73293565 Labor I Digests

That in all things, God may be glorified.

LABOR STANDARDS LAW CASE DIGESTS TABLE OF CONTENTS EMPLOYER – EMPLOYEE RELATIONSHIP

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1. FLORES V. NUESTRO 2. BRORTHERHOOD LABOR UNITY MOVEMENT OF THE PHILIPPINES V. ZAMORA 3. ZANOTTE SHOES V. NLRC 4. CONTINENTAL MARBLE V. NLRC 5. SEVILLA V. COURT OF APPEALS 6. FEATI UNIVERSITY V. BAUTISTA 7. SAN MIGUEL BREWERY SALES FORCE UNION V .OPLE 8. SAN MIGUEL BREWERY INC. V. DEMOCRATIC LABOR ORGANIZATION

5 6 8 9 10 12 13 14

HOURS OF WORK

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9. JARDIN V. NLRC 10. STOLT-NIELSEN MARINE SERVICES V. NLRC 11. INTERPHIL LABORATORIES EMPLOYEES UNION – FFW V. INTERPHIL LABORATORIES 12. PAN AMERICAN WORLD AIRWAYS SYSTEM V. PAN AMERICAN EMPLOYEES ASSOCIATION 13. CAMPANGAN V. NLRC 14. MERCURY DRUG CO., INC. V. DAYAO 15. LUZON STEVEDORING CO., INC. V LUZON MARINE DEPARTMENT UNION

16 18 20 21 21 22 23 24

WAGES

25

16. PAL EMPLOYEES SAVINGS AND LOAN ASSOCIATION 17. SONGCO V. NLRC 18. MABEZA V. NLRC 19. INTERNATIONAL SCHOOL ALLIANCE OF EDUCATORS V. QUISUMBING 20. NESTLE PHILIPPINES V. NLRC 21. R. TIONGCO V. HON. VICENTE LEOGRADO 22. GLOBE MACKAY CABLE V. NLRC 23. NATIONAL SUGAR REFINERIES CORP. V. NLRC 24. LIBERATION STEAMSHIP V. COURT OF INDUSTRIAL RELATIONS 25. TRADERS ROYAL BANK V. NLRC 26. MANILA BANKING CORPORATION V. NLRC

26 27 29 30 31 32 33 35 37 39 40

LABOR-ONLY CONTRACTOR AND INDEPENDENT CONTRACTOR

42

27. TABAS V. CALIFORNIA MANUFACTURING CO., INC. 28. MAFINCO TRADING CORPORATION V. OPLE 29. RHONE-POULENC AGROCHEMICALS PHILIPPINES, INC. V. NLRC 30. AFP MUTUAL BENEFIT ASSOCIATION INC. V NLRC 31. COCA-COLA BOTTLERS PHILIPPINES, INC. V. HINGPIT 32. BROADWAY MOTORS, INC V. NLRC 33. PHILIPPINE BANK OF COMMUNICATIONS V. NLRC

43 44 45 47 48 49 50

INJURY, SICKNESS & DISABILITY

52

34. BELARMINO V. EMPLOYEES’ COMPENSATION COMMISSION

53

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That in all things, God may be glorified. 35. HINOGUIN V. EMPLOYEES’ COMPENSATION COMMISSION 36. TANCINCO V. GOVERNMENT SERVICE INSURANCE SYSTEM 37. ILOILO DOCK & ENGINEERING CO. V. WORKMEN’S COMPENSATION COMMISSION 38. ALANO V. EMPLOYEES’ COMPENSATION COMMISSION 39. LAZO V. EMPLOYEES’ COMPENSATION COMMISSION 40. LUZON STEVEDORING CORP. V. WORKMEN’S COMPENSATION COMMISSION 41. VDA. DE INGUILLO V. EMPLOYEES’ COMPENSATION COMMISSION 42. MEÑEZ V. EMPLOYEES’ COMPENSATION COMMISSION 43. CLEMENTE V. GSIS 44. DABATIAN V. GOVERNMENT SERVICE INSURANCE SYSTEM 45. VILLONES V. ECC 46. RODRIGUEZ V. ECC 47. RARO V. EMPLOYEES’ COMPENSATION COMMISSION 48. MABUHAY SHIPPING SERVICES, INC. V. NLRC 49. YSMAEL MARITIME CORPORATION V. AVELINO 50. VICENTE V. EMPLOYEES’ COMPENSATION COMMISSION 51. GSIS V. GSIS EMPLOYEES ASSOCIATION 52. EMPLOYEES’ COMPENSATION COMMISSION V. SANICO 53. PRINCIPE V. PHILIPPINE-SINGAPORE TRANSPORT SERVICES, INC.

54 56 57 59 60 61 62 64 65 66 67 69 70 71 72 73 75 77 78

ARTICLE 279 - SECURITY OF TENURE

79

54. RANCE V. NLRC 55. KIAMCO V. NLRC 56. MAGTULAC V. NLRC

80 81 83

ARTICLE 280 – KINDS OF EMPLOYMENT: REGULAR & CASUAL EMPLOYMENT

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57. DE LEON V. NLRC 58. A.M. ORETA V. NLRC 59. ECAL V. NLRC 60. MAGANTE V. NLRC 61. BETA ELECTRIC CORPORATION V. NLRC 62. KIMBERLY INDEPENDENT LABOR UNION V. DRILON 63. CAPULE V. NLRC

85 87 89 90 92 93 95

PROJECT EMPLOYMENT

96

64. PHILIPPINE NATIONAL CONSTRUCTION CORPORATION V. NLRC 65. CARTAGENAS V. ROMAGO ELECTRIC COMPANY 66. MARAQUIMOT AND ENERO V. NLRC

97 98 99

SEASONAL EMPLOYMENT

101

67. MERCADO, SR. V. NLRC

102

FIXED PERIOD EMPLOYMENT

104

68. BRENT SCHOOL V. ZAMORA 69. CIELO V. NLRC

105 106

ARTICLE 282 - JUST CAUSES FOR TERMINATION OF EMPLOYMENT

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70. A.M. ORETA AND COMPANY V. NLRC 71. BUISER V. HON. VICENTE LOEGARDO 72. SAN MIGUEL BREWERY SALES V. OPLE 73. INTERNATIONAL CATHOLIC MIGRATION COMMISSION V. NLRC

109 111 113 114

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That in all things, God may be glorified. 74. MERCURY DRUG CORPORATION V. NLRC 75. MANILA ELECTRIC COMPANY V. NLRC 76. FILIPRO, INC. V. NLRC 77. GOLD CITY INTEGRATED PORT SERVICES V. NLRC 78. ABBOT LABORATORIES V. NLRC 79. HOMWOWNERS SAVINGS AND LOAN ASSOCIATION V. NLRC 80. DOSCH V. NLRC AND NORTHWEST AIRLINES 81. PHILIPPINE TELEGRAPH AND TELEPHONE CORP. V. CA 82. CITIBANK V. GATCHALIAN 83. LABOR ET AL. V. NLRC 84. SAN MIGUEL CORPORATION V. NLRC 85. EQUITABLE BANKING CORPORATION V. NLRC 86. ROBUSTA AGRO MARINE PRODUCTS V. GAROMBALEM 87. OFFSHORE INDUSTRIES V. NLRC 86. WENPHIL CORPORATION V. NLRC 89. MANEJA V. NLRC AND MANILA MIDTOWN HOTEL 90. PEPSI COLA BOTTLING CO. V. NLRC 91. DIZON V. NLRC 92. PEPSI COLA BOTTLING CO. V. NL|RC 93. BUSTAMANTE V. NLRC 94. BLTB BUS CO. V. COURT OF APPEALS 95. HELLENIC PHILIPPINE SHIPPING V. NLRC AND E. SIETE 96. VIERNES V. NLRC AND BENGUET ELECTRIC CORPORATION 97. GLOBE-MACKAY CABLE AND RADIO CORPORATION V. NLRC 98. ROQUERO V. PHILIPPINE AIRLINES 99. MARANAW HOTEL V. NLRC 100. SUARIO V. BANK OF THE PHILIPPINE ISLAND 101. SUNIO V. NLRC 102. UICHICO V. NLRC 103. ASIONICS PHILIPPINES, INC. V. NLRC

115 116 117 118 119 120 122 124 125 127 129 130 131 132 133 135 137 139 141 143 146 147 149 151 153 155 156 158 160 162

ARTICLE 283 – 284: AUTHORIZED CAUSES FOR TERMINATION

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104. WILTSHIRE FILE CO. V. NLRC 105. ESCAREAL V. NLRC 106. SAN MIGUEL CORPORATION V. NLRC 107. SERRANO V. NATIONAL LABOR RELATIONS COMMISSION 108. AHS/PHILIPPINES EMPLOYEES UNION V. NLRC 109. ASIAN ALCOHOLIC CORPORATION V. NLRC 110. ASIAN ALCOHOLIC CORPORATION V. NLRC 111. LOPEZ SUGAR CORPORATION V. FEDERATION OF FREE WORKERS 113. INDINO V. NLRC 114. CATATISTA V. NLRC 115. NORTH DAVAO MINING CORPORATION V. NLRC 116. REAH CORPORATION V. NLRC 115. SAN FELIPE NERI SCHOOL OF MANDALUYONG, INC. V. NLRC 118. FILIPINAS PORT SERVICES, INC. V. NLRC 119. CEBU ROYAL PLANT (SMC) V. DEPUTY MINISTER OF LABOR

165 166 168 170 171 173 175 177 179 180 182 183 184 185 186

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That in all things, God may be glorified.

Employer – Employee Relationship

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That in all things, God may be glorified.

1. Flores v. Nuestro FLORES V. NUESTRO 160 SCRA 568 YAP, J. FACTS 1. The petitioner, Herminio Flores and his wife, worked for respondent, Fortunato Nuestro in his funeral parlor since June 1976 as helper-utility man and as bookkeeper and cahier respectively. 2. On October 7, 1980, respondent registered the petitioner spouses with the SSS, as his employee. Thereafter, the spouses received an increase in their respective salaries. 3. On October 30, 1982, Herminio and Nuestro had an altercation, during which the latter physically assaulted the former. 4. Herminio then filed a complaint for physical injuries against Nuestro. 5. As a result of the incident, the Flores family had to leave their quarters at the funeral parlor and seek protection from the Pilar, Bataan Police. 6. Thereafter, petitioners filed illegal dismissal charges against respondent. On the part of the respondent, he denied the existence of employer-employee relationship, and further alleged that petitioners were the ones to voluntarily abandon their work ISSUE Was there an employee-employer relationship in this case? HELD YES. There was an employee-employer relationship. That the respondent registered the petitioners with the Social Security System is proof that they were indeed his employees. The coverage of the Social Security Law is predicated on the existence of an employeremployee relationship.

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2. Brortherhood Labor Unity Movement of the Philippines v. Zamora BROTHERHOOD LABOR UNITY MOVEMENT OF THE PHILIPPINES V. ZAMORA 147 SCRA 49 GUTIERREZ, J. FACTS 1. On July 11, 1969, Brotherhood Labor Unity Movement of the Philippines (BLUMP), filed a complaint against San Miguel Corporation. 2. It alleged that respondents ordered the individual complainants to disaffiliate from the complainant union, the management then dismissed the individual complainants when they insisted on their union membership. 3. Petitioners are workers who have been employed at the San Miguel Parola Glass Factory for nearly 7 years prior to their dismissal. They worked as cargadores or pahinantes at the SMC plant loading, unloading, piling or palleting empty bottles and wooded shells to and from company trucks and warehouses. 4. Respondents alleged that the complainants have never been their employees and were employees of an independent contractor, Camahort. 5. Petitioners first reported for work to Camahort who signs their gate passes and the respondent company provided them with tools, equipment and paraphernalia used in loading, unloading, piling and hauling operations. 6. Job orders came from Camahort. The orders are then transmitted to an assistantofficer-in-charge. In turn, the assistant informs the warehouseman and checkers regarding the same. The latter, thereafter, relays said orders to the capatazes or group leaders who then give orders to the workers as to where, when and what to load, unload, pile, pallet or clean. 7. Petitioners were pain every 10 days on piece rate. The group leader notes down the number or volume of work that each individual worker has accomplished. Camahort approves the final report. 8. Petitioners also worked exclusively for SMC plnt, never having been assigned to other companies or departments of SMC plant, even when the volume of work is minimum. ISSUE Are the petitioners employees of private respondent, San Miguel Corporation? HELD YES. In determining the existence of employee-employer relationship, the elements that are generally considered are the following: 1. the selection and engagement of the employee 2. the payment of wages 3. the power of dismissal 4. the employer’s power to control the employee with respect to the means and methods by which the work is to be accomplished. It is the so-called control test that is the most important element. Applying the above criteria, the evidence strongly indicates the existence of an employer, employee relationship between the petitioner workers and respondent San Miguel Corporation. The respondent asserts that the petitioners are employees of the Guaranteed Labor Contractor, an independent labor contracting firm. The facts and evidence on record negate respondent SMC's claim. The existence of an independent contractor relationship is generally established by the following criteria: "whether or not the contractor is carrying on an independent business; the nature and extent of the work; the skill required; the term and duration of the relationship; the right to assign the performance of a specified piece of work; the control and supervision of the work to another; the employer's power with respect to the hiring, firing and payment of

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That in all things, God may be glorified. the contractor's workers; the control of the premises; the duty to supply the premises tools, appliances, materials and labor; and the mode, manner and terms of payment." None of the above criteria exists in the case at bar. Highly unusual and suspect is the absence of a written contract to specify the performance of a specified piece of work, the nature and extent of the work and the term and duration of the relationship. The records fail to show that a large commercial outfit, such as the San Miguel Corporation, entered into mere oral agreements of employment or labor contracting where the same would involve considerable expenses and dealings with a large number of workers over a long period of time. Despite respondent company's allegations not an iota of evidence was offered to prove the same or its particulars. Such failure makes respondent SMC's stand subject to serious doubts. Uncontroverted is the fact that for an average of seven (7) years, each of the petitioners had worked continuously and exclusively for the respondent company's shipping and warehousing department. Considering the length of time that the petitioners have worked with the respondent company, there is justification to conclude that they were engaged to perform activities necessary or desirable in the usual business or trade of the respondent, and the petitioners are, therefore regular employees.

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3. Zanotte Shoes v. NLRC ZANOTTE SHOES V. NLRC 241 SCRA 261 VITUG, J. FACTS 1. Private respondents Joseph Lluz, et. al averred that they started to work for petitioners Zanotte Shoes/ Leonardo Lorenzo between 1975 to 1987. They alleged that they worked for a minimum of 12 hours daily, including Sundays and holidays when needed and that they were paid on piece-work basis. 2. Private respondents claimed that it angered petitioner Lorenzo when they requested to be made members of the SSS and that when they demanded an increase in their pay rates, they were prevented from entering the work premises. Private respondents filed a complaint for illegal discharge against petitioners. 3. Petitioners, in their Answer, claim that their business operations were only seasonal, normally twice a year- one in June and another in December, when heavy job orders would come in. They contend that private respondents were engaged on purely contractual basis and paid the rates conformably with their respective agreements. 4. The Labor Arbiter rendered judgment in favor of private respondents. He declared that there was an employer-employee relationship between petitioners and private respondents and that the latter were regular employees of the former. The Labor Arbiter concluded that there is neither dismissal nor abandonment, but ordered petitioners to pay the private respondents their separation pay. 5. The NLRC, on appeal, affirmed the Labor Arbiter’s decision ISSUE Whether or not there is an employer-employee relationship between petitioners and private respondents.

HELD YES. There is an employer-employee relationship between petitioners and private respondents. The work of private respondents is clearly related to and in the pursuit of the principal activity of the petitioners. The indicia used for determining the existence of an employer-employee relationship, all extant in the case at bench, include: (1) the selection and engagement of the employee, (2) the payment of wages, (3)the power of dismissal, and (4)the employer’s power to control the employee with respect to the result of the work to be done and to the means and methods by which the work is to be accomplished. The last requirement, so herein posed as an issue, refers to the existence of the right to control and not necessarily to the actual exercise of the right. The Court, however, finds the award of separation pay to be unwarranted.. The Labor Arbiter, sustained by the NLRC, concluded that there was neither dismissal nor abandonment. The fact of the matter is that petitioners have repeatedly indicated their willingness to accept the private respondents, but the latter have steadfastly refused the offer. For being without any clear legal basis, the award of separation pay must thus be set aside. There is nothing, however, that prevents petitioners from voluntarily giving private respondents some amounts on ex gratia basis.

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4. Continental Marble v. NLRC CONTINENTAL MARBLE V. NLRC 161 SCRA 151 PADILLA, J. FACTS 1. Rodito Nasayao claimed that sometime in May 1974, he was appointed plant manager of Continental Marble with an alleged compensation of P3,000.00 a month or 25% of the monthly net income of the company, whichever is greater. 2. When the company failed to pay his salary for the months of May, June and July 1974, Nasayao filed a complaint with NLRC. 3. Continental Marble denied that Rodito Nasayao was its employee. They claimed that the undertaking agreed by the parties was a joint venture, a sort of partnership, wherein Nasayao was to keep the machinery in good working condition and in return, he would get the contracts from end-users for the installation of marble products, in which the company would not interfere. 4. In addition, Nasayao was to receive an amount equivalent to 25% of the net profits that the petitioner corporation would realize, should there be any. Since there had been no profits during said period, private respondent was not entitled to any amount. ISSUE Whether or not the private respondent Nasayao was employed as plant manager of petitioner Continental Marble Corporation. HELD NO. There was nothing in the record which would support the claim of Rodito Nasayao that he was an employee of the petitioner corporation. He was not included in the company payroll nor in the list of company employees furnished by the Social Security System. Most of all the element of control is lacking. It appears that the petitioner had no control over the conduct of Rodito Nasayao in the performance of his work. He decided for himself on what was to be done and worked at his own pleasure. He was not subject to indefinite hours or conditions of work and in turn was compensated according to the results of his on effort. He has a free hand in running the company and its business, so much so, that the petitioner did not know until very later that Nasayao collected old accounts receivables, not covered by their agreement, which he converted to his personal use.

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5. Sevilla v. Court of Appeals SEVILLA V. COURT OF APPEALS 160 SCRA 171 SARMIENTO, J. FACTS 1. Mrs. Segundina Noguera leased her premises located at Ermita, Manila to Tourist World Service, Inc. (TWSI), represented by Eliseo Canilao, for the latter’s use as branch office. In the said contract Mrs. Lina Sevilla held herself solidarily liable with TWSI for the prompt payment of the monthly rental agreed on. 2. When the branch office was opened, the same was run by petitioner Mrs. Sevilla, who was designated as branch manager by TWSI. For any fare bought in on the efforts of Mrs. Sevilla,, 4% was to go her and 3% was to be withheld by TWSI 3. In November 1961, TWSI was allegedly informed that Mrs. Sevilla was connected with a rival travel firm. Since the branch office was losing, TWSI considered closing it down. The firm’s board of directors issued two resolutions; the first abolishing the office of manager of the Ermita Branch Office and the second, authorizing the corporate secretary to receive the property of TWSI in said branch. 4. In January 1962, the lease contract to use the premises as branch office was terminated. In June 1962, the Corporate Secretary went over to the office to comply with the mandate of the resolutions. Finding the premises locked and unable to contact Mrs. Sevilla, he padlocked the premises to protect the interests of TWSI 5. As such, petitioners Spouses Sevilla filed a complaint against respondents TWSI, Canilao and Noguera, praying for mandatory preliminary injunction. Petitioners claim that Mrs. Sevilla’s relationship with TWSI was one of joint business venture and not one of employment. 6. In its answer, TWSI contend that Mrs. Sevilla was its employee and as such was designated manager. 7. The trial court held for the private respondents. It ruled that TWSI, being the true lessee, has the privilege to terminate the lease and padlock the premises. It also held that Mrs. Sevilla was a mere employee of TWSI and that she was bound by the act of her employer. 8. The Court of Appeals affirmed said decision, Hence, the instant petition.

ISSUE Whether or not there is an employer-employee relationship between TWSI and Mrs. Sevilla.

HELD NO. There is no employer-employee relationship between TWSI and Mrs. Sevilla. There has been no uniform test to determine the existence of an employer-employee relation. In general, The Court has relied in the so-called control test, “where the person for whom the services are performed reserves a right to control not only the end to be achieved but also the means to be used in reaching such end. The records will show that the petitioner, Lina Sevilla, was not subject to control by the private respondent Tourist World Service, Inc., either as to the result to the means used in connection therewith. In the first place, under the contract of lease covering the Tourist Worlds Ermita office, she had bound herself in solidum as and for rental payments. A true employee cannot be made to part with his own money in pursuance of his employer’s business, or otherwise, assume any liability thereof. In that event, the parties must be bound by some other relation, but certainly not employment. In the second place, when the branch office was opened, the same was run by Mrs. Sevilla payable to TWSI. Thus it cannot be said that she was under the control of TWSI “as to the means used”. She obviously relied on her own capabilities. It is further admitted that Mrs. Sevilla was not in the company’s payroll. For her efforts, she retained 4% in commissions from airline bookings, the remaining 3% going to TWSI. Unlike

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That in all things, God may be glorified. an employee then, who earns a fixed salary usually, Mrs. Sevilla earned compensation in fluctuating amounts depending on her booking successes. The fact that Sevilla had been designated “branch manager” does not make her, ergo, TWSI’s employee. Employment is determined by the right of control test and certain economic parameters. Titles are weak indicators. However, there is no joint venture or partnership between TWSI and Mrs. Sevilla, either. The Court is of the opinion that the relationship of said parties is one that of a principal and an agent. But unlike simple grants of a power of attorney, the agency that the Court hereby declares to be compatible with the intent of the parties cannot be revoked at will. The reason is that it is an agency coupled with an interest. Thus, TWSI is held liable for damages for its unwarranted revocation of the contract of agency.

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6. Feati University v. Bautista FEATI UNIVERSITY V. BAUTISTA 18 SCRA 1191 ZALDIVAR, J. FACTS 1. On January 14, 1963, the President of the respondent Feati University Faculty ClubPAFLU wrote a letter to the President of petitioner Feati University informing her of the organization of the Faculty Club into a registered labor union. 2. The Faculty Club is composed of members who are professors and/or instructors of the University. 3. The President of the Faculty Club sent another letter containing twenty-six demands that have connection with the employment of the members of the Faculty Club by the University. 4. The University administration refused to bargain collectively and so PAFLU’s president filed a notice of strike with the Bureau of Labor. Thereafter, the members of the Faculty Club declared a strike resulting to disruption of classes. 5. Despite further efforts of the officials of the Department of Labor, no settlement can be reached between the parties. Subsequently, the President of the Philippines certified to the Court of Industrial Relations the dispute between the management of the University and the Faculty Club. 6. The University filed a motion to dismiss the case upon the ground that CIR has no jurisdiction over the case because the Industrial Peace Act is not applicable to the faculty members, they being independent contractors and not employees. The respondent judge denied the motion but ordered the strikers to return to work and the University to take them back. ISSUE Whether or not a charitable institution or one organized for profit is included in the definition of employer? HELD YES. The term “employer“ encompasses all employers except those specifically excluded in the Industrial Peace Act. The Act itself specifically enumerated those who are not included in term employer namely: (1) labor organization; (2) anyone acting in the capacity of officer or agent of such labor organization (3) the Government and any political subdivision or instrumentality. Among these statutory exemptions, educational institutions are not included; hence they can be included in the term “employer.” The Industrial Court has jurisdiction over unfair labor practice charges against institutions that are organized, operated and maintained for profit. The Industrial Peace Act is applicable to any organization or entity – whatever may be its purpose when it was created – that is operated for profit or gain.

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7. San Miguel Brewery Sales Force Union v .Ople SAN MIGUEL BREWERY SALES FORCE UNION V. OPLE 170 SCRA 25 GRIÑO – AQUINO, J FACTS 1. On April 17, 1978, a collective bargaining agreement (effective on May 1, 1978 until January 31, 1981) was entered into by petitioner San Miguel Corporation Sales Force Union (PTGWO), and the private respondent, San Miguel Corporation, Section 1, of Article IV of which provided as follows: “Art. IV, Section 1. Employees within the appropriate bargaining unit shall be entitled to a basic monthly compensation plus commission based on their respective sales.” 2. In September 1979, the company introduced a marketing scheme known as the “Complementary Distribution System” (CDS) whereby its beer products were offered for sale directly to wholesalers through San Miguel’s sales offices. 3. The labor union (herein petitioner) filed a complaint for unfair labor practice in the Ministry of Labor, with a notice of strike on the ground that the CDS was contrary to the existing marketing scheme whereby the Route Salesmen were assigned specific territories within which to sell their stocks of beer, and wholesalers bad to buy beer products from them, not from the company. 4. It was alleged that the new marketing scheme violates Section 1, Article IV of the collective bargaining agreement because the introduction of the CDS would reduce the take-home pay of the salesmen and their truck helpers for the company would be unfairly competing with them. ISSUES Whether or not the Complementary Distribution System violates the collective bargaining agreement. Whether it is an indirect way of busting the union. HELD 1. NO. The CDS was a valid exercise of management prerogative. Except as limited by special laws, an employer is free to regulate, according to his own discretion and judgment, all aspects of employment. Including hiring, work assignments, working methods, time, place and manner of work, tools to be used, processes to be followed, supervision of workers, working regulations, transfer of employees, work supervision, layoff of workers and the discipline, dismissal and recall of work. 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, this Court will uphold them. 2. NO. San Miguel Corporation’s offer to compensate the members of its sales force who will be adversely affected by the implementation of the CDS, by paying them a so-called” back adjustment commission” to make up for the commissions they might lose as a result of the CDS, proves the company’s good faith and lack of intention to bust their union.

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8. San Miguel Brewery Inc. v. Democratic Labor Organization SAN MIGUEL BREWERY V. DEMOCRATIC LABOR ORGANIZATION 8 SCRA 613 BAUTISTA, ANGELO, J. FACTS 1. The Democratic Labor Association filed a complaint against the San Miguel Brewery, Inc., embodying 12 demands for the betterment of the conditions of employment of its members. 2. The company filed its answer to the complaint specifically denying its material averments and answering the demands point by point. The company asked for the dismissal of the complaint. 3. During the hearing, the union manifested its desire to confine its claim to its demands for overtime, night-shift differential pay, and attorney's fees, although it was allowed to present evidence on service rendered during Sundays and holidays, or on its claim for additional separation pay and sick and vacation leave compensation. 4. After the case had been submitted for decision, Presiding Judge Jose S. Bautista, who was commissioned to receive the evidence, rendered decision expressing his disposition with regard to the points embodied in the complaint on which evidence was presented. 5. The demands for the application of the Minimum Wage Law to workers paid on "pakiao" basis, payment of accumulated vacation and sick leave and attorney's fees, as well as the award of additional separation pay, were either dismissed, denied, or set aside. 6. Its motion for reconsideration having been denied by the industrial court en bane, which affirmed the decision of the court a quo with few exceptions, the San Miguel Brewery, Inc. interposed the present petition for review. ISSUE Whether or not outside or field sales personnel are entitled to the benefits of the Eight-Hour Labor Law. HELD NO. After the morning roll call, the employees leave the plant of the company to go on their respective sales routes and they do not have a daily time record but the sales routes are so planned that they can be completed within 8 hours at most, and they receive monthly salaries and sales commission in variable amounts, so that they are made to work beyond the required eight hours similar to piecework, "pakiao", or commission basis regardless of the time employed, and the employees' participation depends on their industry, it is held that the Eight-Hour Labor Law has no application to said outside or field sales personnel and that they are not entitled to overtime pay. The Court is in the opinion that the Eight-Hour Labor Law only has application where an employee or laborer is paid in a monthly or daily basis, or is paid a monthly or daily compensation, in which case, if he is made to work beyond the requisite period of 8 hours, he should be paid the additional compensation prescribed by law. This law has no application when the employee or laborer is paid on a piece-work, "pakiao", or commission basis, regardless of the time employed. The philosophy behind this exemption is that his earnings are in the form of commission based on the gross receipts of the day. His participation depends upon his industry so that the more hours he employs in the work the greater are his gross returns and the higher his commission. This philosophy is better explained in Jewel Tea Co. vs. Willams, C.C.A. Okl., 118 F. 2d 202, as follows: "The reasons for excluding an outside salesman are fairly apparent. Such salesman, to a great extent, works individually. There are no restrictions respecting the time he shall work and he can earn as much or as little, within the range of his ability, as his ambition dictates. In lieu of overtime he ordinarily receives commissions as extra compensation. He works away from his employer's place of business, is not subject to the personal supervision of his employer, and his employer has no way of knowing the number of hours he works per day."

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Hours of Work

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9. Jardin v. NLRC JARDIN V. NLRC 326 SCRA 299 QUISUMBING, J. FACTS 1. Petitioners were drivers of respondent Philjama International Inc., a domestic corporation engaged in the operation of "Goodman Taxi." Petitioners used to drive private respondent's taxicabs every other day on a 24-hour work schedule under the boundary system. 2. The petitioners earned an average of P400.00 daily from which respondent regularly deducts the amount of P30.00 supposedly for the washing of the taxi units. 3. Believing that the deduction is illegal, petitioners decided to form a labor union to protect their rights and interests. 4. Upon learning about the plan of petitioners, private respondent refused to let petitioners drive their taxicabs when they reported for work on August 6, 1991, and on succeeding days. 5. Petitioners suspected that they were singled out because they were the leaders and active members of the proposed union. Aggrieved, petitioners filed with the labor arbiter a complaint against private respondent for unfair labor practice, illegal dismissal and illegal deduction of washing fees. 6. The labor arbiter dismissed said complaint for lack of merit. 7. On appeal, the NLRC reversed and set aside the judgment of the labor arbiter. The labor tribunal declared that petitioners are employees of private respondent, and, as such, their dismissal must be for just cause and after due process. 8. Private respondent's second motion for reconsideration was granted and said court ruled that it lacks jurisdiction over the case as petitioners and private respondent have no employer-employee relationship. Expectedly, petitioners sought reconsideration of the labor tribunal's latest decision which was denied. Hence, the instant petition. ISSUE Whether or not employer-employee relationship exists between the petitioners and respondent Philjama International, Inc. HELD YES. In the determination the existence of employer-employee relationship, the Supreme Court has applied the following four-fold test: '(1) the selection and engagement of the employee; (2) the payment of wages; (3) the power of dismissal; and (4) the power of control the employees conduct.' Under the control test, an employer-employee relationship exists if the 'employer' has reserved the right to control the 'employee' not only as to the result of the work done but also as to the means and methods by which the same is to be accomplished. Otherwise, no such relationship exists. In a number of cases decided by this Court, we ruled that the relationship between jeepney owners/operators on one hand and jeepney drivers on the other under the boundary system is that of employer-employee and not of lessor-lessee. We explained that in the lease of chattels, the lessor loses complete control over the chattel leased although the lessee cannot be reckless in the use thereof, otherwise he would be responsible for the damages to the lessor. In the case of jeepney owners/operators and jeepney drivers, the former exercise supervision and control over the latter. The management of the business is in the owner's hands. The owner as holder of the certificate of public convenience must see to it that the driver follows the route prescribed by the franchising authority and the rules promulgated as regards its operation. Now, the fact that the drivers do not receive fixed wages but get only that in excess of the so-called "boundary" they pay to the owner/operator is not sufficient to withdraw the relationship between them from that of employer and employee. We have applied by analogy the above-stated doctrine to the relationships between bus owner/operator and bus conductor, auto-calesa owner/operator and driver, and recently between taxi owners/operators and taxi drivers. Hence, petitioners are undoubtedly

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10. Stolt-Nielsen Marine Services v. NLRC STOLT-NIELSEN MARINE SERVICES V. NLRC 258 SCRA 643 ROMERO, J. FACTS 1. Respondent Meynardo J. Hernandez was hired by Stolt-Nielsen Marine Services (Phils.) Inc. as radio officer on board M/T Stolt Condor for a period of ten months. He boarded the vessel on January 20, 1990. 2. On April 26, 1990, the ship captain ordered private respondent to carry the baggage of crew member Lito Loveria who was being repatriated. He refused to obey the order out of fear in view of the utterance of said crew member "makakasaksak ako" and also because he did not perceive such task as one of his duties as radio officer. 3. As a result of such refusal, private respondent was ordered to disembark on April 30, 1990 and was himself repatriated on May 15, 1990. He was paid his salaries and wages only up to May 16, 1990. 4. Private respondent filed before public respondent POEA a complaint for illegal dismissal and breach of contract paying for, among other things, payment of salaries, wages, overtime and other benefits due him for the unexpired portion of the contract which was six (6) months and three (3) days. 5. Petitioner in its answer alleged that private respondent refused to follow the "request" of the master of the vessel to explain to Lolito Loveria, the reason for the latter's repatriation and to assist him in carrying his baggage, all in violation of Article XXIV, Section I of the Collective Bargaining Agreement (CBA) and the POEA Standard Contract. Hence, private respondent, after being afforded the opportunity to explain his side, was dismissed for gross insubordination and serious misconduct. 6. Respondent denied that the master of the vessel requested him to explain to Loveria the reason for the latter's repatriation. 7. Thereafter, POEA Administrator rendered an award in favor of private respondent. 8. Aggrieved, petitioner Stolt-Nielsen appealed to the National Labor Relations Commission (NLRC). The NLRC concurred with the POEA Administrator in ruling that private respondent, having been illegally dismissed, was, therefore, entitled to the monetary award. 9. It further stated that private respondent's duty as a radio officer or radio operator does not include the carrying of the luggage of any seaman or explaining to said seaman the reason for his repatriation. Thus, concluded the NLRC, his termination on this ground was not proper and, therefore, he had every right to the monetary award. The NLRC likewise granted private respondent's claim for fixed overtime pay and attorney's fees. ISSUES 1. Whether or not private respondent was legally dismissed on the ground of gross insubordination and serious misconduct. 2. Whether or not private respondent was entitled to the award of over-time pay. HELD 1. YES. Willful disobedience of the employer's lawful orders, as a just cause for the dismissal of an employee, envisages the concurrence of at least two (2) requisites. The employee's assailed conduct must have been willful or intentional, the willfulness being characterized by a "wrongful and perverse attitude", and the order violated must have been reasonable, lawful, made known to the employee and must pertain to the duties which he had been engaged to discharge. The Court agrees that by virtue of the aforementioned CBA and POEA Standard Contract provisions cited by petitioner, private respondent is indeed bound to obey the lawful commands of the captain of the ship, but only as long as these pertain to his duties. The order to carry the luggage of a crew member, while being lawful, is not part of the duties of a radio officer. Assuming arguendo that lawful commands of a ship captain are supposed to be obeyed by the complement of a ship, private respondent's so-called

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That in all things, God may be glorified. "act of disobedience" does not warrant the supreme penalty of dismissal. In instant case, the POEA found that private respondent's actuation which led to his dismissal was the first and only act of disobedience during his service with the petitioner, Furthermore, examination of the circumstances surrounding private respondent's disobedience shows that the repatriated seaman's utterance of "makakasaksak ako" so instilled fear in private respondent that he was deterred from carrying out the order of the captain. Hence, his act could not be rightfully characterized as one motivated by a "wrongful and perverse attitude." Besides, said incident posed no serious or substantial danger to the well-being of his other co-employees or of the general public doing business with petitioner employer, neither did such behavior threaten substantial prejudice to the business of his employer. 2. NO. The Court reiterated that the rendition of overtime work and the submission of sufficient proof that said work was actually performed are conditions to be satisfied before a seaman could be entitled to overtime pay which should be computed on the basis of 30% of the basic monthly salary. In short, the contract provision guarantees the right to overtime pay but the entitlement to such benefit must first be established. Realistically speaking, a seaman, by the very nature of his job, stays on board a ship or vessel beyond the regular eight-hour work schedule. For the employer to give him overtime pay for the extra hours when he might be sleeping or attending to his personal chores or even just lulling away his time would be extremely unfair and unreasonable.

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11. Interphil Laboratories Employees Union – FFW v. Interphil Laboratories INTERPHIL LABORATORIES EMPLOYEES UNION – FFW V. INTERPHIL LABORATORIES 372 SCRA 658 KAPUNAN, J. FACTS 1. Interphil Laboratories Employees Union-FFW is the sole and exclusive bargaining agent of the rank-and file employees of Interphil Laboratories, Inc., a company engaged in the business of manufacturing and packaging pharmaceutical products. 2. They had a Collective Bargaining Agreement (CBA) effective from August 1, 1990 to July 31, 1993. 3. Prior to the expiration of the CBA, Allesandro Salazar, the vice-president of the HR Department and Nestor Ocampo, the union president and Hernando Clemente, a union director had a meeting. The representatives of the union were asking to make the new CBA effective for 2 yeas. 4. Salazar informed them that it was still premature to discuss the new CBA. 5. The following day, all the rank-and-file employees refused to follow their regular twoshift work schedule 6:00am to 6:00pm and from 6:00pm to 6:00am. 6. At 2:00 pm and 2:00 am respectively, the employees stopped working without sealing the containers and securing the raw materials they were working on. 7. Enrico Gonzales, a union director, told Salazar that the employees would only return to their normal work schedule if the company would agree to their demands as to the effectivity and duration of the new CBA. 8. In addition, the employees started to engage in a work slowdown campaign during the time they were working thus substantially delaying the production of the company. 9. Respondent company filed with the NLRC to declare illegal the petitioner union’s overtime boycott and work slowdown which amounted to illegal strike. 10. The respondent company filed with the NCMB an urgent request for mediation. However the parties failed to arrive at an agreement. 11. Petitioner union then filed with NCMB a notice of strike citing unfair labor practice allegedly committed by respondent company. 12. In the interim, the case before NLRC continued. The labor arbiter then found that the overtime boycott and the work slowdown as illegal strike. 13. Petitioner union contended that according to the provisions of their CBA on working hours clearly state that the normal working hours were from 7:30 am to 4:30pm. The labor arbiter should not have admitted other evidence than that stated in the CBA. ISSUE Whether or not the working hours of the petitioner is only from 7:30 am to 4:30 pm. HELD NO. The parties in the CBA stipulated that: “the schedule of shift work shall be maintained; however the company may change the prevailing work time at its discretion, should change be necessary in the operations of the Company. All employees shall observe such rules as have been laid down by the company for the purpose of effecting control over working hours.” It is evident from the foregoing provisions that the working hours may be changed, at the discretion of the company, should such change be necessary for its operations and that the employees shall observe such rules as have been laid down by the company. The company had to adopt a continuous 24-hour work daily schedule by reason of the nature of its business and the demands of its clients. It was established that the employees adhered to the said work schedule since 1988. The employees are deemed to have waived the eighthour schedule since they followed, without any question or complain, the two shift schedule while their CBA was still in force and even prior thereto. As the employees assented by practice to this arrangement, they cannot now be heard to claim that the overtime boycott is justified because they were not obliged to work beyond eight hours.

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12. Pan American World Airways System v. Pan American Employees Association PAN AMERICAN WORLD AIRWAYS SYSTEM V. PAN AMERICAN EMPLOYEES ASSOCIATION 1 SCRA 527 REYES, JBL FACTS 1. Petitioner herein claims that the one hour meal period should not be considered as overtime work, because the evidence showed that complainants could rest completely, and were not in any manner under the control of the company during that period. 2. The court below found, on the contrary, that during the so-called meal period, the mechanics were required to stand by for emergency work; that if they happened not to be available when called, they were reprimanded by the lead man; that as in fact it happened on many occasions, the mechanics had been called from their meals or told to hurry up eating to perform work during this period. ISSUE Whether or not the 1 hour meal period of the mechanics is considered working time. HELD Yes. The Industrial Court’s order for permanent adoption of a straight 8-hour shift including the meal period was but a consequence of its finding that the meal hour was not one of complete rest but was actually a work hour, since for its duration, the laborers had to be on ready call.

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13. Campangan v. NLRC CAGAMPAN VS. NLRC 195 SCRA 533 FACTS 1. On April 17 and 18,1985, petitioners, all seamen, entered into separate contracts of employment with the Golden Light Ocean Transport, Ltd., through its local agency, private respondent ACE MARITIME AGENCIES, INC. 2. Petitioners were deployed on May 7, 1985, and discharged on July 12, 1986. Thereafter, petitioners collectively and/or individually filed complaints for nonpayment of overtime pay, vacation pay and terminal pay against private respondent. 3. In addition, they claimed that they were made to sign their contracts in blank. Likewise, petitioners averred that although they agreed to render services on board the vessel Rio Colorado managed by Golden Light Ocean Transport, Ltd., the vessel they actually boarded was MV "SOIC I" managed by Columbus Navigation. 4. Two (2) petitioners, Jorge de Castro and Juanito de Jesus, charged that although they were employed as ordinary seamen (OS), they actually performed the work and duties of Able Seamen (AB). 5. Private respondent was furnished with copies of petitioners' complaints and summons, but it failed to file its answer within the reglementary period. 6. Thus, on January 12, 1987, an Order was issued declaring that private respondent has waived its right to present evidence in its behalf and that the cases are submitted for decision. 7. On August 5, 1987, the Philippine Overseas Employment Administration (POEA) rendered a Decision dismissing petitioners' claim for terminal pay but granted their prayer for leave pay and overtime pay. On appeal, the NLRC reversed the decision; Hence, the petition. Petitioner contends, inter alia, that they are entitled to leave pay and overtime pay. ISSUE Whether or not petitioners are entitled to leave pay and overtime pay HELD The court sustains the finding of respondent NLRC that petitioners were actually paid more than the amounts fixed in their employment contracts. Even as the denial of petitioners' terminal pay by the NLRC has been justified, such denial should not have been applied to petitioners Julio Cagampan and Silvino Vicera. For, a deeper scrutiny of the records by the Solicitor General has revealed that the fact of overpayment does not cover the aforenamed petitioners since the amounts awarded them were equal only to the amounts stipulated in the crew contracts. Since petitioners Cagampan and Vicera were not overpaid by the company, they should be paid the amounts of US$583.33 and US$933.33, respectively. As regards the question of overtime pay, the NLRC cannot be faulted for disallowing the payment of said pay because it merely straightened out the distorted interpretation asserted by petitioners and defined the correct interpretation of the provision on overtime pay embodied in the contract conformably with settled doctrines on the matter. Notably, the NLRC ruling on the disallowance of overtime pay is ably supported by the fact that petitioners never produced any proof of actual performance of overtime work. In short, the contract provision guarantees the right to overtime pay but the entitlement to such benefit must first be established. Realistically speaking, a seaman, by the very nature of his job, stays on board a ship or vessel beyond the regular eight-hour work schedule. For the employer to give him overtime pay for the extra hours when he might be sleeping or attending to his personal chores or even just lulling away his time would be extremely unfair and unreasonable.

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14. Mercury Drug Co., Inc. v. Dayao MERCURY DRUG CO. INC. VS. DAYAO 117 SCRA 99 FACTS 1. This is a verified petition dated March 17, 1964 which was subsequently amended on July 31, 1964 filed by Nardo Dayao and 70 others against Mercury Drug Co., Inc., and/or Mariano Que, President & General Manager, and Mercury Drug Co., Inc. 2. Employees Association praying, with respect to respondent corporation and its president and general manager: 1) payment of their unpaid back wages for work done on Sundays and legal holidays plus 25c/c additional compensation from date of their employment up to June 30, 1962; 2) payment of extra compensation on work done at night; 3) reinstatement of Januario Referente and Oscar Echalar to their former positions with back salaries; and, as against the respondent union, for its disestablishment and the refund of the money it had collected from petitioners. 3. The CIR sustained the claim of the petitioners for payment of back wages correspoding to the first four hours work rendered on every other Sunday and first four hours on legal holidays should be denied for lack of merit. The motion for reconsideration was denied. 4. Thus, the instant petition contending that private respondents' claims for 25% Sunday and Legal Holiday premiums are not supported by substantial evidence, thus infringing upon the cardinal rights of the petitioner, and that assuming it is, such premiums are already included in the salary of private respondents. ISSUE Whether or not private respondents are entitled to the 25% Sunday and Legal Holiday premiums. HELD The contention is without merit. While an employer may compel his employees to perform service on such days, the law nevertheless imposes upon him the obligation to pay his employees at least 25% additional of their basic or regular salaries. Under Section 4 of C. A. No. 444, no person, firm or corporation, business establishment or place of center of labor shall compel an employee or laborer to work during Sundays and legal holidays unless he is paid an additional sum of at least twenty-five per centum of his regular remuneration: Provided, However, That this prohibition shall not apply to public utilities performing some public service such as supplying gas, electricity, power, water, or providing means of transportation or communication. Although a service enterprise, respondent company's employees are within the coverage of C. A. No. 444, as amended known as the Eight Hour Labor Law, for they do not fall within the category or class of employees or laborers excluded from its provisions. In not giving weight to the evidence of the petitioner company, the respondent court sustained the private respondents' evidence to the effect that their 25% additional compensation for work done on Sundays and Legal Holidays were not included in their respective monthly salaries. The private respondents presented evidence through the testimonies of Nardo, Dayao, Ernesto Talampas, and Josias Federico who are themselves among the employees who filed the case for unfair labor practice in the respondent court and are private respondents herein. The petitioner- company's contention that the respondent court's conclusion on the issue of the 25% additional compensation for work done on Sundays and legal holidays during the first four hours that the private respondents had to work under their respective contracts of employment was not supported by substantial evidence is, therefore, unfounded.

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15. Luzon Stevedoring Co., Inc. v Luzon Marine Department Union LUZON STEVEDORING Co. v. Luzon Marine department Union 101 SCRA 257 FELIX, J. FACTS 1. On June 21, 1948, Luzon Marine Department Union filed a petition with the Court of Industrial Relations containing several demands against Luzon Stevedoring Co., Inc. 2. While the case was still pending, the union declared a strike which was declared illegal by the Court, 3. The union filed a “Constancia” with the Court of Industrial Relations praying that the unresolved demands of the union in their original petition be granted. 4. Among the union’s demands is that work performed beyond eight hours be paid overtime pay of 50% the regular pay rate and that work performed on Sundays and legal holidays be paid double the regular rate pay. 5. The trial Judge found that the employees worked from 6:00 AM to 6:00 PM daily and for work performed in excess of 8 hours, the employees were given overtime pay of P4.00 for officers, patrons and radio operators and P2.00 for the rest of the crew. 6. The counsel for the union filed a motion for reconsideration praying that the decision be modified so as to declare and rule that the members of the Union who had rendered services from 6:00 AM to 6:00 PM were entitled to 4 hours overtime pay and that whatever little time allotted to the taking of their meal should not be deducted from the four hours of overtime rendered by said employees. 7. Luzon Stevedoring also sought for the reconsideration of the decision only insofar as it interpreted that the period during which the seaman is aboard a tugboat shall be considered as working time for the purpose of the 8-hour law. ISSUE Is the definition for “hours of work” as presently applied to dryland laborers equally applicable to seamen? HELD Section 1 of the Commonwealth Act 444 provides that the legal working day for any person employed by another shall not be more than 8 hours daily. When work is not continuous, the time during which the laborer is not working and can leave his working place and can rest completely, shall not be counted. For the purposes of this case, the Court need not set aside for seamen a criterion different from that applied to laborers on land, for under the provisions of the law, the only thing to be done is to determine the meaning and scope of the word “working place” used therein. As the Court understand this term, a laborer need not leave the premises of the factory, shop or boat in order that his period of rest shall not be counted, it being enough that he ceases to work, may rest completely and leave or may leave at his will the spot where he actually stays while working, to go somewhere else, whether within or outside the premises of said factory, shop or boat. If these requisites are complied with, the period of such rest shall not be counted.

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Wages

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16. PAL Employees Savings and Loan Association PAL EMPLOYEES SAVINGS AND LOAN ASSOCIATION, INC. VS. NLRC 260 SCRA 758 FACTS 1. Private respondent Angel Esquejo started working with petitioner PAL Employees Savings and Loan Association (PESALA) as a company guard and was receiving a monthly basic salary of P 1,900 plus an emergency allowance in the amount of P 510. 2. He was required to work 12 hours a day. That during his entire period of employment with petitioner, herein private respondent was required to perform overtime work without any additional compensation from the latter. 3. Sometime later, private respondent was administratively charged with serious misconduct or disobedience of the lawful orders of petitioner or its officers. As a result, private respondent filed a detailed and itemized computation of his money claims. 4. Thereafter, the labor Arbiter rendered a decision granting private respondent overtime pay. 5. Aggrieved by the decision, petitioner appealed to the NLRC only to be rejected later. 6. In the meantime, petitioner filed the instant special civil action for certiorari citing as reason that quite recently, the employee payroll sheets which contained the salaries and overtime pay received by private respondent were located in the bodega of the petitioner and based on the payroll sheets, it appears that substantial overtime pay have been paid to private respondent. ISSUE Whether or not an employee is entitled to overtime pay for work rendered in excess of the regular eight hour day given the fact that he entered into a contract of labor specifying a work-day of twelve hours at a fixed monthly rate above the legislated minimum wage. HELD YES. The Supreme Court held that based on petitioner’s own computation, it appears that the basic salary plus emergency allowance given to private respondent did not actually include the overtime pay claimed by private respondent. Moreover, there was no meeting of the minds between petitioner and private respondent as to what is covered by the salary stipulated. The said contract was definite only as to the number of hours to be rendered. Furthermore, the subsequent act of private respondent in filing the money claims negates the theory that there was a clear agreement as to the inclusion of his overtime pay in the contracted salary rate.

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17. Songco v. NLRC SONGCO V. NLRC 183 SCRA 610 MEDIALDEA, J: FACTS 1. Petitioners were members of the sales force of respondent Zuellig. Zuellig filed with the DOLE an application seeking clearance to terminate the services of petitioners allegedly on the ground of retrenchment due to financial losses. Petitioners opposed said application alleging that the company is not suffering from losses and that they are being dismissed because of their membership in the union. 2. During the last day of hearing of the case, the petitioners manifested that they are no longer contesting their dismissal. The parties agreed that the sole issue to be resolved is the basis of the separation pay due to petitioners. 3. Petitioners, as members of the sales force of Zuellig, received monthly salaries of at least P400 plus commissions for every sale they made. 4. The Collective Bargaining Agreement entered into by Zuellig and Zuellig Employees Association of which the petitioners are members, contains: “Any employee, who is separated from employment due to XXX permanent lay-off not due to the fault of said employee shall receive from the company a retirement gratuity in an amount equivalent to 1 month’s salary per year of service. One month of salary as used in this paragraph shall be deemed equivalent to the salary date of retirement, years of service shall be deemed equivalent to total service credits, a fraction of at least 6 months being considered 1 year, including probationary employment”. 5. Article 284 of the Labor Code then prevailing likewise provides: “The termination of employment of any employee due to XXX retrenchment to prevent losses XXX shall entitle the employee affected thereby to separation pay. XXX The separation pay shall be equivalent to 1 month pay or at least 1 month pay for every year of service, whichever is higher”. 6. Petitioners argue that their sales commissions and allowances should be included in the monthly salary for the purpose of computing their separation pay. 7. Zuellig contends that if it really were the intention of the Labor Code and its Implementing Rules to include commissions in the computation of separation pay, it could have explicitly said so in clear and equivocal terms. In addition, in the definition of the term “wage” (Article 97), commission is used only as one of the features or designations attached to the word “remuneration” or “earnings” 8. The labor arbiter rendered a decision ordering private respondent to pay the petitioners separation pay equivalent to their 1 month salary (exclusive of commissions allowances, etc) for every year of service. The labor arbiter ruled “wage” as defined in Article 97(f) of the Code is not synonymous with “salary” as provided in the CBA and Article 284. 9. Petitioner’s appeal to the NLRC was dismissed for lack of merit. Hence, the present petition for review. ISSUE Whether or nor earned sales commissions and allowances be included in the monthly salary of the petitioners for the purpose of computing their separation pay

HELD YES. Anent the inclusion of allowances, the Court ruled in Santos v. NLRC that in the computation of back wages and separation pay, account must be taken not only of the basis salary of the petitioner but also her transportation and emergency living allowances. Anent the inclusion of commissions, Art 97(f) by itself is explicit that commission is included in the definition of the term “wage”. Where the law speaks in clear and categorical language, there is no room for interpretation or construction; there is only room for application. The ambiguity between Art 97(f), which defines the term “wage” and Article 284 and the CBA, which mention the words “pay” and “salary” is more apparent than real. The word salary

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That in all things, God may be glorified. means a recompense or consideration made to a person for his pains and industry in another man’s business. There is eminent authority for holding that the words “wages” (Middle English: wagen) and “salary” (Latin: salarium) are essentially synonymous. Both words are interchangeably used and refer to one and the same meaning: a reward or recompense for services performed. Likewise, “pay” is synonymous with “wage” and “salary”. Inasmuch as the three words have the same meaning and commission is included in the definition of “wage” the logical conclusion is, in the computation of the separation pay of the petitioners, their salary base should also include their earned sales commissions. Granting, for the sake of argument that the commissions were in the form of incentives or encouragement, so that the petitioners would be inspired to put little more industry on the jobs assigned to them, these commissions are still direct remunerations for services rendered which increased the income of Zuellig. Commission is the recompense, compensation, or reward of an agent, salesman, executor, trustee, receiver, when the same is calculated as a percentage on the amount of his transactions or on the profit of the principal. The nature of the work of a salesman and the reason for such type of remuneration for services rendered demonstrate clearly that commissions are part of petitioners’ wage or salary. The Court takes judicial notice that some salesmen do not receive basic salary but depend on commissions and allowances alone, although an employer-employee relationship exists. If the opposite view is taken that commissions do not form part of salary or wage, the Court will be saying that such salesmen will not be entitled to separation pay, which is absurd. The workingman’s welfare should be the primordial concern in interpreting the Labor Code and its implementing rules and regulations. All doubts should be resolved in favor of labor.

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18. Mabeza v. NLRC MABEZA V. NLRC 271 SCRA 670 KAPUNAN, J. FACTS 1. Norma Mabeza was an employee of Hotel Supreme in Baguio City. 2. Sometime around May 1991, she and her co-employees were asked by the hotel’s management to sign an instrument attesting to the latter’s compliance with minimum wage order and other labor standard provisions of law. 3. Mabeza signed the affidavit but refused to go to the Prosecutor’s Office to swear to the veracity of its contents. 4. The affidavit was drawn by the management was for the purpose of refuting the findings of the Labor Inspector of DOLE in an inspection conducted in the establishment of the private respondent. 5. After Mabeza refused to proceed to the Prosecutor’s Office, she was ordered by management to turn over the keys to her living quarters and to remove all her belongings from the hotel premises. 6. She thereafter filed a leave of absence which was denied by management. When she attempted to return to work of May 10, 1991, she was advised to just continue with her unofficial leave of absence. 7. Petitioner filed a complaint for illegal dismissal. She alleged in her complaint the underpayment of wages, non-payment of holiday pay, service incentive leave pay, 13th month pay, night differential and other benefits. 8. Private respondent avers on the other hand that petitioner abandoned her job without notice to management. They also contend that there was no basis for the money claim for underpayment and other benefits as these were paid in the form of facilities to petitioner and the hotel’s other employees. ISSUE Whether or not the wages received by the employees of private respondent are below the minimum set by law. HELD YES. The Labor Arbiter accepted hook, line and sinker the private respondent’s bare claim that the reason the monetary benefits received by petitioner between 1981 to 1987 were less than the minimum wage was because petitioner did not factor in the meals, lodging, electric consumption and the water she received during the period in her computations. Granting that means and lodging were provided and indeed constituted facilities, such facilities could not be deducted without the employer complying first with certain legal requirements. Without satisfying these requirements, the employer simply cannot deduct the value from the employee’s wages. 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. Finally, facilities must be charged at fair and reasonable value. These requirements were not met in the instance case. More significantly, the food and lodging or the electricity and water consumed by the petitioner were not facilities but supplements. A benefit or privilege granted to an employee for the convenience of the employer is not a facility. The criterion in making a distinction between the two not so much lies in the king (food, lodgingn) but the purpose. Considering therefore, that hotel workers are required to work different shifts and are expected to be available at various odd hours, their ready availability is necessary matter in the operations of a small hotel, such as the private respondent’s hotel.

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19. International School Alliance of Educators v. Quisumbing INTERNATIONAL SCHOOL ALLIANCE OF EDUCATORS VS. QUISUMBING GR 128845, JUNE 1, 2000 FACTS 1. Private respondent International School Inc. is a domestic educational institution established primarily for dependents of foreign diplomatic educational and other temporary residents. 2. The school hires both foreign and local teachers as members of its faculty classifying them as foreign hires and local hires. 3. The school grants foreign-hires certain benefits not accorded local hires such as housing, transportation, and home leave travel allowance. Foreign hires are also paid a salary rate 25% more than local hires. 4. The school justifies the difference on salary based on two significant economic disadvantages foreign hires have to endure, that is the dislocation factor and the limited tenure. 5. Petitioner International School Alliance of Educators contested the difference in salary rates between foreign hire and local hires. They claim that the point of hire classification employed by the School constitutes racial discrimination. However, the Acting Secretary of DOLE upheld the point of hire classification for the distinction in the salary rates. Hence, this petition. ISSUE Whether or not the difference in salary rates between foreign-hires and local hires is of reasonable classification. HELD NO. It has been held that discrimination, particularly in terms of wages, is frowned upon by the Labor Code. There must be equal pay for equal work. Persons who work with substantially equal qualifications, skill, effort and responsibility under similar conditions, should be paid similar salaries. This rule applies to the School, notwithstanding its International character. Moreover, the contention of the School that petitioner has not adduced evidence that local hires perform work equal to that of foreign hires is no moment. It has been held that if an employer accords employees the same position and rank, the presumption is that these employees perform equal work. Furthermore, the dislocation factor and the limited tenure cannot serve as valid basis for distinction in salary rates. The dislocation factor and limited tenure affecting foreign hires are adequately compensated by certain benefits accorded them which are not enjoyed by local hires such as housing, transportation and home leave travel allowances.

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20. Nestle Philippines v. NLRC NESTLE PHILIPPINES V. NLRC 193 SCRA 504 GRIÑO-AQUINO, J FACTS 1. After the four (4) bargaining agreements separately covering Nestle Philippines’ employees expired, the Union of Filipro Employees (UFE) was certified the sole and exclusive bargaining agent for all rank-and-file employees at the Cagayan de Oro factory as well as in the Cebu/Davao Sales Office. 2. During negotiations, the employees at the Cabuyao factory resorted to a “slowdown” and walkouts prompting the petitioner to shut down the factory. 3. Thereafter, UFE declared a bargaining deadlock. 4. On September 2, 1987, the Secretary of Labor assumed jurisdiction and issued a return to work order. 5. In spite of that order, the union struck without notice in Alabang/Cabuyao factory, the Cagayan de Oro factory and Makati office. 6. The company dismissed the union officers and members of the negotiating panel who participated in the illegal strike. 7. On March 30, 1988, the petitioner were able to conclude a CBA with the union at the Cebu/Davao Sales office and on August 5, 1988 with the Cagayan de Oro factory workers. 8. UFE assailed the validity of the agreements and filed a case of unfair labor practice against Nestle. 9. After the conciliation efforts of the National Conciliation and Mediation Board yielded negative results, the dispute was certified to the NLRC by the Secretary of Labor. 10. The NLRC issued a resolution regarding the retirement plan of the workers which provides: a. For 15 years of service or less = 100% of the employee’s monthly salary for year of service b. More than 15 but less than 20 = 125% of the employee’s monthly salary for year of service c. 20 years or more = 150% of the employee’s monthly salary for year of service 11. Petitioner questions the retirement plan contending that since it is non-contributory, Nestle has the sole and exclusive prerogative to define the terms of the plan because workers have no vested and demandable rights thereunder, the grant thereof being not contractual but gratuitous. ISSUE Whether or not Nestle has the sole and exclusive prerogative to define the terms of the plan being non-contributory. HELD NO. The company’s contention that the retirement plan is non-negotiable, is not well taken. The inclusion of the retirement plan in the collective bargaining agreements part of the package of economic benefits extended by the company to its employees to provide them a measure of financial security after they shall have ceased to be employed in the company, reward their loyalty, boost their morale and efficiency and promote industrial peace, gives a contractual character to the plan so that it may not be terminated or modified at the will by either party. The petitioner’s contention that employees have no vested or demandable right to a noncontributory retirement plan, has no merit for employees do have a vested and demandable right over existing benefits voluntarily granted to them by their employer. The latter may not unilaterally withdraw, eliminate or diminish such benefits.

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21. R. Tiongco v. Hon. Vicente Leogrado TIANGCO V. LEOGARDO, JR. GR 57636, MAY 16, 1983 CONCEPCION, JR., J: FACTS 1. The petitioner, Reynaldo Tiangco, is a fishing operator who owns the Reynaldo Tiangco Fishing Company and a fleet of fishing vessels engaged in deep-sea fishing which operates from Navotas, Rizal. 2. His business is capitalized at P2,000,000.00, while the petitioner, Victoria Tiangco, is a fish broker whose business is capitalized at P100,000.00. 3. Some of the private respondents were engaged by Reynaldo Tiangco as batillos, who were tasked to unload the fish catch from the vessels and take them to the Fish Stall of the petitioner Victoria Tiangco. The other private respondents were batillos engaged by Victoria Tiangco. 4. They were all working as part-time since their work were limited to days of arrival of the fishing vessels and their working days in a month are comparatively few. Their working hours average four (4) hours a day. 5. The private respondents filed a complaint against the petitioners with the Ministry of Labor and Employment for non-payment of their legal holiday pay and service incentive leave pay, as well as underpayment of their emergency cost of living allowances which used to be paid in full irrespective of their working days, but which were reduced effective February, 1980, in contravention of Article 100 of the new Labor Code which prohibits the elimination or diminution of existing benefits. 6. The petitioners on the other hand, denied the laborers’ contention and stated that in addition to their regular daily wage, a daily extra pay in amounts ranging from 30 centavos to 10 pesos were given to offset the laborers' claim for service incentive leave and legal holiday pay. They however, admitted that they had discontinued their practice of paying a fixed monthly allowance, and allowances for non-working days. They invoked the principle of “No work, no allowances” and said that the payment of such allowances will cause losses to their business. 7. The petitioners now filed a petition for certiorari and prohibition, with preliminary mandatory injunction and/or restraining order to annul and set aside the order of the respondent Deputy Minister of Labor which modified and affirmed the order of Director of the National Capital Region of the Ministry of Labor, which directed the petitioners to pay the private respondents their legal holiday pay, service incentive pay, and differentials in their emergency cost of living allowances. ISSUE Whether the Deputy Minister of Labor and Employment acted in excess of jurisdiction in deciding that there is diminution of benefits in the discontinuance of giving of allowance. HELD The Deputy Minister of Labor and Employment correctly ruled that, since the petitioners had been paying the private respondents a fixed monthly emergency allowance since November, 1976 up to February, 1980, as a mattter of practice and/or verbal agreement between the petitioners and the private respondents, the discontinuance of the practice and/or agreement unilaterally by the petitioners contravened the provisions of the Labor Code, particularly Article 100 thereof which prohibits the elimination or diminution of existing benefits. Section 15 of the Rules on P.D. 525 and Section 16 pf the Rules on P.D. 1123 also prohibits the diminution of any benefit granted to the employees under existing laws, agreements and voluntary employer practice. The decision of the Deputy Minister of Labor was modified, taking into consideration that the respondent employees are employed by different individuals with varying capitalization.

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22. Globe Mackay Cable v. NLRC GLOBE MACKAY CABLE AND RADIO CORPORATION VS. NLRC, FFW- GLOBE MACKAY EMPLOYEES UNION G.R. NO. 74156. JUNE 29, 1988. MELENCIO- HERRERA, J. FACTS 1. Wage Order No. 6 increased the cost-of-living allowance of non-agricultural workers in the private sector. Petitioner corporation (GMCR) complied with the said Wage Order by paying its monthly-paid employees the mandated P3.00 per day COLA. However, in computing said COLA, GMCR multiplied the P3.00 daily COLA by 22 days, which is the number of working days in the company. 2. Respondent Union disagreed with the computation of the monthly COLA claiming that the daily COLA rate of P3.00 should be multiplied by 30 days to arrive at the monthly COLA rate. The union alleged furthermore that prior to the effectivity of Wage Order No. 6, GMCR had been computing and paying the monthly COLA on the basis of thirty (30) days per month and that this constituted an employer practice, which should not be unilaterally withdrawn. 3. The Labor Arbiter ruled that the monthly COLA should be computed on the basis of twenty two (22) days, since the evidence showed that there are only 22 paid days in a month for monthly-paid employees in the company. To compel the respondent company to use 30 days in a month to compute the allowance and retain 22 days for vacation and sick leave, overtime pay and other benefits is inconsistent and palpably unjust. If 30 days is used as divisor, then it must be used for the computation of all benefits, not just the allowance. But this is not fair to complainants, not to mention that it will contravene the provision of the parties' CBA. 4. However, the NLRC reversed the Labor Arbiter and held that petitioner was guilty of illegal deductions, upon the following considerations: (1) that the P3.00 daily COLA should be paid and computed on the basis of thirty (30) days instead of twenty two (22) days since workers paid on a monthly basis are entitled to COLA on Saturdays, Sundays and legal holidays "even if unworked;" (2) that the full allowance enjoyed by monthly-paid employees before the CBA executed in 1982 constituted voluntary employer practice, which cannot be unilaterally withdrawn. ISSUES 1. How should the COLA be computed? 2. Can the COLA be unilaterally withdrawn by the employer? HELD 1. The primordial consideration for entitlement to COLA is that basic wage is being paid. In other words, the payment of COLA is mandated only for the days that the employees are paid their basic wage, even if said days are unworked. So that, on the days that employees are not paid their basic wage, the payment of COLA is not mandated. Peculiar to this case, however, is the circumstance that pursuant to the Collective Bargaining Agreement (CBA) between Petitioner and Respondent Union, the monthly basic pay is computed on the basis of five (5) days a week, or twenty two (22) days a month. In determining the hourly rate of monthly paid employees for purposes of computing overtime pay, the monthly wage is divided by the number of actual work days in a month and then, by eight (8) working hours. If a monthly-paid employee renders overtime work, he is paid his basic salary rate plus one-half thereof. Thus, where the company observes a 5-day work week, it will have to be held that the COLA should be computed on the basis of twenty two (22) days, which is the period during which the employees of petitioner receive their basic wage. The CBA is the law between the parties and, if not acceptable, can be the subject of future re-negotiation.

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That in all things, God may be glorified. 2. Payment in full by petitioner of the COLA before the execution of the CBA in 1982 and in compliance with Wage Orders Nos. 1 (26 March 1981) to 5 (11 June 1984), should not be construed as constitutive of voluntary employer practice, which cannot now be unilaterally withdrawn by petitioner. To be considered as such, it should have been practiced over a long period of time, and must be shown to have been consistent and deliberate. Adequate proof is wanting in this respect. The test of long practice has been enunciated in Oceanic Pharmaceutical Employees Union vs. Inciong such that “respondent company agreed to continue giving holiday pay knowing fully well that said employees are not covered by the law requiring payment of holiday pay." Absent clear administrative guidelines, petitioner cannot be faulted for erroneous application of the law. Payment may be said to have been made by reason of a mistake in the construction or application of a "doubtful or difficult question of law." Since it is a past error that is being corrected, no vested right may be said to have arisen nor any diminution of benefit under Article 100 of the Labor Code may be said to have resulted by virtue of the correction.

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23. National Sugar Refineries Corp. v. NLRC NATIONAL SUGAR REFINERIES CORPORATION VS. NLRC AND NBSR SUPERVISORY UNION (PACIWU) TUCP GR NO. 101761, MARCH 24, 1993 FACTS 1. Petitioner employer implemented a Job Evaluation program the purpose of which is to rationalize the duties and functions of all positions, reestablish level of responsibility, and reorganize both wage and operational structures. 2. As a result of said evaluation, jobs were then rank according to effort, responsibility, training and working conditions, and relative worth of the job, which led to the adjustments and increases in the benefits commensurate to the actual duties and functions of the employees. One of which are the members of the supervisor’s union which are now elevated to managerial positions. 3. Notable is the fact that that for ten years, previous to the job evaluation, it was a practice in the company to treat members of the respondent supervisor’s union in the same manner as rank-and-file employees. And as such, they are used to be paid with overtime, rest day and holiday pay pursuant to arts. 87, 93 and 94 of the Labor Code. 4. with the said evaluation, adjustments were made, to wit: a. the members of the respondent union were re-classified under level S-5 to S-8 which are considered managerial staff for purpose of compensation and benefits; b. an increase of 50% of their basic pay, giving the union members a wide gap over the basic pay of the highest paid rank-and-file employee; c. longevity pay was increased on top of alignment adjustment; d. increased COLA of P225.00 per month; and e. Of P100.00 allowance for rest day/ holiday work. 5. Two years thereafter, the members of the respondent supervisor’s union filed a complaint for nonpayment of overtime, rest and holiday pay allegedly in violation of Art. 100 of the labor Code. 6. The labor arbiter said that the nonpayment of overtime, rest and holiday pay had ripened into a contractual obligation considering the fact tat it was not paid for a long period of time. Moreso, the arbiter ruled that the P100.00 is short of what the supervisors ought to receive had the overtime pay, rest day and holiday pay not been discontinued, hence, amounted to diminution of benefits. ISSUE Whether or not members of respondent supervisor’s union, after having been re-classified as managerial staffs shall still be paid with overtime, rest day and holiday pay, the same having been ripened into a contractual obligation. HELD THEY ARE MEMBERS OF THE MANAGERIAL STAFF. Respondent NLRC, in holding that the union members are entitled o overtime, rest and holiday pay, and in ruling that the latter are not managerial employees, adopted the definition in the statutory provision that . “Managerial employee is one who is vested with powers or prerogatives to lay down and execute management p-policies and/or to hire, transfer, suspend, lay-off, recall, discharge, assign or discipline employees. Supervisory employees are those who, in the interest of the employer, effectively recommend such managerial actions if the exercise of such authority is not merely routinary or clerical in nature but required the use of independent judgment. All employees not falling within any of the above definitions are considered rank-and-file employees for purposes of this book.” It is the submission of petitioner that while the members of the respondent union, as supervisors, may not be occupying managerial positions, they are clearly officers or members of te managerial staff because they meet the all the conditions prescribed by law, and, hence, they are not entitled to overtime, rest day and holiday pay.

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That in all things, God may be glorified. The SC after the determination of the actions and functions of the respondent union (1. assists the department superintendent, 2. observes, follows and implements company policies at all times and recommends disciplinary action on erring subordinates, 3. train and guides subordinates on how to assume responsibilities and become more productive, etc) ruled that the members of the respondent union are officers or members of the managerial staff. While the constitution is committed to the policy of social justice and the protection of the working class, it should not be supposed that every labor dispute will be automatically decided in favor of labor. Management also has its own rights which, as such, are entitled to respect and enforcement in the interest of simple fair play. This is one such case where we are inclined to tip the scales of justice in favor of the employer. WE DO NOT SUBSCRIBE TO THE FINDING OF THE LABOR ARBITER THAT THE PAYMENT OF THE QUESTIONED BENEFITS TO THE UNION MEMBERS HAS RIPENED INTO A CONTRACTUAL OBLIGATION. Prior to the JE program, the union members, while being supervisors, received benefits similar to the rank and file employees such as overtime, rest ay and holiday pay, simply because they were treated in the same manner as rank and file employees, and their basic pay was nearly on the same level as those of the latter, aside from the fact that their specific functions and duties then as supervisor had not been properly defined and delineated from those of rank and file. Hence, it can be safely concluded therefrom that the members of respondent union were paid the questioned benefits for the reason that, at that time, they were rightfully entitled thereto. Prior to the JE program, they could not be categorically as members or officers of the managerial staff considering that they were then treated merely on the same level as those of the ran and file employees. Consequently, the payment thereof could not be construed as constitutive of voluntary employer practice, which cannot now be unilaterally withdrawn be petitioner. To be considered as such, it should have been practiced over a long period of time, and must be shown to have been consistent and deliberate. The test or rationale of this rule on long practice requires and indubitable showing that the employer agreed to continue in giving the benefits, knowing fully well that said employees are not covered by the law requiring payment thereof. In the case at bar, respondent union filed to sufficiently establish that petitioner has been motivated or has wanted to give these benefits out of pure generosity. Quintessentially, with the promotion of the union members, they are no longer entitled to the benefits which attach and pertain exclusively to their former positions. Entitlement to the benefits provided for by law requires compliance with the conditions set forth therein. With the promotion of the members of the respondent union, they occupied positions which no longer meet the requirements imposed by law. Their assumption of these positions removed them from the coverage of the law, ergo, their exemption therefrom. Promotion of its employees is one of the jurisprudentially recognized exclusive prerogatives of management, provided it is done in good faith. In the case at bar, private respondent union has miserably failed to convince this court that the petitioner acted in bad faith in implementing the JE program. There is no showing of respondent union of the benefits they used to receive.

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24. Liberation Steamship v. Court of Industrial Relations LIBERATION STEAMSHIP CO., INC., VS. COURT OF INDUSTRIAL RELATIONS G.R. NO. L-25390, JUNE 27, 1968 REYES, J.B.L., J. FACTS 1. Petitioner National Development Company (NDC), a government-owned and controlled corporation, in 1961, was the owner and operator of the vessels M/S "Dona Alicia", "Dona Nati" and "Dona Aurora". Prior to April 15, 1961, said corporation decided to dispose of these three vessels and in the bidding that ensued, Liberation Steamship Co., Inc.(LISTCO) won. 2. The crew members of the three vessels made representations with both the seller and the purchaser to retain them in the service of the vessels. And when in the final deed of sale no provision on the hiring of the complement of the vessels was included, the crew-members declared a strike and was certified by the President to the Court of Industrial Relations. 3. The Industrial Court declared that the strike was causing the corporation an actual loss of about P15,000.00 daily, and thus issued a return-to-work order. A month and a half after this order, representatives of the LISTCO posted notices around the M/S "Dona Alicia" to the effect that the officers and members of the crew not otherwise appointed by the said new owner will be ejected. 4. The unlicensed crew members of the three "Dona" vessels thus petitioned the Industrial Court for an order to restrain LISTCO from carrying out its ejection threat of the officers and/or crew members of the M/S "Dona Alicia" and of the two other "Dona", vessels upon their delivery to the new owner. 5. A restraining order was issued against respondent NDC and/or its successor, the LISTCO, directing the maintenance of status quo during the pendency of the dispute. It, however, covered only the officers and unlicensed crew members of the "Dona Nati" and "Dona Aurora". It did not extend to the crew of the "Dona Alicia", because their dismissal had been already carried out. 6. Thereafter, an agreement was reached between the petitioning officers and crew members of the M/S "Dona Alicia" and the LISTCO, by virtue of which those who were laid off were readmitted to work. However, the NDC again took possession of the vessels and resumed their operation. 7. The court rendered judgment denying the petitioners' demand for gratuity pay (from the date of their employment to the sale of the vessels) on the ground that, with the resumption of the operation of the vessels by NDC, this claim had become moot and academic. 8. Considering that a new sale of the "Dona" vessels had taken place during the pendency of the motion for reconsideration, the case was ordered reopened, but only for the purpose of determining the merits of the demand for gratuity pay. ISSUE Whether or not the petitioners are entitled to gratuity pay. HELD The trial judge denied the employees' demands for payment by NDC of gratuity on the ground that with the reacquisition by NDC of possession and management of the vessels they had become academic. The court en banc, however, informed of the resale of the vessels to another party during the pendency of the motion for reconsideration of the trial court's decision, ordered the reopening of the case insofar as these demands for gratuity are concerned. Petitioner contends such reopening to be error because gratuity is not demandable by an employee as a matter of right, being a reward given by an employer in recognition of the services rendered by the employee. It is argued further that there being no showing that the collective bargaining contract between the employees and the NDC provides for payment of gratuity by the employer upon termination of the employee's services, the order to remand the case for reception of evidence lacks legal basis. To this reasoning the Court can not agree. While normally discretionary, the grant of a gratuity or bonus, by reason of its long and regular concession, may become regarded as

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That in all things, God may be glorified. part of regular compensation. In order to determine whether such conditions operated in the instant case, the reopening of the trial for receiving evidence on the point was evidently proper.

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25. Traders Royal Bank v. NLRC TRADERS ROYAL BANK VS. NLRC 189 SCRA 274 GRINO-AQUINO, J.: FACTS 1. On November 1986, TRB employees union filed a complaint with the NLRC for diminution of benefits regarding holiday pay, mid-year and year-end bonuses. 2. NLRC ordered the Bank to pay the employees holiday pay differentials for 1983-1986, as well as mid-year and year-end bonus differential for 1986. ISSUE Did the NLRC abuse its discretion in ordering the payment of mid-year and year-end bonus differentials? HELD YES. A bonus is a gratuity or an act of liberality of the giver which the recipient has no right to demand as a matter of right. The granting of bonus is basically a management prerogative which cannot be forced upon the employer. In the case at bar, the matter of giving bonuses over and above lawful salaries and allowances is entirely on the profits realized by the Bank. In 1986, the Bank weakened considerably due to suspicions that it was a Marcos-owned and controlled bank, and was placed under sequestration by the PCGG. The union contention that the granting of bonuses has ripened into a company practice that may not be adjusted to the prevailing financial condition of the Bank, has no legal or moral bases. Its fiscal condition having declined, the Bank may not be forced to give bonuses it cannot pay, and in effect, be penalized for its past generosity to its employees. There can be no diminution of benefits because bonuses are not part of labor standards in the same class as salaries, cost of living allowances, holiday pay and leave benefits. The NLRC is modified by deleting the award for bonus differentials for 1986.

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26. Manila Banking Corporation v. NLRC THE MANILA BANKING CORPORATION V.THE NATIONAL LABOR RELATIONS COMMISSION GR 107487 & 107902, SEPTEMBER 29, 1997

FACTS 1.

2.

3.

4.

5.

6.

On June 5, 1984, petitioner Manila Banking Corporation (Manilabank) was placed under comptrollership by then Central Bank in view of the bank's financial distress. 4 On May 22, 1987, the Monetary Board issued Resolution No. 505 prohibiting Manilabank from doing business in the Philippines. Feliciano Miranda, Jr. was designated as receiver. He immediately took charge of the bank's assets and liabilities. He likewise terminated the employment of about 343 officers and top managers of the bank. All these officers and top managers, who are private respondents herein, were paid whatever separation and/or retirement benefits were due them. Private respondents filed a complaint against Manilabank and its statutory receiver with. the arbitration branch of the National Labor Relations Commission (NLRC) claiming entitlement to the following additional benefits alleged to have accrued from 1984 to their effective dates of termination, viz: (a) Wage increases; (b) Christmas bonuses; (c) Mid-year bonuses; (d) Profit sharing; (e) Car and travel plans; (f) Gasoline allowances; (g) Differentials on accrued leaves, retirement and other bonuses; (h) Longevity pay and loyalty pay; (i) Medical, dental and optical benefits; and (j) Uniform allowances. Such claim to entitlement of the foregoing benefits was based on Manilabank's alleged practice, policy and tradition of awarding said benefits. They contended that the policy has ripened into vested property rights in their favor. On November 14, 1989, Labor Arbiter Felipe Pati rendered his decision ordering Manilabank and its statutory receiver to pay in full all the claims of private respondents amounting to P193,338,212. 33.

ISSUE Whether or not private respondents are entitled to receive bonus despite the financial distress of the company? HELD NO. By definition, a "bonus" is a gratuity or act of liberality of the giver which the recipient has no right to demand as a matter of right. It is something given in addition to what is ordinarily received by or strictly due the recipient. The granting 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 or other benefits aside from the employee's basic salaries or wages, especially so if it is incapable of doing so. Clearly then, a bonus is an amount given ex gratia to an employee by an employer on account of success in business or realization of profits. How then can an employer be made liable to pay additional benefits in the nature of bonuses to its employees when it has been operating on considerable net losses for a given period of time? Records bear out that petitioner Manilabank was already in dire financial straits in the mid-80's. As early as 1984, the Central Bank found that Manilabank had been suffering financial losses. Presumably the problems commenced even before their discovery in 1984. As earlier chronicled, the Central Bank placed petitioner bank under comptrollership in 1984 because of liquidity problems and excessive interbank borrowings. In 1987, it was placed under receivership and was ordered to close operation. In 1988, it was ordered liquidated. It is evident, therefore, that petitioner bank was operating on net losses from the years 1984, 1985 and 1986, thus, resulting to its eventual closure in 1987 and liquidation in 1988. Clearly, there was no success in business or realization of profits to speak of that would warrant the conferment of additional benefits sought by private respondents. No company should be compelled to act liberally and confer upon its employees additional benefits over

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That in all things, God may be glorified. and above those mandated by law when it is plagued by economic difficulties and financial losses. No act of enlightened generosity and self-interest can be exacted from near empty, if not empty, coffers. Consequently, on the ten (10) items awarded to herein private respondents which represent additional benefits, they having already been paid separation and retirement benefits.

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27. Tabas v. California Manufacturing Co., Inc. TABAS VS. CALIFORNIA MANUFACTURING INC GR NO. 806680, JANUARY 26, 1989 FACTS 1. Petitioners were the employees of Livi Manpower Services. They were assigned to the respondent pursuant to a manpower supply agreement as “promotional merchandisers”. 2. It was provided in the agreement that: 1) California would have no control or supervision over the workers as to how they perform or accomplish their work, 2) Livi is an independent contractor and that it has the sole responsibility of complying with all the existing as well as future laws, rules and regulations pertinent to employment of labor, 3) the assignment to California was “seasonal and contractual”, and 4) payroll, including COLA and holiday pay shall be delivered Livi at California’s premises. 3. Petitioners were made to sign 6-month employment contracts which were renewed for the same period. Unlike regular employees of California, they did not receive fringe benefits and bonuses and were paid only a daily allowance. 4. Petitioners contend that they have become regular employees of California. Subsequent to their claim for regularization, California no longer re-hired them. Livi, on the other hand, claims the workers as its employees and that it is an independent contractor. 5. Labor Arbiter found that no employer-employee relationship existed. The NLRC affirmed the ruling. ISSUE Is there an employer-employee relationship between California and the petitioners? HELD YES. The existence of an employer-employee relationship is a question of law and cannot be made subject to agreement. The stipulations in the manpower supply agreement will not erase either party’s obligations as an employer. Livi is a labor-only contractor, notwithstanding the provisions in the agreement. The nature of one’s business is not determined by self-serving appellations but by test provided by statute and the prevailing case law. California’s contention that the workers are not performing activities which are directly related to its general business of manufacturing is untenable. The promotion or sale of products, including the task of occasional price tagging, is an integral part of the manufacturing business. Livi as a placement agency had simply supplied the manpower necessary for California to carry out its merchandising activities, using the latter’s premises and equipment. Merchandising is likewise not a specific project because it is an activity related to the day-to-day operations of California. Based on Article 106 of the Labor Code, the labor-only contractor is considered merely an agent of the employer and liability must be shouldered by either one or by both. Petitioners are ordered reinstated as regular employees.

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28. Mafinco Trading Corporation v. Ople MAFINCO TRADING CORPORATION VS. OPLE GR NO. L-37790, MARCH 25, 1976 FACTS 1. Cosmos Aerated Water Factory, a firm based at Malabon, Rizal, appointed petitioner Mafinco as its sole distributor of Cosmos soft drinks in Manila. 2. Rodrigo Repomanta and Mafinco executed a peddling contract whereby Repomanta agreed to buy and sell Cosmos soft drinks. Rey Moralde entered into a similar contract. 3. Months later, Mafinco terminated the peddling contract with Repomanta and Moralde. Consequently, Repomanta and Moralde, through their union, filed a compliant with the NLRC, charging the general manager of Mafinco for illegally dismissing them. 4. Mafinco filed a motion to dismiss the complaint on the ground that the NLRC had no jurisdiction because Repomanta and Moralde were not its employees but were independent contractors. It stressed that there was termination of the contract not a dismissal of an employee. ISSUE Whether or not there exist an employer-employee relationship between petitioner Mafinco and private respondents Repomanta and Moralde. HELD The Supreme Court held that under the peddling contracts, Repomanta and Moralde were not employees of Mafinco but were independent contractors as found by the NLC and its fact finder and by the committee appointed by the Secretary of Labor to look into the status of Cosmos and Mafinco peddlers. A contract whereby one engages to purchase and sell soft drinks on trucks supplied by the manufacturer but providing that the other party (peddler) shall have the right to employ his own workers, shall post a bond to protect the manufacturer against losses, shall be responsible for damages caused to third persons, shall obtain the necessary licenses and permits and bear the expenses incurred in the sale of the soft drinks is not a contract of employment.

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29. Rhone-Poulenc Agrochemicals Philippines, Inc. v. NLRC RHOUNE-POULENC AGROCHEMICALS PHILIPPINES, INC. VS. NLRC G.R. NOS. 102633-35 JANUARY 19, 1993 FACTS 1. The petitioner is a domestic corporation engaged in the manufacture of agrochemicals. Its business operations involve the formulation, production, distribution and sale in the local market of its agro-chemical products. 2. On January 1, 1988, as a consequence of the sale by Union Carbide, Inc. of all its agricultural-chemical divisions worldwide in favor of Rhone-Poulenc Agrochemie, France, the petitioner's mother corporation, the petitioner acquired from Union Carbide Philippines Far East, Inc. the latter's agro-chemical formulation plant in Namayan, Mandaluyong, Metro Manila. 3. In 1987, prior to the sale, Union Carbide had entered into a contract with CSI for the latter's supply of janitorial services. During the transition period, Union Carbide continued to avail itself of CSI's janitorial services. Thus, petitioner Rhone-Poulenc found itself sharing the Namayan plant with Union Carbide while the factory was being serviced and maintained by janitors supplied by CSI. 4. Midway through the transition period, Union Carbide instructed CSI to reduce the number of janitors working at the plant from eight (8) to seven (7). 5. Private respondent Paulino Roman, one of the janitors, was recalled by CSI on February 15, l988 for reassignment. However, Roman refused to acknowledge receipt of the recall memorandum. 6. On March 9, 1988, Union Carbide formally notified CSI of the termination of their janitorial service agreement, effective April 1, 1988, citing as reason the global buyout by Rhone-Poulenc, Agrochemie, France of Union Carbides Inc.'s agro-chemical business. 7. CSI thereafter issued a memorandum dated March 20, 1988 to the seven remaining janitors assigned to the Namayan plant, including respondent Urcisio Orain, recalling and advising them to report to the CSI office for reassignment. Like Roman, the janitors refused to acknowledge receipt of the recall memorandum. 8. Meanwhile, in anticipation of the March 31, 1988 pull-out by Union Carbide, the petitioner started screening proposals by prospective service contractors. RhonePoulenc likewise invited CSI to submit to its Bidding Committee a cost quotation of its janitorial services. However, another contractor, the Marilag Business and Industrial Services, Inc. passed the bidding committee's standards and obtained the janitorial services contract. 9. On April 1, 1988, the eight janitors reported for work at the Namayan plant but were refused admission and were told that another group of janitors had replaced them. These janitors then filed separate complaints for illegal dismissal, payment of 13th month salary, service leave and overtime pay against Union Carbide, RhonePoulenc and CSI. ISSUES 1. Whether or not the janitors were employees of Union Carbide 2. Whether or not the CSI is a labor only contractor 3. Whether or not petitioner absorbed the janitors in its workforce HELD The court held that the petition is meritorious. In determining the existence of employeremployee relationship, the following elements are generally considered, namely: (1) the selection and engagement of employees (2) the payment of wages; (3) the power of dismissal; and (4) the power to control the employee's conduct — although the latter is the most important element. There is no employer-employee relationship between Union Carbide and the respondent janitors. The respondents themselves admitted that they were selected and hired by CSI and were assigned to Union Carbide. CSI likewise acknowledged that the two janitors were its employees. The janitors drew their salaries from CSI and not from Union Carbide. CSI exercised control over these janitors through Richard Barroga, also a CSI employee, who gave orders and instructions to CSI janitors assigned to the Namayan

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That in all things, God may be glorified. plant. Moreover, CSI had the power to assign its janitors to various clients and to pull out, as it had done in a number of occasions, any of its janitors working at Union Carbide. As to whether CSI is engaged in labor-only contracting or in job contracting, applying the test prescribed by the Labor Code and the implementing rules, the court finds sufficient basis from the records to conclude that CSI is engaged in job contracting. Without regard to the third issue, even if the janitors were, indeed, employees of Union Carbide or that CSI is a labor-only contractor, thus making Union Carbide a direct employer of these janitors, petitioner Rhone-Poulenc, as purchaser of Union Carbide's business is not compelled to absorb these janitors into its workforce. An innocent transferee of a business establishment has no liability to the employees of the transferor to continue employing them.

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30. AFP Mutual Benefit Association Inc. v NLRC AFP MUTUAL BENEFIT ASSOCIATION, INC. VS, NLRC GR NO. 102199, JANUARY 28, 1997 FACTS 1. Eutiquio Bustamante had been an insurance underwriter of AFP Mutual Benefit Association, Inc.. The Sales Agent's Agreement between them includes: a. Bustamante shall solicit exclusively for AFPMBAI and shall be bound by policies, memo circulars, rules and regulations which it may revise, modify or cancel to serve interests and assign him on other areas on a case to case basis. b. “There shall be no employer-employee relationship between the parties, the SALES AGENT being hereby deemed an independent contractor." 2. AFPMBAI dismissed Bustamante for misrepresentation and for simultaneously selling insurance for another life insurance company in violation of said agreement. 3. At the time of dismissal, Bustamante was entitled to accrued commissions equivalent to P438,835. AFPMBAI Manager said he is only entitled to P75,000. Relying on the computation he signed a quitclaim in favor of Petioner. Upon release of the check, Bustamante noticed he is legally entitled to P354,769 of commissions. He filed for the recovery of the correct amount in the Office of the Insurance Commissioner but was advised that the DOLE has jurisdiction over his case. Bustamante filed under the DOLE. 4. In decision of the case, Bustamante’s dismissal was considered valid thus no separation pay to be awarded. However, it granted the recovery of his unpaid commissions. 5. The Labor arbiter relied on the provision that AFPMBAI may assign Bustamante in other areas and impose quotas which is an existence of employer-employee relationship. The decision was affirmed on appeal. Hence the present petition. ISSUE Whether or not there exist an employer-employee relationship thus vesting jurisdiction over the case to DOLE. HELD The existence of an employer-employee relationship is ultimately a question of fact and that the findings thereon by the labor arbiter and the National Labor Relations Commissions shall be accorded not only repect but even finality when supported by substantial evidence. The Court has applied the "four-fold" test in determining the existence of employeremployee relationship. This tst considers the following elements: (1) the power to dismiss; and (4) the power to control, the last being the most important element. The fact that private respondent was required to solicit business exclusively for petitioner could hardly be considered as control in labor jurisprudence. Thus, the exclusivity restriction clearly springs from a regulation issued by the Insurance Commission, and not from an intention by petitioner to establish control over the method and manner by which private respondent shall accomplish his work. This feature is not meant to change the nature of the relationship between the parties, nor does it necessarily imbue such relationship with the quality of control envisioned by the law.

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31. Coca-Cola Bottlers Philippines, Inc. v. Hingpit COCA-COLA BOTTLERS PHIL., INC. VS. HINGPIT 294 SCRA 594 NARVASA, CJ FACTS 1. Pioneer Multi-Services Co (PIONEER) and Lipercon Services, Inc (LIPERCON) are manning companies with which Coca-Cola successively entered into contracts for the supply of manpower needs of its plant in Tagbilaran. 2. Coca-Cola’s contract with Pioneer was executed on May 28, 1983 and that with Lipercon, 5 years later, on December 17, 1988. 3. 11 persons were claiming they were employees of Coca-Cola in its Tagbilaran City Plant. They filed a complaint against Coca-Cola with the Regional Arbitration Board of the National Labor Relations Commission in Cebu City. 4. In the decision of the RAB, it was found that the complainants were supplied as workers to Coca-Cola first by Pioneer and later by Lipercon. When Lipercon entered into the picture, the complainants were already regular employees of Coca-Cola. This is because while Lipercon was an independent contractor, its predecessor Pioneer was not. 5. The Commission revered the Labor Arbiter’s conclusion that Lipercon was an independent labor contractor. It declared it instead to be a mere “labor-only” contractor. ISSUE Whether or not Lipercon is a “labor only” contractor. HELD The SC held in the negative. The NLRC grounded its decision solely on an earlier case where the court held Lipercon to a be a “Labor only” contractor because it failed to prove that “it has substantial capital, investment, tools, etc.” It is not so in the present case. Here, there is substantial evidence detailed by the labor arbiter, to establish Lipercon’s character as an independent contractor in the real sense of the word. The Labor Arbiter’s ruling is therefore more acceptable that that of the Commission because its decision was founded solely on an inapplicable precedent. Lipercon proved to be an independent contractor. Aside from hiring its own employees and paying the workers their salaries, it also exercised supervision and control over them which is the most important aspect in determining employer-employee relations. That indeed has substantial capital is proven by the fact that it did not depend upon its billing on respondent regarding payment of worker’s salaries. And when complainants were separated from Lipercon, they singed quitclaim and release documents. .

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32. Broadway Motors, Inc v. NLRC BROADWAY MOTORS, INC. VS. NATIONAL LABOR RELATIONS COMMISSION AND VICENTE APOLINARIO 156 SCRA 522 FELICIANO, J.: FACTS 1. By virtue of a written undated "Work Contract," private respondent Vicente Apolinario, sometime in March 1967, began work as an auto painter in the premises of petitioner Broadway Motors, Inc. 2. Apolinario worked as an auto painter for a period of eighteen (18) years, until 23 January 1985 when he was barred from entering the premises of petitioner, and his relationship with it effectively terminated, because of his alleged involvement in a fistfight with 3. the shop superintendent . 4. Apolinario complained for illegal dismissal. 5. The Labor Arbiter (LA) dismissed the complaint on the ground that Apolinario, having supplied the workers-himself included-who performed the auto painting jobs for petitioner, was a mere contractor thus not to be considered as the latter's employee. 6. Apolinario appealed to the NLRC. 7. NLRC found that there was a valid and binding employer-employee relationship. Since Apolinario was dismissed without any investigation by petitioner Corporation to ascertain his participation in the fistfight within company premises, his dismissal was, illegal. ISSUE Whether or not the termination was valid or illegal. HELD YES. The dismissal is illegal. Firstly, there is an employer-employee relationship and whenever there is such the employer cannot just validly terminate the services of an employee without just cause. The petitioner insists that there is a valid labor contract to justify its act of unilaterally dismissing the services of Apolinario et. al. which he cannot do if there is a valid and binding employer-employee relationship. Apolinario was hired directly by petitioner to work as an auto painter, evidenced by the undated Work Contract. That petitioner reserved unto itself the power of dismissal is evident from the fact that petitioner unilaterally undertook to terminate Apolinario's relationships with itself. Such act of termination is unjustified for being in contravention of the procedural due process which is accorded to employees to safeguard their constitutionally protected right of security of tenure. Even though it appears that he was the one who supplied the labor, their performance and work were closely supervised by the petitioner's supervisior. Petitioner Corporation was the one who supplied all the tools necessary for Apolinario and his men to carry out assigned painting jobs. There was, furthermore, no evidence adduced by petitioner to show that Apolinario had substantial capital investment. We conclude that while there is present in the relationship between petitioner Corporation and private respondent some factors suggestive of an owner-independent contractor relationship (e.g., the manner of payment of compensation to Apolinario and his 'Contract Workers"), many other factors are present which demonstrate that the relationship is properly characterized as one of employer-employee.

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33. Philippine Bank of Communications v. NLRC PHILIPPINE BANK OF COMMUNICATIONS, VS. NLRC 146 SCRA 347 FELICIANO, J.: FACTS 1. Philippine Bank of Communications and the Corporate Executive Search Inc. (CESI) entered into a letter agreement dated January 1976 under which (CESI) undertook to provide temporary services to petitioner consisting of 11 messengers. 2. Ricardo Orpiada was thus assigned to work with the petitioner bank. As such, he rendered services to the bank, within the premises of the bank and alongside other people also rendering services to the bank. 3. There was some question as to when Ricardo Orpiada commenced rendering services to the bank. As noted above, the letter agreement was dated January 1976. However, 4. the position paper submitted by (CESI) to the National Labor Relations Commission stated that (CESI) hired Ricardo Orpiada on 25 June 1975 as a Temporary Service employee, and assigned him to work with the petitioner bank "as evidenced by the appointment memo issued to him on 25 June 1975. " 5. On or about October 1976, the petitioner requested (CESI) to withdraw Orpiada's assignment because, in the allegation of the bank, Orpiada's services "were no longer needed." 6. Orpiada then instituted a complaint in the Department of Labor against the petitioner for illegal dismissal and failure to pay the 13th month pay. ISSUE Whether or not there an employer-employee relationship exists. HELD YES. There are four way test to verify the existence of an employer-employee relationship. These factors are: selection and engagement of the putative employee; payment of wages; power of dismissal- and power to control the putative employees' conduct, although the latter is the most important element. In the present case, Orpiada was not previously selected by the bank. Rather, Orpiada was assigned to work in the bank by (CESI). With respect to the payment of Orpiada's wages, the bank remitted to CE SI amounts corresponding to the "daily service rate" of Orpiada and the others similarly assigned by (CESI) to the bank, and (CESI) paid to Orpiada and the others the wages pertaining to to them. In respect of the power of dismissal we note that the bank requested (CESI) to withdraw Orpiada's assignment and that (CESI) did, in fact, withdraw such assignment. Turning to the power to control Orpiada's conduct, it should be noted immediately that Orpiada performed his sections within the bank's premises, and not within the office premises of (CESI) As such, Orpiada must have been subject to at least the same control and supervision that the bank exerciss. Application of the above factors in the specific context of this case appears to yield mixed results so far as concerns the existence of an employer- employer relationship between the bank and Orpiada. Under the general rule set out in the first and second paragraphs of Article 106, an employer who enters into a contract with a contractor for the performance of work for the employer, does not thereby create an employer-employee relationship between himself and the employees of the contractor. Thus, the employees of the contractor remain the contractor's employees and his alone. Nonetheless when a contractor fails to pay the wages of his employees in accordance with the Labor Code, the employer who contracted out the job to the contractor becomes jointly and severally liable with his contractor to the employees of the latter "to the extent of the work performed under the contract" as such employer were the employer of the contractor's employees. We hold that, in the circumstances 'instances of this case, (CESI) was engaged in "labor-only" or attracting vis-a-vis the petitioner and in respect Ricardo Orpiada, and that because there is labor-only contracting, the petitioner

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That in all things, God may be glorified. bank is liable to Orpiada as if Orpiada had been directly, employed not only by (CESI) but also by the bank. It may well be that the bank may in turn proceed against (CESI) to obtain reimbursement of, or some contribution to, the amounts which the bank will have to pay to Orpiada; but this it is not necessary to determine here.

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Injury, Sickness & Disability

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34. Belarmino v. Employees’ Compensation Commission BELARMINO V. EMPLOYEES’ COMPENSATION COMMISSION 185 SCRA 304 GRIÑO-AQUINO, J. FACTS 1. Oania Belarmino was a classroom teacher of the Department of Education Culture and Sports assigned at the Burucan Elementary School in Dimasalang, Masbate for 11 years. 2. On January 14, 1982, Mrs. Belarmino who was in her 8th month of pregnancy, accidentally slipped and fell on the classroom floor. 3. She complained of abdominal pain and stomach cramps but she continued reporting for work because there was much work to do. 4. On January 25, 1982, she went into labor and prematurely delivered a baby girl at home. 5. Her abdominal pain persisted even after delivery. 6. When she was brought to the hospital, her physician informed her that she was suffering from septicemia post partum due to infected lacerations of the vagina. 7. After she was discharged from the hospital, she died three days thereafter. 8. The GSIS denied the claim on the ground that septicemia post partum, the cause of death is an occupational disease and neither was there any showing that the ailment was contracted by reason of her employment. 9. On appeal to the Employees Compensation Commission, latter also denied the claim affirming the denial of the claim by GSIS. ISSUE Whether of not the cause death of Mrs. Belarmino is not work-related and therefore not compensable. HELD NO. The death of Mrs. Belarmino from septicemia post partum is compensable because an employment accident and the conditions of her employment contributed to its development. The condition of the classroom floor caused Mrs. Belarmino to slip and fall and suffer injury as a result. The fall precipitated the onset of recurrent abdominal pains which culminated in the premature termination of her pregnancy with tragic consequences to her. Her fall on the classroom floor brought about her premature delivery which caused the development of post partum septicemia which resulted in death. Her fall therefore was the proximate cause1 that set in motion an unbroken chain of events, leading to her demise. The right to compensation extends to disability due to disease supervening upon and proximately and naturally resulting from a compensable injury. Where the primary injury is shown to have arisen in the course of employment, every natural consequence that flows from the injury likewise arises out of the employment, unless it is the result of an independent intervening cause attributable to claimant’s own negligence or misconduct. Mrs. Belarmino’s fall was the primary injury that arose in the course of her employment as a classroom teacher, hence, all the medical consequences flowing from it: her recurrent abdominal pains, the premature delivery of her baby, her septicemia post partum and death are compensable.

1

Proximate Cause – the efficient cause which sets the others in motion and is to be distinguished from a mere pre-existing condition upon which the effective cause operates and must have been adequate to produce the resultant damage without the intervention of an independent cause.

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35. Hinoguin v. Employees’ Compensation Commission HINOGUIN V. EMPLOYEES’ COMPENSATION COMMISSION 172 SCRA 350 FELICIANO, J. FACTS 1. Sgt. Lemick Hinoguin was a sergeant in “A” company, 14th Infantry Battalion, 5th Infantry Division. 2. The headquarters of the 14th Infantry Battalion was located at Bical, Muñoz, Nueva, Ecija. 3. On August 1, 1985, Sgt. Hinoguin, Cpl. Rogelio Clavo and Dft. Nicomedes Alibuyog sought permission from Capt. Frankie Besas, to go on overnight pass to Aritao, Nueva Viscaya. 4. Capt. Besas orally granted them permission to go to Aritao and to take their issued firearms with them considering that Aritao was regarded as “a critical place.” 5. The three soldiers went to Dft. Alibuyog’s home for a meal and some drinks. At around 7:00 PM, the soldiers headed back to the headquarters. 6. They boarded a tricycle, Hinoguin and Clavo seating themselves in the tricycle cab while Alibuyog occupied the seat behind the tricycle driver. When they reached the poblacion, Alibuyog dismounted from the tricycle. Not noticing that his rifle’s safety lever was on “semi-automatic,” he accidentally touched the trigger, firing a single shot in the process and hitting Sgt. Hinoguin in the left lower abdomen. 7. Sgt. Hinoguin died a few days after the incident. 8. In the investigation conducted by the 14th Infantry Battalion, it was found that the shooting of Sgt. Hinoguin was purely accidental in nature and that he died in the line of duty. The Life of Duty Board of Officers recommended that all benefits due the legal dependents of the late Sgt. Hinoguin be given. 9. However, when the father of the deceased made a claim from GSIS, the same was denied on the ground that the deceased was not at his work place nor performing his duty as a soldier of the Philippine Army at the time of his death. This denial was confirmed by the ECC. ISSUE Whether or not the death of Sgt. Hinoguin compensable under the applicable statute and regulations. HELD YES. The amended Implementing Rules provides in part as follows: SEC. 1. Conditions to Entitlement – (a) The beneficiaries of a deceased employee shall be entitled to an income benefit if all of the following conditions are satisfied: The employee had been duly reported to the System; He died as a result of injury or sickness; and The System has been duly notified of his death, as well as the injury or sickness which caused his death. His employer shall be liable for the benefit if such death occurred before the employer is duly reported for coverage of the System. Art. 167 (k) of the Labor Code defines compensable injury quite simply as any harmful change in the human organism from any accident arising out of and in the course of the employment. The Amended Rules elaborated the succinct statutory provision: SEC. 1 Grounds – (a) For the injury and resulting disability or death to be compensable, the injury must be the result of an employment accident satisfying all of the following grounds: (1) The employee must have been injured at the place where his work requires him to be. (2) The employee must have been performing his official functions; and (3) If the injury is sustained elsewhere, the employee must have been executing an order for the employer.

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The concept of work place referred in Ground 1, for instance, cannot always be literally applied to a soldier on active duty status, as if he were a machine operator or a worker in an assembly line in a factory or a clerk in a particular fixed office. A soldier must go where his company is stationed. Aritao, Nueva Viscaya was not of course, Carranglan, Nueva Ecija. Aritao being approximately 1 – ½ hours from the later by public transportation. But Sgt. Hinoguin, Cpl. Clavo and Dft. Alibuyog had permission from their Commanding Officer to proceed to Aritao and the place which soldiers have secured lawful permission to be at cannot be very different, legally speaking, from a place where they are required to go by their commanding officer. The soldiers were on an overnight pass. They were not on vacation leave. In this connection, a soldier on active duty status is really on 24 hours a day official duty status and is subject to military discipline and military law 24 hours a day. He is subject to call and to the orders of his superior officers at all times, 7 days a week, except, of course, when he is on vacation leave status. A soldier should be presumed to be on official duty unless he is shown to have clearly and unequivocally put aside that status or condition temporarily by, e.g. going on an approved vacation leave.

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36. Tancinco v. Government Service Insurance System TANCINCO V. GOVERNMENT SERVICE INSURANCE SYSTEM 369 SCRA 221 DE LEON, JR. FACTS 1. SPO1 Eddie Tancinco was a member of the NCR Security Protection Group of the Philippine National Police. 2. On July 17, 1995, while he was repairing a service vehicle in front of his house, he was shot dead by 5 unidentified armed men. 3. At the time of his death, he was assigned as part of the close-in security detail of then VP Joseph Estrada. He was off-duty at the time since the Vice President was in the US for medical treatment. 4. When his widow filed a claim with GSIS, the same was denied on the ground that there was no proof that Tancinco’s death was work-related. 5. The denial was affirmed by the ECC. ISSUE Whether or not the death of SPO1 Tancinco is compensable. HELD NO. The pertinent guidelines of the ECC with respect to claims for death benefits, namely: (a) that the employee must be at the place where his work requires him to be; (b) that the employee must have been performing his official functions (c) that if the injury is sustained elsewhere, the employee must have been executing an order for the employer. The aforesaid requirements have not been met. Anent the first, as part of the former VP’s security detail, the decedent was required to guard the person of the former; hence his presence was officially required wherever the Vice-President would go. At the time of his death, SPO1 Tancinco was off-duty since the Vice-President was out of the country. As to the second requirement, it was not sufficiently established that SPO1 Tancinco died while performing his official functions. The 24-hour duty doctrine, as applied to policemen and soldiers serves more as an after-the-fact validation of their acts to place them within the scope of the guidelines rather than a blanket license to benefit them in all situations that may give rise to their deaths. In other words, the 24-hour duty doctrine should not be sweepingly applied to all acts and circumstances causing the death of a police officer but only to those which, although not an official duty, are nonetheless basically police service in character. In the present case, the decedent was repairing a service vehicle when he was killed. It cannot be said that the deceased was discharging official functions, if anything, repairing a service vehicle is only incidental to his job. Neither was the last requirement satisfied. As the fatal incident occurred when SPO1 Tancinco was at home, it was incumbent upon petitioner to show that her husband was discharging a task pursuant to an order issued by his superiors. This was not done.

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37. Iloilo Dock & Engineering Co. v. Workmen’s Compensation Commission ILOILO DOC & ENGINEERING CO. V. WORKMEN’S COMPENSATION COMMISSION 27 SCRA 103 CASTRO, J. FACTS On January 29, 1960, Teodoro Pablo and Rodolfo Galopez, had just finished overtime work at 5:00 pm and was going home. At around 5:02 pm, while Pablo and Galopez was walking along the IDECO road, about 20 meters from the IDECO main gate, Pablo was shot by Martin Cordero. The motive for the crime was and still unknown since Martin Cordero was himself killed before he could be tried for Pablo’s death. ISSUES 1. Whether or not Pablo’s death occurred in the course of employment and arising out of the employment. 2. Whether the PROXIMITY RULE should apply in this case. 3. Whether the death of Pablo was an accident within the purview of the Workmen’s Compensation Act. HELD 1. YES. Workmen’s compensation is granted if the injuries result from an accident which arise our of and in the course of employment. Both the “arising” factor and the “course” factor must be present. If one factor is weak and the other is strong, the injury is compensable but not where both factors are weak. Ultimately, the question is whether the accident is work connected. The words “arising out of” refer to the origin or cause of the accident and are descriptive of its character, while the words “in the course” refer to the time, place and circumstances under which the accident takes place. The presumption that the injury arises out of and in the course of employment prevails where the injury occurs on the employer’s premises. While the IDECO does not own the private road, it cannot be denied that it was using the same as the principal means of ingress and egress. The private road leads directly to its main gate. Its right to use the road must then perforce proceed from either an easement of right of way or a lease. Its right therefore is either a legal one or a contractual one. In wither case the IDECO should logically and properly be charged with security control of the road. 2. YES. The general rule in workmen’s compensation law known as going and coming rule provides that in the absence of special circumstances, an employee injured in, going to, or coming from his place of work is excluded from the benefits of workmen’s compensation acts. The following are the exceptions: a. Where the employee is proceeding to or from his work on the premises of his employer b. Where the employee is about to enter or about to leave the premises of his employer by way of exclusive or customary means of ingress and egress c. Where the employee is charged while on his way to or from his place of employment or at his home or during his employment, with some duty or special errand connected with his employment d. Where the employer, as an incident of the employment provides the means of transportation to and from the place of employment. The second exception is known as the “proximity rule.” The place where the employee was injured being immediately proximate to his place of work, the accident in question must be deemed to have occurred within the zone of his employment and therefore arose out of or in the course thereof.

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That in all things, God may be glorified. 3. YES. An “assault” although resulting from a deliberate act of the slayer, is considered an “accident” within the meaning of the Workmen’s Compensation Act since the word accident is intended to indicate that the act causing the injury shall be casual or unforeseen, an act for which the injured party is not legally responsible.

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38. Alano v. Employees’ Compensation Commission ALANO V. EMPLOYEES’ COMPENSATION COMMISSION 158 SCRA 669 GUTIERREZ, JR. J. FACTS 1. Dedicacion De Vera worked as principal of Salinap Community School in san Carlos City, Pangasinan. 2. Her usual tour of duty was from 7:30 am to 5:30 pm. On November 29, 1976, at 7:00 AM while she was waiting for a ride at Plaza Jaycee in San Carlos City on her way to school, she was bumped and ran over by a speeding Toyota mini-bus which resulted to her instantaneous death. 3. Her brother Generoso Alano filed the instant claim for income benefit with the GSIS for and in behalf of the decedent’s children. 4. The claim was denied by GSIS on the ground that the injury upon which compensation is being claimed is not an employment accident satisfying all the conditions prescribed by law. 5. The ECC affirmed the denial by GSIS. It claimed that the deceased’s accident did not meet the conditions under the Amended Rules on Employees’ Compensation. First, the accident occurred at about 7:00 am or thirty minutes before the deceased’s working hours. Second, it happened not at her workplace but at the plaza where she usually waits for a ride to her work. Third, she was not then performing her official functions as school principal nor was she on a special errand for the school. ISSUE Whether or not the injury sustained by the deceased Dedicacion de Vera resulting in her death is compensable under the law as an employment accident. HELD YES. The claim is compensable. When an employee is accidentally injured at a point reasonably proximate to the place at work, while he is going to and from his work, such injury is deemed to have arisen out of and in the course of his employment. In this case, it is not disputed that the deceased died while going to her place of work. She was at he place where, as the petitioner puts it, her job necessarily required her to be if she was to reach her place of work on time. There was nothing private or personal about the school principal’s being at the place of the accident. She was there because her employment required her to be there.

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39. Lazo v. Employees’ Compensation Commission LAZO V. EMPLOYEES’ COMPENSATION COMMISSION 186 SCRA 569 PADILLA, J FACTS 1. Salvador Lazo is a security guard of the Central Bank of the Philippines. 2. His shift is usually from 2:00 PM to 10:00 PM. 3. On June 18, 1986, the security guard who was to relieve him failed to arrive. Lazo rendered overtime duty up to 5:00AM the following day. 4. Lazo, with the permission from his superior, to left early in order to take home his sack of rice. 5. On his way home, the jeepney that he was riding on turned turtle due to the slippery road. 6. Lazo sustained injuries and for which he seeks compensation. 7. The GSIS denied the claim on the ground that Lazo was not at his place of work when the incident occurred. This denial of claim was affirmed by ECC. ISSUE Whether or not the injuries sustained by Lazo due to the vehicular accident on his way home from work should be construed as “arising out of or in the course of employment” and thus compensable. HELD YES. Employment includes not only the actual doing of the work, but a reasonable margin of time and space necessary to be used in passing to and from the place where the work is to be done. If the employee be injured while passing, with the express or implied consent of the employer, to or from his work by a way over the employer’s premises, or over those of another in such proximity and relation as to be in practical effect a part of the employer’s premises, the injury is one arising out of and in the course of the employment as much as though it had happened while the employee was engaged in his work at the place of its performance. It can be seen that petitioner left his station at the Central Bank several hours after his regular time off, because the reliever did not arrive, and so petitioner was asked to go on overtime. After permission to leave was given, he went home. There is no evidence on record that petitioner deviated from his usual, regular homeward route or that interruptions occurred in the journey. There is no reason, in principle, why employees should not be protected for a reasonable period of time prior to or after working hours and for a reasonable distance before reaching or after leaving the employer’s premises. While the presumption of compensability and theory of aggravation under the Workmen’s Compensation Act may have been abandoned under the New Labor Code, it is significant that the liberality of the law in general in favor of the workingman still subsists. This kind of interpretation gives meaning and substance to the compassionate spirit of the law as embodied in Article 4 of the Labor Code. The policy then is to extend the applicability of the Labor Code to as many employees who can avail of the benefits thereunder.

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That in all things, God may be glorified.

40. Luzon Stevedoring Corp. v. Workmen’s Compensation Commission LUZON STEVEDORING CORP. V. WORKMEN’S COMPENSATION COMMISSION 27 SCRA 1132 REYES, JBL, J. FACTS 1. Pastor Romano was a stevedore engaged by petitioner, Luzon Stevedoring Corporation. 2. On the morning of November 30, 1964, Romano went to Pier 9 to wait for the arrival of the barge of the petitioner. 3. Romano had an argument with Benjamin Valdez regarding the platform to be used in the loading and unloading of the cargoes into or out of the watercraft. 4. Romano was able to get the platform from Valdez. 5. When Romano returned after lunch, Valdez was again in possession of the platform. Another argument ensued. 6. Valdez eventually gave the platform to Romano but not before he had uttered threats against the life of Romano. 7. When the barge did not arrive, Romano and his two companions boarded a passenger jeepney bound for Tondo. 8. When Romano got off from the jeep near his house, he was met by Valdez who stabbed him. 9. Romano died as a result thereof. 10. His widow filed a formal claim for death compensation against Luzon Stevedoring for the death of her husband. The same was denied by Luzon Stevedoring on the ground that the death of Romano was not compensable because it came when he was outside of the company premises and not at work. ISSUE Whether or not the death of Pastor Romano is compensable. HELD YES. It is evident that the cause of the fatal stabbing by Benjamin Valdez can be traced to their disagreement over the possession of a platform that was to be used in their work for petitioner. For an injury to be compensable, it is not necessary that the cause thereof shall take place within the place of his employment. If a workman is acting within the scope of his employment, his protection “in the course of” the employment usually continues, regardless of the place of injury. Furthermore, jurisprudence is to the effect that the injuries sustained by an employee while in the course of his employment, as the result of an assault upon his person by another employee, or by a third person, no question of the injured employee’s own culpability being involved, is compensable where, from the evidence presented, a rational mind is able to trace the injury to a cause set in motion by the nature of the employment, or some condition, obligation or incident therein, and not by some other agency.

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That in all things, God may be glorified.

41. Vda. De Inguillo v. Employees’ Compensation Commission VDA. DE INGUILLO V. EMPLOYEES’ COMPENSATION COMMISSION 174 SCRA 19 MELENCIO-HERRERA, J. FACTS 1. Enrique Inguillo worked as a janitor at E. Jacinto Elementary School in Tondo, Manila. 2. From February 24 to June 5, 1978 he was confined in the hospital due to complaints of difficulty in swallowing food, siolid and liquid, accompanied by chest pains, difficulty of breathing, fever and productive cough. 3. He died on June 20, 1978. The cause of death being attributed to Terminal malignancy, Poorly diffrrentiated Esophageal Edenocarcinoma with Bone and Cervix Metastasis Pneumonio. 4. The surviving spouse, Emilia Inguillo, filed a claim for death benefits with GSIS. The claim was denied on the ground that the cause of death, cancer of the esophagus, is not an occupational disease. This was affirmed by the ECC. 5. The instant petition is anchored on the provisions of the Workman’s Compensation Act, particularly on the presumption of compensability and the principle of aggravation. ISSUES 1. Whether or not the presumption of compensability and the principle of aggravation apply in this case. 2. Whether or not the cause of death is an occupational disease, therefore compensable. HELD 1. NO. The deceased was confined from February 24, 1978 to June 5, 1978 and that he later died on June 20, 1978 and absent any evidence as to when his ailment was contracted, it is the New Labor Code that becomes the governing law. As specifically provided in Art. 208, its provisions cover injury, sickness, disability or death occurring on or after January 1, 1975. The concepts relied on by petitioner under the former Workmen’s Compensation Act, therefore, have ceased to apply, having been expressly discarded under the compensation scheme in the new Labor Code. 2. YES. Art. 67 (1) defines compensable sickness. It means any illness definitely accepted as an occupational disease listed by the Commission, or any illness caused by employment subject to proof by the employee that the risk of contracting the same is increased by working conditions. Se. 1(b) Rule III of the Amended Rules on Employment Compensation further provides that for the sickness and resulting disability or death to be compensable, the sickness must be the result of occupational disease listed under Annex A of the Rules with the conditions set therein satisfied. Definitely, “esophageal edenocarcinoma with bone and cervical metastasis” cannot be considered as an occupational disease since it is not one of those listed under Annex A of the mentioned rules. The nature of a person’s employment appears to have no relevance. However, the ECC failed to adequately take into consideration that there was another cause of death which was “pneumonia.” Pneumonia is qualifiedly occupational disease under all the following conditions: a) There must be an honest and definite history of wetting and chilling during the course of employment, also industrial injury to the chest wall with or without rib fracture, or inhalation of noxious gases, fumes and deleterious substances in the place of work. b) There must be a direct connection between the offending agent or event and the worker’s illness.

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That in all things, God may be glorified. c) The signs of consolidation should appear soon (within few hours) and the symptoms to initial chilling and fever should at least be 24 hours after the injury. d) The patient must present one of the following findings a few days of the accident: i. Severe chill and fever ii. Headache and pain, agonizing in character in the side iii. Short, dry, painful cough with blood-tinged expectoration iv. Physical signs of consolidation with fine rales A review of the deceased work activities, as janitor will show that they included the regular use of deleterious substances such as muriatic acid, the fumes from which are inhaled when used in cleaning and clearing of toilet bowls and the unclogging off toilet pipes and plumbing connections. The deceased also performed other varied manual work such as sweeping, scrubbing and mopping school corridors, with the resultant inhalation of a` lot of dust, lifting heavy objects, painting classrooms, preparing seats for pupils during school programs, as well as going to and from his place of work thus exposing him to occasional wetting and chilling from downpours and rains. The combination of all these, coupled with the fact that the decedent was working in Tondo, a depressed area must have lowered his resistance to fight the microbes causative of pneumonia. The risk of contracting the said disease, therefore was increased by his working conditions, thereby satisfying an additional condition for compensability.

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42. Meñez v. Employees’ Compensation Commission MEÑEZ V. EMPLOYEES’ COMPENSATION COMMISSION 97 SCRA 87 MAKASIAR, J. FACTS 1. Gloria Meñez was a public school teacher. She was assigned to Raja Soliman High School in Tondo-Binondo, Manila. 2. She retired on August 31, 1975 under the disability retirement plan at the age of 54 years after 32 years of teaching due to rheumatoid arthritis and pneumonitis. 3. Petitioner filed a claim for disability benefits with the GSIS. GSIS denied the claim on the ground that petitioner’s ailments are not occupational diseases taking into consideration the nature of her particular work. 4. ECC affirmed the denial of the claim by GSIS. It contended that Meñez’s employment has nothing to do with the development of her disabling disease. They are not listed as occupational disease as to merit compensation under the Labor Code. 5. Petitioner however claims that she contracted the pneumonitis and/or bronchiectasis with hemoptysis and rheumatoid arthritis on January 27, 1975 after wetting and chilling during the course of employment which are permanent and recurring in nature and work-connected. They arose in the course of her employment and were aggravated by the condition and nature of her work. ISSUES Whether or not the illness of the petitioner may be considered occupational diseases. HELD YES. For an illness to be compensable, it must either be: 1. An illness definitely accepted as an occupational disease. 2. An illness caused by employment subject to proof by the employee that the risk of contracting the same is increased by working conditions. An occupational disease is one which results from the nature of the employment and by nature is meant conditions to which all employees of a class are subject and which produce the disease as a natural incident of a particular occupation and attach to that occupation a hazard which distinguishes it from the usual run of occupations and is in excess of the hazard attending the employment in general. Rheumatoid arthritis and pneumonitis can be considered occupational diseases. All public school teachers are subject to emotional strains and stresses, dealing as they to with intractable teenagers, especially young boys and harassed as they are by various extracurricular or non-academic assignments, aside from preparing lesson plan until late at night, if they are not badgered by very demanding superiors. In her work, the petitioner also has to contend with the natural elements like the inclement weather – heavy rains, typhoons – as well as dust – and disease-ridden surrounding peculiar to an insanitary slum area. These unwholesome conditions are normal and consistently present in or are hazards peculiar to the occupation of a public high school teacher. But even if rheumatoid arthritis and pneumonitis are not occupational diseases, there is ample proof that petitioner contracted such ailments by reason of her occupation as a public high school teacher due to her exposure to the adverse working conditions abovementioned.

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That in all things, God may be glorified.

43. Clemente v. GSIS CLEMENTE V. GSIS 152 SCRA 501 GUTIERREZ, JR., J. FACTS 1. Pedro Clemente was a janitor of the Department of Health for 10 years. 2. He was assigned at Ilocos Norte Skin Clinic, Laoag City. 3. On November 3 to 14, 1976, he was hospitalised at the Central Luzon Sanitarium, Tala Sanitarium in Caloocan City due to his ailment of nephritis. He was also found to be suffering from such ailments as portal cirrhosis and leprosy also known as Hansen’s Disease. 4. On November 14, 1976, he died of uremia due to nephritis. 5. His widow filed a claim for employees’ compensation under the Labor Code but the same was denied by GSIS on the ground that the ailments of her husband are not occupational diseases taking into consideration the nature of his work and were not in the lease causally related to his duties and conditions. 6. Petitioner contended that the ailments of her husband were contracted in the course of employment and were aggravated by the nature of his work. Being a janitor of Ilocos Norte Skin Clinic, her husband worked in direct contact with people suffering from different skin diseases and was exposed to obnoxious dusts and other dirt which contributed to his ailment of Hansen’s disease. 7. The ECC affirmed this denial of the claim by GSIS. It contended that the decision of GSIS was anchored upon the findings that the ailments were not listed as occupation diseases and that there was no substantial evidence of causal connections. ISSUES 1. What is the quantum of proof required in claims for compensation? 2. Was the disease of the decedent occupation and thus compensable? HELD 1. Strict rules of evidence are not applicable in claims for compensation. The degree of proof required under PD 626 is merely substantial evidence, which means such relevant evidence as a reasonable mind might accept as adequate to support a conclusion. The claimant must show, at least, by substantial evidence that the development of the disease is brought largely by the conditions present in the nature of the job. What the law requires is a reasonable work-connection and not a direct causal relation. It is enough that the hypothesis on which the workmen’s claim is bases is probable. Medical opinion to the contrary can be disregarded especially where there is some basis in the facts for inferring a work-connection. Probability and not certainty is the touchstone. 2. YES. The major ailments of the deceased could be traced to bacterial and viral infections. In the case of leprosy, it is known that the source of infection is the discharge from lesions of persons with active cases. It is believed that the bacillus enters the body through the skin or through the mucous membrane of the nose and throat. The husband of the petitioner worked in a skin clinic. As a janitor of the skin clinic, he was exposed to different carriers of viral and bacterial diseases. He had to clean the clinic itself where patients with different illnesses come and go. He had to put in order the hospital equipments that had been used. He had to dispose of garbage and wastes that accumulated in the course of each working day. He was the employee most exposed to the dangerous concentration of infected materials and not being a medical practitioner, least likely to known how to avoid infection. It is therefore not unreasonable to conclude that Mr. Clemente’s working conditions definitely increased the risk of his contracting the diseases.

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44. Dabatian v. Government Service Insurance System DEBATIAN V. GOVERNMENT SERVICE INSURANCE SYSTEM 149 SCRA 123 GANCAYCO, J. FACTS 1. Sigfredo Dabatian was employed as a Garbage Truck Driver in the General Services Department of the City Government of Cagayan de Oro City. 2. He was usually assigned mostly in the night shift. At the time of his death, his shift started from 10:00 PM to 6:00 AM. 3. Dabatian was a heavy coffee drinker which was his way of warding off sleepiness. 4. He was observed to have been getting paler and weaker while at work until the time he collapsed. 5. Despite hospitalization, Dabatian died two weeks after he collapsed. 6. When his widow, Hilaria Dabatian filed a claim from GSIS, the same was denied on the ground that the decedent’s ailment, Peptic Ulcer, is not an occupational disease as listed under the present law on compensation. 7. Petitioner argues that the decedent’s predisposition to drinking coffee heavily aggravated his contraction of the disease resulting to his death. Petitioner’s argument is hinged on the presumption of compensability and principle of aggravation as sufficient ground for entitlement under the Workmen’s Compensation Act. ISSUE Whether or not under the premises the death of Sigfredo Dabation is compensable. HELD NO. Petitioner died on July 3, 1976 when the old compensation law had already been abrogated. The present Labor Code as amended, abolished the presumption of compensability and the rule on aggravation of illness caused by the nature of employment, the reason being to restore a sensible equilibrium between the employer’s obligation to pay workmen’s compensation and the employee’s right to receive reparation for work – connected death or disability. Under the present law, in order for the employee to be entitled to sickness or death benefits, the sickness or death resulting therefrom must be or must have resulted from either: a) any illness definitely accepted as an occupational disease listed by the Commission; or b) any illness caused by employment subject to proof that the risk of contracting the same is increased by working conditions. Since peptic ulcer is not included in the list of occupational diseases as drawn up by the Commission, then petitioner has the burden of proving that the nature of her husband’s work increased the risk of contracting the disease. Aside from the undisputed fact that the diseased is a heavy coffee drinker, which was his way of warding off sleepiness, no evidence was ever adduced by petitioner to bolster the theory that her husband’s work increased the risk of contracting the ailment. Being a heavy coffee drinker may have aggravated his peptic ulcer, but, aggravation of an illness is no longer a ground for compensation under the present law.

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45. Villones v. ECC VILLONES V. ECC 92 SCRA 320 MAKASIAR, J. FACTS 1. Rolando Villones was employed as a secondary public school teacher assigned at Dayhagan Barrio Highschool in Bongabon, Oriental Mindoro from July 3, 1972 up to the time of his death on September 2, 1975. 2. He died of pulmonary tuberculosis. 3. When his father filed a claim with the GSIS together with the following documents: a. Medical certificate showing that the deceased was on sick leave from December 4 to 20, 1972 due to influenza. b. Medical certificate issued by Dr. Fernando B. Viloria, Municipal Health Officer of Bongabon certifying that he examined Rolando Villones on July 19, 1972 and found him to be physically and mentally fit for employment. c. A certification from the principal to the effect that the actual duties of the deceased were teaching secondary school subjects such as chemistry, science, history and English. He also led students in other extra-curricular activities. 4. GSIS denied the claim on the ground that although pulmonary tuberculosis is listed as an occupational diseases, the petitioner failed to satisfy other conditions in order to be compensable. According to GSIS, for it to be compensable, the employee manifesting this disease should have an occupation involving close and frequent contact with a source or sources of tuberculosis infection by reason of employment: (a) in the medical treatment or nursing of a person suffering from tuberculosis; (b) as a laboratory worker, pathologist or post mortem worker. 5. The ECC affirmed this decision of the GSIS. ISSUES 1. Whether or not the death of Villones from pulmonary tuberculosis is compensable. 2. Whether or not the provisions of the Workmen’s Compensation Act is applicable in this case. HELD 1. YES. Records reveal that prior to the employment of the deceased, he was physically and mentally fit to perform his duties. While he was employed as a teacher, he went on sick leave for 16 days. His physician diagnosed the sickness as influenza. Considering however the medical facilities in municipal health centers, it is possible that what was diagnosed as influenza was actually pulmonary tuberculosis in its incipient stage, which may not be easily detected by physical examination but by extensive x-ray. Tuberculosis is not an instantaneous disease, it is an imperceptible germ disease that feeds on the lungs whose presence in the body cannot be easily discerned and its incipient stage may not be readily discovered. Considering the nature of the deceased’s employment as certified by the principal, it is not surprising that he contracted tuberculosis so that only after 5 months employed as a teacher, he was forced to go on sick leave by reason of the aforesaid illness. When he was able to resume work, he was again exposed to the same working conditions thus aggravating his illness until he suddenly died of severe hemoptysis due to PTB. The Court has consistently held that the disease of tuberculosis is an occupational disease or work-connected in such occupations as that of teacher, labourer, driver, land inspector and such other occupations, hence compensable. 2. In the instant case, the cause of action accrued as early as December 4, 1972 when Rolando Villones contracted his illness and continued to run until September 2, 1975 when he died by reason thereof; hence the cause of action accrued before the

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That in all things, God may be glorified. effectivity of the New Labor Code. The governing law in the prosecution of the cause of action which accrued of said cause of action. Since the Workmen’s Compensation Act was then in full force and effect, then it should govern in the case at bar. It must be pointed out that as early as December 4 to 20, 1972, the deceased was already entitled to disability benefits under Sec. 14 of the Workmen’s Compensation Act because his illness prevented him from reporting to his work for more than 3 days and under such a situation, his employer was obligated under Sec. 37 to file a notice of illness with the Workmen’s Compensation Commission and to manifest its intention of whether or not to controvert his right to compensation. Failure to comply with said sections constitutes a renunciation of the employer’s right to controvert the claim resulting in the waiver of all its non-jurisdictional defenses, such as non-compensability of the claim.

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46. Rodriguez v. ECC RODRIGUEZ V. ECC 178 SCRA 1989 REGALADO, J. FACTS 1. Hector Rodriguez was a public school teacher assigned at Salaan Elementary School in Mangaldan, Pangasinan. 2. On November 19, 1975, he went on sick leave and was hospitalised at Pangasinan Provincial Hospital after he complained of severe stomach pains accompanied by nausea and vomiting. He was later diagnosed to have an “Intestinal Lipomatis of the Large Colon with Obstruction of the Ascending Colon.” 3. He underwent surgery but the same was unsuccessful. He died on December 2, 1975. 4. When his widow filed a claim with GSIS, the same was denied. GSIS contended that the nature of the deceased duties as a teacher could not have directly caused his ailment which eventuated in his subsequent death. 5. The ECC affirmed the decision of the GSIS. 6. Petitioner does not dispute the fact that the principal duties of her husband as a classroom teacher alone would not have any connection with the disease. However, she posits that the deceased’s auxiliary activities as a classroom teacher directly affected his physical consatitution and caused him to have sustained some trauma in his abdominal cavity and other parts of the body. ISSUE Whether or not the death of the deceased caused by Intestinal Lipomatis of the Large Colon with Obstruction of the Ascending Colon, is compensable. HELD NO. Claims on death benefits under Art. 194 must result from an occupational disease. A compensable disease means any illness accepted and listed by the ECC or any illness caused by the employment subject to proof by the employee that the risk of contracting the same was increased by the working conditions. If the disease is listed in Annex A, no proof of causation is required. If it is not so listed, it has been held that the employee, this time assisted by his employer, is required to prove, a positive proposition, that is, that the risk of contracting the disease is increased by working conditions. Proof of direct causal relation is indispensably required. It is enough that the claimant adduces proof of reasonable work connection, whereby the development of the disease was brought about largely by the conditions present in the nature of the job. Strict rules of evidence, which has been held to be such relevant evidence as a reasonable mind might accept as sufficient to support a conclusion. The circumstances alleged by the petitioner and the evidence she presented are not enough to discharge the required quantum of proof, liberal as it is. There is no clear evidence as to when the diseased commenced and supervened; the tumors which developed in the deceased’s colon may have been growing for many years even before he was employed as a teacher. The trauma that was supposed to have caused or at least contributed to the disease was neither satisfactorily clarified nor adequately proved.

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47. Raro v. Employees’ Compensation Commission RARO V. EMPLOYEES COMPENSATION COMMISSION 172 SCRA 845 GUTIERREZ, JR., J. FACTS 1. Zaida Raro was in perfect health when employed as clerk by the Bureau of Mines and Geo-Sciences at the Regional Office in Daet, Camarines Sur on March 17, 1975. 2. Four years later, she began suffering from severe and recurrent heahaches coupled with blurring of visions. 3. She was diagnosed at the Makati Medical Center to be suffering from brain tumor. By that time her memory, sense of time and reasoning power have been lost. 4. A claim for disability benefits with GSIS was denied because there was no proof that the disease is work-connected. 5. Petitioner contend on the other hand that if a claimant cannot prove the necessary work connection because the causes of the disease are still unknown, it must be presumed that working conditions increased the risk of contracting the ailment. ISSUES 1. Whether brain tumor which causes are unknown but contracted during employment is compensable under the present compensation laws. 2. Whether the presumption of compensability is absolutely inapplicable under the present compensation laws when the disease is not listed as occupational disease. HELD 1. NO. The first thing that stands in the way of this petition is the law itself. The law, as it now stands requires the claimant to prove a positive thing – that the illness was caused by employment and the risk of contracting the disease is increased by working conditions. To say that since proof is not available (since medical science cannot positively identify the causes of various types of cancer), therefore the trust fund has the obligation to pay is contrary to the legal requirement that proof must be adduced. The existence or non-existence of proof cannot be presumed. 2. YES. The new law discarded the concepts of “presumption of compensability” and “aggravation” and substituted a system based on social security principles. The intent was to restore a sensible equilibrium between the employer’s obligation to pay workemen’s compensation and the employee’s right to receive reparation for workconnected or disability. Instead of an adversarial contest by the worker or his family against the employer, we nolw have a social insurance scheme where regular premiums are paid by the employers to a trust fund and claims are pain from the trust fund to those who can prove entitlement. It is now the trust fund and not the employer which suffers if benefits are paid to claimants who are not entitled under the law. If diseases not intended by the law to be compensated are inadvertently or recklessly included, the integrity of the State Insurance Fund is endangered. Compassion for the victims of diseases not covered by the law ignores the need to show a greater concern for the trust fund to which tens of millions of workers and their families look for compensation whenever covered accidents, diseases and deaths occur.

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48. Mabuhay Shipping Services, Inc. v. NLRC MABUHAY SHIPPING SERVICES, INC. V. NLRC 193 SCRA 141 GANCAYCO, J. FACTS th 1. Romulo Sentina was hired as 4 Engineer by Mabuhay Shipping Services for and in behalf of Skippers Maritime Co., Ltd. to work aboard the M/V Harmony I for a period of 1 year. 2. On January 16, 1988, while the vessel was docked alongside Drapetona Pier, Piraeus, Greece, Sentina arrived aboard the ship from the shore visibly drunk. 3. He went to the messhall and took an axe and challenged those who are eating there. 4. He was pacified by his shipmates who led him to his cabin. However, he later went out and became violent. 5. He smashed and threw a cup towards the head to an oiler, Emmanuel Ero. Ero touched his head and noticed blood. This infuriated Ero which led to a fight between the two. 6. Sentina was taken to the hospital where he passed away on January 17, 1988. 7. Cecilia Sentina filed a complaint against the petitioners with the POEA for payment of death benefits, burial expenses, unpaid salaries on board and overtime pay with damages. 8. POEA ordered the petitioners to pay the claim. 9. Petitioners appealed to the NLRC although such appeal was dismissed. ISSUE Is the employer exempted from liability in a case of one who ran amuck or who in the state of intoxication provoked a fight as a result of which he was killed? HELD YES. The mere death of the seaman during the term of his employment does not automatically give rise to compensation. The circumstances which led to the death as well as the provisions of the contract, and the right and obligation of the employer and seaman must be taken into consideration, in consonance with the due process and equal protection clauses of the Constitution. There are limitations to the liability to pay death benefits. When the death of the seaman resulted from a deliberate or wilful act on his own life, and it is directly attributable to the seaman, such death is not compensable. No doubt a case of suicide is covered by this provision. By the same token, when as in this case the seaman, in a state of intoxication, ran amuck, or committed an unlawful aggression against another, inflicting injury on the latter, so that in his own defense the latter fought back and in the process killed the seaman, the circumstances of the death of the seaman could be categorized as a deliberate and wilful act on his own life directly attributable to him.

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49. Ysmael Maritime Corporation v. Avelino YSMAEL MARITIME CORPORATION V. AVELINO 151 SCRA 333 FERNAN, J. FACTS 1. On December 22, 1971, Rolando Lim, a licensed second mate, died when the vessel he was on board ran aground and sank near Sabtan, Batanes. 2. The vessel was owned by petitioner Ysmael Maritime Corporation. 3. The parents of the deceased claiming that the untimely death of their son was due to the negligence of the petitioner, sued the petitioner in the CFI for damages. 4. By way of affirmative defense, petitioner claimed that the private respondents had already been compensated by the Workman’s Compensation Commission (WCC) for the same incident, for which reason they are now precluded from seeking other remedies against the same employer under the Civil Code. ISSUE Whether the compensation remedy under the Workmen’s Compensation Act (WCA), and now under the Labor Code, for work-connected death or injuries sustained by an employee, is exclusive of the other remedies under the Civil Code. HELD In the recent case of Floresca v. Philex Mining Company, the Court was confronted with three divergent opinion on the exclusivity rule. One view is that the injured employee or his heirs, in case of death, may initiate an action to recover damages (not compensation under the Workman’s Compensation Act) with the regular courts on the basis of negligence of the employer pursuant to the Civil Code. Another view, is that the remedy of an employee for work-connected injury or accident is exclusive in accordance with Section 5 of WCA. The third view is that the action is selective and the employee or his heirs have a choice of availing themselves of the benefits under the WCA or of suing in the regular courts under the Code for higher damages from the employer by reason of his negligence. But once the election has been exercised, the employee or his heirs are no longer free to opt for the other remedy. This latter view was adopted by the Court in Floresca v. Philex Mining Company. In doing so, the Court rejected the doctrine of exclusivity of the rights and remedies granted by the WCA. As thus applied to the case at bar, respondent Lim spouses cannot be allowed to maintain their present action to recover additional damages against petitioner under the Civil Code. In open court, respondent admitted that they had previously filed a claim for death benefits with the WCC and had received the compensation payable to them under the WCA. It is therefore clear that thew respondents had not only opted to recover under the Act but they had also been duly paid. At the very least, a sense of fair play would demand that if a person entitled to a choice of remedies made a first election and accepted the benefits thereof, he should no longer be allowed to exercise the second option. Having staked his fortunes on a particular remedy, he is precluded from pursuing the alternate course, at least until the prior claim is rejected by the Compensation Commission.

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50. Vicente v. Employees’ Compensation Commission VICENTE V. EMPLOYEES’ COMPENSATION COMMISSION 193 SCRA 190 SARMIENTO, J. FACTS 1. Domingo Vicente was formerly employed as a nursing attendant at the Veterans Memorial Medical Center. 2. At the age of 45, after having rendered more than 25 years of government service, he applied for optional retirement under the provisions of Sec. 12(c) of RA 1616, giving his reason therefore his inability to continue working as a result of his physical disability. 3. The petitioner likewise filed with the GSIS an application for “income benefits claim for payment” under PD 626. 4. The petitioner submitted a Physician’s Certification wherein his attending doctor had dignosed him as suffering: Osteoarthritis multiple, Hypertensive Cardiovascular Disease, Cardiomegaly, and Left Venticular Hypertrophy and classified him as being under “permanent total disability.” 5. The GSIS granted the claim but only for permanent partial disability compensation or for a period of 19 months. The petitioner was granted the equivalent of an additional 4 months benefits as a consequence of his motion for reconsideration. 6. Still unsatisfied, the petitioner again sent a letter to the GSIS Disability Compensation Department Manager insisting that he should be compensated no less than for “permanent total disability.” 7. The petitioner’s request was denied. He then elevated the case to the ECC which however dismissed the petitioner’s appeal. ISSUE Does the petitioner suffer “permanent total disability” as he claims or from “permanent partial disability” as the respondent Commission would have the Court believe? HELD The petitioner is suffering from permanent total disability. Employee’s Disability under the Labor Code is classified into 3 distinct categories: a. Temporary total disability if as a result of the injury or sickness the employee is unable to perform any gainful occupation for a continuous period not exceeding 120 days except as otherwise provided in Rule X of the Amended Rules on Employees Compensation. b. A disability is total and permanent if a result of the injury or sickness the employee is unable to perform any gainful occupation for a continuous period exceeding 120 days except as otherwise provided for in Rule X of the Amended Rules on Employees Compensation. c. A disability is partial permanent if as a result of the injury or sickness the employee suffers a permanent partial loss of use of any part of his body Permanent total disability invariably results in an employee’s loss for work or inability to perform his usual work. Permanent partial disability, on the other hand, occurs when an employee loses the use of any particular anatomical part of his body which disables him to continue with his former work. The test of whether or not an employee suffers from “permanent total disability” is a showing of the capacity of the employee to continue performing his work notwithstanding the disability he incurred. Thus, if by reason of the injury or sickness he sustained, the employee is unable to perform his customary job for more than 120 days and he does not come within the coverage of Rule X of the Amended Rules on Employees Compensability then the said employee undoubtedly suffers from “permanent total disability” regardless of whether or not he loses the use of any part of his body. In the case at bar, the petitioner’s permanent total disability is established beyond doubt by several factors and circumstances. Noteworthy is the fact that petitioner’s application for

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That in all things, God may be glorified. optional retirement on the basis of his ailment has been approved. Considering that the petitioner was only 45 years old when he retired and still entitled, under good behaviour, to 20 more years in service, the approval of his optional retirement application proves that he was no longer fit to continue his employment. Further, the petitioner’s physician categorically classified the petitioner under permanent total disability.

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51. GSIS v. GSIS Employees Association GSIS V. GSIS EMPLOYEES ASSOCIATION 157 SCRA 236 CORTES, J. FACTS 1. On February 27, 1969, the President of the Philippines certified to the CIR a labor dispute between the GSIS and GSISEA. 2. The CIR assumed jurisdiction and held conciliation and mediation proceedings between the parties. 3. On March 5, 1965, it issued an order which provided that: “any dismissal, suspension, lay-off, transfer, demotion or promotion among the employees affected by this Order shall be subject to prior approval by this Court before such action shall be shall be implemented or effected by the Management of the GSIS.” 4. The GSIS filed a Motion to Approve Resolution No. 611 relative to the appointment of a number of employees. 5. Daniel Roberto, a ranking member of the union, filed a protest. Under Item 737 on Resolution No. 611, it was shown that his appointment as Service Credit Investigator was made effective January 1, 1968. He claims however that he has been performing the task of credit investigator since July 1964, therefore his appointment should be from that date. 6. The facts show that on July 1, 1964, Roberto was promoted to the position of Senior Service Credit Adjudicator. However, on December 1965, an investigator was promoted to another operating unit. Since then Roberto, who was still occupying the position of Senior Service Credit Adjudicator has been performing investigation work which is different from the work of an adjudicator. 7. The CIR issued an order approving Resolution No. 611 with the modification that the appointment of Roberto as Service Credit Investigator should be from July 1964. The CIR later modified this to December 1965. ISSUE 1. Can CIR can interfere with management prerogatives? 2. Granted that it can interfere with management prerogatives, did it act with grave abuse of discretion in this case? HELD 1. YES. During the pendency of a labor dispute certified by the President to the industrial court, the labor court may validly require that any contemplated transfer, promotion, demotion or termination must first be submitted for approval. The CIR is granted a great breadth of discretion in its quest for a solution to a labor problem. Petitioner itself admits that the exercise by Management of its powers to effectuate personnel movements, at least during the pendency of the dispute, may be subjected to certain restrictions. It does not question the validity of the Order of March 5, 1969 requiring the GSIS to submit any dismissal, suspension, lay-off, transfer, demotion or promotion” for approval by the court. In fact, it impliedly admitted the validity of said order when it filed its Motion dated September 15, 1970 asking the Court to approve Resolution No. 611. 2. YES. The CIR in issuing the questioned orders, did so not to stop acts that mar the process of solving the labor problem at hand. It issued its orders because (a) Roberto had been recommended by his supervisors for promotion in July 1964 (b) It would be unfair if the GSIS did not pay the salaries and emoluments of a credit investigator, even as it enjoyed his services as such investigator (c) The CIR is empowered to issue an order fixing the terms and conditions of employment which includes the power of determining when an appointment should be made effective. The first ground relied upon deserves scant considerations. Recommendations cannot control the discretion of the appointing authority. The second ground likewise deserves no merit. If accepted, it would authorize an employee, holding a specific

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That in all things, God may be glorified. position, to perform tasks and responsibilities of another position so that he may be justified in asking for the benefits and emoluments of the latter position. This reasoning in effect deprives management of its power to determine its specific manpower requirements in any given period of time. The third reason fails to appreciate the legal significance of the power of the Court of Industrial Relations to fix the terms and conditions of employment in compulsory arbitration. Sec. 10 of the Industrial Peace Act provides that “if no other solution to the dispute is found, the Court may issue an order fixing the terms and conditions of employment.” The fixing by the Court of the terms and conditions of employment is intended as a solution to the labor dispute which was certified by the President for arbitration. The CIR’s power must be exercised with circumspection inasmuch as it interferes with the management prerogative of controlling personnel movements. The only reason why the CIR’s approval is necessary before any intended transfer, promotion, demotion or separation may be effected pending a dispute is to stop acts that mar the process of solving the labor problem at hand; to produce the salutary effect of preventing further deterioration of the already deteriorated relationship between the employer and employees. Otherwise, the CIR would not be justified in interfering with what, under normal circumstances, is purely a management prerogative.

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52. Employees’ Compensation Commission v. Sanico EMPLOYEES COMPENSATION COMMISSION V. SANICO 321 SCRA 268 KAPUNAN, J. FACTS 1. Edmund Sanico was a former employee of John Gotamco and Sons. He was a wood filer until he was separated from employment on December 31, 1991 due to his illness. 2. His medical evaluation report dated September 31, 1991 showed that he was suffering from pulmonary tuberculosis (PTB). 3. On November 9, 1994 Sanico filed with the SSS a claim for compensation benefits. 4. SSS denied the claim on the ground that of prescription. Under Art. 201 of the Labor Code, a claim for compensation shall be given due course only when the same is filed with the System 3 years from the time the cause of action accrued. 5. SSS reckoned the three-year prescriptive period on September 31, 1991 when PTB first become manifest. 6. Sanico appealed to the ECC. ECC affirmed the decision of the SSS. 7. When the case was elevated to the CA, it ruled that the private respondent’s claim was filed within the prescriptive period under the law. The CA reconciled Article 201 of the Labor Code with Art. 1144(2) of the Civil Code. Under the latter provision of law, an action upon an obligation created by law must be filed within 10 years from the time the cause of action accrues. ISSUE Whether or not private respondent’s claim for compensation benefit had already prescribed when he filed his claim on November 9, 1994. HELD NO. The prescriptive period for filing compensation claims should be reckoned from the time the employee lost his earning capacity, i.e. terminated from employment, due to his illness and not when the same first became manifest. Indeed, a person’s disability might not emerge at one precise moment in time but rather over a period of time. In this case, private respondent’s employment was terminated on December 31, 1991 due to his illness, he filed his claim for compensation benefits on November 9, 1994. Accordingly, private respondent’s claim was filed within the three-year prescriptive period under Art. 201 of the Labor Code.

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53. Principe v. Philippine-Singapore Transport Services, Inc. PRINCIPE V. PHILIPPINE-SINGAPORE TRANSPORT SERVICES, INC. 176 SCRA 514 GANCAYCO, J. FACTS 1. Abelardo Principe was the Chief Engineer of M/V OSAM Falcon, a commercial vessel of Singaporean Registry owned by Chuan Hup Agencies Pte., Ltd., the principal of Philippine-Singapore Transport Services, Inc. 2. The contract of employment provides among other things that the laws of Singapore shall apply in cases of disputes arising out of the said appointment and that said disputes are to be resolved by the courts of Singapore. 3. On September 15, 1982, while Principe was on duty in Malinto Field Palawan, he suddenly contracted a serious illness which eventually resulted to his death. 4. Her widow filed a complaint against PSTSI with the Worker’s Assistance and Adjudication Office of the POEA seeking the payment of death compensation benefits and other benefits accruing to her deceased husband. 5. While the case was pending, a compromise agreement was entered into by the parties. Petitioner executed a release and quitclaim in favor of PSTSI in consideration for the sum of P7,000.00. 6. Consequently, the counsel of the petitioner with the latter’s consent, filed a motion to dismiss and without prejudice as against Chuan Hup. POEA then issued an order dismissing the complaint. 7. On April 21, 1986, petitioner filed with the POEA another claim for death benefits against PSTSI, this time including Chuan Hup. 8. The new case was dismissed by POEA on the ground of res judicata and that the present case is barred by prior judgment based on a compromise agreement in the previous case. ISSUE Whether or not the release and quitclaim executed by the petitioner in favor of the employer is valid. HELD NO. It is true that a compromise agreement once approved by the court has the effect of res judicata between the parties and should not be disturbed except for vices of consent and forgery. However, settled is the rule that the NLRC may disregard technical rules of procedure in order to give life to the constitutional mandate affording protection to labor and to conform to the need of protecting the working class whose inferiority against the employer has always been earmarked by disadvantage. The compromise agreement entered into by the petitioner in favor of PSTSI was not intended to totally foreclose her right over the death benefits of her husband. First, the motion to dismiss filed by the petitioner through her counsel before the POEA clearly reflects the undertaking that the release is without prejudice as regards private respondent Chuan Hup. It is surprising why both the POEA and the NLRC failed to consider this aspect in the resolution of the second complaint by the petitioner PSTSI and Chuan Hup. The second complaint was filed by the petitioner to enforce the joint and several liability of PSTSI and Chuan Hup per joint affidavit of responsibility executed by the said parties in entering into a principal-agent relationship after PSTSI failed to live up to its commitment to assist petitioner in the recover of death compensation. The release is from any claim against PSTSI. Chuan Hup is not a party thereto. He cannot be considered covered by the release. Even assuming for the sake of argument that the quitclaim had foreclosed petitioner’s right over the death benefits of her husband, the fact that the consideration given in exchange thereof was very much less than the amount the petitioner is claiming renders the quitclaim null and void for being contrary to public policy.

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Article 279 - Security of Tenure

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54. Rance v. NLRC RANCE VS. NLRC GR. NO. 68147; JUNE 30, 1988 FACTS 1. A Collective Bargaining Agreement was entered into on April 30, 1981 by and between respondents Polybag Manufacturing Corporation and Polybag Workers Union one of which is a stipulation that the former may dismiss any employee if they would join other organizations aside from the existing one. 2. Petitioners were among the 125 members of the respondent union who were expelled by the latter for disloyalty in that they allegedly joined the NAFLU — a large federation. Because of the expulsion, petitioners were dismissed by Respondent Corporation. Petitioners sued for reinstatement and backwages stating their dismissal was without due process. Losing both in the decisions of the Labor Arbiter and the National Labor Relations Commission (NLRC), they elevated their cause to the Supreme Court. ISSUE Whether or not the dismissal was due to a just cause. HELD The court held that the dismissal was made in bad faith. There was indeed connivance between the corporation and the Union. The facts show that even if the workers sought help from their union, they were disregarded by the leaders, who were not dismissed. Their plights were not heeded by the corporation. Therefore, the main recourse is to seek help from NAFLU, but such act did not authorize the federation to represent them. Nor is it an act of disloyalty based on the CBA. The members did not even sign documents to prove the allegations. In fact, it is there mere act of preserving what they have; their jobs. The state recognizes the right of the workers to security of tenure and that they may not be terminated without a just cause, which in this case is absent.

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55. Kiamco v. NLRC KIAMCO VS. NLRC GR. NO. 129449; JUNE 29, 1999 FACTS 1. On 1 July 1992 private respondent PHILIPPINE NATIONAL OIL COMPANY (PNOC) through its Energy Research and Development Division, later incorporated as PNOC-EDC, hired petitioner Cisell Kiamco as a project employee in its Geothermal Agro-Industrial Plant Project in Valencia, Negros Oriental. 2. The Contract of Employment stipulated among others that Kiamco was being hired by the company as a technician for a period of five (5) months from 1 July 1992 to 30 November 1992, or up to the completion of the project, which ever would come first, at a monthly salary of P3,500.00. 3. After the termination of the contract, a second one was entered into by the parties containing basically the same terms and conditions except that the work-time was reduced to twenty-two (22) days per month instead of twenty-six (26) days as stipulated in the first contract. The period of employment was from 1 December 1992 to 30 April 1993. 4. Thereafter Kiamco was again re-hired, but the third contract was for six (6) months spanning 1 May 1993 to 30 November 1993 with an increased salary of P3,850.00 per month. 5. Then, he received a memorandum about certain infractions he committed. He explained his side, but a preventive suspension order was issued pending investigation. 6. However, respondent contended that an investigation was not necessary since Kiamco ceased to be an employee on November 30, 1993. He appealed before the Labor Arbiter and NLRC but both were denied. ISSUE Was petitioner a regular employee entitled to notice and hearing prior to his termination? HELD Pursuant to the case of Violeta vs. NLRC, the principal test in determining if one is a regular or project employee or not is whether they 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. From the foregoing discussion it is apparent that Kiamco was correctly labeled by the NLRC as a project employee. The basis for this conclusion is indeed well-founded. The three (3) Contracts of Employment entered into by Kiamco clearly established that he was a project employee because (a) he was specifically assigned to work for a particular project, which was the Geothermal Agro-Industrial Demonstration Plant Project of private respondents, and (b) the termination and the completion of the project or undertaking was determined and stipulated in the contract at the time of his employment. The argument of private respondents that reinstatement and payment of back wages could not be made since Kiamco was not a regular employee is apparently misplaced. As quoted above, the normal consequences of an illegal dismissal are the reinstatement of the aggrieved employee and the grant of back wages. These rights of an employee do not depend on the status of his employment prior to his dismissal but rather to the legality and validity of his termination. The fact that an employee is not a regular employee does not mean that he can be dismissed any time, even illegally, by his employer. It cannot be gainsaid that the dismissal of an employee should be for any of the just and authorized causes enumerated in the Labor Code. In this case, no proof or evidence was ever presented by private respondents to justify his termination. They relied solely on the expiration of the employment contract to legitimize his termination, instead of the administrative infractions he allegedly committed, thus abandoning altogether any valid cause private respondents might have under the Labor

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That in all things, God may be glorified. Code that could justify his dismissal. Furthermore, private respondents not only failed to give a valid and justifiable reason to terminate Kiamco, but they also ignored the due process requirement of the law. Due process in termination cases requires the employer to furnish the worker or employee sought to be dismissed with two (2) written notices, i.e., a notice which apprises the employee of the particular acts or omissions for which his dismissal is sought, and a subsequent notice which informs the employee of the employer's decision to dismiss him. The records show that the second written notice informing petitioner of his actual dismissal was not complied with. When Kiamco returned to work he was bluntly informed by private respondents that he was already terminated due to the expiration of his employment contract. Indeed, the failure of private respondents to comply with the due process requirement further tainted Kiamco's dismissal with irregularity.

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56. Magtulac v. NLRC MAGLUTAC VS. NLRC GR. NO. 78345; SEPTEMBER 21, 1990 FACTS 1. Jose M. Maglutac was employed by Commart (Phils.), Inc. sometime in February, 1980 and rose to become the Manager of its Energy Equipment Sales. 2. On October 3, 1984, he received a notice of termination signed by Joaquin S. Cenzon, Vice-President-General Manager and Corporate Secretary of CMS International, a corporation controlled by Commart. 3. Thereafter, Jose Maglutac filed a complaint for illegal dismissal against Commart and Jesus T. Maglutac, President and Chairman of the Board of Directors of Commart. 4. The complainant alleged that his dismissal was part of a vendetta drive against his parents who dared to expose the massive and fraudulent diversion of company funds to the company president's private accounts, stressing that complainant's efficiency and effectiveness were never put to question when very suddenly he received his notice of termination. 5. The Labor Arbiter and NLRC ruled that the termination was for a just cause, but the latter deleted the amount of moral and exemplary damages. Hence, the instant recourse then by both parties alleging grave abuse of discretion. 6. Complainant for his part, questioned the deletion of damages, and Jesus Maglutac and Commart assailed the ruling that the dismissal was without cause. ISSUE Whether or not the dismissal was for a just cause which justifies the award of moral and exemplary damages HELD In cases of illegal dismissal, in addition to the reliefs granted under the Labor Code, other forms of damages under the Civil Code may be granted. From the findings of the Labor Arbiter as affirmed by the NLRC, there is sufficient basis for an award of moral and exemplary damages in the instant case. The alleged loss of trust and confidence on complainant because of his family's establishment of MM International, a company allegedly in direct competition with Commart, was belied by the findings of the Labor Arbiter. The formation of another corporation by complainant's parents including the complainant himself cannot be used to justify the termination of complainant. The formation came about before complainant's parents brought a minority stockholders' derivative suit and in fact, this was with the sanction of respondent company's president.

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Article 280 – Kinds of Employment: Regular & Casual Employment

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57. De Leon v. NLRC MOISES DE LEON VS. NATIONAL LABOR RELATIONS COMMISSION AND LA TONDEÑA, INC. GRN 70705 AUGUST 21, 1989 FERNAN, C.J : FACTS 1. It appears that petitioner was employed by private respondent La Tondeña, Inc. on December 11, 1981, at the Maintenance Section of its Engineering Department in Tondo, Manila. 1 His work consisted mainly of painting company building and equipment, and other odd jobs relating to maintenance. He was paid on a daily basis through petty cash vouchers. 2. In the early part of January, 1983, after a service of more than one (1) year, petitioner requested from respondent company that he be included in the payroll of regular workers, instead of being paid through petty cash vouchers. 3. Private respondent's response to this request was to dismiss petitioner from his employment on January 16, 1983. Having been refused reinstatement despite repeated demands, petitioner filed a complaint for illegal dismissal, reinstatement and payment of backwages before the Office of the Labor Arbiter of the then Ministry now Department of Labor and Employment. 4. Petitioner alleged that he was dismissed following his request to be treated as a regular employee; that his work consisted of painting company buildings and maintenance chores like cleaning and operating company equipment, assisting Emiliano Tanque, Jr., a regular maintenance man; and that weeks after his dismissal, he was re-hired by the respondent company indirectly through the VitasMagsaysay Village Livelihood Council, a labor agency of respondent company, and was made to perform the tasks which he used to do. Emiliano Tanque, Jr. corroborated these averments of petitioner in his affidavit. 5. On the other hand, private respondent claimed that petitioner was not a regular employee but only a casual worker hired allegedly only to paint a certain building in the company premises, and that his work as a painter terminated upon the completion of the painting job. ISSUE Whether or not the petitioner is a regular or casual employee. HELD The law on the matter is Article 281 of the Labor Code which defines regular and casual employment as follows: Art. 281. Regular and casual employment. - The provisions of a written agreement to the contrary notwithstanding and regardless of the oral agreements of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer, except where the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee or where the work or services to be performed is seasonal in nature and the employment is for the duration of the season. An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided, That any employee who has rendered at least one year of service, whether such service is continuous or broken, shall be considered a regular employee with respect to the activity in which he is employed and his employment shall continue while such actually exists. The primary standard, therefore, of determining a regular employment is the reasonable connection between the particular activity performed by the employee in relation to the usual business or trade of the employer. In the case at bar, the respondent company, which is engaged in the business of manufacture and distillery of wines and liquors, claims that petitioner was contracted on a casual basis specifically to paint a certain company building and that its completion rendered petitioner's employment terminated. This may have been true at the beginning,

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That in all things, God may be glorified. and had it been shown that petitioner's activity was exclusively limited to painting that certain building, respondent company's theory of casual employment would have been worthy of consideration. However, during petitioner's period of employment, the records reveal that the tasks assigned to him included not only painting of company buildings, equipment and tools but also cleaning and oiling machines, even operating a drilling machine, and other odd jobs assigned to him when he had no painting job. A regular employee of respondent company, Emiliano Tanque, Jr., attested in his affidavit that petitioner worked with him as a maintenance man when there was no painting job. It is not tenable to argue that the painting and maintenance work of petitioner are not necessary in respondent's business of manufacturing liquors and wines, just as it cannot be said that only those who are directly involved in the process of producing wines and liquors may be considered as necessary employees. Otherwise, there would have been no need for the regular Maintenance Section of respondent company's Engineering Department, manned by regular employees like Emiliano Tanque, Jr., whom petitioner often worked with.

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58. A.M. Oreta v. NLRC A.M. ORETA & CO., INC. VS. NATIONAL LABOR RELATIONS COMMISSION AND SIXTO GRULLA, JR. GR NO 74004 AUGUST 10, 1989 MEDIALDEA, J FACTS 1. Private respondent Grulla was engaged by Engineering Construction and Industrial Development Company (ENDECO) through A.M. Oreta and Co., Inc. as a carpenter in its project in Jeddah, Saudi Arabia. 2. The contract of employment, which was entered into on June 11, 1980 was for a period of twelve (12) months. Respondent Grulla left the Philippines for Jeddah, Saudi Arabia on August 5, 1980. 3. On August 15, 1980, Grulla met an accident which fractured his lumbar vertebrae while working at the jobsite. He was rushed to the New Jeddah Clinic and was confined there for twelve (12) days. On August 27, 1980, Grulla was discharged from the hospital and was told that he could resume his normal duties after undergoing physical therapy for two weeks. 4. On September 18, 1980, respondent Grulla reported back to his Project Manager and presented to the latter a medical certificate declaring the former already physically fit for work. Since then, he stated working again until he received a notice of termination of his employment on October 9, 1980. 5. In December, 1981, respondent Grulla filed a complaint for illegal dismissal, recovery of medical benefits, unpaid wages for the unexpired ten (10) months of his contract and the sum of P1,000.00 as reimbursement of medical expenses against A.M. Oreta and Company, Inc. and Engineering Construction and Industrial Development Co. (ENDECO) with the Philippine Overseas and Employment Administration (POEA). 6. The petitioner A.M. Oreta and Company, Inc. and ENDECO filed their answer and alleged that the contract of employment entered into between petitioners and Grulla provides, as one of the grounds for termination of employment, violation of the rules and regulations promulgated by the contractor; and that Grulla was dismissed because he has not performed his duties satisfactorily within the probationary period of three months. Petitioner contends that the respondent Grulla was validly dismissed because the latter was still a probationary employee; and that his dismissal was justified on the basis of his unsatisfactory performance of his job during the probationary period. ISSUE Whether or not petitioner is a regular employee. Held: Article 280 (formerly Article 281) of the Labor Code, as amended, provides: The provisions of written agreement to the contrary notwithstanding and regardless of the oral agreements of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer, except where the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employment or where the work or service to be performed is seasonal in nature and the employment is far the duration of the season. An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided, that any employee who has rendered at least one year of service, whether such service is continuous or broken, shall be considered a regular employee with respect to the activity in which he is employed and his employment shall continue while such actually exists. Petitioner admitted that respondent Grulla was employed in the company as a carpenter for a period of twelve months before he was dismissed on October 9, 1980. A perusal of the employment contract reveals that although the period of employment of respondent Grulla is

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That in all things, God may be glorified. twelve (12) months, the contract period is renewable subject to future agreement of the parties. It is clear from the employment contract that the respondent Grulla was hired by the company as a regular employee and not just a mere probationary employee.

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59. Ecal v. NLRC ECAL V. NATIONAL LABOR RELATIONS COMMISSION GR NO. 92777 MARCH 13, 1991 GANCAYCO, J. FACTS 1. Isagani Ecal was an employee of Hi-Line sawmill. 2. On February 4, 1987, he tendered his resignation stating the following reasons: “ako po ay magreresign na sa aking trabaho bilang laborer sapagka’t nakita ko na mas malaki and kikitain kung mangongontrata na lamang.” 3. Thereafter, Hi-Line does not choose the workers but merely accepts whoever may be selected by Ecal. 4. Petitioners were not included in the payroll. Instead, a lump sum of P1,400.00 is given to Ecal or his representative Solomon de los Santos, every four days, to cover their wages for the period the petitioners divide among themselves. 5. Private respondents allege that Ecal customarily removes some of his laborers at the Hi-Line sawmill and assigns them to other sawmill. 6. Petitioners worked the company’s compound in Wakas, Bocaue, Bulacan at least eight hours a day, seven days a week. 7. On June 6, 1987, the company unilaterally terminated the services of petitioners without notice allegedly on the ground that its contract with Ecal has expired. ISSUES 1. Whether or not Ecal is a labor only contractor. 2. Whether or not the petitioners are regular employees of Hi-Line. HELD 1. YES. Isagani Ecal is a labor-only contractor, a mere supplier of manpower to HiLine. Isagani was only a poor laborer at the time of his resignation who cannot even afford to have his daughter treated for malnutrition. He resigned and became a supplier of laborers for Hi-Line because he saw an opportunity for him to earn more than what he was earning while still in the payroll of the company. At the same time, he continued working for the company as laborer at the kiln drying section. He does not have sufficient capital to invest in tools and machineries. Private respondents however claim that the business contracted by Ecal did not require the use of tools, equipment and machineries and the contracted task had to be executed in the premises of Hi-Line where they use the machineries and equipment of the company for the drying of lumber materials. Even the company’s personnel officer Elizabeth Natividad admitted that Ecal resigned in order to supply manpower to the company on a task basis. By the very allegations of private respondents, it is quite clear that Isagani Ecal only supplies man-power to Hi-Line within the context of “labor-only” contracting as defined by law. A finding that Isagani Ecal is a labor-only contractor is equivalent to finding that an employer-employee relationship exist between the company and Ecal including the latter’s contract workers, the relationship such as provided by the law itself. 2. YES. There is no question that the task performed by petitioners is directly-related to the business of Hi-Line. Petitioners were assigned to sort out the lumber materials whether wet or fresh kiln as to sizes and to carry them from the stockpile to the dryer where they are loaded for drying after which they are unloaded. The work of petitioners is an integral part of the operation of the sawmill of Hi-Line without which production and company sales will suffer.

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60. Magante v. NLRC TELESFORO MAGANTE V. NATIONAL LABOR RELATIONS COMMISSION G.R. NO. 74969 MAY 7, 1990 FERNAN, C.J. FACTS 3. Private respondent Constress Philippines Inc. is engaged in the concrete structural business. Petitioner Telesforo Magante, on the other hand, was employed by the former as a carpenter from April 17, 1980 until his dismissal on March 6, 1982. 4. He earns three hundred pesos (P300.00), more or less, a week excluding allowance and rendering about fourteen (14) hours of work daily from 7:00 in the morning to 10:00 in the evening. 5. His work involved the making of molds (forma or siding of cement post) for bridges, buildings, charcoal builder sea file, and others. Petitioner was never assigned to work outside the plant of private respondent. 6. Every three (3) months, petitioner was made to fill up and sign an employment contract relating to a particular phase of work in a specific project. Allegedly, the terms of the contract written in English were not understood by petitioner nor was the same explained to him. The last hiring agreement entered into between petitioner and private respondent was on December 7, 1981 which was to take effect on even date with an agreed compensation of P21.36 a day. 7. On March 6, 1982, private respondent posted a notice of termination on its bulletin board to take effect the following day, March 7, 1989, which included petitioner and other employees as among those whose services were being terminated by private respondent. 8. Petitioner was told that he cannot work anymore because he is already old, that his contract had already expired and was not renewed being a project employee. The termination of petitioner and his fellow workers was reported to the Ministry of Labor. 9. Consequently, petitioner filed a complaint with the then Ministry (now Department) of Labor and Employment for illegal dismissal. 10. The Labor Arbiter rendered a decision founding for petitioner. The Labor Arbiter ruled that petitioner is a regular worker, hence, entitled to reinstatement with full backwages. 11. On appeal, the NLRC set aside the decision of the labor arbiter ruling that petitioner's termination was due to the completion of the project for which he was hired. It held that petitioner is a project employee within the purview of Policy Instructions No. 20, a regulation intended for stabilizing employer-employee relations in the construction industry. ISSUE Whether or not petitioner is a project employee as found by public respondent NLRC. HELD NO. Petitioner Telesforo Magante was a regular employee of private respondent. Article 281 of the Labor Code provides: The provisions of written agreement to the contrary notwithstanding and regardless of the oral agreements of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer except where the employment has been fixed for a specific project or undertaking, the completion or termination of which has been determined at the time of the engagement of the employee or where the work or service to be performed is seasonal in nature and the employment is for the duration of the season. An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided, that, any employee who has rendered at least one year of service, whether such service is continuous or broken shall be considered a regular employee with respect to the activity in which he is employed and his employment shall continue while such actually exists.

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That in all things, God may be glorified. Petitioner has established that since the very inception of his employment in 1980, he was never deployed from project to project of private respondent but had been regularly assigned to perform carpentry work under the supervision of a certain Bernardo Padaon who, since 1964 until his resignation on January 2, 1982 worked for private respondent as the supervisor of its Carpentry Department. This goes to show two things: that petitioner was assigned to perform tasks which are usually necessary or desirable in the usual business or trade of private respondent; and that said assignments did not end on a project to project basis, although the contrary was made to appear by private respondent through the signing of separate employment contracts allegedly for different projects because it is indeed obvious that petitioner continued to perform the same kind of work throughout his period of employment allegedly considered to have been done on a project to project basis. Although petitioner had only rendered almost two years of service, nevertheless this should not detract from his status of being a regular employee because as correctly stated by the labor arbiter, the determining factor of the status of complainant- petitioner or any worker is the nature of the work performed by the latter and the place where he performed his assignment. Moreover, if petitioner were employed as a "project employee" private respondent should have submitted a report of termination to the nearest public employment office every time his employment is terminated due to completion of each construction project, as required by Policy Instruction No. 20, which provides: Project employees are not entitled to termination pay if they are terminated as a result of the completion of the project or any phase thereof in which they are employed, regardless of the number of projects in which they have been employed by a particular construction company. Moreover, the company is not required to obtain a clearance from the Secretary of Labor in connection with such termination. What is required of the company is a report to the nearest Public Employment Office for statistical purposes. Throughout the duration of petitioner's employment, there should have been filed as many reports of termination as there were construction projects actually finished if it were true that petitioner Telesforo Magante was only a project worker.

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61. Beta Electric Corporation v. NLRC BETA ELECTRIC CORPORATION V. NATIONAL LABOR RELATIONS COMMISSION G.R. NO. 86408 FEBRUARY 15, 1990 SARMIENTO, J.: FACTS 1. The petitioner hired the private respondent as clerk typist III effective December 15, 1986 until January 16, 1987, and was subsequently rehired on January 16, 1987 up to February 15, 1987. On February 15, 1987, it gave her another extension up to March 15, 1987. On March 15, 1987, it gave her a further extension until April 30, 1987. On May 1, 1987, she was given until May 31, 1987. On June 1, 1987, she was given up to June 30, 1987. 2. Her appointments were covered by corresponding written contracts. 3. On June 22, 1987, her services were terminated without notice or investigation. 4. On the same day, she went to the labor arbiter on a complaint for illegal dismissal. As the court has indicated, both the labor arbiter and the respondent National Labor Relations Commission ruled for her. 5. The petitioner argues mainly that the private respondent's appointment was temporary and hence she may be terminated at will. ISSUE Whether or not private respondent is temporary employee. HELD NO. The private respondent was to all intents and purposes, and at the very least, a probationary employee, who became regular upon the expiration of six months. Under Article 281 of the Labor Code, a probationary employee is "considered a regular employee" if he has been "allowed to work after the probationary period." The fact that her employment has been a contract-to- contract basis can not alter the character of employment, because contracts can not override the mandate of law. Hence, by operation of law, she has become a regular employee. In the case at bar, the private employee was employed from December 15, 1986 until June 22, 1987 when she was ordered laid off. Her tenure having exceeded six months, she attained regular employment.

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62. Kimberly Independent Labor Union v. Drilon KIMBERLY INDEPENDENT LABOR UNION FOR SOLIDARITY, ACTIVISM AND NATIONALISM- ORGANIZED LABOR ASSOCIATION IN LINE INDUSTRIES AND AGRICULTURE (KILUSAN-OLALIA) V. HON. FRANKLIN M. DRILON G.R. NO. L-77629 MAY 9, 1990 REGALADO, J. FACTS 1. Kimberly-Clark Philippines, Inc. (KIMBERLY, for brevity) executed a three-year collective bargaining agreement (CBA) with United Kimberly-Clark Employees UnionPhilippine Transport and General Workers' Organization (UKCEU-PTGWO) which expired on June 30, 1986. 2. Within the 60-day freedom period prior to the expiration of and during the negotiations for the renewal of the aforementioned CBA, some members of the bargaining unit formed another union called "Kimberly Independent Labor Union for Solidarity, Activism and Nationalism- Organized Labor Association in Line Industries and Agriculture (KILUSAN-OLALIA). 3. On April 21, 1986, KILUSAN-OLALIA filed a petition for certification election in the Ministry of Labor and Employment (MOLE). KIMBERLY and (UKCEU-PTGWO) did not object to the holding of a certification election but objected to the inclusion of the so-called contractual workers whose employment with KIMBERLY was coursed through an independent contractor, Rank Manpower Company (RANK for short), as among the qualified voters. 4. On June 2, 1986, Med-Arbiter Bonifacio Marasigan, who was handling the certification election case, issued an order declaring those casuals who have worked at least six (6) months as appearing in the payroll months prior to the filing of the instant petition on April 21, 1986 as eligible to vote in the certification election. 5. During the pre-election conference, 64 casual workers were challenged by KIMBERLY and (UKCEU-PTGWO) on the ground that they are not employees, of KIMBERLY but of RANK. 6. It was agreed by all the parties that the 64 voters shall be allowed to cast their votes but that their ballots shall be segregated and subject to challenge proceedings. 7. On July 2, 1986, KILUSAN-OLALIA filed with the med-arbiter a "Protest and Motion to Open and Count Challenged Votes" on the ground that the 64 workers are employees of KIMBERLY within the meaning of Article 212(e) of the Labor Code. 8. On July 7, 1986, KIMBERLY filed an opposition to the protest and motion, asserting that there is no employer-employee relationship between the casual workers and the company. 9. On November 13, 1986, then Minister Sanchez rendered a decision declaring that the other casual employees not performing janitorial and yard maintenance services were deemed labor-only contractual and since labor-only contracting is prohibited, such employees were held to have attained the status of regular employees, the regularization being effective as of the date of the decision. 10. On November 25, 1986, KIMBERLY flied a motion for reconsideration with respect to the regularization of contractual workers. ISSUE Whether those engaged in janitorial or yard maintenance as well as the other casual employees attained the status of regular employee on November 13, 1986. HELD YES. We find and so hold that the former labor minister gravely abused his discretion in holding that those workers not engaged in janitorial or yard maintenance service attained the status of regular employees only on November 13, 1986, which thus deprived them of their constitutionally protected right to vote in the certification election and choose their rightful bargaining representative.The Labor Code defines who are regular employees, as follows: Art. 280. Regular and Casual Employment. — The provisions of written agreement to the contrary not withstanding and regardless of the oral agreements of the parties, an

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That in all things, God may be glorified. employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer, except where the employment has been fixed for a specific project or under the completion or termination of which has been determined at the time of the engagement of the employee or where the work or services to be performed is seasonal in nature and the employment is for the duration of the season. An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided, That any employee who has rendered at least one year of service, whether such service is continuous or broken, shall be considered a regular employee with respect to the activity in which he is employed and his employment shall continue while such activity exists. The law thus provides for two kinds of regular employees, namely: 1. those who are engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer; and 2. those who have rendered at least one year of service, whether continuous or broken, with respect to the activity in which they are employed. The individual petitioners herein who have been adjudged to be regular employees fall under the second category. These are the mechanics, electricians, machinists machine shop helpers, warehouse helpers, painters, carpenters, pipefitters and masons. It is not disputed that these workers have been in the employ of KIMBERLY for more than one year at the time of the filing of the Petition for certification election by KILUSAN-OLALIA. Owing to their length of service with the company, these workers became regular employees, by operation of law, one year after they were employed by KIMBERLY through RANK. While the actual regularization of these employees entails the mechanical act of issuing regular appointment papers and compliance with such other operating procedures as may be adopted by the employer, it is more in keeping with the intent and spirit of the law to rule that the status of regular employment attaches to the casual worker on the day immediately after the end of his first year of service. To rule otherwise, and to instead make their regularization dependent on the happening of some contingency or the fulfillment of certain requirements, is to impose a burden on the employee which is not sanctioned by law. That the first stated position is the situation contemplated and sanctioned by law is further enhanced by the absence of a statutory limitation before regular status can be acquired by a casual employee. The law is explicit. As long as the employee has rendered at least one year of service, he becomes a regular employee with respect to the activity in which he is employed. The law does not provide the qualification that the employee must first be issued a regular appointment or must first be formally declared as such before he can acquire a regular status. Obviously, where the law does not distinguish, no distinction should be drawn.

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63. Capule v. NLRC CAPULE VS. NATIONAL LABOR RELATIONS COMMISSION G.R. NO. 90653. NOVEMBER 12, 1990 GANCAYCO, J. FACTS 1. Private respondent company is engaged in the manufacture of cultures milk which is sold under the brand name "Yakult". 2. Petitioners were hired to cut cogon grass and weeds at the back of the factory building used by private respondents. 3. They were not required to work on fixed schedule and they worked on any day of the week on their own discretion and convenience. 4. The services of the petitioners were terminated by the private respondent on July 13, 1987. 5. Petitioners filed a complaint for illegal dismissal with the NLRC. The latter rendered its decision in favor of petitioners, ruling that they were illegally dismissed and ordered their reinstatement with full bakwages and without loss of seniority rights . ISSUE Whether or not petitioners are regular employees of private respondent HELD NO. the usual business or trade of private respondents is the manufacture of cultured milk. The cutting of the cogon grasses in the premises of its factory is hardly necessary or desirable in the usual business of the private respondents, indeed, it is alien thereto. Thus, petitioners are casual employees who cannot be considered regular employees under Article 280 of the Labor Code. Nevertheless, they maybe considered regular employees if they have rendered services for at least one (1) year when, as in this case, they were dismissed from their employment before the expiration of the one-year period. They cannot lawfully claim that their dismissal was illegal. Indeed, private respondent had shown that the services of the petitioners were found to be unsatisfactory, so, their termination.

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Project Employment

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64. Philippine National Construction Corporation v. NLRC PHILIPPINE NATIONAL CONSTRUCTION CORPORATION V. NLRC GR 85323, JUNE 20, 1989 GRIÑO, AQUINO, J. FACTS 1. The private respondent was employed by PNCC as an oiler from November 4, 1973 until he was terminated on April 20, 1986, on the ground of completion of the project to which he was assigned. 2. The private respondent, in his complaint for illegal dismissal, alleged that he was discharged not for cause, but because the newly designated supervisor, Reynaldo Bonifacio, wanted to put in his own man. ISSUE Whether the private respondent was a member of the work pool, therefore, considered a regular employee (Art. 280, Labor Code), or a project employee, whose employment was co-terminus with the projects to which he was assigned. HELD The private respondent was a member of the work pool and that he was illegally dismissed from his job. Members of a work pool from which a construction company draws its project employees, if considered employee of the construction company while in the work pool, are non-project employees or employees for an indefinite period. If they are employed in a particular project, the completion of the project or any phase thereof will not mean severance of employeremployee relationship. Any employee who has rendered at least one year of service, whether such service is continuous or broken, shall be considered a regular employee with respect to the activity which he is employed and his employment shall continue while such actually exists. (Art. 280, Labor Code.) A project employee is one whose "employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee or where the work or services to be performed is seasonal in nature and the employment is for the duration of the season." (Sec. 280, Labor Code; Sandoval Shipping Inc. vs. NLRC, 136 SCRA 674.) In finding that Porciuncula was a regular employee, the Labor Arbiter noted that it was the petitioner's practice to rehire him after the completion of every project and this re-hiring continued throughout Porciuncula's 13 years of employment in the company. The Labor Arbiter also observed that the petitioner never reported the completion of its projects and the termination of the employees (like Porciuncula) in its finished projects, to the nearest Public Employment Office as required by Policy Instruction No. 20 of the Secretary of Labor. In the case of Ochoco vs. NLRC, 120 SCRA 774, the failure of the employer to report to the nearest employment office the termination of the workers everytime it completed a project was considered by this Court as proof that they were not project employees.

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65. Cartagenas v. Romago Electric Company CARTAGENAS V. ROMAGO ELECTRIC COMPANY GR NO. 82973, SEPTEMBER 15, 1989 GRIÑO-AQUINO, J. FACTS 1. Respondent Romago is a general contractor engaged in contracting and subcontracting of specific building construction projects or undertaking such as electrical, mechanical and civil engineering aspects in the repair of buildings and from other kindred services. 2. Individual complainants and Lawrence Deguit were temporarily laid-off by virtue of a memorandum issued by the respondent. In said memorandum they were also informed that a meeting regarding the resumption of operation will be held on July 16, 1986 and that they will be notified as to when they will resume work. 3. On July 28, 1986, complainants filed the instant case for illegal dismissal but before the respondent could receive a copy of the complaint and the notification and summons issued by the NLRC National Capital Region (actually received only on August 22, 1986, page 4, records) individual complainants re-applied with the respondent and were assigned to work with its project at Robinson-EDSA. ISSUE Whether the petitioners are project employees of the private respondent Romago Electric Company, Inc., as found by the National Labor Relations Commission, or regular employees as found by the Labor Arbiter. HELD As an electrical contractor, the private respondent depends for its business on the contracts it is able to obtain from real estate developers and builders of buildings. Since its work depends on the availability of such contracts or "projects," necessarily the duration of the employment of its work force is not permanent but co-terminus with the projects to which they are assigned and from whose payrolls they are paid. It would be extremely burdensome for their employer who, like them, depends on the availability of projects, if it would have to carry them as permanent employees and pay them wages even if there are no projects for them to work on. We hold, therefore, that the NLRC did not abuse its discretion in finding, based on substantial evidence in the records, that the petitioners are only project workers of the private respondent

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66. Maraquimot and Enero v. NLRC MARAGUINOT AND ENERO V. NLRC GR 120969 JANUARY 22, 1998 DAVIDE, JR. J. FACTS 1. Petitioner Alejandro Maraguinot, Jr. maintains that he was employed by private respondents on 18 July 1989 as part of the filming crew with a salary of P375.00 per week. About four months later, he was designated Assistant Electrician with a weekly salary of P400.00, which was increased to P450.00 in May 1990. In June 1991, he was promoted to the rank of Electrician with a weekly salary of P475.00, which was increased to P539.00 in September 1991. 2. Petitioner Paulino Enero, on his part, claims that private respondents employed him in June 1990 as a member of the shooting crew with a weekly salary of P375.00, which was increased to P425.00 in May 1991, then to P475.00 on 21 December 1991. 3. Petitioners' tasks consisted of loading, unloading and arranging movie equipment in the shooting area as instructed by the cameraman, returning the equipment to Viva Films' warehouse, assisting in the "fixing" of the lighting system, and performing other tasks that the cameraman and/or director may assign. 4. Sometime in May 1992, petitioners sought the assistance of their supervisors, Mrs. Alejandria Cesario, to facilitate their request that private respondents adjust their salary in accordance with the minimum wage law. 5. In June 1992, Mrs. Cesario informed petitioners that Mr. Vic del Rosario would agree to increase their salary only if they signed a blank employment contract. 6. As petitioners refused to sign, private respondents forced Enero to go on leave in June 1992, then refused to take him back when he reported for work on 20 July 1992. 7. Meanwhile, Maraguinot was dropped from the company payroll from 8 to 21 June 1992, but was returned on 22 June 1992. 8. He was again asked to sign a blank employment contract, and when he still refused, private respondents terminated his services on 20 July 1992. Petitioners thus sued for illegal dismissal before the Labor Arbiter. 9. The Labor Arbiter ruled that complainants are the employees of the respondents. The producer cannot be considered as an independent contractor but should be considered only as a labor-only contractor and as such, acts as a mere agent of the real employer, the herein respondent. Respondents even failed to name and specify who are the producers. Also, it is an admitted fact that the complainants received their salaries from the respondents. The Labor Arbiter also declared that complainants were illegally dismissed. 10. Private respondents appealed to the NLRC reversing the Labor Arbiter, then concluded that complainants were “project employees”. ISSUE Are petitioners project employees? HELD Private respondents contend that petitioners were project employees whose employment was automatically terminated with the completion of their respective projects. Petitioners assert that they were regular employees who were illegally dismissed. It may not be ignored, however, that private respondents expressly admitted that petitioners were part of a work pool; and, while petitioners were initially hired possibly as project employees, they had attained the status of regular employees in view if VIVA's conduct. A project employee or a member of a work pool may acquire the status of a regular employee when the following concur: 1) There is a continuous rehiring of project employees even after cessation of a project; and

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That in all things, God may be glorified. 2) The tasks performed by the alleged "project employee" are vital, necessary and indispensable to the usual business or trade of the employer. However, the length of time during which the employee was continuously re-hired is not controlling, but merely serves as a badge of regular employment. In the instant case, the evidence on record shows that petitioner Enero was employed for a total of two (2) years and engaged in at least eighteen (18) projects, while petitioner Maraguinot was employed for some three (3) years and worked on at least twenty-three (23) projects. Moreover, as petitioners' tasks involved, among other chores, the loading, unloading and arranging of movie equipment in the shooting area as instructed by the cameramen, returning the equipment to the Viva Films’ warehouse, and assisting in the “fixing “ of the lighting system, it may not be gainsaid that these tasks were vital, necessary and indispensable to the usual business or trade of the employer. As regards the underscored phrase, it has been held that this is ascertained by considering the nature of the work performed and its relation to the scheme of the particular business or trade in its entirety. Truly, the cessation of construction activities at the end of every project is a foreseeable suspension of work. Of course, no compensation can be demanded from the employer because the stoppage of operations at the end of a project and before the start of a new one is regular and expected by both parties to the labor relations. Similar to the case of regular seasonal employees, the employment relation is not severed by merely being suspended. The employees are, strictly speaking, not separated from services but merely on leave of absence without pay until they are reemployed. Thus we cannot affirm the argument that non-payment of salary or non-inclusion in the payroll and the opportunity to seek other employment denote project employment. While Lao admittedly involved the construction industry, to which Policy Instruction No. 20/Department Order No. 19 regarding work pools specifically applies, there seems to be no impediment to applying the underlying principles to industries other than the construction industry. Neither may it be argued that a substantial distinction exists between the projects undertaken in the construction industry and the motion picture industry. On the contrary, the raison d' etre of both industries concern projects with a foreseeable suspension of work. At this time, we wish to allay any fears that this decision unduly burdens an employer by imposing a duty to re-hire a project employee even after completion of the project for which he was hired. The import of this decision is not to impose a positive and sweeping obligation upon the employer to re-hire project employees. What this decision merely accomplishes is a judicial recognition of the employment status of a project or work pool employee in accordance with what is fait accompli, i.e., the continuous re-hiring by the employer of project or work pool employees who perform tasks necessary or desirable to the employer's usual business or trade. Let it not be said that this decision "coddles" labor, for as Lao has ruled, project or work pool employees who have gained the status of regular employees are subject to the "no work-no pay" principle.

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Seasonal Employment

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67. Mercado, Sr. v. NLRC MERCADO SR. VS. NLRC G.R. NO 79869, SEPTEMBER 5, 1991 PADILLA, J. FACTS 1. Petitioners alleged in their complaint that they were agricultural workers utilized by private respondents in all the agricultural phases of work on the 7 1/2 hectares of ace land and 10 hectares of sugar land owned by the Aurora L. Cruz, Francisco Borja, Leticia C. Borja and Sto. Niño Realty Incorporated. 2. Fortunato Mercado, Sr. and Leon Santillan worked in the farm of private respondents since 1949, Fortunato Mercado, Jr. and Antonio Mercado since 1972 and the rest of the petitioners since 1960 up to April 1979, when they were all allegedly dismissed from their employment. 3. Private respondent Aurora Cruz in her answer to petitioners' complaint denied that said petitioners were her regular employees and instead averred that she engaged their services, through Spouses Fortunato Mercado, Sr. and Rosa Mercado, their "mandarols", that is, persons who take charge in supplying the number of workers needed by owners of various farms, but only to do a particular phase of agricultural work necessary in rice production and/or sugar cane production, after which they would be free to render services to other farm owners who need their services. 4. Respondent Labor Arbiter Luciano P. Aquino ruled in favor of private respondents and held that petitioners were not regular and permanent workers of the private respondents, for the nature of the terms and conditions of their hiring reveal that they were required to perform phases of agricultural work for a definite period of time after which their services would be available to any other farm owner. 5. The NLRC ruled in favor of private respondents affirming the decision of the respondent Labor Arbiter, with the modification of the deletion of the award for financial assistance to petitioners. ISSUE Whether or not petitioners’ employment that continued for so many years could be considered regular and permanent by express provision of Article 280. HELD NO. The contention of petitioners that the second paragraph of Article 280 of the Labor Code should have been applied in their case presents an opportunity to clarify the aforementioned provision of law. The first paragraph of Article 280 answers the question of who are employees. It states that, regardless of any written or oral agreement to the contrary, an employee is deemed regular where he is engaged in necessary or desirable activities in the usual business or trade of the employer, except for project employees. A project employee has been defined to be one whose employment has been fixed for a specific project or undertaking, the completion or termination of which has been determined at the time of the engagement of the employee, or where the work or service to be performed is seasonal in nature and the employment is for the duration of the season as in the present case. The second paragraph of Art. 280 demarcates as "casual" employees, all other employees who do not fan under the definition of the preceding paragraph. The proviso, in said second paragraph, deems as regular employees those "casual" employees who have rendered at least one year of service regardless of the fact that such service may be continuous or broken. Petitioners, in effect, contend that the proviso in the second paragraph of Art. 280 is applicable to their case and that the Labor Arbiter should have considered them regular by virtue of said proviso. The contention is without merit.

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The general rule is that the office of a proviso is to qualify or modify only the phrase immediately preceding it or restrain or limit the generality of the clause that it immediately follows. The proviso is applicable only to the employees who are deemed "casuals" but not to the "project" employees nor the regular employees treated in paragraph one of Art. 280. Clearly, therefore, petitioners being project employees, or, to use the correct term, seasonal employees, their employment legally ends upon completion of the project or the season. The termination of their employment cannot and should not constitute an illegal dismissal.

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Fixed Period Employment

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68. Brent School v. Zamora BRENT SCHOOL VS. ZAMORA G.R. NO. 48494, FEBRUARY 5, 1990 FACTS 1. In virtue of an employment contract Doroteo R. Alegre was engaged as athletic director by Brent School, Inc. at a yearly compensation of P20,000 .00. 2. The contract fixed a specific term for its existence, five (5) years, i.e., from July 18, 1971, the date of execution of the agreement, to July 17,1976. 3. Subsequent subsidiary agreements dated March 15, 1973, August 28, 1973, and September 14, 1974 reiterated the same terms and conditions, including the expiry date, as those contained in the original contract of July 18, 1971. 4. When the employment contract was signed between Brent School and Alegre (before the Labor Code was Passed) it was perfectly valid for them to enter into stipulations fixing the duration thereof. 5. Some three months before the expiration of the stipulated period, or more precisely on April 20, 1976, Alegre was given a copy of the report filed by Brent School with the Department of Labor advising of the termination of his services effective on July 16, 1976. The stated ground for the termination was, "completion of contract, expiration of the definite period of employment." 6. However, at the investigation conducted by a Labor Conciliator of said report of termination of his services, Alegre protested the announced termination of his employment. He argued that although his contract did stipulate that the same would terminate on July 17,1976, since his services were necessary and desirable in the usual business of his employer, and his employment had lasted for five years, he had acquired the status of a regular employee and could not be removed except for valid cause.

ISSUE Whether or not Alegre was lawfully terminated and that he is entitled to reinstatement. HELD NO. Article 280 of the Labor Code, under a narrow and literal interpretation, not only fails to exhaust the gamut of employment contracts to which the lack of a fixed period would be an anomaly, but would also appear to restrict, without reasonable. distinctions, the right of an employee to freely stipulate with his employer the duration of his engagement, it logically follows that such a literal interpretation should be eschewed or avoided. The law must be given a reasonable interpretation, to preclude absurdity in its application. Outlawing the whole concept of term employment and subverting to boot the principle of freedom of contract to remedy the evil of employers' using it as a means to prevent their employees from obtaining security of tenure is like cutting off the nose to spite the face or, more relevantly, curing a headache by lopping off the head. Article 280 does not proscribe or prohibit an employment contract with a fixed period, provided the same is entered into by the parties without any force, duress or improper pressure being brought to bear upon the employee and absent any other circumstance vitiating consent. It does not necessarily follow that where the duties of the employee consist of activities usually necessary or desirable in the usual business of the employer, the parties are forbidden from agreeing on a period of time for the performance of such activities. There is thus nothing essentially contradictory between a definite period of employment and the nature of the employee’s duties.

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69. Cielo v. NLRC CIELO VS. NLRC G.R. NO. 78693, JANUARY, 1991 FACTS 1. Petitioner was engaged as a truck driver of private respondent Henry Lei Trucking Company. 2. They entered into an agreement and it provides under paragraph 1 “That the term of this Agreement is six (6) months from and after the execution hereof, unless otherwise earlier terminated at the option of either party. It also provides under paragraph 2 “that there is no employer/employee relationship between the parties, the nature of this Agreement being contractual. 3. The agreement was supposed to have commenced on June 30 1984, and to end on December 31, 1984. 4. On December 22, 1984: however, the petitioner was formally notified by the private respondent of the termination of his services on the ground of expiration of their contract. 5. Soon thereafter, on January 22, 1985, the petitioner filed his complaint with the Ministry of Labor and Employment. 6. The private respondent rests its case on the agreement and maintains that the labor laws are not applicable because the relations of the parties are governed by their voluntary stipulations. The contract having expired, it was the prerogative of the trucking company to renew it or not as it saw fit. ISSUE Whether or not the petitioner was a regular employee. HELD YES. The private respondent's intention is obvious. There is no question that the purpose behind these individual contracts was to evade the application of the labor laws by making it appear that the drivers of the trucking company were not its regular employees. Under these arrangements, the private respondent hoped to be able to terminate the services of the drivers without the inhibitions of the Labor Code. All it had to do was refuse to renew the agreements, which, significantly, were uniformly limited to a six-month period. No cause had to be established because such renewal was subject to the discretion of the parties. In fact, the private respondent did not even have to wait for the expiration of the contract as it was there provided that it could be "earlier terminated at the option of either party." By this clever scheme, the private respondent could also prevent the drivers from becoming regular employees and thus be entitled to security of tenure and other benefits, such as a minimum wage, cost-of-living allowances, vacation and sick leaves, holiday pay, and other statutory requirements. The private respondent argues that there was nothing wrong with the affidavit because all the affiant acknowledged therein was full payment of the amount due him under the agreement. The petitioner was a regular employee of the private respondent. The private respondent is engaged in the trucking business as a hauler of cattle, crops and other cargo for the Philippine Packing Corporation. This business requires the services of drivers, and continuously because the work is not seasonal, nor is it limited to a single undertaking or operation. Even if ostensibly hired for a fixed period, the petitioner should be considered a regular employee of the private respondent, conformably to the 1st paragraph of Article 280 of the Labor Code providing as follows: Art. 280. Regular and Casual Employment. -The provision of written agreement to the contrary notwithstanding and regardless: of the oral agreement of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer, except where the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the

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70. A.M. Oreta and Company v. NLRC A.M. ORETA & CO., INC. VS. NATIONAL LABOR RELATIONS COMMISSION G.R. NO. 74004, AUGUST 10, 1989 MEDIALDEA, J. FACTS 1. Private respondent Grulla was engaged by Engineering Construction and Industrial Development Company (ENDECO) through A.M. Oreta and Co., Inc., as a carpenter in its projects in Jeddah, Saudi Arabia. The contract of employment, which was entered into June 11, 1980 was for a period of twelve (12) months. 2. On August 15, 1980, Grulla met an accident which fractured his lumbar vertebra while working at the jobsite. He was confined to the New Jeddah Clinic for twelve (12) days. On August 27, 1980, Grulla was discharged from the hospital and was told that he could resume his normal duties after undergoing physical therapy for two weeks. 3. On September 18, 1980, respondent Grulla reported back to his Project Manager and presented to the latter a medical certificate declaring the former already fit for work. Since then, he started working again until he received a notice of termination of his employment on October 9, 1980. 4. In December, 1981, respondent Grulla filed a complaint for illegal dismissal, recovery of medical benefits, unpaid wages for the unexpired ten (10) months of his contract and the sum of P1,000.00 as reimbursement of medical expenses against A.M. Oreta and Company, Inc., and Engineering Construction and Industrial Development Co. (ENDECO) with the Philippine Overseas Employment Administration (POEA). 5. The petitioner A.M. Oreta and Company, Inc and ENDECO filed their answer and alleged that the contract of employment entered into between petitioners and Grulla provides, as one of the grounds for termination, violations of the rules and regulations promulgated by the contractor; and that Grulla was dismissed because he has not performed his duties satisfactorally within the probationary period of three months. 6. POEA held that complainant’s dismissal was illegal. NLRC affirmed the decision of POEA. ISSUE Was private respondent Grulla’s employment probationary rendering his dismissal valid? HELD Petitioner contends that the respondent Grulla was validly dismissed because the latter was still a probationary employee; and that his dismissal was justified on the basis of his unsatisfactory performance of his job during the probationary period. This contention has no merit. Petitioner admitted that respondent Grulla was employed in the company as carpenter for a period of twelve (12) months before he was dismissed. A perusal of the employment contract reveals that although the period of employment of respondent Grulla is twelve (12) months, the contract is renewable subject to future agreements of the parties. It is clear from the employment contract that the respondent Grulla was hired by the company as a regular employee and not just mere probationary employee. Article 281 of the Labor Code is clear to the effect that in all cases involving employees engaged on probationary period basis, the employer shall make known to the employee at the time he is hired, the standards by which he will qualify as a regular employee. Nowhere in the employment contract executed between petitioner company and respondent Grulla is there a stipulation that the latter shall undergo a probationary period for three months before he can qualify as a regular employee. There is also no evidence on record showing that the respondent Grulla has been appraised of his probationary status and the requirements which he should comply in order to be a regular employee. In the absence of this requisites, there is justification in concluding that respondent Grulla was a regular employee at the time he was dismissed by petitioner. As such, he is entitled to security of tenure during his period

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71. Buiser v. Hon. Vicente Loegardo ILUMINADA VER BUISER, ET AL. VS. VICENTE LEOGARDO, ET AL. G.R. NO. L-63316, JULY 31, 1984 GUERRERO, J. FACTS 1. Petitioners were employed by the private respondent GENERAL TELEPHONE DIRECTORY COMPANY as sales representatives and charged with the duty of soliciting advertisements for inclusion in a telephone directory. 2. The records show that petitioners Iluminada Ver Buiser and Ma. Mercedes P. Intengan entered into an "Employment Contract (on Probationary Status)" with private respondent, a corporation engaged in the business of publication and circulation of the directory of the Philippine Long Distance Telephone Company. Their "Employment Contract (On Probationary Status)" provided among others that: The company hereby employs the employee as telephone representative on a probationary status for a period of eighteen (18) months, i.e. from May 1980 to October 1981, inclusive. It is understood that darung the probationary period of employment, the Employee may be terminated at the pleasure of the company without the necessity of giving notice of termination or the payment of termination pay. The Employee recognizes the fact that the nature of the telephone sales representative's job is such that the company would be able to determine his true character, conduct and selling capabilities only after the publication of the directory, and that it takes about eighteen (18) months before his worth as a telephone saw representative can be fully evaluated inasmuch as the advertisement solicited by him for a particular year are published in the directory only the following year. 3. Corollary to this, the private respondent prescribed sales quotas to be accomplished or met by the petitioners. Failing to meet their respective sales quotas, the petitioners were dismissed from the service by the private respondent. 4. Thus petitioners filed with the National Capital Region, Ministry of Labor and Employment, a complaint for illegal dismissal with claims for backwages, earned commissions and other benefits. The Regional Director dismissed the complaints of the petitioners. On appeal, Deputy Minister Vicente Leogardo, Jr. of the Ministry of Labor affirmed the Regional Director's Order ISSUE Was there illegal dismissal in that probationary employment may not exceed 6 months? HELD Generally, the probationary period of employment is limited to six (6) months. The exception to this general rule is When the parties to an employment contract may agree otherwise, such as when the same is established by company policy or when the same is required by the nature of work to be performed by the employee. In the latter case, there is recognition of the exercise of managerial prerogatives in requiring a longer period of probationary employment, such as in the present case where the probationary period was set for eighteen (18) months, i.e. from May, 1980 to October, 1981 inclusive, especially where the employee must learn a particular kind of work such as selling, or when the job requires certain qualifications, skills, experience or training. In the case at bar, it is shown that private respondent Company needs at least eighteen (18) months to determine the character and selling capabilities of the petitioners as sales representatives. The Company is engaged in advertisement and publication in the Yellow Pages of the PLDT Telephone Directories. Publication of solicited ads are only made a year after the sale has been made and only then win the company be able to evaluate the efficiency, conduct, and selling ability of its sales representatives, the evaluation being based on the published ads. Moreover, an eighteen month probationary period is

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72. San Miguel Brewery Sales v. Ople SAN MIGUEL BREWERY SALES FORCE UNION (PTGWO) V. OPLE GR 53515, FEBRUARY 8, 1989 GRIÑO, AQUINO, J. FACTS 1. In September 1979, the company introduced a marketing scheme known as the "Complementary Distribution System" (CDS) whereby its beer products were offered for sale directly to wholesalers through San Miguel's sales offices. 2. The labor union (herein petitioner) filed a complaint for unfair labor practice in the Ministry of Labor, with a notice of strike on the ground that the CDS was contrary to the existing marketing scheme whereby the Route Salesmen were assigned specific territories within which to sell their stocks of beer, and wholesalers had to buy beer products from them, not from the company. 3. It was alleged that the new marketing scheme violates Section 1, Article IV of the collective bargaining agreement because the introduction of the CDS would reduce the take-home pay of the salesmen and their truck helpers for the company would be unfairly competing with them. 4. The labor union filed a complaint in the Minister of Labor. The Minister of Labor stated that it is undisputable that the establishment of such scheme was part of its overall plan to improve efficiency and economy and at the same time gain profit to the highest. While it may be admitted that the introduction of new sales plan somewhat disturbed the present set-up, the change however was too insignificant as to convince this Office to interpret that the innovation interferred with the worker's right to self-organization. Therefore, their petition was dismissed. I ISSUE Whether the CDS is a valid exercise of management prerogatives. HELD Public respondent was correct in holding that the CDS is a valid exercise of management prerogatives: Except as limited by special laws, an employer is free to regulate, according to his own discretion and judgment, all aspects of employment, including hiring, work assignments, working methods, time, place and manner of work, tools to be used, processes to be followed, supervision of workers, working regulations, transfer of employees, work supervision, lay-off of workers and the discipline, dismissal and recall of work. Every business enterprise endeavors to increase its profits. In the process, it may adopt or devise means designed towards that goal. In Abbott Laboratories vs. NLRC, 154 SCRA 713, We ruled: 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. 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, this Court will uphold them San Miguel Corporation's offer to compensate the members of its sales force who will be adversely affected by the implementation of the CDS by paying them a so-called "back adjustment commission" to make up for the commissions they might lose as a result of the CDS proves the company's good faith and lack of intention to bust their union.

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73. International Catholic Migration Commission v. NLRC INTERNATIONAL CATHOLIC MIGRATION COMMISSION VS. NLRC GR 72222, JANUARY 30, 1989 FACTS 1. Petitioner ICMC engaged the services of Bernadette on January 24, 1983 as a probationary cultural orientation teacher. 2. Three months later, petitioner ICMC informed her, orally and in writing, that her services were being terminated for her failure to meet the prescribed standards as reflected in the performance evaluation by her supervisors. As a result, Bernadette filed a complaint for illegal dismissal and prayed for reinstatement with back wages, exemplary and moral damages. 3. The labor arbiter dismissed the complaint as well as the complaint for damages but ordered ICMC to pay her P6,000 as payment for the last three months of the agreed employment period pursuant to her verbal contract of employment. Both parties appealed. 4. The NLRC dismissed both appeals and sustained the labor arbiter’s decision. ISSUE Whether or not petitioner ICMC must pay Bernadette her salary for the unexpired portion of her six-month probationary employment. HELD NO. There was no circumvention of the rights of Bernadette when she was informed of her termination. Her dismissal was not arbitrary or whimsical. She was duly notified that her services were terminated for failure to meet the prescribed standards. The dissatisfaction of petitioner ICMC over her performance is a legitimate exercise of its prerogative to select whom to hire or refuse employment for the success of its program or undertaking. Moreover, failure to qualify as a regular employee in accordance with the reasonable standards of the employer is a just cause for terminating a probationary employee specially recognized under Article 281 of the Labor Code.

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74. Mercury Drug Corporation v. NLRC MERCURY DRUG CORPORATION V. NATIONAL LABOR RELATIONS COMMISSION 177 SCRA 580 FERNAN, CJ FACTS 1. Private respondent Ladisla was employed by petitioner Mercury Drug Corporation as a Stock Analyst. 2. He had been with the company for at least two years when he was apprehended by the representatives of Mercury Drug while in the act of pilfering company property. 3. Private respondent admitted his guilt to the investigating representatives of petitioner company and executed a handwritten admission. 4. Petitioner, while simultaneously placing private respondent on preventive suspension, filed before the Department of Labor an application for the termination of private respondent on the grounds of dishonesty and breach of trust. 5. Private respondent opposed the aforesaid application alleging, among others, that his suspension and proposed dismissal were unfounded and baseless and that he was not given the opportunity to be heard nor allowed to explain his side before he was summarily suspended. 6. Petitioner also filed a criminal case against private respondent for attempted qualified theft but the same was dismissed. Later, the case was re-filed with the Regional Trial Court and private respondent was convicted for the crime of simple theft. 7. The Labor Arbiter rendered its decision sustaining the validity of private respondent’s dismissal and granting petitioner’s clearance but this was reversed by the National Labor Relations Commission. ISSUE Whether or not petitioner company has reasonable ground to terminate the employment of private respondent Ladisla. HELD Dismissal of a dishonest employee is to the best interest not only of the management but also of labor. As a measure of self-protection against acts inimical to its interest, a company has the right to dismiss its erring employees. An employer cannot be compelled to continue in employment an employee guilty of acts inimical to its interest, justifying loss of confidence in him. The law does not impose unjust situations on either labor or management. We therefore find justification in the termination of private respondent Ladisla’s employment by petitioner Mercury Drug Corporation.

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75. Manila Electric Company v. NLRC MANILA ELECTRIC COMPANY VS. NLRC 175 SCRA 277 MEDIALDEA, J. FACTS 1. Private respondent Signo was employed in petitioner company as supervisorleadman since January 1963 up to the time when his services were terminated on May 18,1983. 2. In 1981, a certain Fernando de Lara filed an application with the petitioner company for electrical services at his residence. 3. Private respondent Signo facilitated the processing of the said application as well as the required documentation for said application. In consideration thereof, private respondent received from De Lara the amount of P7,000. Signo thereafter filed the application for electric services with the Power Sales Division of the company. 4. Since De Lara’s residence was not yet serviceable, certain employees of the company, including respondent Signo, made it appear in the application that the sarisari store at the corner of Marcos Highway, an entrance to the subdivision, is applicant de Lara’s establishment, which, in reality is not owned by the latter. 5. As a result of this scheme, the electrical connections to de Lara’s residence were installed and made possible. However, due to the fault of Power Sales Division of petitioner company, Fernando de Lara was not billed for more than a year. 6. Petitioner conducted an investigation of the matter and found respondent Signo responsible for the said irregularity in the installation. Thus, the services of the latter were terminated. ISSUE Whether or not respondent Signo should be dismissed from petitioner company on grounds of serious misconduct and loss of trust and confidence. HELD There is no question that herein respondent Signo is guilty of breach of trust and violation of company rules, the penalty for which ranges from reprimand to dismissal depending on the gravity of the offense. However, as earlier stated, the respondent Commission and the Labor Arbiter found that dismissal should not be meted to respondent Signo considering his 20 years of service in the employ of petitioner, without any previous derogatory record, in addition to the fact that petitioner company had awarded him in the past, 2 commendations for honesty. If ever the petitioner suffered losses resulting from the unlisted electric consumption of de Lara, this was found to be the fault of petitioner’s Power Sales Division. We find no reason to disturb these findings. Well – established is the principle that findings of administrative agencies which have acquired expertise because their jurisdiction is confined to specific matters are generally accorded not only respect but even finality. Judicial review by this Court on labor cases does not go so far as to evaluated the sufficiency of the evidence upon which the proper labor officer or office based his or its determination but is limited to issues of jurisdiction or grave abuse of discretion. This Court has held time and again, in a number of decisions, that notwithstanding the existence of a valid cause for dismissal, such as breach of trust by an employee, nevertheless, dismissal should not be imposed, as it is too severe a penalty if the latter has been employed for a considerable length of time in the service of his employer.

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76. Filipro, Inc. v. NLRC FILIPRO, INCORPORATED VS. NATIONAL LABOR RELATIONS COMMISSIONS 145 SCRA 123 ALAMPAY, J.: FACTS 1. Private respondent Danila C. Parino was hired as salesman of Petitioner Filipro, Inc. After undergoing mandatory probationary period of 6 months, he became a regular employee. 2. Sometime in the latter part of March, 1980, petitioner received several telephone complaints from its customers and its dealers in the area assigned to private respondent. They averred that they were not being served by the latter. 3. These complaints led to diverse investigations conducted on March 27 and 29, 1980 by Mr. Raymond P. Velasco, petitioner’s sales supervisor for the Metro Manila area. 4. Mr. Velasco discovered that private respondent committed “table distribution” by misreporting fictitious sales and that the latter sought monetary benefits from one dealer who in return would be extended more favorable treatment than other customers. 5. For this initial infraction, private respondent was suspended for a period of 2 weeks beginning June 28 until July 13, 1979 and warned that a repetition thereof would merit a more sever penalty. ISSUE Whether or not the private respondent should be dismissed. HELD The Court differed strongly and disagreed with public respondent NLRC’s judgment. Although the Court often takes a lenient view when it considers the employee to be in a less advantageous position as his employer, this consideration, however, should not be applied in this case where there is clearly an attendant breach of trust and confidence almost equivalent to dishonesty and infidelity in the handling of the company’s products. The irregularities done by private respondent have far reaching effect. Private respondent, as a salesman charged with the distribution of petitioner’s products is the principal person with whom the buyers of petitioner’s products have to deal with. In the final analysis, the consideration, goodwill, and marketability of the products of petitioner company would depend on the fairness and behavior displayed by private respondent. He is a key man and the importance of his role in the organization cannot be minimized. His misdeeds cannot be glossed over as trivial. The initial decision of the Labor Arbiter decreeing the dismissal of private respondent herein is fully justified by the provisions of Article 283 © of the Labor Code, already above quoted. It is not moral for a salesman to extend treatment to a few customers for a fee.

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77. Gold City Integrated Port Services v. NLRC GOLD CITY INTEGRATED PORT SERVICES, INC. VS. NLRC 189 SCRA 811 FACTS 1. Private respondent Jose Bacalso was employed as an admeasurer by petitioner Gold City. 2. He was suspected by management of undermeasuring cargo. Hence, the cargo control officer ordered two other admeasurers to re-measure three pallets of bananas which had already been measured by private respondent. 3. As it turned out, the re-measurement revealed that respondent had under-measured the bananas by 1.427 cubic meters. 4. Feeling insulted by the re-measurement, private respondent confronted and quarreled with Mabalacad, on of the two admeasurers, in the office of Chief Admeasurer Guangco. Guangco told the two to stop fighting and behave properly but this order was ignored and a fistfight ensued. 5. Thereafter, private respondent was charged with assaulting a co-employee and falsifying reports and records of the company. He was then preventively suspended pending investigation of the grievance committee. 6. The committee recommended a forty-five day suspension but apparently, Guanco and Mabalacad did not consider suspension an adequate sanction. 7. Subsequently, private respondent received a notice of termination upon the grounds of assaulting a co-employee and of insubordination. 8. Private respondent filed a complaint for illegal dismissal with the Labor Arbiter, which granted such motion but did not order respondent’s reinstatement. 9. On appeal, the NLRC modified the ruling of the Labor Arbiter. ISSUE 1. Whether or not private respondent was denied due process in the course of his dismissal. 2. Whether or not private respondent was dismissed for a just cause. HELD It must be noted that petitioner did not properly inform private respondent of all the infractions of company regulations which subsequently became the justification for his dismissal. After being preventively suspended, he was charged with assaulting a coemployee and falsifying reports and records of the company relating to his duties. But it came to pass that when private respondent received his notice of termination, the causes therefor were stated as assault on a co-employee and insubordination. The Court considers that there was here at least a partial deprivation of private respondent’s right to procedural due process. He could not be expected adequately to defend himself as he was not fully or correctly informed of the charges against him which management intend to prove. It is less than fair for management to charge an employee with one offense and then to dismiss him for having committed another offense with which he had not been charged against and which he was therefore unable adequately to defend himself. Willful disobedience of the employer’s lawful orders, as a just cause for the dismissal of an employee, envisages the concurrence of at least two requisites: that the employee’s assailed conduct must have been willful or intentional, the willfulness being characterized by a “wrongful and perverse attitude”; and the order violated must have been reasonable, lawful, made known to the employee and must pertain to the duties which he had been engaged to discharge. Both requisites are present in the instant case. It does not follow, however, that private respondent’s services were lawfully terminated. We believe that not every case of insubordination id reasonably penalized with dismissal. For one thing, Article 282 (a) of the Labor Code refers to “serious misconduct or willful disobedience. There must be reasonably proportionality between the willful disobedience by the employee and the penalty imposed therefor.

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78. Abbot Laboratories v. NLRC ABBOT LABORATORIES PHILIPPINES, INC. V. NLRC 154 SCRA 713 J. GUTIERREZ, JR. FACTS 1. Albert Bobadilla was a professional medical representative (PMR) of petitioner Abbott Laboratories (Phils.) Inc. and was assigned to cover the sales territory comprising of Sta. Cruz, Binondo and a part of Quiapo and Divisoria. 2. It has been a policy and established practice of petitioner that the PMRs hired are those who are willing to take provincial assignments. In Bobadilla’s application for employment, he agreed that he will accept assignment in the provinces and/or cities anywhere in the Philippines and that he is willing and can move into and live in the territory assigned to him. 3. Later on, Bobadilla was informed that he was being transferred to the newly opened Cagayan territory comprising the provinces of Cagayan, Nueva Vizcaya and Isabela. 4. Bobadilla objected to the transfer on the ground that it was not only a demotion but also personal and punitive in nature without basis legally and factually. 5. Bobadilla was given a deadline to comply with the transfer order otherwise he would be dropped from the payroll for having abandoned his job but he failed to report to his assignment. 6. Subsequently, Bobadilla filed a complaint against petitioner. The Labor Arbiter dismissed the complaint. On appeal, the NLRC entered a new decision ordering Bobadilla’s reinstatement with full backwages. ISSUE Whether or not Bobadilla could be validly dismissed from his employment on the ground of insubordination fro refusing to accept his new assignment HELD YES. As a general rule, the right to transfer or reassign an employee is recognized as an employer’s exclusive right and the prerogative of the management. Abbott, in accordance with the demands and requirements of its marketing and sales operations, adopted a policy to hire only sales applicants who are willing to accept assignments in the provinces anywhere in the Philippines, and to move into and live in the territory assigned to them, Bobadilla was precisely hired because he manifested at the outset as a job applicant his willingness to follow the conditions of his employment. Moreover, he was selected as PMR for the region primarily because he was a veteran and seasoned PMR who can operate immediately with minimum training and supervision. Thus, the judgment to transfer is valid and not attended by malice. Therefore, Bobadilla had no valid reason to disobey the order of transfer. He has tacitly given his consent thereto when he acceded to the petitioner’s policy of hiring sales staff who are willing to be assigned anywhere in the Philippines which is demanded by petitioner’s business.

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79. Homwowners Savings and Loan Association v. NLRC HOMEOWNERS SAVINGS AND LOAN ASSOCIATION, INC. VS. NLRC 262 SCRA 406 J. HERMOSISIMA, JR. FACTS 1. Private respondent Marilyn Cabatbat a Certified Public Accountant employed as a Branch Accountant in petitioner’s branch office in San Carlos, Pangasinan. 2. On 1981, she was re-assigned to the Sta. Barbara, Pangasinan branch office of petitioner. After brief stint in Sta. Barbara, she was returned to her old post in San Carlos City, for the same position. 3. Petitioner issued a memorandum announcing management’s decision to promote five (5) junior officers and to move four (4) of its employees to new assignments. Private respondent was among those moved from her old post in San Carlos branch. 4. She was transferred to the petitioner’s branch in Urdaneta, also in Pangasinan. Both the promoted and the transfer employees received corresponding increases in their salaries. 5. Private respondent made a letter requesting for the deferment of her new assignment, citing as her reason the fact that she was on her sixth month of pregnancy. The request was granted. 6. After private respondent’s delivery, petitioner again ordered private respondent to report to her new assignment. She again requested that the order to re-assign her be reconsidered because of some very personal reasons. She protested that her new assignment will entail additional expenses and physical exhaustion as Urdaneta is too far for her to commute everyday. 7. Thereafter, she wrote petitioner a letter, this time bluntly refusing her assignment on the pretext that her new assignment was a promotion, in which case, she has the option to reject or accept the same. She was given a warning by petitioner that her continued defiance will be dealt with according to law. However, she continued reporting to the San Carlos branch. 8. Private respondent was issued a notice of termination. She then filed a complaint for illegal dismissal against petitioner. Labor Arbiter dismissed the complaint, which was reversed on appeal to the NLRC. Hence, this petition. ISSUE 1. Whether or not private respondent’s re-assignment from San Carlos branch to Urdaneta involved a promotion which she can rightfully decline without being guilty of willful disobedience, a just cause for termination. 2. Whether or not she was illegally dismissed. HELD 1. NO. A cursory reading of the memorandum unmistakably shows that Marilyn Cabatbat is one among the four employees that was considered for movement from the San Carlos branch to Urdaneta branch with no corresponding change in her position as branch accountant. Henceforth, the clear intention of the petitioner corporation was merely to transfer, and not to promote, the private respondent to a new post. 2. NO. Of relevant significance is the right of the employer to transfer employees in their work station. It is the employer’s prerogative, based on its assessment and perception of its employees’ qualifications, aptitudes and competence to move them around in the various areas of its business operations in order to ascertain where they will function with maximum benefit to the company. The rationale for this rule is that an employee’s right to security of tenure does not give him such a vested right in his position as would deprive the company of its prerogative to change his assignment or transfer him where he will be most useful. Of course, the managerial prerogative must be exercised without grave abuse of discretion and putting to mind the basic elements of justice and fair play. Thus, it cannot be used as a subterfuge by the employer to rid himself of an undesirable worker nor to penalize an employee

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That in all things, God may be glorified. for his union activities and thereby defeat his right to self-organization. But the transfer can be upheld when there is no showing that it is unnecessary, inconvenient and prejudicial to the displaced employee. The case at bench is bereft of any circumstance that would indicate that petitioner’s decision to transfer private respondent to Urdaneta branch was made with grave abuse of discretion. The reason for her transfer was “due to the exigency to uplift the operational efficiency of Urdaneta branch”. This was the very same situation the Court faced in Philippine Telegraph and Telephone Corp. vs. Laplana. In that case, the employee Laplana, was a cashier at the Baguio City branch of PT&T who was directed to transfer tpo the company’s branch office at Laoag City. The employee refused the transfer averring that it will involve additional expenses and it will be a big sacrifice for being away from her family which might adversely affect her efficiency. In ruling for the employer, the Court upheld the transfer from one city to another within the country as valid as long as there is no bad faith on the part of the employer. Surely, Cabatbat is in a better position that Laplana. The distance between her new assignment in Urdaneta Pangasinan and her place of residence is only about 30 kilometers while the distance between Baguio and Laoag City is definitely beyond 30 kilometers. Since the Court ruled that the transfer of Laplana from Baguio to Laoag was valid, we see no reason to resolve that the transfer of Cabatbat from San Carlos to Urdaneta is improper, absent any showing of bad faith on the part of the employer. Prtivate respondent’s refusal to obey the transfer order constitutes willful disobedience of a lawful order of her employer sanctioned under Article 282 of the Lsbor Code, and therefore, warrants dismissal. The decision of NLRC is nullified and set aside. The decision of the Labor Arbiter is reinstated.

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80. Dosch v. NLRC and Northwest Airlines DOSCH VS. NATIONAL LABOR RELATIONS COMMISSION G.R. NO. L-51182 JULY 5, 1983 PONENTE: GUERRERO, J. FACTS 1. Petitioner Helmut Dosch, an American citizen married to a Filipina, was the resident Manager of Northwest Airlines, Inc. in the Philippines. 2. Sometime in 1975, he received an inter-office communication from R.C. Jenkins, Northwest’s Vice President, promoting him to the position of Director of International Sales and transferring him to Northwest’s General Office in Minneapolis, USA., effective on the same day. 3. Petitioner, acknowledging the receipt, expressed his appreciation for the promotion and at the same time regretted that “for personal reasons and reasons involving my family, I am unable to accept a transfer from the Philippines”. 4. The Vice President advised petitioner that “in view of the foregoing, your status as an employee of the company ceased on the close of business, and the company considers your letter to be a resignation without notice. 5. Northwest filed a Report on resignation of Managerial Employee before the Department of Labor. 6. The Report was contested by the petitioner and was thus certified to the NLRC for compulsory arbitration. 7. The Labor Arbiter rendered a decision ordering Northwest to reinstate petitioner. Respondent appealed to the NLRC which reversed the decision. ISSUE 1. Whether or not the transfer was a valid exercise of management prerogative. 2. Whether or not the refusal of petitioner to accept the letter of Northwest constitutes insubordination which is a valid cause for his dismissal. HELD 1. NO. The Jenkins letter directing the promotion of the petitioner from his position as Philippine manager to Director of International Sales in Minneapolis, USA is not a mere transfer order alone but it is more in the nature of a promotion, the former being merely incidental to such promotion. A transfer is a movement from one position to another of equivalent rank, level or salary, without break in the service. Promotion, on the other hand, is the advancement from one position to another with an increase in duties and responsibilities as authorized by law, and usually accompanied by an increase in salary. Whereas a promotion denotes a scalar ascent of a senior officer or employee to another position, higher either in rank or salary, transfer refers to lateral movement from one position to another, of equivalent rank, level or salary. There is no law that compels an employee to accept a promotion, as is in the nature of a gift or a reward, which a person has a right to refuse. When petitioner refused to accept his promotion, he was exercising a right and cannot be punished for it as qui jure suo utitur neminem laedit. He who uses his own legal right injures no one. There can be no dispute that the constitutional guarantee of security of tenure mandated under the Constitution applies to all employees and laborers, whether in the government service or in the private sector. The fact that petitioner is a managerial employee does not by itself exclude him from this protection. Even a manager in a private concern has the right to be secure in his position, to decline a promotion where, although the promotion carries an increase in his salary and rank but results in his transfer to a new place of assignment or station and away from his family. Such an order constitutes removal without just cause and is illegal. Nor can the removal be justified on the ground of loss of confidence as now claimed by

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That in all things, God may be glorified. private respondent, insisting that by petitioner’s alleged contumacious refusal to obey the transfer, said petitioner was guilty or insubordination. 2. NO. Neither is the other ground alleged by Northwest in dismissing petitioner which is loss of confidence, supported by evidence. The fact that Northwest wanted to promote petitioner to Director of International Sales indicated that Northwest had full confidence in petitioner. The outright dismissal of petitioner from his position as Manager-Philippines of Northwest is much too severe, considering the length of service that petitioner rendered for eleven years. While a managerial employee may be dismissed merely on the ground of loss of confidence, the matter of determining whether the cause for dismissing an employee is justified on ground of loss of confidence, cannot be left entirely to the employer. The charges against petitioner were not fully substantiated, and there can be no valid reason for said loss of confidence. Justice and equity call for petitioner’s reinstatement The decision of NLRC is reversed and set aside and the decision of the Labor Arbiter ordering the petitioner’s reinstatement to his former position with full back wages, is reinstated.

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81. Philippine Telegraph and Telephone Corp. v. CA PHILIPPINE TELEGRAPH & TELEPHONE CORPORATION V. COURT OF APPEALS 412 SCRA 263 CALLEJO, SR., J.: FACTS 1. The petitioner is a domestic corporation engaged in the business of providing telegraph and communication services thru its branches all over the country. 2. Pursuant to its Relocation and Restructuring Program, private respondents and other petitioner’s employees were directed to “relocate” and report to their respective new PT&T Branches. 3. The petitioner offered benefits and allowances to those employees who would agree to be transferred under its new program. 4. The private respondents rejected the petitioner’s offer as it would cause enormous difficulties to them particularly the separation from their respective families. 5. Dissatisfied with the explanation, the petitioner considered the private respondents’ refusal as insubordination and willful disobedience to a lawful order; hence, the private respondents were dismissed from their work. 6. They forthwith filed their respective complaints against the petitioner before the appropriate sub-regional branches of the NLRC. 7. A complaint against the petitioner for illegal dismissal and unfair labor practice was then filed. The Labor Arbiter dismissed the complaint, which was thereafter reversed by the NLRC ruling that petitioner illegally dismissed the private respondents. ISSUE Whether or not petitioner illegally dismissed the private respondents. HELD YES. An employee cannot be promoted, even if merely as a result of a transfer, without his consent. A transfer that results in promotion or demotion, advancement or reduction or a transfer that aims to ‘lure the employee away from his permanent position cannot be done without the employees’ consent. there is no law that compels an employee to accept a promotion for the reason that a promotion is in the nature of a gift or reward, which a person has a right to refuse. Hence, the exercise by the private respondents of their right cannot be considered in law as insubordination, or willful disobedience of a lawful order of the employer. As such, there was no valid cause for the private respondent’s dismissal. As the questioned dismissal is not based on any of the just or valid grounds under Article 282 of the Labor Code, the NLRC correctly ordered the private respondent’s reinstatement without loss of seniority rights and the payment of backwages from the time of their dismissal up to their actual reinstatement.

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82. Citibank v. Gatchalian CITIBANK, N.A. V. GATCHALIAN 240 SCRA 212 PUNO, J.: FACTS 1. Respondent Llonillo, together with Teresita Supnad, her co-employee and Florence Verendia, an employee of Asian-Pacific Broadcasting Company, Inc. (APBCI), were implicated in a scheme to defraud petitioner bank. 2. Petitioner bank received 31 applications from alleged APBCI employees for the issuance of Citibank credit cards, known as Mastercard. The applications were approved and the corresponding new and unsigned cards were issued after verifying the applications by a Citibank employee from Verendia, as secretary of the Geneneral Manager of APBCI. 3. Petitioner bank’s policy is for new and unsigned credit cards to be released only to cardholders concerned or their duly authorized representatives. 4. However, a Citibank employee may himself take delivery of new and unsigned credit cards after accomplishing a Card Pull-Out Request Form wherein the employee assumes the responsibility of delivering the same to the cardholder. 5. Supnad and Verendia took delivery of 19 credit cards issued in the name of the alleged APBCI credit applicants. On the other hand, on 5 separate occasions, respondent Llonillo personally picked up the newly approved and unsigned credit cards issued to 7 alleged APBCI employees and delivered them to Verendia. 6. When the bank discovered that the credit card applicants were fictitious, Llonillo was made to explain. She alleged that she wanted to help the bank deliver “fast, competent, and problem-free service to clients” and disclaimed any knowledge that the APBCI applicants were fictitious and denied participation in the fraudulent use of the credit cards. 7. Petitioner bank dismissed Llonillo. However, pursuant to the collective bargaining agreement and after presentation of evidence, Voluntary Arbitrator rendered a decision ordering the reinstatement of respondent Llonillo without payment of backwages. ISSUE Whether or not the reinstatement of respondent Llonillo is proper. HELD NO. Gross negligence implies a want or absence of or failure to exercise slight care or diligence, or the entire absence of care. It evinces a thoughtless disregard of consequences without exerting any effort to avoid them. She admitted that the first time she was asked by Verendia to pick up one of the newly approved and unsigned credit cards, she immediately acceded. Yet, at that time, she had not personally met nor previously seen Verendia. She said that Verendia described herself over the phone and that was how she was able to indentify her when they first met. Thus, on the basis of a mere description over the telephone, respondent Llonillo delivered the credit cards to Verendia. Respondent Llonillo’s negligence was also shown when she gave the credit cards to a messenger when she had not seen before but who merely represented to her that he was the messenger sent, and without asking to sign a receipt evidencing the acceptance. It was also ruled that her negligence is both gross and habitual. It was proved that she picked up the newly approved credit cards on 5 separate occasions and delivered the same to Verendia and the latter’s messenger. Certainly, these repetitive acts and omissions bespeak of habituality. The longer an employee stays in the service of the company, the greater is his responsibility for knowledge and compliance with the norms of conduct and the code of discipline of the

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That in all things, God may be glorified. company. Hence, respondent’s 22 years of service would not, by itself, mitigate her negligence, especially in view of the substantial loss incurred by petitioner bank.

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83. Labor et al. v. NLRC LABOR VS. NATIONAL LABOR RELATIONS COMMISSION G.R. NO. 110388, SEPTEMBER 14, 1995 DAVIDE, JR. J.: FACTS 1. The petitioners are employees of Gold City at its Eye Ball disco at Davao City, who filed a complaint with the DOLE against the latter for violations of labor standards laws. 2. Thereafter, they alleged that Gold City prevented them from entering their work place, their time cards were taken off the time card rack and were advised to resign. 3. They assailed the notice of termination given to them by Gold City and denied that they abandoned their work. 4. A complaint was filed by petitioners with the NLRC and charged Gold City for unfair labor practices for illegally dismissing them in retaliation for their having filed a complaint for labor standards violation against it. 5. The Labor Arbiter rendered a decision in favor of petitioners, declaring their dismissal illegal. Gold City appealed to the NLRC which reversed the decision. 6. According to the NLRC, the filing of the petitioners of their complaint with the DOLE was made to preempt respondents’ lawful prerogatives. It was also ruled that there was abandonment by petitioners and that Gold City, in terminating them, complied with the procedural requirements. Hence, this petition. ISSUE Whether or not the petitioners abandoned their jobs and consequently, whether their dismissal due to abandonment was lawful. HELD NO. To constitute abandonment, two elements must concur: (1) the failure to report for work or absence without valid or justifiable reason, and (2) a clear intention to sever the employer-employee relationship. Mere absence is not sufficient. It is the employer who has the burden of proof to show a deliberate and unjustified refusal of the employee to resume his employment without any intention of returning. Gold city failed to discharge this burden. It did not adduce any proof of some overt act of the petitioners that clearly and unequivocally show their intention to abandon their posts. On the contrary, the petitioners lost not Time in filing the case for illegal dismissal against them, taking only four days from the time most of them from entering their workplace. The filing of an employee of a complaint for illegal dismissal is a proof enough of his desire to return to work, thus negating the employer’s charge of abandonment. The timing of Gold City’s alleged refusal to allow petitioners to enter their work place is highly suspicious. It happened two days after the petitioner filed their complaint for labor standards violations with DOLE. Equally baseless is the charge of dishonesty which Gold City also relies on upon to justify the dismissal of the petitioners from their employment. A charge of dishonesty involves serious misconduct on the part of the employee, a breach of the trust reposed by the employer upon him. For loss of trust and confidence to be a valid ground of an employees dismissal, it must be substantial and not arbitrary, and must be founded on clearly established facts sufficient to warrant the employee’s separation from work. Unfortunately for Gold City, the evidence it adduced is insubstantial, inadequate and unreliable to support a conclusion that the petitioners are even remotely guilty of the acts they are accused of committing. There being no abandonment or commission of dishonest acts by the petitioners, no just cause exists to dismiss them, hence their termination by Gold City is illegal. When petitioners were dismissed by preventing them from entering their work place, no previous notice of any kind was given to them at all. The case of illegal dismissal was filed at least eleven days before the date of the notices. The subsequent notices cannot cure the lack of notice prior to the illegal dismissal of the petitioners.

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That in all things, God may be glorified. A finding that an employee is illegally dismissed entitles him to reinstatement to his former position without loss of seniority rights and the payment of back wages. But in this case, the petitioners did not pray for reinstatement. The Labor ordered the payment of separation pay in lieu of reinstatement which is hereby affirmed. If the employee does not desire to be reinstated, the employer shall pay him separation pay in lieu of reinstatement. This is only just and practical because the reinstatement of petitioners will no longer be in the best interest of petitioners and Gold City considering the animosity and antagonism that exists between them brought about by the filing of charges of both parties against each other. As a rule, full back wages are computed from the time the employee’s illegal dismissal until his actual reinstatement, but since in this case, reinstatement is not possible, the back wages must be computed from the time of the petitioner’s illegal dismissal until the finality of the decision. The decision of NLRC is set aside and the decision of the Labor Arbiter is reinstated.

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84. San Miguel Corporation v. NLRC SAN MIGUEL CORPORATION VS. NLRC 174 SCRA 510 GRIÑO-AQUINO, J.: FACTS 1. The complainants were former securtiy guards of the petitioner which dismissed them for falsification of their time cards. 2. They made false entries in their time cards showing tha they reported for work on February 19 and 20, 1983 when the truth was that they went on a hunting trip to San Juan, Batangas, with their chief, Major Martin Asaytuno, then head of the Adminsitrative Services Department of the Securtiy Directorate of the petitioner. 3. The Labor Arbiter found that the complainants did go on a hunting trip upon the invitation of their department head, Major Asaytuno. 4. They went along to please him because they believed that his invitation was equivalent to a command. Being an army man, Asaytuno expected “total obedience” from his subordinates. 5. But the Labor Arbiter as well as the NLRC reinstated the complainants on the ground that the complainants were not guilty of serious misconduct, fraud, and willful breach of trust. ISSUE Whether or not complainants are guilty of serious misconduct. HELD Although it may be conceded that the private respondents acted under some degree of moral compulsion when they agreed to accompany Major Asaytuno on a hunting trip, they were certainly under no compulsion from him to falsify their time cards and thereby defraud the company by collecting wages for the dates whey they did not report for work. The falsification and fraud which the private respondents committed against their employer were inexcusable. Their acts constituted dishonesty and serious misconduct, lawful grounds for their dismissal under Art 282 subpars. (a) and (c)of the Labor Code.

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85. Equitable Banking Corporation v. NLRC EQUITABLE BANKING CORPORATION VS. NLRC 273 SCRA 352 VITUG, J. FACTS 1. Private respondent Atty. Ricardo Sadac was appointed Vice-President for the Legal Department of petitioner bank by its then President, Manuel L. Morales, with a monthly salary of P8,000 plus an allowance of P4,500 and a Christmas bonus equivalent to a two-month salary. 2. The turning point in the relationship among the parties surfaced, when, on 26 June 1989, nine lawyers of the bank's Legal Department, who were all under private respondent, addressed a “letter-petition” to the Chairman of the Board of Directors, accusing private respondent of abusive conduct, inefficiency, mismanagement, ineffectiveness and indecisiveness. 3. One of the bank's directors, Heminio Banico was directed to look further into the matter and to determine a course of action for the best interest of the bank. 4. Banico concluded that the charge of “abusive conduct” is true and this is supported by overwhelming evidence. The charge of mismanagement is also supported by abundant evidence. 5. A memorandum was issued to private respondent stating that the Board of Directors has chosen the more compassionate option of waiting for the voluntary resignation of private respondent Sadac. 6. Reacting to the memorandum, private respondent addressed a letter to Board Chairman to the effect that the report of Mr. Banico contained libelous statements and requested for a full hearing by the Board of Directors so that he could clear his name. But to no avail. 7. The Board adopted a resolution terminating the services of private respondent “in view of his belligerence and the Board's “honest belief that the relationship between private respondent and petitioner bank was one of client and lawyer. 8. Private respondent was removed from his office occupancy in the bank and ordered disentitled, starting 10 August 1989, to any compensation and other benefits. ISSUE Whether or not private respondent was denied due process. HELD The Court resolved first the issue of employee-employer relationship and ruled in the affirmative on the ground that private respondent participated as part of management and is one of its senior officers holding the position of Vice-President. Upon finding that private respondent is an employee of petitioner, the latter violated the right to due process of private respondent when the latter's request of full hearing was not granted. While it is true that the essence of due process is simply an opportunity to be heard or, as applied in administrative proceedings, an opportunity to explain one's side, meetings in the nature of consultation and conferences such as the case here, however, may not be valid substitutes for the proper observance of notice and hearing. However, reinstatement, which is the consequence of illegal dismissal, has markedly been rendered undesirable. Private respondent shall, instead, be entitled to backwages from the time of his dismissal until reaching sixty years of age and, thereupon, to retirement benefits in accordance with Article 287 of the Labor Code and Sec 14, Rule 1, Book VI of the Implementing rules of the Labor Code.

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86. Robusta Agro Marine Products v. Garombalem ROBUSTA AGRO MARINE PRODUCTS, INC. VS. GOROMBALEM 175 SCRA 93 FACTS 1. Gorombalem filed a complaint against Robusta Agro Marine Products, Inc. with the NLRC on grounds of unfair labor practice, illegal suspension, non payment of overtime, premium for holiday, nightshift differential and rest day, violation of minimum wage and allowances, unpaid wages, commissions and separation pay. Notice for initial hearing was sent to Robusta. 2. The hearing was reset for non appearance of both parties. 3. Further resets due to inappearance were made, first was for Gorombalem and the next from Robusta. A hearing for possible amicable settlement was set, but the parties failed to settle. 4. Gorombalem made a “Sinumpaang Salaysay” as ordered by the Labor Arbiter. 5. However, Robusta repeatedly asked for extensions until the Labor Arbiter compelled them to submit within three days or else decision will be based on documents presented by Gorombalem. Robusta complied. 6. The “Sinumpaang Salaysay” submitted by Gorombalem stated that he was illegally dismissed on account of inquiring why his rations of gata has decreased. Prior to that, Gorombalem, working as fishpond guard under Robusta was already complaining of unpaid hours worked and other benefits due to him. 7. Robusta answered that the dismissal was for just cause stating that Gorombalem voluntarily stopped from work and has abandoned his post due to possible retaliation of a victim which filed a criminal complaint against him. He returned to work only after a period of time in which Robusta invokes prescription from granting the claims. 8. The Labor Arbiter rendered a decision in favor of Gorombalem. The Second Division of the NLRC modified the decision and eventually affirmed by the NLRC. ISSUE Whether or not administrative due process was denied the petitioners when the respondent Labor Arbiter rendered a decision based on position papers filed by the parties without conducting a trial. HELD Petition is dismissed for lack of merit. What clearly appears in the record is contrary to Robusta’s claim that it was denied administrative due process. The simple meaning of procedural due process is that a party to a case must be given sufficient opportunity to be heard. Its very essence is to allow all parties opportunity to present evidence. In the present case, it is crystal clear from the record that Robusta was given several opportunities to present evidence in its favor, but it failed to do so. At no time did Robusta ever ask that there be a trial on the merits. All that it submitted was its position paper. It was within the competence of the labor arbiter to determine if there was a need for a hearing. In this case, the labor arbiter did not deem it necessary to conduct hearing. Robusta was never denied due process.

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87. Offshore Industries v. NLRC OFFSHORE INDUSTRIES, INC. VS. NLRC 177 SCRA 50 FACTS 1. Alfredo F. Osorio is an employee of Offshore Industries Inc., which is engaged in lighterage. Osorio was a barge master when he was dismissed on account of his alleged negligence. 2. VIT Corp. chartered two barges by Offshore for transportation of goods from Negros Occidental to Manila. 3. Both barges were loaded and set out to leave port despite the rough sea and the high winds that day. 4. On its way out of port, one of the chartered barges ran aground. A tugboat tried to pull the barge but was unsuccessful. 5. On account of the incident, Offshore incurred expenses for transferring the cargo to another barge. 6. VIT Corp. reported the incident. Although recognizing the rough sea and high winds, the incident was nevertheless attributed to the negligence of Barge Master Osorio for failure to release the anchor upon the signal of the tug master. 7. No untoward incident occurred to the other barge because of compliance to the anchor release. Also, there was alleged lost of goods also on account of Osorio’s negligence as barge master. 8. Osorio’s employment was terminated. He filed a complaint for illegal dismissal with the NLRC with prayer for overtime pay, nightshift differential, premium for holiday and rest day as well as service incentive leave pay. 9. In justifying dismissal, Offshore contended that they conducted inquiries pointing out to Osorio’s negligence and such cannot be ignored due to his duty as barge master. Regarding the claims, Offshore contended they have already paid submitting as evidence a personnel change memo and check voucher. 10. Osorio answered that his dismissal was without cause. That the incident was caused not of his negligence but the overloading of the barge as well as tide being low. Such overloading is not of his but of the Charterer’s liability. 11. The Labor Arbiter signed the case in favor of Osorio, ruling that the grounds for dismissal does not clearly justify the termination. Offshore appealed to the NLRC and affirmed the Labor Arbiter’s decision. ISSUE Whether or not Osorio’s dismissal is valid. HELD NO. In fine, Offshore failed to show that the dismissal of the private respondents is for just cause. The burden of proof in termination cases rests upon the employer to show that the dismissal is for just cause and the failure to do so means that the dismissal is not justified and the employee is entitled to the reinstatement. As to the propriety of the awards, the Offshore failed to substantiate its allegations that Osorio has already been paid. The personnel change and cash voucher are not sufficient evidence of payment. Actual receipts signed by Osorio, if any, would have been more appropriate. To reiterate, the burden of proof rests on the party asserting the affirmative. Since the petitioner failed to prove its assertion that the money claims of Osorio had been paid, NLRC correctly resolved the matter in favor of Osorio.

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86. Wenphil Corporation v. NLRC WENPHIL CORPORATION V. NATIONAL LABOR RELATIONS COMMISSION 170 SCRA 69 GANCAYCO, J. FACTS 1. Private respondent Roberto Mallare was hired by petitioner Wenphil as a crew member at its Cubao Branch. He thereafter became the assistant head of the Backroom Department. 2. On May 20, 1985, private respondent had an altercation with a co-employee, Job Barrameda regarding the tending of the salad bar. Mallare slapped Barrameda’s cap, stepped on the latter’s foot, and picked up the ice scooper and brandished it against the latter. 3. The incident was reported to the assistant manager, Delilah Hermosura, who immediately asked Mallare to see her. Mallare refused to see Hermosura and it took the security guard to bring him to her. Mallare then shouted profane words instead of making an explanation before her. He stated that the matter should be settled only by him and Barrameda. 4. The store manager, on the basis of Hermosura’s report, suspended Mallare and Barrameda until further notice. Later that day, the store manager issued a memorandum suspending Barrameda for one week and dismissing Mallare from service, in accordance with their Personnel Manual. The notice of dismissal was served on Mallare on May 25, 1985. 5. Respondent Mallare filed a complaint against petitioner Wenphil for unfair labor practice, illegal suspension, and illegal dismissal. 6. Petitioner contended that under its Personnel Manual, which had been read and understood by respondent Mallare, an investigation shall only be conducted if the offense committed by the erring employee is punishable with a penalty higher than suspension of fifteen says and the erring employee requests for an investigation of the incident. Petitioner alleged that since respondent Mallare did not ask for an investigation, he is deemed to have waived such right. 7. The Labor Arbiter dismissed the complaint for lack of merit, since hearing cannot be conducted due to the repeated absence of private respondent’s counsel. 8. The NLRC set aside the appealed decision and ordered the reinstatement of the private respondent to his former position, without loss of seniority and other benefits and one (1) year backwages without qualification and deduction. Hence, the instant petition for review.

ISSUES 1. Whether or not petitioner Wenphil has a just and valid cause to dismiss private respondent Roberto Mallare. 2. Whether or not the due process requirement in the manner of dismissal has been complied with. 3. Whether or not private respondent is entitled to reinstatement without loss of seniority rights and with payment of full backwages for 3 years, without qualification, in case he was dismissed for a cause but without due process.

HELD: 1. YES. The Supreme Court ruled with the Labor Arbiter that the dismissal of private respondent Mallare was for a just cause. He was found guilty of grave misconduct and insubordination. This is borne by the sworn statements of witnesses. 2. NO. The aforementioned provision of the Personnel Manual of Wenphil which may effectively deprive its employees of the right to due process is clearly against the law and hence, null and void. The security of tenure of a laborer or employee is enshrined in the Constitution, the Labor Code and other related laws.

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That in all things, God may be glorified. Under Section 1, Rule XIV of the Implementing Rules and Regulations of the Labor Code, “no worker shall be dismissed except for a just and authorized cause provided by the law and after due process.” Sections 2, 5, 6, and 7 of the same Rules require that before an employee may dismiss an employee, the latter must be given a written notice stating the particular act or omission constituting the grounds thereof; that the employee may answer the allegations with a reasonable period; that the employer shall afford him ample opportunity to be heard and to defend oneself with the assistance of his representative, if he so desires; and that it is only then that the employer may dismiss the employee by notifying him of the decision in writing, stating clearly the reasons therefor. The failure of petitioner Wenphil to give private respondent Roberto Mallare the benefit of a hearing before he was dismissed constitutes an infringement of his constitutional right to due process of law and equal protection of the laws. 3. NO. The Supreme Court held that said policy must be reexamined. .It will be highly prejudicial to the interests of the employer to impose on him the services of an employee who has been shown guilty of the charges that warranted his dismissal from employment. Indeed, it will demoralize the rank and file if the undeserving, if not the undesirable, remains in the service. Thus, in the present case, where the private respondent, who appears to be of violent temper, caused trouble during office hours and even defied his superiors as they tried to pacify him, should not be rewarded with reemployment and backwages. It may encourage him to do even worse and will render a mockery of the rules of discipline that employees are required to observe. Under the circumstances, the dismissal of the private respondent should be maintained, He has no right to return to his former employer. However, the petitioner must nevertheless be held to account for failure to extend to private respondent his right to an investigation before causing his dismissal. Petitioner must be imposed a sanction for said failure. Considering the circumstances of the case, petitioner must indemnify the private respondent the amount of P1,000.00The measure of this ward depends on the facts of each case and the gravity of the omission committed by the employer. The petition is granted.

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89. Maneja v. NLRC and Manila Midtown Hotel MANEJA VS. NLRC 290 SCRA 603 MARTINEZ, J. FACTS 1. Petitioner was a telephone operator at the Manila Midtown Hotel since 1985 and was a member of union with an existing CBA with the private respondent Hotel. 2. In February 1990, she and a fellow telephone operator Rowena Loleng received two Requests for Long Distance Call (RLDC), which were both accompanied by the a 500-peso deposit. Both overseas calls went unanswered. 3. After two days, the hotel cashier inquired about the deposits and the bills were found after a search. One bill was inserted in the guest folio and the other was inside the folder for cancelled calls. 4. The petitioner realized that the second RDLC was not time-stamped so she placed it in the machine which stamped the date. Because the calls were made two days earlier, she wrote and changed the date to reflect the true time when the call was made. 5. The petitioner and Loleng were issued a memorandum to explain the incident and they both submitted written explanations. Chief telephone operator issued a recommendation that the offenses were covered by the Offenses Subject to Disciplinary Action (OSDA) stipulated in the CBA: 1) forging, falsifying official document(s), and 2) culpable carelessness-negligence or failure to follow specific instructions or established procedure. 6. In March 1990, petitioner was served a notice of dismissal and criminal cases for Falsification of Private Document and Qualified Theft were filed. The City Prosecutor dismissed these charges however. 7. Labor Arbiter ruled that there was illegal dismissal and ordered the Hotel to reinstate the petitioner and to pay back wages, 13th month and moral and exemplary damages. The NLRC reversed the decision, ruling that the Labor Arbiter was without jurisdiction because the grievance procedure in the CBA provided for Voluntary Arbitration which was not conducted. 8. Petitioner contends that the procedures she allegedly failed to follow were not followed by the operators and hotel employees when the circumstances warrant. For example, when the cashiers are busy and cannot attend to the RLDCs, the forms and the deposit are brought directly to them by the page boys. Sometimes, the RLDCs are even recycled. ISSUE Was there a valid dismissal? HELD NO. The requisites of a valid dismissal are: 1) dismissal must be for any of the causes expressed in Article 282 of the Labor Code, and 2) the employee must be given the opportunity to be heard and defend himself. As pointed out by the Labor Arbiter, the CBA requires that the failure to follow procedures must result in loss or damage to company property and no proof was adduced that this occurred due to the infraction. As for the alleged falsification, the CBA also provides that the act must be done in such a way as to mislead the users thereof. This was likewise not proved. In fact, in dismissing the criminal case, the City Prosecutor said that alteration that makes the document speak the truth cannot be the foundation of a criminal action. Given the factual circumstances, no dishonesty can be deduced from the act or omission of the petitioner. Our norms of social justice demand that we credit employees with the presumption of good faith in the performance of their duties. Given that dismissal is the ultimate penalty that can be meted an employee, its imposition cannot be justified where the evidence is ambivalent.

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That in all things, God may be glorified. As to due process, the record shows that no hearing was conducted before the petitioner was dismissed. While she submitted a written explanation, she was not accorded the opportunity to fully defend herself. Consultations or conferences may not be a substitute for an actual hearing. The Labor Arbiter decision was reinstated.

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90. Pepsi Cola Bottling Co. v. NLRC PEPSI-COLA BOTTLING CO. VS. NLRC G.R. NO. 101900; JUNE 23, 1992 FACTS 1. On September 1, 1986, private respondent, a licensed mechanical and electrical engineer, was employed by Petitioner Corporation as maintenance manager of its beverage plant at Tanauan, Leyte. 2. Sometime in January 1988, the plant CEM-72 soaker machine needed rehabilitation. 3. Rehabilitation work on the soaker machine was commenced about the middle of March 1988 by a crew of fifteen (15) to twenty (20) men from PREMACOR. However. PREMACOR failed to make the soaker machine fully operational. 4. Petitioner Castillo then asked private respondent to take over the work. Assisted by the men directly under him, private respondent did so and in three weeks time, the soaker machine became operational again at an efficiency rate of sixty-five per cent [65%]. 5. On May 9, 1988, Leah Danaquel, personnel manager of the company informed private respondent that this position may be sacrificed because of the delay in the rehabilitation of the soaker machine. Disappointed, private respondent want on leave from May 9 to 17, 1988. 6. Private respondent was told to resign and offered the amount of P12,000.00 if he did. Private respondent rejected the offer. May 25, 1988, a latter of termination was sent to private respondent through a security guard of the company. 7. On May 30, 1988, private respondent filed a complaint for illegal dismissal and unfair labor practice against petitioners before the National Labor Relations Commission. 8. Both the Labor Arbiter and the NLRC ordered private respondent to reinstate petitioner. In the motion for reconsideration filed with the NLRC, the petitioners alleged that reinstatement is no longer possible since the petitioner company closed down its business on July 24, 1989 and the new franchise holder, Pepsi-Cola Products Philippines (PCPPI) is a new entity. ISSUE Whether or not public respondents committed grave abuse of discretion in ruling that private respondent was terminated from employment without just cause. HELD While it is true that loss of trust and confidence is one of the just causes for termination, such loss of trust and confidence must however have some basis. Proof beyond reasonable doubt is not required. It is sufficient that there is some basis for such loss of confidence or that there must be some reasonable grounds to believe, if not to entertain the moral conviction that the employee concerned is responsible for the misconduct and that the nature of his participation therein rendered him absolutely unworthy of trust and confidence demanded by his position. Apart from the Labor Arbiter's finding that there is no sufficient basis for the petitioners to justify private respondent s dismissal on the ground of loss of trust and confidence, it appears that the dismissal of the private respondent was merely an afterthought to cover up management's embarrassment. The private respondent was by-passed and ignored in the task of rehabilitating the soaker machine and he is now being punished for the mistake of management and the failure of its hired contractor and its favored supervisor. The law requires that the employer must furnish the worker sought to be dismissed with two (2) 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 the requirements taints the dismissal with illegality. This procedure is mandatory; in the absence of which, any judgment reached by management is void and inexistent.

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That in all things, God may be glorified. . The petitioners' contention is untenable. The law is clear on the matter. In fact, when private respondent's lawyer called up Danaquel by phone to inquire categorically if he "had been or was about to be dismissed" Danaquel emphatically answered "No." Then dew days later or on May 25, 1988, the private respondent was handed his termination letter. The employer's action was drastic. Under the circumstances, it cannot be stated that the private respondent was given the opportunity to prepare for his defense. However, to order reinstatement at this juncture would serve no prudent purpose considering the supervening facts and circumstances of the case. Not only is PCPPI a new corporation continuing the business and operations of PCD, there is also no doubt that the relationship between the petitioners and the private respondent has been strained by reason of their respective imputations of bad faith which is quite evident from the vehement and consistent stand of the petitioners in refusing to reinstate the private respondent. Thus, in order to prevent further delay in the execution of the decision to the prejudice of the private respondent and to spare him the agony of having to work anew with the petitioners under an atmosphere of antagonism, and so that the latter do not have to endure the continued services of the private respondent in whom they have lost liking and, at this stage, confidence, the private respondent should be awarded separation pay as an alternative to reinstatement.

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91. Dizon v. NLRC DIZON VS. NLRC G.R. NO. 79554; DECEMBER 14, 1989 FACTS 1. On 4 December 1981, petitioner Leopoldo Dizon entered into an Overseas Employment Contract 1 with respondent Consunji. 2. Sometime in April 1982, petitioner, according to him, became afflicted with skin rashes which forced him to seek medical help from the Company's clinic at the project site. He was treated there on the following dates: 13, 29 April; 3, 25, 28, 29 May; 1 and 7 June. 3. On 17 May 1982, petitioner was again absent from his work place when respondent's workers in the New Istana Project staged a strike demanding an increase of salary. 4. POEA Director issued on 21 May 1982 a return-to-work order. Petitioner failed to comply with that directive; according to him, he was then still suffering from severe skin rashes. Barely three (3) months from the date of effectivity of petitioner's employment contract, Consunji terminated the services of some three hundred sixty (360) workers in the New Istana Project, including those of petitioner, upon the ground that they had breached paragraphs (e) and (f) of clause 13 of their employment contracts. 5. Petitioner commenced a case charging Consunji with illegal dismissal. Consunji denied the illegal dismissal charge and claimed that petitioner had been validly dismissed, considering that he had breached the contract of employment by taking part in an illegal strike and disobeying the return-to-work order issued by the POEA Director. 6. The Administrator of POEA rendered a decision in favor of petitioner. Consunji went on appeal to the NLRC. The NLRC reversed the POEA Administrator in a decision dated March 1987 declaring petitioner's dismissal to have been effected for justifiable cause. Hence this recourse on certiorari. ISSUE Whether or not the dismissal of petitioner Dizon is justified on the ground that he had participated in the illegal strike and had refused to obey Director Imson’s return-to-work order. HELD It is firmly settled that in an unlawful dismissal case, the employer has the burden of proving the lawful cause sustaining the dismissal of the employee. Respondent Consunji did show that petitioner Dizon was not in his workplace on 17 May 1982, the day the strike was declared and went into effect, as well as on 24 May 1982, the day the return-to-work order became effective; actually, petitioner himself so stated in his pleadings before the POEA. Thus, Consunji was able to make out (even if only by petitioner's own statements) a prima facie case that petitioner had joined in the strike and had failed to comply with the return-towork order of Director Imson, which constituted grounds for holding petitioner liable for breach of his contract of employment and hence for dismissing him from his employment. It must be noted, however, that petitioner Dizon showed, by a letter dated 4 January 1983 of respondent Consunji's project-nurse, that he had been afflicted with severe skin rashes for sometime and that he had reported at the Company clinic thrice before 17 May 1982 and visited the same clinic five (5) times after 21 May 1982, for treatment and medication. Petitioner Dizon denied participation in the strike and disclaimed any intent to defy the return-to-work order. Thus, while petitioner's evidence (as distinguished from his pleadings) did not show affirmatively that he had indeed visited the Company clinic on 17 May 1982, it appears to the Court that petitioner submitted on at least prima facie basis an adequate explanation for his absence from his work station on the day the strike began and the day the return-to-work order went effective. Petitioner, in other words, offset or negatived the prima facie case

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That in all things, God may be glorified. made out by private respondent Consunji for a lawful dismissal: the balance of evidence thus moved to equipoise. But equipoise is not enough; the employer must affirmatively show rationally adequate evidence that the dismissal was for a justifiable cause. The burden of proof in effect moved back to and once again rested on respondent Consunji, the employer asserting the existence of a just cause for dismissal. This burden of proof Consunji did not discharge. The failure of Consunji to discharge the onus probandi resting on it, must be taken in conjunction with its conceded failure to conduct an investigation on the project site before serving Dizon his notice of termination. It may be supposed that the carrying out of such an investigation on site before repatriation, would not have been easy. But petitioner was entitled under our law to an investigation where he would be informed of the charges against him and have an opportunity to present his defense or explanation before being dismissed. What is at stake in such a case is not simply a property right but also the employee's means of livelihood. Besides, if an investigation had been conducted, Consunji might well have been convinced by Dizon's explanation.

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92. Pepsi Cola Bottling Co. v. NL|RC PEPSI-COLA DISTRIBUTORS OF THE PHILIPPINES, INC. VS. NLRC G.R. NO. 106831; MAY 6, 1997 FACTS 1. Private respondent was employed by petitioner as a salesman of its softdrink products. On March, 1985, he was promoted as Field Sales Manager assigned by petitioner at its Warehouse in Urdaneta, Pangasinan. 2. Three (3) years later, on May, 1988, private respondent received various memoranda from petitioner suspending him from work due to the following acts: (1) negligence in performance of duties particularly, his incomplete and improper accomplishment of Route Sales Report; (2) failure to achieve sales commitments, and (3) unauthorized extension of credit (IOU’s) to customers. 3. In two memoranda, private respondent was suspended for a total of 3 days due to said acts. In a third memorandum, he was meted with another suspension for an unspecified duration effective May 25, 1988. He was also notified to explain his side on the case. 4. Earlier, on May 23, 1988, the salesmen and helpers at the Urdaneta Warehouse signed a letter address to the Regional Sales Manager (Mr. Ernesto Cabuco) charging private respondent with the following acts and requesting that he be transferred to another station: a. sleeping inside the route truck during route rides instead of alighting from the vehicle to talk to customers; b. obligating his men to pay for his meals and demanding their meal receipts for his own reimbursement from the company; c. fictitiously purchasing 2,000 cases of petitioner’s assorted Pepsi products knowing that the price thereof will increase and later selling them at the adjusted price using petitioner’s resources for his own benefit; d. Inhuman treatment of the salesmen and helpers who are his subordinates. 5. He was again suspended and was eventually dismissed from work. Arguing that his dismissal was illegal, private respondent sued petitioner before the Labor Arbiter praying for backwages, reinstatement, payment of 13th month pay and other claims. The Labor Atbiter and the NLRC ruled in favor of private respondent. ISSUE Whether or not the termination of private respondent was lawful. HELD The validity of private respondent’s dismissal hinges on the satisfaction of the two substantive requirements for a lawful termination of an employee’s services, to wit: [18] (1) the employee was accorded due process, basic of which are opportunity to be heard and to defend himself, and (2) the dismissal must be for any of the causes provided in Article 282 of the Labor Code. On the first requirement, contrary to the findings of public respondents, evidence on record shows that private respondent was accorded due process before his dismissal on October 7, 1988. Administrative due process does not require an actual hearing. The essence thereof is simply an opportunity to be heard. In this case, private respondent was not only given two opportunities to explain his case, but actually availed thereof by submitting his position paper. Although, as a general rule findings of facts of an administrative agency which has acquired expertise in the particular field of its endeavor, are accorded great weight on appeal, such rule cannot be applied with respect to the assailed findings on due process in this case. Rather, what applies is the recognized exception that if such findings are not supported by substantial evidence, the Court can make its own independent evaluation of the facts. Upon scrutiny of the evidence on record, particularly the “notice of preventive suspension,” the ruling below that there was no due process before the dismissal cannot stand. In conformity with Article 277(b) of the Labor Code, the said notice specifically and particularly stated the

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That in all things, God may be glorified. acts leveled against private respondent and also informed him that a hearing is set on a specific time and date for him to explain his version. First, for the charge of misbehavior and abuse of authority, there is scant evidence on record which would show that private respondent is guilty thereof. Mere accusations and declarations by certain persons that the latter attempted to bribe or had engaged in fistfight, cannot support a finding that he indeed committed such acts. Unsubstantiated accusation without more is not synonymous with guilt. With respect to the charge of dishonesty and conflict of interest, evidence on record shows that private respondent purchased 2,000 cases of Pepsi products in his personal capacity, aware that the prices thereof (Pepsi products) will increase. However, he made it appear that said products was bought by a certain customer who later executed an affidavit denying such purchase. When the price of Pepsi products increased, private respondent sold as his own the 2000 cases at the adjusted price thereby accruing benefit to himself. In said fictitious sale, he utilized petitioner’s resources and company time for which the former was duly paid. By making such transaction, he also engaged himself in business competing with his employer and thus comes in conflict of interest against petitioner. He cannot serve himself and petitioner at the same time all at the expense of the latter. It would be unfair to compensate private respondent who does not devote his time and effort to his employer. The primary duty of the employee is to carry out his employer’s policies. Moreover, the fictitious sale is an act of dishonesty. Route salesman, like private respondent, is a highly individualistic personnel who roam around doing field work of selling softdrinks, deal with customers practically on their own and are entrusted with large amounts of funds and properties of the employer. There is a high degree of trust and confidence repose on them and when that confidence is breach, as in this case, proper disciplinary actions may be taken. The foregoing acts of dishonesty and conflict of interest justifies disciplinary sanctions provided it is commensurate with the gravity of the act. Under the factual milieu of this case a disciplinary sanction less punitive than the harsh penalty of dismissal meted on private respondent would suffice, considering his ten (10) years of service with petitioner and this being the first time he was charged with and investigated for such acts. There is no evidence that he has committed infractions against the company before this incident, otherwise, he would not have been promoted in the first place.

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93. Bustamante v. NLRC BUSTAMANTE V. NATIONAL LABOR RELATIONS COMMISSION 265 SCRA 61 PADILLA, J.: FACTS 1. Private respondent Evergreen Farms, Inc. is engaged in the business of producing high-grade bananas in its plantation in Davao del Norte. Petitioners were employed as laborers, harvesters, and sprayers in respondent company's plantation. 2. Petitioners signed contracts of employment for a period of six (6) months from 2 January 1990 to 2 July 1990, but they had started working sometime in September 1989. Previously, they were hired to do the same work for periods lasting a month or more, from 1985 to 1989 3. Before the contracts of employment expired, petitioners' employments were terminated on 25 June 1990 on the ground of poor performance on account of age, as not one of them was allegedly below forty (40) years old. 4. Petitioners filed a complaint for illegal dismissal before the Regional Arbitration Branch of the NLRC in Davao City. 5. Respondent company contends that the petitioners’ employments were terminated due to the expiration of their probationary period in June 1990. 6. The Labor Arbiter rendered judgment in favor of petitioners, declaring their dismissal illegal and ordering respondent Evergreen Farms, Inc. to immediately reinstate complainants to their former position with six (6) months backwages. However, if reinstatement is no longer feasible an additional one (1) month salary shall be awarded as a form of separation pay. 7. The NLRC dismissed the appeal and the subsequent motion for reconsideration of private respondent company for lack of merit. It found that petitioners had become regular employees after serving for more than one (1) year of broken or noncontinuous service as probationary employees. However, it deleted the award of backwages on the ground that the termination of petitioners' services "was the result of the private respondent’s mistaken interpretation of the law and that the same was therefore not necessarily attended by bad faith, or arbitrariness. 8. Petitioners filed the instant petition assailing the NLRC’s resolution that removed the award of backwages in their favor. ISSUE Whether or not petitioners are entitled to full backwages HELD YES. It is undisputed that petitioners were illegally dismissed from employment. Article 280 of the Labor Code states: Art. 280. Regular and Casual Employment. — The provisions of written agreement to the contrary notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer, except where the employment has been fired for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee or where the work or services to be performed is seasonal in nature and the employment is for the duration of the season. An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided, that, any employee who has rendered at least one year of service, whether such service is continuous or broken, shall be considered a regular employee with respect to the activity in which he is employed and his employment shall continue while such activity exists. This provision draws a line between regular and casual employment, a distinction however often abused by employers. It enumerates two (2) kinds of employees, the regular employees and the casual employees. The regular employees consist of the following:

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That in all things, God may be glorified. 1. Those engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer; and 2. Those who have rendered at least one year of service whether such service is continuous or broken. The law distinguishes between the two (2) kinds of employees to protect the interests of labor, particularly the tenurial interest of the worker who may be denied the rights and benefits due a regular employee by virtue of lopsided agreements with the economically powerful employer who can maneuver to keep an employee on a casual status for as long as convenient. In the case at bar, petitioners were employed at various periods from 1985 to 1989 for the same kind of work they were hired to perform in September 1989. Both the Labor Arbiter and the NLRC agree that petitioners were employees engaged to perform activities necessary in the usual business of the employer. As laborers, harvesters or sprayers in an agricultural establishment which produces high grade bananas, petitioners' tasks are indispensable to the year-round operations of respondent company. This belies the theory of respondent company that the employment of petitioners was terminated due to the expiration of their probationary period in June 1990. If at all significant, the contract for probationary employment was utilized by respondent company as a chicanery to deny petitioners their status as regular employees and to evade paying them the benefits attached to such status. Some of the petitioners were hired as far back as 1985, although the hiring was not continuous. They were hired and re-hired in a span of from two to four years to do the same type of work which conclusively shows the necessity of petitioners' service to the respondent company's business. Petitioners have, therefore, become regular employees after performing activities which are necessary in the usual business of their employer. But, even assuming that the activities of petitioners in respondent company's plantation were not necessary or desirable to its business, the Court affirms the NLRC's finding that all of the petitioners have rendered non-continuous or broken service for more than one (1) year and are consequently considered regular employees. The Court does not sustain NLRC’s theory that private respondent should not be made to compensate petitioners for backwages because its termination of their employment was not made in bad faith. The act of hiring and re-hiring the petitioners over a period of time without considering them as regular employees evidences bad faith on the part of private respondent. The subsequent rehiring of petitioners on a probationary status "clearly appears to be a convenient subterfuge on the part of management to prevent petitioners from becoming regular employees. In the case at bar, there is no valid cause for dismissal. The petitioners have not performed any act to warrant termination of their employment. Consequently, petitioners are entitled to their full backwages and other benefits from the time their compensation was withheld from them up to the time of their actual reinstatement. Private respondent moved to reconsider the Court’s (First Division) aforesaid decision on grounds that: (a) Petitioners are not entitled to recover backwages because they were not actually dismissed but their employment was not converted to permanent employment; and (b) assuming that petitioners are entitled to backwages, computation thereof should not start from cessation of work up to actual reinstatement and that salary earned elsewhere (during the period of illegal dismissal) should be deducted from the award of such backwages. The Court En Banc declared that there is no compelling reason to reconsider the decision of the Court (First Division). However, the Court En Banc clarified the computation of backwages due an employee on account of his illegal dismissal from employment The Court declared: The Court deems it appropriate to reconsider the earlier ruling on the computation of backwages as enunciated in the Pines City Educational Center case, by now holding that conformably with the evident legislative intent as expressed in R.A. No. 6715, backwages to be awarded to an illegally dismissed employee, should not, as a general rule, be diminished or reduced by the earnings derived by him elsewhere during the period of his illegal dismissal. The underlying reason for this ruling is that the employee, while litigating the

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That in all things, God may be glorified. legality (illegality) of his dismissal, must still earn a living to support himself and family, while full backwages have to be paid by the employer as part of the price or penalty he has to pay for illegally dismissing his employee. The clear legislative intent of the amendment in R.A. 6715 is to give more benefits to workers than was previously given them under the Mercury Drug rule or the “deduction of earnings elsewhere rule”. A closer adherence to R.A. No. 6715 points to “full backwages” as meaning that i.e,. without deducting from backwages the earnings derived elsewhere by the concerned employee during the period of his illegal dismissal. In other words, the provision calling for “full backwages” to illegally dismissed employees is clear, plain, and free from ambiguity and therefore, must be applied without attempted or strained interpretation.

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94. BLTB Bus Co. v. Court of Appeals BATANGAS LAGUNA TAYABAS BUS CO. VS. COURT OF APPEALS 71 SCRA 470 FACTS 1. Teotimo de Mesa was employed by BTLB Co. as a bus conductor. He rendered his services until the company ceased operations due to WWII outbreak. In resuming business after the war, de Mesa rejoined BTLB Co. as an administrative officer with a salary of P1,000/month. He had a total length of service of 31 years. 2. Teotimo de Mesa’s termination was caused by his act in withdrawing two cash advances or “vales” of P100 each from the company’s Infanta, Quezon station which is in violation of a memorandum restricting cash advances of confidential employees to P100 each payroll period. 3. Contending that BTLB Bus Co. has no valid grounds or cause of terminating his services, de Mesa filed a complaint before the trial court to recover separation pay, retirement benefits, his “would be earnings” had he not been separated and reached compulsory retirement age, an amount for loss of Social Security benefits, moral damages, exemplary damages and attorney’s fees for expenses for litigation. 4. The Trial Court rendered a decision in favor of BTLB Bus Co., stating the dismissal was for lawful cause. However, it still directed the company to pay but limited to retirement benefits plus interest and attorney’s fees. Both parties appealed. The Court of appeals modified the decision but still in favor of BTLB Bus Co.. That in addition to the awards stated by the trial court, they are to pay separation pay and an amount representing de Mesa’s indebtedness to his employer including legal interest. Hence, the petition for review. ISSUE 1. Whether or not respondent de Mesa’s dismissal was for just cause. 2. Whether or not an employee who has received his separation pay can still recover retirement benefits from his employer. HELD On the first issue, the SC held in the negative. On the second issue, an affirmative. It is a fundamental duty of an employee to yield to all reasonable rules, orders and instructions of the employer and that as a general rule, willful or intentional disobedience thereof justifies termination of service. However, the employee’s conduct must have been willful or intentional, willfulness being characterized by a wrongful and perverse mental attitude rendering the employee’s act inconsistent with proper subordination. The rules, orders or instructions must be reasonable and lawful, known to the employee and pertain to duties which the employees discharge. In the case at bar, de Mesa has shown disregard to the memorandum issued by BTLB Bus Co. However, the rules, instructions or commands limiting the cash advances of confidential employees do not pertain to the duties which the petitioner has been engage to discharge. The memo was primarily intended for the benefit of the company itself and has nothing to do with the duties of its employees and therefore cannot be valid ground for their discharge on the score of disobedience. An employee dismissed without cause is entitled to a separation pay and to retirement benefits where both the Labor Agreement and Termination Pay Law do not preclude the said employee from recovering other benefits. In the present case, there is an absence of such prohibition.

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95. Hellenic Philippine Shipping v. NLRC and E. Siete HELLENIC PHILIPPINE SHIPPING, INC. V. SIETE 195 SCRA 179 CRUZ, J. FACTS 1. Private respondent Epifanio Siete was employed as Master of M/V Houda G by Sultan Shipping Co. Ltd. Through its crewing agent, petitioner Hellenic Philippine Shipping. He boarded the vessel on May 24, 1985 at Cyprus. The vessel sailed to El Ferrol Spain where it loaded cargo that it subsequently discharged at Tripoli, Libya. It then proceeded back to Cyprus, arriving there on June 30, 1985 2. On July 8, 1985, Capt. Wilfredo Lim boarded the vessel and advised Siete that he had instructions from the owners to take over its command. These instructions were later confirmed by a telex sent by Sultan Shipping to Siete. Neither Lim nor the telex indicated the reason for Siete’s dismissal. Siete claims that this information was also withheld from him by petitioner Hellenic Shipping upon his repatriation to Manila. 3. Siete filed with the POEA a complaint against the petitioner for illegal dismissal and nonpayment of his salary and other benefits under their employment contract. 4. In its Answer, petitioner alleged that Siete had been dismissed because of his failure to erase the timber load line on the vessel, as instructed, and for his negligence in supervising the discharge of cargo at Tripoli that resulted in the replacement of certain damaged equipment. 5. POEA Administrator Tomas Achacoso dismissed the complaint for lack of merit and held that there was valid cause for Siete’s removal, based on the communications presented in evidence by Hellenic Shipping. 6. The NLRC reversed the POEA Administrator, holding that the dismissal violated due process and that the documents submitted by petitioner were hearsay, self-serving and unverified. 7. Petitioner filed the present petition for review on certiorari, contending that Siete had not been denied due process, considering the summary nature of the proceeding that had to be taken in view of the nature of his position. Moreover, petitioner avers that Siete is a managerial employee and may be dismissed on the basis of loss of confidence. ISSUE Whether or not private respondent was illegally dismissed HELD YES. Substantial evidence has been established that the private respondent was indeed not notified of the charges against him and that no investigation was conducted to justify his dismissal. Moreover, the petitioner has failed to prove that Siete had been instructed to erase the timber load lines and that he had been negligent in the cargo unloading at Tripoli. The Court noted that the reports submitted by the petitioner to prove its charges were all prepared after the fact of Siete’s dismissal and were signed by its own employees. Their motives are necessarily suspect. The excuse of the petitioner that it itself did not know why Siete was dismissed, being only a crewing agent of Sultan Shipping, deserves no comment The Labor Code provides that “no worker shall be dismissed except for a just or authorized cause provided by law and after due process”. Any employer who seeks to dismiss a worker shall furnish him a written notice stating the particular act or omission constituting the grounds for his dismissal. The employee may answer the allegation stated against him in the notice of dismissal within a reasonable period from receipt of such notice. The employer shall afford the worker ample opportunity to be heard and to defend himself with the assistance of his representative, if he so desires. The employer shall immediately notify a worker in writing of a decision to dismiss him stating clearly the reasons therefor. The argument that the aforequoted provisions are not applicable to the private respondent because he was a managerial employee must also be rejected. It is not correct to say that managerial employees may be arbitrarily dismissed at any time and without just cause as

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That in all things, God may be glorified. established in an appropriate investigation. Managerial employees, no less than rank-andfile laborers, are entitled to due process. Loss of confidence, which is the usual ground for the removal of the managerial employee, must be established like any other lawful cause. Even if it be assumed that Siete was a managerial employee- an issue which was not earlier raised or resolved- the petitioner has not satisfactorily proved the reason for its supposed loss of confidence in him. It is not true that the vessel would be left unattended if the captain were to be placed under investigation because he would not have a ready replacement. Under Article 627 of the Code of Commerce: “The sailing mate, as second chief of the vessel and unless the ship agent does not order otherwise, shall take the place of the captain in case of absence, sickness or death, and shall then assume all his powers, obligations and liabilities.” In the instant case, there was even a ready replacement for Siete. Petition is dismissed and the assailed decision is affirmed, with the deduction of $400.90 from respondent’s total award.

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96. Viernes v. NLRC and Benguet Electric Corporation VIERNES VS. NLRC AND BENGUET ELECTRIC COOPERATIVE, INC. (BENECO) G.R. NO. 108405. APRIL 4, 2003. AUSTRIA- MARTINEZ, J. FACTS 1. Petitioners’ services as meter readers were contracted for hardly a month’s duration, from October 8 to 31, 1990. 2. The said term notwithstanding, petitioners were allowed to work until January 2, 1991. 3. On January 3, 1991, they were each served their identical notices of termination. 4. On the same date, they filed complaints for illegal dismissal. They contended that they were not apprentices but regular employees whose services were illegally and unjustly terminated in a manner that was whimsical and capricious. 5. On the other hand, private respondent BENECO invoked Article 283 of the Labor Code in defense of the questioned dismissal. 6. The Labor Arbiter dismissed the complaints for lack of merit. However, it ordered BENECO to extend to the petitioners the contract of temporary employment that the former had offered, with the exception of Jaime Viernes. Also, the Labor Arbiter directed BENECO to pay each the amount equivalent to their monthly salary as indemnity for its failure to give complainants the 30-day notice mandated under Article 283 of the Labor Code. 7. Modifying the Arbiter’s decision, the NLRC rendered that the dismissal was illegal. It ordered petitioners’ reinstatement to their former position as meter readers or to any equivalent position with payment of backwages limited to one year deleting the award of indemnity. ISSUES 1. Whether or not the petitioners should be reinstated to their former position as meter readers on probationary status despite the finding that they are regular employees under Article 280 of the Labor Code. 2. Whether or not the petitioners should be awarded indemnity pay. HELD 1. YES. Reinstatement means restoration to a state or condition from which one had been removed or separated. In case of probationary employment, Article 281 of the Labor Code requires the employer to make known to his employee at the time of the latter’s engagement of the reasonable standards under which they may qualify as a regular employee. In the case at bar, there is nothing on the letter of appointment that their employment as meter readers was on probationary basis. It was not shown that they were informed either, at the time of their appointment, the reasonable standards under which they could qualify as regular employees. Instead, they were initially engaged to perform their job for a limited period, their employment being fixed for a definite period. The principle enunciated in Brent School, Inc. vs. Zamora applies only to fixed term employments. While it is true that the petitioners were initially employed on a fixed term basis as their employment contracts were only for a month, they were allowed to continue working in the same capacity as meter readers without the benefit of a new contract or without the term of their employment being fixed a new. After October 31, 1991, the employment of petitioners is no longer on a fixed term basis. The complexion of the employment relationship is totally changed for the petitioners have attained the status of regular employees. Under Article 280 of the Labor Code, there are two instances whereby it is determined that an employee is regular: (1) the particular activity performed by the employee is necessary or desirable to the usual trade or business of the employer;

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That in all things, God may be glorified. or (2) if the employee has been performing the job for at least one year. The petitioners fall under the first category. The job of a meter reader is necessary to the business of BENECO since unless the meter reader records the electric consumption of the subscribing public, there could not be a valid basis for billing the customers of BENECO. The fact that the petitioners were allowed to continue working after the expiration of their employment is evidence of the necessity and desirability of their service to BENECO’s business. Since petitioners are already regular employees at the time of their illegal dismissal from employment, they are entitled to be reinstated to their former position as regular employees, not merely probationary. Moreover, under Article 279, as amended by R.A. No. 6715, an illegally dismissed employee is entitled to 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. Therefore, petitioners’ backwages should not be limited to one year only. 2. YES. An employer becomes liable to pay indemnity to an employee who has been dismissed if, in effecting such dismissal, the employer fails to comply with the requirements of due process. The indemnity is in the form of nominal damages intended not to penalize the employer but to vindicate or recognize the employee’s right of procedural due process which was violated by the employer. Indemnity is not incompatible with the award of backwages since they are awards based on different considerations. Backwages are granted on the grounds of equity to workers for earnings lost due to their illegal dismissal from work. On the other hand, indemnity is meant to vindicate the right of an employee to due process which has been violated by the employer. In the case at bar, BENECO failed to comply with the provisions of Article 283 of the Labor Code which requires an employer to server a notice of dismissal upon the employees sought to be terminated and to the Department of Labor, at least one month before the intended date of termination. Therefore, it was held that the NLRC committed grave abuse of discretion in deleting the award of indemnity.

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97. Globe-Mackay Cable and Radio Corporation v. NLRC GLOBE- MACKAY CABLE AND RADIO CORPORATION VS. NLRC G.R. NO. 82511. MARCH 3, 1992. ROMERO, J. FACTS 1. Sometime in 1984, petitioner GMCR, prompted by reports that company equipment and spare parts worth thousands of dollars under the custody of Saldivar were missing, caused the investigation of the latter's activities. 2. The report prepared by the company's internal auditor, Mr. Agustin Maramara, indicated that Saldivar had entered into a partnership styled Concave Commercial and Industrial Company with Richard A. Yambao, owner and manager of Elecon Engineering Services (Elecon), a supplier of petitioner often recommended by Saldivar. 3. The report also disclosed that Saldivar had taken petitioner's missing Fedders airconditioning unit for his own personal use without authorization and also connived with Yambao to defraud petitioner of its property. The airconditioner was recovered only after petitioner GMCR filed an action for replevin against Saldivar. 4. Moreover, it appeared in the investigation that Imelda Salazar violated company regulations by involving herself in transactions conflicting with the company's interests. Evidence showed that she signed as a witness to the articles of partnership between Yambao and Saldivar. It also appeared that she had full knowledge of the loss and whereabouts of the Fedders airconditioner but failed to inform her employer. 5. Consequently, in a letter dated October 8, 1984, GMCR placed private respondent Salazar under preventive suspension for one (1) month, effective October 9, 1984, thus giving her thirty (30) days within which to explain her side. But instead of submitting an explanation, three (3) days later or on October 12, 1984, Salazar filed a complaint against petitioner for illegal suspension, which she subsequently amended to include illegal dismissal, after petitioner notified her in writing that effective November 8,1984, she was considered dismissed "in view of (her) inability to refute and disprove these findings." 6. After due hearing, the Labor Arbiter ordered GMCR to reinstate private respondent to her former or equivalent position and to pay her full backwages and other benefits she would have received were it not for the illegal dismissal. Petitioner was also ordered to pay private respondent moral damages of P50,000.00. 7. On appeal, the NLRC in its resolution affirmed the said decision with respect to the reinstatement of Salazar but limited the backwages to a period of two (2) years and deleted the award for moral damages. ISSUES 1. Whether or not the suspension of Salazar was illegal. 2. Whether or not Salazar was entitled to reinstatement and two (2) years' backwages with respect to her subsequent dismissal. HELD 1. YES. The investigative findings of Mr. Maramara, which pointed to Delfin Saldivar's acts in conflict with his position as technical operations manager, necessitated immediate and decisive action on any employee closely associated with Saldivar. The suspension of Salazar was further impelled by the discovery of the missing airconditioning unit inside the apartment private respondent shared with Saldivar. Under such circumstances, preventive suspension was the proper remedial recourse available to the company pending Salazar's investigation. By itself, preventive suspension does not signify that the company has adjudged the employee guilty of the charges she was asked to answer and explain. Such disciplinary measure is resorted to for the protection of the company's property pending investigation of any alleged malfeasance or misfeasance committed by the employee. Thus, it is not correct to conclude that petitioner GMCR had violated Salazar's right to due process when she was promptly suspended. If at all, the fault lay with private respondent when she ignored petitioner's memorandum "giving her ample opportunity to present

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That in all things, God may be glorified. (her) side to the Management." Instead, she went directly to the Labor Department and filed her complaint for illegal suspension without giving her employer a chance to evaluate her side of the controversy. 2. YES. Under Art. 279 of the Labor Code, as amended: “Security of Tenure.-In cases of regular employment, the employer shall not terminate the services of an employee except for a just cause or when authorized by this Title. An employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his compensation was withheld from him up to the time of his actual reinstatement." In the case at bar, there was no evidence which clearly showed an authorized, much less a legal, cause for the dismissal of private respondent, she had every right, not only to be entitled to reinstatement, but as well, to full backwages. The intendment of the law in prescribing the twin remedies of reinstatement and payment of backwages is, in the former, to restore the dismissed employee to her status before she lost her job, for the dictionary meaning of the word "reinstate is "to restore to a state, condition, position, etc. from which one had been removed" and in the latter, to give her back the income lost during the period of unemployment. Both remedies, looking to the past, would perforce make her "whole." The Labor Code is clear and unambiguous: "An employee who is unjustly dismissed from work shall be entitled to reinstatement ... and to his full backwages . . ." Neither does the provision admit of any qualification. An exception to the rule is when the reinstatement may be inadmissible due to ensuing strained relations between the employer and the employee. 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. The principle of "strained relations" cannot be applied indiscriminately. Otherwise, reinstatement can never be possible simply because some hostility is invariably engendered between the parties as a result of litigation. That is human nature. Besides, no strained relations should arise from a valid and legal act of asserting one's right; otherwise an employee who shall assert his right could be easily separated from the service, by merely paying his separation pay on the pretext that his relationship with his employer had already become strained. Here, it has not been proved that the position of private respondent as systems analyst is one that may be characterized as a position of trust and confidence such that if reinstated, it may well lead to strained relations between employer and employee. Hence, this does not constitute an exception to the general rule mandating reinstatement for an employee who has been unlawfully dismissed. As a system analyst, Salazar was very far removed from operations involving the procurement of supplies. In the instant case, petitioner has predicated its dismissal of Salazar on loss of confidence. As has been held before, while loss of confidence or breach of trust is a valid ground for termination, it must rest on some basis which must be convincingly established. An employee may not be dismissed on mere presumptions and suppositions. While the Court should not condone the acts of disloyalty of an employee, neither should it dismiss him on the basis of suspicion derived from speculative inferences. To rely on the Maramara report as a basis for Salazar's dismissal would be most inequitous because the bulk of the findings centered principally Saldivar’s alleged thievery and anomalous transactions as technical operations' support manager. Said report merely insinuated that in view of Salazar's special relationship with Saldivar, Salazar might have had direct knowledge of Saldivar's questionable activities. Direct evidence implicating private respondent is wanting from the records. Thus, she was illegally dismissed.

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98. Roquero v. Philippine Airlines ROQUERO VS. PHILIPPINE AIRLINES, INC. G.R. NO. 152329. APRIL 22, 2003. PUNO, J. FACTS 1. Petitioner Alejandro Roquero and Rene Pabayo were ground equipment mechanics of respondent Philippine Airlines, Inc. (PAL). They were caught red-handed possessing shabu within the company premises by PAL Security and NARCOM personnel. 2. Subsequently, they received a “notice of administrative charge” for violating the PAL Code of Discipline. They were required to answer the charges and were placed under preventive suspension. In their answer, petitioner and Pabayo alleged that they were instigated by PAL to take the drugs. 3. In a Memorandum, Roquero and Pabayo were dismissed by PAL. Thus, they filed a case for illegal dismissal. The Labor Arbiter upheld the dismissal but awarded the parties separation pay. During the period of their appeal with the NLRC, the complainants were acquitted by the RTC in the criminal case charging them of violation of Republic Act 6425. 4. The NLRC ruled in favor of the complainants finding PAL guilty of instigation. However, it ordered reinstatement to their former positions but without backwages. Roquero and Pabayo did not appeal the decision but filed a motion for a writ of execution of the reinstatement order. The Labor Arbiter granted the motion but PAL refused to executed on the ground that they have already filed a petition for review before the Supreme Court. 5. During the pendency of the case, PAL and Pabayo executed a compromise agreement and the latter withdrew the case with regard to him. The Court of Appeals upheld the dismissal but did not award the separation pay on the ground that one who has been validly dismissed is not entitled to those benefits. ISSUES 1. Was Roquero’s dismissal valid? 2. Can the executory nature of the reinstatement order be halted by a petition filed in the higher courts without any restraining order or preliminary injunction having been ordered in the meantime? HELD 1. YES. Roquero is guilty of serious misconduct for possessin and using shabu. He violated Chapter 2,Article VII, section 4 of the PAL Code of Discipline stating, “any employee who, while in the company premises or on duty, takes or is under the influence of prohibited or controlled drugs, or hallucinogenic substances or narcotics shall be dismissed.” Serious 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 judgement.” For serious misconduct to warrant the dismissal of an employee, it (1) must be serious; (2) must relate to the performance of the employee’s duty; and (3) must show that the employee has become unfit to continue working for the employer. It is of public knowledge that drugs can damage the mental faculties. Roquero’s job was with the maintenance and repair of PAL’s airplanes. He cannot discharge that duty if he is a drug user. His failure to do this job can mean great loss of lives and properties. Hence, even if he was instigated to take the drugs, he has no right to be reinstated to his position. Petitioner cannot also complain that he was denied procedural due process for PAL complied with the two-notice requirement before dismissing him. The twin-notice rule requires (1) the notice which apprises the employee of the particular acts or omissions for which his dismissal is being sought along with the opportunity for the employee to air his side, and (2) the subsequent

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That in all things, God may be glorified. notice to of the employer’s decision to dismiss him. Both were given by respondent PAL. 2. NO. Article 223, paragraph 3 of the Labor Code, as amended by Section 12 of Republic Act No. 6715, and Section 2 of the NLRC Interim Rules on Appeals under RA No. 6715, provide that an order of reinstatement by the Labor Arbiter is immediately executory even pending appeal. The rationale being the law itself laid down a compassionate policy as to vivify and enhance the provisions of the 1987 Constitution on labor and the working man. The order of reinstatement is immediately executory. The unjustified refusal of the employer to reinstate a dismissed employee entitles him to payment of his salaries effective from the time the employer failed to reinstate him despite the issuance of a writ of execution. Unless there is a restraining order issued, it is ministerial upon the Labor Arbiter to implement the order of reinstatement. In the case at bar, no restraining order was granted. Thus, it was mandatory for PAL to actually reinstate Roquero or reinstate him in the payroll. Having failed to do so, PAL must pay Roquero the salary he is entitled to, as if he was reinstated, from the time of the decision of the NLRC until the finality of the decision of the SC. Technicalities have no room in labor case where the Rules of Court are applied only in a suppletory manner and only to effectuate the objectives of the Labor Code and not to defeat it. Hence, even if the reinstatement order 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 of the higher court. On the other hand, if the employee has been reinstated during the appeal period and such order is reversed with finality, the employee is not required to reimburse whatever salary he has received for he is entitled to such, more so if he actually rendered services during the period.

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99. Maranaw Hotel v. NLRC MARANAW HOTEL RESORT CORPORATION VS. NLRC 238 SCRA 190 DAVIDE, JR., J.: FACTS 1. On June 16, 1990, Gina G. Castro, was hired on a probationary basis for 6 months as a guest relations officer of the Century Park Sheraton Hotel owned by petitioner Maranaw Hotel. 2. On Nov. 10, 1990, she was dismissed on the ground of failure to meet the standards set forth in her probationary employment contract. She then filed with the Arbitration Branch of the NLRC a complaint for illegal dismissal. 3. The Labor Arbiter rendered a decision finding the dismissal of Castro as illegal and ordered her reinstatement. The petitioner filed for a motion for execution which was not acted upon. 4. The NLRC reversed the findings of the Labor Arbiter and held that there was no illegal dismissal but rather failure of the private respondent to comply with the petitioner's standards for permanent employment. 5. However, notwithstanding the above pronouncements, the NLRC considered petitioner on payroll reinstatement from the time of filling motion for execution until promulgation of its decision. 6. The NLRC based its decision on Art. 223 of the Labor Code. Art. 223 provides that the decision of the Labor Arbiter reinstating a dismissed or separated employee, insofar as the reinstatement aspect is concerned, shall immediately be executory, even pending appeal. The employee shall either be admitted back to work under the terms and conditions prevailing prior to his dismissal or separation or, at the option of the employer, merely reinstated in the payroll. 7. Maranaw filed a petition for certiorari alleging that the NLRC committed grave abuse of discretion. ISSUE Whether or not NLRC committed grave abuse of discretion. HELD YES. It is clear from art. 223 that if execution pending appeal is granted, the employee concerned shall be admitted back to work under terms and conditions prevailing prior to is dismissal or separation. However, instead of doing so, the employer is granted the option to merely reinstate the employee in the payroll. This would simply mean that although not admitted back to work, the employee would nevertheless be included in the payroll and entitled to receive her salary and other benefits as if she were in fact working. It must be stressed, however, that although the reinstatement aspect of the decision is immediately executory, it does not follow that it is self-executory. There must be a writ of execution which is not present in the case at bar for the motion for execution was not acted upon.

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100. Suario v. Bank of the Philippine Island SUARIO VS. BANK OF THE PHILIPPINE ISLANDS G.R. NO. L-50459 AUGUST 25, 1989 FACTS 1. The petitioner, filed this petition for review of the decision of the National Labor Relations Commission (NLRC) which denied his claim for damages arising from an alleged illegal dismissal. In addition to the separation pay already awarded to him, the petitioner asks for P9,995.00 actual damages, P300,000.00 moral damages, P200,000.00 exemplary damages, and attorney's fees to be determined by the Court. 2. Complainant has been a loyal employee of the respondent bank since March, 1969, first assigned as a saving clerk, then rose to become the head of the loan section in 1976 with an official designation as Credit Investigator Appraiser-Credit Analyst. During the time of the complainant' s employment with the respondent bank, he pursued his studies of law without criticism or adverse comments from the respondent bank. 3. Sometime in March, 1976, the complainant verbally requested the then Asst. VicePresident and Branch Manager, Mr. Armando N. Guilatco, for a 6-month leave of absence without pay purposely to take the 1976 pre-bar review in Manila and that the said Mr. Guilatco informed the complainant that there would be no problem as regards the requested leave of absence; 4. That sometime in May, 1976, the complainant received a verbal notice from the new Branch Manager, Mr. Vicente Casino, that the respondent's Head Office approved only a 30-day leave of absence without pay but that Mr. Guilatco, then assigned in Head Office as Vice President, advised him (Casino) to inform the complainant to just avail of the 30-day leave of absence first and then proceed to Manila for the review since the request would be ultimately granted; 5. Complainant never suspected that his application would be disapproved, much less any bad faith on the part of the respondent bank to discriminate union member (sic), since it has been the policy of the respondent bank to grant request of this nature as shown in the case of four (4) former employees who were all granted leave of absence without pay. 6. During the last week of August, 1976, the complainant received another letter from Douglas E. Aurelio, attaching a xerox copy of the application for a Clearance to terminate on the ground of resignation/ or abandonment. ...The complainant failed to file his opposition since as above averred to, he was already in Manila taking up the review and was then very busy since the bar examination was only two months shy; Sometime during the first week of December, 1976, the complainant went to the respondent bank but was verbally informed that he was already dismissed; ISSUE Whether or not the NLRC committed grave abuse of discretion in denying the petitioner's claim for actual, moral and exemplary damages plus attorney's fees in addition to his separation pay. HELD NO. We do not find any bad faith or fraud on the part of the bank officials who denied the petitioner's request for a six months' leave of absence without pay. If the petitioner was made to believe that his request would be granted, we can not fault the branch manager or his subsequent replacement for giving their assurances. They were merely personal assurances which could be reconsidered on the basis of later developments or upon consultation with higher authorities and which are not binding. Certainly, the bank officials who gave their verbal assurances had only the petitioner's paramount welfare in their minds. There is no evidence to show that they meant to deceive the petitioner. They themselves thought that such a request would be granted. Unfortunately, company policy had to be followed. The fact that the petitioner's request for six months' leave of absence was denied does not ipso facto entitle him to damages. It is incumbent upon the petitioner to prove that there was malice or bad faith on the part of the private

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That in all things, God may be glorified. respondents in terminating him On the contrary, the records of this petition show that the private respondent acted in accordance with law before effecting the dismissal. The records also show that there was a prior application with the Ministry of Labor to terminate the petitioner's employment. A copy of said application was furnished to the petitioner. The petitioner, however, did not oppose such application nor did he do anything to preserve his right. Neither can we consider the private respondents' response to the petitioner's query regarding his status as having given him false hopes. The referral to the personnel department was merely a part of the formal procedure undertaken by the bank. Such referral does not show that the bank acted in a wanton or willful manner.

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101. Sunio v. NLRC SUNIO VS. NLRC 127 SCRA 390 MELENCIO-HERRERA, J. FACTS 1. EMRACO and CIPI, sister corporations , sold an iceplant to RDFC, with a mortgage on the same properties constituted the latter in favor of the former to secure the payment of the balance of the purchase price. 2. By virtue of that sale, EMRACO-CIPI, terminated the services of all their employees including private respondents herein, and paid them their separation pay. RDFC hired its own employees and operated the plant. 3. In 1973, RDFC sold the iceplant to petitioner ICC, headed by its President and General Manager, petitioner Alberto Sunio. 4. Petitioners also hired their own employees as private respondents were no longer in the plant. 5. The sale was subject to the mortgage in favor of EMRAC-CIPI. 6. Both RDFC-ICC failed to pay the balance of the purchase price, as a consequence of which, EMRACO-CIPI instituted extra-judicial foreclosure proceedings. The properties were sold at public auction, the highest bidder being EMRACO-CIPI. 7. That day, EMRACO-CIPI sold the ice plant to Nilo Villanueva, subject to the right of redemption of RDFC. Nilo Villanueva then rehired private respondents. 8. RDFC subsequently redeemed the ice plant. Petitioners did not re-employ private respondents. The latter filed complaints against petitioners for illegal dismissal before the Regional Office of Ministry of Labor and Employment. The Assistant Regional Director of the latter declared its decision ordering the reinstatement of private respondent. On appeal, NLRC affirmed the Regional Director's decision. ISSUE Whether or not the NLRC acted with grave abuse of discretion amounting to lack or excess of jurisdiction in ordering the reinstatement of private respondents and the payment of their backwages. HELD Petitioners argue, among others, that no employer-employee relationship exists between them and private respondents because there is no privity of contract that exist between them, the latter being employees of Nilo Villanueva who re-hired them when he took over the operation of the ice plant from CIPI; and that no succession of rights and obligations took place between Villanueva and petitioners as the transfer of possession was a consequence of the exercise of the right of redemption. Private respondents, on the other hand, countered that the sale of a business of a going concern does not ipso facto terminate employer-employee relations when the successor-employer continues the business operation of the predecessor-employer in an essentially unchanged manner. Private respondents argue that the change of management or ownership is not one of the just causes for the termination of services of employees under Article 283 of the Labor Code, as amended. We sustain petitioners. It is true that the sale of a business of going concern does not ipso facto terminate the employer-employee relations insofar as the successor-employer is concerned, and that change of ownership or management of an establishment or company is not one of the just causes provided by law for the termination of employment. The situation here, however, was not one of simple change of ownership. Of not is the fact that when EMRACO-CIPI sold the plant to RDFC, CIPI had terminated the services of its employees, including herein private respondents, giving them their separation pay which they accepted. When RDFC took over ownership and management, therefore, it hired its own employees, not the private respondents, who were no longer there. Thus, it cannot be justifiably said that the plant together with its staff and personnel moved from one ownership to another, No succession of employment rights and obligations can be said to have taken place between EMRACO-CIPI-Nilo Villanueva, on the one hand, and petitioners on the

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That in all things, God may be glorified. other. As regards the personal liability of Sunio, he cannot be made jointly and severally liable with petitioner company and CIPI for the payment of backwages of private respondents. He was impleaded in the Complaint in his capacity as General Manager or petitioner corporation. There appears to be no evidence on the record that he acted maliciously or in bad faith in terminating the services of private respondents. His act is therefore within the scope of his authority and was a corporate act. It is basic that a corporation is invested by law with a personality separate and distinct from those of the persons composing it as well as from that of any other legal entity to which it may be related. Therefore, petitioner Sunio should not have been made personally answerable for the payment of private respondents back salaries.

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102. Uichico v. NLRC UICHICO V. NLRC 237 SCRA 35 HERMOSISIMA, JR., J. FACTS 1. Private respondents were employed by Crispa, Inc. for many years in the latter's garments factory located in Pasig Boulevard, Pasig City. 2. Sometime in September, 1991, private respondents' services were terminated on the ground of retrenchment due to alleged serious business losses suffered by Crispa, Inc. in the years immediately preceding 1990. 3. Respondent employees, on November, 1991, filed before the NLRC, National Capital Region, Manila, three (3) separate complaints for illegal dismissal and diminution of compensation against Crispa, Inc., Valeriano Floro , and the petitioners. Valeriano Floro was a major stockholder, incorporator and Director of Crispa, Inc., while the petitioners were high ranking officers and directors of the company. 4. After due hearing, the Labor Arbiter rendered a decision dismissing the complaints for illegal dismissal but at the same time ordering Crispa, Inc., Floro and the petitioners to pay respondent employees separation pays equivalent to seventeen (17) days for every year of service. Upon motion of reconsideration, NLRC affirmed the Labor Arbiter's decision. ISSUE Whether or not Crispa, Inc. is guilty in illegally dismissing private respondents; and whether or not petitioners herein should be held jointly and severally liable with Crispa for all the money claims of the private respondents. HELD Retrenchment, or "lay-off" in layman's parlance, is the termination of employment initiated by the employer through no fault of the employee's and without prejudice to the latter, resorted to by the management during periods of business recession, industrial depression, or seasonal fluctuations, or during lulls occasioned by lack of orders, shortage of materials, conversion of a plant for a new production program or the introduction of new methods or more efficient machinery, or of automation. We are more in accord with the aforequoted observations made by the NLRC. It is true that administrative and quasi-judicial bodies like the NLRC are not bound by the technical rules of procedure in the adjudication of cases. However, this procedural rule should not be construed as a license to disregard certain fundamental evidentiary rules. While the rules of evidence prevailing in the courts of law or equity are not controlling in proceedings before the NLRC, the evidence presented before it must at least have a modicum of admissibility for it to be given some probative value. The Statement of Profit and Losses submitted by Crispa, Inc. to prove its alleged losses, without the accompanying signature of a certified public accountant or audited by an independent auditor, are nothing but self-serving documents which ought to be treated as a mere scrap of paper devoid of any probative value. For sure, this is not the kind of sufficient and convincing evidence necessary to discharge the burden of proof required of petitioners to establish the alleged losses suffered by Crispa, Inc. in the years immediately preceding 1990 that would justify the retrenchment of respondent employees. In fact, petitioners, as directors and officers of Crispa, Inc., already concede, albeit quite belatedly, in its Reply to Comment of Public Respondent, the finding of public respondent NLRC that petitioners utterly failed to establish the alleged financial losses borne by Crispa, Inc., thus making the company guilty of illegal dismissal against the private respondents. According to petitioners, what they are actually assailing is the decision of the NLRC holding them solidarily liable with the company for the payment of separation pay and backwages to the private respondents. It is the contention of the petitioners that the award of backwages and separation pay is a corporate obligation and must therefore be assumed by Crispa, Inc. alone. We do not agree. In labor cases, particularly, corporate directors and officers are solidariy liable with the corporation for the termination of employment of corporate employees done

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That in all things, God may be glorified. with malice or in bad faith. In this case, it is undisputed that petitioners have a direct hand in the illegal dismissal of respondent employees. They were the ones, who as high-ranking officers and directors of Crispa, Inc., signed the Board Resolution retrenching the private respondents on the feigned ground of serious business losses that had no basis apart from an unsigned and unaudited Profit and Loss Statement which, to repeat, had no evidentiary value whatsoever. This is indicative of bad faith on the part of petitioners for which they can be held jointly and severally liable with Crispa, Inc. for all the money claims of the illegally terminated respondent employees in this case.

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103. Asionics Philippines, Inc. v. NLRC ASIONICS PHILIPPINES VS. NLRC 290 SCRA 164 VITUG, J. FACTS 1. API is a domestic corporation engaged in the business of assembling semiconductor chips and other electronic products mainly for export. 2. Yolanda Boaquina and Juana Gayola started working for API in 1979 and 1988, respectively, as material control clerk and as production operator. 3. During the third quarter of 1992, API commenced negotiations with the duly recognized bargaining agent of its employees, the Federation of Free Workers ("FFW"), for a Collective Bargaining Agreement ("CBA"). 4. A deadlock, however, ensued and the union decided to file a notice of strike. This event prompted the two customers of API, Indala and CP Clare Theta J, to thereupon refrain from sending to API additional kits or materials for assembly. 5. API, given the circumstance that its assembly line had to thereby grind to a halt, was forced to suspend operations pursuant to Article 286 of the Labor Code. Private respondents Boaquina and Gayola were among the employees asked to take a leave from work. 6. Upon the resolution of the bargaining deadlock in October of 1992, a CBA was concluded between API and FFW. 7. Subsequently, and inasmuch as its business activity remained critical, API was constrained to implement a company-wide retrenchment affecting one hundred five (105) employees from a work force that otherwise totalled three hundred four (304). 8. Boaquina and Gayola were ordered by API to take an indefinite leave of absence. They were not recalled since then. 9. Private respondents joined the Lakas ng Manggagawa sa Pilipinas Labor Union (Lakas Union) and, through the latter union, filed a notice of strike against API on the ground of unfair labor practice. The Labor Arbiter declared the strike as illegal. 10. Meanwhile, at the instance of several employees which included private respondents Boaquina and Gayola, a complaint for illegal dismissal, violation of labor standards and separation pay, as well as for recovery of moral and exemplary damages, was filed against API and/or Frank Yih (API's President) before the NLRC National Capital Region Arbitration Branch. 11. The Labor Arbiter declared the private respondent's dismissal as illegal. On appeal, NLRC modified the Labor Arbiter's decision declaring that private respondents were not illegally dismissed but were validly terminated due to the retrenchment policy implemented by API. ISSUE 1. Whether or not private respondents who are officers of Lakas Union are still entitled to separation pay and indemnity despite having participated in a strike that has been declared illegal. 2. Whether or not a stockholder/director/officer of a corporation can be held liable for the obligation of the corporation absent any proof and finding of bad faith. HELD Anent the first issue, we must rule in the negative. It is quite evident that the termination of employment of privaterespondents was due to the retrenchment policy adopted by API and not because of the former's union activities. The decision of Labor Arbiter, declaring private respondents to have lost their employment status due to their participation in an illegal strike is of no really significance to petitioners. It should suffice to say, as so aptly observed by the NLRC, that the retrenchment of private respondents has, in fact, preceded the declaration of strike. It is, instead, on the issue of joint and solidary liability of petitioner Frank Yih with API that the Court has decided to give due course to the instant petition. The court cannot agree with the Solicitor-General in suggesting that even if Frank Yih had no direct hand in the dismissal of the respondents he should be personally liable therefor on account alone of his being the President and majority stockholder of the company. In Sunio vs. NLRC, petitioner

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Article 283 – 284: Authorized Causes for Termination

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104. Wiltshire File Co. v. NLRC WILTSHIRE FILE CO., INC. VS. NLRC 193 SCRA 665 FELICIANO, J.: FACTS 1. Private respondent Vicente Ong was the Sales Manager of petitioner from March 16, 1981 up to June 18, 1985. 2. On 13 June 1985, upon private respondent's return from a business and pleasure trip abroad, he was informed by the President of petitioner that his services were being terminated. 3. Private respondent maintains that he tried to get an explanation from management of his dismissal but to no avail. 4. When private respondent again tried to speak with the President of petitioner, the company's security guard handed him a letter which formally informed him that his services were being terminated upon the ground of redundancy. ISSUE Whether or not private respondent is validly terminated. HELD The Court indeed found that petitioner had serious financial difficulties before, during and after the termination of the services of private respondent. The company showed a net loss of P4,431,321.00 in its audited financial statements. Moreover, Wiltshire finally closed its doords and terminated all operations in the Philippines on January 1987, barely 2 years after the termination of private respondent. The Court considered that finally shutting down business operations constitutes strong confirmatory evidence of petitioner's previous financial distress. It is also to be noted that the letter informing private respondents of the termination of his services used the word “redundant”, that letter also referred to the company having “incurred financial losses which in fact has compelled it to resort to retrenchment to prevent further losses”. Thus, what the letter was in effect saying was that because of financial losses, retrenchment was necessary, which in turn resulted in the redundancy of private respondent's position. That no other person was holding the same position that private respondent held prior to the termination of his services, does not show that his position had not become redundant. Redundancy, for purposes of the Labor Code, exists where the services of an employee are in excess of what is reasonably demanded by the actual requirements of the enterprise. A position is redundant where it is superfluous, and superfluity of a position or positions may be the outcome of a number of factors such as overhiring of workers, decreased volume of business, or dropping of a particular product line or service activity previously manufactured or undertaken by the enterprise.

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105. Escareal v. NLRC ESCAREAL VS. NLRC G.R. NO 99359 SEPTEMBER 2,1992 DAVIDE, JR., J.: FACTS 1. The controversy stemmed from the dismissal of the petitioner from the private respondent Philippine Refining Company, Inc. (hereinafter, PRC) after almost eleven (11) years of gainful employment. 2. Petitioner was hired by the PRC for the position of Pollution Control Manager effective on 16 September 1977 with a starting monthly pay of P4,230.00; the employment was made permanent effective on 16 March 1978. 3. Bases for the hiring of the petitioner are Letter of Instruction (LOD No. 588 implementing the National Pollution Control Decree, P.D. No. 984, dated 1.9 August 1977, the pertinent portion of which reads: “All local governments, development authorities, government-owned or controlled corporations, industrial, commercial and manufacturing establishments, and all other public and private entities, whose functions involve the discharge or emission of pollutants into the water, air and/or land resources or the operation, installation or construction of any anti-pollution device, treatment work or facility, sewerage or sewerage disposal system, shall each appoint and/or designate a Pollution Control Officer." and Memorandum Circular No. 02,6 dated 3 August 1981 and implementing LOI No. 588, which amended Memorandum Circular No. 007, Series of 1977, issued by the National Pollution Control Commission (NPCC). 4. On 1 April 1979, petitioner was also designated as Safety Manager pursuant to Article 162 of the Labor Code (P.D. 442, as amended) and the pertinent implementing rule thereon. 5. In the course of his employment, petitioner's salary was regularly upgraded. 6. Sometime in the first week of November 1987, private respondent George B. Ditching, who was then PRC's Personnel Administration Manager, informed petitioner about the company's plan to declare the position of Pollution Control and Safety Manager redundant. 7. Ditching attempted to convince petitioner to accept the redundancy offer or avail of the company's early retirement plan. Petitioner refused. 8. Notwithstanding the petitioner’s refusal however, his services were terminated. 9. On the date of the effectivity of his termination, petitioner was only fifty seven (57) years of age. He had until 21 July 1991, his sixtieth (60th) birth anniversary, before he would have been compulsorily retired. 10. In view of all this, petitioner filed a complaint for illegal dismissal with damages against the private respondent PRC. ISSUE Whether or not petitioner’s services were validly terminated on the ground of redundancy HELD NO. In Wiltshire File Co., Inc. vs. NLRC, this Court held that redundancy, for purposes of the Labor Code, exists where the services of an employee are in excess of what is reasonably demanded by the actual requirements of the enterprise; a position is redundant when it is superfluous, and superfluity of a position or positions may be the outcome of a number of factors, such as the overhiring of workers, a decreased volume of business or the dropping of a particular product line or service activity previously manufactured or undertaken by the enterprise. Private respondent PRC had no valid and acceptable basis to declare the position of Pollution Control and Safety Manager redundant as the same may not be considered as superfluous by the express mandate of the provisions earlier cited, said positions are required by law. Thus, it cannot be gainsaid that the services of the petitioner are in excess of what is reasonably required by the enterprise.

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That in all things, God may be glorified. If the change was effected to consolidate the functions of the pollution control and safety officer with the duties of the Industrial Engineering Manager, as private respondent postulates, such substitution was done in bad faith for as had already been pointed out, the Industrial Engineering Manager was hardly qualified for the position. If the aim was to generate savings in terms of the salaries that PRC would not be paying the petitioner any more as a result of the streamlining of operations for improved efficiency, such a move could hardly be justified in the face of PRC's hiring of ten (10) fresh graduates for the position of Management Trainee and advertising for vacant positions in the Engineering/Technical Division at around the time of the termination. Besides, there would seem to be no compelling reason to save money by removing such an important position. As shown by their recent financial statements, PRC's yearend net profits had steadily increased from 1987 to 199038 While concededly, Article 283 of the Labor Code does not require that the employer should be suffering financial losses before he can terminate the services of the employee on the ground of redundancy, it does not mean either that a company which is doing well can effect such a dismissal whimsically or capriciously. The fact that a company is suffering from business losses merely provides stronger justification for the termination. In this regard, it could be concluded that the respondent PRC was merely in a hurry to terminate the services of the petitioner as soon as possible in view of the latter’s impending retirement; it appears that said company was merely trying to avoid paying the retirement benefits the petitioner stood to receive upon reaching the age of 60. PRC acted in bad faith.

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106. San Miguel Corporation v. NLRC SAN MIGUEL CORPORATION VS. NLRC GR. NO. 99266 MARCH 2, 1999 PURISIMA, J.: FACTS 1. In July 1990, San Miguel Corporation, alleging the need to streamline its operations due to financial losses, shut down some of its plants and declared 55 positions as redundant, listed as follows: seventeen (17) employees in the Business Logistics Division ("BLD"), seventeen (17) in the Ayala Operations Center (AOC), and eighteen (18) in the Magnolia-Manila Buying Station ("Magnolia-MBS"). 2. Consequently, the private respondent union filed several grievance cases for the said retrenched employees, praying for the redeployment of the said employees to the other divisions of the company. 3. Grievance proceedings were conducted. However, most of the employees were redeployed, while others accepted early retirement. As a result only 17 employees remained when the parties proceeded to the third level (Step 3) of the grievance procedure. 4. In a meeting on October 26, 1990, petitioner informed private respondent union that if by October 30, 1990, the remaining 17 employees could not yet be redeployed; their services would be terminated on November 2, 1990. The said meeting adjourned when Mr. Daniel S. L. Borbon II, a representative of the union, declared that there was nothing more to discuss in view of the deadlock. ISSUE 1. Whether or not San Miguel Corporation exercised a management prerogative. 2. Whether or not San Miguel Corporation violated the Collective Bargaining Agreement. HELD 1. YES. Abolition of departments or positions in the company is one of the recognized management prerogatives. Noteworthy is the fact that the private respondent does not question the validity of the business move of petitioner. In the absence of proof that the act of petitioner was ill-motivated, it is presumed that petitioner San Miguel Corporation acted in good faith. In fact, petitioner acceded to the demands of the private respondent union by redeploying most of the employees involved; such that from an original 17 excess employees in BLD, 15 were successfully redeployed. In AOC, out of the 17 original excess, 15 were redeployed. In the Magnolia - Manila Buying Station, out of 18 employees, 6 were redeployed and only 12 were terminated 2. NO, alleged violation of the CBA, is chargeable against the private respondent union. In abandoning the grievance proceedings and stubbornly refusing to avail of the remedies under the CBA, private respondent violated the mandatory provisions of the collective bargaining agreement. Collective Bargaining Deadlock is defined as "the situation between the labor and the management of the company where there is failure in the collective bargaining negotiations resulting in a stalemate" This situation, is non-existent in the present case since there is a Board assigned on the third level (Step 3), of the grievance machinery to resolve the conflicting views of the parties. Instead of asking the Conciliation Board composed of five representatives each from the company and the union, to decide the conflict, private respondent union declared a deadlock, and thereafter, filed a notice of strike. The main purpose of the parties in adopting a procedure in the settlement of their disputes is to prevent a strike. This procedure must be followed in its entirety if it is to achieve its objective. x x x strikes held in violation of the terms contained in the collective bargaining agreement are illegal, specially when they provide for

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107. Serrano v. National Labor Relations Commission SERRANO V. NLRC 323 SCRA 445 MENDOZA, J. FACTS 1. Ruben Serrano was hired by Isetann Department Store as a security checker to apprehend shoplifters and prevent pilferage of merchandise. 2. He was initially hired a contractual but he eventually became a regular employee on April 4, 1985. In 1988, he became the head of the Security Checkers Section of Isetann. 3. In 1991, as a cost-cutting measure, Isetann decided to phase out its entire security section and engage the services of an independent security agency. 4. On October 11, 1991, Serrano was given a letter which provides the following: “In view of the retrenchment program of the company, we hereby reiterate our verbal notice to you of your termination as Security Section Head effective October 11, 1991.” 5. The loss of his employment prompted Serrano to file a complaint for illegal dismissal, illegal layoff, unfair labor practice, underpayment of wages and nonpayment of salary and overtime pay. ISSUE What are the sanctions for violations of the notice requirements in Articles 282 and 283 of the Labor Code? HELD In the case at bar, petitioner was given a notice of termination on October 11, 1991. On the same day, his services were terminated. He was thus denied his right to be given written notice before the termination of his employment and the question is the appropriate sanction for the violation of petitioner’s right. In the case of Wenphil Corp. v. NLRC, the court ruled that it will be highly prejudicial to the interest of the employer to impose on him the services of an employee who has been shown to be guilty of the charges that warranted his dismissal from employment. The employer must nevertheless held to account for the failure to extend to the employee the right to investigation before causing his dismissal. Considering the circumstances of the case, the employer was ordered to indemnify the employee the amount of P1,000.00. The measure of this award depends on the facts of each case and the gravity of the emission committed by the employer. The number of cases involving dismissals without the requisite notice to the employee, although effected for just or authorized causes, suggests that the imposition of fire for violation of the notice requirement has not been effective in deterring violations of the notice requirement. The remedy is to order the payment to the employee of the full backwages from the time of his dismissal until the court finds that the dismissal was for a just cause. But otherwise, his dismissal must be upheld and he should not be reinstated. This is because his dismissal is ineffectual. For the same reason, if an employee is laid off for any of the causes in Articles 283-284 but the employer did not give him and the DOLE a 30-day written notice of termination in advance, then the termination of his employment should be considered ineffectual and he should be paid backwages. However, the termination of his employment should not be considered void but should simply be paid sepration pay as provided in Article 283 in addition to backwages.

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108. AHS/Philippines Employees Union v. NLRC AHS/PHILIPPINE EMPLOYEES UNION VS. NLRC G.R. NO. 73721 MARHCH 30, 1987 FERNAN, J. FACTS 1. Petitioner AHS/Philippines Employees Union [FFW] was the recognized collective bargaining agent of the rank-and-file employees of private respondent AHS/Philippines Inc., a company engaged in the sale of hospital and laboratory equipment and Berna and Pharmaton products. 2. A collective bargaining agreement [CBA] was concluded between the parties for the period commencing December 1, 1981 to November 30, 1984. 3. Private respondent company claim that as early as October 1983, its operations had been seriously affected by the suspension of trade and foreign credit facilities, which situation grew worse in early 1984 when its suppliers of Berna and Pharmaton products insisted on a cash LIC basis or M guarantee by the mother company. 4. As respondent company could not comply with these requirements, it decided to strengthen its other division, the HML Division, which sold hospital and laboratory equipment bought from the parent company. 5. It posted a job-opening notice for 7 to 10 medical representatives and one field supervisor for the HML Division. Amelita. Calderon, a member of petitioner union applied for the position of medical representative, but was rejected for lack of the necessary educational attainment and unwillingness to accept provincial assignments. 6. When the economic crisis continued until mid-year of 1984, respondent company decided to change its marketing strategy for the Berna and Pharmaton products to ensure the whole company's viability. Instead of ethical selling through the field representatives, it was decided to shift to the over-the counter [OTC] method and to appoint Zuellig Pharma as national distributor. 7. As this move would result in the abolition of the Pharmaceutical Division, the union president was advised on July 26, 1984 of the impending dissolution of said division and was asked to suggest ways and means by which the termination could be effected in the smoothest manner possible and with least pain. 8. On August 1, 1984, the union president categorically stated to the company president that the union would oppose any termination at all costs, respondent company decided to proceed with the announcement of the termination by serving notice on the same day to the 31 employees of the Pharmaceutical Division, said termination to take effect immediately upon service thereof. 9. In lieu of the 3O day notice required by law, the employees were paid one month's salary. Fifteen accepted their termination. ISSUE Whether or not private respondent company validly terminated its employees. HELD NO. Under the New Labor Code, even if the dismissal is based on a just cause under Article 284, the one-month written notice to both the affected employee and the Minister of Labor is required, on top of the separation pay. Hence, unlike in the old termination pay laws, payment of a month's salary cannot be considered substantial compliance with the provisions of Art. 284 of the Labor Code. Since the dismissal of the 31 employees of the Pharmaceutical Division of respondent company was effected in violation of the above-cited provision, the same is illegal. Needless to say, in the absence of a showing that the illegal dismissal was dictated by antiunion motives, the same does not constitute an unfair labor practice as would be a valid ground for a strike. The remedy is an action for reinstatement with backwages and damages. Nevertheless, we take this actuation of respondent company as evidence of the abusive and Oppressive manner by which the retrenchment was effected. And while the lack of proper notice could not be a ground for a strike, this does not mean that the strike

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109. Asian Alcoholic Corporation v. NLRC ASIAWORLD PUBLISHING HOUSE VS. OPLE 152 SCRA 219 GUTIERREZ, JR., J.: FACTS 1. Private respondent Concepcion Joaquin was hired by Asiaworld Publishing House, Inc., as its advertising sales director. 2. As such, she managed and supervised the petitioner's advertising sales force, prepared advertising sales campaign programs, and solicited advertisements from local and foreign adversities. 3. Due to the respondent's able management and hard work, Asiaworld's income from sales advertising increased tremendously. 4. Sometime in 1976, Vicente Pesayco, Jr., the corporation's president and private respondent's immediate superior, requested Ms. Joaquin not to go on vacation leave because she was needed to help direct the advertising sales campaign of Asia Forum, a magazine the petitioner had newly acquired. 5. Respondent Joaquin acceded to such request. She did not avail of her vacation leave benefits for three times at the request of Pesayco. 6. Meanwhile, in October of 1976, the respondent was eventually designated to take charge of the advertising sales work for Asia Forum. In 1977, the private respondent was appointed Vice President for marketing in a concurrent capacity and her monthly compensation was increased to P2,300.00. 7. On May 3, 1978, the petitioner advised the private respondent in writing that her services would be terminated effective May 16, 1978 because of continued losses and offered to pay her one (1) month's salary for her more than three (3) years of service. 8. The private respondent filed a complaint with the Office of the Regional Director, National Capital Region (NCR), Minister of Labor and Employment for illegal dismissal and for recovery of unpaid earned and unused vacation leave credits and reimbursement of representation expenses which she advanced for the petitioner. 9. Minister of Labor ruled in favor of the private respondent and ordered her reinstatement. Petitioner appealed the decision. ISSUE 1. Whether or not private respondent was illegally dismissed. 2. May the private respondent be reinstated? HELD 1. The finding of facts by the Minister of Labor is binding upon this court. Even if we treat the instant petition captioned as "Petition for Review" as a petition for certiorari, there is still no reason why we should arrive at different factual findings. In the first place, the only justification presented by the petitioner for dismissing the private respondent was its financial statement showing a loss of P196,087.83 for the year 1977. Asiaworld failed to show that fair and reasonable standards were used in ascertaining who would be dismissed and who would be retained among its employees. As the Solicitor General correctly stated, there must be fair and reasonable criteria to be used in selecting employees to be dismissed, such as: (a) less preferred status (e.g. temporary employee); (b) efficiency rating, and (c) seniority. (Fernandez, P.V., The Law of Employee Dismissal, pp. 130-131, 1976 Ed.) In the case at bar, the petitioner never denied the fact that the private respondent was performing her job satisfactorily so much so that its income from sales advertising increased. 2. However, as regards the order of reinstatement, we have to take into account that antagonism between the petitioner and the private respondent has been brought about by the filing of this case plus the fact that a new employee had been hired to take over the place of the respondent. There is no showing that an equivalent

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That in all things, God may be glorified. position is available to Ms. Joaquin. All of these militate against the propriety of reinstating the respondent. I f the respondent had been a laborer, clerk, or other rank and file employee, there would be no problem in ordering her reinstatement with facility. But she was Vice President for Marketing of Asiaworld. An officer in such a key position can work effectively only if she enjoys the full trust and confidence of top management. It should be underscored that the backwages are being awarded on the basis of equity or in the nature of a severance pay. This means that a monetary award is to be paid to the striking employees as an alternative to reinstatement which can no longer be effected in view of the long passage of time or because of the realities of the situation. We, therefore, affirm the award of backwages with modifications as an alternative to reinstatement.

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110. Asian Alcoholic Corporation v. NLRC ASIAN ALCOHOL CORPORATION VS. NATIONAL LABOR RELATIONS COMMISSION 305 SCRA 416 J. PUNO FACTS 1. In September, 1991, the Parsons family, who originally owned the controlling stocks in Asian Alcohol, sold their majority rights to Prior Holdings, Inc. 2. The next month, Prior Holdings took over its management and operation. 3. To thwart further losses, Prior Holdings implemented are organizational plan and other cost-saving measures. 4. Some one hundred seventeen (117) employees out of a total workforce of three hundred sixty (360) were separated. 5. Seventy two (72) of them occupied redundant positions that were abolished. Of these positions, twenty one (21) held by union members and fifty one (51) by nonunion members. 6. The six (6) private respondents are among those union members 5 whose positions were abolished due to redundancy. 7. On December 18, 1992 the six (6) private respondents filed with the NLRC complaints for illegal dismissal with a prayer for reinstatement with backwages, moral damages and attorney's fees. 8. They alleged that Asian Alcohol used the retrenchment program as a subterfuge for union busting. They claimed that they were singled out for separation by reason of their active participation in the union. They also asseverated that Asian Alcohol was not bankrupt as it has engaged in an aggressive scheme of contractual hiring. 9. The executive Labor Arbiter dismissed the complainants. Private respondents appealed to the NLRC. NLRC ruled in favor of private respondents. Asian Alcohol moved for reconsideration of the foregoing decision. On September 25, 1997, the NLRC denied the motion. ISSUE Were the private respondents illegally dismissed? HELD NO. The right of management to dismiss workers during periods of business recession and to install labor saving devices to prevent losses is governed by Art. 283 of the labor Code, as amended. Under Art. 283, retrenchment and redundancy are just causes for the employer to terminate the services of workers to preserve the viability of the business. In exercising its right, however, management must faithfully comply with the substantive and procedural requirements laid down law and jurisprudence. In the instant case, private respondents never contested the veracity of the audited financial documents proffered by Asian Alcohol before the Executive Labor Arbiter. Neither did they object to their admissibility. We find that the reorganizational plan and comprehensive cost-saving program to turn the business around were not designed to bust the union of the private respondents. Retrenched were one hundred seventeen (117) employees. Seventy two (72) of them including private respondents were separated because their positions had become redundant. Redundancy exists when the service capability of the work force is in excess of what is reasonably needed to meet the demands on the enterprise. A redundant position is one rendered superfluous by any number of factors, such as overhiring of workers, decreased volume of business, dropping of a particular product line previously manufactured by the company or phasing out of a service activity priorly undertaken by the business. For the implementation of a redundancy program to be valid, the employer must comply with the following requisites: 1. written notice served on both the employees and the Department of Labor and Employment at least one month prior to the intended date of retrenchment;

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That in all things, God may be glorified. 2. payment of separation pay equivalent to at least one month pay or at least one month pay for every year of service, whichever is higher; 3. good faith in abolishing the redundant positions; and 4. fair and reasonable criteria in ascertaining what positions are to be declared redundant and accordingly abolished. In the case at bar, private respondents failed to proffer any proof that the management acted in a malicious or arbitrary manner. Absent such proof, the Court has no basis to interfere with the bona fide decision of management to effect more economic and efficient methods of production.

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111. Lopez Sugar Corporation v. Federation of Free Workers LOPEZ SUGAR CORPORATION V. FEDERATION OF FREE WORKERS, PHILIPPINE LABOR UNION ASSOCIATION (PLUA-NACUSIP) AND NATIONAL LABOR RELATIONS COMMISSION 189 SCRA 179 J. FELICIANO. FACTS Private respondent Federation of Free Workers ("FFW"), as the certified bargaining agent of the rank-and-file employees of petitioner, filed with the Ministry of Labor and Employment a complaint for unfair labor practices and recovery of union dues. In said complainant, FFW claimed that the terminations undertaken by petitioner were violative of the security of tenure of its members and were intended to "bust" the union and hence constituted an unfair labor practice. FFW claimed that after the termination of the services of its members, petitioner advised 110 casuals to report to its personnel office. FFW further argued that to justify retrenchment, serious business reverses must be "actual, real and amply supported by sufficient and convincing evidence." FFW prayed for reinstatement of its members who had been retired or retrenched. The Labor Arbiter denied petitioner's application for clearance to retrench its employees on the ground that for retrenchment to be valid, the employer's losses must be serious, actual and real and must be amply supported by sufficient and convincing evidence. Petitioner was ordered to reinstate twenty-seven retired or retrenched employees represented by private respondent Philippine Labor Union Association and FFW and to pay them full backwages from the time of termination until actual reinstatement. Both dissatisfied with the Labor Arbiter's decision, petitioner and respondent FFW appealed the case to public respondent NLRC. On appeal, the NLRC, finding no justifiable reason for disturbing the decision of the Labor Arbiter, affirmed that decision. Hence, this Petition for certiorari. ISSUE Is petitioner justified in the retrenchment of the private respondents? HELD NO. The retrenchment is unjustified. Petitioner argues that under the law, it has the right to reduce its workforce if made necessary by economic factors which would endanger its existence, and that for retrenchment to be valid, it is not necessary that losses be actually sustained. Article 283 of the Labor Code provides for the authorized causes of termination of employment. In its ordinary connotation, he phrase "to prevent losses" means that retrenchment or termination of the services of some employees is authorized to be undertaken by the employer sometime before the losses anticipated are actually sustained or realized. It is not, in other words, the intention of the lawmaker to compel the employer to stay his hand and keep all his employees until sometime after losses shall have in fact materialized ; if such an intent were expressly written into the law, that law may well be vulnerable to constitutional attack as taking property from one man to give to another. This is simple enough. At the other end of the spectrum, it seems equally clear that not every asserted possibility of loss is sufficient legal warrant for reduction of personnel. In the nature of things, the possibility of incurring losses is constantly present, in greater or lesser degree, in the carrying on of business operations, since some, indeed many, of the factors which impact upon the profitability or viability of such operations may be substantially outside the control of the employer. Thus, the difficult question is determination of when, or under what circumstances, the employer becomes legally privileged to retrench and reduce the number of his employees. The following are the general standards in terms of which the acts of petitioner employer must be appraised. 1. The losses expected should be substantial and not merely de minimis

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That in all things, God may be glorified. in extent. 2. The substantial loss apprehended must be reasonably imminent, as such imminence can be perceived objectively and in good faith by the employer. There should, in other words, be a certain degree of urgency for the retrenchment, which is after all a drastic recourse with serious consequences for the livelihood of the employees retired or otherwise laid-off. Because of the consequential nature of retrenchment, it must, 3. be reasonably necessary and likely to effectively prevent the expected losses. The employer should have taken other measures prior or parallel to retrenchment to forestall losses, i.e., cut other costs than labor costs. Whether or not an employer would imminently suffer serious or substantial losses for economic reasons is essentially a question of fact for the Labor Arbiter and the NLRC to determine. In the instant case, the Labor Arbiter found no sufficient and convincing evidence to sustain petitioner's essential contention that it was acting in order to prevent substantial and serious losses.

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113. Indino v. NLRC BENJAMIN G. INDINO, VS. NAT'L LABOR RELATIONS COM. G.R. NO. 80352, SEPTEMBER 29, 1989 SARMIENTO, J. FACTS The petitioner, Benjamin G. Indino, joined the Philippine National Construction Corporation (PNCC) as a project personnel officer on December 12, 1974. On January 6, 1981, he was transferred to private respondent DISC, a sister corporation of PNCC, which assigned him to its Philphos Project in Isabel, Leyte. On July 27, 1983, while the petitioner was on a paid vacation leave, he received a "letter-memorandum" from Roman B. Lopez, DISC personnel manager, informing him that his services were no longer needed at the Philphos Project in Leyte. Immediately after receipt of the "letter-memorandum," the petitioner filed with the NLRC a complaint for illegal dismissal against private respondent DISC; it was docketed as NLRC-NCR CASE No. 7- 3590-83. 4 The case, however, was prematurely terminated upon a joint motion to dismiss filed by the parties. On the basis of that agreement, the petitioner was reinstated on October 1, 1983 at respondent DISC's central office, occupying the position of Project Administrative Officer III. 6 Barely two months after his reinstatement, however, or on December 14, 1983, the petitioner received another "letter-memorandum" from respondent DISC, again terminating his services. Accordingly, pursuant to this "formal separation," the petitioner received from DISC the amount of P20,458.52 as separation benefits which the petitioner, however, refused to accept. He then filed a complaint for illegal dismissal. The labor arbiter dismissed the petitioner's complaint for lack of merit, whose decision was affirmed by NLRC. ISSUE Does Indino’s removal from employment amount to an illegal dismissal due to failure of the respondent DISC to show that it was incurring, or at least about to incur, losses? HELD The failure of the respondent DISC to show proof of its actual or imminent losses that would justify drastic cuts in personnel or costs, is fatal to its cause. Article 283 (then Article 284) of the Labor Code provides that an "employer may also terminate the employment of any employee due to the installation of labor-saving devices, redundancy, retrenchment to prevent losses or the closing or cessation of operation of the establishment or undertaking unless the closing is for the purpose of circumventing the provisions of this title." Clearly, under the said provision of law, the right of an employer to terminate the services of any employee is predicated on the existence of any of the following causes: (1) installation of labor- saving devices; (2) redundancy; (3) retrenchment to prevent losses; and (4) the closing or cessation of operation of the establishment or undertaking, unless the closing is for the purpose of circumventing the provisions of law. Thus, while business reverses can be a just cause for terminating employees, they must be sufficiently proven by the employer. 14 This is precisely mandated under par. (b) of Article 277 (formerly 278) of the Labor Code which states, among others, that "(T) he burden of proving that the termination was for a valid or authorized cause shall rest on the employer." It is almost an inflexible rule that employers who contemplate terminating the services of their workers cannot be so arbitrary and ruthless as to find flimsy excuses for their decisions. This must be so considering that the dismissal of an employee from work involves not only the loss of his position but more important, his means of livelihood. Applying this caveat to the case at bar, it was therefore incumbent for respondent DISC, before putting into effect any retrenchment process on its work force, to show by convincing evidence that it was being wrecked by serious financial problems. Simply stating its state of insolvency or its impending doom will not be sufficient. To do so would render the security of tenure of workers and employees illusory. In a grander scale, to hold as valid and legal the respondent DISC's act would be disastrous to labor.

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114. Catatista v. NLRC ANTONIO CATATISTA, ET AL. VS. NLRC, ET AL. G.R. NO. 102422, AUGUST 3, 1995 ROMERO, J. FACTS 1. Petitioners were regular plantation workers in Hacienda Binanlutan, one of the six haciendas operated and managed by private respondent Victorias Milling Company, Inc. 2. Sometime in June 1984, private respondent decided to permanently stop and close its sugarcane operations in Hacienda Binanlutan "due to low sugar prices which affected the viability and profitability of said hacienda" and convert it instead into an ipil-ipil plantation. In view of such decision, management subsequently held a conference with all thirteen field workers to explain to them the reason for this move, as well as the computation of their termination pay. 3. In a letter dated July 10, 1984, each of the thirteen petitioners was formally informed of private respondent's decision to close and stop sugarcane operations and the reason for such closure. Petitioners received their termination pay or retirement pay under the pension plan, whichever was higher. 4. Petitioners filed a complaint against private respondent with the arbitration branch of the National Labor Relations Commission for illegal dismissal. The labor arbiter rendered a decision ordering reinstatement of the complainants. On appeal, the National Labor Relations Commission reversed the decision of the Labor Arbiter. ISSUE Were the petitioners illegally terminated from work resulting from the closure of Hacienda Binanlutan? HELD The termination of employment of the employees of Hacienda Binanlutan brought about by the closure is to be considered as retrenchment as Hacienda Binanlutan is only one of the six haciendas of private respondent. Clearly, private respondent's purpose in converting said hacienda into an ipil-ipil plantation and terminating the service of petitioners is to cut down on losses which it had adequately shown to have suffered through an income statement for the fiscal year which ended August 31, 1984. This Court has held that "the requisites of a valid retrenchment are: (a) the losses expected 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. We see no grave abuse of discretion on the part of NLRC when it found that "company haciendas including Hacienda Binanlutan incurred huge losses from years 1982 to 1983 in the amount of P2,842,778.03. Private respondent showed that Hacienda Binanlutan itself suffered a net loss of P22,624.88. It is significant to note that petitioners failed to dispute these submissions of private respondent which more than satisfy the first and fourth requirements for a valid retrenchment. The losses incurred are clearly substantial and sufficiently proven by means of an income statement of Hacienda Binanlutan and the financial statement of the company haciendas. Said losses are not only imminent but had, in fact, already been incurred by private respondent since 1982. This was even more alarming in 1984 considering the worldwide economic situation, as well as the low sugar prices during that year, events which were obviously beyond the control of private respondent. Considering the losses suffered by private respondent, it is logical for it to implement a retrenchment program to prevent further losses. Private respondent's personnel reduction program was meant to reduce excessive labor costs in the company. Having determined that private respondent suffered losses and had to resort to retrenchment of its employees in Hacienda Binanlutan to prevent further losses, this Court holds that private respondent

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115. North Davao Mining Corporation v. NLRC NORTH DAVAO MINING CORPORATION V. NLRC 254 SCRA 721 J. PANGANIBAN FACTS 1. Petitioner was incorporated in 1974 as a 100% privately owned company, but was co-owned by PNB later as a result of a conversion into equity of a portion of loans obtained by petitioner from said bank. PNB later transferred all its loans to and equity in North Davao in favor of the national government. 2. Respondent Wilfredo Guillema is one among several employees of petitioner who were separated by reason of the company’s closure, and who were the complainants. 3. On May 31, 1992, petitioner completely ceased operations due to serious business reverses. From 1988 until its closure in 1992, North Davao suffered net losses averaging P 3 billion per year each of the five years prior to its closure. 4. When it ceased operations, its remaining employees were separated and given the equivalent of 12.5 days’ pay for every year of service, computed on their basic monthly pay, in addition to the commutation to cash of their unused vacation and sick leaves. 5. However, it appears that, during the life of the petitioner corporation, from the beginning of operations in 1981 until its closure in 1992, it had been paying separation pay equivalent to 30 days’ pay for every year of service. 6. The NLRC ruled affirming the Labor Arbiter’s decision that the separation pay equivalent to 30 days pay for every year of service has ripened into an obligation and depriving respondents would be discriminatory. ISSUE Whether or not an employer whose business operations ceased due to serious business losses or financial reverses is obliged to pay separation pay to its employees separated by reason of such closure. HELD NO. the company’s practice of giving one moth’s pay for every year of service could no longer be continued precisely because the company could not afford it anymore. It was forced to close down on account of accumulated losses of over P20 billion. The fact that less separation benefits were granted when the company finally met its business death cannot be characterized as discrimination. Such action was dictated not by a discriminatory management option but by its complete inability to continue its business life due to accumulated losses. Indeed, one cannot squeeze blood out of a dry stone. To require it to continue being generous when it is no longer in a position to do so would certainly be unduly oppressive, unfair and most revolting to the conscience.

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116. Reah Corporation v. NLRC REAHS CORPORATION VS. NLRC 271 SCRA 247 PADILLA, J. FACTS 1. This is a petition for certiorari to annul and set aside the decision rendered by the National Labor Relations Commission (NLRC) which affirmed the decision of the labor arbiter holding individual petitioners jointly and severally liable with petitioner Reah’s Corporation to pay private respondents’ claims for underpayment of wages, holiday pay, 13th month pay and separation pay. 2. Reah’s is engaged in the business of a sing-along, coffee shop and massage clinic and the private respondents were employees therein. 3. Petitioners claim that due to poor business, increase in the rental cost and the failure of Meralco to reconnect the electrical services in the establishment, it suffered losses leading to its closure. 4. Petitioners contend mainly that Article 283 of the Labor Code, “exempts establishment(s) from payment of termination pay when the closure of the business is due to serious business loses or financial reverses”; that petitioners Castulo, Pascua and Valenzuela, while admittedly the acting chairman of the board, board member and accountant-acting manager respectively of Reah’s Corporation, cannot be held jointly and severally liable with Reah’s “unless there is evidence to show that the cause of the closure of the business was due to the criminal negligence of the officers.” ISSUE Whether or not petitioners-officers can be held jointly and severally liable with the corporation in the payment of separation pay to private respondents under Article 283 of the Labor Code. HELD Article 283 provides as an authorized cause in the termination of employment the “closing or cessation of operation of the establishment or undertaking.” However, the burden of proving that the termination was for a valid or authorized cause shall rest on the employer. In the absence of such proof of serious business losses or financial reverses, the employer closing his business is obligated to pay his employees and workers their separation pay. In the case at bar, the corporation’s alleged serious business losses and financial reverses were not amply shown or proved. To justify solidary liability, “there must be an allegation or showing that the officers of the corporation deliberately or maliciously designed to evade the financial obligation of the corporation to its employees,” or a showing that the officers indiscriminately stopped its business to perpetrate an illegal act, as a vehicle for the evasion of existing obligations, in circumvention of statutes, and to confuse legitimate issues. In this case, the issue is not limited to payment of separation pay but also payment of labor standard benefits such as underpayment of wages, holiday pay and 13th month pay. In fine, these officers were conscious that the corporation was violating labor standard provisions but they did not act to correct theses violations, instead, they abruptly closed business. Neither did they offer separation pay to the employees as they conveniently resorted to a lame excuse that they suffered serious business losses, knowing fully well that they had no substantial proof in their hands to prove such losses.

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115. San Felipe Neri School of Mandaluyong, Inc. v. NLRC SAN FELIPE NERI SCHOOL OF MANDALUYONG, INC. VS. NLRC 201 SCRA 478 FACTS 1. San Felipe Neri School of Mandaluyong Inc. sold its properties and assets to the Roman Catholic Archbishop of Manila (RCAM). Immediately thereafter, RCAM as transferee-purchaser, continued the operation of the school, but applied for a new permit to operate the same. 2. RCAM required the respondent teachers to apply as new employees subject to the usual probation. Demoted to probationary status and their past services not recognized by the new employer, the teachers inquired about their rights from the former employer, herein petitioners, but to no avail. Instead, they were referred to the new owners of the school. 3. The teachers then filed a complaint before the Labor Arbiter against all the petitioners, including RCAM, the vendee-transferee, as alternative defendant for separation pay, differential pay and other claims. ISSUE Whether or not respondent teachers’ employment was terminated by the sale and transfer of San Felipe Neri School of Mandaluyong, Inc. to the Archbishop of Manila that would entitle them to separation pay. HELD Change of ownership or management of an establishment or company, however, is not one of the just causes provided by law for the termination of employment. There can be no controversy, however, for it is a principle well-recognized, that it is within the employer's legitimate sphere of management control of the business to adopt economic policies or make some changes or adjustments in their organization or operations that would insure profit to itself or protect the investment of its stockholders. As in the exercise of such management prerogative, the employer may merge or consolidate its business with another, or sell or dispose all or substantially all of its assets and properties which may bring about the dismissal or termination of its employees in the process. Such dismissal or termination should not, however, be interpreted in such a manner as to insulate the employer or selling corporation (petitioner school) from its obligation to its employees, particularly the payment of separation pay. Such situation is not envisioned in the law. It strikes at the very concept of social justice. A close scrutiny of the pertinent Deed of Sale dated April 18, 1981 reveals no express stipulation whatsoever relative to the continued employment by the transferee, RCAM of the employees (herein private respondents) of the erstwhile employer (petitioner). On the contrary, records show that RCAM expressly manifested its unwillingness to absorb the petitioner school's employees or to recognize their prior service. As correctly found by the Labor Arbiter and the NLRC, respondent teachers' employment has been effectively terminated and there was in effect a closure. Obviously, therefore, the fate of private respondents under the new owner (RCAM) appeared unprovided for. And there is no law which requires the purchaser to absorb the employees of the selling corporation. As there is no such law, the most that the purchasing company may do, for purposes of public policy and social justice, is to give preference to the qualified separated employees of the selling company, who in their judgment are necessary in the continued operation of the business establishment. This, RCAM did. It required private respondents to re-apply as new employees as a condition for rehiring, subject to the usual probationary status, the latter's past services with the petitioners-transferors not recognized.

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118. Filipinas Port Services, Inc. v. NLRC FILIPINAS PORT SERVICES, INC. VS. NLRC 200 SCRA 773 PARAS, J.; FACTS 1. In view of the government policy which ordained that cargo handling operations should be limited to only one cargo handling operator-contractor for every port, the different stevedoring and arrastre corporations operating in the Port of Davao were integrated into a single dockhandlers corporation, known as the Davao Dockhandlers, Inc., which was registered with the SEC on July 13, 1976. 2. Due to the late receipt of its permit to operate, Davao Dockhandlers, Inc., which was subsequently renamed Filport, actually started its operation on February 16, 1977. 3. As a result of the merger, Filport’s labor force was mostly taken from the integrating corporations, among them were the private respondents. 4. Private respondent Paterno Liboon and 18 others filed a complaint with the DOLE Regional Office in Davao City, alleging that they were employees of Filport since 1955 through 1958 up to December 31, 1986 when they retired; that they were paid retirement benefits computed from February 16,1977 up to December 31, 1986 only; and that taking into consideration their continuous length of service, they are entitled to be paid retirement benefits differentials from the time they started working with the predecessors of Filport up to the time they were absorbed by the latter in 1977. 5. Finding Filport a mere alter ego of the different integrating corporations, the Labor Arbiter held Filport liable for retirement benefits due private respondents for services rendered prior to February 16, 1977. 6. Said decision was affirmed by the NLRC on appeal. Filport filed a petition for certiorari with the claiming that it is an entirely new corporation with a separate juridical personality from the integrating corporations; and that Filport is not a successor-employer, liable for the obligations of private respondents' previous employers. ISSUE Whether or not Filport is liable for the retirement benefits due private respondents for services rendered prior to Feb. 16, 1977. HELD Filport is liable for the retirement benefits due private respondents for the services rendered prior to Feb. 16, 1977 being a survivor entity as it merely absorbed the integrating workers in its labor force. It was mandated that Filport shall absorb all labor force and necessary personnel complement of the merging operators, thus, clearly indicating the intention to continue the employer-employee relationships of the individual companies with its employees through Filport. Thus, Filport has the obligation not only to absorb the workers of the dissolved companies but also to include the length of service earned by the absorbed employees with their former employees as well. To rule otherwise would be manifestly less than fair, certainly, less than just and equitable. Finally, to deny the private respondents the fruits of their labor corresponding to the time they worked with their previous employers would render at naught the constitutional provisions on labor protection. In interpreting the protection to labor and social justice provisions of the Constitution and the labor laws, and rules and regulations implementing the constitutional mandate, the Supreme Court has always adopted the liberal approach which favors the exercise of labor rights.

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119. Cebu Royal Plant (SMC) v. Deputy Minister of Labor CEBU ROYAL PLANT VS. DEPUTY MINISTER OF LABOR 153 SCRA 38 CRUZ, J. FACTS Private respondent Ramon Pilones, an employee engaged in the processing of soft drinks of Petitioner, filed a complaint for illegal dismissal with the Regional Director of DOLE. The latter dismissed the complaint but was reversed by the Deputy Minister of Labor finding that the private respondent, was already a permanent employee at the time of his dismissal and so was entitled to security of tenure. The alleged ground for his removal, to wit, "pulmonary tuberculosis minimal," (PTB Minimal) was not certified as incurable within six months as to justify his separation. Additionally, the private respondent insists that the petitioner should have first obtained a clearance, as required by the regulations then in force, for the termination of his employment. With this, the Deputy Minister ordered to reinstate the separated employee and pay him back wages. Petitioner for its part claims that the private respondent was still on probation at the time of his dismissal and so had no security of tenure. His dismissal was not only in conformity with company policy but also necessary for the protection of the public health, as he was handling ingredients in the processing of soft drinks which were being sold to the public. ISSUE Whether or not private respondent was a probationary employee who can be justly dismissed after the termination of the probationary period. HELD Private respondent ceased to be a probationary employee at the time of his termination thus, making him a regular employee entitled to security of tenure. The petitioner claims it could not have dismissed the private respondent earlier because the x-ray examination was made only on August 17, 1978, and the results were not immediately available. That excuse is untenable. We note that when the petitioner had all of six months during which to conduct such examination, it chose to wait until exactly the last day of the probation period. In the light of such delay, its protestations now that reinstatement of Pilones would prejudice public health cannot but sound hollow and hypocritical. By its own implied admission, the petitioner had exposed its customers to the employee's disease because of its failure to examine him before entrusting him with the functions of a "syrup man." Its belated concern for the consuming public is hardly persuasive, if not clearly insincere and self-righteous. We are satisfied that whether his employment began on February 16, 1978, or even earlier as he claims, the private respondent was already a regular employee when he was dismissed on August 21, 1978. As such, he could validly claim the security of tenure guaranteed to him by the Constitution and the Labor Code. Moreover, the record does not contain the certification required in Sec. 8, Rule 1, Book VI of the Implementing Rules of the Labor Code. The medical certificate offered by the petitioner came from its own physician, who was not a "competent public health authority," and merely stated the employee's disease, without more. We may surmise that if the required certification was not presented, it was because the disease was not of such a nature or seriousness that it could not be cured within a period of six months even with proper medical treatment. If so, dismissal was unquestionably a severe and unlawful sanction. We agree that there was here an attempt to circumvent the law by separating the employee after five months' service to prevent him from becoming a regular employee, and then rehiring him on probation, again without security of tenure.

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