Here are select January 2014 rulings of the Supreme Court of the Philippines on labor law:

Backwages; when awarded. As a general rule, backwages are granted to indemnify a dismissed employee
for his loss of earnings during the whole period that he is out of his job. Considering that an illegally
dismissed employee is not deemed to have left his employment, he is entitled to all the rights and privileges
that accrue to him from the employment. The grant of backwages to him is in furtherance and effectuation
of the public objectives of the Labor Code, and is in the nature of a command to the employer to make a
public reparation for dismissing the employee in violation of the Labor Code.
The Court held that the respondents are not entitled to the payment of backwages. The Court, citing G&S
Transport Corporation v. Infante (G. R. No. 160303, September 13, 2007) stated that the principle of a
fair days wage for a fair days labor remains as the basic factor in determining the award thereof. An
exception to the rule would be if the laborer was able, willing and ready to work but was illegally locked
out, suspended or dismissed or otherwise illegally prevented from working. It is, however, required, for
this exception to apply, that the strike be legal, a situation which does not obtain in the case at bar. Visayas
Community Medical Center (VCMC) formerly known as Metro Cebu Community Hospital (MCCH) v.
Erma Yballe, et al.,G.R. No. 196156, January 15, 2014
Dismissal; burden of proof on employer. The burden is on the employer to prove that the termination was
for valid cause. Unsubstantiated accusations or baseless conclusions of the employer are insufficient legal
justifications to dismiss an employee. The unflinching rule in illegal dismissal cases is that the employer
bears the burden of proof.
One of CCBPIs policies requires that, on a daily basis, CCBPI Salesmen/Account Specialists must account
for their sales/collections and obtain clearance from the company Cashier before they are allowed to leave
company premises at the end of their shift and report for work the next day. If there is a shortage/failure to
account, the concerned Salesmen/Account Specialist is not allowed to leave the company premises until he
settles the same. In addition, shortages are deducted from the employees salaries. If CCBPI expects to
proceed with its case against petitioner, it should have negated this policy, for its existence and application
are inextricably tied to CCBPIs accusations against petitioner. In the first place, as petitioners employer,
upon it lay the burden of proving by convincing evidence that he was dismissed for cause. If petitioner
continued to work until June 2004, this meant that he committed no infraction, going by this company
policy; it could also mean that any infraction or shortage/non-remittance incurred by petitioner has been
duly settled. Respondents decision to ignore this issue generates the belief that petitioner is telling the
truth, and that the alleged infractions are fabricated, or have been forgiven. Coupled with Macatangays
statement which remains equally unrefuted that the charges against petitioner are a scheme by local
CCBPI management to cover up problems in the Naga City Plant, the conclusion is indeed telling that
petitioner is being wrongfully made to account. Jonas Michael R. Garza v. Coca-Cola Bottlers Phils., Inc.,
et al.,G.R. No. 180972. January 20, 2014.
Embezzlement; failure to remit collections. The irregularity attributed to petitioner with regard to the
Asanza account should fail as well. To be sure, Asanza herself confirmed that she did not make any
payment in cash or check of P8,160.00 covering the October 15, 2003 delivery for which petitioner is being
held to account. This being the case, petitioner could not be charged with embezzlement for failure to remit
funds which he has not collected. There was nothing to embezzle or remit because the customer made no
payment yet. It may appear from Official Receipt No. 303203 issued to Asanza that the October 15 delivery
of products to her has been paid; but as admitted by her, she has not paid for the said delivered products.
The reason for petitioners issuance of said official receipt to Asanza is the latters concurrent promise that
she would immediately issue the check covering the said amount, which she failed to do. Jonas Michael R.
Garza v. Coca-Cola Bottlers Phils., Inc., et al.,G.R. No. 180972. January 20, 2014

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

agreements entered into precisely to circumvent security of tenure. It should have no application to
instances where [the] fixed period of employment was agreed upon knowingly and voluntarily by the
parties x x x absent any x x x circumstances vitiating [the employees] consent, or where [the facts
satisfactorily show] that the employer and [the] employee dealt with each other on more or less equal
terms[.] The indispensability or desirability of the activity performed by the employee will not preclude
the parties from entering into an otherwise valid fixed term employment agreement; a definite period of
employment does not essentially contradict the nature of the employees duties as necessary and desirable
to the usual business or trade of the employer.
Nevertheless, where the circumstances evidently show that the employer imposed the period
precisely to preclude the employee from acquiring tenurial security, the law and this Court will not
hesitate to strike down or disregard the period as contrary to public policy, morals, etc. In such a case, the
general restrictive rule under Article 280 of the Labor Code will apply and the employee shall be deemed
regular. Universal Robina Sugar Milling Corporation and Rene Cabati, G.R. No. 186439. January 15,
2014.
Labor law; kinds of employment; nature of the employment depends on the nature of the activities to be
performed by the employee. The nature of the employment does not depend solely on the will or word of
the employer or on the procedure for hiring and the manner of designating the employee. Rather, the
nature of the employment depends on the nature of the activities to be performed by the employee, taking
into account the nature of the employers business, the duration and scope of work to be done, and, in some
cases, even the length of time of the performance and its continued existence. Universal Robina Sugar
Milling Corporation and Rene Cabati, G.R. No. 186439. January 15, 2014.
Labor law; kinds of employment; project employment; requisites; length of time not controlling. A
project employment, on the other hand, contemplates on arrangement whereby the employment has
been fixed for a specific project or undertaking whose completion or termination has been determined at
the time of the engagement of the employee[.] Two requirements, therefore, clearly need to be satisfied to
remove the engagement from the presumption of regularity of employment, namely: (1) designation of a
specific project or undertaking for which the employee is hired; and (2) clear determination of the
completion or termination of the project at the time of the employees engagement. The services of the
project employees are legally and automatically terminated upon the end or completion of the project as the
employees services are coterminous with the project. Unlike in a regular employment under Article 280 of
the Labor Code, however, the length of time of the asserted project employees engagement is not
controlling as the employment may, in fact, last for more than a year, depending on the needs or
circumstances of the project. Nevertheless, this length of time (or the continuous rehiring of the employee
even after the cessation of the project) may serve as a badge of regular employment when the activities
performed by the purported project employee are necessary and indispensable to the usual business or
trade of the employer. In this latter case, the law will regard the arrangement as regular employment.
Universal Robina Sugar Milling Corporation and Rene Cabati, G.R. No. 186439. January 15, 2014.
Labor law; kinds of employment; regular employment; requisites. Article 280 of the Labor Code provides
for three kinds of employment arrangements, namely: regular, project/seasonal and casual. Regular
employment refers to that arrangement whereby the employee has been engaged to perform activities
which are usually necessary or desirable in the usual business or trade of the employer[.] Under this
definition, the primary standard that determines regular employment is the reasonable connection
between the particular activity performed by the employee and the usual business or trade of the
employer; the emphasis is on the necessity or desirability of the 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.

By way of an exception, paragraph 2, Article 280 of the Labor Code also considers as regular, a casual
employment arrangement when the casual employees engagement is made to last for at least one year,
whether the service is continuous or broken. The controlling test in this arrangement is the length of time
during which the employee is engaged. Universal Robina Sugar Milling Corporation and Rene Cabati, G.R.
No. 186439. January 15, 2014.
Labor law; kinds of employment; seasonal employment; requisites. Seasonal employment operates much
in the same way as project employment, albeit it involves work or service that is seasonal in nature or
lasting for the duration of the season. As with project employment, although the seasonal
employment arrangement involves work that is seasonal or periodic in nature, the employment itself is not
automatically considered seasonal so as to prevent the employee from attaining regular status. To exclude the
asserted seasonal employee from those classified as regular employees, the employer must show that: (1)
the employee must be performing work or services that are seasonal in nature; and (2) he had been employed
for the duration of the season. Hence, when the seasonal workers are continuously and repeatedly hired to
perform the same tasks or activities for several seasons or even after the cessation of the season, this length of
time may likewise serve as badge of regular employment. In fact, even though denominated as seasonal
workers, if these workers are called to work from time to time and are only temporarily laid off during the
off-season, the law does not consider them separated from the service during the off-season period. The law
simply considers these seasonal workers on leave until re-employed. Universal Robina Sugar Milling
Corporation and Rene Cabati, G.R. No. 186439. January 15, 2014.
Overseas employment; that the entitlement of seamen on overseas work to disability benefits is a matter
governed, not only by medical findings, but by law and by contract. With respect to the applicable rules, it is
doctrinal that the entitlement of seamen on overseas work to disability benefits is a matter governed, not
only by medical findings, but by law and by contract. The material statutory provisions are Articles 191 to
193 under Chapter VI (Disability Benefits) of the Labor Code, in relation [to] Rule X of the Rules and
Regulations Implementing Book IV of the Labor Code. By contract, the POEA-SEC, as provided under
Department Order No. 4, series of 2000 of the Department of Labor and Employment, and the parties
Collective Bargaining Agreement bind the seaman and his employer to each other.
In the foregoing light, the Court observes that respondent executed his contract of employment on July 17,
2000, incorporating therein the terms and conditions of the 2000 POEA-SEC which took effect on June 25,
2000. However, since the implementation of the provisions of the foregoing 2000 POEA-SEC was
temporarily suspended by the Court on September 11, 2000, particularly Section 20, paragraphs (A), (B), and
(D) thereof, and was lifted only on June 5, 2002, through POEA Memorandum Circular No. 2, series of 2002,
the determination of respondents entitlement to the disability benefits should be resolved under the
provisions of the 1996 POEA-SEC as it was, effectively, the governing circular at the time respondents
employment contract was executed. INC Shipmanagement, Inc. Captain Sigfredo E. Monterroyo and/or
Interorient Navigation Limited v. Alexander L. Moradas,G.R. No., January 15, 2014
Payment of separation pay as alternative relief for union members who were dismissed for having participated
in an illegal strike is in lieu of reinstatement; circumstances when applicable. The alternative relief for union
members who were dismissed for having participated in an illegal strike is the payment of separation pay in
lieu of reinstatement under the following circumstances: (a) when reinstatement can no longer be effected in
view of the passage of a long period of time or because of the realities of the situation; (b) reinstatement is
inimical to the employers interest; (c) reinstatement is no longer feasible; (d) reinstatement does not serve the
best interests of the parties involved; (e) the employer is prejudiced by the workers continued employment;
(f) facts that make execution unjust or inequitable have supervened; or (g) strained relations between the
employer and employee.

The Court ruled that the grant of separation pay to respondents is the appropriate relief under the
circumstances considering that 15 years had lapsed from the onset of this labor dispute, and in view of
strained relations that ensued, in addition to the reality of replacements already hired by the hospital which
had apparently recovered from its huge losses, and with many of the petitioners either employed elsewhere,
already old and sickly, or otherwise incapacitated. Visayas Community Medical Center (VCMC) formerly
known as Metro Cebu Commnunity Hospital (MCCH) v. Erma Yballe, et al.,G.R. No. 196156, January 15,
2014
Rule 45; only questions of law are allowed in a petition for review on certiorari. It is a settled rule in this
jurisdiction that only questions of law are allowed in a petition for review on certiorari. The Courts power
of review in a Rule 45 petition is limited to resolving matters pertaining to any perceived legal errors,
which the CA may have committed in issuing the assailed decision. In reviewing the legal correctness of
the CAs Rule 65 decision in a labor case, the Court examines the CA decision in the context that it
determined whether or not there is grave abuse of discretion in the NLRC decision subject of its review and
not on the basis of whether the NLRC decision on the merits of the case was correct. Universal Robina
Sugar Milling Corporation and Rene Cabati, G.R. No. 186439. January 15, 2014.
Rule 45; the Courts jurisdiction in a Rule 45 petition is limited to the review of pure questions of law;
exceptions. The Courts jurisdiction in cases brought before it from the CA via Rule 45 of the Rules of
Court is generally limited to reviewing errors of law. The Court is not the proper venue to consider a factual
issue as it is not a trier of facts. This rule, however, is not ironclad and a departure therefrom may be
warranted where the findings of fact of the CA are contrary to the findings and conclusions of the NLRC
and LA, as in this case. In this regard, there is therefore a need to review the records to determine which of
them should be preferred as more conformable to evidentiary facts. INC Shipmanagement, Inc. Captain
Sigfredo E. Monterroyo and/or Interorient Navigation Limited v. Alexander L. Moradas,G.R. No., January
15, 2014.
Section 20 (B) of the 1996 POEA-SEC; an employer shall be liable for the injury or illness suffered by a
seafarer during the term of his contract; exception. The prevailing rule under Section 20 (B) of the 1996
POEA-SEC on compensation and benefits for injury or illness was that an employer shall be liable for the
injury or illness suffered by a seafarer during the term of his contract. To be compensable, the injury or
illness must be proven to have been contracted during the term of the contract. However, the employer may
be exempt from liability if he can successfully prove that the cause of the seamans injury was directly
attributable to his deliberate or willful act as provided under Section 20 (D) thereof, to wit:
D. No compensation shall be payable in respect of any injury, incapacity, disability or death of the seafarer
resulting from his willful or criminal act, provided however, that the employer can prove that such injury,
incapacity, disability or death is directly attributable to seafarer.
Hence, the onus probandi falls on the petitioners herein to establish or substantiate their claim that the
respondents injury was caused by his willful act with the requisite quantum of evidence. INC
Shipmanagement, Inc. Captain Sigfredo E. Monterroyo and/or Interorient Navigation Limited v. Alexander
L. Moradas,G.R. No., January 15, 2014
Substantial evidence; concept of. In labor cases, as in other administrative proceedings, only substantial
evidence or such relevant evidence as a reasonable mind might accept as sufficient to support a conclusion
is required. To note, considering that substantial evidence is an evidentiary threshold, the Court, on
exceptional cases, may assess the factual determinations made by the NLRC in a particular case.

The Court ruled that NLRC had cogent legal bases to conclude that petitioners have successfully discharged
the burden of proving by substantial evidence that respondents injury was directly attributable to himself.
Records bear out circumstances which all lead to the reasonable conclusion that respondent was responsible
for the flooding and burning incidents. While respondent contended that the affidavits and statements of
the vessels officers and his fellow crew members should not be given probative value as they were biased,
self-serving, and mere hearsay, he nonetheless failed to present any evidence to substantiate his own
theory. Besides, as correctly pointed out by the NLRC, the corroborating affidavits and statements
of the vessels officers and crew members must be taken as a whole and cannot just be perfunctorily
dismissed as self-serving absent any showing that they were lying when they made the statements therein.
INC Shipmanagement, Inc. Captain Sigfredo E. Monterroyo and/or Interorient Navigation Limited v.
Alexander L. Moradas,G.R. No., January 15, 2014
Here are select December 2013 rulings of the Supreme Court of the Philippines on labor law:
Appeal; NLRC; accredited bonding company; revocation of authority is prospective in application. The
respondents filed a surety bond issued by Security Pacific Assurance Corporation (Security Pacific) on June
28, 2002. At that time, Security Pacific was still an accredited bonding company. However, the NLRC
revoked its accreditation on February 16, 2003. This subsequent revocation should not prejudice the
respondents who relied in good faith on the then subsisting accreditation of Security Pacific. In Del Rosario v.
Philippine Journalists, Inc. (G.R. No. 181516, August 19, 2009), it was held that a bonding companys
revocation of authority is prospective in application. Nonetheless, the respondents should post a new bond
issued by an accredited bonding company in compliance with paragraph 4, Section 6, Rule 6 of the NLRC
Rules of Procedure, which states that [a] cash or surety bond shall be valid and effective from the date of
deposit or posting, until the case is finally decided, resolved or terminated or the award satisfied. Wilgen
Loon, et al. v. Power Master, Inc., et al., G.R. No. 189404, December 11, 2013.
Appeal; NLRC; bond; jurisdictional. Paragraph 2, Article 223 of the Labor Code provides that [i]n case of a
judgment involving a monetary award, an appeal by the employer may be perfected only upon the posting of
a cash or surety bond issued by a reputable bonding company duly accredited by the NLRC in the amount
equivalent to the monetary award in the judgment appealed from. Contrary to the respondents claim, the
issue of the appeal bonds validity may be raised for the first time on appeal since its proper filing is a
jurisdictional requirement. The requirement that the appeal bond should be issued by an accredited bonding
company is mandatory and jurisdictional. The rationale of requiring an appeal bond is to discourage the
employers from using an appeal to delay or evade the employees just and lawful claims. It is intended to
assure the workers that they will receive the money judgment in their favor if the employers appeal is
dismissed. Wilgen Loon, et al. v. Power Master, Inc., et al., G.R. No. 189404, December 11, 2013.
Appeal; NLRC; verification; formal requisite, not jurisdictional. Neither the laws nor the rules require the
verification of the supplemental appeal. Furthermore, verification is a formal, not a jurisdictional,
requirement. It is mainly intended to give assurance that the matters alleged in the pleading are true and
correct and not of mere speculation. Also, a supplemental appeal is merely an addendum to the verified
memorandum on appeal that was earlier filed in the case; hence, the requirement for verification has been
substantially complied. Wilgen Loon, et al. v. Power Master, Inc., et al., G.R. No. 189404, December 11,
2013.
Appeal; Rule 45; limited to review of questions of law. In this Rule 45 petition for review on certiorari, the
Supreme Court (SC) reviewed the Court of Appeals (CA) decision of a Rule 65 petition for certiorari. The
Supreme Courts power of review in such case is limited to legal errors that the CA might have committed in
issuing its assailed decision, in contrast with the review for jurisdictional errors which it undertakes in an
original certiorari (Rule 65) action filed with it. The SC examines the CA decision based on how it
determined the presence or absence of grave abuse of discretion in the manner by which the NLRC rendered

its decision and not on the basis of whether the NLRC decision on the merits of the case was correct.
Moreover, the Courts power in a Rule 45 petition limits it to a review of questions of law raised against
the assailed CA decision. Baguio Central University v. Ignacio Gallente, G.R. No. 188267, December 2,
2013.
Attorneys fees; when entitled. An employee is entitled to an award of attorneys fees equivalent to ten
percent (10%) of the amount of the wages in actions for unlawful withholding of wages pursuant to Article
111 of the Labor Code. Wilgen Loon, et al. v. Power Master, Inc., et al., G.R. No. 189404, December 11,
2013.
Backwages; when entitled. In termination cases, the burden of proving just and valid cause for dismissing
an employee from his employment rests upon the employer. The employers failure to discharge this burden
in the instant case arising from their non-submission of evidence at the proceedings before the labor arbiter
resulted in the finding that the dismissal is unjustified. Thus, the employees are entitled to the payment of
backwages. Wilgen Loon, et al. v. Power Master, Inc., et al., G.R. No. 189404, December 11, 2013.
Deeds of release and quitclaim; grounds to invalidate. As a rule, deeds of release and quitclaim cannot bar
employees from demanding benefits to which they are legally entitled or from contesting the legality of
their dismissal. The acceptance of those benefits would not amount to estoppel. To excuse respondents
from complying with the terms of their waivers, any one of the following grounds must exist: (1) the
employer used fraud or deceit in obtaining the waivers; (2) the consideration the employer paid is
incredible and unreasonable; or (3) the terms of the waiver are contrary to law, public order, public policy,
morals, or good customs or prejudicial to a third person with a right recognized by law. The Court
concluded that the instant case falls under the first situation.
As the ground for termination of employment was illegal, the quitclaims are deemed illegal because the
employees consent had been vitiated by mistake or fraud. The law looks with disfavor upon quitclaims and
releases by employees pressured into signing by unscrupulous employers minded to evade legal
responsibilities. The circumstances show that petitioners misrepresentation led its employees, specifically
respondents herein, to believe that the company was suffering losses which necessitated the implementation
of the voluntary retirement and retrenchment programs, and eventually the execution of the deeds of
release, waiver and quitclaim. The amounts already received by respondents as consideration for signing
the releases and quitclaims, however, should be deducted from their respective monetary awards.
Philippine Carpet Manufacturing Corporation, et al. v. Ignacio B. Tagyamon, et al., G.R. No. 191475,
December 11, 2013.
Disability benefits; principle of work-aggravation; concept of. Compensability may be established on the
basis of the theory of work aggravation if, by substantial evidence, it can be demonstrated that the working
conditions aggravated or at least contributed in the advancement of respondents cancer. As held in
Rosario v. Denklav Marine, the burden is on the beneficiaries to show a reasonable connection between
the causative circumstances in the employment of the deceased employee and his death or permanent
total disability. In the present case, both parties failed to discharge their respective burdens for
petitioners, they failed to prove the non-work-relatedness of the disease; and for respondent, he failed to
prove that his work aggravated his condition. Thus, the Court had to resolve the case on some other basis.
The Court held that disability should be understood not more on its medical significance, but on the loss of
earning capacity. Permanent total disability means disablement of an employee to earn wages in the same
kind of work or work of similar nature that he was trained for or accustomed to perform, or any kind of
work which a person of his mentality and attainment could do. It does not mean absolute helplessness.
Evidence of this condition can be found in a certification of fitness/unfitness to work issued by the
company-designated physician. In this case, records reveal that the medical report issued by the companydesignated oncologist was bereft of any certification that respondent remained fit to work as a seafarer

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

allegations sought to be proven. Wilgen Loon, et al. v. Power Master, Inc., et al., G.R. No. 189404,
December 11, 2013.
Labor; ground for valid dismissal; loss of trust and confidence; requisites. Loss of trust and confidence is a
just cause for dismissal under Article 282(c) of the Labor Code. Article 282(c) provides that an employer
may terminate an employment for fraud or willful breach by the employee of the trust reposed in him by
his employer or duly authorized representative. However, in order for the employer to properly invoke this
ground, the employer must satisfy two conditions. First, the employer must show that the employee
concerned holds a position of trust and confidence. Second, the employer must establish the existence of an
act justifying the loss of trust and confidence. To be a valid cause for dismissal, the act that betrays the
employers trust must be real, i.e., founded on clearly established facts, and the employees breach of the
trust must be willful, i.e., it was done intentionally, knowingly and purposely, without justifiable excuse.
In Lopez v. Keppel Bank Philippines, Inc. (G.R. No. 176800, September 5, 2011), the Court repeated the
guidelines for the application of loss of confidence as follows: (1) loss of confidence should not be
simulated; (2) it should not be used as a subterfuge for causes which are improper, illegal or unjustified; (3)
it may not be arbitrarily asserted in the face of overwhelming evidence to the contrary; and (4) it must be
genuine, not a mere afterthought to justify an earlier action taken in bad faith.
As applied to the dismissal of managerial employees, employers as a rule enjoy wider latitude of
discretion. They are not required to present proof beyond reasonable doubt as the mere existence of a basis
for believing that such employee has breached the trust of the employer would suffice for the dismissal.
Thus, as long as the employer has reasonable ground to believe that the employee concerned is
responsible for the purported misconduct, and the nature of his participation therein renders him unworthy
of the trust and confidence demanded of his position, the dismissal on this ground is valid.
The Court held that there was sufficient basis to dismiss the respondent for loss of trust and confidence.
First, the Court believed that the respondent held a position of trust and confidence because he was a
managerial employee of the petitioner. As the Dean of two of the petitioners departments, he was tasked,
among others, to assist the school head in all matters affecting the general policies of the entire institution,
to direct and advise the students in their programs of study and to approve their subject load and exercise
educational leadership among his faculty. These tasks involved the exercise of powers and prerogatives
equivalent to managerial actions. Second, the Court ruled that the respondent committed wilful breach of
trust sufficient to justify dismissal. The heart of the loss-of-trust charge is the employees betrayal of the
employers trust. Damage aggravates the charge but its absence does not mitigate nor negate the
employees liability. The respondent betrayed his owed fidelity the moment he engaged in a venture that
required him to perform tasks and make calculated decisions which his duty to the petitioner would have
equally required him to perform or would have otherwise required him to oppose. The Court was
convinced that actual conflict of interest existed when respondent sought to conduct review courses for
nursing examination knowing that the petitioner was already offering similar classes. The respondents
good intentions were beside the point. Ultimately, the determinant is his deliberate engagement in a
venture that would have directly conflicted with the petitioners interests. If respondent merely intended to
help the petitioner and its students in increasing their chances of passing the Civil Service Examination, he
could have just offered, as part of the BCUs course curriculum, review classes for the Civil Service
Examination instead of altogether organizing a review center that obviously will offer the course to
everyone minded to enroll. Baguio Central University v. Ignacio Gallente, G.R. No. 188267, December 2,
2013.
Labor; valid dismissal; requisites. Our Constitution, statutes and jurisprudence uniformly guarantee to
every employee or worker tenurial security. What this means is that an employer shall not dismiss an
employee except for just or authorized cause and only after due process is observed. Thus, for an

employees dismissal to be valid, the employer must meet these basic requirements of: (1) just or authorized
cause (which constitutes the substantive aspect of a valid dismissal); and (2) observance of due process (the
procedural aspect). Baguio Central University v. Ignacio Gallente, G.R. No. 188267, December 2, 2013.
Petition for review on certiorari; only questions of law can be reviewed; exceptions.The well-entrenched rule
in this jurisdiction is that only questions of law may be entertained by the SC in a petition for review on
certiorari under Rule 45. This rule, however, is not absolute and admits certain exceptions, such as when the
petitioner persuasively alleges that there is insufficient or insubstantial evidence on record to support the
factual findings of the tribunal or court a quo as Section 5, Rule 133 of the Rules of Court states in express
terms that in cases filed before administrative or quasi-judicial bodies, a fact may be deemed established only
if supported by substantial evidence. Jebsens Maritime, Inc., et al. v. Eleno A. Baol, G.R. No. 204076,
December 4, 2013.
Probationary employment; concept of; probationer can only qualify upon fulfillment of the reasonable
standards set for permanent employment of a teaching personnel. Probationary employment refers to the trial
stage or period during which the employer examines the competency and qualifications of job applicants, and
determines whether they are qualified to be extended permanent employment status. Such an arrangement
affords an employer the opportunity before the full force of the guarantee of security of tenure comes into
play to fully scrutinize and observe the fitness and worth of probationers while on the job and to determine
whether they would become proper and efficient employees. It also gives the probationers the chance to
prove to the employer that they possess the necessary qualities and qualifications to meet reasonable
standards for permanent employment.
Mere completion of the three-year probation, even with an above-average performance, does not guarantee
that the employee will automatically acquire a permanent employment status. It is settled jurisprudence that
the probationer can only qualify upon fulfillment of the reasonable standards set for permanent employment
of a teaching personnel.
The Court ruled that the requirement to obtain a masters degree was made known to the petitioner. The
contract she signed clearly incorporates the rules, regulations, and employment conditions contained in the
SSC Faculty Manual. The Manual provided for a criteria for permanency which includes, among others, the
requirement that the faculty member must have completed at least a masters degree. Viewed next to the
statements and actions of Manaois i.e., the references to obtaining a masters degree in her application letter,
in the subsequent correspondences between her and SSC, and in the letter seeking the extension of a teaching
load for the school year 2003-2004; and her submission of certifications from UP and from her thesis adviser
the Court found that there is indeed substantial evidence proving that she knew about the necessary
academic qualifications to obtain the status of permanency. Jocelyn Herrera-Manaois v. St. Scholasticas
College, G.R. No. 188914, December 11, 2013.
Probationary employment; part-time member of the academic personnel; requisites to acquire permanence of
employment and security of tenure. Pursuant to the 1992 Manual of Regulations for Private Schools, private
educational institutions in the tertiary level may extend full-time faculty status only to those who possess,
inter alia, a masters degree in the field of study that will be taught. This minimum requirement is neither
subject to the prerogative of the school nor to the agreement between the parties. For all intents and purposes,
this qualification must be deemed impliedly written in the employment contracts between private educational
institutions and prospective faculty members. The issue of whether probationers were informed of this
academic requirement before they were engaged as probationary employees is thus no longer material, as
those who are seeking to be educators are presumed to know these mandated qualifications. Thus, all those
who fail to meet the criteria under the 1992 Manual cannot legally attain the status of permanent full-time
faculty members, even if they have completed three years of satisfactory service.

Further, the Court stated that in line with academic freedom and constitutional autonomy, an institution of
higher learning has the discretion and prerogative to impose standards on its teachers and determine
whether these have been met. Upon conclusion of the probation period, the college or university, being the
employer, has the sole prerogative to make a decision on whether or not to re-hire the probationer. The
probationer cannot automatically assert the acquisition of security of tenure and force the employer to
renew the employment contract. In the case at bar, petitioner failed to comply with the stated academic
qualifications required for the position of a permanent full-time faculty member. Jocelyn Herrera-Manaois
v. St. Scholasticas College, G.R. No. 188914, December 11, 2013.
Question of law; distinguished from a question of fact. A question of law arises when the doubt or
controversy concerns the correct application of law or jurisprudence to a certain set of facts. In contrast, a
question of fact exists when a doubt or difference arises as to the truth or falsehood of facts.
In this petition, the petitioner essentially asks the question whether, under the circumstances and the
presented evidence, the termination of respondents employment was valid. As framed, therefore, the
question before the Court is a proscribed factual issue that it cannot generally consider in this Rule 45
petition, except to the extent necessary to determine whether the CA correctly found the NLRC in grave
abuse of its discretion in considering and appreciating this factual issue.
Nonetheless, as an exception to the Rule 45 requirement, the Court deemed it proper to review the
conflicting factual findings of the LA and the CA, on the one hand, and the NLRC, on the other. Such
exception applies when, based on the records, the factual findings of the tribunals below are in conflict.
Baguio Central University v. Ignacio Gallente, G.R. No. 188267, December 2, 2013.
Stare decisis; doctrine of. Under the doctrine of stare decisis, when a court has laid down a principle of law
as applicable to a certain state of facts, it will adhere to that principle and apply it to all future cases in
which the facts are substantially the same, even though the parties may be different. Where the facts are
essentially different, however, stare decisis does not apply because a perfectly sound principle as applied to
one set of facts might be entirely inappropriate when a factual variant is introduced.
This case and the Philippine Carpet Employees Association (PHILCEA) v. Hon. Sto. Tomas case (Philcea
case; G.R. No. 168719, February 22, 2006), involve the same period which is March to April 2004; the
issuance of the Memorandum to employees informing them of the implementation of the cost reduction
program; the implementation of the voluntary retirement program and retrenchment program, except that
this case involves different employees; the execution of deeds of release, waiver, and quitclaim, and the
acceptance of separation pay by the affected employees. As the respondents here were similarly situated as
the union members in the Philcea case, and considering that the questioned dismissal from the service was
based on the same grounds under the same circumstances, there is no need to re-litigate the issues presented
herein. In short, stare decisis applies and the Court deems it wise to adopt its earlier findings in the Philcea
case that there was no valid ground to terminate the services of the employees. Philippine Carpet
Manufacturing Corporation, et al. v. Ignacio B. Tagyamon, et al., G.R. No. 191475, December 11, 2013.
Substantial evidence; definition of. The assertions of respondent do not constitute as substantial evidence
that a reasonable mind might accept as adequate to support the conclusion that there is a causal relationship
between his illness and the working conditions on board the petitioners vessel. Although the Court has
recognized as sufficient that work conditions are proven to have contributed even to a small degree, such
must, however, be reasonable, and anchored on credible information. The claimant must, therefore, prove a
convincing proposition other than by his mere allegations. Jebsens Maritime, Inc., et al. v. Eleno A. Baol,
G.R. No. 204076, December 4, 2013.

Termination of employment; authorized causes; retrenchment. The illegality of the basis of the
implementation of both voluntary retirement and retrenchment programs of petitioners had been thoroughly
ruled upon by the Court in Philippine Carpet Employees Association (PHILCEA) v. Hon. Sto. Tomas (G.R.
No. 168719, February 22, 2006). It discussed the requisites of both retrenchment and redundancy as
authorized causes of termination and concluded that petitioners failed to substantiate them. In ascertaining the
bases of the termination of employees, it took into consideration petitioners claim of business losses; the
purchase of machinery and equipment after the termination, the declaration of cash dividends to stockholders,
the hiring of 100 new employees after the retrenchment, and the authorization of full blast overtime work for
six hours daily. These, said the Court, are inconsistent with petitioners claim that there was a slump in the
demand for its products which compelled them to implement the termination programs. In arriving at its
conclusions, the Court took note of petitioners net sales, gross and net profits, as well as net income. The
Court, thus, reached the conclusion that the retrenchment effected by the company is invalid due to a
substantive defect. Philippine Carpet Manufacturing Corporation, et al. v. Ignacio B. Tagyamon, et al., G.R.
No. 191475, December 11, 2013.
Termination of employment; ground; closure of business due to serious business losses; notice requirement.
Article 297 of the Labor Code provides that before any employee is terminated due to closure of business, it
must give one (1) months prior written notice to the employee and to the Department of Labor and
Employment. In this relation, case law instructs that it is the personal right of the employee to be personally
informed of his proposed dismissal as well as the reasons therefor; and such requirement of notice is not a
mere technicality or formality which the employer may dispense with. Since the purpose of previous notice is
to, among others, give the employee some time to prepare for the eventual loss of his job, the employer has
the positive duty to inform each and every employee of their impending termination of employment. To this
end, jurisprudence states that an employers act of posting notices to this effect in conspicuous areas in the
workplace is not enough. Verily, for something as significant as the involuntary loss of ones employment,
nothing less than an individually-addressed notice of dismissal supplied to each worker is proper. The Court
held that the Labor Arbiter, NLRC, and Court of Appeals erred in ruling that SPI complied with the notice
requirement when it merely posted various copies of its notice of closure in conspicuous places within the
business premises. SPI is required to serve individual written notices of termination to its employees.
Sangwoo Philippines, Inc. and/or Sang Ik Jang, Jisso Jang, et al. v. Sangwoo Philippines, Inc. Employees
Union-OLALIA, rep. by Porferia Salibongcogon/Sangwoo Philippines, Inc. Employees Union-OLALIA, rep.
by Porferia Salibongcogon v. Sangwoo Philippines, Inc. and/or Sang Ik Jang, Jisso Jang, et al., G.R. No.
173154./G.R. No. 173229, December 9, 2013
Termination of employment; authorized cause; closure of business due to serious business losses; separation
pay. Closure of business is the reversal of fortune of the employer whereby there is a complete cessation of
business operations and/or an actual locking-up of the doors of establishment, usually due to financial losses.
Closure of business, as an authorized cause for termination of employment, aims to prevent further financial
drain upon an employer who cannot pay anymore his employees since business has already stopped. In such a
case, the employer is generally required to give separation benefits to its employees, unless the closure is due
to serious business losses. As explained in the case of Galaxie Steel Workers Union (GSWU-NAFLU-KMU)
v. NLRC (G.R. No. 165757, October 17, 2006): The Constitution, while affording full protection to labor,
nonetheless, recognizes the right of enterprises to reasonable returns on investments, and to expansion and
growth. In line with this protection afforded to business by the fundamental law, Article [297] of the Labor
Code clearly makes a policy distinction. It is only in instances of retrenchment to prevent losses and in cases
of closures or cessation of operations of establishment or undertaking not due to serious business losses or
financial reverses that employees whose employment has been terminated as a result are entitled to
separation pay. In other words, Article [297] of the Labor Code does not obligate an employer to pay
separation benefits when the closure is due to serious losses. To require an employer to be generous when it is
no longer in a position to do so, in our view, would be unduly oppressive, unjust, and unfair to the employer.
Ours is a system of laws, and the law in protecting the rights of the working man, authorizes neither the
oppression nor the self-destruction of the employer.

In this case, the Labor Arbiter, NLRC, and the Court of Appeals all consistently found that petitioners
indeed suffered from serious business losses which resulted in its permanent shutdown and accordingly,
held the companys closure to be valid. It is a rule that absent any showing that the findings of fact of the
labor tribunals and the appellate court are not supported by evidence on record or the judgment is based on
a misapprehension of facts, the Court shall not examine anew the evidence submitted by the parties.
Perforce, without any cogent reason to deviate from the findings on the validity of respondents closure, the
Court held that it is not obliged to give separation benefits to minority employees pursuant to Article 297 of
the Labor Code. Sangwoo Philippines, Inc. and/or Sang Ik Jang, Jisso Jang, et al. v. Sangwoo Philippines,
Inc. Employees Union-OLALIA, rep. by Porferia Salibongcogon/Sangwoo Philippines, Inc. Employees
Union-OLALIA, rep. by Porferia Salibongcogon v. Sangwoo Philippines, Inc. and/or Sang Ik Jang, Jisso
Jang, et al., G.R. No. 173154./G.R. No. 173229, December 9, 2013.
Termination of employment due to closure; procedural infirmity; nominal damages as sanction. It is well
to stress that while respondent had a valid ground to terminate its employees, i.e., closure of business, its
failure to comply with the proper procedure for termination renders it liable to pay the employee nominal
damages for such omission. Based on existing jurisprudence, an employer which has a valid cause for
dismissing its employee but conducts the dismissal with procedural infirmity is liable to pay the employee
nominal damages in the amount of P30,000.00 if the ground for dismissal is a just cause, or the amount of
P50,000.00 if the ground for dismissal is an authorized cause. However, case law exhorts that in instances
where the payment of such damages becomes impossible, unjust, or too burdensome, modification becomes
necessary in order to harmonize the disposition with the prevailing circumstance. In this case, considering
that SPI closed down its operations due to serious business losses and that said closure appears to have
been done in good faith, the Court as in the case of Industrial Timber Corporation v. Ababon (G.R. No.
164518, March 30, 2006), deems it just to reduce the amount of nominal damages to be awarded to each of
the minority employees from P50,000.00 to Pl0,000.00. Sangwoo Philippines, Inc. and/or Sang Ik Jang,
Jisso Jang, et al. v. Sangwoo Philippines, Inc. Employees Union-OLALIA, rep. by Porferia
Salibongcogon/Sangwoo Philippines, Inc. Employees Union-OLALIA, rep. by Porferia Salibongcogon v.
Sangwoo Philippines, Inc. and/or Sang Ik Jang, Jisso Jang, et al., G.R. No. 173154./G.R. No. 173229,
December 9, 2013.
Here are select January 2013 rulings of the Supreme Court of the Philippines on labor law and procedure:
Appeal to the National Labor Relations Commission (NLRC); Requisites for perfection of appeal; Joint
declaration under oath accompanying the surety bond; Substantial compliance with procedural rules. There
was substantial compliance with the NLRC Rules of Procedure when the respondents PAL Maritime
Corporation and Western Shipping Agencies, Pte., Ltd. filed, albeit belatedly, the Joint Declaration Under
Oath, which is required when an employer appeals from the Labor Arbiters decision granting a monetary
award and posts a surety bond. Under the NLRC rules, the following requisites are required to perfect the
employers appeal: (1) it must be filed within the reglementary period; (2) it must be under oath, with proof
of payment of the required appeal fee and the posting of a cash or surety bond; and (3) it must be
accompanied by typewritten or printed copies of the memorandum of appeal, stating the grounds relied
upon, the supporting arguments, the reliefs prayed for, and a statement of the date of receipt of the appealed
decision, with proof of service on the other party of said appeal. If the employer posts a surety bond, the
NLRC rules further require the submission by the employer, his or her counsel, and the bonding company
of a joint declaration under oath attesting that the surety bond posted is genuine and that it shall be in effect
until the final disposition of the case.
In the case at bar, the respondents posted a surety bond equivalent to the monetary award and filed the
notice of appeal and the appeal memorandum within the reglementary period. When the NLRC
subsequently directed the filing of a Joint Declaration Under Oath, the respondents immediately complied
with the said order. There was only a late submission of the Joint Declaration. Considering that there was

substantial compliance with the rules, the same may be liberally construed. The application of technical rules
may be relaxed in labor cases to serve the demands of substantial justice. Rolando L. Cervantes vs. PAL
Maritime Corporation and/or Western Shipping Agencies, Pte., Ltd. G.R. No. 175209. January 16, 2013.
Completeness of service by registered mail; Exception to the general rule regarding a corporations
verification and certification of non-forum shopping; Interpretation of school CBA. A school CBA must be
read in conjunction with statutory and administrative regulations governing faculty qualifications. Such
regulations form part of a valid CBA without need for the parties to make express reference to the same.
In the case at bar, the University of the East (UE) repeatedly extended only semester-to-semester faculty
appointments to the respondents Pepanio and Bueno, since they had not completed postgraduate degrees. The
respondents, however, claimed that the 1994 CBA between UE and the faculty union did not yet require a
masters degree for a teacher to acquire regular status. Having rendered more than three consecutive years of
full-time service to the school, the respondents insisted that UE should have given them permanent
appointments.
The Supreme Court observed that the policy requiring college teachers to have postgraduate degrees was
provided in the Manual of Regulations issued as early as 1992 by the Department of Education, Culture and
Sports (DECS), now the Department of Education. In promulgating the Manual of Regulations, DECS
exercised its power of regulation over educational institutions, which includes prescribing the minimum
academic qualifications for teaching personnel. The legislature subsequently transferred the power to
prescribe such qualifications for teachers in institutions of higher learning to the Commission on Higher
Education (CHED). However, the 1992 Manual of Regulations issued by DECS continued to apply to
colleges and universities until 2010, when CHED issued a Revised Manual of Regulations.
Thus, the requirement of a masters degree for college teachers, as originally provided in the 1992 Manual of
Regulations, was deemed incorporated in the 1994 CBA between UE and the faculty union. Furthermore, the
subsequent CBA in 2001, which provided for the extension of conditional probationary status to the
respondents, subject to their obtaining a masters degree within the probationary period, clearly showed that
UE intended to subject the respondents appointments to the standards set by the law.
The requirement of a masters degree for tertiary education teachers is not unreasonable, considering that the
operation of educational institutions involves public interest. The government has a right to ensure that only
qualified persons, in possession of sufficient academic knowledge and teaching skills, are allowed to teach in
such institutions.
The Supreme Court also overruled the respondents contention that UE filed its appeal to the NLRC beyond
the required ten (10)-day period. For completeness of service by registered mail, the reckoning period starts
either from the date of actual receipt of the mail by the addressee or after five (5) days from the date he or she
received the first notice from the postmaster. In this case, the respondents averred that, on March 17, 2005,
the postmaster gave UEs counsel a notice to claim the mail containing the Labor Arbiters decision. The
respondents claimed that UEs counsel was deemed in receipt of the decision 5 days after the giving of the
notice, or on March 22, 2005. Thus, according to the respondents, when UE filed its appeal to the NLRC on
April 14, 2005, the 10-day reglementary period had already lapsed. The Supreme Court, however, ruled that
there must be conclusive proof that the registry notice was received by or at least served on the addressee. In
this case, the records did not show that UEs counsel in fact received the alleged registry notice requiring him
to claim the mail. On the other hand, UE was able to present a registry return receipt showing that its counsel
actually received a copy of the Labor Arbiters decision on April 4, 2005. Reckoned from this date, the 10day reglementary period had not yet lapsed when UE filed its appeal to the NLRC on April 14, 2005.

Anent UEs failure to comply with the general rule that the Board of Directors or Board of Trustees of a
corporation must authorize the person who shall sign the verification and certification of non-forum
shopping accompanying a petition, the Supreme Court held that such authorization is not necessary when it
is self-evident that the signatory is in a position to verify the truthfulness and correctness of the allegations
in the petition. The Supreme Court declared that Dean Eleanor Javier, who signed UEs verification and
certification, was in such a position, since she knew the factual antecedents of the case and she actually
communicated with the respondents regarding the required postgraduate qualification. University of the
East, et al. vs. Analiza F. Pepanio and Mariti D. Bueno. G.R. No. 193897. January 23, 2013.
Disease as a ground for termination; Retirement under the Labor Code; Age and tenure requirements for
retirement; Financial assistance. Under the Labor Code provision on disease as a ground for termination
(formerly, Article 284, but now renumbered pursuant to Republic Act No. 10151), it must be the employer
who initiates the termination of the employees services. The aforementioned provision cannot be applied
in this case, considering that it was the late petitioner Padillo, and not the Rural Bank of Nabunturan, Inc.
(Bank), who severed the employment relations. With his memory impaired after suffering a mild stroke
due to hypertension, Padillo wrote a letter to the Bank, expressing his intention to avail of an early
retirement package. The clear import of Padillos letter and the fact that he had stopped reporting for work
even before sending the said letter shows that he voluntarily retired. Given the inapplicability of the Labor
Code provision on disease as a ground for termination, it necessarily follows that Padillos claim for
separation pay must be denied.
As regards Padillos claim for retirement benefits, the provision of the Labor Code on retirement (formerly,
Art. 287, but now renumbered pursuant to R.A. No. 10151) states that, in the absence of any applicable
agreement, an employee who has served at least five (5) years in the company may retire upon reaching the
age of sixty (60) years, but not beyond sixty-five (65) years, to be entitled to retirement pay equivalent to at
least one-half (1/2) month salary for every year of service, with a fraction of at least six (6) months being
considered as one whole year. Notably, the aforementioned age and tenure requirements are cumulative,
and non-compliance with either negates the employees entitlement to the retirement pay under the Labor
Code. In this case, the Bank did not have a retirement plan or any other contract with its employees, setting
the terms and conditions for retirement. Padillo also served the Bank for twenty-nine (29) years, far more
than the 5-year tenure requirement. Padillo, however, did not meet the age requirement, considering that he
was only fifty-five (55) years old, or less than 60 years of age, when he retired. Thus, Padillos claim for
retirement pay must also be denied.
Nevertheless, the Supreme Court awarded Padillo financial assistance in the amount of P75,000,
considering the length of time which had supervened before the disposition of this case and Padillos
unblemished record of 29 years of service to the Bank. The award was in addition to the P100,000 benefit
receivable under the Philam Life Plan that the Bank had procured in favor of Padillo. Eleazar S. Padillo
vs. Rural Bank of Nabunturan, Inc., et al. G.R. No. 199338. January 21, 2013.
Redundancy as an authorized cause for termination; Difference between retirement and termination due to
redundancy; General rule regarding the factual findings of the NLRC and the exceptions thereto. Under the
Labor Code, redundancy is one of the authorized causes for termination of employment. The following are
the requisites for the valid implementation of a redundancy program: (a) the employer must serve a written
notice to the affected employees and to the Department of Labor and Employment (DOLE) at least one
month before the intended date of termination; (b) the employer must pay the employees separation pay
equivalent to at least one month pay or at least one month pay for every year of service, whichever is
higher; (c) the employer must abolish the redundant positions in good faith; and (d) the employer must set
fair and reasonable criteria in ascertaining which positions are redundant and may be abolished. The
Supreme Court has also held that a company cannot simply declare redundancy without basis. To exhibit

its good faith and to show that there were fair and reasonable criteria in ascertaining redundant positions, a
company claiming to be over manned must produce adequate proof of the same.
In the case at bar, the General Milling Corporation (GMC) furnished respondent Viajar a written notice
informing her of the termination of her services on the ground of redundancy. GMC also submitted to the
DOLE an Establishment Termination Report, regarding the employees, including Viajar, whose positions
were deemed redundant. Viajar and the DOLE received the respective notices one month before the effective
date of the employees termination. Furthermore, GMC issued to Viajar two checks amounting to
P440,253.02 and P21,211.35, representing her separation pay. However, the Supreme Court held that,
notwithstanding compliance with the requirements on notice and the payment of separation pay, GMC is still
considered to have illegally dismissed Viajar because the company failed to present substantial proof to
support its general allegations of redundancy. GMC could have presented evidence to substantiate
redundancy, such as a new staffing pattern or feasibility studies or proposals on the viability of newly created
positions, job descriptions and the approval by management of the restructuring program, or the companys
audited financial reports. However, no such evidence was submitted by GMC.
On the other hand, Viajar presented proof negating GMCs claim of redundancy and clearly showing GMCs
bad faith in implementing the redundancy program: (1) GMC had hired new employees before it terminated
Viajars employment; (2) Vaijar was barred from entering the company premises even before the effectivity of
her separation; and (3) Viajar was also forced to sign an Application for Retirement and Benefits so that she
could avail of her separation pay. The last circumstance is significant, considering that there is a difference
between voluntary retirement and forced termination of an employee. Retirement from service is contractual
or based on a bilateral agreement of the employer and the employee, while termination of employment is
statutory or governed by the Labor Code and other related laws. Voluntary retirement cuts employment ties,
leaving no residual employer liability; involuntary retirement amounts to a discharge, rendering the employer
liable for termination without cause. GMCs demand that Viajar sign an Application for Retirement and
Benefits, when she had already been informed of the termination of her services due to redundancy, shows
that this case involves not a voluntary retirement, but an illegal termination.
While the Labor Arbiter and the NLRC both found that Viajar was validly dismissed, the general rule that the
factual findings of the NLRC must be accorded respect and finality is not applicable in this case. One of the
exceptions to the said rule covers instances when the findings of fact of the trial court, or of the quasi-judicial
agencies concerned, are conflicting or contradictory with those of the Court of Appeals, as in the present
case. Another exception to the general rule is when the said findings are not supported by substantial
evidence or the inference or conclusion arrived at is manifestly erroneous. In the case at bar, the Supreme
Court agreed with the Court of Appeals that the NLRCs conclusion that Viajar was legally dismissed is
manifestly erroneous. General Milling Corporation vs. Violeta L. Viajar. G.R. No. 181738. January 30,
2013.
Reinstatement; Backwages. It is basic in jurisprudence that illegally dismissed workers are entitled to
reinstatement with backwages plus interest at the legal rate.
This labor controversy started when the employer Automotive Engine Rebuilders, Inc. (AER) and the
Progresibong Unyon ng mga Manggagawa sa AER (Union) filed charges against each other for violating
labor laws. AER filed a complaint against the Union and eighteen (18) of its members for conducting an
illegal strike. On the other hand, thirty-two (32) employees filed a complaint against AER for unfair labor
practices, illegal dismissal, illegal suspension, and run-away shop. In a previous decision (G.R. No. 160138,
July 13, 2011), the Supreme Court had held that both parties were at fault or in pari delicto; hence, the
complaining employees should be reinstated but without backwages. The Motion for Partial Reconsideration
filed by the Union is resolved in the present case.

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

interrelated and intertwined with the sole issue submitted for arbitration. The ruling was necessary to make a
complete and final adjudication of the dispute between the parties.
Furthermore, Goya, Inc.s assertion that its hiring of contractual workers was a valid exercise of management
prerogative is erroneous. Declaring that a particular act falls within the concept of management prerogative is
significantly different from acknowledging that such act is a valid exercise thereof. While the VA and the
Court of Appeals ruled that the act of contracting out or outsourcing work is within the purview of
management prerogative, they did not declare such act to be a valid exercise thereof. As repeatedly held, the
exercise of management prerogative is not unlimited; it is subject to the limitations found in the law, CBA, or
general principles of fair play and justice.
In this case, the CBA provision prescribing the categories of employees in the company and the union
security clause are interconnected and must be given full force and effect. The parties in a CBA are free to
establish such stipulations they may deem convenient, provided that the same are not contrary to law, morals,
good customs, public order, or public policy. Where the CBA is clear and unambiguous, the literal meaning
of its stipulations shall control. The CBA becomes the law between the parties, and compliance therewith is
mandated by the express policy of the law. Goya, Inc. vs. Goya, Inc. Employees Union-FFW. G.R. No.
170054. January 21, 2013.
Here are select September 2012 rulings of the Philippine Supreme Court on labor law and procedure:
Breach of contract; Contract substitution; Constructive dismissal; Illegal recruitment. The agency and its
principal, Modern Metal, committed a prohibited practice and engaged in illegal recruitment when they
altered or substituted the contracts approved by the Philippine Overseas Employment Administration (POEA).
Article 34 (i) of the Labor Code provides: It shall be unlawful for any individual, entity, licensee, or holder of
authority to substitute or alter employment contracts approved and verified by the Department of Labor from
the time of actual signing thereof by the parties up to and including the period of expiration of the same
without the approval of the Secretary of Labor. Meanwhile, Article 38 (i) of the Labor Code, as amended by
R.A. 8042, defined illegal recruitment to include the substitution or alteration, to the prejudice of the
worker, of employment contracts approved and verified by the Department of Labor and Employment from
the time of actual signing thereof by the parties up to and including the period of the expiration of the same
without the approval of the Department of Labor and Employment.
Furthermore, the agency and Modern Metal committed breach of contract by providing substandard working
and living arrangements, when the contract provided free and suitable housing. The living quarters were
cramped as they shared them with 27 other workers. The lodging house was far from the jobsite, leaving
them only three to four hours of sleep every workday because of the long hours of travel to and from their
place of work, not to mention that there was no potable water in the lodging house which was located in an
area where the air was polluted. They complained with the agency about the hardships that they were
suffering, but the agency failed to act on their reports. Significantly, the agency failed to refute their claims.
Thus, with their original contracts substituted and their oppressive working and living conditions unmitigated
or unresolved, the decision to resign is not surprising. They were compelled by the dismal state of their
employment to give up their jobs; effectively, they were constructively dismissed. A constructive dismissal or
discharge is a quitting because continued employment is rendered impossible, unreasonable or unlikely, as,
an offer involving a demotion in rank and a diminution in pay.
Without doubt, continued employment with Modern Metal had become unreasonable. A reasonable mind
would not approve of a substituted contract that pays a diminished salary from 1350 AED a month in the
original contract to 1,000 AED to 1,200 AED in the appointment letters, a difference of 150 AED to 250 AED

(not just 50 AED as the agency claimed) or an extended employment (from 2 to 3 years) at such inferior
terms, or a free and suitable housing which is hours away from the job site, cramped and crowded,
without potable water and exposed to air pollution.
We thus cannot accept the agencys insistence that the respondents voluntarily resigned since they
personally prepared their resignation letters in their own handwriting. Pert/CPM Manpower Exponent Co.,
Inc. vs. Amando A. Vinuya, et al. G.R. No. 197528. September 5, 2012.
Disability benefit. Deemed read and incorporated into the Contract of Employment between David and
respondents are the provisions of the 2000 Philippine Overseas Employment Agency Standard Employment
Contract (POEASEC). Sec. 20(B)(4) of the POEA-SEC clearly established a disputable presumption in
favor of the compensability of an illness suffered by a seafarer during the term of his contract. Hence,
unless contrary evidence is presented by the seafarers employer/s, this disputable presumption stands.
In this case, David not only relies on this disputable presumption of the compensability of his illness but
David has provided more than a reasonable nexus between the nature of his job and the disease that
manifested itself on the sixth month of his last contract with respondents.
It is not necessary that the nature of the employment be the sole and only reason for the illness suffered by
the seafarer. It is sufficient that there is a reasonable linkage between the disease suffered by the employee
and his work to lead a rational mind to conclude that his work may have contributed to the establishment
or, at the very least, aggravation of any pre-existing condition he might have had.
David showed that part of his duties as a Third Officer of the crude tanker M/T Raphael involved
overseeing the loading, stowage, securing and unloading of cargoes. As a necessary corollary, David was
frequently exposed to the crude oil that M/T Raphael was carrying. The chemical components of crude oil
include, among others, sulfur, vanadium and arsenic compounds. Hydrogen sulfide and carbon monoxide
may also be encountered, while benzene is a naturally occurring chemical in crude oil. It has been regarded
that these hazardous chemicals can possibly contribute to the formation of cancerous masses.
In this case, David was diagnosed with MFH (now known as undifferentiated pleomorphic sarcoma
[UPS]), which is a class of soft tissue sarcoma or an illness that account for approximately 1% of the
known malignant tumors. As stated by Dr. Pea of the MMC, who was consulted by the companydesignated physician, the etiology of soft tissue sarcomas are multifactorial. However, some factors are
associated with a higher risk. These factors include exposure to chemical carcinogens like some of the
chemical components of crude oil. Jessie V. David, represented by his wife, Ma. Theresa S. David, and
children, Katherine and Kristina David vs. OSG Shipmanagement Manila, Inc. and/or Michaelmar
Shipping Services. G.R. No. 197205. September 26, 2012.
Dismissal; Unfair labor practice; Liability of corporate officers; Moral and exemplary damages. The
requisites for a valid dismissal are: (a) the employee must be afforded due process, i.e., he must be given an
opportunity to be heard and defend himself; and (b) the dismissal must be for a valid cause as provided in
Article 282 of the Labor Code, or for any of the authorized causes under Articles 283 and 284 of the same
Code. In the case before us, both elements are completely lacking. Respondents were dismissed without
any just or authorized cause and without being given the opportunity to be heard and defend themselves.
The law mandates that the burden of proving the validity of the termination of employment rests with the
employer. Failure to discharge this evidentiary burden would necessarily mean that the dismissal was not
justified and, therefore, illegal. Unsubstantiated suspicions, accusations, and conclusions of employers do
not provide for legal justification for dismissing employees. In case of doubt, such cases should be
resolved in favor of labor, pursuant to the social justice policy of labor laws and the Constitution.

Anent the charge of unfair labor practice, Article 248 (a) of the Labor Code considers it an unfair labor
practice when an employer interferes, restrains or coerces employees in the exercise of their right to selforganization or the right to form an association. In order to show that the employer committed unfair labor
practice under the Labor Code, substantial evidence is required to support the claim. Substantial evidence has
been defined as such relevant evidence as a reasonable mind might accept as adequate to support a
conclusion. In the case at bar, respondents were indeed unceremoniously dismissed from work by reason of
their intent to form and organize a union.
A corporation, being a juridical entity, may act only through its directors, officers and employees. Obligations
incurred by them, while acting as corporate agents, are not their personal liability but the direct accountability
of the corporation they represent. However, corporate officers may be deemed solidarily liable with the
corporation for the termination of employees if they acted with malice or bad faith. In the present case, the
lower tribunals unanimously found that Percy and Harbutt, in their capacity as corporate officers of Burgos,
acted maliciously in terminating the services of respondents without any valid ground and in order to suppress
their right to self-organization. Section 31 of the Corporation Code makes a director personally liable for
corporate debts if he willfully and knowingly votes for or assents to patently unlawful acts of the corporation.
It also makes a director personally liable if he is guilty of gross negligence or bad faith in directing the affairs
of the corporation. Thus, Percy and Harbutt, having acted in bad faith in directing the affairs of Burgos, are
jointly and severally liable with the latter for respondents dismissal.
The awards of moral and exemplary damages in favor of respondents are also in order. Moral damages may
be recovered where the dismissal of the employee was tainted by bad faith or fraud, or where it constituted an
act oppressive to labor, and done in a manner contrary to morals, good customs or public policy, while
exemplary damages are recoverable only if the dismissal was done in a wanton, oppressive, or malevolent
manner. The grant of attorneys fees is likewise proper. Attorneys fees may likewise be awarded to
respondents who were illegally dismissed in bad faith and were compelled to litigate or incur expenses to
protect their rights by reason of the oppressive acts of petitioners. The unjustified act of petitioners had
obviously compelled respondents to institute an action primarily to protect their rights and interests which
warrants the granting of the award. Park Hotel, et al. vs. Manolo Soriano, et al. G.R. No. 171118. September
10, 2012.
Employment termination; Substantive and procedural due process; Mass leave; Strike. Petitioners were
illegally dismissed as they were not afforded substantive and procedural due process. To justify the dismissal
of an employee on the ground of serious misconduct, the employer must first establish that the employee is
guilty of improper conduct, that the employee violated an existing and valid company rule or regulation, or
that the employee is guilty of a wrongdoing. In the instant case, Biomedica failed to even present a copy of
the rules and to prove that petitioners were made aware of such regulations. The accusation is for engaging in
a mass leave tantamount to an illegal strike. The phrase mass leave may refer to a simultaneous availment
of authorized leave benefits by a large number of employees in a company. Here, only 5 employees were
absent on the same day. They did not go on strike, which is a temporary stoppage of work by the concerted
action of employees as a result of any industrial or labor dispute. Concerted is defined as mutually
contrived or planned or performed in unison. In the case at bar, the 5 petitioners went on leave for various
reasons. They were in different places to attend to their personal needs or affairs.
The petitioners were charged with conducting an illegal strike, not a mass leave, without specifying the exact
acts that the company considers as constituting an illegal strike or violative of company policies. Such
allegation falls short of the requirement in King of Kings Transport, Inc. of a detailed narration of the facts
and circumstances that will serve as basis for the charge against the employees. A bare mention of an illegal
strike will not suffice. Further, while Biomedica cites the provisions of the company policy which petitioners
purportedly violated, it failed to quote said provisions in the notice so petitioners can be adequately informed

of the nature of the charges against them and intelligently file their explanation and defenses to said
accusations.
Moreover, the period of 24 hours allotted to petitioners to answer the notice was severely insufficient and in
violation of the implementing rules of the Labor Code. Under the implementing rule of Art. 277, an
employee should be given reasonable opportunity to file a response to the notice.
In addition, Biomedica did not set the charges against petitioners for hearing or conference. While
petitioners did not submit any written explanation to the charges, it is incumbent for Biomedica to set the
matter for hearing or conference to hear the defenses and receive evidence of the employees. More
importantly, Biomedica is duty-bound to exert efforts, during said hearing or conference, to hammer out a
settlement of its differences with petitioners. These prescriptions Biomedica failed to satisfy. Lastly,
Biomedica again deviated from the dictated contents of a written notice of termination as laid down in Sec.
2, Book V, Rule XIII of the Implementing Rules that it should embody the facts and circumstances to
support the grounds justifying the termination. Alex Q. Naranjo, et al. vs. Biomedica Health Care, Inc., et
al. G.R. No. 193789. September 19, 2012.
Employee dismissal; Reinstatement. Following Article 279 of the Labor Code, an employee who is unjustly
dismissed from work is entitled to reinstatement without loss of seniority rights and other privileges and to
his full backwages computed from the time he was illegally dismissed. However, considering that
respondent Dakila was terminated one (1) day prior to his compulsory retirement on May 2, 2007, his
reinstatement is no longer feasible. Accordingly, the NLRC correctly held him entitled to the payment of
his retirement benefits pursuant to the CBA. On the other hand, his backwages should be computed only
for days prior to his compulsory retirement which in this case is only a day. Consequently, the award of
reinstatement wages pending appeal must be deleted for lack of basis. The New Philippine Skylanders, Inc.
and/or Jennifer M. Eano-Bote vs. Francisco N. Dakila. G.R. No. 199547. September 24, 2012
Evidence; Constructive dismissal; Transfer; Substantial evidence. In labor cases, strict adherence with the
technical rules is not required. This liberal policy, however, should still conform to the rudiments of
equitable principles of law. For instance, belated submission of evidence may only be allowed if the delay
is adequately justified and the evidence is clearly material to establish the partys cause. Labor tribunals,
such as the NLRC, are not precluded from receiving evidence submitted on appeal as technical rules are not
binding in cases submitted before them. However, any delay in the submission of evidence should be
adequately explained and should adequately prove the allegations sought to be proven. In the present case,
MORESCO IIs belated submission of evidence cannot be permitted. MORESCO II did not cite any reason
why it had failed to file its position paper or present its cause before the Labor Arbiter despite sufficient
notice and time given to do so. Only after an adverse decision was rendered did it present its defense and
rebut the evidence of Cagalawan by alleging that his transfer was made in response to the letter-request of
the area manager of the Ginoog sub-office asking for additional personnel to meet its collection quota. To
our mind, however, the belated submission of the said letter-request without any valid explanation casts
doubt on its credibility, especially so when the same is not a newly discovered evidence.
The rule is that it is within the ambit of the employers prerogative to transfer an employee for valid
reasons and according to the requirement of its business, provided that the transfer does not result in
demotion in rank or diminution of salary, benefits and other privileges. This Court has always considered
the managements prerogative to transfer its employees in pursuit of its legitimate interests. But this
prerogative should be exercised without grave abuse of discretion and with due regard to the basic elements
of justice and fair play, such that if there is a showing that the transfer was unnecessary or inconvenient and
prejudicial to the employee, it cannot be upheld. Here, while we find that the transfer of Cagalawan neither
entails any demotion in rank since he did not have tenurial security over the position of head of the
disconnection crew, nor result to diminution in pay as this was not sufficiently proven by him, MORESCO

IIs evidence is nevertheless not enough to show that said transfer was required by the exigency of the electric
cooperatives business interest. Simply stated, the evidence sought to be admitted by MORESCO II is not
substantial to prove that there was a genuine business urgency that necessitated the transfer.
When there is doubt between the evidence submitted by the employer and that submitted by the employee, the
scales of justice must be tilted in favor of the employee. This is consistent with the rule that an employers
cause could only succeed on the strength of its own evidence and not on the weakness of the employees
evidence. Thus, MORESCO II cannot rely on the weakness of Ortizs certification in order to give more
credit to its own evidence. Self-serving and unsubstantiated declarations are not sufficient where the quantum
of evidence required to establish a fact is substantial evidence, described as more than a mere scintilla. The
evidence must be real and substantial, and not merely apparent. MORESCO II has miserably failed to
discharge the onus of proving the validity of Cagalawans transfer. Misamis Oriental II Electric Service
Cooperative (MORESCO II) vs. Virgilio M. Cagalawan. G.R. No. 175170. September 5, 2012.
Retirement benefits. While it is true that based on prevailing jurisprudence, disallowed benefits received in
good faith need not be refunded, the case before us may be distinguished from those cases with that ruling
because the monies involved here are retirement benefits. Retirement benefits belong to a different class of
benefits. All the cases with that ruling involved benefits such as cash gifts, representation allowances, rice
subsidies, uniform allowances, per diems, transportation allowances, and the like. The foregoing allowances
or fringe benefits are given in addition to ones salary, either to reimburse him for expenses he might have
incurred in relation to his work, or as a form of supplementary compensation. On the other hand, retirement
benefits are given to one who is separated from employment either voluntarily or compulsorily. Such
benefits, subject to certain requisites imposed by law and/or contract, are given to the employee on the
assumption that he can no longer work. They are also given as a form of reward for the services he had
rendered. The purpose is not to enrich him but to help him during his non-productive years.
Our Decision does not preclude the retirees from receiving retirement benefits provided by existing retirement
laws. What they are prohibited from getting are the additional benefits under the GSIS RFP, which we found
to have emanated from a void and illegal board resolution. To allow the payees to retain the disallowed
benefits would amount to their unjust enrichment to the prejudice of the GSIS, whose avowed purpose is to
maintain its actuarial solvency to finance the retirement, disability, and life insurance benefits of its members.
Government Service Insurance System (GSIS), et al. vs. Commission on Audit (COA), et al. G.R. No. 162372.
September 11, 2012.
Release/Quitclaim; Separation pay. The release/quitclaim affidavits are invalid for being against public policy
for two reasons: (1) the terms of the settlement are unconscionable; the separation pay for termination due to
reorganization/restructuring was deficient by Php400,000.00 for each employee; they were given only half of
the amount they were legally entitled to; and (2) the absence of voluntariness when the employees signed the
document, it was their dire circumstances and inability to support their families that finally drove them to
accept the amount offered. Without jobs and with families to support, they dallied in executing the quitclaim
instrument, but were eventually forced to sign given their circumstances. To be sure, a settlement under these
terms is not and cannot be a reasonable one, given especially the respondents length of service 25 years for
Ybarola and 19 years for Rivera. Radio Mindanao Network, Inc. and Eric S. Canoy vs. Domingo Z. Ybarola,
et al. G.R. No. 198662. September 12, 2012.
Res judicata. Res judicata means a matter adjudged; a thing judicially acted upon or decided; a thing or
matter settled by judgment. It denotes that a final judgment or decree on the merits by a court of
competent jurisdiction is conclusive of the rights of the parties or their privies in all latter suits on all points
and matters determined in the former suit. For res judicata, in its concept as a bar by former judgment to
apply, the following must be present:

1.

The former judgment or order is final;

2.

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

3.

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

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

As the records bear out, the LA found that patent animosity existed between ACMC and Bides considering
the confrontation that took place between the latter and Matthew. The confrontation coupled with Bides
refusal to be reinstated led to the LAs finding of strained relations necessitating an award of separation pay
in lieu of reinstatement. The NLRC, on the other hand, deleted the said award for lack of factual basis. The
CA reinstated the LAs finding of strained relations and explained that too much enmity had developed
between ACMC and Bides that necessarily barred the latters reinstatement.
The Court is well aware that reinstatement is the rule and, for the exception of strained relations to apply, it
should be proved that it is likely that, if reinstated, an atmosphere of antipathy and antagonism would be
generated as to adversely affect the efficiency and productivity of the employee concerned.

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

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

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

Apo Chemical Manufacturing and Michael Cheng vs. Ronaldo A. Bides. G.R. No. 186002. September 19,
2012.

It should be recalled that in G.R. No. 153799, the complainants assailed the Resolutions dated January 14,
2002 and February 20, 2002 of the CAs Fourth Division granting Metrobanks request for injunctive
reliefs. They claimed that the reinstatement aspect of the Labor Arbiters Decision is immediately
executory. Hence, they are entitled to backwages from the time the Labor Arbiter promulgated his
Decision until it was reversed by the NLRC.
As discussed above, however, the November 15, 2010 Decision of this Court in G.R. Nos. 159460 and
159461 already adjudicated the respective rights and liabilities of the parties. Said Decision pronouncing
the monetary awards to which the parties herein are entitled became final and executory on May 20, 2011.
Under the rule on immutability of judgment, this Court cannot alter or modify said Decision. It is a wellestablished rule that once a judgment has become final and executory, it is no longer susceptible to any
modification. Solidbank Union, et al. vs. Metropolitan Bank and Trust Company/Metropolitan Bank and
Trust Company vs. Solidbank Union, et al./Solidbank Corporation, etc., et al. vs. Solidbank Union, et
al./Solidbank Union, et al. vs. Metropolitan Bank and Trust Company. G.R. No. 153799/G.R. No.
157169/G.R. No. 157327/G.R. No. 157506. September 17, 2012.
Reinstatement; Strained relations. A determination of the applicability of the doctrine of strained relations
is essentially a factual question and, thus, not a proper subject in this petition. This rule, however, admits
of exceptions. In cases where the factual findings of the LA and the NLRC are conflicting, the Court, in
the exercise if equity jurisdiction, may review and re-evaluate the factual issues and look into the records of
the case and re-examine the questioned findings.

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

Seafarers disability benefits; Attorneys fees. In determining the disability benefits due a seafarer the POEA
Standard Employment Contract (SEC), specifically its schedule of benefits, medical findings, Article 192 (c)
(1) of the Labor Code, and Rule X, Section 2 of its implementing rules and regulations must be considered.
The initial treatment period of 120 days may be extended up to a maximum of 240 days under the conditions
prescribed by law.
Under Article 2298 of the Civil Code, attorneys fees can be recovered [w]hen the defendants act or
omission has compelled the plaintiff to litigate with third persons or to incur expenses to protect his interest.
This Court sees no reason why damages or attorneys fees should be awarded to Penales. It is obvious that he
did not give the petitioners company-designated physician ample time to assess and evaluate his condition, or
to treat him properly for that matter. The petitioners had a valid reason for refusing to pay his claims,
especially when they were complying with the terms of the POEA SEC with regard to his allowances and
treatment. Pacific Ocean Manning Inc., et al. vs. Benjamin D. Penales. G.R. No. 162809. September 5, 2012.
Here are select rulings of the Philippine Supreme Court on labor law and procedure:
Disability benefits; entitlement. Entitlement of seafarers to disability benefits is governed not only by medical
findings but also by contract and by law. By contract, Department Order No. 4, series of 2000, of the
Department of Labor and Employment and the parties Collective Bargaining Agreement bind the seafarer
and the employer. By law, the Labor Code provisions on disability apply with equal force to seafarers. The
seafarer, upon sign-off from his vessel, must report to the company-designated physician within three (3) days
from arrival for diagnosis and treatment. For the duration of the treatment but in no case to exceed 120 days,
the seaman is on temporary total disability as he is totally unable to work. He receives his basic wage during
this period until he is declared fit to work or his temporary disability is acknowledged by the company to be
permanent, either partially or totally, as his condition is defined under the POEA Standard Employment

Contract and by applicable Philippine laws. If the 120 days initial period is exceeded and no such
declaration is made because the seafarer requires further medical attention, then the temporary total
disability period may be extended up to a maximum of 240 days, subject to the right of the employer to
declare within this period that a permanent partial or total disability already exists. The seaman may of
course also be declared fit to work at any time such declaration is justified by his medical condition.
From the time Tomacruz was repatriated on November 18, 2002, he submitted himself to the care and
treatment of the company-designated physician. When the company-designated physician made a
declaration on July 25, 2003 that Tomacruz was already fit to work, 249 days had already lapsed from the
time he was repatriated. As such, his temporary total disability should be deemed total and permanent,
pursuant to Article 192 (c)(1) of the Labor Code and its implementing rule. Philasia Shipping Agency
Corporation, et al. vs. Andres G. Tomacruz. G.R. No. 181180, August 15, 2012.
Employee dismissal; due process requirements. The following standards of due process shall be
substantially observed for termination of employment based on just causes as defined in Article 282 of the
Labor Code:
(i) A written notice served on the employee specifying the ground or grounds for termination, and giving
said employee reasonable opportunity within which to explain his side.
(ii) A hearing or conference during which the employee concerned, with the assistance of counsel if he so
desires is given opportunity to respond to the charge, present his evidence or rebut the evidence presented
against him.
(iii) A written notice of termination served on the employee, indicating that upon due consideration of all
the circumstances, grounds have been established to justify his termination.
Petitioners evidence fails to prove their contention that they afforded Atencio with due process. The June
21, 1999 letter, which allegedly proves Atencios knowledge of the charges against him, and which
allegedly constitutes Atencios explanation, clearly discusses an entirely different topic which is the
removal of his construction company from the Caltex project. As for the May 24, 1999 letter, which
allegedly constitutes the notice of termination of Atencios employment as JARLs chief operating manager,
the said letter involves the termination of the subcontracting agreement between JARL and Atencios
company, and not the termination of Atencios employment. For petitioners failure to observe the twonotice rule under Article 277(b) of the Labor Code, respondent is entitled to nominal damages. Jarl
Construction and Armando K. Tejada vs. Simeon A. Atencio. G.R. No. 175969, August 1, 2012.
Judgment; law of the case.The law of the case has been defined as the opinion delivered on a former
appeal. It means that whatever is once irrevocably established as the controlling legal rule or decision
between the same parties in the same case continues to be the law of the case, whether correct on general
principles or not, so long as the facts on which such decision was predicated continue to be the facts of the
case before the court.
Both G.R. No. 168477 and this petition are offshoots of petitioners purported temporary measures to
preserve its neutrality with regard to the perceived void in the union leadership. While these two cases
arose out of different notices to strike, it is undeniable that the facts cited and the arguments raised by
petitioner are almost identical. Inevitably, G.R. No. 168477 and this petition seek only one relief, that is, to
absolve petitioner from respondents charge of committing an unfair labor practice. For this reason, we are
constrained to apply the law of the case doctrine in light of the finality of our July 20, 2005 and September
21, 2005 resolutions in G.R. No. 168477. In other words, our previous affirmance of the Court of Appeals

finding that petitioner erred in suspending collective bargaining negotiations with the union and in placing
the union funds in escrow considering the intra-union dispute between the Aliazas and Baez factions was not
a justification therefor is binding in the present case. De la Salle University vs. De la Salle University
Employees Association. G.R. No. 169254. August 23, 2012.
Lien; unpaid wages. Under Republic Act No. 10142, otherwise known as the Financial Rehabilitation and
Insolvency Act of 2010, the right of a secured creditor to enforce his lien during liquidation proceedings is
retained. On the right of first preference as regards unpaid wages, a distinction should be made between a
preference of credit and a lien. A preference applies only to claims which do not attach to specific properties.
A lien creates a charge on a particular property. The right of first preference as regards unpaid wages
recognized by Article 110 of the Labor Code does not constitute a lien on the property of the insolvent debtor
in favor of workers. It is but a preference of credit in their favor, a preference in application. It is a method
adopted to determine and specify the order in which credits should be paid in the final distribution of the
proceeds of the insolvents assets. It is a right to a first preference in the discharge of the funds of the
judgment debtor. Consequently, the right of first preference for unpaid wages may not be invoked in this case
to nullify the foreclosure sales conducted pursuant to PNBs right as a secured creditor to enforce its lien on
specific properties of its debtor, ARCAM. Manuel D. Yngson, Jr., (in his capacity as the Liquidator of
ARCAM & Co., Inc.) vs. Philippine National Bank. G.R. No. 171132, August 15, 2012.
NLRC; jurisdiction. Although Republic Act No. 8042, through its Section 10, transferred the original and
exclusive jurisdiction to hear and decide money claims involving overseas Filipino workers from the POEA to
the Labor Arbiters, the law did not remove from the POEA the original and exclusive jurisdiction to hear and
decide all disciplinary action cases and other special cases administrative in character involving such workers.
The obvious intent of Republic Act No. 8042 was to have the POEA focus its efforts in resolving all
administrative matters affecting and involving such workers. The NLRC had no appellate jurisdiction to
review the decision of the POEA in disciplinary cases involving overseas contract workers.
Although, as a rule, all laws are prospective in application unless the contrary is expressly provided, or unless
the law is procedural or curative in nature, there is no serious question about the retroactive applicability of
Republic Act No. 8042 to the appeal of the POEAs decision on petitioners disciplinary action against
respondents. In a way, Republic Act No. 8042 was a procedural law due to its providing or omitting
guidelines on appeal. Republic Act No. 8042 applies to petitioners complaint by virtue of the case being then
still pending or undetermined at the time of the laws passage, there being no vested rights in rules of
procedure. They could not validly insist that the reckoning period to ascertain which law or rule should apply
was the time when the disciplinary complaint was originally filed in the POEA in 1993. Moreover, Republic
Act No. 8042 and its implementing rules and regulations were already in effect when petitioners took their
appeal. When Republic Act No. 8042 withheld the appellate jurisdiction of the NLRC in respect of cases
decided by the POEA, the appellate jurisdiction was vested in the Secretary of Labor in accordance with his
power of supervision and control under Section 38(1), Chapter 7, Title II, Book III of the Revised
Administrative Code of 1987. Eastern Mediterranean Maritime Ltd., et al. vs. Estanislao Surio, et al. G.R.
No. 154213, August 23, 2012.
Petition for review; question of fact. While generally, only questions of law can be raised in a petition for
review on certiorari under Rule 45 of the Rules of Court, the rule admits of certain exceptions, namely: (1)
when the findings are grounded entirely on speculations, surmises, or conjectures; (2) when the inference
made is manifestly mistaken, absurd, or impossible; (3) when there is a grave abuse of discretion; (4) when
the judgment is based on misappreciation of facts; (5) when the findings of fact are conflicting; (6) when in
making its findings, the same are contrary to the admissions of both appellant and appellee; (7) when the
findings are contrary to those of the trial court; (8) when the findings are conclusions without citation of
specific evidence on which they are based; (9) when the facts set forth in the petition as well as in the
petitioners main and reply briefs are not disputed by the respondent; and (10) when the findings of fact are

premised on the supposed absence of evidence and contradicted by the evidence on record. The illegality of
petitioners dismissal was an issue that was squarely raised before the NLRC. When the NLRC decision
was reversed by the Court of Appeals, there was a situation where the findings of facts are conflicting.
The petition for review filed by the Petitioner comes within the purview of exception (5) and by analogy,
exception (7). Mylene Carvajal vs. Luzon Development Bank and/or Oscar Z. Ramirez. G.R. No. 186169,
August 1, 2012.
Probationary employee; security of tenure. A probationary employee, like a regular employee, enjoys
security of tenure. However, in cases of probationary employment, aside from just or authorized causes of
termination, an additional ground is provided under Article 281 of the Labor Code, i.e., the probationary
employee may also be terminated for failure to qualify as a regular employee in accordance with reasonable
standards made known by the employer to the employee at the time of the engagement.
Punctuality is a reasonable standard imposed on every employee, whether in government or private sector.
As a matter of fact, habitual tardiness is a serious offense that may very well constitute gross or habitual
neglect of duty, a just cause to dismiss a regular employee. Assuming that petitioner was not apprised of the
standards concomitant to her job, it is but common sense that she must abide by the work hours imposed by
the bank. Satisfactory performance is and should be one of the basic standards for regularization. Naturally,
before an employer hires an employee, the former can require the employee, upon his engagement, to
undergo a trial period during which the employer determines his fitness to qualify for regular employment
based on reasonable standards made known to him at the time of engagement.
It is evident that the primary cause of 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. Respondent also cited other
infractions such as unauthorized leaves of absence, mistake in clearing of a check, and underperformance.
All of these infractions were not refuted by petitioner. Mylene Carvajal vs. Luzon Development Bank
and/or Oscar Z. Ramirez. G.R. No. 186169, August 1, 2012.
Salaries; burden of proof of payment. When there is an allegation of nonpayment of salaries and other
monetary benefits, it is the employers burden to prove its payment to its employee. The employers
evidence must show, with a reasonable degree of certainty, that it paid and that the workers actually
received the payment. The reason for the rule is that the pertinent personnel files, payrolls, records,
remittances and other similar documents are not in the possession of the worker but are in the custody and
absolute control of the employer. In the case at bar, the two official receipts issued by Safemark, and
offered as JARLs evidence, only prove that JARL made a total partial payment of P1,891,509.50 to the
said company for its professional services. Since JARL admits that the said company actually rendered
services for JARL on its Caltex project, the payment can only be assumed as covering for the said services.
There is nothing on the face of the receipts to support the conclusion that Atencio (and not his company)
received it as payment for his service as a JARL employee. Jarl Construction and Armando K. Tejada vs.
Simeon A. Atencio. G.R. No. 175969, August 1, 2012.
Seafarers; contract. The employment of seafarers, and its incidents, including claims for death benefits, is
governed by the contracts they sign every time they are hired or rehired. Such contracts have the force of
law between the parties as long as their stipulations are not contrary to law, morals, public order or public
policy. While the seafarers and their employers are governed by their mutual agreements, the POEA rules
and regulations require that the POEA Standard Employment Contract, which contains the standard terms
and conditions of the seafarers employment in foreign ocean-going vessels, be integrated in every
seafarers contract. The pertinent provision of the 1996 POEA SEC, which was in effect at the time of
Tanawans employment, was Section 20(B) Compensation and Benefits. Wallem Maritime Services, Inc.
vs. Ernesto C. Tanawan. G.R. No. 160444. August 29, 2012.

Seafarers; disability benefits. The one tasked to determine whether the seafarer suffers from any disability or
is fit to work is the company-designated physician. As such, the seafarer must submit himself to the companydesignated physician for a post-employment medical examination within three days from his repatriation. But
the assessment of the company-designated physician is not final, binding or conclusive on the seafarer, the
labor tribunals, or the courts. The seafarer may request a second opinion and consult a physician of his choice
regarding his ailment or injury, and the medical report issued by the physician of his choice shall also be
evaluated on its inherent merit by the labor tribunal and the court.
Tanawan submitted himself to Dr. Lim, the company-designated physician, for a medical examination within
the 3-day reglementary period from his repatriation. The medical examination conducted focused on
Tanawans foot injury, the cause of his repatriation. Dr. Lim treated Tanawan for the foot injury from
December 1, 1997 until May 21, 1998, when Dr. Lim declared him fit to work. Within that period that lasted
172 days, Tanawan was unable to perform his job, an indication of a permanent disability. Under the law,
there is permanent disability if a worker is unable to perform his job for more than 120 days, regardless of
whether or not he loses the use of any part of his body. Disability should be understood more on the loss of
earning capacity rather than on the medical significance of the disability. Even in the absence of an official
finding by the company-designated physician to the effect that the seafarer suffers a disability and is unfit for
sea duty, the seafarer may still be declared to be suffering from a permanent disability if he is unable to work
for more than 120 days. On the other hand, Tanawans claim for disability benefits due to the eye injury was
already barred by his failure to report the injury and to have his eye examined by a company-designated
physician. The rationale for the rule is that reporting the illness or injury within three days from repatriation
fairly makes it easier for a physician to determine the cause of the illness or injury.
Under the 1996 POEA SEC, it was enough to show that the injury or illness was sustained during the term of
the contract. The Court has declared that the unqualified phrase during the term found in Section 20(B)
thereof covered all injuries or illnesses occurring during the lifetime of the contract. Whoever claims
entitlement to the benefits provided by law should establish his right to the benefits by substantial evidence.
Tanawan did not present any proof of having sustained the eye injury during the term of his contract. All that
he submitted was his bare allegation that his eye had been splashed with some thinner while he was on board
the vessel. Wallem Maritime Services, Inc. vs. Ernesto C. Tanawan. G.R. No. 160444. August 29, 2012.
Here are select July 2012 rulings of the Supreme Court of the Philippines on labor law and procedure:
Dismissal; due process. Due process requirement is met when there is simply an opportunity to be heard and
to explain ones side even if no hearing is conducted. An employee may be afforded ample opportunity to be
heard by means of any method, verbal or written, whether in a hearing, conference or some other fair, just and
reasonable way. After receiving the first notice apprising him of the charges against him, the employee may
submit a written explanation (which may be in the form of a letter, memorandum, affidavit or position paper)
and offer evidence in support thereof, like relevant company records and the sworn statements of his
witnesses. For this purpose, he may prepare his explanation personally or with the assistance of a
representative or counsel. He may also ask the employer to provide him copy of records material to his
defense. His written explanation may also include a request that a formal hearing or conference be held. In
such a case, the conduct of a formal hearing or conference becomes mandatory, just as it is where there exist
substantial evidentiary disputes or where company rules or practice requires an actual hearing as part of
employment pre-termination procedure.
Petitioners written response to the prerequisite notice provided her with an avenue to explain and defend her
side and thus served the purpose of due process. That there was no hearing, investigation or right to appeal,
which petitioner opined to be a violation of company policies, is of no moment since the record is bereft of
any showing that there is an existing company policy that requires these procedures with respect to the
termination of a CHR Director like petitioner or that company practice calls for the same. There was also no

request for a formal hearing on the part of petitioner. As she was served with a notice apprising her of the
charges against her and also a subsequent notice informing her of the managements decision to terminate
her services after respondents found her written response to the first notice unsatisfactory, petitioner was
clearly afforded her right to due process. Flordeliza Maria Reyes-Rayel vs. Philippine Luen Thai Holdings
Corporation, et al. G.R. No. 174893, July 11, 2012.
Dismissal; loss of trust and confidence. An employer has a distinct prerogative and wider latitude of
discretion in dismissing a managerial personnel who performs functions which by their nature require the
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 was L&Ts CHR Director for Manufacturing, which is a managerial position saddled with great
responsibility. As such, she was directly responsible for managing her own departmental staff. Because of
this, petitioner must enjoy the full trust and confidence of her superiors. However, petitioner delivered
dismal performance and displayed poor work attitude, which constitute sufficient reasons for an employer
to terminate an employee on the ground of loss of trust and confidence. First, records show that petitioner
indeed unreasonably failed to effectively communicate with her immediate superior. Second, the affidavits
of petitioners co-workers revealed her negative attitude and unprofessional behavior towards them and the
company. Lastly, petitioner displayed inefficiency and ineptitude in her job as a CHR Director. Taking all
these circumstances collectively, the Court is convinced that respondents have sufficient and valid reasons
for terminating the services of petitioner as her continued employment would be patently inimical to
respondents interest. Flordeliza Maria Reyes-Rayel vs. Philippine Luen Thai Holdings Corporation, et al.
G.R. No. 174893, July 11, 2012.
Employee dismissal; validity of termination. Retrenchment is one of the authorized causes for the dismissal
of employees recognized by the Labor Code. It is a management prerogative resorted to by employers to
avoid or to minimize business losses. The Court has laid down the following standards that an employer
should meet to justify retrenchment and to foil abuse, namely:
(a) The expected losses should be substantial and not merely de minimis in extent;
(b) The substantial losses apprehended must be reasonably imminent;
(c) The retrenchment must be reasonably necessary and likely to effectively prevent the expected losses;
and
(d) The alleged losses, if already incurred, and the expected imminent losses sought to be forestalled must
be proved by sufficient and convincing evidence
In termination cases, the burden of proving that the dismissal was for a valid or authorized cause rests upon
the employer. The petitioner did not submit evidence of the losses to its business operations and the
economic havoc it would thereby imminently sustain. It only claimed that respondents termination was
due to its present business/financial condition. This bare statement fell short of the norm to show a valid
retrenchment. Indeed, not every loss incurred or expected to be incurred by an employer can justify
retrenchment. The employer must prove, among others, that the losses are substantial and that the
retrenchment is reasonably necessary to avert such losses. Thus, by its failure to present sufficient and
convincing evidence to prove that retrenchment was necessary, respondents termination due to

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

Management prerogative; transfer of employees. An employers decision to transfer an employee, if made

in good faith, is a valid exercise of a management prerogative, although it may result in personal
inconvenience or hardship to the employee. Re-assignments made by management pending investigation of
irregularities allegedly committed by an employee fall within the ambit of management prerogative. The
purpose of reassignments is no different from that of preventive suspension which management could
validly impose as a disciplinary measure for the protection of the companys property pending investigation
of any alleged malfeasance or misfeasance committed by the employee.
As the executive assistant of the president, petitioner undeniably occupied a sensitive position that required
her employers utmost trust and confidence. Having lost his trust and confidence in petitioner, respondent
Delfin had the right to transfer her to ensure that she would no longer have access to the companies
confidential files. Although it is true that petitioner has yet to be proven guilty, respondents had the
authority to reassign her, pending investigation. When petitioner was assigned to Cavite, there was an
ongoing investigation of the charges filed against her. It is undisputed that she refused to fill up, for no
justifiable reasons, the questionnaire distributed by her employer to determine who among those who had
access to the confidential files was responsible for their taking. Furthermore, a witness had executed an
Affidavit claiming that she found the missing files, and that her husband told her that it was petitioner who
handed those files to him. Lastly, the person who supposedly received these documents from petitioner did
not deny or rebuke the statements made by his wife. Josephine Ruiz vs. Wendel Osaka Realty Corp., et al.
G.R. No. 189082, July 11, 2012.

rendered to the defendant without intent to donate on the part of the plaintiff, or the failure to acquire
something that the latter would have obtained.
PAL invested a considerable amount of money in sending the petitioner abroad to undergo training to prepare
him for his new appointment as B747-400 Captain. In the process, the petitioner acquired new knowledge and
skills which effectively enriched his technical know-how. As all other investors, PAL expects a return on
investment in the form of service by the petitioner for a period of 3 years, which is the estimated length of
time within which the costs of the latters training can be fully recovered. The petitioner is, thus, expected to
work for PAL and utilize whatever knowledge he had learned from the training for the benefit of the
company. However, after only one (1) year of service, the petitioner opted to retire from service, leaving PAL
stripped of a necessary manpower. Undeniably, the petitioner was enriched at the expense of PAL. After
undergoing the training fully shouldered by PAL, he acquired a higher level of technical competence which,
in the professional realm, translates to a higher compensation. Further, his training broadened his
opportunities for a better employment as in fact he was able to transfer to another airline company
immediately after he left PAL. To allow the petitioner to simply leave the company without reimbursing it for
the proportionate amount of the expenses it incurred for his training will only magnify the financial
disadvantage sustained by PAL. Reason and fairness dictate that he must return to the company a
proportionate amount of the costs of his training. Bibiano C. Elegir vs. Philippine Airlines, Inc. G.R. No.
181995, July 16, 2012.
Here are select June 2012 rulings of the Supreme Court of the Philippine on labor law and procedure:

Retirement Pay; collective bargaining agreement. Article 287 of the Labor Code provides that it is
applicable only to a situation where (1) there is no CBA or other applicable employment contract providing
for retirement benefits for an employee, or (2) there is a CBA or other applicable employment contract
providing for retirement benefits for an employee, but it is below the requirement set by law. The rationale
for the first situation is to prevent the absurd situation where an employee, deserving to receive retirement
benefits, is denied to them through the nefarious scheme of employers to deprive employees of the benefits
due them under existing labor laws. On the other hand, the second situation aims to prevent private
contracts from derogating from the public law. The determining factor in choosing which retirement
scheme to apply is still superiorityin terms of benefits provided. Thus, even if there is an existing CBA but
the same does not provide for retirement benefits equal or superior to that which is provided under Article
287 of the Labor Code, the latter will apply.
There are two retirement schemes at point in this case: (1) Article 287 of the Labor Code, and; (2) the PALALPAP Retirement Plan and the PAL Pilots Retirement Benefit Plan. The two retirement schemes are
alternative in nature such that the retired pilot can only be entitled to that which provides for superior
benefits. Comparing the benefits under the two (2) retirement schemes, it can readily be perceived that the
22.5 days worth of salary for every year of service provided under Article 287 of the Labor Code cannot
match the 240% of salary or almost two and a half worth of monthly salary per year of service provided
under the PAL Pilots Retirement Benefit Plan, which will be further added to the 125,000.00 to which the
petitioner is entitled under the PAL-ALPAP Retirement Plan. Clearly then, it is to the petitioners advantage
that PALs retirement plans were applied in the computation of his retirement benefits. Bibiano C. Elegir
vs. Philippine Airlines, Inc. G.R. No. 181995, July 16, 2012.
Unjust enrichment. There is unjust enrichment when a person unjustly retains a benefit at the loss of
another, or when a person retains the money or property of another against the fundamental principles of
justice, equity and good conscience. Two conditions must concur: (1) a person is unjustly benefited; and (2)
such benefit is derived at the expense of or with damages to another. The enrichment may consist of a
patrimonial, physical, or moral advantage, so long as it is appreciable in money. It must have a correlative
prejudice, disadvantage or injury to the plaintiff which may consist, not only of the loss of the property or
the deprivation of its enjoyment, but also of the non-payment of compensation for a prestation or service

Appeal; issue of employer-employee relationship raised for the first time on appeal. It is a fundamental rule of
procedure that higher courts are precluded from entertaining matters neither alleged in the pleadings nor
raised during the proceedings below, but ventilated for the first time only in a motion for reconsideration or
on appeal. The alleged absence of employer-employee relationship cannot be raised for the first time on
appeal. The resolution of this issue requires the admission and calibration of evidence and the LA and the
NLRC did not pass upon it in their decisions. Petitioner is bound by its submissions that respondent is its
employee and it should not be permitted to change its theory. Such change of theory cannot be tolerated on
appeal, not on account of the strict application of procedural rules, but as a matter of fairness. Duty Free
Philippines Services, Inc. vs. Manolito Q. Tria. G.R. No. 174809. June 27, 2012.
Dismissal; abandonment. Abandonment cannot be inferred from the actuations of respondent. When he
discovered that his time card was off the rack, he immediately inquired from his supervisor. He later sought
the assistance of his counsel, who wrote a letter addressed to Polyfoam requesting that he be re-admitted to
work. When said request was not acted upon, he filed the instant illegal dismissal case. These circumstances
clearly negate the intention to abandon his work. Polyfoam-RGC International, Corporation and Precilla A.
Gramaje vs. Edgardo Concepcion. G.R. No. 172349, June 13, 2012.
Dismissal; due process. To meet the requirements of due process in the dismissal of an employee, an
employer must furnish the worker with two written notices: (1) a written notice specifying the grounds for
termination and giving to said employee a reasonable opportunity to explain his side and (2) another written
notice indicating that, upon due consideration of all circumstances, grounds have been established to justify
the employers decision to dismiss the employee. The law does not require that an intention to terminate ones
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 ones employment should be explicitly stated.
The guiding principles in connection with the hearing requirement in dismissal cases are the following:

1.
2.
3.

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

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

its trust and confidence in Dejan. He is no ordinary employee. As branch representative, he was principally
charged with the function and responsibility to accept payment of fees required for the installation of electric
service and facilitate issuance of meter sockets. The duties of his position require him to always act with the
highest degree of honesty, integrity and sincerity, as the company puts it. In light of his fraudulent act,
Meralco, an enterprise imbued with public interest, cannot be compelled to continue Dejans employment, as
it would be inimical to its interest. Manila Electric Company (Meralco) vs. Herminigildo H. Dejan. G.R. No.
194106, June 18, 2012.
Employee benefit; attorneys fees. Lazaro must establish a legal basis either by law, contract or other
sources of obligations to merit the receipt of the additional 10% attorneys fees collected in the various
foreclosure procedures he settled as the banks legal officer. Lazaro has not produced any contract or
provision of law that would warrant the payment of the additional attorneys fees. He is only entitled to his
salaries as the banks legal officer, because the services he rendered in the foreclosure proceedings were part
of his official tasks. Banco Filipino Savings and Mortgage Bank vs. Miguelito M. Lazaro/Miguelito M.
Lazaro vs. Banco Filipino Savings and Mortgage Bank, et al. G.R. No. 185346 & G.R. No. 185442. June 27,
2012.
Employee benefit; retirement pay. Banco Filipino maintains that the seven-year period when it was under
liquidation should not be credited in computing Lazaros retirement pay because, during that period, the bank
was considered closed. The Supreme Court held that banks under liquidation retain their legal personality. In
fact, even if they are prohibited from conducting regular banking business, it is necessary that debts owed to
them be collected. Lazaro performed the duty of foreclosing debts in favor of Banco Filipino. It cannot
rightfully disclaim Lazaros work that benefitted it.
As found in the Implementing Rules of the Retirement Pay Law and in jurisprudence, only in the absence of
an applicable retirement agreement shall Article 287 of the Labor Code apply. There is a proviso however,
that an employees retirement benefits under any agreement shall not be less than those provided in the said
article. The Rules of the Banco Filipino Retirement Fund do not provide for benefits lower than those in the
Labor Code. In fact, the bank offers a retirement pay equivalent to one andone-half month salary for every
year of service, a rate over and above the one-half month salary threshold provided by the law. Although the
Rules of the Banco Filipino Retirement Fund do not grant a rounding off scheme, they nonetheless provide
that prorated credit shall be given for incomplete years, regardless of the fraction of months in the retirees
length of service. Notwithstanding the lack of a rounding-up provision, still, the higher retirement pay,
together with the prorated crediting, cannot be deemed to be less favorable than that provided for by the law.
Ultimately, the more important threshold to be considered in construing whether the retirement agreement
provides less benefits, compared to those provided by the Retirement Pay Law, is that the retirement benefits
in the said agreement should at least amount to one-half of the employees monthly salary. Banco Filipino
Savings and Mortgage Bank vs. Miguelito M. Lazaro/Miguelito M. Lazaro vs. Banco Filipino Savings and
Mortgage Bank, et al. G.R. No. 185346 & G.R. No. 185442. June 27, 2012
Employee dismissal. When the floating status of employees lasts for more than six (6) months, they may be
considered to have been illegally dismissed from the service. Floating status means an indefinite period of
time when one does not receive any salary or financial benefit provided by law. In this case, petitioners were
actually reassigned to new posts, albeit in a different location from where they resided. Thus, there can be no
floating status or indefinite period to speak of. Instead, petitioners were the ones who refused to report for
work in their new assignment.
In cases involving security guards, a relief and transfer order in itself does not sever the employment
relationship between the security guards and their agency. Employees have the right to security of tenure, but
this does not give them such a vested right to their positions as would deprive the company of its prerogative
to change their assignment or transfer them where their services, as security guards, will be most beneficial to

the client. An employer has the right to transfer or assign its employees from one office or area of operation
to another in pursuit of its legitimate business interest, provided there is no demotion in rank or diminution
of salary, benefits, and other privileges; and the transfer is not motivated by discrimination or bad faith, or
effected as a form of punishment or demotion without sufficient cause. While petitioners may claim that
their transfer to Manila will cause added expenses and inconvenience, absent any showing of bad faith or ill
motive on the part of the employer, the transfer remains valid. Salvador O. Mojar, et al. vs. Agro
Commercial Security Service Agency, et al. G.R. No. 187188, June 27, 2012.
Employee dismissal; burden of proof. Under the law, the burden of proving that the termination of
employment was for a valid or authorized cause rests on the employer. Failure to discharge this burden
would result in an unjust or illegal dismissal. The companys evidence on the respondents alleged
infractions do not substantially show that they violated company rules and regulations to warrant their
dismissal. It is obvious that the company overstepped the bounds of its management prerogative in the
dismissal of Mauricio and Camacho. It lost sight of the principle that management prerogative must be
exercised in good faith and with due regard to the rights of the workers in the spirit of fairness and with
justice in mind. Philbag Industrial Manufacturing Corp. vs. Philbag Workers Union-Lakas at Gabay ng
Manggagawang Nagkakaisa. G.R. No. 182486, June 20, 2012.
Employee dismissal; due process. Retrenchment is subject to faithful compliance with the substantive and
procedural requirements laid down by law and jurisprudence. For a valid retrenchment, the following
elements must be present:
1.
2.
3.
4.
5.

That retrenchment is reasonably necessary and likely to prevent business losses which, if already
incurred, are not merely de minimis, but substantial, serious, actual and real, or if only expected,
are reasonably imminent as perceived objectively and in good faith by the employer;
That the employer served written notice both to the employees and to the Department of Labor
and Employment at least one month prior to the intended date of retrenchment;
That the employer pays the retrenched employees separation pay equivalent to one (1) month pay
or at least month pay for every year of service, whichever is higher;
That the employer exercises its prerogative to retrench employees in good faith for the
advancement of its interest and not to defeat or circumvent the employees right to security of
tenure; and
That the employer used fair and reasonable criteria in ascertaining who would be dismissed and
who would be retained among the employees, such as status, efficiency, seniority, physical
fitness, age, and financial hardship for certain workers.

All these elements were successfully proven by petitioner. First, the huge losses suffered by the Club for
the past two years had forced petitioner to close it down to avert further losses which would eventually
affect the operations of petitioner. Second, all 45 employees working in the Club were served with notice of
termination. The corresponding notice was likewise served to the DOLE one month prior to retrenchment.
Third, the employees were offered separation pay, most of whom have accepted and opted not to join in
this complaint. Fourth, the cessation of or withdrawal from business operations was bona fide in character
and not impelled by a motive to defeat or circumvent the tenurial rights of employees. Waterfront Cebu
City Hotel vs. Ma. Melanie P. Jimenez, et al. G.R. No. 174214, June 13, 2012.
Employee dismissal; due process. The following are the guiding principles in connection with the hearing
requirement in dismissal cases:
1.

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

2.
3.

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

Given that the petitioners expressly requested a conference or a convening of a grievance committee, such
formal hearing became mandatory. After PGAI failed to affirmatively respond to such request, it follows that
the hearing requirement was not complied with and, therefore, Vallota was denied his right to procedural due
process. Prudential Guarantee and Assurance Employee Labor Union and Sandy T. Vallota vs. NLRC,
Prudential Guarantee and Assurance Inc., and/or Jocelyn Retizos. G.R. No. 185335, June 13, 2012.
Employee dismissal; just cause. Article 282(e) of the Labor Code talks of other analogous causes or those
which are susceptible of comparison to another in general or in specific detail as a cause for termination of
employment. A cause analogous to serious misconduct is a voluntary and/or willful act or omission attesting
to an employees moral depravity. Theft committed by an employee against a person other than his employer,
if proven by substantial evidence, is a cause analogous to serious misconduct. Previous infractions may be
cited as justification for dismissing an employee only if they are related to the subsequent offense. However,
it must be noted that such a discussion was unnecessary since the theft, taken in isolation from Fermins other
violations, was in itself a valid cause for the termination of his employment. Cosmos Bottling Corp. vs.
Wilson Fermin/Wilson Fermin vs. Cosmos Bottling Corp. and Cecilia Bautista. G.R. No. 193676 & G.R. No.
194303. June 20, 2012.
Employee dismissal; loss of trust and confidence. The Labor Code recognizes that an employer, for just cause,
may validly terminate the services of an employee for serious misconduct or willful disobedience of the
lawful orders of the employer or representative in connection with the employees work. Fraud or willful
breach by the employee of the trust reposed by the employer in the former, or simply loss of confidence, also
justifies an employees dismissal from employment. Willful breach of trust or loss of confidence requires that
the employee (1) occupied a position of trust or (2) was routinely charged with the care of the employers
property. To warrant dismissal based on loss of confidence, there must be some basis for the loss of trust or
the employer must have reasonable grounds to believe that the employee is responsible for the misconduct
that renders the latter unworthy of the trust and confidence demanded by his or her position. For more than a
month, the petitioners did not even inform PLDT of the whereabouts of the plant materials. Instead, he
stocked these materials at his residence even if they were needed in the daily operations of the company. In
keeping with the honesty and integrity demanded by his position, he should have turned over these materials
to the plants warehouse. Thus, PLDT reasonably suspected petitioner of stealing the companys property. At
that juncture, the employer may already dismiss the employee since it had reasonable grounds to believe or to
entertain the moral conviction that the latter was responsible for the misconduct, and the nature of his
participation therein rendered him absolutely unworthy of the trust and confidence demanded by his position.
Romeo E. Paulino vs. NLRC, Philippine Long Distance Co., Inc. G.R. No. 176184, June 13, 2012.
Employee dismissal; loss of trust and confidence. Loss of confidence as a just cause for dismissal was never
intended to provide employers with a blank check for terminating their employees. It should ideally apply
only to cases involving employees occupying positions of trust and confidence or to those situations where
the employee is routinely charged with the care and custody of the employers money or property. To the first
class belong managerial employees, i.e., those vested with the powers or prerogatives to lay down
management policies and/or to hire, transfer, suspend, lay-off, recall, discharge, assign or discipline
employees or effectively recommend such managerial actions; and to the second class belong cashiers,
auditors, property custodians, etc., or those who, in the normal and routine exercise of their functions,
regularly handle significant amounts of money or property.

The first requisite for dismissal on the ground of loss of trust and confidence is that the employee
concerned must be one holding a position of trust and confidence. The second requisite is that there must be
an act that would justify the loss of trust and confidence. Vallotas position as Junior Programmer is
analogous to the second class of positions of trust and confidence. Though he did not physically handle
money or property, he became privy to confidential data or information by the nature of his functions. At a
time when the most sensitive of information is found not printed on paper but stored on hard drives and
servers, an employee who handles or has access to data in electronic form naturally becomes the unwilling
recipient of confidential information. There was no other evidence presented to prove fraud in the manner
of securing or obtaining the files found in Vallotas computer. The presence of the files would merely merit
the development of some suspicion on the part of the employer, but should not amount to a loss of trust and
confidence such as to justify the termination of his employment. Such act is not of the same class, degree or
gravity as the acts that have been held to be of such character. Prudential Guarantee and Assurance
Employee Labor Union and Sandy T. Vallota vs. NLRC, Prudential Guarantee and Assurance Inc., and/or
Jocelyn Retizos. G.R. No. 185335, June 13, 2012.
Employee dismissal; loss of trust and confidence. To validly dismiss an employee on the ground of loss of
trust and confidence under Article 282 (c) of the Labor Code of the Philippines, the following guidelines
must be observed: 1) loss of confidence should not be simulated; 2) it should not be used as subterfuge for
causes which are improper, illegal or unjustified; 3) it may not be arbitrarily asserted in the face of
overwhelming evidence to the contrary; and 4) it must be genuine, not a mere afterthought to justify earlier
action taken in bad faith. More importantly, it must be based on a willful breach of trust and founded on
clearly established facts. The testimony of Lobitaa constitutes substantial evidence to prove that
respondent, as the then Power Plant Manager, accepted commissions and/or kickbacks from suppliers,
which is a clear violation of Section 2.04 of petitioners Company Rules and Regulations. Jurisprudence
consistently holds that for managerial employees, the mere existence of a basis for believing that such
employee has breached the trust of his employer would suffice for his dismissal. Respondents termination
was for a just and valid cause. Apo Cement Corporation Vs. Zaldy E. Baptisma. G.R. No. 176671. June 20,
2012.
Employee dismissal; order of reinstatement. Article 223 of the Labor Code provides that in case there is an
order of reinstatement, the employer must admit the dismissed employee under the same terms and
conditions, or merely reinstate the employee in the payroll. The order shall be immediately executory.
Thus, 3rd Alert cannot escape liability by simply invoking that Navia did not report for work. The law
states that the employer must still reinstate the employee in the payroll. Where reinstatement is no longer
viable as an option, separation pay equivalent to one (1) month salary for every year of service could be
awarded as an alternative. 3rd Alert Security and Detective Services, Inc. vs. Romualdo Navia. G.R. No.
200653, June 13, 2012.
Employee dismissal; retrenchment. Retrenchment is the termination of employment initiated by the
employer through no fault of and without prejudice to the employees. It is resorted to during periods of
business recession, industrial depression, or seasonal fluctuations or during lulls occasioned by lack of
orders, shortage of materials, conversion of the plant for a new production program or the introduction of
new methods or more efficient machinery or of automation. It is an act of the employer of dismissing
employees because of losses in the operation of a business, lack of work, and considerable reduction on the
volume of his business. In this case, the closure of a department or division of a company constitutes
retrenchment by, and not closure of, the company itself. Petitioner has not totally ceased its business
operations. It merely ceased operations of a department. Waterfront Cebu City Hotel vs. Ma. Melanie P.
Jimenez, et al. G.R. No. 174214, June 13, 2012.
Employee dismissal; willful breach of trust. The loss of trust and confidence must be based on willful
breach of the trust reposed in the employee by his employer. Such breach is willful if it is done

intentionally, knowingly, and purposely, without justifiable excuse, as distinguished from an act done
carelessly, thoughtlessly, heedlessly or inadvertently. Moreover, it must be based on substantial evidence and
not on the employers whims or caprices or suspicions otherwise, the employee would eternally remain at the
mercy of the employer. The Supreme Court has laid down the guidelines for the application of the loss of
trust and confidence doctrine: (1) loss of confidence should not be simulated; (2) it should not be used as a
subterfuge for causes which are improper, illegal or unjustified; (3) it may not be arbitrarily asserted in the
face of overwhelming evidence to the contrary; and (4) it must be genuine, not a mere afterthought, to justify
an earlier action taken in bad faith. Villanueva worked for Meralco as a Branch Representative whose tasks
included the issuance of Contracts for Electric Service after receipt of the amount due for service connection
from customers. Obviously, he was entrusted not only with the responsibility of handling company funds but
also to cater to customers who intended to avail of Meralcos services. This is nothing but an indication that
trust and confidence were reposed in him by the company, although his position was not strictly managerial
by nature. Meralcos loss of trust and confidence arising out of Villanuevas act of misappropriation of
company funds in the course of processing customer applications has been proven by substantial evidence,
thus, justified. Verily, the issuance of additional receipts for excessive payments exacted from customers is a
willful breach of the trust reposed in him by the company. Vicente Villanueva, Jr. vs.. The National Labor
Relations Commission, Third Division, Manila Electric Company, Manuel Lopez, Chairman and CEO, and
Francisco Collantes, Manager. G.R. No. 176893, June 13, 2012.
Employee suit; damages. To obtain moral damages, the claimant must prove the existence of bad faith by
clear and convincing evidence, for the law always presumes good faith. It is not even enough that one merely
suffered sleepless nights, mental anguish and serious anxiety as the result of the actuations of the other party.
In this case, Lazaro did not state any moral anguish that he suffered. Neither did he substantiate his
imputations of malice to Banco Filipino. He only made a sweeping declaration, without concrete proof, that
the bank in refusing his claim maliciously damaged his property rights and interest. Accordingly, neither
moral damages nor exemplary damage can be awarded to him.
With respect to attorneys fees, an award is proper only if that person was forced to litigate and incur expenses
to protect ones rights and interest by reason of an unjustified act or omission of the party for whom it is
sought. Banco Filipino had a prima facie legitimate defense that, because it underwent liquidation
proceedings, it cannot be compelled to credit that period in the computation of the employees the retirement
pay and profit shares. Considering that Banco Filipinos refusal cannot be accurately characterized as
unjustified, Lazaro cannot claim an award of attorneys fees. Banco Filipino Savings and Mortgage Bank vs.
Miguelito M. Lazaro/Miguelito M. Lazaro vs. Banco Filipino Savings and Mortgage Bank, et al. G.R. No.
185346 & G.R. No. 185442. June 27, 2012.
Independent contractor; tests. Permissible job contracting or subcontracting refers to an arrangement whereby
a principal agrees to put out or farm out to a contractor or subcontractor the performance or completion of a
specific job, work or service within a definite or predetermined period, regardless of whether such job, work
or service is to be performed or completed within or outside the premises of the principal. A person is
considered engaged in legitimate job contracting or subcontracting if the following conditions concur:
(a) The contractor or subcontractor carries on a distinct and independent business and undertakes to perform
the job, work or service on its own account and under its own responsibility according to its own manner and
method, and free from the control and direction of the principal in all matters connected with the performance
of the work except as to the results thereof;
(b) The contractor or subcontractor has substantial capital or investment; and

(c) The agreement between the principal and contractor or subcontractor assures the contractual
employees entitlement to all labor and occupational safety and health standards, free exercise of the right to
self-organization, security of tenure, and social welfare benefits.
In contrast, labor-only contracting, a prohibited act, is an arrangement where the contractor or
subcontractor merely recruits, supplies or places workers to perform a job, work or service for a principal.
In labor-only contracting, the following elements are present:
(a) The contractor or subcontractor does not have substantial capital or investment to actually perform the
job, work or service under its own account and responsibility; and
(b) The employees recruited, supplied or placed by such contractor or subcontractor, are performing
activities which are directly related to the main business of the principal.
The test of independent contractorship is whether one claiming to be an independent contractor has
contracted to do the work according to his own methods and without being subject to the control of the
employer, except only as to the results of the work.
Gramaje is not an independent job contractor, but a labor-only contractor. First, Gramaje has no
substantial capital or investment. The presumption is that a contractor is a labor-only contractor unless he
overcomes the burden of proving that it has substantial capital, investment, tools, and the like. Neither
Gramaje nor Polyfoam presented evidence showing Gramajes ownership of the equipment and
machineries used in the performance of the alleged contracted job.
Second, Gramaje did not carry on an independent business or undertake the performance of its service
contract according to its own manner and method, free from the control and supervision of its principal,
Polyfoam, its apparent role having been merely to recruit persons to work for Polyfoam. It is undisputed
that respondent had performed his task of packing Polyfoams foam products in Polyfoams premises. As to
the recruitment of respondent, petitioners were able to establish only that respondents application was
referred to Gramaje, but that is all. Prior to his termination, respondent had been performing the same job
in Polyfoams business for almost six (6) years. He was even furnished a copy of Polyfoams Mga
Alituntunin at Karampatang Parusa, which embodied Polyfoams rules on attendance, the manner of
performing the employees duties, ethical standards, cleanliness, health, safety, peace and order. These
rules carried with them the corresponding penalties in case of violation. While it is true that petitioners
submitted the Affidavit of Polyfoams supervisor, claiming that the latter did not exercise supervision over
respondent because the latter was not Polyfoams but Gramajes employee, said Affidavit is insufficient to
prove such claim. Petitioners should have presented the person who they claim to have exercised
supervision over respondent and their alleged other employees assigned to Polyfoam. It was never
established that Gramaje took entire charge, control and supervision of the work and service agreed upon.
Polyfoam-RGC International, Corporation and Precilla A. Gramaje vs. Edgardo Concepcion. G.R. No.
172349, June 13, 2012.
NLRC; jurisdiction over interpretation or implementation of the CBA. R.A. 8042 is a special law governing
overseas Filipino workers. However, there is no specific provision thereunder which provides for
jurisdiction over disputes or unresolved grievances regarding the interpretation or implementation of a
CBA. Section 10 of R.A. 8042 simply speaks, in general, of claims arising out of an employer-employee
relationship or by virtue of any law or contract involving Filipino workers for overseas deployment
including claims for actual, moral, exemplary and other forms of damages. On the other hand, Articles
217(c) and 261 of the Labor Code are very specific in stating that voluntary arbitrators have jurisdiction
over cases arising from the interpretation or implementation of collective bargaining agreements. In the

present case, the basic issue raised by Merridy Jane in her complaint filed with the NLRC is: which provision
of the subject CBA applies insofar as death benefits due to the heirs of Nelson are concerned. This issue
clearly involves the interpretation or implementation of the said CBA. Thus, the specific or special provisions
of the Labor Code govern.
CBA is the law or contract between the parties. Article 13.1 of the CBA entered into by and between
respondent GCI and AMOSUP provides that the Company and the Union agree that in case of dispute or
conflict in the interpretation or application of any of the provisions of this Agreement, or enforcement of
Company policies, the same shall be settled through negotiation, conciliation or voluntary arbitration. The
provisions of the CBA are in consonance with Rule VII, Section 7 of the present Omnibus Rules and
Regulations Implementing the Migrant Workers and Overseas Filipinos Act of 1995, as amended by Republic
Act No. 10022, which states that for OFWs with collective bargaining agreements, the case shall be submitted
for voluntary arbitration in accordance with Articles 261 and 262 of the Labor Code. With respect to disputes
involving claims of Filipino seafarers wherein the parties are covered by a collective bargaining agreement,
the dispute or claim should be submitted to the jurisdiction of a voluntary arbitrator or panel of arbitrators. It
is only in the absence of a collective bargaining agreement that parties may opt to submit the dispute to either
the NLRC or to voluntary arbitration. Estate of Nelson R. Dulay, represented by his wife Meddiry Jane P.
Dulay vs. Aboitiz Jebsen Maritime, Inc. and General Charterers, Inc. G.R. No. 172642, June 13, 2012.
Service; proof of service. Petitioners allege that no affidavit of service was attached to the CA Petition.
However, the Supreme Court noted that in the CA Resolution, the appellate court stated that their records
revealed that Atty. Espinas, petitioners counsel of record at the time, was duly served a copy of the following:
CA Resolution granting respondents Motion for Extension of Time to file the CA Petition; CA Resolution
requiring petitioners to file their Comment on the CA Petition; and CA Resolution, submitting the case for
resolution, as no comment was filed. Such service to Atty. Espinas was valid despite the fact he was already
deceased at the time. If a party to a case has appeared by counsel, service of pleadings and judgments shall be
made upon his counsel or one of them, unless service upon the party is specifically ordered by the court. It is
not the duty of the courts to inquire, during the progress of a case, whether the law firm or partnership
representing one of the litigants continues to exist lawfully, whether the partners are still alive, or whether its
associates are still connected with the firm. Salvador O. Mojar, et al. vs. Agro Commercial Security Service
Agency, et al. G.R. No. 187188, June 27, 2012.
Here are select April 2012 rulings of the Supreme Court of the Philippines on labor law and procedure:
Dismissal; due process. When the Labor Code speaks of procedural due process, the reference is usually to
the two (2)-written notice rule envisaged in Section 2 (III), Rule XXIII, Book V of the Omnibus Rules
Implementing the Labor Code. MGG Marine Services, Inc. v. NLRC tersely described the mechanics of what
may be considered a two-part due process requirement which includes the two-notice rule, x x x one, of the
intention to dismiss, indicating therein his acts or omissions complained against, and two, notice of the
decision to dismiss; and an opportunity to answer and rebut the charges against him, in between such
notices.
Here, the first and second notice requirements have not been properly observed. The adverted memo would
have had constituted the charge sheet, sufficient to answer for the first notice requirement, but for the fact
that there is no proof such letter had been sent to and received by him. Neither was there compliance with the
imperatives of a hearing or conference. Suffice it to point out that the record is devoid of any showing of a
hearing or conference having been conducted. And the written notice of termination itself did not indicate all
the circumstances involving the charge to justify severance of employment. For violating petitioners right to
due process, the Supreme Court ordered the payment to petitioner of the amount of P30,000 as nominal
damages. Armando Ailing vs. Jose B. Feliciano, Manuel F. San Mateo III, et al., G.R. No. 185829. April 25,
2012.

Dismissal; just cause. In fine, an employees failure to meet sales or work quotas falls under the concept of
gross inefficiency, which in turn is analogous to gross neglect of duty that is a just cause for dismissal
under Article 282 of the Code. However, in order for the quota imposed to be considered a valid
productivity standard and thereby validate a dismissal, managements prerogative of fixing the quota must
be exercised in good faith for the advancement of its interest. The duty to prove good faith, however, rests
with WWWEC as part of its burden to show that the dismissal was for a just cause. 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. Armando Ailing vs. Jose B. Feliciano, Manuel F. San
Mateo III, et al., G.R. No. 185829. April 25, 2012.

a regular employee. Thus, pursuant to the explicit provision of Article 281 of the Labor Code, Section 6(d) of
the Implementing Rules of Book VI, Rule VIII-A of the Labor Code and settled jurisprudence, petitioner
Aliling is deemed a regular employee as of June 11, 2004, the date of his employment contract.

Dismissal; retrenchment. Retrenchment is a valid exercise of management prerogative subject to the strict
requirements set by jurisprudence, to wit:

Employee; separation package. Article 283 of the Labor Code provides only the required minimum amount of
separation pay, which employees dismissed for any of the authorized causes are entitled to receive.
Employers, therefore, have the right to create plans, providing for separation pay in an amount over and
above what is imposed by Article 283. There is nothing therein that prohibits employers and employees from
contracting on the terms of employment, or from entering into agreements on employee benefits, so long as
they do not violate the Labor Code or any other law, and are not contrary to morals, good customs, public
order, or public policy.

(1) That the retrenchment is reasonably necessary and likely to prevent business losses which, if already
incurred, are not merely de minimis, but substantial, serious, actual and real, or if only expected, are
reasonably imminent as perceived objectively and in good faith by the employer;
(2) That the employer served written notice both to the employees and to the Department of Labor and
Employment at least one month prior to the intended date of retrenchment;
(3) That the employer pays the retrenched employees separation pay equivalent to one month pay or at
least month pay for every year of service, whichever is higher;
(4) That the employer exercises its prerogative to retrench employees in good faith for the advancement of
its interest and not to defeat or circumvent the employees right to security of tenure; and
(5) That the employer used fair and reasonable criteria in ascertaining who would be dismissed and who
would be retained among the employees, such as status, x x x efficiency, seniority, physical fitness, age,
and financial hardship for certain workers.
As aptly found by the NLRC and justly sustained by the CA, Petrocon exercised its prerogative to retrench
its employees in good faith and the considerable reduction of work allotments of Petrocon by Saudi
Aramco was sufficient basis for Petrocon to reduce the number of its personnel. As for the notice
requirement, however, contrary to petitioners contention, proper notice to the DOLE within 30 days prior
to the intended date of retrenchment is necessary and must be complied with despite the fact that
respondent is an overseas Filipino worker. In the present case, although respondent was duly notified of his
termination by Petrocon 30 days before its effectivity, no allegation or proof was advanced by petitioner to
establish that Petrocon ever sent a notice to the DOLE 30 days before the respondent was terminated. Thus,
this requirement of the law was not complied with. Despite the fact that respondent was employed by
Petrocon as an OFW in Saudi Arabia, still both he and his employer are subject to the provisions of the
Labor Code when applicable. The basic policy in this jurisdiction is that all Filipino workers, whether
employed locally or overseas, enjoy the protective mantle of Philippine labor and social legislations (citing
Philippine National Bank v. Cabansag, G.R. No. 157010, June 21, 2005, 460 SCRA 514, 518 and Royal
Crown Internationale v. NLRC, G.R. No. 78085, October 16, 1989, 178 SCRA 569.) International
Management Services/Marilyn C. Pascual vs. Roel P. Logarta, G.R. No. 163657, April 18, 2012.
Employee; probationary employee. The aforequoted Section 6 of the Implementing Rules of Book VI, Rule
VIII-A of the Code specifically requires the employer to inform the probationary employee of such
reasonable standards at the time of his engagement, not at any time later; else, the latter shall be considered

The letter-offer to Aliling states that the regularization standards or the performance norms to be used are still
to be agreed upon by him and his supervisor. Moreover, Aliling was assigned to GX trucking sales, an activity
entirely different to the Seafreight Sales for which he was originally hired and trained for. In the present case,
there was no proof that Aliling was informed of the standards for his continued employment, such as the sales
quota, at the time of his engagement. Armando Ailing vs. Jose B. Feliciano, Manuel F. San Mateo III, et al.,
G.R. No. 185829. April 25, 2012.

Consequently, petitioners are not allowed to receive separation pay from both the Labor Code, on the one
hand, and the New Gratuity Plan and the SSP, on the other, they would receive double compensation for the
same cause (i.e., separation from the service due to redundancy). Ma. Corina C. Jiao, et al. vs. Global
Business Bank, Inc., et al., G.R. No. 182331, April 18, 2012.
Employer-employee relationship. In determining the presence or absence of an employer-employee
relationship, the Court has consistently looked for the following incidents, to wit: (a) the selection and
engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and (d) the employers
power to control the employee on the means and methods by which the work is accomplished. The last
element, the so-called control test, is the most important element.
It can be deduced from the March 1996 affidavit of petitioner that respondents challenged his authority to
deliver some 158 checks to SFC. Considering that petitioner contested respondents challenge by pointing to
the existing arrangements between BCC and SFC, it should be clear that respondents did not exercise the
power of control over petitioner, because he thereby acted for the benefit and in the interest of SFC more than
of BCC. Charlie Jao vs. BCC Products Sales, Inc. and Terrance Ty, G.R. No. 163700, April 18, 2012.
Project employee; conversion into regular employee. In all the 38 projects where DMCI engaged Jamins
services, the tasks he performed as a carpenter were indisputably necessary and desirable in DMCIs
construction business. He might not have been a member of a work pool since DMCI insisted that it does not
maintain a work pool, but his continuous rehiring in 38 projects over a period of 31 years and the nature of his
work unmistakably made him a regular employee. In Maraguinot, Jr. v. NLRC, 348 Phil. 580 (1998), the
Court held that once a project or work pool employee has been: (1) continuously, as opposed to intermittently,
rehired by the same employer for the same tasks or nature of tasks; and (2) these tasks are vital, necessary and
indispensable to the usual business or trade of the employer, then the employee must be deemed a regular
employee.
Surely, length of time is not the controlling test for project employment but it is vital in determining if the
employee was hired for a specific undertaking or if it is tasked to perform functions vital, necessary and
indispensable to the usual business or trade of the employer. Here, [private] respondent had been a project
employee several times over. The nature of his employment ceased to be project-based when he was

repeatedly re-hired due to the demands of petitioners business. D.M. Consunji, Inc. and/or David M.
Consunji vs. Estelito, G.R. No. 192514, April 18, 2012.

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.

Dismissal; willful disobedience. For willful disobedience to be a valid cause for dismissal, these two
elements must concur: (1) the employees assailed conduct must have been willful, that is, characterized by
a wrongful and perverse attitude; and (2) the order violated must have been reasonable, lawful, made
known to the employee, and must pertain to the duties which he had been engaged to discharge.

(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.

The petitioners arbitrary defiance to Graphics, Inc.s order for him to render overtime work constitutes
willful disobedience. Because of his refusal to render overtime work, the company failed to meet its
printing deadlines, resulting in losses to the company. The Supreme Court took into account the fact that
petitioner was inclined to absent himself and to report late for work despite being previously penalized, and
affirmed the CAs ruling that the petitioner is indeed utterly defiant of the lawful orders and the reasonable
work standards prescribed by his employer. The Court reiterated its previous rulings stating that an
employer has the right to require the performance of overtime service in any of the situations contemplated
under Article 89 of the Labor Code and an employees non-compliance is willful disobedience. Realda v.
New Age Graphics, Inc. et. al. G.R. No. 192190, April 25, 2012.

Graphics, Inc. failed to afford the petitioner with a reasonable opportunity to be heard and defend itself. An
administrative hearing set on the same day that the petitioner received the memorandum and the 24-hour
period given to him to submit a written explanation is far from reasonable. Furthermore, there is no indication
that Graphics, Inc. issued a second notice, informing the petitioner of his dismissal. Graphics, Inc. admitted
that it decided to terminate the petitioners employment when he ceased to report for work after being served
with the memorandum requiring him to explain and subsequent to his failure to submit a written explanation.
However, there is nothing on record showing that Graphics, Inc. placed its decision to dismiss in writing and
that a copy thereof was sent to the petitioner. Notwithstanding the existence of a just cause to terminate
petitioners employment, respondent was ordered to pay P30,000 as nominal damages for violation of the
employees right to due process. Realda v. New Age Graphics, Inc. et. al. G.R. No. 192190, April 25, 2012.

Dismissal; inefficiency. 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. The employee in this case failed to observe this simple
procedure and proceeded to print without making sure that the colors were at par with the clients demands.
This resulted to delays in the delivery of output, client dissatisfaction, and additional costs to Graphics,
Inc.. Realda v. New Age Graphics, Inc. et. al. G.R. No. 192190, April 25, 2012.
Dismissal; due process. In King of Kings Transport, Inc. v. Mamac, this Court laid down the manner by
which the procedural due requirements of due process can be satisfied:
(1)
The first written notice to be served on the employees should contain the specific causes or
grounds for termination against them, and a directive that the employees are given the opportunity to
submit their written explanation within a reasonable period. Reasonable opportunity under the Omnibus
Rules means every kind of assistance that management must accord to the employees to enable them to
prepare adequately for their defense. This should be construed as a period of at least five (5) calendar days
from receipt of the notice to give the employees an opportunity to study the accusation against them,
consult a union official or lawyer, gather data and evidence, and decide on the defenses they will raise
against the complaint. Moreover, in order to enable the employees to intelligently prepare their explanation
and defenses, the notice should contain a detailed narration of the facts and circumstances that will serve as
basis for the charge against the employees. A general description of the charge will not suffice. Lastly, the
notice should specifically mention which company rules, if any, are violated and/or which among the
grounds under Art. 282 is being charged against the employees.
(2)
After serving the first notice, the employers should schedule and conduct a hearing or conference
wherein the employees will be given the opportunity to: (a) explain and clarify their defenses to the charge
against them; (b) present evidence in support of their defenses; and (c) rebut the evidence presented against
them by the management. During the hearing or conference, the employees are given the chance to defend

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

Dismissal; constructive dismissal. Constructive dismissal exists where there is cessation of work because
continued employment is rendered impossible, unreasonable or unlikely, as an offer involving a demotion
in rank and a diminution in pay. Constructive dismissal is a dismissal in disguise or an act amounting to
dismissal but made to appear as if it were not. In constructive dismissal cases, the employer is, concededly,
charged with the burden of proving that its conduct and action or the transfer of an employee are for valid
and legitimate grounds such as genuine business necessity. In the instant case, the overt act relied upon by
petitioner is not only a doubtful occurrence but is, if it did transpire, even consistent with the dismissal
from employment posited by the respondent. The factual appraisal of the Court of Appeals is correct.
Petitioner was displeased after incurring expenses for respondents medical check-up and, it is credible that,
thereafter, respondent was prevented entry into the work premises. This is tantamount to constructive
dismissal. The Supreme Court agreed with the Court of Appeals that the incredibility of petitioners
submission about abandonment of work renders credible the position of respondent that she was prevented
from entering the property. This was even corroborated by the affidavits of Siarot and Mendoza which were
made part of the records of this case. Ma. Melissa A. Galang vs. Julia Malasuqui, G.R. No. 174173. March
7, 2012.
Dismissal; loss of trust and confidence. The rule is long and well settled that, in illegal dismissal cases like
the one at bench, the burden of proof is upon the employer to show that the employees termination from
service is for a just and valid cause. The employers case succeeds or fails on the strength of its evidence
and not on the weakness of that adduced by the employee, in keeping with the principle that the scales of
justice should be tilted in favor of the latter in case of doubt in the evidence presented by them. Often
described as more than a mere scintilla, the quantum of proof is substantial evidence which is understood as
such relevant evidence as a reasonable mind might accept as adequate to support a conclusion, even if other
equally reasonable minds might conceivably opine otherwise. Failure of the employer to discharge the
foregoing onus would mean that the dismissal is not justified and therefore illegal.
In the case at bar, the Supreme Court agreed with the petitioners that mere substantial evidence and not
proof beyond reasonable doubt is required to justify the dismissal from service of an employee charged
with theft of company property. However, the Court found no error in the CAs findings that the petitioners
had not adequately proven by substantial evidence that Arlene and Joseph indeed participated or cooperated
in the commission of theft relative to the six missing intensifying screens so as to justify the latters
termination from employment on the ground of loss of trust and confidence. Blue Sky Trading Company,
Inc. et al. vs. Arlene P. Blas and Joseph D. Silvano, G.R. No. 190559. March 7, 2012.
Dismissal; probationary employees. Gala insists that he cannot be sanctioned for the theft of company
property on May 25, 2006. He maintains that he had no direct participation in the incident and that he was
not aware that an illegal activity was going on as he was at some distance from the trucks when the alleged
theft was being committed. He adds that he did not call the attention of the foremen because he was a mere
lineman and he was focused on what he was doing at the time. He argues that in any event, his mere
presence in the area was not enough to make him a conspirator in the commission of the pilferage.
Gala misses the point. He forgets that as a probationary employee, his overall job performance and his
behavior were being monitored and measured in accordance with the standards (i.e., the terms and
conditions) laid down in his probationary employment agreement. Under paragraph 8 of the agreement, he
was subject to strict compliance with, and non-violation of the Company Code on Employee Discipline,
Safety Code, rules and regulations and existing policies. Par. 10 required him to observe at all times the
highest degree of transparency, selflessness and integrity in the performance of his duties and
responsibilities, free from any form of conflict or contradicting with his own personal interest. Manila
Electric Company vs. Jan Carlo Gala, G.R. No. 191288. March 7, 2012.

Dismissal; relief of illegally dismissed employee. An illegally dismissed employee is entitled to two reliefs:
back wages and reinstatement. The two reliefs provided are separate and distinct. In instances where
reinstatement is no longer feasible because of strained relations between the employee and the employer,
separation pay is granted. In effect, an illegally dismissed employee is entitled to either reinstatement if such
is viable, or separation pay if reinstatement is no longer viable, and to back wages. The normal consequences
of respondents illegal dismissal, then, are reinstatement without loss of seniority rights, and payment of back
wages computed from the time compensation was withheld from him up to the date of actual reinstatement.
Where reinstatement is no longer viable as an option, separation pay equivalent to one month salary for every
year of service should be awarded as an alternative. The payment of separation pay is in addition to payment
of back wages.
Petitioners question the CA Resolution dated October 24, 2008, arguing that it modified its March 31, 2008
Decision which has already attained finality insofar as respondent is concerned. Such contention is misplaced.
The CA merely clarified the period of payment of back wages and separation pay up to the finality of its
decision (March 31, 2008) modifying the Labor Arbiters decision. In view of the modification of monetary
awards in the Labor Arbiters decision, the time frame for the payment of back wages and separation pay is
accordingly modified to the finality of the CA decision. Norkis Distribution, Inc., et al. vs. Delfin S.
Descallar, G.R. No. 185255. March 14, 2012
Employees; project vs. regular employees. The principal test for determining whether particular employees
are properly characterized as project employees as distinguished from regular employees is whether or
not the project employees were assigned to carry out a specific project or undertaking, the duration and
scope of which were specified at the time the employees were engaged for that project.
In a number of cases, the Court has held that the length of service or the re-hiring of construction workers on
a project-to-project basis does not confer upon them regular employment status, since their re-hiring is only a
natural consequence of the fact that experienced construction workers are preferred. Employees who are hired
for carrying out a separate job, distinct from the other undertakings of the company, the scope and duration of
which has been determined and made known to the employees at the time of the employment are properly
treated as project employees and their services may be lawfully terminated upon the completion of a project.
Should the terms of their employment fail to comply with this standard, they cannot be considered project
employees.
Applying the above disquisition, the Court agreed with the findings of the CA that petitioners were project
employees. It is not disputed that petitioners were hired for the construction of the Cordova Reef Village
Resort in Cordova, Cebu. By the nature of the contract alone, it is clear that petitioners employment was to
carry out a specific project. Wilfredo Aro, Ronilo Tirol, et al. vs. NLRC, Fourth Division, et al., G.R. No.
174792. March 7, 2012.
Jurisdiction; power of the DOLE to determine the existence of employer-employee relationship. If a
complaint is filed with the DOLE, and it is accompanied by a claim for reinstatement, the jurisdiction is
properly with the Labor Arbiter, under Art. 217(3) of the Labor Code, which provides that the Labor Arbiter
has original and exclusive jurisdiction over those cases involving wages, rates of pay, hours of work, and
other terms and conditions of employment, if accompanied by a claim for reinstatement.
In the present case, the finding of the DOLE Regional Director that there was an employer-employee
relationship has been subjected to review by the Supreme Court, with the finding being that there was no
employer-employee relationship between petitioner and private respondent, based on the evidence presented.
The DOLE had no jurisdiction over the case, as there was no employer-employee relationship present. Thus,
the dismissal of the complaint against petitioner is proper. Peoples Broadcasting Service (Bombo Rado
Phils., Inc.) vs. The Secretary of the Dept. of Labor & Employment, et al. G.R. No. 179652. March 6, 2012.

Management prerogative; resignation of employees running for public office. The Supreme Court has
consistently held that so long as a companys management prerogatives 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, the Court will uphold them. In the instant
case, ABS-CBN validly justified the implementation of Policy No. HR-ER-016. It is well within its rights
to ensure that it maintains its objectivity and credibility and freeing itself from any appearance of
impartiality so that the confidence of the viewing and listening public in it will not be in any way eroded.
Even as the law is solicitous of the welfare of the employees, it must also protect the right of an employer
to exercise what are clearly management prerogatives. The free will of management to conduct its own
business affairs to achieve its purpose cannot be denied. Ernesto Ymbong vs. ABS-CBN Broadcasting
Corporation, Veranda Sy & Dante Luzon, G.R. No. 184885. March 7, 2012.
Separation pay; payment to those who participated in illegal strikes. Separation pay may be given as a form
of financial assistance when a worker is dismissed in cases such as the installation of labor-saving devices,
redundancy, retrenchment to prevent losses, closing or cessation of operation of the establishment, or in
case the employee was found to have been suffering from a disease such that his continued employment is
prohibited by law. It is a statutory right defined as the amount that an employee receives at the time of his
severance from the service and is designed to provide the employee with the wherewithal during the period
that he is looking for another employment. It is oriented towards the immediate future, the transitional
period the dismissed employee must undergo before locating a replacement job. As a general rule, when
just causes for terminating the services of an employee exist, the employee is not entitled to separation pay
because lawbreakers should not benefit from their illegal acts. The rule, however, is subject to exceptions.
Here, not only did the Court declare the strike illegal, rather, it also found the Union officers to have
knowingly participated in the illegal strike. Worse, the Union members committed prohibited acts during
the strike. Thus, as the Court has concluded in other cases it has previously decided, such Union officers
are not entitled to the award of separation pay in the form of financial assistance. C. Alcantara & Sons, Inc.
vs. Court of Appeals, et al./Nagkahiusang Mamumuo sa Alsons-SPFL, et al. vs. C. Alcantara & Sons, Inc.,
et al./Nagkahiusang Mamumuo sa Alsons-SPFL, et al. vs. C. Alcantara & Sons, Inc., et al. G.R. No.
155109/G.R. No. 155135/G.R. No. 179220. March 14, 2012.
Here are select February 2012 rulings of the Supreme Court on labor law and procedure:
Appeal; factual finding of NLRC. Findings of fact of administrative agencies and quasi-judicial bodies,
which have acquired expertise because their jurisdiction is confined to specific matters, are generally
accorded not only respect but finality when affirmed by the Court of Appeals. Factual findings of quasijudicial bodies like the NLRC, if supported by substantial evidence, are accorded respect and even finality
by the Supreme Court, more so when they coincide with those of the Labor Arbiter. Such factual findings
are given more weight when the same are affirmed by the Court of Appeals. In the present case, the
Supreme Court found no reason to depart from these principles since the Labor Arbiter found that there was
substantial evidence to conclude that Oasay had breached the trust and confidence of Palacio Del
Gobernador Condominium Corporation, which finding the NLRC had likewise upheld. Sebastian F. Oasay,
Jr. vs. Palacio del Gobernador Condominium Corporation and Omar T. Cruz, G.R. No. 194306, February
6, 2012.
Civil Service; Clark Development Corporation. Clark Development Corporation (CDC) owes its existence
to Executive Order No. 80 issued by then President Fidel V. Ramos. It was meant to be the implementing
and operating arm of the Bases Conversion and Development Authority tasked to manage the Clark Special
Economic Zone. Expressly, CDC was formed in accordance with Philippine corporation laws and existing
rules and regulations promulgated by the Securities and Exchange Commission pursuant to Section 16 of
Republic Act 7227. CDC, a government owned or controlled corporation without an original charter, was

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

In this case, there is no dispute that Eastern Telecommunications Phils., Inc. and Eastern Telecoms
Employees Union agreed on the inclusion of a provision for the grant of 14th, 15th and 16th month bonuses
in the 1998-2001 CBA Side Agreement, as well as in their 2001-2004 CBA Side Agreement, which
contained no qualification for its payment. There were no conditions specified in the CBA Side Agreements
for the grant of the bonus. There was nothing in the relevant provisions of the CBA which made the grant
of the bonus dependent on the companys financial standing or contingent upon the realization of profits.
There was also no statement that if the company derives no profits, no bonus will be given to the
employees. In fine, the payment of these bonuses was not related to the profitability of business operations.
Consequently, the giving of the subject bonuses cannot be peremptorily withdrawn by Eastern
Telecommunications Phils., Inc. without violating Article 100 of the Labor Code, which prohibits the
unilateral elimination or diminution of benefits by the employer. The rule is settled that any benefit and
supplement being enjoyed by the employees cannot be reduced, diminished, discontinued or eliminated by
the employer. The principle of non-diminution of benefits is founded on the constitutional mandate to
protect the rights of workers and to promote their welfare and to afford labor full protection. Eastern
Telecommunications Philippines, Inc. vs. Eastern Telecoms Employees Union, G.R. No. 185665, February
8, 2012.
Employee dismissal; constructive dismissal. In constructive dismissal cases, the employer has the burden
of proving that the transfer of an employee is for just or valid ground, such as genuine business necessity.
The employer must demonstrate that the transfer is not unreasonable, inconvenient, or prejudicial to the
employee and that the transfer does not involve a demotion in rank or a diminution in salary and other
benefits. If the employer fails to overcome this burden of proof, the employees transfer is tantamount to
unlawful constructive dismissal. [Merck Sharp and Dohme (Philippines) v. Robles, G.R. No. 176506,
November 25, 2009] Petitioners failed to satisfy the burden of proving that the transfer was based on just or
valid ground. Petitioners bare assertions of imminent threat from the respondents are mere accusations
which are not substantiated by any proof. The Supreme Court agreed with the Court of Appeals in ruling
that the transfer of respondents amounted to a demotion. Julies Bakeshop and/or Edgar Reyes vs. Henry
Arnaiz, et al., G.R. No. 173882, February 15, 2012.
Employee dismissal; disease; dereliction of duties. With regard to disease as a ground for termination,
Article 284 of the Labor Code provides that an employer may terminate the services of an employee who
has been found to be suffering from any disease and whose continued employment is prohibited by law or
is prejudicial to his health, as well as to the health of his co-employees. In order to validly terminate
employment on this ground, Section 8, Rule I, Book VI of the Omnibus Rules Implementing the Labor
Code requires that: (i) the employee be suffering from a disease and his continued employment is
prohibited by law or prejudicial to his health or to the health of his co-employees, and (ii) a certification by
a competent public health authority that the disease is of such nature or at such a stage that it cannot be
cured within a period of six (6) months even with proper medical treatment. If the disease or ailment can be
cured within the period, the employer shall not terminate the employee but shall ask the employee to take a
leave. The employer shall reinstate such employee to his former position immediately upon the restoration
of his normal health. In Triple Eight Integrated Services, Inc. v. NLRC (G.R. No. 129584, December 3,
1998), the Court held that the requirement for a medical certificate under Article 284 of the Labor Code
cannot be dispensed with; otherwise, it would sanction the unilateral and arbitrary determination by the
employer of the gravity or extent of the employees illness and, thus, defeat the public policy on the
protection of labor.
In this case, Ynson should have reported back to work or attended the investigations conducted by Wuerth
Philippines, Inc. immediately upon being permitted to work by his doctors, knowing that his position
remained vacant for a considerable length of time. However, he did not even show any sincere effort to
return to work. Clearly, since there is no more hindrance for him to return to work and attend the
investigations set by Wuerth Philippines, Inc., Ynsons failure to do so was without any valid or justifiable
reason. His conduct shows his indifference and utter disregard of his work and his employers interest, and

displays his clear, deliberate, and gross dereliction of duties. The power to dismiss an employee is a
recognized prerogative inherent in the employers right to freely manage and regulate his business. The law,
in protecting the rights of the laborers, authorizes neither oppression nor self-destruction of the employer. The
workers right to security of tenure is not an absolute right, for the law provides that he may be dismissed for
cause. As a general rule, employers are allowed wide latitude of discretion in terminating the employment of
managerial personnel. The mere existence of a basis for believing that such employee has breached the trust
and confidence of his employer would suffice for his dismissal. Needless to say, an irresponsible employee
like Ynson does not deserve a position in the workplace, and it is Wuerth Philippines, Inc.s management
prerogative to terminate his employment. To be sure, an employer cannot be compelled to continue with the
employment of workers when continued employment will prove inimical to the employers interest. Wuerth
Philippines, Inc. vs. Rodante Ynson, G.R. No. 175932, February 15, 2012.
Employee dismissal; due process. With respect to due process requirement, the employer is bound to furnish
the employee concerned with two (2) written notices before termination of employment can be legally
effected. One is the notice apprising the employee of the particular acts or omissions for which his dismissal
is sought and this may loosely be considered as the proper charge. The other is the notice informing the
employee of the managements decision to sever his employment. This decision, however, must come only
after the employee is given a reasonable period from receipt of the first notice within which to answer the
charge, thereby giving him ample opportunity to be heard and defend himself with the assistance of his
representative should he so desire. The requirement of notice, it has been stressed, is not a mere technicality
but a requirement of due process to which every employee is entitled. Here, Palacio Del Gobernador
Condominium Corporation complied with the two-notice rule stated above. Sebastian F. Oasay, Jr. vs.
Palacio del Gobernador Condominium Corporation and Omar T. Cruz, G.R. No. 194306, February 6, 2012.
Employee dismissal; due process. Cityland did not afford Galang the required notice before he was
dismissed. As the Court of Appeals noted, the investigation conference Tupas called to look into the janitors
complaints against Galang did not constitute the written notice required by law as he had no clear idea what
the charges against him were. Romeo A. Galang vs. Citiland Shaw Tower, Inc. and Virgilio Baldemor, G.R.
No. 173291, February 8, 2012.
Employee dismissal; grounds. The validity of an employees dismissal from service hinges on the satisfaction
of the two substantive requirements for a lawful termination. These are, first, whether the employee was
accorded due process the basic components of which are the opportunity to be heard and to defend himself.
This is the procedural aspect. And second, whether the dismissal is for any of the causes provided in the
Labor Code of the Philippines. This constitutes the substantive aspect. On the substantive aspect, the
Supreme Court found that Palacio Del Gobernador Condominium Corporations termination of the Oasays
employment was for a cause provided under the Labor Code. In terminating Oasays employment, Palacio
Del Gobernador Condominium Corporation invoked loss of trust and confidence. The first requisite for
dismissal on the ground of loss of trust and confidence is that the employee concerned must be holding a
position of trust and confidence. Here, it is indubitable that Oasay holds a position of trust and confidence.
The position of Building Administrator, being managerial in nature, necessarily enjoys the trust and
confidence of the employer. The second requisite is that there must be an act that would justify the loss of
trust and confidence. Loss of trust and confidence, to be a valid cause for dismissal, must be based on a
willful breach of trust and founded on clearly established facts. Palacio Del Gobernador Condominium
Corporation had established, by clear and convincing evidence, Oasays acts which justified its loss of trust
and confidence on the former. Sebastian F. Oasay, Jr. vs. Palacio del Gobernador Condominium Corporation
and Omar T. Cruz, G.R. No. 194306, February 6, 2012.
Employee dismissal; just cause. The Supreme Court found that Galang had become unfit to continue his
employment. The evidence supports the view that he continued to exhibit undesirable traits as an employee
and as a person, in relation to both his co-workers and his superiors, particularly Tupas, her immediate

supervisor. Quoting the Court of Appeals decision with approval, the Supreme Court held: Without
offering any possible ill motive that might have impelled [the respondents] to summarily dismiss [Galang],
who admitted having been absorbed by the former as janitor upon the termination of his contract with his
agency, this Court is more inclined to give credence to the evidence pointing to the conclusion that
[Galangs] employment was actually severed for a just cause. Romeo A. Galang vs. Citiland Shaw Tower,
Inc. and Virgilio Baldemor, G.R. No. 173291, February 8, 2012.
Employer; right to discipline employee. In Sagales v. Rustans Commercial Corporation (G.R. No. 166554,
November 27, 2008), the Supreme Court ruled:
Truly, while the employer has the inherent right to discipline, including that of dismissing its employees,
this prerogative is subject to the regulation by the State in the exercise of its police power.
In this regard, it is a hornbook doctrine that infractions committed by an employee should merit only
the corresponding penalty demanded by the circumstance. The penalty must be commensurate with
the act, conduct or omission imputed to the employee and must be imposed in connection with the
disciplinary authority of the employer. (Emphasis in the original.)
In the case at bar, the penalty handed out by the petitioners was the ultimate penalty of dismissal. There
was no warning or admonition for respondents violation of team rules, only outright termination of his
services for an act which could have been punished appropriately with a severe reprimand or suspension.
Negros Slashers, Inc., Rodolfo C. Alvarez and Vicente Tan vs. Alvin L. Teng, G.R. No. 187122, February
22, 2012.
Employer-employee relationship; onus probandi. The onus probandi falls on petitioner to establish or
substantiate such claim by the requisite quantum of evidence. The issue of Javiers alleged illegal dismissal
is anchored on the existence of an employer-employee relationship between him and Fly Ace. As the
records bear out, the Labor Arbiter and the Court of Appeals found Javiers claim of employment with Fly
Ace as wanting and deficient. Although Section 10, Rule VII of the New Rules of Procedure of the NLRC
allows a relaxation of the rules of procedure and evidence in labor cases, this rule of liberality does not
mean a complete dispensation of proof. Labor officials are enjoined to use reasonable means to ascertain
the facts speedily and objectively with little regard to technicalities or formalities but nowhere in the rules
are they provided a license to completely discount evidence, or the lack of it. The quantum of proof
required, however, must still be satisfied. Hence, when confronted with conflicting versions on factual
matters, it is for them in the exercise of discretion to determine which party deserves credence on the basis
of evidence received, subject only to the requirement that their decision must be supported by substantial
evidence. [Salvador Lacorte v. Hon. Amado G. Inciong, 248 Phil. 232 (1988)] Accordingly, Javier needs
to show by substantial evidence that he was indeed an employee of the company against which he claims
illegal dismissal. Bitoy Javier (Danilo P. Javier) vs. Fly Ace Corporation/Flordelyn Castillo, G.R. No.
192558, February 15, 2012.
Employer-employee relationship; test. To determine the existence of an employer-employee relationship,
the following are considered: (1) the selection and engagement of the employee; (2) the payment of wages;
(3) the power of dismissal; and (4) the power to control the employees conduct. Of these elements, the
most important criterion is whether the employer controls or has reserved the right to control the employee
not only as to the result of the work but also as to the means and methods by which the result is to be
accomplished. In this case, Javier was not able to persuade the Court that the above elements exist in his
case. He could not submit competent proof that Fly Ace engaged his services as a regular employee; that
Fly Ace paid his wages as an employee, or that Fly Ace could dictate what his conduct should be while at
work. In other words, Javiers allegations did not establish that his relationship with Fly Ace had the
attributes of an employer-employee relationship on the basis of the above-mentioned four-fold test. Worse,

Javier was not able to refute Fly Aces assertion that it had an agreement with a hauling company to undertake
the delivery of its goods. It was also baffling to realize that Javier did not dispute Fly Aces denial of his
services exclusivity to the company. In short, all that Javier laid down were bare allegations without
corroborative proof. Bitoy Javier (Danilo P. Javier) vs. Fly Ace Corporation/Flordelyn Castillo, G.R. No.
192558, February 15, 2012.
Employment contract; stages. Contracts undergo three distinct stages, to wit: negotiation; perfection or birth;
and consummation. Negotiation begins from the time the prospective contracting parties manifest their
interest in the contract and ends at the moment of agreement of the parties. Perfection or birth of the contract
takes place when the parties agree upon the essential elements of the contract. Consummation occurs when
the parties fulfill or perform the terms agreed upon in the contract, culminating in the extinguishment thereof.
Under Article 1315 of the Civil Code, a contract is perfected by mere consent and from that moment the
parties are bound not only to the fulfillment of what has been expressly stipulated but also to all the
consequences which, according to their nature, may be in keeping with good faith, usage and law. An
employment contract, like any other contract, is perfected at the moment (1) the parties come to agree upon its
terms; and (2) concur in the essential elements thereof: (a) consent of the contracting parties, (b) object certain
which is the subject matter of the contract and (c) cause of the obligation. In the present case, C.F. Sharp, on
behalf of its principal, International Shipping Management, Inc., hired Agustin and Minimo as
Sandblaster/Painter for a 3-month contract, with a basic monthly salary of US$450.00. Thus, the object of the
contract is the service to be rendered by Agustin and Minimo on board the vessel while the cause of the
contract is the monthly compensation they expect to receive. These terms were embodied in the Contract of
Employment which was executed by the parties. The agreement upon the terms of the contract was
manifested by the consent freely given by both parties through their signatures in the contract. Neither parties
disavow the consent they both voluntarily gave. Thus, there is a perfected contract of employment. C.F.
Sharp & Co. Inc. and John J. Rocha vs. Pioneer Insurance and Surety Corporation, et al., G.R. No. 179469,
February 15, 2012.
Employment relationship; commencement. The commencement of an employer-employee relationship must
be treated separately from the perfection of an employment contract. Santiago v. CF Sharp Crew
Management, Inc., (G.R. No. 162419, 10 July 2007) is an instructive precedent on this point. In that case, the
Supreme Court made a distinction between the perfection of the employment contract and the commencement
of the employer-employee relationship, thus:
The perfection of the contract, which in this case coincided with the date of execution thereof, occurred when
petitioner and respondent agreed on the object and the cause, as well as the rest of the terms and conditions
therein. The commencement of the employer-employee relationship, as earlier discussed, would have taken
place had petitioner been actually deployed from the point of hire. Thus, even before the start of any
employer-employee relationship, contemporaneous with the perfection of the employment contract was the
birth of certain rights and obligations, the breach of which may give rise to a cause of action against the
erring party.
Despite the fact that the employer-employee relationship has not commenced due to the failure to deploy
Agustin and Minimo in this case, Agustin and Minimo are entitled to rights arising from the perfected
Contract of Employment, such as the right to demand performance by C.F. Sharp of its obligation under the
contract. C.F. Sharp & Co. Inc. and John J. Rocha vs. Pioneer Insurance and Surety Corporation, et al., G.R.
No. 179469, February 15, 2012.
Forum shopping; elements; res judicata. For forum shopping to exist, it is necessary that (a) there be identity
of parties or at least such parties that represent the same interests in both actions; (b) there be identity of rights
asserted and relief prayed for, the relief being founded on the same facts; and (c) the identity of the two
preceding particulars is such that any judgment rendered in one action will, regardless of which party is

successful, amount to res judicata in the other action. Petitioners are correct as to the first two requisites of
forum shopping. First, there is identity of parties involved: Negros Slashers Inc. and respondent Teng.
Second, there is identity of rights asserted i.e., the right of management to terminate employment and the
right of an employee against illegal termination. However, the third requisite of forum shopping is missing
in this case. Any judgment or ruling of the Office of the Commissioner of the Metropolitan Basketball
Association will not amount to res judicata. Res judicata is defined in jurisprudence as to have four basic
elements: (1) the judgment sought to bar the new action must be final; (2) the decision must have been
rendered by a court having jurisdiction over the subject matter and the parties; (3) the disposition of the
case must be a judgment on the merits; and (4) there must be as between the first and second action,
identity of parties, subject matter, and causes of action. Here, although contractually authorized to settle
disputes, the Office of the Commissioner of the Metropolitan Basketball Association is not a court of
competent jurisdiction as contemplated by law with respect to the application of the doctrine of res
judicata. At best, the Office of the Commissioner of the Metropolitan Basketball Association is a private
mediator or go-between as agreed upon by team management and a player in the Metropolitan Basketball
Association Players Contract of Employment. Any judgment that the Office of the Commissioner of the
Metropolitan Basketball Association may render will not result in a bar for seeking redress in other legal
venues. Hence, respondents action of filing the same complaint in the Regional Arbitration Branch of the
NLRC does not constitute forum shopping. Negros Slashers, Inc., Rodolfo C. Alvarez and Vicente Tan vs.
Alvin L. Teng, G.R. No. 187122, February 22, 2012.
Jurisdiction; NLRC. It is clear from the NLRC Rules of Procedure that appeals must be verified and
certified against forum-shopping by the parties-in-interest themselves. The purpose of verification is to
secure an assurance that the allegations in the pleading are true and correct and have been filed in good
faith. In the case at bar, the parties-in-interest are petitioner Salenga, as the employee, and respondent Clark
Development Corporation as the employer. A corporation can only exercise its powers and transact its
business through its board of directors and through its officers and agents when authorized by a board
resolution or its bylaws. The power of a corporation to sue and be sued is exercised by the board of
directors. The physical acts of the corporation, like the signing of documents, can be performed only by
natural persons duly authorized for the purpose by corporate bylaws or by a specific act of the board.
Absent the requisite board resolution, neither Timbol-Roman nor Atty. Mallari, who signed the
Memorandum of Appeal and Joint Affidavit of Declaration allegedly on behalf of respondent corporation,
may be considered as the appellant and employer referred to by the NLRC Rules of Procedure. As
such, the NLRC had no jurisdiction to entertain the appeal. Antonio B. Salenga, et al. vs. Court of Appeals,
et al., G.R. No. 174941, February 1, 2012.
Labor; effect if procedural due process not followed but with a valid cause for termination. It is required
that the employer furnish the employee with two written notices: (1) a written notice served on the
employee specifying the ground or grounds for termination, and giving to said employee reasonable
opportunity within which to explain his side; and (2) a written notice of termination served on the
employee indicating that upon due consideration of all the circumstances, grounds have been established to
justify his termination. The twin requirements of notice and hearing constitute the elements of due process
in cases of employees dismissal. The requirement of notice is intended to inform the employee concerned
of the employers intent to dismiss and the reason for the proposed dismissal. Upon the other hand, the
requirement of hearing affords the employee an opportunity to answer his employers charges against him
and accordingly, to defend himself therefrom before dismissal is effected. Obviously, the second written
notice, as indispensable as the first, is intended to ensure the observance of due process. In this case, there
was only one written notice which required respondents to explain within five (5) days why they should not
be dismissed from the service. Alcovendas was the only one who signed the receipt of the notice. The
others, as claimed by Lynvil, refused to sign. The other employees argue that no notice was given to
them. Despite the inconsistencies, what is clear is that no final written notice or notices of termination
were sent to the employees. Due to the failure of Lynvil to follow the procedural requirement of two-notice

rule, nominal damages in the amount of P50,000 were granted to Ariola, et al. despite their dismissal for just
cause. Lynvil Fishing Enterprises, Inc. vs. Andres G. Ariola, et al., G.R. No. 181974, February 1, 2012.
Labor; liability of officers if termination is attended with bad faith. In labor cases, the corporate directors and
officers are solidarily liable with the corporation for the termination of employment of employees done with
malice or in bad faith. Indeed, moral damages are recoverable when the dismissal of an employee is attended
by bad faith or fraud or constitutes an act oppressive to labor, or is done in a manner contrary to good morals,
good customs or public policy. The term bad faith contemplates a state of mind affirmatively operating
with furtive design or with some motive of self-interest or will or for ulterior purpose. The Supreme Court
agreed with the ruling of both the NLRC and the Court of Appeals when they pronounced that there was no
evidence on record that indicates commission of bad faith on the part of De Borja, the general manager of
Lynvil, who was tasked with the supervision of the employees and the operation of the business. There is no
proof that he imposed on Ariola, et al. the por viaje provision for purpose of effecting their summary
dismissal. Lynvil Fishing Enterprises, Inc. vs. Andres G. Ariola, et al., G.R. No. 181974, February 1, 2012.
Labor; nature of employment; security of tenure. In the context of these facts (1) Ariola, et al. were doing
tasks necessary to Lynvils fishing business with positions ranging from captain of the vessel to bodegero; (2)
after the end of a trip, they will again be hired for another trip with new contracts; and (3) this arrangement
continued for more than ten years the Court believed that Lynvil intended to go around the security of
tenure of Ariola, et al. as regular employees. The Court held that by the express provisions of the second
paragraph of Article 280 which cover casual employment, Ariola, et al. had become regular employees of
Lynvil. Lynvil Fishing Enterprises, Inc. vs. Andres G. Ariola, et al., G.R. No. 181974, February 1, 2012.
Labor; procedural and substantive due process; grounds for valid termination; breach of trust. Just cause is
required for a valid dismissal. The Labor Code provides that an employer may terminate an employment
based on fraud or willful breach of the trust reposed on the employee. Such breach is considered willful if it
is done intentionally, knowingly, and purposely, without justifiable excuse, as distinguished from an act done
carelessly, thoughtlessly, heedlessly or inadvertently. It must also be based on substantial evidence and not on
the employers whims or caprices or suspicions otherwise, the employee would eternally remain at the mercy
of the employer. Loss of confidence must not be indiscriminately used as a shield by the employer against a
claim that the dismissal of an employee was arbitrary. And, in order to constitute a just cause for dismissal,
the act complained of must be work-related and shows that the employee concerned is unfit to continue
working for the employer. In addition, loss of confidence as a just cause for termination of employment is
premised on the fact that the employee concerned holds a position of responsibility, trust and confidence or
that the employee concerned is entrusted with confidence in delicate matters, such as the handling or care and
protection of the property and assets of the employer. The betrayal of this trust is the essence of the offense
for which an employee is penalized. The Supreme Court found that breach of trust is present in this case,
when Ariola (the captain), Alcovendas (Chief Mate), Calinao (Chief Engineer), Nubla (cook), Baez (oiler),
and Sebullen (bodegero) conspired with one another and stole pampano and tangigue fish and delivered
them to another vessel, to the prejudice of Lynvil. Lynvil Fishing Enterprises, Inc. vs. Andres G. Ariola, et al.,
G.R. No. 181974, February 1, 2012.
Labor; public prosecutors decision not binding on the labor tribunal. The Supreme Court has held in Nicolas
v. National Labor Relations Commission [327 Phil. 883, 886-887 (1996)] that a criminal conviction is not
necessary to find just cause for employment termination. Otherwise stated, an employees acquittal in a
criminal case, especially one that is grounded on the existence of reasonable doubt, will not preclude a
determination in a labor case that he is guilty of acts inimical to the employers interests. In the reverse, the
finding of probable cause is not followed by automatic adoption of such finding by the labor tribunals. In
other words, whichever way the public prosecutor disposes of a complaint, the finding does not bind the labor
tribunal. Lynvil contends that the filing of a criminal case before the Office of the Prosecutor is sufficient
basis for a valid termination of employment based on serious misconduct and/or loss of trust and confidence.

The Supreme Court held that Lynvil cannot argue that since the Office of the Prosecutor found probable
cause for theft, the Labor Arbiter must follow the finding as a valid reason for the termination of
respondents employment. The proof required for purposes that differ from one and the other are likewise
different. Lynvil Fishing Enterprises, Inc. vs. Andres G. Ariola, et al., G.R. No. 181974, February 1, 2012.
Labor; regular employee; fixed-contract agreement, requisites for validity. Prior Supreme Court decisions
have laid two conditions for the validity of a fixed-contract agreement between the employer and
employee: First, the fixed period of employment was knowingly and voluntarily agreed upon by the parties
without any force, duress, or improper pressure being brought to bear upon the employee and absent any
other circumstances vitiating his consent; or Second, it satisfactorily appears that the employer and the
employee dealt with each other on more or less equal terms with no moral dominance exercised by the
former or the latter. Lynvil contends that Ariola, et al. were employed under a fixed-term contract which
expired at the end of the voyage. Contrarily, Ariola, et al. contend that they became regular employees by
reason of their continuous hiring and performance of tasks necessary and desirable in the usual trade and
business of Lynvil. Textually, the provision in the contract between Lynvil and Ariola, et al. that: NA ako
ay sumasang-ayon na maglingkod at gumawa ng mga gawain sang-ayon sa patakarang por viaje na
magmumula sa pagalis sa Navotas papunta sa pangisdaan at pagbabalik sa pondohan ng lantsa sa
Navotas, Metro Manila is for a fixed period of employment. In the context, however, of the facts that: (1)
Ariola, et al. were doing tasks necessarily to Lynvils fishing business with positions ranging from captain
of the vessel to bodegero; (2) after the end of a trip, they will again be hired for another trip with new
contracts; and (3) this arrangement continued for more than ten years, the clear intention is to go around the
security of tenure of Ariola, et al. as regular employees. As such, the Supreme Court found that Ariola, et
al. are regular employees. Lynvil Fishing Enterprises, Inc. vs. Andres G. Ariola, et al., G.R. No.
181974, February 1, 2012.
Labor Code; maximum award of attorneys fees in cases of recovery of wages. Article 111 of the Labor
Code provides for a maximum award of attorneys fees in cases of recovery of wages:
a. In cases of unlawful withholding of wages, the culpable party may be assessed attorneys fees equivalent
to ten percent of the amount of wages recovered.
b. It shall be unlawful for any person to demand or accept, in any judicial or administrative proceedings for
the recovery of wages, attorneys fees which exceed ten percent of the amount of wages recovered.
Since De Gracia, et al. had to secure the services of the lawyer to recover their unpaid salaries and protect
their interest, attorneys fees in the amount of ten percent (10%) of the total claims was imposed. Skippers
United Pacific, Inc. and Skippers Maritime Services, Inc. Ltd. vs. Nathaniel Doza, et al., G.R. No.
175558. February 8, 2012.
Labor contracting; elements. There is labor-only contracting where: (a) the person supplying workers to an
employer does not have substantial capital or investment in the form of tools, equipment, machineries,
work premises, among others; and (b) the workers recruited and placed by such person are performing
activities which are directly related to the principal business of the employer. In the present case, the
Supreme Court found that both the capitalization requirement and the power of control on the part of
Requio are wanting. Generally, the presumption is that the contractor is a labor-only contractor unless
such contractor overcomes the burden of proving that it has the substantial capital, investment, tools and
the like. In the present case, though Garden of Memories is not the contractor, it has the burden of proving
that Requio has sufficient capital or investment since it is claiming the supposed status of Requio as
independent contractor. Garden of Memories, however, failed to adduce evidence purporting to show that
Requio had sufficient capitalization. Neither did it show that she invested in the form of tools, equipment,
machineries, work premises and other materials which are necessary in the completion of the service

contract. Garden of Memories Park and Life Plan, Inc., et al. vs. NLRC, 2nd Div., et al., G.R. No. 160278,
February 8, 2012.
Migrant Workers; RA No. 8042; money claims in cases of unjust termination. Section 10 of Republic Act No.
8042 (Migrant Workers Act) provides for money claims in cases of unjust termination of employment
contracts:
In case of termination of overseas employment without just, valid or authorized cause as defined by law or
contract, the workers shall be entitled to the full reimbursement of his placement fee with interest of twelve
percent (12%) per annum, plus his salaries for the unexpired portion of his employment contract or for three
(3) months for every year of the unexpired term, whichever is less.
The Migrant Workers Act provides that salaries for the unexpired portion of the employment contract or three
(3) months for every year of the unexpired term, whichever is less, shall be awarded to the overseas Filipino
worker, in cases of illegal dismissal. However, in 24 March 2009, Serrano v. Gallant Maritime Services and
Marlow Navigation Co. Inc. (G.R. No. 167614), the Court, in an En Banc Decision, declared unconstitutional
the clause or for three months for every year of the unexpired term, whichever is less and awarded the
entire unexpired portion of the employment contract to the overseas Filipino worker. On 8 March 2010,
however, Section 7 of Republic Act No. 10022 (RA 10022) amended Section 10 of the Migrant Workers Act,
and once again reiterated the provision of awarding the unexpired portion of the employent contract or three
(3) months for every year of the unexpired term, whichever is less. Nevertheless, since the termination
occurred on January 1999 before the passage of the amendatory RA 10022, the Supreme Court applied RA
8042, without touching on the constitutionality of Section 7 of RA 10022. The declaration in March 2009 of
the unconstitutionality of the clause or for three months for every year of the unexpired term, whichever is
less in RA 8042 shall be given retroactive effect to the termination that occurred in January 1999 because an
unconstitutional clause in the law confers no rights, imposes no duties and affords no protection. The
unconstitutional provision is inoperative, as if it was not passed into law at all. Skippers United Pacific, Inc.
and Skippers Maritime Services, Inc. Ltd. vs. Nathaniel Doza, et al., G.R. No. 175558. February 8, 2012.
NLRC; contempt powers. Under Article 218 the Labor Code, the NLRC (and the labor arbiters) may hold
any offending party in contempt, directly or indirectly, and impose appropriate penalties in accordance with
law. The penalty for direct contempt consists of either imprisonment or fine, the degree or amount depends on
whether the contempt is against the Commission or the labor arbiter. The Labor Code, however, requires the
labor arbiter or the Commission to deal with indirect contempt in the manner prescribed under Rule 71 of the
Rules of Court. Rule 71 of the Rules of Court does not require the labor arbiter or the NLRC to initiate
indirect contempt proceedings before the trial court. This mode is to be observed only when there is no law
granting them contempt powers. As is clear under Article 218(d) of the Labor Code, the labor arbiter or the
Commission is empowered or has jurisdiction to hold the offending party or parties in direct or indirect
contempt. Robosa, et al., therefore, have not improperly brought the indirect contempt charges against the
respondents before the NLRC. Federico S. Robosa, et al. vs. National Labor Relations Commission (First
Division), et al., G.R. No. 176085, February 8, 2012.
NLRC; factual findings. It is a well-entrenched rule that findings of facts of the NLRC, affirming those of the
Labor Arbiter, are accorded respect and due consideration when supported by substantial evidence. The
Supreme Court, however, found that the doctrine of great respect and finality has no application to the case at
bar. The Labor Arbiter dismissed Arnaiz, et al.s complaints on mere technicality. The NLRC, upon appeal,
then came up with three divergent rulings. At first, it remanded the case to the Labor Arbiter. However, in a
subsequent resolution, it decided to resolve the case on the merits by ruling that Arnaiz, et al. were
constructively dismissed. But later on, it again reversed itself in its third and final resolution of the case and
ruled in favor of Julies bakeshop. Therefore, contrary to Reyess claim, the NLRC did not, on any occasion,
affirm any factual findings of the Labor Arbiter. The Court of Appeals is thus correct in reviewing the entire

records of the case to determine which findings of the NLRC is sound and in accordance with law.
Besides, the Court of Appeals may still resolve factual issues by express mandate of the law despite the
respect given to administrative findings of fact. Julies Bakeshop and/or Edgar Reyes vs. Henry Arnaiz, et
al., G.R. No. 173882, February 15, 2012.
Probationary employee; valid cause for dismissal but without procedural due process; employee entitled to
nominal damages. Section 2, Rule I, Book VI of the Labor Codes Implementing Rules and Regulations
provides: If the termination is brought about by the completion of a contract or phase thereof, or by
failure of an employee to meet the standards of the employer in the case of probationary employment, it
shall be sufficient that a written notice is served the employee within a reasonable time from the effective
date of termination. Dalangin was hired by Canadian Opportunities as Immigration and Legal Manager,
subject to a probationary period of six months. One month after hiring Dalangin, the company terminated
his employment, declaring him unfit and unqualified to continue as Immigration and Legal Manager,
for reasons which included obstinacy and utter disregard of company policies. Propensity to take prolonged
and extended lunch breaks, shows no interest in familiarizing oneself with the policies and objectives, lack
of concern for the companys interest despite having just been employed in the company (Declined to
attend company sponsored activities, seminars intended to familiarize company employees with
Management objectives and enhancement of company interest and objectives), lack of enthusiasm toward
work, and lack of interest in fostering relationship with his co-employees. The company contends that it
complied with the rule on procedural due process when it asked Dalangin, through a Memorandum, to
explain why he could not attend the seminar. When he failed to submit his explanation, the company served
him a notice the following day terminating his employment. According to the Supreme Court, the notice to
Dalangin was not served within a reasonable time from the effective date of his termination as required by
the rules since he was dismissed on the very day the notice was given to him. However, because of the
existence of a valid cause for termination, the Supreme Court did not invalidate his dismissal but penalized
the company for its non-compliance with the notice requirement, and ordered the company to pay an
indemnity, in the form of nominal damages amounting to P10,000. Canadian Opportunities Unlimited, Inc.
vs. Bart Q. Dalangin, Jr., G.R. No. 172223, February 6, 2012.
Probationary employee; valid dismissal even before 6 months. The essence of a probationary period of
employment fundamentally lies in the purpose or objective of both the employer and the employee during
the period. While the employer observes the fitness, propriety and efficiency of a probationer to ascertain
whether he is qualified for permanent employment, the latter seeks to prove to the former that he has the
qualifications to meet the reasonable standards for permanent employment. The trial period or the length
of time the probationary employee remains on probation depends on the parties agreement, but it shall not
exceed six (6) months under Article 281 of the Labor Code. The Supreme Court found substantial evidence
indicating that the company was justified in terminating Dalangins probationary employment. Dalangin
admitted in compulsory arbitration that the proximate cause for his dismissal was his refusal to attend the
companys Values Formation Seminar scheduled for October 27, 2001, a Saturday. He refused to attend
the seminar after he learned that it had no relation to his duties, as he claimed, and that he had to leave at
2:00 p.m. because he wanted to be with his family in the province. When the Chief Operations Officer,
insisted that he attend the seminar to encourage his co-employees to attend, he stood pat on not attending,
arguing that marked differences exist between their positions and duties, and insinuating that he did not
want to join the other employees. He also questioned the scheduled 2:00 p.m. seminars on Saturdays as
they were not supposed to be doing a company activity beyond 2:00 p.m. He considers 2:00 p.m. as the
close of working hours on Saturdays; thus, holding them beyond 2:00 p.m. would be in violation of the law.
This incident reveals Dalangins lack of interest in establishing a good working relationship with his coemployees, especially the rank and file; he did not want to join them because of his view that the seminar
was not relevant to his position and duties. It also betrays his arrogant and condescending attitude towards
his co-employees, and a lack of support for the company objective. Dalangin also exhibited negative
working habits, particularly with respect to the one hour lunch break policy of the company and the
observance of the companys working hours. Dalangin would take prolonged lunch breaks or would go out

of the office without leave of the company and call the personnel manager later only to say that he would
be unable to return to the office because of some personal matters he needs to attend to. Canadian
Opportunities Unlimited, Inc. vs. Bart Q. Dalangin, Jr., G.R. No. 172223, February 6, 2012.
Procedural rules; liberal application. Ordinarily, rules of procedure are strictly enforced by courts in order to
impart stability in the legal system. However, in not a few instances, the Supreme Court has relaxed the rigid
application of the rules of procedure to afford the parties the opportunity to fully ventilate their cases on the
merits. This is in line with the time honored principle that cases should be decided only after giving all the
parties the chance to argue their causes and defenses. In that way, the ends of justice would be better served.
For indeed, the general objective of procedure is to facilitate the application of justice to the rival claims of
contending parties, bearing always in mind that procedure is not to hinder but to promote the administration
of justice. In Ong Lim Sing, Jr. v. FEB Leasing and Finance Corporation (G.R. No. 168115, June 8, 2007), the
Supreme Court ruled:
Courts have the prerogative to relax procedural rules of even the most mandatory character, mindful of the
duty to reconcile both the need to speedily put an end to litigation and the parties right to due process. In
numerous cases, this Court has allowed liberal construction of the rules when to do so would serve the
demands of substantial justice and equity. x x x
Indeed the prevailing trend is to accord party litigants the amplest opportunity for the proper and just
determination of their causes, free from the constraints of needless technicalities. In this case, besides the fact
that a denial of the recourse to the Court of Appeals would serve more to perpetuate an injustice and violation
of Tengs rights under our labor laws, the Supreme Court found that as correctly held by the Court of Appeals,
no intent to delay the administration of justice could be attributed to Teng. The Court of Appeals therefore
did not commit reversible error in excusing Tengs one-day delay in filing his motion for reconsideration and
in giving due course to his petition for certiorari. Negros Slashers, Inc., Rodolfo C. Alvarez and Vicente Tan
vs. Alvin L. Teng, G.R. No. 187122, February 22, 2012.
Reinstatement; backwages. Employees who are illegally dismissed are entitled to full backwages, inclusive of
allowances and other benefits or their monetary equivalent, computed from the time their actual compensation
was withheld from them up to the time of their actual reinstatement. But if reinstatement is no longer
possible, the backwages shall be computed from the time of their illegal termination up to the finality of the
decision. Thus, when there is an order of reinstatement, the computation of backwages shall be reckoned from
the time of illegal dismissal up to the time that the employee is actually reinstated to his former position.
Pursuant to the order of reinstatement rendered by the Labor Arbiter, the Bank of Lubao sent Manabat a letter
requiring him to report back to work on May 4, 2007. Notwithstanding the said letter, Manabat opted not to
report for work. Thus, it is but fair that the backwages to be awarded to Manabat should be computed from
the time that he was illegally dismissed until the time when he was required to report for work, i.e. from
September 1, 2005 until May 4, 2007. Bank of Lubao, Inc. vs. Rommel J. Manabat, et al., G.R. No.
188722, February 1, 2012.
Reinstatement; doctrine of strained relations; when applicable. Under the law and prevailing jurisprudence, an
illegally dismissed employee is entitled to reinstatement as a matter of right. However, if reinstatement would
only exacerbate the tension and strained relations between the parties, or where the relationship between the
employer and the employee has been unduly strained by reason of their irreconcilable differences,
particularly where the illegally dismissed employee held a managerial or key position in the company, it
would be more prudent to order payment of separation pay instead of reinstatement. Under the doctrine of
strained relations, the payment of separation pay is considered an acceptable alternative to reinstatement
when the latter option is no longer desirable or viable. On one hand, such payment liberates the employee
from what could be a highly oppressive work environment. On the other hand, it releases the employer from
the grossly unpalatable obligation of maintaining in its employ a worker it could no longer trust. In such

cases, it should be proved that the employee concerned occupies a position where he enjoys the trust and
confidence of his employer; and that it is likely that if reinstated, an atmosphere of antipathy and
antagonism may be generated as to adversely affect the efficiency and productivity of the employee
concerned. In the present case, the Supreme Court found that the relations between the parties had been
already strained thereby justifying the grant of separation pay in lieu of reinstatement in favor of Manabat.
Manabats reinstatement to his former position would only serve to intensify the atmosphere of antipathy
and antagonism between the parties. Undoubtedly, Bank of Lubaos filing of various criminal complaints
against Manabat for qualified theft and the subsequent filing by the latter of the complaint for illegal
dismissal against the former, taken together with the pendency of the instant case for more than six years,
had caused strained relations between the parties. Considering that Manabats former position as bank
encoder involves the handling of accounts of the depositors of the Bank of Lubao, it would not be equitable
on the part of the Bank of Lubao to be ordered to maintain the former in its employ since it may only
inspire vindictiveness on the part of Manabat. Also, the refusal of Manabat to return to work is in itself an
indication of the existence of strained relations between him and the petitioner. Bank of Lubao, Inc.
vs. Rommel J. Manabat, et al., G.R. No. 188722, February 1, 2012.

Contract; novation. Novation is the extinguishment of an obligation by the substitution or change of the
obligation by a subsequent one which extinguishes or modifies the first, either by changing the object or
principal conditions, or, by substituting another in place of the debtor, or by subrogating a third person in the
rights of the creditor. In order for novation to take place, the concurrence of the following requisites is
indispensable: (1) There must be a previous valid obligation; (2) There must be an agreement of the parties
concerned to a new contract; (3) There must be the extinguishment of the old contract; and (4) There must be
the validity of the new contract. The parties impliedly extinguished the first contract by agreeing to enter into
the second contract. The records also reveal that the 2nd contract extinguished the first contract by changing
its object or principal. These contracts were for overseas employment aboard different vessels. The first
contract was for employment aboard the MV Stolt Aspiration while the second contract involved working
in another vessel, the MV Stolt Pride. Petitioners and Madequillo, Jr. accepted the terms and conditions of
the second contract. Undoubtedly, he was still employed under the first contract when he negotiated with
petitioners on the second contract. Since Madequillo was still employed under the first contract when he
negotiated with petitioners on the second contract, novation became an unavoidable conclusion. Stolt-Nielsen
Transportation Group, Inc., et al. vs. Sulpecio Modequillo, G.R. No. 177498, January 18, 2011.

Seafarers; employment contract; perfection stage vs. commencement stage. An employment contract, like
any other contract, is perfected at the moment (1) the parties come to agree upon its terms; and (2) concur
in the essential elements thereof: (a) consent of the contracting parties, (b) object certain which is the
subject matter of the contract, and (c) cause of the obligation. The object of the contract was the rendition
of service by Fantonial on board the vessel for which service he would be paid the salary agreed upon. In
this case, the employment contract was perfected on January 15, 2000 when it was signed by the parties
who entered into the contract in behalf of their principal. However, the employment relationship never
commenced since Fantonial was not allowed to leave on January 17, 2000 and go on board the vessel M/V
AUK in Germany on the ground that he was not yet declared fit to work on the day of his scheduled
departure. But, even if no employer-employee relationship commenced, there was, contemporaneous with
the perfection of the employment contract, the birth of certain rights and obligations, the breach of which
may give rise to a cause of action against the erring party. Bright Maritime Corporation (BMC) / Desiree P.
Tenorio vs. Ricardo B. Fantonial, G.R. No. 165935, February 8, 2012.

Employee; money claims. On the issue of how the seafarer will be compensated by reason of the
unreasonable non-deployment, the Supreme Court decreed the application of Section 10 of Republic Act No.
8042 (Migrant Workers Act) which provides for money claims by reason of a contract involving Filipino
workers for overseas deployment. The law provides:

Here are selected January 2012 rulings of the Supreme Court of the Philippines on labor law and
procedure:
Certiorari; effect of receipt of award. The prevailing partys receipt of the full amount of the judgment
award pursuant to a writ of execution issued by the labor arbiter does not close or terminate the case if such
receipt is qualified as without prejudice to the outcome of the petition for certiorari pending with the Court
of Appeals. Timoteo H. Sarona vs. National Labor Relations Commission, Royale Security Agency, et al.,
G.R. No. 185280, January 18, 2011.
Constructive dismissal; change in position. Constructive dismissal exists where there is cessation of work
because continued employment is rendered impossible, unreasonable or unlikely, as an offer involving a
demotion in rank or a diminution in pay and other benefits. Aptly called a dismissal in disguise of an act
amounting to dismissal but made to appear as if it were not,constructive dismissal may, likewise, exist if an
act of clear discrimination, insensibility, or disdain by an employer becomes so unbearable on the part of
the employee that it could foreclose any choice by him except to forego his continued employment.In cases
of a transfer of an employee, the rule is settled that the employer is charged with the burden of proving that
its conduct and action are for valid and legitimate grounds such as genuine business necessity and that the
transfer is not unreasonable, inconvenient or prejudicial to the employee. If the employer cannot overcome
this burden of proof, the employees transfer shall be tantamount to unlawful constructive dismissal.
Jonathan V. Morales vs. Harbour Centre Port Terminal, Inc., G.R. No. 174208, January 25, 2011.

Sec. 10. Money Claims. Notwithstanding any provision of law to the contrary, the Labor Arbiters of the
National Labor Relations Commission (NLRC) shall have the original and exclusive jurisdiction to hear and
decide, within ninety (90) calendar days after the filing of the complaint, the claims arising out of an
employer-employee relationship or by virtue of any law or contract involving Filipino workers for overseas
deployment including claims for actual, moral, exemplary and other forms of damages. x x x (Underscoring
supplied)
Following the law, the claim is still cognizable by the labor arbiters of the NLRC under the second phrase of
the provision. Applying the rules on actual damages, Article 2199 of the New Civil Code provides that one is
entitled to an adequate compensation only for such pecuniary loss suffered by him as he has duly proved.
Stolt-Nielsen Transportation Group, Inc., et al. vs. Sulpecio Modequillo, G.R. No. 177498, January 18, 2011.
Employee; preventive suspension; penalty of suspension. Preventive suspension is a disciplinary measure
resorted to by the employer pending investigation of an alleged malfeasance or misfeasance committed by an
employee. The employer temporarily bars the employee from working if his continued employment poses a
serious and imminent threat to the life or property of the employer or of his co-workers. On the other hand,
the penalty of suspension refers to the disciplinary action imposed on the employee after an official
investigation or administrative hearing is conducted. The employer exercises its right to discipline erring
employees pursuant to company rules and regulations. In the present case, Henry Delada filed a grievance
against Manila Pavilion Hotel (MPH). Failing to reach a settlement, Delada lodged a Complaint before the
National Conciliation and Mediation Board, which was eventually referred to a panel of voluntary arbitrators
(PVA). Meanwhile, citing security and safety reasons, MPH placed Delada on a 30-day preventive suspension
and proceeded with the administrative case against him. MPH eventually found Delada liable for
insubordination and willful disobedience of the transfer order and imposed upon him a penalty of 90-day
suspension. The PVA ruled that there was no legal and factual basis to support MPHs imposition of
preventive suspension on Delada, and that the penalty of 90-day suspension imposed by MPH against Delada
went beyond the 30-day period of preventive suspension prescribed by the Implementing Rules of the Labor
Code. PVA also ruled that MPH lost its authority to continue with the administrative proceedings for
insubordination and willful disobedience of the transfer order and to impose the penalty of 90-day suspension
on Delada. According to the panel, it acquired exclusive jurisdiction over the issue when the parties submitted

the aforementioned issues before it. The Supreme Court held that MPH did not lose its authority to
discipline, and that MPH had the authority to continue with the administrative proceedings for
insubordination and willful disobedience against Delada and to impose on him the penalty of suspension.
Manila Pavilion Hotel, etc. vs. Henry Delada, G.R. No. 189947, January 25, 2011.
Employee; release and quitclaim. While the law looks with disfavor upon releases and quitclaims by
employees who are inveigled or pressured into signing them by unscrupulous employers seeking to evade
their legal responsibilities, a legitimate waiver representing a voluntary settlement of a laborers claims
should be respected by the courts as the law between the parties. Considering the petitioners claim of fraud
and bad faith against Philcomsat to be unsubstantiated, the Supreme Court found the quitclaim in dispute to
be a legitimate waiver. The Court of Appeals and the National Labor Relations Commission were
unanimous in holding that the petitioner voluntarily executed the subject quitclaim. The Supreme Court is
not a trier of facts, and this doctrine applies with greater force in labor cases. Factual questions are for the
labor tribunals to resolve and whether the petitioner voluntarily executed the subject quitclaim is a question
of fact. In this case, the factual issues have already been determined by the National Labor Relations
Commission and its findings were affirmed by the Court of Appeals. Judicial review by the Supreme Court
does not extend to a reevaluation of the sufficiency of the evidence upon which the proper labor tribunal
has based its determination. Hypte R. Aujero vs. Philippine Communications Satellite Corporation, G.R.
No. 193484, January 18, 2011.
Employee benefit; holiday pay, service incentive leave pay and proportionate 13 th month pay. Under the
Labor Code, the employee is entitled to his regular rate on holidays even if he does not work. Likewise,
express provision of the law entitles him to service incentive leave benefit if he has rendered service for
more than a year already. Furthermore, under Presidential Decree No. 851, the employee should be paid
his 13th month pay. The employer has the burden of proving that it has paid these benefits to its employees.
AbdulJuahid R. Pigcaulan vs. Security and Credit Investigation, Inc. and/or Rene Amby Reyes, G.R. No.
173648, January 16, 2011.
Employee benefit; overtime pay. In the absence of any concrete proof that additional service beyond the
normal working hours and days had been rendered, overtime pay cannot be granted. Handwritten itemized
computations are self-serving, unreliable and unsubstantiated evidence to sustain the grant of salary
differentials, particularly overtime pay. Unsigned and unauthenticated as they are, there is no way of
verifying the truth of the handwritten entries stated therein. AbdulJuahid R. Pigcaulan vs. Security and
Credit Investigation, Inc. and/or Rene Amby Reyes, G.R. No. 173648, January 16, 2011.
Employee benefit; permanent disability. The Supreme Court reiterated Remigio v. National Labor
Relations Commission, G.R. No. 159887, April 12, 2006, which stated that: Thus, the Court has applied
the Labor Code concept of permanent total disability to the case of seafarers. In Philippine Transmarine
Carriers v. NLRC, G.R. No. 123891, February 28, 2001, seaman Carlos Nietes was found to be suffering
from congestive heart failure and cardiomyopathy and was declared as unfit to work by the companyaccredited physician. The Court affirmed the award of disability benefits to the seaman, citing ECC v.
Sanico, G.R. No. 134028, December 17, 1999, GSIS v. CA, G.R. No. 117572, January 29, 1998, GSIS v.
CA, G.R. No. 116015, July 31, 1996 and Bejerano v. ECC, G. R. No. 84777, January 30, 1992, that
disability should not be understood more on its medical significance but on the loss of earning capacity.
Permanent total disability means disablement of an employee to earn wages in the same kind of work, or
work of similar nature that [he] was trained for or accustomed to perform, or any kind of work which a
person of [his] mentality and attainment could do. It does not mean absolute helplessness. It likewise cited
Bejerano to reiterate that in a disability compensation, it is not the injury which is compensated, but rather
it is the incapacity to work resulting in the impairment of ones earning capacity. The Court also cited the
more recent case of Crystal Shipping, Inc. v. Natividad, G.R. No. 154798, October 20, 2005, applying the
same principles, and GSIS v. Cadiz, G.R. No. 145093, July 8, 2003, and Ijares v. CA, G.R. No. 105854,

August 26, 1999, which declared that permanent disability is the inability of a worker to perform his job for
more than 120 days, regardless of whether or not he loses the use of any part of his body. Magsaysay
Maritime Corporation, et al. vs. Oberto S. Lobusta, G.R. No. 177578, January 25, 2011.
Employee dismissal; due process. Notice and hearing constitute the essential elements of due process in the
dismissal of employees. The employer must furnish the employee with two written notices before termination
of employment can be legally effected. The first apprises the employee of the particular acts or omissions for
which dismissal is sought. The second informs the employee of the employers decision to dismiss him. With
regard to the requirement of a hearing, the essence of due process lies simply in an opportunity to be heard,
and not that an actual hearing should always and indispensably be held. These requirements were satisfied in
this case. The first required notice was dated November 3, 2003, sufficiently notifying Yabut of the particular
acts being imputed against him, as well as the applicable law and the company rules considered to have been
violated. On November 17, 2003, Meralco conducted a hearing on the charges against the petitioner where he
was accorded the right to air his side and present his defenses on the charges against him. Significantly, a
high-ranking officer of the supervisory union of Meralco assisted him during the said investigation. His sworn
statement that forms part of the case records even listed the matters that were raised during the investigation.
Finally, Meralco served a notice of dismissal dated February 4, 2004 upon Yabut. Such notice notified the
latter of the companys decision to dismiss him from employment on the grounds clearly discussed
therein.Norman Yabut vs. Manila Electric Company and Manuel M. Lopez, G.R. No. 190436, January 16,
2011.
Employee dismissal; due process. Even if there is a just or valid cause for terminating an employee, it is
necessary to comply with the requirements of due process prior to the termination. Lolita S. Concepcion vs.
Minex Import Corporation/Minerama Corporation, et al., G.R. No. 153569, January 24, 2011.
Employee dismissal; gross negligence; habitual neglect. Gross negligence has been defined as the want of
care in the performance of ones duties and habitual neglect has been defined as repeated failure to perform
ones duties for a period of time, depending upon the circumstances. These are not overly technical terms,
which, in the first place, are expressly sanctioned by the Labor Code of the Philippines, to wit: ART. 282.
Termination by employer. An employer may terminate an employment for any of the following causes:
[xxx](b) Gross and habitual neglect by the employee of his duties; [xxx] Diosdado Bitara was dismissed from
service due to habitual tardiness and absenteeism, and for having continued disregarding attendance policies
despite his undertaking to report on time. His weekly time record for the first quarter of the year 2000
revealed that he came late 19 times out of the 47 times he reported for work. He also incurred 19 absences out
of the 66 working days during the quarter. His absences without prior notice and approval from March 11-16,
2000 were considered to be the most serious infraction of all because of its adverse effect on business
operations. The Supreme Court held that even in the absence of a written company rule defining gross and
habitual neglect of duties, Bitaras omissions qualify as such warranting his dismissal from the service.
Mansion Printing Center and Clement Cheng vs. Diosdado Bitara, Jr., G.R. No. 168120, January 25, 2011.
Employee dismissal; just cause; loss of confidence. To dismiss an employee, the law requires the existence of
a just and valid cause. Article 282 of the Labor Code enumerates the just causes for termination by the
employer: (a) serious misconduct or willful disobedience by the employee of the lawful orders of his
employer or the latters representative in connection with the employees work; (b) gross and habitual neglect
by the employee of his duties; (c) fraud or willful breach by the employee of the trust reposed in him by his
employer or his duly authorized representative; (d) commission of a crime or offense by the employee against
the person of his employer or any immediate member of his family or his duly authorized representative; and
(e) other causes analogous to the foregoing.
It is unfair to require an employer to first be morally certain of the guilt of the employee by awaiting a
conviction before terminating him when there is already sufficient showing of the wrongdoing. Requiring that

certainty may prove too late for the employer, whose loss may potentially be beyond repair. In the present
case, no less than the DOJ Secretary found probable cause for qualified theft against Concepcion. That
finding was enough to justify her termination for loss of confidence. Lolita S. Concepcion vs. Minex Import
Corporation/Minerama Corporation, et al., G.R. No. 153569, January 24, 2011.
Employee dismissal; loss of trust and confidence. For loss of trust and confidence to be a valid ground for
dismissal, it must be based on a willful breach of trust and founded on clearly established facts. A breach is
willful if it is done intentionally, knowingly and purposely, without justifiable excuse, as distinguished
from an act done carelessly, thoughtlessly, heedlessly or inadvertently. In addition, loss of trust and
confidence must rest on substantial grounds and not on the employers arbitrariness, whims, caprices or
suspicion. Manila Electric Company (Meralco) vs. Ma. Luisa Beltran, G.R. No. 173774, January 30, 2011.
Employee dismissal; misconduct. Article 282(a) provides that an employer may terminate an employment
because of an employees serious misconduct, a cause that was present in this case in view of the
petitioners violation of his employers code of conduct. Misconduct is defined as the transgression of
some established and definite rule of action, a forbidden act, a dereliction of duty, willful in character, and
implies wrongful intent and not mere error in judgment. For serious misconduct to justify dismissal, the
following requisites must be present: (a) it must be serious; (b) it must relate to the performance of the
employees duties; and (c) it must show that the employee has become unfit to continue working for the
employer. Installation of shunting wires is without doubt a serious wrong as it demonstrates an act that is
willful or deliberate, pursued solely to wrongfully obtain electric power through unlawful means. The act
clearly relates to the petitioners performance of his duties given his position as branch field representative
who is equipped with knowledge on meter operations, and who has the duty to test electric meters and
handle customers violations of contract. Instead of protecting the companys interest, the petitioner himself
used his knowledge to illegally obtain electric power from Meralco. His involvement in this incident deems
him no longer fit to continue performing his functions for respondent-company. Norman Yabut vs. Manila
Electric Company and Manuel M. Lopez, G.R. No. 190436, January 16, 2011.
Employer-employee relationship; commencement. The POEA Standard Employment Contract provides
that employment shall commence upon the actual departure of the seafarer from the airport or seaport in
the port of hire. Distinction must be made between the perfection of the employment contract and the
commencement of the employer-employee relationship. The perfection of the contract, which in this case
coincided with the date of execution thereof, occurred when petitioner and respondent agreed on the object
and the cause, as well as the rest of the terms and conditions therein. The commencement of the employeremployee relationship would have taken place had petitioner been actually deployed from the point of hire.
Stolt-Nielsen Transportation Group, Inc., et al. vs. Sulpecio Modequillo, G.R. No. 177498, January 18,
2011.
Judgment; finality. The petition was brought only on behalf of Pigcaulan. The CA Decision has already
become final and executory as to Canoy since he did not appeal from it. Canoy cannot now simply
incorporate in his affidavit a verification of the contents and allegations of the petition as he is not one of
the petitioners therein. AbdulJuahid R. Pigcaulan vs. Security and Credit Investigation, Inc. and/or Rene
Amby Reyes, G.R. No. 173648, January 16, 2011.
Judgment; res judicata. The doctrine of res judicata lays down two main rules which may be stated as
follows: (1) The judgment or decree of a court of competent jurisdiction on the merits concludes the parties
and their privies to the litigation and constitutes a bar to a new action or suit involving the same cause of
action either before the same or any other tribunal; and (2) Any right, fact, or matter in issue directly
adjudicated or necessarily involved in the determination of an action before a competent court in which a
judgment or decree is rendered on the merits is conclusively settled by the judgment therein and cannot
again be litigated between the parties and their privies whether the claim or demand, purpose, or subject

matter of the two suits is the same or not. These two main rules mark the distinction between the principles
governing the two typical cases in which a judgment may operate as evidence. In speaking of these cases, the
first general rule, and which corresponds to paragraph (b) of Section 47 of Rule 39 of the Rules of Court is
referred to as bar by former judgment while the second general rule, which is embodied in paragraph (c) of
the same section, is known as conclusiveness of judgment. The present labor case is closely related to the
civil case that was decided with finality. The acts and omissions alleged by the Bank in the civil case as basis
of its counterclaim against Mauricio are the very same acts and omissions which were used as grounds to
terminate his employment. Considering that it has already been conclusively determined with finality in the
civil case that the questioned acts of Mauricio were well within his discretion as branch manager and
approving officer of the Bank, and the same were sanctioned by the Head Office, the Supreme Court found
that the Court of Appeals did not err in holding that there was no valid or just cause for the Bank to terminate
Mauricios employment. Prudential Bank (now Bank of the Philippine Islands) vs. Antonio S.A. Mauricio,
substituted by his legal heirs Maria Fe, Voltaire, Antonio, Jr., Antonio, Earl John, and Francisco Roberto all
surnamed Mauricio, G.R. No. 183350, January 18, 2011.
Jurisdiction; voluntary arbitrators. In Sime Darby Pilipinas, Inc. v. Deputy Administrator Magsalin, G.R. No.
90426, December 15, 1989, the Supreme Court ruled that the voluntary arbitrator had plenary jurisdiction and
authority to interpret the agreement to arbitrate and to determine the scope of his own authority subject only,
in a proper case, to the certiorari jurisdiction of this Court. It was also held in that case that the failure of the
parties to specifically limit the issues to that which was stated allowed the arbitrator to assume jurisdiction
over the related issue. In Ludo & Luym Corporation v. Saornido, G.R. No. 140960, January 20, 2003, the
Supreme Court recognized that voluntary arbitrators are generally expected to decide only those questions
expressly delineated by the submission agreement; that, nevertheless, they can assume that they have the
necessary power to make a final settlement on the related issues, since arbitration is the final resort for the
adjudication of disputes. Thus, the Supreme Court ruled that even if the specific issue brought before the
arbitrators merely mentioned the question of whether an employee was discharged for just cause, they could
reasonably assume that their powers extended beyond the determination thereof to include the power to
reinstate the employee or to grant back wages. In the same vein, if the specific issue brought before the
arbitrators referred to the date of regularization of the employee, law and jurisprudence gave them enough
leeway as well as adequate prerogative to determine the entitlement of the employees to higher benefits in
accordance with the finding of regularization. Indeed, to require the parties to file another action for payment
of those benefits would certainly undermine labor proceedings and contravene the constitutional mandate
providing full protection to labor and speedy labor justice. Manila Pavilion Hotel, etc. vs. Henry Delada,
G.R. No. 189947, January 25, 2011.
Procedural rules; liberal application; when waived. Procedural rules may be waived or dispensed with in
absolutely meritorious cases. The Supreme Court, in past cases, has adhered to the strict implementation of
the rules and considered them inviolable when it is shown that the patent lack of merit of the appeals render
liberal interpretation pointless and naught. The contrary obtains in this case as Philcomsats case is not
entirely unmeritorious. Specifically, Philcomsat alleged that the petitioners execution of the subject quitclaim
was voluntary despite his claim that he did not do so. Philcomsat likewise argued that the petitioners
educational attainment and the position he occupied in Philcomsats hierarchy militate against his claim that
he was pressured or coerced into signing the quitclaim. The emerging trend in our jurisprudence is to afford
every party-litigant the amplest opportunity for the proper and just determination of his cause free from the
constraints of technicalities. Far from having gravely abused its discretion, the NLRC correctly prioritized
substantial justice over the rigid and stringent application of procedural rules. In the present case, the Supreme
Court held that the CA was correct in not finding grave abuse of discretion in the NLRCs decision to give
due course to Philcomsats appeal despite its being belatedly filed. Hypte R. Aujero vs. Philippine
Communications Satellite Corporation, G.R. No. 193484, January 18, 2011.
Public officers; reassignment; constructive dismissal. While a temporary transfer or assignment of personnel
is permissible even without the employees prior consent, it cannot be done when the transfer is a preliminary

step toward his removal, or a scheme to lure him away from his permanent position, or when it is designed
to indirectly terminate his service, or force his resignation. Such a transfer would in effect circumvent the
provision which safeguards the tenure of office of those who are in the Civil Service. Significantly, Section
6, Rule III of CSC Memorandum Circular No. 40, series of 1998, defines constructive dismissal as a
situation when an employee quits his work because of the agency heads unreasonable, humiliating, or
demeaning actuations which render continued work impossible. Hence, the employee is deemed to have
been illegally dismissed. This may occur although there is no diminution or reduction of salary of the
employee. It may be a transfer from one position of dignity to a more servile or menial job. Republic of the
Phil., represented by the Civil Service Commission vs. Minerva M.P. Pacheco, G.R. No. 178021, January
31, 2011.
Reinstatement; not possible; backwages. In case separation pay is awarded and reinstatement is no longer
feasible, backwages shall be computed from the time of illegal dismissal up to the finality of the decision
should separation pay not be paid in the meantime. It is the employees actual receipt of the full amount of
his separation pay that will effectively terminate the employment of an illegally dismissed employee.
Otherwise, the employer-employee relationship subsists and the illegally dismissed employee is entitled to
backwages, taking into account the increases and other benefits, including the 13th month pay, that were
received by his co-employees who are not dismissed. It is the obligation of the employer to pay an illegally
dismissed employee or worker the whole amount of the salaries or wages, plus all other benefits and
bonuses and general increases, to which he would have been normally entitled had he not been dismissed
and had not stopped working. Timoteo H. Sarona vs. National Labor Relations Commission, Royale
Security Agency, et al., G.R. No. 185280, January 18, 2011.
Reorganization; management prerogative. Admittedly, the right of employees to security of tenure does not
give them vested rights to their positions to the extent of depriving management of its prerogative to
change their assignments or to transfer them. By management prerogative is meant the right of an employer
to regulate all aspects of employment, such as the freedom to prescribe work assignments, working
methods, processes to be followed, regulation regarding transfer of employees, supervision of their work,
lay-off and discipline, and dismissal and recall of workers. Although jurisprudence recognizes said
management prerogative, it has been ruled that the exercise thereof, while ordinarily not interfered with, is
not absolute and is subject to limitations imposed by law, collective bargaining agreement, and general
principles of fair play and justice. Thus, an employer may transfer or assign employees from one office or
area of operation to another, provided there is no demotion in rank or diminution of salary, benefits, and
other privileges, and the action is not motivated by discrimination, made in bad faith, or effected as a form
of punishment or demotion without sufficient cause. Indeed, having the right should not be confused with
the manner in which that right is exercised. Jonathan V. Morales was hired by Harbour Centre Port
Terminal, Inc. (HCPTI) as an Accountant and Acting Finance Officer, with a monthly salary of P18,000.00.
Regularized on November 17, 2000, Morales was promoted to Division Manager of the Accounting
Department, for which he was compensated a monthly salary of P33,700.00, plus allowances starting July
1, 2002. Subsequent to HCPTIs transfer to its new offices at Vitas, Tondo, Manila on January 2, 2003,
Morales received an inter-office memorandum dated March 27, 2003, reassigning him to Operations Cost
Accounting, tasked with the duty of monitoring and evaluating all consumables requests, gears and
equipment related to the corporations operations and of interacting with its sub-contractor, Bulk Fleet
Marine Corporation. The memorandum was issued by HCPTIs new Administration Manager, duly noted
by its new Vice President for Administration and Finance, and approved by its President and Chief
Executive Officer. Morales protested that his reassignment was a clear demotion since the position to
which he was transferred was not even included in HCPTIs plantilla. In response to Morales grievance
that he had been effectively placed on floating status, an inter-office memorandum was issued on April 4,
2003 to the effect that transfer of employees is a management prerogative and that HCPTI had the right
and responsibility to find the perfect balance between the skills and abilities of employees to the needs of
the business. However, the Supreme Court found that HCPTI did not even bother to show that it had
implemented a corporate reorganization and/or approved a new plantilla of positions which included the

one to which Morales was being transferred. Thus, the Court reinstated the NLRCs July 29, 2005 Decision
which found Morales reassignment to be a clear demotion despite lack of showing of diminution of salaries
and benefits. Jonathan V. Morales vs. Harbour Centre Port Terminal, Inc., G.R. No. 174208, January 25,
2011.
Rule 45; question of law. As a general rule, the Supreme Court is not a trier of facts and a petition for review
on certiorari under Rule 45 of the Rules of Court must exclusively raise questions of law. Moreover, if factual
findings of the National Labor Relations Commission and the Labor Arbiter have been affirmed by the Court
of Appeals, the Supreme Court accords them the respect and finality they deserve. It is well-settled and oftrepeated that findings of fact of administrative agencies and quasi-judicial bodies, which have acquired
expertise because their jurisdiction is confined to specific matters, are generally accorded not only respect, but
finality when affirmed by the Court of Appeals.Nevertheless, the Supreme Court will not hesitate to deviate
from what are clearly procedural guidelines and disturb and strike down the findings of the Court of Appeals
and those of the labor tribunals if there is a showing that they are unsupported by the evidence on record or
there was a patent misappreciation of facts. Indeed, that the impugned decision of the Court of Appeals is
consistent with the findings of the labor tribunals does not per se conclusively demonstrate the correctness
thereof. By way of exception to the general rule, the Supreme Court will scrutinize the facts if only to rectify
the prejudice and injustice resulting from an incorrect assessment of the evidence presented. Timoteo H.
Sarona vs. National Labor Relations Commission, Royale Security Agency, et al., G.R. No. 185280, January
18, 2011.
Here are selected November 2011 rulings of the Supreme Court of the Philippines on labor law and
procedure:
Award of attorneys fees; concepts. There are two commonly accepted concepts of attorneys fees the
ordinary and extraordinary. In its ordinary concept, an attorneys fee is the reasonable compensation paid to a
lawyer by his client for the legal services the former renders; compensation is paid for the cost and/or results
of legal services per agreement or as may be assessed. In its extraordinary concept, attorneys fees are
deemed indemnity for damages ordered by the court to be paid by the losing party to the winning party. This
is payable not to the lawyer but to the client, unless the client and his lawyer have agreed that the award shall
accrue to the lawyer as additional or part of his compensation. Article 111 of the Labor Code, as amended,
contemplates the extraordinary concept of attorneys fees. Although an express finding of facts and law is
still necessary to prove the merit of the award, there need not be any showing that the employer acted
maliciously or in bad faith when it withheld the wages. Thus the SC concluded that the CA erred in ruling
that a finding of the employers malice or bad faith in withholding wages must precede an award of attorneys
fees under Article 111 of the Labor Code. To reiterate, a plain showing that the lawful wages were not paid
without justification is sufficient. Kaisahan at Kapatiran ng mga Manggagawa at Kawani sa MWC-East
Zone Union and Eduardo Borela, etc. vs. Manila Water Company, Inc., G.R. No. 174179. November 16, 2011.
Award of attorneys fees; Article 111. One of the issues of this case involved the effect of the Memorandum
of Agreement provision that attorneys fees shall be deducted from the amelioration allowance (AA) and CBA
receivables. In this regard, the CA held that the additional grant of 10% attorneys fees by the NLRC violates
Article 111 of the Labor Code, considering that the MOA between the parties already ensured the payment of
10% attorneys fees deductible from the AA and CBA receivables of the Unions members. In the present
case, the Union bound itself to pay 10% attorneys fees to its counsel under the MOA and also gave up the
attorneys fees awarded to the Unions members in favor of their counsel. The award by the NLRC cannot be
taken to mean an additional grant of attorneys fees, in violation of the ten percent (10%) limit under Article
111 of the Labor Code since it rests on an entirely different legal obligation than the one contracted under the
MOA. Simply stated, the attorneys fees contracted under the MOA do not refer to the amount of attorneys
fees awarded by the NLRC; the MOA provision on attorneys fees does not have any bearing at all to the
attorneys fees awarded by the NLRC under Article 111 of the Labor Code. Based on these considerations, it

is clear that the CA erred in ruling that the LAs award of attorneys fees violated the maximum limit of ten
percent (10%) fixed by Article 111 of the Labor Code. Kaisahan at Kapatiran ng mga Manggagawa at
Kawani sa MWC-East Zone Union and Eduardo Borela, etc. vs. Manila Water Company, Inc., G.R. No.
174179. November 16, 2011.
Disability benefits; compensable. In this case, respondent was diagnosed with Central Retinal Vein
Occlusion of his left eye. Central retinal vein occlusion causes painless vision loss which is usually
sudden, but it can also occur gradually over a period of days to weeks. This condition, despite numerous
medical procedures undertaken, eventually led to a total loss of sight of respondents left eye. Loss of one
bodily function falls within the definition of disability which is essentially loss or impairment of a
physical or mental function resulting from injury or sickness. The disputable presumption that a particular
injury or illness that results in disability, or in some cases death, is work-related stands in the absence of
contrary evidence. In the case at bench, the said presumption was not overturned by the petitioners.
Although, the employer is not the insurer of the health of his employees, he takes them as he finds them
and assumes the risk of liability. Consequently, the Court concurred with the finding of the lower courts
that respondents disability is compensable. Fil-star Maritime Corporation, et al. vs. Hanziel O. Resete,
G.R. No. 192686. November 23, 2011.
Disability benefits; total disability. A total disability does not require that the employee be completely
disabled, or totally paralyzed. What is necessary is that the injury must be such that the employee cannot
pursue his or her usual work and earn from it. On the other hand, a total disability is considered permanent
if it lasts continuously for more than 120 days. What is crucial is whether the employee who suffers from
disability could still perform his work notwithstanding the disability he incurred. Evidently, respondent
was not able to return to his job as a seafarer after his left eye was declared legally blind. Records showed
that the petitioners did not give him a new overseas assignment after his disability. This only proved that
his disability effectively barred his chances to be deployed abroad as an officer of an ocean-going vessel.
Hence, the Supreme Court found it fitting that respondent be entitled to permanent total disability benefits
considering that he would not be able to resume his position as a maritime officer, and the probability that
he would be hired by other maritime employers would be close to impossible. Fil-star Maritime
Corporation, et al. vs. Hanziel O. Resete, G.R. No. 192686. November 23, 2011.
Dismissal; gross and habitual neglect of duties. Gross negligence connotes want of care in the performance
of ones duties, while habitual neglect implies repeated failure to perform ones duties for a period of time,
depending on the circumstances. In the case at bench, Padao was accused of having presented a
fraudulently positive evaluation of the business, credit standing/rating and financial capability of Reynaldo
and Luzvilla Baluma and eleven other loan applicants. Some businesses were eventually found not to exist
at all, while in other transactions, the financial status of the borrowers simply could not support the grant of
loans in the approved amounts. Moreover, Padao over-appraised the collateral of spouses Gardito and Alma
Ajero, and that of spouses Ihaba and Rolly Pango. Padaos repeated failure to discharge his duties as a
credit investigator of the bank amounted to gross and habitual neglect of duties under Article 282 (b) of the
Labor Code. He not only failed to perform what he was employed to do, but also did so repetitively and
habitually, causing millions of pesos in damage to PNB. Thus, PNB acted within the bounds of the law by
meting out the penalty of dismissal, which it deemed appropriate given the circumstances. Philippine
National Bank vs. Dan Padao, G.R. Nos. 180849 and 187143. November 16, 2011.
Dismissed employees; separation pay. Padao is not entitled to financial assistance. The rule regarding
separation pay as a measure of social justice is that it shall be paid only in those instances where the
employee is validly dismissed for causes other than serious misconduct, willful disobedience, gross and
habitual neglect of duty, fraud or willful breach of trust, commission of a crime against the employer or his
family, or those reflecting on his moral character. In this case, Padao was guilty of gross and habitual

neglect of duties. Philippine National Bank vs. Dan Padao, G.R. Nos. 180849 and 187143. November 16,
2011.
Employment of seafarers. The employment of seafarers, including claims for death benefits, is governed by
the contracts they sign every time they are hired or rehired; and as long as the stipulations therein are not
contrary to law, morals, public order or public policy, they have the force of law between the parties. While
the seafarer and his employer are governed by their mutual agreement, the POEA rules and regulations
require that the POEA Standard Employment Contract (POEA-SEC) be integrated in every seafarers
contract. In this case, considering that petitioner executed an overseas employment contract with respondent
company in November 1999, the 1996 POEA-SEC should govern. The 2000 POEA-SEC initially took effect
on June 25, 2000. Thereafter, the Court issued the Temporary Restraining Order (TRO) which was later lifted
on June 5, 2002. Thus, petitioner cannot simply rely on the disputable presumption provision mentioned in
Section 20 (B)(4) of the 2000 POEA-SEC which states that: Those illnesses not listed in Section 32 of this
Contract are disputably presumed as work related. Gilbert Quizora vs. Denholm Crew Management
(Philippines), Inc., G.R. No. 185412. November 16, 2011.
Employment of seafarers; disability compensation. Granting that the provisions of the 2000 POEA-SEC
apply, the disputable presumption provision in Section 20 (B) does not allow petitioner to just sit down and
wait for respondent company to present evidence to overcome the disputable presumption of work-relatedness
of the illness. Contrary to his position, the seafarer still has to substantiate his claim in order to be entitled to
disability compensation. He has to prove that the illness he suffered was work-related and that it must have
existed during the term of his employment contract. For disability to be compensable under Section 20 (B) of
the 2000 POEA-SEC, two elements must concur: (1) the injury or illness must be work-related; and (2) the
work-related injury or illness must have existed during the term of the seafarers employment contract. In
other words, to be entitled to compensation and benefits under this provision, it is not sufficient to establish
that the seafarers illness or injury has rendered him permanently or partially disabled; it must also be shown
that there is a causal connection between the seafarers illness or injury and the work for which he had been
contracted. Unfortunately for petitioner, he failed to prove that his varicose veins arose out of his
employment with respondent company. Gilbert Quizora vs. Denholm Crew Management (Philippines), Inc.,
G.R. No. 185412. November 16, 2011.
Employees compensation; increased risk theory. For a sickness or resulting disability or death to be
compensable, the claimant must prove either (1) that the employees sickness was the result of an
occupational disease listed under Annex A of the Amended Rules on Employees Compensation, or (2) that
the risk of contracting the disease was increased by his working conditions. Under the increased risk theory,
there must be a reasonable proof that the employees working condition increased his risk of contracting the
disease, or that there is a connection between his work and the cause of the disease. In this case, since
Besitans ailment, End Stage Renal Disease secondary to Chronic Glomerulonephritis is not among those
listed under Annex A, of the Amended Rules on Employees Compensation, he needs to show by
substantial evidence that his risk of contracting the disease was increased by his working condition.
Government Service Insurance System vs. Manuel P. Besitan, G.R. No. 178901. November 23, 2011.
Employeess Compensation; proceedings; quantum of proof. Direct and clear evidence, is not necessary to
prove a compensable claim. Strict rules of evidence do not apply as PD No. 626 only requires substantial
evidence. The SC found that Besitan has sufficiently proved that his working condition increased his risk of
contracting Glomerulonephritis, which according to GSIS may be caused by bacterial, viral, and parasitic
infection. When Besitan entered the government service in 1976, he was given a clean bill of health. In
2005, he was diagnosed with End Stage Renal Disease secondary to Chronic Glomerulonephritis. It would
appear therefore that the nature of his work could have increased his risk of contracting the disease. His
frequent travels to remote areas in the country could have exposed him to certain bacterial, viral, and parasitic
infection, which in turn could have caused his disease. Delaying his urination during his long trips to the

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

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