WEEK 7: LABOR LAW REVIEW CASE DIGEST

1.Royale Homes v. Alcantara, G.R. No. 195190, July 28, 2014

(Four-fold test)
Not every form of control that a hiring party imposes on the hired party is indicative of
employee-employer relationship. Rules and regulations that merely serve as guidelines towards
the achievement of a mutually desired result without dictating the means and methods of
accomplishing it do not establish employer-employee relationship.
FACTS:
Alcantara filed a Complaint for Illegal Dismissal against Royale Homes et al..He contended
among others that he is a regular employee of Royal Homes since he is performing tasks that are
necessary and desirable to its business and that his performance is subject to company rules and
regulations, code of ethics, periodic evaluation, and exclusivity clause of contract.
Royale Homes however argued that its contract with Alcantara is clear and unambiguous
it engaged his services as an independent contractor as can be seen from their contract stating
that no employer-employee relationship exists between the parties; that Alcantara was free to
solicit sales at any time and by any manner he may deem appropriate; that he may recruit sales
personnel to assist him in marketing Royale Homes inventories; and, thathis remunerations are
dependent on his sales performance.Royale Homeslikewise contended that CA grievously erred
in ruling that it exercised control over Alcantara based on a shallow ground that his performance
is subject to company rules and regulations, code of ethics, periodic evaluation, and exclusivity
clause of contract. RoyaleHomes alleged that it is expected to exercise some degree of control
over its independent contractors,but that does not automatically result in the existence
ofemployer-employee relationship. For control to be consideredas a proof tending to establish
employer-employee relationship, the same mustpertain to the means and method of performing
the work; not on the relationship of the independent contractors among themselves or their
persons or their source of living.
The Labor Arbiter declared Alcantara as employee of Royale Homes with a fixed-term
employment. The NLRC however ruled that he is an independent contractor. The Court of Appeals
reversed the decision of NLRC and further ruled that Alcantaras termination from employment
was without any valid or just cause, and it was carried out in violation of his right to procedural
due process.
ISSUE:
Whether Alcantara was an independent contractor or an employee of Royale Homes.
RULING:
Alcantara was an independent contractor.
In view of the conflicting findings of the tribunals the court is constrained to go over the
factual matters involved in this case and examined the juridical relationship of the parties based
on their written contract. The court also determined the juridical relationship of the parties based
on Control Test.
In this case, the contract, duly signed and not disputed by the parties, conspicuously
provides that "no employer-employee relationship exists between" Royale Homes and
Alcantara, as well as his sales agents. It is clear that they did not want to be bound by
employer-employee relationship atthe time ofthe signing of the contract.Since "the terms of the
contract are clear and leave no doubt upon the intention of the contracting parties, the literal
meaning of its stipulations should control." No construction is even needed asthey already
expressly state their intention.
In determining the existence of an employer-employee relationship, the Court has
generally relied on the four-fold test, to wit: (1) the selection and engagement of the
employee; (2) the payment of wages; (3) the power of dismissal; and (4) the
employers power to control the employee with respect to the means and methods by
which the work is to be accomplished.Among the four, the most determinative factor
in ascertaining the existence of employer-employee relationship is the "right of
control test".It is deemed to be such an important factor that the other requisites may even be
disregarded.This holds true where the issues to be resolved iswhether a person who performs
work for another is the latters employee or is an independent contractor, as in this case. For
where the person for whom the services are performed reserves the right to control not only the
end to beachieved, but also the means by which such end is reached, employer-employee
relationship is deemed to exist.
As such, not every form of control is indicative of employer-employee relationship. A
person who performs work for another and is subjected to its rules, regulations, and code of
ethics does not necessarily become an employee.As long as the level of control does not

interfere with the means and methods of accomplishing the assigned tasks, the rules imposed by
the hiring party on the hired party do not amount to the labor law concept of control that is
indicative of employer-employee relationship. In Insular Life Assurance Co., Ltd. v. National Labor
Relations Commission it was pronounced that:Logically, the line should be drawn between
rules that merely serve as guidelines towards the achievement of the mutually
desired result without dictating the means or methods to be employed in attaining it,
and those that control or fix the methodology and bind or restrict the party hired to
the use of such means. The first, which aim only to promote the result, create no
employer-employee relationship unlike the second, which address both the result and
the means used to achieve it. x x
In this case, the Court agrees with Royale Homes that the rules, regulations, code of
ethics, and periodic evaluation alluded to byAlcantara do not involve control over the means and
methods by which he was to performhis job. Royale Homes has to fix the price, impose
requirements on prospective buyers, and lay down the terms and conditionsof the sale, including
the mode of payment, which the independent contractors must follow. It is also necessary for
Royale Homes to allocateits inventories among its independent contractors, determine who has
priority in selling the same, grant commission or allowance based on predetermined criteria, and
regularly monitor the result of their marketing and sales efforts. But tothe mind of the Court,
these do not pertain to the means and methods of how Alcantara was to perform and accomplish
his task of soliciting sales. They do not dictate upon him the details of how he would solicit sales
or the manner as to how he would transact business with prospective clients. Guidelines or rules
and regulations that do notpertain to the means or methodsto be employed in attaining the
result are not indicative of control as understood in labor law.Lastly, the court ruled that
exclusivity of contract does not necessarily result in employer-employee relationship and noted
that the element of payment of wages is also absent in this case.
2. LEGEND HOTEL (MANILA), owned by TITANIUM CORPORATION, and/or, NELSON
NAPUD, in his capacity as the President of Petitioner Corporation, Petitioner, v.HERNANI
S. REALUYO, also known as JOEY ROA, Respondent. [G.R. NO. 153511 - July 18, 2012]
In termination cases, the burden of proving that the dismissal was for a valid or authorized cause
rests upon the employer. Here, petitioner did not submit evidence of the losses to its business
operations and the economic havoc it would thereby imminently sustain. It only claimed that
respondent s termination was due to its "present business/financial condition." This bare
statement fell short of the norm to show a valid retrenchment. Hence, we hold that there was no
valid cause for the retrenchment of respondent.
Respondent s remuneration, albeit denominated as talent fees, was still considered as included
in the term wage in the sense and context of the Labor Code, regardless of how petitioner chose
to designate the remuneration.
FACTS
This labor case for illegal dismissal involves a pianist employed to perform in the restaurant of a
hotel. On August 9, 1999, respondent, whose stage name was Joey R. Roa, filed a complaint for
alleged unfair labor practice, constructive illegal dismissal, and the underpayment/nonpayment
of his premium pay for holidays, separation pay, service incentive leave pay, and 13111 month
pay. He prayed for attorney's fees, moral damages off P100,000.00 and exemplary damages for
P100,000.00.1rll
Respondent averred that he had worked as a pianist at the Legend Hotel s Tanglaw Restaurant
from September 1992 with an initial rate of P400.00/night that was given to him after each night
s performance; that his rate had increased to P750.00/night; and that during his employment, he
could not choose the time of performance, which had been fixed from 7:00 pm to 10:00 pm for
three to six times/week. He added that the Legend Hotel s restaurant manager had required him
to conform with the venue s motif; that he had been subjected to the rules on employees
representation checks and chits, a privilege granted to other employees; that on July 9, 1999, the
management had notified him that as a cost-cutting measure his services as a pianist would no
longer be required effective July 30, 1999; that he disputed the excuse, insisting that Legend
Hotel had been lucratively operating as of the filing of his complaint; and that the loss of his
employment made him bring his complaint. 2rll
In its defense, petitioner denied the existence of an employer-employee relationship with
respondent, insisting that he had been only a talent engaged to provide live music at Legend
Hotel s Madison Coffee Shop for three hours/day on two days each week; and stated that the
economic crisis that had hit the country constrained management to dispense with his services.
On December 29, 1999, the Labor Arbiter (LA) dismissed the complaint for lack of merit upon
finding that the parties had no employer-employee relationship.
ISSUES

I. XXX WHEN IT RULED THAT THERE IS THE EXISTENCE OF EMPLOYER-EMPLOYEE RELATIONSHIP

BETWEEN THE PETITIONER HOTEL AND RESPONDENT ROA.
II. XXX IN FINDING THAT ROA IS A REGULAR EMPLOYEE AND THAT THE TERMINATION OF HIS
SERVICES WAS ILLEGAL. THE CA LIKEWISE ERRED WHEN IT DECLARED THE REINSTATEMENT OF
ROA TO HIS FORMER POSITION OR BE GIVEN A SEPARATION PAY EQUIVALENT TO ONE MONTH
FOR EVERY YEAR OF SERVICE FROM SEPTEMBER 1999 UNTIL JULY 30, 1999 CONSIDERING THE
ABSENCE OF AN EMPLOYMENT RELATIONSHIP BETWEEN THE PARTIES.
III. XXX WHEN IT DECLARED THAT ROA IS ENTITLED TO BACKWAGES, SERVICE INCENTIVE LEAVE
AND OTHER BENEFITS CONSIDERING THAT THERE IS NO EMPLOYER EMPLOYEE RELATIONSHIP
BETWEEN THE PARTIES.
IV. XXX WHEN IT NULLIFIED THE DECISION DATED MAY 31, 2001 IN NLRC NCR CA NO. 0234042000 OF THE NLRC AS WELL AS ITS RESOLUTION DATED JUNE 29, 2001 IN FAVOR OF HEREIN
PETITIONER HOTEL WHEN HEREIN RESPONDENT ROA FAILED TO SHOW PROOF THAT THE NLRC
AND THE LABOR ARBITER HAVE COMMITTED GRAVE ABUSE OF DISCRETION OR LACK OF
JURISDICTION IN THEIR RESPECTIVE DECISIONS.
V. XXX WHEN IT OVERLOOKED THE FACT THAT THE PETITION WHICH ROA FILED IS IMPROPER
SINCE IT RAISED QUESTIONS OF FACT.
VI. XXX WHEN IT GAVE DUE COURSE TO THE PETITION FILED BY ROA WHEN IT IS CLEARLY
IMPROPER AND SHOULD HAVE BEEN DISMISSED OUTRIGHT CONSIDERING THAT A PETITION FOR
CERTIORARI UNDER RULE 65 IS LIMITED ONLY TO QUESTIONS OR ISSUES OF GRAVE ABUSE OF
DISCRETION OR LACK OF JURISDICTION COMMITTED BY THE NLRC OR THE LABOR ARBITER,
WHICH ISSUES ARE NOT PRESENT IN THE CASE AT BAR.
RULING
The appeal fails.
Procedural Issue:
Certiorari was a proper recourse
The contention is unwarranted. There is no longer any doubt that a petition for certiorari brought
to assail the decision of the NLRC may raise factual issues, and the CA may then review the
decision of the NLRC and pass upon such factual issues in the process. 8 The power of the CA to
review factual issues in the exercise of its original jurisdiction to issue writs of certiorari is based
on Section 9 of Batas PambansaBlg. 129, which pertinently provides that the CA "shall have the
power to try cases and conduct hearings, receive evidence and perform any and all acts
necessary to resolve factual issues raised in cases falling within its original and appellate
jurisdiction, including the power to grant and conduct new trials or further proceedings."
Substantive Issue No. 1:
Employer-employee relationship existed between the parties
We next ascertain if the CA correctly found that an employer-employee relationship existed
between the parties.
The issue of whether or not an employer-employee relationship existed between petitioner and
respondent is essentially a question of fact. 9 The factors that determine the issue include who
has the power to select the employee, who pays the employee s wages, who has the power to
dismiss the employee, and who exercises control of the methods and results by which the work
of the employee is accomplished.10 Although no particular form of evidence is required to prove
the existence of the relationship, and any competent and relevant evidence to prove the
relationship may be admitted,11 a finding that the relationship exists must nonetheless rest on
substantial evidence, which is that amount of relevant evidence that a reasonable mind might
accept as adequate to justify a conclusion.
Respondent was paid P400.00 per three hours of performance from 7:00 pm to 10:00 pm, three
to six nights a week. Such rate of remuneration was later increased to P750.00 upon restaurant
manager Velazco s recommendation. There is no denying that the remuneration denominated as
talent fees was fixed on the basis of his talent and skill and the quality of the music he played
during the hours of performance each night, taking into account the prevailing rate for similar
talents in the entertainment industry.
Respondent s remuneration, albeit denominated as talent fees, was still considered as included
in the term wage in the sense and context of the Labor Code, regardless of how petitioner chose
to designate the remuneration.
Clearly, respondent received compensation for the services he rendered as a pianist in petitioner
s hotel. Petitioner cannot use the service contract to rid itself of the consequences of its
employment of respondent. There is no denying that whatever amounts he received for his
performance, howsoever designated by petitioner, were his wages.
Substantive Issue No. 2:
Validity of the Termination
Having established that respondent was an employee whom petitioner terminated to prevent
losses, the conclusion that his termination was by reason of retrenchment due to an authorized
cause under the Labor Code is inevitable.

Retrenchment is one of the authorized causes for the dismissal of employees recognized by the
Labor Code. It is a management prerogative resorted to by employers to avoid or to minimize
business losses. On this matter, Article 283 of the Labor Code states:
Article 283.Closure of establishment and reduction of personnel. The employer may also
terminate the employment of any employee due to the installation of labor-saving devices,
redundancy, retrenchment to prevent losses or the closing or cessation of operation of the
establishment or undertaking unless the closing is for the purpose of circumventing the
provisions of this Title, by serving a written notice on the workers and the Ministry of Labor and
Employment at least one (1) month before the intended date thereof. xxx. In case of
retrenchment to prevent losses and in cases of closures or cessation of operations of
establishment or undertaking not due to serious business losses or financial reverses, the
separation pay shall be equivalent to one (1) month pay or at least one-half (1/2) month pay for
every year of service, whichever is higher. A fraction of at least six (6) months shall be
considered one (1) whole year.
The Court has laid down the following standards that an employer should meet to justify
retrenchment and to foil abuse, namely:
(a) The expected losses should be substantial and not merely de minimis in extent;
(b) The substantial losses apprehended must be reasonably imminent;
(c) The retrenchment must be reasonably necessary and likely to effectively prevent the
expected losses; and
(d) The alleged losses, if already incurred, and the expected imminent losses sought to be
forestalled must be proved by sufficient and convincing evidence.
WHEREFORE, we DENY the Petition for Review on Certiorari, and AFFIRM the decision of the Court
of Appeals promulgated on February 11, 2002, subject to the modification that should
reinstatement be no longer feasible, petitioner shall pay to respondent separation pay of one
month for every year of service computed from September 1992 until the finality of this decision,
and full backwages from the time his compensation was withheld until the finality of this
decision.
3. GMA NETWORK, INC., Petitioner, vs. CARLOS P. PABRIGA, GEOFFREY F. ARIAS, KIRBY
N. CAMPO, ARNOLD L. LAGAHIT, and ARMANDO A. CATUBIG, Respondents. [G.R. No.
176419, November 27, 2013]
**This case is under Kinds of Employment: Probationary but probationary employees are not
mentioned therein. The case is all about regular employees and project employees.**
Doctrine:
ARTICLE 280. Regular and casual employment. The provisions of written agreement
to the contrary notwithstanding and regardless of the oral agreement of the parties,
an employment shall be deemed to be regular where the employee has been engaged
to perform activities which are usually necessary or desirable in the usual business or
trade of the employer, except where the employment has been fixed for a specific
project or undertaking the completion or termination of which has been determined at
the time of the engagement of the employee or where the work or services to be
performed is seasonal in nature and employment is for the duration of the season.
An employment shall be deemed to be casual if it is not covered by the preceding
paragraph: Provided, That, any employee who has rendered at least one year of
service, whether such service is continuous or broken, shall be considered a regular
employee with respect to the activity in which he is employed and his employment
shall continue while such activity actually exist.
Facts:
On July 19 1999 due to the miserable working conditions private respondents were forced to file
a complaint against petitioner before the National Labor Relations Commission Regional
Arbitration Branch No. VII Cebu City. Private respondents were engaged by petitioner to perform
the following activities, to wit: (a) manning of Technical operations center; (b) acting as
transmitter/VTR men; (c) acting as maintenance staff; (d) acting as cameramen.
On 4 August 1999, petitioner received a notice of hearing of the complaint. The following day,
petitioners Engineering Manager, Roy Villacastin, confronted the private respondents about the
said complaint.
On 9 August 1999, private respondents were summoned to the office of petitioners Area
Manager, Mrs. Susan Alio, and they were made to explain why they filed the complaint. The

next day, private respondents were barred from entering and reporting for work without any
notice stating the reasons therefor.
On 13 August 1999, private respondents, through their counsel, wrote a letter to Mrs. Susan
Alio requesting that they be recalled back to work.
On 23 August 1999, a reply letter from Mr. Bienvenido Bustria, petitioners head of Personnel and
Labor Relations Division, admitted the non-payment of benefits but did not mention the request
of private respondents to be allowed to return to work.
On 15 September 1999, private respondents sent another letter to Mr. Bustria reiterating their
request to work but the same was totally ignored. On 8 October 1999, private respondents filed
an amended complaint raising the following additional issues: 1) Unfair Labor Practice; 2) Illegal
dismissal; and 3) Damages and Attorneys fees.
The Labor Arbiter dismissed the complaint so respondents appealed to the NLRC. The NLRC
reversed the decision of the labor arbiter, stating among others that: All complainants are
regular employees with respect to the particular activity to which they were assigned, until it
ceased to exist. As such, they are entitled to payment of separation pay computed at one (1)
month salary for every year of service.
Petitioner elevated the case to the Court of Appeals and the appellate court denied the petition
for lack of merit.
Respondents claim that they are regular employees of petitioner GMA Network, Inc. The latter,
on the other hand, interchangeably characterize respondents employment as project and fixed
period/fixed term employment.
Issue:
Whether or not respondents are regular or project employees.
Ruling:
Respondents are regular employees.
At the outset, we should note that the nature of the employment is determined by law,
regardless of any contract expressing otherwise. The supremacy of the law over the
nomenclature of the contract and the stipulations contained therein is to bring to life the policy
enshrined in the Constitution to afford full protection to labor. Labor contracts, being imbued with
public interest, are placed on a higher plane than ordinary contracts and are subject to the police
power of the State.
The terms regular employment and project employment are taken from Article 280 of the Labor
Code, which also speaks of casual and seasonal employment:
ARTICLE 280. Regular and casual employment. The provisions of written
agreement to the contrary notwithstanding and regardless of the oral agreement of
the parties, an employment shall be deemed to be regular where the employee has
been engaged to perform activities which are usually necessary or desirable in the
usual business or trade of the employer, except where the employment has been
fixed for a specific project or undertaking the completion or termination of which
has been determined at the time of the engagement of the employee or where the
work or services to be performed is seasonal in nature and employment is for the
duration of the season.
An employment shall be deemed to be casual if it is not covered by the preceding
paragraph: Provided, That, any employee who has rendered at least one year of
service, whether such service is continuous or broken, shall be considered a regular
employee with respect to the activity in which he is employed and his employment
shall continue while such activity actually exist.
It is evidently important to become clear about the meaning and scope of the term "project" in
the present context. The "project" for the carrying out of which "project employees" are hired
would ordinarily have some relationship to the usual business of the employer. Exceptionally, the

"project" undertaking might not have an ordinary or normal relationship to the usual business of
the employer.
In the realm of business and industry, we note that "project" could refer to one or the other of at
least two (2) distinguishable types of activities. Firstly, a project could refer to a particular job or
undertaking that is within the regular or usual business of the employer company, but which is
distinct and separate, and identifiable as such, from the other undertakings of the company. Such
job or undertaking begins and ends at determined or determinable times. The typical example of
this first type of project is a particular construction job or project of a construction company. A
construction company ordinarily carries out two or more [distinct] identifiable construction
projects: e.g., a twenty-five-storey hotel in Makati; a residential condominium building in Baguio
City; and a domestic air terminal in Iloilo City. Employees who are hired for the carrying out of
one of these separate projects, the scope and duration of which has been determined and made
known to the employees at the time of employment, are properly treated as "project employees,"
and their services may be lawfully terminated at completion of the project.
The term "project" could also refer to, secondly, a particular job or undertaking that is not within
the regular business of the corporation. Such a job or undertaking must also be identifiably
separate and distinct from the ordinary or regular business operations of the employer. The job
or undertaking also begins and ends at determined or determinable times. x x x. (Emphases
supplied, citation omitted.)
Thus, in order to safeguard the rights of workers against the arbitrary use of the word "project" to
prevent employees from attaining the status of regular employees, employers claiming that their
workers are project employees should not only prove that the duration and scope of the
employment was specified at the time they were engaged, but also that there was indeed a
project.
There is no denying that the manning of the operations center to air commercials, acting as
transmitter/VTR men, maintaining the equipment, and acting as cameramen are not
undertakings separate or distinct from the business of a broadcasting company.
Petitioners allegation that respondents were merely substitutes or what they call pinch-hitters
(which means that they were employed to take the place of regular employees of petitioner who
were absent or on leave) does not change the fact that their jobs cannot be considered projects
within the purview of the law. Every industry, even public offices, has to deal with securing
substitutes for employees who are absent or on leave.
Nowhere in the records is there any showing that petitioner reported the completion of its
projects and the dismissal of private respondents in its finished projects to the nearest Public
Employment Office as per Policy Instruction No. 20 of the Department of Labor and Employment
[DOLE]. Jurisprudence abounds with the consistent rule that the failure of an employer to report
to the nearest Public Employment Office the termination of its workers services everytime a
project or a phase thereof is completed indicates that said workers are not project employees.
In sum, we affirm the findings of the NLRC and the Court of Appeals that respondents are regular
employees of petitioner. As regular employees, they are entitled to security of tenure and
therefore their services may be terminated only for just or authorized causes. Since petitioner
failed to prove any just or authorized cause for their termination, we are constrained to affirm the
findings of the NLRC and the Court of Appeals that they were illegally dismissed.
4. MYLENE CARVAJAL vs. LUZON DEVELOPMENT BANK, G.R. No. 186169, August 1,
2012
DOCTRINE: A probationary employee, like a regular employee, enjoys security of tenure.
However, in cases of probationary employment, aside from just or authorized causes of
termination, an additional ground is provided under Article 281 of the Labor Code, i.e., the
probationary employee may also be terminated for failure to qualify as a regular employee in
accordance with reasonable standards made known by the employer to the employee at the time
of the engagement. Thus, the services of an employee who has been engaged on probationary
basis may be terminated for any of the following: (1) a just or (2) an authorized cause and (3)
when he fails to qualify as a regular employee in accordance with reasonable standards
prescribed by the employer.
FACTS: Petitioner Mylene Carvajal was employed as a trainee-teller by respondent Bank under a
six-month probationary employment contract. On 10 December 2003, the Bank sent petitioner a
Memorandum directing her to explain in writing why she should not be subjected to disciplinary

action for "chronic tardiness" for a total of eight (8) times. Petitioner apologized in writing
and explained that she was in the process of making adjustments regarding her work and house
chores. She was thus reprimanded in writing and reminded of her status as a probationary
employee. Still, on 6 January 2004, a second Memorandum was sent to petitioner directing her to
explain why she should not be suspended for "chronic tardiness" on 13 occasions. On 12
January 2004, petitioner was informed, through a Memorandum, of her suspension for three (3)
working days without pay effective 21 January 2004. Finally, in a Memorandum dated 22 January
2004, petitioners suspension was lifted but in the same breath, her employment was terminated
effective 23 January 2004. Hence, petitioners filing of the Complaint for illegal dismissal before
the Labor Arbiter. Petitioner alleged, in her position paper, that the following were the reasons for
her termination: 1) she is not an effective frontliner; 2) she has mistakenly cleared a check; 3)
tardiness; 4) absenteeism; and 5) shortage. In their position paper, respondents averred that
petitioner was terminated as a probationary employee on three grounds, namely: 1) chronic
tardiness; 2) unauthorized absence; and 3) failure to perform satisfactorily as a
probationary employee. The Labor Arbiter ruled that petitioner was illegally dismissed. The
decision of the Labor Arbiter was partially appealed to the NLRC by petitioner. Petitioner
contended that she should be considered a regular employee and that the computation by
the Labor Arbiter of backwages up to the end of her probationary contract is without
basis. In its Comment, respondent argued against the illegality of petitioners dismissal and their
joint and solidary liability to pay complainants monetary claims. The NLRC affirmed with
modification the Labor Arbiters Decision. Respondents filed a motion for reconsideration but the
NLRC denied the same. In a petition for certiorari filed by respondents, the Court of Appeals
rendered the Decision reversing the NLRC ruling. Petitioner elevated the case to this Court via
petition for review on certiorari.
ISSUE: Whether the petitioner met the qualification to be considered as regular employee of the
respondent.
RULING: NO.
Petitioner premised her appeal on Article 279 of the Labor Code which provides:
Art. 279. Security of Tenure In cases of regular employment, the employer shall not terminate
the services of an employee except for a just cause or when authorized by this Title. An
employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of
seniority rights and other privileges and to his full backwages, inclusive of allowances, and to his
other benefits or other monetary equivalent computed from the time his compensation was
withheld from him up to the time of his actual reinstatement.
Petitioner maintained that she became a regular employee by virtue of Book VI, Rule 1, Section
6(d) of the Implementing Rules of the Labor Code which states:
(d) In all cases of probationary employment, the employer shall make known to the employee the
standards under which he will qualify as a regular employee at the time of his engagement.
Where no standards are made known to the employee at that time, he shall be deemed a regular
employee.
It is beyond dispute that petitioner was hired as a probationary employee. Whether her
employment status ripened into a regular one is the point of contention.
Under the very provision cited by petitioner, we cannot, by any hermeneutics, see petitioners
employment status as regular. At the time of her engagement and as mandated by law,
petitioner was informed in writing of the standards necessary to qualify her as a regular
employee.
A probationary employee, like a regular employee, enjoys security of tenure. However, in cases
of probationary employment, aside from just or authorized causes of termination, an additional
ground is provided under Article 281 of the Labor Code, i.e., the probationary employee may
also be terminated for failure to qualify as a regular employee in accordance with
reasonable standards made known by the employer to the employee at the time of
the engagement. Thus, the services of an employee who has been engaged on probationary
basis may be terminated for any of the following: (1) a just or (2) an authorized cause and (3)
when he fails to qualify as a regular employee in accordance with reasonable
standards prescribed by the employer.

It is evident that the primary cause of respondents dismissal from her probationary employment
was her "chronic tardiness." At the very start of her employment, petitioner already exhibited
poor working habits. Even during her first month on the job, she already incurred eight (8)
tardiness. In a Memorandum dated 11 December 2003, petitioner was warned that her tardiness
might affect her opportunity to become a permanent or regular employee. And petitioner did not
provide a satisfactory explanation for the cause of her tardiness.
More importantly, satisfactory performance is and should be one of the basic
standards for regularization. Naturally, before an employer hires an employee, the
former can require the employee, upon his engagement, to undergo a trial period
during which the employer determines his fitness to qualify for regular employment
based on reasonable standards made known to him at the time of engagement. This is
the concept of probationary employment which is intended to afford the employer an opportunity
to observe the fitness of a probationary employee while at work, and to ascertain whether he will
become an efficient and productive employee. While the employer observes the fitness,
propriety and efficiency of a probationer to ascertain whether he is qualified for permanent
employment, the probationer, on the other hand, seeks to prove to the satisfaction of the
employer that he has the qualifications to meet the reasonable standards for permanent
employment.
Moreover, in the letter of appointment, respondents reserved the right to "immediately terminate
this contract in the event of a below satisfactory performance, serious disregard of company
rules and policies and other reasons critical to its interests." In sum, petitioner was validly
dismissed from probationary employment before the expiration of her 6-month probationary
employment contract. If the termination is for cause, it may be done anytime during the
probation; the employer does not have to wait until the probation period is over.
5. SAN MIGUEL CORPORATION V. CAROLINE C. DEL ROSARIO
[GR Nos. 168194 & 168603 December 13, 2005]

FACTS:
Respondent was employed by petitioner as key account specialist. On March 9, 2001,
petitioner informed respondent that her probationary employment will be severed at the close of
the business hours of March 12, 2001. On March 13, 2001, respondent was refused entry to
petitioner's premises. On June 24, 2002, respondent filed a complaint against petitioner for illegal
dismissal and underpayment/non-payment of monetary benefits. Respondent alleged that
petitioner feigned an excess in manpower because after her dismissal, it hired new recruits and
re-employed two of her batch mates. On the other hand, petitioner claimed that respondent was
a probationary employee whose services were terminated as a result of the excess manpower
that could no longer be accommodated by the company.
The Labor Arbiter declared respondent a regular employee because her employment
exceeded six months and holding that she was illegally dismissed as there was no authorized
cause to terminate her employment. On appeal to NLRC, it modified the previous decision.
ISSUE:
Whether or not the respondent was an employee and was illegally terminated. If so, is she
entitled to monetary benefits.
HELD:
Respondent was illegally dismissed and is thus entitled to monetary benefits.
In termination cases, the burden of proving the circumstances that would justify the
employee's dismissal rests with the employer. The best proof that petitioner should have
presented to prove the probationary status of respondent is her employment contract. None,
having been presented, the continuous employment of respondent as an account specialist for
almost 11 months, from April 17, 2000 to March 12, 2001, means that she was a regular
employee and not a temporary reliever or a probationary employee. And while it is true that by
way of exception, the period of probationary employment may exceed six months when the
parties so agree, such as when the same is established by company policy, or when it is required
by the nature of the work, none of these exceptional circumstance were proven in the present
case. Thus, respondent whose employment exceeded six months is undoubtedly a regular
employee of petitioner.

Her termination from employment must be for a just or authorized cause, otherwise, her
dismissal would be illegal. Petitioner tried to justify the dismissal of respondent under the
authorized cause of redundancy. It thus argued in the alternative that even assuming that
respondent qualified for regular employment, her services still had to be terminated because
there are no more regular positions in the company. Undoubtedly, petitioner is invoking a
redundancy which allegedly resulted in the termination not only of the trainees, probationers but
also of some of its regular employees.
Redundancy, for purposes of the Labor Code, exists where the services of an employee are
in excess of what is reasonably demanded by the actual requirements of the enterprise.
Succinctly put, a position is redundant where it is superfluous, and superfluity of a position or
positions may be the outcome of a number of factors, such as overhiring of workers, decreased
volume of business, or dropping of a particular product line or service activity previously
manufactured or undertaken by the enterprise. The criteria in implementing a redundancy are:
(a) less preferred status, e.g. temporary employee; (b) efficiency; and (c) seniority. What further
militated against the alleged redundancy advanced by petitioner is their failure to refute
respondent's assertion that after her dismissal, it hired new recruits and re-employed two of her
batch mates. The Court finds that petitioner was not able to discharge the burden of proving that
the dismissal of respondent was valid.
Considering that respondent was illegally dismissed, she is entitled not only to
reinstatement but also to payment of full back wages, computed from the time her compensation
was actually withheld from her on March 13, 2001, up to her actual reinstatement. She is likewise
entitled to other benefits, i.e., service incentive leave pay and 13th month pay computed from
such date also up to her actual reinstatement. Respondent is not entitled to holiday pay because
the records reveal that she is a monthly paid regular employee. Under Section 2, Rule IV, Book III
of the Omnibus Rules Implementing the Labor Code, employees who are uniformly paid by the
month, irrespective of the number of working days therein, shall be presumed to be paid for all
the days in the month whether worked or not.
6. MACARTHUR MALICDEM and HERMENIGILDO FLORES vs. MARULAS INDUSTRIAL
CORPORATION and MIKE MANCILLA
G.R. No. 204406
February 26, 2014
Once a project or work pool employee has been: (1) continuously, as opposed to intermittently,
re-hired by the same employer for the same tasks or nature of tasks; and (2) these tasks are
vital, necessary and indispensable to the usual business or trade of the employer, then the
employee must be deemed a regular employee, pursuant to Article 280 of the Labor Code and
jurisprudence.
Facts:
Malicdem and Flores were first hired by Marulas, engaged in the business of manufacturing sacks
intended for local and export markets, as extruder operators in 2006, as shown by their
employment contracts. They were responsible for the bagging of filament yarn, the quality of pp
yarn package and the cleanliness of the work place area. Their employment contracts were for a
period of one (1) year. Every year thereafter, they would sign a Resignation/Quitclaim in favor of
Marulas a day after their contracts ended, and then sign another contract for one (1) year.
On December 16, 2010, Flores was told not to report for work anymore after being asked to sign
a paper by Marulas' HR Head to the effect that he acknowledged the completion of his
contractual status. On February 1, 2011, Malicdem was also terminated after signing a similar
document. Thus, both claimed to have been illegally dismissed.
On July 13, 2011, the Labor Arbiter rendered a decision in favor of the respondents,
finding no illegal dismissal. He ruled that Malicdem and Flores were not terminated
and that their employment naturally ceased when their contracts expired.
Petitions appealed to the NLRC which partially granted their appeal with the award of payment of
13th month pay, service incentive leave and holiday pay for three (3) years. Petitioners filed a
motion for reconsideration, but it was denied by the NLRC.
They filed a petition for certiorari under Rule 65 with the CA but it was denied substantially
explaining that petitioners do not qualify as regular employees.
Hence, this petition.

Issue:
Whether or not the petitioner are regular employees.
Ruling:
Yes, the petitioners are regular employees.
Article 281 of the Labor Code provides that "an employee who is allowed to work after a
probationary period shall be considered a regular employee." When an employer renews a
contract of employment after the lapse of the six-month probationary period, the employee
thereby becomes a regular employee. No employer is allowed to determine indefinitely the
fitness of its employees. While length of time is not the controlling test for project employment, it
is vital in determining if the employee was hired for a specific undertaking or tasked to perform
functions vital, necessary and indispensable to the usual business of trade of the employer.
In the earlier case of Maraguinot, Jr. v. NLRC, it was ruled that a project or work pool employee,
who has been: (1) continuously, as opposed to intermittently, rehired by the same employer for
the same tasks or nature of tasks; and (2) those tasks are vital, necessary and indispensable to
the usual business or trade of the employer, must be deemed a regular employee. Thus:
x x x. Lest it be misunderstood, this ruling does not mean that simply because an employee is a
project or work pool employee even outside the construction industry, he is deemed, ipso jure, a
regular employee. All that the court holds is that once a project or work pool employee has been:
(1) continuously, as opposed to intermittently, re-hired by the same employer for the same tasks
or nature of tasks; and (2) these tasks are vital, necessary and indispensable to the usual
business or trade of the employer, then the employee must be deemed a regular employee,
pursuant to Article 280 of the Labor Code and jurisprudence. To rule otherwise would allow
circumvention of labor laws in industries not falling within the ambit of Policy Instruction No.
20/Department Order No. 19, hence allowing the prevention of acquisition of tenurial security by
project or work pool employees who have already gained the status of regular employees by the
employer's conduct.
The test to determine whether employment is regular or not is the reasonable connection
between the particular activity performed by the employee in relation to the usual business or
trade of the employer. If the employee has been performing the job for at least one year, even if
the performance is not continuous or merely intermittent, the law deems the repeated and
continuing need for its performance as sufficient evidence of the necessity, if not indispensability
of that activity to the business.
A reading of the 2008 employment contracts, denominated as "Project Employment Agreement,"
reveals that there was a stipulated probationary period of six (6) months from its
commencement. It was provided therein that in the event that they would be able to comply with
the companys standards and criteria within such period, they shall be reclassified as project
employees with respect to the remaining period of the effectivity of the contract.
In the case at bar, the Court is of the considered view that there was clearly a deliberate intent
to prevent the regularization of the petitioners. To begin with, there is no actual project. The only
stipulations in the contracts were the dates of their effectivity, the duties and responsibilities of
the petitioners as extruder operators, the rights and obligations of the parties, and the
petitioners compensation and allowances. As there was no specific project or undertaking to
speak of, the respondents cannot invoke the exception in Article 280 of the Labor Code. This is a
clear attempt to frustrate the regularization of the petitioners and to circumvent the law. Next,
granting that they were project employees, the petitioners could only be considered as regular
employees as the two factors enumerated in Maraguinot, Jr., are present in this case. It is
undisputed that the petitioners were continuously rehired by the same employer for the same
position as extruder operators. As such, they were responsible for the operation of machines that
produced the sacks. Hence, their work was vital, necessary and indispensable to the usual
business or trade of the employer.
In D.M. Consunji, Inc. v. Estelito Jamin and Liganza v. RBL Shipyard Corporation, the Court
reiterated the ruling that an employment ceases to be coterminous with specific projects when
the employee is continuously rehired due to the demands of the employers business and reengaged for many more projects without interruption.
The respondents cannot use the alleged expiration of the employment contracts of the
petitioners as a shield of their illegal acts. The project employment contracts that the petitioners
were made to sign every year since the start of their employment were only a stratagem to

violate their security of tenure in the company. As restated in Poseidon Fishing v. NLRC, "if from
the circumstances it is apparent that periods have been imposed to preclude acquisition of
tenurial security by the employee, they should be disregarded for being contrary to public
policy."
The respondents invocation of William Uy Construction Corp. v. Trinidad is misplaced because it
is applicable only in cases involving the tenure of project employees in the construction industry.
It is widely known that in the construction industry, a project employee's work depends on the
availability of projects, necessarily the duration of his employment. It is not permanent but
coterminous with the work to which he is assigned. It would be extremely burdensome for the
employer, who depends on the availability of projects, to carry him as a permanent employee
and pay him wages even if there are no projects for him to work on. The rationale behind this is
that once the project is completed it would be unjust to require the employer to maintain these
employees in their payroll. To do so would make the employee a privileged retainer who collects
payment from his employer for work not done. This is extremely unfair to the employers and
amounts to labor coddling at the expense of management.
Thus, the petitioners should be considered regular employees and, as such, entitled to full
backwages and other entitlements.
7. FVR SKILLS AND SERVICES EXPONENTS, INC. (SKILLEX), FULGENCIO V. RANA and
MONINA R. BURGOS, Petitioners,
vs.
JOVERT SEVA, JOSUEL V. V ALENCERINA, JANET ALCAZAR, ANGELITO AMPARO,
BENJAMIN ANAEN, JR., JOHN HILBERT BARBA, BONIFACIO BATANG, JR., VALERIANO
BINGCO,JR., RONALD CASTRO, MARLON CONSORTE, ROLANDO CORNELIO, EDITO
CULDORA, RUEL DUNCIL, MERVIN FLORES, LORD GALISIM, SOTERO GARCIA, JR., REY
GONZALES, DANTE ISIP, RYAN ISMEN, JOEL JUNIO, CARLITO LATOJA, ZALDY MARRA,
MICHAEL PANTANO, GLENN PILOTON, NORELDO QUIRANTE, ROEL RANCE, RENANTE
ROSARIO and LEONARDA TANAEL, Respondents. [G.R. No. 200857, October 22, 2014]

PRINCIPLE:
Article 280 (now Article 294) of the Labor Code governs the determination of whether an
employee is a regular or a project employee.
Under this provision, there are two kinds of regular employees, namely: (1) those who were
engaged to perform activities which are usually necessary or desirable in the usual business or
trade of the employer; and (2) those casual employees who became regular after one year of
service, whether continuous or broken, but only with respect to the activity for which they have
been hired.
We distinguish these two types of regular employees from a project employee, or one whose
employment was fixed for a specific project or undertaking, whose completion or termination had
been determined at the time of engagement.
FACTS:
The twenty-eight (28) respondents in this case were employees of petitioner FVR Skills and
Services Exponents, Inc., an independent contractor engaged in the business of providing
janitorial and other manpower services to its clients. As early as 1998, some of the respondents
had already been under the petitioner's employ. The petitioner individually hired the respondents
on various dates from 1998 to 2007, to work as janitors, service crews and sanitation aides.
On April 21, 2008, the petitioner entered into a Contract of Janitorial Service (service contract)
with Robinsons Land Corporation (Robinsons). Both agreed that the petitioner shall supply
janitorial, manpower and sanitation services to Robinsons Place Ermita Mall for a period of one
year - from January 1, 2008 to December 31, 2008. Pursuant to this, the respondents were
deployed to Robinsons.
Halfway through the service contract, the petitioner asked the respondents to execute individual
contracts which stipulated that their respective employments shall end on December 31, 2008,
unless earlier terminated.

The petitioner and Robinsons no longer extended their contract of janitorial services.
Consequently, the petitioner dismissed the respondents as they were project employees whose
duration of employment was dependent on the petitioner's service contract with Robinsons.
The respondents responded to the termination of their employment by filing a complaint for
illegal dismissal with the NLRC. They argued that they were not project employees; they were
regular employees who may only be dismissed for just or authorized causes. The respondents
also asked for payment of their unpaid wage differential, 13th month pay differential, service
incentive leave pay, holiday pay and separation pay.
The Labor Arbiter ruled in the petitioner's favor. He held that the respondents were not regular
employees. They were project employees whose employment was dependent on the petitioner's
service contract with Robinsons. Since this contract was not renewed, the respondents'
employment contracts must also be terminated.
The respondents disagreed with the Labor Arbiter and appealed to the NLRC, which reversed the
Labor Arbiter's ruling, and held that they were regular employees. The NLRC considered that the
respondents had been under the petitioner's employ for more than a year already, some of them
as early as 1998. Thus, as regular employees, the respondents may only be dismissed for just or
authorized causes, which the petitioner failed to show.
The Court of Appeals dismissed the petitioner's certiorari petition and affirmed the NLRC's
decision. Hence, this petition.
ISSUE:
Whether or not, respondents were regular employees.
RULING:
The respondents were regular employees, not project employees.
Article 280 (now Article 294) of the Labor Code governs the determination of whether an
employee is a regular or a project employee.
Under this provision, there are two kinds of regular employees, namely: (1) those who were
engaged to perform activities which are usually necessary or desirable in the usual business or
trade of the employer; and (2) those casual employees who became regular after one year of
service, whether continuous or broken, but only with respect to the activity for which they have
been hired.
We distinguish these two types of regular employees from a project employee, or one whose
employment was fixed for a specific project or undertaking, whose completion or termination had
been determined at the time of engagement.
The primary standard in determining regular employment is the reasonable connection between
the particular activity performed by the employee and the employer's business or trade. This
connection can be ascertained by considering the nature of the work performed and its relation
to the scheme of the particular business, or the trade in its entirety.
Guided by this test, we conclude that the respondents' work as janitors, service crews and
sanitation aides, are necessary or desirable to the petitioner's business of providing janitorial and
manpower services to its clients as an independent contractor.
Also, the respondents had already been working for the petitioner as early as 1998. Even before
the service contract with Robinsons, the respondents were already under the petitioner's
employ. They had been doing the same type of work and occupying the same positions from the
time they were hired and until they were dismissed in January 2009. The petitioner did not
present any evidence to refute the respondents' claim that from the time of their hiring until the
time of their dismissal, there was no gap in between the projects where they were assigned to.
The petitioner continuously availed of their services by constantly deploying them to its clients.
8. OMNI HAULING SERVICES, INC., LOLITA FRANCO, and ANICETO FRANCO,
petitioners, vs. BERNARDO BON

DOCTRINE : Since respondents were not clearly and knowingly informed of their employment
status as mere project employees, with the duration and scope of the project specified at the
time they were engaged, the presumption of regular employment should be accorded
in their favor pursuant to Article 280, in which they shall be considered as [regular
employees].
Facts:
Petitioner Omni Hauling Services, Inc. (Omni), a company owned by petitioners Lolita and Aniceto
Franco (petitioners), was awarded a one (1) year service contract by the local government of
Quezon City to provide garbage hauling services for the period July 1, 2002 to June 30, 2003. For
this purpose, Omni hired respondents as garbage truck drivers and paleros who were then paid
on a per trip basis. When the service contract was renewed for another year, petitioners required
each of the respondents to sign employment contracts which provided that they will be "re-hired"
only for the duration of the same period. However, respondents refused to sign the employment
contracts, claiming that they were regular employees since they were engaged to perform
activities which were necessary and desirable to Omni's usual business or trade. For this reason,
Omni terminated the employment of respondents which, in turn, resulted in the filing of cases for
illegal dismissal.

LA Ruling
The LA found that respondents, at the time of their engagement, were informed that their
employment will be limited for a specific period of one year and was co-terminus with the service
contract with the Quezon City government. Thus, respondents were not regular but merely
project employees whose hiring was solely dependent on the aforesaid service contract. As a
result, respondents' contracts with Omni expired upon the service contract's expiration on June
30, 2003.

NLRC Ruling
It sustained the LA's finding that respondents were only project employees whose employment
was co-terminus with Omni's service contract with the Quezon City government. Thus, when
respondents refused to sign the employment contracts for the subsequent period, there was no
dismissal to speak of, but rather, a mere expiration of respondents' previous contracts.

CA Ruling
The CA reversed and set aside the NLRC's earlier pronouncements.
It held that the NLRC failed to consider the glaring fact that no contract of employment exists to
support petitioners' allegation that respondents are fixed-term (or properly speaking, project)
employees. In view of the fact that no other evidence was offered to prove the supposed project
employment, petitioners' failure to present an employment contract puts into serious doubt the
allegation that the employees, i.e., respondents, were properly informed at the onset of their
employment status as project employees.

Issue:
WON respondents were project employees.

Held:
A project employee is assigned to a project which begins and ends at determined or
determinable times. Unlike regular employees who may only be dismissed for just and/or
authorized causes under the Labor Code, the services of employees who are hired as "project
employees" may be lawfully terminated at the completion of the project.
According to jurisprudence, the principal test for determining whether particular employees are
properly characterized as "project employees" as distinguished from "regular employees," is
whether or not the employees were assigned to carry out a "specific project or
undertaking," the duration (and scope) of which were specified at the time they were engaged

for that project. The project could either be (1) a particular job or undertaking that is within the
regular or usual business of the employer company, but which is distinct and separate, and
identifiable as such, from the other undertakings of the company; or (2) a particular job or
undertaking that is not within the regular business of the corporation. In order to safeguard the
rights of workers against the arbitrary use of the word "project" to prevent employees from
attaining a regular status, employers claiming that their workers are project employees
should not only prove that the duration and scope of the employment was specified at
the time they were engaged, but also that there was indeed a project.
Even though the absence of a written contract does not by itself grant regular status to
respondents, such a contract is evidence that respondents were informed of the duration and
scope of their work and their status as project employees. As held in Hanjin Heavy Industries
and Construction Co., Ltd. v. Ibaez:
Even though the absence of a written contract does not by itself grant regular
status to respondents, such a contract is evidence that respondents were
informed of the duration and scope of their work and their status as project
employees. In this case, where no other evidence was offered, the
absence of an employment contract puts into serious question
whether the employees were properly informed at the onset of their
employment status as project employees. It is doctrinally entrenched
that in illegal dismissal cases, the employer has the burden of proving with
clear, accurate, consistent and convincing evidence that a dismissal was
valid.
In this case, records are bereft of any evidence to show that respondents were made to sign
employment contracts explicitly stating that they were going to be hired as project employees,
with the period of their employment to be co-terminus with the original period of Omni's service
contract with the Quezon City government. Neither is petitioners' allegation that respondents
were duly apprised of the project-based nature of their employment supported by any other
evidentiary proof. Thus, the logical conclusion is that respondents were not clearly and knowingly
informed of their employment status as mere project employees, with the duration and scope of
the project specified at the time they were engaged. As such, the presumption of regular
employment should be accorded in their favor pursuant to Article 280 of the Labor Code
which provides that "[employees] who have rendered at least one year of service, whether such
service is continuous or broken [ as respondents in this case ] shall be considered as
[regular employees] with respect to the activity in which [they] are employed and [their]
employment shall continue while such activity actually exists."
As regular employees, it is incumbent upon petitioners to establish that respondents had been
dismissed for a just and/or authorized cause. However, petitioners failed in this respect; hence,
respondents were illegally dismissed.
9. Pasos vs. Phil National Construction Corp. G.R. No. 192394, July 3, 2013
Facts:
Pasos started working for PNCC, under a Project Employment Contract which was to last three
month. His employment was however extended two years, and thereafter severally rehired under
similar contracts. Despite the termination of his last contract, he was instructed to report back as
he will be employed again.
Pasos underwent medical examination for purposes of reemployment. He was advised to take a
14-day sick leave, and on a subsequent check-up, was advised to take a 60-day sick leave. It was
at this circumstance that petitioner was told he was not entitled to sick leave as he was not a
regular employee. And when petitioner was finally given a clean bill of health and reported to
work, he was no longer admitted and told his contract ended on October 19, 2000.
This prompted petitioner to file a complaint for illegal dismissal against PNCC. He argued that he
is deemed a regular employee of PNCC due to his prolonged employment as a project employee
as well as the failure on the part of PNCC to report his termination every time a project is
completed.
PNCC countered that petitioner was hired as a project employee in several projects with specific
dates of engagement and termination and had full knowledge and consent that his appointment
was only for the duration of each project.
Issue: WON petitioner is a regular employee with right to security of tenure.

Ruling:
This Court is convinced however that although petitioner started as a project employee, he
eventually became a regular employee of PNCC.
Under Article 280 of the Labor Code, as amended, a project employee is one whose "employment
has been fixed for a specific project or undertaking the completion or termination of which has
been determined at the time of the engagement of the employee or where the work or services
to be performed is seasonal in nature and the employment is for the duration of the season."
Thus, the principal test used to determine whether employees are project employees is whether
or not the employees were assigned to carry out a specific project or undertaking, the duration or
scope of which was specified at the time the employees were engaged for that project.
In the case at bar, petitioner worked continuously for more than two years after the supposed
three-month duration of his project employment for the NAIA II Project.
The failure of an employer to file termination reports after every project completion proves that
an employee is not a project employee.
Records clearly show that PNCC did not report the termination of petitioners supposed project
employment to the DOLE. Department Order No. 19, or the "Guidelines Governing the
Employment of Workers in the Construction Industry," requires employers to submit a report of
an employees termination to the nearest public employment office every time an employees
employment is terminated due to a completion of a project.
A regular employee dismissed for a cause other than the just or authorized causes provided by
law is illegally dismissed.
Petitioners regular employment was terminated by PNCC due to contract expiration or project
completion, which are both not among the just or authorized causes provided in the Labor Code,
as amended, for dismissing a regular employee.
Thus, petitioner was illegally dismissed.
10. Universal Robina Sugar Milling Corp. vs. Acibo
Doctrines:

(1)
The nature of the employment does not depend solely on the will or word of the employer
or on the procedure for hiring and the manner of designating the employee. Rather, the nature
of the employment depends on the nature of the activities to be performed by the employee,
considering the nature of the employers business, the duration and scope to be done, and, in
some cases, even the length of time of the performance and its continued existence.

(2)
Seasonal workers who are called to work from time to time and are temporarily laid off
during the off-season are not separated from the service in said period, but are merely
considered on leave until re-employment.

Facts:

The complainants were employees of URSUMCO (Universal Robina). They were hired on various
dates (between February 1988 and April 1996) and on different capacities, i.e., drivers, crane
operators, bucket hookers, welders, mechanics, laboratory attendants and aides, steel workers,
laborers, carpenters and masons, among others. At the start of their respective engagements,
the complainants signed contracts of employment for a period of one (1) month or for a given
season. URSUMCO repeatedly hired the complainants to perform the same duties and, for every
engagement, required the latter to sign new employment contracts for the same duration of one
(1) month or for a given season.

Issue:

(1) W/N, the complainants are regular employees.

(2) W/N, if considered regular employees they are entitled to CBA-benefit.
Ruling:

1st Issue:

Yes. They are regular seasonal employees.Article 280 of the Labor Code provides for three kinds
of employment arrangements, namely: regular, project/seasonal and casual.
Regular
employment refers to that arrangement whereby the employee "has been engaged to perform
activities which are usually necessary or desirable in the usual business or trade of the employer.
Under the definition, the primary standard that determines regular employment is the
reasonable connection between the particular activity performed by the employee
and the usual business or trade of the employer. The emphasis is on the necessity or
desirability of the employees activity. Thus, when the employee performs activities considered
necessary and desirable to the overall business scheme of the employer, the law regards the
employee as regular.
Seasonal employment involves work or service that is seasonal in nature or lasting for the
duration of the season.This employment arrangement while involves work that is seasonal or
periodic in nature, the employment itself is not automatically considered seasonal so as to
prevent the employee from attaining regular status.

To exclude the asserted "seasonal" employee from those classified as regular employees, the
employer must show that: (1) the employee must be performing work or services that are
seasonal in nature; and (2) he had been employed for the duration of the season.Hence, when
the "seasonal" workers are continuously and repeatedly hired to perform the same tasks or
activities for several seasons or even after the cessation of the season, this length of time may
serve as badge of regular employment.

In litany of cases, this Court has already settled that seasonal workers who are called to work
from time to time and are temporarily laid off during the off-season are not separated from the
service in said period, but are merely considered on leave until re-employment

Clearly, therefore, the nature of the employment does not depend solely on the will or word of
the employer or on the procedure for hiring and the manner of designating the employee.
Rather, the nature of the employment depends on the nature of the activities to be performed by
the employee, considering the nature of the employers business, the duration and scope to be
done,33 and, in some cases, even the length of time of the performance and its continued
existence.

In this case, the respondents duties as loader operators, hookers, crane operators and drivers
were necessary to haul and transport the sugarcane from the plantation to the mill; laboratory
attendants, workers and laborers to mill the sugar; and welders, carpenters and utility workers to
ensure the smooth and continuous operation of the mill for the duration of the milling season.

Second, the respondents were regularly and repeatedly hired to perform the same tasks year
after year. This regular and repeated hiring of the same workers (two different sets) for two
separate seasons has put in place, principally through jurisprudence, the system of regular
seasonal employment in the sugar industry and other industries with a similar nature of
operations.

2nd Issue

No.Regular seasonal employees, like the respondents in this case, should not be confused with
the regular employees of the sugar mill such as the administrative or office personnel who
perform their tasks for the entire year regardless of the season.

The settled rule is that regular seasonal employees are regular workers with respect to their
seasonal tasks or activities and while such activities exist, cannot automatically be governed by
the existing CBAas they cannot be lumped with the regular employees due to the differences in
the nature of their duties and the duration of their work vis-a-vis the operations of the company.
11. JAIME N. GAPAYAO, Petitioner, vs. ROSARIO FULO, SOCIAL SECURITY SYSTEM and
SOCIAL SECURITY COMMISSION, Respondents. (G.R. No. 193493, June 13, 2013)

FACTS:
On 4 November 1997, Jaime Fulo (deceased) died of "acute renal failure secondary to 1st
degree burn 70% secondary electrocution" while doing repairs at the residence and business
establishment of petitioner located at San Julian, Irosin, Sorsogon.
On 14 January 1998, both parties executed a Compromise Agreement, the relevant
portion of which is quoted below:
We, the undersigned unto this Honorable Regional Office/District Office/Provincial Agency
Office respectfully state:
1. The undersigned employer, hereby agrees to pay the sum of FORTY
THOUSAND PESOS (P40,000.00) to the surviving spouse of JAIME POLO, an
employee who died of an accident, as a complete and full payment for all claims
due the victim.
2. On the other hand, the undersigned surviving spouse of the victim having
received the said amount do [sic] hereby release and discharge the employer from
any and all claims that maybe due the victim in connection with the victims
employment thereat.
Thereafter,private respondent filed a claim for social security benefits with the Social
Security System (SSS)SorosogonBranch. However, upon verification and evaluation, it
was discovered that the deceased was not a registered member of the SSS.
The SSS conducted a field investigation to clarify his status of employment. In its field
investigation report, it enumerated its findings as follows:
In connection with the complaint filed by Mrs. Rosario Fulo, hereunder are the findings per
interview with Mr. Leonor Delgra, Santiago Bolanos and Amado Gacelo:
1. That Mr. Jaime Fulo was an employee of Jaime Gapayao as farm laborer from 1983
to 1997.

2. Mr. Leonor Delgra and Santiago Bolanos are co-employees of Jaime Fulo.
3. Mr. Jaime Fulo receives compensation on a daily basis ranging from P5.00
to P60.00 from 1983 to 1997.
Per interview from Mrs. Estela Gapayao, please be informed that:
1. Jaime Fulo is an employee of Mr.&Mrs. Jaime Gapayao on an extra basis.
2. Sometimes Jaime Fulo is allowed to work in the farm as abaca harvester and earn
1/3 share of its harvest as his income.
3. Mr.&Mrs.Gapayao hired the services of Jaime Fulo not only in the farm as well as
in doing house repairs whenever it is available. Mr.Fulo receives his remuneration
usually in the afternoon after doing his job.
4. Mr.&Mrs.Gapayao hires 50-100 persons when necessary to work in their farm as
laborer and Jaime Fulo is one of them. Jaime Fulo receives more or less P50.00 a day.
(Emphases in the original)
Consequently, the SSS demanded
contributions of the deceased.

that

petitioner

remit

the

social

security

On 14 March 2007, the SSC rendered a Resolution, stating that this Commission finds, and so
holds, that Jaime Fulo, the late husband of petitioner, was employed by respondent Jaime N.
Gapayao from January 1983 to November 4, 1997, working for nine (9) months a year receiving
the minimum wage then prevailing.CA rendered a Decision in favor of private respondent.
ISSUE:
Whether or not there exists between the deceased Jaime Fulo and petitioner an employeremployee relationship that would merit an award of benefits in favor of private respondent under
social security laws.
RULING:
Yes, there exists employer-employee relationship that would merit an award of benefits in favor
of private respondent under social security laws.
Farm workers may be considered regular seasonal employees.
Article 280 of the Labor Code states:
Article 280.Regular and Casual Employment. The provisions of written agreement to the
contrary notwithstanding and regardless of the oral agreement of the parties, an
employment shall be deemed to be regular where the employee has been engaged to
perform activities which are usually necessary or desirable in the usual business or trade
of the employer, except where the employment has been fixed for a specific project or
undertaking the completion or termination of which has been determined at the time of
the engagement of the employee or where the work or services to be performed is
seasonal in nature and the employment is for the duration of the season.
An employment shall be deemed to be casual if it is not covered by the preceding
paragraph: Provided, That, any employee who has rendered at least one year of service
whether such service is continuous or broken, shall be considered a regular employee with
respect to the activity in which he is employed and his employment shall continue while
such actually exists.
Jurisprudence has identified the three types of employees mentioned in the provision:
(1) regular employees or those who have been engaged to perform activities that are
usually necessary or desirable in the usual business or trade of the employer;
(2) project employees or those whose employment has been fixed for a specific project
or undertaking, the completion or termination of which has been determined at the time of

their engagement, or those whose work or service is seasonal in nature and is performed
for the duration of the season; and
(3) casual employees or those who are neither regular nor project employees.

Farm workers generally fall under the definition of seasonal employees. We have
consistently held that seasonal employees may be considered as regular employees.Regular
seasonal employees are those called to work from time to time. The nature of their relationship
with the employer is such that during the off season, they are temporarily laid off; but
reemployed during the summer season or when their services may be needed. They are in
regular employment because of the nature of their job,and not because of the length of time
they have worked.
The rule, however, is not absolute. In Hacienda Fatima v. National Federation of
Sugarcane Workers-Food & General Trade, the Court held that seasonal workers who
have worked for one season only may not be considered regular employees. Similarly,
in Mercado, Sr. v. NLRC,it was held that when seasonal employees are free to contract
their services with other farm owners, then the former are not regular employees.
For regular employees to be considered as such, the primary standard used is the
reasonable connection between the particular activity they perform and the usual
trade or business of the employer. This test has been explained thoroughly in De Leon v.
NLRC,viz:
The primary standard, therefore, of determining a regular employment is the reasonable
connection between the particular activity performed by the employee in relation to the
usual business or trade of the employer. The test is whether the former is usually
necessary or desirable in the usual business or trade of the employer. The connection
can be determined by considering the nature of the work performed and its
relation to the scheme of the particular business or trade in its entirety. Also if
the employee has been performing the job for at least one year, even if the performance is
not continuous or merely intermittent, the law deems the repeated and continuing need
for its performance as sufficient evidence of the necessity if not indispensability of that
activity to the business. Hence, the employment is also considered regular, but only with
respect to such activity and while such activity exists.
A reading of the records reveals that the deceased was indeed a farm worker who was
in the regular employ of petitioner. From year to year, starting January 1983 up until his
death, the deceased had been working on petitioners land by harvesting abaca and coconut,
processing copra, and clearing weeds. His employment was continuous in the sense that it was
done for more than one harvesting season. Moreover, no amount of reasoning could detract from
the fact that these tasks were necessary or desirable in the usual business of petitioner.
The other tasks allegedly done by the deceased outside his usual farm work only bolster the
existence of an employer-employee relationship. As found by the SSC, the deceased was a
construction worker in the building and a helper in the bakery, grocery, hardware, and piggery
all owned by petitioner.This fact only proves that even during the off season, the deceased was
still in the employ of petitioner.
The most telling indicia of this relationship is the Compromise Agreement executed by
petitioner and private respondent.Petitioner entered into the agreement with full
knowledge that he was described as the employer of the deceased.

Pakyaw workers are regular employees,provided they are subject to the control of
petitioner.
Pakyaw workers are considered employees for as long as their employers exercise control over
them. In Legend Hotel Manila v. Realuyo,the Court held that "the power of the employer to
control the work of the employee is considered the most significant determinant of
the existence of an employer-employee relationship. This is the so-called control test
and is premised on whether the person for whom the services are performed reserves
the right to control both the end achieved and the manner and means used to achieve

that end." It should be remembered that the control test merely calls for the existence of the
right to control, and not necessarily the exercise thereof. It is not essential that the employer
actually supervises the performance of duties by the employee. It is enough that the former has
a right to wield the power.
In this case, we agree with the CA that petitioner wielded control over the deceased
in the discharge of his functions. Being the owner of the farm on which the latter worked,
petitioner on his own or through his overseer necessarily had the right to review the quality of
work produced by his laborers.It matters not whether the deceased conducted his work inside
petitioners farm or not because petitioner retained the right to control him in his work, and in
fact exercised it through his farm manager Amado Gacelo. The latter himself testified that
petitioner had hired the deceased as one of the pakyaw workers whose salaries were derived
from the gross proceeds of the harvest.
Summary Notes:
Jurisprudence has identified the three types of employees in Article 280 of the Labor Code:
(1) regular employees ;
(2) project employees ; and
(3) casual employees.

GR: Farm workers may be considered regular seasonal employees.

EXC:
1. Seasonal workers who have worked for one season only may not be considered regular
employees. (Hacienda Fatima v. National Federation of Sugarcane Workers-Food & General
Trade)
2. When seasonal employees are free to contract their services with other farm owners, then
the former are not regular employees. (Mercado, Sr. v. NLRC)

TEST (regular employment): The primary standard used is the reasonable connection between
the particular activity they perform and the usual trade or business of the employer.
The test is whether the former is usually necessary or desirable in the usual business or trade
of the employer. The connection can be determined by considering the nature of the work
performed and its relation to the scheme of the particular business or trade in its entirety. (De
Leon v. NLRC)

Regular seasonal employees are those called to work from time to time. The nature of their
relationship with the employer is such that during the off season, they are temporarily laid off;
but reemployed during the summer season or when their services may be needed. They are in
regular employment because of the nature of their job,and not because of the length of time
they have worked.

Employer-employee relationship:
The most telling indicia of this relationship is the Compromise Agreement executed by
petitioner and private respondent. Petitioner entered into the agreement with full
knowledge that he was described as the employer of the deceased.

The power of the employer to control the work of the employee

significant determinant of the existence of an employer-employee
so-called control test and is premised on whether the person for
performed reserves the right to control both the end achieved and
used to achieve that end.

is considered the most

relationship. This is the
whom the services are
the manner and means

It should be remembered that the control test merely calls for the existence of the right to
control, and not necessarily the exercise thereof. It is not essential that the employer
actually supervises the performance of duties by the employee. It is enough that the
former has a right to wield the power.

Pakyaw workers are regular employees, provided they are subject to the control of petitioner.

12. ROLANDO Y. TAN, petitioner, vs. LEOVIGILDO LAGRAMA and THE HONORABLE
COURT OF APPEALS, respondents. [G.R. No. 151228. August 15, 2002]
Doctrine (as per assigned topic):The primary standard for determining regular employment is
the reasonable connection between the particular activity performed by the employee in relation
to the usual trade or business of the employer.The primary standard for determining regular
employment is the reasonable connection between the particular activity performed by the
employee in relation to the usual trade or business of the employer. In this case, there is such a
connection between the job of Lagrama painting billboards and murals and the business of
petitioner. To let the people know what movie was to be shown in a movie theater requires
billboards. Petitioner in fact admits that the billboards are important to his business.
Facts: Petitioner Rolando Tan is the president of Supreme Theater Corporation and the general
manager of Crown and Empire Theaters in Butuan City. Private respondent Leovigildo Lagrama is
a painter, making ad billboards and murals for the motion pictures shown at the Empress,
Supreme, and Crown Theaters for more than 10 years, from September 1, 1988 to October 17,
1998.
On October 17, 1998, private respondent Lagrama was summoned by Tan and upbraided:
Nangihi na naman ka sulod sa imong drawinganan. When Lagrama asked what Tan was saying,
Tan told him, Ayaw daghang estorya. Dili ko gusto nga mo-drawing ka pa. Guikan karon, wala
nay drawing. Gawas. Lagrama denied the charge, and if it were true, such was justa minor
infraction to warrant his dismmissal.However, everytime he spoke, Tan shoutedGawas (Get
out), leaving him with no other choice but to leave the premises.
Lagrama filed a case for illegal dismissal. Petitioner Tan denied that Lagrama was his
employee. He asserted that Lagrama was an independent contractor who did his work according
to his methods, while he (petitioner) was only interested in the result thereof. He cited the
admission of Lagrama during the conferences before the Labor Arbiter that he was paid on a
fixed piece-work basis, i.e., that he was paid for every painting turned out as ad billboard or
mural for the pictures shown in the three theaters, on the basis of a no mural/billboard drawn,
no pay policy.
Issues:

1. WON there is EE-ER relationship?;

2. Was he illegally dismissed?

Ruling:
1. Yes (discussion on EE-ER relationship is not so relevant to the current topic you
may refer to case digest for week 4)
2. Yes. Lagrama had been employed by petitioner since 1988. Under the law, therefore,
he is deemed a regular employee and is thus entitled to security of tenure, as provided in Art.
279 of Labor Code:
ART. 279. Security of Tenure.In cases of regular employment, the employer shall
not terminate the services of an employee except for a just cause or when
authorized by this Title. An employee who is unjustly dismissed from work shall be
entitled to reinstatement without loss of seniority rights and other privileges and to
his full backwages, inclusive of allowances, and to his other benefits or their
monetary equivalent computed from the time his compensation was withheld from
him up to the time of his actual reinstatement.

This Court has held that if the employee has been performing the job for at least one year, even
if not continuously but intermittently, the repeated and continuing need for its performance is
sufficient evidence of the necessity, if not indispensability, of that activity to the business of his
employer. Hence, the employment is also considered regular, although with respect only to such
activity, and while such activity exists.
The primary standard for determining regular employment is the reasonable connection between
the particular activity performed by the employee in relation to the usual trade or business of the
employer.19 In this case, there is such a connection between the job of Lagrama painting
billboards and murals and the business of petitioner. To let the people know what movie was to
be shown in a movie theater requires billboards. Petitioner in fact admits that the billboards are
important to his business.
13. FUJI TELEVISION NETWORK INC. vs. ARLENE ESPIRITU
G.R. NO. 204944-45
DECEMBER 3, 2014
J. Leonen
(FIXED TERM)
FACTS: Arlene S. Espiritu (Arlene) was engaged by Fuji Television Network, Inc. (Fuji) as a
news correspondent/producer tasked to report Philippine news to Fuji through its Manila Bureau
field office. Arlenes employment contract initially provided for a term of one (1) year but was
successively renewed on a yearly basis with salary adjustment upon every renewal.
Unfortunately she was diagnosed with lung cancer. She then informed Fuji about her condition. In
turn, the Chief of News Agency of Fuji, Yoshiki Aoki, informed Arlene that the company will have
a problem renewing her contract since it would be difficult for her to perform her job. She
insisted that she was still fit to work as certified by her attending physician. After several
verbal and written communications, Arlene and Fuji signed a non-renewal contract on May 5,
2009 where it was stipulated that her contract would no longer be renewed after its expiration on
May 31, 2009. The contract also provided that the parties release each other from liabilities and
responsibilities under the employment contract. In consideration of the non-renewal contract,
Arlene acknowledged receipt of the total amount of US$18,050.00 representing her monthly
salary from March 2009 to May 2009, year-end bonus, mid-year bonus, and separation
pay.13 However, Arlene affixed her signature on the non-renewal contract with the initials U.P.
for under protest.
Arlene then filed a complaint for illegal dismissal and attorneys fees with the National Capital
Region Arbitration Branch of the National Labor Relations Commission. She alleged that she was
forced to sign the non-renewal contract when Fuji came to know of her illness and that Fuji
withheld her salaries and other benefits for March and April 2009 when she refused to sign.
Labor Arbiter Corazon C. Borbolla dismissed Arlenes complaint. Citing Sonza v. ABS-CBN and
applying the four-fold test, the Labor Arbiter held that Arlene was not Fujis employee but an
independent contractor. However, on appeal, the National Labor Relations Commission reversed
the Labor Arbiters decision. It held that Arlene was a regular employee with respect to the
activities for which she was employed since she continuously rendered services that were
deemed necessary and desirable to Fujis business. The National Labor Relations Commission
ordered Fuji to pay Arlene backwages, computed from the date of her illegal dismissal
Both parties filed a motion for consideration but were denied. Hence both appealed the matte to
the Court of Appeals. Court of Appeals affirmed the National Labor Relations Commission with
the modification that Fuji immediately reinstate Arlene to her position as News Producer without
loss of seniority rights, and pay her backwages, 13th-month pay, mid-year and year-end
bonuses, sick leave and vacation leave with pay until reinstated, moral damages, exemplary
damages, attorneys fees, and legal interest of 12% per annum of the total monetary awards.
Aggrieved, Fuji filed this petition for review and argued that the Court of Appeals erred in
affirming with modification the National Labor Relations Commissions decision, holding that
Arlene was a regular employee and that she was illegally dismissed. Fuji also questioned the
award of monetary claims, benefits, and damages.
ISSUE: (1) Whether or not Arlene was an independent contractor?
(2) Whether or not Arlene was a regular employee?
(3) Whether or not Arlene was illegally dismissed?
(4) Whether or not the Court of Appeals correctly rein awarded reinstatement, damages
and attorneys fees?

RULING: The petition should be dismissed.

Determination of employment status; burden of proof
In this case, there is no question that Arlene rendered services to Fuji. However, Fuji alleges that
Arlene was an independent contractor, while Arlene alleges that she was a regular employee. To
resolve this issue, we ascertain whether an employer-employee relationship existed between Fuji
and Arlene.
This court has often used the four-fold test to determine the existence of an employer-employee
relationship. Under the four-fold test, the control test is the most important. 134 As to how the
elements in the four-fold test are proven, this court has discussed that:
[t]here is no hard and fast rule designed to establish the aforesaid elements. Any competent and
relevant evidence to prove the relationship may be admitted.
If the facts of this case vis--vis the four-fold test show that an employer-employee relationship
existed, we then determine the status of Arlenes employment, i.e., whether she was a regular
employee. Relative to this, we shall analyze Arlenes fixed-term contract and determine whether
it supports her argument that she was a regular employee, or the argument of Fuji that she was
an independent contractor. We shall scrutinize whether the nature of Arlenes work was
necessary and desirable to Fujis business or whether Fuji only needed the output of her work. If
the circumstances show that Arlenes work was necessary and desirable to Fuji, then she is
presumed to be a regular employee. The burden of proving that she was an independent
contractor lies with Fuji.
In labor cases, the quantum of proof required is substantial evidence. 136 Substantial evidence
has been defined as such amount of relevant evidence which a reasonable mind might accept
as adequate to justify a conclusion.
If Arlene was a regular employee, we then determine whether she was illegally dismissed. In
complaints for illegal dismissal, the burden of proof is on the employee to prove the fact of
dismissal. Once the employee establishes the fact of dismissal, supported by substantial
evidence, the burden of proof shifts to the employer to show that there was a just or authorized
cause for the dismissal and that due process was observed.
Applicable laws discussed by the Supreme Court
Art. 280. Regular and casual employment. The provisions of written agreement to the
contrary notwithstanding and regardless of the oral agreement of the parties, an employment
shall be deemed to be regular where the employee has been engaged to perform activities which
are usually necessary or desirable in the usual business or trade of the employer, except where
the employment has been fixed for a specific project or undertaking the completion or
termination of which has been determined at the time of the engagement of the employee or
where the work or services to be performed is seasonal in nature and the employment is for the
duration of the season.
An employment shall be deemed to be casual if it is not covered by the preceding paragraph;
Provided, That, any employee who has rendered at least one year of service, whether such
service is continuous or broken, shall be considered a regular employee with respect to the
activity in which he is employed and his employment shall continue while such activity exist.
Art. 279. Security of tenure. In cases of regular employment, the employer shall not
terminate the services of an employee except for a just cause of when authorized by this Title.
An employee who is unjustly dismissed from work shall be entitled to reinstatement without loss
of seniority rights and other privileges and to his full backwages, inclusive of allowances, and to
his other benefits or their monetary equivalent computed from the time his compensation was
withheld from him up to the time of his actual reinstatement.
Thus, on the right to security of tenure, no employee shall be dismissed, unless there are just or
authorized causes and only after compliance with procedural and substantive due process is
conducted.
Art. 284. Disease as ground for termination. An employer may terminate the services of an
employee who has been found to be suffering from any disease and whose continued
employment is prohibited by law or is prejudicial to his health as well as to the health of his coemployees: Provided, That he is paid separation pay equivalent to at least one (1) month salary
or to one-half (1/2) month salary for every year of service, whichever is greater, a fraction of at
least six (6) months being considered as one (1) whole year.

Book VI, Rule 1, Section 8 of the Omnibus Rules Implementing the Labor Code. Disease
as a ground for dismissal. Where the employee suffers from a disease and his continued
employment is prohibited by law or prejudicial to his health or to the health of his co-employees,
the employer shall not terminate his employment unless there is a certification by a competent
public health authority that the disease is of such nature or at such a stage that it cannot be
cured within a period of six (6) months even with proper medical treatment. If the disease or
ailment can be cured within the period, the employer shall not terminate the employee but shall
ask the employee to take a leave. The employer shall reinstate such employee to his former
position immediately upon the restoration of his normal health.
1. Arlene was not an independent contractor.
Fuji alleged that Arlene was an independent contractor citing the Sonza case. She was hired
because of her skills. Her salary was higher than the normal rate. She had the power to bargain
with her employer. Her contract was for a fixed term. It also stated that Arlene was not forced to
sign the non-renewal agreement, considering that she sent an email with another version of her
non-renewal agreement.
Arlene argued (1) that she was a regular employee because Fuji had control and supervision over
her work; (2) that she based her work on instructions from Fuji; (3) that the successive renewal of
her contracts for four years indicated that her work was necessary and desirable; (4) that the
payment of separation pay indicated that she was a regular employee; (5) that the Sonza case is
not applicable because she was a plain reporter for Fuji; (6) that her illness was not a ground for
her dismissal; (7) that she signed the non-renewal agreement because she was not in a position
to reject the same.
Distinctions among fixed-term employees, independent contractors, and regular
employees
Fixed Term Employment

1) The fixed period of employment was knowingly and voluntarily agreed

upon by the parties without any force, duress, or improper pressure being
brought to bear upon the employee and absent any other circumstances
vitiating his consent; or
2) It satisfactorily appears that the employer and the employee dealt with
each other on more or less equal terms with no moral dominance
exercised by the former or the latter.
These indications, which must be read together, make the Brent doctrine
applicable only in a few special cases wherein the employer and employee are
on more or less in equal footing in entering into the contract. The reason for this
is evident: when a prospective employee, on account of special skills or market
forces, is in a position to make demands upon the prospective employer, such
prospective employee needs less protection than the ordinary worker. Lesser
limitations on the parties freedom of contract are thus required for the
protection of the employee.155 (Citations omitted)
For as long as the guidelines laid down in Brent are satisfied, this court will
recognize the validity of the fixed-term contract. (GMA Network, Inc. vs. Pabriga)
Independent Contractor
One who carries on a distinct and independent business and undertakes to
perform the job, work, or service on its own account and under ones own
responsibility according to ones own manner and method, free from the control
and direction of the principal in all matters connected with the performance of
the work except as to the results thereof.
No employer-employee relationship exists between the independent contractors
and their principals.
Art. 106. Contractor or subcontractor. Whenever an employer enters into a
contract with another person for the performance of the formers work, the
employees of the contractor and of the latters subcontractor, if any, shall be
paid
in
accordance
with
the
provisions
of
this
Code.
XXX

The Secretary of Labor and Employment may, by appropriate regulations, restrict

or prohibit the contracting-out of labor to protect the rights of workers
established under this Code. In so prohibiting or restricting, he may make
appropriate distinctions between labor-only contracting and job contracting as
well as differentiations within these types of contracting and determine who
among the parties involved shall be considered the employer for purposes of this
Code, to prevent any violation or circumvention of any provision of this Code.
There is labor-only contracting where the person supplying workers to an
employer does not have substantial capital or investment in the form of tools,
equipment, machineries, work premises, among others, and the workers
recruited and placed by such person are performing activities which are directly
related to the principal business of such employer. In such cases, the person or
intermediary shall be considered merely as an agent of the employer who shall
be responsible to the workers in the same manner and extent as if the latter
were directly employed by him.
Department Order No. 18-A, Series of 2011, Section 3
(c) . . . an arrangement whereby a principal agrees to put out or farm out with a
contractor the performance or completion of a specific job, work or service within
a definite or predetermined period, regardless of whether such job, work or
service is to be performed or completed within or outside the premises of the
principal.
This department order also states that there is a trilateral relationship in
legitimate job contracting and subcontracting arrangements among the
principal, contractor, and employees of the contractor. There is no employeremployee relationship between the contractor and principal who engages the
contractors services, but there is an employer-employee relationship between
the contractor and workers hired to accomplish the work for the
principal.162chanRoblesvirtualLawlibrary
Jurisprudence has recognized another kind of independent contractor: individuals
with unique skills and talents that set them apart from ordinary employees.
There is no trilateral relationship in this case because the independent contractor
himself or herself performs the work for the principal. In other words, the
relationship is bilateral.
XXX
There are different kinds of independent contractors: those engaged in
legitimate job contracting and those who have unique skills and talents that set
them apart from ordinary employees.
Since no employer-employee relationship exists between independent
contractors and their principals, their contracts are governed by the Civil Code
provisions on contracts and other applicable laws.
Regular Employees
Contracts of employment are different and have a higher level of regulation
because they are impressed with public interest. Article 13, Section 3 of the 1987
Constitution provides full protection to labor.
Apart from the Constitutional guarantee, Article 1700 of the Civil Code states
that : The relations between capital and labor are not merely contractual. They
are so impressed with public interest that labor contracts must yield to the
common good. Therefore, such contracts are subject to the special laws on labor
unions, collective bargaining, strikes and lockouts, closed shop, wages, working
conditions, hours of labor and similar subjects.
In contracts of employment, the employer and the employee are not on equal
footing. Thus, it is subject to regulatory review by the labor tribunals and courts
of law. The law serves to equalize the unequal. The labor force is a special class
that is constitutionally protected because of the inequality between capital and
labor.176 This presupposes that the labor force is weak.

Comparison of the Sonza and

Dumpit-Murillo cases using
the four-fold test
Sonza was engaged by ABS-CBN in view of his unique skills, talent and celebrity status not
possessed by ordinary employees.188 His work was for radio and television programs.189 On
the other hand, Dumpit-Murillo was hired by ABC as a newscaster and co-anchor.
Sonzas talent fee amounted to P317,000.00 per month, which this court found to be a
substantial amount that indicated he was an independent contractor rather than a regular
employee.191Meanwhile, Dumpit-Murillos monthly salary was P28,000.00, a very low amount
compared to what Sonza received.
Sonza was unable to prove that ABS-CBN could terminate his services apart from breach of
contract. There was no indication that he could be terminated based on just or authorized causes
under the Labor Code. In addition, ABS-CBN continued to pay his talent fee under their
agreement, even though his programs were no longer broadcasted.193 Dumpit-Murillo was found
to have been illegally dismissed by her employer when they did not renew her contract on her
fourth year with ABC.
In Sonza, this court ruled that ABS-CBN did not control how Sonza delivered his lines, how he
appeared on television, or how he sounded on radio.195 All that Sonza needed was his
talent.196Further, ABS-CBN could not terminate or discipline SONZA even if the means and
methods of performance of his work . . . did not meet ABS-CBNs approval.197 In DumpitMurillo, the duties and responsibilities enumerated in her contract was a clear indication that
ABC had control over her work.
Application of the four-fold test

The Court of Appeals did not err when it relied on the ruling in Dumpit-Murillo and affirmed the
ruling of the National Labor Relations Commission finding that Arlene was a regular employee.
Arlene was hired by Fuji as a news producer, but there was no showing that she was hired
because of unique skills that would distinguish her from ordinary employees. Neither was there
any showing that she had a celebrity status. Her monthly salary amounting to US$1,900.00
appears to be a substantial sum, especially if compared to her salary when she was still
connected with GMA.199 Indeed, wages may indicate whether one is an independent contractor.
Wages may also indicate that an employee is able to bargain with the employer for better pay.
However, wages should not be the conclusive factor in determining whether one is an employee
or an independent contractor.
Fuji had the power to dismiss Arlene, as provided for in paragraph 5 of her professional
employment contract. Her contract also indicated that Fuji had control over her work because
she was required to work for eight (8) hours from Monday to Friday, although on flexible
time.201 Sonza was not required to work for eight (8) hours, while Dumpit-Murillo had to be in ABC
to
do
both
on-air
and
off-air
tasks.
On the power to control, Arlene alleged that Fuji gave her instructions on what to report. 202 Even
the mode of transportation in carrying out her functions was controlled by Fuji. Paragraph 6 of
her contract states:
6. During the travel to carry out work, if there is change of place or change of place of work,
the train, bus, or public transport shall be used for the trip. If the Employee uses the
private car during the work and there is an accident the Employer shall not be responsible
for the damage, which may be caused to the Employee.
Thus, the Court of Appeals did not err when it upheld the findings of the National Labor Relations
Commission that Arlene was not an independent contractor.
2. Arlene was a regular employee with a fixed-term contract.
In determining whether an employment should be considered regular or non-regular, the
applicable test is the reasonable connection between the particular activity performed by the
employee in relation to the usual business or trade of the employer. The standard, supplied by
the law itself, is whether the work undertaken is necessary or desirable in the usual business or
trade of the employer, a fact that can be assessed by looking into the nature of the services
rendered and its relation to the general scheme under which the business or trade is pursued in

the usual course. It is distinguished from a specific undertaking that is divorced from the normal
activities required in carrying on the particular business or trade.
However, there may be a situation where an employees work is necessary but is not always
desirable in the usual course of business of the employer. In this situation, there is no regular
employment.
Fujis Manila Bureau Office is a small unit 213 and has a few employees. Arlene had to do all
activities related to news gathering.
A news producer plans and supervises newscast [and] works with reporters in the field planning
and gathering information, including monitoring and getting news stories, rporting interviewing
subjects in front of a video camera, submission of news and current events reports pertaining to
the Philippines, and traveling to the regional office in Thailand. She also had to report for work
in Fujis office in Manila from Mondays to Fridays, eight per day. She had no equipment and had
to use the facilities of Fuji to accomplish her tasks.
The successive renewals of her contract indicated the necessity and desirability of her work in
the usual course of Fujis business. Because of this, Arlene had become a regular employee with
the right to security of tenure.
Arlenes contract indicating a fixed term did not automatically mean that she could never be a
regular employee. For as long as it was the employee who requested, or bargained, that the
contract have a definite date of termination, or that the fixed-term contract be freely entered
into by the employer and the employee, then the validity of the fixed-term contract will be
upheld.
3. Arlene was illegally dismissed.
As a regular employee, Arlene was entitled to security of tenure under Article 279 of the Labor
Code and could be dismissed only for just or authorized causaes and after observance of due
process.
The expiration of the contract does not negate the finding of illegal dismissal. The manner by
which Fuji informed Arlene of non-renewal through email a month after she informed Fuji of her
illness is tantamount to constructive dismissal. Further, Arlene was asked to sign a letter of
resignation prepared by Fuji. The existence of a fixed-term contract should not mean that there
can be no illegal dismissal. Due process must still be observed.
Moreover, disease as a ground for termination under Article 284 of the Labor Code and Book VI,
Rule 1, Section 8 of the Omnibus Rules Implementing the Labor Code require two requirements to
be complied with: (1) the employees disease cannot be cured within six months and his
continued employment is prohibited by law or prejudicial to his health as well as to the health of
his co-employees; and (2) certification issued by a competent public health authority that even
with proper medical treatment, the disease cannot be cured within six months. The burden of
proving compliance with these requisites is on the employer. Non-compliance leads to illegal
dismissal.\
Arlene was not accorded due process. After informing her employer of her lung cancer, she was
not given the chance to present medical certificates. Fuji immediately concluded that Arlene
could no longer perform her duties because of chemotherapy. Neither did it suggest for her to
take a leave. It did not present any certificate from a competent public health authority.
Therefore, Arlene was illegally dismissed.
2. The Court of Appeals correctly awarded reinstatement, damages and attorneys
fees.
The Court of Appeals awarded moral and exemplary damages and attorneys fees. It also ordered
reinstatement, as the grounds when separation pay was awarded in lieu of reinstatement were
not proven.
The Labor Code provides in Article 279 that illegally dismissed employees are entitled to
reinstatement, backwages including allowances, and all other benefits.
Separation pay in lieu of reinstatement is allowed only (1) when the employer has ceased
operations; (2) when the employees position is no longer available; (3) strained relations; and
(4) a substantial period has lapsed from date of filing to date of finality.
The doctrine of strained relations should be strictly applied to avoid deprivation of the right to
reinstatement. In the case at bar, no evidence was presented by Fuji to prove that reinstatement
was no longer feasible. Fuji did not allege that it ceased operations or that Arlenes position was
no longer feasible. Nothing showed that the reinstatement would cause an atmosphere of
antagonism in the workplace.
Moral damages are awarded when the dismissal is attended by bad faith or fraud or constitutes
an act oppressive to labor, or is done in a manner contrary to good morals, good customs or
public policy. On the other hand, exemplary damages may be awarded when the dismissal was
effected in a wanton, oppressive or malevolent manner.
After Arlene had informed Fuji of her cancer, she was informed that there would be problems in
renewing her contract on account of her condition. This information caused Arlene mental
anguish, serious anxiety, and wounded feelings. The manner of her dismissal was effected in an

oppressive approach with her salary and other benefits being withheld until May 5, 2009, when
she had no other choice but to sign the non-renewal contract.
With regard to the award of attorneys fees, Article 111 of the Labor Code states that [i]n cases
of unlawful withholding of wages, the culpable party may be assessed attorneys fees equivalent
to ten percent of the amount of wages recovered. In actions for recovery of wages or where an
employee was forced to litigate and, thus, incur expenses to protect his rights and interest, the
award of attorneys fees is legally and morally justifiablen. Due to her illegal dismissal, Arlene
was forced to litigate.
Therefore, the awards for reinstatement, damages and attorneys fees were proper.
PETITION DISMISSED.
14. Collegio Del Santisimo Rosario, et. al. vs. Emmanuel Rojo
Citation: G.R. No. 170388, Sept. 04, 2013
Ponente: DEL CASTILLO, J.:
Topic: TERMINATION OF EMPLOYMENT for Fixed Term Employees
PRINCIPLE:
For teachers on probationary employment, in which case a fixed term contract is not
specifically used for the fixed term it offers, it is incumbent upon the school to have not only set
reasonable standards to be followed by said teachers in determining qualification for regular
employment, the same must have also been communicated to the teachers at the start of the
probationary period, or at the very least, at the start of the period when they were to be applied.
These terms, in addition to those expressly provided by the Labor Code, would serve as the just
cause for the termination of the probationary contract. The specific details of this finding of just
cause must be communicated to the affected teachers as a matter of due process . Corollarily,
should the teachers not have been apprised of such reasonable standards at the time
specified above, they shall be deemed regular employees.
Book VI, Rule I, Section 2 of the IRR of the Labor Code provides:
Section 2. Security of Tenure. (a) In cases of regular employment, the employer shall not
terminate the services of an employee except for just or authorized causes as provided by
law, and subject to the requirements of due process.
FACTS:
Colegio del Santisimo Rosario (CSR), petitioner herein, hired respondent Emmanuel Rojo as
a high school teacher on probationary basis for the school years 1992-1993, 1993-1994 and
1994-1995.
On April 5, 1995, CSR, through petitioner Sr. Zenaida S. Mofada, OP, decided not to renew
respondents services which prompted respondent to file a complaint for illegal dismissal on July
13, 1995. The latter claimed that since he had served three consecutive school years, which is
the maximum number of terms allowed for probationary employment, he should be extended
permanent employment and made as basis of his claim paragraph 75 of the 1970 Manual of
Regulations for Private Schools (1970 Manual), which provides that "full- time teachers who have
rendered three (3) consecutive years of satisfactory services shall be considered permanent."
However, petitioners herein argued that respondent knew that his Teachers Contract for school
year 1994-1995 with CSR would expire on March 31, 1995. Accordingly, respondent was not
dismissed but his probationary contract merely expired and was not renewed. Further, CSR
claimed that 3 years purported in the Teachers Manual means 36 months and not three school
years which respondent has not served yet given that his contract was merely for 10 months
each or total of 30 months only.
The Labor Arbiter decided in favor of the respondent and ruled t hat the latter was illegally
dismissed. NLRC affirmed the latters decision but modified it ruling that after serving three
school years, respondent had attained the status of regular employment especially because CSR
did not make known to respondent the reasonable standards he should meet. The NLRC also
agreed with the LA that respondents termination was done in bad faith. It held that respondent
is entitled to reinstatement, if viable; or separation pay, if reinstatement was no longer feasible,
and backwages.
Moreover, the Court of Appeals denied the Petition for Certiorari filed by petitioners
alleging grave abuse of discretion on the part of the NLRCs decision. It held that respondent has
satisfied all the requirements necessary to acquire permanent employment and security of
tenure viz:
1. The teacher is a full-time teacher;
2. The teacher must have rendered three (3) consecutive years of service; and
3. Such service must be satisfactory.
Hence, the instant petition before the Supreme Court.
ISSUE:
WHETHER THE COURT OF APPEALS [AS WELL AS THE NATIONAL LABOR RELATIONS COMMISSION]
COMMITTED GRIEVOUS AND REVERSIBLE ERROR WHEN IT RULED THAT A BASIC EDUCATION

(ELEMENTARY) TEACHER HIRED FOR THREE (3) CONSECUTIVE SCHOOL YEARS AS A

PROBATIONARY EMPLOYEE AUTOMATICALLY AND/OR BY LAW BECOMES A PERMANENT EMPLOYEE
UPON COMPLETION OF HIS THIRD YEAR OF PROBATION NOTWITHSTANDING [A] THE
PRONOUNCEMENT OF THIS HONORABLE COURT IN COLEGIO SAN AGUSTIN V. NLRC, 201 SCRA
398 1991 THAT A PROBATIONARY TEACHER ACQUIRES PERMANENT STATUS "ONLY WHEN HE IS
ALLOWED TO WORK AFTER THE PROBATIONARY PERIOD" AND [B] DOLE-DECS-CHED-TESDA
ORDER NO. 01, S. 1996 WHICH PROVIDE THAT TEACHERS WHO HAVE SERVED THE
PROBATIONARY PERIOD "SHALL BE MADE REGULAR OR PERMANENT IF ALLOWED TO WORK
AFTER SUCH PROBATIONARY PERIOD."
RULING:
The Supreme Court denied the petition. It held that such employment for fixed terms
during the teachers probationary period is an accepted practice in the teaching profession. It
quoted Magis Young Achievers Learning Center v. Manalo that the common practice is for the
employer and the teacher to enter into a contract, effective for one school year. At the end of the
school year, the employer has the option not to renew the contract, particularly considering the
teachers performance. If the contract is not renewed, the employment relationship terminates.
If the contract is renewed, usually for another school year, the probationary employment
continues. Again, at the end of that period, the parties may opt to renew or not to renew the
contract. At the end of the third year, the employer may now decide whether to extend a
permanent appointment to the employee, primarily on the basis of the employee having met the
reasonable standards of competence and efficiency set by the employer. For the entire duration
of this three-year period, the teacher remains under probation. Upon the expiration of his
contract of employment, being simply on probation, he cannot automatically claim security of
tenure and compel the employer to renew his employment contract. It is when the yearly
contract is renewed for the third time that Section 93 of the manual becomes operative, and the
teacher then is entitled to regular or permanent employment status.
For teachers on probationary employment, in which case a fixed term contract is not
specifically used for the fixed term it offers, it is incumbent upon the school to have not only set
reasonable standards to be followed by said teachers in determining qualification for regular
employment, the same must have also been communicated to the teachers at the start of the
probationary period, or at the very least, at the start of the period when they were to be applied.
These terms, in addition to those expressly provided by the Labor Code, would serve as the just
cause for the termination of the probationary contract. The specific details of this finding of just
cause must be communicated to the affected teachers as a matter of due process . Corollarily,
should the teachers not have been apprised of such reasonable standards at the time
specified above, they shall be deemed regular employees.
In Tamsons Enterprises, Inc. v. Court of Appeals, the Court held that "[t]he law is clear that
in all cases of probationary employment, the employer shall [convey] to the employee the
standards under which he will qualify as a regular employee at the time of his engagement.
Where no standards are made known to the employee at that time, he shall be deemed a regular
employee.
In this case, glaringly absent from petitioners evidence are the reasonable standards that
respondent was expected to meet that could have served as proper guidelines for purposes of
evaluating his performance. Nowhere in the Teachers Contract could such standards be found.
Neither was it mentioned that the same were ever conveyed to respondent. Even assuming that
respondent failed to meet the standards set forth by CSR and made known to the former at the
time he was engaged as a teacher on probationary status, still, the termination was flawed for
failure to give the required notice to respondent.46 This is because Book VI, Rule I, Section 2 of
the IRR of the Labor Code provides:
Section 2. Security of Tenure. (a) In cases of regular employment, the employer shall not
terminate the services of an employee except for just or authorized causes as provided by
law, and subject to the requirements of due process.
Further, it should be pointed out that absent any showing of unsatisfactory performance
on the part of respondent, it can be presumed that his performance was satisfactory.
Therefore, the petition is hereby denied. The decision of the CA was affirmed.
15. AVELINO S. ALILIN, et. al vs. PETRON CORPORATION [G.R. No. 177592 June 9, 2014]
DOCTRINE:
A contractor is presumed to be a labor-only contractor, unless it proves that it has the
substantial capital, investment, tools and the like. However, where the principal is the
one claiming that the contractor is a legitimate contractor, the burden of proving the
supposed status of the contractor rests on the principal.

FACTS:
Petron is a domestic corporation engaged in the oil business. It owns several bulk plants in the
country for receiving, storing and distributing its petroleum products.
In 1968, Romualdo D. Gindang Contractor, which was owned and operated by Romualdo D.
Gindang (Romualdo), started recruiting laborers for fielding to Petrons Mandaue Bulk Plant.
When Romualdo died in1989, his son Romeo D. Gindang (Romeo), through Romeo D. Gindang
Services(RDG), took over the business and continued to provide manpower services to Petron.
Petitioners were among those recruited by Romualdo D. Gindang Contractor and RDG to work in
the premises of the said bulk plant.
On June 1, 2000, Petron and RDG entered into a Contract for Services for the period from June 1,
2000 to May 31, 2002, whereby RDG undertook to provide Petron with janitorial, maintenance,
tanker receiving, packaging and other utility services in its Mandaue Bulk Plant. This contract
was extended on July 31, 2002 and further extended until September 30, 2002. Upon expiration
thereof, no further renewal of the service contract was done.
Alleging that they were barred from continuing their services on October 16, 2002, petitioners
Alilin,et. al. filed a Complaint for illegal dismissal, underpayment of wages, damages and
attorneys fees against Petron and RDG. Petitioner Laurente filed another Complaint for illegal
dismissal, underpayment of wages, non-payment of overtime pay, holiday pay, premium pay for
holiday, rest day, 13th month pay, service incentive leave pay, allowances, separation pay,
retirement benefits, damages and attorneys fees against Petron and RDG. The said complaints
were later consolidated.
Petitioners did not deny that RDG hired them and paid their salaries. They, however, claimed
that the latter is a labor-only contractor, which merely acted as an agent of Petron, their true
employer. They asseverated that their jobs, which are directly related to Petrons business,
entailed them to work inside the premises of Petron using the required equipment and tools
furnished by it and that they were subject to Petrons supervision. Claiming to be regular
employees, petitioners thus asserted that their dismissal allegedly in view of the expiration of
the service contract between Petron and RDG is illegal.
RDG corroborated petitioners claim that they are regular employees of Petron. It alleged that
Petron directly supervised their activities; they performed jobs necessary and desirable to
Petrons business; Petron provided petitioners with supplies, tools and equipment used in their
jobs; and that petitioners workplace since the start of their employment was at Petrons bulk
plant in Mandaue City. RDG denied liability over petitioners claim of illegal dismissal and further
argued that Petron cannot capitalize on the service contract to escape liability.
Petron, on the other hand, maintained that RDG is an independent contractor and the real
employer of the petitioners. It was RDG which hired and selected petitioners, paid their salaries
and wages, and directly supervised their work. Attesting to these were two former employees of
RDG and Petrons Mandaue Terminal Superintendent. Petron argued that with the expiration of
the service contract it entered with RDG, petitioners term of employment has concomitantly
ended. And not being the employer, Petron cannot be held liable for petitioners claim of illegal
dismissal.
Labor Arbiter ruled that petitioners are regular employees of Petron. It found that their jobs were
directly related to Petrons business operations; they worked under the supervision of Petrons
foreman and supervisor; and they were using Petrons tools and equipment in the performance of
their works. The Labor Arbiter also found that Petron merely utilized RDG in its attempt to hide
the existence of employee-employer relationship between it and petitioners and avoid liability
under labor laws. And there being no showing that petitioners dismissal was for just or
authorized cause, the Labor Arbiter declared them to have been illegally dismissed. Petron was
thus held solidarily liable with Romeo for the payment of petitioners separation pay (in lieu of
reinstatement due to strained relations with Petron) fixed at one month pay for every year of
service and backwages computed on the basis of the last salary rate at the time of dismissal.
NLRC affirmed the Labor Arbiters Decision.
CA reversed and set aside the NLRC and Labor Arbiters ruling.
Hence this petition.

ISSUES:
1) Whether or not RDG is a legitimate job contractor
2) Whether or not there exists an employer-employee relationship between the parties as to
make Petron liable for petitioners dismissal

RULING:
1) NO. Petron failed to discharge the burden of proving that RDG is a legitimate contractor.
Hence, the presumption that RDG is a labor-only contractor stands.
Labor-only contracting, distinguished from permissible job contracting:
The prevailing rule on labor-only contracting at the time Petron and RDG entered into the
Contract for Services in June 2000 is DOLE Department Order No. 10, series of 1997, the
pertinent provision of which reads:
Section 4. x x x
(f) "Labor-only contracting" prohibited under this Rule is an arrangement where the
contractor or subcontractor merely recruits, supplies or places workers to perform a job,
work or service for a principal and the following elements are present:
(i) The contractor or subcontractor does not have substantial capital or investment to
actually perform the job, work or service under its own account and responsibility; and
(ii) The employees recruited, supplied or placed by such contractor or subcontractor are
performing activities which are directly related to the main business of the principal.
Section 6. Permissible contracting or subcontracting. - Subject to the conditions set
forth in Section 3 (d) and (e) and Section 5 hereof, the principal may engage the services
of a contractor or subcontractor for the performance of any of the following:
(a) Works or services temporarily or occasionally needed to meet abnormal increase in the
demand of products or services, provided that the normal production capacity or regular
workforce of the principal cannot reasonably cope with such demands;
(b) Works or services temporarily or occasionally needed by the principal for undertakings
requiring expert or highly technical personnel to improve the management or operations
of an enterprise;
(c) Services temporarily needed for the introduction or promotion of new products, only for
the duration of the introductory or promotional period;
(d) Works or services not directly related or not integral to the main business or operation
of the principal, including casual work, janitorial, security, landscaping, and messengerial
services, and work not related to manufacturing processes in manufacturing
establishments;
(e) Services involving the public display of manufacturers products which do not involve
the act of selling or issuance of receipts or invoices;
(f) Specialized works involving the use of some particular, unusual or peculiar skills,
expertise, tools or equipment the performance of which is beyond the competence of the
regular workforce or production capacity of the principal; and
(g) Unless a reliever system is in place among the regular workforce, substitute services
for absent regular employees, provided that the period of service shall be coextensive with
the period of absence and the same is made clear to the substitute employee at the time
of engagement. The phrase "absent regular employees" includes those who are serving

suspensions or other disciplinary measures not amounting to termination of employment

meted out by the principal, but excludes those on strike where all the formal requisites for
the legality of the strike have been prima facie complied with based on the records filed
with the National Conciliation and Mediation Board.
Permissible job contracting or subcontracting refers to an arrangement whereby a
principal agrees to farm out with a contractor or subcontractor the performance of a
specific job, work, or service within a definite or predetermined period, regardless of
whether such job, work or, service is to be performed or completed within or outside the
premises of the principal. Under this arrangement, the following conditions must be met:
(a) the contractor carries on a distinct and independent business and undertakes the
contract work on his account under his own responsibility according to his own manner
and method, free from the control and direction of his employer or principal in all matters
connected with the performance of his work except as to the results thereof;
(b) the contractor has substantial capital or investment; and
(c) the agreement between the principal and contractor or subcontractor assures the
contractual employees entitlement to all labor and occupational safety and health
standards, free exercise of the right to self-organization, security of tenure, and social
welfare benefits.
Labor-only contracting, on the other hand, is a prohibited act, defined as "supplying
workers to an employer who does not have substantial capital or investment in the form of
tools, equipment, machineries, work premises, among others, and the workers recruited
and placed by such person are performing activities which are directly related to the
principal business of such employer.
In distinguishing between prohibited labor-only contracting and permissible job
contracting, the totality of the facts and the surrounding circumstances of the case shall
be considered. Generally, the contractor is presumed to be a labor-only contractor, unless
such contractor overcomes the burden of proving that it has the substantial capital,
investment, tools and the like. However, where the principal is the one claiming that
the contractor is a legitimate contractor, as in the present case, said principal
has the burden of proving that supposed status. It is thus incumbent upon
Petron, and not upon petitioners as Petron insists, to prove that RDG is an
independent contractor.

2)YES. Petrons power of control over petitioners exists in this case.

A finding that a contractor is a labor-only contractor is equivalent to declaring that there is an
employer-employee relationship between the principal and the employees of the supposed
contractor. In this case, the employer - employee relationship between Petron and petitioners
becomes all the more apparent due to the presence of the power of control on the part of the
former over the latter.
This Court has constantly adhered to the "four-fold test" to determine whether there exists an
employer-employee relationship between the parties. The four elements 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 power to control the employees conduct.
Of these four elements, it is the power to control which is the most crucial and most
determinative factor, so important, in fact, that, the other elements may even be disregarded.
One manifestation of the power of control is the power to transfer employees from one work
assignment to another.Here, Petron could order petitioners to do work outside of their regular
"maintenance/utility" job. Also, petitioners were required to report for work everyday at the bulk
plant, observe an 8:00 a.m. to 5:00 p.m. daily work schedule, and wear proper uniform and
safety helmets as prescribed by the safety and security measures being implemented within the
bulk plant. All these imply control.
The engagement of petitioners for the same works for a long period of time is a strong indication
that such works were indeed necessary to Petrons business. In view of these, and considering

further that petitioners length of service entitles them to become regular employees under the
Labor Code, petitioners are deemed by law to have already attained the status as Petrons
regular employees. As such, Petron could not terminate their services on the pretext that the
service contract it entered with RDG has already lapsed. For one, and as previously discussed,
such regular status had already attached to them even before the execution of the service
contract in 2000. For another, the same does not constitute a just or authorized cause for a valid
dismissal of regular employees.
Petron therefore, being the principal employer and RDG, being the labor-only
contractor, are solidarily liable for petitioners' illegal dismissal and monetary claims.
16. FIRST PHILIPPINE INDUSTRIAL CORPORATION, Petitioner, v. RAQUEL M. CALIMBAS
AND LUISA P. MAHILOM, Respondents [G.R. No. 179256, July 10, 2013]
DOCTRINES:
Article 106. Contractor or subcontractor. Whenever an employer enters into a contract with
another person for the performance of the formers work, the employees of the contractor and of
the latters subcontractor, if any, shall be paid in accordance with the provisions of this Code.
In the event that the contractor or subcontractor fails to pay the wages of his employees in
accordance with this Code, the employer shall be jointly and severally liable with his contractor
or subcontractor to such employees to the extent of the work performed under the contract, in
the same manner and extent that he is liable to employees directly employed by him.
The Secretary of Labor may, by appropriate regulations, restrict or prohibit the contracting-out of
labor to protect the rights of workers established under the Code. In so prohibiting or restricting,
he may make appropriate distinctions between labor-only contracting and job-contracting as well
as differentiations within these types of contracting and determine who among the parties
involved shall be considered the employer for purposes of this Code, to prevent any violation or
circumvention of any provision of this Code.
There is labor-only contracting where the person supplying workers to an employer does not
have substantial capital or investment in the form of tools, equipment, machineries, work
premises, among others, and the workers recruited and placed by such person are performing
activities which are directly related to the principal business of such employer. In such cases, the
person or intermediary shall be considered merely as an agent of the employer who shall be
responsible to the workers in the same manner and extent as if the latter were directly employed
by him.
Sec. 8. Job contracting. There is job contracting permissible under the Code if the following
conditions are met:cralavvonlinelawlibrary
(1)The contractor carries on an independent business and undertakes the contract work on his
own account under his own responsibility according to his own manner and method, free from
the control and direction of his employer or principal in all matters connected with the
performance of the work except as to the results thereof; and
(2)The contractor has substantial capital or investment in the form of tools, equipment,
machineries, work premises, and other materials which are necessary in the conduct of his
business.
Sec. 9. Labor-only contracting.
(a)Any person who undertakes to supply workers to an employer shall be deemed to be engaged
in labor-only contracting where such person:
(1)Does not have substantial capital or investment in the form of tools, equipment, machineries,
work premises and other materials; and
(2)The workers recruited and placed by such persons are performing activities which are directly
related to the principal or operations of the employer in which workers are habitually employed.
(b)Labor-only contracting as defined herein is hereby prohibited and the person acting as
contractor shall be considered merely as an agent or intermediary of the employer who shall be
responsible to the workers in the same manner and extent as if the latter were directly employed
by him.
(c)For cases not falling under this Article, the Secretary of Labor shall determine through
appropriate orders whether or not the contracting out of labor is permissible in the light of the
circumstances of each case and after considering the operating needs of the employer and the
rights of the workers involved. In such case, he may prescribe conditions and restrictions to
insure the protection and welfare of the workers.
FACTS:
Private respondent First Philippine Industrial Corporation (FPIC) is a domestic corporation
primarily engaged in the transportation of petroleum products by pipeline. Upon the other hand,
petitioners Raquel Calimbas and Luisa Mahilom were engaged by De Guzman Manpower Services
(DGMS) to perform secretarial and clerical jobs for FPIC. [DGMS] is engaged in the business of
supplying manpower to render general clerical, building and grounds maintenance, and janitorial
and utility services.

On March 29, 1993, FPIC, represented by its Senior Vice-President and Head of Administration
Department, Eustaquio Generoso, Jr. entered into a Contract of Special Services with DGMS,
represented by its Operations Manager, Manuel De Guzman, wherein the latter agreed to
undertake some aspects of building and grounds maintenance at FPICs premises, offices and
facilities, as well as to provide clerical and other utility services as may be required from time to
time by FPIC.
Pursuant to the said Contract, petitioner Raquel Calimbas and Luisa Mahilom were engaged by
the DGMS to render services to FPIC. Thereat, petitioner Calimbas was assigned as a department
secretary at the Technical Services Department beginning June 3, 1996, while petitioner Mahilom
served as a clerk at the Money Movement Section of the Finance Division starting February 13,
1996.
On June 21, 2001, FPIC, through its Human Resources Manager, Lorna Young, informed the
petitioners that their services to the company would no longer be needed by July 31, 2001 as a
result of the Pace-Setting Study conducted by an outside consultant. Accordingly, on July 9,
2001, Priscilla de Leon, Treasurer of DGMS, formally notified both the petitioners that their
respective work assignments in FPIC were no longer available to them effective July 31, 2001,
citing the termination of the Project Contract with FPIC as the main reason thereof. On August 3,
2001, petitioners Calimbas and Mahilom signed quitclaims, releasing and discharging DGMS from
whatever claims that they might have against it by virtue of their past employment, upon receipt
of the sums of P17,343.10 and P23,459.14, respectively.
Despite having executed the said quitclaims, the petitioners still filed on August 16, 2001 a
Complaint against FPIC for illegal dismissal and for the collection of monetary benefits, damages
and attorneys fees, alleging that they were regular employees of FPIC after serving almost five
(5) years, and that they were dismissed without cause.
ISSUES:
a. Whether or not the respondents are employees of petitioner
b. Whether or not respondents were lawfully dismissed from their employment
HELD:
a. YES
Respondents are petitioners employees and that DGMS is engaged in labor-only
contracting. Firstly, records reveal that DGMS has no substantial equipment in the form of
tools, equipment and machinery. As a matter of fact, respondents were using office
equipment and materials owned by petitioner while they were rendering their services at
its offices.
Second, petitioner exercised the power of control and supervision over the respondents.
As aptly observed by the CA, the daily time records of respondents even had to be
countersigned by the officials of petitioner to check whether they had worked during the
hours declared therein. Furthermore, the fact that DGMS did not assign representatives to
supervise over respondents work in petitioners company tends to disprove the
independence of DGMS.
Lastly, an employer-employee relationship exists between petitioner and respondents. And
having served for almost five years at petitioners company, respondents had already
attained the status of regular employees.
b. NO
Petitioners failed to show any valid or just cause under the Labor Code on which it may
justify the termination of services of respondents. Also, apart from notifying that their
services had already been terminated, petitioner failed to comply with the rudimentary
requirement of notifying respondents regarding the acts or omissions which led to the
termination of their services as well as giving them an ample opportunity to contest the
legality of their dismissal. Having failed to establish compliance with the requirements of
termination of employment under the Labor Code, respondents dismissal is tainted with
illegality.
Resultantly, the CA correctly held that respondents are entitled to reinstatement without
loss of seniority rights, and other privileges and to their full backwages, inclusive of
allowances and other benefits or their monetary equivalent, computed from the time their
compensation was withheld up to the time of their actual reinstatement. Considering that
reinstatement is no longer feasible, respondents are entitled instead to separation pay
equivalent to one month salary for every year of service.

17. ALIVIADO vs.PROCTER & GAMBLE [G.R. No. 160506, June 6, 2011]
Facts:
Petitioners worked as merchandisers of P&G
In December 1991, petitioners filed a complaint against P&G for regularization, service
incentive leave pay and other benefits with damages. The complaint was later amendedto
include the matter of their subsequent dismissal.
Issue:
whether P&G is the employer of petitioners
Ruling:
yes
There is "labor-only" contracting where the person supplying workers to an employer does
not have substantial capital or investment in the form of tools, equipment, machineries, work
premises, among others, and the workers recruited and placed by such person are performing
activities which are directly related to the principal business of such employer. In such cases, the
person or intermediary shall be considered merely as an agent of the employer who shall be
responsible to the workers in the same manner and extent as if the latter were directly employed
by him.
"Where labor-only contracting exists, the Labor Code itself establishes an employer-employee
relationship between the employer and the employees of the labor-only contractor."
18. Imasen Phil. Manufacturing Corp. vs Alcon [G.R. No. 194884 October 22, 2014]
Sexual acts and intimacies between two consenting adults belong, as a principled ideal, to
the realm of purely private relations. Whether aroused by lust or inflamed by sincere affection,
sexual acts should be carried out at such place, time and circumstance that, by the generally
accepted norms of conduct, will not offend public decency nor disturb the generally held or
accepted social morals. Under these parameters, sexual acts between two consenting adults do
not have a place in the work environment. This act falls under punishable misconduct.
For misconduct or improper behavior to be a just cause for dismissal, the following
elements must concur: (a) the misconduct must be serious; (b) it must relate to the performance
of the employees duties showing that the employee has become unfit to continue working for
the employer; and (c) it must have been performed with wrongful intent.
FACTS:
Petitioner Imasen Philippine manufacturing Corporation is a domestic corporation engaged
in the manufacture of auto seat-recliners and slide-adjusters. It hired the respondents as manual
welders in 2001.
On October 5, 2002, the respondents reported for work on the second shift-from 8:00 p.m.
to 5:00 a.m. of the following day. At around 12:40 a.m., Cyrus A/ Altiche, Iamsens security guard
on duty, went to patrol and inspect the producing plants premises. When Altiche reached
Imasens Press Area, he heard the sound of a running industrial plan. Intending to turn the fan
off, hefollowed the sound that led him to the plants Tool and Die section.
At the tool and Die section, Altiche saw the respondents having sexual intercourse on
the floor, using a piece of carton as mattress. Altiche immediately went back to the guard house
and relayed what he saw to Danilo S. Ogana, another security guard on duty.
Respondents defense, they claimed that they were merely sleeping in the Tool and Die
section at the time of the incident. They also claimed that other employees were near the area,
making the commission of the act charged impossible.
Both LA and NLRC held that the dismissal was valid. CA however nullified NLRCs decision
and held that sexual intercourse inside company premises is not serious misconduct and t he
penalty of dismissal is not commensurate to the respondents' act, considering especially that the
respondents had not committed any infraction in the past.

ISSUE:
Whether the respondents infraction engaging in sexual intercourse inside
company premises during work hours amounts to serious misconduct justifying their dismissal.
RULING
YES. Sexual acts and intiomacies between two consenting adults belong, as principled
ideal, to the realm of purely private relations. Whether aroused by lust or inflamed by sincere
affection, sexual acts should be carried out at such place, time and circumstance that, by the
generally accepted norms of conduct, will not offend public decency nor disturb the generally
held or accepted social morals. Under these parameters, sexual acts between two consenting
adults do not have a place in the work environment.
Undisputably, the respondent engaged in sexual intercourse inside company premises and
during work hours. These circumstances, by themselves, are already punishable misconduct.
Added to these considerations, however, is the implication that the respondent did not only
disregard company rules but flaunted their disregard in a manner that could reflect adversely on
the status of ethics and morality in the company.
Additionaly, the respondents engaged in sexual intercourse in an area where coemployees or other company personnel have ready and available access. The respondents
likewise committed their act at a time when the employees were expected to be and had, in fact,
been at their respective posts, and when they themselves were supposed to be, as all other
employees had in fact been, working.
The Court also considered the rspindents misconduct to be of grave and aggravated
character so that the company was justified in imposing the highest penalty available
dismissal.
Their infraction transgressed the bounds of socially and morally accepted human public
behavior, and at the same time showed brazen disregard for the respect that their employer
expected of them as employees. By their misconduct, the respondents, in effect, issued an open
invitation for others to commit the same infraction, with like disregard for their employers rules,
for the respect owed to their employer, and for their co-employees sensitivities.
19. REALDA v. NEW AGE [G.R. No. 192190, April 25, 2012]
DOCTRINE: In Merin v. National Labor Relations Commission,] this Court expounded on the
principle of totality of infractions as follows:
The totality of infractions or the number of violations committed during the period of
employment shall be considered in determining the penalty to be imposed upon an erring
employee. The offenses committed by petitioner should not be taken singly and
separately. Fitness for continued employment cannot be compartmentalized into tight little
cubicles of aspects of character, conduct and ability separate and independent of each
other. While it may be true that petitioner was penalized for his previous infractions, this does
not and should not mean that his employment record would be wiped clean of his
infractions. After all, the record of an employee is a relevant consideration in determining the
penalty that should be meted out since an employee's past misconduct and present behavior
must be taken together in determining the proper imposable penalty[.]Despite the sanctions
imposed upon petitioner, he continued to commit misconduct and exhibit undesirable behavior
on board. Indeed, the employer cannot be compelled to retain a misbehaving employee, or one
who is guilty of acts inimical to its interests.
FACTS: The petitioner was the former machine operator of respondent New Age Graphics Inc.
The CA exonerated the petitioner from the charges of destroying Graphics, Inc. property and
disloyalty to Graphics, Inc. and its objectives. However, the CA ruled that the petitioners
unjustified refusal to render overtime work, unexplained failure to observe prescribed work
standards, habitual tardiness and chronic absenteeism despite warning and non-compliance with
the directive for him to explain his numerous unauthorized absences constitute sufficient
grounds for his termination. Nonetheless, while the CA recognized the existence of just causes
for dismissal, it found the petitioner entitled to nominal damages in the amount of P5, 000.00
due to Graphics, Inc.s failure to observe the procedural requirements of due process.
ISSUE: (1) Whether or not petitioner was guilty of willful disobedience and legally dismissed due
to a just cause
HELD: First, the petitioners arbitrary defiance to Graphics, Inc.s order for him to render overtime
work constitutes willful disobedience. Taking this in conjunction with his inclination to absent

himself and to report late for work despite being previously penalized, the CA correctly ruled that
the petitioner is indeed utterly defiant of the lawful orders and the reasonable work standards
prescribed by his employer.
Second, the petitioners failure to observe Graphics, Inc.s work standards constitutes inefficiency
that is a valid cause for dismissal. Failure to observe prescribed standards of work, or to fulfill
reasonable work assignments due to inefficiency may constitute just cause for dismissal. Such
inefficiency is understood to mean failure to attain work goals or work quotas, either by failing to
complete the same within the alloted reasonable period, or by producing unsatisfactory
results. As the operator of Graphics, Inc.s printer, he is mandated to check whether the colors
that would be printed are in accordance with the clients specifications and for him to do so, he
must consult the General Manager and the color guide used by Graphics, Inc. before making a
full run. Unfortunately, he failed to observe this simple procedure and proceeded to print without
making sure that the colors were at par with the clients demands. This resulted to delays in the
delivery of output, client dissatisfaction, and additional costs on Graphics, Inc.s part.
While a penalty in the form of suspension had already been imposed on the petitioner for his
habitual tardiness and repeated absenteeism, the principle of totality of infractions sanctions the
act of Graphics, Inc. of considering such previous infractions in decreeing dismissal as the proper
penalty for his tardiness and unauthorized absences incurred afterwards, in addition to his
refusal to render overtime work and conform to the prescribed work standards.
ISSUE: (2) Whether or not there was procedural compliance by Graphics
HELD: As correctly observed by the CA, Graphics, Inc. failed to afford the petitioner with a
reasonable opportunity to be heard and defend itself. An administrative hearing set on the same
day that the petitioner received the memorandum and the twenty-four (24) hour period for him
to submit a written explanation are far from being reasonable.
Furthermore, there is no indication that Graphics, Inc. issued a second notice, informing the
petitioner of his dismissal. The respondents admit that Graphics, Inc. decided to terminate the
petitioners employment after he ceased reporting for work from the time he received the
memorandum requiring him to explain and subsequent to his failure to submit a written
explanation. However, there is nothing on record showing that Graphics, Inc. placed its decision
to dismiss in writing and that a copy thereof was sent to the petitioner.
Notably, the respondents do not question the findings of the CA. The respondents chose not to
convince this Court otherwise by not filing an appeal, which reasonably suggests that Graphics,
Inc.s failure to comply with the procedural requirements of due process is admitted.
Nonetheless, while the CA finding that the petitioner is entitled to nominal damages as his right
to procedural due process was not respected despite the presence of just causes for his dismissal
is affirmed, this Court finds the CA to have erred in fixing the amount that the Company is liable
to pay. The CA should have taken cognizance of the numerous cases decided by this Court where
the amount of nominal damages was fixed at P30,000.00 if the dismissal was for a just cause.

20. INTERNATIONAL SCHOOL MANILA AND/OR BRIAN McCAULEY, Petitioners, vs.

INTERNATIONAL SCHOOL ALLIANCE OF EDUCATORS (ISAE) AND MEMBERS
REPRESENTED BY RAQUEL DAVID CHING, PRESIDENT, EVANGELINE SANTOS, JOSELYN
RUCIO AND METHELYN FILLER, Respondents. G.R. No. 167286, 05 February 2014
Principle
Gross inefficiency is a just case since it is closely related to gross neglect.
Facts
Respondent Evangeline Santos filed a labor complaint for illegal dismissal against her employer
defendant International School Manila and Brian McCauley. Previously, she was first hired by the
School in 1978 as a full-time Spanish language teacher. Upon return from a leave of absence of
one academic year, she agreed to teach the only available Spanish class and four other classes
of Filipino.
Since it was her first time to teach Filipino, the Schools high school administrators observed the
way she conducted her classes. The results of the observations on her classes were summarized
in Classroom Standards Evaluation Forms accomplished by the designated observers. In
accordance with said forms, Santos was evaluated in the areas of Planning, the Teaching Act,
Climate, Management and Communication.

Subsequently, after making observations, the Assistant Principal completed his Classroom
Standards Evaluation Form. He remarked that the lesson plan that Santos provided was written
with little detail given. Santos was also noted as needing improvement in the following criteria:
(1) uses effective questioning techniques; (2) is punctual and time efficient; (3) states and
enforces academic and classroom behavior expectations in a positive manner; and (4) reinforces
appropriate behavior. Hill also stated that Santoss management of the class left much to be
desired. Hill added that [t]he beginning and the end of the class were poorly structured with
students both coming late and leaving early with no apparent expectations to the contrary.
Almost similar remarks were made on the Spanish class of Santos.
After another observation on the Filipino classes, the new Assistant Principal noted that Santos
needed improvement on certain areas. Thereafter, Santos was made to undergo a remediation
phase of the evaluation process through a Professional Growth Plan. After the implementation of
the plan, there were noticeable improvements on Santos. However, the positive reviews were
gradually replaced by renewed concerns on her planning. Thus, a written notice to explain was
sent to complainant directing her to explain in writing why her employment from the School
should not be terminated because of her failure to meet the criteria for improvement set out in
her Professional Growth Plan and her substandard performance as a teacher.
In response, Santos blamed the School for her predicament. She said that, in the last few years,
she had been forced to teach Filipino, a subject which she had no preparation for. The School
allegedly made this happen against her objections and despite the fact that she had no training
in Filipino linguistics and literature. Santos also asked for clarification on why she was being
asked to explain and the reasons therefor.
Thereafter, a series of conferences were held to clarify matters. Afterwards, the management
rendered a decision terminating her employment.
Respondent Santos gets a favorable ruling from the Labor Arbiter up to the NLRC, hence, this
petition.
Issues
a) WHETHER OR NOT THE COURT OF APPEALS ERRED IN FINDING THAT RESPONDENT
EVANGELINE SANTOS WAS ILLEGALLY DISMISSED; and
b) WHETHER OR NOT RESPONDENT EVANGELINE SANTOS IS ENTITLED TO REINSTATEMENT
OR SEPARATION PAY WITH BACKWAGES.61
Ruling
Defendants were not liable. Termination was valid and legal. In all cases involving termination of
employment, the burden of proving the existence of the above just causes rests upon the
employer. The quantum of proof required in these cases is substantial evidence, that is, such
relevant evidence that a reasonable mind might accept as adequate to support a conclusion,
even if other equally reasonable minds might conceivably opine otherwise.
Citing jurisprudence, the concept of gross negligence connotes want or absence of or failure to
exercise slight care or diligence, or the entire absence of care. It evinces a thoughtless disregard
of consequences without exerting any effort to avoid them. Fraud and willful neglect of duties
imply bad faith of the employee in failing to perform his job, to the detriment of the employer
and the latters business. On the other hand, habitual neglect implies repeated failure to
perform ones duties for a period of time, depending upon the circumstances.
Further, in dismissing an employee for gross and habitual neglect of duties, the negligence
should not merely be gross, it should also be habitual.

Meanwhile, gross inefficiency, while not stated in the Labor Code, falls within the purview of
other causes analogous to the foregoing. Hence, it is a just cause to terminate an employee.
Citing caselaw, one is analogous to another if it is susceptible of comparison with the latter
either in general or in some specific detail; or has a close relationship with the latter. Gross
inefficiency is closely related to gross neglect, for both involve specific acts of omission on the
part of the employee resulting in damage to the employer or to his business. [In a previous
case], this Court ruled that failure to observe prescribed standards of work, or to fulfill reasonable
work assignments due to inefficiency may constitute just cause for dismissal.
In this case, the actuations of Santos cannot constitute gross and habitual neglect of her duties.
From the very beginning of her tenure as a teacher of the Filipino language, the recurring
problem observed of Santos was that her lesson plans lacked details and coherent correlation to
each other, to the course, and to the curriculum, which in turn affected how lessons and
instructions were conveyed to the students. After Santos was placed in a Professional Growth
Plan on March 29, 1996, petitioners observed a noticeable improvement on her part. In his memo
dated May 24, 1996, then Assistant Principal Loy even stated that Santoss improvement was a
result of her positive attitude in approaching her growth plan. Unfortunately, though, Santos
could not sustain this progress. Not long after, the School administrators were again admonishing
Santos for her vague lesson plans that lacked specifics.
However, based on records, the inadequacies of Santos as a teacher did not stem from a
reckless disregard of the welfare of her students or of the issues raised by the School regarding
her teaching. Far from being tainted with bad faith, Santoss failings appeared to have resulted
from her lack of necessary skills, in-depth knowledge, and expertise to teach the Filipino
language at the standards required of her by the School. Consequently, defendants sufficiently
proved the charge of gross inefficiency, which warranted the dismissal of Santos from the
School.
As previously held, it is the prerogative of the school to set high standards of efficiency for its
teachers since quality education is a mandate of the Constitution. As long as the standards fixed
are reasonable and not arbitrary, courts are not at liberty to set them aside. Further, this is also
in in line with the academic freedom accorded to schools.
Going further, the CBA between ISAE and the School for the years 1992-1995 also recognized
the exclusive right of the School to hire and appoint qualified faculty subject to such reasonable
rules and regulations as it may prescribe, as well as the right of the School to discipline its
faculty and determine reasonable levels of performance. Section 8 of Appendix A of the CBA also
states that [a]ll faculty members must meet the high standard of performance expected by the
SCHOOL and abide by all its policies, procedures and contractual terms.
Here, it is not accurate to state that Santos was dismissed by the School for inefficiency on
account of the fact that she was caught only once without a lesson plan. The documentary
evidence submitted by [defendants], the contents of which we laid down in detail in our
statement of facts, pointed to the numerous instances when Santos failed to observe the
prescribed standards of performance set by the School in several areas of concern, not the least
of which was her lack of adequate planning for her Filipino classes. Said evidence established
that the School administrators informed Santos of her inadequacies as soon as they became
apparent; that they provided constructive criticism of her planning process and teaching
performance; and that regular conferences were held between Santos and the administrators in
order to address the latters concerns. In view of her slow progress, the School required her to
undergo the remediation phase of the evaluation process through a Professional Growth Plan.
Despite the efforts of the School administrators, Santos failed to show any substantial
improvement in her planning process. Having failed to exit the remediation process successfully,
the School was left with no choice but to terminate her employment.
Lastly, it must be pointed out that Santos voluntarily agreed to teach the Filipino classes given
to her when she came back from her leave of absence. Said classes were not forced upon her by
the School. This much she admitted in the hearing of the case before the Labor Arbiter. She

stated therein that for the school year 1993-1994, she was given the option to teach only one
Spanish class and not have any Filipino teaching loads. She, however, said that if she took that
option she would have been underpaid and her salary would not have been the same. Moreover,
for the school years 1994-1995 and 1995-1996, she made known to the School that she did not
prefer a change in teaching assignment. Thus, when she consented to take on the Filipino
classes, it was Santoss responsibility to teach them well within the standards of teaching
required by the School, as she had done previously as a teacher of Spanish. Failing in this, she
must answer for the consequences.
While employees who were validly terminated are ordinarily not entitled to separation pay, an
exception is when the court finds justification in applying the principle of social justice according
to the equities of the case. In this case, the Court finds equitable and proper the award of
separation pay in favor of Santos in view of the length of her service with the School prior to the
events that led to the termination of her employment. To recall, Santos was first employed by the
School in 1978 as a Spanish language teacher. During this time, the records of this case are
silent as to the fact of any infraction that she committed and/or any other administrative case
against her that was filed by the School. Thus, an award of separation pay equivalent to one-half
(1/2) month pay for every year of service is awarded in favor of Santos on grounds of equity and
social justice.
21. SCHOOL OF THE HOLY SPIRIT OF QUEZON CITY and/or SR. CRISPINA A. TOLENTINO,
S.Sp.S. vs.CORAZON P. TAGUIAM [G.R. No. 165565 July 14, 2008]
Topic: Dismissal from employment: Just Cause Gross Negligence & Habitual Neglect of Duties
Negligence is a question of fact.
Facts:
Respondent was the Class Adviser of Grade 5-Esmeralda of the petitioner school. The class
president, wrote a letter to the principal requesting permission to hold a year-end celebration at
the school grounds. The principal authorized the activity and allowed the pupils to use the
swimming pool. In this connection, respondent distributed the parents/guardians permit forms
to the pupils.
Respondent admitted that Chiara Mae Federicos permit form was unsigned. Nevertheless, she
concluded that Chiara Mae was allowed by her mother to join the activity since her mother
personally brought her to the school with her packed lunch and swimsuit.
Before the activity started, respondent warned the pupils who did not know how to swim to avoid
the deeper area. However, while the pupils were swimming, two of them sneaked out.
Respondent went after them to verify where they were going.
Unfortunately, while respondent was away, Chiara Mae drowned which resulted to her death.
Respondent was then dismissed by petitioners on the ground of gross negligence resulting to loss
of trust and confidence. Furthermore, the pupils parents filed against respondent a damage suit
and a criminal complaint for reckless imprudence resulting in homicide.
Respondent in turn filed a complaint against petitioners for illegal dismissal, with a prayer for
reinstatement with full backwages and other money claims, damages and attorneys fees.
In dismissing the complaint, the Labor Arbiter declared that respondent was validly terminated
for gross neglect of duty which was affirmed by the NLRC. Aggrieved, respondent instituted a
petition for certiorari before the CA, which ruled in her favor. Hence, this petition.
Issue: Whether or not the respondents dismissal on the ground of gross negligence resulting to
loss of trust and confidence was valid.
Ruling: YES
The issue of whether a party is negligent is a question of fact. As a rule, the SC is not a
trier of facts and this applies with greater force in labor cases. However, where the issue is
shrouded by a conflict of factual perception, the SC is constrained to review the factual findings

of the CA. In this case, the findings of facts of the appellate court contradict those of the Labor
Arbiter and the NLRC.
Under Article 282 of the Labor Code, gross and habitual neglect of duties is a valid ground for an
employer to terminate an employee. Gross negligence implies a want or absence of or a failure
to exercise slight care or diligence, or the entire absence of care. It evinces a thoughtless
disregard of consequences without exerting any effort to avoid them. Habitual neglect implies
repeated failure to perform ones duties for a period of time, depending upon the circumstances.
The perusal of the records leads the SC to conclude that respondent had been grossly negligent.
First, it is undisputed that Chiara Maes permit form was unsigned. Yet, respondent
allowed her to join the activity because she assumed that Chiara Maes mother has allowed her
to join it by personally bringing her to the school with her packed lunch and swimsuit.
The purpose of a permit form is precisely to ensure that the parents have allowed their child to
join the school activity involved. Respondent cannot simply ignore this by resorting to
assumptions. Respondent admitted that she was around when Chiara Mae and her mother
arrived. She could have requested the mother to sign the permit form before she left the school
or at least called her up to obtain her conformity.
Second, it was respondents responsibility as Class Adviser to supervise her class in
all activities sanctioned by the school. Thus, she should have coordinated with the school to
ensure that proper safeguards, such as adequate first aid and sufficient adult personnel, were
present during their activity. She should have been mindful of the fact that with the number of
pupils involved, it would be impossible for her by herself alone to keep an eye on each one of
them.
As it turned out, since respondent was the only adult present, majority of the pupils were left
unsupervised when she followed the two pupils who sneaked out. In the light of the odds
involved, respondent should have considered that those who sneaked out could not have left the
school premises since there were guards manning the gates. The guards would not have allowed
them to go out in their swimsuits and without any adult accompanying them. But those who
stayed at the pool were put at greater risk, when she left them unattended by an adult.
Notably, respondents negligence, although gross, was not habitual. In view of the considerable
resultant damage (death of the pupil), however, the SC is in agreement that the cause is
sufficient to dismiss respondent.
Moreover, a simple reminder "not to go to the deepest part of the pool" 26 was insufficient to cast
away all the serious dangers that the situation presented to the children, especially when
respondent knew that Chiara Mae cannot swim.
Finally, the SC note that based on the criminal complaint filed by Chiara Maes parents, the Asst.
City Prosecutor found probable cause to indict respondent for the crime of reckless imprudence
resulting in homicide. While this finding is not controlling for purposes of the instant case, this
only supports the SCs conclusion that respondent has indeed been grossly negligent.
All told, there being a clear showing that respondent was culpable for gross negligence resulting
to loss of trust and confidence, her dismissal was valid and legal. It was error for the Court of
Appeals to reverse and set aside the resolution of the NLRC.
22.
GILDA
C.
FERNANDEZ
AND
BERNADETTE
A.
BELTRAN,
Petitioners,
vs.
NEWFIELD STAFF SOLUTIONS, INC./ARNOLD "JAY" LOPEZ, JR., Respondents.
G.R. No. 201979

July 10, 2013

DOCTRINE: "It defies reason that they would leave their jobs and then fight odds to
win them back. Human experience dictates that a worker will not just walk away from
a good paying job and risk unemployment and damages as a result thereof UNLESS
illegally dismissed."
FACTS:
Respondent Newfield hired Fernandez as Recruitment Manager and also hired
Beltran as probationary Recruitment Specialist. Petitioners guaranteed to perform their

tasks for six months and breach of this guarantee would make them liable for damages. A written
notice 45 days before the effective date of termination was also agreed upon if they wish to
terminate their employment. On Oct. 17, 2008 respondent Arnold "Jay" Lopez, Jr., Newfields
General Manager, terminated their employment on the ground that they failed to
perform satisfactorily. BUT! A week later, petitioners received Lopez, Jr.s return-towork letters dated October 22, 2008 which stated that they did not report since October 20,
2008 without resigning, in violation of their employment agreements and that they were directed
to report and explain their failure to file resignation letters.
Fernandez countered with a demand letter dated November 11, 2008 wherein she
claimed for unpaid salary and phone expenses in furtherance of Newfields business were not
paid. Beltran for her part also sent a demand letter similar to Fernandezs. Respondent did not
grant petitioners claims. Aggrieved, petitioners filed a complaint for illegal dismissal.
Petitioners claim JAY told them: "YOURE FIRED, this is your last day and turn over the records to
your successors." In rebuttal, respondents claimed that petitioners signed fixed-term
employment agreements where they agreed to perform their tasks for six months and of the
requirement for them to give a written notice 45 days in advance if they want to terminate their
employment agreements which were not complied with by petitioners. Respondents claim that
petitioners did not report for work and did not even communicate with respondents despite the
return-to-work letter which prompted respondent to declared her absent without official leave
(AWOL) and terminated her employment on the ground of breach of contract since both of them
no longer showed up for work.
The Labor Arbiter ruled that petitioners dismissal was illegal, Rejecting
respondents claim of abandonment and that their complaint is proof of their desire to return to
work and negates any suggestion of abandonment. The NLRC affirmed the Labor Arbiters
decision. BUT!! CA reversed the NLRC and dismissed petitioners complaint for illegal
dismissal, ruling that petitioners abandoned their jobs and pre-terminated their six-month
employment agreements.
ISSUE: W/N PETITIONERS WERE ILLEGALY DISSMISED.
RULING: YES, PETITIONERS WERE ILLEGALY DISMISSED.
Petitioners argue that for dismissal to be valid there must be a just or authorized cause and due
process must be observed.
1. Lopez, Jr. terminated their employment. ON October 17, 2008, told them that it was their
last day and ordered them to turn over the records to their successors. RESPONDENTS DID NOT
EVEN DENY what happened as stated under oath by petitioners.
2. The CA also erred in ruling that petitioners abandoned their jobs.
Petitioners employment agreements are not fixed-term contracts for six months because
Fernandez and Beltran merely guaranteed to perform their tasks for six months and failure to
comply with this guarantee makes them liable for liquidated damages. Thus, respondents, the
NLRC and CA misread the guarantee as the fixed duration of petitioners employment.
Petitioners are not fixed-term employees but probationary employees.
Respondents even admitted that Beltran was hired as probationary Recruitment Specialist. A
probationary employee may be terminated for a just or authorized cause or when he
fails to qualify as a regular employee in accordance with reasonable standards
prescribed by the employer.
ALSO, NO ABANDONMENT HA!!! TAKE NOTE! DI NI CHAR
Abandonment is a form of neglect of duty, one of the just causes for an
employer to terminate an employee. For abandonment to exist, two factors must be
present: (1) the failure to report for work or absence without valid or justifiable
reason; and (2) a clear intention to sever the employer-employee relationship, with
the second element as the more determinative factor being manifested by some overt
acts.
BOT FACTORS ARE NOT PRESENT, petitioners are not guilty of abandonment.

1. Petitioners were absent because Lopez, Jr. had fired them. Thus, we cannot
fault them for refusing to comply with the return-to-work letters and responding instead
with their demand letters. Neither can they be accused of being AWOL or of breaching
their employment agreements.

2. petitioners have no intention to sever the employment relationship. They

protested their dismissal by sending demand letters and filing a complaint for illegal
dismissal with prayer for reinstatement. Employees who take steps to protest their
dismissal cannot logically be said to have abandoned their work. A charge of
abandonment is totally inconsistent with the immediate filing of a complaint for illegal
dismissal. The filing thereof is proof enough of ones desire to return to work. So NO
ABANDONMENT!
ALSO! Petitioners did NOT SHOW THAT THEY NO LONGER WANTED TO CONTINUE
WORKING FOR RESPONDENT. They were told to resign despite their accomplishments. Thus,
they had no option but to sue respondents for illegal dismissal. This does NOT show ANY
intention to abandon their jobs. Fernandez earns P56,000 and Beltran earns P17,000 per month.
"It defies reason that they would leave their jobs and then fight odds to win them
back. Human experience dictates that a worker will not just walk away from a good
paying job and risk unemployment and damages as a result thereof UNLESS illegally
dismissed." THUS, NO JUST CAUSE FOR DISMISSAL.
Under Article 279 of the Labor Code, as amended, an employee unjustly dismissed
from work is entitled to reinstatement and full back wages from the time his
compensation was withheld from him up to the time of his actual reinstatement.
However, the NLRCs award of back wages and separation pay is binding on
petitioners who no longer contested and are therefore presumed to have accepted
the adjudication The Labor Arbiter and NLRC have not found Lopez, Jr. guilty of malice or bad
faith. Thus, there is no basis to hold Lopez, Jr. solidarily liable with Newfield. THUS, CA DECISION
REVERSED.
23. SANDEN AIRCON PHILIPPINES and ANTONIO ANG, petitioners, vs. LORESSA P.
ROSALES, respondent. [G.R. No. 169260.March 23, 2011]
DOCTRINES:
1) Termination of Employment due to Loss of Trust and Confidence
Article 282(c) of the Labor Code prescribes two separate and distinct grounds for
termination of employment, namely: (1) fraud or (2) willful breach by the employee of the trust
reposed in him by his employer or duly authorized representative. Settled is the rule that under
Article 282(c), the breach of trust must be willful. Ordinary breach will not suffice.
A breach is willful if it is done intentionally and knowingly without any justifiable excuse,
as distinguished from an act done carelessly, thoughtlessly or inadvertently. As firmly
entrenched in our jurisprudence, loss of trust and confidence as a just cause for termination of
employment is premised on the fact that an employee concerned holds a position where greater
trust is placed by management andfrom whom greater fidelity to duty is correspondingly
expected. The betrayal of this trust is the essence of the offense for which an employee is
penalized.
2) Burden of Proof to prove allegation of loss of trust and confidence is on the
employer.
Unlike in other cases where the complainant has the burden of proof to prove its
allegations, the burden of establishing facts as bases for an employers loss of confidence in an
employeefacts which reasonably generate belief by the employer that the employee was
connected with some misconduct and the nature of his participation therein is such as to render
him unworthy of trust and confidence demanded of his positionis on the employer.
3) Confidential Employees
The first requisite for dismissal on the ground of loss of trust and confidence is that
the employee concerned must be holding a position of trust and confidence. In this case, we
agree that Loressa, who had immediate access to Sandens confidential files, papers and
documents, held a position of trust and confidence as Coordinator and Data Custodian of the MIS
Department.
The second requisite is that there must be an act that would justify the loss of trust
and confidence. Loss of trust and confidence, to be a valid cause for dismissal, must be based on

a willful breach of trust and founded on clearly established facts. The basis for the dismissalmust
be clearly and convincingly established but proof beyond reasonable doubt is not necessary.
FACTS:
Sanden Aircon Philippines (Sanden) is a corporation engaged in the business of manufacturing,
assembling, and fabricating automotive air-conditioning systems.In August 1992, Sanden
employed Loressa P. Rosales (Loressa) as Management Information System (MIS) Department
Secretary and was promoted as Data Custodian and Coordinator. As such, Loressa had access to
all computer programs and marketing computer data, including the Delivery Receipt Transaction
files of Sanden. The Finance Department based its billing and collection activities on the
marketing delivery receipt transactions. Loressas functions and authority include opening,
editing and copying files in Sandens computers. She was also charged with the duty of creating
back-up copies of all files under her custody. For this purpose, she can request all computer users
at a particular time to log out or exit from the system.
On May 16, 1997, Sanden discovered that the marketing delivery receipt transactions computer
files were missing. The Internal Auditing Department, immediately sent a memorandumdated
May 17, 1997 to Garrick L. Ang (Garrick), the MIS Manager, requesting that a technical
investigation be conducted.Garrick then issued a memorandumenumerating the findings of the
MIS Department.
On June 26, 1997,(Atty. Reynaldo), the Personnel and Administrative Services Manager sent a
letter to Loressa charging her with data sabotage and absences without leave (AWOL). She was
given 24 hours to explain her side.On July 2, 1997, Loressa submitted her letter to Atty. Reynaldo
where she vehemently denied the allegations of data sabotage.On July 17, 1997, the husband of
Loressa received a Notice of Disciplinary Action from Sanden notifying Loressa that management
is terminating Loressas employment effective upon receipt of the said communication. The
reason cited by Sanden was the loss of trust on her capability to continue as its Coordinator and
Data Custodian. Sanden indicated in the said letter that based on all the documents and written
testimonies gathered during the investigation, Loressa caused the deliberate sabotage of the
marketing data involving the Delivery Receipts.On September 9, 1997, Loressa filed a complaint
for illegal dismissal with a prayer for the payment of 13th month pay, attorneys fees and other
benefits.
On May 28, 1998, Labor Arbiter rendered a Decision finding that Sanden is guilty of illegal
dismissal.On November 29, 2000, the NLRC issued a Resolution affirming the Decision of the
Labor Arbiter with the modification. On November 28, 2003, the NLRC issued another
Resolutionwhich reversed its November 29, 2000 Resolution and dismissed the complaint for lack
of merit.
On May 24, 2005, the CA granted the petition and reversed and set aside the November 28,
2003 Resolution of the NLRC and reinstated the latters November 29, 2000 Resolution.
Petitioners moved for reconsideration,but to no avail. Hence, this petition.
ISSUE:
Whether or not Sanden legally terminated Loressas employment on the ground of willful breach
of trust and confidence as Coordinator andData Custodian
RULING:
The petition is bereft of merit.
Article 282(c) of the Labor Code prescribes two separate and distinct grounds for termination of
employment, namely: (1) fraud or (2) willful breach by the employee of the trust reposed in him
by his employer or duly authorized representative.
Settled is the rule that under Article 282(c), the breach of trust must be willful.
Ordinary breach will not suffice.A breach is willful if it is done intentionally and knowingly
without any justifiable excuse, as distinguished from an act done carelessly, thoughtlessly or
inadvertently.
As firmly entrenched in our jurisprudence, loss of trust and confidence as a just cause for
termination of employment is premised on the fact that an employee concerned holds a position
where greater trust is placed by management and from whom greater fidelity to duty is
correspondingly expected. The betrayal of this trust is the essence of the offense for which an
employee is penalized.
Sanden has the burden of proof toprove its allegations.
While it is true that loss of trust and confidence is one of the just causes for termination, such
loss of trust and confidence must, however, have some basis. Proof beyond reasonable doubt is
not required. It is sufficient that there must only be some basis for such loss of confidence or that
there is reasonable ground to believe if not to entertain the moral conviction that the concerned
employee is responsible for the misconduct and that the nature of his participation therein
rendered him absolutely unworthy of trust and confidence demanded by his position.

Sanden failed to discharge the burden of proof that the dismissal of Loressa is for a
just cause.
The first requisite for dismissal on the ground of loss of trust and confidence is that the
employee concerned must be holding a position of trust and confidence.
In this case, we agree that Loressa, who had immediate access to Sandens confidential files,
papers and documents,held a position of trust and confidence as Coordinator and Data Custodian
of the MIS Department.
The second requisite is that there must be an act that would justify the loss of trust and
confidence. Loss of trust and confidence, to be a valid cause for dismissal, must be based on a
willful breach of trust and founded on clearly established facts. The basis for the dismissal must
be clearly and convincingly established but proof beyond reasonable doubt is not necessary. 35
Sandens evidence against Loressa fails to meet this standard.
The same holds true with AWOL. Appellant failed to prove that complainant-appellee went on
absence without official leave. The appellant should have at least presented the daily time record
of appellee to prove that the latter was absent. Mere allegations again would not suffice. 36
Petition denied, judgment and resolution affirmed.
24. LHUILLIER vs. VELAYO, G.R. No. 198620, November 12, 2014
Fiduciary rank-and-file employees, such as cashiers, auditors, property custodians,
though rank-and-file, are routinely charged with the care and custody of the
employers money or property, and are thus classified as occupying positions of trust
and confidence. Petitioner is fully justified in terminating private respondent invoking
loss of trust and confidence under Article 282(c) of the Labor Code.
FACTS:
On June 13, 2003, (herein petitioner) PJ (CEBU) LHUILLIER, INC. (PJ LHUILLIER for brevity)
hired FLORDELIZ M. ABATAYO [sic] as Accounting Clerk at the LH-4, Cagayan de Oro City
Branch with a basic monthly salary of P9,353.00. On February 9, 2008 appellant (herein
private respondent) was served with a Show Cause Memo by MARIO RAMON LUDEA, Area
Operations Manager of PJ Lhuillier (herein petitioner), ordering her to explain within 48
hours why no disciplinary action should be taken against her for dishonesty,
misappropriation, theft or embezzlement of company funds in violation of Item 11, Rule V
of the Company Code of Conduct. Thereafter, she was placed under preventive suspension
from February 9 to March 8, 2008 while her case was under investigation.
The charges against the appellant (herein private respondent) were based on the Audit
Findings conducted on October 29, 2007, where the overage amount of P540.00 was not
reported immediately to the supervisor, not recorded at the end of that day.
On February 11, 2008, complainant (herein private respondent) submitted her reply and
admitted that she was not able to report the overage to the supervisor since the latter was
on leave on that day and that she was still tracing the overage; and that the omission or
failure to report immediately the overage was just a simple mistake without intent to
defraud her employer. On March 10, 2008, after the conduct of a formal investigation and
after finding complainants (herein private respondents) [explanations] without merit, PJ
LHUILLIER (herein petitioner) terminated her employment as per Notice of Termination on
grounds of serious misconduct and breach of trust.
On March 14, 2008, the respondent filed a complaint for illegal dismissal, separation pay
and other damages against P.J. Lhuillier, Inc. (PJLI) and Mario Ramon Ludea, Area
Operations Manager (petitioners).
On July 23, 2008, the Labor Arbiter (LA) rendered judgment ordering the dismissal of the
instant complaint for lack of merit.
On appeal, the NLRC in its Decision dated March 19, 2009 countermanded the LA, holding
that the respondent was illegally dismissed since the petitioners failed to prove a just
cause of serious misconduct and willful breach of trust.
The CA agreed with the NLRC.
HELD:

There is merit in the petition. Respondent held a position of utmost trust and confidence in the
company.
The respondent is not just charged with a misdeed, but with loss of trust and confidence under
Article 282(c) of the Labor Code, a cause premised on the fact that the employee holds a position
whose functions may only be performed by someone who enjoys the trust and confidence of
management.
There are two classes of corporate positions of trust: on the one hand are the
managerial employees whose primary duty consists of the management of the establishment
in which they are employed or of a department or a subdivision thereof, and other officers or
members of the managerial staff; on the other hand are the fiduciary rank-and-file
employees, such as cashiers, auditors, property custodians, or those who, in the normal
exercise of their functions, regularly handle significant amounts of money or property. These
employees, though rank-and-file, are routinely charged with the care and custody of the
employers money or property, and are thus classified as occupying positions of trust and
confidence.
In order that an employer may invoke loss of trust and confidence in terminating an employee
under Article 282(c) of the Labor Code, certain requirements must be complied with, namely: (1)
the employee must be holding a position of trust and confidence; and (2) there must be an act
that would justify the loss of trust and confidence.
The petitioners are fully justified in claiming loss of trust and confidence in the respondent.
A cashiers inability to safeguard and account for missing cash is sufficient cause to dismiss her.
The respondent insisted that she never intended to misappropriate the missing fund, but in
Santos v. San Miguel Corp., the Court held that misappropriation of company funds,
notwithstanding that the shortage has been restituted, is a valid ground to terminate the
services of an employee for loss of trust and confidence. Also, in Caeda v. Philippine Airlines,
Inc., the Court held that it is immaterial what the respondents intent was concerning the missing
fund, for the undisputed fact is that cash which she held in trust for the company was missing in
her custody. At the very least, she was negligent and failed to meet the degree of care and
fidelity demanded of her as cashier. Her excuses and failure to give a satisfactory explanation for
the missing cash only gave the petitioners sufficient reason to lose confidence in her. As it was
held in Metro Drug Corporation v. NLRC:
It would be most unfair to require an employer to continue employing as its cashier a person
whom it reasonably believes is no longer capable of giving full and whole hearted trustworthiness
in the stewardship of company funds.
25. ARMANDO ALILING, petitioner, vs. JOSE B. FELICIANO, MANUEL F. SAN MATEO III,
JOSEPH R. LARIOSA, and WIDE WIDE WORLD EXPRESS CORPORATION, respondents.
[G.R. No. 185829. April 25, 2012.]

Doctrine: 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 the employer as part of its burden to show that the dismissal was for a just
cause.

Facts:
Petitioner was offered employement by respondent Wide Wide World Express
Corp(WWWEC) as account executive (seafreight sales). The offer came with a 6-month probation
period with an express caveat: Performance during [sic] probationary period shall be made as
basis for confirmation to Regular or Permanent Status. The contract was signed on June 11,
2004, which contained the following terms (among others): upon the effectivity of your
probation, you and your immediate superior are required to jointly define your
objectives compared with the job requirements of the position.

However, instead of seafriegh sales assignment, WWWEC asked Aliling to handle Ground
Express(GX), a new product involving domesting cargo forwarding. Barely a month after,
respondent San Mateo, the sales director, emailed Aliling to express disatisfication of the latters
performance. Thereafter, in a letter of September 25, 2004,Joseph R. Lariosa (Lariosa), Human
Resources Manager of WWWEC, asked Aliling to report to the Human Resources Department to
explain his absence taken without leave from September 20, 2004. Aliling responded two days
later. He denied being absent on the days in question, attaching to his reply-letter a copy of his
timesheetwhich showed that he worked from September 20 to 24, 2004. On September 27,
2004, Aliling sent a resignation letter to HR Manager Lariosa. While WWWEC took no action on
his tender, Aliling nonetheless demanded reinstatement and a written apology, claiming in a
subsequent letter dated October 1, 2004 to management that San Mateo had forced him to
resign. On October 6, 2004,Lariosa again wrote, this time 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 and non-payment of
salaries. He also alleged that he was not informed of the standards under which he will qualify as
regular employee. Labor Arbiter found the dismissal unjustified. Upon appeal by both parties,
NLRC affirmed in toto. Aliling went on certiorari to CA which affirmed wth modification the
decision of NLRC. The CA anchored its assailed action on the strength of the following premises:
(a) respondents failed to prove that Ali lings dismal performance constituted gross and habitual
neglect necessary to justify his dismissal; (b) not having been informed at the time of his
engagement of the reasonable standards under which he will qualify as a regular employee,
Aliling was deemed to have been hired from day one as a regular employee; and (c) the strained
relationship existing between the parties argues against the propriety of reinstatement.

Issues: 1. WON Aliling was a regular employee?

2. WON Aliling was illegaly dismissed?

Ruling:
1.Yes.Section 6(d) of the Implementing Rules of Book VI, Rule VIII-A of the Labor
Code provides: x x x x (d)In all cases of probationary employment, the employer shall
make known to the employee the standards under which he will qualify as a regular
employee at the time of his engagement. Where no standards are made known to the
employee at that time, he shall be deemed a regular employee.
To note, the contract 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.
As to WWWEC contention that San Mateo sent an email to Aliling about the standards of
his regularization, the email message was sent to Aliling more than a month after he signed his
employment contract with WWWEC. The aforequoted Section 6 of the Implementing Rules of
Book VI, Rule VIII-A of the Code specifically requires the employer to inform the probationary
employee of such reasonable standards at the time of his engagement, not at any time
later; else, the latter shall be considered a regular employee.

2. Yes. Aliling was illegaly dismissed. WWWEC failed to discharge its twin burden to prove just
cause and to afford due process.
First off, the circumstances of the case would show that petitioners alleged failure
to achieve quota, as a ground for termnation, was a mere aftethought. Consider:
Lariosas letter of September 25, 2004 already betrayed managements intention to dismiss the
petitioner for alleged unauthorized absences. Aliling was in fact made to explain and he did so
satisfactorily. But, lo and behold, WWWEC nonetheless proceeded with its plan to dismiss the
petitioner for non-satisfactory performance, although the corresponding termination letter dated
October 6, 2004 did not even specifically state Alilings non-satisfactory performance, or that
Alilings termination was by reason of his failure to achieve his set quota.

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.Article 282 of the Labor Code considers any of the following acts or omission on the
part of the employee as just cause or ground for terminating employment: (b)Gross and
habitual neglect by the employee of his duties, xxx (e)Other causes analogous to the
foregoing.
In fine, 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. WWWEC must show that
such quota was imposed in good faith. This WWWEC failed to do, perceptibly because it could
not. The fact of the matter is that the alleged imposition of the quota was a desperate attempt to
lend a semblance of validity to Alilings illegal dismissal.
Being an experimental activity and having been launched for the first time, the sales of GX
services could not be reasonably quantified. The contract only implied 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.

Notes: Since Aliling was a regular employee, not a mere probationary employee, SC granted
backages reckoned from the time of his dismissal, and separation in lieu of reinstatement on the
ground strained relationship. SC also granted an award for nominal damages for violation of due
process instead of moral and exemplary damages. Aliling failed to show bad faith on the part of
WWWEC.
26. FLORDELIZA MARIA REYES-RAYEL, Petitioner, vs.PHILIPPINE LUEN THAI HOLDINGS,
CORPORATION/L&T INTERNATIONAL GROUP PHILIPPINES, INC.,Respondents.
G.R. No. 174893

July 11, 2012

Facts
In February 2000, PLTHC hired petitioner as Corporate Human Resources (CHR) Director for
Manufacturing for its subsidiary/affiliate company, L&T. In the employment contract, petitioner

was tasked to perform functions in relation to administration, recruitment, benefits,

audit/compliance, policy development/ structure, project plan, and such other works as may be
assigned by her immediate superior, Frank Sauceda (Sauceda), PLTHCs Corporate Director for
Human Resources.
In a Termination Notice dated September 12, 2001, respondents dismissed petitioner from the
service for loss of confidence on her ability to promote the interests of the company. This led
petitioner to file a Complaint for illegal dismissal.
In her Position Paper, petitioner argued that her dismissal was without valid or just cause and
was effected without due process. According to her, the causes for her dismissal as stated in the
Prerequisite Notice and Notice of Termination are not proper grounds for termination under the
Labor Code and the same do not even pertain to any willful violation of the companys code of
discipline or any other company policy. Even the alleged loss of confidence was not supported by
any evidence of wrongdoing on her part. She likewise claimed that due process was not observed
since she was not afforded a hearing, investigation and right to appeal as per company
procedure for disciplining employees. Furthermore, respondents were guilty of violating the
termination provision under the employment contract which stipulated that employment after
probationary period shall be terminated by giving the employee a three-month notice in writing
or by paying three months salary in lieu of notice. Petitioner also accused respondents of having
acted in bad faith by subjecting her to public humiliation and embarrassment when she was
ordered to immediately turn over the company car, vacate her office and remove all her
belongings on the same day she received the termination notice, in full view of all the other
employees.
Respondents, on the other hand, claimed that they have a wide discretion in dismissing
petitioner as she was occupying a managerial position. They claimed that petitioners inefficiency
and lackadaisical attitude in performing her work were just and valid grounds for termination. In
the same token, her gross and habitual neglect of duties were enough bases for respondents to
lose all their confidence in petitioners ability to perform her job satisfactorily. Also, petitioner
was accorded due process as she was furnished with two notices - the first requiring her to
explain why she should not be terminated, and the second apprising her of the managements
decision to terminate her from employment.
Issue
Petitioner posits that there is no substantial evidence to establish valid grounds for her dismissal
since various emails from her superiors illustrating her accomplishments and commendations, as
well as her "good" overall performance rating negate loss of trust and confidence.
Ruling
The petition is DENIED. There exists a valid ground for petitioners termination from
employment.
Jurisprudence provides that an employer has a distinct prerogative and wider latitude of
discretion in dismissing a managerial personnel who performs functions which by their nature
require the employers full trust and confidence. As distinguished from a rank and file personnel,
mere existence of a basis for believing that a managerial employee has breached the trust of the
employer justifies dismissal. Loss of confidence as a ground for dismissal does not require proof
beyond reasonable doubt as the law requires only that there be at least some basis to justify it.
Petitioner, in the present case, was L&Ts CHR Director for Manufacturing. As such, she was
directly responsible for managing her own departmental staff. It is therefore without question
that the CHR Director for Manufacturing is a managerial position saddled with great
responsibility. Because of this, petitioner must enjoy the full trust and confidence of her
superiors. Not only that, she ought to know that she is "bound by more exacting work ethics"and
should live up to this high standard of responsibility. However, petitioner delivered dismal
performance and displayed poor work attitude which constitute sufficient reasons for an
employer to terminate an employee on the ground of loss of trust and confidence. Respondents
also impute upon petitioner gross negligence and incompetence which are likewise justifiable
grounds for dismissal. The burden of proving that the termination was for a valid cause lies on
the employer. Here, respondents were able to overcome this burden as the evidence presented
clearly support the validity of petitioners dismissal.

Respondents enumerated the various instances which manifested petitioners poor work attitude
and dismal performance, to wit: 1) her failure to perform in accordance with management
directives such as when she unreasonably delayed the hiring of a Human Rights and Compliance
Manager; failed to establish communication with superiors and co-workers; failed to regularly
update Sauceda of the progress of her work; requested for reimbursement of unauthorized
expenditures; and, gave orders contrary to policy on the computation of legal and holiday pay; 2)
her negative pronouncements against the companys program in the presence of colleagues and
subordinates; 3) her inability to incite collaboration and harmony within her department; 4) her
negative attitude towards the company, its officers and employees; and 5) her low performance
appraisal rating which is unacceptable for a top level personnel like herself. Exchange of emails,
affidavits and other documents were presented to provide proof of incidents which gave rise to
these allegations.
Taking all these circumstances collectively, the Court is convinced that respondents have
sufficient and valid reasons in terminating the services of petitioner as her continued
employment would be patently inimical to respondents interest. An employer "has the right to
regulate, according to its discretion and best judgment, all aspects of employment, including
work assignment, working methods, processes to be followed, working regulations, transfer of
employees, work supervision, lay-off of workers and the discipline, dismissal and recall of
workers."47 "[S]o long as they are exercised in good faith for the advancement of the employers
interest and not for the purpose of defeating or circumventing the rights of the employees under
special laws or under valid agreements," 48 the exercise of this management prerogative must be
upheld.
27. EDGE APPAREL, INC., petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION,
Fourth Division, Cebu City; Regional Arbitration Branch No. 7, Cebu City; and
JOSEPHINE ANTIPUESTO, NORINA ANDO, JULIET BAGUIO, APOLINARIA VELONTA,
CORAZON PINO, and JOSEPHINE CAETE, respondents. [G.R. No. 121314 February 12,
1998]
Doctrines:
Termination of an employee's services because of a reduction of work force due to a decrease in
the scope or volume of work of the employer is synonymous to, or a shade of termination
because of redundancy under Article 283 (formerly 284) of the Labor Code. Redundancy exist
where the services of an employee are in excess of what is reasonably demanded by the actual
requirements of the enterprise. A position is redundant where it is superfluous, and superfluity of
a position or positions may be the outcome of a number of factors, such as overhiring of workers,
decreased volume of business, or dropping of a particular product line or service activity
previously manufactured or undertaken by the enterprise. (Tierra International Construction
Corporation vs. NLRC, 77 SCRA Vol. 211).
In case of termination due to the installation of labor saving devices or redundancy, the worker
affected thereby shall be entitled to at least one (1) month pay or to at least one month pay for
every year of service, which ever is higher. (Art. 283, Labor Code).
Article 283, in turn, specifies the authorized causes for the termination of employment, viz:
(a) installation of labor-saving devices;
(b) redundancy;
(c) retrenchment to prevent losses; and
(d) closing or cessation of operation of the establishment or undertaking unless the closing
is for the purpose of circumventing the provisions of law.
In addition, Article 284 provides that an employer would be authorized to terminate the services
of an employee found to be suffering from any disease if the employee's continued employment
is prohibited by law or is prejudicial to his health or to the health of his fellow employees
Facts:
Pursuing its retrenchment program, petitioner Edge Apparel, Inc., dismissed private respondents
Josephine Antipuesto, Norina Ando, Juliet Baguio, Apolinaria Velonta, Corazon Pino and Josephine
Caete from employment effective 03 September 1992.
The subsequent receipt of their separation pay benefits, nevertheless, did not deter Antipuesto,
et al., from later going through with their complaint for illegal dismissal against the corporation.

The charge averred that the retrenchment program was a mere subterfuge used by Edge
Apparel to give a semblance of regularity and validity to the dismissal of the complainants.
Edge Apparel showed that it has incurred unabated losses of P681,280.00 in 1989, P262,741.00
in 1990, P162,170.00 in 1991 and P749,294.00 in 1992, constraining the company to adopt and
implement a retrenchment program, and that row #8 in which complainants were
employed, was phased out because respondent Company's "buyers had already
ceased its orders for simple style garments.
Labor Arbiter dismissed the complaint while the NLRC held that the termination of the 27
retrenched employees is considered a redundancy. Hence, the complainants, who were already
paid the separation pay equivalent to 1/2 month pay per year of service, are entitled to be paid
the additional separation pay equivalent to 1/2 month pay for every year of service.
Issue:
Whether or not it was proper for NLRC to order Edge Apparel to pay the complainants an
additional separation pay equivalent to 1/2 month pay for every year of service.
Held:
No. Redundancy exists where the services of an employee are in excess of what would
reasonably be demanded by the actual requirements of the enterprise. A position is redundant
when it is superfluous, and superfluity of a position or positions could be the result of a number
of factors, such as the overhiring of workers, a decrease in the volume of business or the
dropping of a particular line or service previously manufactured or undertaken by the enterprise.
An employer has no legal obligation to keep on the payroll employees more than the number
needed for the operation of the business.
Retrenchment, in contrast to redundancy, is an economic ground to reduce the number of
employees. In order to be justified, the termination of employment by reason of retrenchment
must be due to business losses or reverses which are serious, actual and real. Retrenchment is
normally resorted to by management during periods of business reverses and
economic difficulties occasioned by such events as recession, industrial depression, or
seasonal fluctuations. Retrenchment is, in many ways, a measure of last resort when other
less drastic means have been tried and found to be inadequate. A lull caused by lack of orders or
shortage of materials must be of such nature as would severely affect the continued business
operations of the employer to the detriment of all and sundry if not properly addressed.
The documents presented in evidence were found to "conclusively show that petitioner suffered
serious financial losses." The general standards or elements needed for the retrenchment to be
valid i.e., that the losses expected are substantial and not merely de minimis in extent; that
the expected losses are reasonably imminent such as can be perceived objectively and in good
faith by the employer; that the retrenchment is reasonably necessary and likely to effectively
prevent the expected losses; and that the imminent losses sought to be forestalled are
substantiated were adequately shown in the present case. The findings of the Labor Arbiter
and the NLRC would negate any impression that petitioner was guilty of bad faith or misdoing in
its retrenchment policy.
Clearly, the fact alone that a mere portion of the business of an employer, not the whole of it, is
shut down does not necessarily remove that measure from the ambit of the term "retrenchment"
within the meaning of Section 283(c) of the Labor Code.
When the termination of employment is due to retrenchment to prevent losses, or to closure or
cessation of operations of establishment or undertaking not due to serious business losses or
financial reverses, the separation pay is only an equivalent of "one (1) month pay or at least onehalf (1/2) month pay for every year of service, whichever is higher." In the above instances, a
fraction of at least six (6) months is considered as one (1) whole year.
The Court, accordingly, must sustain the position taken by the Labor Arbiter that private
respondents should only be entitled to severance compensation equivalent to one-half (1/2)
month pay for every year of service.
28. MAGNOLIA DAIRY PRODUCTS CORPORATION, petitioner, vs. NATIONAL LABOR
RELATIONS COMMISSION and JENNY A. CALIBO, respondents. [G.R. No. 114952.
January 29, 1996]
DECISION
The objective of the State in prohibiting labor-only contracting is to ensure that labor laws are
followed and to prevent exploitation of workers. A labor-only contractor is one that presents itself
as an employer even if it does not have capital to run a business or capacity to ensure that its
workers are paid their wages and other benefits as prescribed by law. As such, it cannot

independently undertake to perform a subcontracted job or service. To allow a labor-only

contractor to operate is to give it an opportunity to circumvent the law and to exploit workers."
Facts:
Petitioner, a division of San Miguel Corporation (SMC), entered into a contract of service with
Skillpower, Inc., a duly organized corporation engaged in the business of offering and providing
manpower services to the public. On June 11, 1983, Skillpower, Inc., assigned private respondent
Jenny A. Calibo to petitioners Tetra Paster Division.
When petitioners contract with Skillpower, Inc., expired, private respondent applied with
Lippercon Services, Inc., also a corporation engaged in providing manpower services. In July
1987, Lippercon Services, Inc., assigned her to petitioners Tetra Paster Division as a cleaning
aide. In December 1987, she was terminated without notice from service due to petitioners
installation of automated machines.
On July 11, 1989, private respondent instituted a complaint for illegal dismissal against
petitioner. In answer thereto, petitioner averred that it has no employer-employee relationship
with private respondent since Skilipower, Inc., and Lippercon Services, Inc., were solely
responsible for private respondents employment and that the dismissal was prompted by the
installation of labor saving devices - an authorized cause for dismissal under the Labor Code, as
amended.
Issues:
1. Whether or not there was an employer-employee relationship?
2. Whether or not there was an illegal dismissal in the case at bar?
Held:
1. YES, there was an employer-employee relationship.
In the instant case, the undertaking of respondents Skilipower and/or Lippercon was to
provide respondent Magnolia with a certain number of persons able to carry out the works in
the production line. These workers supplied by Skillpower and/or Lippercon in performing their
works utilized the premises, tools, equipments and machineries of respondent Magnolia and
not those of the former.
Moreover, the work being performed by complainant, such as, to remove bulgings (damaged
goods) from dilapidated cartoons, (sic) to replace damaged goods and re-paste the cartoon
(sic) thereof, to dispose the damaged goods or returned goods from Magnolias warehouse to
avoid bad odors, to clean leftovers of leaking tetra-pak by mopping or washing the
contaminated premises, and others, are of course directly related to the day to day
operations of respondent Magnolia.
Here, it is clear as daylight, hayag pas udtong tutok that Skilipower and/or Lippercon merely
considered as agents of the petitioner who shall be responsible to Ms. Calibo in the same
manner and extent as if the latter were directly employed by him.
2. NO
The law authorizes an employer, like the herein petitioner, to terminate the employment of
any employee due to the installation of labor saving devices. The installation of these devices
is a management prerogative, and the courts will not interfere with its exercise in the absence
of abuse of discretion, arbitrariness, or maliciousness on the part of management, as in this
case.
Nonetheless, this did not excuse petitioner from complying with the required written notice to
the employee and to the Department of Labor and Employment (DOLE) at least one month
before the intended date of termination. This procedure enables an employee to contest the
reality or good faith character of the asserted ground for the termination of his services
before the DOLE.
The failure of petitioner to serve the written notice to private respondent and to the DOLE,
however, does not ipso facto make private respondents termination from service illegal so as
to entitle her to reinstatement and payment of backwages. If at all, her termination from
service is merely defective because it was not tainted with bad faith or arbitrariness and was
due to a valid cause.

29. EUGENE S. ARABIT, EDGARDO C. SADSAD, LOWELL C. FUNTANOZ, GERARDO F.

PUNZALAN, FREDDIE M. MENDOZA, EMILIO B. BELEN, VIOLETA C. DIUMANO AND MB
FINANCE EMPLOYEES ASSOCIATION FFW CHAPTER (FEDERATION OF FREE WORKERS),
Petitioners, v. JARDINE PACIFIC FINANCE, INC. (FORMERLY MB FINANCE), Respondent.
[G.R. No. 181719, April 21, 2014]
Labor law; Retrenchment differentiated from redundancy. Retrenchment and redundancy are
two different concepts; they are not synonymous; thus, they should not be used interchangeably.
Redundancy exists where the services of an employee are in excess of what is reasonably
demanded by the actual requirements of the enterprise. A position is redundant where it is
superfluous, and superfluity of a position or positions may be the outcome of a number of
factors, such as over hiring of workers, decreased volume of business, or dropping of a particular
product line or service activity previously manufactured or undertaken by the enterprise.
Retrenchment, on the other hand, is used interchangeably with the term lay-off. It is the
termination of employment initiated by the employer through no fault of the employees and
without prejudice to the latter, resorted to by management during periods of business recession,
industrial depression, or seasonal fluctuations, or during lulls occasioned by lack of orders,
shortage of materials, conversion of the plant for a new production program or the introduction
of new methods or more efficient machinery, or of automation. Simply put, it is an act of the
employer of dismissing employees because of losses in the operation of a business, lack of work,
and considerable reduction on the volume of his business, a right consistently recognized and
affirmed by this Court.
FACTS
Petitioners were former regular employees of respondent Jardine Pacific Finance, Inc. (formerly
MB Finance) (Jardine). The petitioners were also officers and members of MB Finance Employees
AssociationFFW Chapter (the Union), a legitimate labor union and the sole exclusive bargaining
agent of the employees of Jardine. The table below shows the petitioners previously occupied
positions, as well as their total length of service with Jardine before their dismissal from
employment.
Petitioner
Position
Number
of
Years
of
Service
Eugene S. Arabit
Field Collector
20 years
Edgardo C. Sadsad
Field Collector
3 years
Lowell C. Funtanoz
Field Collector
7 years
Gerardo F. Punzalan
Field Collector
16 years
Freddie M. Mendoza
Field Collector
20 years
Emilio B. Belen
Senior Credit Investigator/Field 18 years
Collector San Pablo Branch
Violeta C. Diumano
Senior
Accounting 19 years
Clerk/Documentation Clerk San
Pablo Branch
On the claim of financial losses, Jardine decided to reorganize and implement a redundancy
program among its employees. The petitioners were among those affected by the redundancy
program. Jardine thereafter hired contractual employees to undertake the functions these
employees
used
to
perform.
The Union filed a notice of strike with the National Conciliation and Mediation Board (NCMB),
questioning the termination of employment of the petitioners who were also union officers. The
Union alleged unfair labor practice on the part of Jardine, as well as discrimination in the
dismissal
of
its
officers
and
members.
Negotiations ensued between the Union and Jardine under the auspices of the NCMB, and both
parties eventually reached an amicable settlement. In the settlement, the petitioners accepted
their redundancy pay without prejudice to their right to question the legality of their dismissal
with the NLRC. Jardine paid the petitioners a separation package composed of their severance
pay,
plus
their
grossed
up
transportation
allowance. 7
On June 1, 1999, the petitioners and the Union filed a complaint against Jardine with the NLRC for
illegal dismissal and unfair labor practice.
ISSUES
(a) whether the separation of the petitioners was valid or not; and (b) whether Jardine
committed an unfair labor practice against the Union.

RULING
We resolve to GRANT the petition.Jardine, in its petition for certiorari with the CA, posited
that the distinction between redundancy and retrenchment is not material. 48 It contended that
employers resort to these causes of dismissal for purely economic considerations. 49Jardine
further argued that the immateriality of the distinction between these two just causes for
dismissal is shown by the fact that redundancy and retrenchment are found and lumped together
in
just
one
single
provision
of
the
Labor
Code
(Article
283
thereof).
We cannot accept Jardines shallow understanding of the concepts of redundancy and
retrenchment in determining the validity of the severance of an employeremployee relationship.
The fact that they are found together in just one provision does not necessarily give rise to the
conclusion that the difference between them is immaterial. This Court has already ruled before
that retrenchment and redundancy are two different concepts; they are not
synonymous; thus, they should not be used interchangeably.
To dismiss the petitioners and hire new contractual employees as replacements necessarily give
rise to the sound conclusion that the petitioners services have not really become in excess of
what Jardines business requires. To replace the petitioners who were all regular employees with
contractual ones would amount to a violation of their right to security of tenure. For this, we
affirm the NLRCs ruling, citing the LAs decision, when it ruled:
In the case at bench, respondents did not dispute that after layingoff complainants herein, they
engaged the services of an agency to perform the tasks use (sic) to be done by complainants.
This is [in direct] contradiction to the concept of redundancy which precisely requires
the trimming down of the [workforce] because a task is being carried out by just too
many people. The subsequent contracting out to an agency the functions or duties
that used to be the domain of individual complainants herein is a circumvention of
their constitutional rights to security of tenure, and therefore illegal. 53
The employers exercise of its management prerogative, however, is not an unbridled right that
cannot be subjected to this Courts scrutiny. The exercise of management prerogative is subject
to the caveat that it should not performed in violation of any law and that it is not tainted by any
arbitrary or malicious motive on the part of the employer.
In Golden Thread Knitting Industries, Inc. v. NLRC,59 this Court laid down the principle that the
employer must use fair and reasonable criteria in the selection of employees who will be
dismissed from employment due to redundancy. Such fair and reasonable criteria may include
the following, but are not limited to: (a) less preferred status (e.g. temporary employee); (b)
efficiency; and (c) seniority. The presence of these criteria used by the employer shows good
faith on its part and is evidence that the implementation of redundancy was painstakingly done
by the employer in order to properly justify the termination from the service of its employees.
Aside from the guidelines for the selection of employees who will be terminated, the Court, in
Asian Alcohol Corp. v. NLRC,61 also laid down guidelines for redundancy to be characterized as
validly undertaken by the employer. The Court ruled:
For the implementation of a redundancy program to be valid, the employer must comply with the
following requisites: (1) written notice served on both the employees and the Department of
Labor and Employment at least one month prior to the intended date of retrenchment; (2)
payment of separation pay equivalent to at least one month pay or at least one month pay for
every year of service, whichever is higher; (3) good faith in abolishing the redundant
positions; and (4) fair and reasonable criteria in ascertaining what positions are to be
declared redundant and accordingly abolished.62
Admittedly, Jardine complied with guidelines 1 and 2 of the guidelines in Asian Alcohol. Jardine
informed the Department of Labor and Employment of the petitioners separation from the
service due to redundancy on April 30, 1999, one month before their terminations effectivity.
Also, the petitioners were given their individual separation packages, composed of their
severance
pay,
plus
their
grossed
up
transportation
allowance.
Guidelines 3 and 4 of Asian Alcohol, however, are different matters. These last two guidelines
are interrelated to ensure good faith in abolishing redundant positions; the employer must clearly
show that it used fair and reasonable criteria in ascertaining what positions are to be declared
redundant.
30. MANILA POLO CLUB EMPLOYEES' UNION (MPCEU) FUR-TUCP, Petitioner, vs. MANILA
POLO CLUB, INC., Respondent. [G.R. No. 172846 July 24, 2013]
Doctrine: Dismissal from Employment Authorized Causes
--Doctrine is very long. Please refer to bold text in the Ruling.
Facts:

Petitioner Manila Polo Club Employees Union (MPCEU), which is affiliated with the Federation of
Unions of Rizal (FUR)-TUCP, is a legitimate labor organization duly registered with the
Department of Labor and Employment (DOLE), while respondent Manila Polo Club, Inc. is a nonprofit and proprietary membership organization which provides recreation and sports facilities to
its proprietary members, their dependents, and guests.
On December 13, 2001, the Board of Directors of respondent unanimously resolved to
completely terminate the entire operations of its Food and Beverage (F & B) outlets, except the
Last Chukker, and award its operations to a qualified restaurant operator or caterer. Cited as
reasons were as follows:
Xxx..
Food and Beverage (F & B) operations has resulted in yearly losses to the Club in six
out of the last eight years.
Due to the substantial losses incurred by the Club in both F&B operation and in its
recurring operations.
The non-viability of the operations of the F&B Department and that its continued
operations by the Club will result in substantial losses that will seriously impair the
Clubs financial health and membership satisfaction.
xxX.
On March 22, 2002, respondents Board7 approved the implementation of the retrenchment
program of employees who are directly and indirectly involved with the operations of the F & B
outlets and authorized then General Manager Philippe D. Bartholomi to pay the employees
separation pay in accordance with the following scheme:
Length of Service (# Years)

Separation Pay (Php)

2 years of service and below

More than 2 years to 9 years of service
At least 10 years of service
At least 15 years of service
At least 20 years of service

1 month pay
1/2 month pay for every year of service
1 month pay for every year of service
1.25 month(s) pay for every year of
service
1.5 month(s) pay for every year of
service
On even date, respondent sent notices to the petitioner and the affected employees (via
registered mail) as well as submitted an Establishment Termination Report to the
DOLE. Respondent informed, among others, of the retrenchment of 123 employees in the F & B
Division and those whose functions are related to its operations; the discontinuance of the F & B
operations effective March 25, 2002; the termination of the employment relationship on April 30,
2002; and, the continued payment of the employees salaries despite the directive not to report
to work effective immediately.
Unaware yet of the termination notice sent to them by respondent, the affected employees of
petitioner were surprised when they were prevented from entering the Club premises as they
reported for work on March 25, 2002. Treating the incident as respondents way of terminating
union members under the pretense of retrenchment to prevent losses, petitioner filed a Step II
grievance and requested for an immediate meeting with the Management. When the
Management refused, petitioner filed a Notice of Strike before the National Conciliation and
Mediation Board (NCMB) for illegal dismissal, violation/non-implementation of the Collective
Bargaining Agreement (CBA), union busting, and other unfair labor practices (ULP).
The parties agreed to submit before Voluntary Arbitrator (VA) Diamonon the lone issue of
whether the retrenchment of the 117 union members is legal. VA Diamonon dismissed
petitioners complaint for lack of merit, but without prejudice to the payment of separation pay to
the affected employees. The CA affirmed in toto the VAs decision and denied the substantive
aspects of petitioners motion for reconsideration; hence this petition.
Issue:

Whether or not the employees were illegally dismissed.

Ruling:
No.
The Court, citing Eastridge Golf Club, Inc. v. Eastridge Golf Club, Inc., Labor Union, quoted as
follows in explaining the valid termination of the employees:
Retrenchment or lay-off is the termination of employment initiated by the employer,
through no fault of the employees and without prejudice to the latter, during periods
of business recession, industrial depression, or seasonal fluctuations, or during lulls
occasioned by lack of orders, shortage of materials, conversion of the plant for a new
production program or the introduction of new methods or more efficient machinery,
or of automation. It is an exercise of management prerogative which the Court
upholds if compliant with certain substantive and procedural requirements, namely:
1. That retrenchment is necessary to prevent losses and it is proven, by sufficient and
convincing evidence such as the employer's financial statements audited by an
independent and credible external auditor, that such losses are substantial and not
merely flimsy and actual or reasonably imminent; and that retrenchment is the only
effective measure to prevent such imminent losses;
2. That written notice is served on to the employees and the DOLE at least one (1)
month prior to the intended date of retrenchment; and
3. That the retrenched employees receive separation pay equivalent to one (1) month
pay or at least one-half (1/2) month pay for every year of service, whichever is higher.
The employer must prove compliance with all the foregoing requirements. Failure to
prove the first requirement will render the retrenchment illegal and make the
employer liable for the reinstatement of its employees and payment of full
backwages. However, were the retrenchment undertaken by the employer is bona
fide, the same will not be invalidated by the latter's failure to serve prior notice on
the employees and the DOLE; the employer will only be liable in nominal damages, the
reasonable rate of which the Court En Banc has set at P50,000.00 for each employee.
Closure or cessation of business is the complete or partial cessation of the operations
and/or shut-down of the establishment of the employer. It is carried out to either
stave off the financial ruin or promote the business interest of the employer.
Unlike retrenchment, closure or cessation of business, as an authorized cause of
termination of employment, need not depend for validity on evidence of actual or
imminent reversal of the employer's fortune. Article 283 authorizes termination of
employment due to business closure, regardless of the underlying reasons and
motivations therefor, be it financial losses or not.
To be precise, closure or cessation of an employers business operations, whether in
whole or in part, is governed by Article 283 of the Labor Code, as amended. It states:
Article 283.Closure of establishment and reduction of personnel. - The employer may
also terminate the employment of any employee due to the installation of laborsaving devices, redundancy, retrenchment to prevent losses or the closing or
cessation of operation of the establishment or undertaking unless the closing is for
the purpose of circumventing the provisions of this Title, by serving a written notice
on the workers and the Ministry of Labor and Employment at least one (1) month
before the intended date thereof. In case of termination due to the installation of
labor-saving devices or redundancy, the worker affected thereby shall be entitled to a
separation pay equivalent to at least his one (1) month pay or to at least one (1)
month pay for every year of service, whichever is higher. In case of retrenchment to
prevent losses and in cases of closures or cessation of operations of establishment or
undertaking not due to serious business losses or financial reverses, the separation
pay shall be equivalent to one (1) month pay or at least one-half (1/2) month pay for
every year of service, whichever is higher. A fraction of at least six (6) months shall be
considered one (1) whole year.

While petitioner did not sufficiently establish substantial losses to justify closure of its F & B
Department on this ground, there is basis for its claim that the continued maintenance of said
department had become more expensive through the years. An evaluation of the financial figures
appearing in the audited financial statements prepared by the SGV & Co. shows that ninety-one
to ninety-six (91%-96%) percent of the actual revenues earned by the F & B Department
comprised the costs and expenses in maintaining the department. Petitioner's decision to place
its F & B operations under a concessionaire must then be respected, absent a showing of bad
faith on its part.
In fine, management's exercise of its prerogative to close a section, branch, department, plant or
shop will be upheld as long as it is done in good faith to advance the employer's interest and not
for the purpose of defeating or circumventing the rights of employees under the law or a valid
agreement.
30. Deoferio vs. Intel Technology [G.R. No. 202996, June 18, 2014]
Facts: Deoferiowas employed as a product quality and reliability engineer. Intel assigned him to
the United States as a validation engineer for an agreed period of two years. ThenDeoferio was
repatriated to the Philippines after being confined at Providence St. Vincent Medical Center for
major depression with psychosis. In the Philippines, he worked as a product engineer.
Deoferio underwent a series of medical and psychiatric treatment at Intels expense after his
confinement in the United States. Dr. Paul Lee, a consultant psychiatrist of the Philippine General
Hospital, concluded that Deoferio was suffering from schizophrenia. He stated that Deoferios
psychotic symptoms are not curable within a period of six months and "will negatively affect his
work and social relation with his co-worker[s]." Pursuant to these findings, Intel issued Deoferio a
notice of termination.
Deoferio responded to his termination of employment by filing a complaint for illegal dismissal
with prayer for money claims against respondents Intel and Mike Wentling (respondents). He
denied that he ever had mental illness and insisted that he satisfactorily performed his duties as
a product engineer.
In defense, the respondents argued that Deoferios dismissal was based on Dr. Lees certification
that: (1) his schizophrenia was not curable within a period of six months even with proper
medical treatment; and (2) his continued employment would be prejudicial to his and to the
other employees health.
Labor Arbiter (LA) ruled that Deoferio had been validly dismissed. The LA further held that the
Labor Code and its IRR do not require the employer to comply with the twin-notice requirement
in dismissals due to disease.
National Labor Relations Commission (NLRC) wholly affirmed the LAs ruling.
CA affirmed the NLRC decision.
Issue:
1. Whether Deoferio's dismissal is valid - YES
2. Whether the twin-notice requirement in dismissals applies to terminations due to disease YES
Ruling:
1. YES. Intel had an authorized cause to dismiss Deoferio from employment.
The present case involves termination due to disease an authorized cause for dismissal under
Article 284 of the Labor Code. As substantive requirements, the Labor Code and its IRR require
the presence of the following elements:
(1) An employer has been found to be suffering from any disease.
(2) His continued employment is prohibited by law or prejudicial to his health, as well as to the
health of his co-employees.
(3) A competent public health authority certifies that the disease is of such nature or at such a
stage that it cannot be cured within a period of six months even with proper medical treatment.

With respect to the first and second elements, the Court liberally construed the phrase
"prejudicial to his health as well as to the health of his co-employees" to mean "prejudicial to his
health or to the health of his co-employees." We did not limit the scope of this phrase to
contagious diseases for the reason that this phrase is preceded by the phrase "any disease"
under Article 284 of the Labor Code, to wit:
Art. 284. Disease as ground for termination. An employer may terminate the services of an
employee who has been found to be suffering from any disease and whose continued
employment is prohibited by law or is prejudicial to his health as well as to the health of his coemployees: Provided, That he is paid separation pay equivalent to at least one (1) month salary
or to one-half (1/2) month salary for every year of service, whichever is greater, a fraction of at
least six (6) months being considered as one (1) whole year.
In the current case, we agree with the CA that Dr. Lees psychiatric report substantially proves
that Deoferio was suffering from schizophrenia, that his disease was not curable within a period
of six months even with proper medical treatment, and that his continued employment would be
prejudicial to his mental health. This conclusion is further substantiated by the unusual and
bizarre acts that Deoferio committed while at Intels employ.
2. YES. The Labor Code and its IRR are silent on the procedural due process required in
terminations due to disease. Despite the seeming gap in the law, Section 2, Rule 1, Book VI of
the IRR expressly states that the employee should be afforded procedural due process in all
cases of dismissals.
From these perspectives, the CA erred in not finding that the NLRC gravely abused its discretion
when it ruled that the twin-notice requirement does not apply to Article 284 of the Labor Code.
This conclusion is totally devoid of any legal basis; its ruling is wholly unsupported by law and
jurisprudence. In other words, the NLRCs unprecedented, whimsical and arbitrary ruling, which
the CA erroneously affirmed, amounted to a jurisdictional error.
Intels violation of Deoferios right to statutory procedural due process warrants the payment of
indemnity in the form of nominal damages, amounting to 30,000.
31. KING OF KINGS TRANSPORT INC., vs. SANTIAGO O. MAMAC, G.R. No. 166208, June
29, 2007
DOCTRINE: Due process under the Labor Code involves two aspects: first, substantivethe
valid and authorized causes of termination of employment under the Labor Code; and second,
proceduralthe manner of dismissal.
- Under Article 283 of this Code, the employer shall furnish the worker whose employment is
sought to be terminated a written notice containing a statement of the causes for
termination and shall afford the latter ample opportunity to be heard and to defend
himself with the assistance of his representative if he so desires in accordance with
company rules and regulations promulgated pursuant to guidelines set by the
Department of Labor and Employment.
FACTS: Petitioner KKTI is a corporation engaged in public transportation. Respondent Mamac
was hired as bus conductor of Don Mariano Transit Corporation (DMTC). 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, illegal deductions,
nonpayment of 13th-month pay, service incentive leave, and separation pay. Moreover, he
claimed that his dismissal was effected without due process. In its Position Paper, KKTI contended
that respondent was legally dismissed after his commission of a series of misconducts and
misdeeds. It claimed that respondent had violated the trust and confidence reposed upon him by
KKTI. Also, it averred that it had observed due process in dismissing respondent and maintained
that respondent was not entitled to his money claims. The Labor Arbiter rendered judgment
dismissing respondents Complaint for lack of merit. Aggrieved, respondent appealed to the
NLRC. The NLRC rendered a Decision in favor of petitioner. Respondent moved for
reconsideration but it was denied by the NLRC. Thereafter, respondent filed a Petition for
Certiorari before the CA urging the nullification of the NLRC Decision and Resolution. The CA
affirmed the NLRC and held that there was just cause for respondents dismissal. It ruled that
respondents act in "declaring sold tickets as returned tickets x x x constituted fraud or acts of
dishonesty justifying his dismissal."
ISSUE: Whether petitioner complied with the procedural due process in terminating the
respondent.
RULING: NO.
Art. 277 of the Labor Code provides the manner of termination of employment, thus:
Art. 277. Miscellaneous Provisions.x x x
(b) Subject to the constitutional right of workers to security of tenure and their right to be
protected against dismissal except for a just and authorized cause without prejudice to the
requirement of notice under Article 283 of this Code, the employer shall furnish the worker
whose employment is sought to be terminated a written notice containing a statement of
the causes for termination and shall afford the latter ample opportunity to be heard
and to defend himself with the assistance of his representative if he so desires in
accordance with company rules and regulations promulgated pursuant to guidelines
set by the Department of Labor and Employment. Any decision taken by the employer shall
be without prejudice to the right of the worker to contest the validity or legality of his dismissal
by filing a complaint with the regional branch of the National Labor Relations Commission. The
burden of proving that the termination was for a valid or authorized cause shall rest on the
employer.
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."
We are not convinced.
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. In Pepsi Cola Bottling Co. v. NLRC, the Court held that
consultations or conferences are not a substitute for the actual observance of notice and hearing.
Also, in Loadstar Shipping Co., Inc. v. Mesano, the Court, sanctioning the employer for
disregarding the due process requirements, held that the employees written explanation did not
excuse the fact that there was a complete absence of the first notice.
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 the termination letter indicating as
grounds, not only his infraction, but also his previous infractions.

32. Unilever Phils vs. Rivera, G.R. No. 201701, June 3, 2013
Facts:
ON OCT. 19, 2007, respondent Maria Ruby M. Rivera filed a complaint for illegal dismissal and
other monetary claims against petitioner Unilever Philippines, Inc. (Unilever).
When the case reached the National Labor Relations Commission (NLRC), Unilever was ordered to
pay respondent P30,000 as nominal damages, retirement benefits and separation pay. Upon a
motion for reconsideration filed by Unilever, the NLRC, in a resolution of March 31, 2009,
modified its ruling by deleting the award of separation pay and reducing the nominal damages
from P30,000 to P20,000 but affirmed the award of retirement benefits.
Unilever elevated the case to the Court of Appeals (CA), Cagayan de Oro City, via a petition for
certiorari under Rule 65 of the Rules of Court. Respondent Rivera did not appeal the decision of
the NLRC. The CA deleted the award for retirement benefit but awarded separation pay as a
measure of social justice.
Issue: WON CA was correct in awarding separation pay.
Ruling:
Yes.
In this case, Rivera was dismissed from work because she intentionally circumvented a strict
company policy, manipulated another entity to carry out her instructions without the companys
knowledge and approval, and directed the diversion of funds, which she even admitted doing
under the guise of shortening the laborious process of securing funds for promotional activities
from the head office. These transgressions were serious offenses that warranted her dismissal
from employment and proved that her termination from work was for a just cause. Hence, she is
not entitled to separation pay.
More importantly, Rivera did not appeal the March 31, 2009 ruling of the NLRC disallowing the
award of separation pay to her. It was Unilever who elevated the case to the CA. It is axiomatic

that a party who does not appeal, or file a petition for certiorari, is not entitled to any affirmative
relief.
Due process prevents the grant of additional awards to parties who did not appeal. An appellee
who is not an appellant may assign errors in his brief where his purpose is to maintain the
judgment, but he cannot seek modification or reversal of the judgment or claim affirmative relief
unless he has also appealed. It was, therefore, erroneous for the CA to grant an affirmative relief
to Rivera who did not ask for it.
33. FELIX B. PEREZ and AMANTE G. DORIA vs. PHILIPPINE TELEGRAPH AND
TELEPHONE COMPANY and JOSE LUIS SANTIAGO
G.R. No. 152048
April 7, 2009
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.
Facts:
Petitioners were employed by respondent as shipping clerk and supervisor, respectively, in
PT&Ts Shipping Section, Materials Management Group. It was discovered that there were
anomalous transactions as 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: first on October 3, 1993 and second
on October 18, 1993.
Criminal charges were filed against petitioners and a memorandum was issued dismissing them
from service for having falsified company documents. Petitioners then filed a complaint for illegal
suspension and illegal dismissal.
The labor arbiter found that the 30-day extension of petitioners suspension and their
subsequent dismissal were both illegal. The NLRC reversed the decision of the labor arbiter. It
ruled that petitioners were dismissed for just cause, that they were accorded due process and
that they were illegally suspended for only 15 days.
Petitioners appealed to the CA which affirmed the NLRC decision insofar as petitioners illegal
suspension for 15 days and dismissal for just cause were concerned. However, it found that
petitioners were dismissed without due process.
Petitioners now seek a reversal of the CA decision.
Issue:
Whether or not respondents observed due process in dismissing petitioners.
Ruling:
No, the respondents failed to observe due process in dismissing the petitioners.
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. The labor
arbiter and the CA correctly found that respondents failed to comply with the two-notice
requirement for terminating employees.
As to petitioners contention that due process was not observed in the absence of a hearing in
which they could have explained their side and refuted the evidence against them, the court

rules that there is no need for a hearing or conference. It is to be noted that there is a marked
difference in the standards of due process to be followed as prescribed in the Labor Code and its
implementing rules. The Labor Code, on one hand, provides that an employer must provide the
employee ample opportunity to be heard and to defend himself with the assistance of his
representative if he so desires:
ART. 277. Miscellaneous provisions. x x x
(b) Subject to the constitutional right of workers to security of tenure and their right to be
protected against dismissal except for a just and authorized cause and without prejudice to the
requirement of notice under Article 283 of this Code, the employer shall furnish the worker
whose employment is sought to be terminated a written notice containing a statement of the
causes for termination and shall afford the latter ample opportunity to be heard and to defend
himself with the assistance of his representative if he so desires in accordance with company
rules and regulations promulgated pursuant to guidelines set by the Department of Labor and
Employment. Any decision taken by the employer shall be without prejudice to the right of the
worker to contest the validity or legality of his dismissal by filing a complaint with the regional
branch of the National Labor Relations Commission. The burden of proving that the termination
was for a valid or authorized cause shall rest on the employer.
The omnibus rules implementing the Labor Code, on the other hand, require a hearing and
conference during which the employee concerned is given the opportunity to respond to the
charge, present his evidence or rebut the evidence presented against him:
Section 2. Security of Tenure. x x x
(d) In all cases of termination of employment, the following standards of due process shall be
substantially observed:
For termination of employment based on just causes as defined in Article 282 of the Labor Code:
(i) A written notice served on the employee specifying the ground or grounds for termination, and
giving said employee reasonable opportunity within which to explain his side.
(ii) A hearing or conference during which the employee concerned, with the assistance of counsel
if he so desires, is given opportunity to respond to the charge, present his evidence or rebut the
evidence presented against him.
(iii) A written notice of termination served on the employee, indicating that upon due
consideration of all the circumstances, grounds have been established to justify his termination.
Article 277(b) of the Labor Code provides that, in cases of termination for a just cause, an
employee must be given "ample opportunity to be heard and to defend himself." Thus, the
opportunity to be heard afforded by law to the employee is qualified by the word "ample" which
ordinarily means "considerably more than adequate or sufficient." 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.
In Autobus Workers Union v. NLRC, the court ruled:
The twin requirements of notice and hearing constitute the essential elements of due process.
Due process of law simply means giving opportunity to be heard before judgment is rendered. In
fact, there is no violation of due process even if no hearing was conducted, where the party was
given a chance to explain his side of the controversy. What is frowned upon is the denial of the
opportunity to be heard.
In Solid Development Corporation Workers Association v. Solid Development Corporation, the
court had the occasion to state:
[W]ell-settled is the dictum that the twin requirements of notice and hearing constitute the
essential elements of due process in the dismissal of employees. It is a cardinal rule in our
jurisdiction that the employer must furnish the employee with two written notices before the
termination of employment can be effected: (1) the first apprises the employee of the particular
acts or omissions for which his dismissal is sought; and (2) the second informs the employee of
the employers decision to dismiss him. The requirement of a hearing, on the other hand, is
complied with as long as there was an opportunity to be heard, and not necessarily that an
actual hearing was conducted.
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.
34. DOLORES T. ESGUERRA, petitioner, vs. VALLE VERDE COUNTRY CLUB, INC.
[G.R. No. 173012, June 13, 2012]
DOCTRINE: The law does not require that an intention to terminate one's employment should be
included in the first notice. It is enough that employees are properly apprised of the charges
brought against them so they can properly prepare their defenses; it is only during the second
notice that the intention to terminate one's employment should be explicitly stated.
There is also no basis to question the absence of a proper hearing. The existence of an actual,
formal "trial-type" hearing, although preferred, is not absolutely necessary to satisfy the
employee's right to be heard.
Facts:
On April 1, 1978, Valle Verde hired Esguerra as Head Food Checker. In 1999, she was promoted to
Cost Control Supervisor.
On January 15, 2000, the Couples for Christ held a seminar at the country club. Esguerra was
tasked to oversee the seminar held in the two function rooms the Ballroom and the Tanay
Room. The Valle Verde Management found out the following day that only the proceeds from the
Tanay Room had been remitted to the accounting department. There were also unauthorized
charges of food on the account of Judge Rodolfo Bonifacio, one of the participants. Valle Verde
sent a memorandum to Esguerra requiring her to show cause as to why no disciplinary action
should be taken against her for the non-remittance of the Ballroom's sales. Esguerra was placed
under preventive suspension with pay, pending investigation. In her letter-response, Esguerra
denied having committed any misappropriation. She explained that it had been her daughter
(who was assigned as a food checker) who lost the money. To settle the matter, Esguerra paid
the unaccounted amount as soon as her daughter informed her about it. Esguerra also explained
the unauthorized charging of food on Judge Bonifacio's account. She alleged that Judge Bonifacio
took pity on her and told her to take home some food and to charge it on his account. Valle Verde
found Esguerra's explanation unsatisfactory and, on July 26, 2000, issued a second
memorandum terminating Esguerra's employment.

LABOR ARBITER'S RULING

Labor Arbiter dismissed the complaint for lack of merit, but ordered Valle Verde to pay Esguerra
13th month pay in the amount of P2,016.66, rice subsidy in the amount of P1,100.00, and ten
percent (10%) attorney's fees in the amount of P311.66.

THE NLRC'S RULING

The NLRC modified the decision and only awarded P143,000.00 as separation pay, equivalent to
one-half (1/2) month for every year of service, after taking into account Esguerra's long years of
service and absence of previous derogatory records.

THE CA RULING
It found that the NLRC did not commit any grave abuse of discretion in finding that Esguerra was
validly dismissed from employment for loss of trust and confidence, and that her length of
service cannot be counted in her favor.

Issue :

WON Valle Verde failed to comply with procedural requirements.

Held:
The petition is without merit.
"Under the Labor Code, the requirements for the lawful dismissal of an employee are two-fold:
the substantive and the procedural aspects. Not only must the dismissal be for a just or
authorized cause, the rudimentary requirements of due process notice and hearing must,
likewise, be observed. Without the concurrence of the two, the termination would be illegal
There was valid notice and hearing
We fail to find any irregularities in the service of notice to Esguerra. Esguerra's allegation that the
notice was insufficient since it failed to contain any intention to terminate her is incorrect.
In Perez v. Philippine Telegraph and Telephone Company, the Court underscored the significance
of the two-notice rule in dismissing an employee:
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. [emphases and italics ours].
Contrary to Esguerra's allegation, the law does not require that an intention to terminate one's
employment should be included in the first notice. It is enough that employees are properly
apprised of the charges brought against them so they can properly prepare their defenses; it is
only during the second notice that the intention to terminate one's employment should be
explicitly stated.
There is also no basis to question the absence of a proper hearing. The existence of an actual,
formal "trial-type" hearing, although preferred, is not absolutely necessary to satisfy the
employee's right to be heard. Esguerra was able to present her defenses; and only upon proper
consideration of it did Valle Verde send the second memorandum terminating her employment.
Since Valle Verde complied with the two-notice requirement, no procedural defect exists in
Esguerra's termination.
(side issue)
Esguerra occupied a position of trust and confidence
Esguerra held the position of Cost Control Supervisor and had the duty to remit to the accounting
department the cash sales proceeds from every transaction she was assigned to. This is not a
routine task that a regular employee may perform; it is related to the handling of business
expenditures or finances. For this reason, Esguerra occupies a position of trust and confidence
a position enumerated in the second class of positions of trust. Any breach of the trust imposed
upon her can be a valid cause for dismissal.
We find no merit in the allegation that it was Esguerra's daughter who should be held liable. She
had no custody of the cash sales since it was not part of her duties as a food checker. It was
Esguerra's responsibility to account for the cash proceeds; in case of problems, she should have
promptly reported it, regardless of who was at fault. We cannot favorably consider Esguerra's
explanation about the unauthorized charging on Judge Bonifacio's account. It is highly unethical
for an employee to bring home food intended to be sold to customers.
35. Jaka Food Processing vs. Pacot; [G.R. No. 151378. March 28, 2005]
Facts:
Respondents Darwin Pacot, Robert Parohinog, David Bisnar, Marlon Domingo, RhoelLescano and
Jonathan Cagabcab were earlier hired by petitioner JAKA Foods Processing Corporation (JAKA, for
short) until the latter terminated their employment on August 29, 1997 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.

In time, respondents separately filed with the Regional Arbitration Branch of the National Labor
Relations Commission (NLRC) complaints for illegal dismissal, underpayment of wages and
nonpayment of service incentive leave and 13th month pay against JAKA and its HRD Manager,
Rosana Castelo. After due proceedings, the Labor Arbiter rendered a decision 3 declaring the
termination illegal and ordering JAKA and its HRD Manager to reinstate respondents with full
backwages, and separation pay if reinstatement is not possible.
Issue: What are the legal implications of a situation where an employee is dismissed for cause
but such dismissal was effected without the employer's compliance with the notice requirement
under the Labor Code.
Ruling:
In the very recent case of Agabon vs. NLRC, 8 we had the opportunity to resolve a similar
question. Therein, we found that the employees committed a grave offense, i.e., abandonment,
which is a form of a neglect of duty which, in turn, is one of the just causes enumerated under
Article 282 of the Labor Code. In said case, we upheld the validity of the dismissal despite noncompliance with the notice requirement of the Labor Code. However, we required the employer
to pay the dismissed employees the amount of P30,000.00, representing nominal damages for
non-compliance with statutory due process. The difference between Agabon and the instant case
is that in the former, the dismissal was based on a just cause under Article 282 of the Labor Code
while in the present case, respondents were dismissed due to retrenchment, which is one of the
authorized causes under Article 283 of the same Code. A dismissal for just cause under Article
282 implies that the employee concerned has committed, or is guilty of, some violation against
the employer, i.e. the employee has committed some serious misconduct, is guilty of some fraud
against the employer, or, as in Agabon, he has neglected his duties. Thus, it can be said that the
employee himself initiated the dismissal process.
On another breath, a dismissal for an authorized cause under Article 283 does not necessarily
imply delinquency or culpability on the part of the employee. Instead, the dismissal process is
initiated by the employer's exercise of his management prerogative, i.e. when the employer opts
to install labor saving devices, when he decides to cease business operations or when, as in this
case, he undertakes to implement a retrenchment program. Accordingly, it is wise to hold that:
(1) if the dismissal is based on a just cause under Article 282 but the employer failed to comply
with the notice requirement, the sanction to be imposed upon him should be tempered because
the dismissal process was, in effect, initiated by an act imputable to the employee; and (2) if the
dismissal is based on an authorized cause under Article 283 but the employer failed to comply
with the notice requirement, the sanction should be stiffer because the dismissal, process was
initiated by the employer's exercise of his management prerogative.
It is, therefore, established that there was ground for respondents' dismissal, i.e., retrenchment,
which is one of the authorized causes enumerated under Article 283 of the Labor Code. Likewise,
it is established that JAKA failed to comply with the notice requirement under the same Article.
Considering the factual circumstances in the instant case and the above ratiocination, we,
therefore, deem it proper to fix the indemnity at P50,000.00.