Consolidated LabRel Cases

By RICKY BOY CABATU/ 3B/ L-100355
Employer-Employee Relationship
G.R. No. 185251 October 2, 2009
RAUL G. LOCSIN and EDDIE B. TOMAQUIN vs. PLT
VELASCO, JR., J .:
FACTS:
PLDT and the Security and Safety Corporation of the Philippines
(SSCP) entered into an agreement whereby SSCP would provide
armed security guards to PLDT to be assigned to its various
offices. Petitioners, among other security guards, were posted at
a PLDT office.
However, respondent issued a letter terminating the Agreement.
Despite the termination of the Agreement, however, petitioners
continued to secure the premises of their assigned office. They
were allegedly directed to remain at their post by representatives
of respondent thru presentation of pay slips. Subsequently, they
were terminated.
Thus, petitioners filed a complaint before the Labor Arbiter for
illegal dismissal and recovery of money claims against PLDT.
The Labor Arbiter rendered a Decision finding PLDT liable for
illegal dismissal. NLRC affirmed.
CA reversed. According to CA, SSCP was not a labor-only
contractor and was an independent contractor having substantial
capital to operate and conduct its own business. Further the
agreement stipulated that there shall be no employer-employee
relationship between the security guards and PLDT. Lastly, the
payslips were issued by SSCP.
ISSUE: Whether there exists an employer-employee
relationship?
HELD: An Employer-Employee Relationship Existed Between the
Parties. They became employees of respondent after the
Agreement between SSCP and respondent was terminated. In
the ordinary course of things, responsible business owners or
managers would not allow security guards of an agency with
whom the owners or managers have severed ties with to
continue to stay within the business premises. This is because
upon the termination of the owners or managers agreement with
the security agency, the agencys undertaking of liability for any
damage that the security guard would cause has already been
terminated. Thus, in the event of an accident or otherwise
damage caused by such security guards, it would be the
business owners and/or managers who would be liable and not
the agency. The business owners or managers would, therefore,
be opening themselves up to liability for acts of security guards
over whom the owners or managers allegedly have no control.
Further, petitioners remained at their post under the instructions
of respondent. Thus, respondent dictated upon petitioners that
the latter perform their regular duties to secure the premises
during operating hours (proof of control). Hence, there is an
existence of an employer-employee relationship.
Power of control is the right to control not only the end to be
achieved but also the means to be used in reaching such
end. With the conclusion that respondent directed petitioners to
remain at their posts and continue with their duties, it is clear that
respondent exercised the power of control over them; thus, the
existence of an employer-employee relationship.
________________________
G.R. No. 170087 August 31, 2006
ANGELINA FRANCISCO vs. NLRC, KASEI CORPORATION,
SEIICHIRO TAKAHASHI, TIMOTEO ACEDO, DELFIN LIZA,
IRENE BALLESTEROS, TRINIDAD LIZA and RAMON
ESCUETA
YNARES-SANTIAGO, J .:
FACTS:
petitioner was hired by Kasei Corporation during its incorporation
stage. She was designated as Accountant and Corporate
Secretary and was assigned to handle all the accounting needs
of the company. She was also designated as Liaison Officer to
the City of Makati to secure business permits, construction
permits and other licenses for the initial operation of the
company.
Later, petitioner was designated Acting Manager for five years.
As Acting Manager, petitioner was assigned to handle
recruitment of all employees and perform management
administration functions; represent the company in all dealings
with government agencies, especially with the BIR, SSS and in
the city government of Makati; and to administer all other matters
pertaining to the operation of Kasei Restaurant which is owned
and operated by Kasei Corporation.
However, petitioner was replaced as Manager. Petitioner alleged
that she was required to sign a prepared resolution for her
replacement but she was assured that she would still be
connected with Kasei Corporation. But her salary was reduced.
She was not paid portion of her salary and when she asked for
the unpaid salary, the company informed her that she was no
longer connected with it.
Since she was no longer paid her salary, petitioner did not report
for work and filed an action for constructive dismissal before the
labor arbiter.
According to respondent, petitioners designation as technical
consultant depended solely upon the will of management. As
such, her consultancy may be terminated any time considering
that her services were only temporary in nature and dependent
on the needs of the corporation. Further, petitioner did not go
through the usual procedure of selection of employees, but
her services were engaged through a Board Resolution
designating her as technical consultant. The money received
by petitioner from the corporation was her professional fee
subject to the 10% expanded withholding tax on

professionals, and that she was not one of those reported to
the BIR or SSS as one of the companys employees.
The Labor Arbiter found that petitioner was illegally dismissed.
NLRC affirmed. CA reversed.
ISSUE: Whether there was an employer-employee relationship
between petitioner and private respondent Kasei Corporation (to
answer WON there was illegal dismissal).
HELD:
SC adopted a two-tiered test involving: (1) the putative
employers power to control the employee with respect to the
means and methods by which the work is to be accomplished;
and (2) the underlying economic realities of the activity or
relationship (the proper standard of economic dependence is
whether the worker is dependent on the alleged employer for his
continued employment in that line of business). This test is
especially appropriate in this case where there is no written
agreement or terms of reference to base the relationship on; and
due to the complexity of the relationship based on the various
positions and responsibilities given to the worker over the period
of the latters employment.
By applying the control test, petitioner is an employee of
Kasei Corporation because she was under the direct control
and supervision of Seiji Kamura, the corporations Technical
Consultant. She reported for work regularly and served in
various capacities as Accountant, Liaison Officer, Technical
Consultant, Acting Manager and Corporate Secretary, with
substantially the same job functions, that is, rendering accounting
and tax services to the company and performing functions
necessary and desirable for the proper operation of the
corporation such as securing business permits and other licenses
over an indefinite period of engagement.
Under the broader economic reality test, the petitioner can
likewise be said to be an employee of respondent corporation
because she had served the company for six years before her
dismissal, receiving check vouchers indicating her
salaries/wages, benefits, 13th month pay, bonuses and
allowances, as well as deductions and Social Security
contributions. Petitioners membership in the SSS as manifested
by a copy of the SSS specimen signature card which was signed
by the President of Kasei Corporation and the inclusion of her
name in the on-line inquiry system of the SSS evinces the
existence of an employer-employee relationship between
petitioner and respondent corporation.
Thus, petitioner is an employee of respondent Kasei Corporation.
She was selected and engaged by the company for
compensation, and is economically dependent upon respondent
for her continued employment in that line of business. Her main
job function involved accounting and tax services rendered to
respondent corporation on a regular basis over an indefinite
period of engagement. Respondent corporation hired and
engaged petitioner for compensation, with the power to dismiss
her for cause. More importantly, respondent corporation had the
power to control petitioner with the means and methods by which
the work is to be accomplished.
___________________________
G.R. No. 179652 May 8, 2009
PEOPLE'S BROADCASTING (BOMBO RADYO PHILS., INC.)
vs. DOLE SECRETARY , THE REGIONAL DIRECTOR, DOLE
REGION VII, and JANDELEON JUEZAN
TINGA, J .:
A complaint was filed by Jandeleon Juezan (respondent) against
Bombo Radyo for illegal deduction, non-payment of service
incentive leave, 13th month pay, etc. before the DOLE Regional
Office in Cebu City.
According to Bombo Radyo, Juezan is a drama talent hired on a
per drama " participation basis" hence no employer-
employeeship existed between them. As proof of this,
management presented photocopies of cash vouchers, billing
statement, employments of specific undertaking (a contract
between the talent director & the complainant), summary of
billing of drama production etc. They (mgt.) has no control of the
talent if he ventures into another contract w/ other broadcasting
industries.
DOLE found that there was an er-ee relationship.
Bombo Radyo elevated the case to CA stating that is no
employer-employee relationship had ever existed between it and
respondent because it was the drama directors and producers
who paid, supervised and disciplined respondent. It also added
that the case was beyond the jurisdiction of the DOLE and should
have been considered by the labor arbiter because respondents
claim exceeded P5,000.00.
Jandeleon, on the other hand, invokes Republic Act No. 7730,
which "removes the jurisdiction of the Secretary of Labor and
Employment or his duly authorized representatives, from the
effects of the restrictive provisions of Article 129 and 217 of the
Labor Code, regarding the confinement of jurisdiction based on
the amount of claims."
ISSUE: Does the Secretary of Labor have the power to
determine the existence of an employer-employee relationship?
HELD: Art. 228 of LC is quite explicit that the visitorial and
enforcement power of the DOLE comes into play only "in cases
when the relationship of employer-employee still exists." It also
underscores the avowed objective underlying the grant of power
to the DOLE which is "to give effect to the labor standard
provision of this Code and other labor legislation." Of course, a
persons entitlement to labor standard benefits under the labor
laws presupposes the existence of employer-employee
relationship in the first place.
The clause "in cases where the relationship of employer-
employee still exists" signifies that the employer-employee
relationship must have existed even before the emergence of the
controversy. Necessarily, the DOLEs power does not apply in
two instances, namely: (a) where the employer-employee

relationship has ceased; and (b) where no such relationship has
ever existed.
In the first situation, the claim has to be referred to the NLRC
because it is the NLRC which has jurisdiction in view of the
termination of the employer-employee relationship. The same
procedure has to be followed in the second situation since it is
the NLRC that has jurisdiction in view of the absence of
employer-employee relationship between the evidentiary parties
from the start.
It has long been established that in administrative and quasi-
judicial proceedings, substantial evidence is sufficient as a basis
for judgment on the existence of employer-employee relationship.
Substantial evidence, which is the quantum of proof required in
labor cases, is "that amount of relevant evidence which a
reasonable mind might accept as adequate to justify a
conclusion." No particular form of evidence is required to prove
the existence of such employer-employee relationship. Any
competent and relevant evidence to prove the relationship may
be admitted. Hence, while no particular form of evidence is
required, a finding that such relationship exists must still rest on
some substantial evidence. Moreover, the substantiality of the
evidence depends on its quantitative as well as
its qualitative aspects.
________________________
G.R. No. 192558 February 15, 2012
BITOY JAVIER (DANILO P. JAVIER) vs. FLY ACE
CORPORATION/FLORDELYN CASTILLO
MENDOZA, J .:
FACTS:

Javier filed a complaint before the NLRC for underpayment of
salaries and other labor standard benefits. He alleged that he
was an employee of Fly Ace performing various tasks at the
respondents warehouse such as cleaning and arranging the
canned items before their delivery to certain locations, except in
instances when he would be ordered to accompany the
companys delivery vehicles, as pahinante; that he reported for
work from Monday to Saturday from 7:00 oclock in the morning
to 5:00 oclock in the afternoon; that during his employment, he
was not issued an identification card and payslips by the
company; that on May 6, 2008, he reported for work but he was
no longer allowed to enter the company premises by the security
guard upon the instruction of his superior (Ong).
To support his allegations, Javier presented an affidavit of one
Bengie Valenzuela who alleged that Javier was a stevedore
or pahinante of Fly Ace. The said affidavit was subscribed before
the Labor Arbiter (LA).
For its part, Fly Ace averred that it was engaged in the business
of importation and sales of groceries; that Javier was contracted
by its employee, Mr. Ong, as extra helper on a pakyaw basis at
an agreed rate of P 300.00 per trip, which was later increased.
Mr. Ong contracted Javier roughly 5 to 6 times only in a month
whenever the vehicle of its contracted hauler, Milmar Hauling
Services, was not available. Later, Fly Ace no longer needed the
services of Javier. Denying that he was their employee, Fly Ace
insisted that there was no illegal dismissal.
Fly Ace submitted a copy of its agreement with Milmar Hauling
Services and copies of acknowledgment receipts evidencing
payment to Javier for his contracted services bearing the words,
"daily manpower (pakyaw/piece rate pay)" and the latters
signatures/initials.
LA dismissed the complaint for lack of merit on the ground that
Javier failed to present proof that he was a regular employee of
Fly Ace: (1) that Javier has no employee ID showing his
employment with the Respondent (2) nor any document showing
that he received the benefits accorded to regular employees of
the Respondents. His contention that Respondent failed to give
him said ID and payslips implies that indeed he was not a regular
employee of Fly Ace considering that complainant was a helper
and that Respondent company has contracted a regular trucking
for the delivery of its products. Respondent Fly Ace is not
engaged in trucking business but in the importation and sales of
groceries. Since there is a regular hauler to deliver its products,
we give credence to Respondents claim that complainant was
contracted on "pakiao" basis. As to the claim for underpayment of
salaries, the payroll presented by the Respondents showing
salaries of workers on "pakiao" basis has evidentiary weight
because although the signature of the complainant appearing
thereon are not uniform, they appeared to be his true signature.
On appeal with the NLRC, Javier was favored. The NLRC stated
that a pakyaw-basis arrangement did not preclude the existence
of employer-employee relationship. Payment by result is a
method of compensation and does not define the essence of the
relation. It is a mere method of computing compensation, not a
basis for determining the existence or absence of an employer-
employee relationship. The NLRC further averred that it did not
follow that a worker was a job contractor and not an employee,
just because the work he was doing was not directly related to
the employers trade or business or the work may be considered
as "extra" helper as in this case; and that the relationship of an
employer and an employee was determined by law and the same
would prevail whatever the parties may call it. In this case, the
NLRC held that substantial evidence was sufficient basis for
judgment on the existence of the employer-employee
relationship. Javier was a regular employee of Fly Ace
because there was reasonable connection between the
particular activity performed by the employee (as a
"pahinante") in relation to the usual business or trade of the
employer (importation, sales and delivery of groceries). He
may not be considered as an independent contractor
because he could not exercise any judgment in the delivery
of company products. He was only engaged as a "helper."
The CA annulled the NLRC findings that the non-issuance of a
company-issued identification card to private respondent
supports petitioners contention that private respondent was not
its employee; that Javiers failure to present salary vouchers,
payslips, or other pieces of evidence to bolster his contention,
pointed to the inescapable conclusion that he was not an

employee of Fly Ace; that Javiers work was not necessary and
desirable to the business or trade of the company, as it was only
when there were scheduled deliveries, which a regular hauling
service could not deliver, that Fly Ace would contract the services
of Javier as an extra helper. He contracted work outside the
company premises; he was not required to observe definite hours
of work; he was not required to report daily; and he was free to
accept other work elsewhere as there was no exclusivity of his
contracted service to the company, the same being co-terminous
with the trip only. Since no substantial evidence was presented to
establish an employer-employee relationship, the case for illegal
dismissal could not prosper.
ISSUE: Whether Javier is an employee?
HELD:
(1) In dealing with factual issues in labor cases, substantial
evidence that amount of relevant evidence which a reasonable
mind might accept as adequate to justify a conclusion is
sufficient. Although Section 10, Rule VII of the New Rules of
Procedure of the NLRC allows a relaxation of the rules of
procedure and evidence in labor cases, this rule of liberality does
not mean a complete dispensation of proof. Labor officials are
enjoined to use reasonable means to ascertain the facts speedily
and objectively with little regard to technicalities or formalities but
nowhere in the rules are they provided a license to completely
discount evidence, or the lack of it. The quantum of proof
required, however, must still be satisfied. Hence, "when
confronted with conflicting versions on factual matters, it is for
them in the exercise of discretion to determine which party
deserves credence on the basis of evidence received, subject
only to the requirement that their decision must be supported by
substantial evidence."
No particular form of evidence is required to prove the existence
of such employer-employee relationship. Any competent and
relevant evidence to prove the relationship may be
admitted.Hence, while no particular form of evidence is required,
a finding that such relationship exists must still rest on some
substantial evidence. Moreover, the substantiality of the evidence
depends on its quantitative as well as its qualitative aspects."
Although substantial evidence is not a function of quantity but
rather of quality, the circumstances of the instant case demand
that something more should have been proffered. Had there
been other proofs of employment, such as inclusion in
petitioners payroll, or a clear exercise of control, the Court would
have affirmed the finding of employer-employee relationship."
In sum, the rule of thumb remains: the onus probandi falls on
petitioner to establish or substantiate such claim by the requisite
quantum of evidence. "Whoever claims entitlement to the
benefits provided by law should establish his or her right thereto
x x x." Sadly, Javier failed to adduce substantial evidence as
basis for the grant of relief.
(2) In this case, Javier was not able to persuade the Court that
the elements (er-ee relationship) exist in his case. He could not
submit competent proof that Fly Ace engaged his services as a
regular employee; that Fly Ace paid his wages as an employee,
or that Fly Ace could dictate what his conduct should be while at
work.
__________________________
G.R. No. 184885 March 7, 2012
ERNESTO G. YMBONG vs. ABS-CBN, VENERANDA SY AND
DANTE LUZON
VILLARAMA, JR., J .:
FACTS:
Petitioner Ernesto G. Ymbong started working for ABS-CBN in
1993 at its regional station in Cebu as a television talent, co-
anchoring Hoy Gising and TV Patrol Cebu. His stint in ABS-CBN
later extended to radio when ABS-CBN Cebu launched its AM
station DYAB in 1995 where he worked as drama and voice
talent, spinner, scriptwriter and public affairs program anchor.
Later, the ABS-CBN Head Office in Manila issued a Policy on
Employees Seeking Public Office--- that any employee who
intends to run for any public office position, must file his/her letter
of resignation; that any employee who intends to join a political
group/party or even with no political affiliation but who intends to
openly and aggressively campaign for a candidate or group of
candidates must file a request for leave of absence subject to
managements approval.
Subsequently, Ymbong ran for public office (councilor of Lapu-
Lapu City) but he lost. When he tried to come back to ABS-CBN
Cebu, he was informed that he cannot work there anymore
because of company policy.
Ymbong in contrast contended that after the expiration of his
leave of absence, he reported back to work as a regular talent
and in fact continued to receive his salary but later he received a
memorandum stating that his services are being terminated
immediately, much to his surprise. Thus, he filed an illegal
dismissal complaint against ABS-CBN.
ABS-CBN prayed for the dismissal of the complaints arguing that
there is no employer-employee relationship between the
company and Ymbong/ ABS-CBN contended that they are not
employees but talents as evidenced by their talent contracts.
However, notwithstanding their status, ABS-CBN has a standing
policy on persons connected with the company whenever they
will run for public office.
LA found the dismissal illegal. NLRC ordered for Ymbongs
reinstatement. CA reversed.
ISSUE: Whether there was em-ee relationship.
HELD: CA is affirmed.
(1) Working for the government and the company at the same
time is clearly disadvantageous and prejudicial to the rights and
interest not only of the company but the public as well. In the
event an employee wins in an election, he cannot fully serve, as
he is expected to do, the interest of his employer. The employee

has to serve 2 employers, obviously detrimental to the interest of
both the government and the private employer. In the event the
employee loses in the election, the impartiality and cold neutrality
of an employee as broadcast personality is suspect, thus readily
eroding and adversely affecting the confidence and trust of the
listening public to employers station.
(2) Ymbong is deemed resigned when he ran for councilor.
Ymbongs overt act of running for councilor of Lapu-Lapu City is
tantamount to resignation on his part. He was separated from
ABS-CBN not because he was dismissed but because he
resigned. Since there was no termination to speak of, the
requirement of due process in dismissal cases cannot be applied
to Ymbong. Thus, ABS-CBN is not duty-bound to ask him to
explain why he did not tender his resignation before he ran for
public office as mandated by the subject company policy.
_____________________________
G.R. No. 138051 June 10, 2004

JOSE Y. SONZA vs. ABS-CBN BROADCASTING
CORPORATION

CARPIO, J .:

Facts: In May 1994, respondent signed an Agreement with the
Mel and Jay Management as represented by its President Sonza.
MJMDC agreed to provide Sonzas services exclusively to ABS-
CBN as talent for radio and television. ABS-CBN agreed to pay
for Sonzas services. On April 1, 1996, SONZA wrote a letter to
ABS-CBN informing the latter that he is waiving and renouncing
recovery of the remaining amount stipulated in paragraph 7 of the
Agreement but reserves the right to seek recovery of the other
benefits. On April 30, Sonza filed a complaint against ABS-CBN
for not paying his salaries and other labor standards benefits. On
July 10, ABS-CBN filed a Motion to Dismiss on the ground that
no employer-employee relationship existed between the parties.

Issue: Whether or not Sonza is an employee of ABS-CBN

Held; No. Sonza is an independent contractor. ABS-CBN was not
involved in the actual performance that produced the finished
product of SONZAs work.ABS-CBN did not instruct SONZA how
to perform his job. ABS-CBN merely reserved the right to modify
the program format and airtime schedule "for more effective
programming."ABS-CBN did not exercise control over the means
and methods of performance of SONZAs work. It is well-settled
that the less control the hirer exercises, the more likely the
worker is considered an independent contractor.
__________________________
G.R. No. 126297 February 11, 2008
PROFESSIONAL SERVICES, INC. vs. CA and NATIVIDAD and
ENRIQUE AGANA
SANDOVAL-GUTIERREZ, J .:
Natividad Agana was admitted at the Medical City because of
difficulty of bowel movement and bloody anal discharge. Dr.
Ampil diagnosed her to be suffering from "cancer of the sigmoid."
Thus, Dr. Ampil, assisted by the medical staff of Medical City,
performed an anterior resection surgery upon her. During the
surgery, he found that the malignancy in her sigmoid area had
spread to her left ovary, necessitating the removal of certain
portions of it.
Dr. Fuentes performed and completed the hysterectomy.
Afterwards, Dr. Ampil took over, completed the operation and
closed the incision. However, the operation appeared to be
flawed. Tthey found a piece of gauze in the vagina so Natividad
underwent another surgery.
Natividad and her husband filed with the RTC of Quezon City a
complaint for damages against PSI (owner of Medical City), Dr.
Ampil and Dr. Fuentes.
RTC decided in favor of the Aganas. CA affirmed. The found the
Petitioner PSI jointly and severally liable with Dr. Ampil for the
following reasons: first, there is an employer-employee
relationship between Medical City and Dr. Ampil. The Court
relied on Ramos v. Court of Appeals, holding that for the
purpose of apportioning responsibility in medical negligence
cases, an employer-employee relationship in effect
exists between hospitals and their attending and visiting
physicians; second, PSIs act of publicly displaying in the lobby of
the Medical City the names and specializations of its accredited
physicians, including Dr. Ampil, estopped it from denying the
existence of an employer-employee relationship between them
under the doctrine of ostensible agency or agency by
estoppel; and third, PSIs failure to supervise Dr. Ampil and its
resident physicians and nurses and to take an active step in
order to remedy their negligence rendered it directly liable under
the doctrine of corporate negligence.
PSI contends that there is no employer-employee relationship
between it and its consultant, Dr. Ampil. PSI stressed that the
Courts Decision in Ramos holding that "an employer-employee
relationship in effect exists between hospitals and their attending
and visiting physicians for the purpose of apportioning
responsibility" had been reversed in a subsequent Resolution.
Further, PSI argues that the doctrine of ostensible agency or
agency by estoppel cannot apply because spouses Agana
failed to establish one requisite of the doctrine, i.e., that Natividad
relied on the representation of the hospital in engaging the
services of Dr. Ampil. And lastly, PSI maintains that the doctrine
of corporate negligence is misplaced because the proximate
cause of Natividads injury was Dr. Ampils negligence.
ISSUE: WON there exists an er-ee relationship?
HELD: There exists.
Private hospitals hire, fire and exercise real control over their
attending and visiting "consultant" staff. While "consultants" are
not, technically employees, a point which respondent
hospital asserts in denying all responsibility for the patients
condition, the control exercised, the hiring, and the right to
terminate consultants all fulfill the important hallmarks of an

employer-employee relationship, with the exception of the
payment of wages. In assessing whether such a relationship
in fact exists, the control test is determining. Accordingly,
on the basis of the foregoing, we rule that for the purpose of
allocating responsibility in medical negligence cases, an
employer-employee relationship in effect exists between
hospitals and their attending and visiting physicians.
Even assuming that Dr. Ampil is not an employee of Medical City,
but an independent contractor, still the said hospital is liable to
the Aganas. In general, a hospital is not liable for the negligence
of an independent contractor-physician. There is, however, an
exception to this principle. The hospital may be liable if the
physician is the "ostensible" agent of the hospital. This exception
is also known as the "doctrine of apparent authority." (Sometimes
referred to as the apparent or ostensible agency theory). The
doctrine of apparent authority essentially involves two factors to
determine the liability of an independent contractor-physician
which are (1) the hospitals manifestations and is sometimes
described as an inquiry whether the hospital acted in a manner
which would lead a reasonable person to conclude that the
individual who was alleged to be negligent was an employee or
agent of the hospital and (2) the second factor focuses on the
patients reliance. It is sometimes characterized as an inquiry on
whether the plaintiff acted in reliance upon the conduct of the
hospital or its agent, consistent with ordinary care and prudence.
Clearly, PSI is estopped from passing the blame solely to Dr.
Ampil. Its act of displaying his name and those of the other
physicians in the public directory at the lobby of the hospital
amounts to holding out to the public that it offers quality medical
service through the listed physicians. This justifies Atty. Aganas
belief that Dr. Ampil was a member of the hospitals staff. It must
be stressed that under the doctrine of apparent authority,
the question in every case is whether the principal has by
his voluntary act placed the agent in such a situation that a
person of ordinary prudence, conversant with business
usages and the nature of the particular business, is justified
in presuming that such agent has authority to perform the
particular act in question. In these cases, the circumstances
yield a positive answer to the question.
__________________________
Labor Dispute
G.R. No. 108961 November 27, 1998
CITIBANK, N.A., vs CA, and CITI-BANK INTEGRATED
GUARDS LABOR ALLIANCE (CIGLA) SEGA-TUPAS/FSM
LOCAL CHAPTER No. 1394.
PARDO, J .:
Citibank and El Toro Security Agency, Inc. entered into a contract
for the latter to provide security and protective services to
safeguard and protect the bank's premises. Citibank renewed the
security contract with El Toro yearly until 1990. On April 22,
1990, the contract between Citibank and El Toro expired.
Respondent CIGLA filed with the NCMB a request for preventive
mediation citing Citibank as respondent therein giving as issues
for preventive mediation the following: a) Unfair labor practice; b)
Dismissal of union officers/members; and c) Union bust.
Petitioner Citibank served on El Toro a written notice that the
bank would not renew anymore the service agreement with the
LATTER. Simultaneously, Citibank hired another security agency
to render security services at Citibank's premises.
Then, respondent CIGLA filed a manifestation with the NCMB
that it was converting its request for preventive mediation into a
notice of strike for failure of the parties to reach a mutually
acceptable settlement of the issues, which it followed with a
supplemental notice of strike alleging as supplemental issue the
mass dismissal of all union officers and members.
The security guards of El Toro who were replaced by guards of
the Golden Pyramid Security Agency considered the non-renewal
of El Toro's service agreement with Citibank as constituting a
lockout and/or a mass dismissal. They threatened to go on strike
against Citibank and picket its premises.
Subsequently, petitioner Citibank filed with the Regional Trial
Court Makati, a complaint for injunction and damages.

The
complaint sought to enjoin CIGLA and any person claiming
membership therein from striking or otherwise disrupting the
operations of the bank.
Respondent CIGLA filed with the trial court a motion to dismiss
the complaint. The motion alleged that (a) the Court had no
jurisdiction, this being labor dispute; b) The guards were
employees of the bank; c) There were pending cases/labor
disputes between the guards and the bank at the different
agencies of the Department of Labor and Employment (DOLE).;
d) The bank was guilty of forum shopping in filing the complaint
with the RTC after submitting itself voluntarily to the jurisdiction of
the different agencies of the DOLE.
RTC denied the motion to dismiss. CA reversed and ruled that
the status quo ante declaration of strike shall be observed
pending the proceedings in the National Conciliation and
Mediation Board, Department of Labor and Employment,
National Capital Region.
Petitioner Citibank contends that there is no employer-employee
relationship between Citibank and the security guards
represented by respondent CIGLA and that there is no "labor
dispute" in the subject controversy. The security guards were
employees of El Toro security agency, not of Citibank. Its service
contract with Citibank had expired and not renewed.
ISSUE: Whether it is the labor tribunal or the regional trial court
that has jurisdiction over the subject matter of the complaint filed
by Citibank with the trial court.
HELD: There is no labor dispute. RTC has jurisdiction.
It has been decided also that the Labor Arbiter has no jurisdiction
over a claim filed where no employer-employee relationship

existed between a company and the security guards assigned to
it by a security service contractor.

In this case, it was the
security agency El Toro that recruited, hired and assigned
the watchmen to their place of work. It was the security
agency that was answerable to Citibank for the conduct of
its guards.
The question arises. Is there a labor dispute between
Citibank and the security guards, members of respondent
CIGLA, regardless of whether they stand in the relation of
employer and employees? Article 212, paragraph 1 of the
Labor Code provides the definition of a "labor dispute". It
"includes any controversy or matter concerning terms or
conditions of employment or the association or
representation of persons in negotiating, fixing, maintaining,
changing or arranging the terms and conditions of
employment, regardless of whether the disputants stand in
the proximate relation of employer and employee.
If at all, the dispute between Citibank and El Toro security
agency is one regarding the termination or non-renewal of the
contract of services. This is a civil dispute. El Toro was an
independent contractor. Thus, no employer-employee
relationship existed between Citibank and the security guard
members of the union in the security agency who were assigned
to secure the bank's premises and property. Hence, there was no
labor dispute and no right to strike against the bank.
____________________
G.R. No. 120567 March 20, 1998
PAL vs. NLRC, FERDINAND PINEDA and GOGFREDO
CABLING
MARTINEZ, J .:
FACTS:
Private respondents are flight stewards of the petitioner. Both
were dismissed from the service for their alleged involvement in
the currency smuggling in Hong Kong.
Aggrieved by said dismissal, private respondents filed with the
NLRC a petition for injunction praying that a temporary
restraining order be issued, prohibiting respondents (petitioner
herein) from effecting or enforcing its Decision or to reinstate
petitioners temporarily while a hearing on the propriety of the
issuance of a writ of preliminary injunction is being undertaken;
The NLRC issued a temporary mandatory injunction enjoining
petitioner to cease and desist from enforcing its Memorandum of
dismissal.
Petitioner argued that the NLRC erred in granting a temporary
injunction order when it has no jurisdiction to issue an injunction
or restraining order since this may be issued only under Article
218 of the Labor Code if the case involves or arises from labor
disputes.
ISSUE: WON there was a labor dispute as to warrant the NLRCs
issuance of the assailed writ?
HELD:
In labor cases, Article 218 of the Labor Code empowers the
NLRC to enjoin or restrain any actual or threatened commission
of any or all prohibited or unlawful acts or to require the
performance of a particular act in any labor dispute which, if not
restrained or performed forthwith, may cause grave or irreparable
damage to any party or render ineffectual any decision in favor of
such party; . . ."
From the foregoing provisions of law, the power of the NLRC to
issue an injunctive writ originates from "any labor dispute" upon
application by a party thereof, which application if not granted
"may cause grave or irreparable damage to any party or render
ineffectual any decision in favor of such party."
The term "labor dispute" is defined as "any controversy or matter
concerning terms and conditions of employment or the
association or representation of persons in negotiating, fixing.
maintaining, changing, or arranging the terms and conditions of
employment regardless of whether or not the disputants stand in
the proximate relation of employers and employees."
8

The term "controversy" is likewise defined as "a litigated
question; adversary proceeding in a court of law; a civil action or
suit, either at law or in equity; a justiciable dispute."

A "justiciable controversy" is "one involving an active antagonistic
assertion of a legal right on one side and a denial thereof on the
other concerning a real, and not a mere theoretical question or
issue."
Taking into account the foregoing definitions, it is an
essential requirement that there must first be a labor dispute
between the contending parties before the labor arbiter. In
the present case, there is no labor dispute between the
petitioner and private respondents as there has yet been no
complaint for illegal dismissal filed with the labor arbiter by
the private respondents against the petitioner.
The petition for injunction directly filed before the NLRC is in
reality an action for illegal dismissal of which the LA has original
and exclusive jurisdiction.
_________________
Managerial Employee
G.R. No. 159577 May 3, 2006
CHARLITO PEARANDA vs. BAGANGA PLYWOOD
CORPORATION and HUDSON CHUA
PANGANIBAN, CJ :
FACTS:

Sometime in June 1999, Petitioner Charlito Pearanda was hired
as an employee of Baganga Plywood Corporation (BPC) to take
charge of the operations and maintenance of its steam plant
boiler. Later, Pearanda filed a Complaint for illegal dismissal
with money claims against BPC and its general manager,
Hudson Chua, before the NLRC.
Pearanda through counsel in his position paper alleges that he
was employed by respondent as Foreman/Boiler Head/Shift
Engineer until he was illegally terminated. Further, [he] alleges
that his services [were] terminated without the benefit of due
process and valid grounds in accordance with law. Furthermore,
he was not paid his overtime pay, premium pay for working
during holidays/rest days, night shift differentials and finally
claims for payment of damages and attorneys fees having been
forced to litigate the present complaint.
Upon the other hand, respondent [BPC] allege that being a
managerial employee he is not entitled to overtime pay and if
ever he rendered services beyond the normal hours of work,
[there] was no office order/or authorization for him to do so.
The labor arbiter ruled that there was no illegal dismissal and that
petitioners Complaint was premature because he was still
employed by BPC. The temporary closure of BPCs plant did not
terminate his employment, hence, he need not reapply when the
plant reopened. Nevertheless, the labor arbiter found petitioner
entitled to overtime pay, premium pay for working on rest days,
and attorneys fees in the total amount of P21,257.98.
13

Respondents filed an appeal to the NLRC, which deleted the
award of overtime pay and premium pay for working on rest
days. According to the Commission, petitioner was not entitled to
these awards because he was a managerial employee.
CA reversed.
ISSUE: WON he is a managerial employee.
HELD:
Managerial employees and members of the managerial staff are
exempted from the provisions of the Labor Code on labor
standards. Since petitioner belongs to this class of employees,
he is not entitled to overtime pay and premium pay for working on
rest days.
The Court disagrees with the NLRCs finding that petitioner
was a managerial employee. However, petitioner was a
member of the managerial staff, which also takes him out of
the coverage of labor standards. Like managerial
employees, officers and members of the managerial staff are
not entitled to the provisions of law on labor standards. The
Implementing Rules of the Labor Code define members of a
managerial staff as those with the following duties and
responsibilities:
"(1) The primary duty consists of the performance of
work directly related to management policies of the
employer;
"(2) Customarily and regularly exercise discretion
and independent judgment;
"(3) (i) Regularly and directly assist a proprietor or a
managerial employee whose primary duty consists
of the management of the establishment in which he
is employed or subdivision thereof; or (ii) execute
under general supervision work along specialized or
technical lines requiring special training,
experience, or knowledge; or (iii) execute under
general supervision special assignments and tasks;
and
"(4) who do not devote more than 20 percent of their
hours worked in a workweek to activities which are
not directly and closely related to the performance
of the work described in paragraphs (1), (2), and (3)
above."
______________________
G.R. No. 169717 March 16, 2011
SAMAHANG MANGGAGAWA SA CHARTER CHEMICAL
SOLIDARITY OF UNIONS IN THE PHILIPPINES FOR
EMPOWERMENT AND REFORMS (SMCC-SUPER),
ZACARRIAS JERRY VICTORIO-Union President vs.
CHARTER CHEMICAL and COATING CORPORATION
DEL CASTILLO, J .:
FACTS:
SMCC filed a petition for certification election among the regular
rank-and-file employees of Charter Chemical and Coating
Corporation with the Mediation Arbitration Unit of the DOLE,
National Capital Region.
Respondent company filed an Answer with Motion to Dismiss on
the ground that petitioner union is not a legitimate labor
organization because of (1) failure to comply with the
documentation requirements set by law, and (2) the inclusion of
supervisory employees within petitioner union.
5

The Med-Arbiter dismissed the petition for certification election
for the reason that the list of membership of petitioner union
consisted of 12 batchman, mill operator and leadman who
performed supervisory functions. Under Article 245 of the Labor
Code, said supervisory employees are prohibited from joining
petitioner union which seeks to represent the rank-and-file
employees of respondent company.
DOLE ruled that there was no obstacle to the grant of petitioner
unions petition for certification election.
CA set aside DOLEs ruling upholding the Med-Arbiters finding
that petitioner union consisted of both rank-and-file and
supervisory employees.

ISSUE: Whether the alleged mixture of rank-and-file and
supervisory employee[s] of petitioner [unions] membership is [a]
ground for the cancellation of petitioner [unions] legal personality
and dismissal of [the] petition for certification election.
HELD: The mixture of rank-and-file and supervisory
employees in petitioner union does not nullify its legal
personality as a legitimate labor organization.
Preliminarily, we note that petitioner union questions the factual
findings of the Med-Arbiter, as upheld by the appellate court, that
12 of its members are supervisory employees. However,
petitioner union failed to present any rebuttal evidence in the
proceedings below after respondent company submitted in
evidence the job descriptions of the aforesaid employees. The
job descriptions indicate that the aforesaid employees
exercise recommendatory managerial actions which are not
merely routinary but require the use of independent
judgment, hence, falling within the definition of supervisory
employees under Article 212(m) of the Labor Code. For this
reason, we are constrained to agree with the Med-Arbiter, as
upheld by the appellate court, that petitioner union consisted of
both rank-and-file and supervisory employees.
Nonetheless, the inclusion of the aforesaid supervisory
employees in petitioner union does not divest it of its status as a
legitimate labor organization. R.A. No. 6715 omitted specifying
the exact effect any violation of the prohibition [on the co-
mingling of supervisory and rank-and-file employees] would
bring about on the legitimacy of a labor organization.
On June 21, 1997, the 1989 Amended Omnibus Rules was
further amended by Department Order No. 9, series of 1997
(1997 Amended Omnibus Rules). Specifically, the requirement
under Sec. 2(c) of the 1989 Amended Omnibus Rules that the
petition for certification election indicate that the bargaining unit
of rank-and-file employees has not been mingled with
supervisory employees was removed. Instead, what the 1997
Amended Omnibus Rules requires is a plain description of the
bargaining unit.
The applicable law and rules in the instant case are the same
as those in Kawashima because the present petition for
certification election was filed in 1999 when D.O. No. 9,
series of 1997, was still in effect. Hence,Kawashima applies
with equal force here. As a result, petitioner union was not
divested of its status as a legitimate labor organization even
if some of its members were supervisory employees; it had
the right to file the subject petition for certification election.
_____________________
G.R. No. 187887 September 7, 2011
PAMELA FLORENTINA P. JUMUAD vs. HI-FLYER FOOD, INC.
and/or JESUS R. MONTEMAYOR
MENDOZA, J .:
FACTS:
Petitioner Jumuad began her employment with respondent Hi-
Flyer Food, Inc. (Hi-Flyer), as management trainee. Based on her
performance through the years, Jumuad received several
promotions until she became the area manager for the entire
Visayas-Mindanao 1 region, comprising the provinces of Cebu,
Bacolod, Iloilo and Bohol.
Aside from being responsible in monitoring her subordinates,
Jumuad was tasked to: 1) be highly visible in the restaurants
under her jurisdiction; 2) monitor and support day-to-day
operations; and 3) ensure that all the facilities and equipment at
the restaurant were properly maintained and serviced. Among
the branches under her supervision were the KFC branches in
Gaisano Mall, Cebu City (KFC-Gaisano); in Cocomall, Cebu
City(KFC-Cocomall); and in Island City Mall, Bohol (KFC-Bohol).
In just her first year as Area Manager, Jumuad gained distinction
and was awarded the 3rd top area manager nationwide. She was
rewarded with a trip to Singapore for her excellent performance.
However, an examination of the KFC branches by respondent
revealed several sanitation violations. Moreover, there were cash
shortages.
Seeking to hold Jumuad accountable for the irregularities
uncovered in the branches under her supervision, and was later
on dismissed.
Jumuad filed a complaint for illegal dismissal.
LA found that no serious cause for termination existed, thus
Jumuad was illegally dismissed. NLRC affirmed.
CA rendered the subject decision reversing the decision of the
labor tribunal.
ISSUE: WON dismissal is proper.
HELD: It cannot be denied that Jumuad willfully breached her
duties as to be unworthy of the trust and confidence of Hi-
Flyer. First, there is no denying that Jumuad was a managerial
employee for Jumuad executed management policies and had
the power to discipline the employees of KFC branches in her
area. She recommended actions on employees to the head
office. Pertinent is Article 212 (m) of the Labor Code defining a
managerial employee as one who is vested with powers or
prerogatives to lay down and execute management policies
and/or hire, transfer, suspend, lay off, recall, discharge, assign or
discipline employees.
Based on established facts, the mere existence of the grounds
for the loss of trust and confidence justifies petitioners dismissal.
As long as there is some basis for such loss of confidence, such
as when the employer has reasonable ground to believe that the
employee concerned is responsible for the purported misconduct,
and the nature of his participation therein renders him unworthy
of the trust and confidence demanded of his position, a
managerial employee may be dismissed.

In the present case, the CERs reports of Hi-Flyer show that there
were anomalies committed in the branches managed by Jumuad.
On the principle of respondeat superior or command
responsibility alone, Jumuad may be held liable for negligence in
the performance of her managerial duties. She may not have
been directly involved in causing the cash shortages in KFC-
Bohol, but her involvement in not performing her duty monitoring
and supporting the day to day operations of the branches and
ensure that all the facilities and equipment at the restaurant were
properly maintained and serviced, could have truly prevented the
whole debacle from ever occurring.
Moreover, it is observed that rather than taking proactive steps to
prevent the anomalies at her branches, Jumuad merely effected
remedial measures. In the restaurant business where the health
and well-being of the consuming public is at stake, this does not
suffice. Thus, there is reasonable basis for Hi-Flyer to withdraw
its trust in her and dismissing her from its service.
_____________________
Jurisdiction of the Labor Arbiter
G.R. No. 185567 October 20, 2010
ARSENIO Z. LOCSIN, Petitioner,
vs.
NISSAN LEASE PHILS. INC. and LUIS
BANSON, Respondents.
D E C I S I O N
BRION, J .:
FACTS:
Locsin was elected EVP and Treasurer of NCLPI. Locsin held
this position for 13 years until he was nominated and elected
Chairman of NCLPIs Board of Directors.
Seven months after his election as Chairman of the Board, on a
special meeting, Locsin was neither re-elected Chairman nor
reinstated to his previous position as EVP/Treasurer.
Subsequently, Locsin filed a complaint for illegal dismissal with
prayer for reinstatement, payment of backwages, damages and
attorneys fees before the Labor Arbiter against NCLPI and
Banson, who was then President of NCLPI.
NCLPI and Banson filed a Motion to Dismiss, on the ground
that the Labor Arbiter did not have jurisdiction over the case
since the issue of Locsins removal as EVP/Treasurer
involves an intra-corporate dispute.
LA denied the motion. CA reversed.
ISSUE: WON LA has jurisdiction.
HELD: The CA correctly ruled that no employer-employee
relationship exists between Locsin and Nissan. Hence, LA has no
jurisdiction.
Locsin was undeniably Chairman and President, and was elected
to these positions by the Nissan board pursuant to its By-laws.
As such, he was a corporate officer, not an employee. The CA
reached this conclusion by relying on the submitted facts and on
Presidential Decree 902-A, which defines corporate officers as
"those officers of a corporation who are given that character
either by the Corporation Code or by the corporations by-laws."
Likewise, Section 25 of Batas Pambansa Blg. 69, or the
Corporation Code of the Philippines (Corporation Code) provides
that corporate officers are the president, secretary, treasurer and
such other officers as may be provided for in the by-laws.
Even as Executive Vice-President/Treasurer, Locsin already
acted as a corporate officer because the position of Executive
Vice-President/Treasurer is provided for in Nissans By-Laws.
Article IV, Section 4 of these By-Laws specifically provides for
this position.
Given Locsins status as a corporate officer, the RTC, not
the Labor Arbiter or the NLRC, has jurisdiction to hear the
legality of the termination of his relationship with Nissan. As
we also held in Okol, a corporate officers dismissal from
service is an intra-corporate dispute:
A corporate officers dismissal is always a corporate act, or an
intra-corporate controversy which arises between a stockholder
and a corporation. so that the RTC should exercise jurisdiction.
Therefore, the Labor Arbiter does not have jurisdiction over the
termination dispute Locsin brought, and should not be allowed to
continue to act on the case after the absence of jurisdiction has
become obvious, based on the records and the law. In more
practical terms, a contrary ruling will only cause substantial delay
and inconvenience as well as unnecessary expenses, to the
point of injustice, to the parties. This conclusion, of course, does
not go into the merits of termination of relationship and is without
prejudice to the filing of an intra-corporate dispute on this point
before the appropriate RTC.
_________________________
G.R. No. 160146 December 11, 2009
LESLIE OKOL vs. SLIMMERS WORLD INTERNATIONAL,
BEHAVIOR MODIFICATIONS, INC., and RONALD JOSEPH
MOY
CARPIO, J .:
FACTS:
Respondent SWI employed petitioner Okol as a management
trainee. She rose up the ranks to become Head Office Manager
and then Director and Vice President until her dismissal. The
dismissal was in connection with the equipment seized by the
Bureau of Customs.

Okol filed a complaint with the Arbitration branch of the NLRC
against respondents for illegal suspension, illegal dismissal,
unpaid commissions, damages and attorneys fees, with prayer
for reinstatement and payment of backwages.
Respondents asserted, through their motion to dismiss, that the
NLRC had no jurisdiction over the subject matter of the
complaint.
LA granted the motion. The labor arbiter ruled that Okol was the
vice-president of Slimmers World at the time of her dismissal.
Since it involved a corporate officer, the dispute was an intra-
corporate controversy falling outside the jurisdiction of the
Arbitration branch.
NLRC reversed.
CA reversed NLRC.
Petitioner enumerated the instances that she was under the
power and control of Moy, Slimmers Worlds president: (1)
petitioner received salary evidenced by pay slips, (2) Moy
deducted Medicare and SSS benefits from petitioners salary,
and (3) petitioner was dismissed from employment not through a
board resolution but by virtue of a letter from Moy. Thus, having
shown that an employer-employee relationship exists, the
jurisdiction to hear and decide the case is vested with the labor
arbiter and the NLRC.
ISSUE: Whether or not the NLRC has jurisdiction over the illegal
dismissal case filed by petitioner.
HELD:
From the documents submitted by respondents, petitioner
was a director and officer of Slimmers World. The charges of
illegal suspension, illegal dismissal, unpaid commissions,
reinstatement and back wages imputed by petitioner against
respondents fall squarely within the ambit of intra-corporate
disputes. Thus, the question of remuneration involving a
stockholder and officer, not a mere employee, is not a
simple labor problem but a matter that comes within the area
of corporate affairs and management and is a corporate
controversy in contemplation of the Corporation Code.
It is a settled rule that jurisdiction over the subject matter is
conferred by law. The determination of the rights of a director and
corporate officer dismissed from his employment as well as the
corresponding liability of a corporation, if any, is an intra-
corporate dispute subject to the jurisdiction of the regular courts.
Thus, the appellate court correctly ruled that it is not the NLRC
but the regular courts which have jurisdiction over the present
case.
________________
G.R. No. 89621 September 24, 1991
PEPSI COLA represented by its Plant General Manager
ANTHONY B. SIAN, ELEAZAR LIMBAB, IRENEO BALTAZAR
& JORGE HERAYA vs. HON. LOLITA O. GAL-LANG,
SALVADOR NOVILLA, ALEJANDRO OLIVA, WILFREDO
CABAAS & FULGENCIO LEGO
CRUZ, J .:p
FACTS:
The private respondents were employees of the petitioner who
were suspected of complicity in the irregular disposition of empty
Pepsi Cola bottles. The petitioners filed a criminal complaint for
theft against them but this was later withdrawn and substituted
with a criminal complaint for falsification of private documents.
After a preliminary investigation conducted by the Municipal Trial
Court of Tanauan, Leyte, the complaint was dismissed.
Meantime, allegedly after an administrative investigation, the
private respondents were dismissed by the petitioner company.
As a result, they lodged a complaint for illegal dismissal with the
Regional Arbitration Branch of the NLRC in Tacloban City and
decisions manded reinstatement with damages. In addition, they
instituted in the RTC of Leyte a separate civil complaint against
the petitioners for damages arising from what they claimed to be
their malicious prosecution.
The petitioners moved to dismiss the civil complaint on the
ground that the trial court had no jurisdiction over the case
because it involved employee-employer relations that were
exclusively cognizable by the labor arbiter.
The RTC ruled that the present civil case is distinct from the labor
case for damages now pending before the labor courts." The
petitioners then came to this Court for relief.
ISSUE: WON RTC has jurisdiction.
HELD: It must be stressed that not every controversy involving
workers and their employers can be resolved only by the labor
arbiters. This will be so only if there is a "reasonable causal
connection" between the claim asserted and employee-employer
relations to put the case under the provisions of Article 217.
Absent such a link, the complaint will be cognizable by the
regular courts of justice in the exercise of their civil and criminal
jurisdiction.
The case now before the Court involves a complaint for damages
for malicious prosecution which was filed with the Regional Trial
Court of Leyte by the employees of the defendant company. It
does not appear that there is a "reasonable causal connection"
between the complaint and the relations of the parties as
employer and employees. The complaint did not arise from such
relations and in fact could have arisen independently of an
employment relationship between the parties. No such
relationship or any unfair labor practice is asserted. What the
employees are alleging is that the petitioners acted with bad faith
when they filed the criminal complaint which the Municipal Trial
Court said was intended "to harass the poor employees" and the
dismissal of which was affirmed by the Provincial Prosecutor "for
lack of evidence to establish even a slightest probability that all
the respondents herein have committed the crime imputed
against them." This is a matter which the labor arbiter has no

competence to resolve as the applicable law is not the Labor
Code but the Revised Penal Code.
____________________
G.R. No. 172013 October 2, 2009
PATRICIA HALAGUEA and other flight attendants of
PHILIPPINE AIRLINES vs. PHILIPPINE AIRLINES
INCORPORATED
PERALTA, J .:
Petitioners were employed as female flight attendants of
respondent Philippine Airlines (PAL) on different dates.
Respondent and FASAP entered into a CBA incorporating the
terms and conditions of their agreement for the years 2000 to
2005, hereinafter referred to as PAL-FASAP CBA that the
compulsory retirement shall be fifty-five (55) for females and sixty
(60) for males.
Petitioners and several female cabin crews manifested that the
aforementioned CBA provision on compulsory retirement is
discriminatory, and demanded for an equal treatment with their
male counterparts.
Petitioners filed a Special Civil Action for Declaratory Relief with
Prayer for the Issuance of Temporary Restraining Order and Writ
of Preliminary Injunction with the RTC of Makati City for the
invalidity of the assailed portion of the CBA.
RTC issued an Order upholding its jurisdiction over the present
case. According to RTC, this case is not directed specifically
against respondent arising from any act of the latter, nor does it
involve a claim against the respondent. Rather, this case seeks a
declaration of the nullity of the questioned provision of the CBA,
which is within the Court's competence, with the allegations in the
Petition constituting the bases for such relief sought.
CA reversed which declared that RTC have NO JURISDICTION
OVER THE CASE.
ISSUE: Whether the RTC has jurisdiction over the petitioners'
action challenging the legality or constitutionality of the provisions
on the compulsory retirement age contained in the CBA between
respondent PAL and FASAP.
HELD:
Jurisdiction of the court is determined on the basis of the material
allegations of the complaint and the character of the relief prayed
for irrespective of whether plaintiff is entitled to such relief.
In the case at bar, the allegations in the petition for
declaratory relief plainly show that petitioners' cause of
action is the annulment of Section 144, Part A of the PAL-
FASAP CBA. From the petitioners' allegations and relief prayed
for in its petition, it is clear that the issue raised is whether
Section 144, Part A of the PAL-FASAP CBA is unlawful and
unconstitutional. Here, the petitioners' primary relief in Civil Case
No. 04-886 is the annulment of Section 144, Part A of the PAL-
FASAP CBA, which allegedly discriminates against them for
being female flight attendants. The subject of litigation is
incapable of pecuniary estimation, exclusively cognizable by
the RTC, pursuant to Section 19 (1) of Batas Pambansa Blg.
129, as amended. Being an ordinary civil action, the same is
beyond the jurisdiction of labor tribunals.
The said issue cannot be resolved solely by applying the Labor
Code. Rather, it requires the application of the Constitution, labor
statutes, law on contracts and the Convention on the Elimination
of All Forms of Discrimination Against Women, and the power to
apply and interpret the constitution and CEDAW is within the
jurisdiction of trial courts, a court of general jurisdiction
_______________________
Article 221
G.R. Nos. 191288 & 191304 March 7, 2012
MERALCO vs. JAN CARLO GALA
BRION, J .:
FACTS:
Respondent Gala commenced employment with the petitioner
Meralco as a probationary lineman. Barely four months on the
job, Gala was dismissed for alleged complicity in pilferages of
Meralcos electrical supplies. He filed a complaint for illegal
dismissal
The LA dismissed the complaint for lack of merit. She held that
Galas participation in the pilferage of Meralcos property
rendered him unqualified to become a regular employee.
Gala appealed to the NLRC which reversed the labor arbiters
ruling. It found that Gala had been illegally dismissed, since there
was "no concrete showing of complicity with the alleged
misconduct/dishonesty[.]" The NLRC, however, ruled out Galas
reinstatement, stating that his tenure lasted only up to the end of
his probationary period. It awarded him backwages and
attorneys fees.
Both parties moved for partial reconsideration; Gala, on the
ground that he should have been reinstated with full backwages,
damages and interests; and Meralco, on the ground that the
NLRC erred in finding that Gala had been illegally dismissed. The
NLRC denied the motions. Relying on the same grounds, Gala
and Meralco elevated the case to the CA through a petition for
certiorari under Rule 65 of the Rules of Court.
CA denied Meralcos petition for lack of merit and partially
granted Galas petition. It concurred with the NLRC that Gala had
been illegally dismissed, a ruling that was supported by the
evidence.

Meralco faults the CA for not giving credit to its witnesses
Aguilar, Dola and Riano, and instead treated their joint affidavit
(Samasamang Sinumpaang Salaysay) as inconclusive to
establish Galas participation in the pilferage of company
property.
Gala asks for a denial of the petition because of (1) serious and
fatal infirmities in the petition; (2) unreliable statements of
Meralcos witnesses; and (3) clear lack of basis to support the
termination of his employment.
Gala contends, in regard to the alleged procedural defects of the
petition, that the "Verification and Certification," "Secretarys
Certificate" and "Affidavit of Service" do not contain the details of
the Community or Residence Tax Certificates of the affiants, in
violation of Section 6 of Commonwealth Act No. 465 (an Act to
Impose a Residence Tax). Additionally, the lawyers who signed
the petition failed to indicate their updated Mandatory Continuing
Legal Education (MCLE) certificate numbers, in violation of the
rules.
ISSUE: Whether there was procedural defect on part of
Meralcos petition.
HELD: It is the spirit and intention of labor legislation that
the NLRC and the labor arbiters shall use every reasonable
means to ascertain the facts in each case speedily and
objectively, without regard to technicalities of law or
procedure, provided due process is duly observed. In
keeping with this policy and in the interest of substantial justice,
we deem it proper to give due course to the petition, especially in
view of the conflict between the findings of the labor arbiter, on
the one hand, and the NLRC and the CA, on the other. As we
said in S.S. Ventures International, Inc. v. S.S. Ventures Labor
Union,
20
"the application of technical rules of procedure in labor
cases may be relaxed to serve the demands of substantial
justice."
_________________
G.R. No. 155844 July 14, 2008
NATIONWIDE SECURITY and ALLIED SERVICES, INC. vs.
CA, NLRC and JOSEPH DIMPAZ, HIPOLITO LOPEZ,
EDWARD ODATO, FELICISIMO PABON and JOHNNY AGBAY
QUISUMBING, J .:
FACTS:
Labor Arbiter found petitioner, a security agency, not liable for
illegal dismissal involving eight security guards who were
employees of the petitioner. However, the Labor Arbiter directed
the petitioner to pay the aforementioned security guards their
separation pay, unpaid salaries, underpayment and 10%
attorneys fees based on the total monetary award.
Dissatisfied with the decision, petitioner appealed to the NLRC
which dismissed its appeal for two reasons first, for having
been filed beyond the reglementary period within which to perfect
the appeal and second, for filing an insufficient appeal bond.
Petitioner then appealed to the Court of Appeals to have the
appeal resolved on the merits rather than on pure technicalities in
the interest of due process. CA dismissed holding that in a
special action for certiorari, the burden is on petitioner to prove
not merely reversible error, but grave abuse of discretion
amounting to lack of or excess of jurisdiction on the part of public
respondent NLRC.
ISSUE:
(1) WHETHER OR NOT TECHNICALITIES IN LABOR CASES
MUST PREVAIL OVER THE SPIRIT AND INTENTION OF THE
LABOR CODE UNDER ARTICLE 221 THEREOF WHICH
STATES
(2) WHETHER OR NOT THE REQUIREMENT ON
CERTIFICATION AGAINST FORUM SHOPPING WHICH WAS
RAISED BEFORE THE NLRC IS ENFORCEABLE IN THE
INSTANT CASE.
HELD: The petition lacks merit.
In the instant case, both the NLRC and the Court of Appeals
found that petitioner received the decision of the Labor Arbiter on
July 16, 1999. This factual finding is supported by sufficient
evidence, and we take it as binding on us. Petitioner then
simultaneously filed its "Appeal Memorandum", "Notice of
Appeal" and "Motion to Reduce Bond", by registered mail on July
29, 1999, under Registry Receipt No. 003098. These were
received by the NLRC on July 30, 1999. The appeal to the NLRC
should have been perfected, as provided by its Rules, within a
period of 10 days from receipt by petitioner of the decision on
July 16, 1999. Clearly, the filing of the appeal--three days
after July 26, 1999--was already beyond the reglementary period
and in violation of the NLRC Rules and the pertinent Article on
Appeal in the Labor Code.
Failure to perfect an appeal renders the decision final and
executory. The right to appeal is a statutory right and one who
seeks to avail of the right must comply with the statute or the
rules. The rules, particularly the requirements for perfecting
an appeal within the reglementary period specified in the
law, must be strictly followed as they are considered
indispensable interdictions against needless delays and for
the orderly discharge of judicial business. It is only in highly
meritorious cases that this Court will opt not to strictly apply the
rules and thus prevent a grave injustice from being done. The
exception does not obtain here. Thus, we are in agreement that
the decision of the Labor Arbiter already became final and
executory because petitioner failed to file the appeal within
10 calendar days from receipt of the decision.
______________
Article 223

G.R. No. 168501, January 31, 2011

ISLRIZ TRADING/ VICTOR HUGO LU VS. EFREN CAPADA et
al.

DEL CASTILLO, J.:

FACTS:

FACTS:
Respondents were drivers and helpers of Islriz Trading, a gravel
and sand business. Claiming that they were illegally dismissed,
respondents filed a Complaint

for illegal dismissal and non-
payment of overtime pay, holiday pay, rest day pay, allowances
and separation pay against petitioner before the Labor Arbiter.
On his part, petitioner imputed abandonment of work against
respondents.
LA ruled that there was illegal dismissal and reinstatement
without loss of seniority rights and the payment of full backwages
from date of dismissal to actual reinstatement.

On appeal, NLRC ordered respondents' reinstatement but
without backwages.
Respondents filed a Motion for Reconsideration thereto but same
was likewise denied in an NLRC Resolution which became final
and executory.

Respondents averred that since the Decision of Labor Arbiter
ordered their reinstatement, a Writ of Execution

was already
issued for the enforcement of its reinstatement aspect as same is
immediately executory even pending appeal. But this
notwithstanding and despite the issuance and subsequent finality
of the NLRC Resolution which likewise ordered respondents'
reinstatement, petitioner still refused to reinstate them. Thus,
respondents prayed that in view of the orders of reinstatement, a
computation of the award of backwages.

Petitioner contends that in upholding the issuance of the
questioned Writ of Execution for the enforcement of respondents'
accrued salaries, said Decision and Resolution, in effect, altered
the NLRC Resolution which only decreed respondents'
reinstatement without backwages. Moreover, Article 223 of the
Labor Code only applies when an employee has been illegally
dismissed from work. And since in this case the NLRC ruled that
respondents' failure to continue working for petitioner was not
occasioned by termination, there is no illegal dismissal to speak
of, hence, said provision of the Labor Code does not apply.
Lastly, petitioner claims that the computation of respondents'
accrued salaries in the total amount of P1,110,665.60 has no
legal and factual bases since as repeatedly pointed out by him,
the NLRC Resolution reversing the Labor Arbiter's Decision has
already ordered respondents' reinstatement without backwages
after it found that there was no illegal termination.

ISSUE: Whether respondents may collect their wages during the
period between the Labor Arbiter's order of reinstatement
pending appeal and the NLRC Resolution overturning that of the
Labor Arbiter.

HELD: Employees are entitled to their accrued salaries
during the period between the Labor Arbiter's order of
reinstatement pending appeal and the resolution of the
National Labor Relations Commission (NLRC) overturning
that of the Labor Arbiter. Otherwise stated, even if the order of
reinstatement of the Labor Arbiter is reversed on appeal, the
employer is still obliged to reinstate and pay the wages of the
employee during the period of appeal until reversal by a higher
court or tribunal. In this case, respondents are entitled to their
accrued salaries from the time petitioner received a copy of the
Decision of the Labor Arbiter declaring respondents' termination
illegal and ordering their reinstatement up to the date of the
NLRC resolution overturning that of the Labor Arbiter.

On the other hand, if the employee has been reinstated during
the appeal period and such reinstatement order is reversed with
finality, the employee is not required to reimburse whatever
salary he received for he is entitled to such, more so if he actually
rendered services during the period.

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

Application of the Two-Fold Test to the present case

(1) Was there an actual delay or was the order of reinstatement
pending appeal executed prior to its reversal? Yes.

(2) Was the delay not due to the employer's unjustified act or
omission? Yes.

NOTE: Respondents are entitled to their accrued salaries
only from the time petitioner received a copy of Labor
Arbiter Gan's Decision declaring respondents' termination
illegal and ordering their reinstatement up to the date of the
NLRC Resolution overturning that of the Labor Arbiter.
______________________
G.R. No. 196830 February 29, 2012
CESAR V. GARCIA et al. vs. KJ Commercial and Reynaldo
Que
CARPIO, J .:
FACTS:
Respondent KJ Commercial employed as truck drivers and truck
helpers petitioners.
Later, petitioners demanded for a P40 daily salary increase. To
pressure KJ Commercial to grant their demand, they stopped
working and abandoned their trucks at the Northern Cement
Plant Station in Sison,Pangasinan. They also blocked other
workers from reporting to work.
Petitioners filed with the Labor Arbiter a complaint

for illegal
dismissal, underpayment of salary and non-payment of service
incentive leave and thirteenth month pay.
The Labor Arbiter held that KJ Commercial illegally dismissed
petitioners.
KJ Commercial appealed to the NLRC. It filed before the NLRC a
motion to reduce bond and posted a P50,000 cash bond.
The NLRC dismissed the appeal. It must be stressed that under
Section 6, Rule VI of the 2005 Revised Rules of this
Commission, a motion to reduce bond shall only be entertained
when the following requisites concur: (1) The motion is founded
on meritorious ground; and (2) A bond of reasonable amount in
relation to the monetary award is posted. Further, they are
unwilling to at least put up a property to secure a surety bond.
The P50,000.00 cash bond posted by respondents-appellants
which represents less than two (2) percent of the monetary
award is dismally disproportionate to the monetary award
of P2,612,930.00 and that the amount of bond posted by
respondents-appellants is not reasonable in relation to the
monetary award.
KJ Commercial filed a motion

for reconsideration and posted
a P2,562,930surety bond. NLRC granted the motion and held
that petitioners were not dismissed.
Petitioners filed a motion for reconsideration. The NLRC denied
the motion for lack of merit.
The CA affirmed.
ISSUE: WON KJ Commercial failed to perfect an appeal since
the motion to reduce bond did not stop the running of the period
to appeal.
HELD: Petitoners cannot, for the first time, raise as issue in their
petition filed with this Court that the Labor Arbiters 30 October
2008 Decision had become final and executory. Points of law,
theories and arguments not raised before the Court of Appeals
will not be considered by this Court. Otherwise, KJ Commercial
will be denied its right to due process.
Furthermore, whether respondents were able to appeal on
time is a question of fact that cannot be entertained in a
petition for review under Rule 45 of the Rules of Court. In
general, the jurisdiction of this Court in cases brought
before it from the Court of Appeals is limited to a review of
errors of law allegedly committed by the court a quo.
KJ Commercials filing of a motion to reduce bond and delayed
posting of theP2,562,930 surety bond did not render
the Labor Arbiters 30 October 2008 Decision final and executory.
The Rules of Procedure of the NLRC allows the filing of a motion
to reduce bond subject to two conditions: (1) there is meritorious
ground, and (2) a bond in a reasonable amount is posted. The
filing of a motion to reduce bond and compliance with the two
conditions stop the running of the period to perfect an appeal.
The NLRC has full discretion to grant or deny the motion to
reduce bond,

and it may rule on the motion beyond the 10-
day period within which to perfect an appeal. Obviously, at
the time of the filing of the motion to reduce bond and
posting of a bond in a reasonable amount, there is no
assurance whether the appellants motion is indeed based
on meritorious ground and whether the bond he or she
posted is of a reasonable amount. Thus, the appellant
always runs the risk of failing to perfect an appeal.
In order to give full effect to the provisions on motion to reduce
bond, the appellant must be allowed to wait for the ruling of the
NLRC on the motion even beyond the 10-day period to perfect an
appeal. If the NLRC grants the motion and rules that there is
indeed meritorious ground and that the amount of the bond
posted is reasonable, then the appeal is perfected. If the NLRC
denies the motion, the appellant may still file a motion for
reconsideration as provided under Section 15, Rule VII of the
Rules. If the NLRC grants the motion for reconsideration and
rules that there is indeed meritorious ground and that the amount
of the bond posted is reasonable, then the appeal is perfected. If
the NLRC denies the motion, then the decision of
the labor arbiter becomes final and executory.
In the present case, KJ Commercial filed a motion to reduce
bond and posted a P50,000 cash bond. When the NLRC
denied its motion, KJ Commercial filed a motion for
reconsideration and posted the full P2,562,930 surety bond.
The NLRC then granted the motion for reconsideration.

In any case, the rule that the filing of a motion to reduce bond
shall not stop the running of the period to perfect an appeal is not
absolute. The Court may relax the rule when (1) fundamental
consideration of substantial justice; (2) prevention of miscarriage
of justice or of unjust enrichment; and (3) special circumstances
of the case combined with its legal merits, and the amount and
the issue involved.
The bond requirement on appeals may be relaxed when there is
substantial compliance with the Rules of Procedure of the NLRC
or when the appellant shows willingness to post a partial bond.
While the bond requirement on appeals involving monetary
awards has been relaxed in certain cases, this can only be done
where there was substantial compliance of the Rules or where
the appellants, at the very least, exhibited willingness to pay by
posting a partial bond.
________________
Article 224
G.R. No. 182915 December 12, 2011
MARIALY O. SY, et al. vs. FAIRLAND KNITCRAFT CO., INC.
DEL CASTILLO, J .:

FACTS:
Fairland is a domestic corporation engaged in garments
business, while Susan de Leon (Susan) is the owner/proprietress
of Weesan Garments (Weesan). On the other hand, the
complaining workers (the workers) are sewers, trimmers, helpers,
a guard and a secretary who were hired by Weesan.
Petitioners Sy et al. filed with the Arbitration Branch of the NLRC
a Complaint for underpayment and/or non-payment of wages,
overtime pay, premium pay for holidays, 13th month pay and
other monetary benefits against Susan/Weesan.
However, Weesan filed before the DOLE-NCR a report on its
temporary closure for a period of not less than six months. The
complainants them amended the complaint adding illegal
dismissal.
LA dismissed the complaint but ruled that respondents are to pay
the complainants 5,000 as financial assistance. NLRC reversed
and ruled that there was illegal dismissal and ordered the
respondents to pay the claims. The NLRC however, denied both
motions for lack of merit.
CA affirmed the NLRCs ruling that the workers were illegally
dismissed and that Weesan and Fairland are solidarily liable to
them as labor-only contractor and principal, respectively.
However, the CAs Special Ninth Division reversed the First
Divisions ruling. It held that the labor tribunals did not acquire
jurisdiction over the person of Fairland, and even assuming they
did, Fairland is not liable to the workers since Weesan is not a
mere labor-only contractor but a bona fide independent
contractor. The Special Ninth Division thus annulled and set
aside the assailed NLRC Decision and Resolution insofar as
Fairland is concerned and excluded the latter therefrom.
With regard to Susans petition, the CA Special Ninth
Division issued an order temporarily restraining the NLRC
from enforcing its assailed decision and thereafter the CA
Special Eighth Division issued a writ of preliminary
prohibitory injunction.
Citing PNOC Dockyard and Engineering Corporation v. National
Labor Relations Commission, the CA likewise emphasized that
in labor cases, both the party and his counsel must be duly
served their separate copies of the order, decision or resolution
unlike in ordinary proceedings where notice to counsel is deemed
notice to the party. It then quoted Article 224 of the Labor Code
as follows:
The CA then concluded that since Fairland and its counsel were
not separately furnished with a copy of the August 26, 2005
NLRC Resolution denying the motions for reconsideration of its
November 30, 2004 Decision, said Decision cannot be enforced
against Fairland. The CA likewise concluded that because of this,
said November 30, 2004 Decision which held Susan/Weesan
and Fairland solidarily liable to the workers, has not attained
finality.
In the instant petition for certiorari, petitioner Santos reiterates
that he should not have been adjudged personally liable by public
respondents, the latter not having validly acquired jurisdiction
over his person whether by personal service of summons or by
substituted service under Rule 19 of the Rules of Court.
ISSUE: WON CA is correct.
HELD: Article 224 contemplates the furnishing of copies of final
decisions, orders or awards and could not have been intended to
refer to the period for computing the period for appeal to the
Court of Appeals from a non-final judgment or order. The period
or manner of appeal from the NLRC to the Court of Appeals is
governed by Rule 65 pursuant to the ruling of the Court in the
case of St. Martin Funeral Homes vs. NLRC. Section 4 of Rule
65, as amended, states that the petition may be filed not later
than sixty (60) days from notice of the judgment, or resolution
sought to be assailed.
Corollarily, Section 4, Rule III of the New Rules of Procedure of
the NLRC expressly mandates that (F)or the purposes of
computing the period of appeal, the same shall be counted from
receipt of such decisions, awards or orders by the counsel of
record. Although this rule explicitly contemplates an appeal
before the Labor Arbiter and the NLRC, we do not see any
cogent reason why the same rule should not apply to petitions for
certiorari filed with the Court of Appeals from decisions of the
NLRC. This procedure is in line with the established rule that
notice to counsel is notice to party and when a party is
represented by counsel, notices should be made upon the
counsel of record at his given address to which notices of

all kinds emanating from the court should be sent. It is to be
noted also that Section 7 of the NLRC Rules of Procedure
provides that (A)ttorneys and other representatives of
parties shall have authority to bind their clients in all matters
of procedure a provision which is similar to Section 23,
Rule 138 of the Rules of Court. More importantly, Section 2,
Rule 13 of the 1997 Rules of Civil Procedure analogously
provides that if any party has appeared by counsel, service
upon him shall be made upon his counsel.
To stress, Article 224 contemplates the furnishing of copies
of final decisions, orders or awards both to the parties and
their counsel in connection with the execution of such final
decisions, orders or awards. However, for the purpose of
computing the period for filing an appeal from the NLRC to the
CA, same shall be counted from receipt of the decision, order or
award by the counsel of record pursuant to the established rule
that notice to counsel is notice to party. And since the period for
filing of an appeal is reckoned from the counsels receipt of the
decision, order or award, it necessarily follows that the reckoning
period for their finality is likewise the counsels date of receipt
thereof, if a party is represented by counsel. Hence, the date of
receipt referred to in Sec. 14, Rule VII of the then in force New
Rules of Procedure of the NLRC
106
which provides that
decisions, resolutions or orders of the NLRC shall become
executory after 10 calendar days from receipt of the same, refers
to the date of receipt by counsel. Thus contrary to the CAs
conclusion, the said NLRC Decision became final, as to Fairland,
10 calendar days after Atty. Tecsons receipt
107
thereof.
108
In
sum, we hold that the Labor Arbiter had validly acquired
jurisdiction over Fairland and its manager, Debbie, through the
appearance of Atty. Geronimo as their counsel and likewise,
through the latters filing of pleadings on their behalf.


Jurisdiction of Labor Arbiter
1) G.R. No. 152396 November 20, 2007
EX-BATAAN VETERANS SECURITY AGENCY, INC. vs.
THE SECRETARY OF LABOR BIENVENIDO E.
LAGUESMA et al.
CARPIO, J.:
FACTS: Ex-Bataan Veterans Security Agency, Inc. is in
the business of providing security services while private
respondents are EBVSAI's employees assigned to the
NAPOCOR at Ambuklao Hydro Electric Plant, Bokod,
Benguet (Ambuklao Plant).
Private respondents instituted a complaint for
underpayment of wages against EBVSAI before the
Regional Office of the DOLE.
The Regional Office conducted a complaint inspection at
the Ambuklao Plant, found several violation (e.g. non-
payment of labor standard benefits) and then set a hearing
between the parties.
The Regional Director issued an order for the security
agency to pay the deficiencies owing to the respondents.
EBVSAI filed a motion for reconsideration and alleged
that the Regional Director does not have jurisdiction
over the subject matter of the case because the money
claim of each private respondent exceeded P5,000.
EBVSAI pointed out that the Regional Director should
have endorsed the case to the Labor Arbiter.
The Regional Director denied EBVSAI's motion for
reconsideration. The Regional Director stated that,
pursuant to RA 7730, the limitations under Articles 129
and 217(6)13 of the Labor Code no longer apply to the
Secretary of Labor's visitorial and enforcement powers
under Article 128(b). The Secretary of Labor or his duly
authorized representatives are now empowered to hear
and decide, in a summary proceeding, any matter
involving the recovery of any amount of wages and other
monetary claims arising out of employer-employee
relations at the time of the inspection.
EBVSAI appealed to the Secretary of Labor. The
Secretary of Labor ruled that, pursuant to RA 7730, the
Court's decision in the Servando case is no longer
controlling insofar as the restrictive effect of Article 129 on
the visitorial and enforcement power of the Secretary of
Labor is concerned.
The Court of Appeals adopted the Secretary of Labor's
ruling that RA 7730 repealed the jurisdictional limitation
imposed by Article 129 on Article 128 of the Labor Code.
ISSUE:
(1) Whether the Secretary of Labor or his duly authorized
representatives acquired jurisdiction over EBVSAI; and
(2) Whether the Secretary of Labor or his duly authorized
representatives have jurisdiction over the money claims of
private respondents which exceed P5,000.
HELD:
While it is true that under Articles 129 and 217 of the Labor
Code, the Labor Arbiter has jurisdiction to hear and decide
cases where the aggregate money claims of each
employee exceeds P5,000.00, said provisions of law do
not contemplate nor cover the visitorial and enforcement
powers of the Secretary of Labor or his duly authorized
representatives.
Rather, said powers are defined and set forth in Article 128
of the Labor Code (as amended by R.A. No. 7730).The
provision explicitly excludes from its coverage Articles 129
and 217 of the Labor Code by the phrase
"(N)otwithstanding the provisions of Articles 129 and 217
of this Code to the contrary x x x" thereby retaining and
further strengthening the power of the Secretary of Labor
or his duly authorized representatives to issue compliance
orders to give effect to the labor standards provisions of
said Code and other labor legislation based on the findings
of labor employment and enforcement officer or industrial
safety engineer made in the course of inspection.
However, if the labor standards case is covered by the
exception clause in Article 128(b) of the Labor Code, then
the Regional Director will have to endorse the case to the
appropriate Arbitration Branch of the NLRC. In order to
divest the Regional Director or his representatives of
jurisdiction, the following elements must be present:
(a) that the employer contests the findings of the labor
regulations officer and raises issues thereon; (b) that
in order to resolve such issues, there is a need to
examine evidentiary matters; and (c) that such matters
are not verifiable in the normal course of inspection.
The rules also provide that the employer shall raise such
objections during the hearing of the case or at any time
after receipt of the notice of inspection results.

In this case, the Regional Director validly assumed
jurisdiction over the money claims of private

respondents even if the claims exceeded P5,000
because such jurisdiction was exercised in
accordance with Article 128(b) of the Labor Code and
the case does not fall under the exception clause.
Further, EBVSAI did not contest the findings of the labor
regulations officer during the hearing or after receipt of the
notice of inspection results.
_______________________
(2) LESLIE OKOL vs. SLIMMERS WORLD
INTERNATIONAL
CARPIO, J.:
FACTS: Respondent SWI employed petitioner Okol as a
management trainee. She rose up the ranks to become
Head Office Manager and then Director and Vice
President.
Prior to Okols dismissal, Slimmers World preventively
suspended Okol due to the Customs seizure of some
equipments of SWI.
Okol filed a complaint with the Arbitration branch of the
NLRC against SWI for illegal suspension, illegal dismissal,
unpaid commissions, damages and attorneys fees, with
prayer for reinstatement and payment of backwages.
Respondents asserted that the NLRC had no jurisdiction
over the subject matter of the complaint.
The labor arbiter granted the motion to dismiss. Since it
involved a corporate officer, the dispute was an intra-
corporate controversy falling outside the jurisdiction of the
Arbitration branch.
The NLRC reversed and set aside the labor arbiters order.
The CA affirmed the labor arbiter and ruled that the case,
being an intra-corporate dispute, falls within the jurisdiction
of the regular courts pursuant to Republic Act No. 8799.
ISSUE: Whether or not the NLRC has jurisdiction over the
illegal dismissal case filed by petitioner.
HELD: NLRC has no jurisdiction.

In the case, the respondents, in their motion to dismiss,
attached the General Information Sheet (GIS), Minutes of
the meeting of the Board of Directors, and Secretarys
Certificate, and the Amended By-Laws SWI as submitted
to the SEC to show that petitioner was a corporate officer
whose rights do not fall within the NLRCs jurisdiction. The
GIS and minutes of the meeting of the board of directors
indicated that petitioner was a member of the board of
directors, holding one subscribed share of the capital
stock, and an elected corporate officer.
Clearly, from the documents submitted by respondents,
petitioner was a director and officer of Slimmers World.
The charges of illegal suspension, illegal dismissal, unpaid
commissions, reinstatement and back wages imputed by
petitioner against respondents fall squarely within the
ambit of intra-corporate disputes. The question of
remuneration involving a stockholder and officer, not
a mere employee, is not a simple labor problem but a
matter that comes within the area of corporate affairs
and management and is a corporate controversy in
contemplation of the Corporation Code.
It is a settled rule that jurisdiction over the subject matter is
conferred by law. The determination of the rights of a
director and corporate officer dismissed from his
employment as well as the corresponding liability of a
corporation, if any, is an intra-corporate dispute subject to
the jurisdiction of the regular courts. Thus, the appellate
court correctly ruled that it is not the NLRC but the
regular courts which have jurisdiction over the
present case.
________________________
(3) PATRICIA HALAGUEA et al. vs. PAL
PERALTA, J.:
FACTS: Petitioners were employed as female flight
attendants of respondent PAL. They are members of the
Flight Attendants and Stewards Association of the
Philippines (FASAP), a labor organization certified as the
sole and exclusive certified as the sole and exclusive
bargaining representative of the flight attendants, flight
stewards and pursers of respondent.
Respondent and FASAP entered into a CBA incorporating
the terms and conditions of their agreement for the years.
Section 144, Part A of the PAL-FASAP CBA, provides that:

A. For the Cabin Attendants hired before 22 November
1996:
3. Compulsory Retirement: Subject to the grooming
standards provisions of this Agreement, compulsory

retirement shall be fifty-five (55) for females and sixty (60)
for males. x x x.
Petitioners and several female cabin crews manifested
that the aforementioned CBA provision on compulsory
retirement is discriminatory, and demanded for an equal
treatment with their male counterparts.
Petitioners filed a Special Civil Action for Declaratory
Relief with Prayer for the Issuance of Temporary
Restraining Order and Writ of Preliminary Injunction
with the RTC of Makati City against respondent for the
invalidity of Section 144, Part A of the PAL-FASAP
CBA.
The RTC issued an Order upholding its jurisdiction over
the present case.
CA ruled that RTC has no jurisdiction.
ISSUE: Whether the RTC has jurisdiction over the
petitioners' action challenging the legality or
constitutionality of the provisions on the compulsory
retirement age contained in the CBA between respondent
PAL and FASAP.
HELD: RTC has jurisdiction.
Jurisdiction of the court is determined on the basis of the
material allegations of the complaint and the character of
the relief prayed for irrespective of whether plaintiff is
entitled to such relief.
In the case at bar, the allegations in the petition for
declaratory relief plainly show that petitioners' cause of
action is the annulment of Section 144, Part A of the PAL-
FASAP CBA.
From the petitioners' allegations and relief prayed for
in its petition, it is clear that the issue raised is
whether Section 144, Part A of the PAL-FASAP CBA is
unlawful and unconstitutional. Here, the petitioners'
primary relief is the annulment of Section 144, Part A of
the PAL-FASAP CBA, which allegedly discriminates
against them for being female flight attendants. The
subject of litigation is incapable of pecuniary estimation,
exclusively cognizable by the RTC, pursuant to Section 19
(1) of Batas Pambansa Blg. 129, as amended.15 Being an
ordinary civil action, the same is beyond the jurisdiction of
labor tribunals.

The said issue cannot be resolved solely by applying
the Labor Code. Rather, it requires the application of
the Constitution, labor statutes, law on contracts and
the Convention on the Elimination of All Forms of
Discrimination Against Women, and the power to
apply and interpret the constitution and CEDAW is
within the jurisdiction of trial courts, a court of general
jurisdiction.
Not every controversy or money claim by an employee
against the employer or vice-versa is within the exclusive
jurisdiction of the labor arbiter. Actions between
employees and employer where the employer-employee
relationship is merely incidental and the cause of action
precedes from a different source of obligation is within the
exclusive jurisdiction of the regular court. Here, the
employer-employee relationship between the parties is
merely incidental and the cause of action ultimately
arose from different sources of obligation, i.e., the
Constitution and CEDAW.
The change in the terms and conditions of employment,
should Section 144 of the CBA be held invalid, is but a
necessary and unavoidable consequence of the principal
relief sought, i.e., nullification of the alleged discriminatory
provision in the CBA. Thus, it does not necessarily follow
that a resolution of controversy that would bring about a
change in the terms and conditions of employment is a
labor dispute, cognizable by labor tribunals. It is unfair to
preclude petitioners from invoking the trial court's
jurisdiction merely because it may eventually result into a
change of the terms and conditions of employment. Along
that line, the trial court is not asked to set and fix the terms
and conditions of employment, but is called upon to
determine whether CBA is consistent with the laws.
__________________________
(4) G.R. No. 162419 July 10, 2007
PAUL V. SANTIAGO vs. CF SHARP CREW
MANAGEMENT, INC.
TINGA, J.:
FACTS: After working for five years for respondent,
Petitioner signed a new contract of employment with
respondent, with the duration of nine (9) months. The
contract was approved by the POEA. Petitioner was to be
deployed on board the "MSV Seaspread" which was
scheduled to leave the port of Manila for Canada.
A week before the scheduled date of departure, Capt.
Pacifico Fernandez, respondents Vice President, sent a
facsimile message to the captain of "MSV Seaspread,"
which eventually prevented Santiago from departing.

Petitioner was thus told that he would not be leaving for
Canada anymore, but he was reassured that he might be
considered for deployment at some future date.
Petitioner filed a complaint for illegal dismissal,
damages, and attorney's fees against respondent and
its foreign principal, Cable and Wireless (Marine) Ltd
before the Labor Arbiter.
The labor arbiter held respondent liable.
The NLRC ruled that there is no employer-employee
relationship between petitioner and respondent
because under the Standard Terms and Conditions
Governing the Employment of Filipino Seafarers on Board
Ocean Going Vessels (POEA Standard Contract), the
employment contract shall commence upon actual
departure of the seafarer from the airport or seaport at
the point of hire and with a POEA-approved contract.
CA affirmed.
ISSUE: Whether the claims or disputes of the
Overseas Filipino Worker by virtue of a contract fall
within the jurisdiction of the Labor Arbiter of the NLRC
as provided by Section 10 of Republic Act [R.A.] No. 8042
otherwise known as the Migrant Workers Act of 1995 as
well as Section 29 of the Standard Terms and Conditions
Governing the Employment of Filipino Seafarers On-Board
Ocean-Going Vessels (which is deemed incorporated
under the petitioners POEA approved Employment
Contract)
HELD: LA has jurisdiction.
There is no question that the parties entered into an
employment contract whereby petitioner was contracted by
respondent to render services on board "MSV Seaspread"
for nine (9) months, plus overtime pay. However,
respondent failed to deploy petitioner from the port of
Manila to Canada. Considering that petitioner was not able
to depart from the airport or seaport in the point of hire, the
employment contract did not commence, and no employer-
employee relationship was created between the parties.

However, a distinction must be made between the
perfection of the employment contract and the
commencement of the employer-employee
relationship. The perfection of the contract, which in this
case coincided with the date of execution thereof, occurred
when petitioner and respondent agreed on the object and
the cause, as well as the rest of the terms and conditions
therein. The commencement of the employer-employee
relationship, as earlier discussed, would have taken
place had petitioner been actually deployed from the
point of hire. Thus, even before the start of any
employer-employee relationship, contemporaneous
with the perfection of the employment contract was
the birth of certain rights and obligations, the breach
of which may give rise to a cause of action against the
erring party. Thus, if the reverse had happened, that is
the seafarer failed or refused to be deployed as agreed
upon, he would be liable for damages.
Respondents act of preventing petitioner from
departing the port of Manila and boarding "MSV
Seaspread" constitutes a breach of contract, giving
rise to petitioners cause of action. Respondent
unilaterally and unreasonably reneged on its
obligation to deploy petitioner and must therefore
answer for the actual damages he suffered.
The fact that the POEA Rules are silent as to the payment
of damages to the affected seafarer does not mean that
the seafarer is precluded from claiming the same. The
sanctions provided for non-deployment do not end with the
suspension or cancellation of license or fine and the return
of all documents at no cost to the worker. They do not
forfend a seafarer from instituting an action for damages
against the employer or agency which has failed to deploy
him.
The POEA Rules only provide sanctions which the
POEA can impose on erring agencies. It does not
provide for damages and money claims recoverable
by aggrieved employees because it is not the POEA,
but the NLRC, which has jurisdiction over such
matters.
Despite the absence of an employer-employee relationship
between petitioner and respondent, the Court rules that
the NLRC has jurisdiction over petitioners complaint. The
jurisdiction of labor arbiters is not limited to claims arising
from employer-employee relationships.
Section 10 of R.A. No. 8042 (Migrant Workers Act),
Notwithstanding any provision of law to the contrary, the
Labor Arbiters of the National Labor Relations Commission
(NLRC) shall have the original and exclusive jurisdiction to
hear and decide, within ninety (90) calendar days after the
filing of the complaint, the claims arising out of an
employer-employee relationship or by virtue of any law or
contract involving Filipino workers for overseas
deployment including claims for actual, moral, exemplary
and other forms of damages.
Since the present petition involves the employment
contract entered into by petitioner for overseas

employment, his claims are cognizable by the labor
arbiters of the NLRC.
_____________________
(5) G.R. No. 142244 November 18, 2002
ATLAS FARMS, INC. vs. NLRC, JAIME O. DELA PEA
and MARCIAL I. ABION
QUISUMBING, J.:
FACTS: Private respondent Jaime O. dela Pea was
employed as a veterinary aide by petitioner. He was
among several employees terminated but was re-hired by
petitioner and given the additional job of feedmill operator.
He was instructed to train selected workers to operate the
feedmill.
Pea was allegedly caught urinating and defecating on
company premises not intended for the purpose. Refusal
and failure to explain his action, Atlas terminated him.
Co-respondent Marcial I. Abion was a carpenter/mason
and a maintenance man whose employment by petitioner.
Allegedly, he caused the clogging of the fishpond drainage
resulting in damages worth several hundred thousand
pesos when he improperly disposed of the cut grass and
other waste materials into the ponds drainage system.
Refusal and failure to explain his action, Atlas terminated
him.
Pea and Abion filed separate complaints for illegal
dismissal that were later consolidated. Both claimed
that their termination from service was due to
petitioners suspicion that they were the leaders in a
plan to form a union to compete and replace the
existing management-dominated union.
The labor arbiter dismissed their complaints on the ground
that the grievance machinery in the collective bargaining
agreement (CBA) had not yet been exhausted. Private
respondents availed of the grievance process, but later on
refiled the case before the NLRC in Region IV. They
alleged "lack of sympathy" on petitioners part to engage in
conciliation proceedings.
Their cases were consolidated in the NLRC. At the
initial mandatory conference, petitioner filed a motion
to dismiss, on the ground of lack of jurisdiction,
alleging private respondents themselves admitted that
they were members of the employees union with
which petitioner had an existing CBA. This being the
case, according to petitioner, jurisdiction over the
case belonged to the grievance machinery and
thereafter the voluntary arbitrator, as provided in the
CBA.
The labor arbiter dismissed the complaint for lack of merit,
finding that the case was one of illegal dismissal and did
not involve the interpretation or implementation of any
CBA provision. He stated that Article 217 (c) of the Labor
Code was inapplicable to the case. Further, the labor
arbiter found that although both complainants did not
substantiate their claims of illegal dismissal, there was
proof that private respondents voluntarily accepted their
separation pay and petitioners financial assistance.
Thus, private respondents brought the case to the NLRC,
which reversed the labor arbiters decision. CA affirmed.
ISSUE: Whether there is lack of jurisdiction on the part of
the labor arbiter, that the cases should have been resolved
through the grievance machinery, and eventually referred
to voluntary arbitration, as prescribed in the CBA.
HELD:
Article 217 of the Labor Code provides that labor arbiters
have original and exclusive jurisdiction over termination
disputes.
A possible exception is provided in Article 261 of the Labor
Code, which provides that the Voluntary Arbitrator or panel
of voluntary arbitrators shall have original and exclusive
jurisdiction to hear and decide all unresolved grievances
arising from the interpretation or implementation of the
CBA and those arising from the interpretation or
enforcement of company personnel policies referred to in
the immediately preceding article. Accordingly, violations
of a CBA, except those which are gross in character, shall
no longer be treated as unfair labor practice and shall be
resolved as grievances under the CBA. For purposes of
this article, gross violations of CBA shall mean flagrant and
or malicious refusal to comply with the economic
provisions of such agreement.
The Commission, its Regional Offices and the Regional
Directors of the Department of Labor and Employment
shall not entertain disputes, grievances or matters under
the exclusive and original jurisdiction of the Voluntary
Arbitrator or panel of Voluntary Arbitrators and shall
immediately dispose and refer the same to the grievance
Machinery or Arbitration provided in the CBA.
In these termination cases of private respondents, the
union had no participation, it having failed to object to
the dismissal of the employees concerned by the
petitioner. It is obvious that arbitration without the
unions active participation on behalf of the dismissed

employees would be pointless, or even prejudicial to
their cause.
Coming to the merits of the petition, the NLRC found that
petitioner did not comply with the requirements of a valid
dismissal. No evidence was shown that private
respondents refused, as alleged, to receive the notices
requiring them to show cause why no disciplinary
action should be taken against them. Given the fact of
dismissal, it can be said that the cases were
effectively removed from the jurisdiction of the
voluntary arbitrator, thus placing them within the
jurisdiction of the labor arbiter. Where the dispute is just
in the interpretation, implementation or enforcement stage,
it may be referred to the grievance machinery set up in the
CBA, or brought to voluntary arbitration. But, where there
was already actual termination, with alleged violation of the
employees rights, it is already cognizable by the labor
arbiter.
In sum, we conclude that the labor arbiter and then the
NLRC had jurisdiction over the cases involving private
respondents dismissal, and no error was committed
by the appellate court in upholding their assumption
of jurisdiction.
__________________________
(6) G.R. No. 121948 October 8, 2001
PERPETUAL HELP CREDIT COOPERATIVE, INC. vs.
BENEDICTO FABURADA et al.
SANDOVAL-GUTIERREZ, J.:
FACTS: Private respondents filed a complaint against the
Perpetual Help Credit Cooperative, Inc. (PHCCI),
petitioner, with the Arbitration Branch of DOLE,
Dumaguete City, for illegal dismissal, premium pay on
holidays and rest days, separation pay, wage differential,
moral damages, and attorney's fees.
Petitioner PHCCI filed a motion to dismiss the complaint
on the ground that there is no employer-employee
relationship between them as private respondents are all
members and co-owners of the cooperative. Furthermore,
private respondents have not exhausted the remedies
provided in the cooperative by-laws.
Petitioner also filed a supplemental motion to dismiss
alleging that Article 121 of R.A. No. 6939, otherwise known
as the Cooperative Development Authority Law requires
conciliation or mediation within the cooperative before a
resort to judicial proceeding.
The Labor Arbiter denied petitioner's motion to dismiss,
holding that the case is impressed with employer-
employee relationship and that the law on cooperatives is
subservient to the Labor Code.
The NLRC affirmed the Labor Arbiter's decision.
ISSUE: Whether LA has jurisdiction.
Article 121 of Republic Act No. 6938 (Cooperative
Code of the Philippines) provides the procedure how
cooperative disputes are to be resolved, thus:
ART. 121. Settlement of Disputes. Disputes among
members, officers, directors, and committee members,
and intra-cooperative disputes shall, as far as practicable,
be settled amicably in accordance with the conciliation or
mediation mechanisms embodied in the by-laws of the
cooperative, and in applicable laws.
Should such a conciliation/mediation proceeding fail, the
matter shall be settled in a court of competent jurisdiction."
Complementing this Article is Section8 of R.A. No.
6939 (Cooperative Development Authority Law) which
reads:
SEC. 8. Mediation and Conciliation. Upon request of
either or both parties, the Authority shall mediate and
conciliate disputes within a cooperative or between
cooperatives: Provided, That if no mediation or conciliation
succeeds within three (3) months from request thereof, a
certificate of non-resolution shall be issued by the
Commission prior to the filing of appropriate action before
the proper courts.

The above provisions apply to members, officers and
directors of the cooperative involved in disputes
within a cooperative or between cooperatives.
There is no evidence that private respondents are
members of petitioner PHCCI and even if they are, the
dispute is about payment of wages, overtime pay, rest
day and termination of employment. Under Art. 217 of
the Labor Code, these disputes are within the original
and exclusive jurisdiction of the Labor Arbiter.
_____________________
G.R. No. 124382 August 16, 1999
(7) PASTOR DIONISIO V. AUSTRIA vs. NLRC

KAPUNAN, J.:
FACTS: Private Respondent Central Philippine Union
Mission Corporation of the Seventh-Day Adventists (SDA)
is a religious corporation duly organized and existing under
Philippine law and is represented in this case by its
officers. Petitioner, on the other hand, was a Pastor of the
SDA.
The records show that petitioner Pastor Dionisio V. Austria
worked with the SDA for 28 years. He worked as literature
evangelist, selling literature of the SDA over the island of
Negros. He got promoted several times. Petitioner became
the Assistant Publishing Director in the West Visayan
Mission of the SDA and was elevated to the position of
Pastor in the West Visayan Mission. He was promoted as
District Pastor of the Negros Mission of the SDA with
twelve (12) churches under his jurisdiction.
He was made accountable for the unremitted collection
and was thereafter terminated.
Petitioner filed a complaint before the Labor Arbiter for
illegal dismissal against the SDA and its officers and
prayed for reinstatement with backwages and benefits,
moral and exemplary damages and other labor law
benefits.
The Labor Arbiter C rendered a decision in favor of
petitioner.
The NLRC affirmed (though its first decision was a
reversal).
Notable in the motion for reconsideration (before the
NLRC) filed by private respondents is their invocation, for
the first time on appeal, that the Labor Arbiter has no
jurisdiction over the complaint filed by petitioner due to the
constitutional provision on the separation of church and
state since the case allegedly involved an ecclesiastical
affair to which the State cannot interfere.
The NLRC, without ruling on the merits of the case,
reversed itself once again.
ISSUE:
(1) Whether or not the Labor Arbiter/NLRC has jurisdiction
to try and decide the complaint filed by petitioner against
the SDA; and
(2) Whether or not the termination of the services of
petitioner is an ecclesiastical affair, and, as such, involves
the separation of church and state; and
The principle of separation of church and state finds no
application in this case.
The case at bar does not concern an ecclesiastical or
purely religious affair as to bar the State from taking
cognizance of the same. An ecclesiastical affair
involves the relationship between the church and its
members and relate to matters of faith, religious
doctrines, worship and governance of the
congregation. To be concrete, examples of this so-
called ecclesiastical affairs to which the State cannot
meddle are proceedings for excommunication,
ordinations of religious ministers, administration of
sacraments and other activities with attached religious
significance. The case at bar does not even remotely
concern any of the abovecited examples. While the matter
at hand relates to the church and its religious minister it
does not ipso facto give the case a religious significance.
Simply stated, what is involved here is the relationship
of the church as an employer and the minister as an
employee. It is purely secular and has no relation
whatsoever with the practice of faith, worship or
doctrines of the church. In this case, petitioner was not
ex-communicated or expelled from the membership of the
SDA but was terminated from employment. Indeed, the
matter of terminating an employee, which is purely
secular in nature, is different from the ecclesiastical
act of expelling a member from the religious
congregation.
The grounds invoked for petitioner's dismissal are all
based on Article 282 of the Labor Code which enumerates
the just causes for termination of employment. By this
alone, it is palpable that the reason for petitioner's
dismissal from the service is not religious in nature.
Coupled with this is the act of the SDA in furnishing NLRC
with a copy of petitioner's letter of termination. This again
is an eloquent admission by private respondents that
NLRC has jurisdiction over the case
Morever, as correctly pointed out by petitioner, private
respondents are estopped from raising the issue of
lack of jurisdiction for the first time on appeal. It is
already too late in the day for private respondents to
question the jurisdiction of the NLRC and the Labor Arbiter
since the SDA had fully participated in the trials and
hearings of the case from start to finish. The Court has
already ruled that the active participation of a party against
whom the action war brought, coupled with his failure to
object to the jurisdiction of the court or quasi-judicial body
where the action is pending, is tantamount to an invocation
of that jurisdiction and a willingness to abide by the
resolution of the case and will bar said party from later on
impugning the court or body's jurisdiction. Thus, the active

participation of private respondents in the
proceedings before the Labor Arbiter and the NLRC
mooted the question on jurisdiction.
______________________
(8) G.R. No. 113191 September 18, 1996
DFA vs. NLRC, HON. LABOR ARBITER NIEVES V. DE
CASTRO and JOSE C. MAGNAYI
VITUG, J.:
FACTS: Private respondent initiated a NLRC-NCR Case
for his alleged illegal dismissal by ADB and the latter's
violation of the "labor-only" contracting law.
The ADB and the DFA notified respondent Labor
Arbiter that the ADB, as well as its President and
Office, were covered by an immunity from legal
process except for borrowings, guaranties or the sale of
securities pursuant to Article 50(1) and Article 55 of the
Agreement Establishing the Asian Development Bank (the
"Charter") in relation to Section 5 and Section 44 of the
Agreement Between The Bank And The Government Of
The Philippines Regarding The Bank's Headquarters (the
"Headquarters Agreement").

The Labor Arbiter took cognizance of the complaint on the
impression that the ADB had waived its diplomatic
immunity from suit. In time, the Labor Arbiter rendered his
decision that concluded that there was illegal termination.
The ADB did not appeal the decision. Instead, the DFA
referred the matter to the NLRC; in its referral, the DFA
sought a "formal vacation of the void judgment."
The NLRC ruled that it does not have the competence to
investigate or review any decision of a Labor Arbiter.
However, on the purely administrative aspect of the
decision-making process, he may cause that an
misconduct, malfeasance or misfeasance, upon complaint
properly made.
If the Department of Foreign Affairs feels that the action of
Labor Arbiter Nieves de Castro constitutes misconduct,
malfeasance or misfeasance, it is suggested that an
appropriate complaint be lodged with the Office of the
Ombudsman.
ISSUE: Whether ADB is correct in invoking its immunity
from suit under the Charter and the Headquarters
Agreement thereby divesting LA of jurisdiction.
HELD: Yes, ABD is immuned. LA has no jurisdiction.
Article 50(1) of the Charter provides that the Bank
shall enjoy immunity from every form of legal process,
except in cases arising out of or in connection with the
exercise of its powers to borrow money, to guarantee
obligations, or to buy and sell or underwrite the sale of
securities.
Under Article 55 thereof
All Governors, Directors, alternates, officers and
employees of the Bank, including experts performing
missions for the Bank:
(1)shall be immune from legal process with respect of acts
performed by them in their official capacity, except when
the Bank waives the immunity.
Like provisions are found in the Headquarters
Agreement. Thus, its Section 5 reads:
The Bank shall enjoy immunity from every form of legal
process, except in cases arising out of, or in connection
with, the exercise of its powers to borrow money, to
guarantee obligations, or to buy and sell or underwrite the
sale of securities.

And, with respect to certain officials of the bank, Section
44 of the agreement states:
Governors, other representatives of Members, Directors,
the president, Vice-President and executive officers as
may be agreed upon between the Government and the
Bank shall enjoy, during their stay in the Republic of the
Philippines in connection with their official duties with the
Bank:
(b) Immunity from legal process of every kind in respect of
words spoken or written and all acts done by them in their
official capacity.
The above stipulations of both the Charter and
Headquarters Agreement should be able, may well
enough, to establish that, except in the specified
cases of borrowing and guarantee operations, as well
as the purchase, sale and underwriting of securities,
the ADB enjoys immunity from legal process of every
form. The Bank's officers, on their part, enjoy immunity in
respect of all acts performed by them in their official
capacity. The Charter and the Headquarters Agreement
granting these immunities and privileges are treaty

covenants and commitments voluntarily assumed by
the Philippines government which must be respected.
In the instant case, the filing of the petition by the
DFA, in behalf of ADB, is itself an affirmance of the
government's own recognition of ADB's immunity.
Being an international organization that has been
extended diplomatic status, the ADB is independent of the
municipal law.
One of the basic immunities of an international
organization is immunity from local jurisdiction, i.e.,
that it is immune from the legal writs and processes
issued by the tribunals of the country where it is
found. The obvious reason for this is that the subjection of
such an organization to the authority of the local courts
would afford a convenient medium thru which the host
government may interfere in their operations or even
influence or control its policies and decisions of the
organization; besides, such subjection to local jurisdiction
would impair the capacity of such body to discharge its
responsibilities impartially behalf of its member-states.
NOTE: There are two conflicting concept of sovereign
immunity, each widely held and firmly established.
According to the classical or absolute theory, a sovereign
cannot, without its consent, be made a respondent in the
Courts of another sovereign. According to the newer or
restrictive theory, the immunity of the sovereign is
recognized only with regard to public acts or acts jure
imperii of a state, but not with regard to private act or
acts jure gestionis.
Certainly, the mere entering into a contract by a foreign
state with a private party cannot be the ultimate test. Such
an act can only be the start of the inquiry. The logical
question is whether the foreign state is engaged in the
activity in regular course of business. If the foreign state is
not engaged regularly in a business or trade, the particular
act or transaction must then be tested by its nature. If the
act is in pursuit of a sovereign activity, or an incident
thereof, then it is an act jure imperit, especially when it is
not undertaken for gain or profit.
The service contracts referred to by private
respondent have not been intended by the ADB for
profit or gain but are official acts over which a waiver
of immunity would not attack.
____________________________
(9) G.R. No. 120077 October 13, 2000
THE MANILA HOTEL CORP. AND MANILA HOTEL
INTL. LTD. vs. NLRC, ARBITER CEFERINA J.
DIOSANA AND MARCELO G. SANTOS
PARDO, J.:
FACTS: Private respondent Marcelo Santos was an
overseas worker employed as a printer at the Mazoon
Printing Press, Sultanate of Oman. Subsequently he was
directly hired by the Palace Hotel, Beijing, People's
Republic of China and later terminated due to
retrenchment.
When the case was filed , MHC was still a government-
owned and controlled corporation duly organized and
existing under the laws of the Philippines.
The Palace Hotel terminated the employment of
respondent Santos and paid all benefits due him, including
his plane fare back to the Philippines.
Respondent Santos filed a complaint for illegal dismissal
with the Arbitration Branch, National Capital Region, NLRC
against MHC, MHICL, the Palace Hotel and Mr. Shmidt.

The Palace Hotel and Mr. Shmidt were not served with
summons and neither participated in the proceedings
before the Labor Arbiter.
The LA decided the case against petitioners.
Petitioners appealed to the NLRC, arguing that the
POEA, not the NLRC had jurisdiction over the case.
NLRC reversed due to want of jurisdiction. Complainant is
enjoined to file his complaint with the POEA.
Santos argued that the case was not cognizable by the
POEA as he was not an "overseas contract worker.
NLRC reversed itself.
ISSUE: Whether NLRC or LA has jurisdiction.
HELD: The NLRC was a seriously inconvenient forum.
NLRC or LA has no jurisdiction.
The main aspects of the case transpired in two foreign
jurisdictions and the case involves purely foreign
elements. The only link that the Philippines has with the
case is that respondent Santos is a Filipino citizen. The

Palace Hotel and MHICL are foreign corporations. Not
all cases involving our citizens can be tried here.
The employment contract. Respondent Santos was
hired directly by the Palace Hotel, a foreign employer,
through correspondence sent to the Sultanate of Oman,
where respondent Santos was then employed. He was
hired without the intervention of the POEA or any
authorized recruitment agency of the government.
Under the rule of forum non conveniens, a Philippine
court or agency may assume jurisdiction over the
case if it chooses to do so provided: (1) that the
Philippine court is one to which the parties may
conveniently resort to; (2) that the Philippine court is
in a position to make an intelligent decision as to the
law and the facts; and (3) that the Philippine court has
or is likely to have power to enforce its decision. The
conditions are unavailing in the case at bar.
The grounds for dismissal of the case by the SC.
(1) Not Convenient. The inconvenience is compounded
by the fact that the proper defendants, the Palace Hotel
and MHICL are not nationals of the Philippines. Neither
.are they "doing business in the Philippines." Likewise, the
main witnesses, Mr. Shmidt and Mr. Henk are non-
residents of the Philippines.
(2) No power to determine applicable law. Neither
can an intelligent decision be made as to the law
governing the employment contract as such was perfected
in foreign soil. This calls to fore the application of the
principle of lex loci contractus (the law of the place where
the contract was made).
The employment contract was not perfected in the
Philippines. Respondent Santos signified his acceptance
by writing a letter while he was in the Republic of Oman.
This letter was sent to the Palace Hotel in the People's
Republic of China.
(3) No power to determine the facts. Neither can the
NLRC determine the facts surrounding the alleged illegal
dismissal as all acts complained of took place in Beijing,
People's Republic of China. The NLRC was not in a
position to determine whether the Tiannamen Square
incident truly adversely affected operations of the Palace
Hotel as to justify respondent Santos' retrenchment.
(4) Principle of effectiveness, no power to execute
decision. Even assuming that a proper decision could
be reached by the NLRC, such would not have any binding
effect against the employer, the Palace Hotel. The Palace
Hotel is a corporation incorporated under the laws of China
and was not even served with summons. Jurisdiction over
its person was not acquired.
This is not to say that Philippine courts and agencies
have no power to solve controversies involving
foreign employers. Neither are we saying that we do
not have power over an employment contract
executed in a foreign country. If Santos were an
"overseas contract worker", a Philippine forum,
specifically the POEA, not the NLRC, would protect
him. He is not an "overseas contract worker" a fact
which he admits with conviction.
_____________________________________
(10) G.R. No. 157010 June 21, 2005
PNB vs. FLORENCE O. CABANSAG
PANGANIBAN, J.:
FACTS: Respondent Florence Cabansag arrived in
Singapore as a tourist. She applied for employment, with
the Singapore Branch of the PNB. At the time, the Branch
Office had two (2) types of employees: (a) expatriates or
the regular employees, hired in Manila and assigned
abroad including Singapore, and (b) locally (direct) hired.
She applied for employment as Branch Credit Officer and
her application yielded a positive feedback.
She then filed an Application, with the Ministry of
Manpower of the Government of Singapore, for the
issuance of an Employment Pass as an employee of
the Singapore PNB Branch. Her application was
approved for a period of two (2) years.
Florence O. Cabansag accepted the position and
assumed office. In the meantime, the Philippine
Embassy in Singapore processed the employment
contract of Florence O. Cabansag and, on March 8,
1999, she was issued by the POEA, an Overseas
Employment Certificate, certifying that she was a
bona fide contract worker for Singapore.
However, barely 3 months, she was asked to resign as a
cost-cutting measure of the Bank, that the bank will be
sold and that the bank needed a Chinese-speaking
employee. She filed a case for illegal dismissal.
The Labor Arbiter rendered judgment in favor of the
Cabansag. NLRC affirmed.
The CA affirmed. The CA noted that petitioner bank had
failed to adduce in evidence the Singaporean law
supposedly governing the latters employment

Contract with respondent. The appellate court found
that the Contract had actually been processed by the
Philippine Embassy in Singapore and approved by the
Philippine Overseas Employment Administration
(POEA), which then used that Contract as a basis for
issuing an Overseas Employment Certificate in favor
of respondent.
According to the CA, even though respondent secured an
employment pass from the Singapore Ministry of
Employment, she did not thereby waive Philippine labor
laws, or the jurisdiction of the labor arbiter or the NLRC
over her Complaint for illegal dismissal. In so doing,
neither did she submit herself solely to the Ministry of
Manpower of Singapores jurisdiction over disputes arising
from her employment. The appellate court further noted
that a cursory reading of the Ministrys letter will readily
show that no such waiver or submission is stated or
implied.
ISSUE: Whether or not the arbitration branch of the NLRC
in the National Capital Region has jurisdiction over the
instant controversy.
Section 10 of RA 8042 reads in part:
SECTION 10. Money Claims. Notwithstanding any
provision of law to the contrary, the Labor Arbiters of the
National Labor Relations Commission (NLRC) shall have
the original and exclusive jurisdiction to hear and decide,
within ninety (90) calendar days after the filing of the
complaint, the claims arising out of an employer-employee
relationship or by virtue of any law or contract involving
Filipino workers for overseas deployment including claims
for actual, moral, exemplary and other forms of damages.
Based on the foregoing provisions, labor arbiters
clearly have original and exclusive jurisdiction over
claims arising from employer-employee relations,
including termination disputes involving all workers,
among whom are overseas Filipino workers (OFW).
Respondent was directly hired, while on a tourist status in
Singapore, by the PNB branch in that city state. Prior to
employing respondent, petitioner had to obtain an
employment pass for her from the Singapore Ministry of
Manpower. Securing the pass was a regulatory
requirement pursuant to the immigration regulations
of that country.
Similarly, the Philippine government requires non-
Filipinos working in the country to first obtain a local
work permit in order to be legally employed here. That
permit, however, does not automatically mean that the
non-citizen is thereby bound by local laws only, as
averred by petitioner. It does not at all imply a waiver
of ones national laws on labor. Absent any clear and
convincing evidence to the contrary, such permit
simply means that its holder has a legal status as a
worker in the issuing country.
Respondent likewise applied for and secured an Overseas
Employment Certificate from the POEA through the
Philippine Embassy in Singapore. The Certificate declared
her a bona fide contract worker for Singapore. Under
Philippine law, this document authorized her working
status in a foreign country and entitled her to all benefits
and processes under our statutes. Thus, even assuming
arguendo that she was considered at the start of her
employment as a "direct hire" governed by and
subject to the laws, common practices and customs
prevailing in Singapore she subsequently became a
contract worker or an OFW who was covered by
Philippine labor laws and policies upon certification
by the POEA. At the time her employment was illegally
terminated, she already possessed the POEA
employment Certificate.
Moreover, petitioner admits that it is a Philippine
corporation doing business through a branch office in
Singapore. Significantly, respondents employment by the
Singapore branch office had to be approved by the
president of the bank whose principal offices were in
Manila. This circumstance militates against petitioners
contention that respondent was "locally hired"; and totally
"governed by and subject to the laws, common practices
and customs" of Singapore, not of the Philippines. Instead,
with more reason does this fact reinforce the presumption
that respondent falls under the legal definition of migrant
worker, in this case one deployed in Singapore. Hence,
petitioner cannot escape the application of Philippine laws
or the jurisdiction of the NLRC and the labor arbiter.
Note: As to the question of venue, Florence is a Filipino
and not a legal resident of that Singapore. She thus falls
within the category of "migrant worker" or "overseas
Filipino worker."
As such, it is her option to choose the venue of her
Complaint against petitioner for illegal dismissal. The law
gives her two choices: (1) at the Regional Arbitration
Branch (RAB) where she resides or (2) at the RAB
where the principal office of her employer is situated.
Since her dismissal by petitioner, respondent has returned
to the Philippines -- specifically to her residence at
Filinvest II, Quezon City. Thus, in filing her Complaint
before the RAB office in Quezon City, she has made a
valid choice of proper venue.
________________________

(11) G.R. No. 128024 May 9, 2000
BEBIANO M. BAEZ vs. HON. DOWNEY C.
VALDEVILLA and ORO MARKETING, INC.
GONZAGA-REYES, J.
FACTS: Petitioner was the sales operations manager of
private respondent in its branch in Iligan City. Private
respondent "indefinitely suspended" petitioner and the
latter filed a complaint for illegal dismissal with the NLRC
in Iligan City.
The Labor Arbiter found petitioner to have been illegally
dismissed. The decision was appealed to the NLRC, which
dismissed the same for having been filed out of time.

Private respondent filed a complaint for damages before
RTC of Misamis Oriental for loss of profit, etc.
Petitioner filed a motion to dismiss the above complaint.
He interposed in the court below that the action for
damages, having arisen from an employer-employee
relationship, was squarely under the exclusive original
jurisdiction of the NLRC under Article 217(a), paragraph 4
of the Labor Code and is barred by reason of the final
judgment in the labor case. He accused private
respondent of splitting causes of action, stating that the
latter could very well have included the instant claim for
damages in its counterclaim before the Labor Arbiter. He
also pointed out that the civil action of private respondent
is an act of forum-shopping and was merely resorted to
after a failure to obtain a favorable decision with the
NLRC.
RTC declared itself as having jurisdiction over the subject
matter of the instant controversy as the complaint which is
for damages does not ask for any relief under the Labor
Code of the Philippines. It seeks to recover damages as
redress for defendant's breach of his contractual obligation
to plaintiff who was damaged and prejudiced. The Court
believes such cause of action is within the realm of civil
law, and jurisdiction over the controversy belongs to the
regular courts.
ISSUE: Whether or not RTC has jurisdiction.
HELD: RTC has no jurisdiction. The claim arose from
employer-employee relationship.
Art. 217(a), paragraph 4 of the Labor Code, which was
already in effect at the time of the filing of this case,
reads:
Art. 217. Jurisdiction of Labor Arbiters and the
Commission. (a) Except as otherwise provided under
this Code the Labor Arbiters shall have original and
exclusive jurisdiction to hear and decide, within thirty (30)
calendar days after the submission of the case by the
parties for decision without extension, even in the absence
of stenographic notes, the following cases involving all
workers, whether agricultural or non-agricultural:
4. Claims for actual, moral, exemplary and other forms of
damages arising from the employer-employee relations;

The above provisions are a result of the amendment by
Section 9 of Republic Act ("R.A.") No. 6715, which took
effect on March 21, 1989, and which put to rest the earlier
confusion as to who between Labor Arbiters and regular
courts had jurisdiction over claims for damages as
between employers and employees.
Presently, and as amended by R.A. 6715, the
jurisdiction of Labor Arbiters and the NLRC in Article
217 is comprehensive enough to include claims for all
forms of damages "arising from the employer-
employee relations"
By the designating clause "arising from the employer-
employee relations" Article 217 should apply with equal
force to the claim of an employer for actual damages
against its dismissed employee, where the basis for the
claim arises from or is necessarily connected with the fact
of termination, and should be entered as a counterclaim in
the illegal dismissal case.
There is no mistaking the fact that in the case before
us, private respondent's claim against petitioner for
actual damages arose from a prior employer-employee
relationship. In the first place, private respondent would
not have taken issue with petitioner's "doing business of
his own" had the latter not been concurrently its employee.
Second, and more importantly, to allow respondent court
to proceed with the instant action for damages would be to
open anew the factual issue of whether petitioner's
installment sale scheme resulted in business losses and
the dissipation of private respondent's property. This issue
has been duly raised and ruled upon in the illegal
dismissal case, where private respondent brought up as a
defense the same allegations now embodied in his
complaint, and presented evidence in support thereof.
Article 217(a) of the Labor Code, as amended, clearly
bestows upon the Labor Arbiter original and exclusive
jurisdiction over claims for damages arising from
employer-employee relations in other words, the

Labor Arbiter has jurisdiction to award not only the
reliefs provided by labor laws, but also damages
governed by the Civil Code.
____________________
(12) G.R. No. 166377 November 28, 2008
MA. ISABEL T. SANTOS, represented by ANTONIO P.
SANTOS vs. SERVIER PHILIPPINES, INC. and NLRC
NACHURA, J.:
FACTS: Petitioner Ma. Isabel T. Santos was the Human
Resource Manager of respondent Servier Philippines, Inc.
Petitioner attended a meeting of all human resource
managers of respondent, held in Paris, France. Since the
last day of the meeting coincided with the graduation of
petitioners only child, she arranged for a European
vacation with her family right after the meeting. She, thus,
filed a vacation leave.
Petitioner, together with her husband, her son, and some
friends, had dinner at Leon des Bruxelles, a Paris
restaurant known for mussels as their specialty. While
having dinner, petitioner complained of stomach pain, then
vomited. She was confined to the ICU for 52 days due to
allergy to mussels.
During the time that petitioner was confined at the hospital,
her husband and son stayed with her in Paris. Petitioners
hospitalization expenses, as well as those of her husband
and son, were paid by respondent. Her hospital bills in the
Philippines were also paid by the respondent.
After conducting tests, petitioners physician
concluded that the former had not fully recovered
mentally and physically. Hence, respondent was
constrained to terminate petitioners services.
She was given retirement plan consisting of a retirement
pay, a portion of which was not given due to taxation
purposes.
Petitioner, represented by her husband, instituted the
instant case for unpaid salaries etc.
The Labor Arbiter rendered a Decision dismissing
petitioners complaint. The arbiter refused to rule on the
legality of the deductions made by respondent from
petitioners total retirement benefits for taxation
purposes, as the issue was beyond the jurisdiction of
the NLRC.
NLRC reversed. CA affirmed.
ISSUE: Whether the issue on tax deduction was beyond
the tribunals (LA) jurisdiction---that petitioners claim for
illegal deduction could be addressed by filing a tax refund
with the Bureau of Internal Revenue.

HELD: Contrary to the Labor Arbiter and NLRCs
conclusions, petitioners claim for illegal deduction
falls within the tribunals jurisdiction.
It is noteworthy that petitioner demanded the completion of
her retirement benefits, including the amount withheld by
respondent for taxation purposes. The issue of deduction
for tax purposes is intertwined with the main issue of
whether or not petitioners benefits have been fully given
her. It is, therefore, a money claim arising from the
employer-employee relationship, which clearly falls within
the jurisdiction of the Labor Arbiter and the NLRC.
__________________________
Article 218
(13) G.R. No. 120567 March 20, 1998
PAL. vs. NATIONAL LABOR RELATIONS
COMMISSION, FERDINAND PINEDA and GOGFREDO
CABLING
MARTINEZ, J.:
FACTS: Private respondents are flight stewards of the
petitioner. Both were dismissed from the service for their
alleged involvement in the currency smuggling in Hong
Kong.
Aggrieved by said dismissal, private respondents filed with
the NLRC a petition for injunction.
The NLRC issued a temporary mandatory injunction 2
enjoining petitioner to cease and desist from enforcing its
Memorandum of dismissal. According to NLRC, it is
empowered under Article 218 (e) of the Labor Code
not only to restrain any actual or threatened
commission of any or all prohibited or unlawful acts
but also to require the performance of a particular act
in any labor dispute, which, if not restrained or
performed forthwith, may cause grave or irreparable
damage to any party. a
PAL errs NLRC for granting a temporary injunction order
when it has no jurisdiction to issue an injunction or
restraining order since this may be issued only under

Article 218 of the Labor Code if the case involves or arises
from labor disputes.
ISSUE: Can the NLRC even without a complaint for illegal
dismissal filed before the labor arbiter, entertain an action
for injunction and issue such writ enjoining petitioner
Philippine Airlines, inc. from enforcing its Orders of
dismissal against private respondents, and ordering
petitioner to reinstate the private respondents to their
previous positions?
HELD: No, there should be a labor dispute first.
Generally, injunction is a preservative remedy for the
protection of one's substantive rights or interest. It is not a
cause of action in itself but merely a provisional remedy,
an adjunct to a main suit. It is resorted to only when there
is a pressing necessity to avoid injurious consequences
which cannot be remedied under any standard of
compensation. The application of the injunctive writ rests
upon the existence of an emergency or of a special reason
before the main case be regularly heard. The essential
conditions for granting such temporary injunctive
relief are that the complaint alleges facts which appear
to be sufficient to constitute a proper basis for
injunction and that on the entire showing from the
contending parties, the injunction is reasonably
necessary to protect the legal rights of the plaintiff
pending the litigation. Injunction is also a special
equitable relief granted only in cases where there is no
plain, adequate and complete remedy at law.
The foregoing ancillary power may be exercised by the
Labor Arbiters only as an incident to the cases pending
before them in order to preserve the rights of the parties
during the pendency of the case, but excluding labor
disputes involving strikes or lockout.
From the foregoing provisions of law, the power of the
NLRC to issue an injunctive writ originates from "any
labor dispute" upon application by a party thereof,
which application if not granted "may cause grave or
irreparable damage to any party or render ineffectual
any decision in favor of such party."
The term "labor dispute" is defined as "any controversy or
matter concerning terms and conditions of employment or
the association or representation of persons in negotiating,
fixing. maintaining, changing, or arranging the terms and
conditions of employment regardless of whether or not the
disputants stand in the proximate relation of employers
and employees."
The term "controversy" is likewise defined as "a litigated
question; adversary proceeding in a court of law; a civil
action or suit, either at law or in equity; a justiciable
dispute."
A "justiciable controversy" is "one involving an active
antagonistic assertion of a legal right on one side and a
denial thereof on the other concerning a real, and not a
mere theoretical question or issue."
Taking into account the foregoing definitions, it is an
essential requirement that there must first be a labor
dispute between the contending parties before the
labor arbiter. In the present case, there is no labor
dispute between the petitioner and private
respondents as there has yet been no complaint for
illegal dismissal filed with the labor arbiter by the
private respondents against the petitioner.
The petition for injunction directly filed before the
NLRC is in reality an action for illegal dismissal. This
is clear from the allegations in the petition which
prays for; reinstatement of private respondents; award
of full backwages, moral and exemplary damages; and
attorney's fees. As such, the petition should have
been filed with the labor arbiter who has the original
and exclusive jurisdiction to hear and decide the
following cases involving all workers, whether
agricultural or non-agricultural.
The jurisdiction of the NLRC in illegal dismissal cases is
appellate in nature and, therefore, it cannot entertain the
private respondents' petition for injunction which
challenges the dismissal orders of petitioner. Article 218(e)
of the Labor Code does not provide blanket authority to the
NLRC or any of its divisions to issue writs of injunction,
considering that Section 1 of Rule XI of the New Rules of
Procedure of the NLRC makes injunction only an ancillary
remedy in ordinary labor disputes."
Thus, the NLRC exceeded its jurisdiction when it issued
the assailed Order granting private respondents' petition
for injunction and ordering the petitioner to reinstate
private respondents.
The argument of the NLRC in its assailed Order that to file
an illegal dismissal suit with the labor arbiter is not an
"adequate" remedy since it takes three (3) years before it
can be disposed of, is patently erroneous. An "adequate"
remedy at law has been defined as one "that affords relief
with reference to the matter in controversy, and which is
appropriate to the particular circumstances of the case." It
is a remedy which is equally, beneficial, speedy and
sufficient which will promptly relieve the petitioner from the
injurious effects of the acts complained of.
Under the Labor Code, the ordinary and proper recourse
of an illegally dismissed employee is to file a complaint for

illegal dismissal with the labor arbiter. In the case at bar,
private respondents disregarded this rule and directly went
to the NLRC through a petition for injunction praying that
petitioner be enjoined from enforcing its dismissal orders.
In Lamb vs. Phipps, we ruled that if the remedy is
specifically provided by law, it is presumed to be adequate.
Moreover, the preliminary mandatory injunction prayed for
by the private respondents in their petition before the
NLRC can also be entertained by the labor arbiter who, as
shown earlier, has the ancillary power to issue preliminary
injunctions or restraining orders as an incident in the cases
pending before him in order to preserve the rights of the
parties during the pendency of the case.
Furthermore, an examination of private respondents'
petition for injunction reveals that it has no basis since
there is no showing of any urgency or irreparable injury
which the private respondents might suffer. An injury is
considered irreparable if it is of such constant and frequent
recurrence that no fair and reasonable redress can be had
therefor in a court of law, or where there is no standard by
which their amount can be measured with reasonable
accuracy, that is, it is not susceptible of mathematical
computation. It is considered irreparable injury when it
cannot be adequately compensated in damages due to the
nature of the injury itself or the nature of the right or
property injured or when there exists no certain pecuniary
standard for the measurement of damages.
In the case at bar, the alleged injury which private
respondents stand to suffer by reason of their alleged
illegal dismissal can be adequately compensated and
therefore, there exists no "irreparable injury," as defined
above which would necessitate the issuance of the
injunction sought for. Article 279 of the Labor Code
provides that an employee who is unjustly dismissed from
employment shall be entitled to reinstatement, without loss
of seniority rights and other privileges, and to the payment
of full backwages, inclusive of allowances, and to other
benefits or their monetary equivalent computed from the
time his compensation was withheld from him up to the
time of his actual reinstatement.
Finally, an injunction, as an extraordinary remedy, is not
favored in labor law considering that it generally has not
proved to be an effective means of settling labor disputes.
It has been the policy of the State to encourage the parties
to use the non-judicial process of negotiation and
compromise, mediation and arbitration. Thus, injunctions
may be issued only in cases of extreme necessity based
on legal grounds clearly established, after due
consultations or hearing and when all efforts at conciliation
are exhausted which factors, however, are clearly absent
in the present case.
________________________________
(14) G.R. No. 152611 August 5, 2003
LAND BANK OF THE PHILIPPINES vs. SEVERINO
LISTANA, SR.
YNARES-SANTIAGO, J.:
FACTS: Respondent Listana is the owner of a parcel of
land located in Sorsogon. He voluntarily offered to sell the
said land to the government, through the DAR under the
CARL). The DAR valued the property which was however
rejected by the respondent. Hence, the Department of
Agrarian Reform Adjudication Board (DARAB) of Sorsogon
commenced summary administrative proceedings to
determine the just compensation of the land.
The DARAB after determining the just compensation
ordered The Land Bank of the Philippines to pay Listana.
A Writ of Execution was issued by the PARAD directing
the manager of Land Bank to pay the respondent the
aforesaid amount as just compensation in the manner
provided by law.
Petitioner Land Bank failed to comply with the Writ of
Execution so it constitutes contempt of the DARAB. The
Manager of the Bank was cited for indirect contempt and
an arrest order was issued.
Petitioner Land Bank filed a petition for injunction before
the RTC of Sorsogon with application for the issuance of a
writ of preliminary injunction to restrain the Provincial
Agrarian Reform Adjudicator (PARAD) from issuing the
order of arrest.
The RTC issued the injuction.
ISSUES:
(1) Whether the PARAD can issue warrants of arrest over
the LBP Manager.
(2) Whether the order of contempt is valid.
HELD:
There are only two ways a person can be charged with
indirect contempt, namely, (1) through a verified
petition; and (2) by order or formal charge initiated by
the court motu proprio.
In the case at bar, neither of these modes was adopted in
charging Mr. Lorayes with indirect contempt.

More specifically, Rule 71, Section 12 of the 1997
Rules of Civil Procedure, referring to indirect
contempt against quasi-judicial entities, provides:
Sec. 12. Contempt against quasi-judicial entities.
Unless otherwise provided by law, this Rule shall apply to
contempt committed against persons, entities, bodies or
agencies exercising quasi-judicial functions, or shall have
suppletory effect to such rules as they may have adopted
pursuant to authority granted to them by law to punish for
contempt. The Regional Trial Court of the place wherein
the contempt has been committed shall have jurisdiction
over such charges as may be filed therefore.
The foregoing amended provision puts to rest once and for
all the questions regarding the applicability of these rules
to quasi-judicial bodies, to wit:
1. This new section was necessitated by the holdings that
the former Rule 71 applied only to superior and inferior
courts and did not comprehend contempt committed
against administrative or quasi-judicial officials or bodies,
unless said contempt is clearly considered and expressly
defined as contempt of court, as is done in the second
paragraph of Sec. 580, Revised Administrative Code. The
provision referred to contemplates the situation where a
person, without lawful excuse, fails to appear, make oath,
give testimony or produce documents when required to do
so by the official or body exercising such powers. For such
violation, said person shall be subject to discipline, as in
the case of contempt of court, upon application of the
official or body with the Regional Trial Court for the
corresponding sanctions.
Evidently, quasi-judicial agencies that have the power
to cite persons for indirect contempt pursuant to Rule
71 of the Rules of Court can only do so by initiating
them in the proper Regional Trial Court. It is not within
their jurisdiction and competence to decide the
indirect contempt cases. These matters are still within
the province of the Regional Trial Courts. In the present
case, the indirect contempt charge was filed, not with the
Regional Trial Court, but with the PARAD, and it was the
PARAD that cited Mr. Lorayes with indirect contempt.

Hence, the contempt proceedings initiated through an
unverified "Motion for Contempt" filed by the respondent
with the PARAD were invalid for the following reason:
First, the Rules of Court clearly require the filing of a
verified petition with the Regional Trial Court, which was
not complied with in this case. The charge was not initiated
by the PARAD motu proprio; rather, it was by a motion
filed by respondent. Second, neither the PARAD nor the
DARAB have jurisdiction to decide the contempt charge
filed by the respondent. The issuance of a warrant of
arrest was beyond the power of the PARAD and the
DARAB. Consequently, all the proceedings that stemmed
from respondents "Motion for Contempt," specifically the
Orders of the PARAD for the arrest of Alex A. Lorayes, are
null and void.
______________________________
Art. 223 (Reinstatement Aspect of LAs Decision)
(15) G.R. No. 118651 October 16, 1997
PIONEER TEXTURIZING CORP. and/or JULIANO LIM,
vs. NLRC, PIONEER TEXTURIZING WORKERS UNION
and LOURDES A. DE JESUS
FRANCISCO, J.:
FACTS: Private respondent de Jesus is petitioners'
reviser/trimmer. She was alleged for dishonesty and
tampering of official records and documents with the
intention of cheating which led to her preventive
suspension. Subsequently, she was terminated.
She filed a complaint for illegal dismissal against
petitioners. The Labor Arbiter ruled there was illegal
dismissal. Petitioners were accordingly ordered to
reinstate de Jesus to her previous position without loss
of seniority rights and with full backwages from the time of
her suspension.
The NLRC declared that the status quo between them
should be maintained and affirmed the Labor Arbiter's
order of reinstatement, but without backwages.
Petitioners insist that the NLRC gravely abused its
discretion in holding that de Jesus is entitled to
reinstatement to her previous position for she was not
illegally dismissed in the first place.
Petitioners' theory is that an order for reinstatement is not
self-executory. They stress that there must be a writ of
execution which may be issued by the NLRC or by the
Labor Arbiter motu proprio or on motion of an interested
party. They further maintain that even if a writ of execution
was issued, a timely appeal coupled by the posting of
appropriate supersedeas bond, which they did in this case,
effectively forestalled and stayed execution of the
reinstatement order of the Labor Arbiter.
ISSUE: Whether or not an order for reinstatement needs a
writ of execution.
HELD: No writ of execution is necessary.

Article 223 of the Labor Code, as amended by R.A. No.
6715, pertinently provides:
Art. 223. Appeal. Decision, awards, or orders of the
Labor Arbiter are final and executory unless appealed to
the Commission by any or both parties within ten (10)
calendar days from receipt of such decisions, awards, or
orders. Such appeal may be entertained only on any of the
following grounds: X X X
In any event, the decision of the Labor Arbiter
reinstating a dismissed or separated employee,
insofar as the reinstatement aspect is concerned, shall
immediately be executory, even pending appeal. The
employee shall either be admitted back to work under the
same terms and conditions prevailing prior to his dismissal
or separation or, at the option of the employer, merely
reinstated in the payroll. The posting of a bond by the
employer shall not stay the execution for reinstatement
provided herein.
The employer shall reinstate the employee concerned
either by: (a) actually admitting him back to work under the
same terms and conditions prevailing prior to his dismissal
or separation; or (b) at the option of the employer, merely
reinstating him in the payroll.
______________________________
(16) G.R. No. 152329 April 22, 2003
ALEJANDRO ROQUERO vs. PAL
PUNO, J.:
FACTS: Roquero was a ground equipment mechanics of
PAL. He was caught red-handed possessing and using
shabu in a raid conducted by PAL security officers and
NARCOM personnel.
Roquero received a "notice of administrative charge" for
violating the PAL Code of Discipline and was placed under
preventive suspension.
He was dismissed so he filed a case for illegal dismissal.
LA upheld the dismissal.
While the case was on appeal with the NLRC, the
petitioner was acquitted by the RTC of Pasay City on the
ground of instigation.
The NLRC ordered reinstatement to their former
positions but without backwages. Complainants did not
appeal from the decision but filed a motion for a writ of
execution of the order of reinstatement. The Labor Arbiter
granted the motion but PAL refused to execute the said
order on the ground that they have filed a Petition for
Review before this Court. PALs petition was referred to
the CA.
CA reversed the decision of the NLRC and reinstated the
decision of the Labor Arbiter insofar as it upheld the
dismissal of Roquero.
ISSUES:
(1) Can the executory nature of the decision, more so the
reinstatement aspect of a labor tribunal's order be halted
by a petition having been filed in higher courts without any
restraining order or preliminary injunction having been
ordered in the meantime?
(2) Would the employer who refused to reinstate an
employee despite a writ duly issued be held liable to pay
the salary of the subject employee from the time that he
was ordered reinstated up to the time that the reversed
decision was handed down?
HELD:
(1) Article 223 (3rd paragraph) of the Labor Code20 as
amended by Section 12 of Republic Act No. 6715,21 and
Section 2 of the NLRC Interim Rules on Appeals under RA
No. 6715, Amending the Labor Code,22 provide that an
order of reinstatement by the Labor Arbiter is
immediately executory even pending appeal.
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 on 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 this Court.
The rule that technicalities have no room in labor cases
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 them. Hence, even if the order of
reinstatement of the Labor Arbiter is reversed on
appeal, it is obligatory on the part of the employer to
reinstate and pay the wages of the dismissed

employee during the period of appeal until reversal by
the higher court. On the other hand, if the employee has
been reinstated during the appeal period and such
reinstatement order is reversed with finality, the employee
is not required to reimburse whatever salary he received
for he is entitled to such, more so if he actually rendered
services during the period.
_______________________________
(17) G.R. NO. 148247 August 7, 2006
AIR PHILIPPINES CORPORATION vs ENRICO E.
ZAMORA
AUSTRIA-MARTINEZ, J.:
FACTS: Zamora was employed with Air Philippines as a
Flight Deck Crew. He applied for promotion to the position
of airplane captain and underwent the requisite training
program. After completing training, he inquired about his
promotion but APC did not act on it; instead, it continued to
give him assignments as flight deck crew. Thus, Zamora
filed a Complaint with the Labor Arbiter. He argued
that the act of APC of withholding his promotion
rendered his continued employment with it oppressive
and unjust. He therefore asked that APC be held liable
for constructive dismissal.
The Labor Arbiter ruled in favor of Zamora and declared
APC liable for constructive dismissal. LA order
reinstatement.
Zamora immediately filed a Motion for Execution of the
order of reinstatement. The Labor Arbiter granted the
motion and issued a writ of execution directing APC to
reinstate complainant to his former position.
Meanwhile, APC filed with the NLRC an appeal assailing
the finding of the Labor Arbiter that it was liable for
constructive dismissal.
The NLRC granted the appeal and held that no dismissal,
constructive or otherwise, took place for it was Zamora
himself who voluntarilly terminated his employment by not
reporting for work and by joining a competitor Grand Air.
However, respondent Air Philippines was ordered to
pay complainant his unpaid salaries and allowances
for the complainant arose from the order of his
reinstatement which is executory even pending appeal of
respondent questioning the same, pursuant to Article 223
of the Labor Code. In the eyes of the law, complainant was
as if actually working from the date respondent received
the copy of the appealed decision of the Labor Arbiter
directing the reinstatement of complainant based on his
finding that the latter was illegally dismissed from
employment.
CA dismissed Air Phils petition due to non-compliance of
requisites (e.g. attach copies of all pleadings etc).
ISSUE: Whether or not Air Phil is liable for unpaid salaries
from the LAs decision of reinstatement up to NLRCs
reversal.
HELD: Yes, Air Phil is liable.
Even if the order of reinstatement of the Labor Arbiter
is reversed on appeal, it is obligatory on the part of the
employer to reinstate and pay the wages of the
dismissed employee during the period of appeal until
reversal by the higher court. On the other hand, if the
employee has been reinstated during the appeal period
and such reinstatement order is reversed with finality, the
employee is not required to reimburse whatever salary he
received for he is entitled to such, more so if he actually
rendered services during the period.
In short, with respect to decisions reinstating employees,
the law itself has determined a sufficiently overwhelming
reason for its execution pending appeal.
Pursuant to the police power, the State may authorize an
immediate implementation, pending appeal, of a decision
reinstating a dismissed or separated employee since that
saving act is designed to stop, although temporarily since
the appeal may be decided in favor of the appellant, a
continuing threat or danger to the survival or even the life
of the dismissed or separated employee and his family.
________________________
(18c) G.R. No. 177026 January 30, 2009
LUNESA O. LANSANGAN AND ROCITA CENDAA vs.
AMKOR TECHNOLOGY PHILIPPINES, INC.
CARPIO MORALES, J.:
FACTS: An anonymous e-mail was sent to the General
Manager of Amkor Technology Philippines detailing
allegations of malfeasance on the part of its supervisory
employees petitioners for "stealing company time."
Petitioners admitted their wrongdoing. Respondent
terminated petitioners for "extremely serious offenses" as
defined in its Code of Discipline prompting petitioners to
file a complaint for illegal dismissal against it.
The Labor Arbiter dismissed petitioners complaint. The
Arbiter, however, ordered the reinstatement of petitioners

to their former positions without backwages "as a measure
of equitable and compassionate relief" owing mainly to
petitioners prior unblemished employment records, show
of remorse, harshness of the penalty and defective
attendance monitoring system of respondent.
Respondent assailed the reinstatement aspect of the
Arbiters order before the NLRC.
In the meantime, petitioners, without appealing the
Arbiters finding them guilty of "dishonesty as a form of
serious misconduct and fraud or breach of trust," moved
for the issuance of a "writ of reinstatement."
LA issued an alias writ of execution following which
respondents bank account at Equitable-PCI Bank was
garnished.
The NLRC did not rule for reinstatement and set aside the
Arbiters Alias Writ of Execution and Notice of
Garnishment.
CA affirmed the finding that petitioners were guilty of
misconduct and the like, ordered respondent to "pay
petitioners their corresponding backwages without
qualification and deduction for the period covering
date of the Arbiters decision up to date of the NLRC
Decision.

ISSUE: Whether petitioner is entitled to such payment.
HELD: Petitioners are not entitled to full backwages as
their dismissal was not found to be illegal. Agabon v.
NLRC so states payment of backwages and other
benefits is justified only if the employee was unjustly
dismissed.
Roquero, as well as Article 223 of the Labor Code on
which the appellate court also relied, finds no
application in the present case. Article 223 concerns
itself with an interim relief, granted to a dismissed or
separated employee while the case for illegal dismissal is
pending appeal, as what happened in Roquero. It does
not apply where there is no finding of illegal dismissal,
as in the present case.
The Arbiter found petitioners dismissal to be valid. Such
finding had, as stated earlier, become final, petitioners not
having appealed it. Following Article 279 which provides:
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.
_____________________________
(19) G.R. Nos. 142732-33 December 4, 2007
MARILOU S. GENUINO vs. NLRC, CITIBANK, N.A.,
WILLIAM FERGUSON, and AZIZ RAJKOTWALA
FACTS: Genuino was employed by Citibank as Treasury
Sales Division Head with the rank of Assistant Vice-
President.
Citibank sent Genuino a letter charging her with
"knowledge and/or involvement" in transactions "which
were irregular or even fraudulent and was informed she
was under preventive suspension.
Later, after investigation and administrative hearing,
Genuino's employment was terminated by Citibank on
grounds of (1) serious misconduct, (2) willful breach of the
trust reposed upon her by the bank, and (3) commission of
a crime against the bank.
She filed before the Labor Arbiter a Complaint for illegal
suspension and illegal dismissal with damages and prayer
for temporary restraining order and/or writ of preliminary
injunction.
The LA found there was illegal dismissal and ordered for
Genuinos reinstatement.
The NLRC reversed the Labor Arbiter's decision with the
following modification: (1) DECLARING the dismissal of
the complainant valid but (2) ORDERING the respondent
bank to pay the salaries due to the complainant from the
date it reinstated complainant in the payroll as found by
the Labor Arbiter) up to and until the date of its (NLRC)
decision.
CA affirmed NLRC.
Citibank questions the ruling that Genuino has a right
to reinstatement under Article 223 of the Labor Code.
Citibank contends that the Labor Arbiter's finding is
not supported by evidence; thus, the decision is void.

Since a void decision cannot give rise to any rights,
Citibank opines that there can be no right to payroll
reinstatement.
ISSUE: Whether Genuino is entitled to payment of such
salaries.
HELD: No, since the dismissal was valid.
Citibank had valid grounds to dismiss Genuino on ground
of loss of confidence. The NLRC's order for payroll
reinstatement is set aside.
Ordinarily, the employer is required to reinstate the
employee during the pendency of the appeal pursuant to
Art. 223, paragraph 3 of the Labor Code, which states:
In any event, the decision of the Labor Arbiter reinstating a
dismissed or separated employee, insofar as the
reinstatement aspect is concerned, shall immediately be
executory, even pending appeal. The employee shall
either be admitted back to work under the same terms and
conditions prevailing prior to his dismissal or separation or,
at the option of the employer, merely reinstated in the
payroll. The posting of a bond by the employer shall not
stay the execution for reinstatement provided herein.

If the decision of the labor arbiter is later reversed on
appeal upon the finding that the ground for dismissal
is valid, then the employer has the right to require the
dismissed employee on payroll reinstatement to
refund the salaries s/he received while the case was
pending appeal, or it can be deducted from the
accrued benefits that the dismissed employee was
entitled to receive from his/her employer under
existing laws, collective bargaining agreement
provisions, and company practices. However, if the
employee was reinstated to work during the pendency
of the appeal, then the employee is entitled to the
compensation received for actual services rendered
without need of refund.
Considering that Genuino was not reinstated to work or
placed on payroll reinstatement, and her dismissal is
based on a just cause, then she is not entitled to be paid
the salaries.
_________________________
(20) G.R. No. 164856 January 20, 2009
JUANITO A. GARCIA and ALBERTO J. DUMAGO vs.
PAL
CARPIO MORALES, J.:
FACTS: There was an administrative charge filed by PAL
against its employees-herein petitioners after they were
allegedly caught in the act of sniffing shabu when a team
of company security personnel and law enforcers raided
the PAL Technical Centers Toolroom Section.
After due notice, PAL dismissed petitioners for
transgressing the PAL Code of Discipline prompting them
to file a complaint for illegal dismissal and damages.
The case was resolved by the Labor Arbiter in their
favor, thus ordering PAL to, inter alia, immediately
comply with the reinstatement aspect of the decision.
Prior to the promulgation of the Labor Arbiters
decision, the SEC placed PAL which was suffering
from severe financial losses, under receivership.
The NLRC reversed LAs decision and dismissed
petitioners complaint for lack of merit.
Later, the Labor Arbiter issued a Writ of Execution
respecting the reinstatement aspect of his Decision, and,
he issued a Notice of Garnishment.

The NLRC affirmed the validity of the Writ and the Notice
issued by the Labor Arbiter but suspended and referred
the action to the Rehabilitation Receiver for appropriate
action.
CA reversed on the ground that (1) a subsequent
finding of a valid dismissal removes the basis for
implementing the reinstatement aspect of a labor
arbiters decision, and (2) the impossibility to comply
with the reinstatement order due to corporate
rehabilitation provides a reasonable justification for
the failure to exercise the options under Article 223 of
the Labor Code.
ISSUE:
(1) Whether petitioners may collect their wages during the
period between the Labor Arbiters order of reinstatement
pending appeal and the NLRC decision overturning that of
the Labor Arbiter.
(2) Whether the impossibility to comply with the
reinstatement order due to corporate rehabilitation
provides a reasonable justification for the failure to
exercise the options under Article 223 of the Labor Code.

HELD:
(1) Yes. Even if the order of reinstatement of the Labor
Arbiter is reversed on appeal, it is obligatory on the part of
the employer to reinstate and pay the wages of the
reversal by the higher court. It settles the view that the
Labor Arbiter's order of reinstatement is immediately
executory and the employer has to either re-admit them to
work under the same terms and conditions prevailing prior
to their dismissal, or to reinstate them in the payroll, and
that failing to exercise the options in the alternative,
employer must pay the employees salaries.
(2) Yes, the peculiar predicament of a corporate
rehabilitation rendered it impossible for respondent to
exercise its option under the circumstances (Article 223).
After the labor arbiters decision is reversed by a higher
tribunal, the employee may be barred from collecting the
accrued wages, if it is shown that the delay in enforcing
the reinstatement pending appeal was without fault on the
part of the employer.

The test is two-fold: (1) there must be actual delay or the
fact that the order of reinstatement pending appeal was
not executed prior to its reversal; and (2) the delay must
not be due to the employers unjustified act or omission. If
the delay is due to the employers unjustified refusal, the
employer may still be required to pay the salaries
notwithstanding the reversal of the Labor Arbiters
decision.
It is settled that upon appointment by the SEC of a
rehabilitation receiver, all actions for claims before
any court, tribunal or board against the corporation
shall ipso jure be suspended. As stated early on, during
the pendency of petitioners complaint before the Labor
Arbiter, the SEC placed respondent under an Interim
Rehabilitation Receiver. After the Labor Arbiter rendered
his decision, the SEC replaced the Interim Rehabilitation
Receiver with a Permanent Rehabilitation Receiver.
Case law recognizes that unless there is a restraining
order, the implementation of the order of reinstatement is
ministerial and mandatory. This injunction or suspension of
claims by legislative fiat partakes of the nature of a
restraining order that constitutes a legal justification for
respondents non-compliance with the reinstatement order.
Respondents failure to exercise the alternative
options of actual reinstatement and payroll
reinstatement was thus justified. Such being the case,
respondents obligation to pay the salaries pending appeal,
as the normal effect of the non-exercise of the options, did
not attach.
While reinstatement pending appeal aims to avert the
continuing threat or danger to the survival or even the life
of the dismissed employee and his family, it does not
contemplate the period when the employer-corporation
itself is similarly in a judicially monitored state of being
resuscitated in order to survive.
Respondent was effectively deprived of the alternative
choices under Article 223 of the Labor Code, not only
by virtue of the statutory injunction but also in view of
the interim relinquishment of management control to
give way to the full exercise of the powers of the
rehabilitation receiver.
______________________
(21) G.R. No. 173076 October 10, 2007
MT. CARMEL COLLEGE vs. JOCELYN RESUENA,
EDDIE VILLALON, SYLVIA SEDAYON and ZONSAYDA
EM
CHICO-NAZARIO, J.:
FACTS: Respondents were employees of petitioner. They
participated in a protest action against petitioner. After a
hearing conducted by petitioners Fact-Finding Committee
and submission of its Report recommending dismissal or
suspension of respondents, petitioner issued written
notices of termination to respondents.
Separate complaints were filed by each of the four
respondents against petitioner before Regional Arbitration
Branch VI of the NLRC in Bacolod City. Respondents
charged petitioner with illegal dismissal, among others.
The LA issued a decision affirming the validity of
respondents termination by petitioner on the ground of
loss of trust and confidence. However, the LA did not rule
for reinstatement but in its writ of execution, it ordered
reinstatement of the employyes.
The NLRC ruled that there was an illegal dismissal. It
ordered the reinstatement of respondents, with payment of
backwages or payment of separation pay.
CA affirmed. However, in this case since the Labor Arbiter
did not order reinstatement, the NLRC correctly excluded
the period of the appeal in the computation of back wages
due to respondents.

Petitioner argues that any reinstatement aspect of the
NLRC Decision, as affirmed by the Court of Appeals,
should have been done through the issuance of a Writ of
Execution as it is no longer self-executory.
Petitioner vehemently raises the argument that the award
of backwages subject to execution is limited to the period
prior to the appeal and does not include the period during
the pendency of the appeal, on the contention that
reinstatement during appeal is warranted only when the
Labor Arbiter rules that the dismissed employee should be
reinstated.
ISSUES:
(1) Whether reinstatement (as decided by NLRC) in the
instant case is self-executory and does not need a writ of
execution for its enforcement; and
(2) Whether the continuing award of backwages is proper.
HELD:

(1) Yes, there is a need for such writ. Article 223 being
inapplicable in the case.
Verily, Article 223 of the Labor Code is not applicable in
the instant case. The said provision stipulates 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.
Petitioner contends that the statutory provision applicable
is Article 224 of the Labor Code, as well as Rule III,
Section 2(b) of the NLRC Manual on Execution of
Judgment, because the case was decided on appeal.
Furthermore, it is a decision which is of a final and
executory nature.
The records of the case indicate that when Labor Arbiter
issued its Decision, there was no order of reinstatement
yet although the dispositive portion of the Order issued by
another Labor Arbiter already provided for reinstatement or
payment of separation pay.
Art. 223 of the Labor Code provides that reinstatement is
immediately executory even pending appeal only when the
Labor Arbiter himself ordered the reinstatement. In this
case, the original Decision of Labor Arbiter Drilon did not
order reinstatement. Reinstatement in this case was
actually ordered by the NLRC, affirmed by the Court of
Appeals. The order of Labor Arbiter directing reinstatement
was issued after the Court of Appeals Decision which
affirmed the NLRCs order of reinstatement. Thus, Art. 223
finds no application in the instant case. Considering that
the order for reinstatement was first decided upon appeal
to the NLRC and affirmed with finality by the Court of
Appeals, petitioner rightly invoked Art. 224 of the Labor
Code.
(2) The computation of backwages is proper (from the
time respondents were dismissed up to actual
reinstatement or upon payment of separation pay if
the reinstatement is no longer feasible).
The ruling of the NLRC had the effect of reversing and
modifying the findings of the Labor Arbiter. Under Article
218(c) of the Labor Code, the Commission is empowered
to "correct, amend, or waive any error, defect or irregularity
whether in substance or form," in the exercise of its
appellate jurisdiction. The dispositive portion of the Labor
Arbiters Decision as worded is clear and needs no further
interpretation. The NLRC found respondents to have been
illegally dismissed by petitioner, and ordered reinstatement
and payment of backwages. Additionally, it stated that
where reinstatement is not possible, separation pay as
computed in the appealed decision should be awarded to
respondents.
Backwages are to be computed from the time of illegal
dismissal until reinstatement or upon petitioners payment
of separation pay to respondents if reinstatement is no
longer possible.
An illegally dismissed employee is entitled to two reliefs:
backwages and reinstatement. The two reliefs provided
are separate and distinct. In instances where
reinstatement is no longer feasible because of strained
relations between the employee and the employer,
separation pay is granted. In effect, an illegally dismissed
employee is entitled to either reinstatement, if viable, or
separation pay if reinstatement is no longer viable, and
backwages.
Thus, the backwages due respondents must be
computed from the time they were unjustly dismissed
until their actual reinstatement to their former position
or upon petitioners payment of separation pay to
them if reinstatement is no longer feasible. Thus, until
petitioner actually implements the reinstatement aspect of
the NLRC Decision as affirmed in the Court of Appeals, its
obligation to respondents, insofar as accrued backwages
and other benefits are concerned, continues to
accumulate.
__________________________

(22) G.R. No. 147806 November 12, 2002
NERISSA BUENVIAJE et al. vs. CA, HONORABLE
ARBITER ROMULUS PROTASIO, COTTONWAY
MARKETING CORPORATION and MICHAEL G. TONG,
President and General Manager
PUNO, J.:
FACTS: Petitioners were former employees of Cottonway
Marketing Corp. hired as promo girls for their garment
products.
After their services were terminated as the company was
allegedly suffering business losses, petitioners filed with
the NLRC a complaint for illegal dismissal, underpayment
of salary, and non-payment of premium pay for rest day,
service incentive leave pay and thirteenth month pay
against Cottonway.
The LA issued a Decision finding petitioners' retrenchment
valid and ordering Cottonway to pay petitioners' separation
pay and their proportionate thirteenth month pay.
The NLRC reversed the Decision of the LA and ordered
the reinstatement of petitioners without loss of seniority
rights and other privileges. It also ordered Cottonway to
pay petitioners their full backwages inclusive of allowances
and other benefits, or their monetary equivalent computed
from the time their salaries were withheld from them up to
the date of their actual reinstatement.
Later, Cottonway filed with the NLRC a manifestation
stating that they have complied with the order of
reinstatement by sending notices requiring the petitioners
to return to work, but to no avail; and consequently, they
sent letters to petitioners informing them that they have
lost their employment for failure to comply with the return
to work order.
Petitioners filed with the NLRC a motion for execution of its
Decision on the ground that it had become final and
executory.
Cottonway filed with the NLRC a supplemental
manifestation praying that the Commission allow the
reception of evidence with respect to their claim that
petitioners have found new employment. But NLRC
denied.
The LA released an order declaring that payment be
limited from the time of their illegal dismissal up to the
time they received the notice of termination sent by
the company upon their refusal to report for work
despite the order of reinstatement. He cited the fact that
petitioners failed to report to their posts without justifiable
reason despite respondent's order requiring them to return
to work immediately.
The NLRC set aside LAs order.
CA ruled that petitioners' reinstatement was no longer
possible as they deliberately refused to return to work
despite the notice given by Cottonway. The Court of
Appeals thus held that the amount of backwages due them
should be computed only up to the time they received their
notice of termination.
ISSUE: Whether payment of backwages should be limited
from the time they were illegally dismissed until they
received the notice of termination sent by Cottonway on or
whether it should be computed from the time of their illegal
dismissal until their actual reinstatement.
HELD: The backwages should be computed from the time
of actual reinstatement.
Under R.A. 6715, employees who are illegally dismissed
are entitled to full backwages, inclusive of allowances and
other benefits or their monetary equivalent, computed from
the time their actual compensation was withheld from them
up to the time of their actual reinstatement. If
reinstatement is no longer possible, the backwages
shall be computed from the time of their illegal
termination up to the finality of the decision.
Petitioners' alleged failure to return to work cannot be
made the basis for their termination. Such failure does not
amount to abandonment which would justify the severance
of their employment. To warrant a valid dismissal on the
ground of abandonment, the employer must prove the
concurrence of two elements: (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.
The facts of this case do not support the claim of
Cottonway that petitioners have abandoned their desire to
return to their previous work at said company. It appears
that three months after the NLRC had rendered its
decision ordering petitioners reinstatement to their former
positions, Cottonway sent individual notices to petitioners
mandating them to immediately report to work.
Petitioners, however, were not able to promptly comply
with the order. Instead, their counsel sent a reply letter
stating that his clients were not in a position to comply with
said order since the NLRC has not yet finally disposed of
the case.

Cottonway, before finally deciding to dispense with their
services, did not give the petitioners the opportunity to
explain why they were not able to report to work. The
records also do not bear any proof that all the petitioners
received a copy of the letters. Cottonway merely claimed
that some of them have left the country and some have
found other employment. This, however, does not
necessarily mean that petitioners were no longer
interested in resuming their employment at Cottonway as it
has not been shown that their employment in the other
companies was permanent. Furthermore, petitioners
never abandoned their suit against Cottonway. While
the case was pending appeal before the NLRC, the
Court of Appeals and this Court, petitioners continued
to file pleadings to ensure that the company would
comply with the directive of the NLRC to reinstate
them and to pay them full backwages in case said
decision is upheld.
Article 223 of Labor Code is intended for the benefit of the
employee and cannot be used to defeat their own interest.
The law mandates the employer to either admit the
dismissed employee back to work under the same
terms and conditions prevailing prior to his dismissal
or to reinstate him in the payroll to abate further loss
of income on the part of the employee during the
pendency of the appeal. But we cannot stretch the
language of the law as to give the employer the right to
remove an employee who fails to immediately comply with
the reinstatement order, especially when there is
reasonable explanation for the failure.
If Cottonway were really sincere in its offer to immediately
reinstate petitioners to their former positions, it should
have given them reasonable time to wind up their current
preoccupation or at least to explain why they could not
return to work at Cottonway at once. Cottonway did not do
either. Instead, it gave them only five days to report to their
posts and when the petitioners failed to do so, it lost no
time in serving them their individual notices of termination.
We are, therefore, not impressed with the claim of
respondent company that petitioners have been validly
dismissed (on their failure to resume work) and hence their
backwages should only be computed up to that time.
Petitioners are entitled to receive full backwages computed
from the time their compensation was actually withheld
until their actual reinstatement, or if reinstatement is no
longer possible, until the finality of the decision.
_________________
(23) G.R. No. 177467 March 9, 2011
PFIZER, INC. AND/OR REY GERARDO BACARRO,
AND/OR FERDINAND CORTES, AND/OR ALFRED
MAGALLON, AND/OR ARISTOTLE ARCE vs.
GERALDINE VELASCO
LEONARDO-DE CASTRO, J.:
FACTS: Private respondent Velasco was employed with
petitioner PFIZER, INC. as Professional Health Care
Representative. Velasco had a medical work up for her
high-risk pregnancy and was subsequently advised bed
rest which resulted in her extending her leave of absence.
Velasco filed for sick and vacation leaves and leave
without pay.
While Velasco was still on leave, PFIZER personally
served Velasco a "Show-cause Notice". Aside from
mentioning about an investigation on her possible
violations of company work rules regarding "unauthorized
deals and/or discounts in money or samples and
unauthorized withdrawal and/or pull-out of stocks" and
instructing her to submit her explanation on the matter
within 48 hours from receipt of the same, the notice also
advised her that she was being placed under "preventive
suspension.
Velasco denied the charges.
Velasco filed a complaint for illegal suspension with money
claims before the Regional Arbitration Branch. But despite
the pendency of the case, PFIZER terminated Velasco.
The LA rules there was illegal dismissal and ordered
for her reinstatement with backwages and further
awarding moral and exemplary damages with
attorneys fees. NLRC affirmed.
The CA upheld the validity of respondents dismissal from
employment. CA directed PFIZER to pay respondent her
wages from the date of the Labor Arbiters Decision up to
the Court of Appeals Decision.
It is PFIZERs contention that "there was no unjustified
refusal on [its part] to reinstate [respondent] Velasco
during the pendency of the appeal," thus, the
pronouncement in Roquero cannot be made to govern this
case. During the pendency of the case with the Court of
Appeals and prior to its Decision, PFIZER claimed that it
had already required respondent to report for work.
However, according to PFIZER, it was respondent who
refused to return to work when she wrote PFIZER, through
counsel, that she was opting to receive her separation pay
and to avail of PFIZERs early retirement program.
In PFIZERs view, it should no longer be required to
pay wages considering that:

(1) it had already previously paid an enormous sum to
respondent under the writ of execution issued by the
Labor Arbiter;
(2) it was allegedly ready to reinstate respondent as
of July 1, 2005 but it was respondent who
unjustifiably refused to report for work;
(3) it would purportedly be tantamount to allowing
respondent to choose "payroll reinstatement" when
by law it was the employer which had the right to
choose between actual and payroll reinstatement;
(4) respondent should be deemed to have "resigned"
and therefore not entitled to additional backwages or
separation pay; and
(5) this Court should not mechanically apply Roquero
but rather should follow the doctrine in Genuino v.
National Labor Relations Commission which was
supposedly "more in accord with the dictates of
fairness and justice."
ISSUE: Whether or not Pfizer is to pay Velasco wages
from the date of the Labor Arbiters decision ordering her
reinstatement until when the Court of Appeals rendered its
decision declaring Velascos dismissal valid.
HELD: Yes, Genuino ruling is abandoned.
It is almost two years from the time the order of
reinstatement was handed down in the Labor Arbiters
Decision did Pfizer reinstated Velasco.
In the case at bar, PFIZER did not immediately admit
respondent back to work which, according to the law,
should have been done as soon as an order or award of
reinstatement is handed down by the Labor Arbiter without
need for the issuance of a writ of execution. Thus,
respondent was entitled to the wages paid to her under the
aforementioned writ of execution.
To reiterate, under Article 223 of the Labor Code, an
employee entitled to reinstatement "shall either be
admitted back to work under the same terms and
conditions prevailing prior to his dismissal or
separation or, at the option of the employer, merely
reinstated in the payroll."
It cannot be said that PFIZER, due to its belated fulfillment
of the Labor Arbiters reinstatement order, had shown a
clear intent to reinstate respondent to her former position
under the same terms and conditions nor to a substantially
equivalent position. To begin with, the return-to-work order
PFIZER sent respondent is silent with regard to the
position or the exact nature of employment that it wanted
respondent to take up. Even if we assume that the job
awaiting respondent in the new location is of the same
designation and pay category as what she had before, it is
plain from the text of PFIZERs letter that such
reinstatement was not "under the same terms and
conditions" as her previous employment, considering that
PFIZER ordered respondent to report to its main office in
Makati City while knowing fully well that respondents
previous job had her stationed in Baguio City
(respondents place of residence) and it was still
necessary for respondent to be briefed regarding her work
assignments and responsibilities, including her relocation
benefits.
There was no real, bona fide reinstatement to speak of
prior to the reversal by the Court of Appeals of the
finding of illegal dismissal.
In view of PFIZERs failure to effect respondent's
actual or payroll reinstatement, it is indubitable that
the Roquero ruling is applicable to the case at bar. The
option of the employer to effect actual or payroll
reinstatement must be exercised in good faith.
In the case at bar, respondents decision to claim
separation pay over reinstatement had no legal effect, not
only because there was no genuine compliance by the
employer to the reinstatement order but also because the
employer chose not to act on said claim. If it was PFIZERs
position that respondents act amounted to a "resignation"
it should have informed respondent that it was accepting
her resignation and that in view thereof she was not
entitled to separation pay. PFIZER did not respond to
respondents demand at all. As it was, PFIZERs failure to
effect reinstatement and accept respondents offer to
terminate her employment relationship with the company
meant that, prior to the Court of Appeals reversal,
PFIZERs liability for backwages continued to accrue for
the period not covered by the writ of execution.
In other words, a dismissed employee whose case
was favorably decided by the Labor Arbiter is entitled
to receive wages pending appeal upon reinstatement,
which is immediately executory. Unless there is a
restraining order, it is ministerial upon the Labor
Arbiter to implement the order of reinstatement and it
is mandatory on the employer to comply therewith.
But if the decision of the labor arbiter is later reversed on
appeal upon the finding that the ground for dismissal is
valid, then the employer has the right to require the
dismissed employee on payroll reinstatement to refund the
salaries [he] received while the case was pending appeal,
or it can be deducted from the accrued benefits that the
dismissed employee was entitled to receive from [his]
employer under existing laws, collective bargaining
agreement provisions, and company practices. However, if
the employee was reinstated to work during the pendency
of the appeal, then the employee is entitled to the

compensation received for actual services rendered
without need of refund (Genuino ruling)
The Genuino ruling not only disregards the social justice
principles behind the rule, but also institutes a scheme
unduly favorable to management. Under such scheme, the
salaries dispensed pendente lite merely serve as a bond
posted in installment by the employer. For in the event of a
reversal of the Labor Arbiter's decision ordering
reinstatement, the employer gets back the same amount
without having to spend ordinarily for bond premiums. This
circumvents, if not directly contradicts, the proscription that
the "posting of a bond [even a cash bond] by the employer
shall not stay the execution for reinstatement."
In playing down the stray posture in Genuino requiring
the dismissed employee on payroll reinstatement to
refund the salaries in case a final decision upholds the
validity of the dismissal, the Court realigns the proper
course of the prevailing doctrine on reinstatement
pending appeal vis--vis the effect of a reversal on
appeal.
The Court reaffirms the prevailing principle that even if
the order of reinstatement of the Labor Arbiter is
reversed on appeal, it is obligatory on the part of the
employer to reinstate and pay the wages of the
reversal by the higher court.
The SC ruled that:
1. Reinstatement pending appeal necessitates that it
must be immediately self-executory without need for a
writ of execution during the pendency of the appeal, if
the law is to serve its noble purpose, and any attempt on
the part of the employer to evade or delay its execution
should not be allowed.
2. An order for reinstatement entitles an employee to
receive his accrued backwages from the moment the
reinstatement order was issued up to the date when
the same was reversed by a higher court without fear
of refunding what he had received.
____________________
Article 224
(24) G.R. No. 126322 January 16, 2002
YUPANGCO COTTON MILLS, INC. vs. CA, HON.
URBANO C. VICTORIO, SR., Presiding Judge, RTC
Branch 50, Manila, RODRIGO SY MENDOZA,
SAMAHANG MANGGAGAWA NG ARTEX (SAMAR-
ANGLO) represented by its Local President RUSTICO
CORTEZ, and WESTERN GUARANTY CORPORATION
PARDO, J.:
FACTS: Petitioner alleged that it is the owner of the
properties which were erroneously levied upon by the
sheriff of the NLRC as a consequence of the decision
rendered by the said Commission in a labor case.
It filed a notice of third-party claim with the Labor Arbiter. It
filed an Affidavit of Adverse Claim with the NLRC) but was
dismissed by the labor Arbiter.
The CA promulgated a decision dismissing the petition on
the ground of forum shopping and that petitioner's remedy
was to seek relief from this Court.
Petitioner filed with the Court of Appeals a motion for
reconsideration of the decision. Petitioner argued that the
filing of a complaint for accion reinvindicatoria with the
Regional Trial Court was proper because it is a remedy
specifically granted to an owner (whose properties were
subjected to a writ of execution to enforce a decision
rendered in a labor dispute in which it was not a party) by
Section 17 (now 16), Rule 39, Revised Rules of Court and
by the case doctrines.
In addition, petitioner argued that the reliefs sought and
the issues involved in the complaint for recovery of
property and damages filed with the Regional Trial Court
of Manila, presided over by respondent judge, were
entirely distinct and separate from the reliefs sought and
the issues involved in the proceedings before the Labor
Arbiter and the NLRC. Besides, petitioner pointed out that
neither the NLRC nor the Labor Arbiter is empowered to
adjudicate matters involving ownership of properties.
ISSUE:
(1) Whether Petitioner is guilty of forum shopping.
(2) Whether the Court of Appeals erred in dismissing the
petitioner's accion reinvindicatoria on the ground of lack of
jurisdiction of the trial court.
HELD:
(1) There was no forum shopping.
There is no forum-shopping where two different orders
were questioned, two distinct causes of action and issues
were raised, and two objectives were sought.

In the case at bar, there was no identity of parties, rights
and causes of action and reliefs sought.
The case before the NLRC where Labor Arbiter Reyes
issued a labor dispute between Artex and Samar-Anglo.
Petitioner was not a party to the case. The only issue
petitioner raised before the NLRC was whether or not the
writ of execution issued by the labor arbiter could be
satisfied against the property of petitioner, not a party to
the labor case.
On the other hand, the accion reinvindicatoria filed by
petitioner in the trial court was to recover the property
illegally levied upon and sold at auction. Hence, the
causes of action in these cases were different.
The rule is that "for forum-shopping to exist both actions
must involve the same transactions, the same
circumstances. The actions must also raise identical
causes of action, subject matter and issues.
(2) A third party whose property has been levied upon
by a sheriff to enforce a decision against a judgment
debtor is afforded with several alternative remedies to
protect its interests. The third party may avail himself of
alternative remedies cumulatively, and one will not
preclude the third party from availing himself of the other
alternative remedies in the event he failed in the remedy
first availed of.
Thus, a third party may avail himself of the following
alternative remedies:
a) File a third party claim with the sheriff of the Labor
Arbiter, and
b) If the third party claim is denied, the third party may
appeal the denial to the NLRC.
Even if a third party claim was denied, a third party may
still file a proper action with a competent court to recover
ownership of the property illegally seized by the sheriff.
This finds support in Section 17 (now 16), Rule 39,
Revised Rules of Court, to wit:
SEC. 17 (now 16). Proceedings where property claimed by
third person. - If property claimed by any other person than
the judgment debtor or his agent, and such person makes
an affidavit of his title thereto or right to the possession
thereof, stating the grounds of such right or title, and serve
the same upon the officer making the levy, and a copy
thereof upon the judgment creditor, the officer shall not be
bound to keep the property, unless such judgment creditor
or his agent, on demand of the officer, indemnify the officer
against such claim by a bond in a sum not greater than the
value of the property levied on. In case of disagreement as
to such value, the same shall be determined by the court
issuing the writ of execution.
In light of the above, the filing of a third party claim
with the Labor Arbiter and the NLRC did not preclude
the petitioner from filing a subsequent action for
recovery of property and damages with the Regional
Trial Court. And, the institution of such complaint will
not make petitioner guilty of forum shopping.
A separate civil action for recovery of ownership of the
property would not constitute interference with the powers
or processes of the Arbiter and the NLRC which rendered
the judgment to enforce and execute upon the levied
properties. The property levied upon being that of a
stranger is not subject to levy. Thus, a separate action for
recovery, upon a claim and prima-facie showing of
ownership by the petitioner, cannot be considered as
interference.
_________________________
(25) G.R. No. 184007 February 16, 2011
PAQUITO V. ANDO vs. ANDRESITO Y. CAMPO, ET AL.,
NACHURA, J.:
FACTS: Petitioner was the president of Premier Allied
and Contracting Services, Inc. (PACSI), an independent
labor contractor. Respondents were hired by PACSI as
pilers or haulers tasked to manually carry bags of sugar
from the warehouse of Victorias Milling Company and load
them on trucks. Respondents were dismissed from
employment. They filed a case for illegal dismissal and
some money claims with the NLRC Regional Arbitration
Branch of Bacolod City.
The Labor Arbiter promulgated a decision, ruling in
respondents favor. PACSI and petitioner were directed to
pay respondents separation pay and the award of
attorneys fees.
NLRC affirmed. Upon finality of the decision, respondents
moved for its execution.
To answer for the monetary award, NLRC Acting
Sheriff Romeo Pasustento issued a Notice of Sale on
Execution of Personal Property over the property
covered by a TCT in the name of "Paquito V. Ando x x
x married to Erlinda S. Ando."


This prompted petitioner to file an action for prohibition and
damages with prayer for the issuance of a TRO before the
RTC of Bacolod City. Petitioner claimed that the property
belonged to him and his wife, not to the corporation, and,
hence, could not be subject of the execution sale. Since it
is the corporation that was the judgment debtor, execution
should be made on the latters properties.
RTC denied issuing the TRO, holding that the trial court
had no jurisdiction to try and decide the case. The RTC
ruled that, pursuant to the NLRC Manual on the
Execution of Judgment, petitioners remedy was to file
a third-party claim with the NLRC Sheriff. Despite lack
of jurisdiction, however, the RTC went on to decide the
merits of the case.
The RTC, respondent contended, could stay the execution
of a judgment if the same was unjust. He also contended
that, pursuant to a ruling of this Court, a third party who is
not a judgment creditor may choose between filing a third-
party claim with the NLRC sheriff or filing a separate action
with the courts.
The CA affirmed the RTC Order in so far as it dismissed
the complaint on the ground that it had no jurisdiction over
the case.
ISSUE:
(1) Whether RTC has jurisdiction to restrain the
implementation of the writ of the execution by the LA.
(2) Whether there is a need to file a third-party complaint.
HELD:
(1) RTC lack jurisdiction to restrain the implementation of
the writ of execution issued by the Labor Arbiter.
The Court has long recognized that regular courts
have no jurisdiction to hear and decide questions
which arise from and are incidental to the enforcement
of decisions, orders, or awards rendered in labor
cases by appropriate officers and tribunals of the
Department of Labor and Employment. To hold
otherwise is to sanction splitting of jurisdiction which is
obnoxious to the orderly administration of justice.

Thus, it is, first and foremost, the NLRC Manual on the
Execution of Judgment that governs any question on the
execution of a judgment of that body. Petitioner need not
look further than that. The Rules of Court apply only by
analogy or in a suppletory character.
Consider the provision in Section 16, Rule 39 of the
Rules of Court on third-party claims:
SEC. 16. Proceedings where property claimed by third
person.If the property levied on is claimed by any person
other than the judgment obligor or his agent, and such
person makes an affidavit of his title thereto or right to the
possession thereof, stating the grounds of such right or
title, and serves the same upon the officer making the levy
and a copy thereof upon the judgment obligee, the officer
shall not be bound to keep the property, unless such
judgment obligee, on demand of the officer, files a bond
approved by the court to indemnify the third-party claimant
in a sum not less than the value of the property levied on.
In case of disagreement as to such value, the same shall
be determined by the court issuing the writ of execution.
No claim for damages for the taking or keeping of the
property may be enforced against the bond unless the
action therefor is filed within one hundred twenty (120)
days from the date of the filing of the bond.
The officer shall not be liable for damages for the taking or
keeping of the property, to any third-party claimant if such
bond is filed. Nothing herein contained shall prevent such
claimant or any third person from vindicating his claim to
the property in a separate action, or prevent the judgment
obligee from claiming damages in the same or a separate
action against a third-party claimant who filed a frivolous or
plainly spurious claim.
When the writ of execution is issued in favor of the
Republic of the Philippines, or any officer duly representing
it, the filing of such bond shall not be required, and in case
the sheriff or levying officer is sued for damages as a
result of the levy, he shall be represented by the Solicitor
General and if held liable therefor, the actual damages
adjudged by the court shall be paid by the National
Treasurer out of such funds as may be appropriated for
the purpose.
On the other hand, the NLRC Manual on the Execution of
Judgment deals specifically with third-party claims in cases
brought before that body. It defines a third-party claim as
one where a person, not a party to the case, asserts title to
or right to the possession of the property levied upon. It
also sets out the procedure for the filing of a third-party
claim, to wit:

SECTION 2. Proceedings. If property levied upon be
claimed by any person other than the losing party or his
agent, such person shall make an affidavit of his title
thereto or right to the possession thereof, stating the
grounds of such right or title and shall file the same with
the sheriff and copies thereof served upon the Labor

Arbiter or proper officer issuing the writ and upon the
prevailing party. Upon receipt of the third party claim, all
proceedings with respect to the execution of the property
subject of the third party claim shall automatically be
suspended and the Labor Arbiter or proper officer issuing
the writ shall conduct a hearing with due notice to all
parties concerned and resolve the validity of the claim
within ten (10) working days from receipt thereof and his
decision is appealable to the Commission within ten (10)
working days from notice, and the Commission shall
resolve the appeal within same period.
There is no doubt in our mind that petitioners complaint is
a third- party claim within the cognizance of the NLRC.
Petitioner may indeed be considered a "third party" in
relation to the property subject of the execution vis--vis
the Labor Arbiters decision. There is no question that the
property belongs to petitioner and his wife, and not to the
corporation. Thus, the property belongs to a third party. At
the very least, the Court can consider that petitioners
wife is a third party within contemplation of the law.
The broad powers granted to the Labor Arbiter and to the
National Labor Relations Commission by Articles 217, 218
and 224 of the Labor Code can only be interpreted as
vesting in them jurisdiction over incidents arising from, in
connection with or relating to labor disputes, as the
controversy under consideration, to the exclusion of the
regular courts.
There is no denying that the present controversy arose
from the complaint for illegal dismissal. The subject matter
of petitioners complaint is the execution of the NLRC
decision. Execution is an essential part of the proceedings
before the NLRC. Jurisdiction, once acquired, continues
until the case is finally terminated, and there can be no
end to the controversy without the full and proper
implementation of the commissions directives.
Further underscoring the RTCs lack of jurisdiction over
petitioners complaint is Article 254 of the Labor Code, to
wit:
ART. 254. INJUNCTION PROHIBITED. No temporary or
permanent injunction or restraining order in any case
involving or growing out of labor disputes shall be issued
by any court or other entity, except as otherwise provided
in Articles 218 and 264 of this Code.
The power of the NLRC, or the courts, to execute its
judgment extends only to properties unquestionably
belonging to the judgment debtor alone. A sheriff,
therefore, has no authority to attach the property of any
person except that of the judgment debtor. Likewise, there
is no showing that the sheriff ever tried to execute on the
properties of the corporation.


Contempt Powers of the NLRC
(1) G.R. No. 176085 February 8, 2012
FEDERICO S. ROBOSA et al. vs. NLRC, CHEMO-
TECHNISCHE MANUFACTURING, INC. and its
responsible officials led by FRANKLIN R. DE
LUZURIAGA, and PROCTER & GAMBLE PHILIPPINES,
INC.
BRION, J .:
FACTS: CTMI issued a notice of termination of employment
to the sales drivers, due to the abolition of the sales driver
positions.
The union and its affected members filed a complaint for
illegal dismissal and unfair labor practice, with a claim for
damages, against CTMI, De Luzuriaga and other CTMI
officers. The union also moved for the issuance of a writ of
preliminary injunction and/or temporary restraining order
(TRO).
The labor arbiter handling the case denied the unions
motion for a stay order on the ground that the issues raised
by the petitioners can best be ventilated during the trial on
the merits of the case. This prompted the union to file with
NLRC a petition for the issuance of a preliminary mandatory
injunction and/or TRO.
NLRC issued a TRO and to immediately reinstate them if
the dismissals have been effected.
Allegedly, the respondents did not comply with the NLRCs
resolution. They instead moved to dissolve the TRO and
opposed the unions petition for preliminary injunction.
The NLRC upgraded the TRO to a writ of preliminary
injunction. The respondents moved for reconsideration.
The union opposed the motion and urgently moved to
cite the responsible CTMI officers in contempt of court.
NLRC denied the respondents motion for
reconsideration and directed Labor Arbiter to hear the
motion for contempt. The contempt charge was dismissed.
The CA opined that the dismissal is not subject to review by
an appellate court.
Petitioners contend that the respondents were guilty of
contempt for their failure (1) to observe strictly the NLRC
status quo order; and (2) to reinstate the dismissed
petitioners and to pay them their lost wages, sales
commissions, per diems, allowances and other employee
benefits.
The petitioners assail the CAs reliance on the Courts
ruling that a contempt charge partakes of a criminal
proceeding where an acquittal is not subject to appeal.
They argue that the facts obtaining in the present case are
different from the facts of the cases where the Courts ruling
was made. They further argue that by the nature of this
case, the Labor Code and its implementing rules and
regulations should apply, but in any event, the appellate
court is not prevented from reviewing the factual basis of the
acquittal of the respondents from the contempt charges.
ISSUE:
(1) Whether the NLRC has contempt powers;
(2) Whether the dismissal of a contempt charge is
appealable; and
(3) Whether the NLRC committed grave abuse of discretion
in dismissing the contempt charge against the respondents.
HELD:
(1) Yes, under Article 218 of the Labor Code, the NLRC
(and the labor arbiters) may hold any offending party in
contempt, directly or indirectly, and impose appropriate
penalties in accordance with law. The Labor Code,
however, requires the labor arbiter or the Commission
to deal with indirect contempt in the manner prescribed
under Rule 71 of the Rules of Court.
Rule 71 of the Rules of Court does not require the labor
arbiter or the NLRC to initiate indirect contempt
proceedings before the trial court. This mode is to be
observed only when there is no law granting them
contempt powers. As is clear under Article 218(d) of the
Labor Code, the labor arbiter or the Commission is
empowered or has jurisdiction to hold the offending
party or parties in direct or indirect contempt. The
petitioners, therefore, have not improperly brought the
indirect contempt charges against the respondents
before the NLRC.
(2) Yes. The contempt proceeding is far from being a civil
action but of a criminal nature and of summary character in
which the court exercises but limited jurisdiction. Hence, as
in criminal proceedings, an appeal would not lie from the
order of dismissal of, or an exoneration from, a charge of
contempt of court.
(3) There was no grave abuse of discretion in dismissing the
contempt charge because:
Petitioners allegation that there was only payroll
reinstatement does not make the respondents guilty of

contempt of court. Even if the drivers were just in the garage
doing nothing, the same does not make respondents guilty
of contempt nor does it make them violators of the injunction
order. What is important is that they were reinstated and
receiving their salaries.
Further, the CTMI closed its manufacturing and marketing
operations after the termination of its licensing agreement
with WELLA AG of Germany. In fact, the closure resulted in
the termination of CTMIs remaining employees aside from
the sales drivers who were earlier dismissed but reinstated
in the payroll, in compliance with the NLRC injunction. The
petitioners termination of employment, as well as all of their
money claims, was the subject of the illegal dismissal and
unfair labor practice complaint before the labor arbiter. The
latter was ordered by the NLRC on to proceed hearing the
case. The NLRC thus subsumed all other issues into the
main illegal dismissal and unfair labor practice case pending
with the labor arbiter. On this point, the NLRC declared:
Note that when the injunction order was issued,
WELLA AG of Germany was still under licensing
agreement with respondent company. However, the
situation has changed when WELLA AG of Germany
terminated its licensing agreement with the
respondent, causing the latter to close its business.
Respondents could no longer be ordered to restore the
status quo as far as the individual petitioners are concerned
as these matters regarding the termination of the employees
are now pending litigation with the Arbitration Branch of the
Commission. To resolve the incident now regarding the
closure of the respondent company and the matters alleged
by petitioners such as the creations of three (3) new
corporations xxx as successor-corporations are matters best
left to the Labor Arbiter hearing the merits of the unfair labor
practice and illegal dismissal cases.
________________________
Reasonable Causal Connection Rule
G.R. No. 163768 March 27, 2007
JULIUS KAWACHI and GAYLE KAWACHI vs. DOMINIE
DEL QUERO and HON. JUDGE MANUEL R. TARO,
Metropolitan Trial Court, Branch 43, Quezon City
TINGA, J .:
FACTS: In an Affidavit-Complaint, private respondent
Dominie Del Quero charged A/J Raymundo Pawnshop, Inc.,
Virgilio Kawachi and petitioner Julius Kawachi with illegal
dismissal, non-execution of a contract of employment,
violation of the minimum wage law, and non-payment of
overtime pay. The complaint was filed before the NLRC.
The complaint essentially alleged that Virgilio Kawachi hired
private respondent as a clerk of the pawnshop and that on
certain occasions, she worked beyond the regular working
hours but was not paid the corresponding overtime pay.
The complaint also narrated an incident wherein petitioner
Julius Kawachi scolded private respondent in front of many
people about the way she treated the customers of the
pawnshop and afterwards terminated private respondents
employment without affording her due process.
Private respondent Dominie Del Quero filed an action for
damages against petitioners Julius Kawachi and Gayle
Kawachi before the MeTC of Quezon City. The complaint,
which was a Civil Case alleged that respondents accused
her of having committed an act which she had not done and
was scolded in a loud voice in front of many employees and
customers in their offices and that for no apparent reason
the Plaintiff was ordered to get out and leave the pawnshop
office and was told to wait for her salary outside the office
when she tried to explain that she had no fault in the
complaint of the customer, however, her explanation fell on
deaf ears. The complaint for damages specifically sought
the recovery of moral damages, exemplary damages and
attorneys fees.
Petitioners moved for the dismissal of the complaint on
the grounds of lack of jurisdiction and forum-shopping
or splitting causes of action.
The MTC ruled that no causal connection appeared
between private respondents cause of action and the
employer-employee relations between the parties.
The RTC upheld jurisdiction of MTC. It held that private
respondents action for damages was based on the alleged
tortious acts committed by her employers and did not seek
any relief under the Labor Code.
Petitioners argue that the NLRC has jurisdiction over
the action for damages because the alleged injury is
work-related. They also contend that private respondent
should not be allowed to split her causes of action by
filing the action for damages separately from the labor
case.
ISSUE: Whether there no causal connection between the
case filed before MTC and that before the NLRC.
HELD: Yes, there is such connection.

In the instant case, the allegations in private respondents
complaint for damages show that her injury was the offshoot
of petitioners immediate harsh reaction as her
administrative superiors to the supposedly sloppy manner
by which she had discharged her duties.
Petitioners reaction culminated in private respondents
dismissal from work in the very same incident. The incident
alleged in the complaint for damages was similarly narrated
in private respondents Affidavit-Complaint supporting her
action for illegal dismissal before the NLRC. Clearly, the
alleged injury is directly related to the employer-employee
relations of the parties.
Where the employer-employee relationship is merely
incidental and the cause of action proceeds from a
different source of obligation, the Court has not
hesitated to uphold the jurisdiction of the regular
courts. Where the damages claimed for were based on
tort, malicious prosecution, or breach of contract, as
when the claimant seeks to recover a debt from a
former employee or seeks liquidated damages in the
enforcement of a prior employment contract, the
jurisdiction of regular courts was upheld. The scenario
that obtains in this case is obviously different. The
allegations in private respondents complaint
unmistakably relate to the manner of her alleged illegal
dismissal.
For a single cause of action, the dismissed employee cannot
be allowed to sue in two forums: one, before the labor
arbiter for reinstatement and recovery of back wages or for
separation pay, upon the theory that the dismissal was
illegal; and two, before a court of justice for recovery of
moral and other damages, upon the theory that the
manner of dismissal was unduly injurious or tortious. Suing
in the manner described is known as "splitting a cause of
action," a practice engendering multiplicity of actions. It is
considered procedurally unsound and obnoxious to the
orderly administration of justice.
In the instant case, the NLRC has jurisdiction over
private respondents complaint for illegal dismissal and
damages arising therefrom. She cannot be allowed to
file a separate or independent civil action for damages
where the alleged injury has a reasonable connection to
her termination from employment. Consequently, the
action for damages filed before the MeTC must be
dismissed.
What is the "reasonable causal connection rule?
Under this rule, if there is a reasonable causal connection
between the claim asserted and the employer-employee
relations, then the case is within the jurisdiction of our
labor courts. In the absence of such nexus, it is the regular
courts that have jurisdiction.
The rule emerged in the 1987 case of Primero v.
Intermediate Appellate Court, where the Court recognized
the jurisdiction of the labor arbiters over claims for
damages in connection with termination of employment,
thus:
It is clear that the question of the legality of the act of
dismissal is intimately related to the issue of the
legality of the manner by which that act of dismissal
was performed. But while the Labor Code treats of
the nature of, and the remedy available as regards
the first the employees separation from
employment it does not at all deal with the second
the manner of that separation which is governed
exclusively by the Civil Code. In addressing the first
issue, the Labor Arbiter applies the Labor Code; in
addressing the second, the Civil Code. And this
appears to be the plain and patent intendment of the
law. For apart from the reliefs expressly set out in
the Labor Code flowing from illegal dismissal from
employment, no other damages may be awarded to
an illegally dismissed employee other than those
specified by the Civil Code. Hence, the fact that the
issueof whether or not moral or other damages
were suffered by an employee and in the affirmative,
the amount that should properly be awarded to him
in the circumstancesis determined under the
provisions of the Civil Code and not the Labor Code,
obviously was not meant to create a cause of action
independent of that for illegal dismissal and thus
place the matter beyond the Labor Arbiters
jurisdiction.
____________________________
Article 226 (BLR)
(3) G.R. No. 162943 December 6, 2010
EMPLOYEES UNION OF BAYER PHILS., FFW and
JUANITO S. FACUNDO, in his capacity as President vs.
BAYER PHILIPPINES, INC., DIETER J. LONISHEN
(President), ASUNCION AMISTOSO (HRD Manager),
AVELINA REMIGIO AND ANASTACIA VILLAREAL
FACTS: Petitioner EUBP is the exclusive bargaining agent
of all rank-and-file employees of Bayer Philippines (Bayer),
and is an affiliate of the Federation of Free Workers (FFW).
EUBP, headed by its president Facundo, negotiated with
Bayer for the signing of a CBA. During the negotiations,
EUBP rejected Bayers 9.9% wage-increase proposal
resulting in a bargaining deadlock. Subsequently, EUBP

staged a strike, prompting the Secretary of the DOLE to
assume jurisdiction over the dispute.
Pending the resolution of the dispute, respondent Remigio
and 27 other union members, without any authority from
their union leaders, accepted Bayers wage-increase
proposal. EUBPs grievance committee questioned
Remigios action and reprimanded Remigio and her allies.
The DOLE Secretary issued an arbitral award ordering
EUBP and Bayer to execute a CBA retroactive to January 1,
1997 and to be made effective until December 31, 2001.
The said CBA was registered with the Industrial Relations
Division of the DOLE-NCR.
Meanwhile, the rift between Facundos leadership and
Remigios group broadened. Barely six months from the
signing of the new CBA, during a company-sponsored
seminar, Remigio solicited signatures from union members
in support of a resolution containing the decision of the
signatories to disaffiliate among others.The said resolution
was signed by 147 of the 257 local union members. A
subsequent resolution was also issued affirming the first
resolution.
Facundo accused the company of interfering with purely
union matters. Bayer responded by deciding not to deal with
either of the two groups, and by placing the union dues
collected in a trust account until the conflict between the two
groups is resolved.
EUBP filed a complaint for unfair labor practice (first ULP
complaint) against Bayer for non-remittance of union dues
before NLRC.
EUBP asked Bayer for a grievance conference. The meeting
was conducted by the management with all REUBP officers
including their lawyers present. Facundo did not attend the
meeting, but sent two EUBP officers to inform REUBP and
the management that a preventive mediation conference
between the two groups has been scheduled before the
NCMB.
Apparently, the two groups failed to settle their issues as
Facundo again asked for a grievance meeting with the
management to discuss the failure of the latter to comply
with the terms of their CBA. Both requests remained
unheeded.
While the first ULP case was still pending and despite
EUBPs repeated request for a grievance conference, Bayer
decided to turn over the collected union dues to REUBP.
Aggrieved by the said development, EUBP lodged a
complaint against Remigios group before the Industrial
Relations Division of the DOLE praying for their expulsion
from EUBP for commission of "acts that threaten the life of
the union.
Labor Arbiter dismissed the first ULP complaint for lack
of jurisdiction because the root cause for Bayers failure
to remit the collected union dues can be traced to the
intra-union conflict between EUBP and Remigios
group and that the charges imputed against Bayer
should have been submitted instead to voluntary
arbitration. EUBP did not appeal the said decision.
Petitioners lodged a second complaint (second ULP
complaint) charging the respondents with unfair labor
practice committed by organizing a company union, gross
violation of the CBA and violation of their duty to bargain.
The Regional Director of the Industrial Relations Division of
DOLE issued a decision dismissing the issue on expulsion
filed by EUBP against Remigio and her allies for failure to
exhaust reliefs within the union and ordering the conduct of
a referendum to determine which of the two groups should
be recognized as union officers. EUBP seasonably
appealed the said decision to the BLR which reversed the
Regional Directors ruling and ordered the management of
Bayer to respect the authority of the duly-elected officers of
EUBP in the administration of the prevailing CBA.
Unfortunately, the said BLR ruling came late since Bayer
had already signed a new CBA with REUBP. The said CBA
was eventually ratified by majority of the bargaining unit.
The LA dismissed EUBPs second ULP complaint for lack of
jurisdiction for the case involves intra-union disputes. NLRC
and CA affirmed.
ISSUE: Who has jurisdiction?
HELD: As to the case against Bayer and its officials, NLRC
has jurisdiction being ULP; but as to Remigio and Villareal
(Treasurer of REUBP), neither NLRC nor LA has jurisdiction
being intra-union dispute.
An intra-union dispute refers to any conflict between and
among union members, including grievances arising from
any violation of the rights and conditions of membership,
violation of or disagreement over any provision of the
unions constitution and by-laws, or disputes arising from
chartering or disaffiliation of the union.
It is clear from the foregoing that the issues raised by
petitioners do not fall under any of the aforementioned
circumstances constituting an intra-union dispute. More
importantly, the petitioners do not seek a determination of
whether it is the Facundo group (EUBP) or the Remigio
group (REUBP) which is the true set of union officers.

Instead, the issue raised pertained only to the validity of
the acts of management in light of the fact that it still
has an existing CBA with EUBP. Thus as to Bayer,
Lonishen and Amistoso the question was whether they
were liable for unfair labor practice, which issue was
within the jurisdiction of the NLRC. The dismissal of the
second ULP complaint was therefore erroneous.
However, as to respondents Remigio and Villareal, we find
that petitioners complaint was validly dismissed.
Petitioners ULP complaint cannot prosper as against
respondents Remigio and Villareal because the issue,
as against them, essentially involves an intra-union
dispute based on Section 1 (n) of DOLE Department
Order No. 40-03. To rule on the validity or illegality of their
acts, the Labor Arbiter and the NLRC will necessarily touch
on the issues respecting the propriety of their disaffiliation
and the legality of the establishment of REUBP issues that
are outside the scope of their jurisdiction. Accordingly, the
dismissal of the complaint was validly made, but only with
respect to these two respondents.
RULE XI
INTER/INTRA-UNION DISPUTES AND
OTHER RELATED LABOR RELATIONS DISPUTES
Section 1. Coverage. - Inter/intra-union disputes shall
include:
(a) cancellation of registration of a labor
organization filed by its members or by another
labor organization;
(b) conduct of election of union and workers
association officers/nullification of election of
union and workers association officers;
(c) audit/accounts examination of union or
workers association funds;
(d) deregistration of collective bargaining
agreements;
(e) validity/invalidity of union affiliation or
disaffiliation;
(f) validity/invalidity of acceptance/non-
acceptance for union membership;
(g) validity/invalidity of impeachment/expulsion of
union and workers association officers and
members;
(h) validity/invalidity of voluntary recognition;
(i) opposition to application for union and CBA
registration;
(j) violations of or disagreements over any
provision in a union or workers association
constitution and by-laws;
(k) disagreements over chartering or registration
of labor organizations and collective bargaining
agreements;
(l) violations of the rights and conditions of union
or workers association membership;
(m) violations of the rights of legitimate labor
organizations, except interpretation of collective
bargaining agreements;
(n) such other disputes or conflicts involving the
rights to self-organization, union membership and
collective bargaining
(1) between and among legitimate labor
organizations;
(2) between and among members of a
union or workers association.

________________
(4) G.R. No. 168583 July 26, 2010
ATTY. ALLAN S. MONTAO vs. ATTY. ERNESTO C.
VERCELES
DEL CASTILLO, J .:
FACTS: Atty. Montao worked as legal assistant of FFW
Legal Center. Subsequently, he joined the union of rank-
and-file employees, the FFW Staff Association, and
eventually became the employees union president and was
likewise designated officer-in-charge of FFW Legal Center.
During the 21
st
National Convention and Election of National
Officers of FFW, Atty. Montao was nominated for the
position of National Vice-President. However, the
Commission on Election (FFW COMELEC), informed him
that he is not qualified for the position as his candidacy
violates the 1998 FFW Constitution and By-Laws.
During the election, despite strong opposition and protest of
respondent Atty. Verceles, the convention delegates allowed

Atty. Montaos candidacy. He emerged victorious and was
proclaimed as the National Vice-President. Atty. Verceles
protested.
Atty. Verceles filed before the BLR a petition for the
nullification of the election of Atty. Montao as FFW
National Vice-President because the FFWs constitution
prohibits federation employees from sitting in its
Governing Board.
Atty. Montao filed his Comment with Motion to
Dismiss on the grounds that the Regional Director of
the DOLE and not the BLR has jurisdiction over the
case; that the filing of the petition was premature due to
the pending and unresolved protest before the FFW
COMELEC; and that, Atty. Verceles has no legal
standing to initiate the petition not being the real party
in interest.
BLR dismissed Atty. Verceles petition. While it upheld its
jurisdiction over the intra-union dispute case and affirmed,
as well, Atty. Verceles legal personality to institute the
action as president of an affiliate union of FFW, the BLR
ruled that there were no grounds to hold Atty. Montao
unqualified to run for National Vice-President of FFW.
The CA set aside the BLRs Decision. While it agreed that
jurisdiction was properly lodged with the BLR, that Atty.
Verceles has legal standing to institute the petition, and that
the applicable provision of FFW Constitution and By-Laws is
Section 26 of Article VIII and not Section 76 of Article XIX,
the CA however ruled that Atty. Montao did not possess
the qualification requirement under paragraph (d) of Section
26 that candidates must be an officer or member of a
legitimate labor organization. Atty. Montano was considered
a confidential employee.
ISSUE: Whether BLR has jurisdiction.
HELD: The BLR has jurisdiction over intra-union disputes
involving a federation.
Section 226 of the Labor Code clearly provides that the BLR
and the Regional Directors of DOLE have concurrent
jurisdiction over inter-union and intra-union disputes. Such
disputes include the conduct or nullification of election of
union and workers association officers. There is, thus, no
doubt as to the BLRs jurisdiction over the instant dispute
involving member-unions of a federation arising from
disagreement over the provisions of the federations
constitution and by-laws.
SC agree with BLRs observation that: Rule XVI lays
down the decentralized intra-union dispute settlement
mechanism. Section 1 states that any complaint in this
regard shall be filed in the Regional Office where the union
is domiciled. The concept of domicile in labor relations
regulation is equivalent to the place where the union seeks
to operate or has established a geographical presence for
purposes of collective bargaining or for dealing with
employers concerning terms and conditions of employment.
The matter of venue becomes problematic when the intra-
union dispute involves a federation, because the
geographical presence of a federation may encompass
more than one administrative region. Pursuant to its
authority under Article 226, this Bureau exercises original
jurisdiction over intra-union disputes involving federations. It
is well-settled that FFW, having local unions all over the
country, operates in more than one administrative region.
Therefore, this Bureau maintains original and exclusive
jurisdiction over disputes arising from any violation of or
disagreement over any provision of its constitution and by-
laws.
________________________
(5) G.R. No. 168475 July 4, 2007
EMILIO E. DIOKNO et al. vs. HON. HANS LEO J.
CACDAC, in his capacity as Director of the Bureau of
Labor Relations, DOLE, MANILA et al.
CHICO-NAZARIO, J .:
FACTS: The First Line Association of Meralco Supervisory
Employees (FLAMES) is an LLO which is the supervisory
union of Meralco. Petitioners and private respondents are
members of FLAMES.
During the election of officers of FLAMES, private
respondents filed their candidacy but the COMELEC
rejected on the ground that they were not a member of
FLAMES and that their department is excluded from the
scope of the existing CBA being confidential employees.
Hence, they filed a Petition before the Med-Arbitration Unit
of the DOLE for the nullification of the order of the
COMELEC which disallowed their candidacy. They further
prayed that petitioners be directed to render an accounting
of funds with full and detailed disclosure of expenditures and
financial transactions; and that a representative from the
BLR be designated to act as chairman of the COMELEC in
lieu of petitioner Tong. (First Petition)
DOLE-NCR Regional Director issued an Order directing
DOLE personnel to observe the conduct of the FLAMES
election.
Petitioners filed a Petition with the COMELEC seeking the
disqualification of some of private respondents for they

allowed themselves to be assisted by non-union members,
and committed acts of disloyalty which are inimical to the
interest of FLAMES. COMELEC disqualified them.
Private respondents filed with the Med-Arbitration Unit of the
DOLE-NCR a Petition to: a) Nullify Order of Disqualification;
b) Nullify Election Proceedings and Counting of Votes; c)
Declare Failure of Election; and d) Declare Holding of New
Election to be Controlled and Supervised by the DOLE.
(Second petition)
Another Petition was also with the Med-Arbitration Unit of
the DOLE-NCR against petitioners to nullify the election on
the ground that the same was not free, orderly, and
peaceful. (Third petition)
The petitions were consolidated.
The Med-Arbiter issued a Decision in favor of private
respondents in the second petition. However, the third
petition was dismissed because it was premature, it
appearing that the COMELEC had not yet resolved their
protest prior to their resort to the Med-Arbiter. Finally, the
first petition seeking to declare themselves as bona fide
members of FLAMES was ordered dismissed.
The Med-Arbiter defended his jurisdiction over the case.
He concluded that even as the election of union officers
is an internal affair of the union, his office has the right
to inquire into the merits and conduct of the election
when its jurisdiction is sought.
Director of the BLR issued a Resolution affirming in toto the
assailed Decision of the Med-Arbiter. CA also affirmed.
Petitioners question the jurisdiction of the BLR on the case
at bar because of the failure of private respondents (on the
second petition) to exhaust administrative remedies within
the union. It is the stance of petitioner that Article 226 of the
Labor Code which grants power to the BLR to resolve inter-
union and intra-union disputes is dead law, and has been
amended by Section 14 of Republic Act No. 6715, whereby
the conciliation, mediation and voluntary arbitration functions
of the BLR had been transferred to the National Conciliation
and Mediation Board.
Respondents, on the other hand, maintain that the Petition
they filed before the DOLE-NCR Med-Arbiter questioning
the disqualification order of the COMELEC and seeking the
nullification of the election involves an intra-union dispute
which is within the jurisdiction of the BLR.
ISSUE:
(1) Whether BLR has jurisdiction.
(2) Whether respondents failed to exhaust administrative
remedies.
HELD:
(1) BLR has jurisdiction.
Interpreting Article 226 of the Labor Code, it was explicit in
declaring that the BLR has the original and exclusive
jurisdiction on all inter-union and intra-union conflicts. Since
Article 226 of the Labor Code has declared that the BLR
shall have original and exclusive authority to act on all inter-
union and intra-union conflicts, there should be no more
doubt as to its jurisdiction. As defined, an intra-union
conflict would refer to a conflict within or inside a labor
union, while an inter-union controversy or dispute is
one occurring or carried on between or among
unions. More specifically, an intra-union dispute is
defined under Section (z), Rule I of the Rules
Implementing Book V of the Labor Code, viz:
(z) "Intra-Union Dispute" refers to any conflict between and
among union members, and includes all disputes or
grievances arising from any violation of or disagreement
over any provision of the constitution and by-laws of a union,
including cases arising from chartering or affiliation of labor
organizations or from any violation of the rights and
conditions of union membership provided for in the Code.
The controversy in the case at bar is an intra-union
dispute. There is no question that this is one which
involves a dispute within or inside FLAMES, a labor
union. At issue is the propriety of the disqualification of
private respondents by the FLAMES COMELEC in the
elections. It must also be stressed that even as the dispute
involves allegations that private respondents (second
petition) sought the help of non-members of the union in
their election campaign to the detriment of FLAMES, the
same does not detract from the real character of the
controversy. It remains as one which involves the grievance
over the constitution and bylaws of a union, and it is a
controversy involving members of the union. Moreover, the
non-members of the union who were alleged to have aided
private respondents are not parties in the case. SC therefore
was unable to understand petitioners persistence in placing
the controversy outside of the jurisdiction of the BLR. The
law is very clear. It requires no further interpretation. The
Petition which was initiated by private respondents before
the BLR was properly within its cognizance, it being an intra-
union dispute. Indubitably, when private respondents
brought the case to the BLR, it was an invocation of the
power and authority of the BLR to act on an intra-union
conflict.
(2) No failure since the case is an exception to the rule of
exhaustion of administrative remedies.

There are exceptions to the applicability of the
exhaustion of administrative remedies doctrine which
are: 1) when the question raised is purely legal; 2) when the
administrative body is in estoppel; 3) when the act
complained of is patently illegal; 4) when there is urgent
need for judicial intervention; 5) when the claim involved is
small; 6) when irreparable damage will be suffered; 7) when
there is no other plain, speedy, and adequate remedy; 8)
when strong public interest is involved; 9) when the subject
of the proceeding is private land; 10) in quo warranto
proceedings; and 11) where the facts show that there was
a violation of due process.
As aptly determined by the BLR Director, private
respondents Daya, et al., were prejudiced by the
disqualification order of the COMELEC. They endeavored to
seek reconsideration, but the COMELEC failed to act
thereon. The COMELEC was also found to have refused to
receive their written protest. The foregoing facts sustain
the finding that private respondents were deprived of
due process. Hence, it becomes incumbent upon private
respondents to seek the aid of the BLR. To insist on the
contrary is to render their exhaustion of remedies within the
union as illusory and vain. These antecedent circumstances
convince the SC that there was proper application by the
Med-Arbiter of the exception to the rule of exhaustion of
administrative remedies, as affirmed by the BLR Director,
and upheld by the Court of Appeals.
_________________________
Article 227 (Compromise Agreeement)
(6) G.R. No. 161003 May 6, 2005
FELIPE O. MAGBANUA et al. vs. RIZALINO UY
PANGANIBAN, J .:
DOCTRINE: Rights may be waived through a compromise
agreement, notwithstanding a final judgment that has
already settled the rights of the contracting parties. To be
binding, the compromise must be shown to have been
voluntarily, freely and intelligently executed by the parties,
who had full knowledge of the judgment. Furthermore, it
must not be contrary to law, morals, good customs and
public policy.
FACTS: As a final consequence of the final and executory
decision of the Supreme Court in Rizalino P. Uy v. National
Labor Relations Commission, et. al., hearings were
conducted NLRC Sub-Regional Arbitration Branch in Iloilo
City to determine the amount of wage differentials due the
eight (8) complainants therein who are petitioners.
Petitioners filed a Motion for Issuance of Writ of Execution.
Respondent Uy filed a Manifestation requesting that the
cases be terminated and closed, stating that the judgment
award as computed had been complied with to the
satisfaction of petitioners. Said Manifestation was also
signed by the eight (8) [petitioners]. Together with the
Manifestation is a Joint Affidavit of petitioners, attesting to
the receipt of payment from respondent and waiving all
other benefits due them in connection with their complaint.
Petitioners filed an Urgent Motion for Issuance of Writ of
Execution wherein they confirmed that each of them
received P40,000 from respondent.
Respondent opposed the motion on the ground that the
judgment award had been fully satisfied. In their Reply,
petitioners claimed that they received only partial payments
of the judgment award.
Later, six (6) of the eight (8) [petitioners] filed a
Manifestation requesting that the cases be considered
closed and terminated as they are already satisfied of what
they have received from [respondent]. Together with said
Manifestation is a Joint Affidavit in the local dialect, of the six
(6) [petitioners] attesting that they have no more collectible
amount from [respondent] and if there is any, they are
abandoning and waiving the same.
The LA issued an order denying the motion for issuance of
writ of execution and [considered] the cases closed and
terminated.
NLRC reversed the LA and directed the immediate issuance
of a writ of execution, holding that a final and executory
judgment can no longer be altered and that quitclaims and
releases are normally frowned upon as contrary to public
policy.
The CA held that compromise agreements may be
entered into even after a final judgment. Thus,
petitioners validly released respondent from any claims,
upon the voluntary execution of a waiver pursuant to
the compromise agreement.
The appellate court denied petitioners motion for
reconsideration for having been filed out of time.
8

ISSUES:
(1) Whether or not the final and executory judgment of the
Supreme Court could be subject to compromise settlement;

(2) Whether or not the petitioners affidavit waiving their
awards in [the] labor case executed without the assistance
of their counsel and labor arbiter is valid;
HELD:
(1) There is no justification to disallow a compromise
agreement, solely because it was entered into after final
judgment.
Petitioners vehemently argue that a compromise of a final
judgment is invalid under Article 2040 of the Civil Code:
"Art. 2040. If after a litigation has been decided by a
final judgment, a compromise should be agreed
upon, either or both parties being unaware of the
existence of the final judgment, the compromise
may be rescinded.
"Ignorance of a judgment which may be revoked or
set aside is not a valid ground for attacking a
compromise."
The first paragraph of Article 2040 refers to a scenario in
which either or both of the parties are unaware of a courts
final judgment at the time they agree on a compromise. In
this case, the law allows either of them to rescind the
compromise agreement. It is evident from the quoted
paragraph that such an agreement is not prohibited or void
or voidable. Instead, a remedy to impugn the contract, which
is an action for rescission, is declared available. The law
allows a party to rescind a compromise agreement,
because it could have been entered into in ignorance of
the fact that there was already a final judgment.
Knowledge of a decisions finality may affect the resolve to
enter into a compromise agreement.
The second paragraph, though irrelevant to the present
case, refers to the instance when the courts decision is still
appealable or otherwise subject to modification. Under this
paragraph, ignorance of the decision is not a ground to
rescind a compromise agreement, because the parties are
still unsure of the final outcome of the case at this time.
Petitioners argument, therefore, fails to convince.
Article 2040 of the Civil Code does not refer to the
validity of a compromise agreement entered into after
final judgment. Moreover, an important requisite, which
is lack of knowledge of the final judgment, is wanting in
the present case.
Further, Article 2040 impliedly allowed such agreements;
there was no limitation as to when these should be entered
into.
Moreover, the facts also reveal that respondent has already
complied with its obligation pursuant to the compromise
agreement. Having already benefited from the agreement,
estoppel bars petitioners from challenging it.
Note: A compromise of a final judgment operates as a
novation of the judgment obligation, upon compliance
with either requisite: 1) the substitution is
unequivocally declared, or (2) the old and the new
obligations are incompatible on every point. In the
present case, the incompatibility of the final judgment with
the compromise agreement is evident, because the latter
was precisely entered into to supersede the former.
_______________________
(7) G.R. No. 150861 January 22, 2008
AL ARELLANO et al. vs. POWERTECH CORPORATION,
WILLIE CABOBOS and COURT OF APPEALS (Former
Special Ninth Division)
REYES, R.T., J .:
FACTS: A complaint for illegal dismissal and other money
claims was filed by the Nagkakaisang Manggagawa
Ng Powertech Corporation against Powertech. The case
was dismissed as to twenty-seven (27) employees by virtue
of duly executed affidavits of repudiation and quitclaim. The
case proceeded with respect to the remaining twenty-five
(25) employees, petitioners in this case.
The LA rendered a Decision declaring illegal the termination
of 20 of petitioners and granting their monetary claims.
Powertech appealed to the NLRC. During its pendency,
Carlos Gestiada, for himself and on behalf of other
petitioners, executed a quitclaim, release and waiver in
favor of Powertech in consideration of the amount
ofP150,000.00. Earlier, Gestiada was appointed by his co-
petitioners as their attorney-in-fact. The appointment was
evidenced by a special power of attorney. The compromise
amount was paid to Gestiada by check.
Relying on the quitclaim and release, Powertech filed a
motion for the withdrawal of the appeal and cash bond. The
NLRC granted the motion, dismissed the appeal and
ordered the release of the cash bond.
The P150,000.00 check, however, bounced due to a stop
payment order of Powertech.
Aggrieved, petitioners moved to nullify the release and
quitclaim for lack of consideration. The NLRC declared the
quitclaim, release and waiver void for lack of consideration,

reinstated the appeal and ordered Powertech to post a cash
or surety bond for the monetary judgment less the amount it
had previously posted.
Gestiada terminated the services of their counsel, Atty.
Evangelista and, instead, retained Atty. Manuel Luis Felipe
of the Public Attorneys Office.
A day later, Powertech paid P150,000.00 to Gestiada
purportedly as compromise amount for all of petitioners.
That same day, Gestiada, through Atty. Felipe, and
Powertech filed a joint motion to dismiss with the NLRC
based on the compromise agreement. Atty. Evangelista
opposed the motion, alleging that the compromise
agreement is unconscionable, that he was illegally
terminated as counsel for the other petitioners without their
consent, and that the P150,000.00 was received by
Gestiada as payment solely for his backwages and other
monetary claims.
The NLRC denied the motion to dismiss because
the P150,000.00 received by Gestiada did not cover the
monetary claim of petitioners against Powertech.
CA rendered a decision in favor of Powertech and upheld
the validity of the compromise agreement between
petitioners and Powertech. The proper remedy of the
aggrieved party is not to file a motion for reconsideration on
the ground of non-payment but to have the compromise
agreement enforced by means of a writ of execution. Any
violation of the terms thereof would entitle the aggrieved
party to an execution of the judgment.
ISSUE: Whether there is a valid compromise agreement.
HELD:The Compromise Agreement is
invalid.The P150,000 was paid to Gestiada solely as
payment for his backwages, not those of petitioners; there is
evident collusion between Powertech and Gestiada, hence,
the compromise agreement is void.
First, Petitioners already won on the arbiter level P2.5
million pesos. It is highly improbable that they would
suddenly agree to accept P150,000 as compromise for
the P2.5 million. That translates to a paltry sum of P6,000.00
each for petitioners. This minuscule amount is certainly
questionable because it does not represent a true and fair
amount which a reasonable agent may bargain for his
principal.
Second, even granting for the mere sake of argument that
the P150,000 was a fair and reasonable compromise for all,
petitioners failed to receive a single centavo from the
compromise. This conclusively indicates that Gestiada
received the P150,000 in payment of his backwages and no
other.
Third, Gestiada admitted that he received the P150,000.00
as payment for his own backwages. In his letter to Atty.
Evangelista, Gestiada said that he was pressured by
Powertech to sign the waiver and quitclaim for petitioners in
order to receive his share in the P2.5 million judgment.
Having no stable job after his dismissal, Gestiada had no
other choice but to breach his fiduciary obligation to
petitioners.
Fourth, the events that led to the execution of the
compromise agreement show that Powertech was
negotiating in bad faith. More importantly, they show that
Powertech colluded with Gestiada to defraud petitioners of
their share of the P2.5 million Labor Arbiter judgment.
Thus, Powertech was negotiating in bad faith and,
worse, it colluded with Gestiada in shortchanging, nay,
fraudulently depriving petitioners of their just share in
the award.
Collusion is a species of fraud. Article 227 of the Labor
Code empowers the NLRC to void a compromise agreement
for fraud.
_____________________
(8) G.R. No. 166421 September 5, 2006
PHILIPPINE JOURNALISTS, INC., BOBBY DELA CRUZ,
ARNOLD BANARES and ATTY. RUBY RUIZ BRUNO vs.
NLRC, HON. COMMS. LOURDES JAVIER, TITO GENILO
and ERNESTO VERCELES, JOURNAL EMPLOYEES
UNION, and CA
CALLEJO, SR., J .:
FACTS: PJI is a domestic corporation engaged in the
publication and sale of newspapers and magazines. The
exclusive bargaining agent of all the rank-and-file
employees in the company is the Journal Employees Union.
The Union filed a notice of strike before the NCMB claiming
that PJI was guilty of unfair labor practice. The Secretary of
the DOLE certified the labor dispute to the NLRC for
compulsory arbitration pursuant to Article 263 (g) of the
Labor Code.
The NLRC declared that the 31 complainants were illegally
dismissed and that there was no basis for the
implementation of petitioner's retrenchment program. PJI
was adjudged liable in the total amount of P6,447,008.57.
Thereafter, the parties executed a Compromise Agreement
where PJI undertook to reinstate the 31 complainant-
employees without loss of seniority rights and benefits; 17 of

them who were previously retrenched were agreed to be
given full and complete payment of their respective
monetary claims, while 14 others would be paid their
monetary claims minus what they received by way of
separation pay. The compromise agreement was submitted
to the NLRC for approval. All the employees mentioned in
the agreement and in the NLRC Resolution affixed their
signatures thereon. They likewise signed the Joint Manifesto
and Declaration of Mutual Support and Cooperation which
had also been submitted for the consideration of the labor
tribunal.
The compromise agreement was approved.
Later, the Union filed another Notice of Strike. The DOLE
Secretary certified the case to the NLRC for compulsory
arbitration. In the new case, the Union claimed that some of
its members were illegally dismissed, among others.
The NLRC ruled that the complainants were not illegally
dismissed. The first NLRC Resolution declaring the
retrenchment program illegal did not attain finality as "it
had been academically mooted by the compromise
agreement entered into between both parties. According
to the Commission, it was on the basis of this agreement
that the first Resolution which declared the case closed and
terminated was issued. Further, the NLRC declared that the
two cases involved different sets of facts, hence, the
inapplicability of the doctrine of stare decisis. In the first
action, the issue was whether the complainants as regular
employees were illegally retrenched; in this case, whether
the 29 complainants, contractual employees, were illegally
dismissed on separate dates long after their retrenchment.
The CA reversed. It held that the compromise
agreement referred only to the award given by the NLRC
to the complainants in the said case, that is, the
obligation of the employer to the complainants. The CA
pointed out that the NLRC Resolution nevertheless declared
that respondent failed to prove the validity of its
retrenchment program, which according to it, stands even
after the compromise agreement was executed; it was the
reason why the agreement was reached in the first place.
ISSUE: Whether an NLRC Resolution, which includes a
pronouncement that the members of a union had been
illegally dismissed, is abandoned or rendered "moot and
academic" by a compromise agreement subsequently
entered into between the dismissed employees and the
employer; this, in turn, raises the question of whether such
a compromise agreement constitutes res judicata to a
new complaint later filed by other union members-
employees, not parties to the agreement, who likewise
claim to have been illegally dismissed.
HELD: No res judicata.
The nature of a compromise is spelled out in Article 2028 of
the New Civil Code: it is "a contract whereby the parties, by
making reciprocal concessions, avoid litigation or put an end
to one already commenced."In relation, Article 227 of the
Labor Code of the Philippines authorizes compromise
agreements voluntarily agreed upon by the parties, in
conformity with the basic policy of the State "to promote and
emphasize the primacy of free collective bargaining and
negotiations, including voluntary arbitration, mediation and
conciliation, as modes of settling labor or industrial
disputes."
Thus, contrary to the allegation of petitioners, the execution
and subsequent approval by the NLRC of the agreement
forged between it and the respondent Union did not render
the NLRC resolution ineffectual, nor rendered it "moot and
academic." The agreement becomes part of the judgment of
the court or tribunal, and as a logical consequence, there is
an implicit waiver of the right to appeal.
In any event, the compromise agreement cannot bind a
party who did not voluntarily take part in the settlement
itself and gave specific individual consent. It must be
remembered that a compromise agreement is also a
contract; it requires the consent of the parties, and it is
only then that the agreement may be considered as
voluntarily entered into.
A judgment approving a compromise agreement cannot
have the effect of res judicata upon non-signatories since
the requirement of identity of parties is not satisfied. A
judgment upon a compromise agreement has all the force
and effect of any other judgment, and, conclusive only upon
parties thereto and their privies, hence, not binding on third
persons who are not parties to it.
To reiterate, the rule is that when judgment is rendered
based on a compromise agreement, the judgment
becomes immediately executory, there being an implied
waiver of the parties' right to appeal from the
decision. The judgment having become final, the Court
can no longer reverse, much less modify it.
_________________________
Article 232 (Prohibition on Certification Election:
Contract-Bar Rule)
(9) G.R. No. 141471. September 18, 2000
COLEGIO DE SAN JUAN DE LETRAN vs. ASSOCIATION
OF EMPLOYEES AND FACULTY OF LETRAN and
ELEONOR AMBAS
KAPUNAN, J .:

FACTS: Salvador Abtria, then President of respondent union
initiated the renegotiation of its CBA with petitioner for the
last two (2) years of the CBA's five (5) year lifetime. On the
same year, the union elected a new set of officers wherein
private respondent Eleanor Ambas emerged as the newly
elected President.
Ambas wanted to continue the renegotiation of the CBA but
petitioner claimed that the CBA was already prepared for
signing by the parties. The parties submitted the disputed
CBA to a referendum by the union members, who eventually
rejected the said CBA.
Petitioner accused the union officers of bargaining in bad
faith before the NLRC. The LA decided in favor of petitioner.
However, the Labor Arbiter's decision was reversed on
appeal before the NLRC.
Later, the union notified the NCMB of its intention to strike
on the grounds of petitioner's: non-compliance with the
NLRC (1) order to delete the name of Atty. Federico Leynes
as the union's legal counsel; and (2) refusal to bargain.
Afterwards, the parties agreed to disregard the unsigned
CBA and to start negotiation on a new five-year CBA. The
union submitted its proposals to petitioner, which notified the
union that the same had been submitted to its Board of
Trustees. In the meantime, Ambas was informed that her
work schedule was being changed from Monday to Friday to
Tuesday to Saturday. Ambas protested and requested
management to submit the issue to a grievance machinery
under the old CBA.
Due to petitioner's inaction, the union filed a notice of strike.
The parties met before the NCMB to discuss the ground
rules for the negotiation. The union received petitioner's
letter dismissing Ambas for alleged insubordination. Hence,
the union amended its notice of strike to include Ambas'
dismissal.
Both parties again discussed the ground rules for the CBA
renegotiation. However, petitioner stopped the
negotiations after it purportedly received information
that a new group of employees had filed a petition for
certification election.
Subsequently, the union finally struck. Public respondent
Secretary of Labor and Employment assumed jurisdiction
and ordered all striking employees including the union
president to return to work and for petitioner to accept them
back under the same terms and conditions before the actual
strike. Petitioner readmitted the striking members except
Ambas.
Public respondent issued an order declaring petitioner guilty
of unfair labor practice on two counts and directing the
reinstatement of private respondent Ambas with backwages.
CA affirmed.
ISSUES:
(1) Whether petitioner is guilty of ULP by refusing to bargain
with the union when it unilaterally suspended the ongoing
negotiations for a new CBA upon mere information that a
petition for certification has been filed by another legitimate
labor organization; and
(2) Whether the termination of the union president amounts
to an interference of the employees' right to self-
organization.
HELD:
(1) Yes, petitioner is guilty of ULP.
In order to allow the employer to validly suspend the
bargaining process there must be a valid petition for
certification election raising a legitimate representation
issue. Hence, the mere filing of a petition for
certification election does not ipso facto justify the
suspension of negotiation by the employer.
The petition must first comply with the provisions of the
Labor Code and its Implementing Rules. Foremost is that a
petition for certification election must be filed during the
sixty-day freedom period. The "Contract Bar Rule
provides that: "If a collective bargaining agreement has
been duly registered in accordance with Article 231 of
the Code, a petition for certification election or a motion
for intervention can only be entertained within sixty (60)
days prior to the expiry date of such agreement."
The rule is based on Article 232, in relation to Articles 253,
253-A and 256 of the Labor Code. No petition for
certification election for any representation issue may be
filed after the lapse of the sixty-day freedom period. The old
CBA is extended until a new one is signed. The rule is that
despite the lapse of the formal effectivity of the CBA the law
still considers the same as continuing in force and effect
until a new CBA shall have been validly executed. Hence,
the contract bar rule still applies. The purpose is to ensure
stability in the relationship of the workers and the company
by preventing frequent modifications of any CBA earlier
entered into by them in good faith and for the stipulated
original period.
In the case at bar, the lifetime of the previous CBA
was from 1989-1994. The petition for certification
election by ACEC, allegedly a legitimate labor
organization, was filed with the DOLE only on May 26,
1996. Clearly, the petition was filed outside the sixty-day
freedom period. Hence, the filing thereof was barred by
the existence of a valid and existing collective
bargaining agreement. Consequently, there is no
legitimate representation issue and, as such, the filing
of the petition for certification election did not

constitute a bar to the ongoing negotiation. Reliance,
therefore, by petitioner of the ruling in Lakas Ng
Manggagawang Makabayan v. Marcelo Enterprises is
misplaced since that case involved a legitimate
representation issue which is not present in the case at
bar.
(2) Yes, the dismissal was effected in violation of the
employees' right to self-organization.
To justify the dismissal, petitioner asserts managerial
prerogative to discipline and/or dismiss its employees due to
the employees failure to abide by the new work schedule.
The employer's right to terminate the services of an
employee for just or authorized cause must be exercised in
good faith. More importantly, it must not amount to
interfering with, restraining or coercing employees in
the exercise of their right to self-organization because it
would amount to, as in this case, unlawful labor
practice under Article 248 of the Labor Code.
Ambas was dismissed in order to strip the union of a leader
who would fight for the right of her co-workers at the
bargaining table.
____________________________
Article 234 (Requirements of Registration)
(10) G.R. No. 183317 December 21, 2009
MARIWASA SIAM CERAMICS, INC vs. DOLE Secretary
et al.
NACHURA, J .:
FACTS: Respondent Samahan Ng Mga Manggagawa Sa
Mariwasa Siam Ceramics, Inc. was issued a Certificate of
Registration as an LLO by the DOLE, Region IV-A.
Petitioner filed a Petition for Cancellation of Union
Registration against respondent, claiming that the latter
violated Article 234 of the Labor Code for not complying
with the 20% requirement, and that it committed
massive fraud and misrepresentation in violation of
Article 239 of the same code.
The Regional Director of DOLE IV-A issued an Order
granting the petition, revoking the registration of respondent,
and delisting it from the roster of active labor unions. CA
affirmed the reversal.
The petitioner insists that respondent failed to comply with
the 20% union membership requirement for its registration
as a legitimate labor organization because of the
disaffiliation from the total number of union members of 102
employees who executed affidavits recanting their union
membership.
ISSUE: Whether the registration should be cancelled.
HELD: No cancellation of registration.
In the case, the affidavits of disaffiliation was examined--
Ako, _____________, Pilipino, may sapat na gulang, regular
na empleyado bilang Rank & File sa Mariwasa Siam
Ceramics, Inc., Bo. San Antonio, Sto. Tomas, Batangas,
matapos na makapanumpa ng naaayon sa batas ay malaya
at kusang loob na nagsasaad ng mga sumusunod:
1. Ako ay napilitan at nilinlang sa pagsapi sa
Samahan ng mga Manggagawa sa Mariwasa Siam
Ceramics, Inc. o SMMSC-Independent sa kabila ng
aking pag-aalinlangan[;]
2. Aking lubos na pinagsisihan ang aking pagpirma
sa sipi ng samahan, at handa ako[ng] tumalikod sa
anumang kasulatan na aking nalagdaan sa
kadahilanan na hindi angkop sa aking pananaw ang
mga mungkahi o adhikain ng samahan.
SA KATUNAYAN NANG LAHAT, ako ay lumagda ng aking
pangalan ngayong ika-____ ng ______, 2005 dito sa
Lalawigan ng Batangas, Bayan ng Sto. Tomas.
____________________
Nagsasalaysay
Evidently, these affidavits were written and prepared in
advance, and the pro forma affidavits were ready to be
filled out with the employees names and signatures.
The first common allegation in the affidavits is a declaration
that, in spite of his hesitation, the affiant was forced and
deceived into joining the respondent union. It is worthy to
note, however, that the affidavit does not mention the
identity of the people who allegedly forced and deceived the
affiant into joining the union, much less the circumstances
that constituted such force and deceit. Indeed, not only was
this allegation couched in very general terms and sweeping
in nature, but more importantly, it was not supported by any
evidence whatsoever.
The second allegation ostensibly bares the affiants regret
for joining respondent union and expresses the desire to
abandon or renege from whatever agreement he may have
signed regarding his membership with respondent.

Simply put, through these affidavits, it is made to
appear that the affiants recanted their support of
respondents application for registration.
Distinction must be that withdrawals made before the
filing of the petition are presumed voluntary unless
there is convincing proof to the contrary, whereas
withdrawals made after the filing of the petition are
deemed involuntary.
The reason for such distinction is that if the withdrawal or
retraction is made before the filing of the petition, the names
of employees supporting the petition are supposed to be
held secret to the opposite party. Logically, any such
withdrawal or retraction shows voluntariness in the absence
of proof to the contrary. Moreover, it becomes apparent that
such employees had not given consent to the filing of the
petition, hence the subscription requirement has not been
met.
When the withdrawal or retraction is made after the petition
is filed, the employees who are supporting the petition
become known to the opposite party since their names are
attached to the petition at the time of filing. Therefore, it
would not be unexpected that the opposite party would use
foul means for the subject employees to withdraw their
support.
In the instant case, the affidavits of recantation were
executed after the identities of the union members
became public, i.e., after the union filed a petition for
certification election, since the names of the members
were attached to the petition. The purported withdrawal of
support for the registration of the union was made after the
documents were submitted to the DOLE, Region IV-A. The
logical conclusion, therefore, following jurisprudence, is that
the employees were not totally free from the employers
pressure, and so the voluntariness of the employees
execution of the affidavits becomes suspect.
Nevertheless, even assuming the veracity of the
affidavits of recantation, the legitimacy of respondent
as a labor organization must be affirmed. While it is true
that the withdrawal of support may be considered as a
resignation from the union, the fact remains that at the time
of the unions application for registration, the affiants were
members of respondent and they comprised more than the
required 20% membership for purposes of registration as a
labor union. Article 234 of the Labor Code merely
requires a 20% minimum membership during the
application for union registration. It does not mandate
that a union must maintain the 20% minimum
membership requirement all throughout its existence.
Further, the bare fact that two signatures appeared
twice on the list of those who participated in the
organizational meeting would not provide a valid reason
to cancel respondents certificate of registration. The
cancellation of a unions registration doubtless has an
impairing dimension on the right of labor to self-organization.
For fraud and misrepresentation to be grounds for
cancellation of union registration under the Labor Code, the
nature of the fraud and misrepresentation must be grave
and compelling enough to vitiate the consent of a majority of
union members.
____________________
(11) G.R. No. 172699 July 27, 2011
ELECTROMAT MANUFACTURING and RECORDING
CORPORATION vs. HON. CIRIACO LAGUNZAD, in his
capacity as Regional Director, DOLE-NCR et al.
BRION, J .:
FACTS: Private respondent Nagkakaisang Samahan ng
Manggagawa ng Electromat-Wasto (union), a charter
affiliate of the Workers Advocates for Struggle,
Transformation and Organization (WASTO), applied for
registration with the BLR. Supporting the application were
the following documents: (1) copies of its ratified constitution
and by-laws (CBL); (2) minutes of the CBLs adoption and
ratification; (3) minutes of the organizational meetings; (4)
names and addresses of the union officers; (5) list of union
members; (6) list of rank-and-file employees in the
company; (7) certification of non-existence of a CBA in the
company; (8) resolution of affiliation with WASTO, a labor
federation; (9) WASTOs resolution of acceptance; (10)
Charter Certificate; and (11) Verification under oath.
The BLR thereafter issued the union a Certification of
Creation of Local Chapter (equivalent to the certificate of
registration of an independent union), pursuant to
Department Order No. (D.O.) 40-03.
However, the petitioner company filed a petition for
cancellation of the unions registration certificate, for the
unions failure to comply with Article 234 of the Labor Code.
It argued that D.O. 40-03 is an unconstitutional diminution of
the Labor Codes union registration requirements under
Article 234.
The DOLE Regional Director dismissed the petition. BLR
affirmed.
Petitioner maintained that the BLR should not have
granted the unions registration through the issuance of
a Certification of Creation of Local Chapter since the
union submitted only the Charter Certificate issued to it
by WASTO.

CA affirmed. It pointed out that D.O. 40-03 was issued by
the DOLE pursuant to its rule-making power under the law.
Petitioner argued that the unions registration certificate
was invalid as there was no showing that WASTO, the
labor federation to which the union is affiliated, had at
least 10 locals or chapters as required by D.O. 40-03.
ISSUE: Whether D.O. 40-03 is a valid exercise of the rule-
making power of the DOLE.
HELD: Yes, such is a valid exercise.
D.O. 40-03 represents an expression of the governments
implementing policy on trade unionism. It builds upon the old
rules by further simplifying the requirements for the
establishment of locals or chapters. As in D.O. 9, we see
nothing contrary to the law or the Constitution in the
adoption by the Secretary of Labor and Employment of D.O.
40-03 as this department order is consistent with the intent
of the government to encourage the affiliation of a local
union with a federation or national union to enhance the
locals bargaining power. If changes were made at all, these
were those made to recognize the distinctions made in the
law itself between federations and their local chapters, and
independent unions; local chapters seemingly have
lesser requirements because they and their members
are deemed to be direct members of the federation to
which they are affiliated, which federations are the ones
subject to the strict registration requirements of the law.
In any case, the local union in the present case has more
than satisfied the requirements the petitioner complains
about (see facts). These submissions were properly verified
as required by the rules. In sum, the petitioner has no
factual basis for questioning the unions registration, as even
the requirements for registration as an independent local
have been substantially complied with.
________________
(12) G.R. No. 178989 March 18, 2010
EAGLE RIDGE GOLF & COUNTRY CLUB vs CA and
EAGLE RIDGE EMPLOYEES UNION (EREU)
VELASCO, JR., J .:
FACTS: At least 20% of Eagle Ridges rank-and-file
employeesthe percentage threshold required under Article
234(c) of the Labor Code for union registrationhad a
meeting where they organized themselves into an
independent labor union, named "Eagle Ridge Employees
Union, elected a set of officers, and ratified their
constitution and by-laws.
EREU formally applied for registration before the DOLE
Regional Office which granted the application and issued
EREU Registration Certificate.
The EREU then filed a petition for certification election in
Eagle Ridge Golf & Country Club. Eagle Ridge opposed this
petition, followed by its filing of a petition for the
cancellation of Reg. Cert.
Eagle Ridge alleged that the EREU declared in its
application for registration having 30 members, when the
minutes of its organizational meeting showed it only had 26
members. The misrepresentation was exacerbated by the
discrepancy between the certification issued by the Union
secretary and president that 25 members actually ratified
the constitution and by-laws and the fact that 26 members
affixed their signatures on the documents, making one
signature a forgery.
Finally, Eagle Ridge contended that five employees who
attended the organizational meeting had manifested the
desire to withdraw from the union. The five executed
individual affidavits or Sinumpaang Salaysay on attesting
that they arrived late at said meeting which they claimed to
be drinking spree; that they did not know that the documents
they signed on that occasion pertained to the organization of
a union; and that they now wanted to be excluded from the
Union. The withdrawal of the five, Eagle Ridge maintained,
effectively reduced the union membership to 20 or 21, either
of which is below the mandatory minimum 20% membership
requirement under Art. 234(c) of the Labor Code. Reckoned
from 112 rank-and-file employees of Eagle Ridge, the
required number would be 22 or 23 employees.
The DOLE Regional Director, Region IV-A, focusing on the
question of misrepresentation, issued an Order finding for
Eagle Ridge, its petition to cancel Reg. Cert. No. being
granted and EREU being delisted from the roster of
legitimate labor organizations.
BLR reversed. It found without basis allegations of
misrepresentation or fraud as ground for cancellation of
EREUs registration.
CA dismissed the appeal of the company due to procedural
defects.
Eagle Ridge cites the grounds provided under Art. 239(a)
and (c) of the Labor Code for its petition for cancellation of
the EREUs registration. On the other hand, the Union
asserts bona fide compliance with the registration
requirements under Art. 234 of the Code, explaining the
seeming discrepancies between the number of employees
who participated in the organizational meeting and the total
number of union members at the time it filed its registration,
as well as the typographical error in its certification which

understated by one the number of union members who
ratified the unions constitution and by-laws.
ISSUE: Whether there was fraud in the application of the
union.
HELD: No Fraud in the Application
A scrutiny of the records fails to show any
misrepresentation, false statement, or fraud committed by
EREU to merit cancellation of its registration.
First. The Union submitted the required documents attesting
to the facts of the organizational meeting, the election of its
officers, and the adoption of the Unions constitution and by-
laws.
Second. The members of the EREU totaled 30 employees
when it applied for registration. The Union thereby complied
with the mandatory minimum 20% membership requirement
under Art. 234(c).
Third. The Union has sufficiently explained the discrepancy
between the number of those who attended the
organizational meeting showing 26 employees and the list of
union members showing 30. The difference is due to the
additional four members admitted two days after the
organizational meeting as attested to by their duly
accomplished Union Membership forms. Consequently, the
total number of union members was 30, which was truthfully
indicated in its application for registration.
The admission of new members is neither prohibited by
law nor was it concealed in its application for
registration. Eagle Ridges contention is flawed when it
equated the requirements under Art. 234(b) and (c) of the
Labor Code. Par. (b) clearly required the submission of the
minutes of the organizational meetings and the list of
workers who participated in the meetings, while par. (c)
merely required the list of names of all the union members
comprising at least 20% of the bargaining unit. The fact that
EREU had 30 members when it applied for registration
while only 26 actually participated in the organizational
meeting is borne by the records.
Fourth. In its futile attempt to clutch at straws, Eagle Ridge
assails the inclusion of the additional four members
allegedly for not complying with what it termed as "the sine
qua non requirements" for union member applications under
the Unions constitution and by-laws, specifically Sec. 2 of
Art. IV. The SC is not persuaded. Any seeming infirmity in
the application and admission of union membership, most
especially in cases of independent labor unions, must be
viewed in favor of valid membership.
Fifth. The difference between the number of 26 members,
who ratified the Unions constitution and by-laws, and the 25
members shown in the certification of the Union secretary as
having ratified it, is, as shown by the factual antecedents, a
typographical error. It was an insignificant mistake
committed without malice or prevarication. The list of those
who attended the organizational meeting shows 26
members, as evidenced by the signatures beside their
handwritten names. Thus, the certifications
understatement by one member, while not factual, was
clearly an error, but neither a misleading one nor a
misrepresentation of what had actually happened.
Sixth. The affidavits of retraction executed by six union
members cannot overcome those of the supporting affidavits
of 12 union members and their counsel as to the
proceedings and the conduct of the organizational meeting.
In the case, the affidavit of retraction were not re-
affirmed by the presentation of the affiant before the
hearing officer. Thus, inadmissible.
Seventh. The fact that six union members, indeed,
expressed the desire to withdraw their membership through
their affidavits of retraction will not cause the cancellation of
registration on the ground of violation of Art. 234(c) of the
Labor Code requiring the mandatory minimum 20%
membership of rank-and-file employees in the employees
union.
Eighth. Eagle Ridge has apparently resorted to filing the
instant case for cancellation of the Unions certificate of
registration to bar the holding of a certification election. This
can be gleaned from the fact that the grounds it raised in its
opposition to the petition for certification election are
basically the same grounds it resorted to in the instant case
for cancellation of EREUs certificate of registration. This
amounts to a clear circumvention of the law and cannot be
countenanced.
The withdrawal of six member-employees from the
Union will affect neither the Unions registration nor its
petition for certification election, as their affidavits of
retraction were executed after the Unions petition for
certification election had been filed.
Further, where the company seeks the cancellation of a
unions registration during the pendency of a petition
for certification election, the same grounds invoked to
cancel should not be used to bar the certification
election. A certification election is the most expeditious and
fairest mode of ascertaining the will of a collective
bargaining unit as to its choice of its exclusive
representative. It is the fairest and most effective way of
determining which labor organization can truly represent the
working force. It is a fundamental postulate that the will of
the majority, if given expression in an honest election with

freedom on the part of the voters to make their choice, is
controlling.
The employees withdrawal from a labor union made
before the filing of the petition for certification election
is presumed voluntary, while withdrawal after the filing
of such petition is considered to be involuntary and
does not affect the same. Now then, if a withdrawal from
union membership done after a petition for certification
election has been filed does not vitiate such petition, is
it not but logical to assume that such withdrawal cannot
work to nullify the registration of the union? Yes, the
affidavits of retraction had no evidentiary weight.
__________________________
Certificate of Registration Labor Organization
(13) G.R. No. 142000 January 22, 2003
TAGAYTAY HIGHLANDS INTERNATIONAL GOLF CLUB
INCORPORATED vs. TAGAYTAY HIGHLANDS
EMPLOYEES UNION-PGTWO
CARPIO-MORALES, J .:
FACTS: Respondent, Local Chapter No. 776, a legitimate
labor organization said to represent majority of the rank-and-
file employees of THIGCI, filed a petition for certification
election before the DOLE Mediation-Arbitration Unit.
THIGCI opposed THEUs petition for certification
election on the ground that the list of union members
submitted by it was defective and fatally flawed as it
included the names and signatures of supervisors,
resigned, terminated and absent without leave (AWOL)
employees, as well as employees of The Country Club,
Inc., a corporation distinct and separate from THIGCI;
and that out of the 192 signatories to the petition, only
71 were actual rank-and-file employees of THIGCI.
THIGCI also alleged that some of the signatures in the
list of union members were secured through fraudulent
and deceitful means, and submitted copies of the
handwritten denial and withdrawal of some of its
employees from participating in the petition.
THEU asserted that it had complied with all the
requirements for valid affiliation and inclusion in the roster of
legitimate labor organizations pursuant to DOLE Department
Order No. 9, series of 1997,

on account of which it was duly
granted a Certification of Affiliation by DOLE; and that
Section 5, Rule V of said Department Order provides
that the legitimacy of its registration cannot be subject
to collateral attack, and for as long as there is no final
order of cancellation, it continues to enjoy the rights
accorded to a legitimate organization.
THEU thus concluded that under the circumstances, the
Med-Arbiter should, pursuant to Article 257 of the Labor
Code and Section 11, Rule XI of DOLE Department Order
No. 09, automatically order the conduct of a certification
election.
The DOLE Med-Arbiter Anastacio Bactin ordered the
holding of a certification election among the rank-and-file
employees of THIGCI.
DOLE Secretary set aside the said Med-Arbiters Order and
accordingly dismissed the petition for certification election
on the ground that there is a "clear absence of community or
mutuality of interests," it finding that THEU sought to
represent two separate bargaining units (supervisory
employees and rank-and-file employees) as well as
employees of two separate and distinct corporate entities. It
held that since THEU is a local chapter, the twenty percent
(20%) membership requirement is not necessary for it to
acquire legitimate status, hence, "the alleged retraction and
withdrawal of support by 45 of the 70 remaining rank-and-
file members . . . cannot negate the legitimacy it has already
acquired before the petition."
CA affirmed. It held that while a petition for certification
election is an exception to the innocent bystander rule,
hence, the employer may pray for the dismissal of such
petition on the basis of lack of mutuality of interests of the
members of the union as well as lack of employer-employee
relationship, petitioner failed to adduce substantial
evidence to support its allegations.
ISSUE:
(1) Whether SUPERVISORY EMPLOYEES AND NON-
EMPLOYEES COULD SIMPLY BE REMOVED FROM
APPELLEES ROSTER OF RANK-AND-FILE
MEMBERSHIP INSTEAD OF RESOLVING THE
LEGITIMACY OF RESPONDENT UNIONS STATUS
(2) Whether the DISQUALIFIED EMPLOYEES STATUS
COULD READILY BE RESOLVED DURING THE
INCLUSION AND EXCLUSION PROCEEDINGS
(3) Whether THE ALLEGATIONS OF PETITIONER HAD
BEEN DULY PROVEN BY FAILURE OF RESPONDENT
UNION TO DENY THE SAME AND BY THE SHEER
WEIGHT OF EVIDENCE INTRODUCED BY PETITIONER
AND CONTAINED IN THE RECORDS OF THE CASE
HELD:

(1) No. THEU, having been validly issued a certificate of
registration, should be considered to have already
acquired juridical personality which may not be assailed
collaterally.
Article 245 expressly prohibits supervisory employees from
joining a rank-and-file union, it does not provide what would
be the effect if a rank-and-file union counts supervisory
employees among its members, or vice-versa.
In the case of Progressive Development Corp. Pizza Hut
v. Ledesma, the Labor Code requires that in organized and
unorganized establishments, a petition for certification
election must be filed by a legitimate labor organization. The
acquisition of rights by any union or labor organization,
particularly the right to file a petition for certification
election, first and foremost, depends on whether or not
the labor organization has attained the status of a legitimate
labor organization.
After a certificate of registration is issued to a union, its
legal personality cannot be subject to collateral attack.
It may be questioned only in an independent petition for
cancellation in accordance with Section 5 of Rule V,
Book IV of the "Rules to Implement the Labor Code"
(Implementing Rules) which section reads:
Sec. 5. Effect of registration. The labor organization
or workers association shall be deemed registered
and vested with legal personality on the date of
issuance of its certificate of registration. Such legal
personality cannot thereafter be subject to collateral
attack, but may be questioned only in an
independent petition for cancellation in
accordance with these Rules.
The grounds for cancellation of union registration are
provided for under Article 239 of the Labor Code. The
inclusion in a union of disqualified employees is not
among the grounds for cancellation.
(2) As for petitioners allegation that some of the
signatures in the petition for certification election were
obtained through fraud, false statement and
misrepresentation, the proper procedure is, as reflected
above, for it to file a petition for cancellation of the
certificate of registration, and not to intervene in a
petition for certification election.
(3) Regarding the alleged withdrawal of union members
from participating in the certification election
"[T]he best forum for determining whether there
were indeed retractions from some of the laborers is
in the certification election itself wherein the workers
can freely express their choice in a secret ballot.
Suffice it to say that the will of the rank-and-file
employees should in every possible instance be
determined by secret ballot rather than by
administrative or quasi-judicial inquiry. Such
representation and certification election cases are
not to be taken as contentious litigations for suits
but as mere investigations of a non-adversary, fact-
finding character as to which of the competing
unions represents the genuine choice of the workers
to be their sole and exclusive collective bargaining
representative with their employer."
(4) As for the lack of mutuality of interest argument of
petitioner, it, at all events, does not lie given, as found by the
court a quo, its failure to present substantial evidence that
the assailed employees are actually occupying supervisory
positions.
_________________
(14) G.R. No. 161690 July 23, 2008
S.S. VENTURES INTERNATIONAL, INC. vs. S.S.
VENTURES LABOR UNION (SSVLU) and DIR. HANS
LEO CACDAC, in His capacity as Director of the BLR
VELASCO, JR., J .:
FACTS:
Petitioner is a PEZA-registered export firm engaged in the
business of manufacturing sports shoes. Respondent is a
labor organization registered with the DOLE.
The Union filed with DOLE-Region III a petition for
certification election in behalf of the rank-and-file employees
of Ventures. 542 signatures, 82 of which belong to
terminated Ventures employees.
Ventures filed a Petition to cancel the Unions certificate of
registration invoking the grounds set forth in Article 239(a) of
the Labor Code (e.g. including the 82 names no longer
connected with the company, etc.)
The DOLE Regional Director CANCELLED the Certificate of
Registration of respondent union.
BLR reversed. CA affirmed.
ISSUE: Whether or not to cancel certificate of registration.
HELD: No cancellation of registration.

Once registered with the DOLE, a union is considered a
legitimate labor organization endowed with the right
and privileges granted by law to such organization.
While a certificate of registration confers a union with
legitimacy with the concomitant right to participate in or ask
for certification election in a bargaining unit, the registration
may be canceled or the union may be decertified as the
bargaining unit, in which case the union is divested of the
status of a legitimate labor organization. Among the grounds
for cancellation is the commission of any of the acts
enumerated in Art. 239(a) of the Labor Code, such as fraud
and misrepresentation in connection with the adoption or
ratification of the unions constitution and like documents.
The Court, has in previous cases, said that to decertify a
union, it is not enough to show that the union includes
ineligible employees in its membership. It must also be
shown that there was misrepresentation, false statement, or
fraud in connection with the application for registration and
the supporting documents, such as the adoption or
ratification of the constitution and by-laws or amendments
thereto and the minutes of ratification of the constitution or
by-laws, among other documents.
Essentially, Ventures faults both the BLR and the CA in
finding that there was no fraud or misrepresentation on the
part of the Union sufficient to justify cancellation of its
registration. In this regard, Ventures makes much of, first,
the separate hand-written statements of 82 employees who,
in gist, alleged that they were unwilling or harassed
signatories to the attendance sheet of the organizational
meeting.
As aptly noted by both the BLR and CA, these mostly
undated written statements submitted by Ventures seven
months after it filed its petition for cancellation of
registration, partake of the nature of withdrawal of union
membership executed after the Unions filing of a petition for
certification election.
The employees withdrawal from a labor union made
before the filing of the petition for certification election
is presumed voluntary, while withdrawal after the filing
of such petition is considered to be involuntary and
does not affect the same. Now then, if a withdrawal from
union membership done after a petition for certification
election has been filed does not vitiate such petition, is it not
but logical to assume that such withdrawal cannot work to
nullify the registration of the union? Upon this light, the Court
is inclined to agree with the CA that the BLR did not abuse
its discretion nor gravely err when it concluded that the
affidavits of retraction of the 82 members had no evidentiary
weight.
It cannot be over-emphasized that the registration or the
recognition of a labor union after it has submitted the
corresponding papers is not ministerial on the part of
the BLR. Far from it, after a labor organization has filed
the necessary registration documents, it becomes
mandatory for the BLR to check if the requirements
under Art. 234 of the Labor Code have been sedulously
complied with. If the unions application is infected by
falsification and like serious irregularities, especially those
appearing on the face of the application and its attachments,
a union should be denied recognition as a legitimate labor
organization. Prescinding from these considerations, the
issuance to the Union of Certificate of Registration
necessarily implies that its application for registration
and the supporting documents thereof are prima facie
free from any vitiating irregularities.
__________________
Articles 238-239 (Effect of a Petition for Cancellation of
Registration & Grounds for Cancellation of Unions
Registration)
(15) G.R. No. 178296 January 12, 2011
THE HERITAGE HOTEL MANILA, acting through its
owner, GRAND PLAZA HOTEL CORPORATION vs.
NATIONAL UNION OF WORKERS IN THE HOTEL,
RESTAURANT AND ALLIED INDUSTRIES-HERITAGE
HOTEL MANILA SUPERVISORS CHAPTER (NUWHRAIN-
HHMSC)
NACHURA, J .:
FACTS: Respondent filed with the DOLE-NCR a petition for
certification election. The Med-Arbiter granted the petition
and ordered the holding of a certification election. On
appeal, the DOLE Secretary affirmed the Med-Arbiters
order and remanded the case to the Med-Arbiter for the
holding of a pre-election conference
Petitioner discovered that respondent had failed to
submit to the BLR its annual financial report for several
years and the list of its members since it filed its
registration papers. Consequently, petitioner filed a
Petition for Cancellation of Registration of respondent, on
the ground of the non-submission of the said documents.
Petitioner prayed that respondents Certificate of Creation of
Local/Chapter be cancelled and its name be deleted from
the list of legitimate labor organizations. It further requested
the suspension of the certification election proceedings.
Petitioner averred that the dismissal or suspension of
the proceedings is warranted, considering that the
legitimacy of respondent is seriously being challenged
in the petition for cancellation of registration. Petitioner
maintained that the resolution of the issue of whether
respondent is a legitimate labor organization is crucial
to the issue of whether it may exercise rights of a

legitimate labor organization, which include the right to
be certified as the bargaining agent of the covered
employees.
Nevertheless, the certification election pushed through and
respondent emerged as winner.
Petitioners prayed that the certification of the election results
and winner be deferred until the petition for cancellation
shall have been resolved, and that respondents members
who held confidential or managerial positions be excluded
from the supervisors bargaining unit.
Respondent prayed for the dismissal of the petition for
the following reasons: (a) petitioner is estopped from
questioning respondents status as a legitimate labor
organization as it had already recognized respondent as
such during the pre-election conferences; (b) petitioner
is not the party-in-interest, as the union members are
the ones who would be disadvantaged by the non-
submission of financial reports; (c) it has already
complied with the reportorial requirements, having
submitted its financial statements, its updated list of
officers, and its list of members; (d) the petition is
already moot and academic, considering that the
certification election had already been held, and the
members had manifested their will to be represented by
respondent.
The Med-Arbiter dismissed petitioners protest, and certified
respondent as the sole and exclusive bargaining agent of all
supervisory employees. DOLE affirmed.
In the meantime, the Regional Director finally resolved
the petition for cancellation of registration. While
finding that respondent had indeed failed to file
financial reports and the list of its members for several
years, he, nonetheless, denied the petition, ratiocinating
that freedom of association and the employees right to
self-organization are more substantive considerations.
DOLE affirmed. CA affirmed.
Petitioner also insists that respondents registration as a
legitimate labor union should be cancelled. Petitioner posits
that once it is determined that a ground enumerated in
Article 239 of the Labor Code is present, cancellation of
registration should follow; it becomes the ministerial duty of
the Regional Director to cancel the registration of the labor
organization, hence, the use of the word "shall." Petitioner
points out that the Regional Director has admitted in its
decision that respondent failed to submit the required
documents for a number of years; therefore, cancellation of
its registration should have followed as a matter of course.
ISSUE: Whether there should be Cancellation despite the
mandatory and unequivocal provisions of the Labor Code
and its Implementing Rules.
HELD: No.
Art. 239-39 give the Regional Director ample discretion in
dealing with a petition for cancellation of a unions
registration, particularly, determining whether the union still
meets the requirements prescribed by law. It is sufficient to
give the Regional Director license to treat the late filing
of required documents as sufficient compliance with the
requirements of the law. After all, the law requires the
labor organization to submit the annual financial report and
list of members in order to verify if it is still viable and
financially sustainable as an organization so as to protect
the employer and employees from fraudulent or fly-by-night
unions. With the submission of the required documents by
respondent, the purpose of the law has been achieved,
though belatedly.
There is no abuse of discretion by Regional Director and the
DOLE Secretary in denying the petition for cancellation of
respondents registration. The union members and, in fact,
all the employees belonging to the appropriate bargaining
unit should not be deprived of a bargaining agent, merely
because of the negligence of the union officers who were
responsible for the submission of the documents to the BLR.
Labor authorities should, indeed, act with circumspection in
treating petitions for cancellation of union registration, lest
they be accused of interfering with union activities. In
resolving the petition, consideration must be taken of the
fundamental rights guaranteed by Article XIII, Section 3 of
the Constitution, i.e., the rights of all workers to self-
organization, collective bargaining and negotiations, and
peaceful concerted activities. Labor authorities should bear
in mind that registration confers upon a union the status of
legitimacy and the concomitant right and privileges granted
by law to a legitimate labor organization, particularly the
right to participate in or ask for certification election in a
bargaining unit. Thus, the cancellation of a certificate of
registration is the equivalent of snuffing out the life of a labor
organization. For without such registration, it loses - as a
rule - its rights under the Labor Code.
It is undisputed that appellee failed to submit its annual
financial reports and list of individual members in
accordance with Article 239 of the Labor Code. However,
the existence of this ground should not necessarily lead to
the cancellation of union registration. Article 239 recognizes
the regulatory authority of the State to exact compliance with
reporting requirements. Yet there is more at stake in this
case than merely monitoring union activities and requiring
periodic documentation thereof.

Moreover, submission of the required documents is the duty
of the officers of the union. It would be unreasonable for this
Office to order the cancellation of the union and penalize the
entire union membership on the basis of the negligence of
its officers.
_____________________
(16) G.R. No. 160352 July 23, 2008
REPUBLIC OF THE PHILIPPINES, represented by DOLE
vs KAWASHIMA TEXTILE MFG., PHILIPPINES, INC.
AUSTRIA-MARTINEZ, J .:
FACTS: KFWU (union) filed with DOLE Regional Office a
Petition for Certification Election to be conducted in the
bargaining unit composed of 145 rank-and-file employees of
respondent. Attached to its petition are a Certificate of
Creation of Local/Chapter issued by DOLE Regional Office
stating that it [KFWU] submitted to said office a Charter
Certificate issued to it by the national federation Phil.
Transport & General Workers Organization (PTGWO), and a
Report of Creation of Local/Chapter.
Respondent filed a Motion to Dismiss the petition on the
ground that KFWU did not acquire any legal personality
because its membership of mixed rank-and-file and
supervisory employees violated Article 245 of the Labor
Code, and its failure to submit its books of account
contravened the ruling of the Court in Progressive
Development Corporation v. Secretary, Department of Labor
and Employment.
The Med-Arbiter Bactin found KFWUs legal personality
defective and dismissed its petition for certification election.
On the basis of the aforecited decision, respondent filed with
DOLE Regional Office a Petition for Cancellation of
Charter/Union Registration of KFWU, the final outcome of
which, unfortunately, cannot be ascertained from the
records.
Meanwhile, KFWU appealed to the DOLE which issued the
decision of the med-arbiter. DOLE granted the petition for
election.
DOLE also directed the employer to submit to the office of
origin the certified list of current employees in the bargaining
unit for the last three months prior to the issuance of this
decision.
The DOLE held that while Article 245 declares supervisory
employees ineligible for membership in a labor organization
for rank-and-file employees, the provision did not state the
effect of such prohibited membership on the legitimacy of
the labor organization and its right to file for certification
election. Neither was such mixed membership a ground for
cancellation of its registration.
CA reversed since respondent union clearly consists of
both rank and file and supervisory employees, it cannot
qualify as a legitimate labor organization imbued with
the requisite personality to file a petition for certification
election. This infirmity in union membership cannot be
corrected in the inclusion-exclusion proceedings during
the pre-election conference.
ISSUE:
(1) Whether a mixed membership of rank-and-file and
supervisory employees in a union is a ground for the
dismissal of a petition for certification election in view of the
amendment brought about by D.O. 9, series of 1997, which
deleted the phraseology in the old rule that "[t]he appropriate
bargaining unit of the rank-and-file employee shall not
include the supervisory employees and/or security guards;"
and
(2) Whether the legitimacy of a duly registered labor
organization can be collaterally attacked in a petition for a
certification election through a motion to dismiss filed by an
employer such as Kawashima Textile Manufacturing Phils.,
Inc.
HELD:
(1) No. Under Section 12 of R.A. No. 9481, employers have
no personality to interfere with or thwart a petition for
certification election filed by a legitimate labor organization.
The employer shall not be considered a party thereto
with a concomitant right to oppose a petition for
certification election. The employer's participation in
such proceedings shall be limited to: (1) being notified
or informed of petitions of such nature; and (2)
submitting the list of employees during the pre-election
conference should the Med-Arbiter act favorably on the
petition." (Art. 258-A)
(2) No. Except when it is requested to bargain
collectively, an employer is a mere bystander to any petition
for certification election; such proceeding is non-adversarial
and merely investigative, for the purpose thereof is to
determine which organization will represent the employees
in their collective bargaining with the employer. The choice
of their representative is the exclusive concern of the
employees; the employer cannot have any partisan interest
therein; it cannot interfere with, much less oppose, the
process by filing a motion to dismiss or an appeal from
it; not even a mere allegation that some employees
participating in a petition for certification election are actually

managerial employees will lend an employer legal
personality to block the certification election. The employer's
only right in the proceeding is to be notified or informed
thereof. The amendments to the Labor Code and its
implementing rules have buttressed that policy even more.

________________________
Article 241 (Rights and Condition of Membership in a
Labor Organization)
(17) G.R. No. 170112 April 30, 2008
DEL PILAR ACADEMY, EDUARDO ESPEJO and ELISEO
OCAMPO, JR. vs. DEL PILAR ACADEMY EMPLOYEES
UNION
D E C I S I O N
NACHURA, J .:
FACTS: Respondent UNION is the certified collective
bargaining representative of teaching and non-teaching
personnel of petitioner educational institution operating in
Imus, Cavite.
The UNION and DEL PILAR entered into a CBA granting
salary increase and other benefits to the teaching and non-
teaching staff.
The UNION then assessed agency fees from non-union
employees, and requested DEL PILAR to deduct said
assessment from the employees salaries and wages. DEL
PILAR, however, refused to effect deductions claiming that
the non-union employees were not amenable to it.
The UNION negotiated for the renewal of the CBA. DEL
PILAR, however, refused to renew the same unless the
provision regarding entitlement to two (2) months summer
vacation leave with pay will be amended by limiting the
same to teachers, who have rendered at least three (3)
consecutive academic years of satisfactory service. The
UNION objected to the proposal claiming diminution of
benefits. DEL PILAR refused to sign the CBA, resulting in a
deadlock. The UNION requested DEL PILAR to submit the
case for voluntary arbitration, but the latter allegedly
refused, prompting the UNION to file a case for unfair labor
practice with the Labor Arbiter against DEL PILAR.
DEL PILAR denied committing unfair labor practices
against the UNION. It justified the non-deduction of the
agency fees by the absence of individual check off
authorization from the non-union employees. As regards
the proposal to amend the provision on summer vacation
leave with pay, DEL PILAR alleged that the proposal cannot
be considered unfair for it was done to make the provision of
the CBA conformable to the DECS Manual of Regulations
for Private Schools.
The charge for ULP was discharged. However, with regard
to the non-deduction, it was error on part of Del Pilar but
with regard to the vacation pay, it merely followed DECS.
NLRC affirmed the Arbiters ruling. In gist, it upheld the
UNIONs right to agency fee, but did not consider DEL
PILARs failure to deduct the same an unfair labor practice.
6

CA affirmed. However, it ordered DEL PILAR to deduct
agency fees from the salaries of non-union employees.
ISSUE: Whether or not the UNION is entitled to collect
agency fees from non-union members, and if so, whether an
individual written authorization is necessary for a valid check
off.
HELD: Yes.
When so stipulated in a collective bargaining agreement
or authorized in writing by the employees concerned,
the Labor Code and its Implementing Rules recognize it
to be the duty of the employer to deduct the sum
equivalent to the amount of union dues, as agency fees,
from the employees' wages for direct remittance to the
union. The system is referred to as check off. No
requirement of written authorization from the non-union
employees is necessary if the non-union employees
accept the benefits resulting from the CBA.
Accordingly, no requirement of written authorization from the
non-union employees is needed to effect a valid check off.
Article 248(e) makes it explicit that Article 241, paragraph
(o), requiring written authorization is inapplicable to non-
union members, especially in this case where the non-union
employees receive several benefits under the CBA.
The employee's acceptance of benefits resulting from a
collective bargaining agreement justifies the deduction
of agency fees from his pay and the union's entitlement
thereto. In this aspect, the legal basis of the union's
right to agency fees is neither contractual nor statutory,
but quasi-contractual, deriving from the established
principle that non-union employees may not unjustly
enrich themselves by benefiting from employment
conditions negotiated by the bargaining union.
______________________
(18) G.R. No. 149763 July 7, 2009

EDUARDO J. MARIO, JR., et al. vs GIL Y. GAMILLA et
al.
CHICO-NAZARIO, J .:
FACTS:
1
st
Case
Petitioners were among the executive officers and directors
of the University of Sto. Tomas Faculty Union, a labor union
duly organized and registered under the laws of the
Republic of the Philippines and the bargaining
representative of the faculty members of the UST.
Respondents were UST professors and USTFU members.
The 1986 CBA between UST and USTFU expired.
Thereafter, bargaining negotiations ensued between UST
and the Mario Group, which represented USTFU. As the
parties were not able to reach an agreement despite their
earnest efforts, a bargaining deadlock was declared and
USTFU filed a notice of strike. Subsequently, DOLE Sec.
Drilon assumed jurisdiction over the dispute. The DOLE
Secretary issued an Order laying the terms and conditions
for a new CBA between the UST and USTFU. In
accordance with said Order, the UST and USTFU entered
into a CBA in 1991, which was to be effective for the period
of 1988 to 1993. In keeping with Article 253-A of the Labor
Code, as amended, the economic provisions of the 1988-
1993 CBA were subject to renegotiation for the fourth and
fifth years.
Accordingly, on 1992, UST and USTFU executed a
MOA, whereby UST faculty members belonging to the
collective bargaining unit were granted additional economic
benefits for the fourth and fifth years of the 1988-1993 CBA.
The majority of USTFU members signed individual
instruments of ratification, which purportedly signified their
consent to the economic benefits with provision for
check-off granted under the MOA.
UST remitted to union the amount corresponding to the
check-off. The remaining amount, after the check-off was
distributed to the faculty members.
Respondents filed with the Med-Arbiter, DOLE-NCR, a
Complaint for the expulsion of the Mario Group as
USTFU officers and directors because they violated the
rights and conditions of membership in USTFU,
particularly by: 1) investing the unspent balance of
the P42 million economic benefits package given by
UST without prior approval of the general membership;
2) simultaneously holding elections viva voce; 3)
ratifying the CBA involving the P42 million economic
benefits package; and 4) approving the
attorneys/agency fees worth P4.2 million in the form of
check-off. Respondents prayed that the Mario Group
be declared jointly and severally liable for refunding all
collected attorneys/agency fees from individual
members of USTFU and the collective bargaining unit;
and that, after due hearing, the Mario group be
expelled as USTFU officers and directors.
2
nd
Case
After the 1988-93 CBA expired, a new CBA was entered to
be effected from 1993-98.
Respondentsfiled with the Med-Arbiter of DOLE-NCR
another Complaint against the Mario Group for violation of
the rights and conditions of union membership.
3
rd
Case
Respondents wrote a letter to the USTFU Committee on
Elections, urging the latter to re-schedule the elections to
ensure a free, clean, honest, and orderly election and to
afford the union members the time to prepare themselves
for the same. The USTFU Committee on Elections failed to
act positively on respondents letter, and neither did they
adopt and promulgate the rules and regulations for the
conduct of the scheduled election.
Respondents filed with the Med-Arbiter, DOLE-NCR, an
Urgent Ex-Parte Petition/Complaint on the ground that the
general membership meeting called by the USTFU Board of
Directors, the agenda of which included the election of union
officers, was in violation of the provisions of the Constitution
and By-Laws of USTFU. Respondents prayed that the
DOLE supervise the conduct of the USTFU elections, and
that they be awarded attorneys fees.
The Med-Arbiter DOLE-NCR, issued a TRO enjoining the
holding of the USTFU elections scheduled the next day.
4
th
Case
The UST Secretary General headed a general faculty
assembly attended by USTFU members, as well as USTFU
non-members, but who were members of the collective
bargaining unit. During said assembly, respondents were
among the elected officers of USTFU (collectively referred to
as the Gamilla Group).
Petitioners filed with the Med-Arbiter, DOLE-NCR, a Petition
seeking injunctive reliefs and the nullification of the results of
election.

The Med-Arbiter DOLE-NCR, nullified the election of the
Gamilla Group as USTFU officers for having been
conducted in violation of the Constitution and By-Laws of the
union. BLR affirmed. The SC voided the election.
5
th
Case
Respondents filed before the Med-Arbiter, DOLE-NCR, a
fourth Complaint/Petition against the Mario Group, as well
as the Philippine Foundation for the Advancement of the
Teaching Profession, Inc., Security Bank Corporation, and
Bank of the Philippine Islands claiming that they were the
legitimate USTFU officers, having been elected and prayed
for an order directing the Mario Group to cease and desist
from using the name of USTFU and from performing acts for
and on behalf of the USTFU and the rest of the members of
the collective bargaining unit.
DOLE-NCR Decisions
Regional Director adjudged the Mario Group, as the
executive officers of USTFU, guilty of violating the
provisions of the USTFU Constitution and By-laws by failing
to collect union dues and to conduct a general assembly
every three months. The DOLE-NCR Regional Director
also ruled that the Mario Group violated Article
241(c) and (l) of the Labor Code when they did not
submit a list of union officers to the DOLE; when they
did not submit/provide DOLE and the USTFU members
with copies of the audited financial statements of the
union; and when they invested in a bank, without prior
consent of USTFU members, the sum of P9,766,570.01,
which formed part of the P42 million economic benefits
package.
Additionally, the DOLE-NCR Regional Director declared
that the check-off was invalid. According to the MOA
executed by UST and USTFU, the P42 million economic
benefits package was chargeable against the share of the
faculty members in the incremental proceeds of tuition fees
collected and still to be collected. Under Republic Act No.
6728, 70% of the tuition fee increases should be allotted to
academic and non-academic personnel. Given that the
records were silent as to how much of the P42 million
economic benefits package was obtained through
negotiations and how much was from the statutory allotment
of 70% of the tuition fee increases, the DOLE-NCR Regional
Director held that the entire amount was within the statutory
allotment, which could not be the subject of negotiation and,
thus, could not be burdened by negotiation fees.
Thus, it led to the expulsion of Petitioners as officers; refund
of the amount checked-off; and order them to account.
BLR Decision
BLR agreed in the finding of the DOLE-NCR Regional
Director that the P42 million economic benefits package was
sourced from the faculty members share in the tuition fee
increases under Republic Act No. 6728. This allotment is
mandatory and cannot be diminished, although it may be
increased by collective bargaining. It follows that only the
amount beyond that mandated by law shall be subject to
negotiation fees and attorney's fees for the simple reason
that it was only this amount that the school employees had
to bargain for.
The BLR further reasoned that the P4.2 million collected by
the Mario Group was in the nature of attorneys fees or
negotiation fees and, therefore, fell under the general
prohibition against such fees in Article 222(b) of the Labor
Code, as amended. Also, the exception to charging against
union funds was not applicable because the P42 million
economic benefits package under the MOA was not union
fund, as the same was intended not for the union coffers,
but for the members of the entire bargaining unit. The fact
that the P4.2 million check-off was approved by the majority
of USTFU members was immaterial in view of the clear
command of Article 222(b) that any contract, agreement, or
arrangement of any sort, contrary to the prohibition
contained therein, shall be null and void.
CA affirmed.
ISSUES:
(1) What is the nature of the P42 million economic benefits
package granted by UST to USTFU;
(2) the legality of the 10% check-off collected by the Mario
Group from the P42 million economic benefits package; and
(3) the validity of the BLR order for USTFU to conduct
election of union officers under the control and supervision
of the DOLE-NCR Regional Director.
HELD:
(1) The P42 million economic benefits package- not a
result of unions efforts
In this case, UST and USTFU stipulated in their MOA
that the P42 million economic benefits package granted
by UST to the members of the collective bargaining unit
represented by USTFU, was chargeable against the 70%
allotment from the proceeds of the tuition fee increases
collected and still to be collected by UST.
Preceding from this presumption, any deduction from
the P42 million economic benefits package, such as
the P4.2 million claimed by the Mario Group as

attorneys/agency fees, should not be allowed, because it
would ultimately result in the reduction of the statutorily
mandated 70% allotment from the tuition fee increases of
UST.
(2) The P4.2 Million Check-off--- Illegal
The pertinent legal provisions on a check-off are found
in Articles 222(b) and 241(n) and (o) of the Labor Code,
as amended.
Article 222(b) of the Labor Code, as amended, prohibits the
payment of attorney's fees only when it is effected through
forced contributions from the employees from their own
funds as distinguished from union funds. Hence, the
general rule is that attorneys fees, negotiation fees, and
other similar charges may only be collected from union
funds, not from the amounts that pertain to individual
union members. As an exception to the general rule,
special assessments or other extraordinary fees may be
levied upon or checked off from any amount due an
employee for as long as there is proper authorization by
the employee.
A check-off is a process or device whereby the employer, on
agreement with the Union, recognized as the proper
bargaining representative, or on prior authorization from the
employees, deducts union dues or agency fees from the
latter's wages and remits them directly to the Union. Its
desirability in a labor organization is quite evident. The
Union is assured thereby of continuous funding. As this
Court has acknowledged, the system of check-off is
primarily for the benefit of the Union and, only indirectly, for
the individual employees.
In the instant case, the P42 million economic benefits
package granted by UST did not constitute union funds from
where the P4.2 million could have been validly deducted as
attorneys fees. TheP42 million economic benefits package
was not intended for the USTFU coffers, but for all the
members of the bargaining unit USTFU represented,
whether members or non-members of the union. A close
reading of the terms of the MOA reveals that after the
satisfaction of the outstanding obligations of UST under the
1986 CBA, the balance of the P42 million was to be
distributed to the covered faculty members of the collective
bargaining unit in the form of salary increases, returns on
paycheck deductions; and increases in hospitalization,
educational, and retirement benefits, and other economic
benefits. The deduction of the P4.2 million, as alleged
attorneys/agency fees, from the P42 million economic
benefits package effectively decreased the share from
said package accruing to each member of the collective
bargaining unit.
What the law requires is that the funds be already deemed
union funds even before the attorneys fees are deducted or
paid therefrom; it does not become union funds after the
deduction or payment. To rule otherwise will also render the
general prohibition stated in Article 222(b) nugatory,
because all that the union needs to do is to deduct from the
total benefits awarded to the employees the amount
intended for attorneys fees and, thus, "convert" the latter to
union funds, which could then be used to pay for the said
attorneys fees.
The Court further determines that the requisites for a
valid levy and check-off of special assessments, laid
down by Article 241(n) and (o), respectively, of the
Labor Code, as amended, have not been complied with
in the case at bar. To recall, these requisites are: (1) an
authorization by a written resolution of the majority of
all the union members at the general membership
meeting duly called for the purpose; (2) secretary's
record of the minutes of the meeting; and (3) individual
written authorization for check-off duly signed by the
employee concerned.
51

In the case, the inclusion of the authorization for a
check-off of union dues and special assessments for
the Labor Education Fund and attorneys fees, in the
same document for the ratification of the MOA granting
the P42 million economic benefits package, necessarily
vitiated the consent of USTFU members. For sure, it is
fairly reasonable to assume that no individual member of
USTFU would casually turn down the substantial and
lucrative award of P42 million in economic benefits under
the MOA. However, there was no way for any individual
union member to separate his or her consent to the
ratification of the MOA from his or her authorization of the
check-off of union dues and special assessments. As it
were, the ratification of the MOA carried with it the automatic
authorization of the check-off of union dues and special
assessments in favor of the union. Such a situation militated
against the legitimacy of the authorization for the P4.2
million check-off by a majority of USTFU membership.
Although the law does not prescribe a particular form
for the written authorization for the levy or check-off of
special assessments, the authorization must, at the very
least, embody the genuine consent of the union
member.
____________________
Article 242 (Rights of LLO and Reportorial
Requirements)
(20) G.R. No. 178296 January 12, 2011
THE HERITAGE HOTEL MANILA, acting through its
owner, GRAND PLAZA HOTEL CORPORATION vs.

NATIONAL UNION OF WORKERS IN THE HOTEL,
RESTAURANT AND ALLIED INDUSTRIES-HERITAGE
HOTEL MANILA SUPERVISORS CHAPTER (NUWHRAIN-
HHMSC)
NACHURA, J .:
FACTS: Petitioner insists that respondents registration as a
legitimate labor union should be cancelled. Petitioner posits
that once it is determined that a ground enumerated in
Article 239 of the Labor Code is present, cancellation of
registration should follow; it becomes the ministerial duty of
the Regional Director to cancel the registration of the labor
organization, hence, the use of the word "shall." Petitioner
points out that the Regional Director has admitted in its
decision that respondent failed to submit the required
documents for a number of years; therefore, cancellation of
its registration should have followed as a matter of course.
HELD: Articles 238-239 give the Regional Director ample
discretion in dealing with a petition for cancellation of a
unions registration, particularly, determining whether the
union still meets the requirements prescribed by law. It is
sufficient to give the Regional Director license to treat the
late filing of required documents as sufficient compliance
with the requirements of the law. After all, the law requires
the labor organization to submit the annual financial report
and list of members in order to verify if it is still viable and
financially sustainable as an organization so as to protect
the employer and employees from fraudulent or fly-by-night
unions. With the submission of the required documents by
respondent, the purpose of the law has been achieved,
though belatedly.
There is no abuse of discretion on the part of the Regional
Director and the DOLE Secretary in denying the petition for
cancellation of respondents registration. The union
members and, in fact, all the employees belonging to the
appropriate bargaining unit should not be deprived of a
bargaining agent, merely because of the negligence of the
union officers who were responsible for the submission of
the documents to the BLR.
Labor authorities should, indeed, act with
circumspection in treating petitions for cancellation of
union registration, lest they be accused of interfering
with union activities. In resolving the petition,
consideration must be taken of the fundamental rights
guaranteed by Article XIII, Section 3 of the Constitution,
i.e., the rights of all workers to self-organization,
collective bargaining and negotiations, and peaceful
concerted activities. Labor authorities should bear in
mind that registration confers upon a union the status
of legitimacy and the concomitant right and privileges
granted by law to a legitimate labor organization,
particularly the right to participate in or ask for
certification election in a bargaining unit. Thus, the
cancellation of a certificate of registration is the
equivalent of snuffing out the life of a labor
organization. For without such registration, it loses - as
a rule - its rights under the Labor Code.
It is worth mentioning that the Labor Codes provisions on
cancellation of union registration and on reportorial
requirements have been recently amended by Republic Act
(R.A.) No. 9481. The amendment sought to strengthen the
workers right to self-organization and enhance the
Philippines compliance with its international obligations as
embodied in the ILO Convention No. 87 pertaining to the
non-dissolution of workers organizations by administrative
authority.Thus, R.A. No. 9481 amended Article 239 to read:
ART. 239. Grounds for Cancellation of Union
Registration.The following may constitute grounds for
cancellation of union registration:
(a) Misrepresentation, false statement or fraud in
connection with the adoption or ratification of
the constitution and by-laws or amendments
thereto, the minutes of ratification, and the list
of members who took part in the ratification;
(b) Misrepresentation, false statements or fraud
in connection with the election of officers,
minutes of the election of officers, and the list of
voters;
(c) Voluntary dissolution by the members.
R.A. No. 9481 also inserted in the Labor Code Article
242-A, which provides:
ART. 242-A. Reportorial Requirements.The following
are documents required to be submitted to the Bureau
by the legitimate labor organization concerned:
(a) Its constitution and by-laws, or amendments
thereto, the minutes of ratification, and the list
of members who took part in the ratification of
the constitution and by-laws within thirty (30)
days from adoption or ratification of the
constitution and by-laws or amendments
thereto;
(b) Its list of officers, minutes of the election of
officers, and list of voters within thirty (30) days
from election;
(c) Its annual financial report within thirty (30)
days after the close of every fiscal year; and

(d) Its list of members at least once a year or
whenever required by the Bureau.
Failure to comply with the above requirements shall not
be a ground for cancellation of union registration but
shall subject the erring officers or members to
suspension, expulsion from membership, or any
appropriate penalty.
In the case, it is undisputed that appellee failed to submit its
annual financial reports and list of individual members in
accordance with Article 239 of the Labor Code. However,
the existence of this ground should not necessarily lead to
the cancellation of union registration. Article 239 recognizes
the regulatory authority of the State to exact compliance with
reporting requirements. Yet there is more at stake in this
case than merely monitoring union activities and requiring
periodic documentation thereof.
The more substantive considerations involve the
constitutionally guaranteed freedom of association and right
of workers to self-organization. Also involved is the public
policy to promote free trade unionism and collective
bargaining as instruments of industrial peace and
democracy. An overly stringent interpretation of the statute
governing cancellation of union registration without regard to
surrounding circumstances cannot be allowed. Otherwise, it
would lead to an unconstitutional application of the statute
and emasculation of public policy objectives. Worse, it can
render nugatory the protection to labor and social justice
clauses that pervades the Constitution and the Labor Code.
Moreover, submission of the required documents is the duty
of the officers of the union. It would be unreasonable for this
Office (DOLE- Regional Office) to order the cancellation of
the union and penalize the entire union membership on the
basis of the negligence of its officers.
The rights of workers to self-organization finds general and
specific constitutional guarantees. x x x Such constitutional
guarantees should not be lightly taken much less nullified. A
healthy respect for the freedom of association demands that
acts imputable to officers or members be not easily visited
with capital punishments against the association itself."
At any rate, appellee had submitted its financial statement
for the years 1996-1999. With this submission, appellee has
substantially complied with its duty to submit its financial
report for the said period. To rule differently would be to
preclude the union, after having failed to meet its periodic
obligations promptly, from taking appropriate measures to
correct its omissions. For the record, we do not view with
favor appellees late submission. Punctuality on the part of
the union and its officers could have prevented this petition.
______________
G.R. No. 154113 December 7, 2011
EDEN GLADYS ABARIA et al. vs NLRC, METRO CEBU
COMMUNITY HOSPITAL, INC. et al.
FACTS: The National Federation of Labor (NFL) is the
exclusive bargaining representative of the rank-and-file
employees of MCCHI.
Nava (president of another union) wrote Rev. Iyoy (MCCH
representative) expressing the unions desire to renew the
CBA, attaching to her letter a statement of proposals
signed/endorsed by 153 union members. Nava
subsequently requested that some employees be allowed to
avail of one-day union leave with pay. However, MCCHI
returned the CBA proposal for Nava to secure first the
endorsement of the legal counsel of NFL as the official
bargaining representative of MCCHI employees.
Meanwhile, Atty. Alforque (of NHL) informed MCCHI that the
proposed CBA submitted by Nava was never referred to
NFL and that NFL has not authorized any other legal
counsel or any person for collective bargaining negotiations.
The collection of union fees (check-off) was temporarily
suspended by MCCHI in view of the existing conflict
between the federation and its local affiliate. Thereafter,
MCCHI attempted to take over the room being used as
union office but was prevented to do so by Nava and her
group who protested these actions and insisted that
management directly negotiate with them for a new CBA.
MCCHI referred the matter to Atty. Alforque, NFLs Regional
Director, and advised Nava that their group is not
recognized by NFL.
NFL suspended their union membership for serious violation
of the Constitution and By-Laws due to their pledge of
loyalty to KMU.
The next day, several union members led by Nava launched
a series of mass actions such as wearing black and red
armbands/headbands, marching around the hospital
premises and putting up placards, posters and streamers.
Atty. Alforque immediately disowned the concerted activities
being carried out by union members which are not
sanctioned by NFL.
DOLE said that the union of Nava is not an LLO.
The union of Nava filed a Notice of Strike but the same was
deemed not filed for want of legal personality on the part of
the filer. NCMB office likewise denied their motion for
reconsideration. However, they still held strike.

Navas group was terminated so they held more mass
actions. The means of ingress to and egress from the
hospital were blocked so that vehicles carrying patients and
employees were barred from entering the premises.
Placards were placed at the hospitals entrance gate stating:
"Please proceed to another hospital" and "we are on
protest." Employees and patients reported acts of
intimidation and harassment perpetrated by union leaders
and members. With the intensified atmosphere of violence
and animosity within the hospital premises as a result of
continued protest activities by union members, MCCHI
suffered heavy losses due to low patient admission rates.
The hospitals suppliers also refused to make further
deliveries on credit.
A TRO was issued by NLRC. The City Government of Cebu
ordered the demolition of the structures and obstructions put
up by the picketing employees of MCCHI along the
sidewalk, having determined the same as a public nuisance
or nuisance per se.
They filed complaint for dismissal and ULP. LA dismissed
the complaints. NLRC affirmed.
ISSUES:
(1) Whether MCCHI is guilty of unfair labor practice;
(2) Whether petitioning employees were illegally dismissed;
and
(3) If their termination was illegal, whether petitioning
employees are entitled to separation pay, backwages,
damages and attorneys fees.
HELD:

(1) MCCHI not guilty of unfair labor practice
Records of the NCMB and DOLE Region 7 confirmed
that NAMA-MCCH-NFL had not registered as a labor
organization, having submitted only its charter
certificate as an affiliate or local chapter of NFL. Not
being a legitimate labor organization, NAMA-MCCH-NFL
is not entitled to those rights granted to a legitimate
labor organization under Art. 242, specifically:
(a) To act as the representative of its members
for the purpose of collective bargaining;
(b) To be certified as the exclusive
representative of all the employees in an
appropriate collective bargaining unit for
purposes of collective bargaining;
Further, NAMA-MCCH-NFL is not the labor organization
certified or designated by the majority of the rank-and-file
hospital employees to represent them in the CBA
negotiations but the NFL, as evidenced by CBAs concluded
in 1987, 1991 and 1994. While it is true that a local union
has the right to disaffiliate from the national federation,
NAMA-MCCH-NFL has not done so as there was no any
effort on its part to comply with the legal requisites for a
valid disaffiliation during the "freedom period" or the
last 60 days of the last year of the CBA, through a
majority vote in a secret balloting in accordance with
Art. 241 (d). Nava and her group simply demanded that
MCCHI directly negotiate with the local union which has
not even registered as one.
To prove majority support of the employees, NAMA-MCCH-
NFL presented the CBA proposal allegedly signed by 153
union members. However, the petition signed by said
members showed that the signatories endorsed the
proposed terms and conditions without stating that they
were likewise voting for or designating the NAMA-MCCH-
NFL as their exclusive bargaining representative. In any
case, NAMA-MCCH-NFL at the time of submission of said
proposals was not a duly registered labor organization,
hence it cannot legally represent MCCHIs rank-and-file
employees for purposes of collective bargaining. Hence,
even assuming that NAMA-MCCH-NFL had validly
disaffiliated from its mother union, NFL, it still did not
possess the legal personality to enter into CBA negotiations.
A local union which is not independently registered cannot,
upon disaffiliation from the federation, exercise the rights
and privileges granted by law to legitimate labor
organizations; thus, it cannot file a petition for certification
election. Besides, the NFL as the mother union has the right
to investigate members of its local chapter under the
federations Constitution and By-Laws, and if found guilty to
expel such members. MCCHI therefore cannot be faulted
for deferring action on the CBA proposal submitted by
NAMA-MCCH-NFL in view of the union leaderships
conflict with the national federation. The issue of
disaffiliation is an intra-union dispute which must be
resolved in a different forum in an action at the instance
of either or both the federation and the local union or a
rival labor organization, not the employer.
Not being a legitimate labor organization nor the certified
exclusive bargaining representative of MCCHIs rank-and-
file employees, NAMA-MCCH-NFL cannot demand from
MCCHI the right to bargain collectively in their
behalf. Hence, MCCHIs refusal to bargain then with NAMA-
MCCH-NFL cannot be considered an unfair labor practice to
justify the staging of the strike.
(2) Strike and picketing activities conducted by union
officers and members were illegal

Art. 263 (b) of the Labor Code, as amended, provides:
ART. 263. Strikes, picketing and lockouts. x x x
(b) Workers shall have the right to engage in concerted
activities for purposes of collective bargaining or for their
mutual benefit and protection. The right of legitimate labor
organizations to strike and picket and of employers to
lockout, consistent with the national interest, shall continue
to be recognized and respected. However, no labor union
may strike and no employer may declare a lockout on
grounds involving inter-union and intra-union disputes.
As borne by the records, NAMA-MCCH-NFL was not a duly
registered or an independently registered union at the time it
filed the notice of strike and when it conducted the strike
vote. It could not then legally represent the union members.
Consequently, the mandatory notice of strike and the
conduct of the strike vote report were ineffective for having
been filed and conducted by NAMA-MCCH-NFL which has
no legal personality as a legitimate labor organization, in
violation of Art. 263 (c), (d) and (f) of the Labor Code and
Rule XXII, Book V of the Omnibus Rules Implementing the
Labor Code.
Furthermore, the strike was illegal due to the
commission of the following prohibited activities : (1)
violence, coercion, intimidation and harassment against
non-participating employees; and (2) blocking of free
ingress to and egress from the hospital, including
preventing patients and their vehicles from entering the
hospital and other employees from reporting to work,
the putting up of placards with a statement advising
incoming patients to proceed to another hospital
because MCCHI employees are on strike/protest.
(3) There was no illegal dismissal.
Considering their persistence in holding picketing activities
despite the declaration by the NCMB that their union was
not duly registered as a legitimate labor organization and the
letter from NFLs legal counsel informing that their acts
constitute disloyalty to the national federation, and their filing
of the notice of strike and conducting a strike vote
notwithstanding that their union has no legal personality to
negotiate with MCCHI for collective bargaining purposes,
there is no question that NAMA-MCCH-NFL officers
knowingly participated in the illegal strike. The CA therefore
did not err in ruling that the termination of union
officers was valid and justified.
(4) Dismissed union members not entitled to backwages
but should be awarded separation pay in lieu of
reinstatement.
Since there is no clear proof that union members actually
participated in the commission of illegal acts during the
strike, they are not deemed to have lost their employment
status as a consequence of a declaration of illegality of the
strike.
_____________________
Article 245 (Ineligibility of Managerial Employees)
(21) G.R. No. 169717 March 16, 2011
SAMAHANG MANGGAGAWA SA CHARTER CHEMICAL
SOLIDARITY OF UNIONS IN THE PHILIPPINES FOR
EMPOWERMENT AND REFORMS (SMCC-SUPER),
ZACARRIAS JERRY VICTORIO-Union President vs
CHARTER CHEMICAL and COATING CORPORATION
DEL CASTILLO, J .:
DOCTRINE: The right to file a petition for certification
election is accorded to a labor organization provided that it
complies with the requirements of law for proper registration.
The inclusion of supervisory employees in a labor
organization seeking to represent the bargaining unit of
rank-and-file employees does not divest it of its status
as a legitimate labor organization.
FACTS:
Petitioner union filed a petition for certification election
among the regular rank-and-file employees of respondent
company with the Mediation Arbitration Unit of the DOLE-
NCR.
Respondent company filed an Answer with Motion to
Dismiss on the ground that petitioner union is not a
legitimate labor organization because of (1) failure to comply
with the documentation requirements set by law, and (2) the
inclusion of supervisory employees within petitioner
union.
LA dismissed the petition for certification election because
petitioner union is not a legitimate labor organization
because the Charter Certificate, etc. were not executed
under oath and certified by the union secretary and attested
to by the union president. Moreover, the membership
consisted of people who performed supervisory
functions. Under Article 245 of the Labor Code, said
supervisory employees are prohibited from joining
petitioner union which seeks to represent the rank-and-
file employees of respondent company.
DOLE reversed.

CA reversed DOLE because petitioner union failed to
comply with the documentation requirements under the
Labor Code and that petitioner union consisted of both rank-
and-file and supervisory employees.
ISSUES:
(1) Whether the alleged failure to certify under oath the local
charter certificate issued by its mother federation and list of
the union membership attending the organizational meeting
[is a ground] for the cancellation of petitioner [unions] legal
personality as a labor organization and for the dismissal of
the petition for certification election.
(2) Whether the alleged mixture of rank-and-file and
supervisory employee[s] of petitioner [unions] membership
is [a] ground for the cancellation of petitioner [unions] legal
personality and dismissal of [the] petition for certification
election.
HELD:
(1) The charter certificate need not be certified under
oath by the local unions secretary or treasurer and
attested to by its president.
In accordance with this ruling, petitioner unions charter
certificate need not be executed under oath. Consequently,
it validly acquired the status of a legitimate labor
organization upon submission of (1) its charter
certificate, (2) the names of its officers, their addresses, and
its principal office, and (3) its constitution and by-laws the
last two requirements having been executed under oath by
the proper union officials as borne out by the records.
(2) The mixture of rank-and-file and supervisory
employees in petitioner union does not nullify its legal
personality as a legitimate labor organization.
A batchman, mill operator and leadman, are supervisory
employees. Nonetheless, the inclusion of the aforesaid
supervisory employees in petitioner union does not divest it
of its status as a legitimate labor organization.
R.A. No. 6715 omitted specifying the exact effect any
violation of the prohibition on the co-mingling of
supervisory and rank-and-file employees] would bring
about on the legitimacy of a labor organization.
The applicable law and rules in the instant case are the
same as those in Kawashima because the present petition
for certification election was filed in 1999 when D.O. No. 9,
series of 1997, was still in effect. Hence,Kawashima applies
with equal force here. As a result, petitioner union was not
divested of its status as a legitimate labor organization even
if some of its members were supervisory employees; it had
the right to file the subject petition for certification election.
(3) The legal personality of petitioner union cannot be
collaterally attacked by respondent company in the
certification election proceedings.
Except when it is requested to bargain collectively, an
employer is a mere bystander to any petition for certification
election; such proceeding is non-adversarial and merely
investigative, for the purpose thereof is to determine which
organization will represent the employees in their collective
bargaining with the employer. The choice of their
representative is the exclusive concern of the employees;
the employer cannot have any partisan interest therein; it
cannot interfere with, much less oppose, the process by
filing a motion to dismiss or an appeal from it; not even a
mere allegation that some employees participating in a
petition for certification election are actually managerial
employees will lend an employer legal personality to block
the certification election. The employer's only right in the
proceeding is to be notified or informed thereof.
__________________________
(22) G.R. No. 164561 August 30, 2006
CATHAY PACIFIC STEEL CORPORATION, BENJAMIN
CHUA JR., VIRGILIO AGERO, and LEONARDO
VISORRO, JR. vs. CA, CAPASCO UNION OF
SUPERVISORY EMPLOYEES (CUSE) and ENRIQUE
TAMONDONG III
CHICO-NAZARIO, J.:
FACTS: Petitioner CAPASCO, hired private respondent
Tamondong as Assistant to the Personnel Manager for its
Cainta Plant. Thereafter, he was promoted to the position of
Personnel/Administrative Officer, and later to that of
Personnel Superintendent. Sometime in June 1996, the
supervisory personnel of CAPASCO launched a move to
organize a union among their ranks, later known as private
respondent CUSE. Private respondent Tamondong actively
involved himself in the formation of the union and was even
elected as one of its officers after its creation.
Consequently, petitioner CAPASCO sent a memo to
private respondent Tamondong requiring him to explain
and to discontinue from his union activities, with a
warning that a continuance thereof shall adversely
affect his employment in the company. Private
respondent Tamondong ignored said warning and made a
reply letter invoking his right as a supervisory employee to
join and organize a labor union.
Petitioner CAPASCO through a memo terminated the
employment of private respondent Tamondong on the

ground of loss of trust and confidence, citing his union
activities as acts constituting serious disloyalty to the
company.
Private respondent Tamondong challenged his filed a
Complaint for Illegal Dismissal and Unfair Labor Practice
before the NLRC. According to him, there was no just cause
for his dismissal and it was anchored solely on his
involvement and active participation in the organization of
the union of supervisory personnel in CAPASCO. Though
private respondent Tamondong admitted his active role
in the formation of a union composed of supervisory
personnel in the company, he claimed that such was
not a valid ground to terminate his employment
because it was a legitimate exercise of his
constitutionally guaranteed right to self-organization.
Petitioner CAPASCO contended that by virtue of private
respondent Tamondongs position as Personnel
Superintendent and the functions actually performed by
him in the company, he was considered as a managerial
employee, thus, under the law he was prohibited from
joining a union as well as from being elected as one of
its officers.
LA ruled that there was illegal dismissal and ULP.
NLRC dismissed the illegal dismissal and ULP.
CA reversed NLRC.
ISSUE: Whether respondent is managerial or supervisorial
employee.
HELD: Respondent is supervisorial employee.
In the case at bar, private respondent Tamondong to
observe fixed daily working hours which is very
uncharacteristic of a managerial employee. One of the
essential characteristics of an employee holding a
managerial rank is that he is not subjected to the rigid
observance of regular office hours or maximum hours of
work.
Further he may have possessed enormous powers and was
performing important functions that go with the position of
Personnel Superintendent, nevertheless, there was no
clear showing that he is at liberty, by using his own
discretion and disposition, to lay down and execute
major business and operational policies for and in
behalf of CAPASCO. [Petitioner] CAPASCO miserably
failed to establish that [private respondent] Tamondong was
authorized to act in the interest of the company using his
independent judgment. x x x. Withal, [private respondent]
Tamondong may have been exercising certain
important powers, such as control and supervision over
erring rank-and-file employees, however, x x x he does
not possess the power to hire, transfer, terminate, or
discipline erring employees of the company. At the most,
the record merely showed that Tamondong informed and
warned rank-and-file employees with respect to their
violations of CAPASCOs rules and regulations. x x x. [Also,
the functions performed by private respondent such as]
issuance of warning to employees with irregular attendance
and unauthorized leave of absences and requiring
employees to explain regarding charges of abandonment of
work, are normally performed by a mere supervisor, and not
by a manager.
Accordingly, Article 212(m) of the Labor Code, as
amended, differentiates supervisory employees from
managerial employees, to wit:
Managerial Supervisorial
those who are vested with
powers or prerogatives to
lay down and execute
management policies and/or
hire, transfer, suspend, lay
off, recall, discharge, assign
or discipline employees
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 requires the use of
independent judgment
Hence, the Labor Code provisions regarding disqualification
of a managerial employee from joining, assisting or forming
any labor organization does not apply to herein private
respondent Tamondong. Being a supervisory employee of
CAPASCO, he cannot be prohibited from joining or
participating in the union activities of private respondent
CUSE.
With regard to the allegation that private respondent
Tamondong was not only a managerial employee but
also a confidential employee, the same cannot be
validly raised in this Petition for Certiorari. It is settled
that an issue which was not raised in the trial court
cannot be raised for the first time on appeal.

Art. 232 (Contract-Bar Rule)
CHRIS GARMENTS CORPORATION vs. HON.
PATRICIA A. STO. TOMAS and CHRIS
GARMENTS WORKERS UNION-PTGWO
LOCAL CHAPTER No. 832
(1 ) Under Department Order No. 40-03, Series
of 2003, the decision of the Secretary of Labor
and Employment shall be final and executory
after ten days from receipt thereof by the parties
and that it shall not be subject of a motion for
reconsideration.
(2) The doctrine of res judicata provides that a
final judgment or decree on the merits by a court
of competent jurisdiction is conclusive of the
rights of the parties or their privies in all later suits
on points and matters determined in the former
suit.
In the instant case, there is no dispute as to the
presence of the first three elements of res
judicata. The Resolution of the DOLE Secretary
on the first petition for certification election
became final and executory. It was rendered on
the merits and the Secretary of Labor and
Employment had jurisdiction over the case. Now,
is the fourth element identity of parties,
subject matter, and causes of action between
the first and third petitions for certification
election present? We hold in the negative.
The Secretary of Labor and Employment
dismissed the first petition as it was filed
outside the 60-day freedom period. At that
time therefore, the union has no cause of
action since they are not yet legally allowed
to challenge openly and formally the status of
SMCGC-SUPER as the exclusive bargaining
representative of the bargaining unit. Such
dismissal, however, has no bearing in the
instant case since the third petition for
certification election was filed well within the
60-day freedom period. Otherwise stated,
there is no identity of causes of action to
speak of since in the first petition, the union
has no cause of action while in the third, a
cause of action already exists for the union as
they are now legally allowed to challenge the
status of SMCGC-SUPER as exclusive
bargaining representative.
______________________
Art. 243-249 (ULP)
GENERAL SANTOS COCA-COLA PLANT
FREE WORKERS UNION-TUPAS vs. COCA-
COLA BOTTLERS PHILS., INC. (GENERAL
SANTOS CITY), CA & NLRC
The company engaged by COCA-COLA was a
legitimate, independent contractor and that
CCBPI Gen San engaged the services of JLBP to
meet business exigencies created by the freeze-
hiring directive of the CCBPI Head Office.
The companys action to contract-out the
services and functions performed by Union
members did not constitute unfair labor practice
as this was not directed at the members right to
self-organization.
Unfair labor practice refers to "acts that
violate the workers right to organize." The
prohibited acts are related to the workers
right to self-organization and to the
observance of a CBA. Without that element,
the acts, even if unfair, are not unfair labor
practices
Both the NLRC and the CA found that petitioner
was unable to prove its charge of unfair labor
practice. It was the Union that had the burden of
adducing substantial evidence to support its
allegations of unfair labor practice which burden it
failed to discharge.
_____________
UST FACULTY UNION vs. UNIVERSITY OF
SANTO TOMAS, REV. FR. ROLANDO DE LA
ROSA, REV. FR. RODELIO ALIGAN,
DOMINGO LEGASPI, and MERCEDES
HINAYON

DOCTRINE: In sum, petitioner makes several
allegations that UST committed ULP. The onus
probandi falls on the shoulders of petitioner to
establish or substantiate such claims by the requisite
quantum of evidence. In labor cases as in other
administrative proceedings, substantial evidence or
such relevant evidence as a reasonable mind might
accept as sufficient to support a conclusion is
required. In the petition at bar, petitioner miserably
failed to adduce substantial evidence as basis for the
grant of relief.
(2) ART. 250. Procedure in collective bargaining.
The following procedures shall be observed in
collective bargaining:
(a) When a party desires to negotiate an agreement, it
shall serve a written notice upon the other party with a
statement of its proposals. The other party shall make
a reply thereto not later than ten (10) calendar days
from receipt of such notice;
Moreover, Art. 252 of the Code defines the duty to
bargain collectively as:
ART. 252. Meaning of duty to bargain
collectively.The duty to bargain collectively means
the performance of a mutual obligation to meet and
convene promptly and expeditiously in good faith for
the purpose of negotiating an agreement with respect
to wages, hours of work and all other terms and
conditions of employment including proposals for
adjusting any grievances or questions arising under
such agreement and executing a contract
incorporating such agreements if requested by either
party but such duty does not compel any party to
agree to a proposal or to make any concession.
The general principle is that one who makes an
allegation has the burden of proving it. While
there are exceptions to this general rule, in the
case of ULP, the alleging party has the burden of
proving such ULP.
(a) With regard to the alleged derogatory remarks
of Atty. Legaspi, the three tribunals correctly
ruled that there was no evidence to support such
allegation. The alleged evidence to support
petitioners claim, the Affidavit dated January 21,
2000 of Yu, is unacceptable. In the Affidavit it is
stated that: "6. That in the said meeting, Atty.
Legaspi gave the participants information that are
derogatory to the officers of the UST Faculty
Union."
It may be observed that the information allegedly
provided during the meeting as "derogatory" is a
conclusion of law and not of fact. What may be
derogatory to Yu may not be punishable under
the law. There was, therefore, no fact that was
established by the Affidavit. Hence, petitioner
failed to present evidence in support of its claim
that respondents committed ULP through alleged
remarks of Atty. Legaspi.
(b) The contents of the memorandum cannot
be interpreted to mean that faculty members
were required to attend the convocation. Not
one coercive term was used in the
memorandum to show that the faculty club
members were compelled to attend such
convocation. And the phrase "we are allowing
them to hold a convocation" negates any idea
that the UST would participate in the
proceedings.
Moreover, the Faculty Convocation was held
without the overt participation of any UST
Administrator or Official.
Thus, there is no evidence that UST organized
the convocation in connivance with the Gamilla
Group.
(c) Anent USTs dealing with the Gamilla
Group, including the processing of faculty
members educational and hospitalization
benefits, the Gamilla Group represented itself
to respondents as the duly elected officials of
the USTFU. As such, respondents were
bound to deal with them.
In the instant case, until the SC decision that the
Gamilla Group was not validly elected into office,
there was no reason to believe that the members
of the Gamilla Group were not the validly elected
officers and directors of USTFU.

More important though is the fact that the records
are bereft of any evidence to show that the
Mario Group informed the UST of their
objections to the election of the Gamilla Group. In
fact, there is even no evidence to show that the
scheduled elections that was supposed to be
presided over by the Mario Group ever pushed
through. Instead, petitioner filed a complaint with
the med-arbiter praying for the nullification of the
election of the Gamilla Group.
(d) It is not the duty or obligation of
respondents to inquire into the validity of the
election of the Gamilla Group. Such issue is
properly an intra-union controversy subject to
the jurisdiction of the med-arbiter of the
DOLE. Respondents could not have been
expected to stop dealing with the Gamilla
Group on the mere accusation of the Mario
Group that the former was not validly elected
into office.
(e) As to the padlocking of the USTFU office, it
must be emphasized that based on the
Certification of Sibug (witness of petitioner),
Cardenas (of the security agency contracted by
UST) was merely present, with the Brgy. Capt. at
the padlocking of the USTFU office. The
Certification also stated that Sibug himself also
padlocked the USTFU office and that he was
neither harassed nor coerced by the padlocking
group. Clearly, Cardenas mere presence cannot
be equated to a positive act of "aiding" the
Gamilla Group in securing the USTFU office.
With regard to the photograph, while it evidences
that there was indeed a guard posted at the
USTFU office, such cannot be used to claim that
the guard prevented the Mario Group from
performing its duties.
___________
PHILIPPINE SKYLANDERS, INC., MARILES C.
ROMULO and FRANCISCO DAKILA vs. NLRC
, LABOR ARBITER EMERSON TUMANON,
PHILIPPINE ASSOCIATION OF FREE LABOR
UNIONS (PAFLU) SEPTEMBER (now UNIFIED
PAFLU) and SERAFIN AYROSO
(1) The pendency of an election protest involving
both the mother federation and the local union
did not constitute a bar to a valid disaffiliation.
Neither was it disputed by PAFLU that 92.5% of
the total union membership supported the claim
of disaffiliation and had in fact disauthorized
PAFLU from instituting any complaint in their
behalf.
It was entirely reasonable then for PSI to enter
into a collective bargaining agreement with
PSEA-NCW. As PSEA had validly severed itself
from PAFLU, there would be no restrictions which
could validly hinder it from subsequently affiliating
with NCW and entering into a collective
bargaining agreement in behalf of its members.
(2) The mere act of disaffiliation did not divest
PSEA (being an independent union) of its own
personality; neither did it give PAFLU the license
to act independently of the local union. Recreant
to its mission, PAFLU cannot simply ignore the
demands of the local chapter and decide for its
welfare. PAFLU might have forgotten that as an
agent it could only act in representation of and in
accordance with the interests of the local union.
The complaint then for unfair labor practice
lodged by PAFLU against PSI, PSEA and their
respective officers, having been filed by a
party which has no legal personality to
institute the complaint, should have been
dismissed at the first instance for failure to
state a cause of action.
Policy considerations dictate that in weighing the
claims of a local union as against those of a
national federation, those of the former must be
preferred. Parenthetically though, the desires of
the mother federation to protect its locals are not
altogether to be shunned. It will however be to err
greatly against the Constitution if the desires of
the federation would be favored over those of its
members. That, at any rate, is the policy of the
law. For if it were otherwise, instead of protection,

there would be disregard and neglect of the lowly
workingmen.
__________________
TROPICAL HUT EMPLOYEES' UNION-CGW et
al. vs. TROPICAL HUT FOOD MARKET, INC.
et al.
(1) VALID DISAFFILIATION.
The inclusion of the word NATU after the name of
the local union THEU in the registration with the
Department of Labor is merely to stress that the
THEU is NATU's affiliate at the time of the
registration. It does not mean that the said local
union cannot stand on its own. Neither can it be
interpreted to mean that it cannot pursue its own
interests independently of the federation. A local
union owes its creation and continued existence
to the will of its members and not to the
federation to which it belongs.
When the local union withdrew from the old
federation to join a new federation, it was merely
exercising its primary right to labor organization
for the effective enhancement and protection of
common interests. In the absence of enforceable
provisions in the federation's constitution
preventing disaffiliation of a local union a local
may sever its relationship with its parent.
There is nothing in the constitution of the
NATU or in the constitution of the THEU-
NATU that the THEU was expressly forbidden
to disaffiliate from the federation. The alleged
non-compliance of the local union with the
provision in the NATU Constitution requiring
the service of three months notice of
intention to withdraw did not produce the
effect of nullifying the disaffiliation for the
following grounds: firstly, NATU was not even
a legitimate labor organization, it appearing
that it was not registered at that time with the
Department of Labor, and therefore did not
possess and acquire, in the first place, the
legal personality to enforce its constitution
and laws, much less the right and privilege
under the Labor Code to organize and affiliate
chapters or locals within its group, and
secondly, the act of non-compliance with the
procedure on withdrawal is premised on
purely technical grounds which cannot rise
above the fundamental right of self-
organization.
Further, there is no merit in the contention of
the respondents that the act of disaffiliation
violated the union security clause of the CBA
and that their dismissal as a consequence
thereof is valid. A perusal of the CBA shows
that the THEU-NATU, and not the NATU
federation, was recognized as the sole and
exclusive collective bargaining agent for all its
workers and employees in all matters concerning
wages, hours of work and other terms and
conditions of employment. Although NATU was
designated as the sole bargaining agent in the
check-off authorization form attached to the CBA,
this simply means it was acting only for and in
behalf of its affiliate. The NATU possessed the
status of an agent while the local union remained
the basic principal union which entered into
contract with the respondent company. When the
THEU disaffiliated from its mother federation, the
former did not lose its legal personality as the
bargaining union under the CBA. Moreover, the
union security clause embodied in the
agreements cannot be used to justify the
dismissals meted to petitioners since it is not
applicable to the circumstances obtaining in this
case. The CBA imposes dismissal only in
case an employee is expelled from the union
for joining another federation or for forming
another union or who fails or refuses to
maintain membership therein. The case at bar
does not involve the withdrawal of merely
some employees from the union but of the
whole THEU itself from its federation. Clearly,
since there is no violation of the union
security provision in the CBA, there was no
sufficient ground to terminate the
employment of petitioners.
(2) NO ULP.

The prerogative of the employer to dismiss or lay-
off an employee should be done without abuse of
discretion or arbitrainess, for what is at stake is
not only the employee's name or position but also
his means of livelihood. Thus, the discharge of an
employee from his employment is null and void
where the employee was not formally
investigated and given the opportunity to refute
the alleged findings made by the company.
Likewise, an employer can be adjudged guilty of
unfair labor practice for having dismissed its
employees in line with a closed shop provision if
they were not given a proper hearing.
In view of the fact that the dispute revolved
around the mother federation and its local, with
the company suspending and dismissing the
workers at the instance of the mother federation
then, the company's liability should be limited to
the immediate reinstatement of the workers. And
since their dismissals were effected without
previous hearing and at the instance of NATU,
this federation should be held liable to the
petitioners for the payment of their backwages,
as what We have ruled in the Liberty Cotton Mills
Case (supra).
_________________
PUREFOODS CORPORATION vs.
NAGKAKAISANG SAMAHANG
MANGGAGAWA NG PUREFOODS RANK-
AND-FILE, ST. THOMAS FREE WORKERS
UNION, PUREFOODS GRANDPARENT FARM
WORKERS UNION and PUREFOODS UNIFIED
LABOR ORGANIZATION
It is crystal clear that the closure of the Sto.
Tomas farm was made in bad faith. Badges of
bad faith are evident from the following acts of
the petitioner: it unjustifiably refused to recognize
the STFWUs and the other unions affiliation with
PULO; it concluded a new CBA with another
union in another farm during the agreed indefinite
suspension of the collective bargaining
negotiations; it surreptitiously transferred and
continued its business in a less hostile
environment; and it suddenly terminated the
STFWU members, but retained and brought the
non-members to the Malvar farm. Petitioner
presented no evidence to support the contention
that it was incurring losses or that the subject
farms lease agreement was pre-terminated.
Ineluctably, the closure of the Sto. Tomas farm
circumvented the labor organizations right to
collective bargaining and violated the members
right to security of tenure.
The sudden termination of the STFWU members
is tainted with ULP because it was done to
interfere with, restrain or coerce employees in the
exercise of their right to self-organization.
________________
DE LA SALLE UNIVERSITY and DR.
CARMELITA I. QUEBENGCO vs. DE LA
SALLE UNIVERSITY EMPLOYEES
ASSOCIATION (DLSUEA-NAFTEU)
Pending the final resolution of the intra-union
dispute, respondents officers remained duly
authorized to conduct union affairs. The
clarification letter issued by BLR Director stated
that there is no void in the DLSUEA leadership.
The Decision of DOLE-NCR Regional Director
should not be construed as an automatic
termination of the incumbent officers tenure of
office.
It bears noting that at the time petitioners
questioned moves were adopted, a valid and
existing CBA had been entered between the
parties. It thus behooved petitioners to observe
the terms and conditions thereof bearing on
union dues and representation. It is axiomatic in
labor relations that a CBA entered into by a
legitimate labor organization and an employer
becomes the law between the parties,
compliance with which is mandated by express
policy of the law.
_____________________
MALAYANG SAMAHAN NG MGA
MANGGAGAWA SA M. GREENFIELD (MSMG-

UWP) et al. vs. HON. CRESENCIO J. RAMOS
et al.
(1)There was illegal dismissal but no ULP.
Although this Court has ruled that union security
clauses embodied in the collective bargaining
agreement may be validly enforced and that
dismissals pursuant thereto may likewise be
valid, this does not erode the fundamental
requirement of due process. The reason
behind the enforcement of union security clauses
which is the sanctity and inviolability of contracts
cannot override one's right to due process.
In the case, respondent company did not
inquire into the cause of the expulsion and
whether or not the federation had sufficient
grounds to effect the same.
While it is true that the issue of expulsion of the
local union officers is originally between the local
union and the federation, hence, intra-union in
character, the issue was later on converted into a
termination dispute when the company dismissed
the petitioners from work without the benefit of a
separate notice and hearing. As a matter of fact,
the records reveal that the termination was
effective on the same day that the termination
notice was served on the petitioners.
Thus, notwithstanding the fact that the
dismissal was at the instance of the
federation and that it undertook to hold the
company free from any liability resulting from
such a dismissal, the company may still be
held liable if it was remiss in its duty to
accord the would-be dismissed employees
their right to be heard on the matter.
Anent public respondents finding that there was
no unfair labor practice on the part of respondent
company and federation officers, the Court
sustains the same. As earlier discussed, union
security clauses in collective bargaining
agreements, if freely and voluntarily entered into,
are valid and binding. Corrolarily, dismissals
pursuant to union security clauses are valid and
legal subject only to the requirement of due
process, that is, notice and hearing prior to
dismissal. Thus, the dismissal of an employee by
the company pursuant to a labor unions demand
in accordance with a union security agreement
does not constitute unfair labor practice.
(2) EXPULSION WAS INVALID.
A local union which has affiliated itself with a
federation is free to sever such affiliation anytime
and such disaffiliation cannot be considered
disloyalty. In the absence of specific
provisions in the federation's constitution
prohibiting disaffiliation or the declaration of
autonomy of a local union, a local may
dissociate with its parent union.
The evidence on hand does not show that there
is such a provision in ULGWP's constitution.
Respondents' reliance upon Article V, Section 6,
of the federation's constitution is not right
because said section, in fact, bolsters the
petitioner union's claim of its right to declare
autonomy:
Sec. 6. The autonomy of a local union affiliated
with ULGWP shall be respected insofar as it
pertains to its internal affairs, except as provided
elsewhere in this Constitution.
There is no disloyalty to speak of, neither is
there any violation of the federation's
constitution because there is nothing in the
said constitution which specifically prohibits
disaffiliation or declaration of autonomy.
Hence, there cannot be any valid dismissal
because Article II, Section 4 of the union security
clause in the CBA limits the dismissal to only
three (3) grounds, to wit: failure to maintain
membership in the union (1) for non-payment of
union dues, (2) for resignation; and (3) for
violation of the union's Constitution and By-Laws.
____________________
ALABANG COUNTRY CLUB, INC. vs. NLRC,
ALABANG COUNTRY CLUB INDEPENDENT

EMPLOYEES UNION, CHRISTOPHER
PIZARRO, MICHAEL BRAZA, and NOLASCO
CASTUERAS
In terminating the employment of an employee by
enforcing the union security clause, the employer
needs only to determine and prove that:
(1) the union security clause is applicable;
(2) the union is requesting for the
enforcement of the union security provision
in the CBA; and
(3) there is sufficient evidence to support
the union's decision to expel the employee
from the union.
The three respondents were expelled from and
by the Union after due investigation for acts of
dishonesty and malversation of Union funds. In
accordance with the CBA, the Union properly
requested the Club to enforce the Union security
provision in their CBA and terminate said
respondents. Then, in compliance with the
Union's request, the Club reviewed the
documents submitted by the Union, requested
said respondents to submit written explanations,
and thereafter afforded them reasonable
opportunity to present their side. After it had
determined that there was sufficient evidence
that said respondents malversed Union funds,
the Club dismissed them from their employment
conformably with Sec. 4(f) of the CBA.
Thus, there is sufficient cause for the three
respondents' termination from employment.
Further, the Club has substantially complied with
due process. The three respondents were
notified that their dismissal was being requested
by the Union, and their explanations were heard.
Then, the Club, through its President, conferred
with said respondents during the last week of
October 2001. The three respondents were
dismissed only after the Club reviewed and
considered the documents submitted by the
Union vis--vis the written explanations submitted
by said respondents. Under these circumstances,
we find that the Club had afforded the three
respondents a reasonable opportunity to be
heard and defend themselves.
_____________________
STANDARD CHARTERED BANK EMPLOYEES
UNION (NUBE) vs. The Honorable MA.
NIEVES R. CONFESOR, in her capacity as
SECRETARY OF LABOR AND EMPLOYMENT;
and the STANDARD CHARTERED BANK
NO ULP SINCE THERE WAS NO
INTERFERENCE BY THE BANK.
(1) If an employer interferes in the selection of its
negotiators or coerces the Union to exclude from
its panel of negotiators a representative of the
Union, and if it can be inferred that the employer
adopted the said act to yield adverse effects on
the free exercise to right to self-organization or
on the right to collective bargaining of the
employees, ULP under Article 248(a) in
connection with Article 243 of the Labor Code is
committed.
In order to show that the employer committed
ULP under the Labor Code, substantial evidence
is required to support the claim. In the case at
bar, the Union bases its claim of interference
on the alleged suggestions of Diokno to
exclude Umali from the Unions negotiating
panel.
The circumstances that occurred during the
negotiation do not show that the suggestion
made by Diokno to Divinagracia is an anti-union
conduct from which it can be inferred that the
Bank consciously adopted such act to yield
adverse effects on the free exercise of the right to
self-organization and collective bargaining of the
employees, especially considering that such was
undertaken previous to the commencement of
the negotiation and simultaneously with
Divinagracias suggestion that the bank lawyers
be excluded from its negotiating panel.

The records show that after the initiation of the
collective bargaining process, with the inclusion
of Umali in the Unions negotiating panel, the
negotiations pushed through. The complaint was
made only after a deadlock was declared by the
Union.
It is clear that such ULP charge was merely an
afterthought. The accusation occurred after the
arguments and differences over the economic
provisions became heated and the parties had
become frustrated. It happened after the parties
started to involve personalities. As the public
respondent noted, passions may rise, and as a
result, suggestions given under less adversarial
situations may be colored with unintended
meanings. Such is what appears to have
happened in this case.

(2) The Union alleges that the Bank violated its
duty to bargain; hence, committed ULP under
Article 248(g) when it engaged in surface
bargaining. It alleged that the Bank just went
through the motions of bargaining without any
intent of reaching an agreement, as evident in the
Banks counter-proposals. It explained that of the
34 economic provisions it made, the Bank only
made 6 economic counterproposals. Further, as
borne by the minutes of the meetings, the Bank,
after indicating the economic provisions it had
rejected, accepted, retained or were open for
discussion, refused to make a list of items it
agreed to include in the economic package.
Surface bargaining is defined as "going
through the motions of negotiating" without
any legal intent to reach an agreement. The
resolution of surface bargaining allegations never
presents an easy issue. The determination of
whether a party has engaged in unlawful surface
bargaining is usually a difficult one because it
involves, at bottom, a question of the intent of the
party in question, and usually such intent can
only be inferred from the totality of the challenged
partys conduct both at and away from the
bargaining table. It involves the question of
whether an employers conduct demonstrates an
unwillingness to bargain in good faith or is merely
hard bargaining.
The minutes of meetings do not show that the
Bank had any intention of violating its duty to
bargain with the Union. Records show that after
the Union sent its proposal to the Bank, the latter
replied with a list of its counter-proposals.
Thereafter, meetings were set for the settlement
of their differences. The minutes of the meetings
show that both the Bank and the Union
exchanged economic and non-economic
proposals and counter-proposals.
Admittedly, the parties were not able to agree
and reached a deadlock. However, it is herein
emphasized that the duty to bargain "does
not compel either party to agree to a proposal
or require the making of a concession."
Hence, the parties failure to agree did not
amount to ULP under Article 248(g) for violation
of the duty to bargain.
(3) In view of the finding of lack of ULP based on
Article 248(g), the accusation that the Bank made
bad-faith provisions has no leg to stand on. The
records show that the Banks counterproposals
on the non-economic provisions or political
provisions did not put "up for grabs" the entire
work of the Union and its predecessors. As can
be gleaned from the Banks counterproposal,
there were many provisions which it proposed to
be retained. The revisions on the other provisions
were made after the parties had come to an
agreement. Far from buttressing the Unions
claim that the Bank made bad-faith proposals on
the non-economic provisions, all these, on the
contrary, disprove such allegations.
(4) SC also found that the Union failed to
substantiate its claim that the Bank refused to
furnish the information it needed.
While the refusal to furnish requested information
is in itself an unfair labor practice, and also
supports the inference of surface bargaining, in
the case at bar, Umali, in a meeting, requested

the Bank to validate its guestimates on the data
of the rank and file. However, Umali failed to put
his request in writing as provided for in Article
242(c) of the Labor Code.
The Union, did not, as the Labor Code requires,
send a written request for the issuance of a copy
of the data about the Banks rank and file
employees. Moreover, as alleged by the Union,
the fact that the Bank made use of the aforesaid
guestimates, amounts to a validation of the data
it had used in its presentation.
(5) The Union Did Not Engage In Blue-Sky
Bargaining
The Bank failed to show that the economic
demands made by the Union were exaggerated
or unreasonable. The minutes of the meeting
show that the Union based its economic
proposals on data of rank and file employees and
the prevailing economic benefits received by
bank employees from other foreign banks doing
business in the Philippines and other branches of
the Bank in the Asian region.
_____________________
GENERAL MILLING CORPORATION vs HON.
COURT OF APPEALS, GENERAL MILLING
CORPORATION INDEPENDENT LABOR
UNION (GMC-ILU), and RITO MANGUBAT
GUILTY OF ULP (for evasion of the duty to
bargain collectively; interference)
(1) The law mandates that the representation
provision of a CBA should last for five years. The
relation between labor and management should
be undisturbed until the last 60 days of the fifth
year. Hence, it is indisputable that when the
union requested for a renegotiation of the
economic terms of the CBA, it was still the
certified collective bargaining agent of the
workers, because it was seeking said
renegotiation within five (5) years from the date of
effectivity of the CBA. The unions proposal was
also submitted within the prescribed 3-year
period from the date of effectivity of the CBA,
albeit just before the last day of said period. It
was obvious that GMC had no valid reason to
refuse to negotiate in good faith with the union.
For refusing to send a counter-proposal to the
union and to bargain anew on the economic
terms of the CBA, the company committed an
unfair labor practice under Article 248.
Under Article 252, both parties are required to
perform their mutual obligation to meet and
convene promptly and expeditiously in good faith
for the purpose of negotiating an agreement. The
union lived up to this obligation when it presented
proposals for a new CBA to GMC within three (3)
years from the effectivity of the original CBA. But
GMC failed in its duty under Article 252. What it
did was to devise a flimsy excuse, by questioning
the existence of the union and the status of its
membership to prevent any negotiation.
GMCs refusal to make a counter-proposal to
the unions proposal for CBA negotiation is
an indication of its bad faith. Where the
employer did not even bother to submit an
answer to the bargaining proposals of the
union, there is a clear evasion of the duty to
bargain collectively.
(2) Further, there was interference. The letters
by 13 union members signifying their resignation
from the union clearly indicated that GMC
exerted pressure on its employees. The records
show that GMC presented these letters to prove
that the union no longer enjoyed the support of
the workers. The fact that the resignations of the
union members occurred during the pendency of
the case before the labor arbiter shows GMCs
desperate attempts to cast doubt on the
legitimate status of the union. Thus, the ill-timed
letters of resignation from the union members
indicate that GMC had interfered with the right of
its employees to self-organization.
(3) Lastly, it would be unfair to the union and its
members if the terms and conditions contained in
the old CBA would continue to be imposed on
GMCs employees for the remaining two (2)

years of the CBAs duration. Since it was GMC
which violated the duty to bargain collectively,
based on Kiok Loy and Divine Word University of
Tacloban, it had lost its statutory right to
negotiate or renegotiate the terms and conditions
of the draft CBA proposed by the union.
However, as strictly distinguished from the facts
of this case, there was no pre-existing CBA
between the parties in Kiok Loy and Divine Word
University of Tacloban. Nonetheless, we deem it
proper to apply in this case the rationale of the
doctrine in the said two cases. To rule otherwise
would be to allow GMC to have its cake and eat it
too.
_____________________
HACIENDA FATIMA and/or PATRICIO
VILLEGAS, ALFONSO VILLEGAS and
CRISTINE SEGURA vs. NATIONAL
FEDERATION OF SUGARCANE WORKERS-
FOOD AND GENERAL TRADE
(1) The sudden changes in work assignments
reeked of bad faith. These changes were
implemented immediately after respondents had
organized themselves into a union and started
demanding collective bargaining. Those who
were union members were effectively deprived of
their jobs. Petitioners' move actually amounted to
unjustified dismissal of respondents, in violation
of the Labor Code.
Where there is no showing of clear, valid and
legal cause for the termination of employment,
the law considers the matter a case of illegal
dismissal and the burden is on the employer to
prove that the termination was for a valid and
authorized cause. In the case at bar, petitioners
failed to prove any such cause for the dismissal
of respondents who, as discussed above, are
regular employees.
(2) From respondents' refusal to bargain, to their
acts of economic inducements resulting in the
promotion of those who withdrew from the union,
the use of armed guards to prevent the
organizers to come in, and the dismissal of union
officials and members, one cannot but conclude
that respondents did not want a union in their
haciendaa clear interference in the right of the
workers to self-organization.
__________________
ST. JOHN COLLEGES, INC. vs. ST. JOHN
ACADEMY FACULTY AND EMPLOYEES
UNION
DOCTRINE: In sum, the timing of, and the
reasons for the closure of the high school and
its reopening after only one year from the time
it was closed down, show that the closure was
done in bad faith for the purpose of
circumventing the Unions right to collective
bargaining and its members right to security of
tenure. Consequently, SJCI is liable for ULP
and illegal dismissal.
Under Article 283 of the Labor Code, the
following requisites must concur for a valid
closure of the business: (1) serving a written
notice on the workers at least one (1) month
before the intended date thereof; (2) serving a
notice with the DOLE one month before the
taking effect of the closure; (3) payment of
separation pay equivalent to one (1) month or at
least one half (1/2) month pay for every year of
service, whichever is higher, with a fraction of at
least six (6) months to be considered as a whole
year; and (4) cessation of the operation must be
bona fide.
The determination of whether SJCI acted in bad
faith depends on the particular facts as
established by the evidence on record. Bad faith
is, after all, an inference which must be drawn
from the peculiar circumstances of a case. The
two decisive factors in determining whether SJCI
acted in bad faith are (1) the timing of, and
reasons for the closure of the high school, and
(2) the timing of, and the reasons for the
subsequent opening of a college and elementary
department, and, ultimately, the reopening of the

high school department by SJCI after only one
year from its closure.
In the case, it is not difficult to discern that the
closure was done to defeat the parties
agreement to refer the labor dispute to the SOLE;
to unilaterally end the bargaining deadlock; to
render nugatory any decision of the SOLE; and to
circumvent the Unions right to collective
bargaining and its members right to security of
tenure. By admitting that the closure was due to
irreconcilable differences between the Union and
school management, specifically, the financial
aspect of the ongoing CBA negotiations, SJCI in
effect admitted that it wanted to end the
bargaining deadlock and eliminate the problem of
dealing with the demands of the Union. This is
precisely what the Labor Code abhors and
punishes as unfair labor practice since the net
effect is to defeat the Unions right to collective
bargaining.
(2) Even assuming that the Unions demands
were illegal or excessive, the important and
crucial point is that these alleged illegal or
excessive demands did not justify the closure of
the high school and do not, in any way, establish
SJCIs good faith. The employer cannot
unilaterally close its establishment on the pretext
that the demands of its employees are excessive.
As already discussed, neither party is obliged to
give-in to the others excessive or unreasonable
demands during collective bargaining, and the
remedy in such case is to refer the dispute to the
proper tribunal for resolution.
This was what SJCI and the Union did when they
referred the 1997 CBA bargaining deadlock to
the SOLE; however, SJCI pre-empted the
resolution of the dispute by closing the high
school. SJCI disregarded the whole dispute
resolution mechanism and undermined the
Unions right to collective bargaining when it
closed down the high school while the dispute
was still pending with the SOLE.
The Labor Code does not authorize the
employer to close down the establishment on
the ground of illegal or excessive demands of
the Union. Instead, aside from the remedy of
submitting the dispute for voluntary or
compulsory arbitration, the employer may file
a complaint for ULP against the Union for
bargaining in bad faith. If found guilty, this
gives rise to civil and criminal liabilities and
allows the employer to implement a lock out,
but not the closure of the establishment
resulting to the permanent loss of
employment of the whole workforce.
In fine, SJCI undermined the Labor Codes
system of dispute resolution by closing down the
high school while the 1997 CBA negotiations
deadlock issues were pending resolution before
the SOLE. The closure was done in bad faith for
the purpose of defeating the Unions right to
collective bargaining. Besides, as found by the
NLRC, the alleged illegality and excessiveness of
the Unions demands were not sufficiently proved
by SJCI. Even on the assumption that the
Unions demands were illegal or excessive,
SJCIs remedy was to await the resolution by the
SOLE and to file a ULP case against the Union.
However, SJCI did not have the power to take
matters into its own hands by closing down the
school in order to get rid of the Union.
Finally, when SJCI reopened its high school, it
did not rehire the Union members. Evidently, the
closure had achieved its purpose, that is, to get
rid of the Union members.
___________________
CENTRAL AZUCARERA DE BAIS
EMPLOYEES UNION-NFL [CABEU-NFL] vs.
CENTRAL AZUCARERA DE BAIS, INC. [CAB]
NO ULP. For a charge of unfair labor practice to
prosper, it must be shown that CAB was
motivated by ill will, "bad faith, or fraud, or was
oppressive to labor, or done in a manner contrary
to morals, good customs, or public policy, and, of
course, that social humiliation, wounded feelings
or grave anxiety resulted x x x" in suspending
negotiations with CABEU-NFL. Notably, CAB

believed that CABEU-NFL was no longer the
representative of the workers. It just wanted to
foster industrial peace by bowing to the wishes of
the overwhelming majority of its rank and file
workers and by negotiating and concluding in
good faith a CBA with CABELA." Such actions of
CAB are nowhere tantamount to anti-unionism,
the evil sought to be punished in cases of unfair
labor practices.
Furthermore, basic is the principle that good faith
is presumed and he who alleges bad faith has
the duty to prove the same. By imputing bad faith
to the actuations of CAB, CABEU-NFL has the
burden of proof to present substantial evidence to
support the allegation of unfair labor practice.
Apparently, CABEU-NFL refers only to the
circumstances mentioned in the letter-response,
namely, the execution of the supposed CBA
between CAB and CABELA and the request to
suspend the negotiations, to conclude that bad
faith attended CABs actions. The Court is of the
view that CABEU-NFL, in simply relying on the
said letter-response, failed to substantiate its
claim of unfair labor practice to rebut the
presumption of good faith.
Moreover, as correctly determined by the LA,
the filing of the complaint for unfair labor
practice was premature inasmuch as the
issue of collective bargaining is still pending
before the NCMB.
In the resolution of labor cases, this Court has
always been guided by the State policy enshrined
in the Constitution that the rights of workers and
the promotion of their welfare shall be protected.
The Court is, likewise, guided by the goal of
attaining industrial peace by the proper
application of the law. Thus, it cannot favor one
party, be it labor or management, in arriving at a
just solution to a controversy if the party has no
valid support to its claims. It is not within this
Courts power to rule beyond the ambit of the
law.
_____________________
UNION OF FILIPRO EMPLOYEES - DRUG,
FOOD AND ALLIED INDUSTRIES UNIONS -
KILUSANG MAYO UNO (UFE-DFA-KMU) vs.
NESTL PHILIPPINES, INCORPORATED
The purpose of collective bargaining is the
reaching of an agreement resulting in a contract
binding on the parties; but the failure to reach an
agreement after negotiations have continued for
a reasonable period does not establish a lack of
good faith. The statutes invite and contemplate a
collective bargaining contract, but they do not
compel one. The duty to bargain does not include
the obligation to reach an agreement.
There is no per se test of good faith in
bargaining. Good faith or bad faith is an inference
to be drawn from the facts. To some degree, the
question of good faith may be a question of
credibility. The effect of an employers or a
unions individual actions is not the test of good-
faith bargaining, but the impact of all such
occasions or actions, considered as a whole, and
the inferences fairly drawn therefrom collectively
may offer a basis for the finding of the NLRC.
While the law makes it an obligation for the
employer and the employees to bargain
collectively with each other, such compulsion
does not include the commitment to precipitately
accept or agree to the proposals of the other. All
it contemplates is that both parties should
approach the negotiation with an open mind and
make reasonable effort to reach a common
ground of agreement.
In the case, in thinking to exclude the issue of
Retirement Plan from the CBA negotiations,
Nestl, cannot be faulted for considering the
same benefit as unilaterally granted,
considering that eight out of nine bargaining
units have allegedly agreed to treat the
Retirement Plan as a unilaterally granted
benefit. This is not a case where the employer
exhibited an indifferent attitude towards collective
bargaining, because the negotiations were not
the unilateral activity of the bargaining
representative. Nestls desire to settle the

dispute and proceed with the negotiation being
evident in its cry for compulsory arbitration is
proof enough of its exertion of reasonable effort
at good-faith bargaining.
In the case at bar, Nestle never refused to
bargain collectively with UFE-DFA-KMU. The
corporation simply wanted to exclude the
Retirement Plan from the issues to be taken up
during CBA negotiations, on the postulation that
such was in the nature of a unilaterally granted
benefit.
An employers steadfast insistence to exclude
a particular substantive provision is no
different from a bargaining representatives
perseverance to include one that they deem
of absolute necessity. Indeed, an adamant
insistence on a bargaining position to the point
where the negotiations reach an impasse does
not establish bad faith. It is but natural that at
negotiations, management and labor adopt
positions or make demands and offer proposals
and counter-proposals. On account of the
importance of the economic issue proposed by
UFE-DFA-KMU, Nestle could have refused to
bargain with the former but it did not. And the
managements firm stand against the issue of the
Retirement Plan did not mean that it was
bargaining in bad faith. It had a right to insist on
its position to the point of stalemate.
____________________
EMPLOYEES UNION OF BAYER PHILS., FFW
and JUANITO S. FACUNDO, in his capacity as
President vs. BAYER PHILIPPINES, INC.,
HELD: Bayer committed ULP.
Note: Petitioners ULP complaint cannot
prosper as against respondents Remigio and
Villareal because the issue, as against them,
essentially involves an intra-union dispute
based on Section 1 (n) of DOLE Department
Order No. 40-03. To rule on the validity or
illegality of their acts, the Labor Arbiter and the
NLRC will necessarily touch on the issues
respecting the propriety of their disaffiliation
and the legality of the establishment of REUBP
issues that are outside the scope of their
jurisdiction. Accordingly, the dismissal of the
complaint was validly made, but only with
respect to these two respondents.
It must be remembered that a CBA is entered
into in order to foster stability and mutual
cooperation between labor and capital. An
employer should not be allowed to rescind
unilaterally its CBA with the duly certified
bargaining agent it had previously contracted
with, and decide to bargain anew with a different
group if there is no legitimate reason for doing so
and without first following the proper procedure. If
such behavior would be tolerated, bargaining and
negotiations between the employer and the union
will never be truthful and meaningful, and no CBA
forged after arduous negotiations will ever be
honored or be relied upon.
A CBA entered into by a legitimate labor
organization that has been duly certified as the
exclusive bargaining representative and the
employer becomes the law between them.
Additionally, in the Certificate of Registration
issued by the DOLE, it is specified that the
registered CBA serves as the covenant between
the parties and has the force and effect of law
between them during the period of its duration.
Compliance with the terms and conditions of the
CBA is mandated by express policy of the law
primarily to afford protection to labor and to
promote industrial peace. Thus, when a valid and
binding CBA had been entered into by the
workers and the employer, the latter is behooved
to observe the terms and conditions thereof
bearing on union dues and representation. If the
employer grossly violates its CBA with the duly
recognized union, the former may be held
administratively and criminally liable for unfair
labor practice.
(a) Respondents Bayer, Lonishen and
Amistoso, contend that their acts cannot
constitute unfair labor practice as the same

did not involve gross violations in the
economic provisions of the CBA.
However, it should not be construed to apply to
violations of the CBA which can be considered as
gross violations per se, such as utter disregard of
the very existence of the CBA itself, similar to
what happened in this case. When an employer
proceeds to negotiate with a splinter union
despite the existence of its valid CBA with the
duly certified and exclusive bargaining agent,
the former indubitably abandons its
recognition of the latter and terminates the
entire CBA.
Respondents cannot claim good faith to justify
their acts. They knew that Facundos group
represented the duly-elected officers of EUBP.
Moreover, they were cognizant of the fact that
even the DOLE Secretary himself had recognized
the legitimacy of EUBPs mandate by rendering
an arbitral award ordering the signing of the
1997-2001 CBA between Bayer and EUBP.
Respondents were likewise well-aware of the
pendency of the intra-union dispute case, yet
they still proceeded to turn over the collected
union dues to REUBP and to effusively deal with
Remigio. The totality of respondents conduct,
therefore, reeks with anti-EUBP animus.
(b) Bayer, Lonishen and Amistoso argue that
the case is already moot and academic
following the lapse of the 1997-2001 CBA and
their renegotiation with EUBP for the 2006-
2007 CBA. They also reason that the act of
the company in negotiating with EUBP for the
2006-2007 CBA is an obvious recognition on
their part that EUBP is now the certified
collective bargaining agent of its rank-and-file
employees.
First, a legitimate labor organization cannot be
construed to have abandoned its pending claim
against the management/employer by returning
to the negotiating table to fulfill its duty to
represent the interest of its members, except
when the pending claim has been expressly
waived or compromised in its subsequent
negotiations with the management. To hold
otherwise would be tantamount to subjecting
industrial peace to the precondition that previous
claims that labor may have against capital must
first be waived or abandoned before negotiations
between them may resume. Undoubtedly, this
would be against public policy of affording
protection to labor and will encourage scheming
employers to commit unlawful acts without fear of
being sanctioned in the future.
Second, that the management of Bayer decided
to recognize EUBP as the certified collective
bargaining agent of its rank-and-file employees
for purposes of its 2006-2007 CBA negotiations
is of no moment. It did not obliterate the fact that
the management of Bayer had withdrawn its
recognition of EUBP and supported REUBP
during the tumultuous implementation of the
1997-2001 CBA. Such act of interference which
is violative of the existing CBA with EUBP led to
the filing of the subject complaint.


Art. 252 (Meaning of Duty to Bargain
Collectively)
(1) G.R. Nos. 158930-31 March 3, 2008
UFE-DFA-KMU vs. NESTL PHILIPPINES, INC.
CHICO-NAZARIO, J.:
FACTS: UFE-DFA-KMU informed Nestl of their
intent to open new Collective Bargaining
Negotiation. In response thereto, Nestl informed
them that it was also preparing its own counter-
proposal and proposed ground rules to govern the
impending conduct of the CBA negotiations.
Nestl reiterated its stance that "unilateral grants,
one-time company grants, company-initiated
policies and programs, which include, but are not
limited to the Retirement Plan, Incidental Straight
Duty Pay and Calling Pay Premium, are by their
very nature not proper subjects of CBA
negotiations and therefore shall be excluded
therefrom.
After the ruling of the SC directing the parties to
resume negotiations respecting the Retirement
Plan, Nestl filed a Motion for Clarification
respecting the dispositive part of this Courts
Decision directing herein parties to resume
negotiations on the retirement compensation
package of the concerned employees;
While the Union filed a Motion for Partial
Reconsideration---that Nestls "refusal to bargain
on a very important CBA economic provision
constitutes unfair labor practice. Nestl set as a
precondition for the holding of collective
bargaining negotiations the non-inclusion of the
issue of Retirement Plan.
ISSUE: WON there was ULP committed by
Nestle.
HELD: NO ULP.
The duty to bargain collectively is mandated by
Articles 252 and 253 of the Labor Code, as
amended.
Obviously, the purpose of collective bargaining is
the reaching of an agreement resulting in a
contract binding on the parties; but the failure to
reach an agreement after negotiations have
continued for a reasonable period does not
establish a lack of good faith. The statutes invite
and contemplate a collective bargaining contract,
but they do not compel one. The duty to bargain
does not include the obligation to reach an
agreement.
Herein, the union merely bases its claim of refusal
to bargain on a letter written by Nestl where the
latter laid down its position that "unilateral grants,
one-time company grants, company-initiated
policies and programs, which include, but are not
limited to the Retirement Plan, Incidental Straight
Duty Pay and Calling Pay Premium, are by their
very nature not proper subjects of CBA
negotiations and therefore shall be excluded
therefrom." But as we have stated in this Courts
Decision, said letter is not tantamount to refusal to
bargain. In thinking to exclude the issue of
Retirement Plan from the CBA negotiations,
Nestl, cannot be faulted for considering the same
benefit as unilaterally granted, considering that
eight out of nine bargaining units have allegedly
agreed to treat the Retirement Plan as a
unilaterally granted benefit. This is not a case
where the employer exhibited an indifferent
attitude towards collective bargaining, because
the negotiations were not the unilateral activity of
the bargaining representative. Nestls desire to
settle the dispute and proceed with the negotiation
being evident in its cry for compulsory arbitration
is proof enough of its exertion of reasonable effort
at good-faith bargaining.
In the case at bar, Nestle never refused to bargain
collectively with UFE-DFA-KMU. The corporation
simply wanted to exclude the Retirement Plan
from the issues to be taken up during CBA
negotiations, on the postulation that such was in
the nature of a unilaterally granted benefit. An

employers steadfast insistence to exclude a
particular substantive provision is no different from
a bargaining representatives perseverance to
include one that they deem of absolute necessity.
Indeed, an adamant insistence on a bargaining
position to the point where the negotiations reach
an impasse does not establish bad faith. It is but
natural that at negotiations, management and
labor adopt positions or make demands and offer
proposals and counter-proposals. On account of
the importance of the economic issue proposed by
UFE-DFA-KMU, Nestle could have refused to
bargain with the former but it did not. And the
managements firm stand against the issue of the
Retirement Plan did not mean that it was
bargaining in bad faith. It had a right to insist on its
position to the point of stalemate.
On Nestles Motion for Clarification, the Secretary
having already assumed jurisdiction over the labor
dispute subject of these consolidated petitions, the
issue concerning the retirement benefits of the
concerned employees must be remanded back to
him for proper disposition.
_________
(2) G.R. No. 180892 April 7, 2009
UST FACULTY UNION vs. UST
VELASCO, JR., J.:
FACTS: There were 2 groups claiming to be the
USTFU: the Gamilla Group and the group led by
Atty. Mario, Jr. (Mario Group).
The Mario Group filed a complaint for ULP
against the UST. The group also filed a complaint
praying for the nullification of the election of the
Gamilla Group as officers of the USTFU.
However, in 1996, a CBA was entered into by the
Gamilla Group and the UST which superseded the
CBA which is to take effect until 1998.

The SC, after appeals, declared the election of the
Gamilla group as null and void.
ISSUES: WON there was ULP on the ground that
UST entered into CBA with Gamilla group..
HELD: No ULP.
The fact of the matter is, the Gamilla Group
represented itself to respondents as the duly
elected officials of the USTFU. As such,
respondents were bound to deal with them.
In the instant case, until the SCs decision that the
Gamilla Group was not validly elected into office,
there was no reason to believe that the members
of the Gamilla Group were not the validly elected
officers and directors of USTFU. To reiterate, the
Gamilla Group submitted a Letter whereby it
informed Fr. Rolando De La Rosa that its
members were the newly elected officers and
directors of USTFU. In the Letter, every officer
allegedly elected was identified with the Letter
signed by the alleged newly elected Secretary
General and President, Ma. Lourdes Medina and
Gamilla, respectively.
More important though is the fact that the records
are bereft of any evidence to show that the Mario
Group informed the UST of their objections to the
election of the Gamilla Group. In fact, there is
even no evidence to show that the scheduled
elections that was supposed to be presided over
by the Mario Group ever pushed through.
Instead, petitioner filed a complaint with the med-
arbiter praying for the nullification of the election of
the Gamilla Group.
As such, there was no reason not to recognize the
Gamilla Group as the new officers and directors of
USTFU. And as stated in the above-quoted
provisions of the Labor Code, the UST was
obligated to deal with the USTFU, as the
recognized representative of the bargaining unit,
through the Gamilla Group. USTs failure to
negotiate with the USTFU would have constituted
ULP.

It is not the duty or obligation of respondents to
inquire into the validity of the election of the
Gamilla Group. Such issue is properly an intra-
union controversy subject to the jurisdiction of the
med-arbiter of the DOLE. Respondents could not
have been expected to stop dealing with the
Gamilla Group on the mere accusation of the
Mario Group that the former was not validly
elected into office.
The subsequent ruling of SC that the Gamilla
Group was not validly elected into office cannot
support petitioners allegation of ULP. Had
respondents dealt with the Gamilla Group after
such ruling had become final and executory, it
would have been a different story. As the CA ruled
correctly, until the validity of the election of the
Gamilla Group is resolved with finality,
respondents could not be faulted for negotiating
with said group.
____________________
G.R. No. 146728 February 11, 2004
GENERAL MILLING CORPORATION vs CA
QUISUMBING, J.:
FACTS: A day before the expiration of the CBA,
the union sent GMC a proposed CBA, with a
request that a counter-proposal be submitted
within 10 days.
However, GMC had received collective and
individual letters from workers who stated that
they had withdrawn from their union membership,
on grounds of religious affiliation and personal
differences. Believing that the union no longer had
standing to negotiate a CBA, GMC did not send
any counter-proposal.
ISSUE: WON there was violation of the duty to
bargain collectively.
HELD:
The law mandates that the representation
provision of a CBA should last for five years. The
relation between labor and management should
be undisturbed until the last 60 days of the fifth
year. Hence, it is indisputable that when the union
requested for a renegotiation of the economic
terms of the CBA on November 29, 1991, it was
still the certified collective bargaining agent of the
workers, because it was seeking said
renegotiation within five (5) years from the date of
effectivity of the CBA on December 1, 1988. The
unions proposal was also submitted within the
prescribed 3-year period from the date of
effectivity of the CBA, albeit just before the last
day of said period. It was obvious that GMC had
no valid reason to refuse to negotiate in good faith
with the union. For refusing to send a counter-
proposal to the union and to bargain anew on the
economic terms of the CBA, the company
committed an unfair labor practice under Article
248 of the Labor Code.
Under Article 252 abovecited, both parties are
required to perform their mutual obligation to meet
and convene promptly and expeditiously in good
faith for the purpose of negotiating an agreement.
The union lived up to this obligation when it
presented proposals for a new CBA to GMC within
three (3) years from the effectivity of the original
CBA. But GMC failed in its duty under Article 252.
What it did was to devise a flimsy excuse, by
questioning the existence of the union and the
status of its membership to prevent any
negotiation.
It bears stressing that the procedure in collective
bargaining prescribed by the Code is mandatory
because of the basic interest of the state in
ensuring lasting industrial peace.
GMCs failure to make a timely reply to the
proposals presented by the union is indicative of
its utter lack of interest in bargaining with the
union. Its excuse that it felt the union no longer
represented the workers, was mainly dilatory as it
turned out to be utterly baseless.


We hold that GMCs refusal to make a counter-
proposal to the unions proposal for CBA
negotiation is an indication of its bad faith. Where
the employer did not even bother to submit an
answer to the bargaining proposals of the union,
there is a clear evasion of the duty to bargain
collectively.
Failing to comply with the mandatory obligation to
submit a reply to the unions proposals, GMC
violated its duty to bargain collectively, making it
liable for unfair labor practice. Perforce, the Court
of Appeals did not commit grave abuse of
discretion amounting to lack or excess of
jurisdiction in finding that GMC is, under the
circumstances, guilty of unfair labor practice.
NOTA BENE: It would be unfair to the union and
its members if the terms and conditions contained
in the old CBA would continue to be imposed on
GMCs employees for the remaining two (2) years
of the CBAs duration. We are not inclined to
gratify GMC with an extended term of the old CBA
after it resorted to delaying tactics to prevent
negotiations. Since it was GMC which violated the
duty to bargain collectively, based on Kiok Loy
and Divine Word University of Tacloban, it had
lost its statutory right to negotiate or renegotiate
the terms and conditions of the draft CBA
proposed by the union.
Under ordinary circumstances, it is not obligatory
upon either side of a labor controversy to
precipitately accept or agree to the proposals of
the other. But an erring party should not be
allowed to resort with impunity to schemes
feigning negotiations by going through empty
gestures. Thus, by imposing on GMC the
provisions of the draft CBA proposed by the union,
in our view, the interests of equity and fair play
were properly served and both parties regained
equal footing, which was lost when GMC thwarted
the negotiations for new economic terms of the
CBA.
________________
Art. 253-A (Terms of a CBA)
(4) G.R. No. 176249 November 27, 2009
FVC LABOR UNION vs SANAMA-FVC-SIGLO
BRION, J.:
FACTS: FVCLU-PTGWO the recognized
bargaining agent of the rank-and-file employees of
the FVC company signed a five-year CBA with
the company. At the end of the 3rd year of the
five-year term and pursuant to the CBA, FVCLU-
PTGWO and the company entered into the
renegotiation of the CBA and modified, among
other provisions, the CBAs duration. Article XXV,
Section 2 of the renegotiated CBA extended the
original five-year period of the CBA by 4 months.

However, 4 months and 9 days away from the
expiration of the amended CBA period, the
respondent SANAMA-SIGLO filed before the
DOLE a petition for certification election for the
same rank-and-file unit covered by the FVCLU-
PTGWO CBA. FVCLU-PTGWO moved to dismiss
the petition on the ground that the certification
election petition was filed outside the freedom
period.
FVCLU-PTGWO has taken the view that its
exclusive representation status should fully be in
step with the term of the CBA and that this status
can be challenged only within 60 days before the
expiration of this term. Thus, when the term of the
CBA was extended, its exclusive bargaining status
was similarly extended so that the freedom period
for the filing of a petition for certification election
should be counted back from the expiration of the
amended CBA term.

ISSUE: WON the amended CBAs expiration date
is the new date from which the freedom period
should be reckoned.
HELD: No.

SC held that the FVCLU-PTGWO position to be
correct, but only with respect to the original five-
year term of the CBA which, by law, is also the
effective period of the unions exclusive bargaining
representation status. While the parties may agree
to extend the CBAs original five-year term
together with all other CBA provisions, any such
amendment or term in excess of five years will not
carry with it a change in the unions exclusive
collective bargaining status.
By express provision of the above-quoted
Article 253-A, the exclusive bargaining status
cannot go beyond five years and the
representation status is a legal matter not for
the workplace parties to agree upon. In other
words, despite an agreement for a CBA with a life
of more than five years, either as an original
provision or by amendment, the bargaining
unions exclusive bargaining status is effective
only for five years and can be challenged within
sixty (60) days prior to the expiration of the CBAs
first five years.
In the event however, that the parties, by mutual
agreement, enter into a renegotiated contract with
a term of three (3) years or one which does not
coincide with the said five-year term and said
agreement is ratified by majority of the members
in the bargaining unit, the subject contract is valid
and legal and therefore, binds the contracting
parties. The same will however not adversely
affect the right of another union to challenge the
majority status of the incumbent bargaining agent
within sixty (60) days before the lapse of the
original five (5) year term of the CBA.
__________________
(5) G.R. No. 111262 September 19, 1996

SAN MIGUEL CORPORATION EMPLOYEES
UNION-PTGWO vs. HON. MA. NIEVES D.
CONFESOR (DOLE Sec)
KAPUNAN, J.:
FACTS:
Petitioner-union entered into a CBA with SMC to
take effect upon the expiration of the previous
CBA or on June 30, 1989 until June 30, 1992. The
CBA also stated that the term of the Agreement
insofar as the representation aspect is concerned,
shall be for 5 years from July 1, 1989 to June 30,
1994. Hence, the freedom period for purposes of
such representation shall be sixty (60) days prior
to June 30, 1994.
After June 30, 1992, the CBA was renegotiated in
accordance with the terms of the CBA and Article
253-A of the Labor Code. Negotiations started
sometime in July, 1992 with the two parties
submitting their respective proposals and
counterproposals.
During the negotiations, the petitioner-union
insisted that the bargaining unit of SMC should
still include the employees of the spun-off
corporations: Magnolia and SMFI; and that the
renegotiated terms of the CBA shall be effective
only for the remaining period of two years or until
June 30, 1994.
SMC, on the other hand, contended that the
members/employees who had moved to Magnolia
and SMFI, automatically ceased to be part of the
bargaining unit at the SMC. Furthermore, the CBA
should be effective for three years in accordance
with Art. 253-A of the Labor Code.
ISSUES:
1) Whether or not the duration of the renegotiated
terms of the CBA is to be effective for three years
of for only two years; and
2) Whether or not the bargaining unit of SMC
includes also the employees of the Magnolia and
SMFI.
HELD:
(1) The renegotiated terms of the CBA shall be
for three (3) years.

Article 253-A states that the CBA has a term of
five (5) years instead of three years, before the
amendment of the law as far as the representation
aspect is concerned. All other provisions of the
CBA shall be negotiated not later than three (3)
years after its execution. The "representation
aspect" refers to the identity and majority status of
the union that negotiated the CBA as the
exclusive bargaining representative of the
appropriate bargaining unit concerned. "All other
provisions" simply refers to the rest of the CBA,
economic as well as non-economic provisions,
except representation.
From the congressional discussions, the
legislators were more inclined to have the period
of effectivity for three (3) years insofar as the
economic as well as non-economic provisions are
concerned, except representation.
Obviously, the framers of the law wanted to
maintain industrial peace and stability by having
both management and labor work harmoniously
together without any disturbance. Thus, no
outside union can enter the establishment within
five (5) years and challenge the status of the
incumbent union as the exclusive bargaining
agent. Likewise, the terms and conditions of
employment (economic and non-economic)
cannot be questioned by the employers or
employees during the period of effectivity of the
CBA. The CBA is a contract between the parties
and the parties must respect the terms and
conditions of the agreement. Notably, the framers
of the law did not give a fixed term as to the
effectivity of the terms and conditions of
employment. It can be gleaned from their
discussions that it was left to the parties to fix the
period.
As a matter of policy the parties are encouraged
to enter into a renegotiated CBA with a term which
would coincide with the aforesaid five (5) year
term of the bargaining representative.
In the event however, that the parties, by mutual
agreement, enter into a renegotiated contract with
a term of three (3) years or one which does not
coincide with the said 5-year term, and said
agreement is ratified by majority of the members
in the bargaining unit, the subject contract is valid
and legal and therefore, binds the contracting
parties. The same will however not adversely
affect the right of another union to challenge the
majority status of the incumbent bargaining agent
within sixty (60) days before the lapse of the
original five (5) year term of the CBA.
(2) The employees of Magnolia and SMFI are
not considered part of the bargaining unit of
SMC.
As a result of the spin-offs:
1.Each of the companies are run by, supervised
and controlled by different management teams
including separate human resource/personnel
managers.
2.Each Company enforces its own administrative
and operational rules and policies and are not
dependent on each other in their operations.
3.Each entity maintains separate financial
statements and are audited separately from each
other.
Indubitably, therefore, Magnolia and SMFI
became distinct entities with separate juridical
personalities. Thus, they can not belong to a
single bargaining unit.
There are various factors which must be satisfied
and considered in determining the proper
constituency of a bargaining unit. (1) will of the
employees (Globe Doctrine); (2) affinity and unit of
employees' interest, such as substantial similarity
of work and duties, or similarity of compensation
and working conditions; (3) prior collective
bargaining history; and (4) employment status,
such as temporary, seasonal and probationary
employees.
Even assuming in gratia argumenti that at the time
of the election they were regular employees of
San Miguel, nonetheless, these workers are no

longer connected with San Miguel Corporation in
any manner because Magnolia has ceased to be
a division of San Miguel Corporation and has
been formed into a separate corporation with a
personality of its own. This development, which
was brought to our attention by private
respondents, necessarily renders moot and
academic any further discourse on the propriety of
the elections which petitioners impugn via the
recourse,
_________________
Art. 254 (Injunction Prohibited)
(6) G.R. No. 184007 February 16, 2011
PAQUITO V. ANDO vs. ANDRESITO Y. CAMPO,
ET AL.
NACHURA, J.:
FACTS: Petitioner was the president of Premier
Allied and Contracting Services, Inc. (PACSI), an
independent labor contractor. Respondents were
hired by PACSI as pilers or haulers tasked to
manually carry bags of sugar from the warehouse
of Victorias Milling Company and load them on
trucks.Rrespondents were dismissed from
employment so they filed a case for illegal
dismissal and some money claims.
Respondents won the case. To answer for the
monetary award, NLRC Acting Sheriff issued a
Notice of Sale on Execution of Personal Property
over the property covered by TCT No. T-140167
in the name of "Paquito V. Ando x x x married to
Erlinda S. Ando."
This prompted petitioner to file an action for
prohibition and damages with prayer for the
issuance of a TRO before the RTC of Bacolod
City. Petitioner claimed that the property belonged
to him and his wife, not to the corporation, and,
hence, could not be subject of the execution sale.
Since it is the corporation that was the judgment
debtor, execution should be made on the latters
properties.
RTC denied and held that it had no jurisdiction to
try and decide the case.
ISSUE: WON RTC has jurisdiction.
HELD: RTC do not have jurisdiction.
The Court has long recognized that regular courts
have no jurisdiction to hear and decide questions
which arise from and are incidental to the
enforcement of decisions, orders, or awards
rendered in labor cases by appropriate officers
and tribunals of the DOLE. To hold otherwise is to
sanction splitting of jurisdiction which is obnoxious
to the orderly administration of justice.
Ostensibly the complaint before the trial court was
for the recovery of possession and injunction, but
in essence it was an action challenging the legality
or propriety of the levy vis-a-vis the alias writ of
execution, including the acts performed by the
Labor Arbiter and the Deputy Sheriff implementing
the writ. The complaint was in effect a motion to
quash the writ of execution of a decision rendered
on a case properly within the jurisdiction of the
Labor Arbiter, to wit: Illegal Dismissal and Unfair
Labor Practice. Considering the factual setting, it
is then logical to conclude that the subject matter
of the third party claim is but an incident of the
labor case, a matter beyond the jurisdiction of
regional trial courts.
Further underscoring the RTCs lack of jurisdiction
over petitioners complaint is Article 254 of the
Labor Code.
_______________
Art. 255 (Exclusive Bargaining Representation
and Workers Participation in Policy and
Decision-Making)
(7) G.R. No. 128845 June 1, 2000
INTERNATIONAL SCHOOL ALLIANCE OF
EDUCATORS (ISAE) vs. HON. LEONARDO A.
QUISUMBING (DOLE SEC)

KAPUNAN, J.:
FACTS: Accordingly, the School hires both
foreign and local teachers as members of its
faculty, classifying the same into two: (1) foreign-
hires and (2) local-hires. The School grants
foreign-hires certain benefits not accorded local-
hires.
When negotiations for a new collective bargaining
agreement were held on June 1995, petitioner
International School Alliance of Educators, "a
legitimate labor union and the collective
bargaining representative of all faculty members"
of the School, contested the difference in salary
rates between foreign and local-hires. This issue,
as well as the question of whether foreign-hires
should be included in the appropriate bargaining
unit, eventually caused a deadlock between the
parties.
HELD:
(1) 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, its "international
character" notwithstanding.
The School contends that petitioner has not
adduced evidence that local-hires perform work
equal to that of foreign-hires. The Court finds this
argument a little cavalier. If an employer accords
employees the same position and rank, the
presumption is that these employees perform
equal work. This presumption is borne by logic
and human experience. If the employer pays one
employee less than the rest, it is not for that
employee to explain why he receives less or why
the others receive more. That would be adding
insult to injury. The employer has discriminated
against that employee; it is for the employer to
explain why the employee is treated unfairly.
(2) However, foreign-hires do not belong to the
same bargaining unit as the local-hires.
A bargaining unit is "a group of employees of a
given employer, comprised of all or less than all of
the entire body of employees, consistent with
equity to the employer, indicate to be the best
suited to serve the reciprocal rights and duties of
the parties under the collective bargaining
provisions of the law." The factors in determining
the appropriate collective bargaining unit are (1)
the will of the employees (Globe Doctrine); (2)
affinity and unity of the employees' interest, such
as substantial similarity of work and duties, or
similarity of compensation and working conditions
(Substantial Mutual Interests Rule); (3) prior
collective bargaining history; and (4) similarity of
employment status. The basic test of an asserted
bargaining unit's acceptability is whether or not it
is fundamentally the combination which will best
assure to all employees the exercise of their
collective bargaining rights.
It does not appear that foreign-hires have
indicated their intention to be grouped together
with local-hires for purposes of collective
bargaining. The collective bargaining history in the
School also shows that these groups were always
treated separately. Foreign-hires have limited
tenure; local-hires enjoy security of tenure.
Although foreign-hires perform similar functions
under the same working conditions as the local-
hires, foreign-hires are accorded certain benefits
not granted to local-hires. These benefits, such as
housing, transportation, shipping costs, taxes, and
home leave travel allowance, are reasonably
related to their status as foreign-hires, and justify
the exclusion of the former from the latter. To
include foreign-hires in a bargaining unit with
local-hires would not assure either group the
exercise of their respective collective bargaining
rights.
_________________
(8) G.R. No. 79526, December 21, 1990]
NATIONAL ASSOCIATION OF FREE TRADE
UNIONS (NAFTU) VS. MAINIT LUMBER
DEVELOPMENT COMPANY WORKERS UNION-

UNITED LUMBER AND GENERAL WORKERS
OF THE PHILIPPINES (MALDECOWU--ULGWP)
PARAS, J.:
FACTS: Private respondent, a legitimate labor
organization duly registered with the DOLE filed a
petition for certification election to determine the
sole and exclusive collective bargaining
representative among the rank and file
workers/employees of Mainit Lumber
Development Company Inc. (MALDECO).
The Med-Arbiter granted the petition for
certification election. NAFTU appealed the
decision of the Med-Arbiter on the ground that
MALDECO was composed of two (2) bargaining
units, the Sawmill Division and the Logging
Division, but both the petition and decision treated
these separate and distinct units only as one.
ISSUE: WON there were two bargaining unit.
HELD: Only one bargaining unit.
Significantly, out of two hundred and one (201)
employees of MALDECO, one hundred seventy
five (175) consented and supported the petition for
certification election, thereby confirming their
desire for one bargaining representative.
Moreover, while the existence of bargaining
history is a factor that may be reckoned with in
determining the appropriate bargaining unit, the
same is not decisive or conclusive. Other factors
must be considered. The test of grouping is
community or mutuality of interests. This is so
because "the basic test of an asserted bargaining
unit's acceptability is whether or not it is
fundamentally the combination which will best
assure to all employees the exercise of their
collective bargaining rights."
Certainly, there is a mutuality of interest among
the employees of the Sawmill Division and the
Logging Division. Their functions mesh with one
another. One group needs the other in the same
way that the company needs them both. There
may be difference as to the nature of their
individual assignments but the distinctions are not
enough to warrant the formation of a separate
bargaining unit.
Moreover, there was already res judicata for the
issue had been raised earlier by petitioner. The
respondent Bureau of Labor Relations had
already ruled on the same in its decision affirming
the Med-Arbiter's Order which granted the petition
for Certification Election. NAFTU did not elevate
the decision to this Court. On the contrary, it
participated in the questioned election and later it
did not raise the issue in its election protest.
__________________
Art. 256 (Representation Issues in Organized
Establishments)
(9) G.R. No. 172666 December 7, 2011
PICOP RESOURCES, INCORPORATED (PRI)
vs. RICARDO DEQUILLA et al.
MENDOZA, J.:
FACTS: Private respondents were regular rank-
and-file employees of PICOP and members of the
NAMAPRI-SPFL, a duly registered labor
organization and existing bargaining agent of the
PICOP rank-and-file employees. PICOP and
NAMAPRI-SPFL had a collective bargaining
agreement (CBA) which would expire on May 22,
2000.
The National President of the Southern
Philippines Federation of Labor (SPFL), advised
the PICOP management to terminate about 800
employees due to acts of disloyalty, specifically,
for allegedly campaigning, supporting and signing
a petition for the certification of a rival union, the
Federation of Free Workers Union (FFW) before
the 60-day "freedom period" and during the
effectivity of the CBA. Such acts of disloyalty were
construed to be a valid cause for termination
under the terms and conditions of the CBA. Based

on the CBA, the freedom period would start on
March 22, 2000.
Subsequently, the employees were dismissed so
they filed a case for illegal dismissal.
PICOP basically argues that Article 253 of the
Labor Code applies in this case. Article 253 of the
Labor Code provides that the terms and
conditions of a CBA remain in full force and effect
even beyond the 5-year period when no new CBA
has yet been reached. It claims that the private
respondents violated this provision when they
campaigned for, supported and signed FFWs
petition for certification election on March 19 and
20, 2000, before the onset of the freedom period.
ISSUE: WHETHER [OR NOT] AN EXISTING
COLLECTIVE BARGAINING AGREEMENT
(CBA) CAN BE GIVEN ITS FULL FORCE AND
EFFECT IN ALL ITS TERMS AND CONDITIONS
INCLUDING ITS UNION SECURITY CLAUSE,
EVEN BEYOND THE 5-YEAR PERIOD WHEN
NO NEW CBA HAS YET BEEN ENTERED INTO?
HELD: No, as there was already a petition for
cert. election during the freedom period.
Applying Art. 256, it can be said that while it is
incumbent for the employer to continue to
recognize the majority status of the incumbent
bargaining agent even after the expiration of the
freedom period, they could only do so when no
petition for certification election was filed. The
reason is, with a pending petition for certification,
any such agreement entered into by management
with a labor organization is fraught with the risk
that such a labor union may not be chosen
thereafter as the collective bargaining
representative. The provision for status quo is
conditioned on the fact that no certification
election was filed during the freedom period. Any
other view would render nugatory the clear
statutory policy to favor certification election as the
means of ascertaining the true expression of the
will of the workers as to which labor organization
would represent them.
In the instant case, four (4) petitions were filed as
early as May 12, 2000. In fact, a petition for
certification election was already ordered by the
Med-Arbiter on August 23, 2000. Therefore,
following Article 256, at the expiration of the
freedom period, PRI's obligation to recognize
NAMAPRI-SPFL as the incumbent bargaining
agent does not hold true when petitions for
certification election were filed, as in this case.
Moreover, the last sentence of Article 253 which
provides for automatic renewal pertains only to the
economic provisions of the CBA, and does not
include representational aspect of the CBA. An
existing CBA cannot constitute a bar to a filing of a
petition for certification election. When there is a
representational issue, the status quo provision in
so far as the need to await the creation of a new
agreement will not apply. Otherwise, it will create
an absurd situation where the union members will
be forced to maintain membership by virtue of the
union security clause existing under the CBA and,
thereafter, support another union when filing a
petition for certification election. If we apply it,
there will always be an issue of disloyalty
whenever the employees exercise their right to
self-organization. The holding of a certification
election is a statutory policy that should not be
circumvented, or compromised.
_________________
(10) G.R. No. 181531 July 31, 2009
NATIONAL UNION OF WORKERS IN HOTELS,
RESTAURANTS AND ALLIED INDUSTRIES-
MANILA PAVILION HOTEL CHAPTER vs.
SECRETARY OF LABOR AND EMPLOYMENT
CARPIO MORALES, J.:
FACTS:
A certification election was conducted among the
rank-and-file employees of respondent Holiday Inn
Manila Pavilion Hotel (the Hotel) with the following
results:

TOTAL VOTES CAST = 346
NUWHRAIN-MPHC = 151
HIMPHLU = 169
In view of the significant number of segregated
votes, contending unions referred the case back
to Med-Arbiter to decide which among those votes
would be opened and tallied.
11 votes were initially segregated because they
were cast by dismissed employees, albeit the
legality of their dismissal was still pending before
the CA. Six other votes were segregated because
the employees who cast them were already
occupying supervisory positions at the time of the
election. Still five other votes were segregated on
the ground that they were cast by probationary
employees and, pursuant to the existing CBA,
such employees cannot vote. It bears noting early
on, however, that the vote of one probationary
employee was counted.
Petitioner has the following contentions:
1. Inclusion of one but excluding the vote of
the six other probationary employees
violated the principle of equal protection
and is not in accord with the ruling in
Airtime Specialists, Inc. v. Ferrer-Calleja;
2. The time of reckoning for purposes of
determining when the probationary
employees can be allowed to vote is not
the date of issuance by Med-Arbiter of the
Order granting the conduct of certification
elections, but the date the SOLE Order
affirming the Med-Arbiters Order.
3. Even if the votes of the six probationary
employees were included, still, HIMPHLU
could not be considered as having obtained
a majority of the valid votes cast as the
opening of the 17 ballots would increase
the number of valid votes from 321 to 338,
hence, for HIMPHLU to be certified as the
exclusive bargaining agent, it should have
garnered at least 170, not 169, votes.
ISSUES:
(1) Whether employees on probationary status at
the time of the certification elections should be
allowed to vote
(2) Whether HIMPHLU was able to obtain the
required majority for it to be certified as the
exclusive bargaining agent.
HELD:
(1) Yes.
The inclusion of Gatbontons vote was proper not
because it was not questioned but because
probationary employees have the right to vote in a
certification election. The votes of the six other
probationary employees should thus also have
been counted.
Collective bargaining covers all aspects of the
employment relation and the resultant CBA
negotiated by the certified union binds all
employees in the bargaining unit. Hence, all rank
and file employees, probationary or permanent,
have a substantial interest in the selection of the
bargaining representative. The Code makes no
distinction as to their employment status as basis
for eligibility in supporting the petition for
certification election. The law refers to "all" the
employees in the bargaining unit. All they need to
be eligible to support the petition is to belong to
the "bargaining unit."
The provision in the CBA disqualifying
probationary employees from voting cannot
override the Constitutionally-protected right of
workers to self-organization, as well as the
provisions of the Labor Code and its Implementing
Rules on certification elections and jurisprudence
thereon.
During the pendency of the appeal, the employer
may hire additional employees. To exclude the
employees hired after the issuance of the Med-
Arbiters Order but before the appeal has been
resolved would violate the guarantee that every

employee has the right to be part of a labor
organization from the first day of their service.
But while the Court rules that the votes of all the
probationary employees should be included,
under the particular circumstances of this case
and the period of time which it took for the appeal
to be decided, the votes of the six supervisory
employees must be excluded because at the time
the certification elections was conducted, they had
ceased to be part of the rank and file, their
promotion having taken effect two months before
the election.
(2) HIMPHLU should not be certified as the
exclusive bargaining agent.
It is well-settled that under the so-called "double
majority rule," for there to be a valid certification
election, majority of the bargaining unit must have
voted AND the winning union must have garnered
majority of the valid votes cast.
Prescinding from the Courts ruling that all the
probationary employees votes should be deemed
valid votes while that of the supervisory
employees should be excluded, it follows that the
number of valid votes cast would increase from
321 to 337. Under Art. 256 of the Labor Code, the
union obtaining the majority of the valid votes cast
by the eligible voters shall be certified as the sole
and exclusive bargaining agent of all the workers
in the appropriate bargaining unit. This majority is
50% + 1. Hence, 50% of 337 is 168.5 + 1 or at
least 170.
To be sure, the conduct of a certification
election has a two-fold objective:
1. to determine the appropriate bargaining
unit and
2. to ascertain the majority representation of
the bargaining representative, if the
employees desire to be represented at all
by anyone.
It is not simply the determination of who between
two or more contending unions won, but whether it
effectively ascertains the will of the members of
the bargaining unit as to whether they want to be
represented and which union they want to
represent them.
NOTA BENE:
A run-off election must be held.
A run-off election refers to an election between the
labor unions receiving the two (2) highest number
of votes in a certification or consent election with
three (3) or more choices, where such a certified
or consent election results in none of the three (3)
or more choices receiving the majority of the valid
votes cast; provided that the total number of votes
for all contending unions is at least fifty percent
(50%) of the number of votes cast. With 346 votes
cast, 337 of which are now deemed valid and
HIMPHLU having only garnered 169 and
petitioner having obtained 151 and the choice "NO
UNION" receiving 1 vote, then the holding of a
run-off election between HIMPHLU and petitioner
is in order.
_________________
Art. 260-61 (Grievance Machinery and
Voluntary Arbritration and Jurisdiction of
Arbritrators)
(11) G.R. No. 174420 March 22, 2010
MIGUELA SANTUYO et al. vs. REMERCO
GARMENTS MANUFACTURING, INC. and/or
VICTORIA REYES.
CORONA, J.:
FACTS: Due to a serious industrial dispute, the
union staged a strike against respondent.
Because the strike was subsequently declared
illegal, all union officers were dismissed.
Employees who wanted to sever their employment
were paid separation pay while those who wanted
to resume work were recalled on the condition that
they would no longer be paid a daily rate but on a
piece-rate basis.

Petitioners, who had been employed as sewers,
were among those recalled.
Without allowing RGMI to normalize its
operations, the union filed a notice of strike in the
NCMB. According to the union, RGMI conducted a
time and motion study and changed the salary
scheme from a daily rate to piece-rate basis
without consulting it. RGMI therefore not only
violated the existing CBA but also diminished the
salaries agreed upon. It therefore committed ULP.
While the conciliation proceedings between the
union and respondent were pending, petitioners
filed a complaint for illegal dismissal against
respondents, accusing the latter of harassment.
Respondents, on the other hand, moved to
dismiss the complaint in view of the pending
conciliation proceedings (which involved the
same issue) in the NCMB. Moreover, alleged
violations of the CBA should be resolved
according to the grievance procedure laid out
therein. Thus, the labor arbiter had no
jurisdiction over the complaint.
ISSUE: WON LA has jurisdiction.
HELD: LA has no jurisdiction.
Petitioners clearly and consistently questioned the
legality of RGMIs adoption of the new salary
scheme (i.e., piece-rate basis), asserting that such
action, among others, violated the existing CBA.
Indeed, the controversy was not a simple case of
illegal dismissal but a labor dispute involving the
manner of ascertaining employees salaries, a
matter which was governed by the existing CBA.
This provision requires labor arbiters to refer
cases involving the implementation of CBAs to the
grievance machinery provided therein and to
voluntary arbitration.
Moreover, Article 260 of the Labor Code clarifies
that such disputes must be referred first to the
grievance machinery and, if unresolved within
seven days, they shall automatically be referred to
voluntary arbitration.
Under Art. 261, voluntary arbitrators have original
and exclusive jurisdiction over matters which have
not been resolved by the grievance machinery.
NOTA BENE:
By virtue of Art. 263, The Secretary of Labor
assumed jurisdiction over the controversy
because RGMI had a substantial number of
employees and was a major exporter of garments
to the United States and Canada. In view of these
considerations, the Secretary of Labor resolved
the labor dispute between the union and RGMI in
his order. Since neither the union nor RGMI
appealed the said order, it became final and
executory.
_____________
(12) G.R. No. 169704 November 17,
2010
ALBERT TENG vs. ALFREDO S. PAHAGAC et
al.
BRION, J.:
FACTS: Respondent workers filed a complaint for
illegal dismissal against petitioners.
The respondent workers alleged that Teng hired
them, without any written employment contract, to
serve as his "eyes and ears" aboard the fishing
boats; to classify the fish caught by baera; to
report to Teng via radio communication the
classes and volume of each catch; to receive
instructions from him as to where and when to
unload the catch; to prepare the list of the
provisions requested by the maestro and the
mechanic for his approval; and, to procure the
items as approved by him. They also claimed that
they received regular monthly salaries, 13th
month pay, Christmas bonus, and incentives in
the form of shares in the total volume of fish
caught.

In his defense, Teng maintained that he did not
have any hand in hiring the respondent workers;
the maestros, rather than he, invited them to join
the venture. According to him, his role was clearly
limited to the provision of the necessary capital,
tools and equipment, consisting of basnig, gears,
fuel, food, and other supplies.
The VA rendered a decision in Tengs favor and
declared that no employer-employee relationship
existed between Teng and the respondent
workers.
CA denied the MR. According to the VA, an award
or the Decision of the Voluntary Arbitrators
becomes final and executory after 10 calendar
days from receipt of copies of the award or
decision by the parties Moreover, the above-
mentioned guidelines do not provide the remedy
of a motion for reconsideration to the party
adversely affected by the order or decision of
voluntary arbitrators.
ISSUE: WON there is MR in decisions of VA.
HELD: Article 262-A of the Labor Code does not
prohibit the filing of a motion for reconsideration.
It is true that the present rule [Art. 262-A] makes
the voluntary arbitration award final and executory
after ten calendar days from receipt of the copy of
the award or decision by the parties. Presumably,
the decision may still be reconsidered by the
Voluntary Arbitrator on the basis of a motion for
reconsideration duly filed during that period.
__________________
(13) G.R. No. 164939 June 6, 2011
SAMAHAN NG MGA MANGGAGAWA SA
HYATT vs. HON. VOLUNTARY ARBITRATOR
MAGSALIN
VILLARAMA, JR., J.:
FACTS: Because of the succession of infractions
he committed, the HRD also required Caragdag to
explain why the hotels OSDA 4.32 (Committing
offenses which are penalized with three [3]
suspensions during a 12-month period) should not
be enforced against him.
However, despite notice of the scheduled
hearing, both Caragdag and the Union President
failed to attend. Thereafter, the investigating board
resolved on the said date to dismiss Caragdag for
violation of OSDA 4.32.
Caragdags dismissal was questioned by
petitioner, and the dispute was referred to
voluntary arbitration upon agreement of the
parties.
VA upheld the dismissal. However, for
humanitarian considerations, Hyatt is hereby
ordered to grant financial assistance to Mr.
Caragdag.
ISSUES:
(1) Whether the CA erred in dismissing outright
the petition for certiorari filed before it on the
ground that the same is an improper mode of
appeal; and
(2) Whether the CA erred in deleting the award of
financial assistance in the amount of P100,000.00
to Caragdag.
HELD:
(1) No, CA did not err. A decision or award of a
voluntary arbitrator is appealable to the CA via
petition for review under Rule 43 just like those of
the quasi-judicial agencies, boards and
commissions enumerated therein, and consistent
with the original purpose to provide a uniform
procedure for the appellate review of adjudications
of all quasi-judicial entities.
Hence, upon receipt on May 26, 2003 of the
Voluntary Arbitrators Resolution denying
petitioners motion for reconsideration, petitioner
should have filed with the CA, within the fifteen

(15)-day reglementary period, a petition for
review, not a petition for certiorari.
(2) No, there should be no award.
Severance compensation, or whatever name it is
called, on the ground of social justice shall be
allowed only when the cause of the dismissal is
other than serious misconduct or for causes which
reflect adversely on the employees moral
character.
Where the reason for the valid dismissal is, for
example, habitual intoxication or an offense
involving moral turpitude, like theft or illicit sexual
relations with a fellow worker, the employer may
not be required to give the dismissed employee
separation pay, or financial assistance, or
whatever other name it is called, on the ground of
social justice.
A contrary rule would have the effect of rewarding
rather than punishing the erring employee for his
offense.
Here, Caragdags dismissal was due to several
instances of willful disobedience to the reasonable
rules and regulations prescribed by his employer.
Records show the various violations of the hotels
rules and regulations were committed by
Caragdag. He was suspended for violating the
hotel policy on bag inspection and body frisking.
He was likewise suspended for threatening and
intimidating a superior while the latter was
counseling his staff. He was again suspended for
leaving his work assignment without permission.
Evidently, Caragdags acts constitute serious
misconduct.
______________
Art. 263-64 (Strikes and Lockouts)
(14) G.R. No. 154113 December 7, 2011
EDEN GLADYS ABARIA et al. vs. NLRC
VILLARAMA, JR., J.:
FACTS: Nava (of the union) wrote Rev. Iyoy
expressing the unions desire to renew the CBA,
attaching to her letter a statement of proposals
signed/endorsed by 153 union members. Nava
subsequently requested that the following
employees be allowed to avail of one-day union
leave with pay. However, MCCHI returned the
CBA proposal for Nava to secure first the
endorsement of the legal counsel of NFL as the
official bargaining representative of MCCHI
employees.
NFL informed the hospital that it has not
authorized any other legal counsel or any person
for collective bargaining negotiations. Later, the
collection of union fees (check-off) was
temporarily suspended by MCCHI in view of the
existing conflict between the federation and its
local affiliate. Thereafter, MCCHI attempted to
take over the room being used as union office but
was prevented to do so by Nava and her group
who protested these actions and insisted that
management directly negotiate with them for a
new CBA. MCCHI referred the matter to Atty.
Alforque, NFLs Regional Director, and advised
Nava that their group is not recognized by NFL.
Due to acts of disloyalty of Navas group, they
were suspended from the union.
Later, several union members led by Nava and
her group launched a series of mass actions such
as wearing black and red armbands/headbands,
marching around the hospital premises and
putting up placards, posters and streamers.
NAMA-MCCH-NFL (led by Nava) filed a Notice of
Strike but the same was deemed not filed for want
of legal personality on the part of the filer. The
NCMB Region 7 office likewise denied their
motion for reconsideration. Despite such rebuff,
Nava and her group still conducted a strike vote
during which an overwhelming majority of union
members approved the strike.
Because of their refusal to submit to investigation,
they were terminated.

Unfazed, the striking union members held more
mass actions. The means of ingress to and egress
from the hospital were blocked so that vehicles
carrying patients and employees were barred from
entering the premises. Employees and patients
reported acts of intimidation and harassment
perpetrated by union leaders and members. With
the intensified atmosphere of violence and
animosity within the hospital premises as a result
of continued protest activities by union members,
MCCHI suffered heavy losses due to low patient
admission rates. The hospitals suppliers also
refused to make further deliveries on credit.
ISSUES:
(1) Whether MCCHI is guilty of unfair labor
practice;
(2) Whether petitioning employees were illegally
dismissed; and
(3) if their termination was illegal, whether
petitioning employees are entitled to separation
pay, backwages, damages and attorneys fees.
HELD:
(1) MCCHI not guilty of unfair labor practice
Records of the NCMB and DOLE Region 7
confirmed that Navas group had not registered as
a labor organization, having submitted only its
charter certificate as an affiliate or local chapter of
NFL. Not being a legitimate labor organization,
NAMA-MCCH-NFL is not entitled to those rights
granted to a legitimate labor organization under
Art. 242.
Not being a legitimate labor organization nor the
certified exclusive bargaining representative of
MCCHIs rank-and-file employees, NAMA-MCCH-
NFL cannot demand from MCCHI the right to
bargain collectively in their behalf. Hence,
MCCHIs refusal to bargain then with NAMA-
MCCH-NFL cannot be considered an unfair labor
practice to justify the staging of the strike.
(2) Strike and picketing activities conducted by
union officers and members were illegal
As borne by the records, NAMA-MCCH-NFL was
not a duly registered or an independently
registered union at the time it filed the notice of
strike on and when it conducted the strike vote. It
could not then legally represent the union
members. Consequently, the mandatory notice of
strike and the conduct of the strike vote report
were ineffective for having been filed and
conducted by NAMA-MCCH-NFL which has no
legal personality as a legitimate labor
organization, in violation of Art. 263 (c), (d) and (f)
of the Labor Code and Rule XXII, Book V of the
Omnibus Rules Implementing the Labor Code.
Furthermore, the strike was illegal due to the
commission of the following prohibited activities :
1. violence, coercion, intimidation and
harassment against non-participating
employees; and
2. blocking of free ingress to and egress from
the hospital, including preventing patients
and their vehicles from entering the hospital
and other employees from reporting to
work, the putting up of placards with a
statement advising incoming patients to
proceed to another hospital because
MCCHI employees are on strike/protest.
Art. 264 makes a distinction between workers and
union officers who participate in an illegal strike:
an ordinary striking worker cannot be terminated
for mere participation in an illegal strike. There
must be proof that he or she committed illegal acts
during a strike. A union officer, on the other hand,
may be terminated from work when he knowingly
participates in an illegal strike, and like other
workers, when he commits an illegal act during a
strike.
Thus, there is no question that NAMA-MCCH-NFL
officers knowingly participated in the illegal strike.
With respect to the dismissed union members,
although MCCHI submitted photographs taken at

the picket line, it did not individually name those
striking employees and specify the illegal act
committed by each of them. As to the affidavits
executed by non-striking employees, they
identified mostly union officers as the persons who
blocked the hospital entrance, harassed hospital
employees and patients whose vehicles were
prevented from entering the premises. Only some
of these witnesses actually named a few union
members who committed similar acts of
harassment and coercion. Consequently, the
dismissal of union members who merely
participated in the illegal strike was illegal.
(3) Dismissed union members not entitled to
backwages but should be awarded separation
pay in lieu of reinstatement
Since there is no clear proof that union members
actually participated in the commission of illegal
acts during the strike, they are not deemed to
have lost their employment status as a
consequence of a declaration of illegality of the
strike.
Considering that 15 years had lapsed from the
onset of this labor dispute, and in view of strained
relations that ensued, in addition to the reality of
replacements already hired by the hospital which
had apparently recovered from its huge losses,
and with many of the petitioners either employed
elsewhere, already old and sickly, or otherwise
incapacitated, separation pay without back wages
is the appropriate relief. We note that during the
pendency of the cases in this Court, some of the
petitioners have entered into compromise
agreements with MCCHI, all of which were duly
approved by this Court. Thus, excluded from the
herein monetary awards are the following
petitioners whose compromise agreements have
been approved by this Court and judgment having
been entered therein.
______________
Ricky Boy Cabatu San Beda College of Law Labor Relations (Case Digest: Art. 260)
Art. 263-66 (Strikes and Lockouts)
(14) G.R. No. 155125 December 4, 2009
YSS EMPLOYEES UNION - PHILIPPINE TRANSPORT AND
GENERAL WORKERS ORGANIZATION vs. YSS
LABORATORIES, INC.
CHICO-NAZARIO, J.:
FACTS: In order to arrest escalating business losses, YSS
Laboratories implemented a retrenchment program which affected
11 employees (9 of which were union officers. purportedly chosen
in accordance with the reasonable standards established by the
company. They were asked to avail of the early retirement
program, but they did not so the company terminated them.
The union held a strike claiming that YSS Laboratories was guilty
of discrimination and union-busting in carrying out the said
retrenchment program. After the necessary strike vote was taken
under the supervision of the NCMB, the union staged a strike.
The Secretary of Labor assumed jurisdiction and certified the case
to the NLRC. Accordingly, all striking workers were thereby
directed to return to work within 24 hours from their receipt of the
said Order, and YSS Laboratories to accept them under the terms
and conditions prevailing before the strike.
The employer refused to fully comply with the directive of the
Secretary of Labor. It argued that nine union officers and
members who were previously terminated from service
pursuant to a valid retrenchment should be excluded from the
operation of the return-to-work order. It also asserted that the
union officers who participated in the purported illegal strike
should likewise not be allowed to be back to their employment
for they were deemed to have already lost their employment
status.
ISSUE: Whether to reinstate the retrenched employees.
HELD: Yes, there should be reinstatement.
The assumption or certification order shall have the effect of
automatically enjoining the intended or impending strike or lockout.
Moreover, if one has already taken place, all striking workers shall
immediately return to work, and the employer shall immediately
resume operations and readmit all workers under the same terms
and conditions prevailing before the strike or lockout.
Accordingly, when the Secretary of Labor directed YSS
Laboratories to accept all the striking workers back to work, the
Secretary did not exceed his jurisdiction, or gravely abuse the
same.
In the case at bar, there is no showing that the assailed orders
were issued in an arbitrary or despotic manner. The Orders were
issued by the Secretary of Labor, with the end in view of preserving
the status quo ante while the main issues of the validity of the
retrenchment and legality of the strike were being threshed out in
the proper forum. This was done for the promotion of the common
good, considering that a lingering strike could be inimical to the
interest of both employer and employee. The Secretary of Labor
acts to maintain industrial peace. Thus, his certification for
compulsory arbitration is not intended to interfere with the
managements rights but to obtain a speedy settlement of the
dispute.
Accepting back the workers in this case is not a matter of option,
but of obligation mandated by law for YSS Laboratories to faithfully
comply with. Its compulsory character is mandated, not to cater to
a narrow segment of society, or to favor labor at the expense of
management, but to serve the greater interest of society by
maintaining the economic equilibrium.
Certainly, the determination of who among the strikers could be
admitted back to work cannot be made to depend upon the
discretion of employer, lest we strip the certification or assumption-
of-jurisdiction orders of the coercive power that is necessary for
attaining their laudable objective. The return-to-work order does not
interfere with the managements prerogative, but merely regulates
it when, in the exercise of such right, national interests will be
affected. The rights granted by the Constitution are not absolute.
They are still subject to control and limitation to ensure that they
are not exercised arbitrarily. The interests of both the employers
and employees are intended to be protected and not one of them is
given undue preference.
_____________
(15) G.R. No. 163942 November 11, 2008
NATIONAL UNION OF WORKERS IN THE HOTEL
RESTAURANT AND ALLIED INDUSTRIES- DUSIT HOTEL
NIKKO CHAPTER vs. CA
VELASCO, JR., J.:
FACTS: Tthe Union submitted its CBA negotiation proposals to the
Hotel. As negotiations ensued, the parties failed to arrive at
mutually acceptable terms and conditions. Due to the bargaining
deadlock, the Union filed a Notice of Strike on the ground of the
bargaining deadlock with the NCMB. Thereafter, conciliation
hearings were conducted which proved unsuccessful.
Consequently, a Strike Vote was conducted by the Union on which
it was decided that the Union would wage a strike.
Soon thereafter, the Union held a general assembly at its office
located in the Hotel's basement, where some members sported
closely cropped hair or cleanly shaven heads. The next day more
male Union members came to work sporting the same hair style.
The Hotel prevented these workers from entering the premises
claiming that they violated the Hotel's Grooming Standards.
(FIRST STRIKE)
In view of the Hotel's action, the Union staged a picket outside the
Hotel premises. Later, other workers were also prevented from
entering the Hotel causing them to join the picket. For this reason
the Hotel experienced a severe lack of manpower which forced
them to temporarily cease operations in three restaurants.
Subsequently, the Hotel issued notices to Union members,
preventively suspending them and charging them with the ff
offenses: (1) violation of the duty to bargain in good faith; (2) illegal
picket; (3) unfair labor practice; (4) violation of the Hotel's
Grooming Standards; (5) illegal strike; and (6) commission of illegal
acts during the illegal strike.
The next day, the Union filed with the NCMB a second Notice of
Strike on the ground of unfair labor practice and violation of Article
248(a) of the Labor Code on illegal lockout.
Subsequent terminations and suspension of the employees
occured and so they declared a strike. (SECOND STRIKE)
Another notice of strike was filed on the ground of ULP and union
busting.
Secretary assumed jurisdiction and certified the case.
The NLRC explained that the strike (FIRST STRIKE) which
occurred on January 18, 2002 was illegal because it failed to
comply with the mandatory 30-day cooling-off period and the
seven-day strike ban. The NLRC also ruled that even if the Union
had complied with the temporal requirements mandated by law, the
strike would nonetheless be declared illegal because it was
attended by illegal acts committed by the Union officers and
members.
ISSUE: Whether the Union conducted an illegal strike.
(1) Article 263(g) states that all workers must immediately return to
work and all employers must readmit all of them under the same
terms and conditions prevailing before the strike or lockout. The
phrase "under the same terms and conditions" makes it clear
that the norm is actual reinstatement. This is consistent with the
idea that any work stoppage or slowdown in that particular industry
can be detrimental to the national interest.
However, this one is subject to exceptions, as when the
reinstatement would be impracticable and would only serve to
exacerbate the situation. In the case, it is obviously impracticable
for the Hotel to actually reinstate the employees who shaved their
heads or cropped their hair because this was exactly the reason
they were prevented from working in the first place.
(2) Union is liable for conducting an illegal strike
First, the Union's violation of the Hotel's Grooming
Standards was clearly a deliberate and concerted action to
undermine the authority of and to embarrass the Hotel and
was, therefore, not a protected action. The decision to violate
the company rule on grooming was designed and calculated to
place the Hotel management on its heels and to force it to agree
to the Union's proposals.
The act of the Union was not merely an expression of their
grievance or displeasure but, indeed, a calibrated and calculated
act designed to inflict serious damage to the Hotel's finances or
its reputation.
Second, the Union's concerted action which disrupted
the Hotel's operations clearly violated the CBA's "No
Strike, No Lockout" provision. In the case, the concerted
action is an economic strike upon which the afore-quoted
"no strike/work stoppage and lockout" prohibition is
squarely applicable and legally binding.
Third, the Union officers and members' concerted
action to shave their heads and crop their hair not only
violated the Hotel's Grooming Standards but also
violated the Union's duty and responsibility to bargain
in good faith. The law prohibits the commission of any act
which will disrupt or impede the early settlement of the
labor disputes that are under conciliation. Since the
bargaining deadlock is being conciliated by the NCMB, the
Union's action to have their officers and members' heads
shaved was manifestly calculated to antagonize and
embarrass the Hotel management and in doing so
effectively disrupted the operations of the Hotel and
violated their duty to bargain collectively in good faith.
Fourth, the Union failed to observe the mandatory 30-
day cooling-off period and the seven-day strike ban
before it conducted the strike on January 18, 2002. The
strike should be should on January 25, 7 days after
submission of the report on the strike-vote
Last, the Union committed illegal acts in the conduct of
its strike. The Union officers and members formed human
barricades and obstructed the driveway of the Hotel as
shown in a picture.
(3) As to the liability, the law makes a distinction between union
officers and mere union members. Union officers may be validly
terminated from employment for their participation in an
illegal strike, while union members have to participate in and
commit illegal acts for them to lose their employment status.
Thus, it is necessary for the company to adduce proof of the
participation of the striking employees in the commission of illegal
acts during the strikes.
_________________
(16) G.R. Nos. 171618-19 March 20, 2009
JACKBILT INDUSTRIES, INC. vs JACKBILT EMPLOYEES
WORKERS UNION-NAFLU-KMU
CORONA, J.:
FACTS: Due to the adverse effects of the Asian economic crisis on
the construction industry, petitioner decided to temporarily stop its
business of producing concrete hollow blocks, compelling most of
its employees to go on leave for six months.
Respondent union immediately protested the temporary shutdown.
Because its collective bargaining agreement with petitioner
was expiring during the period of the shutdown, respondent
claimed that petitioner halted production to avoid its duty to
bargain collectively. The shutdown was allegedly motivated by
anti-union sentiments.
Accordingly, respondent went on strike. Its officers and members
picketed petitioners main gates and deliberately prevented
persons and vehicles from going into and out of the compound.
Petitioner filed a petition for injunction with a prayer for the
issuance of a TRO in the NLRC.
NLRC issued a TRO directing the respondents to refrain from
preventing access to petitioners property.
The union violated such order.
The union officers and members were then required to explain but
they refused to do so. Thus, they were dismissed.
Respondents then filed a complaint before the LA.
The labor arbiter dismissed the complaints for illegal lockout and
unfair labor practice for lack of merit. However, because
petitioner did not file a petition to declare the strike illegal
before terminating respondents officers and employees, it
was found guilty of illegal dismissal.
NLRC only modified the monetary award.
CA held that the temporary shutdown was moved by anti-union
sentiments. Petitioner was therefore guilty of unfair labor practice.
ISSUE: Whether or not the filing of a petition with the labor arbiter
to declare a strike illegal is a condition sine qua non for the valid
termination of employees who commit an illegal act in the course of
such strike.
HELD: Not a condition sine qua non.
Article 264(e) of the Labor Code prohibits any person engaged in
picketing from obstructing the free ingress to and egress from the
employers premises. Since respondent was found by the NLRC to
have prevented the free entry into and exit of vehicles from
petitioners compound, respondents officers and employees clearly
committed illegal acts in the course of the strike.
The use of unlawful means in the course of a strike renders such
strike illegal. Therefore, pursuant to the principle of conclusiveness
of judgment, strike was ipso facto illegal. The filing of a petition to
declare the strike illegal was thus unnecessary.
Consequently, we uphold the legality of the dismissal of
respondents officers and employees. Article 264 of the Labor
Code further provides that an employer may terminate employees
found to have committed illegal acts in the course of a strike.
Petitioner clearly had the legal right to terminate respondents
officers and employees.
______________
(17) G.R. No. 168382 June 6, 2011
AIRLINE PILOTS ASSOCIATION OF THE PHILIPPINES
(ALPAP) vs. PAL
DEL CASTILLO, J.:
FACTS: Claiming that PAL committed ULP, ALPAP filed on
December 9, 1997, a notice of strike against respondent PAL with
the DOLE. Upon PALs petition and considering that its continued
operation is impressed with public interest, the DOLE Secretary
assumed jurisdiction over the labor dispute. The DOLE ordered
that all strikes and lockouts at the PAL, whether actual or
impending, are hereby strictly prohibited. The parties are also
enjoined from committing any act that may exacerbate the
situation.
However, ALPAP went on strike. This constrained the DOLE, to
issue a return-to-work order on June 7, 1998. However, it was only
on June 26, 1998 when ALPAP officers and members reported
back to work as shown in a logbook signed by each of them. As a
consequence, PAL refused to accept the returning pilots for their
failure to comply immediately with the return-to-work order.
ALPAP filed with the LA a complaint for illegal lockout against PAL.
ALPAP contended that its counsel received a copy of the return-to-
work order only on June 25, 1998, which justified their non-
compliance therewith until June 26, 1998.
The DOLE Sec ruled that there was illegal strike but no illegal
lockout and that the dismissal of those who failed to obey the
return-to-work order be upheld. CA affirmed. SC also affirmed.
ALPAP contends that it was erroneous for Sto. Tomas and Imson
to merely take note of the motions when the issues raised therein
sprang from the DOLE Secretarys exercise of authority to assume
jurisdiction over a labor dispute which have nevertheless remained
unresolved. ALPAP prays that the assailed letters dated July 4,
2003 and July 30, 2003 be declared null and void. It likewise seeks
for a conduct of a proceeding to determine who actually
participated in the illegal strike of June 1998 and consequently
who, from its vast membership, should be deemed to have lost
employment status.
ISSUE: WON there is a need for a proceeding to determine who
among the ALPAP members and officers actually participated in
the illegal strike.
HELD: No.
Such proceeding would entail a reopening of a final judgment
which could not be permitted by this Court. Settled in law is that
once a decision has acquired finality, it becomes immutable and
unalterable, thus can no longer be modified in any respect. Subject
to certain recognized exceptions, the principle of immutability
leaves the judgment undisturbed as "nothing further can be done
except to execute it."
True, the dispositive portion of the DOLE Resolution does not
specifically enumerate the names of those who actually
participated in the strike but only mentions that those strikers who
failed to heed the return-to-work order are deemed to have lost
their employment. This omission, however, cannot prevent an
effective execution of the decision.
There is no necessity to conduct a proceeding to determine the
participants in the illegal strike or those who refused to heed the
return to work order because the ambiguity can be cured by
reference to the body of the decision and the pleadings filed.
A review of the records reveals that in NCMB and the DOLE
Secretary declared the ALPAP officers and members to have lost
their employment status based on either of two grounds, viz: their
participation in the illegal strike or their defiance of the return-to-
work order of the DOLE Secretary. The records of the case unveil
the names of each of these returning pilots. The logbook with the
heading "Return To Work Compliance/ Returnees" bears their
individual signature signifying their conformity that they were
among those workers who returned to work only on June 26, 1998
or after the deadline imposed by DOLE. From this crucial and vital
piece of evidence, it is apparent that each of these pilots is bound
by the judgment. Besides, the complaint for illegal lockout was filed
on behalf of all these returnees. Thus, a finding that there was no
illegal lockout would be enforceable against them. In fine, only
those returning pilots, irrespective of whether they comprise the
entire membership of ALPAP, are bound by the June 1, 1999
DOLE Resolution.
ALPAP harps on the inequity of PALs termination of its officers
and members considering that some of them were on leave or
were abroad at the time of the strike. Some were even merely
barred from returning to their work which excused them for not
complying immediately with the return-to-work order. Again, a
scrutiny of the records of the case discloses that these
allegations were raised at a very late stage, that is, after the
judgment has finally decreed that the returning pilots
termination was legal. Interestingly, these defenses were not
raised and discussed when the case was still pending before the
DOLE Secretary, the CA or even before this Court.
_________________
(18) G.R. No. 160302 September 27, 2010
JAILE OLISA et al. vs. DANILO ESCARIO et al.
BERSAMIN, J.:
DOCTRINE: Conformably with the long honored principle of a fair
days wage for a fair days labor, employees dismissed for joining
an illegal strike are not entitled to backwages for the period of the
strike even if they are reinstated by virtue of their being merely
members of the striking union who did not commit any illegal act
during the strike.
FACTS: All the officers and some 200 members of the Union
walked out of companys premises and proceeded to the barangay
office to show support for Juanito Caete, an officer of the Union
charged with oral defamation by Aurora Manor, the companys
personnel manager, and Yolanda Fabella, Manors secretary. It
appears that the proceedings in the barangay resulted in a
settlement, and the officers and members of the Union all returned
to work thereafter.
As a result of the walkout, PINA preventively suspended all officers
of the Union because of the walkout incident. PINA terminated the
officers of the Union after a month.
PINA filed a complaint for ULP and damages. LA ruled that the
incident was an illegal walkout constituting ULP; and that all the
Unions officers, except Caete, had thereby lost their employment.
Union filed a notice of strike, claiming that PINA was guilty of union
busting through the constructive dismissal of its officers. The Union
held a strike vote (June 9), at which a majority of 190 members of
the Union voted to strike. The strike was held in the afternoon of
June 15, 1993.
NLRC issued a TRO enjoining the Unions officers and members to
cease and desist from barricading and obstructing the entrance to
and exit from PINAs premises, to refrain from committing any and
all forms of violence, and to remove all forms of obstructions such
as streamers, placards, or human barricade.
LA held the strike to be illegal. NLRC affirmed but it further rules
that there was no abandonment.
The union claimed that the NLRC gravely abused its discretion in
not awarding backwages pursuant to Article 279 of the Labor
Code, and in not declaring their strike as a good faith strike.
ISSUE: WON petitioners are entitled to full backwages from the
date of dismissal until the date of actual reinstatement due to their
not being found to have abandoned their jobs.
HELD:
The situation of the petitioners calls for the application of third
paragraph of Article 264(a) and not Art. 279.
With respect to Art. 279---- By its use of the phrase unjustly
dismissed, Article 279 refers to a dismissal that is unjustly done,
that is, the employer dismisses the employee without observing
due process, either substantive or procedural. Substantive due
process requires the attendance of any of the just or authorized
causes for terminating an employee as provided under Article 278
(termination by employer), or Article 283 (closure of establishment
and reduction of personnel), or Article 284 (disease as ground for
termination), all of the Labor Code; while procedural due process
demands compliance with the twin-notice requirement.
With respect to Art. 264- Contemplating two causes for the
dismissal of an employee, that is: (a) unlawful lockout; and (b)
participation in an illegal strike, the third paragraph of Article 264(a)
authorizes the award of full backwages only when the termination
of employment is a consequence of an unlawful lockout. On the
consequences of an illegal strike, the provision distinguishes
between a union officer and a union member participating in an
illegal strike. A union officer who knowingly participates in an illegal
strike is deemed to have lost his employment status, but a union
member who is merely instigated or induced to participate in the
illegal strike is more benignly treated. Part of the explanation for
the benign consideration for the union member is the policy of
reinstating rank-and-file workers who are misled into supporting
illegal strikes, absent any finding that such workers committed
illegal acts during the period of the illegal strikes.
The petitioners were terminated for joining a strike that was later
declared to be illegal. The NLRC ordered their reinstatement or, in
lieu of reinstatement, the payment of their separation pay, because
they were mere rank-and-file workers whom the Unions officers
had misled into joining the illegal strike. They were not unjustly
dismissed from work. Based on the text and intent of the two
aforequoted provisions of the Labor Code, therefore, it is plain that
Article 264(a) is the applicable one.
(2) Petitioners not entitled to backwages despite their
reinstatement: A fair days wage for a fair days labor
The petitioners participation in the illegal strike was precisely what
prompted PINA to file a complaint to declare them, as striking
employees, to have lost their employment status. However, the
NLRC ultimately ordered their reinstatement after finding that they
had not abandoned their work by joining the illegal strike. They
were thus entitled only to reinstatement, regardless of whether or
not the strike was the consequence of the employers ULP,
considering that a strike was not a renunciation of the employment
relation.
As a general rule, backwages are granted to indemnify a dismissed
employee for his loss of earnings during the whole period that he is
out of his job. Considering that an illegally dismissed employee is
not deemed to have left his employment, he is entitled to all the
rights and privileges that accrue to him from the employment. The
grant of backwages to him is in furtherance and effectuation of the
public objectives of the Labor Code, and is in the nature of a
command to the employer to make a public reparation for his illegal
dismissal of the employee in violation of the Labor Code.
That backwages are not granted to employees participating in
an illegal strike simply accords with the reality that they do
not render work for the employer during the period of the
illegal strike.
The petitioners herein do not deny their participation in the June
15, 1993 strike. As such, they did not suffer any loss of earnings
during their absence from work. Their reinstatement except
backwages is in order, to conform to the policy of a fair days wage
for a fair days labor.
Under the principle of a fair days wage for a fair days labor, the
petitioners were not entitled to the wages during the period of the
strike (even if the strike might be legal), because they performed
no work during the strike.
(3) Appropriate Amount for Separation Pay is One Month per
Year of Service
PINA manifested that the reinstatement of the petitioners would not
be feasible because: (a) it would "inflict disruption and oppression
upon the employer"; (b) "petitioners [had] stayed away" for more
than 15 years; (c) its machines had depreciated and had been
replaced with newer, better ones; and (d) it now sold goods
through independent distributors, thereby abolishing the positions
related to sales and distribution.
Under the circumstances, the grant of separation pay in lieu of
reinstatement of the petitioners was proper. Court has granted
separation pay as a measure of social justice even when an
employee has been validly dismissed, as long as the dismissal has
not been due to serious misconduct or reflective of personal
integrity or morality.
Here, we note that this case has dragged for almost 17 years from
the time of the illegal strike. Bearing in mind PINAs manifestation
that the positions that the petitioners used to hold had ceased to
exist for various reasons, we hold that separation pay equivalent to
one month per year of service in lieu of reinstatement fully aligns
with the aforecited rulings of the Court on the matter.


Art. 277 (b)
G.R. No. 152166 October 20, 2010
ST. LUKE'S MEDICAL CENTER, INC. and
ROBERT KUAN vs. ESTRELITO NOTARIO
PERALTA, J.:
FACTS: St. Lukes Medical employed respondent as
In-House Security Guard.
Respondents duty consisted mainly of monitoring
the video cameras. A patient of the hospital lost his
belongings. It was found later that the video
cameras were not working at the time of the
incident.
He was asked to explain. Respondent explained that
on the subject dates, he was the only personnel on
duty as nobody wanted to assist him. Because of
this, he decided to focus the cameras on the Old
and New Maternity Units, as these two units have
high incidence of crime.
He was terminated. He filed a complaint for illegal
dismissal seeking reinstatement plus backwages.
Petitioners countered that they validly dismissed
respondent for gross negligence and observed due
process before terminating his employment.
ISSUE: WON there was valid dismissal.
HELD: Illegal Dismissal.
To effectuate a valid dismissal from employment by
the employer, the Labor Code has set twin
requirements, namely: (1) the dismissal must be for
any of the causes provided in Article 282 of the
Labor Code; and (2) the employee must be given an
opportunity to be heard and defend himself. This
first requisite is referred to as the substantive
aspect, while the second is deemed as the
procedural aspect.
An employer can terminate the services of an
employee only for valid and just causes which must
be supported by clear and convincing evidence. The
employer has the burden of proving that the
dismissal was indeed for a valid and just cause.
A perusal of petitioner hospitals CCTV Monitoring
Guidelines,15 disseminated to all in-house security
personnel, reveals that that there is no categorical
provision requiring an in-house security personnel to
observe a rotation sequence procedure in focusing
the cameras so that the security monitoring would
cover as many areas as possible.
Under Article 282 (b) of the Labor Code, an
employer may terminate an employee for gross
and habitual neglect of duties. Neglect of duty,
to be a ground for dismissal, must be both gross
and habitual.
A single or isolated act of negligence does not
constitute a just cause for the dismissal of the
employee. Under the prevailing circumstances,
respondent exercised his best judgment in
monitoring the CCTV cameras so as to ensure the
security within the hospital premises. Verily,
assuming arguendo that respondent was negligent,
although this Court finds otherwise, the lapse or
inaction could only be regarded as a single or
isolated act of negligence that cannot be
categorized as habitual and, hence, not a just cause
for his dismissal.
No complaint was filed before the police. Even the
supposed complainant, Tibon, did not institute any
complaint against petitioner hospital. Therefore, it
cannot be said that petitioners incurred actual loss
or pecuniary damage.
(2) No due process.
Where the dismissal was without just cause and
there was no due process, Article 279 of the Labor
Code, as amended, mandates that the employee is
entitled to reinstatement without loss of seniority
rights and other privileges and full backwages,
inclusive of allowances and other benefits, or their
monetary equivalent computed from the time the
compensation was not paid up to the time of actual
reinstatement.
Petitioners lack of just cause and non-compliance
with the procedural requisites in terminating
respondents employment renders them guilty of
illegal dismissal. Consequently, respondent is
entitled to reinstatement to his former position
without loss of seniority rights and payment of

backwages. However, if such reinstatement proves
impracticable, and hardly in the best interest of the
parties, perhaps due to the lapse of time since his
dismissal, or if he decides not to be reinstated,
respondent should be awarded separation pay in
lieu of reinstatement.
Prescinding from the foregoing, the Court deems
that since reinstatement is no longer feasible due to
the long passage of time, petitioners are required to
pay respondent his separation pay equivalent to one
(1) months pay for every year of service. Petitioners
are thus ordered to pay respondent his backwages.
--------------------
G.R. No. 185829 April 25, 2012
ARMANDO ALILING vs. JOSE B. FELICIANO,
MANUEL F. SAN MATEO III, JOSEPH R.
LARIOSA, and WIDE WIDE WORLD EXPRESS
CORPORATION
VELASCO, JR., J.:
FACTS: Via a letter, respondent company offered to
employ petitioner Aliling the position Account
Executive (Seafreight Sales). Aliling was only
probationary on such position subject to
regularization depending on his
Training then started. However, instead of a
Seafreight Sale assignment, the company asked
Aliling to handle Ground Express (GX).
The company was dissatisfied with Alilings
performance.
A letter was sent to Aliling asking him to explain his
absence taken without leave.
Aliling responded two days later. He denied being
absent on the days in question, attaching to his
reply-letter a copy of his timesheet which showed
that he worked during those dats. Alilings
explanation came with a query regarding the
withholding of his salary.
Another letter was sent my Aliling tending his
resignation. While WWWEC took no action on his
tender, Aliling nonetheless demanded reinstatement
and a written apology, claiming in a subsequent
letter to management that San Mateo had forced
him to resign.
The company replied to advise Aliling of the
termination of his services effective as of that date
owing to his "non-satisfactory performance" during
his probationary period.
Aliling filed a Complaint for illegal dismissal due to
forced resignation, nonpayment of salaries as well
as damages with the NLRC against WWWEC.
HELD:
(1) Petitioner is a regular employee
The letter-offer itself states that the regularization
standards or the performance norms to be used are
still to be agreed upon by Aliling and his supervisor.
WWWEC has failed to prove that an agreement as
regards thereto has been reached. Clearly then,
there were actually no performance standards to
speak of. And lest it be overlooked, Aliling was
assigned to GX trucking sales, an activity entirely
different to the Seafreight Sales he was originally
hired and trained for. Thus, at the time of his
engagement, the standards relative to his
assignment with GX sales could not have plausibly
been communicated to him as he was under
Seafreight Sales.
Respondents further allege that San Mateos email
shows that the standards for his regularization were
made known to petitioner Aliling at the time of his
engagement. To recall, in that email message, San
Mateo reminded Aliling of the sales quota he ought
to meet as a condition for his continued
employment, i.e., that the GX trucks should already
be 80% full by August 5, 2004. Contrary to
respondents contention, San Mateos email cannot
support their allegation on Aliling being informed of
the standards for his continued employment, such
as the sales quota, at the time of his engagement.
As it were, the email message was sent to Aliling
more than a month after he signed his employment
contract with WWWEC.
Section 6 of the Implementing Rules of Book VI,
Rule VIII-A of the Code specifically requires the
employer to inform the probationary employee of

such reasonable standards at the time of his
engagement, not at any time later; else, the latter
shall be considered a regular employee. Thus,
pursuant to the explicit provision of Article 281
of the Labor Code, Section 6(d) of the
Implementing Rules of Book VI, Rule VIII-A of the
Labor Code and settled jurisprudence, petitioner
Aliling is deemed a regular employee as of June
11, 2004, the date of his employment contract.

(2) Petitioner was illegally dismissed
To justify fully the dismissal of an employee, the
employer must, as a rule, prove that the dismissal
was for a just cause and that the employee was
afforded due process prior to dismissal. As a
complementary principle, the employer has the onus
of proving with clear, accurate, consistent, and
convincing evidence the validity of the dismissal.

WWWEC had failed to discharge its twin burden
in the instant case.
First off, the termination letter did not even
specifically state Alilings "non-satisfactory
performance," or that Alilings termination was by
reason of his failure to achieve his set quota.
Further, what WWWEC considered as the evidence
purportedly showing it gave Aliling the chance to
explain his inability to reach his quota was a
purported memo of San Mateo addressed to the
latter. However, Aliling denies having received such
letter and WWWEC has failed to refute his
contention of non-receipt. In net effect, WWWEC
was at a loss to explain the exact just reason for
dismissing Aliling.
At any event, assuming for argument that the
petitioner indeed failed to achieve his sales quota,
his termination from employment on that ground
would still be unjustified.
An employees failure to meet sales or work
quotas falls under the concept of gross
inefficiency, which in turn is analogous to gross
neglect of duty that is a just cause for dismissal
under Article 282 of the Code.
However, in order for the quota imposed to be
considered a valid productivity standard and
thereby validate a dismissal, managements
prerogative of fixing the quota must be
exercised in good faith for the advancement of
its interest. The duty to prove good faith, however,
rests with WWWEC as part of its burden to show
that the dismissal was for a just cause. This
WWWEC failed to do, perceptibly because it could
not.
Being an experimental activity and having been
launched for the first time, the sales of GX
services could not be reasonably quantified. This
would explain why Amador implied in her email that
other bases besides sales figures will be used to
determine Alilings performance. And yet, despite
such a neutral observation, Aliling was still
dismissed for his dismal sales of GX services. In any
event, WWWEC failed to demonstrate the
reasonableness and the bona fides on the quota
imposition.
Respondent WWWEC miserably failed to prove
the termination of petitioner was for a just cause
nor was there substantial evidence to
demonstrate the standards were made known to
the latter at the time of his engagement. Hence,
petitioners right to security of tenure was
breached.
(3) Alilings right to procedural due process was
violated
The first and second notice requirements have not
been properly observed, thus tainting petitioners
dismissal with illegality.
The adverted memo supposedly informing Aliling of
the likelihood of his termination and directing him to
account for his failure to meet the expected job
performance would have had constituted the
"charge sheet," sufficient to answer for the first
notice requirement, but for the fact that there is no
proof such letter had been sent to and received by
him. In fact, Aliling goes on to tag such
letter/memorandum as fabrication. WWWEC did not
adduce proof to show that a copy of the letter was

duly served upon Aliling. Clearly enough, WWWEC
did not comply with the first notice requirement.
Neither was there compliance with the imperatives
of a hearing or conference. The Court need not
dwell at length on this particular breach of the due
procedural requirement. Suffice it to point out that
the record is devoid of any showing of a hearing or
conference having been conducted. On the contrary,
in its letter to Aliling, or barely five (5) days after it
served the notice of termination, WWWEC
acknowledged that it was still evaluating his case.
And the written notice of termination itself did not
indicate all the circumstances involving the charge
to justify severance of employment.
(4) Aliling is entitled to backwages and
separation pay in lieu of reinstatement
As earlier explained, Aliling cannot be rightfully
considered as a mere probationary employee. Thus,
he is entitled to backwages reckoned from the time
he was illegally dismissed on October 6, 2004, with
a PhP 17,300.00 monthly salary, until the finality of
this
Clearly, Art. 279 intends the award of backwages
and similar benefits to accumulate past the date of
the Labor Arbiters decision until the dismissed
employee is actually reinstated. But if, as in this
case, reinstatement is no longer possible, this Court
has consistently ruled that backwages shall be
computed from the time of illegal dismissal until the
date the decision becomes final.
Additionally, Aliling is entitled to separation pay in
lieu of reinstatement on the ground of strained
relationship.

Under the doctrine of strained relations, the
payment of separation pay is considered an
acceptable alternative to reinstatement when the
latter option is no longer desirable or viable. On
one hand, such payment liberates the employee
from what could be a highly oppressive work
environment. On the other hand, it releases the
employer from the grossly unpalatable obligation of
maintaining in its employ a worker it could no longer
trust.
Strained relations must be demonstrated as a fact,
however, to be adequately supported by evidence
substantial evidence to show that the relationship
between the employer and the employee is indeed
strained as a necessary consequence of the judicial
controversy.
As the CA correctly observed, "To reinstate
petitioner [Aliling] would only create an atmosphere
of antagonism and distrust, more so that he had only
a short stint with respondent company." The Court
need not belabor the fact that the patent animosity
that had developed between employer and
employee generated what may be considered as the
arbitrary dismissal of the petitioner.
Thus, Aliling is entitled to both backwages and
separation pay (in lieu of reinstatement) in the
amount of one (1) months salary for every year of
service, that is, from June 11, 2004 (date of
employment contract) until the finality of this
decision with a fraction of a year of at least six (6)
months to be considered as one (1) whole year.
(5) The officers of WWWEC cannot be held
jointly and severally liable with the company
In labor cases, for instance, the Court has held
corporate directors and officers solidarily liable with
the corporation for the termination of employment of
employees done with malice or in bad faith.
A review of the facts of the case does not reveal
ample and satisfactory proof that respondent officers
of WWEC acted in bad faith or with malice in
effecting the termination of petitioner Aliling. Even
assuming arguendo that the actions of WWWEC are
ill-conceived and erroneous, respondent officers
cannot be held jointly and solidarily with it. Hence,
the ruling on the joint and solidary liability of
individual respondents must be recalled.
(6) Aliling is entitled to Attorneys Fees and
Legal Interest
Petitioner Aliling is also entitled to attorneys fees in
the amount of ten percent (10%) of his total
monetary award, having been forced to litigate in
order to seek redress of his grievances, pursuant to
Article 111 of the Labor Code.

Finally, legal interest shall be imposed on the
monetary awards herein granted at the rate of 6%
per annum from date of termination until fully paid.
____________________
G.R. No. 152048 April 7, 2009
FELIX B. PEREZ and AMANTE G. DORIA vs.
PHILIPPINE TELEGRAPH AND TELEPHONE
COMPANY and JOSE LUIS SANTIAGO
CORONA, J.:
FACTS: Petitioners were employed by respondent
PT&T as shipping clerk and supervisor, respectively,
in PT&Ts Shipping Section, Materials Management
Group.
Acting on an alleged unsigned letter regarding
anomalous transactions at the Shipping Section,
respondents formed a special audit team to
investigate the matter. It was discovered that the
Shipping Section jacked up the value of the freight
costs for goods shipped and that the duplicates of
the shipping documents allegedly showed traces of
tampering, alteration and superimposition.
Petitioners were placed on preventive suspension
for 30 days for their alleged involvement in the
anomaly. Their suspension was extended for 15
days twice:
A memorandum was issued by respondents
dismissing the petitioners.
Petitioners filed a complaint for illegal suspension
and illegal dismissal. They alleged that they were
dismissed the date they received the above-
mentioned memorandum.
HELD:
(1) Respondents Failed to Prove Just Cause and
to Observe Due Process
Without undermining the importance of a shipping
order or request, we find respondents evidence
insufficient to clearly and convincingly establish the
facts from which the loss of confidence resulted.
Other than their bare allegations and the fact that
such documents came into petitioners hands at
some point, respondents should have provided
evidence of petitioners functions, the extent of their
duties, the procedure in the handling and approval
of shipping requests and the fact that no personnel
other than petitioners were involved. There was,
therefore, a patent paucity of proof connecting
petitioners to the alleged tampering of shipping
documents.
The alterations on the shipping documents could not
reasonably be attributed to petitioners because it
was never proven that petitioners alone had control
of or access to these documents. Unless duly
proved or sufficiently substantiated otherwise,
impartial tribunals should not rely only on the
statement of the employer that it has lost confidence
in its employee.
Willful breach by the employee of the trust reposed
in him by his employer or duly authorized
representative is a just cause for termination.
However, loss of confidence should not be
simulated. It should not be used as a subterfuge for
causes which are improper, illegal or unjustified.
Loss of confidence may not be arbitrarily asserted in
the face of overwhelming evidence to the contrary. It
must be genuine, not a mere afterthought to justify
an earlier action taken in bad faith.
The burden of proof rests on the employer to
establish that the dismissal is for cause in view of
the security of tenure that employees enjoy under
the Constitution and the Labor Code.
Respondents illegal act of dismissing
petitioners was aggravated by their failure to
observe due process. To meet the requirements of
due process in the dismissal of an employee, an
employer must furnish the worker with two written
notices: (1) a written notice specifying the grounds
for termination and giving to said employee a
reasonable opportunity to explain his side and (2)
another written notice indicating that, upon due
consideration of all circumstances, grounds have
been established to justify the employer's decision to
dismiss the employee.
Petitioners were neither apprised of the charges
against them nor given a chance to defend
themselves. They were simply and arbitrarily
separated from work and served notices of

termination in total disregard of their rights to due
process and security of tenure.
However, with respect to the hearing
requirement, such hearing is not necessary.
A hearing means that a party should be given a
chance to adduce his evidence to support his side of
the case and that the evidence should be taken into
account in the adjudication of the controversy."To be
heard" does not mean verbal argumentation alone
inasmuch as one may be heard just as effectively
through written explanations, submissions or
pleadings. Therefore, while the phrase "ample
opportunity to be heard" may in fact include an
actual hearing, it is not limited to a formal hearing
only. In other words, the existence of an actual,
formal "trial-type" hearing, although preferred, is not
absolutely necessary to satisfy the employees right
to be heard.
It has been recognized that the employer may
provide an employee with ample opportunity to be
heard and defend himself with the assistance of a
representative or counsel in ways other than a
formal hearing. The employee can be fully afforded
a chance to respond to the charges against him,
adduce his evidence or rebut the evidence against
him through a wide array of methods, verbal or
written.
NOTA BENE:
In sum, the following are the guiding principles in
connection with the hearing requirement in dismissal
cases:
(a) "ample opportunity to be heard" means any
meaningful opportunity (verbal or written)
given to the employee to answer the charges
against him and submit evidence in support
of his defense, whether in a hearing,
conference or some other fair, just and
reasonable way.
(b) a formal hearing or conference becomes
mandatory only when requested by the
employee in writing or substantial evidentiary
disputes exist or a company rule or practice
requires it, or when similar circumstances
justify it.
(c) the "ample opportunity to be heard" standard
in the Labor Code prevails over the "hearing
or conference" requirement in the
implementing rules and regulations.
(3) Petitioners Were Illegally Suspended for 30
Days

An employee may be validly suspended by the
employer for just cause provided by law. Such
suspension shall only be for a period of 30 days,
after which the employee shall either be reinstated
or paid his wages during the extended period.
In this case, petitioners contended that they were
not paid during the two 15-day extensions, or a total
of 30 days, of their preventive suspension.
Respondents failed to adduce evidence to the
contrary.
(3) Further, where the dismissal was without just or
authorized cause and there was no due process,
Article 279 of the Labor Code, as amended,
mandates that the employee is entitled to
reinstatement without loss of seniority rights and
other privileges and full backwages, inclusive of
allowances, and other benefits or their monetary
equivalent computed from the time the
compensation was not paid up to the time of actual
reinstatement.
In this case, however, reinstatement is no longer
possible because of the length of time that has
passed from the date of the incident to final
resolution. Fourteen years have transpired from the
time petitioners were wrongfully dismissed. To order
reinstatement at this juncture will no longer serve
any prudent or practical purpose.
---------------------------
G.R. No. 166208 June 29, 2007
KING OF KINGS TRANSPORT, INC., CLAIRE
DELA FUENTE, and MELISSA LIM vs SANTIAGO
O. MAMAC,
VELASCO, JR., J.:

FACTS: Respondent Mamac was hired as bus
conductor. Respondent was required to accomplish
a Conductors Trip Report and submit it to the
company after each trip. As a background, this
report indicates the ticket opening and closing for
the particular day of duty. After submission, the
company audits the reports. Once an irregularity is
discovered, the company issues an Irregularity
Report against the employee, indicating the nature
and details of the irregularity. Thereafter, the
concerned employee is asked to explain the incident
by making a written statement or counter-affidavit at
the back of the same Irregularity Report. After
considering the explanation of the employee, the
company then makes a determination of whether to
accept the explanation or impose upon the
employee a penalty for committing an infraction.
That decision shall be stated on said Irregularity
Report and will be furnished to the employee.
Upon audit of the Conductors Report of
respondent, KKTI noted an irregularity. It
discovered that respondent declared several sold
tickets as returned tickets causing KKTI to lose an
income of eight hundred and ninety pesos. While no
irregularity report was prepared on the incident,
KKTI nevertheless asked respondent to explain the
discrepancy. In his letter, respondent said that the
erroneous declaration in his Trip Report was
unintentional. He explained that during that days
trip, the windshield of the bus assigned to them was
smashed; and they had to cut short the trip in order
to immediately report the matter to the police. As a
result of the incident, he got confused in making the
trip report.
Respondent received a letter terminating his
employment. The dismissal letter alleged that the
irregularity was an act of fraud against the company.
KKTI also cited as basis for respondents dismissal
the other offenses he allegedly committed since
1999.
Respondent filed a Complaint for illegal dismissal.
He denied committing any infraction and alleged that
his dismissal was intended to bust union activities.
Moreover, he claimed that his dismissal was
effected without due process.
ISSUE: Whether petitioner KKTI complied with the
due process requirements in terminating
respondents employment.
HELD: No due process.
To clarify, the following should be considered in
terminating the services of employees:
1. The first written notice to be served on the
employees should contain the specific causes or
grounds for termination against them, and a
directive that the employees are given the
opportunity to submit their written explanation
within a reasonable period. Reasonable
opportunity under the Omnibus Rules means
every kind of assistance that management must
accord to the employees to enable them to
prepare adequately for their defense. This
should be construed as a period of at least five
(5) calendar days from receipt of the notice to
give the employees an opportunity to study the
accusation against them, consult a union official
or lawyer, gather data and evidence, and decide
on the defenses they will raise against the
complaint. Moreover, in order to enable the
employees to intelligently prepare their
explanation and defenses, the notice should
contain a detailed narration of the facts and
circumstances that will serve as basis for the
charge against the employees. A general
description of the charge will not suffice. Lastly,
the notice should specifically mention which
company rules, if any, are violated and/or which
among the grounds under Art. 282 is being
charged against the employees.
2. After serving the first notice, the employers
should schedule and conduct a hearing or
conference wherein the employees will be given
the opportunity to: (1) explain and clarify their
defenses to the charge against them; (2) present
evidence in support of their defenses; and (3)
rebut the evidence presented against them by
the management. During the hearing or
conference, the employees are given the chance
to defend themselves personally, with the
assistance of a representative or counsel of their
choice. Moreover, this conference or hearing
could be used by the parties as an opportunity to
come to an amicable settlement.
3. After determining that termination of employment
is justified, the employers shall serve the
employees a written notice of termination
indicating that: (1) all circumstances involving
the charge against the employees have been
considered; and (2) grounds have been

established to justify the severance of their
employment.
In the instant case, KKTI admits that it had failed to
provide respondent with a charge sheet. However,
it maintains that it had substantially complied with
the rules, claiming that respondent would not have
issued a written explanation had he not been
informed of the charges against him.
First, respondent was not issued a written notice
charging him of committing an infraction. The
law is clear on the matter. A verbal appraisal of
the charges against an employee does not
comply with the first notice requirement.
Second, even assuming that petitioner KKTI was
able to furnish respondent an Irregularity Report
notifying him of his offense, such would not comply
with the requirements of the law. We observe from
the irregularity reports against respondent for his
other offenses that such contained merely a general
description of the charges against him. The reports
did not even state a company rule or policy that the
employee had allegedly violated. Likewise, there is
no mention of any of the grounds for termination of
employment under Art. 282 of the Labor Code.
Thus, KKTIs standard charge sheet is not
sufficient notice to the employee.
Third, no hearing was conducted. Regardless of
respondents written explanation, a hearing was still
necessary in order for him to clarify and present
evidence in support of his defense. Moreover,
respondent made the letter merely to explain the
circumstances relating to the irregularity in his
Conductors Trip Report. He was unaware that a
dismissal proceeding was already being effected.
Thus, he was surprised to receive termination letter
indicating as grounds, all infraction (including
previous ones).
Thus, for non-compliance with the due process
requirements in the termination of respondents
employment, petitioner KKTI is sanctioned to
pay respondent the amount of PhP 30,000 as
nominal damages. (not backwages)
____________________
Preventive Suspension
G.R. NO. 146779 January 23, 2006
RENATO S. GATBONTON vs. NLRC , MAPUA
INSTITUTE OF TECHNOLOGY and JOSE
CALDERON
AUSTRIA-MARTINEZ, J.:
FACTS: Petitioner Renato S. Gatbonton is an
associate professor of respondent. A civil
engineering student of respondent filed a letter-
complaint against petitioner for unfair/unjust grading
system, sexual harassment and conduct
unbecoming of an academician. Pending
investigation of the complaint, respondent MIT,
through its Committee on Decorum and
Investigation placed petitioner under a 30-day
preventive suspension effective January 11, 1999.
The committee believed that petitioners continued
stay during the investigation affects his performance
as a faculty member, as well as the students
learning; and that the suspension will allow
petitioner to "prepare himself for the investigation
and will prevent his influences to other members of
the community."

Thus, petitioner filed with the NLRC a complaint for
illegal suspension.
Petitioner questioned the validity of the
administrative proceedings with the Regional Trial
Court of Manila in a petition for certiorari but the
case was terminated when the parties entered into a
compromise agreement wherein respondent MIT
agreed to publish in the school organ the rules and
regulations implementing R.A. No. 7877 or the Anti-
Sexual Harassment Act; disregard the previous
administrative proceedings and conduct anew an
investigation on the charges against petitioner.
Petitioner agreed to recognize the validity of the
published rules and regulations, as well as the
authority of respondent to investigate, hear and
decide the administrative case against him.
LA held that preventive suspension was illegal and
respondents (school) directed to pay his wages
during the period of his preventive suspension.
NLRC reversed. Ca affirmed.

Petitioner finds fault in the CAs decision,
arguing that his preventive suspension does not
find any justification in the Mapua Rules and
Regulations considering that at the time of his
preventive suspension on January 11, 1999, the
rules have not been promulgated yet as it was
published only on February 23, 1999.
HELD: ILLEGAL SUSPENSION
Preventive suspension is a disciplinary measure for
the protection of the companys property pending
investigation of any alleged malfeasance or
misfeasance committed by the employee. The
employer may place the worker concerned under
preventive suspension if his continued employment
poses a serious and imminent threat to the life or
property of the employer or of his co-workers.
However, when it is determined that there is no
sufficient basis to justify an employees preventive
suspension, the latter is entitled to the payment of
salaries during the time of preventive suspension.
R.A. No. 7877 imposed the duty on educational or
training institutions to "promulgate rules and
regulations in consultation with and jointly approved
by the employees or students or trainees, through
their duly designated representatives, prescribing
the procedures for the investigation of sexual
harassment cases and the administrative sanctions
therefor." Petitioners preventive suspension was
based on respondent MITs Rules and Regulations
for the Implemention of the Anti-Sexual Harassment
Act of 1995, or R.A. No. 7877.
It must be noted however, that respondent published
said rules and regulations only on February 23,
1999.
The Mapua Rules is one of those issuances that
should be published for its effectivity, since its
purpose is to enforce and implement R.A. No. 7877,
which is a law of general application. In fact, the
Mapua Rules itself explicitly required publication of
the rules for its effectivity, as provided in Section 3,
Rule IV (Administrative Provisions), which states
that "[T]hese Rules and Regulations to implement
the Anti-Sexual Harassment Act of 1995 shall take
effect fifteen (15) days after publication by the
Committee." Thus, at the time of the imposition of
petitioners preventive suspension on January
11, 1999, the Mapua Rules were not yet legally
effective, and therefore the suspension had no
legal basis.
Moreover, even assuming that the Mapua Rules are
applicable, the Court finds that there is no sufficient
basis to justify his preventive suspension. Under the
Mapua Rules, an accused may be placed under
preventive suspension during pendency of the
hearing under any of the following circumstances:
a) if the evidence of his guilt is strong and the
school head is morally convinced that the
continued stay of the accused during the
period of investigation constitutes a
distraction to the normal operations of the
institution; or
b) the accused poses a risk or danger to the life
or property of the other members of the
educational community.
In petitioners case, there is no indication that
petitioners preventive suspension may be based on
the foregoing circumstances.
The resolution (stating such preventive suspension)
does not show that evidence of petitioners guilt is
strong and that the school head is morally convinced
that petitioners continued stay during the period of
investigation constitutes a distraction to the normal
operations of the institution; or that petitioner poses
a risk or danger to the life or property of the other
members of the educational community.
Even under the Labor Code, petitioners preventive
suspension finds no valid justification.
As previously stated, there is nothing on record
which shows that respondent MIT imposed the
preventive suspension on petitioner as his continued
employment poses a serious threat to the life or
property of the employer or of his co-workers;
therefore, his preventive suspension is not justified.
Consequently, the payment of wages during his
30-day preventive suspension is in order.
----------------------------------------


Art. 279 (Security of Tenure)
JENNY M. AGABON and VIRGILIO C. AGABON vs.
NLRC, RIVIERA HOME IMPROVEMENTS, INC. and
VICENTE ANGELES

FACTS: Private respondent is engaged in the business of
selling and installing ornamental and construction materials.
It employed petitioners as gypsum board and cornice
installers.
Petitioners then filed a complaint for illegal dismissal and
payment of money claims.
LA held there was illegal dismissal.
NLRC reversed. It held that were was abandonment of work.
CA affirmed NLRC.
Petitioners assert that they were dismissed because the
private respondent refused to give them assignments unless
they agreed to work on a "pakyaw" basis. They did not agree
on this arrangement because it would mean losing benefits
as SSS members. Petitioners also claim that private
respondent did not comply with the twin requirements of
notice and hearing.
Private respondent, on the other hand, maintained that
petitioners were not dismissed but had abandoned their
work. In fact, private respondent sent two letters to the last
known addresses of the petitioners advising them to report
for work. Private respondent's manager even talked to
petitioner Virgilio by telephone to tell him about the new
assignment at Pacific Plaza Towers involving 40,000 square
meters of cornice installation work. However, petitioners did
not report for work because they had subcontracted to
perform installation work for another company. Petitioners
also demanded for an increase in their wage. When this was
not granted, petitioners stopped reporting for work and filed
the illegal dismissal case.

ISSUE: Whether petitioners were illegally dismissed.

HELD:

Abandonment is the deliberate and unjustified refusal of an
employee to resume his employment.

It is a form of neglect
of duty, hence, a just cause for termination of employment by
the employer.

For a valid finding of abandonment, these two factors
should be present:
1. the failure to report for work or absence without valid
or justifiable reason; and
2. a clear intention to sever employer-employee
relationship, with the second as the more
determinative factor which is manifested by overt
acts from which it may be deduced that the
employees has no more intention to work. The intent
to discontinue the employment must be shown by
clear proof that it was deliberate and unjustified.

In this case, petitioners were frequently absent having
subcontracted for an installation work for another company.
Subcontracting for another company clearly showed the
intention to sever the employer-employee relationship with
private respondent.

Dismissals based on just causes contemplate acts or
omissions attributable to the employee while dismissals
based on authorized causes involve grounds under the
Labor Code which allow the employer to terminate
employees.

Procedurally,
1. if the dismissal is based on a just cause under
Article 282, the employer must give the employee
two written notices and a hearing or opportunity to
be heard if requested by the employee before
terminating the employment: a notice specifying the
grounds for which dismissal is sought a hearing or
an opportunity to be heard and after hearing or
opportunity to be heard, a notice of the decision to
dismiss; and
2. if the dismissal is based on authorized causes under
Articles 283 and 284, the employer must give the
employee and the Department of Labor and
Employment written notices 30 days prior to the
effectivity of his separation.

From the foregoing rules four possible situations may
be derived:
a. the dismissal is for a just cause under Article 282 of
the Labor Code, for an authorized cause under
Article 283, or for health reasons under Article 284,
and due process was observed;
b. the dismissal is without just or authorized cause but
due process was observed;
c. the dismissal is without just or authorized cause and
there was no due process; and
d. the dismissal is for just or authorized cause but due
process was not observed.

In the first situation, the dismissal is undoubtedly valid and
the employer will not suffer any liability.
In the second and third situations where the dismissals
are illegal, Article 279 mandates that the employee is

entitled to reinstatement without loss of seniority rights and
other privileges and full backwages, inclusive of allowances,
and other benefits or their monetary equivalent computed
from the time the compensation was not paid up to the time
of actual reinstatement.
In the fourth situation, the dismissal should be upheld.
While the procedural infirmity cannot be cured, it should not
invalidate the dismissal. However, the employer should be
held liable for non-compliance with the procedural
requirements of due process.

(2) The present case squarely falls under the fourth
situation. The dismissal should be upheld because it was
established that the petitioners abandoned their jobs to work
for another company. Private respondent, however, did not
follow the notice requirements and instead argued that
sending notices to the last known addresses would have
been useless because they did not reside there anymore.
Unfortunately for the private respondent, this is not a valid
excuse because the law mandates the twin notice
requirements to the employee's last known address. Thus, it
should be held liable for non-compliance with the procedural
requirements of due process.
Due process under the Labor Code, like Constitutional due
process, has two aspects: substantive, i.e., the valid and
authorized causes of employment termination under the
Labor Code; and procedural, i.e., the manner of dismissal.
(3) Further, the violation of the petitioners' right to
statutory due process by the private respondent
warrants the payment of indemnity in the form of
nominal damages.
-------------------------------------------------------------------
(2) G.R. No. 151378. March 28, 2005 GARCIA, J.:

JAKA FOOD PROCESSING CORPORATION vs. DARWIN
PACOT et al.

FACTS: Respondents were hired by petitioner until the latter
terminated their employment on because the corporation
was "in dire financial straits". It is not disputed, however, that
the termination was effected without JAKA complying with
the requirement under Article 283 of the Labor Code
regarding the service of a written notice upon the employees
and the Department of Labor and Employment at least one
(1) month before the intended date of termination.

ISSUE: What are the legal implications of a situation where
an employee is dismissed for cause but such dismissal was
effected without the employers compliance with the notice
requirement under the Labor Code.

HELD:

A dismissal for an authorized cause under Article 283 does
not necessarily imply delinquency or culpability on the part of
the employee. Instead, the dismissal process is initiated by
the employers exercise of his management prerogative, i.e.
when the employer opts to install labor saving devices, when
he decides to cease business operations or when, as in this
case, he undertakes to implement a retrenchment program.
The clear-cut distinction between a dismissal for just cause
under Article 282 and a dismissal for authorized cause under
Article 283 is further reinforced by the fact that in the first,
payment of separation pay, as a rule, is not required, while in
the second, the law requires payment of separation pay.
Accordingly, it is wise to hold that:
a. if the dismissal is based on a just cause under
Article 282 but the employer failed to comply with the
notice requirement, the sanction to be imposed upon
him should be tempered because the dismissal
process was, in effect, initiated by an act imputable
to the employee; and
b. if the dismissal is based on an authorized cause
under Article 283 but the employer failed to comply
with the notice requirement, the sanction should be
stiffer because the dismissal process was initiated
by the employers exercise of his management
prerogative.
The rule is that in all cases of business closure or cessation
of operation or undertaking of the employer, the affected
employee is entitled to separation pay. This is consistent
with the state policy of treating labor as a primary social
economic force, affording full protection to its rights as well
as its welfare. The exception is when the closure of
business or cessation of operations is due to serious
business losses or financial reverses; duly proved, in
which case, the right of affected employees to
separation pay is lost for obvious reasons.
Also, the SC awarded a much higher nominal damages in
the amount of 50,000 than that awarded if the dismissal is
due to just causes and there is no compliance with due
process. (note that in Agabon it was only 30,000)
-------------------------------------------------------------------
(3) G.R. No. 165381 February 9, 2011

NELSON A. CULILI vs. EASTERN
TELECOMMUNICATIONS PHILIPPINES, INC. et al.

DE CASTRO, J.:

FACTS: Petitioner was employed by ETPI as a Technician in
its Field Operations Department. Culili was promoted to

Senior Technician in the Customer Premises Equipment
Management Unit of the Service Quality Department and his
basic salary was increased.
Due to business troubles and losses, ETPI was compelled to
implement a Right-Sizing Program. Special Retirement
Programs were offered to qualified employees but it was only
Culili rejected the offer.
Later, the Service Quality Department was abolished. Such
rendered the specialized functions of a Senior Technician
unnecessary. As a result, Culilis position was abolished due
to redundancy and his functions were absorbed by another
employee already with the Business and Consumer
Accounts Department which absorbed petitioners
department.
Thus, Culili was dismissed.
Culili alleged that neither he nor the DOLE were formally
notified of his termination. Thus, he filed a case for illegal
dismissal.
Culili asserted that he was illegally dismissed because there
was no valid cause to terminate his employment. He claimed
that ETPI failed to prove that his position had become
redundant and that ETPI was indeed incurring losses. Culili
further alleged that his functions as a Senior Technician
could not be considered a superfluity because his tasks were
crucial and critical to ETPIs business.

HELD:
There is redundancy when the service capability of the
workforce is greater than what is reasonably required to
meet the demands of the business enterprise. A position
becomes redundant when it is rendered superfluous by any
number of factors such as over-hiring of workers, decrease
in volume of business, or dropping a particular product line
or service activity previously manufactured or undertaken by
the enterprise.
This Court has been consistent in holding that the
determination of whether or not an employees services are
still needed or sustainable properly belongs to the employer.
Provided there is no violation of law or a showing that the
employer was prompted by an arbitrary or malicious act, the
soundness or wisdom of this exercise of business judgment
is not subject to the discretionary review of the Labor Arbiter
and the NLRC.
However, an employer cannot simply declare that it has
become overmanned and dismiss its employees without
producing adequate proof to sustain its claim of
redundancy.
Among the requisites of a valid redundancy program are:
a. the good faith of the employer in abolishing the
redundant position; and
b. fair and reasonable criteria in ascertaining what
positions are to be declared redundant, such as but
not limited to: preferred status, efficiency, and
seniority.
This Court also held that the following evidence may be
proffered to substantiate redundancy: the new staffing
pattern, feasibility studies/ proposal on the viability of the
newly created positions, job description and the approval by
the management of the restructuring.
In the case at bar, ETPI was upfront with its employees
about its plan to implement a Right-Sizing Program. Even in
the face of initial opposition from and rejection of the said
program by ETEU, ETPI patiently negotiated with ETEUs
officers to make them understand ETPIs business dilemma
and its need to reduce its workforce and streamline its
organization. This evidently rules out bad faith on the part of
ETPI.
In deciding which positions to retain and which to abolish,
ETPI chose on the basis of efficiency, economy, versatility
and flexibility. It needed to reduce its workforce to a
sustainable level while maintaining functions necessary to
keep it operating. The records show that ETPI had
sufficiently established not only its need to reduce its
workforce and streamline its organization, but also the
existence of redundancy in the position of a Senior
Technician. ETPI explained how it failed to meet its business
targets and the factors that caused this, and how this
necessitated it to reduce its workforce and streamline its
organization. ETPI also submitted its old and new tables of
organization and sufficiently described how limited the
functions of the abolished position of a Senior Technician
were and how it decided on whom to absorb these functions.
In the new table of organization that the management
approved, one hundred twelve (112) employees were
redeployed and nine (9) positions were declared redundant.

It is inconceivable that ETPI would effect a company-wide
reorganization of this scale for the mere purpose of singling
out Culili and terminating him. If Culilis position were indeed
indispensable to ETPI, then it would be absurd for ETPI,
which was then trying to save its operations, to abolish that
one position which it needed the most. Contrary to Culilis
assertions that ETPI could not do away with his functions as
long as it is in the telecommunications industry, ETPI did not
abolish the functions performed by Culili as a Senior
Technician. What ETPI did was to abolish the position
itself for being too specialized and limited. The functions
of that position were then added to another employee whose
functions were broad enough to absorb the tasks of a Senior
Technician.
(2) ETPI, however, was remiss in its duty to observe
procedural due process in effecting the termination of
Culili.
ETPI does not deny its failure to provide DOLE with a written
notice regarding Culilis termination. It, however, insists that
it has complied with the requirement to serve a written notice
to Culili as evidenced by his admission of having received it
and forwarding it to his union president. However, since the

dismissal was due to business reasons, notice to DOLE is
required.
In view of ETPIs failure to comply with the notice
requirements under the Labor Code, Culili is entitled to
nominal damages in addition to his separation pay.
-------------------------------------------------------------------
(4) G.R. No. 167614 March 24, 2009 AUSTRIA-MARTINEZ,
J.:

ANTONIO M. SERRANO vs. Gallant MARITIME
SERVICES, INC. and MARLOW NAVIGATION CO., INC.

FACTS: Petitioner was hired by Gallant under a POEA-
approved Contract of Employment for a duration of 12
months.
On the date of his departure, petitioner was constrained to
accept a downgraded employment contract for the position
of Second Officer lesser salary, upon the assurance and
representation of respondents that he would be made Chief
Officer later on.
Respondents did not deliver on their promise to make
petitioner Chief Officer. Hence, petitioner refused to stay on
as Second Officer and was repatriated to the Philippines.
Petitioner's employment contract was for a period of 12
months, but at the time of his repatriation on, he had served
only two (2) months and seven (7) days of his contract,
leaving an unexpired portion of nine (9) months and twenty-
three (23) days.

ISSUE: WON Sec. 10 of RA 8042 is constitutional.

HELD: Unconstitutional.

A closer examination reveals that the subject clause has a
discriminatory intent against, and an invidious impact on,
OFWs at two levels:
First, OFWs with employment contracts of less than one
year vis--vis OFWs with employment contracts of one year
or more;
Second, among OFWs with employment contracts of more
than one year; and
Third, OFWs vis--vis local workers with fixed-period
employment;

OFWs with employment contracts of less than one year
vis--vis OFWs with employment contracts of one year
or more
The enactment of the subject clause in R.A. No. 8042
introduced a differentiated rule of computation of the money
claims of illegally dismissed OFWs based on their
employment periods, in the process singling out one
category whose contracts have an unexpired portion of one
year or more and subjecting them to the peculiar
disadvantage of having their monetary awards limited to their
salaries for 3 months or for the unexpired portion thereof,
whichever is less, but all the while sparing the other category
from such prejudice, simply because the latter's unexpired
contracts fall short of one year.

Among OFWs With Employment Contracts of More Than
One Year
The subject clause creates a sub-layer of discrimination
among OFWs whose contract periods are for more than one
year: those who are illegally dismissed with less than one
year left in their contracts shall be entitled to their salaries for
the entire unexpired portion thereof, while those who are
illegally dismissed with one year or more remaining in their
contracts shall be covered by the subject clause, and their
monetary benefits limited to their salaries for three months
only.

OFWs vis--vis Local Workers
With Fixed-Period Employment
The Court concludes that the subject clause contains a
suspect classification in that, in the computation of the
monetary benefits of fixed-term employees who are illegally
discharged, it imposes a 3-month cap on the claim of OFWs
with an unexpired portion of one year or more in their
contracts, but none on the claims of other OFWs or local
workers with fixed-term employment. The subject clause
singles out one classification of OFWs and burdens it with a
peculiar disadvantage.
Note: Section 3, Article XIII cannot be treated as a principal
source of direct enforceable rights, for the violation of which
the questioned clause may be declared unconstitutional. It
may unwittingly risk opening the floodgates of litigation to
every worker or union over every conceivable violation of so
broad a concept as social justice for labor.
It must be stressed that Section 3, Article XIII does not
directly bestow on the working class any actual enforceable
right, but merely clothes it with the status of a sector for
whom the Constitution urges protection through executive or
legislative action and judicial recognition. Its utility is best
limited to being an impetus not just for the executive and
legislative departments, but for the judiciary as well, to
protect the welfare of the working class.

(2) The word salaries in Section 10(5) does not include
overtime and leave pay. For seafarers like petitioner, DOLE
Department Order No. 33, series 1996, provides a Standard

Employment Contract of Seafarers, in which salary is
understood as the basic wage, exclusive of overtime, leave
pay and other bonuses; whereas overtime pay is
compensation for all work "performed" in excess of the
regular eight hours, and holiday pay is compensation for any
work "performed" on designated rest days and holidays.
By the foregoing definition alone, there is no basis for
the automatic inclusion of overtime and holiday pay in
the computation of petitioner's monetary award, unless
there is evidence that he performed work during those
periods.
-------------------------------------------------------------------
(5) G.R. No. 179532 May 30, 2011

CLAUDIO S. YAP vs. THENAMARIS SHIP'S
MANAGEMENT and INTERMARE MARITIME AGENCIES,
INC.

NACHURA, J.:

FACTS: Yap was employed as electrician of a vessel by
Intermare Maritime Agencies, Inc. in behalf of its principal,
Vulture Shipping Limited. The contract of employment was
for a duration of 12 months.
However, the vessel was sold. The POEA was informed
about the sale.
Yap insisted that he was entitled to the payment of the
unexpired portion of his contract since he was illegally
dismissed from employment. He alleged that he opted
for immediate transfer but none was made.
Respondents, for their part, contended that Yap was not
illegally dismissed. They alleged that following the sale of the
M/T SEASCOUT, Yap signed off from the vessel and was
paid his wages corresponding to the months he worked plus
his seniority bonus, vacation bonus and extra bonus. They
further alleged that Yaps employment contract was
validly terminated due to the sale of the vessel and no
arrangement was made for Yaps transfer to
Thenamaris other vessels.

HELD:
As a general rule, an unconstitutional act is not a law; it
confers no rights; it imposes no duties; it affords no
protection; it creates no office; it is inoperative as if it has not
been passed at all.
The doctrine of operative fact serves as an exception to
the aforementioned general rule. The doctrine of operative
fact, as an exception to the general rule, only applies as a
matter of equity and fair play. It nullifies the effects of an
unconstitutional law by recognizing that the existence of a
statute prior to a determination of unconstitutionality is an
operative fact and may have consequences which cannot
always be ignored. The past cannot always be erased by a
new judicial declaration.
The doctrine is applicable when a declaration of
unconstitutionality will impose an undue burden on
those who have relied on the invalid law. Thus, it was
applied to a criminal case when a declaration of
unconstitutionality would put the accused in double jeopardy
or would put in limbo the acts done by a municipality in
reliance upon a law creating it.
30

Following Serrano, we hold that this case should not be
included in the aforementioned exception. After all, it was
not the fault of petitioner that he lost his job due to an act of
illegal dismissal committed by respondents. To rule
otherwise would be iniquitous to petitioner and other OFWs,
and would, in effect, send a wrong signal that
principals/employers and recruitment/manning agencies may
violate an OFWs security of tenure which an employment
contract embodies and actually profit from such violation
based on an unconstitutional provision of law.

(2) A close perusal of the contract reveals that the tanker
allowance of US$130.00 was not categorized as a bonus
but was rather encapsulated in the basic salary clause,
hence, forming part of the basic salary of petitioner. If
respondents intended it differently, the contract per se
should have indicated that said allowance does not form part
of the basic salary or, simply, the contract should have
separated it from the basic salary clause.
----------------------------------------------------------------
(6) G.R. No. 188722 February 1, 2012

BANK OF LUBAO, INC. vs. ROMMEL J. MANABAT and
the NLRC

REYES, J.:

FACTS: Manabat was hired by petitioner Bank as a Market
Collector. Subsequently, the respondent was assigned as an
encoder at the Bank of Lubaos Sta. Cruz Extension Office,
which he manned together with two other employees. As an
encoder, the respondents primary duty is to encode the
clients deposits on the banks computer after the same are
received by Lingad.
An initial audit on the Bank of Lubaos Sta. Cruz Extension
Office conducted by the petitioner revealed that there was a
misappropriation of funds in the amount of 3M more or less.
Apparently, there were transactions entered and posted in
the passbooks of the clients but were not entered in the
banks book of accounts. Further audit showed that there
were various deposits which were entered in the banks

computer but were subsequently reversed and marked as
"error in posting".
The respondent, through a memorandum sent by the
petitioner, was asked to explain in writing the discrepancies
that were discovered during the audit. Respondent submitted
to the petitioner his letter-explanation which, in essence,
asserted that there were times when a co-employee used
the banks computer while he was out on errands.
An administrative hearing was conducted by the banks
investigating committee where the respondent was further
made to explain his side. Subsequently, the investigating
committee concluded that the respondent conspired with a
co-employee in making fraudulent entries disguised as error
corrections in the banks computer.
Petitioner filed several criminal complaints for qualified theft.
Thereafter, citing serious misconduct tantamount to willful
breach of trust as ground, it terminated the respondents
employment.
Respondent filed a Complaint for illegal dismissal.
Respondent claimed that there was no valid ground for
his dismissal, averred that the charge against him for
qualified theft was dismissed for lack of sufficient basis
to conclude that he conspired with the co-employee.
For its part, the petitioner insists that the dismissal of the
respondent is justified, asserting the February 14, 2006 Audit
Report which confirmed the participation of the respondent in
the alleged misappropriations. Likewise, the petitioner
asserted that the dismissal of the qualified theft charge
against the respondent is immaterial to the validity of the
ground for the latters dismissal.

LA decided in favor of respondent. The petitioner appealed
the foregoing disposition to the NLRC, submitting a new
audit report. Pending appeal, the petitioner sent the
respondent a letter requiring him to report for work pursuant
to the reinstatement order of the LA. The said letter was
served to the respondent but he refused to receive the same.
NLRC affirmed LA.
CA held that the respondent is entitled to separation pay
equivalent to one-month salary for every year of service in
lieu of reinstatement and backwages to be computed from
the time of his illegal dismissal until the finality of the said
decision.
The CA found there was illegal dismissal. Nevertheless, the
CA held that the petitioner should pay the respondent
separation pay since the latter did not pray for reinstatement
before the LA and that the same would be in the best interest
of the parties considering the animosity and antagonism that
exist between them.

ISSUES:
(1) WON there should be separation pay in lieu of
reinstatement; and
(2) WON the respondent is entitled to payment of
backwages.

HELD:

(1) Separation Pay in Lieu of Reinstatement

Under the law and prevailing jurisprudence, an illegally
dismissed employee is entitled to reinstatement as a
matter of right.
However, if reinstatement would only exacerbate the tension
and strained relations between the parties, or where the
relationship between the employer and the employee has
been unduly strained by reason of their irreconcilable
differences, particularly where the illegally dismissed
employee held a managerial or key position in the company,
it would be more prudent to order payment of separation pay
instead of reinstatement.
Under the doctrine of strained relations, the payment of
separation pay is considered an acceptable alternative to
reinstatement when the latter option is no longer desirable or
viable. On one hand, such payment liberates the employee
from what could be a highly oppressive work environment.
On the other hand, it releases the employer from the grossly
unpalatable obligation of maintaining in its employ a worker it
could no longer trust.
In such cases, it should be proved that the employee
concerned occupies a position where he enjoys the trust and
confidence of his employer; and that it is likely that if
reinstated, an atmosphere of antipathy and antagonism may
be generated as to adversely affect the efficiency and
productivity of the employee concerned.
Here, we agree with the CA that the relations between
the parties had been already strained thereby justifying
the grant of separation pay in lieu of reinstatement in
favor of the respondent.
First, the petitioners filing of various criminal complaints
against the respondent for qualified theft and the subsequent
filing by the latter of the complaint for illegal dismissal
against the latter, taken together with the pendency of the
instant case for more than six years, had caused strained
relations between the parties.
Second, considering that the respondents former position
as bank encoder involves the handling of accounts of the
depositors of the Bank of Lubao, it would not be equitable on
the part of the petitioner to be ordered to maintain the former
in its employ since it may only inspire vindictiveness on the
part of the respondent.

Third, the refusal of the respondent to be re-admitted to
work is in itself indicative of the existence of strained
relations between him and the petitioner.

(2) Backwages
Pursuant to the order of reinstatement rendered by the
LA, the petitioner sent the respondent a letter requiring
him to report back to work. Notwithstanding the said
letter, the respondent opted not to report for work. Thus,
it is but fair that the backwages that should be awarded
to the respondent be computed from the time that the
respondent was illegally dismissed until the time when
he was required to report for work (by the LA). It is only
during the said period that the respondent is deemed to
be entitled to the payment of backwages.
The fact that the CA in its decision, ordered the payment of
separation pay in lieu of the respondents reinstatement
would not entitle the latter to backwages. It bears stressing
that decisions of the CA, unlike that of the LA, are not
immediately executory.
---------------------------------------------------------------
(7) G.R. No. 164913 September 8, 2010

St. MARY'S ACADEMY of Dipolog City, vs. TERESITA
PALACIO et al.

DEL CASTILLO, J.:

FACTS: Petitioner hired respondents as classroom teachers
and guidance counselor. However, petitioner informed them
that their re-application could not be accepted because they
failed to pass the Licensure Examination for Teachers (LET).
According to petitioner, as non-board passers, respondents
could not continue practicing their teaching profession
pursuant to the DECS Memorandum which requires
incumbent teachers to register as professional teachers
pursuant to Philippine Teachers Professionalization Act of
1994.

CA agreed with the findings of both the Labor Arbiter and the
NLRC that the dismissal was effected prematurely in
violation of existing laws, noting that respondents still had
until September 19, 2000 within which to pass the LET. A
contingency plan, according to the CA, should have instead
been adopted by petitioner in the event respondents
termination from the service in the middle of the school year
becomes inevitable. The CA also observed that petitioners
ulterior motive for the termination may have been the result
of a confrontation between petitioners principal and
respondents. The CA also found petitioners acts of retaining
and hiring other equally unqualified teachers who do not
possess the required eligibility and allowing them to teach for
the school year 2000-2001 as badges of bad faith.
As regards to other employees, the CA found them to be
mere probationary, and not regular, employees. Their
employment contracts merely expired and since the
petitioner did not wish to renew their contracts, then there is
no illegal dismissal to speak of.

HELD:

(1) The dismissal of some teachers was premature and
defeated their right to security of tenure. Sailes
dismissal has legal basis for lack of the required
qualification needed for continued practice of teaching.
Pursuant to the law, resolution and memorandum, only
holders of valid certificates of registration, valid professional
licenses and valid special/temporary permits can engage in
teaching in both public and private schools. Clearly,
respondents, in the case at bar, had until September 19,
2000 to comply with the mandatory requirement to register
as professional teachers. As respondents are categorized as
those not qualified to register without examination, the law
requires them to register by taking and passing the licensure
examination.
It is undisputed that respondents were all non-board passers
when they were dismissed. Based on the certification issued
by the PRC only respondent Santander passed the LET but
only for the elementary level. Thus, she is still unqualified to
teach in the high school level. However, it is to be noted
that the law still allows those who failed the licensure
examination to continue teaching if they obtain
temporary or special permits as para-teachers. In other
words, as the law has provided a specific timeframe
within which respondents could comply, petitioner has
no right to deny them of this privilege accorded to them
by law. Thus, the dismissal was premature.
Petitioner claims that it terminated respondents employment
as early as March 2000 because it would be highly difficult to
hire professional teachers in the middle of the school year as
replacements for respondents without compromising the
operation of the school and education of the students. Also,
petitioner reasons out that it could not enter into written
contracts with respondents for the period June 2000 to
September 19, 2000 without violating the DECSs policy
requiring contracts of yearly duration for elementary and high
school teachers.
Petitioners contentions are not tenable. Mere reliance on the
policy of DECS requiring yearly contracts for teachers should
not prevent petitioner from retaining the services of
respondents until and unless the law provides for cause for
respondents dismissal.
Further, by setting a deadline for registration as professional
teachers, the law has allowed incumbent teachers to practice

their teaching profession until September 19, 2000, despite
being unregistered and unlicensed. The prejudice that
respondents retention would cause to the schools operation
is only trivial if not speculative as compared to the
consequences of respondents unemployment. Because of
petitioners predicament, it should have adopted measures to
protect the interest of its teachers as regular employees. As
correctly observed by the CA, petitioner should have earlier
drawn a contingency plan in the event there is need to
terminate respondents services in the middle of the school
year. Incidentally, petitioner did not dispute that it hired and
retained other teachers who do not likewise possess the
qualification and eligibility and even allowed them to teach
during the school year 2000-2001. This indicates petitioners
ulterior motive in hastily dismissing respondents.
To reiterate, this Court will not hesitate to defend
respondents right to security of tenure. The premature
dismissal from the service of some respondents is
unwarranted.
However, we take exception to the case of respondent Saile
who, as alleged by petitioner, was not qualified to take the
LET as she only had three out of the minimum 10 required
educational units to be admitted to take the LET pursuant to
Section 15 of RA 7836, which fact respondent Saile did not
refute. Not being qualified to take the examination to become
a duly licensed professional teacher, petitioner cannot be
compelled to retain her services as she cannot possibly
obtain the needed prerequisite to allow her to continue
practicing the teaching profession. Thus, we find her
termination just and legal.

(2) Limited backwages computed from March 31, 2000 to
September 30, 2000 awarded in favor of Palacio,
Calibod, Laquio, Santander and Montederamos are
sustained.
Petitioner questions the amount of separation pay awarded
to respondents contending that assuming respondents were
illegally dismissed, they are only entitled to an amount
computed from the time of dismissal up to September 19,
2000 only. After September 19, 2000, respondents,
according to petitioner, are already dismissible for cause for
lack of the necessary license to teach.
This contention deserves no merit. Petitioner cannot
possibly presume that respondents could not timely comply
with the requirements of the law. At any rate, we note that
petitioner only assailed the amount of backwages for the first
time in its motion for reconsideration of the Decision of the
CA. Thus, the Court cannot entertain the issue for being
belatedly raised. Hence, the award of limited backwages
covering the period from March 31, 2000 to September 30,
2000 as ruled by the Labor Arbiter and affirmed by both the
NLRC and CA is in order.
------------------------------------------------------------------
(8) G.R. Nos. 158786 & 158789 October 19, 2007

TOYOTA MOTOR PHILS. CORP. WORKERS
ASSOCIATION (TMPCWA) vs NLRC

VELASCO, JR., J.:

FACTS: Petitioner Union filed a PCE among the Toyota rank
and file employees with the NCMB but was denied. But, on
appeal, the DOLE Secretary granted the Unions petition and
directed the immediate holding of the certification election.
The Union was certified as the EBR.
Then, the Union submitted its CBA proposals to Toyota, but
the latter refused to negotiate in view of its pending appeal.
Subsequent strikes were held which was declared illegal by
the SC.
Anent the grant of severance compensation to legally
dismissed union members, Toyota assails the turn-around by
the CA in granting separation pay in its June 20, 2003
Resolution after initially denying it in its February 27, 2003
Decision. The company asseverates that based on the CA
finding that the illegal acts of said union members constitute
gross misconduct, not to mention the huge losses it suffered,
then the grant of separation pay was not proper.

ISSUE: Whether separation pay should be awarded to the
Union members who participated in the illegal strikes.

HELD: Not entitled due to serious miscounduct.

The advertence to the alleged honest belief on the part of the
227 employees that Toyota committed a breach of the duty
to bargain collectively and an abuse of valid exercise of
management prerogative has not been substantiated by the
evidence extant on record. There can be no good faith in
intentionally incurring absences in a collective fashion from
work on February 22 and 23, 2001 just to attend the DOLE
hearings. The Unions strategy was plainly to cripple the
operations and bring Toyota to its knees by inflicting
substantial financial damage to the latter to compel union
recognition. The Union officials and members are supposed
to know through common sense that huge losses would
befall the company by the abandonment of their regular
work. It was not disputed that Toyota lost more than PhP 50
million because of the willful desertion of company
operations in February 2001 by the dismissed union
members. In addition, further damage was experienced by
Toyota when the Union again resorted to illegal strikes from
March 28 to April 12, 2001, when the gates of Toyota were
blocked and barricaded, and the company officials,
employees, and customers were intimidated and harassed.
Moreover, they were fully aware of the company rule on
prohibition against concerted action inimical to the interests

of the company and hence, their resort to mass actions on
several occasions in clear violation of the company
regulation cannot be excused nor justified. Lastly, they
blatantly violated the assumption/certification Order of the
DOLE Secretary, exhibiting their lack of obeisance to the rule
of law. These acts indeed constituted serious
misconduct. Thus, they are not entitled to separation
pay.
Note: The general rule is that when just causes for
terminating the services of an employee under Art. 282
of the Labor Code exist, the employee is not entitled to
separation pay. The apparent reason behind the forfeiture
of the right to termination pay is that lawbreakers should not
benefit from their illegal acts. The dismissed employee,
however, is entitled to "whatever rights, benefits and
privileges [s/he] may have under the applicable individual or
collective bargaining agreement with the employer or
voluntary employer policy or practice" or under the Labor
Code and other existing laws. This means that the
employee, despite the dismissal for a valid cause, retains the
right to receive from the employer benefits provided by law,
like accrued service incentive leaves. With respect to
benefits granted by the CBA provisions and voluntary
management policy or practice, the entitlement of the
dismissed employees to the benefits depends on the
stipulations of the CBA or the company rules and policies.
As in any rule, there are exceptions. One exception where
separation pay is given even though an employee is
validly dismissed is when the court finds justification in
applying the principle of social justice well entrenched
in the 1987 Constitution. The categorical mandates in the
Constitution for the improvement of the lot of the workers are
more than sufficient basis to justify the award of separation
pay in proper cases even if the dismissal be for cause.
The Court laid down the rule that severance
compensation shall be allowed only when the cause of
the dismissal is other than serious misconduct or that
which reflects adversely on the employees moral
character.

---------------------------------------------------------------
(9) G.R. No. 167449 December 17, 2008

BRISTOL MYERS SQUIBB (PHILS.), INC. vs. RICHARD
NIXON A. BABAN

REYES, R.T., J.:

A MEDICAL representative should distribute his
employer's products per company directions or risk
termination. The willful breach of the trust reposed in
him by his employer is a cause for the termination of his
employment.

FACTS: Petitioner hired respondent Baban as district
manager/medical representative of the company.
While conducting a field audit in Mindanao, petitioner's
auditor found packs of "Mamacare" samples in the baggage
compartment of a company car with an accompanying note.
It was found out that, respondent's father was thanking
supporters through distribution of company sample products.
A notice was given to Baban requiring him to explain.
Furthermore, respondent admitted that he committed an
honest mistake, an irresponsible act to have succumbed to
the suggestion of Dr. Gustahan. He pleaded for
consideration for the lapse, insisting that he has not caused
any damage nor injury to the image of the company as the
samples were not, in fact, distributed and that no gain was
derived by him or his family.
In a private conference respondent was asked to explain the
incident and was given the chance to submit evidence and to
be assisted by counsel during the conference. Later he
received under protest the company's memorandum
dismissing him from employment.

ISSUES AND HELD:
(1) May the CA order the reinstatement, with full
backwages and damages, of a confidential employee
whom it had found to be guilty of breach of trust?

It is clear that Article 282(c) of the Labor Code allows an
employer to terminate the services of an employee for loss of
trust and confidence.
REQUISITES FOR DISMISSAL BASED ON LOSS OF
TRUST AND CONFIDENCE:
1. The employee concerned must be one holding a
position of trust and confidence. There are two (2)
classes of positions of trust.
a. Managerial employees- those vested with the
powers or prerogatives to lay down management
policies and to hire, transfer suspend, lay-off,
recall, discharge, assign or discipline employees
or effectively recommend such managerial
actions.
b. Cashiers, auditors, property custodians, etc.-
those who in the normal and routine exercise of
their functions, regularly handle significant
amounts of money or property.
In the case, respondent was employed to handle
pharmaceutical products for distribution to medical
practitioners and sale to drug outlets. As a result of his
handling of large amounts of petitioner's samples,

respondent is, by law, an employee with a position of trust,
falling under the second class.
2. There must be an act that would justify the loss of
trust and confidence. The basis for the dismissal must
be clearly and convincingly established but proof
beyond reasonable doubt is not necessary.
Respondent's act of stapling a thank you note from his father
warrants the loss of petitioner's trust and confidence. As the
supervisor of fellow medical representatives, he had the duty
to set a good example to his colleagues. A higher standard
of confidence was reposed in him.
There is no doubt that respondent willfully breached the trust
and confidence reposed in him by not asking for permission
before using company property for his own or another's
benefit, as required in the Company Standards of Business
Conduct. Moreover, when respondent failed to turn over the
samples left in his care and stapled the political "thank you"
note with the intention of distributing them to his father's
supporters, he had, in effect appropriated company property
for personal gain and benefit.
The CA reliance on Caltex is misplaced. A closer
examination of the two cases reveals that the facts are
different. The only similarity is that both respondent and
Clarete had no prior violations. However, unlike Clarete
(dismissed employee in the Caltex case who stole a
lighter fluid), respondent qualifies as a confidential
employee. It bears emphasis that there is a well-settled
distinction between the treatment of a confidential employee
and rank-and-file personnel, insofar as the application of the
doctrine of trust and confidence is concerned. There was
also no finding that the value of the goods was minimal
compared to respondent's salary. Another glaring difference
between the two cases is that respondent had people under
his supervision and he engaged them to help commit his
infraction.
The two requisites for dismissal for loss of trust and
confidence having been met, petitioner is well within its rights
to dismiss respondent. While the State can regulate the
right of an employer to select and discharge his
employees, an employer cannot be compelled to
continue the employment of an employee in whom there
has been a legitimate loss of trust and confidence.

(2) However, while SC finds that the dismissal is valid, it
considered respondent's plea for mercy. In a line of
cases SC held that separation pay may be awarded as
some equitable relief in consideration of the past
services rendered. Since respondent was validly dismissed
for a cause other than serious misconduct or those that
negatively reflect on his moral character, the award of
separation pay is justifiable. This award is merely to coat the
bitter termination experienced by respondent with a little
social justice. Separation pay at the rate of one month salary
for every year of service is proper.
-------------------------------------------------------------------
(10) G.R. No. 177467 March 9, 2011

PFIZER, INC. vs. GERALDINE VELASCO


FACTS: Velasco was employed with petitioner PFIZER, INC.
as Professional Health Care Representative. Velasco had a
medical work up for her high-risk pregnancy and was
subsequently advised bed rest which resulted in her
extending her leave of absence.
While Velasco was still on leave, PFIZER through its Area
Sales Manager served Velasco a "Show-cause Notice".
Aside from mentioning about an investigation on her possible
violations of company work rules regarding "unauthorized
deals and/or discounts in money or samples and
unauthorized withdrawal and/or pull-out of stocks" and
instructing her to submit her explanation on the matter within
48 hours from receipt of the same, the notice also advised
her that she was being placed under "preventive
suspension".
Velasco denied the charges and claimed that the transaction
with Mercury Drug, Magsaysay Branch covered by her check
was merely to accommodate two undisclosed patients of a
certain doctor.
A "Second Show-cause Notice" was issued informing her of
additional developments in their investigation. According to
the notice, a witness points to Velasco as the one who
transacted with a printing shop to print PFIZER discount
coupons.
While the complaint for illegal suspension was pending, she
was dismissed.
In PFIZERs view, it should no longer be required to pay
wages considering that (1) it was allegedly ready to
reinstate respondent but it was respondent who
unjustifiably refused to report for work; (2) it would
purportedly be tantamount to allowing respondent to
choose "payroll reinstatement" when by law it was the
employer which had the right to choose between actual
and payroll reinstatement; (3) respondent should be
deemed to have "resigned" and therefore not entitled to
additional backwages or separation pay.

ISSUE: WON respondent is entitled to backwages and
separation pay.

HELD: The dismissal was valid but respondent is still entitled
to backwage until CAs decision (reversing the NLRCs
decision) and separation pay.

It is well-settled that when a person is illegally
dismissed, he is entitled to reinstatement without loss of
seniority rights and other privileges and to his full
backwages. In the event, however, that reinstatement is
no longer feasible, or if the employee decides not be
reinstated, the employer shall pay him separation pay in
lieu of reinstatement. Such a rule is likewise observed in
the case of a strained employer-employee relationship
or when the work or position formerly held by the
dismissed employee no longer exists. In sum, an
illegally dismissed employee is entitled to: (1) either
reinstatement if viable or separation pay if reinstatement
is no longer viable, and (2) backwages.
Similarly, we have previously held that an employees
demand for separation pay may be indicative of strained
relations that may justify payment of separation pay in lieu of
reinstatement. This is not to say, however, that respondent is
entitled to separation pay in addition to backwages. We
stress here that a finding of strained relations must
nonetheless still be supported by substantial evidence.
In the case at bar, respondents decision to claim separation
pay over reinstatement had no legal effect, not only because
there was no genuine compliance by the employer to the
reinstatement order but also because the employer chose
not to act on said claim. If it was PFIZERs position that
respondents act amounted to a "resignation" it should
have informed respondent that it was accepting her
resignation and that in view thereof she was not entitled
to separation pay. PFIZER did not respond to
respondents demand at all. As it was, PFIZERs failure
to effect reinstatement and accept respondents offer to
terminate her employment relationship with the
company meant that, prior to the CAs reversal in the
November 23, 2005 Decision, PFIZERs liability for
backwages continued to accrue for the period not
covered by the writ of execution dated May 24, 2005 until
November 23, 2005.
In sum, the Court reiterates the principle that reinstatement
pending appeal necessitates that it must be immediately self-
executory without need for a writ of execution during the
pendency of the appeal, if the law is to serve its noble
purpose, and any attempt on the part of the employer to
evade or delay its execution should not be allowed.
Furthermore, we likewise restate our ruling that an order for
reinstatement entitles an employee to receive his accrued
backwages from the moment the reinstatement order was
issued up to the date when the same was reversed by a
higher court without fear of refunding what he had received.
It cannot be denied that, under our statutory and
jurisprudential framework, respondent is entitled to payment
of her wages for the period after LA decision until the CA
decision, notwithstanding the finding therein that her
dismissal was legal and for just cause. Thus, the payment of
such wages cannot be deemed as unjust enrichment on
respondents part.
---------------------------------------------------------------------------------
(11) G.R. No. 187200 May 5, 2010

GOLDEN ACE BUILDERS and ARNOLD U. AZUL vs.
JOSE A. TALDE

CARPIO MORALES, J.:

FACTS: Respondent Talde was hired as a carpenter by
petitioner. Azul (the company owner), alleging the
unavailability of construction projects, stopped giving work
assignments to respondent, prompting the latter to file a
complaint

for illegal dismissal.
LA decided in favor of respondent. Pending their appeal
to the NLRC and in compliance with the Labor Arbiters
Decision, petitioners, through counsel, advised
respondent to report for work in the construction site
within 10 days from receipt thereof. Respondent
submitted, however, to the LA that actual animosities
existed between him and petitioners and there had been
threats to his life and his familys safety, hence, he
opted for the payment of separation pay. Petitioners
denied the existence of any such animosity.
NLRC affirmed LA. CA also affirmed.
Finding the amount exorbitant, petitioners filed a motion for
reconsideration with the NLRC, contending that since
respondent refused to report back to work, he should be
considered to have abandoned the same, hence, the
recomputation of the wages and benefits due him
should not be beyond May 15, 2001, the date when he
manifested his refusal to be reinstated.
NLRC granted petitioners motion and accordingly vacated
the computation. It held that since respondent did not appeal
the Decision of the LA granting him only reinstatement and
backwages, not separation pay in lieu thereof, he may not be
afforded affirmative relief; and since he refused to go back to
work, he may recover backwages only up the day he was
supposed to return to the job site.
CA set aside NLRC. CA held that respondent is entitled to
both backwages and separation pay, even if separation pay
was not granted by the Labor Arbiter, the latter in view of the
strained relations between the parties.
HELD:
The basis for the payment of backwages is different from
that for the award of separation pay. Separation pay is
granted where reinstatement is no longer advisable because
of strained relations between the employee and the
employer. Backwages represent compensation that should
have been earned but were not collected because of the
unjust dismissal. The basis for computing separation is
usually the length of the employees service while that for
backwages is the actual period when the employee was
unlawfully prevented from working.

The normal consequences of respondents illegal
dismissal, then, are reinstatement without loss of
seniority rights, and payment of backwages computed
from the time compensation was withheld up to the date
of actual reinstatement. Where reinstatement is no
longer viable as an option, separation pay equivalent to
one (1) month salary for every year of service should be
awarded as an alternative. The payment of separation
pay is in addition to payment of backwages.
The accepted doctrine is that separation pay may avail
in lieu of reinstatement if reinstatement is no longer
practical or in the best interest of the parties. Separation
pay in lieu of reinstatement may likewise be awarded if the
employee decides not to be reinstated.
Under the doctrine of strained relations, the payment of
separation pay is considered an acceptable alternative to
reinstatement when the latter option is no longer desirable or
viable. On one hand, such payment liberates the employee
from what could be a highly oppressive work environment.
On the other hand, it releases the employer from the grossly
unpalatable obligation of maintaining in its employ a worker it
could no longer trust.
Strained relations must be demonstrated as a fact, however,
to be adequately supported by evidence substantial
evidence to show that the relationship between the employer
and the employee is indeed strained as a necessary
consequence of the judicial controversy.
In the present case, the Labor Arbiter found that actual
animosity existed between petitioner Azul and respondent as
a result of the filing of the illegal dismissal case. Such
finding, especially when affirmed by the appellate court as in
the case at bar, is binding upon the Court, consistent with
the prevailing rules that this Court will not try facts anew and
that findings of facts of quasi-judicial bodies are accorded
great respect, even finality.
Clearly then, respondent is entitled to backwages and
separation pay as his reinstatement has been rendered
impossible due to strained relations. As correctly held
by the appellate court, the backwages due respondent
must be computed from the time he was unjustly
dismissed until his actual reinstatement, or from
February 1999 until June 30, 2005 when his
reinstatement was rendered impossible without fault on
his part.
The Court, however, does not find the appellate courts
computation of separation pay in order. The appellate court
considered respondent to have served petitioner company
for only eight years. Petitioner was hired in 1990, however,
and he must be considered to have been in the service
not only until 1999, when he was unjustly dismissed, but
until June 30, 2005, the day he is deemed to have been
actually separated (his reinstatement having been
rendered impossible) from petitioner company or for a
total of 15 years.
-------------------------------------------------------------------
(12) G.R. No. 168096 August 28, 2007
ALEX B. CARLOS, ABC SECURITY SERVICES, INC., and
HONEST CARE JANITORIAL SERVICES, INC., vs CA

CHICO-NAZARIO, J.:

FACTS: Private respondents were employed by petitioner
ABC Security as security guards and were assigned to
Greenvalley Country Club at the time they were allegedly
separated from employment.
Respondents filed a complaint for the payment of minimum
wage etc. On the following day, some respondents were
allegedly relieved from their posts and were not given new
assignments. Some also were also allegedly dismissed from
employment.
Private respondents claimed that every time they received
their salaries, they were made to sign two sets of pay slips,
one was written in ink while the other was written in pencil.
These two pay slips showed the amount of salaries they
actually received, which was below the minimum; but since
the entries written on one of the pay slips they signed were
in pencil, there was a possibility that petitioners could alter
the said entries to make it appear that they were compliant
with the labor laws.
For its part, petitioners averred that private respondents
were not dismissed but voluntarily resigned from their
respective employments as evidenced by the resignation
letters bearing their signatures. Petitioners claimed that after
private respondents assignment to Greenvalley Country
Club ended, they were reassigned to other posts as an
exercise of management prerogative, but they refused to
transfer and opted to resign. In addition, petitioners alleged
that private respondents resignations were prompted by the
loss of bowling equipment in their custody, which they were
obliged to pay.

ISSUE:
(1) WON there was dismissal.
(2) WON they are entitled to backwages.

HELD:
(1) There was illegal dismissal.
In illegal dismissal cases, the onus of proving that the
employee was not dismissed or if dismissed, that the
dismissal was not illegal, rests on the employer and failure to
discharge the same would mean that the dismissal is not
justified and therefore illegal.
Petitioners complete reliance on the alleged resignation
letters to support their claim that private respondents
voluntarily resigned is unavailing, as the filing of the

complaint for illegal dismissal is inconsistent with resignation.
Resignation is the voluntary act of employees who are
compelled by personal reasons to dissociate
themselves from their employment. It must be done with
the intention of relinquishing an office, accompanied by
the act of abandonment.
It is illogical for private respondents to resign and then
file a complaint for illegal dismissal. We find it highly
unlikely that private respondents would just quit their jobs
because they refused to take new assignments or attempted
to avoid any monetary liability for the purported loss of
bowling equipment, after enduring long years of working for
the petitioners, notwithstanding the meager salary they were
receiving and the lack of the appropriate labor and social
benefits. It would have been equally senseless for private
respondents to file a complaint seeking payment of their
salaries and benefits, as mandated by law, then abandon
subsequently and immediately their work by resigning.
(2) Undoubtedly, private respondents are entitled to the
payment of full backwages, that is, without deducting
their earnings elsewhere during the periods of their
illegal dismissal. However, where, as in this case,
reinstatement is no longer feasible due to strained relations
between the parties, separation pay equivalent to one
months salary for every year of service shall be granted.
The question now arises: when is the period for computation
of backwages and separation pay supposed to end? The
computation shall be up to the time of finality of this
Court's decision. The justification is that along with the
finality of this Court's decision, the issue of illegal dismissal is
finally laid to rest.
The petitioners insistence that they cannot be held liable for
backwages during the period of the pendency of this action
for they cannot be faulted for the delay of the disposition of
this case cannot take precedence over the long-standing and
well-entrenched jurisprudential rule.
Parenthetically, the award for separation pay equivalent
to one-month pay for every year of service shall be
computed from the time the private respondents were
illegally separated from their employment up to the
finality of this Courts Decision in the instant petition.


Article 282
(1) G.R. No. 162994 September 17,
2004
DUNCAN ASSOCIATION OF DETAILMAN-
PTGWO and PEDRO A. TECSON vs. GLAXO
WELLCOME PHILIPPINES, INC.
TINGA, J.:
FACTS: Petitioner Tecson was hired by
respondent Glaxo as medical representative. He
signed a contract of employment which
stipulates, among others, that he agrees to
study and abide by existing company rules; to
disclose to management any existing or
future relationship by consanguinity or
affinity with co-employees or employees of
competing drug companies and should
management find that such relationship
poses a possible conflict of interest, to
resign from the company.
Subsequently, Tecson entered into a romantic
relationship with Bettsy, an employee of Astra
Pharmaceuticals (Astra), a competitor of Glaxo.
Even before they got married, Tecson received
several reminders from his District Manager
regarding the conflict of interest which his
relationship with Bettsy might engender. Still,
love prevailed, and Tecson married Bettsy.
Tecsons superiors informed him that his
marriage to Bettsy gave rise to a conflict of
interest. Tecsons superiors reminded him that
he and Bettsy should decide which one of them
would resign from their jobs, although they told
him that they wanted to retain him as much as
possible because he was performing his job
well.
Tecson requested for time to comply with the
company policy against entering into a
relationship with an employee of a competitor
company.
Later, Glaxo transferred Tecson to the
Butuan City-Surigao City-Agusan del Sur
sales area. Tecson asked Glaxo to
reconsider its decision, but his request was
denied. Tecson defied the transfer order and
continued acting as medical representative in
the Camarines Sur-Camarines Norte sales area.
During the pendency of the grievance
proceedings, Tecson was paid his salary, but
was not issued samples of products which
were competing with similar products
manufactured by Astra. He was also not
included in product conferences regarding
such products.
Petitioners averred that Glaxos policy
prohibiting its employees from marrying an
employee of a competitor company is not valid;
and Tecson was constructively dismissed when
he was transferred to a new sales territory, and
deprived of the opportunity to attend products
seminars and training sessions.
ISSUE: Whether Tecson was constructively
dismissed.
HELD: Tescon was not constructively dismissed
when he was transferred from the Camarines
Norte-Camarines Sur sales area to the Butuan
City-Surigao City-Agusan del Sur sales area,
and when he was excluded from attending the
companys seminar on new products which were
directly competing with similar products
manufactured by Astra.
Constructive dismissal is defined as a
quitting, an involuntary resignation resorted
to when continued employment becomes
impossible, unreasonable, or unlikely; when
there is a demotion in rank or diminution in
pay; or when a clear discrimination,
insensibility or disdain by an employer
becomes unbearable to the employee. None
of these conditions are present in the instant
case. The record does not show that Tescon
was demoted or unduly discriminated upon by
reason of such transfer. Glaxo properly

exercised its management prerogative in
reassigning Tecson to the Butuan City sales
area.
Petitioners transfer to another place of
assignment was merely in keeping with the
policy of the company in avoidance of conflict of
interest, and thus valid. The proximity of their
(Tecson and his wife) areas of responsibility, all
in the same Bicol Region, renders the conflict of
interest not only possible, but actual, as learning
by one spouse of the others market strategies in
the region would be inevitable.
Further, by the very nature of his employment, a
drug salesman or medical representative is
expected to travel. He should anticipate
reassignment according to the demands of their
business. It would be a poor drug corporation
which cannot even assign its representatives or
detail men to new markets calling for opening or
expansion or to areas where the need for
pushing its products is great. More so if such
reassignments are part of the employment
contract.
Finally, the challenged policy has been
implemented by Glaxo impartially and
disinterestedly for a long period of time. In the
case at bar, the record shows that Glaxo gave
Tecson several chances to eliminate the conflict
of interest brought about by his relationship with
Bettsy. When their relationship was still in its
initial stage, Tecsons supervisors at Glaxo
constantly reminded him about its effects on his
employment with the company and on the
companys interests. After Tecson married
Bettsy, Glaxo gave him time to resolve the
conflict by either resigning from the company or
asking his wife to resign from Astra. Glaxo even
expressed its desire to retain Tecson in its
employ because of his satisfactory performance
and suggested that he ask Bettsy to resign from
her company instead. Glaxo likewise acceded to
his repeated requests for more time to resolve
the conflict of interest. When the problem could
not be resolved after several years of waiting,
Glaxo was constrained to reassign Tecson to a
sales area different from that handled by his wife
for Astra. Notably, the employer did not
terminate Tecson from employment but only
reassigned him to another area where his home
province, Agusan del Sur, was included. In
effecting Tecsons transfer, Glaxo even
considered the welfare of Tecsons family.
Clearly, the foregoing dispels any suspicion of
unfairness and bad faith on the part of Glaxo.
Note: Glaxos policy prohibiting an employee
from having a relationship with an employee of a
competitor company is a valid exercise of
management prerogative. Glaxo has a right to
guard its trade secrets, manufacturing formulas,
marketing strategies and other confidential
programs and information from competitors,
especially so that it and Astra are rival
companies in the highly competitive
pharmaceutical industry.
In any event, from the wordings of the
contractual provision and the policy in its
employee handbook, it is clear that Glaxo does
not impose an absolute prohibition against
relationships between its employees and those
of competitor companies. Its employees are free
to cultivate relationships with and marry persons
of their own choosing. What the company
merely seeks to avoid is a conflict of interest
between the employee and the company that
may arise out of such relationships.
Further Tecson was aware of that restriction
when he signed his employment contract and
when he entered into a relationship with Bettsy.
Since Tecson knowingly and voluntarily entered
into a contract of employment with Glaxo, the
stipulations therein have the force of law
between them and, thus, should be complied
with in good faith." He is therefore estopped
from questioning said policy.
----------------------------------------------------
(2) STAR PAPER CORPORATION vs. SIMBOL
G.R. No. 164774, April 12, 2006
PUNO,J.:

FACTS: Petitioner Star Paper Corporation (the
company) is a corporation engaged in trading
principally of paper products. Josephine
Ongsitco is its Manager of the Personnel and
Administration Department while Sebastian
Chua is its Managing Director.
(a) The respondents were all regular employees
of the company;

(b) On October 27, 1993, Simbol was hired by
the company. He met Alma Dayrit, also an
employee of the company. He married her on
June 27, 1998. Prior to the marriage, Ongsitco
advised the couple that should they decide to
get married, one of them should resign pursuant
to a company policy promulgated in 1995.
Simbol resigned on June 20, 1998.

(c) On February 5, 1997, Comia was hired by
the company. She met Howard Comia, a co-
employee whom she married on June 1, 2000.
Ongsitco likewise reminded them pursuant to
the aforementioned company policy. Comia
resigned on June 30, 2000.
(d) Simbol and Comia alleged that they did not
resign voluntarily; they were compelled to resign
in view of an illegal company policy.

(e) On July 29, 1994, Estrella was hired by the
company. She met Luisito Zuniga, also a co-
worker, whom petitioners claimed to be a
married man who got Estrella impregnated. The
company allegedly could have terminated her
services due to immorality but she opted to
resign on December 21, 1999.

(f) Estrella alleged that she had a relationship
with co-worker Zuniga who misrepresented
himself as a married but a separated man. After
he got her pregnant, she discovered that he was
not separated. Thus, she severed her
relationship with him to avoid dismissal due to
company policy.

(g) On November 30, 1999, Estrella met an
accident and had to recuperate for twenty-one
(21) days as advised by the doctor of the
Orthopaedic Hospital. On December 21, 1999
but she found out that her name was on hold at
the gate. She was directed to the personnel
office and handed a memorandum that stated
that she was being dismissed for immoral
conduct. Estrella was asked to submit an
explanation but she was dismissed nonetheless.
She resigned because she was in dire need of
money and resignation could give her the
thirteenth month pay.
On May 31, 2001, Labor Arbiter Del Rosario
dismissed the complaint for lack of merit. On
January, 11, 2002, NLRC affirmed the decision
of the Labor Arbiter. On August 8, 2002, NLRC
denied the respondents Motion for
Reconsideration through a Resolution.
On August 3, 2004, the CA reversed the NLRC
decision and declared that:
(a) The petitioners dismissal from employment
was illegal:
(b) The private respondents are ordered to
reinstate the petitioners to their former positions
without loss of seniority rights with full
backwages from the time of their dismissal until
actual reinstatement; and
(c) The private respondents are to pay
petitioners attorneys fees amounting to 10% of
the award and the cost of the suit.

ISSUE: Whether the subject 1995
policy/regulation is violative of the constitutional
rights towards marriage and the family of
employees and of Article 136 of the Labor Code

HELD: YES. These courts find the no-spouse
employment policy invalid for failure of the
employer to present any evidence of business
necessity other than the general perception that
spouses in the same workplace might adversely
affect the business. They hold that the absence
of such a bona fide occupational qualification
invalidates a rule denying employment to one
spouse due to the current employment of the
other spouse in the same office. Thus, they rule
that unless the employer can prove that the
reasonable demands of the business require a
distinction based on marital status and there is
no better available or acceptable policy which

would better accomplish the business purpose,
an employer may not discriminate against an
employee based on the identity of the
employees spouse. This is known as the bona
fide occupational qualification exception.

To justify a bona fide occupational qualification,
the employer must prove two factors: (1) that the
employment qualification is reasonably related
to the essential operation of the job involved;
and, (2) that there is a factual basis for believing
that all or substantially all persons meeting the
qualification would be unable to properly perform
the duties of the job.

We do not find a reasonable business necessity
in the case at bar.

Petitioners sole contention that "the company
did not just want to have two (2) or more of its
employees related between the third degree by
affinity and/or consanguinity" is lame. That the
second paragraph was meant to give teeth to
the first paragraph of the questioned rule is
evidently not the valid reasonable business
necessity required by the law.

It is significant to note that in the case at bar,
respondents were hired after they were found fit
for the job, but were asked to resign when they
married a co-employee. Petitioners failed to
show how the marriage of Simbol, then a
Sheeting Machine Operator, to Alma Dayrit, then
an employee of the Repacking Section, could be
detrimental to its business operations. The
failure of petitioners to prove a legitimate
business concern in imposing the questioned
policy cannot prejudice the employees right to
be free from arbitrary discrimination based upon
stereotypes of married persons working together
in one company. Thus, for failure of petitioners
to present undisputed proof of a reasonable
business necessity, we rule that the questioned
policy is an invalid exercise of management
prerogative. Corollarily, the issue as to whether
respondents Simbol and Comia resigned
voluntarily has become moot and academic.

As to respondent Estrella, the Labor Arbiter and
the NLRC based their ruling on the singular fact
that her resignation letter was written in her own
handwriting. Both ruled that her resignation was
voluntary and thus valid. The respondent court
failed to categorically rule whether Estrella
voluntarily resigned but ordered that she be
reinstated along with Simbol and Comia.

Estrella avers that she went back to work on
December 21, 1999 but was dismissed due to
her alleged immoral conduct. At first, she did not
want to sign the termination papers but she was
forced to tender her resignation letter in
exchange for her thirteenth month pay.

The contention of petitioners that Estrella was
pressured to resign because she got
impregnated by a married man and she could
not stand being looked upon or talked about as
immoral is incredulous. If she really wanted to
avoid embarrassment and humiliation, she
would not have gone back to work at all. Nor
would she have filed a suit for illegal dismissal
and pleaded for reinstatement. We have held
that in voluntary resignation, the employee is
compelled by personal reason(s) to dissociate
himself from employment. It is done with the
intention of relinquishing an office, accompanied
by the act of abandonment. Thus, it is illogical
for Estrella to resign and then file a complaint for
illegal dismissal. Given the lack of sufficient
evidence on the part of petitioners that the
resignation was voluntary, Estrellas dismissal is
declared illegal.

----------------------------------
(3) ACE PROMOTION AND MARKETING
CORPORATION, vs.REYNALDO URSABIA,
G.R. No. 171703 September 22, 2006
YNARES-SANTIAGO, J
The facts show that sometime in August, 1994,
petitioner Ace Promotion and Marketing
Corporation, a company engaged in the

promotion of various consumer products,
commodities, and goods, hired respondent
Reynaldo Ursabia as a company driver assigned
to pick up the products of Nestle Philippines,
Inc., for promotion and marketing.
On July 6, 2001, respondent failed to report for
work. Petitioner, through its area supervisor,
Gerry Garcia, issued a Memorandum for
Violation of Company Rule of Abandonment of
Work last Jul. 06, 2001 and to explain in writing
why there should be no disciplinary measure be
taken within 24 hrs.
When respondent reported back to work on July
9, 2001, he was personally served with the
foregoing memorandum but refused to
acknowledge the same, hence, petitioner sent it
through registered mail to his (respondent) last
known address.5
The following day, July 10, 2001, Garcia noticed
some damage on the vehicle assigned to
respondent, hence, he issued another
Memorandum for Destruction of Company
Property, which provides: After instructing your
immediate supervisor to hold your services and
told (sic) you to explain why you abandoned
your work last July 6, 2001, instead of explaining
reasons, you act (sic) negatively. Pointing
somebody damage the vehicle assigned to you
(sic). You didn't manage to wait for me and
explain, you left the office by saying (sabihin mo
kay boss gerry na awol na lang ako). Upon
returning back to the office, we check (sic) the
vehicle and found out that the right front wheel
was deflated, we also found out that the sliding
door was slightly damage (sic). It seems that a
smooth object is (sic) used in hitting the vehicle
and I think you disconnected some wirings so as
not others may use (sic) the said vehicle. We
also found a piece of paper inserted on the
distribution cap.
In this regard, we again require you to explain
why you cannot be Terminated base (sic) on the
abovementioned. We need your response 24
hrs upon receipt of this memorandum. Service of
the said memorandum was done through
registered mail to respondent's last known
address.7
Sometime in July 2001, an anonymous note8
was discovered among the stocks of petitioner
containing the words "(Good news) be careful
and save youre (sic) life because there's a time
to come everybody x x x will die."9 The
examination conducted by the PNP Crime
Laboratory allegedly showed that the
handwriting of respondent has significant
similarities with the said handwritten note.10
On August 6, 2001, respondent went to
petitioner's office and was served with a
termination letter. Again, respondent refused to
receive the same prompting petitioner serve it by
registered mail to respondent's last known
address.
Meanwhile, the petitioner filed two criminal
cases for Malicious Mischief and Grave Threats
against the respondent.
Displeased with his termination, respondent filed
a complaint for illegal dismissal and non-
payment of other monetary benefits.
Labor Arbiter rendered a decision in favor of
respondent. On appeal, the NLRC rendered a
decision, reversing the decision of the Labor
arbiter. The Court of Appeals set aside the
decision of the NLRC and held that respondent
was illegally dismissed.
ISSUE: Whether or not there exists a just cause
to dismiss respondent (1) abandonment, (2)
destruction of company property, and (3) leaving
a note which petitioner interpreted to be a threat
and whether he was accorded procedural due
process.
HELD: Respondent cannot be dismissed for
abandonment. To constitute a just and valid
ground for dismissal, abandonment requires the
deliberate and unjustified refusal of the
employee to resume his employment. Two

elements must be present, namely: (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. The
second element is more determinative of the
intent and must be evinced by overt acts. Mere
absence, not being sufficient, the burden of
proof rests upon the employer to show that the
employee clearly and deliberately intended to
discontinue his employment without any
intention of returning.19
In the instant case, the subsequent conduct of
respondent after he failed to report for work on
July 6, 2001, shows that he had no intention to
sever his employment with petitioner. Record
shows that he went to work on July 9, 2001,
which enabled petitioner to personally serve him
the memorandum of even date. While his act of
loitering outside the company premises cannot
considered as reporting for work, it shows an
intention to make his services available for
petitioner. More importantly, he formally reported
for work on August 6, 2001. All these show that
respondent never really wanted to quit his job.
He may be guilty of going on absence without
leave, but not abandonment because the totality
of his acts show a clear intention to return to
work.
Likewise, the alleged damage on the company
car assigned to respondent cannot justify his
dismissal. Termination is simply disproportionate
to such infraction not only because the extent of
the damage was never proved by petitioner but
more importantly, no substantial evidence was
presented to establish the guilt of respondent.
With regard to the "anonymous note"
purportedly written by the latter, petitioner failed
to discharge the burden of proving that the same
was indeed a threat and that respondent was
the author thereof.
The foregoing, notwithstanding, we find that
respondent should be dismissed for willful
disobedience of the memoranda issued by
petitioner. To be validly dismissed on the ground
of willful disobedience requires the concurrence
of at least two requisites: (1) the employee's
assailed conduct must have been willful or
intentional, the willfulness being characterized
by a wrongful and perverse attitude; and (2) the
order violated must have been reasonable,
lawful, made known to the employee and must
pertain to the duties which he had been
engaged to discharge.
In the instant case, the failure of respondent to
answer the July 9 and 10, 2001 memoranda of
petitioner is clearly intentional. He reported to
and loitered outside petitioner's premises but
never made any oral or written reply to the said
memoranda. This shows respondent's wrongful
and perverse attitude to defy the reasonable
orders which undoubtedly pertain to his duties
as an employee of petitioner.
Similarly in Aquinas School v. Magnaye,21 the
Court found just cause to dismiss the employee
for her willful disobedience of the superior's
directives requiring her to explain her absence,
violation of school policy and refusal to subject
herself to medical examination. While the
employee therein was held not to be guilty of
abandonment, she was nonetheless held liable
for misconduct or willful disobedience to the
lawful orders of the school.
Nevertheless, the Court finds that respondent
was not afforded his procedural due process
rights. In dismissing an employee, the employer
has the burden of proving that the former worker
has been served two notices: (1) one to apprise
him of the particular acts or omissions for which
his dismissal is sought, and (2) the other to
inform him of his employer's decision to dismiss
him. The first notice must state that dismissal is
sought for the act or omission charged against
the employee, otherwise, the notice cannot be
considered sufficient compliance with the rules.
In the instant case, the just cause to terminate
respondent was his willful disobedience to the
July 9 and July 10, 2001 memoranda of
petitioner. However, he was not given sufficient
notice that his services will be terminated on

such grounds. Respondent defied two
memoranda of petitioner and received last
memoranda for his termination which failed to
specify the ground for his dismissal. It vaguely
stated that he is being terminated for violation of
company rules which were not specified by
petitioner. It even added a third ground (i.e.,
writing a threat), for which respondent was not
given a chance to controvert. Under the
circumstances, we find that petitioner did not
sufficiently comply with the required two notice
rule.
In Agabon v. National Labor Relations
Commission,24 it was held that where the
dismissal is for a just cause, as in the instant
case, the lack of statutory due process should
not nullify the dismissal, or render it illegal, or
ineffectual. However, the employer should
indemnify the employee for violation of his
statutory rights. Thus, applying Agabon, the
Court, in Electro System Industries Corporation
v. National Labor Relations
Commission25awarded P30,000.00 to an
employee who was dismissed for just cause but
was not afforded due process. Conformably,
respondent in the present case should be
indemnified in the amount of P30,000.00 as
nominal damages which we consider as
appropriate under the circumstances.
WHEREFORE, declaring the dismissal of
respondent valid and petitioner is directed to pay
respondent P30,000.00 as nominal damages.
---------------------------------------------

Article 284
(1) G.R. No. 142293 February 27, 2003

VICENTE SY, TRINIDAD PAULINO, 6BS
TRUCKING CORPORATION, and SBT1
TRUCKING CORPORATION, petitioners,
vs.
HON. COURT OF APPEALS and JAIME
SAHOT, respondents.

QUISUMBING, J.:

FACTS:
Sometime in 1958, private respondent Jaime
Sahot started working as a truck helper for
petitioners family-owned trucking business
named Vicente Sy Trucking. In 1965, he
became a truck driver of the same family
business, renamed T. Paulino Trucking Service,
later 6Bs Trucking Corporation in 1985, and
thereafter known as SBT Trucking Corporation
since 1994. Throughout all these changes in
names and for 36 years, private respondent
continuously served the trucking business of
petitioners.

In April 1994, Sahot was already 59 years old.
He had been incurring absences as he was
suffering from various ailments. Particularly
causing him pain was his left thigh, which greatly
affected the performance of his task as a driver.
He inquired about his medical and retirement
benefits with the Social Security System (SSS)
on April 25, 1994, but discovered that his
premium payments had not been remitted by his
employer.

Sahot had filed a week-long leave sometime in
May 1994. On May 27th, he was medically
examined and treated for EOR, presleyopia,
hypertensive retinopathy G II , respectively),6
HPM, UTI, Osteoarthritis and heart enlargement
On said grounds, Belen Paulino of the SBT
Trucking Service management told him to file a
formal request for extension of his leave. At the
end of his week-long absence, Sahot applied for
extension of his leave for the whole month of
June, 1994. It was at this time when petitioners
allegedly threatened to terminate his
employment should he refuse to go back to
work.

At this point, Sahot found himself in a dilemma.
He was facing dismissal if he refused to work,
But he could not retire on pension because
petitioners never paid his correct SSS
premiums. The fact remained he could no longer
work as his left thigh hurt abominably.
Petitioners ended his dilemma. They carried out
their threat and dismissed him from work,
effective June 30, 1994. He ended up sick,
jobless and penniless.

On September 13, 1994, Sahot filed with the
NLRC NCR Arbitration Branch, a complaint for
illegal dismissal, He prayed for the recovery of
separation pay and attorneys fees against
Vicente Sy and Trinidad Paulino-Sy, Belen
Paulino, Vicente Sy Trucking, T. Paulino
Trucking Service, 6Bs Trucking and SBT
Trucking, herein petitioners.

For their part, petitioners admitted they had a
trucking business in the 1950s but denied
employing helpers and drivers. They contend
that private respondent was not illegally
dismissed as a driver because he was in fact
petitioners industrial partner. They add that it
was not until the year 1994, when SBT Trucking
Corporation was established, and only then did
respondent Sahot become an employee of the
company, with a monthly salary that reached
P4,160.00 at the time of his separation.

Petitioners further claimed that sometime prior to
June 1, 1994, Sahot went on leave and was not
able to report for work for almost seven days.
On June 1, 1994, Sahot asked permission to
extend his leave of absence until June 30, 1994.
It appeared that from the expiration of his leave,
private respondent never reported back to work
nor did he file an extension of his leave. Instead,
he filed the complaint for illegal dismissal
against the trucking company and its owners.

Petitioners add that due to Sahots refusal to
work after the expiration of his authorized leave
of absence, he should be deemed to have
voluntarily resigned from his work. They
contended that Sahot had all the time to extend
his leave or at least inform petitioners of his
health condition.

LA----ruled that there was no illegal dismissal in
Sahots case. Private respondent had failed to
report to work. Moreover, said the Labor Arbiter,
petitioners and private respondent were
industrial partners before January 1994. The
Labor Arbiter concluded by ordering petitioners
to pay "financial assistance" of P15,000 to Sahot
for having served the company as a regular
employee since January 1994 only.

NLRC-------On appeal, modified the judgment of
the Labor Arbiter. It declared that private
respondent was an employee, not an industrial
partner, since the start. Private respondent
Sahot did not abandon his job but his
employment was terminated on account of his
illness, pursuant to Article 284 of the Labor
Code. Accordingly, the NLRC ordered
petitioners to pay private respondent separation
pay in the amount of P60,320.00, at the rate of
P2,080.00 per year for 29 years of service.

CA-----affirmed with modification the judgment of
the NLRC. It held that private respondent was
indeed an employee of petitioners since 1958. It
also increased the amount of separation pay
awarded to private respondent to P74,880,
computed at the rate of P2,080 per year for 36
years of service from 1958 to 1994.

ISSUES:

1) Whether or not an employer-employee
relationship existed between petitioners and
respondent Sahot;
(2) Whether or not there was valid dismissal;
and
(3) Whether or not respondent Sahot is entitled
to separation pay.

HELD:

(1)The elements to determine the existence of
an employment relationship are: (a) the
selection and engagement of the employee; (b)
the payment of wages; (c) the power of
dismissal; and (d) the employers power to
control the employees conduct. The most
important element is the employers control of
the employees conduct, not only as to the result
of the work to be done, but also as to the means
and methods to accomplish it.

As found by the appellate court, petitioners
owned and operated a trucking business since
the 1950s and by their own allegations, they
determined private respondents wages and rest
day. Records of the case show that private
respondent actually engaged in work as an
employee. During the entire course of his
employment he did not have the freedom to
determine where he would go, what he would
do, and how he would do it. He merely followed
instructions of petitioners and was content to do
so, as long as he was paid his wages. Indeed,
said the CA, private respondent had worked as
a truck helper and driver of petitioners not for his
own pleasure but under the latters control.

Article 1767 of the Civil Code states that in a
contract of partnership two or more persons bind
themselves to contribute money, property or
industry to a common fund, with the intention of
dividing the profits among themselves. Not one
of these circumstances is present in this case.
No written agreement exists to prove the
partnership between the parties. Private
respondent did not contribute money, property
or industry for the purpose of engaging in the
supposed business. There is no proof that he
was receiving a share in the profits as a matter
of course, during the period when the trucking
business was under operation. Neither is there
any proof that he had actively participated in the
management, administration and adoption of
policies of the business. Thus, the NLRC and
the CA did not err in reversing the finding of the
Labor Arbiter that private respondent was an
industrial partner from 1958 to 1994. we affirm
the findings of the appellate court and the
NLRC. Private respondent Jaime Sahot was not
an industrial partner but an employee of
petitioners from 1958 to 1994.

(2)It is worthy to note that respondent is
engaged in the trucking business where physical
strength is of utmost requirement . Complainant
started working with respondent as truck helper
at age twenty-three (23), then as truck driver
since 1965. Complainant was already fifty-nine
(59) when the complaint was filed and suffering
from various illness triggered by his work and
age.

In termination cases, the burden is upon the
employer to show by substantial evidence that
the termination was for lawful cause and validly
made. For an employees dismissal to be valid,
(a) the dismissal must be for a valid cause and
(b) the employee must be afforded due process.

Article 284 of the Labor Code authorizes an
employer to terminate an employee on the
ground of disease, viz:

Art. 284. Disease as a ground for termination-
An employer may terminate the services of an
employee who has been found to be suffering
from any disease and whose continued
employment is prohibited by law or prejudicial to
his health as well as the health of his co-
employees: xxx

However, in order to validly terminate
employment on this ground, Book VI, Rule I,

Section 8 of the Omnibus Implementing Rules of
the Labor Code requires:

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

As this Court stated in Triple Eight integrated
Services, Inc. vs. NLRC, the requirement for a
medical certificate under Article 284 of the Labor
Code cannot be dispensed with; otherwise, it
would sanction the unilateral and arbitrary
determination by the employer of the gravity or
extent of the employees illness and thus defeat
the public policy in the protection of labor.

In the case at bar, the employer clearly did not
comply with the medical certificate requirement
before Sahots dismissal was effected.

From the records, it clearly appears that
procedural due process was not observed in the
separation of private respondent by the
management of the trucking company. The
employer is required to furnish an employee with
two written notices before the latter is dismissed:
(1) the notice to apprise the employee of the
particular acts or omissions for which his
dismissal is sought, which is the equivalent of a
charge; and (2) the notice informing the
employee of his dismissal, to be issued after the
employee has been given reasonable
opportunity to answer and to be heard on his
defense. These, the petitioners failed to do,
even only for record purposes. What
management did was to threaten the employee
with dismissal, then actually implement the
threat when the occasion presented itself
because of private respondents painful left
thigh.

All told, both the substantive and procedural
aspects of due process were violated. Clearly,
therefore, Sahots dismissal is tainted with
invalidity.

(3) respondent Jaime Sahot is entitled to
separation pay. The law is clear on the matter.
An employee who is terminated because of
disease is entitled to "separation pay equivalent
to at least one month salary or to one-half month
salary for every year of service, whichever is
greater xxx." Following the formula set in Art.
284 of the Labor Code, his separation pay was
computed by the appellate court at P2,080 times
36 years (1958 to 1994) or P74,880. We agree
with the computation, after noting that his last
monthly salary was P4,160.00 so that one-half
thereof is P2,080.00. Finding no reversible error
nor grave abuse of discretion on the part of
appellate court, we are constrained to sustain its
decision. To avoid further delay in the payment
due the separated worker, whose claim was filed
way back in 1994, this decision is immediately
executory. Otherwise, six percent (6%) interest
per annum should be charged thereon, for any
delay, pursuant to provisions of the Civil Code.

--------------------------
(2) UNION MOTOR CORPORATION vs.
NATIONAL LABOR RELATIONS COMMISSION
and ALEJANDRO A. ETIS
G.R. No. 159738. December 9, 2004
CALLEJO, SR., J.

DOCTRINE: Nowhere in our jurisprudence
requires that all medical certificates be notarized
to be accepted as a valid evidence. Common
sense dictates that an ordinary worker does not
need to have these medical certificates to be

notarized for proper presentation to his company
to prove his ailment.

FACTS: On October 23, 1993, the respondent
was hired by the petitioner as an automotive
mechanic at the service department in the
latters Paco Branch. In 1994, he was
transferred to the Caloocan City Branch. During
his employment, he was awarded the Top
Technician for the month of May in 1995 and
Technician of the Year (1995). He also became
a member of the Exclusive P40,000.00 Club and
received the Model Employee Award in the
same year.

On September 22, 1997, the respondent made a
phone call to Rosita dela Cruz, the company
nurse, and informed her that he had to take a
sick leave as he had a painful and unbearable
toothache. The next day, he again phoned Dela
Cruz and told her that he could not report for
work because he still had to consult a doctor.
The doctor referred him to Dr. Rodolfo Pamor, a
dentist, who scheduled the respondents tooth
extraction on September 27, 1997. Upon
instructions from the management, Mr.
Dumagan, a company security guard, visited the
respondent in his house on September 24, 1997
and confirmed that the latter was ill.

On September 27, 1997, Dr. Pamor rescheduled
the respondents tooth extraction on October 4,
1997 because the inflammation had not yet
subsided and recommended that he rest. Thus,
the respondent was not able to report for work
due to the painful and unbearable toothache.

On October 2, 1997, the petitioner issued an
Inter Office Memorandum through Angelo B.
Nicolas, the manager of its Human Resources
Department, terminating the services of the
respondent for having incurred more than five
(5) consecutive absences without proper
notification. The petitioner considered the
consecutive absences of the respondent as
abandonment of office under Section 6.1.1,
Article III of the Company Rules. The petitioner
contends that the respondents dismissal was
also justified under Article 282(b) of the Labor
Code, which provides that an employer may
dismiss an employee due to gross and habitual
neglect of his duties.

On October 4, 1997, Dr. Pamor successfully
extracted the respondents tooth. As soon as he
had recovered, the respondent reported for
work, but was denied entry into the companys
premises. He was also informed that his
employment had already been terminated. The
respondent sought help from the union but
thereafter, the unions complaints were
dismissed by the NCMB. Left with no other
recourse, the respondent filed, on May 18, 1999,
a complaint for illegal dismissal before the
arbitration branch of the NLRC against the
petitioner and/or Benito Cua.

Labor Arbiter rendered a Decision dismissing
the complaint. However, NLRC issued a
Resolution reversing the decision of the Labor
Arbiter. The NLRC upheld the claim of the
respondent that his successive absences due to
severe toothache was known to management. It
ruled that the medical certificates issued by the
doctor and dentist who attended to the
respondent substantiated the latters medical
problem. It also declared that the lack of
notarization of the said certificates was not a
valid justification for their rejection as evidence.
The NLRC declared that the respondents
absence for ten (10) consecutive days could not
be classified as gross and habitual neglect of
duty under Article 282 of the Labor Code. In its
Decision dated April 10, 2003, the CA affirmed
in toto the November 29, 2001 Resolution of the
NLRC.

ISSUE: Whether or not the private respondent
was illegally dismissed.

HELD: Yes. We note that the company rules do
not require that the notice of an employees
absence and the reasons therefor be in writing
and for such notice to be given to any specific
office and/or employee of the petitioner. Hence,
the notice may be verbal; it is enough then that

an officer or employee of the petitioner,
competent and responsible enough to receive
such notice for and in behalf of the petitioner,
was informed of such absence and the
corresponding reason.

The evidence on record shows that the
respondent informed the petitioner of his illness
through the company nurse. The security guard
who was dispatched by the petitioner to verify
the information received by the company nurse,
confirmed the respondents illness. We find and
so hold that the respondent complied with the
requisite of giving notice of his illness and the
reason for his absences to the petitioner.

We reject the petitioners contention that the
medical certificates adduced in evidence by the
respondent to prove (a) his illness, the nature
and the duration of the procedures performed by
the dentist on him; and (b) the period during
which he was incapacitated to work are
inadmissible in evidence and barren of probative
weight simply because they were not notarized,
and the medical certificate dated September 23,
1997 was not written on paper bearing the
dentists letterhead. Neither do we agree with
the petitioners argument that even assuming
that the respondent was ill and had been
advised by his dentist to rest, the same does not
appear on the medical certificate dated
September 23, 1997; hence, it behooved the
respondent to report for work on September 23,
1997.

Nowhere in our jurisprudence requires that all
medical certificates be notarized to be accepted
as a valid evidence. In this case, there is
[neither] difficulty nor an obstacle to claim that
the medical certificates presented by
complainant are genuine and authentic. Indeed,
the physician and the dentist who examined the
complainant, aside from their respective
letterheads, had written their respective license
numbers below their names and signatures.
These facts have not been impugned nor
rebutted by respondent-appellee throughout the
proceedings of his case. Common sense
dictates that an ordinary worker does not need
to have these medical certificates to be
notarized for proper presentation to his company
to prove his ailment.

While the records do not reveal that the
respondent filed the required leave of absence
for the period during which he suffered from a
toothache, he immediately reported for work
upon recovery, armed with medical certificates
to attest to the cause of his absence. The
respondent could not have anticipated the cause
of his illness, thus, to require prior approval
would be unreasonable. While it is true that the
petitioner had objected to the veracity of the
medical certificates because of lack of
notarization, it has been said that verification of
documents is not necessary in order that the
said documents could be considered as
substantial evidence. The medical certificates
were properly signed by the physicians; hence,
they bear all the earmarks of regularity in their
issuance and are entitled to full probative
weight.

The petitioner, likewise, failed to prove the
factual basis for its dismissal of the respondent
on the ground of gross and habitual negligence
under Article 282(b) of the Labor Code of the
Philippines, or even under Section 6.1.1, Rule III
of the Company Rules.

Dismissal is the ultimate penalty that can be
meted to an employee. Thus, it must be based
on just cause and must be supported by clear
and convincing evidence. To effect a valid
dismissal, the law requires not only that there be
just and valid cause for termination; it, likewise,
enjoins the employer to afford the employee the
opportunity to be heard and to defend himself.

The petitioners claim of gross and habitual
neglect of duty pales in comparison to the
respondents unblemished record. The
respondent did not incur any intermittent
absences. His only recorded absence was the
consecutive ten-day unauthorized absence,
albeit due to painful and unbearable toothache.

The petitioners claim that the respondent had
manifested poor work attitude was belied by its
own recognition of the respondents dedication
to his job as evidenced by the latters awards:
Top Technician of the Year (1995), Member of
the Exclusive P40,000.00 Club, and Model
Employee of the Year (1995).

IN LIGHT OF ALL THE FOREGOING, the
petition is DENIED DUE COURSE. The
Decision of the Court of Appeals in CA-G.R. SP
No. 73602 is AFFIRMED..

--------------------------------------
(3) ROMEO VILLARUEL, PETITIONER, VS.
YEO HAN GUAN, DOING BUSINESS UNDER
THE NAME AND STYLE YUHANS
ENTERPRISES, RESPONDENT.

D E C I S I O N

PERALTA, J.:
petitioner filed with the NLRCfor payment of
separation pay against Yuhans Enterprises.

He was employed as a machine operator by
Ribonette Manufacturing Company managed by
herein respondent Yeo Han Guan. Over a period
of almost twenty (20) years, the company
changed its name four times. Starting in 1993 up
to the time of the filing of petitioner's complaint in
1999, the company was operating under the
name of Yuhans Enterprises. Despite the
changes in the company's name, petitioner
remained in the employ of respondent. Petitioner
further alleged that on October 5, 1998, he got
sick and was confined in a hospital; on
December 12, 1998, he reported for work but
was no longer permitted to go back because of
his illness; he asked that respondent allow him
to continue working but be assigned a lighter
kind of work but his request was denied; instead,
he was offered a sum of P15,000.00 as his
separation pay; however, the said amount
corresponds only to the period between 1993
and 1999; petitioner prayed that he be granted
separation pay computed from his first day of
employment in June 1963, but respondent
refused. Aside from separation pay, petitioner
prayed for the payment of service incentive
leave for three years as well as attorney's fees.

On the other hand, respondent averred in his
Position Paper[5] that petitioner was hired as
machine operator from March 1, 1993 until he
stopped working sometime in February 1999 on
the ground that he was suffering from illness;
after his recovery, petitioner was directed to
report for work, but he never showed up.
Respondent was later caught by surprise when
petitioner filed the instant case for recovery of
separation pay. Respondent claimed that he
never terminated the services of petitioner and
that during their mandatory conference, he even
told the latter that he could go back to work
anytime but petitioner clearly manifested that he
was no longer interested in returning to work
and instead asked for separation pay.

Labor Arbiter handling the case rendered
judgment in favor of petitioner.

Aggrieved, respondent filed an appeal with the
NLRC.

On March 31, 2003, the Third Division of the
NLRC rendered its Decision[7] dismissing
respondent's appeal and affirming the Labor
Arbiter's Decision.

Respondent filed a Motion for
Reconsideration,[8] but the same was denied by
the NLRC in a Resolution[9] dated May 30,
2003.

Respondent then filed with the CA a petition for
certiorari under Rule 65 of the Rules of Court.

On February 16, 2005, the CA promulgated its
presently assailed Decision disposing as follows:

WHEREFORE, premises considered, the
petition is partially GRANTED. The award of
separation pay is hereby DELETED, but the
Decision insofar as it awards private respondent
[herein petitioner] service incentive leave pay of

three thousand and fifteen pesos (P3,015.00)
stands. The NLRC is permanently ENJOINED
from partially executing its Decision dated
November 27, 2000 insofar as the award of
separation pay is concerned; or if it has already
effected execution, it should order the private
respondent to forthwith restitute the same.

SO ORDERED.[10]

Herein petitioner filed his Motion for
Reconsideration[11] of the CA Decision, but it
was denied by the CA via a Resolution[12] dated
August 2, 2005.

Hence, the instant petition based on the
following assignment of errors:

II

[THE HONORABLE COURT OF APPEALS
SERIOUSLY ERRED] IN DENYING
[PETITIONER'S] ENTITLEMENT TO
SEPARATION PAY UNDER ARTICLE 284 OF
THE LABOR CODE AND UNDER THE
OMNIBUS RULES IMPLEMENTING THE
LABOR CODE.

THE HONORABLE COURT OF APPEALS
SERIOUSLY ERRED IN ITS FINDING THAT
THE BURDEN OF PROOF THAT AN
EMPLOYEE IS SUFFERING FROM DISEASE
THAT HAS TO BE TERMINATED REST[S]
UPON THE EMPLOYER IN ORDER FOR THE
EMPLOYEE TO BE ENTITLED TO
SEPARATION PAY.

IV

THE HONORABLE COURT OF APPEALS
SERIOUSLY ERRED IN ORDERING THE
DELETION OF THE AWARD OF SEPARATION
PAY TO THE [PETITIONER].[13]

The Court finds the petition without merit.

The assigned errors in the instant petition
essentially boil down to the question of whether
petitioner is entitled to separation pay under the
provisions of the Labor Code, particularly Article
284 thereof, which reads as follows:

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

A plain reading of the abovequoted provision
clearly presupposes that it is the employer who
terminates the services of the employee found to
be suffering from any disease and whose
continued employment is prohibited by law or is
prejudicial to his health as well as to the health
of his co-employees. It does not contemplate a
situation where it is the employee who severs
his or her employment ties. This is precisely the
reason why Section 8,[14] Rule 1, Book VI of the
Omnibus Rules Implementing the Labor Code,
directs that an employer shall not terminate the
services of the employee unless there is a
certification by a competent public health
authority that the disease is of such nature or at
such a stage that it cannot be cured within a
period of six (6) months even with proper
medical treatment.

Hence, the pivotal question that should be
settled in the present case is whether
respondent, in fact, dismissed petitioner from his
employment.

The Court finds no convincing justification, in the
Decision of the Labor Arbiter on why petitioner is
entitled to such pay. In the same manner, the
NLRC Decision did not give any rationalization
as the gist thereof simply consisted of a quoted

portion of the appealed Decision of the Labor
Arbiter.

On the other hand, the Court agrees with the CA
in its observation of the following circumstances
as proof that respondent did not terminate
petitioner's employment: first, the only cause of
action in petitioner's original complaint is that he
was "offered a very low separation pay"; second,
there was no allegation of illegal dismissal, both
in petitioner's original and amended complaints
and position paper; and, third, there was no
prayer for reinstatement.

In consonance with the above findings, the
Court finds that petitioner was the one who
initiated the severance of his employment
relations with respondent. It is evident from the
various pleadings filed by petitioner that he
never intended to return to his employment with
respondent on the ground that his health is
failing. Indeed, petitioner did not ask for
reinstatement. In fact, he rejected respondent's
offer for him to return to work. This is tantamount
to resignation.

Resignation is defined as the voluntary act of an
employee who finds himself in a situation where
he believes that personal reasons cannot be
sacrificed in favor of the exigency of the service
and he has no other choice but to disassociate
himself from his employment.[15]

In the present case, neither the abovementioned
provisions of the Labor Code and its
implementing rules and regulations nor the
exceptions apply because petitioner was not
dismissed from his employment and there is no
evidence to show that payment of separation
pay is stipulated in his employment contract or
sanctioned by established practice or policy of
herein respondent, his employer.

Since petitioner was not terminated from his
employment and, instead, is deemed to have
resigned therefrom, he is not entitled to
separation pay under the provisions of the Labor
Code.

The foregoing notwithstanding, this Court, in a
number of cases, has granted financial
assistance to separated employees as a
measure of social and compassionate justice
and as an equitable concession. Taking into
consideration the factual circumstances
obtaining in the present case, the Court finds
that petitioner is entitled to this kind of
assistance.

In our view, with these special circumstances,
we can call upon the same "social and
compassionate justice" cited in several cases
allowing financial assistance. These
circumstances indubitably merit equitable
concessions, via the principle of "compassionate
justice" for the working class. x x x

Considering all of the foregoing and in line with
Eastern, the ends of social and compassionate
justice would be served best if respondent will
be given some equitable relief. Thus, the award
of P100,000.00 to respondent as financial
assistance is deemed equitable under the
circumstances.[22]

While the abovecited cases authorized the grant
of financial assistance in lieu of retirement
benefits, the Court finds no cogent reason not to
employ the same guiding principle of
compassionate justice applied by the Court,
taking into consideration the factual
circumstances obtaining in the present case. In
this regard, the Court finds credence in
petitioner's contention that he is in the employ of
respondent for more than 35 years. In the
absence of a substantial refutation on the part of
respondent, the Court agrees with the findings of
the Labor Arbiter and the NLRC that respondent
company is not distinct from its predecessors
but, in fact, merely continued the operation of
the latter under the same owners and the same
business venture. The Court further notes that
there is no evidence on record to show that
petitioner has any derogatory record during his
long years of service with respondent and that

his employment was severed not by reason of
any infraction on his part but because of his
failing physical condition. Add to this the
willingness of respondent to give him financial
assistance. Hence, based on the foregoing, the
Court finds that the award of P50,000.00 to
petitioner as financial assistance is deemed
equitable under the circumstances.

WHEREFORE, the instant petition is DENIED.
The assailed Decision and Resolution of the
Court of Appeals are AFFIRMED with
MODIFICATION by awarding petitioner with
financial assistance in the amount of
P50,000.00.

SO ORDERED.

Article 285
(1) G.R. No. 160348 December 17, 2004
WILLI HAHN ENTERPRISES and/or WILLI
HAHN, petitioner, vs. LILIA R. MAGHUYOP,
respondent.
Facts: In 1982, respondent Lilia Maghuyop was
hired by petitioner Willi Hahn as nanny of one of
his sons. In 1986, she was employed as
salesclerk of Willi Hahn Enterprises in one of its
branches as an authorized dealer of sporting
goods, guns and ammunitions. After sometime,
she was promoted as store manager of its
branch in Shoe Mart (SM) Cebu. Petitioner
conducted an Inventory Report and discovered
that its SM Cebu branch incurred stock
shortages and non-remittances in the total
amount of P27,727.39. Petitioner decided to
terminate the services of respondent because of
her participation in the said irregularities;
however, before he could do so, the latter
tendered her resignation. Believing the good
faith of respondents resignation, petitioner
decided not to file charges against her anymore.
Respondent however claimed that she was
forced to resign by persons connected with
petitioner. Respondent filed a complaint with the
NLRC, alleging that she should be awarded
backwages, separation pay, salary for July 16-
22, 1998 which was withheld by petitioner,
proportionate 13th month pay, damages and
attorneys fees. The Labor Arbiter and the NLRC
dismissed respondents complaint of illegal
dismissal.
Issue: Whether respondent voluntarily resigned
as manager of the SM Cebu branch and would
thus not make the petitioner liable for illegal
dismissal.
Held: Respondent voluntarily resigned from her
work and was not illegally dismissed. The failure
of petitioner to pursue the termination
proceedings against respondent and to make
her pay for the shortage incurred did not cast
doubt on the voluntary nature of her resignation.
A decision to give a graceful exit to an employee
rather than to file an action for redress is

perfectly within the discretion of an employer.
Furthermore, respondents claim that she was
coerced to sign the resignation letter does not
deserve credence because it was not supported
by substantial evidence. It clearly appears that
the filing of an illegal dismissal case by
respondent was evidently a mere afterthought. It
was filed not because she wanted to return to
work but to claim separation pay and
backwages. Settled is the rule that factual
findings of labor officials who are deemed to
have acquired expertise in matters within their
respective jurisdiction are generally accorded
not only respect, but even finality, and bind the
Supreme Court when supported by substantial
evidence. The findings of both the Labor Arbiter
and the NLRC are amply supported by the
required quantum of evidence.
---------------------------------

(2) Malig-on vs. Equitable General Services inc.
june 29, 2010

ABAD, J.:

Doctrine:
The rule in termination cases is that the
employer bears the burden of proving that he
dismissed his employee for a just cause. And,
when the employer claims that the employee
resigned from work, the burden is on the
employer to prove that he did so willingly.
Whether that is the case would largely depend
on the circumstances surrounding such alleged
resignation. Those circumstances must be
consistent with the employees intent to give up
work.

Facts:
Elsa Malig-on (Malig-on) claimed that
Equitable General Services, Inc. (the company)
hired her as janitress. The company paid her
P250.00 per day for a nine-hour work. After six
years Malig-ons immediate supervisor told her
that the company would be assigning her to
another client. But it never did despite several
follow-ups that she made. Eight months later
the company told Malig-on that she had to file a
resignation letter before it would reassign her.
She complied but the company reneged on its
undertaking, prompting Malig-on to file a
complaint against it for illegal dismissal.

The company denied Malig-ons
allegations. It claimed that she just stopped
reporting for work on February 16, 2002 without
giving any reason. Consequently, the company
wrote her two letters, first on August 23, 2002
and again on September 2, 2002, asking her to
explain her continued absence. On October 15,
2002 Malig-on showed up at the companys
office and submitted her resignation letter.

(LA) rendered a decision, finding Malig-
ons resignation valid and binding. But ordered
the company to pay her emergency cost of living
allowance and the balance of her 13th month
pay.

(NLRC) reversed the LAs decision and
ruled that the company had constructively
dismissed Malig-on. The NLRC ordered the
company to reinstate Malig-on with full
backwages from the time the company illegally
dismissed her up to the date of the finality of its
decision.

The respondent company went up to the
Court of Appeals (CA) to challenge the NLRC
decision. On July 16, 2008 the CA reversed the
NLRCs ruling and reinstated that of the LA,
hence, this petition by Malig-on.

The Issue Presented

The issue in this case is whether or not the CA
erred in holding that petitioner Malig-on
abandoned her work and eventually resigned
from it rather than that respondent company
constructively dismissed her.
The Rulings of the Court


The company claims that Malig-on voluntarily
resigned, gave a letter of resignation that she
wrote with her own hand, used the vernacular
language, and signed it. But these are not
enough. They merely prove that she wrote that
letter, a thing that she did not deny. She was
quick to point out that she wrote it after being
told that she needed to resign so she could be
cleared for her next assignment.

According to the company, Malig-on
simply dropped out of sight one day on February
16, 2002 for no reason at all. Eight months later
or on October 15, 2002 she appeared at the
companys office and tendered her resignation.
To the companys surprise, three days later or
on October 18, 2002 she went to the NLRC
office and filed her complaint against the
company for illegal dismissal. Clearly, however,
these circumstances do not sound consistent
with resignation freely made.

First, when Malig-on reportedly dropped out of
sight and the company had no idea about the
reason for it, the natural and right thing for it to
do was investigate why she had suddenly
vanished. Indeed, the company needed to write
Malig-on immediately and ask her to explain in
writing why she should not be considered to
have abandoned her job so the company may
be cleared of its responsibility as employer. This
did not happen here.

Second, if Malig-on had abandoned her work
and had no further interest in it, there was no
reason for her to suddenly show up at her
former place of work after eight months and file
her resignation letter.

And, third, that Malig-on went to the NLRC to file
a complaint for unjust dismissal just three days
after she filed her alleged resignation letter is
inconsistent with genuine resignation.

The company evidently placed Malig-on on
floating status after being relieved as janitress in
a clients workplace. But, as the Court has
repeatedly ruled, such act of off-detailing
Malig-on was not the equivalent of dismissal so
long as her floating status did not continue
beyond a reasonable time. But, when it ran up
to more than six months, the company may be
considered to have constructively dismissed her
from work, that is, as of August 16, 2002. Thus,
her purported resignation on October 15, 2002
could not have been legally possible.

An illegally dismissed employee is entitled to two
reliefs: backwages and reinstatement. Still, the
Court has held that the grant of separation pay,
rather than reinstatement, may be proper
especially when the latter is no longer practical
or will be for the best interest of the parties, as in
this case. it was only eight months later that she
showed keen interest in being taken back by
following an advice that she first tender her
resignation in order to clear up her record prior
to being rehired.

After just three days from tendering her
resignation, Malig-on hastened to the NLRC and
accused her employer of illegal dismissal.
Under the circumstances, her reinstatement to
her former position would only result in a highly
hostile work environment for the parties and
might further worsen their relations which are
already scarred by the present case. The NLRC
should have just awarded Malig-on separation
pay instead of ordering the company to reinstate
her.

Backwages represent compensation that should
have been earned but were not collected
because of the unjust dismissal.[9] Malig-on can
be said to be entitled to reinstatement from the
time she was constructively dismissed in August
2002 until the NLRC ordered her immediate
reinstatement in February 2005, a period of two
years and six months. For this she is entitled to
backwages. But since, as already stated, the
circumstances already rule out actual
reinstatement, she is entitled to separation pay
at the rate of one month for every year of service
from 1996, when she began her employment to
2005, when she is deemed to have been
actually separated from work, a period of nine

years, both amountsthe backwages and the
separation payto bear interest of 6 percent per
annum until fully paid.
----------------------------------

(3) G.R. No. 175558 February 8, 2012 CARPIO,
J.:
SKIPPERS UNITED PACIFIC, INC. and
SKIPPERS MARITIME SERVICES, INC., LTD.,
Petitioners,
vs.
NATHANIEL DOZA, NAPOLEON DE GRACIA,
ISIDRO L. LATA, and CHARLIE APROSTA,
Respondents.
FACTS: This arose from consolidated labor
case4 filed by seafarers Napoleon De Gracia
(De Gracia), Isidro L. Lata (Lata), Charlie
Aprosta (Aprosta), and Nathaniel Doza (Doza)
against local manning agency Skippers United
Pacific, Inc. and its foreign principal, Skippers
Maritime Services, Inc., Ltd. (Skippers) for
unremitted home allotment for the month of
December 1998, salaries for the unexpired
portion of their employment contracts, moral
damages, exemplary damages, and attorneys
fees. Skippers, on the other hand, answered
with a claim for reimbursement of De Gracia,
Aprosta and Latas repatriation expenses, as
well as award of moral damages and attorneys
fees.
Skippers United Pacific, Inc. deployed, in behalf
of Skippers, De Gracia, Lata, and Aprosta to
work on board the vessel MV Wisdom Star
under contract. No employment contract was
submitted for Nathaniel Doza. Skippers failed to
remit the home allotment for the month of
December 1998. On 28 January 1999, De
Gracia, et al. were unceremoniously discharged
from MV Wisdom Stars and immediately
repatriated. Upon arrival in the Philippines, De
Gracia, et al. filed a complaint for illegal
dismissal with the LA on 4 April 1999 and
prayed for payment of their home allotment for
the month of December 1998, salaries for the
unexpired portion of their contracts, moral
damages, exemplary damages, and attorneys
fees.
De Gracia, et al. claims were dismissed by the
LA for lack of merit. The LA also dismissed
Skippers claims. De Gracia, et al. appealed the
LAs decision with the NLRC, but the First
Division of the NLRC dismissed the appeal for
lack of merit. Doza, et al.s Motion for
Reconsideration was likewise denied by the
NLRC,9 so they filed a Petition for Certiorari with
the CA.
The CA granted the petition, reversed the Labor
Arbiter and NLRC Decisions, and awarded to De
Gracia, Lata and Aprosta their unremitted home
allotment, three months salary each
representing the unexpired portion of their
employment contracts and attorneys fees. No
award was given to Doza for lack of factual
basis.12 The CA denied Skippers Motion for
Partial Reconsideration. Hence, this Petition.
ISSUE: W/N the CA seriously erred in not giving
due credence to the masters telex message
showing that the respondents voluntarily
requested to be repatriated.
HELD: YES. In this case, there was no written
notice furnished to De Gracia, et al. regarding
the cause of their dismissal. Cosmoship
furnished a written notice (telex) to Skippers, the
local manning agency, claiming that De Gracia,
et al. were repatriated because the latter
voluntarily pre-terminated their contracts. This
telex was given credibility and weight by the LA
and NLRC in deciding that there was pre-
termination of the employment contract "akin to
resignation" and no illegal dismissal. However,
as correctly ruled by the CA, the telex message
is "a biased and self-serving document that does
not satisfy the requirement of substantial
evidence." If, indeed, De Gracia, et al. voluntarily
pre-terminated their contracts, then De Gracia,

et al. should have submitted their written
resignations.
Article 285 of the Labor Code recognizes
termination by the employee of the employment
contract by "serving written notice on the
employer at least 1 month in advance." Given
that provision, the law contemplates the
requirement of a written notice of resignation. In
the absence of a written resignation, it is safe to
presume that the employer terminated the
seafarers. In addition, the telex message relied
upon by the LA and NLRC bore conflicting dates
of 22 January 1998 and 22 January 1999, giving
doubt to the veracity and authenticity of the
document. In 22 January 1998, De Gracia, et al.
were not even employed yet by the foreign
principal. For these reasons, the dismissal of De
Gracia, et al. was illegal.
**The real issue of the case W/N petitioners are
liable to pay backwages and the alleged
unremitted home allotment pay despite the
finding of the LA and the NLRC that the claims
are baseless.
-------------------------------------
(4) G.R. No. 174208 January 25, 2012

JONATHAN V. MORALES, Petitioner, vs.
HARBOUR CENTRE PORT TERMINAL, INC.
Respondent.

PEREZ, J.:

Facts: Petitioner Morales was hired by
respondent HCPTI as an Accountant and Acting
Finance Officer. After regularization in
November 2000, Morales was promoted to
Division Manager of the Accounting Department
starting July 2002. Subsequent to HCPTIs
transfer to its new offices at Vitas, Tondo, Manila
on January 2003, Morales received an inter-
office memorandum dated 27 March 2003,
reassigning him to Operations Cost Accounting,
tasked with the duty of "monitoring and
evaluating all consumables requests, gears and
equipment" related to the corporations
operations and of interacting with its sub-
contractor. The memorandum was issued by
Singson, HCPTIs new Administration Manager,
duly noted by Filart, its new Vice President for
Administration and Finance, and approved by its
President and Chief Executive Officer, Suazo.
On 31 March 2003, Morales wrote Singson,
protesting that his reassignment was a clear
demotion since the position to which he was
transferred was not even included in HCPTIs
plantilla. In response, Singson issued a 4 April
2003 inter-office memorandum to the effect that
"transfer of employees is a management
prerogative" and that HCPTI had "the right and
responsibility to find the perfect balance
between the skills and abilities of employees to
the needs of the business." For the whole of the
ensuing month Morales was absent from work
and/or tardy. Singson issued to Morales a 29
April 2003 inter-office memorandum as a First
Warning reminding Morales that, as an
employee of HCPTI, he was subject to its rules
and regulations and could be disciplinarily dealt
with pursuant to its Code of Conduct. In view of
the absences Morales continued to incur, HCPTI
issued a Second Warning dated 6 May 2003
and a Notice to Report for Work and Final
Warning dated 22 May 2003.

In the meantime, Morales filed a complaint dated
25 April 2003 against HCPTI, Filart and Singson,
for constructive dismissal, moral and exemplary
damages as well as attorneys fees. Morales
alleged that subsequent to its transfer to its new
offices, HCPTI had suspended all the privileges
enjoyed by its Managers, Division Chiefs and
Section Heads; that upon the instruction of
Filart, Suarez, HCPTIs Corporate Treasurer,
informed him that he was going to be terminated
and had only 3 weeks to look for another job;
that having confirmed his impending termination
on 27 March 2003, Filart decided to "temper" the
same by instead reassigning him to Operations
Cost Accounting; and, that his reassignment to a
position which was not included in HCPTIs
plantilla was a demotion and operated as a
termination from employment as of said date.

Maintaining that he suffered great humiliation
when, in addition to being deprived of his office
and its equipments, he received no further
instructions from Filart and Singson regarding
his new position, Morales claimed that he was
left no other choice but file his complaint for
constructive dismissal. HCPTI, Filart and
Singson argued that Morales abandoned his
employment and was not constructively
dismissed. Calling attention to the supposed fact
that Morales negligence had resulted in
HCPTIs payment of P3,350,000.00 in taxes
from which it was exempt as a PEZA-registered
company, said respondents averred that,
confronted by Filart sometime in March 2003
regarding the lapses in his work performance,
Morales admitted his inability to handle his tasks
at the corporations Accounting Department; that
as a consequence, HCPTI reassigned Morales
from managerial accounting to operations cost
accounting as an exercise of its management
prerogative to assign its employees to jobs for
which they are best suited; and, that despite the
justification in Singsons 4 April 2003 reply to his
31 March 2003 protest against his
reassignment, Morales chose to stop reporting
for work. Faulting Morales with unjustified
refusal to heed the repeated warnings and
notices directing him to report for work, HCPTI,
Filart and Singson prayed for the dismissal of
the complaint and the grant of their counterclaim
for attorneys fees.

The LA dismissed the complaint for lack of merit
and ruled that Morales reassignment was a
valid exercise of management prerogative which
cannot be construed as constructive dismissal
absent showing that the same was done in bad
faith and resulted in the diminution of his salary
and benefits.

On appeal, the NLRC reversed and set aside
the LAs decision. It ruled that Morales
reassignment was a clear demotion despite lack
of showing of diminution of salaries and benefits.
The MR was denied.

The CA reversed the NLRCs decision, upon the
following findings and conclusions: (a) Morales
reassignment to Operations Cost Accounting
was a valid exercise of HCPTIs prerogative to
transfer its employees as the exigencies of the
business may require; (b) the transfer cannot be
construed as constructive dismissal since it
entailed no demotion in rank, salaries and
benefits; and, (c) rather than being terminated,
Morales refused his new assignment by taking a
leave of absence from 4 to 17 April 2003 and
disregarding HCPTIs warnings and directives to
report back for work. Morales MR was denied
for lack of merit.

Issue:
Whether or not the change in the
designation/position of petitioner constituted
constructive dismissal.

Ruling:
Yes. Constructive dismissal exists where there
is cessation of work because "continued
employment is rendered impossible,
unreasonable or unlikely, as an offer involving a
demotion in rank or a diminution in pay" and
other benefits. Aptly called a dismissal in
disguise or an act amounting to dismissal but
made to appear as if it were not, constructive
dismissal may, likewise, exist if an act of clear
discrimination, insensibility, or disdain by an
employer becomes so unbearable on the part of
the employee that it could foreclose any choice
by him except to forego his continued
employment. In cases of a transfer of an
employee, the rule is settled that the employer is
charged with the burden of proving that its
conduct and action are for valid and legitimate
grounds such as genuine business necessity
and that the transfer is not unreasonable,
inconvenient or prejudicial to the employee. If
the employer cannot overcome this burden of
proof, the employees transfer shall be
tantamount to unlawful constructive dismissal.

In this case, HCPTI failed to discharge the
foregoing onus. While there was a lack of
showing that the transfer or reassignment

entailed a diminution of salary and benefits, one
fact that must not be lost sight of was that
Morales was already occupying the position of
Division Manager at HCPTIs Accounting
Department as a consequence of his promotion
to said position. Morales was then subsequently
reassigned by HCPTI "from managerial
accounting to Operations Cost Accounting",
without any mention of the position to which he
was actually being transferred. That the
reassignment was a demotion is, however,
evident from Morales new duties which, far from
being managerial in nature, were very simply
and vaguely described as inclusive of
"monitoring and evaluating all consumables
requests, gears and equipments related to
[HCPTIs] operations" as well as "close
interaction with [its] sub-contractor." There is no
evidentiary basis for the CAs finding that
Morales was designated as head of HCPTIs
Operations Department which, as indicated in
the corporations plantilla, had the Vice-
President for Operations at its helm. On the
contrary, Morales demotion is evident from the
fact that his reassignment entailed a transfer
from a managerial position to one which was not
even included in the corporations plantilla.
Admittedly, the right of employees to security of
tenure does not give them vested rights to their
positions to the extent of depriving management
of its prerogative to change their assignments or
to transfer them. By management prerogative is
meant the right of an employer to regulate all
aspects of employment, such as the freedom to
prescribe work assignments, working methods,
processes to be followed, regulation regarding
transfer of employees, supervision of their work,
lay-off and discipline, and dismissal and recall of
workers. Although jurisprudence recognizes said
management prerogative, it has been ruled that
the exercise thereof, while ordinarily not
interfered with, is not absolute and is subject to
limitations imposed by law, collective bargaining
agreement, and general principles of fair play
and justice. Thus, an employer may transfer or
assign employees from one office or area of
operation to another, provided there is no
demotion in rank or diminution of salary,
benefits, and other privileges, and the action is
not motivated by discrimination, made in bad
faith, or effected as a form of punishment or
demotion without sufficient cause. Indeed,
having the right should not be confused with the
manner in which that right is exercised.

HCPTI argues that Morales transfer was
brought about by the reorganization of its
corporate structure in 2003 which was
undertaken in the exercise of its management
prerogative to regulate every aspect of its
business. This claim is at odds with HCPTIs
assertions that Morales erroneously and
negligently authorized the repeated payments of
realty taxes from which the corporation was
exempt as a PEZA-registered company; that
confronted by Filart regarding his poor work
performance which resulted in losses amounting
to P3,350,000.00, Morales admitted his inability
to handle his job at the accounting department;
and, that as a consequence, HCPTI decided to
reassign him to the Operations Cost Accounting.
However there was no proof provided as to
these arguments. Morales was able to prove
that HCPTIs existing plantilla did not include an
Operations Cost Accounting Department and/or
an Operations Cost Accountant. In
administrative or quasi-judicial proceedings like
those conducted before the NLRC, the standard
of proof is substantial evidence which is
understood to be more than just a scintilla or
such amount of relevant evidence which a
reasonable mind might accept as adequate to
justify a conclusion.

Although much had been made about Morales
supposed refusal to heed his employers
repeated directives for him to return to work, our
perusal of the record also shows that HCPTIs
theory of abandonment of employment cannot
bear close scrutiny. While ostensibly dated 6
May 2003, the Inter-Office Memorandum labeled
as a Second Warning was sent to Morales thru
the JRS Express only on 9 May 2003 or two (2)
days after summons were served on HCPTI,
Filart and Singson on 7 May 2003. Sent to
Morales on 26 May 2003 or after the parties

initial conference before the Labor Arbiter on 19
May 2003, there was obviously even less reason
for HCPTIs 22 May 2003 letter denominated
asNotice to Report for Work and Final Warning.
As a just and valid ground for dismissal, at any
rate, abandonment requires the deliberate,
unjustified refusal of the employee to resume his
employment, without any intention of returning.
Since an employee like Morales who takes steps
to protest his dismissal cannot logically be said
to have abandoned his work, it is a settled
doctrine that the filing of a complaint for illegal
dismissal is inconsistent with abandonment of
employment.
------------------------------------

(5) SHS PERFORATED MATERIALS, INC.,
WINFRIED HARTMANNSHENN,
and HINRICH JOHANN SCHUMACHER, v
MANUEL F. DIAZ

G.R. No. 185814 October 13, 2010
MENDOZA, J.:

DOCTRINES: Although management
prerogative refers to the right to regulate all
aspects of employment, it cannot be
understood to include the right to temporarily
withhold salary/wages without the consent of the
employee. To sanction such an interpretation
would be contrary to Article 116 and Art 113.

There is constructive dismissal if an act of clear
discrimination, insensibility, or disdain by an
employer becomes so unbearable on the part of
the employee that it would foreclose any choice
by him except to forego his continued
employment. It exists where there is cessation
of work because continued employment is
rendered impossible, unreasonable or unlikely,
as an offer involving a demotion in rank and a
diminution in pay.

FACTS: Diaz was hired by petitioner SHS as
Manager for Business Development on
probationary status from July 18, 2005 to
January 18, 2006, with a monthly salary of
P100,000.00. As Hartmannnshenn, SHSs
president, was often abroad, his instructions to
Diaz were either sent thru e-mail or telephone
calls. Hence, there was no close supervision as
to Diazs work.

Hartmannshenn expressed his dissatisfaction
over Diazs poor performance; that he allegedly
failed to make any concrete business proposal
or implement any specific measure to improve
the productivity of the SHS office and plant or
deliver sales. In numerous emails, respondent
acknowledged his poor performance and offered
to resign from the company. Diaz denied having
sent or received any of the messages.
Meanwhile, Hartmannshenn ordered the
company not to release Diazs salary for having
failed to immediately communicate with the
former.

Diaz then tendered his resignation letter with a
demand of his unpaid salary which is being
withheld illegally. Hartmannshenn then accepted
respondents resignation and informed him that
his salary would be released upon explanation
of his failure to report to work, and proof that he
did, in fact, work for the period in question. He
demanded that respondent surrender all
company property and information in his
possession. Respondent agreed to these exit
conditions through email. Instead of complying
with the said conditions, however, Diaz sent
another email to Hartmannshenn and
Schumacher appealing for the release of his
salary. They refused his demand while Diaz
alleged that he was rudely treated during their
meeting and that he was forced to accept a
certain amount instead of his accrued wages
and to stop working for SHS.

Diaz filed a Complaint for illegal dismissal; non-
payment of salaries/wages and 13th month pay
with prayer for reinstatement and full
backwages, among others.

The LA ruled against the petitioners. The LA
found that respondent was constructively
dismissed because the withholding of his salary
was contrary to Article 116 of the Labor Code as

it was not one of the exceptions for allowable
wage deduction by the employer under Article
113 of the Labor Code. He had no other
alternative but to resign because he could not be
expected to continue working for an employer
who withheld wages without valid cause.

The NLRC, reversed the said decision holding
that that the withholding of respondents salary
was a valid exercise of management
prerogative. The act was deemed justified as it
was reasonable to demand an explanation for
failure to report to work and to account for his
work accomplishments. The NLRC held that the
respondent voluntarily resigned as evidenced by
the language used in his resignation letter and
demand letters.

The CA reversed NLRCs decision. It held that
withholding respondents salary was not a valid
exercise of management prerogative as there is
no such thing as a management prerogative to
withhold wages temporarily. The malicious
withholding of respondents salary made it
impossible or unacceptable for respondent to
continue working, thus, compelling him to resign.
The respondents immediate filing of a complaint
for illegal dismissal could only mean that his
resignation was not voluntary. As a probationary
employee entitled to security of tenure,
respondent was illegally dismissed.

ISSUE: WON Diaz was constructively dismissed

HELD: YES. What made it impossible,
unreasonable or unlikely for respondent to
continue working for SHS was the unlawful
withholding of his salary. For said reason, he
was forced to resign. It is of no moment that he
served his resignation letter on November 30,
2005, the last day of the payroll period and a
non-working holiday, since his salary was
already due him on November 29, 2005, being
the last working day of said period. In fact, he
was then informed that the wages of all the other
SHS employees were already released, and
only his was being withheld. What is significant
is that the respondent prepared and served his
resignation letter right after he was informed that
his salary was being withheld. It would be
absurd to require respondent to tolerate the
unlawful withholding of his salary for a longer
period before his employment can be
considered as so impossible, unreasonable or
unlikely as to constitute constructive dismissal.
Even granting that the withholding of
respondents salary on November 30, 2005,
would not constitute an unlawful act, the
continued refusal to release his salary after the
payroll period was clearly unlawful. The
petitioners claim that they prepared the check
ready for pick-up cannot undo the unlawful
withholding.

It is worthy to note that in his resignation letter,
respondent cited petitioners illegal and unfair
labor practice as his cause for resignation. As
correctly noted by the CA, respondent lost no
time in submitting his resignation letter and
eventually filing a complaint for illegal dismissal
just a few days after his salary was withheld.
These circumstances are inconsistent with
voluntary resignation and bolster the finding of
constructive dismissal. Respondent was
constructively dismissed and, therefore, illegally
dismissed.

-------------------------------------------------

(6) G.R. No. 153982 July 18, 2011
SAN MIGUEL PROPERTIES PHILIPPINES,
INC., Petitioner,
vs.
GWENDELLYN ROSE S. GUCABAN,
Respondent.

Gwendellyn Rose Gucaban started as a
construction management specialist, and was
promoted to technical services manager, and
then to project development manager. As project
development manager, she also sat as a
member of the companys management

committee until her termination in February
1998.

She claimed that she was informed by SMPIs
President and Chief Executive Officer, Federico
Gonzalez , that to cut costs, the company is to
reorganize its manpower. The HR Department
allegedly furnished her a blank resignation form
which she refused to sign.

Gucaban complained of the ugly treatment
which she had since received from Gonzalez
and the management supposedly her refusal to
sign the resignation letter. She received an
evaluation report signed by Gonzalez showing
that for the covered period she had been
negligent and unsatisfactory in the performance
of her duties. It was supposedly the extreme
humiliation and alienation that impelled her to
resign.

SMPI argued that it truly encountered a steep
market decline in 1997 that would require the
abolition of certain job positions, project
development manager was one of such
positions. The company proposed to Gucaban
that she voluntarily resign from office in
consideration of a financial package. Gucaban,
however, did not communicate her acceptance
of the offer and conferred with the Human
Resource Department and negotiated to
augment her benefits package.

On the day before her effective date of
resignation, she signed a document
denominated as Receipt and Release whereby
she acknowledged receipt of P1,131,865.67
cash representing her monetary benefits and
waived her right to demand satisfaction of any
employment-related claims which she might
have against management.

The Labor Arbiter dismissed the complaint for
lack of merit.

The NLRC reversed the ruling of the Labor
Arbiter.

The CA affirmed the NLRCs finding of
illegal/constructive dismissal, but modified the
monetary award.

Issue: Whether her resignation is valid it being
voluntary.

Held: No.

Resignation the formal pronouncement or
relinquishment of a position or office is the
voluntary act of an employee who is in a
situation where he believes that personal
reasons cannot be sacrificed in favor of the
exigency of the service, and he has then no
other choice but to disassociate himself from
employment. The intent to relinquish must
concur with the overt act of relinquishment;43
hence, the acts of the employee before and after
the alleged resignation must be considered in
determining whether he in fact intended to
terminate his employment. In illegal dismissal
cases, fundamental is the rule that when an
employer interposes the defense of resignation,
on him necessarily rests the burden to prove
that the employee indeed voluntarily resigned.
SMPI was unable to discharge this burden.

While indeed the abolition of Gucabans position
as a consequence of petitioners supposed
reorganization plan is not the ground invoked in
this case of termination, still, the question of
whether or not there was such reorganization
plan in place at the time of Gucabans
separation from the company, is material to the
determination of whether her resignation was of
her own
volition.

SMPI, as proof, submitted a copy of its June 9,
1998 Memorandum which shows that new
appointments had been made to various
positions in the company. The said document
however said nothing of a reorganization
scheme.

While a reorganization of SMPIs corporate
structure happened only more than a year after

Gucabans separation from the company and
after she filed her complaint. SMPIs claim in this
respect all the more loses its bearing,
considering that said corporate restructuring was
brought about rather by the sudden change in
management than the need to cope with
business losses
There was still no concrete plan for a corporate
reorganization at the time Gonzalez presented
to Gucaban the seemingly last available
alternative options of voluntary resignation and
termination by abolition of her office. Certainly,
inasmuch as the necessity of corporate
reorganization generally lies within the exclusive
prerogative of management, Gucaban at that
point had no facility to ascertain the truth behind
it, and neither was she in a position to question it
right then and there
It is then understandable for Gucaban,
considering the attractive financial package
which SMPI admittedly offered to her, to opt for
resignation instead of suffer termination a
consequence the certainty of which she was
made to believe. As rightly noted by the Court of
Appeals, that there was no actual reorganization
plan in place when Gucaban was induced to
resign, and that she had been excluded from the
meetings of the management committee since
she refused to sign her resignation letter
followed by the soured treatment that caused
her humiliation and alienation, are matters which
SMPI has not directly addressed and
successfully refuted.50
The element of voluntariness in her resignation
is, therefore, missing. She had been
constructively and, hence, illegally dismissed as
indeed her continued employment is rendered
impossible, unreasonable or unlikely under the
circumstances.53 The observation made by the
Court of Appeals is instructive:
x x x As correctly noted by public respondent
NLRC, respondent Gucaban did not voluntarily
resign but was forced to do so because of
petitioners representation regarding its planned
reorganization. Mr. Gonzale[z] informed
respondent that if she does not resign from her
employment, she shall be terminated which
would mean less financial benefits than that
offered to her. When respondent initially refused,
petitioners subsequent actions as alleged by
respondent which were not rebutted by
petitioner, show that she is being eased out from
the company. Said actions rendered
respondents continuous employment with
petitioner impossible, unreasonable and unlikely.
x x x

x x x [R]esignation must be voluntary and made
with the intention of relinquishing the office,
accompanied with an act of relinquishment.
Indeed, it would have been illogical for private
respondent herein to resign and then file a
complaint for illegal dismissal. Resignation is
inconsistent with the filing of the said complaint.
x x x
x x x Since respondent could not have resigned
absent petitioners broaching to her the idea of
voluntary resignation instead of retrenchment,
coupled with petitioners acts of discrimination,
petitioner in effect forced respondent to resign.
The same is constructive dismissal and is a
dismissal without cause. x x x
San Miguel Properties Philippines, Inc. is
DIRECTED to pay respondent Gwendellyn Rose
S. Gucaban separation pay in lieu of
reinstatement and backwages.

---------------------------

(7) BGM Records Phils. Vs. Aperacio
September 5, 2007
Facts: The NLRC reversed the decision of the
Labor Arbiter that Aparecio, who was hired by
petitioner as a promo girl, voluntarily resigned
and was not illegally dismissed by petitioner. In
Aparacios complaint against petitioner, she
alleged that she was illegally dismissed and
before she was so terminated BMG records
offered her the benefits due her, like 1 month
pay for every year of service, 13th month pay,
overtime etc. on the condition that she will
tender her resignation letter. And so, with this
promise, poor Aperacio did tender her
resignation but alas the company did not fulfill
the promise it made to her. After seven years of

service for the company the latter broke her
heart. But the company offered another set of
facts, in their story it was Aperacio who
intimated to them her desire to resign. She even
asked the supervisor for some financial
assistance when she resigns but company
policy does not give any financial assistance to
employees who resign from work. The NLRC
said that the promo girl did not voluntarily resign
and was illegally dismissed by the company and
this was affirmed by the CA hence this appeal
by petitioners.

Issue: Did the promo girl resign from work out of
her own volition?

Held: Reading through the records would
ineluctably reveal that the evidence upon which
both the NLRC and the CA based their
conclusion rests on rather shaky foundation.
After careful analysis, this Court finds and so
holds that the submissions of Aparecio in all her
pleadings failed to substantiate the allegation
that her consent was vitiated at the time she
tendered her resignation and that petitioners are
guilty of illegal dismissal.It appears from the
resignation letter that she resigned in
consideration of the benefits that company
promised her. But there was no fraud attending
the resignation as posited by Aperacio.
Resignation is the voluntary act of an employee
who is in a situation where one believes that
personal reasons cannot be sacrificed in favor of
the exigency of the service, and one has no
other choice but to dissociate oneself from
employment.
Once an employee resigns and his resignation is
accepted, he no longer has any right to the job.
If the employee later changes his mind, he must
ask for approval of the withdrawal of his
resignation from his employer, as if he were re-
applying for the job. It will then be up to the
employer to determine whether or not his
service would be continued. If the employer
accepts said withdrawal, the employee retains
his job. If the employer does not x x x the
employee cannot claim illegal dismissal for the
employer has the right to determine who his
employees will be. To say that an employee who
has resigned is illegally dismissed, is to
encroach upon the right of employers to hire
persons who will be of service to them.
Certainly, what transpired here was caused by
an employee's error of judgment and not by the
employer's application of means vitiating the
consent to resign. It would be utterly unfair to
attribute to petitioners the commission of illegal
dismissal and to impose upon them the burden
of accepting back Aparecio who unequivocally
manifested her intent and willingness to sever
her employment ties.
-----------------------------------


Art. 286
(1) G.R. No. 177816 August 3, 2011
NIPPON HOUSING PHIL. INC., and/or
TADASHI OTA, HOROSHI TAKADA,
YUSUHIRO KAWATA, MR. NOBOYUSHI and
JOEL REYES Petitioners,
vs.
MAIAH ANGELA LEYNES, Respondent.
D E C I S I O N
PEREZ, J.:
FACTS:
NHPI hired respondent Maiah Angela Leynes
(Leynes) for the position of Property Manager.
Leynes had a misunderstanding with Engr.
Honesto Cantuba (Cantuba), the Building
Engineer assigned at the Project, regarding the
extension of the latters working hours. Hiroshi
Takada (Takada), NHPIs Vice President, went
on to issue the 12 February 2002 memorandum,
attributing the incident to "simple personal
differences" and directing Leynes to allow Engr.
Cantuba to report back for work.
Disappointed with the foregoing management
decision, Leynes submitted to Tadashi Ota,
NHPIs President, a letter asking for an
emergency leave of absence for the supposed
purpose of coordinating with her lawyer
regarding her resignation letter. While NHPI
offered the Property Manager position to Engr.
Carlos Jose on 13 February 2002 as a
consequence of Leynes signification of her
intention to resign, it also appears that Leynes

sent another letter to Reyes by telefax on the
same day, expressing her intention to return to
work on 15 February 2002 and to call off her
planned resignation upon the advice of her
lawyer. Having subsequently reported back for
work and resumed performance of her assigned
functions, Leynes was constrained to send out a
20 February 2002 written protest regarding the
verbal information she supposedly received from
Reyes that a substitute has already been hired
for her position. On 22 February 2002, Leynes
was further served by petitioner Yasuhiro
Kawata and Noboyushi Hisada, NHPIs Senior
Manager and Janitorial Manager, with a letter
and memorandum from Reyes, relieving her
from her position and directing her to report to
NHPIs main office while she was on floating
status.
Aggrieved, Leynes lost no time in filing against
NHPI and its above-named officers the a
complaint for illegal dismissal, unpaid salaries,
benefits, damages and attorneys fees. NHPI
and its officers asserted that the managements
exercise of the prerogative to put an employee
on floating status for a period not exceeding six
months was justified in view of her threatened
resignation from her position and BGCCs
request for her replacement. During the
pendency of the case, however, Reyes
eventually served the Department of Labor and
Employment (DOLE) and Leynes with the 8
August 2002 notice terminating her services
effective 22 August 2002, on the ground of
redundancy or lack of a posting commensurate
to her position at the Project.
ISSUE:
WHETHER PETITIONERS DECISION TO
PLACE RESPONDENT ON FLOATING
STATUS IS TANTAMOUNT TO
CONSTRUCTIVE DISMISSAL, hence, IS
GUILTY OF ILLEGAL DISMISSAL
HELD:
NO.
Traditionally invoked by security agencies when
guards are temporarily sidelined from duty while
waiting to be transferred or assigned to a new
post or client, Article 286 of the Labor Code has
been applied to other industries when, as a
consequence of the bona fide suspension of the
operation of a business or undertaking, an
employer is constrained to put employees on
floating status for a period not exceeding six
months. In brushing aside respondents reliance
on said provision to justify the act of putting
Leynes on floating status, the CA ruled that no
evidence was adduced to show that there was a
bona fide suspension of NHPIs business. What
said court clearly overlooked, however, is the
fact that NHPI had belatedly ventured into
building management and, with BGCC as its
only client in said undertaking, had no other
Property Manager position available to Leynes.
Considering that even labor laws discourage
intrusion in the employers judgment concerning
the conduct of their business, courts often
decline to interfere in their legitimate business
decisions, absent showing of illegality, bad faith
or arbitrariness. Indeed, the right of employees
to security of tenure does not give them vested
rights to their positions to the extent of depriving
management of its prerogative to change their
assignments or to transfer them. The record
shows that Leynes filed the complaint for actual
illegal dismissal from which the case originated
on 22 February 2002 or immediately upon being
placed on floating status as a consequence of
NHPIs hiring of a new Property Manager for the
Project. The rule is settled, however, that "off-
detailing" is not equivalent to dismissal, so long
as such status does not continue beyond a
reasonable time and that it is only when such a
"floating status" lasts for more than six months
that the employee may be considered to have
been constructively dismissed. A complaint for
illegal dismissal filed prior to the lapse of said
six-month and/or the actual dismissal of the
employee is generally considered as
prematurely filed.
----------------------------------------------------------------

There is said to be constructive dismissal when
an act of clear discrimination, insensitivity or
disdain on the part of the employer has become
so unbearable as to leave an employee with no
choice but to forego continued employment.
Constructive dismissal exists where there is
cessation of work because continued
employment is rendered impossible,
unreasonable or unlikely, as an offer involving a
demotion in rank and a diminution in pay. Stated
otherwise, it is a dismissal in disguise or an act
amounting to dismissal but made to appear as if
it were not.
With no other client aside from BGCC for the
building management side of its business, we
find that NHPI was acting well within its
prerogatives when it eventually terminated
Leynes services on the ground of redundancy.
One of the recognized authorized causes for the
termination of employment, redundancy exists
when the service capability of the workforce is in
excess of what is reasonably needed to meet
the demands of the business 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
service activity priorly undertaken by the
business.
-------------------------------
(2) G.R. No. 157634 May 16, 2005 PUNO, J.:
MAYON HOTEL & RESTAURANT, et. al.,
Petitioners vs. ROLANDO ADANA et. al.,
Respondents-by Angel Palattao
Facts:
Respondents were employed by petitioner hotel.
Due to the expiration and non-renewal of the
lease contract for the rented space occupied by
said hotel, the operations of the business were
suspended. The hotel transferred to a new
location while waiting for the construction of its
new site. This time, however, only 9 out of the
16 employees continued working in the new
location. The 16 employees filed complaints for
underpayment of wages and other money claims
and the 7 employees who were left out filed
complaints for illegal dismissal which was
upheld by the labor Arbiter. The NLRC, however
reversed the LAs ruling and decided in favor of
the hotel finding that no clear act of termination
is attendant in the case ate bar, which decision
was later set aside by the CA.
Issue:
WON there was mere temporary cessation of
operations by petitioner hotel precluding the
respondents to an award of separation pay.
Held:
The records were unequivocal that when
petitioner hotel suspended its operations and
transferred to a new location, 6 of the
respondents were no longer allowed to work and
the other one was laid off after the hotel
transferred to its new site even after the
construction, they were never recalled to work
for more than 3 years. Also from the records,
more than 6 mos. have lapsed without the hotel
having resumed operation. Art. 286 of the LC is
clear there is termination of employment when
an otherwise bona fide suspension of work
exceeds 6 mos. In this case, the cessation of
employment for more than 6 mos. was patent
and the employer has the burden of proving that
the termination was for a just or authorized
cause which the employer failed to do. At first,
petitioners claim that the employer-employee
relationship was merely suspended and
therefore the claim for separation pay was
premature and without factual and legal basis
invoking Art. 286 of the LC. On the other hand,
petitioners argued that they held respondents
particularly Loveres as responsible for
mismanagement of the business and for abuse
of trust and confidence. Petitioner asserts that
respondents are not entitled to separation pay
for they were not terminated and if ever, the

business ceased to operate, it was because of
losses. The vehemence of petitioners
accusation of mismanagement against
respondents is inconsistent with the desire to
recall them to work like what it claims in its first
contention that the suspension of operations
was merely temporary and that it was its
intention to recall the respondents to work.
Furthermore, the petitioner terminated all the
respondents after it had transferred to its new
site. All these when put together conclude that
petitioners really intended to dismiss all
respondents and merely used the termination of
the lease contract as means by which they could
terminate their employees. Moreover, even
assuming arguendo that the cessation of
employment was merely temporary, it became
dismissal by operation of law when petitioners
failed to reinstate respondents after the lapse of
6 mos. pursuant to Art. 286 of the LC. If it were
true that the lay off was temporary but then
serious business losses prevented the
reinstatement of respondents, petitioners should
have complied with the requirements of written
notice which they again failed to do. And even
assuming that the closure was due to a reason
beyond the control of petitioners, it still has to
accord its employees some relief in the form of
severance pay. The court awarded the illegally
dismissed employees with separation pay
except those already of retirable age, who were
nevertheless awarded retirement pay.
---------------------------------

Art. 287
(1) ROSENDO PIERO, DUMAGUETE
CATHEDRAL COLLEGE FACULTY AND
STAFF ASSOCIATION (DUCACOFSA) and
NATIONAL FEDERATION OF TEACHERS AND
EMPLOYEES UNION (NAFTEU), Petitioners,
vs. NATIONAL LABOR RELATIONS
COMMISSION, FOURTH DIVISION, CEBU
CITY and DUMAGUETE CATHEDRAL
COLLEGE, INC., Respondents.
G.R. No. 149610 August 20, 2004

Doctrine: An employee who is dismissed for
cause is generally not entitled to any financial
assistance. Equity considerations, however,
provide an exception. Equity has been defined
as justice outside law, being ethical rather than
jural and belonging to the sphere of morals than
of law. It is grounded on the precepts of
conscience and not on any sanction of positive
law, for equity finds no room for application
where there is law.
Facts: Private respondent Dumaguete Cathedral
College, Inc., an educational institution, is the
employer of the faculty and staff members
comprising the labor union DUCACOFSA-
NAFTEU. On December 19, 1986,
DUCACOFSA (then affiliated with the National
Alliance of Teachers and Allied Workers
NATAW) and private respondent entered into a
Collective Bargaining Agreement (CBA) effective
for 3 years. Upon the expiration of their CBA in
1989, the parties failed to conclude another CBA
which led DUCACOFSA (now affiliated with
NAFTEU) to file a notice of strike with the
Department of Labor and Employment (DOLE)
on the ground of refusal to bargain.
On November 4, 1991, DUCACOFSA-
NAFTEU conducted a strike in the premises of
private respondent without submitting to the
DOLE the required results of the strike vote
obtained from the members of the union.
Consequently, on November 21, 1991,
private respondent filed with the DOLE a
complaint to declare the strike illegal and to
dismiss the officers of DUCACOFSA-NAFTEU.
On October 28, 1994, the Labor Arbiter
rendered a decision declaring the strike illegal
and declaring the union officers to have lost their
employment status effective on the date of this
decision.
On December 19, 1995, the NLRC affirmed the
decision of the Labor Arbiter.

Issue: (1) Whether or not petitioner Pinero
should be dismissed for participating in illegal
strike.
(2) Whether or not petitioner should be
entitled to retirement benefits.
Held: 1. YES. There is no doubt that the strike
staged by DUCACOFSA-NAFTEU is illegal for
non-compliance with the strike-vote
requirements.
The requisites for a valid strike are as follows:
(a) a notice of strike filed with the DOLE thirty
days before the intended date thereof or fifteen
days in case of unfair labor practice; (b) strike
vote approved by a majority of the total union
membership in the bargaining unit concerned
obtained by secret ballot in a meeting called for
that purpose; (c) notice given to the DOLE of the
results of the voting at least seven days before
the intended strike. These requirements are
mandatory and failure of a union to comply
therewith renders the strike illegal.
Pursuant to Article 264 of the Labor Code, any
union officer who knowingly participates in an
illegal strike and any worker or union officer who
knowingly participates in the commission of
illegal acts during a strike may be declared to
have lost his employment status.
In the case at bar, DUCACOFSA-NAFTEU failed
to prove that it obtained the required strike-vote
among its members and that the results thereof
were submitted to the DOLE. The strike was
therefore correctly declared illegal, for non-
compliance with the procedural requirements of
Article 263 of the Labor Code, and Piero
properly dismissed from service.
The Court notes that petitioner Piero turned 60
years old and retired on March 1, 1996 after 29
years of service, rendering his dismissal from
service moot and academic. However, in view
of the propriety of his termination as a
consequence of the illegal strike, he is no longer
entitled to payment of retirement benefits

because he lost his employment status effective
as of the date of the decision of the Labor
Arbiter October 28, 1994.
2. Yes. An employee who is dismissed for cause
is generally not entitled to any financial
assistance. Equity considerations, however,
provide an exception. Equity has been defined
as justice outside law, being ethical rather than
jural and belonging to the sphere of morals than
of law. It is grounded on the precepts of
conscience and not on any sanction of positive
law, for equity finds no room for application
where there is law.
Although meriting termination of employment,
Pieros infraction is not so reprehensible nor
unscrupulous as to warrant complete disregard
of his long years of service. Moreover, he has no
previous derogatory records. Weighed on the
scales of justice, conscience and reason tip in
favor of granting financial assistance to support
him in the twilight of his life after long years of
service.
Under the circumstances, social and
compassionate justice dictate that petitioner
Piero be awarded financial assistance
equivalent to one-half (1/2) months pay for
every year of service computed from his date of
employment up to October 28, 1994 when he
was declared to have lost his employment
status. Indeed, equities of this case should be
accorded due weight because labor law
determinations are not only secundum rationem
but also secundum caritatem.
-----------------------------------------
(2) Sta. catalina colleges vs NLRC
Gr. 144438; nov. 19,2003
Carpio-morales, J:
Facts: Hilaria was hired by petitioner school as
an elemnlentary teacher on 1955. on 1970, she
applied for leave without pay bevause of her
mothers illness and was granted by the school.
at the expiration of her leave, she did not return
to work. on 1980-1982, she was employed at
different schools as a teacher. afterwhich she re-
applied for a teaching job in 1983 at petitikner
school and was rehired. on 1997, she was
awarded a Plaque of appreciation for 30 years
of service. in the same year, Hilaria retired
purauant to art.287 of the Labor Code at the
age of 65. she was then granted retirement
benefits computed from 1982-1997 for 15 years.
Hilaria contends that her retirement benefits
should be computed on the basis of 30 years of
service, counting he years prior her leave
without pay.
Issue: WON Hilaria's retirement pay should
include her employment prior her leave

Held: Abandonment of work being a just cause
for terminating the services of Hilaria, petitioner
school was under no obligation to serve a
written notice to her.
That Hilaria was in 1997 given a plaque of
appreciation for thirty years of service to the
school and awarded P12,000.00 as gratuity pay
should not be taken against petitioners, for
acknowledgment of the total number of years of
her service, which was discontinuous, should
not obliterate the fact that she abandoned her
employment in 1971, albeit she was rehired in
1982.
It was error too for the CA to conclude that since
petitioner school did not award separation pay
and Hilarias share of her retirement
contributions when she temporarily stopped
working after she left her teaching position in
1971, employer-employee relation between
them was not severed. It bears noting that an
employee who is terminated for just cause is
generally not entitled to separation pay.
Moreover, the PERAA, petitioner schools
substitute retirement plan, was only established
in 1972, such that when Hilaria abandoned her

work in 1971, there were no retirement
contributions to speak of.
As Hilaria was considered a new employee
when she rejoined petitioner school upon re-
applying in 1982, her retirement benefits should
thus be computed only on the basis of her years
of service from 1982 to 1997. This is what JAM
Transportation Co., Inc. v. Flores[25] teaches:
Private respondents re-employment as a new
employee x x x would mean a demotion in rank
and privileges, retirement benefits, for example,
as his entire previous eighteen (18) years of
service with petitioner, would simply be
considered as non-existent.
This Court is not unmindful of Hilarias rendition
of a total of thirty years of teaching in petitioner
school and should be accorded ample support in
her twilight years. Petitioner school in fact
acknowledges her dedicated service to its
students. She can, however, only be awarded
with what she is rightfully entitled to under the
law. So Sosito v. Aguinaldo Development
Corporation dictates:[26]
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.
Out of its concern for those with less privilege in
life, this Court has inclined more often than not
toward the worker and upheld his cause in his
conflicts with the employer. Such favoritism,
however, has not blinded us to the rule that
justice is in every case for the deserving, to be
dispensed in the light of the established facts
and the applicable law and doctrine.
--------------------------------
(3) G.R. No. 95940 July 24, 1996
PANTRANCO NORTH EXPRESS, INC.,
petitioner, vs. NATIONAL LABOR RELATIONS
COMMISSION and URBANO SUIGA,
respondents.
PANGANIBAN, J.:p

FACTS: Private respondent was hired by
petitioner in 1964 as a bus conductor. He
eventually joined the Pantranco Employees
Association-PTGWO. He continued the
petitioner's employ until August 12, 1989, when
he was retired at the age of fifty-two (52) after
having rendered twenty five years' service. The
basis of his retirement was the compulsory
retirement provision of the collective bargaining
agreement between the petitioner and the
aforenamed union. Private respondent received
P49,300.00 as retirement pay.
Private respondent filed a complaint for illegal
dismissal against petitioner with the Sub-
Regional Arbitration Branch of the respondent
Commission in Dagupan City.
LA & NLRC: Private respondent was illegally
dismissed and ordered for his reinstatement.
ISSUES:
1. Who has jurisdiction over a case involving
such a question the labor arbiter or arbitrators
authorized by such CBA?
2. Is a Collective Bargaining Agreement
provision allowing compulsory retirement before
age 60 but after twenty five years of service
legal and enforceable?
HELD:
1. Jurisdiction of Labor Arbiter
It cannot be said that the "dispute" is between
the union and petitioner company because both
have previously agreed upon the provision on

"compulsory retirement" as embodied in the
CBA. Also, it was only private respondent on his
own who questioned the compulsory retirement.
Thus, the case is properly denominated as a
"termination dispute" which comes under the
jurisdiction of labor arbiters.
2. Private Respondent's Compulsory Retirement
Is Not Illegal Dismissal
Compulsory retirement in the CBA: Upon
reaching the age of sixty (60) years or upon the
completing twenty-five (25) years of service to
the COMPANY, whichever comes first, and the
employee shall be compulsorily retired and paid
the retirement benefits herein provided.
Art. 287 of the Labor Code as worded permits
employers and employees to fix the applicable
retirement age at below 60 years. Moreover,
providing for early retirement does not constitute
diminution of benefits. In almost all countries
today, early retirement, i.e., before age 60, is
considered a reward for services rendered since
it enables an employee to reap the fruits of his
labor particularly retirement benefits, whether
lump-sum or otherwise at an earlier age,
when said employee, in presumably better
physical and mental condition, can enjoy them
better and longer. As a matter of fact, one of the
advantages of early retirement is that the
corresponding retirement benefits, usually
consisting of a substantial cash windfall, can
early on be put to productive and profitable uses
by way of income-generating investments,
thereby affording a more significant measure of
financial security and independence for the
retiree who, up till then, had to contend with life's
vicissitudes within the parameters of his
fortnightly or weekly wages. Thus we are now
seeing many CBA's with such early retirement
provisions. And the same cannot be considered
a diminution of employment benefits.
A CBA incorporates the agreement reached
after negotiations between employer and
bargaining agent with respect to terms and
conditions of employment. A CBA is not an
ordinary contract. "(A)s a labor contract within
the contemplation of Article 1700 of the Civil
Code of the Philippines which governs the
relations between labor and capital, (it) is not
merely contractual in nature but impressed with
public interest, thus it must yield to the common
good. As such, it must be construed liberally
rather than narrowly and technically, and the
courts must place a practical and realistic
construction upon it, giving due consideration to
the context in which it is negotiated and purpose
which it is intended to serve.
Being a product of negotiation, the CBA
between the petitioner and the union intended
the provision on compulsory retirement to be
beneficial to the employees-union members,
including herein private respondent. When
private respondent ratified the CBA with the
union, he not only agreed to the CBA but also
agreed to conform to and abide by its provisions.
Thus, it cannot be said that he was illegally
dismissed when the CBA provision on
compulsory retirement was applied to his case.
Republic Act No. 7641, known as "The
Retirement Pay Law", which went into effect on
January 7, 1993. Although passed many years
after the compulsory retirement of herein private
respondent, nevertheless, the said statute sheds
light on the present discussion when it amended
Art. 287 of the Labor Code, to make it read as
follows:
Art. 287. Retirement Any employee may be
retired upon reaching the retirement age
established in the collective bargaining
agreement or other applicable employment
contract.
xxx xxx xxx
In the absence of a retirement plan or
agreement providing for retirement benefits of
employees in the establishment, an employee
upon reaching the age of sixty (60) years or
more, but not beyond sixty-five (65) years which
is hereby declared the compulsory retirement

age, who has served at least five (5) years in the
said establishment may retire . . . .
The aforequoted provision makes clear the
intention of spirit of the law to give employers
and employees a free hand to determine and
agree upon the terms and conditions of
retirement. Providing in a CBA for compulsory
retirement of employees after twenty-five (25)
years of service is legal and enforceable so long
as the parties agree to be governed by such
CBA. The law presumes that employees know
what they want and what is good for them
absent any showing that fraud or intimidation
was employed to secure their consent thereto.
On this point then, public respondent committed
a grave abuse of discretion in affirming the
decision of the labor arbiter. The compulsory
retirement of private respondent effected in
accordance with the CBA is legal and binding.
----------------------------------
(4) R & E TRANSPORT INC and ENRIQUEZ
VS LATAG, representing her deceased husband
PEDRO LATAG (Pascasio)

February 13, 2004, GR No 155214, J.
Panganiban

DOCTRINE
Taxi drivers not entitled to 13th month pay or
service incentive leave thus their retirement pay
should be computed on the sole basis of his
salary.

FACTS
Pedro Latag was a regular employee of La
Mallorca since March 1, 1961 receiving a daily
salary of 500 per day as a taxi driver. La
Mallorca ceased operations and he was
transferred to R&E Transport Inc, petitioner.
When he got sick, he asked petitioner for his
retirement pay but he was ignored. Thus, he
filed a case for payment of his retirement pay
before the NLRC.
He later died while the case was pending and
his wife substituted him.

Labor Arbiter ruled in favor of Latag and ordered
Mallorca, R&E transport to pay him the sum of P
277,500 as his retirement pay computing the
creditable number of years of service to a total
of 37 years, which is the 23 years of
employment with La Mallorca added to his 14
years with R&E Transport. The NLRC reversed
LAs decision and found that Pedro must be
credited only with his 14 years of employment
with R&E.

However, his wife accepted petitioner R&Es
offer of P38,500 and was asked to sign a
quitclaim and a joint motion to dismiss.

ISSUE:
Whether or not the basis for computing Pedros
retirement pay should only be the 14 years of
service with R&E Transport Inc.

RULING

YES. Undisputably, Pedro M. Latag was
credited with 14 years of service with R & E
Transport, Inc only.There was no showing that
La Mallorca and R&E are one and the same
corporate entity since there was no stock control
and complete domination over one and the other
taxi company and vice versa.

Article 287 of the Labor Code, as amended by
Republic Act No. 7641, provides:

x x x x x x x x x
age, who has served at least five (5) years in
said establishment, may retire and shall be
entitled to retirement pay equivalent to at least
one-half (1/2) month salary for every year of

service, a fraction of at least six (6) months
being considered as one whole year.
Unless the parties provide for broader
inclusions, the term one half-month salary shall
mean fifteen (15) days plus one-twelfth (1/12) of
the 13th month pay and the cash equivalent of
not more than five (5) days of service incentive
leaves.

It is accepted that taxi drivers do not receive
fixed wages, but retain only those sums in
excess of the boundary or fee they pay to the
owners or operators of their vehicles. Pedro is
not entitled to 13th month pay or service
incentive leave thus his retirement pay should
be computed on the sole basis of his salary.
Thus, the basis for computing their benefits
should be the average daily income. Since
Pedro was earning an average of (P500) per
day.

We thus compute his retirement pay as follows:
P500 x 15 days x 14 years of service equals
P105,000. Consequently he is entitled to
retirement pay of P105,000 less the P38,850
which has already been received by respondent,
plus 6% interest from December 21, 1998 until
its full payment.
-----------------------------------------

(5) RODOLFO J. SERRANO vs. SEVERINO
SANTOS TRANSIT and/or SEVERINO
SANTOS
G.R. No. 187698 August 9, 2010

Doctrine:
Retirement pay; applicability to employees on
commission basis: Even if the petitioner asbus
conductor was paid on commission basis, he
falls within the coverage of R.A. 7641 and
itsimplementing rules. Thus, his retirement pay
should include the cash equivalent of 5-days SIL
and 1/12of 13th month pay. The NLRCs
reliance on the case of R & E Transport, Inc. as
a basis for ruling thatbus conductors are not
covered by the law on SIL and 13th month pay
is erroneous since that involved ataxi driver who
was paid according to the boundary system.
There is a difference between driverspaid under
the boundary system and conductors who are
paid on commission basis. In practice,
taxidrivers do not receive fixed wages and retain
only those sums in excess of the boundary or
fee theypay to the owners or operators of the
vehicles. Conductors, on the other hand, are
paid a certainpercentage of the bus earnings for
the day.

Facts:
Petitioner was hired on September 28, 1992 as
bus conductor by respondent Severino Santos
Transit, a bus company owned and operated by
its co-respondent Severino Santos.

After 14 years of service, petitioner applied for
optional retirement from the company whose
representative advised him that he must first
sign the already prepared Quitclaim before his
retirement pay could be released. As
petitioners request to first go over the
computation of his retirement pay was denied,
he signed the Quitclaim on which he wrote
U.P. (under protest) after his signature,
indicating his protest to the amount of
P75,277.45 which he received, computed by the
company at 15 days per year of service.

Petitioner soon after filed a complaint before the
LA, alleging that the company erred in its
computation since under Republic Act No. 7641,
otherwise known as the Retirement Pay Law, his
retirement pay should have been computed at
22.5 days per year of service to include the cash
equivalent of the 5-day service incentive leave
(SIL) and 1/12 of the 13th month pay which the
company did not.

The company maintained, however, that the
Quitclaim signed by petitioner barred his claim
and, in any event, its computation was correct
since petitioner was not entitled to the 5-day SIL
and pro-rated 13th month pay for, as a bus
conductor, he was paid on commission basis.
Respondents, noting that the retirement
differential pay amounted to only P1,431.15,
explained that in the computation of petitioners

retirement pay, five months were inadvertently
not included because some index cards
containing his records had been lost.
By Decision of February 15, 2007, LA Jr. ruled in
favor of petitioner, awarding him P116,135.45 as
retirement pay differential, and 10% of the total
monetary award as attorneys fees.

The NLRC to which respondents appealed
reversed the Labor Arbiters ruling and
dismissed petitioners complaint by Decision
dated April 23, 2008. It, however, ordered
respondents to pay retirement differential in the
amount of P2,365.35. Citing R & E Transport,
Inc. v. Latag, the NLRC held that since petitioner
was paid on purely commission basis, he was
excluded from the coverage of the laws on 13th
month pay and SIL pay, hence, the 1/12 of the
13th month pay and the 5-day SIL should not be
factored in the computation of his retirement
pay.
Petitioners motion for reconsideration having
been denied, he appealed to the Court of
Appeals which affirmed the NLRCs ruling, it
merely holding that it was based on substantial
evidence, hence, should be respected.
Petitioners motion for reconsideration was
denied, hence, the present petition for review on
certiorari.

Issue: Whether or not the computation of
respondent in determining the retirement pay of
Serrano was correct?

Held: The petition is meritorious.
Republic Act No. 7641 which was enacted on
December 9, 1992 amended Article 287 of the
Labor Code by providing for retirement pay to
qualified private sector employees in the
absence of any retirement plan in the
establishment. The pertinent provision of said
law reads:
Section 1. Article 287 of Presidential Decree
No. 442, as amended, otherwise known as the
Labor Code of the Philippines, is hereby
amended to read as follows:

x x x x
age, who has served at least five (5) years in the
said establishment, may retire and shall be
entitled to retirement pay equivalent to at least
one-half (1/2) month salary for every year of
service, a fraction of at least six (6) months
being considered as one whole year.
Unless the parties provide for broader
inclusions, the term one-half (1/2) month salary
shall mean fifteen (15) days plus one-twelfth
(1/12) of the 13th month pay and the cash
equivalent of not more than five (5) days of
service incentive leaves.

Retail, service and agricultural establishments or
operations employing not more than (10)
employees or workers are exempted from the
coverage of this provision. x x x x (emphasis
and underscoring supplied)
Further, the Implementing Rules of said law
provide:

RULE II: Retirement Benefits

SECTION 1.
General Statement on Coverage. This Rule
shall apply to all employees in the private sector,
regardless of their position, designation or status
and irrespective of the method by which their
wages are paid, except to those specifically
exempted under Section 2 hereof. As used
herein, the term Act shall refer to Republic Act
No. 7641 which took effect on January 7, 1993.

SECTION 2 : Exemptions. This Rule shall not
apply to the following employees:
2.1 Employees of the National Government and
its political subdivisions, including Government-
owned and/or controlled corporations, if they are
covered by the Civil Service Law and its
regulations.
2.2 Domestic helpers and persons in the
personal service of another.

2.3 Employees of retail, service and agricultural
establishment or operations regularly employing
not more than ten (10) employees. As used in
this sub-section;
x x x x

SECTION 5 :Retirement Benefits.
5.1 In the absence of an applicable agreement
or retirement plan, an employee who retires
pursuant to the Act shall be entitled to retirement
pay equivalent to at least one-half () month
salary for every year of service, a fraction of at
least six (6) months being considered as one
whole year.
5.2 Components of One-half () Month Salary.
For the purpose of determining the minimum
retirement pay due an employee under this
Rule, the term one-half month salary shall
include all of the following:
(a) Fifteen (15) days salary of the employee
based on his latest salary rate. As used herein,
the term salary includes all remunerations paid
by an employer to his employees for services
rendered during normal working days and hours,
whether such payments are fixed or ascertained
on a time, task, piece of commission basis, or
other method of calculating the same, and
includes the fair and reasonable value, as
determined by the Secretary of Labor and
Employment, of food, lodging or other facilities
customarily furnished by the employer to his
employees. The term does not include cost of
living allowances, profit-sharing payments and
other monetary benefits which are not
considered as part of or integrated into the
regular salary of the employees.
(b) The cash equivalent of not more than five (5)
days of service incentive leave;
(c) One-twelfth of the 13th month pay due the
employee.
(d) All other benefits that the employer and
employee may agree upon that should be
included in the computation of the employees
retirement pay.
x x x x (emphasis supplied)
Admittedly, petitioner worked for 14 years for the
bus company which did not adopt any retirement
scheme. Even if petitioner as bus conductor
was paid on commission basis then, he falls
within the coverage of R.A. 7641 and its
implementing rules. As thus correctly ruled by
the Labor Arbiter, petitioners retirement pay
should include the cash equivalent of the 5-day
SIL and 1/12 of the 13th month pay.

The affirmance by the appellate court of the
reliance by the NLRC on R & E Transport, Inc. is
erroneous. In said case, the Court held that a
taxi driver paid according to the boundary
system is not entitled to the 13th month and
the SIL pay, hence, his retirement pay should be
computed on the sole basis of his salary.
For purposes, however, of applying the law on
SIL, as well as on retirement, the Court notes
that there is a difference between drivers paid
under the boundary system and conductors
who are paid on commission basis.
In practice, taxi drivers do not receive fixed
wages. They retain only those sums in excess
of the boundary or fee they pay to the owners
or operators of the vehicles. Conductors, on the
other hand, are paid a certain percentage of the
bus earnings for the day.

It bears emphasis that under P.D. 851 or the SIL
Law, the exclusion from its coverage of workers
who are paid on a purely commission basis is
only with respect to field personnel. The more
recent case of Auto Bus Transport Systems,
Inc., v. Bautista clarifies that an employee who is
paid on purely commission basis is entitled to
SIL:
A careful perusal of said provisions of law will
result in the conclusion that the grant of service
incentive leave has been delimited by the
Implementing Rules and Regulations of the
Labor Code to apply only to those employees
not explicitly excluded by Section 1 of Rule V.
According to the Implementing Rules, Service
Incentive Leave shall not apply to employees
classified as field personnel. The phrase
other employees whose performance is
unsupervised by the employer must not be
understood as a separate classification of
employees to which service incentive leave shall
not be granted. Rather, it serves as an

amplification of the interpretation of the definition
of field personnel under the Labor Code as
those whose actual hours of work in the field
cannot be determined with reasonable
certainty.

The same is true with respect to the phrase
those who are engaged on task or contract
basis, purely commission basis. Said phrase
should be related with field personnel, applying
the rule on ejusdem generis that general and
unlimited terms are restrained and limited by the
particular terms that they follow. Hence,
employees engaged on task or contract basis or
paid on purely commission basis are not
automatically exempted from the grant of service
incentive leave, unless, they fall under the
classification of field personnel.
x x x x

According to Article 82 of the Labor Code, field
personnel shall refer to non-agricultural
employees who regularly perform their duties
away from the principal place of business or
branch office of the employer and whose actual
hours of work in the field cannot be determined
with reasonable certainty. This definition is
further elaborated in the Bureau of Working
Conditions (BWC), Advisory Opinion to
Philippine Technical-Clerical Commercial
Employees Association which states that:
As a general rule, [field personnel] are those
whose performance of their job/service is not
supervised by the employer or his
representative, the workplace being away from
the principal office and whose hours and days of
work cannot be determined with reasonable
certainty; hence, they are paid specific amount
for rendering specific service or performing
specific work. If required to be at specific places
at specific times, employees including drivers
cannot be said to be field personnel despite the
fact that they are performing work away from the
principal office of the employee.

-------------------------------------
(6) Obusan vs. PNB
GR No. 181178; July 26, 2010

Nachura, J:

Doctrine:
The retirement age is primarily
determined by the existing agreement or
employment contract. Absent such an
agreement, the retirement age under Article 287
of the Labor Code will apply.

Facts:
Herein petitioner was employed by PNB
in 1979 when it was still a government-owned
and controlled corporation. As such, PNB's
retirement plan was administered by GSIS
pursuant to PD 1146 (Revised Government
Insurance Act of 1977). However in 1996, PNB
was privatized and pursuant to its charter, the
effect of privatization shall cease PNB's status
as a GOCC and shall thereafter be governed by
the rules governing private banks. Consequent
to the privatization, all PNB employees,
including Obusan, were deemed retired from the
government service. The GSIS confirmed
Obusans retirement from the government
service, and accordingly paid her retirement
gratuity. Thereafter, Obusan continued to be an
employee of PNB as a private bank.
Later on, in 2000 the PNB Board
approved its Regular Retirement Plan (RRP)
wherein the bank imposed that the mandatory
retirement age of its employees shall be 60
years old, the said plan was registered with the
BIR and subsequently recognized by the PNB
Employees Union in their CBA. There was no
opposition to the said plan.
However, on 2002 Obusan was notified
that she will be compulsorily retired upon
reaching 60 years old pursuant to the Regular
Retirement Plan, this was opposed by Obusan
and threatened that she will take legal action
against PNB for illegal dismissal and union
busting since she was also the president of the
supervisors union.
In a letter to Obusan, PNB maintained
that the compulsory retirement under their
retirement plan is not contrary to law and is not
aimed at union busting. Obusan on the other

hand sued for illegal dismissal and ULP,
claiming that PNB could not compulsorily retire
her at the age of 60 years, with her having a
vested right to be retired only at 65 years old
pursuant to civil service regulations. She further
contends that the RRP does not apply to her
since she was employed prior to its
implementation and as such, Art. 287 should
prevail, entitling her to retire at age 65.
The Labor Arbiter dismissed the
complaint, the NLRC and the CA also affirmed
the LA's dismissal. Hence Obusan sought
recourse before the Supreme Court.

Issue:
Whether or not the new Regular
Retirement Plan applies to Obusan?

Held:
Yes, under Art. 287, the retirement age is
primarily determined by the existing agreement
or employment contract. Absent such an
agreement, the retirement age shall be fixed by
law. The above-cited law mandates that the
compulsory retirement age is at 65 years, while
the minimum age for optional retirement is set at
60 years. Moreover, Article 287 of the Labor
Code, as amended, applies only to a situation
where (1) there is no CBA or other applicable
employment contract providing for retirement
benefits for an employee; or (2) there is a
collective bargaining agreement or other
applicable employment contract providing for
retirement benefits for an employee, but it is
below the requirement set by law. The rationale
for the first situation is to prevent the absurd
situation where an employee, deserving to
receive retirement benefits, is denied them
through the nefarious scheme of employers to
deprive employees of the benefits due them
under existing labor laws. The rationale for the
second situation is to prevent private contracts
from derogating from the public law.
In this case, Obusan was initially hired in
1979 as a government employee, PNB then
being a government-owned and controlled
corporation. As such, she was governed by civil
service laws, and the compulsory retirement
age, as imposed by law, was at 65 years.
Peculiar to her situation, however, was that the
corporate entity that hired her ceased to be
government-owned and controlled when it was
privatized in 1996. As a result of the privatization
of PNB, all of its officers and employees were
deemed retired from the government service.
Consequently, many of them, Obusan included,
received their respective retirement gratuities.
It cannot be said that the PNB-RRP is a
retirement plan providing retirement benefits
less than what the law requires. In fact, in the
computation of the employees retirement pay,
the plan factored what Article 287 requires.
Retirement plans allowing employers to
retire employees who have not yet reached the
compulsory retirement age of 65 years are not
per se repugnant to the constitutional guaranty
of security of tenure. By its express language,
the Labor Code permits employers and
employees to fix the applicable retirement age at
60 years or below, provided that the employees
retirement benefits under any CBA and other
agreements shall not be less than those
provided therein. By this yardstick, the PNB-
RRP complies.
Moreover, PNB had disseminated
information on the RRP before implementation
giving the employees sufficient notice of its
provisions and an opportunity to question it; not
only was there no opposition but it was
recognized by the union. The SC had also ruled
in previous cases that consultation was not a
requirement as this would constrict management
prerogative.
In summation, the RRP is a valid
retirement plan, therefore the compulsory
retirement age of 60 for PNB employees is not
contrary to law, and the same applies to
Obusan.

----------------------------------


Art. 291

(1) G.R. No. 139420 August 15, 2001
ROBERTO R. SERRANO, petitioner,
vs.
COURT OF APPEALS, NATIONAL LABOR
RELATIONS COMMISSION, MAERSK-
FILIPINAS CREWING, INC. and A.P. MOLLER,
respondents.
PUNO,J.:


FACTS: From 1974 to 1991, respondent
Maersk-Filipinas Crewing, Inc., the local agent of
respondent foreign corporation A.P. Moller,
deployed petitioner Serrano as a seaman to
Liberian, British and Danish ships.1 As petitioner
was on board a ship most of the time,
respondent Maersk offered to send portions of
petitioner's salary to his family in the Philippines.
The amounts would be sent by money order. It
appears that petitioner's family failed to receive
the money orders petitioner sent through
respondent Maersk.3 Upon learning this in 1978,
petitioner demanded that respondent Maersk
pay him the amounts the latter deducted from
his salary. Respondent Maersk assured him that
they would look into the matter, then assigned
him again to board one of their vessels.

Whenever he returned to the Philippines,
petitioner would go to the office of respondent
Maersk to follow up his money claims but he
would be told to return after several weeks as
respondent Maersk needed time to verify its
records and to bring up the matter with its
principal employer, respondent A.P. Moller.

In April 1994, petitioner filed a complaint for
collection of the total amount of the unsent
money orders and illegal salary deductions
against the respondent Maersk in the Philippine
Overseas Employment Agency (POEA).
WHEREFORE, judgment is hereby made
ordering the respondent and/or TICO Insurance
Co., Inc. to refund to complainant his
untransmitted money order payment of
HK$4,600 and 1,050 Sterling Pounds.
Respondent Maersk appealed to the NLRC the
Labor Arbiter's grant of the claim for the amount
of unsent money orders. The NLRC reversed
and set side Labor Arbiter Amansec's decision
and dismissed the case on the ground of
prescription. Petitioner sought recourse in the
Court of Appeals. The appellate court dismissed
his petition for having been filed out of time.
HENCE, THIS PETITION.
ISSUE: Whether or not the claim of petitioner on
the unsent money orders has already
prescribed.
HELD: No. ARTICLE 291. Money claims. All
money claims arising from employer-employee
relations accruing during the effectivity of this
Code shall be filed withinthree years from the
time the cause of action accrued, otherwise they
shall be forever barred. Petitioner's cause of
action accrued in November 1993 upon
respondent Maersk's definite denial of his
money claims following this Court's ruling in the
similar case ofBaliwag Transit, Inc. v. Ople.
It is settled jurisprudence thata cause of action
has three elements, to wit, (1) a right in favor of
the plaintiff by whatever means and under
whatever law it arises or is created; (2) an
obligation on the part of the named defendant to
respect or not to violate such right; and (3) an
act or omission on the part of such defendant
violative of the right of the plaintiff or constituting
a breach of the obligation of the defendant to the
plaintiff .

The facts in the case at bar are similar to the
Baliwag case. Petitioner repeatedly demanded
payment from respondent Maersk but similar to
the actuations of Baliwag Transit in the above
cited case, respondent Maersk warded off these
demands by saying that it would look into the
matter until years passed by. In October 1993,
Serrano finally demanded in writing payment of
the unsent money orders. Then and only then
was the claim categorically denied by
respondent A.P. Moller in its letter dated
November 22, 1993. Following the Baliwag
Transit ruling, petitioner's cause of action
accrued only upon respondent A.P. Moller's
definite denial of his claim in November 1993.
Having filed his action five (5) months thereafter
or in April 1994, we hold that it was filed within
the three-year (3) prescriptive period provided in

WHEREFORE, the petition is GRANTED and
the impugned resolutions of the Court of
Appeals dated June 18, 1999 and July 15, 1999
are REVERSED and SET ASIDE.
-----------------------------------------


(2) INTERCONTINENTAL BROADCASTING
CORPORATION VS PANGANIBAN
GR NO 151407, FEBRUARY 6, 2007
J CHICO-NAZARIO

FACTS
Ireneo Panganiban (respondent) was
employed as Assistant General Manager of the
Intercontinental Broadcasting Corporation
(petitioner) from May 1986 until his preventive
suspension on August 26, 1988. Respondent
resigned from his employment on September 2,
1988. On April 12, 1989, respondent filed with
the Regional Trial Court of Quezon City, Branch
93, Civil Case No. Q-89-2244 against the
members of the Board of Administrators (BOA)
of petitioner alleging, among others, non-
payment of his unpaid commissions.

A motion to dismiss was filed by Joselito
Santiago, one of the defendants, on the ground
of lack of jurisdiction, as respondent's claim was
a labor money claim, but this was denied by the
RTC per Orders dated October 19, 1990 and
November 23, 1990.

Thus, Santiago filed a petition for
certiorari with the CA, docketed as CA-G.R. SP
No. 23821, and in a Decision dated October 29,
1991, the CA granted Santiago's petition for lack
of jurisdiction and set aside the RTC's Orders
dated October 19, 1990 and November 23,
1990.

Thereafter, respondent was elected by
the BOA as Vice-President for Marketing in July
1992. He resigned in April 1993.

On July 24, 1996, respondent filed against
petitioner a complaint for illegal dismissal,
separation pay, retirement benefits, unpaid
commissions, and damages.

In a Decision dated September 23, 1997,
the Labor Arbiter (LA) ordered respondent's
reinstatement with full backwages, and the
payment of his unpaid commission in the
amount of P2,521,769.77, damages and
attorney's fees.

Petitioner appealed to the National Labor
Relations Commission (NLRC) but due to
petitioner's failure to post a bond, the appeal
was dismissed on February 26, 1998, in a
Decision that was deemed final and executory.

Petitioner filed a motion for
reconsideration of the NLRC's dismissal, which
was denied per Resolution dated March 25,
1998.

Petitioner then filed a petition with this
Court but the same was referred to the CA in
view of the ruling in St. Martin Funeral Home v.
National Labor Relations Commission, 356 Phil.
811 (1998).

On July 30, 1999, the CA rendered its
Decision, the dispositive portion of which reads:

WHEREFORE, the instant petition is
GRANTED. The challenged Order of February
26, 1998 and Resolution dated March 25, 1998
of public respondent NLRC in NLRC NCR CA
013845-97 as well as the Decision of the Labor
Arbiter in NLRC NCR 00-07-04614-96 are
hereby annulled, reversed and set aside and the
claims of private respondent for reinstatement,
backwages and benefits in conjunction with his
employment from 1986 to 1988 have prescribed.
The complaint in connection with his
appointment as Vice-President for Marketing
from July, 1992 to April 26, 1993 is within the
jurisdiction of the Securities and Exchange
Commission and NLRC NCR 00-07-04614-96 is
dismissed for lack of jurisdiction.

Respondent filed a motion for
reconsideration of the CA Decision, and on
August 21, 2001, the CA rendered the assailed
Resolution.

Petitioner sought reconsideration of the
CA Resolution, but it was denied per the
assailed Resolution dated January 9, 2002.

ISSUE

Whether or not respondents claim for unpaid
commission has already prescribed

RULING: YES.

The applicable law in this case is Article
291 of the Labor Code which provides that all
money claims arising from employer-employee
relations accruing during the effectivity of this
Code shall be filed within three (3) years from
the time the cause of action accrued; otherwise
they shall be forever barred. The term money
claims covers all money claims arising from an
employer-employee relation.

Corollarily, Article 217 of the Labor Code
provides for the jurisdiction of labor courts,
which includes money claims arising from
employer-employee relations, to wit:

ART. 217. Jurisdiction of Labor Arbiters and the
Commission.-- (a) Except as otherwise provided
under this Code the Labor Arbiter shall have
original and exclusive jurisdiction to hear and
decide, within thirty (30) calendar days after the
submission of the case by the parties for
decision without extension, even in the absence
of stenographic notes, the following cases
involving all workers, whether agricultural or
non-agricultural:

x x x x
3. If accompanied with a claim for
reinstatement, those cases that workers may file
involving wages, rates of pay, hours of work and
other terms and conditions of employment;
4. Claims for actual, moral, exemplary and other
forms of damages arising from employer-
employee relations;
x x x x
6. Except claims for Employees Compensation,
Social Security, Medicare and maternity
benefits, all other claims, arising from employer-
employee relations, including those of persons
in domestic or household service, involving an
amount exceeding five thousand pesos
(P5,000.00) regardless of whether accompanied
with a claim for reinstatement.
x x x x

Like other causes of action, the prescriptive
period for money claims is subject to
interruption, and in the absence of an equivalent
Labor Code provision for determining whether
the said period may be interrupted, Article 1155
of the Civil Code may be applied, [15] to wit:

ART. 1155. The prescription of actions is
interrupted when they are filed before the Court,
when there is a written extrajudicial demand by
the creditors, and when there is any written
acknowledgment of the debt by the debtor.

Thus, the prescription of an action is interrupted
by (a) the filing of an action, (b) a written
extrajudicial demand by the creditor, and (c) a
written acknowledgment of the debt by the
debtor. On this point, the Court ruled that
although the commencement of a civil action
stops the running of the statute of prescription or
limitations, its dismissal or voluntary
abandonment by plaintiff leaves the parties in
exactly the same position as though no action
had been commenced at all. [16]

Hence, while the filing of Civil Case No.
Q-89-2244 could have interrupted the running of
the three-year prescriptive period, its
consequent dismissal by the CA in CA-G.R. SP
No. 23821 due to lack of jurisdiction effectively
canceled the tolling of the prescriptive period
within which to file his money claim, leaving
respondent in exactly the same position as
though no civil case had been filed at all. [17]
The running of the three-year prescriptive period
not having been interrupted by the filing of Civil
Case No. Q-89-2244, respondent's cause of
action had already prescribed on September 2,
1991, three years after his cessation of
employment on September 2, 1988.
Consequently, when respondent filed his
complaint for illegal dismissal, separation pay,

retirement benefits, and damages in July 24,
1996, his claim, clearly, had already been barred
by prescription.
-------------------------

(3) ACCESSORIES SPECIALIST INC., a.k.a.
ARTS 21 CORPORATION, and TADAHIKO
HASHIMOTO, vs.ERLINDA B. ALABANZA, for
and in behalf of her deceased husband, JONES
B. ALABANZA , [G.R. No. 168985]; July 23,
2008; NACHURA, J.:

Doctrine: Labor Law. Promissory estoppel may
arise from the making of a promise, even though
without consideration, if it was intended that the
promise should be relied upon, as in fact it was
relied upon, and if a refusal to enforce it would
virtually sanction the perpetration of fraud or
would result in other injustice. The principle of
promissory estoppel is a recognized exception
to the three-year prescriptive period enunciated
in Article 291of the Labor Code. Labor Law. The
posting of a bond is indispensable to the
perfection of an appeal in cases involving
monetary awards from the decision of the Labor
Arbiter. The filing of the bond is not only
mandatory but also a jurisdictional requirement
that must be complied with in order to confer
jurisdiction upon the NLRC.

FACTS: Erlinda B. Alabanza, for and in behalf of
her husband Jones B. Alabanza filed a
complaint against petitioners Accessories
Specialists, Inc. (ASI) also known as ARTS 21
Corporation, and Tadahiko Hashimoto for non-
payment of salaries, separation pay, and 13th
month pay.
Erlinda alleged, among others, that her husband
Jones was the Vice-President, Manager and
Director of ASI. Jones rendered outstanding
services for the petitioners from 1975 to October
1997. That Jones was compelled by the owner
of ASI, Tadahiko Hashimoto, to file his
involuntary resignation on the ground that ASI
allegedly suffered losses due to lack of market
and incurred several debts caused by a slam in
the market. Jones demanded payment of his
money claims upon resignation but ASI informed
him that it would just settle first the money
claims of the rank- and-file employees, and his
claims will be paid thereafter. Knowing the
predicament of the company, Jones patiently
waited for his turn to be paid. Several demands
were made by Jones but ASI just kept on
assuring him that he will be paid his monetary
claims. Jones died on August 5, 2002 and failed
to receive the same.
ASI contended that Jones voluntarily resigned
on October 31, 1997. Thus, Erlindas cause of
action has already prescribed and is forever
barred on the ground that under Article 291 of
the Labor Code, all money claims arising from
an employer-employee relationship shall be filed
within three (3) years from the time the cause of
action accrues. Since the complaint was filed
only on September 27, 2002, or almost five (5)
years from the date of the alleged illegal
dismissal of her husband Jones, Erlindas
complaint is now barred.
The Labor Arbiter rendered a decision ordering
ASI to pay Erlinda in the total of P4,765,200.00
representing her husbands unpaid salaries,
13th month pay, and separation pay.
ASI filed a notice of appeal with motion to
reduce bond and attached thereto photocopies
of the receipts for the cash bond in the amount
of P290,000.00, and appeal fee in the amount
ofP170.00.
NLRC denied the ASIs motion to reduce bond
and directing the latter to post an additional
bond, and in case the ASI opted to post a surety
bond, the latter were required to submit a joint
declaration, indemnity agreement and collateral
security within ten (10) days from receipt of the
said order, otherwise their appeal shall be
dismissed.ASI moved for a reconsideration of
the said order. However, the NLRC denied the
same and dismissed the appeal.
The resolution became final and executory.
Thus, Erlinda filed a motion for execution.
ASI filed an opposition to the said motion for
execution. The Labor Arbiter issued an order
directing the issuance of a writ of execution.
ASI filed a petition for certiorari before the CA
and prayed for the issuance of a temporary
restraining order (TRO) and a writ of preliminary

injunction. The CA issued a TRO directing the
respondents, their agents, assigns, and all
persons acting on their behalf to refrain and/or
cease and desist from executing the Decision of
the Labor Arbiter (LA).
Thereafter, CA dismissed the petition.
Issues: Whether the cause of action of
respondents has already prescribed;
The Ruling of the Court: The petition is
DENIED
ASI contends that the three-year prescriptive
period under Article 291 of the Labor Code had
already set-in, thereby barring all of
respondents money claims arising from their
employer-employee relations.
Based on the findings of facts of the LA, it was
ASI which was responsible for the delay in the
institution of the complaint. When Jones filed his
resignation, he immediately asked for the
payment of his money claims. However, the
management of ASI promised him that he would
be paid immediately after the claims of the rank-
and-file employees had been paid. Jones relied
on this representation. Unfortunately, the
promise was never fulfilled even until the time of
Jones death.
The Court applied the principle of promissory
estoppel, which is a recognized exception to the
three-year prescriptive period enunciated in
Promissory estoppel may arise from the making
of a promise, even though without consideration,
if it was intended that the promise should be
relied upon, as in fact it was relied upon, and if a
refusal to enforce it would virtually sanction the
perpetration of fraud or would result in other
injustice. Promissory estoppel presupposes the
existence of a promise on the part of one
against whom estoppel is claimedhi. The
promise must be plain and unambiguous and
sufficiently specific so that the court can
understand the obligation assumed and enforce
the promise according to its terms.
In order to make out a claim of promissory
estoppel, a party bears the burden of
establishing the following elements: (1) a
promise was reasonably expected to induce
action or forbearance; (2) such promise did, in
fact, induce such action or forbearance; and (3)
the party suffered detriment as a result.
All the requisites of promissory estoppel are
present in this case. Jones relied on the promise
of ASI that he would be paid as soon as the
claims of all the rank-and-file employees had
been paid. If not for this promise that he had
held on to until the time of his death, we see no
reason why he would delay filing the complaint
before the LA. Thus, we find ample justification
not to follow the prescriptive period imposed
under Article 291 of the Labor Code. Great
injustice will be committed if we will brush aside
the employees claims on a mere technicality,
especially when it was petitioners own action
that prevented respondent from interposing the
claims within the required period.
Extra Issue Resolved: (For your consumption
and satisfaction)

Issue No. 2: WON the posting of the complete
amount of the bond in an appeal from the
decision of the Labor Arbiter to the NLRC is an
indispensable requirement for the perfection of
the appeal despite the filing of a motion to
reduce the amount of the appeal bond.

Held: YES. Ratio: Article 223 of the Labor Code
mandates that in case of a judgment of the
Labor Arbiter involving a monetary award, an
appeal by the employer to the NLRC maybe
perfected only upon the posting of a cash or
surety bond issued by a reputable bonding
company duly accredited by the Commission, in
the amount equivalent to the monetary award in
the judgment appealed from.
----------------------------------

(4) AUTO BUS TRANSPORT SYSTEMS, INC.
vs. ANTONIO BAUTISTA
G.R. No. 156367. May 16, 2005

CHICO-NAZARIO, J.:

DOCTRINE: Applying Article 291 of the Labor
Code in light of this peculiarity of the service
incentive leave, we can conclude that the three
3-year prescriptive period commences, not at

the end of the year when the employee
becomes entitled to the commutation of his
service incentive leave, but from the time when
the employer refuses to pay its monetary
equivalent after demand of commutation or upon
termination of the employee's services, as the
case may be.

FACTS:
Autobus employed Bautista as a driver-
conductor since May 1995. He was paid on a
commission basis. On January 3, 2000,
respondent accidentally bumped the rear portion
of another bus owned by the petitioner.
Respondent averred that the accident happened
because he was compelled by the management
to go back to Roxas, Isabela, although he had
not slept for almost 24 hours, as he had just
arrived in Manila from Roxas, Isabela.
Respondent was not allowed to work until he
fully paid the amount of P75,551.50,
representing 30% of the cost of repair of the
damaged buses. After Bautista was provided
with an opportunity to explain his side,
management sent him a letter of termination.

Thus, on February 2, 2000, respondent
instituted a Complaint for Illegal Dismissal with
Money Claims for nonpayment of 13th month
pay and service incentive leave pay against
Autobus.

Petitioner averred that Bautista is a
commissioned employee and is a field personnel
hence he is not entitled to a service incentive
leave.

The Labor Arbiter dismissed the complaint for
illegal dismissal but ruled that the respondent
must pay the complainant his 13th month pay
and service incentive leave. The NLRC deleted
the award of 13th month pay but maintained the
service incentive leave award. CA affirmed the
decision, hence this petition.

ISSUE:Whether or not the 3-year prescriptive
period provided under Article 291 of the Labor
Code, as amended, is applicable to respondent's
claim of service incentive leave pay.

HELD: Bautista was able to file his suit in time
before the 3-year prescriptive period expired.
Applying Article 291 of the Labor Code in light of
this peculiarity of the service incentive leave, we
can conclude that the three 3-year prescriptive
period commences, not at the end of the year
when the employee becomes entitled to the
commutation of his service incentive leave, but
from the time when the employer refuses to pay
its monetary equivalent after demand of
commutation or upon termination of the
employee's services, as the case may be.

The above construal of Art. 291, vis--vis the
rules on service incentive leave, is in keeping
with the rudimentary principle that in the
implementation and interpretation of the
provisions of the Labor Code and its
implementing regulations, the workingman's
welfare should be the primordial and paramount
consideration. The policy is to extend the
applicability of the decree to a greater number of
employees who can avail of the benefits under
the law, which is in consonance with the avowed
policy of the State to give maximum aid and
protection to labor.

In the case at bar, respondent had not made use
of his service incentive leave nor demanded for
its commutation until his employment was
terminated by petitioner. Neither did petitioner
compensate his accumulated service incentive
leave pay at the time of his dismissal. It was only
upon his filing of a complaint for illegal dismissal,
one month from the time of his dismissal, that
respondent demanded from his former employer
commutation of his accumulated leave credits.
His cause of action to claim the payment of his
accumulated service incentive leave thus
accrued from the time when his employer
dismissed him and failed to pay his accumulated
leave credits.

Therefore, the prescriptive period with respect to
his claim for service incentive leave pay only

commenced from the time the employer failed to
compensate his accumulated service incentive
leave pay at the time of his dismissal. Since
respondent had filed his money claim after only
one month from the time of his dismissal,
necessarily, his money claim was filed within the
prescriptive period provided for by Article 291 of
the Labor Code.
---------------------------------

(5) PLDT v. Roberto Pingol
G.R. No. 182622

MENDOZA, J

In 1979, respondent Roberto R. Pingol (Pingol)
was hired by petitioner PLDT as a maintenance
technician.

On April 13, 1999, while still under the employ of
PLDT, Pingol was admitted at The Medical City,
Mandaluyong City, for paranoid personality
disorder due to financial and marital problems.
On May 14, 1999, he was discharged from the
hospital. Thereafter, he reported for work but
frequently absented himself due to his poor
mental condition.

From September 16, 1999 to December
31, 1999, Pingol was absent from work without
official leave. According to PLDT, notices were
sent to him with a stern warning that he would
be dismissed from employment if he continued
to be absent without official leave pursuant to
PLDT Systems Practice which provides that
Absence without authorized leaves for seven (7)
consecutive days is subject to termination from
the service. Despite the warning, he failed to
show up for work. On January 1, 2000, PLDT
terminated his services on the grounds of
unauthorized absences and abandonment of
office.

On March 29, 2004, four years later,
Pingol filed a Complaint for Constructive
Dismissal and Monetary Claims against PLDT.
In his complaint, he alleged that he was hastily
dismissed from his employment on January 1,
2000. In response, PLDT filed a motion to
dismiss claiming, among others, that
respondents cause of action had already
prescribed as the complaint was filed four (4)
years and three (3) months after his dismissal.

Pingol, however, countered that in
computing the prescriptive period, the years
2001 to 2003 must not be taken into account. He
explained that from 2001 to 2003, he was
inquiring from PLDT about the financial benefits
due him as an employee who was no longer
allowed to do his work, but he merely got empty
promises. It could not, therefore, result in
abandonment of his claim.

LA
Action was barred by prescription

NLRC and CA
The cause of action has not yet prescribed as
Pingol was not formally dismissed on January 1,
2000 or his monetary claims categorically
denied by petitioner.

Issue:
WON respondent Pingol filed his complaint for
constructive dismissal and money claims within
the prescriptive period of four (4) years as
provided in Article 1146 of the Civil Code and
three (3) years as provided in Article 291 of the
Labor Code.

SC

The actions have prescribed.

Judicial admissions made by parties in
the pleadings, or in the course of the trial or
other proceedings in the same case are
conclusive and so does not require further
evidence to prove them. These admissions
cannot be contradicted unless previously shown
to have been made through palpable mistake or
that no such admission was made.


In the case at bench, Pingol himself alleged the
date January 1, 2000 as the date of his
dismissal in his complaint filed on March 29,
2004, exactly four (4) years and three (3)
months later. Respondent never denied making
such admission or raised palpable mistake as
the reason therefor. Thus, the petitioner
correctly relied on such allegation in the
complaint to move for the dismissal of the case
on the ground of prescription.

The Labor Code has no specific provision on
when a claim for illegal dismissal or a monetary
claim accrues. Thus, the general law on
prescription applies. Article 1150 of the Civil
Code states:

Article 1150. The time for prescription for
all kinds of actions, when there is no special
provision which ordains otherwise, shall be
counted from the day they may be brought.

The day the action may be brought is the
day a claim starts as a legal possibility. In the
present case, January 1, 2000 was the date that
respondent Pingol was not allowed to perform
his usual and regular job as a maintenance
technician. Respondent Pingol cited the same
date of dismissal in his complaint before the LA.
Thus, the complaint filed had already prescribed.

The prescription of an action is interrupted by (a)
the filing of an action, (b) a written extrajudicial
demand by the creditor, and (c) a written
acknowledgment of the debt by the debtor. In
this case, respondent Pingol never made any
written extrajudicial demand. Neither did
petitioner make any written acknowledgment of
its alleged obligation. Thus, the claimed follow-
ups could not have validly tolled the running of
the prescriptive period. It is worthy to note that
respondent never presented any proof to
substantiate his allegation of follow-ups.

Effect of Change of Ownership of Business

PEAFRANCIA TOURS AND TRAVEL
TRANSPORT, INC.
v. JOSELITO P. SARMIENTO and RICARDO S.
CATIMBANG

G.R. No. 178397, October 20, 2010

NACHURA, J.

DOCTRINE: A change of ownership in a
business concern is not proscribed by law.
However, the sale or disposition must be
motivated by good faith as a condition for
exemption from liability. Thus, where the charge
of ownership is done in bad faith, or is used to
defeat the rights of labor, the successor-
employer is deemed to have absorbed the
employees and is held liable for the
transgressions of his or her predecessor.

FACTS: Respondents Joselito Sarmiento
(Sarmiento) and Ricardo Catimbang
(Catimbang) both worked for petitioner as bus
inspectors until their alleged termination on
October 30, 2002. Respondents averred that
sometime in the first week of October 2002, they
received notices of termination on the ground of
petitioners alleged irreversible business losses.

In the middle of October 2002, a meeting was
called by petitioners President and General

Manager, Bonifacio Cu, wherein respondents
were introduced to Alfredo Perez, the owner of
ALPS Transportation, as the new owner of
petitioner, having allegedly bought the same.
On October 30, 2002, respondents received
their last pay with a letter informing them that
their application with the company had been
held in abeyance. Respondents, however,
learned that, several days after their termination,
Bonifacio Cu continued to operate petitioner bus
company. Petitioner argued that the matter of
rehiring respondents rested on the sound
discretion of its new owners, and the latter could
not be compelled to absorb petitioners former
employees since the same was not part of the
deal. Petitioner alleged that respondents
submitted their application for reemployment
but, after evaluation, the new owners opted not
to hire respondents.

While respondents case for illegal dismissal
was pending before the Labor Arbiter, a notice
was issued by Edilberto Perez to all employees
of petitioner, stating that the management of the
company shall revert to its former President,
Bonifacio Cu. Thereafter, Bonifacio Cu wrote
Alfredo Perez relative to the latters failure to
comply with their agreement and the decision to
rescind the sale involving petitioner. Sometime
in March 2003, Bonifacio Cu entered into a
transaction, denominated as a Deed of Sale
with Assignment of Franchise (By Way of Dation
in Payment), with Southern Comfort Bus Co.,
Inc. (SCBC), represented by its President and
General Manager, Willy Deterala.

The Labor Arbiter ruled in favor of the petitioner
finding no substantial evidence to support the
action of the complainants for illegal dismissal.
On appeal, the NLRC ruled that no sale of the
business actually took place. The CA affirmed
the decision of the NLRC holding that the
petitioner failed to establish its allegation that it
was suffering from business reverses. Hence,
this petition.

ISSUE: Whether respondents were legally
terminated from employment by the reason of
the sale of the business enterprise and the
consequent change or transfer of
ownership/management.

RULING: NO. Closure of business is the
reversal of fortune of the employer whereby
there is a complete cessation of business
operations and/or an actual locking-up of the
doors of the establishment, usually due to
financial losses. Closure of business, as an
authorized cause for termination of employment,
aims to prevent further financial drain upon an
employer who can no longer pay his employees
since business has already stopped. Closure or
cessation of operation of the establishment is an
authorized cause for terminating an employee,
as provided in Article 283 of the Labor Code.

On this ground, petitioner terminated the
employment of respondents. However, what
petitioner apparently made was a transfer of
ownership. It is true that a change of ownership
in a business concern is not proscribed by law.
Lest petitioner forget, however, that the sale or
disposition must be motivated by good faith as a
condition for exemption from liability. Thus,
where the charge of ownership is done in bad
faith, or is used to defeat the rights of labor, the
successor-employer is deemed to have
absorbed the employees and is held liable for
the transgressions of his or her predecessor.

In this case, there is no successor-employer
because there was no actual change of
ownership. We sustain the uniform factual
finding of both the NLRC and the CA that no
actual sale transpired and, as such, there is no
closure or cessation of business that can serve
as an authorized cause for the dismissal of
respondents. The fact remains that the Cu family
continues to operate petitioners business.
Despite the alleged recent sale to SCBC,
represented by Willy Deterala, petitioner failed to
refute the allegations of respondents that the Cu
family still continues to own and operate
petitioner, or even to show that Deterala is
actually in charge of petitioners business.
Petitioner having failed to discharge its burden

of submitting sufficient and convincing evidence
required by law, we hold that respondents were
illegally dismissed.

Liability of Corporate Officers
G.R. No. 147590 April 2, 2007
ANTONIO C. CARAG vs. NLRC
CARPIO, J.:
FACTS: NAFLU and Mariveles Apparel
Corporation Labor Union (MACLU) (collectively,
complainants), on behalf of all of MAC's rank
and file employees, filed a complaint against
MAC for illegal dismissal brought about by its
illegal closure of business.
Complainants moved to implead Atty. ANTONIO
CARAG, in his official capacity as Chairman of
the Board along with MR. ARMANDO DAVID as
President.
Respondents averred that they should not be
impleaded because MAC (Mariveles Apparel
Corporation) is actually owned by a consortium
of banks. Carag and David own shares in MAC
only to qualify them to serve as MAC's officers.
Arbiter Ortiguerra, the NLRC, and the Court of
Appeals to hold Carag personally liable for the
separation pay owed by MAC to complainants
based alone on Article 212(e) of the Labor
Code.
ISSUE: When is a director personally liable for
the debts of the corporation?
HELD: It was error for Arbiter Ortiguerra, the
NLRC, and the Court of Appeals to hold Carag
personally liable for the separation pay owed by
MAC to complainants based alone on Article
212(e) of the Labor Code. Article 212(e) does
not state that corporate officers are personally
liable for the unpaid salaries or separation pay of
employees of the corporation. The liability of
corporate officers for corporate debts remains
governed by Section 31 of the Corporation
Code.
The rule is that a director is not personally liable
for the debts of the corporation, which has a
separate legal personality of its own. Section 31
of the Corporation Code makes a director
personally liable for corporate debts if he wilfully
and knowingly votes for or assents to patently
unlawful acts of the corporation. Section 31 also
makes a director personally liable if he is guilty
of gross negligence or bad faith in directing the
affairs of the corporation.
Complainants did not allege in their complaint
that Carag wilfully and knowingly voted for or
assented to any patently unlawful act of MAC.
Complainants did not present any evidence
showing that Carag wilfully and knowingly voted
for or assented to any patently unlawful act of
MAC. Neither did Arbiter Ortiguerra make any
finding to this effect in her Decision.

Complainants did not also allege that Carag is
guilty of gross negligence or bad faith in
directing the affairs of MAC. Complainants did
not present any evidence showing that Carag is
guilty of gross negligence or bad faith in
directing the affairs of MAC. Neither did Arbiter
Ortiguerra make any finding to this effect in her
Decision.
To hold a director personally liable for debts of
the corporation, and thus pierce the veil of
corporate fiction, the bad faith or wrongdoing of
the director must be established clearly and
convincingly. Bad faith is never presumed. Bad
faith does not connote bad judgment or
negligence. Bad faith imports a dishonest
purpose. Bad faith means breach of a known
duty through some ill motive or interest. Bad
faith partakes of the nature of fraud.
In this case, Article 283 of the Labor Code,
requiring a one-month prior notice to employees
and the Department of Labor and Employment
before any permanent closure of a company,
does not state that non-compliance with the
notice is an unlawful act punishable under the
Code. There is no provision in any other Article
of the Labor Code declaring failure to give such
notice an unlawful act and providing for its
penalty.
Complainants did not allege or prove, and
Arbiter Ortiguerra did not make any finding, that
Carag approved or assented to any patently
unlawful act to which the law attaches a penalty
for its commission. On this score alone, Carag
cannot be held personally liable for the
separation pay of complainants.
LA erred when it stated that "when the
company had already ceased operations and
there is no way by which a judgment in favor
of employees could be satisfied, corporate
officers can be held jointly and severally
liable with the company."
Indeed, complainants seek to hold Carag
personally liable for the debts of MAC based
solely on Article 212(e) of the Labor Code. This
is the specific legal ground cited by
complainants, and used by Arbiter Ortiguerra, in
holding Carag personally liable for the debts of
MAC. However, Article 212(e) of the Labor
Code, by itself, does not make a corporate
officer personally liable for the debts of the
corporation. The governing law on personal
liability of directors for debts of the corporation is
still Section 31 of the Corporation Code.
Personal liability of corporate directors, trustees
or officers attaches only when
1. they assent to a patently unlawful act of
the corporation, or when they are guilty of
bad faith or gross negligence in directing
its affairs, or when there is a conflict of
interest resulting in damages to the
corporation, its stockholders or other
persons;
2. they consent to the issuance of watered
down stocks or when, having knowledge
of such issuance, do not forthwith file with
the corporate secretary their written
objection;
3. they agree to hold themselves personally
and solidarily liable with the corporation;
or
4. they are made by specific provision of law
personally answerable for their corporate
action.
It was error for Arbiter Ortiguerra, the NLRC,
and the Court of Appeals to hold Carag
personally liable for the separation pay owed by
MAC to complainants based alone on Article
212(e) of the Labor Code. Article 212(e) does
not state that corporate officers are personally
liable for the unpaid salaries or separation pay of
employees of the corporation. The liability of
corporate officers for corporate debts remains
governed by Section 31 of the Corporation
Code.
Effect of company merger on union shop
clause

BPI VS BPI EMPLOYEES UNION-DAVAO
Chapter-Federation of Unions in BPI Unibank
(FEBTC)
G.R. No. 164301 August 10, 2010
Facts: The BSP approved the Articles of Merger
executed on January 20, 2000 by and between
BPI, and FEBTC. This Article and Plan of
Merger was approved by the SEC on April 7,
2000. Pursuant to the Article and Plan of
Merger, all the assets and liabilities of FEBTC
were transferred to and absorbed by BPI as the
surviving corporation. FEBTC employees,
including those in its different branches across
the country, were hired by petitioner as its own
employees, with their status and tenure
recognized and salaries and benefits
maintained.
Respondent BPI Employees Union-Davao
Chapter-Federation of Unions in BPI Unibank is
the exclusive bargaining agent of BPIs rank and
file employees in Davao City. The former
FEBTC rank-and-file employees in Davao City
did not belong to any labor union at the time of
the merger. Prior to the effectivity of the merger,
respondent union invited said FEBTC
employees to a meeting regarding the Union
Shop Clause of the existing CBA between
petitioner BPI and respondent union. The parties
both advert to certain provisions of the existing
CBA.
After the meeting called by the union, some of
the former FEBTC employees joined the union,
while others refused. Later, however, some of
those who initially joined retracted their
membership. Respondent union then sent
notices to the former FEBTC employees who
refused to join, as well as those who retracted
their membership and called them to a hearing
regarding the matter. When these former
FEBTC employees refused to attend the
hearing, the president of the Union requested
BPI to implement the Union Shop Clause of the
CBA and to terminate their employment.
After two months of management inaction on the
request, respondent informed petitioner of its
decision to refer the issue of the implementation
of the Union Shop Clause of the CBA to the
Grievance Committee. However, the issue
remained unresolved at this level and so it was
subsequently submitted for voluntary arbitration
by the parties. Voluntary Arbitrator ruled in favor
of petitioner BPI. Respondent Union filed a
motion for reconsideration, but the voluntary
arbitrator denied the same. It appealed to the
CA and the CA reversed and set aside the
decision of the voluntary arbitrator. Hence, this
petition.
Issue: May a corporation invoke its merger with
another corporation as a valid ground to exempt
its absorbed employees from the coverage of a
union shop clause contained in its existing CBA
with its own certified labor union
Held: No. All employees in the bargaining unit
covered by a Union Shop Clause in their CBA
with management are subject to its terms.
However, under law and jurisprudence, the
following kinds of employees are exempted from
its coverage, namely, employees who at the
time the union shop agreement takes effect are
bona fide members of a religious organization
which prohibits its members from joining labor
unions on religious grounds; employees already
in the service and already members of a union
other than the majority at the time the union
shop agreement took effect; confidential
employees who are excluded from the rank and
file bargaining unit; and employees excluded
from the union shop by express terms of the
agreement.
To reiterate, petitioner insists that the term new
employees, as the same is used in the Union
Shop Clause of the CBA at issue, refers only to
employees hired by BPI asnon-regular
employees who later qualify for regular
employment and become regular employees,

and not those who, as a legal consequence of a
merger, are allegedly automatically deemed
regular employees of BPI. However, the CBA
does not make a distinction as to how a regular
employee attains such a status. Moreover,
there is nothing in the Corporation Law and the
merger agreement mandating the automatic
employment as regular employees by the
surviving corporation in the merger.
Significantly, too, the Articles of Merger and Plan
of Merger dated April 7, 2000 did not contain
any specific stipulation with respect to the
employment contracts of existing personnel of
the non-surviving entity which is FEBTC. Unlike
the Voluntary Arbitrator, this Court cannot
uphold the reasoning that the general stipulation
regarding transfer of FEBTC assets and
liabilities to BPI as set forth in the Articles of
Merger necessarily includes the transfer of all
FEBTC employees into the employ of BPI and
neither BPI nor the FEBTC employees allegedly
could do anything about it. Even if it is so, it
does not follow that the absorbed employees
should not be subject to the terms and
conditions of employment obtaining in the
surviving corporation.
The rule is that unless expressly assumed, labor
contracts such as employment contracts and
collective bargaining agreements are not
enforceable against a transferee of an
enterprise, labor contracts being in personam,
thus binding only between the parties. A labor
contract merely creates an action in personam
and does not create any real right which should
be respected by third parties. This conclusion
draws its force from the right of an employer to
select his employees and to decide when to
engage them as protected under our
Constitution, and the same can only be
restricted by law through the exercise of the
police power.

Consolidated LabRel Cases

Transféré par

Informations du document

Copyright

Formats disponibles

Partager ce document

Partager ou intégrer le document

Options de partage

Avez-vous trouvé ce document utile ?

Ce contenu est-il inapproprié ?

Droits d'auteur :

Formats disponibles

Consolidated LabRel Cases

Transféré par

Droits d'auteur :

Formats disponibles

By RICKY BOY CABATU/ 3B/ L-100355

Vous aimerez peut-être aussi