee’s dismissal to be valid, the employer must meet these basic requirements of: (1) just or authorized cause (which constitutes the substantive aspect of a valid dismissal); and (2) observance of due process (the procedural aspect). Baguio Central University v. Ignacio Gallente, G.R. No. 188267, December 2, 2013.Petition for review on certiorari; only questions of law can be reviewed; exceptions.The well-entrenched rule in this jurisdiction is that only questions of law may be entertained by the SC in a petition for review on certiorari under Rule 45. This rule, however, is not absolute and admits certain exceptions, such as when the petitioner persuasively alleges that there is insufficient or insubstantial evidence on record to support the factual findings of the tribunal or court a quo as Section 5, Rule 133 of the Rules of Court states in express terms that in cases filed before administrative or quasi-judicial bodies, a fact may be deemed established only

if supported by substantial evidence. Jebsens Maritime, Inc., et al. v. Eleno A. Baol, G.R. No. 204076, December 4, 2013.Probationary employment; concept of; probationer can only qualify upon fulfillment of the reasonable standards set for permanent employment of a teaching personnel. Probationary employment refers to the trial stage or period during which the employer examines the competency and qualifications of job applicants, and determines whether they are qualified to be extended permanent employment status. Such an arrangement affords an employer the opportunity – before the full force of the guarantee of security of tenure comes into play – to fully scrutinize and observe the fitness and worth of probationers while on the job and to determine whether they would become proper and efficient employees. It also gives the probationers the chance to prove to the employer that they possess the necessary qualities and qualifications to meet reasonable standards for permanent employment.Mere completion of the three-year probation, even with an above-average performance, does not guarantee that the employee will automatically acquire a permanent employment status. It is settled jurisprudence that the probationer can only qualify upon fulfillment of the reasonable standards set for permanent employment of a teaching personnel.

The Court ruled that the requirement to obtain a master’s degree was made known to the petitioner. The contract she signed clearly incorporates the rules, regulations, and employment conditions contained in the SSC Faculty Manual. The Manual provided for a criteria for permanency which includes, among others, the requirement that the faculty member must have completed at least a master’s degree. Viewed next to the statements and actions of Manaois – i.e., the references to obtaining a master’s degree in her application letter, in the subsequent correspondences between her and SSC, and in the letter seeking the extension of a teaching load for the school year 2003-2004; and her submission of certifications from UP and from her thesis adviser – the Court found that there is indeed substantial evidence proving that she knew about the necessary academic qualifications to obtain the status of permanency. Jocelyn Herrera-Manaois v. St. Scholastica’s College, G.R. No. 188914, December 11, 2013.Probationary employment; part-time member of the academic personnel; requisites to acquire permanence of employment and security of tenure. Pursuant to the 1992 Manual of Regulations for Private Schools, private educational institutions in the tertiary level may extend “full-time faculty” status only to those who possess, inter alia, a master’s degree in the field of study that will be taught. This minimum requirement is neither subject to the prerogative of the school nor to the agreement between the parties. For all intents and purposes, this qualification must be deemed impliedly written in the employment contracts between private educational institutions and prospective faculty members. The issue of whether probationers were informed of this academic requirement before they were engaged as probationary employees is thus no longer material, as those who are seeking to be educators are presumed to know these mandated qualifications. Thus, all those who fail to meet the criteria under the 1992 Manual cannot legally attain the status of permanent full-time faculty members, even if they have completed three years of satisfactory service.Further, the Court stated that in line with academic freedom and constitutional autonomy, an institution of higher learning has the discretion and prerogative to impose standards on its teachers and determine whether these have been met. Upon conclusion of the probation period, the college or university, being the employer, has the sole prerogative to make a decision on whether or not to re-hire the probationer. The probationer cannot automatically assert the acquisition of security of tenure and force the employer to renew the employment contract. In the case at bar, petitioner failed to comply with the stated academic qualifications required for the position of a permanent full-time faculty member. Jocelyn Herrera-Manaois v. St. Scholastica’s College,G.R. No. 188914, December 11, 2013.Question of law; distinguished from a question of fact. A question of law arises when the doubt or controversy concerns the correct application of law or jurisprudence to a certain set of facts. In contrast, a question of fact exists when a doubt or difference arises as to the truth or falsehood of facts.In this petition, the petitioner essentially asks the question – whether, under the circumstances and the presented evidence, the termination of respondent’s employment was valid. As framed, therefore, the question before the Court is a proscribed factual issue that it cannot generally consider in this Rule 45 petition, except to the extent necessary to determine whether the CA correctly found the NLRC in grave abuse of its discretion in considering and appreciating this factual issue.

Nonetheless, as an exception to the Rule 45 requirement, the Court deemed it proper to review the conflicting factual findings of the LA and the CA, on the one hand, and the NLRC, on the other. Such exception applies when, based on the records, the factual findings of the tribunals below are in conflict. Baguio Central University v. Ignacio Gallente, G.R. No. 188267, December 2, 2013.Stare decisis ; doctrine of . Under the doctrine of stare decisis, when a court has laid down a principle of law as applicable to a certain state of facts, it will adhere to that principle and apply it to all future cases in which the facts are substantially the same, even though the parties may be different. Where the facts are essentially different, however, stare decisis does not apply because a perfectly sound principle as applied to one set of facts might be entirely inappropriate when a factual variant is introduced.This case and the Philippine Carpet Employees Association (PHILCEA) v. Hon. Sto. Tomas case (Philcea case; G.R. No. 168719, February 22, 2006), involve the same period which is March to April 2004; the issuance of the Memorandum to employees informing them of the implementation of the cost reduction program; the implementation of the voluntary retirement program and retrenchment program, except that this case involves different employees; the execution of deeds of release, waiver, and quitclaim, and the acceptance of separation pay by the affected employees. As the respondents here were similarly situated as the union members in the Philcea case, and considering that the questioned dismissal from the service was based on the same grounds under the same circumstances, there is no need to re-litigate the issues presented herein. In short, stare decisis applies and the Court deems it wise to adopt its earlier findings in the Philcea case that there was no valid ground to terminate the services of the employees. Philippine Carpet Manufacturing Corporation, et al. v. Ignacio B. Tagyamon, et al., G.R. No. 191475, December 11, 2013.Substantial evidence; definition of. The assertions of respondent do not constitute as substantial evidence that a reasonable mind might accept as adequate to support the conclusion that there is a causal relationship between his illness and the working conditions on board the petitioners’ vessel. Although the Court has recognized as sufficient that work conditions are proven to have contributed even to a small degree, such must, however, be reasonable, and anchored on credible information. The claimant must, therefore, prove a convincing proposition other than by his mere allegations. Jebsens Maritime, Inc., et al. v. Eleno A. Baol, G.R. No. 204076, December 4, 2013.Termination of employment; authorized causes; retrenchment. The illegality of the basis of the implementation of both voluntary retirement and retrenchment programs of petitioners had been thoroughly ruled upon by the Court in Philippine Carpet Employees Association (PHILCEA) v. Hon. Sto. Tomas (G.R. No. 168719, February 22, 2006). It discussed the requisites of both retrenchment and redundancy as authorized causes of termination and concluded that petitioners failed to substantiate them. In ascertaining the bases of the termination of employees, it took into consideration petitioners’ claim of business losses; the purchase of machinery and equipment after the termination, the declaration of cash dividends to stockholders, the hiring of 100 new employees after the retrenchment, and the authorization of full blast overtime work for six hours daily. These, said the Court, are inconsistent with petitioners’ claim that there was a slump in the demand for its products which compelled them to implement the termination programs. In arriving at its conclusions, the Court took note of petitioners’ net sales, gross and net profits, as well as net income. The Court, thus, reached the conclusion that the retrenchment effected by the company is invalid due to a substantive defect. Philippine Carpet Manufacturing Corporation, et al. v. Ignacio B. Tagyamon, et al., G.R. No. 191475, December 11, 2013.Termination of employment; ground; closure of business due to serious business losses; notice requirement. Article 297 of the Labor Code provides that before any employee is terminated due to closure of business, it must give one (1) month’s prior written notice to the employee and to the Department of Labor and Employment. In this relation, case law instructs that it is the personal right of the employee to be personally informed of his proposed dismissal as well as the reasons therefor; and such requirement of notice is not a mere technicality or formality which the employer may dispense with. Since the purpose of previous notice is to, among others, give the employee some time to prepare for the eventual loss of his job, the employer has the positive duty to inform each and every employee of their impending termination of employment. To this end, jurisprudence states that an employer’s act of posting notices to this effect in conspicuous areas in the workplace is not enough. Verily, for something as significant as the involuntary loss of one’s employment, nothing less than an individually-addressed notice of dismissal supplied to each worker is proper. The Court held that the Labor Arbiter, NLRC, and Court of Appeals erred in ruling that SPI complied with the notice

requirement when it merely posted various copies of its notice of closure in conspicuous places within the business premises. SPI is required to serve individual written notices of termination to its employees. Sangwoo Philippines, Inc. and/or Sang Ik Jang, Jisso Jang, et al. v. Sangwoo Philippines, Inc. Employees Union-OLALIA, rep. by Porferia Salibongcogon/Sangwoo Philippines, Inc. Employees Union-OLALIA, rep. by Porferia Salibongcogon v. Sangwoo Philippines, Inc. and/or Sang Ik Jang, Jisso Jang, et al., G.R. No. 173154./G.R. No. 173229, December 9, 2013Termination of employment; authorized cause; closure of business due to serious business losses; separation pay. Closure of business is the reversal of fortune of the employer whereby there is a complete cessation of business operations and/or an actual locking-up of the doors of establishment, usually due to financial losses. Closure of business, as an authorized cause for termination of employment, aims to prevent further financial drain upon an employer who cannot pay anymore his employees since business has already stopped. In such a case, the employer is generally required to give separation benefits to its employees, unless the closure is due to serious business losses. As explained in the case of Galaxie Steel Workers Union (GSWU-NAFLU-KMU) v. NLRC (G.R. No. 165757, October 17, 2006): “The Constitution, while affording full protection to labor, nonetheless, recognizes “the right of enterprises to reasonable returns on investments, and to expansion and growth.” In line with this protection afforded to business by the fundamental law, Article [297] of the Labor Code clearly makes a policy distinction. It is only in instances of “retrenchment to prevent losses and in cases of closures or cessation of operations of establishment or undertaking not due to serious business losses or financial reverses” that employees whose employment has been terminated as a result are entitled to separation pay. In other words, Article [297] of the Labor Code does not obligate an employer to pay separation benefits when the closure is due to serious losses. To require an employer to be generous when it is no longer in a position to do so, in our view, would be unduly oppressive, unjust, and unfair to the employer. Ours is a system of laws, and the law in protecting the rights of the working man, authorizes neither the oppression nor the self-destruction of the employer.”In this case, the Labor Arbiter, NLRC, and the Court of Appeals all consistently found that petitioners indeed suffered from serious business losses which resulted in its permanent shutdown and accordingly, held the company’s closure to be valid. It is a rule that absent any showing that the findings of fact of the labor tribunals and the appellate court are not supported by evidence on record or the judgment is based on a misapprehension of facts, the Court shall not examine anew the evidence submitted by the parties. Perforce, without any cogent reason to deviate from the findings on the validity of respondent’s closure, the Court held that it is not obliged to give separation benefits to minority employees pursuant to Article 297 of the Labor Code. Sangwoo Philippines, Inc. and/or Sang Ik Jang, Jisso Jang, et al. v. Sangwoo Philippines, Inc. Employees Union-OLALIA, rep. by Porferia Salibongcogon/Sangwoo Philippines, Inc. Employees Union-OLALIA, rep. by Porferia Salibongcogon v. Sangwoo Philippines, Inc. and/or Sang Ik Jang, Jisso Jang, et al.,G.R. No. 173154./G.R. No. 173229, December 9, 2013.Termination of employment due to closure; procedural infirmity; nominal damages as sanction. It is well to stress that while respondent had a valid ground to terminate its employees, i.e., closure of business, its failure to comply with the proper procedure for termination renders it liable to pay the employee nominal damages for such omission. Based on existing jurisprudence, an employer which has a valid cause for dismissing its employee but conducts the dismissal with procedural infirmity is liable to pay the employee nominal damages in the amount of P30,000.00 if the ground for dismissal is a just cause, or the amount of P50,000.00 if the ground for dismissal is an authorized cause. However, case law exhorts that in instances where the payment of such damages becomes impossible, unjust, or too burdensome, modification becomes necessary in order to harmonize the disposition with the prevailing circumstance. In this case, considering that SPI closed down its operations due to serious business losses and that said closure appears to have been done in good faith, the Court as in the case of Industrial Timber Corporation v. Ababon (G.R. No. 164518, March 30, 2006), deems it just to reduce the amount of nominal damages to be awarded to each of the minority employees from P50,000.00 to Pl0,000.00. Sangwoo Philippines, Inc. and/or Sang Ik Jang, Jisso Jang, et al. v. Sangwoo Philippines, Inc. Employees Union-OLALIA, rep. by Porferia Salibongcogon/Sangwoo Philippines, Inc. Employees Union-OLALIA, rep. by Porferia Salibongcogon v. Sangwoo Philippines, Inc. and/or Sang Ik Jang, Jisso Jang, et al., G.R. No. 173154./G.R. No. 173229, December 9, 2013.

January 2014 Philippine Supreme Court Decisions on Labor LawBackwages; when awarded.

As a general rule, backwages are granted to indemnify a dismissed employee for his loss of earnings during the whole period that he is out of his job. Considering that an illegally dismissed employee is not deemed to have left his employment, he is entitled to all the rights and privileges that accrue to him from the employment. The grant of backwages to him is in furtherance and effectuation of the public objectives of the Labor Code, and is in the nature of a command to the employer to make a public reparation for dismissing the employee in violation of the Labor Code.

The Court held that the respondents are not entitled to the payment of backwages. The Court, citing G&S Transport Corporation v. Infante (G. R. No. 160303, September 13, 2007) stated that the principle of a “fair day’s wage for a fair day’s labor” remains as the basic factor in determining the award thereof. An exception to the rule would be if the laborer was able, willing and ready to work but was illegally locked out, suspended or dismissed or otherwise illegally prevented from working. It is, however, required, for this exception to apply, that the strike be legal, a situation which does not obtain in the case at bar. Visayas Community Medical Center (VCMC) formerly known as Metro Cebu Community Hospital (MCCH) v. Erma Yballe, et al.,G.R. No. 196156, January 15, 2014

Dismissal; burden of proof on employer.

The burden is on the employer to prove that the termination was for valid cause. Unsubstantiated accusations or baseless conclusions of the employer are insufficient legal justifications to dismiss an employee. “The unflinching rule in illegal dismissal cases is that the employer bears the burden of proof.”

One of CCBPI’s policies requires that, on a daily basis, CCBPI Salesmen/Account Specialists must account for their sales/collections and obtain clearance from the company Cashier before they are allowed to leave company premises at the end of their shift and report for work the next day. If there is a shortage/failure to account, the concerned Salesmen/Account Specialist is not allowed to leave the company premises until he settles the same. In addition, shortages are deducted from the employee’s salaries. If CCBPI expects to proceed with its case against petitioner, it should have negated this policy, for its existence and application are inextricably tied to CCBPI’s accusations against petitioner. In the first place, as petitioner’s employer, upon it lay the burden of proving by convincing evidence that he was dismissed for cause. If petitioner continued to work until June 2004, this meant that he committed no infraction, going by this company policy; it could also mean that any infraction or shortage/non-remittance incurred by petitioner has been duly settled. Respondents’ decision to ignore this issue generates the belief that petitioner is telling the truth, and that the alleged infractions are fabricated, or have been forgiven. Coupled with Macatangay’s statement – which remains equally unrefuted – that the charges against petitioner are a scheme by local CCBPI management to cover up problems in the Naga City Plant, the conclusion is indeed telling that petitioner is being wrongfully made to account. Jonas Michael R. Garza v. Coca-Cola Bottlers Phils., Inc., et al.,G.R. No. 180972. January 20, 2014.Embezzlement; failure to remit collections. The irregularity attributed to petitioner with regard to the Asanza account should fail as well. To be sure, Asanza herself confirmed that she did not make any payment in cash or check of P8,160.00 covering the October 15, 2003 delivery for which petitioner is being held to account. This being the case, petitioner could not be charged with embezzlement for failure to remit funds which he has not collected. There was nothing to embezzle or remit because the customer made no payment yet. It may appear from Official Receipt No. 303203 issued to Asanza that the October 15 delivery of products to her has been paid; but as admitted by her, she has not paid for the said delivered products. The reason for petitioner’s issuance of said official receipt to Asanza is the latter’s concurrent promise that she would immediately issue

the check covering the said amount, which she failed to do. Jonas Michael R. Garza v. Coca-Cola Bottlers Phils., Inc., et al.,G.R. No. 180972. January 20, 2014Grave abuse of discretion; concept of. Having established through substantial evidence that respondent’s injury was self-inflicted and, hence, not compensable pursuant to Section 20 (D) of the 1996 POEA-SEC, no grave abuse of discretion can be imputed against the NLRC in upholding LA’s decision to dismiss respondent’s complaint for disability benefits. It is well-settled that an act of a court or tribunal can only be considered to be tainted with grave abuse of discretion when such act is done in a capricious or whimsical exercise of judgment as is equivalent to lack of jurisdiction. INC Shipmanagement, Inc. Captain Sigfredo E. Monterroyo and/or Interorient Navigation Limited v. Alexander L. Moradas,G.R. No., January 15, 2014Illegal strike and illegal acts during the strike; distinction between union members and union officers in determining when they lose their employment status. The Supreme Court stressed that the law makes a distinction between union members and union officers. A union member who merely participates in an illegal strike may not be terminated from employment. It is only when he commits illegal acts during a strike that he may be declared to have lost employment status. In contrast, a union officer may be terminated from employment for knowingly participating in an illegal strike or participates in the commission of illegal acts during a strike. The law grants the employer the option of declaring a union officer who participated in an illegal strike as having lost his employment. It possesses the right and prerogative to terminate the union officers from service.NAMA-MCCH-NFL is not a legitimate labor organization, thus, the strike staged by its leaders and members was declared illegal. The union leaders who conducted the illegal strike despite knowledge that NAMA-MCCH-NFL is not a duly registered labor union were declared to have been validly terminated by petitioner. However, as to the respondents who were mere union members, it was not shown that they committed any illegal act during the strike. The Labor Arbiter and the NLRC were one in finding that respondents actively supported the concerted protest activities, signed the collective reply of union members manifesting that they launched the mass actions to protest management’s refusal to negotiate a new CBA, refused to appear in the investigations scheduled by petitioner because it was the union’s stand that they would only attend these investigations as a group, and failed to heed petitioner’s final directive for them to desist from further taking part in the illegal strike. The CA, on the other hand, found that respondents’ participation in the strike was limited to the wearing of armbands. Since an ordinary striking worker cannot be dismissed for such mere participation in the illegal strike, the CA correctly ruled that respondents were illegally dismissed. However, the CA erred in awarding respondents full back wages and ordering their reinstatement despite the prevailing circumstances. Visayas Community Medical Center (VCMC) formerly known as Metro Cebu Commnunity Hospital (MCCH) v. Erma Yballe, et al.,G.R. No. 196156, January 15, 2014Labor law; kinds of employment; casual employment; requisites. Casual employment, the third kind of employment arrangement, refers to any other employment arrangement that does not fall under any of the first two categories, i.e., regular or project/seasonal. Universal Robina Sugar Milling Corporation and Rene Cabati, G.R. No. 186439. January 15, 2014.Labor law; kinds of employment; fixed term employment; requisites. The Labor Code does not mention another employment arrangement – contractual or fixed term employment (or employment for a term) – which, if not for the fixed term, should fall under the category of regular employment in view of the nature of the employee’s engagement, which is to perform an activity usually necessary or desirable in the employer’s business.In Brent School, Inc. v. Zamora (G.R. No. L-48494, February 5, 1990), the Court, for the first time, recognized and resolved the anomaly created by a narrow and literal interpretation of Article 280 of the Labor Code that appears to restrict the employee’s right to freely stipulate with his employer on the duration of his engagement. In this case, the Court upheld the validity of the fixed-term employment agreed upon by the employer, Brent School, Inc., and the employee, Dorotio Alegre, declaring that the restrictive clause in Article 280 “should be construed to refer to the substantive evil that the Code itself x x x singled out: agreements entered into precisely to circumvent security of tenure. It should have no application to instances where [the] fixed period of employment was agreed upon knowingly and voluntarily by the parties x x x absent any x x x circumstances vitiating [the employee’s] consent, or where [the facts satisfactorily show] that the employer and [the] employee dealt with each other on more or less equal terms[.]” The indispensability or desirability of the activity performed by the employee will not preclude the parties from entering into an

otherwise valid fixed term employment agreement; a definite period of employment does not essentially contradict the nature of the employee’s duties as necessary and desirable to the usual business or trade of the employer.

Nevertheless, “where the circumstances evidently show that the employer imposed the period precisely to preclude the employee from acquiring tenurial security, the law and this Court will not hesitate to strike down or disregard the period as contrary to public policy, morals, etc.” In such a case, the general restrictive rule under Article 280 of the Labor Code will apply and the employee shall be deemed regular. Universal Robina Sugar Milling Corporation and Rene Cabati,G.R. No. 186439. January 15, 2014.Labor law; kinds of employment; nature of the employment depends on the nature of the activities to be performed by the employee. The nature of the employment does not depend solely on the will or word of the employer or on the procedure for hiring and the manner of designating the employee. Rather, the nature of the employment depends on the nature of the activities to be performed by the employee, taking into account the nature of the employer’s business, the duration and scope of work to be done, and, in some cases, even the length of time of the performance and its continued existence. Universal Robina Sugar Milling Corporation and Rene Cabati, G.R. No. 186439. January 15, 2014.Labor law; kinds of employment; project employment; requisites; length of time not controlling. A project employment, on the other hand, contemplates on arrangement whereby “the employment has been fixed for a specific project or undertaking whose completion or termination has been determined at the time of the engagement of the employee[.]” Two requirements, therefore, clearly need to be satisfied to remove the engagement from the presumption of regularity of employment, namely: (1) designation of a specific project or undertaking for which the employee is hired; and (2) clear determination of the completion or termination of the project at the time of the employee’s engagement. The services of the project employees are legally and automatically terminated upon the end or completion of the project as the employee’s services are coterminous with the project. Unlike in a regular employment under Article 280 of the Labor Code, however, the length of time of the asserted “project” employee’s engagement is not controlling as the employment may, in fact, last for more than a year, depending on the needs or circumstances of the project. Nevertheless, this length of time (or the continuous rehiring of the employee even after the cessation of the project) may serve as a badge of regular employment when the activities performed by the purported “project” employee are necessary and indispensable to the usual business or trade of the employer. In this latter case, the law will regard the arrangement as regular employment. Universal Robina Sugar Milling Corporation and Rene Cabati,G.R. No. 186439. January 15, 2014.Labor law; kinds of employment; regular employment; requisites. Article 280 of the Labor Code provides for three kinds of employment arrangements, namely: regular, project/seasonal and casual. Regular employment refers to that arrangement whereby the employee “has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer[.]” Under this definition, the primary standard that determines regular employment is the reasonable connection between the particular activity performed by the employee and the usual business or trade of the employer; the emphasis is on the necessity or desirability of the employee’s activity. Thus, when the employee performs activities considered necessary and desirable to the overall business scheme of the employer, the law regards the employee as regular.By way of an exception, paragraph 2, Article 280 of the Labor Code also considers as regular, a casual employment arrangement when the casual employee’s engagement is made to last for at least one year, whether the service is continuous or broken. The controlling test in this arrangement is the length of time during which the employee is engaged. Universal Robina Sugar Milling Corporation and Rene Cabati, G.R. No. 186439. January 15, 2014.Labor law; kinds of employment; seasonal employment; requisites. Seasonal employment operates much in the same way as project employment, albeit it involves work or service that is seasonal in nature or lasting for the duration of the season. As with project employment, although the seasonal employment arrangement involves work that is seasonal or periodic in nature, the employment itself is not automatically considered seasonal so as to prevent the employee from attaining regular status. To exclude the asserted “seasonal” employee from those classified as regular employees, the employer must show that: (1) the employee must be performing work or services that are seasonal in nature; and (2) he had been employed for

the duration of the season. Hence, when the “seasonal” workers are continuously and repeatedly hired to perform the same tasks or activities for several seasons or even after the cessation of the season, this length of time may likewise serve as badge of regular employment. In fact, even though denominated as “seasonal workers,” if these workers are called to work from time to time and are only temporarily laid off during the off-season, the law does not consider them separated from the service during the off-season period. The law simply considers these seasonal workers on leave until re-employed. Universal Robina Sugar Milling Corporation and Rene Cabati, G.R. No. 186439. January 15, 2014.Overseas employment; that the entitlement of seamen on overseas work to disability benefits is a matter governed, not only by medical findings, but by law and by contract. With respect to the applicable rules, it is doctrinal that the entitlement of seamen on overseas work to disability benefits “is a matter governed, not only by medical findings, but by law and by contract. The material statutory provisions are Articles 191 to 193 under Chapter VI (Disability Benefits) of the Labor Code, in relation [to] Rule X of the Rules and Regulations Implementing Book IV of the Labor Code. By contract, the POEA-SEC, as provided under Department Order No. 4, series of 2000 of the Department of Labor and Employment, and the parties’ Collective Bargaining Agreement bind the seaman and his employer to each other.”In the foregoing light, the Court observes that respondent executed his contract of employment on July 17, 2000, incorporating therein the terms and conditions of the 2000 POEA-SEC which took effect on June 25, 2000. However, since the implementation of the provisions of the foregoing 2000 POEA-SEC was temporarily suspended by the Court on September 11, 2000, particularly Section 20, paragraphs (A), (B), and (D) thereof, and was lifted only on June 5, 2002, through POEA Memorandum Circular No. 2, series of 2002, the determination of respondent’s entitlement to the disability benefits should be resolved under the provisions of the 1996 POEA-SEC as it was, effectively, the governing circular at the time respondent’s employment contract was executed. INC Shipmanagement, Inc. Captain Sigfredo E. Monterroyo and/or Interorient Navigation Limited v. Alexander L. Moradas,G.R. No., January 15, 2014Payment of separation pay as alternative relief for union members who were dismissed for having participated in an illegal strike is in lieu of reinstatement; circumstances when applicable. The alternative relief for union members who were dismissed for having participated in an illegal strike is the payment of separation pay in lieu of reinstatement under the following circumstances: (a) when reinstatement can no longer be effected in view of the passage of a long period of time or because of the realities of the situation; (b) reinstatement is inimical to the employer’s interest; (c) reinstatement is no longer feasible; (d) reinstatement does not serve the best interests of the parties involved; (e) the employer is prejudiced by the workers’ continued employment; (f) facts that make execution unjust or inequitable have supervened; or (g) strained relations between the employer and employee.The Court ruled that the grant of separation pay to respondents is the appropriate relief under the circumstances considering that 15 years had lapsed from the onset of this labor dispute, and in view of strained relations that ensued, in addition to the reality of replacements already hired by the hospital which had apparently recovered from its huge losses, and with many of the petitioners either employed elsewhere, already old and sickly, or otherwise incapacitated. Visayas Community Medical Center (VCMC) formerly known as Metro Cebu Commnunity Hospital (MCCH) v. Erma Yballe, et al.,G.R. No. 196156, January 15, 2014Rule 45; only questions of law are allowed in a petition for review on certiorari . It is a settled rule in this jurisdiction that only questions of law are allowed in a petition for review on certiorari. The Court’s power of review in a Rule 45 petition is limited to resolving matters pertaining to any perceived legal errors, which the CA may have committed in issuing the assailed decision. In reviewing the legal correctness of the CA’s Rule 65 decision in a labor case, the Court examines the CA decision in the context that it determined whether or not there is grave abuse of discretion in the NLRC decision subject of its review and not on the basis of whether the NLRC decision on the merits of the case was correct. Universal Robina Sugar Milling Corporation and Rene Cabati, G.R. No. 186439. January 15, 2014.Rule 45; the Court’s jurisdiction in a Rule 45 petition is limited to the review of pure questions of law; exceptions. The Court’s jurisdiction in cases brought before it from the CA via Rule 45 of the Rules of Court is generally limited to reviewing errors of law. The Court is not the proper venue to consider a factual issue as it is not a trier of facts. This rule, however, is not ironclad and a departure therefrom may be warranted where the findings of fact of the CA are contrary to the findings and conclusions of the NLRC and LA, as in this case. In this regard, there is therefore a need to review the records to determine which of them should be preferred as

more conformable to evidentiary facts. INC Shipmanagement, Inc. Captain Sigfredo E. Monterroyo and/or Interorient Navigation Limited v. Alexander L. Moradas,G.R. No., January 15, 2014.Section 20 (B) of the 1996 POEA-SEC; an employer shall be liable for the injury or illness suffered by a seafarer during the term of his contract; exception. The prevailing rule under Section 20 (B) of the 1996 POEA-SEC on compensation and benefits for injury or illness was that an employer shall be liable for the injury or illness suffered by a seafarer during the term of his contract. To be compensable, the injury or illness must be proven to have been contracted during the term of the contract. However, the employer may be exempt from liability if he can successfully prove that the cause of the seaman’s injury was directly attributable to his deliberate or willful act as provided under Section 20 (D) thereof, to wit:D. No compensation shall be payable in respect of any injury, incapacity, disability or death of the seafarer resulting from his willful or criminal act, provided however, that the employer can prove that such injury, incapacity, disability or death is directly attributable to seafarer.

Hence, the onus probandi falls on the petitioners herein to establish or substantiate their claim that the respondent’s injury was caused by his willful act with the requisite quantum of evidence.INC Shipmanagement, Inc. Captain Sigfredo E. Monterroyo and/or Interorient Navigation Limited v. Alexander L. Moradas,G.R. No., January 15, 2014Substantial evidence; concept of. In labor cases, as in other administrative proceedings, only substantial evidence or such relevant evidence as a reasonable mind might accept as sufficient to support a conclusion is required. To note, considering that substantial evidence is an evidentiary threshold, the Court, on exceptional cases, may assess the factual determinations made by the NLRC in a particular case.The Court ruled that NLRC had cogent legal bases to conclude that petitioners have successfully discharged the burden of proving by substantial evidence that respondent’s injury was directly attributable to himself. Records bear out circumstances which all lead to the reasonable conclusion that respondent was responsible for the flooding and burning incidents. While respondent contended that the affidavits and statements of the vessel’s officers and his fellow crew members should not be given probative value as they were biased, self-serving, and mere hearsay, he nonetheless failed to present any evidence to substantiate his own theory. Besides, as correctly pointed out by the NLRC, the corroborating affidavits and statements of the vessel’s officers and crew members must be taken as a whole and cannot just be perfunctorily dismissed as self-serving absent any showing that they were lying when they made the statements therein. INC Shipmanagement, Inc. Captain Sigfredo E. Monterroyo and/or Interorient Navigation Limited v. Alexander L. Moradas,G.R. No., January 15, 2014