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Labor Review Digest 2017

SOCIAL JUSTICE protection to labor is not meant to be an instrument to

oppress employers.
Security Bank Savings Corp. v.Charles Singson
Gr. No. 214230, Feb 10, 2016, NOTE the ff:
1. Separation pay shall be allowed as measure of social
Singson was hired in 1985 by Premiere Development justice only when the dismissal :
Bank,( now Security Bank Savings Corp.) as messenger.
He held various positions in the company until he was a. Was not for serious misconduct; and
appointed as Acting Assistant Branch Manager and then b. Does not reflect on the moral character of
as Customer Service Operations Head (CSOH) tasked employee or would involve moral turpitude
with the safekeeping of its checkbooks and other bank *moral turpitude- crimes that have an
forms. inherent quality of baseness, vileness or
depravity with respect to a person’s duty to
On July 2008, Singson received a show-cause another or society
memorandum charging him with violation of the bank’s
Code of Conduct when he mishandled various 2. Separation pay is not warranted where the cause of
checkbooks under his custody. The SBSC’sI dismissal is on the ff grounds (Art 296):
nvestigation Committee also found 41 checkbooks were
also missing. Singson readily admitted that he allowed a. Serious misconduct or willful disobedience,
Pinero ( the QC branch manager), to bring out the check b. gross and habitual neglect of duty ,
books from the bank’s premises and other bank forms c. fraud or willful breach of trust or
since Pinero was a senior officer with lengthy tenure and d. commission of a crime against the employer
good reputation. Pending investigation he was or his family
reassigned to Pedro Gil branch and then after to
Sampaloc, Manila branch. Out of dismay for the frequent 3. With respect to analogous cases for termination like
transfers, he tendered his resignation but before the inefficiency, drug use, and others the social justice
effectivity of his resignation the SBSC rejected the exception could be made to apply depending on certain
resignation and terminated him on the ground of habitual considerations such as the length of service of the
neglect of duties. employee, the amount involved whether the act is first
offence, the performance of the employee and the like.
Singson filed complaint for illegal dismissal and claims
for backwages and attorney’s fees. Rulings from LA to Philippine Geothermal, Inc Employees Union vs.
CA found the dismissal valid but allowed as a measure UNOCAL
of social justice the award of separation pay.
Edilberto Alvarez was occupying the position of Steam
Is the award of separation pay, as a measure of social test Operator II at Philippine Geothermal Inc (petitioner)
justice, valid despite the finding of a valid dismissal? when he injured his wrist while he was checking a
geothermal well operated by Petitioner. His right arm
Ruling : was placed in a plaster cast and was confined at the San
Pablo Doctor’s Hospital from May 31, 1989 to June 3,
In this case, NO, SC held that the award of separation 1989.
pay is not warranted in this case. Separation pay is
warranted when the cause of termination is not Petitioner gave privae respondent fifty days and was
attributable to the employee’s fault such as those refered to Dr. Leagogo at petitioner’s expense. After six
enumerated in ART 295 and 296 of the Labor Code. months after the injury, despite the certification from the
doctor that he can go back to work, Alvarez continued to
Singson is a custodian of accountable bank forms and absent himself from work and had used ten days
as such was mandated to strictly comply with the vacation leave, 18 days of sick leabe, 15 days of WCA
monitoring procedure and disposition thereof as a and 4 days emergency leave.
security measure to avoid high risk to the bank.
Singon’s long years of service and clean employment Petitioner wrote Alvarez a letter informing him that he is
record will not justify the award of separation pay since considered AWOL and without pay. He was advised to
his violation (gross and habitual neglect of duty) reflects immediately report to work or further disciplinary action
a regrettable lack of loyalty and worse betrayal of the will be taken. The attached medical certificates from Dr.
company. If an employee’s length of service is to be Garcia, Dr. Pineda,Dr. Relampagos, Dr. Francisco, and
regarded as a justification for moderating the penalty of Dr. Leagogo all indicate that Alvarez is fit to work pero
dismissal, such gesture will actually become a prize for hindi parin siya pumasok.
disloyalty, distorting the meaning of Social Justice and
undermining the efforts of labor to cleanse the ranks of Under petitioner's company rules, employees who incur
undersirableness. The constitutional policy to provide full unauthorized absences of six (6) days or more are

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subject to dismissal. Thus, when Alvarez failed to report the result is an injustice to the employer. Justitia nemini
for work from 8 to 28 February 1990, a total of eighteen neganda est (Justice is to be denied to none).
(18) working days with three (3) days off.
The Petitioner terminated Alvarez. He then filed a CONTAINER LINES/MONETTE CUENCA (BRANCH
complaint for illegal dismissal against petitioner. MANAGER)
G.R. No. 177680, January 13, 2016
Labor Arbiter: Dismissal is valid and justified
Doctrines Involved:
NLRC: Petitioner was ordered to reinstate Edilberto M.
Alvarez to his former position without loss of seniority
rights but without backwages. Every resignation presupposes the existence of
Issue: W/N Alvarez was validly dismissed the employer-employee relationship; hence, there can
be no valid resignation after the fact of termination of the
SC: Alvarez was validly dismissed.
employment simply because the employee had no
Article 282(b) of the Labor Code provides that an employer-employee relationship to relinquish.
employer may validly dismiss an employee for gross and There are two classes of employees vested with
habitual neglect by the employee of his duties. In the trust and confidence. To the first class belong the
present case, it is clear that private respondent was managerial employees or those vested with the powers
guilty of seriously neglecting his duties. or prerogatives to lay down management policies and to
hire, transfer, suspend, lay-off, recall, discharge, assign
Notwithstanding the certifications from different doctors, or discipline employees or effectively recommend such
Alvarez continued to incur unexplained absences until managerial actions. The second class includes those
his dismissal on 9 March 1990. A review of Alvarez' who in the normal and routine exercise of their functions
record of attendance shows that from August to regularly handle significant amounts of money or
December 1989, he reported for work only seventy- property.
seven (77) times while he incurred forty-seven (47)
absences. Petitioner validly dismissed him not only for
violation of company policy but also for violation of FACTS:
Section 282(c) of the Labor Code aforecited. Respondent Pacific Concord Container Lines
(Pacific Concord), a domestic corporation engaged in
An employee who earnestly desires to resume his cargo forwarding, hired the petitioner as an Account
regular duties after recovering from an injury Executive/Marketing Assistant. In January 2002, Pacific
undoubtedly will not go through the trouble of getting Concord promoted her as a sales manager with the
opinions from five (5) different of getting opinions from monthly salary rate of P25,000.00, and provided her with
five (5) different physicians before going back to work a brand new Toyota Altis plus gasoline allowance. On
after he has been certified to be fit to return to his regular November 8, 2002, she reported for work at 9:00 a.m.
duties. and left the company premises at around 10:30 a.m. to
make client calls. At 1:14 p.m. of that day, she received
In spite of the warnings, Alvarez was absent without the following text message from respondent Monette
official leave (AWOL) for eighteen (18) days. Under Cuenca, to wit:
company policy, of which Alvarez was made aware,
employees who incur without valid reason six (6) or
more absences are subject to dismissal. TODAY U R OFFICIALY NT CONNECTED WITH US.

While it is true that compassion and human Sender: MONETTE

consideration should guide the disposition of casses +639173215330
involving termination of employment since it affects
Sent: 8-Nov-2002
one's source or means of livelihood, it should not be
overlooked that the benefits accorded to labor do not 13:14:01
include compelling an employer to retain the services of
an employee who has been shown to be a gross liability
to the employer. The law in protecting the rights of the Cuenca also sent a text message to Roy Lagahit, the
employees authorizes neither oppression nor self- petitioner's husband, as follows:
destruction of the employer. 12 It should be made clear
that when the law tilts the scale of justice in favor of
labor, it is but a recognition of the inherent economic IBALIK KARON DAYON ANG AUTO OG PALIHUG
inequality between labor and management. The intent is LANG KO OG KUHA SA NYONG BUTANG OG DI
to balance the scale of justice; to put the two parties on NAKO MO STORY A NI JENIFER. IL WAIT
relatively equal positions. There may be cases where the
circumstances warrant favoring labor over the interests Sender: MONETTE
of management but never should the scale be so tilted if

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Sent: 8-Nov-2002 well as the notices distributed to the clients and

12:50:54 published in the Sun Star. It is notable that the
respondents did not deny or controvert her evidence on
the matter. Thereby, she showed Pacific Concord's
The petitioner immediately tried to contact resolve to terminate her employment effective November
Cuenca, but the latter refused to take her calls. On the 8, 2002.
same day, the petitioner learned from clients and friends On the other hand, the respondents' insistence
that the respondents had disseminated notices, flyers that the petitioner had resigned was bereft of factual
and memos informing all clients of Pacific Concord that support. As a rule, the employer who interposes the
she was no longer connected with the company as of resignation of the employee as a defense should prove
November 8, 2002. Pacific Concord also caused the that the employee voluntarily resigned. A valid
publication of the notice to the public in the Sunstar Daily resignation is the voluntary act of an employee who finds
issue of December 15, 2002. herself in a situation where she believes that personal
On November 13, 2002, the petitioner sent a reasons cannot be sacrificed in favor of the exigency of
letter to Pacific Concord contending that she was the service and that she has no other choice but to
deprived of the due process that would have given her disassociate herself from employment. The resignation
the chance to formally present her side. Despite this, she must be unconditional and with a clear intention to
have accepted her fate and asked Cuenca to arrange relinquish the position.
and expedite settlement of all benefits due to her under The facts and circumstances before and after
the law. the petitioner's severance from her employment on
On November 26, 2002, the petitioner filed her November 8, 2002 did not show her resolute intention to
complaint for constructive dismissal in the Regional relinquish her job. Indeed, it would be unfounded to infer
Arbitration Branch of the National Labor Relations the intention to relinquish from her November 13, 2002
Commission (NLRC) in'Cebu City. In their position letter, which, to us, was not a resignation letter due to
paper, the respondents denied having terminated the the absence therefrom of anything evincing her desire to
petitioner despite the fact that there were valid grounds sever the employer-employee relationship. The letter
to do so. They insisted that the petitioner had betrayed instead presented her as a defenseless employee
the trust and confidence reposed in her when she: (a) unjustly terminated for unknown reasons who had been
used the company-issued vehicle for her own personal made the subject of notices and flyers informing the
interest; (b) failed to achieve her sales quota, and to public of her unexpected termination. It also depicted her
enhance and develop the Sales Department; (c) enticed as an employee meekly accepting her unexpected fate
her marketing assistant, Jo Ann Otrera, to resign and and requesting the payment of her backwages and
join her in transferring to another forwarding company; accrued benefits just to be done with the employer.
(d) applied for other employment during office hours and For sure, to conclude that the petitioner resigned
using company resources; (e) solicited and offered the because of her letter of November 13, 2002 is absurd in
services of Seajet International, Inc. during her light of the respondents having insisted that she had
employment with Pacific Concord; (f) received a been terminated from her employment earlier on
personal commission from Wesport Line, Inc. for November 8, 2002. In that regard, every resignation
container shipments; and (g) illegally manipulated and presupposes the existence of the employer-employee
diverted several containers to Seajet International. relationship; hence, there can be no valid resignation
ISSUES: after the fact of termination of the employment simply
because the employee had no employer-employee
1. Whether Lagahit resigned from her relationship to relinquish.
2. Lagahit did not breach her employer's
2. Whether Lagahit breached her trust; her dismissal was, therefore, illegal.
employer's trust.
Article 282(c) of the Labor Code authorizes an
RULING: employer to dismiss an employee for committing fraud,
1. Lagahit did not resign from her or for willful breach of the trust reposed by the employer.
employment. However, loss of confidence is never intended to provide
the employer with a blank check for terminating its
In cases of unlawful dismissal, the employer
employee. For this to be a valid ground for the
bears the burden of proving that the termination was for
termination of the employee, the employer must
a valid or authorized cause, but before the employer is
establish that: (1) the employee must be holding a
expected to discharge its burden of proving that the
position of trust and confidence; and (2) the act
dismissal was legal, the employee must first establish by
complained against would justify the loss of trust and
substantial evidence the fact of her dismissal from
employment. In this case, the petitioner proved the overt
acts committed by the respondents in abruptly There are two classes of employees vested with
terminating her employment through the text messages trust and confidence. To the first class belong the
sent by Cuenca to the petitioner and her husband, as managerial employees or those vested with the powers

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or prerogatives to lay down management policies and to President Michelena of Cocoplans, Inc. forced
hire, transfer, suspend, lay-off, recall, discharge, assign Villapando to resign on the alleged ground of loss of
or discipline employees or effectively recommend such trust and confidence, i.e. Villapando influence her co-
managerial actions. The second class includes those workers for mass resignation and allegedly order her
who in the normal and routine exercise of their functions subordinates to slow down sales production or stop
regularly handle significant amounts of money or selling. Meanwhile, President Michelena changed her
property. Cashiers, auditors, and property custodians mind and no longer demanding Villapando to resign.
are some of the employees in the second class. Instead, a committee was created to investigate the
Petitioner's position as sales manager did not matter and came up with a resolution of suspension as
immediately make the petitioner a managerial employee. penalty to be imposed against Villapando. Villapando
The actual work that she performed, not her job title, however, avers that he do not understand why there is a
determined whether she was a managerial employee need for an investigation while he was effectively
vested with trust and confidence. Her employment as convicted and terminated. According to Villapando,
sales manager was directly related with the sales of President Michelena simply wanted to oust her from the
cargo forwarding services of Pacific Concord, and had company because he felt that she was sympathizing with
nothing to do with the implementation of the vice president for marketing, Martinez, an officer with
management's rules and policies. As such, the position whom Michelena has a personal quarrel.
of sales manager came under the second class of
employees vested with trust and confidence. Therein Issue: whether or not there is illegal dismissal.
was the flaw in the CA's assailed decision. Although the
mere existence of the basis for believing that the Held: Yes.
managerial employee breached the trust reposed by the
employer would normally suffice to justify a dismissal, It must also be noted that in termination cases, the
we should desist from applying this norm against the burden of proving just and valid cause for dismissing an
petitioner who was not a managerial employee. employee from his employment rests upon the employer.
Failure by the employer to discharge this burden shall
At any rate, the employer must present clear result in the finding that the dismissal is unjustified. In
and convincing proof of an actual breach of duty feet, a dismissed employee is not even required to prove
committed by the employee by establishing the facts and his innocence of the charges levelled against him by his
incidents upon which the loss of confidence in the employer. This is because the determination of the
employee may fairly be made to rest. The required existence of a just cause must be exercised with fairness
amount of evidence for doing so is substantial proof. and in good faith and after observing due process for
With these guidelines in mind, we cannot hold that the loss of trust and confidence, as a ground of dismissal,
evidence submitted by the respondents (consisting of has never been intended to afford an occasion for abuse
the three affidavits) sufficiently established the disloyalty due to its subjective nature. It should not be used as a
of the petitioner. The affidavits did not show how she subterfuge for causes which are illegal, improper, and
had betrayed her employer's trust. Specifically, the unjustified. It must be genuine and not a mere
affidavit of Russell B. Noel only stated that she and her afterthought intended to justify an earlier action taken in
husband Roy had met over lunch with Garcia Imports bad faith. Let it not be forgotten that what is at stake is
and a certain Wilbur of Sea-Jet International Forwarder the means of livelihood, the name, and the reputation of
in the first week of November 2002. To conclude that the employee. To countenance an arbitrary exercise of
such lunch caused Pacific Concord to lose its trust in the that prerogative is to negate the employee's
petitioner would be arbitrary. constitutional right to security of tenure.
Considering that the petitioner's duties related to
the sales of forwarding services offered by Pacific In the instant case, the Court does not find the evidence
Concord, her calling other forwarding companies to presented by petitioners to be substantial enough to
inquire for vacant positions did not breach the trust discharge the burden of proving that Villapando was,
reposed in her as sales manager. Such act, being at indeed, dismissed for just cause. As borne by the
worst a simple act of indiscretion, did not constitute the records, petitioners submitted the following pieces of
betrayal of trust that merited the extreme penalty of evidence in support of their claims: (1) Affidavit of Ms.
dismissal from employment. We remind that dismissal is Gurango dated September 19, 2002; (2) Affidavit of
a penalty of last resort, to be meted only after having petitioner Michelena dated October 21, 2002; and (3)
appreciated and evaluated all the relevant Joint Affidavit of Mr. Sandoval and Ms. Perez dated
circumstances with the goal of ensuring that the ground October 9, 2002. Yet, as clearly discussed by the CA,
for dismissal was not only serious but true. the documents fail to convince.

To repeat, in justifying dismissals due to loss of trust and

COCOPLANS, INC. AND CAESAR T. MICHELENA, , confidence, there must be an actual breach of duty
v. MA. SOCORRO R. VILLAPANDO, committed by the employee, established by substantial
G.R. No. 183129, May 30, 2016 evidence.37 The Court is of the view, however, that a
Facts: single Joint Affidavit of doubtful probative value can
hardly be considered as substantial. Had petitioners

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provided the Court with other convincing proof, apart written notice of termination in advance, then the
from said Joint Affidavit, that Villapando had, indeed, termination of his employment should be considered
wilfully influenced her subordinates to transfer to a ineffectual and he should be paid backwages. However,
competing company, their claims of loss of confidence the termination of his employment should not be
could have been sustained. As the Court now sees it, considered void but he should simply be paid separation
petitioners terminated the services of Villapando on the pay as provided in Art. 283 in addition to backwages.
mere basis of the Joint Affidavit executed by Ms. Perez
and Mr. Sandoval, which, as previously discussed, is put Also, violation by the employer of the notice requirement
in doubt by conflicting evidence. Hence, in the absence cannot be considered a denial of due process resulting
of sufficient proof, the Court finds that petitioners failed in the nullity of the employees dismissal or layoff. The
to discharge the onus of proving the validity of first is that the Due Process Clause of the Constitution is
Villapando's dismissal. a limitation on governmental powers. It does not apply to
the exercise of private power, such as the termination of
DUE PROCESS employment under the Labor Code. This is plain from
the text of Art. III, 1 of the Constitution, viz.: "No person
RUBEN SERRANO, , vs. NLRC and ISETANN shall be deprived of life, liberty, or property without due
DEPARTMENT STORE, process of law. . . ." The reason is simple: Only the State
G.R. No. 117040. January 27, 2000 has authority to take the life, liberty, or property of the
individual. The purpose of the Due Process Clause is to
FACTS: ensure that the exercise of this power is consistent with
what are considered civilized methods. The second
Petitioner was hired by private respondent as a security reason is that notice and hearing are required under the
checker. Initially hired on contractual basis, petitioner Due Process Clause before the power of organized
eventually became a regular employee. Sometime in society are brought to bear upon the individual. This is
1991, as a cost-cutting measure, private respondent obviously not the case of termination of employment
decided to phase out its entire security section and under Art. 283. Here the employee is not faced with an
engage the services of an independent security agency. aspect of the adversary system. The purpose for
For this reason, his services were terminated. The loss requiring a 30-day written notice before an employee is
of his employment prompted petitioner to file a complaint laid off is not to afford him an opportunity to be heard on
for illegal dismissal, illegal layoff, unfair labor practice, any charge against him, for there is none. The purpose
underpayment of wages, and nonpayment of salary and rather is to give him time to prepare for the eventual loss
overtime pay. of his job and the DOLE an opportunity to determine
whether economic causes do exist justifying the
ISSUE: termination of his employment. Even in cases of
whether or not the dismissal was valid dismissal under Art. 282, the purpose for the
requirement of notice and hearing is not to comply with
Due Process Clause of the Constitution. The time for
notice and hearing is at the trial stage. Then that is the
time we speak of notice and hearing as the essence of
Yes. The bare assertion is not a sufficient basis for procedural due process. Thus, compliance by the
concluding that the termination of petitioners employer with the notice requirement before he
employment was not a bona fide decision of dismisses an employee does not foreclose the right of
management to obtain reasonable return from its the latter to question the legality of his dismissal. As Art.
investment, which is a right guaranteed to employers 277(b) provides, "Any decision taken by the employer
under the Constitution. Accordingly, the termination of shall be without prejudice to the right of the worker to
petitioners services was upheld for an authorized contest the validity or legality of his dismissal by filing a
cause, i.e., redundancy. complaint with the regional branch of the National Labor
Relations Commission." The third reason why the notice
Art. 283 also provides that to terminate the employment requirement under Art. 283 can not be considered a
of an employee for any of the authorized causes the requirement of the Due Process Clause is that the
employer must serve "a written notice on the workers employer cannot really be expected to be entirely an
and the Department of Labor and Employment at least impartial judge of his own cause.
one (1) month before the intended date thereof." In the
case at bar, petitioner was given a notice of termination JENNY M. AGABON and VIRGILIO C. AGABON v
on October 11, 1991. On the same day, his services NLRC, RIVIERA HOME IMPROVEMENTS, INC.
were terminated. He was thus denied his right to be G.R. No. 158693,November 17, 2004
given written notice before the termination of his Facts:
employment, and the question is the appropriate Riviera Home Improvements, Inc. is engaged in
sanction for the violation of petitioners right. However, if the business of selling and installing ornamental and
an employee is laid off for any of the causes in Arts. 283- construction materials. It employed petitioners Virgilio
284, i.e., installation of a labor-saving device, but the Agabon and Jenny Agabon as gypsum board and
employer did not give him and the DOLE a 30-day

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cornice installers when they were dismissed for Emma H. Quiro-Quiro v. Balagtas Credit Cooperative
abandonment of work. & Community Development, Inc.
Petitioners then filed a complaint for illegal G.R. No. 209921,13, January 13, 2016
dismissal and payment of money claims. The Labor
Arbiter rendered a decision declaring the dismissals Facts: Emma Quiro-Quiro was hired by BCCCDI as an
illegal and ordered private respondent to pay the accountant in 1989. However, in 2010, her employment
monetary claims. was terminated on the ground of gross negligene or
On appeal, the NLRC reversed the Labor Arbiter violation of company policy and gross dishonesty.
because it found that the petitioners had abandoned Aggrieved, Quiro-quiro filed a complaint for illegal
their work, and were not entitled to backwages and dismissal and damages. In her position paper before the
separation pay. The other money claims awarded by the Labor Arbiter, Quiro-quiro claimed that her termination
Labor Arbiter were also denied for lack of evidence. was not valid nor justified. She argued that "there was
The Court of Appeals in turn ruled that the no ground that existed for her dismissal from
dismissal of the petitioners was not illegal because they employment" and that her dismissal did not satisfy the
had abandoned their employment but ordered the requirements of due process, as she was not given
payment of money claims. "ample opportunity," nor the "natural sequence of notice
of charges, hearing and notice of judgment." On the
Issue: Whether or not petitioners were illegally other hand, BCCCDI and its officers Fe Adrados and
dismissed Atty. Tagumpay B. Ponce averred that the termination of
Quiro-quiro’s employment based on the charges against
Held: her were "official acts" of the cooperative BCCCDI, as
No. To dismiss an employee, the law requires contained in the board Resolution of April 20, 2010.
not only the existence of a just and valid cause but also Then, Atty. Ponce was designated by the said board, as
enjoins the employer to give the employee the BCCCDI’s counsel, to write and send a "Notice to
opportunity to be heard and to defend himself. Explain/Show Cause Memo" to Quiro-quiro to explain
In February 1999, petitioners were frequently her side and show cause why she should not be
absent having subcontracted for an installation work for terminated. BCCCDI alleged that Quiro-quiro responded
another company. Subcontracting for another company with her explanation on April 23, 2010. Also, Quiro-quiro
clearly showed the intention to sever the employer- allegedly sent a letter of apology dated April 29, 2010
employee relationship with private respondent. This was admitting her "shortcomings and wrongdoings" but
not the first time they did this. In January 1996, they did asking for one last chance from the board. On April 30,
not report for work because they were working for 2010, the board and officers convened with Quiro-quiro
another company. Private respondent at that time in attendance. There, she explained her side and
warned petitioners that they would be dismissed if this answered questions from the board. Thereafter, the
happened again. Petitioners disregarded the warning board put the matter to a vote and unanimously decided
and exhibited a clear intention to sever their employer- to terminate Quiro-quiro’s services. The proceedings
employee relationship. The record of an employee is a were reduced in writing through the minutes thereof.
relevant consideration in determining the penalty that Finally, the decision to terminate Quiro-quiro’s
should be meted out to him. employment was communicated to her through a Notice
The law imposes many obligations on the to Terminate prepared by Atty. Ponce upon the board’s
employer such as providing just compensation to instruction. Labor Arbiter found that there was
workers, observance of the procedural requirements of substantial evidence showing that petitioner was lawfully
notice and hearing in the termination of employment. On dismissed and respondent observed due process in
the other hand, the law also recognizes the right of the terminating her.
employer to expect from its workers not only good
performance, adequate work and diligence, but also Issue: Whether or not petitioner was validly dismissed.
good conduct and loyalty. The employer may not be
compelled to continue to employ such persons whose
continuance in the service will patently be inimical to his Ruling: Yes. Respondent was able to prove by
interests. substantial evidence that petitioner’s dismissal is lawful.
The dismissal should be upheld because it was Substantial evidence is defined as that amount of
established that the petitioners abandoned their jobs to relevant evidence which a reasonable mind might accept
work for another company. Private respondent, however, as adequate to justify a conclusion. Respondent
did not follow the notice requirements and instead presented documents and affidavits establishing
argued that sending notices to the last known addresses petitioner’s gross negligence and her breach of
would have been useless because they did not reside respondent’s trust and confidence in her.
there anymore. Unfortunately for the private respondent,
this is not a valid excuse because the law mandates the Moreover, there is no dispute that petitioner held
twin notice requirements to the employees last known the sensitive positions of general manager and
address. Thus, it should be held liable for non- accountant, which demand respondent’s utmost trust
compliance with the procedural requirements of due and confidence. Her responsibilities as accountant
process. included, among others, the handling and processing of

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the deposits and withdrawals of the members of the 1. YES.

cooperative; installing an effective accounting system The nature of the job of an employee becomes
within the cooperative; and safekeeping of certificates of relevant in termination of employment by the
title. As general manager, petitioner was in charge of employer because the rules on termination of
supervising and overseeing the daily operations of the managerial and supervisory employees are different
cooperative and was tasked to prepare periodic reports from those on the rank-and-file. Managerial employees
on the financial condition of the cooperative. are tasked to perform key and sensitive functions, and
thus are bound by more exacting work ethics. Therefore,
While petitioner's dismissal is lawful, she was managerial employees are covered by the trust and
awarded P30,000 nominal damages for respondent's confidence rule. The same holds true for supervisory
non-observance of the due process requirements in employees occupying positions of responsibility.
dismissing her. The 48 hours given to petitioner to The position of petitioner as chief cook is
explain her side was insufficient time to "consult the supervisory in nature. A chief cook directs and
union official or lawyer, gather data and evidence and participates in the preparation and serving of meals;
decide on her defenses. Petitioner should have been determines timing and sequence of operations required
given at least five calendar days from receipt of the to meet serving times; and inspects galley and
notice to prepare for her defense. Notwithstanding, the equipment for cleanliness and proper storage and
lack of statutory due process does not nullify the preparation of food. Naturally, a chief cook falls under
dismissal or render it illegal or ineffectual when the the definition of a supervisor, i.e., one who, in the
dismissal was for just cause,21 but it will merit the grant interest of the employer, effectively recommends
of nominal damages as indemnification. managerial actions, which would require the use of
independent judgment and is not merely routinary or
2. YES.
JULITO SAGALES vs. RUSTAN'S COMMERCIAL Security of tenure is a paramount right of every
CORPORATION employee that is held sacred by the Constitution. The
G.R. No. 166554 Nov. 27, 2008 reason for this is that labor is deemed “property" within
FACTS: the meaning of constitutional guarantees. Indeed, the
At the time of his dismissal, petitioner was right of every employee to security of tenure is even
occupying the position of Chief Cook at the Yum Yum more secured by the Labor Code by providing that "the
Tree Coffee Shop. Petitioner was a consistent recipient employer shall not terminate the services of an
of numerous citations for his performance. Petitioner employee except for a just cause or when authorized" by
conveyed to respondent his intention of retiring after law. Otherwise, an employee who is illegally dismissed
reaching 31 years in service. Petitioner, however, was "shall be entitled to reinstatement without loss of
not allowed to retire with his honor intact. seniority rights and other privileges and to his full
backwages, inclusive of allowances, and to his other
On June 18, 2001, Security Guard Magtangob, benefits or their monetary equivalent computed from the
apprehended petitioner in the act of taking out from time his compensation was withheld from him up to the
Rustan's Supermarket a plastic bag containing squid time of his actual reinstatement."
heads worth P50.00. Petitioner was not able to show any
receipt when confronted. Respondent, required Necessarily then, the employer bears the burden of
petitioner to explain in writing within 48 hours why he proof to show the basis of the termination of the
should not be terminated in view of the June 18, 2001 employee. It was proved that petitioner committed the
incident. Respondent also placed petitioner under crime charged.
preventive suspension. The free will of management to conduct its own
On June 29, 2001, petitioner was informed that business affairs to achieve its purpose cannot be denied.
a formal investigation would be conducted however; The only condition is that the exercise of management
respondent did not find merit in the explanation of prerogatives should not be done in bad faith or with
petitioner. Thus, petitioner was dismissed from service abuse of discretion. Truly, while the employer has the
on July 26, 2001. At that time, petitioner had been under inherent right to discipline, including that of dismissing its
preventive suspension for one (1) month. Aggrieved, employees, this prerogative is subject to the regulation
petitioner filed a complaint for illegal dismissal against by the State in the exercise of its police power.
respondent. He also prayed for unpaid salaries/wages, In this regard, infractions committed by an employee
overtime pay, as well as moral and exemplary damages, should merit only the corresponding penalty demanded
attorney's fees, and service charges. by the circumstance. The penalty must be
ISSUE: commensurate with the act, conduct or omission
imputed to the employee and must be imposed in
1. WON the position of petitioner is supervisory in connection with the disciplinary authority of the
nature covered by the trust and confidence rule. employer. In the case at bar, petitioner deserves
2. WON petitioner was illegally dismissed. compassion more than condemnation.

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At the end of the day, it is undisputed that: (1) shoelaces when the game is not yet finished is also
petitioner has worked for respondent for almost 31years; irresponsible and unprofessional. However, we agree
(2) his tireless and faithful service is attested by the with the Labor Arbiter that such isolated foolishness of
numerous awards he has received from respondent; (3) an employee does not justify the extreme penalty of
the incident on June 18, 2001 was his first offense in his dismissal from service. Petitioners could have opted to
long years of service; (4) the value of the squid heads impose a fine or suspension on Teng for his
worth P50.00 is negligible; (5) respondent practically did unacceptable conduct. Other forms of disciplinary action
not lose anything as the squid heads were considered could also have been taken after the incident to impart
scrap goods and usually thrown away in the on the team that such misconduct will not be tolerated.
wastebasket; (6) the ignominy and shame undergone by Infractions committed by an employee should merit only
petitioner in being imprisoned, however momentary, is the corresponding penalty demanded by the
punishment in itself; and (7) petitioner was preventively circumstance. The penalty must be commensurate with
suspended for one month, which is already a the act, conduct or omission imputed to the employee
commensurate punishment for the infraction committed. and must be imposed in connection with the disciplinary
Truly, petitioner has more than paid his due. authority of the employer. In the case at bar, the penalty
It would be useless to order the reinstatement of handed out by the petitioners was the ultimate penalty of
petitioner, considering that he would have been retired dismissal. There was no warning or admonition for
by now. Thus, in lieu of reinstatement, it is but proper to respondent’s violation of team rules, only outright
award petitioner separation pay computed at one-month termination of his services for an act which could have
salary for every year of service, a fraction of at least 6 been punished appropriately with a severe reprimand or
months considered as one whole year. In the suspension.
computation of separation pay, the period where
backwages are awarded must be included. Mgmt Prerogatives and Constructive Dismissal


NEGROS SLASHERS INC. V. ALVIN TENG Gr. No. 188269 April 17, 2017
G.R. No. 187122, February 22, 2012 Facts:

FACTS: Baya was employed as a supervisor and joined the

Alvin Teng, a professional basketball player, union of supervisors, and eventually, formed AMS
played for the Negros Slashers of the Metropolitan Kapalong Agrarian Reform Beneficiaries Multipurpose
Basketball Association, after being transferred from the Cooperative (AMSKARBEMCO), the basic agrarian
Laguna Lakers. On Game Number 4 of the MBA reform organization of the regular employees of AMSFC.
Championship Round for the year 2000 season, Teng
had a below-par playing performance. Because of this,
Baya was reassigned to a series of supervisory positions
the coaching staff decided to pull him out of the game.
in AMSFC’s sister company also joined the supervisory
Teng then sat on the bench, untied his shoelaces and
positions and became a member of the latter’s
donned his practice jersey. On the following game,
supervisory union.
Game Number 5 of the Championship Round, Teng
called-in sick and did not play. On November 21, 2000,
Vicente Tan, Finance Head of Negros Slashers, required Later on and upon AMSKARBEMCO’s petition before
Teng to explain in writing why no disciplinary action the Department of Agrarian Reform (DAR), some 220
should be taken against him for his precipitated absence hectares of AMSFC’s 513-hectare banana plantation
during the crucial game. A formal investigation against were covered by the Comprehensive Agrarian Reform
him was later conducted. A subsequent meeting was Law. Eventually, said portion was transferred to
also held, attended by the management, coaching staff AMSFC’s regular employees as Agrarian Reform
and players of the Negros Slashers team, wherein the Beneficiaries (ARBs), including Baya.
team members and coaching staff unanimously
expressed their sentiments against Teng and their ARBs held a referendum in order to choose as to which
opposition against the possibility of Teng joining back group between AMSKARBEMCO or SAFFPAI, an
the team. Eventually, Teng was terminated from the association of pro-company beneficiaries, they wanted to
team, prompting him to file a case of illegal dismissal belong. 280 went to AMSKARBEMCO while 85 joined
against the team. SAFFPAI.

ISSUE: When AMSFC learned that AMSKARBEMCO entered

Whether or not Teng’s actions merited the into an export agreement with another company, it
penalty of dismissal summoned AMSKARBEMCO officers, including Baya, to
lash out at them and even threatened them that the
HELD: ARBs’ takeover of the lands would not push through.
No. As an employee of the Negros Slashers, Thereafter, Baya was again summoned, this time by a
Teng was expected to report for work regularly. Missing DFC manager, who told the former that he would be
a team game is indeed a punishable offense. Untying of putting himself in a “difficult situation” if he will not shift

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his loyalty to SAFFPAI; this notwithstanding, Baya 20, 2002, while the acts constitutive of constructive
politely refused to betray his cooperative. A few days dismissal were performed as early as August 30, 2002,
later, Baya received a letter stating that his secondment when Baya returned to AMSFC. Thus, AMSFC and DFC
with DFC has ended, thus, ordering his return to are guilty of constructively dismissing Baya.
AMSFC. However, upon Baya’s return to AMSFC, he
was informed that there were no supervisory positions Chateau Royal v Balba
available; thus, he was assigned to different rank-and- (Taken from Manila Times, When Transfer oF Employee
file positions instead. is Invalid by Persida Acosta)

Issue: In the case of Chateau Royale Sports and Country Club,

Whether or not Abaya was constructive Inc. vs Rachelle Balba, et al. (G.R. No. 197492, 18
dismissal. January 2017),penned by the Honorable Associate
Held: Justice Lucas P. Bersamin, who discussed about
Yes. “Constructive dismissal exists where there management prerogative in case of office transfers, the
is cessation of work, because ‘continued employment is importance of the clauses in the employment contract,
rendered impossible, unreasonable or unlikely, as an and the burden of proof in cases for constructive illegal,
offer involving a demotion in rank or a diminution in pay’ viz.:
and other benefits. Aptly called a dismissal in disguise or
an act amounting to dismissal but made to appear as if it “In the resolution of whether the transfer of the
were not, constructive dismissal may, likewise, exist if an respondents from one area of operation to another was
act of clear discrimination, insensibility, or disdain by an valid, finding a balance between the scope and limitation
employer becomes so unbearable on the part of the of the exercise of management prerogative and the
employee that it could foreclose any choice by him employees’ right to security of tenure is necessary. We
except to forego his continued employment.” In Peckson have to weigh and consider, on the one hand, that
v. Robinsons Supermarket Corp., the Court held that the management has a wide discretion to regulate all
burden is on the employer to prove that the transfer or aspects of employment, including the transfer and re-
demotion of an employee was a valid exercise of assignment of employees according to the exigencies of
management prerogative and was not a mere subterfuge the business; and, on the other, that the transfer
to get rid of an employee; failing in which, the employer constitutes constructive dismissal when it is
will be found liable for constructive dismissal, viz.: unreasonable, inconvenient or prejudicial to the
employee, or involves a demotion in rank or diminution
In case of a constructive dismissal, the employer has the of salaries, benefits and other privileges, or when the
burden of proving that the transfer and demotion of an acts of discrimination, insensibility or disdain on the part
employee are for valid and legitimate grounds such as of the employer become unbearable for the employee,
genuine business necessity. Particularly, for a transfer forcing him to forego her employment.
not to be considered a constructive dismissal, the
employer must be able to show that such transfer is not “In this case of constructive dismissal, the burden of
unreasonable, inconvenient, or prejudicial to the proof lies in the petitioner as the employer to prove that
employee; nor does it involve a demotion in rank or a the transfer of the employee from one area of operation
diminution of his salaries, privileges and other benefits. to another was for a valid and legitimate ground, like
Failure of the employer to overcome this burden of proof, genuine business necessity. We are satisfied that the
the employee’s demotion shall no doubt be tantamount petitioner duly discharged its burden, and thus
to unlawful constructive dismissal. established that, contrary to the claim of the respondents
that they had been constructively dismissed, their
In this case, a judicious review of the records reveals transfer had been an exercise of the petitioner’s
that the top management of both AMSFC and DFC, legitimate management prerogative.
which were sister companies at the time, were well-
aware of the lack of supervisory positions in AMSFC. G.R. No. 215047 November 23, 2016
This notwithstanding, they still proceeded to order UNIVERSAL CANNING INC., v. COURT OF APPEALS
Baya’s return therein, thus, forcing him to accept rank- AND DANTE SAROSAL, FRANCISCO DUMAGAL,
and-file positions. Notably, AMSFC and DFC failed to JR., NELSON E. FRANCISCO, ELMER C.
refute the allegation that Baya’s “end of secondment with SAROMINES AND SAMUEL D. CORONEL
DFC” only occurred after: (a) he and the rest of
AMSKARBEMCO officials and members were subjected FACTS:
to harassment and cooperative busting tactics employed Respondents were caught playing cards at the
by AMSFC and DFC; and (b) he refused to switch company's premises. Respondents were placed under
loyalties from AMSKARBEMCO to SAFFPAI, the pro- preventive investigation. Respondents argued that while
company cooperative. In this relation, the Court cannot they were playing cards inside the company premises, it
lend credence to the contention that Baya’s termination cannot be considered gambling as there was no money
was due to the ARBs’ takeover of the banana plantation, involved and that it took place during noon break.
because the said takeover only occurred on September Respondents were dismissed from employment.

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Aggrieved by the turn of events, respondents initiated an to DWCL’s college department. He was transferred to
action for illegal dismissal, illegal suspension, payment the college department as an Associate Professor III.
of separation pay, rest day pay and moral and Thereafter, Mina was assigned as the College
exemplary damages before the Labor Arbiter. Laboratory Custodian and was divested of his teaching
load. He was the only one among several teachers
ISSUE: WON there was illegal dismissal. transferred to the college department who was divested
of teaching load.
HELD: NONE. Respondents were dismissed for two He was then offered early retirement but he
reasons: (1) for violation of company rules and declined. He later received a Memorandum from the
regulations under Paragraph IV, Number 4 under Office of the Dean enumerating specific acts of gross
Offenses Against Public Morals; and (2) for loss of trust negligence, insubordination and reporting for work under
and confidence. While it is true that loss of trust and influence of alcohol. It was made to appear that his
confidence alone could not stand as a ground for services were terminated by reason of redundancy to
dismissal in this case since respondents are rank and avoid any tax implications. Mina then filed a case for
file employees who are not occupying positions of trust illegal dismissal and recovery of separation pay and
and confidence, such is not the only ground, relied by other claims.
the company in terminating respondents' employment.
Company also cited the infraction of company rules ISSUE: Was Mina constructively dismissed?
and regulations, in addition to loss and trust of
confidence. Infraction of the company rules and HELD:
regulation which is akin to serious misconduct is a Yes. Constructive dismissal is a dismissal in disguise.
just cause for termination of employment recognized There is cessation of work in constructive dismissal
under Article 282 (a) of the Labor Code. because ‘"continued employment is rendered
impossible, unreasonable or unlikely, as an offer
To constitute a valid cause for the dismissal the involving a demotion in rank or a diminution in pay’ and
employee's misconduct must be serious, i.e., of such other benefits." To be considered as such, an act must
grave and aggravated character and not merely trivial or be a display of utter discrimination or insensibility on the
unimportant. Additionally, the misconduct must be part of the employer so intense that it becomes
related to the performance of the employee's duties unbearable for the employee to continue with his
showing him to be unfit to continue working for the employment. The law recognizes and resolves this
employer. Further, and equally important and required, situation in favor of employees in order to protect their
the act or conduct must have been performed with rights and interests from the coercive acts of the
wrongful intent. employer.
Mina’s appointment as laboratory custodian was
The defense that playing cards took place during noon a demotion. There is demotion when an employee
break and that no stakes were involved will not save the occupying a highly technical position requiring the use of
day for the respondents. The use of the company's time one’s mental faculty is transferred to another position,
and premises for gambling activities is a grave offense where the employee performed mere mechanical work –
which warrants the penalty of dismissal for it amounts to virtually a transfer from a position of dignity to a servile
theft of the company's time and it is explicitly prohibited or menial job.
by the company rules on the ground that it is against
public morals. In this case, Mina’s transfer clearly amounted to
a constructive dismissal. For almost 22 years, he was a
Suffice it to state that an employee may be validly high school teacher enjoying a permanent status in
dismissed for violation of a reasonable company rule or DWCL’s high school department. In 2002, he was
regulation adopted for the conduct of the company's appointed as an associate professor at the college
business. It is the recognized prerogative of the department but shortly thereafter, or on June 1, 2003, he
employer to discipline workers. As a general proposition, was appointed as a college laboratory custodian, which
an employer has free reign over every aspect of its is a clear relegation from his previous position. Not only
business, including the dismissal of his employees as that. He was also divested of his teaching load. His
long as the exercise of its management prerogative is appointment even became contractual in nature and was
done reasonably, in good faith, and in a manner not subject to automatic termination after one year "without
otherwise intended to defeat or circumvent the rights of any further notification." Aside from this, Mina was the
workers. only one among the high school teachers transferred to
the college department who was divested of teaching
Divine Word College of Laoag vs. Shirley Mina load. More importantly, DWCL failed to show any reason
G.R. No. 195155; April 13, 2016 for Mina’s transfer and that it was not unreasonable,
FACTS: inconvenient, or prejudicial to him.
DWCL is run by the Society of Divine Word (SVD). Mina
was first employed as a high school teacher and later on ICT MAJRKETING SERVICES v MARIPHIL L. SALES
a high school principal at the Academy of St. Joseph G.R. No. 202090, September 09, 2015
(ASJ), a school run by the SVD. He was later transferred Facts:

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ICT Marketing hired Sales as its Customer Service and account to the Bank of America program, petitioner was
assigned her to its Capital One account. Sales became a hiring additional CSRs/TSRs. This simply means that if it
regular employee. Thereafter respondent was assigned was then hiring new CSRs/TSRs, then there should be
to the Washington Mutual account, where she was given no need to transfer respondent to the Bank of America
awards for being a top agent. program; it could simply train new hires for that program.
Transferring respondent - an experienced employee who
When respondent complained about supposed was already familiar with the Washington Mutual
irregularities in the handling of funds entrusted to account, and who even proved to be outstanding in
petitioner by Washington Mutual which were intended for handling the same - to another account means additional
distribution to outstanding Washington Mutual CSRs and expenses for petitioner: it would have to train respondent
TSRs as prizes and incentives. No action appears to for the Bank of America account, and train a new hire to
have been taken on her complaint. Respondent was take her place in the Washington Mutual account. This
then transferred to the Bank of America account. Without does not make sense; quite the contrary, it is impractical
prior notice to respondent, petitioner scheduled her for and entails more expense on petitioner's part. If
training on the very same day of her transfer. On the respondent already knew her work at the Washington
third day of training, respondent was unable to attend. Mutual account very well, then it is contrary to
When she reported for training the next day, respondent experience and logic to transfer her to another account
was informed that she could not be certified to handle which she is not familiar with, there to start from scratch;
calls for Bank of America due to her failure to complete this could have been properly relegated to a new hire.
the training. From then on, respondent was placed on
"floating status" and was not given any work assignment.
Issue: Whether or not respondent was validly G.R. No. 185100, July 9, 2014
Ruling: Respondent STI is an educational institution duly
Under the doctrine of management prerogative, every incorporated, organized, and existing under Philippine
employer has the inherent right to regulate, according to laws. Petitioner Girly G. Ico was hired as Faculty
his own discretion and judgment, all aspects of Member by STI College Makati. In this case, petitioner
employment, including hiring, work assignments, argues in her Petition and Reply that her appointment as
working methods, the time, place and manner of work, Compliance Manager is illegal, because the abolition of
work supervision, transfer of employees, lay-off of the STI Makati COO position and the creation of the
workers, and discipline, dismissal, and recall of position of Compliance Manager were contrived and
employees. The only limitations to the exercise of this fabricated. She adds that her appointment to the position
prerogative are those imposed by labor laws and the of Compliance Manager was in fact a demotion: she was
principles of equity and substantial justice. relegated to a position where she did not have any staff
to supervise; her work became merely mechanical in
Concerning the transfer of employees, these are the nature; she became a mere Compliance Officer
following jurisprudential guidelines: reporting to the Compliance Group Head; and her work
was severely limited. Petitioner adds that she was
(a) a transfer is a movement from one position to subjected to harassment and discrimination, humiliated
another of equivalent rank, level or salary without and became the victim of STI’s fraudulent scheme to
break in the service or a lateral movement from one illegally oust her from her position as STI-Makati COO.
position to another of equivalent rank or salary;
She cites: 1) the May 18, 2004 incident, noting the
(b) the employer has the inherent right to transfer or
treatment accorded her by Fernandez and the manner
reassign an employee for legitimate business
by which she was allegedly forced to receive the
Memorandum of even date; 2) the investigation into
alleged irregularities, which she characterized as sham;
(c) a transfer becomes unlawful where it is motivated
3) her preventive suspension, which she claims was
by discrimination or bad faith or is effected as a
illegal for being based on non-existent charges; and 4)
form of punishment or is a demotion without
the withholding of her travel award.
sufficient cause;

(d) the employer must be able to show that the Petitioner insists that her suspension was illegal, as her
transfer is not unreasonable, inconvenient, or new employment as Compliance Manager did not put
prejudicial to the employee.obleslaw her in a position where she would have access to
sensitive STI records; thus, she was never a serious
While the prerogative to transfer respondent to another threat to such extent that respondents believed she was.
account belonged to petitioner, it weilded the same Besides, the investigation into allegations of irregularities
unfairly. The evidence suggests that at the time committed by her, which was the cause for her
respondent was transferred from the Washington Mutual suspension as well, was a sham for violating her rights

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to a hearing and due process. Respondents maintain was contrived, confirms the view that petitioner was not
that the merger of STI and STI Makati required the transferred to the School Compliance Group as a matter
abolition of the Chairman, President/CEO, COO, of necessity, but as punishment for her perceived
Treasurer and Corporate Secretary positions in STI- irregularities. In effect, petitioner was demoted and
Makati; likewise, it became necessary to effect a relegated to a position of insignificance within STI, there
reorganization of STI’s corporate structure in order to to suffer for what her employer alleged were
streamline its operations. Petitioner’s transfer was in line transgressions committed by her. To all intents and
with such merger and reorganization; no bad faith may purposes, petitioner was punished even before she
thus be inferred from their actions, which were carried could be tried.
out legally and pursuant to STI’s rights, prerogatives,
and needs at the time. Echo 2000 Commercial Corp. vs. Obrero Filipino-
Echo 2000 Chapter
Issue: G.R. No. 214092; January 11, 2016
Whether or not the transfer of position of the petitioner
constitute an illegal constructive dismissal FACTS:
King 8 Commercial Corp., Echo’s predecessor,
Ruling: employed Cortes and Somido. Echo thereafter absorbed
Yes. Constructive dismissal exists where there is the Cortes and Somido as employees as a Warehouse
cessation of work because continued employment is Checker and a Forklift Operator.
rendered impossible, unreasonable or unlikely, as an Echo received information about shortages in
offer involving a demotion in rank or a diminution in pay peso value arising from the movement of products to
and other benefits. Aptly called a dismissal in disguise or and from its warehouse. Since an uninterrupted
an act amounting to dismissal but made to appear as if it investigation was necessary, Echo, in the exercise of its
were not, constructive dismissal may, likewise, exist if an management prerogative, decided to re-assign the staff.
act of clear discrimination, insensibility, or disdain by an Cortes and Somido were among those affected. They
employer becomes so unbearable on the part of the were transferred to the Delivery Section. The transfer
employee that it could foreclose any choice by him would entail no change in ranks, status and salaries.
except to forego his continued employment. In cases of Cortes and Somido declined Echo’s offer of promotion
a transfer of an employee, the rule is settled that the as Delivery Supervisor/Coordinator.
employer is charged with the burden of proving that its Echo issued successive memoranda to Cortes
conduct and action are for valid and legitimate grounds and Somido, who refused to acknowledge receipt and
such as genuine business necessity and that the transfer comply with the directives therein regarding their
is not unreasonable, inconvenient or prejudicial to the transfer. One memorandum suspended them without
employee. If the employer cannot overcome this burden pay for 5 days for insubordination, another terminated
of proof, the employee’s transfer shall be tantamount to them from employment.
unlawful constructive dismissal.
ISSUE: Were Cortes and Somido illegally suspended
It appears,in the case, that the position of STI-Makati and terminated?
COO was actually never abolished. As a matter of fact,
soon after petitioner was removed from the position, HELD:
Fernandez was appointed to take her place as STI- Yes. The offer of transfer is, in legal contemplation, a
Makati COO; his appointment was even publicly promotion, which Cortes and Somido validly refused.
announced via an official communication disseminated Such refusal cannot be the basis for their dismissal from
company-wide. This thus belies respondents’ claim that service. Management has the prerogative to transfer or
the position of STI-Makati COO became unnecessary assign employees from one office or area of operation to
and was thus abolished. 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
Next, petitioner’s appointment as Compliance Manager
bad faith, or effected as a form of punishment or
appears to be contrived as well. The only positions
demotion without sufficient cause.
within the department that were at the time vacant were
those of Compliance Officers, which are of lower rank. In A transfer is a movement from one position to
other words,petitioner could not have been validly another which is of equivalent rank, level or salary,
without break in service. Promotion, on the other hand,
appointed as Compliance Manager, a position within STI
is the advancement from one position to another with an
that was then very much occupied; if ever, petitioner
increase in duties and responsibilities as authorized by
took the position of a mere Compliance Officer, the only
law, and usually accompanied by an increase in salary.
vacant position within the department.
Conversely, demotion involves a situation where an
employee is relegated to a subordinate or less important
The conversation between petitioner and Fernandez, position constituting a reduction to a lower grade or rank,
taken in conjunction with the Court’s findings that the with a corresponding decrease in duties and
position of STI-Makati COO was never abolished and responsibilities, and usually accompanied by a decrease
that petitioner’s appointment as Compliance Manager in salary.

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For promotion to occur, there must be an further posits that complainant guards were directed
advancement from one position to another or an upward several times to report to the office for their new
vertical movement of the employee's rank or position. assignments but they failed to comply with such
Any increase in salary should only be considered directives. Hence, Igmedio, Jose, and Ervin a complaint
incidental but never determinative of whether or not a for illegal dismissal and for monetary claims.
promotion is bestowed upon an employee. An employee
is not bound to accept a promotion, which is in the Issue:
nature of a gift or reward. Refusal to be promoted is a Is there illegal dismissal in this case?
valid exercise of a right. Such exercise cannot be
considered in law as insubordination, or willful Ruling:
disobedience of a lawful order of the employer, hence, it Yes. There is illegal dismissal through
cannot be the basis of an employee's dismissal from constructive dismissal when Igmedio, Jose and Ervin
service. were not given new assignments. Indeed, the employer
has the right to transfer or assign its employees from
In the case at bench, a Warehouse Checker and one area of operation to another, "provided there is no
a Forklift Operator are rank-and-file employees. On the demotion in rank or diminution of salary, benefits, and
other hand, the job of a Delivery Supervisor/Coordinator other privileges, and the transfer is not motivated by
requires the exercise of discretion and judgment from discrimination or bad faith, or effected as a form of
time to time. Hence, despite the fact that no salary punishment or demotion without sufficient cause." During
increases were effected, the assumption of the post of a that period of time when they are in between
Delivery Supervisor/Coordinator should be considered a assignments or when they are made to wait for new
promotion. The respondents' refusal to accept the same assignments after being relieved from a previous post,
was therefore valid. guards are considered on temporary "off-detail" or under
"floating status". It is true that placing security guards
SOLIMAN SECURITY SERVICES, INC. AND under floating status or temporary off-detail has been an
TERESITA L. SOLIMAN v IGMEDIO C. SARMIENTO established industry practice. But, employees put on
et. Al, G.R. No. 194649, 10 August 2016 floating status cannot be in such position indefinitely. As
(digest from SLU Bar Acads- Labor Law 2016) regards Soliman Security’s defense that it was Igmedio
et. al’s fault for their repeated failure to comply with the
Facts: directives to report to the office for new assignments,
such was not given merit by the court for being mere
Igmedio Sarmiento, Jose Jun Cada, and Ervin afterthoughts. The notices were allegedly sent to
R. Robis were hired as security guards by Soliman respondents on 24 and 26 April 24 2007, a month after
Security Services, Inc. and were assigned to Interphil the hearing before the Executive Labor Arbiter. By the
Laboratories, working seven (7) days a week for twelve time the notices were sent, a complaint for illegal
(12) straight hours daily. They alleged that during their dismissal with a prayer for reinstatement was already
employment - from May 1997 until January 2007 for filed. In fact, the agency, through its representative,
Robis and from May 2003 until January 2007 for already had the chance to discuss new assignments
Sarmiento and Cada — they were paid only P275.00 a during the hearing before the Labor Arbiter. Instead of
day for eight (8) hours of work or P325.00 for twelve (12) taking the opportunity to clarify during the hearing that
hours of work but were not paid ECOLA, night shift respondents were not dismissed but merely placed on
differentials, holiday pay, as well as rest day premiums. floating status and instead of specifying details about the
For cash bond and mutual aid contributions, the available new assignments, the agency merely gave out
amounts of P400.00 and P100.00, respectively, were empty promises. No mention was made regarding
deducted from their salaries per month. Respondents specific details of these pending new assignments. If
claimed that they sought a discussion of the nonpayment respondent guards indeed had new assignments
of their benefits with petitioner Teresita Soliman but the awaiting them, as what the agency has been insinuating
latter refused to take heed and told them to tender their since the day respondents were relieved from their
resignations instead. According to respondents, on 21 posts, the agency should have identified these
January 2007, they received an order relieving them assignments during the hearing instead of asking
from their posts and since then, they were not given any respondents to report back to the office.
assignments. On the other hand, Soliman Security
claimed that Igmedio et. al were actually only placed REPUBLIC OF THE PHILIPPINES vs. PACHEO
under a "floating status." The agency admitted relieving Gr. No. 178021, January 25, 2012
the them from duty on 20 January 2007 but insists that
the same was only done pursuant to its contract with Facts:
client Interphil Laboratories. To support this claim, Pacheo was a Revenue Attorney IV, Assistant
Soliman Security presented a standing contract with Chief of the Legal Division of the Bureau of Internal
Astrazeneca Pharmaceuticals, Interphil's predecessor- Revenue(BIR) in Quezon City. The BIR issued Revenue
in-interest. The contract contained stipulations pertaining Travel Assignment Order ordering the reassignment of
to the client's policy of replacing guards on duty every Pacheo as Assistant Chief, Legal Division from RR7 in
six (6) months without repeat assignment. The agency Quezon City to RR4 in San Fernando, Pampanga.

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her original station in Quezon City or her new place of

Pacheo questioned the reassignment through assignment in San Fernando, Pampanga negates her
her Letter addressed to Rene G. Banez, then claim of constructive dismissal.
Commissioner of Internal Revenue (CIR). She
considered her transfer from Quezon City to Pampanga It is clear, however, from E.O. 292, Book V, Title
as amounting to a constructive dismissal. 1, Subtitle A, Chapter 5, Section 26 (7) that there is no
such duty to first report to the new place of assignment
Due to the then inaction of the BIR, Pacheo filed prior to questioning an alleged invalid reassignment
a complaint before the CSC, praying for the nullification imposed upon an employee. Pacheo was well within her
of RTAO No. 25-2002. The BIR, through its Deputy right not to report immediately to RR4, San Fernando,
Commissioner for Legal and Inspection Group, Guevara, Pampanga, and to question her reassignment.
denied Pacheos protest for lack of merit. It contended
that her reassignment could not be considered Reassignments involving a reduction in rank,
constructive dismissal as she maintained her position as status or salary violate an employee’s security of tenure,
Revenue Attorney IV and was designated as Assistant which is assured by the Constitution, the Administrative
Chief of Legal Division. Code of 1987, and the Omnibus Civil Service Rules and
Regulations. Security of tenure covers not only
Pacheo appealed to the CSC where the latter employees removed without cause, but also cases of
granted the same. However, the CSC held that rules and unconsented transfers and reassignments, which are
so holds that the withholding by the BIR of her salaries is tantamount to illegal/constructive removal.
justified as she is not entitled thereto since she is
deemed not to have performed any actual work in the She is entitled to reinstatement, but finds itself
government on the principle of no work no pay. Still not unable to sustain the ruling that she is entitled to full
satisfied, Pacheo moved for reconsideration. She argued back wages and benefits. It is a settled jurisprudence
that the CSC erred in not finding that she was that an illegally dismissed civil service employee is
constructively dismissed and, therefore, entitled to back entitled to back salaries but limited only to a maximum
salary. However, the motion was dismissed. period of five (5) years, and not full back salaries from
his illegal dismissal up to his reinstatement.
Whether or not the CA erred in ruling that Pacheo was Mgmt Prerogatives and Contracting and
constructively dismissed and entitled to backwages Reorganization


No. Political Law- transfer or assignment of EZARD LLUZ ET AL.
personnel cannot be done when the same is a G.R. No. 208451, February 3, 2016
preliminary step toward his removal or a scheme to lure
him away from his permanent position. FACTS:
Manila Memorial Park Cemetery, Inc. (Manila
While a temporary transfer or assignment of Memorial) entered into a Contract of Services with
personnel is permissible even without the employee's respondent Ward Trading and Services. The Contract of
prior consent, it cannot be done when the transfer is a Services provided that Ward Trading, as an independent
preliminary step toward his removal, or a scheme to lure contractor, will render interment and exhumation
him away from his permanent position, or when it is services and other related work to Manila Memorial.
designed to indirectly terminate his service, or force his Among those assigned by Ward Trading to perform
resignation. Such a transfer would in effect circumvent services at the Manila Memorial Park were respondents
the provision which safeguards the tenure of office of Ezard Lluz, Norman Corral, Erwm Fugaban, Valdimar
those who are in the Civil Service. Balisi, Emilio Fabon, John Mark Aplicador, Michael
Curioso, Junlin Espares, and Gavino Farinas. On 26
Significantly, Section 6, Rule III of CSC June 2007, respondents filed a Complaint for
Memorandum Circular No. 40, series of 1998, defines regularization and Collective Bargaining Agreement
constructive dismissal as a situation when an employee benefits against Manila Memorial; Enrique B. Lagdameo,
quits his work because of the agency heads Manila Memorial's Executive Vice-President and Director
unreasonable, humiliating, or demeaning actuations in Charge for Overall Operations, and Ward Trading. On
which render continued work impossible. Hence, the 6 August 2007, respondents filed an amended complaint
employee is deemed to have been illegally dismissed. to include illegal dismissal, underpayment of 13th month
This may occur although there is no diminution or pay, and payment of attorney's fees. Respondents
reduction of salary of the employee. It may be a transfer alleged that they asked Manila Memorial to consider
from one position of dignity to a more servile or menial them as regular workers within the appropriate
job. bargaining unit established in the collective bargaining
agreement by Manila Memorial and its union, the Manila
The CSC, through the OSG, contends that the Memorial Park Free Workers Union (MMP Union).
deliberate refusal of Pacheo to report for work either in Manila Memorial refused the request since respondents

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were employed by Ward Trading, an independent labor employees concerned. The Court also found that Ward
contractor. The MMP Union, on behalf of respondents, Trading is not a registered contractor under the
sought their regularization which Manila Memorial again Department of Labor and Employment. For failing to
declined. Respondents then filed the complaint. register as a contractor, a presumption arises that one is
Subsequently, respondents were dismissed by Manila engaged in labor-only contracting unless the contractor
Memorial. Thus, respondents amended the complaint to overcomes the burden of proving that it has substantial
include the prayer for their reinstatement and payment of capital, investment, tools and the like.
back wages.
Whether or not an employer-employee WORKERS SOLIDARITY OF
relationship exists between Manila Memorial and DARBMUPCO/DIAMOND-SPFL, DIAMOND FARMS
respondents for the latter to be entitled to their claim for AGRARIAN REFORM BENEFICIARIES MULTI-
wages and other benefits PURPOSE COOPERATIVE (DARBMUPCO),
G.R. Nos. 173254-55 & 173263 January 13, 2016
Yes. Contracting arrangements for the
performance of specific jobs or services under the law Diamond Farms, Inc. (DFI) owned an 800-
and its implementing rules are allowed. However, hectare banana plantation in Alejal, Carmen, Davao. DFI
contracting must be made to a legitimate and sold 689.88 hectares of the original plantation to the
independent job contractor since labor rules expressly government, and on January 1, 1996, the Department of
prohibit labor-only contracting. Labor-only contracting Agrarian Reform (DAR) turned over the purchased land
exists when the contractor or subcontractor merely to qualified agrarian reform beneficiaries (“ARBs”).
recruits, supplies or places workers to perform a job, These ARBs were the same farmers who were
work or service for a principal and any of the following working in the original plantation. They subsequently
elements are present: a.) The contractor or organized themselves into a multi-purpose cooperative
subcontractor does not have substantial capital or named “DARBMUPCO”.
investment which relates to the job, work or service to be On March 27, 1996, DARBMUPCO and DFI
performed and the employees recruited, supplied or entered into a Banana Production and Purchase
placed by such contractor or subcontractor are Agreement (BPPA). In this contract, DARBMUPCO
performing activities which are directly related to the agreed to cultivate bananas to be sold exclusively to
main business of the principal; or b.) The contractor DFI. To assist DARBMUPCO in meeting its production
does not exercise the right to control the performance of obligations in the BPPA, DFI engaged the services of 12
the work of the contractual employee. A closer look at individual contractors, who in turn recruited 400 workers.
the Contract of Services reveals that Ward Trading does
On June 20, 1997 and September 15, 1997, the
not have substantial capital or investment in the form of
tools, equipment, machinery, work premises and other Southern Philippines Federation of Labor (SPFL),
materials since it is Manila Memorial which owns the together with more than 300 workers, filed a case for
underpayment of wages, nonpayment of 13th month pay
equipment used in the performance of work needed for
and service incentive leave pay and attorney’s fees
interment and exhumation services. While the Contract
against DFI, DARBMUPCO and the respondent-
of Services provides that Manila Memorial shall sell
equipment worth P1.4 million to Ward Trading, the Court contractors before the NLRC.
found no evidence to prove that the sale actually pushed
through or that payments were made by Ward Trading. ISSUE:
The Contract also provides that Manila Memorial shall Who among DFI, DARBMUPCO and the
have the right to rent back from Ward Trading all or any respondent-contractors is the employer of the
of its equipment. This provision is clear proof that Ward respondent-workers?
Trading does not have an absolute right to use or enjoy
the equipment; hence proving that it has no ownership
thereof. HELD:
Furthermore, since Manila Memorial agreed to provide There is no evidence showing that respondent-
office space for Ward Trading’s staff and personnel, the contractors are independent contractors, they are labor-
Court treated it as a clear proof that even its work only contractors. The respondent-contractors, DFI, and
premises are not owned by Ward Trading. The records DARBMUPCO did not offer any proof that respondent-
show that Manila Memorial and Enrique B. Lagdameo contractors were not engaged in labor-only contracting.
admitted that respondents performed various interment A finding that a contractor is a labor-only contractor is
services at its Sucat, Paranaque branch which were equivalent to a declaration that there is an employer-
directly related to Manila Memorial's business of employee relationship between the principal, and the
developing, selling and maintaining memorial parks and workers of the labor-only contractor; the labor-only
interment functions. Manila Memorial even retained the contractor is deemed only as the agent of the principal.
right to control the performance of the work of the Thus, in this case, respondent-contractors are the labor-

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only contractors and either DFI or DARBMUPCO is their prosecution thereof. -- Unfair labor practices violate the
principal. constitutional right of workers and employees to self-
Under Article 106 of the Labor Code, a principal organization, are inimical to the legitimate interests of
or employer refers to the person who enters into an both labor and management, including their right to
agreement with a job contractor, either for the bargain collectively and otherwise deal with each other
performance of a specified work or for the supply of in an atmosphere of freedom and mutual respect, disrupt
manpower. industrial peace and hinder the promotion of healthy and
stable labor-management relations.
That DFI is the employer of the respondent-workers is
bolstered by the CA’s finding that DFI exercises control
Prohibited acts considered as ULP relate to the
over the respondent-workers. DFI, through its manager
workers' right to self-organization and to the
and supervisors provides for the work assignments and
observance of a CBA. Without that element, the acts,
performance targets of the respondent-workers. The
even if unfair, are not ULP. Thus, an employer may
managers and supervisors also have the power to
only be held liable for unfair labor practice if it can be
directly hire and terminate the respondent-workers.
shown that his acts affect in whatever manner the right
Evidently, DFI wields control over the respondent-
of his employees to self-organize.
workers. In labor-only contracting, it is the law, which
creates an employer-employee relationship between the
Aside from the bare allegations of the Union, nothing in
principal and the workers of the labor-only contractor.
the records strongly proves that Bankard intended the
Inasmuch as it is the law that forms the MRP as a tool to drastically and deliberately reduce
employment ties, the stipulation in the BPPA that union membership. There was no proof that the program
respondent-workers are not employees of DFI is not was meant to encourage the employees to disassociate
controlling, as the proven facts show otherwise. The law themselves from the Union or to restrain them from
prevails over the stipulations of the parties. Clearly, DFI joining any union or organization.
is the true employer of the respondent-workers;
respondent-contractors are only agents of DFI. Under True, the program might have affected the number of
Article 106 of the Labor Code, DFI shall be solidarily union membership but it does not necessarily follow that
liable with the respondent-contractors for the rightful Bankard indeed purposely sought such result. The MRP
claims of the respondent-workers, to the same manner was implemented as a valid cost-cutting measure, well
and extent as if the latter are directly employed by DFI. within the ambit of the so-called management
prerogatives. In the absence of any showing that
BANKARD, INC. v. NATIONAL LABOR RELATIONS Bankard was motivated by ill will, bad faith or malice, or
COMMISSION- FIRST DIVISION, PAULO that it was aimed at interfering with its employees' right
BUENCONSEJO,BANKARD EMPLOYEES UNION- to self-organize, it cannot be said to have committed an
AWATU act of unfair labor practice.
G.R. NO. 171664 March 6, 2013
Management has wide latitude to conduct its own affairs
FACTS: Bankard, Inc. in implementing the Manpower in accordance with the necessities of its business. This
Rationalization Program (MRP) reduced the number of is so because the law on unfair labor practices is not
employees and because of said reduction the former intended to deprive employers of their fundamental right
subsequently contracted out the jobs held by former to prescribe and enforce such rules as they honestly
employees to other contractual employees. The Union believe to be necessary to the proper, productive and
claims that in implementing the MRP, it violated Article profitable operation of their business. Contracting out of
248(c) of the Labor Code which states that: Art. 248. services is an exercise of business judgment or
Unfair labor practices of employers. It shall be management prerogative. Absent any proof that
unlawful for an employer to commit any of the following management acted in a malicious or arbitrary manner,
unfair labor practice: x x x (c) To contract out services or the Court will not interfere with the exercise of judgment
functions being performed by union members when such by an employer.
will interfere with, restrain or coerce employees in the
exercise of their rights to self-organization. Because the Eugene Arabit v Jardine Pacific Financea
MRP eventually reduced the number of employees thus G.R. No. 181719,21 April 2014
reduced the number of union members. At the same
time the number of contractual employees, who were Facts: Petitioners were former regular employees at
never eligible for union membership for lack of Jardine and were officers and members of the Labor
qualification, increased. Union. On the claim of financial losses, Jardine
implemented a redundancy program and petitioners
ISSUE: WON Bankard committed acts considered as were affected. Thereafter, Jardine hired contractual
ULP. employees to perform the work of the former employees.
The Union filed a notice of strike and they reached a
HELD: NONE. The underlying concept of ULP is found compromise agreement where petitioners were given
in Article 247 of the Labor Code, to wit: Art. 247. redundancy pay without prejudice to the filing of a
Concept of unfair labor practice and procedure for complaint. They filed a case for illegal dismissal and

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Unfair labor practices. The Labor Arbiter ruled in their is a circumvention of their constitutional rights to security
favour. NLRC affirmed. CA reversed. Hence, this of tenure, and therefore illegal.
Issue: Whether or not they were illegally dismissed. ATTY. MA. ROSARIO MANALANG-DEMIGILLO vs.
Ruling: Yes. Redundancy exists where the services of CORPORATION OF THE PHILIPPINES (TIDCORP),
an employee are in excess of what is reasonably and its BOARD OF DIRECTORS
demanded by the actual requirements of the enterprise. TRADE AND INVESTMENT DEVELOPMENT
A position is redundant where it is superfluous, and CORPORATION OF THE PHILIPPINES vs.
superfluity of a position or positions may be the outcome MA. ROSARIO S. MANALANG-DEMIGILLO
of a number of factors, such as over hiring of workers, G.R. No. 168613 March 5, 2013
decreased volume of business, or dropping of a
particular product line or service activity previously Facts:
manufactured or undertaken by the enterprise. Republic Act No. 8494 reorganized the structure
Retrenchment, on the other hand, is used of TIDCORP. Rosario Manalang-Demigillo was
interchangeably with the term lay-off. It is the termination appointed as Senior Vice President with permanent
of employment initiated by the employer through no fault status, and was assigned to the Legal and Corporate
of the employees and without prejudice to the latter, Services Department of TIDCORP.
resorted to by management during periods of business During the implementation of the Organizational
recession, industrial depression, or seasonal Refinement/Restructuring Plan, the LCSD was
fluctuations, or during lulls occasioned by lack of orders, abolished. According to the List of Appointed Employees
shortage of materials, conversion of the plant for a new under the New Organizational Structure of TIDCORP,
production program or the introduction of new methods Demigillo, albeit retaining her position as a Senior Vice
or more efficient machinery, or of automation. Simply President, was assigned to head the Remedial and
put, it is an act of the employer of dismissing employees Credit Management Support Sector. On the same date,
because of losses in the operation of a business, lack of President Valdes issued her appointment as head of
work, and considerable reduction on the volume of his RCMSS, such appointment being in nature a
business, a right consistently recognized and affirmed by reappointment under the reorganization plan.
this Court. These rulings appropriately clarify that President Valdes issued a memorandum
redundancy does not need to be always triggered by a informing all officers and employees of TIDCORP that
decline in the business. Primarily, employers resort to the Board of Directors had approved the appointments
redundancy when the functions of an employee have issued pursuant to the newly approved positions under
already become superfluous or in excess of what the the Organizational Refinement/Restructuring Plan.
business requires. Thus, even if a business is doing well, Demigillo challenged before the Board of
an employer can still validly dismiss an employee from Directors the validity of Resolution No. 1365 and of her
the service due to redundancy if that employee’s position assignment to the RCMSS. She averred that she had
has already become in excess of what the employers been thereby illegally removed from her position of
enterprise requires. From this perspective, it is illogical Senior Vice President in the LCSD to which she had
for Jardine to terminate the petitioners employment and been previously assigned during the reorganization of
replace them with contractual employees. The July 1998. She insisted that contrary to OGCC Opinion
replacement effectively belies Jardine’s claim that the No. 221 the Board of Directors had not been authorized
petitioners positions were abolished due to superfluity. to undertake the reorganization and corporate
Redundancy could have been justified if the functions of restructuring.
the petitioners were transferred to other existing In the meanwhile, President Valdes
employees of the company. To dismiss the petitioners informed Demigillo of her poor performance rating for the
and hire new contractual employees as replacements period from January 1, 2002 to December 31, 2002.
necessarily give rise to the sound conclusion that the Subsequently, TIDCORP reinstated
petitioners services have not really become in excess of Demigillo to the position of Senior Vice President in
what Jardine’s business requires. To replace the RCMSS, a position she accepted without prejudice to
petitioners who were all regular employees with her right to appeal the decision of the CSC.
contractual ones would amount to a violation of their
right to security of tenure. In the case at bench, Issue: Whether or not the reorganization is valid
respondents did not dispute that after laying-off resulting to Demigillo’s reassignment valid
complainants herein, they engaged the services of an
agency to perform the tasks use to be done by Held:
complainants. This is in direct contradiction to the Yes. Under the circumstances, when the
concept of redundancy which precisely requires the members of the Board of Directors effected the assailed
trimming down of the workforce because a task is being 2002 reorganization, they were acting as the responsible
carried out by just too many people. The subsequent members of the Board of Directors of TIDCORP
contracting out to an agency the functions or duties that constituted pursuant to Presidential Decree No. 1080, as
used to be the domain of individual complainants herein amended by Republic Act No. 8494, not as the alter
egos of the President. We cannot stretch the application

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of a doctrine that already delegates an enormous pattern of the provincial government. Pursuant to said
amount of power. Also, it is settled that the delegation of Resolution, Governor Parilla issued Executive Order
power is not to be lightly inferred. (EO) No. 98-07 declaring all positions in the provincial
government of Biliran as abolished except those of the
The result of the lengthy consultations and close Provincial Treasurer and all elective positions. EO No.
coordination was the comprehensive reorganization plan 98-07 was revoked by EO No. 98-08 which in turn
that included a new organizational structure, position declared all positions under the new staffing pattern
classification and staffing pattern, qualification vacant and directed all permanent employees to submit
standards, rules and regulations to implement the their application within fifteen (15) days from the date of
reorganization, separation incentive packages and posting of the approved new staffing pattern. Petitioners
timetable of implementation. Undoubtedly, TIDCORP filed a suit for Prohibition to question the validity of EO
effected the reorganization within legal bounds and in No. 98-08. Meanwhile, pursuant to said EO, a Personnel
response to the perceived need to make the agency Placement Committee (Committee) was created to
more attuned to the changing times. screen and evaluate all applicants for the vacant
positions. Petitioners failed/refused to apply for any
Having found the 2002 reorganization to be valid position under the new staffing pattern, claiming that to
and made pursuant to Republic Act No. 8494, we do so would be inconsistent with their pending suit for
declare that there are no legal and practical bases for prohibition. As a result of the reorganization, the
reinstating Demigillo to her former position as Senior positions in the Biliran Provincial Health Service
Vice President in the LCSD. To be sure, the occupied by petitioners were excluded or abolished.
reorganization plan abolished the LCSD, and put in Then petitioners received their notices of
place a setup completely different from the previous one, termination/non-reappointment.
including a new staffing pattern in which Demigillo would
be heading the RCMSS, still as a Senior Vice President ISSUE: whether or not the reorganization was done
of TIDCORP. With that abolition, reinstating her as in bad faith
Senior Vice President in the LCSD became legally and
physically impossible. HELD:
Demigillo’s contention that she was specifically
appointed to the position of Senior Vice President in the No. Petitioners failed to adduce evidence to show bad
LCSD was bereft of factual basis. The records indicate faith on the part of the Province in effecting the
that her permanent appointment pertained only to the reorganization. First, petitioners have failed to show that
position of Senior Vice President. Her appointment did there was a significant increase in the number of
not indicate at all that she was to hold that specific post positions in the new staffing pattern of Biliran Province
in the LCSD. Hence, her re-assignment to the RCMSS as a result of the reorganization. Second, petitioners
was by no means a diminution in rank and status have failed to present evidence that an office performing
considering that she maintained the same rank of Senior substantially the same functions as an abolished office
Vice President with an accompanying increase in pay was created as a result of the reorganization. Third,
grade. petitioners have not shown that there was
a reclassification of offices in the department or agency
The assignment to the RCMSS did not also concerned and the reclassified offices perform
violate Demigillo’s security of tenure as protected by substantially the same function as the original offices.
Republic Act No. 6656. We have already upheld Fourth, petitioners have not adduced evidence that
reassignments In the Civil Service resulting from valid they were replaced by those less qualified in terms of
reorganizations. Nor could she claim that her status of appointment, performance and merit.
reassignment was invalid because it caused the
reduction in her rank, status or salary. On the contrary, Petitioners were not deprived of due process when they
she was reappointed as Senior Vice President, a were not screened and evaluated for possible
position that was even upgraded like all the other similar appointment to new positions, as they had not filed their
positions to Pay Grade 16, Step 4, Level II. In every applications notwithstanding the invitation for them to do
sense, the position to which she was reappointed under so.
the 2002 reorganization was comparable with, if not Mgmt Prerogatives and Grant Of Bonuses and
similar to her previous position. Allowances

Eastern Telecommunications Phils. Inc v Eastern

COTIANGCO VS PROVINCE OF BILIRAN Telecoms Employees Union (GR 15665, 2013)
GR. 157139, Oct. 19, 2011 Facts:
Petitioners held permanent appointments as public Eastern Telecommunications Phils Inc (ETPI) is a
health workers in the Province of Biliran. The corporation engaged in telecom with over 400
Sangguniang Panlalawigan of Biliran passed a employees. Eastern Telecoms Employees Union (ETEU)
Resolution approving the revised structure and staffing

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is the certified exclusive bargaining agent of the THE GIST ON BONUS and MGMT PREROGATIVES :
company’s rank and File.
Gen Rule :
The dispute arose when ETPI postponed the payment of
the 14th, 15th and 16th month bonuses due to alleged A bonus is a gratuity or act of liberality of the giver which
continuing deterioration of company’s financial position, the recipient has no right to demand as a matter of right.
plus, the payment would depend upon the availability of The grant of a bonus is basically a mgmt prerogative
the funds. which cannot be forced upon the employer who may not
be obliged to assume the onerous burden of granting
CBA provision in issue : Employment Related Bonuses. bonuses or other benefits aside from the employees
The company confirms that the 14th, 15th and 16th month basic salaries and wages.
bonuses (other than the 13th month pay) are granted.
Of course the union objected to the deferred payment of
the bonuses. The disagreement lead to a MOA that the It becomes demandable or enforceable obligation when
bonuses shall be paid in 2004 of April, however, the it is made part of the wage or salary or compensation of
president of the Company refused to sign the MOA and the employee.
later on ETPI declared that there will be no bonuses until
the issue is resolved. The SOLE certified the labor This means that bonus is not subject to any
dispute finding that the ETPI is vital to the telecom condition for its payment (so unconditional sya).
Exception to the exception –meaning babalik sa general
ETEU’s contention: ETPI had consistently and rule
voluntarily been giving 14th, 15th and 16th month bonuses
If the payment is premised on certain conditions
every year even when profits have not yet been realized.
like profitability of the company, or productivity clauses,
These bonuses have ripened into a company practice
in such case it is not actually a bonus kasi in that sense
which can no longer be unilaterally withdrawn by ETPI,
it become a prize, and thus, not part of wage.
also the bonuses had been part of side agreements to
the CBA thus, ETPI is contractually bound. TEST TO DETERMINE IF BONUS IS DEMANDABLE
ETPI’s contention : the bonuses were not part of the
legally demandable wage and the grant thereof to its
Is the grant and payment of the bonus subject to any
employees is an act of pure gratuity and generosity,
stemming from the exercise of ETPI’s mgmt prerogative.
If yes= PRIZE therefore not demandable as matter of
The discontinuance of bonuses is for legitimate reason
right if the condition was not met, if conditions were met
of huge losses by company and no malice was intended.
then it becomes demandable.
As to the side agreement, ETPI posits that it was a mere
affirmation but still premised on the success of the If no = PART of WAGE so demandable and
business. enforceable as a matter of right
Issue : May ETPI be compelled to pay bonuses ? Eh paano kung may CBA agreement ? Check pa rin
if the bonus is subject to certain conditions and then
NLRC : dismissed complaint, no payment obligation if no
apply the same test mentioned above.
CA: There is a contractual obligation based on the Side
GR 213472, Jan 2016, Mendoza, J.
agreement in the CBA.
Facts :
SC Says : As the bonuses are part of the Side
Agreement to the CBA where the grant of bonuses was Zamboanga City Water District (ZCWD) is a GOCC
not premised on any condition, ETEU has the right to which was created pursuant to the provisions of PD 198
demand for payment of the 14th, 15th and 16th Bonuses. or the Provincial Water Utilities Act (PWUA) of 1973.
History of the company also shows that even despite
losses in previous years, the company still granted and On Jan 9, 2007 a team of COA auditors for Zamboanga
paid the bonuses to its employees. City headed by Genel disallowed various payments.
The disallowed payments included payment of 14th
To not grant the bonuses when it has become custom month bonus, one month Mid-Year Incentive , Collective
would be tantamount to diminution of benefits. Art. 100 Negotiation Agreement incentives and a separate
of the Labor Code provides : Prohibitions against insurance policy other than the GSIS. Notice of
elimination or diminution of benefits. Nothing in this book Disallowance was issued to ZCWD.
shall be construed to eliminate or in any way diminish
ZCWD then filed its appeal to LAO since the payments
supplements of other employee benefits being enjoyed
were approved by CSC
at the time of promulgation of this code.

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ZCWD Contention : There was compliance with PSLMC Side Issue : Paano yung mga narealease na like the mid
and payment of 14th month payment has always been year incentives, refund pa ba yun ( uh oh )
paid to its employees since July 1 1989 and that
disallowing payment of the 14th month payment to SC Says : No na anyways ZCWD relied in good faith on
employees hired after July 1, 1989 would be a violation the approval of CSC. ZCWD believed in good faith that
against the equal protection clause. the approval of CSC is sufficient, pero yun lang ha,
those items were CSC approval was relied upon.
LAO: Upheld the disapproval on said payment due to
the following: OKAY,so hindi na din isosoli yung mga ibang narelease
na sa ees ?
CNC incentives: CSC approval is not sufficient,
there must be legal basis. No compliance with Public SC Says : IBALIK yung 14th month kasi walang good
Sector Labor Mgmt Council faith ang ZCWD for failure to comply with PSLMC BUT
the BOD and ZCWD officers are the ones liable for the
(PSLMC) was also shown. Additional Insurance other return/ reimbursement not the employees (malay ba nila
than GSIS is contrary to Commonwealth Act 186 as na unauthorized yung tinanggap nila, It’s not their fault
amended by RA 4986. but the BOD’s fault)! Passive recipients who cannot be
charged with knowledge of any irregularity attending the
COA: LAO ruling affirmed because no proof of disallowed disbursement (Silang v COA)
compliance with PSLMC particularly:
a. identifying specific cost cutting measures and , GR 210001, July 2016, EnBanc, Brion J.
b. proof that the funds for the incentives were taken from Facts:
savings as a result of cost cutting measures.
EO 46 authorized DOT through Philippine Tourism
Issue : Is the disallowance of incentives and 14th month Authority to operate stores and shops that would sell tax
proper? and duty free merchandise, goods and articles in
international airports and sea ports throughout the
SC Says: YES country. Duty Free was established pursuant to this
ON CNA Incentives :Swak lang Section 2 of PSLMC
requires that CNA must include cost-cutting measures Duty Free Phil Services Inc (DFPSI) a private
that shall be undertaken both by the management and contracting agency initially provided the manpower of
union. There must also be savings in the prior year to Duty Free DFPSI ees organized the Duty Free
justify the payment for the present year. In this case no Philippines Employees Association (DFPEA). In 1997
such proof was shown that there was indeed savings due to the certification election by DFPEA with DOLE, it
from last year. was found by DOLE that DFPSI is a labor only
contractor, thus its ees were deemed direct ees of Duty
ON 14th month pay of ees : No Entitlement !
Free. Duty Free granted 14th month bonus to its ees and
First> ZCWD failed to prove by sufficient documents that officials in 2002, with the total amount of more or less
the 14th month payment was paid to ees in previous P14.8M.
years. Christmas bonus is not the same as 14th month
pay, I4th month pay is an additional benefit. A non- In 2006, COA disallowed the payment the bonus for
integrated benefit to be continuously enjoyed must have being irregular due to non approval of PTA BOD and the
been since July 1, 1989 to incumbents of said date. It Office of the President as required by law under sec 5 of
cannot be extended to those who replaced the July 1, PD 1597 and M.O 20, June 25, 2005.
1989 employees. The COA ordered certain officials and ees to settle the
Will non payment of 14th month bonus violate equal
protection clause? COA Legal Adjudication Sector (COA LAS) denied MR
by Duty Free.
NO! The equal protection clause allows classification The finding that DFPSI is a Labor Only Contractor
provided that it is based on real and substantial converted the status of the ees from private to
differences having reasonable relation the subject. In government. The non-payment of 14th month is not a
this case there is distinction between those hired before diminution of the worker’s benefits since their salaries
July 1, 1989 (SLL) and those hired after July 1, 1989. and benefits are governed by law, rules and regulations
The difference is germane to the objective of the Salary applicable to government ees.
Standardization Law. The classification was made with
the purpose of phasing out the said benefits without COA : Duty Free employees are government employees
resulting to the diminution of benefits and pay of the and thus their salary structure is subject to RA 6758 or
incumbents. the Salary Stand..L.

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But …additional allowances and benefits granted to SC Says : NO NA KASI MAY GOOD FAITH!
incumbent govt ees before the effectivity of the SSL (july
1, 1989) shall not be diminished. Duty Free ees whi have What a relief! Well Sc said the Duty Free official relied
been receiving 14th month as of July , 1989 shall on good faith that they were paying it as it was vested
continue to receive it but those hire after July 1, 1989 right of the ees plus the circumstance was so complex
shall not be entitled to 14th month pay although their due to pasa from DFPSI to Duty Free. Also they did so in
contracts with DFPSI gave such entitlements. the fear of litigation against govt due to non payment of
the 14th month pay. So there was no malice on their part
DUTY Free Contention : 1. If they do not pay such is and on the part of the ees. So wag na soli yung money
tantamount to diminution of the workers benefits. 2. The and no one is also to be held accountable, in short,
payment of 14th month in 2002 was made in good faith lesson learned na lang .
supported by jurisprudence and the Duty Free ees’
vested rights to benefits granted under their contracts. PEZA v. COA
GR 210903, Nov 2016, Peralta J.,
COA’s Contention: Med Arbiter did not rule that duty Facts :
free continue paying benefits of DFPSI ees when it was
declared the direct er of DFPSI ees. Duty Free are ees PEZA Charter, RA 7916 was amended by RA 8748 in
of government and therefore subject to the SSL and the 1999 exempting PEZA from existing laws, rules and
July 1, 1989 churves re hired before and after such date regulations on compensation, position classification and
and the effect to the receipt of bonus. qualification standards Sec 16 of RA 7916.

Issue: IS COA correct in the Notice of Disallowance The PEZA board in a resolution dated Oct 1999 adjusted
PEZA’s compensation plan and included is the grant of
SC Says: YES Christmas bonus in such amount as may be fixed by the
board. PEZA has been granting Christmas bonus in the
Duty Free ees are government ees. They became amount of P50K to each of its ees and officers for 2000-
such when Duty Free terminated contract with DFPSI 2004. From 5Ok in 200o and with increase after by
when it was found to be labor only contractor and 2008m the Christmas bonus was already P75K.
besides Duty Free without a doubt is a government
entity. COA through state auditor Funa in May 2010 issued a
Notice of Disallowance for the bonuses from 2005-2008
As government ees working in a govt entity, The stating that GOCC bonuses not covered by SSL, by law,
duty Free personnel’s’ compensation structure must must first be approved by the Ofc of the President, such
comply and not contradict the Salary was effective since June 25, 2001.
Standardization Law. SSL applies to all positions,
appointive or elective, on full or part-time basis, now Corporate Government Sector B : Affirmed the Notice
existing or hereafter created in the govt including GOCC of Disallowance by COA
and Govt Financial institution. (Sec 4 SSL).
COA : Notwithstanding the provision in the charter of
Sec 12 xxx such other additional compensation , PEZA, PEZA is still duty bound to observe the guidelines
whether in cas or in kind, being received by incumbents and policies as may be issued by the President. (thru
only as of July 1, 1989 not integrated into the DBM) which also includes approval of salary increases,
standardized salary rate shall continue to be authorized. such requisites do not undermine the BOD of PEZA as it
is meant to check on compliance to the laws, rules,
In this case, at the time that Duty Free paid the regulations.
disallowed 14th month bonus (2002), the ees were
already under its direct supervision and control, they PEZA Contention: Not covered by PD 1597 because its
were then govt ees covered by the SSL. Thus, wala pa provisions are inconsistent with RA 7916, and the law
ding diminution of benefits kasi nga the SSL is deemed provides reporting to the president through the DBM, the
to have superseded (made sapaw na) the employment law does not provide for approval of the President.
contracts of DFPSI the moment that Duty Free
terminated its contracts with DFPSI. Hindi pwedeng Duty SOlgen for COA : despite the exception clause of sec
Free is obligated to fill in the shoes of DFPSI in the 16 of RA 7916, said provision should be read in
employment contract granting the 14th month pay kasi as conjunction with the existing laws pertaining to
government entity Duty Free cannot assume such compensation among govt services as it is undoubtedly
obligation that is contrary to law, in this case the SSL. a GOCC over which the Pres exercise his power of
control through DBM, aside from the parameter of the
So not valid yung 14th month in the Total amount, of provision which provides that PEZA “shall however
more or less P14.8M, and since hindi sya fault ng ees, endeavor to make its system conform as closely as
ibig sabihin the Duty Free officers are liable to return the possible with the principles under RA 6758’.
money ba to government? Oh shoot !

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Issue : IS COA correct in disallowing the bonuses on the the ground that it was contrary to jurisprudential doctrine
ground of irregularity in the procedure of the and that there was no legal basis on such grants. LMRG
compensation plan? is the same as Performance Incentive Bonus (PIB).

SC Says : CORAK pa din si COA . Kasi, SC in reviewing COA legal Services Sector: denied MR
the other Government instrumentalities (Land Bank of
the Phils, SSS, Small Business Guarantee and Finance COA Commissioner Proper: sustained the
Corp., GSIS, DBP, Home Guaranty Corporation and disallowance
PDIC) which have the same exception clause does not
warrant that it is not without any form of restriction. They COA CP En Banc: denied MR
are still required to report to the office of the President
through the DBM the details of their salary and PHIIC Contention: 2001 CNASB not 2002 and the SSS
compensation system and to endeavor to make the v COA was yet to be resolved in the year 2002. The
system to conform as closely as possible to the modes WESA has legal basis, Magna Carta for Worker in Public
and principles in SSL. Such restriction is the most Health, Labor Management Relations Gratuity not
apparent indication that the legislature did not divest the duplicate of PIB , as LMRG was passed by the PHIC
Pres. as Chief Exec. of his power of control over the said board in the exercise of its fiscal autonomy while the PIB
government entities. was granted under EO 486. COLA back pay was for
services rendered 1989-95 when it was not yet
“Shall Endeavor” as SC applied StatCon means to published that COLA was integrated in the SSL.
devote serious effort, in the case of TIDCORP, SC held Publication was only made in 1999.
that the duty “to endeavor to conform” allows TIDCORP
to deviate but should try to closely hew (make it as close COA contention : Fiscal Autonomy of PHIC does not
as possible) to the modes and principles in RA preclude the COA’s power to disallow the grant of
6758/SSL and not to the entirety of the law. allowances. Also that PHIC cannot rely on Sec 16 of RA
7875 because in GSIC v CSC, the term compensation
Reminder was also made that in our system of Govt, the excludes all bonuses, per diems, allowances and
Pres has control over exec depts., bureaus, and offices. overtime pay or salary pay or compensation given in
… addition to the base pay of the position or rank as fixed
by law or regulation. , LMRG is exactly the same as PIB,
BUT such disallowance does not automatically cast COLA should not be paid by PHIC, WESA was approved
liability to the officers … question of good faith must be not by the board but only by the president.
ISSUE : Is PHIC correct in invoking its fiscal autonomy
Good faith denotes “honesty of intention and freedom under its charter especially since it does not have the “to
from knowledge of circumstances which ought to put the endeavor to conform” clause
holder upon inquiry, an honest intention to abstain from
taking any unconscientious advantage of another even SC Says : NO. Devoid of merit daw !
though technicalities of law, together with absence of all
information, notice, or benefit or belief of facts which Notwithstanding any exemption granted under their
render transaction unconscientious.” charters, the power of GOCCs to fix salaries and
allowances must still conform to compensation and
In this case, SC found that it was unfair to penalize position classification standards laid down by applicable
public officials based on overly stretched and strained law. (Hmm kasi naman espesyal talaga kayo!) Even if
interpretation of rules which were not readily capable of the charter does not provide that there must be approval
being understood at the time such functionaries acted in by any other agency or offices, or that even if there is an
good faith. explicit provision on exemption such cannot be so as it is
giving PHIC an unbridled authority and undue delegation
PHILHEALTH v COA of the legislative power.
GR 213453, Nov 2016, Peralta J.,
Facts: Under SSL provi in sec 12, the general rule is that all
PHIC granted several allowances to its officers and ees. allowances are deemed included in the SSL except for
These were under Collective Negotiaon Agreement the following: (1) RATA, (2) Clothing and Laundry
Signing Bonus (CNASB) of P5K each to all qualified ees Allowance, (3) Subsistence Allowances of Marine officer
due to extension of the then existing CNA between PHIC and Crew on board govt Vessels and hospital
mgmt and PHIC Employees Association for another 3 personnel, (4) Hazard pay, (5) Allowances of foreign
yrs. Welfare Support Assistance (WESA) in the amount service personnel stationed abroad, (6) such other
of P4K in lieu of the laundry allowance granted in the additional compensation not otherwise specified herein
Magna Carta for Public Health Workers. Another was the as may be determined by DBM. Section 12 of SSL is an
payment of COLA of health workers that they absorbed exclusive list and it is also self executing thus those not
from Phil Medical Care Commission (PMCC). under the list are deemed additional non integrated
COA issued a notice of disallowance on the mentioned allowances.
grant of bonuses in the total amount of about P87.7M on

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Equal protection clause is not applicable here kasi nga operations were severely affected thus, they set up new
there is a reasonable ground for the classification which product line exclusively for Pentax Cebu Phils Corp.
is also germane or closely relate to the purpose of the (Pentax). The Pentax’s order declined kaya nag reduce
law. ng work days per week in from April to June ’06.

Thus, absent any bad faith the WESA, CNASB, COLA INTEC Contention : The reduction of working days was
are not to be reimbursed. However, as to the LMRG, it to forestall business losses as proven by audited
must be refunded by the officers who approved it for financial losses 2001-06. The 188 were on-the—job
having done so without authority of any law and mere trainees from TESDA and Sisters of Mary who were
reliance to the so called ‘fiscal autonomy’ of the BOD. already employed bago pa ng reduce working days.
Applying the passive participation those who did not These 188 was retained para makcomply sila sa urgent
participate in the passing and approval of the LMRG are off-and-on the job orderd ng Pentax. Sila they voluntarily
not liable. resigned and abandoned nung nalaman ang reduce
work week.
In Sum : in case of Govt Agencies, and Instru always
note the ff: 37 Contention : Ney ney ney illegal yung reduced work
week ng Intec and also refutes business losses claimed
1. “endeavor to conform clause” by Intec, wala kayang financial losses when they hired
2. Power of supervision and control of the president the 188 and the 188 were hired despite the reduced
3. Good faith of the officers working days.
4. Passive participation of recipients
5. Equal protection clause defense is not applicable LA : Illegal dismissal so pay kayo ng separation pay and
against ees hired before July1, 1989 as against those backwages, all other claims(hahah kung ano man yun)
ees hire after July 1, 1989 because the classification is are dismissed.
reasonable and is germane to the purpose of the law.
6. Employment Contracts to be honored must not run NLRC : Eh Intec suffered nga tremendous financial
contrary to the provisions of laws, rules and regulations losses kaya justified ang reduction of working days,
by the Government like the Salary Standardization Law. besides the 37 were neither actually or constructively
7. Sec 12 of the SSL is self-executing and the list is dismissed, pay ng separation pay but waley backwages.
8. If not part of list = additional non-integrated CA: Balik sa decision ng LA, illegal dismissal
allowances which must be reported or approved by Pres
through DBM for the vailidity of such allowances. Issue : Was the reduced working days valid?

SC Says : WALEY!
REDUCTION OF WORK WEEK This is because upon examination of the financial
records submitted while there was a loss of about
P9.2M, the company gained P9.5M and besides the
Gr 189951, June 2016, Perez J.,
reports lack details of actual sales and delivery receipts
for it to substantially prove the claim of financial losses
Intec Cebu Inc (Intec) is engaged in the manufacture claimed by Intec. The loss was not also shown to be
and assembly of mechanical system and printed circuit directly related to slump in orders of their clients
board for cassette tape recorder, CD and CD ROM because for one there was a purchase of an asset at the
player (yes there was a time when having a portable CD time. Neither did they show actual details that the
player in your bag was cool). Private respondents (37 reduction of the working days will result to reduction of
sila) were hired by Intec in ’97 and ’98 respectively as losses.
production workers.
As to the 188 hired workers, que trainees pa sila o
Respondents alleged that in 2005 their working days casual ees, eh dag dag pa sila sa cost ng Intec kung
were reduced from 6 days to 2-4 days / week and Intec tutuusin , isa pa it was not proven that the 188 were
said it was because of lack of job orders. Respondents performing tasks that were different from the tasks of the
nga lang found out naman that Intect hired 188 37.
contractual ees to perform the tasks that they were
Management is free to regulate, according to its own
doing. Subsequently the 37 alleged that they were
discretion and judgment, all aspects of employment,
effectively terminated in May 2006 as shown by
including hiring, work assignments ,working methods,
Establishment Termination Report submitted to DOLE.
time, place and manner of work, processes to be
So sila 37 nagfile sila ng illegal dismissal case.
followed, supervision of workers, lay-off of workers and
Intec on their part claimed that the company was discipline, dismissal and recall of workers. HOWEVER,
established to supply the required materials of Kenwood the exercise of management prerogative is not
Precision Corporation(Kenwood). When Kenwood absolute as it must be exercised in good faith and with
stopped its operations in Philippines, Intec’s business due regard to the rights of labor. Thus Intec had the

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burden of proving that the reduced working days is valid LA : Illegal reduction of work hours
and done in good faith.
NLRC : Legal reduction of work hours, mgmt prerogative
Issue : Was there constructive dismissal here then? justified by the ’97 Asian Crisis

SC Says : HAVEY na HAVEY CA: EES were constructively dismissed, Illegal reduction
of working days,
Intec’s unilateral and arbitrary reduction of work day
scheme had significantly reduced the 37’s salaries Issue: Was the reduction of Working days Illegal?
thereby rendering constructive dismissal. Kasi nga
Constructive dismissal occurs when there is cessation of SC Says: Pak na Pak. The compressed work week is
work because continued employment is rendered unjustifiable and illegal.
impossible, unreasonable or unlikely: when there is a
demotion in rank or diminution in pay or both: or when a Certainly management has the prerogative to come up
clear discrimination, insensibility or disdain by an with cost cutting measures to ensure profitability or loss
employer becomes unbearable to the ee. minimization. However such privilege is not absolute.
Management prerogative must be exercised in good
Was there Abandonment as claimed by Intec? faith and with due regard to the rights of labor.

No abandonment by workers kasi abandonment exists Financial losses must be shown before a company can
when there is clear proof of deliberate and unjustified validly opt to reduce work hours of its ees. However
intent to sever the er-ee relationship. It is also settled there is no definite guideline in this provided by law or
doctrine that the filing of a complaint for illegal dismissal regulation but if we apply in parallel in Art 283 re the
is inconsistent with abandonment of employment. An justifiability of retrenchment or Art 286 re justifiability in
employee who takes steps to protest his dismissal suspension of work, Linton fails to meet the Standards.
cannot be said to have abandoned his work. The filing of Art 286 applies only when there is bona fide suspension
such complaint is proof enough of his desire to work, of the ers operation of business for a period not
thus, negating any suggestion of abandonment. exceeding 6 months.

LINTON COMMERCIAL CO., INC v. HELLERA In Sum Mgmt Prerof vis-à-vis reduction of work hours
GR 163147, 0ct. 2007, Tinga J.,
Facts: 1. It is a mgmt prerog but the validity is anchored in the
good faith of the err in the implementation of the
Linton Commercial Co inc(Linton) is a domestic reduction.
corporation engaged in the business of importation,
wholesale, retail and fabrication of steel and its by 2. The reduction must be shown and proved to be cost
products. The VP in Dec 1997 issued a memo to its cutting measure supported by “actual” financial losses .
employees informing them of the company’s suspension
of operation from Dec 18 ‘97to Jan 5’ 98 due to the 3. Bureau of Working Conditions by Dole : A reduction of
currency crisis which is affecting the business. the number of workding days is valid where the
Establishment Termination Report was filed with DOLE arrangement is resorted to by the er to prevent serious
Dec 17. Business operation will resume on Jan 6, 1998. losses due to causes beyond his control, such as when
there is substabtial slump in the demand for his goods
On Jan 7, 1998, Linton issued another memo statitng and services or when there is lack of raw materials.
that there will be reduced work week of 3 days on a
rotation basis. An ETR was submitted to DOLE Jan 7, 4. Filing of Establishment Termination Report 30 days
the scheme was implemented while awaiting approval of prior effetcivity of the proposed reduced work week.
The respondents are the 68 workers in Linton affected
by the reduction of work days. They filed an illegal
GR 164774, April 2006, Puno, J.,
reduction of workdays. They allege that Linton
implemented reduced working days contrary to Art. 283
of Labor Code, the provi requires that notice of closure Star Paper Corp (Star Paper) is corp engaged in trading
or reduction of personnel must be file one month prior principally of (syempre!) paper products. Respondents
the implementation of the reduction. Linton only filed the are regular ees of Star Paper. The following are
ETR on the very date of its implementation. allegations of Star Paper:
LINTON Contention : The reduction of working days to Simbol was hired in ’93, Dayrit was also an ee, whom
3 days per week on a rotation basis was a cost cutting Simbol married in ’98, Prior to marriage Ongsitco,
measure due to financial losses incurred because of personnel mngr of Star Paper, advised the couple that
currency devaluation. Art 283 is not applicable in this should they decide to marry, one of them should resign

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pursuant to company policy. Masunurin si Simbol, he First.>In this case, the respondents were hired after they
resigned in ’98. were found fit for the job, but were asked to resign after
they got married to a co-ee. Star Paper failed to show
The company policy provides that: new applicants will the ff: a. Simbol’s (sheeting Machine Operator) marriage
not be hired should they have relative up to 3 rd degree of to Dayrit (ee in Repacking Section) could be detrimental
consanguinity to any current ee of Star paper and in to Star Papers’ business operation,b.Comia’s (prodn
case two ees develop a friendly relationship in the helper) marriage to Howard (cutter machine helper)
course of employment and decide to marry, one should could be detrimental to the corp’s business operations.
resign to preserve the company policy. There is no proof to say that the intermarriage of ees will
make these workers less efficient. If this is to be allowed
Comia was hired in ’97, she married a co employee in then ers can create policies based on unproven
2000, she was given the same advise, thus, she presumption of danger at the expense of ees’ security of
resigned in 2000. tenure.
Estrella was hired in ’94, she met co worker, na inlove Second>As to Art 136, the policy is not facially violative
nabuntis kaso late na nung maknowings nya na si of Art 136 but its impact when applied under disparate
Zuniga ay married man, Estrella resigned in ’99.. Corp impact theory, creates a disproportionate effect. Thus, to
says she could have been terminated for immorality. pass validity, it, must be shown that the policy is
reasonable despite being discriminatory, by proving a
Respondents Say: They were compelled to resign. As legitimate business concern . (Disparate Treatment
to Estrella, she alleged that she did bot know that Zuniga Analysis- plaintiff must prove that an employment policy
was married and that she was actually denied entry to is discriminatory on its face, Disparate Impact Theory-
company premises after she had her maternity check up. the plaintiff must prove that facially neutral policy has a
She was forced to resign in order to receive her 13th disproportionate effect on particular class ex although
month pay. the marital policy does not facially indicate which spouse
to resign but the policy often disproportionately affects
Respondents Contention: Constructive dismissal,
one sex).
unfair labor practice as they were union members , and
company policy illegal as it is contrary to Art 136 of LC. Third>The absence of prohibition in our laws against
marital discrimination cannot benefit the corp. The
Star Paper Contention: Its not contrary to Art 136 it
protection given to labor in vast and extensive so as to
may appear so but if read together with the first rule, the
draw inference that the legislative did not intend the
rule does not require the woman to resign, because the
same protection to married ees.
married ees have the right to choose who between them
shoud resign(har har utang na loob pa nila na may Musta naman ang kay Mareng Estrella ?
choice kung sino ang aalis). Also the ees are free to
marry persons other than co-ees, what the policy is The resignation was not voluntary especially since it was
aimed at is avoiding hiring ees that are relatives of other negated by the filling of an illegal dismissal complaint. A
ees up to 3rd degree. resignation is voluntary when the ee is compelled by
personal reason(s) to dissociate himself from
LA: Dismissed complaint. This is mgmt prerog. employment. It is done with the act of relinquishing office
& the act of abandonment.
NLRC : Affirmed LA
Capin-Cadiz v Brent Hospital and Colleges
CA: Illegal dismissal and the policy is violative of consti
GR 187417, Feb 2016, Reyes J.,
rights towards marriage & family of ees and contrary to
Facts :
Art 136 of the LC.

Issue : Is the policy on prohibition of intermarriage Cadiz was the Human Resource Officer of Brent
between ees a valid mgmt prerog? Hospital and Colleges Inc (Brent) at the time of indefinite
suspension from employment in 2006. She was
SC Says: Maley ! Corak si CA! Policy is invalid exercise suspended on the ground of Cadiz’s Unprofessionalism
of mgmt prerogative absent proof of a reasonable and unethical Behavior Resulting to Unwed Pregnancy
business necessity. (wow shocking! Note the sarcasm). She got preggy out
of wedlock and she was suspended until she and her bf
It is true that the policy of prohibiting relatives from gets married. Cadiz then filed ULP , Constructive
working in the same company takes the nature of anti Dismissal among others.
nepotism employment policy. There are actually two
types of policies involving spouses: (1) no-spouse Cadiz Contention : Getting pregnant out of wedlock is
employment policies: banning only spouses from not grossly immoral especially when parties do not have
working in the same company, (2) anti-nepotism any legal impediment to marry. The condition imposed
employment policy: banning all immediate family by Brent that she get married violates Art 136 of the
members, including spouses from working in the same Labor Code.

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Brent Contention : Cadiz limitation of acts of immorality operation of the job involved, (2) that there is factual
only to extramarital affairs is “to change the norms, basis for believing that all or substantially all persons
beliefs, teachings and practices of BRENT as a Churcj meeting the qualifications would be unable to properly
institution of the xxx Episcopal Church in the perform the duties of the job. Brent failed to prove this.
Philippines”. The Brent has policies in its Employment
Manual Policy against immorality and is punishable by In sum, consider the ff when it comes to morality policies
dismissal at first offense. and or marital related policies of companies:

Sec 94 of the Manual of Regulations of Private School 1. Art 136 of the Labor Code ..Stipulation against
(MRPS) which lists “disgraceful or immoral conduct” as a marriage. It shall be unlawful for an employee to require
cause for terminating employment. as a condition of employment or continuation of
employment that a woman employee shall not get
LA : Yes, constructive, not illegal dismissal as there was married or to stipulate expressly or tacitly that upon
just cause to her dismissal due to her premarital sexual getting married, a woman employee shall be deemed
relations (wow archaic lang) resigned or separated, or to actually dismiss, discharge
or otherwise prejudice a woman employed merely by
NLRC: Affirmed LA Decision reason of her marriage.
CA: Oh dismissed outright due to technicalities such as 2. RA 9710 Magna Carta for Women protects women
material dates against discrimination in all matters relating to marriage
& family relations including the right to chose freely a
ISSUE : IS Immorality a Just cause of Termination of spouse & to enter into marriage only with their free & full
Employment? consent.
SC Says : Ditey, nope 3. Two Step process in determination of whether or not a
conduct is disgraceful or immoral:
The totality of the circumstances do not justify the
conclusion that Cadiz and her bf committed acts of a. consideration of the totality of the circums
immorality as they had no legal impediment to marry, in surrounding the conduct
fact they got married in 2005 . Besides, as Brent never b. an assessment of said circum vis-à-vis the
knew of their premarital sexual relations it cannot be said prevailing norms of conduct, i.e what the society
that Joy flaunted her sexual relations nor that she carried generally considers moral & respectable.
it under scandalous or disgraceful circumstances.
4. Standard of Morality is not religious morality but public
Referring to Leus v Sta. Scholastica case, “there is no and secular morality.
law which penalizes unmarried mother by reason of her
sexual conduct or proscribes the consensual sexual 5. Disparate Treatment Analysis- plaintiff must prove
activity between two unmarried persons, that neither that an employment policy is discriminatory on its face,
does such situation contravenes any fundamental state
policy enshrined in the Consti.” 6. Disparate Impact Theory- the plaintiff must prove
that facially neutral policy has a disproportionate effect
As to MRPS, such cannot be relied upon as in the case
on particular class ex although the marital policy does
of Leus v Sta. Scholastica, premarital sexual relations
not facially indicate which spouse to resign but the policy
between two consenting adults who have no impediment
often disproportionately affects one sex
to marry each other, and, consequently conceiving a
child out of wedlock, gauged from a purely public and
secular view of morality, does not amount to a
disgraceful or immoral conduct under sec 94e of the
1992 MRPS.
GR 163269, April 2006, Callejo Sr., J.,
Issue : MGMT prerogative and the condition of marriage Facts:
for Cadiz’ reinstatement
Petitioner has worked with Solid bank since July 1977
SC Says: Brent’s condition is coercive, oppressive & and handled various position from audit clerk and retiring
discriminatory. There is no rhyme or reason for it. as Manager of the Credit Investigation & Appraisal
Division of the Consumers Banking Group.
The conditions force Cadiz to marry for economic
reasons and deprives her of the freedom to choose her In 1994 Solidbank came up with two retirement
status, which is a privilege that inheres in her as an programs: (1) Ordinary Retirement Program (ORP)
intangible & inalienable right. While a marriage or no- where e will receive 85% of his monthly basic salary
marriage qualification may be justified as “bona fide multiplied by number of years in service, (2) Special
occupational qualification” Brent must prove two factors Retirement Program (SRP) a retiring employee would
necessitating its imposition: (1) that the employment receive 250% of the gross monthly salary multiplied by
qualification is reasonably related to the essential the numbers of years of service.

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However as to the cause of action or the automatic

Rivera was only 45 then so he was not qualified under return of the benefits and retirement payment received,
ORP so he opted for SRP with the thought of investing it such is not automatic as the return is premised on a
in the poultry business. The retirement was approved, he breach of contract, In our jusridiction damages arising
was required by Solidbank to sign an undated Release from breach must necessarily be proven in court first.
Waiver and Quitclaim which was notarized March 1, Thus, Solid bank must initiate an action with regular
1995. proceeding to prove its entitlement to its claims against
The quitclaim included a promise that he would not at
anytime and in any manner whatsoever, directly or NOTE : Restraint of Trade & Public Policy
indirectly engage in any unlawful activity prejudicial to
the interest of Solidbank, its parent, affiliate, or Respondent, as er, is burdened to establish that a
subsidiary companies, their stockholders, officers, restrictive covenant barring an ee from accepting a
directors, or ees, & their successor-in interest & will not competitive employment after retirement or resignation is
disclose any info concerning the business of Solidbank, not an unreasonable or oppressive or in undue or
its manner or operations, its plans, processed or data of unreasonable restraint of trade, thus, unenforceable for
any kind. This included that right of Solidbank to a cause being repugnant to public policy.
of action against Rivera in case of breach, plus that he
will not seek employment with a competitor bank or Restraint of trade is void as against public policy
financial institution within 1 year from Feb 28, 1995, if he because : (1) of the injury to the public by being deprived
does Rivera must return all retirement benefits received of the restricted party’s industry and (2) the other is the
from Solidbank. injury to the party himself by being precluded from
pursuing his occupation, and thus being prevented from
May 1995, Rivera was employed by Equitable Bank as supporting himself and his family.
manager of its Credit Investigation and Appraisal division
The employment ban to be valid, er must adduce
of its Consumers Banking Group. Rivera thus received
evidence to prove evidence that the restriction is
from Solidbank that with the violation, Rivera must
reasonable and not greater than necessary to protect the
return all monetary benefits received or face legal action.
er’s legitimate business interests and that it must not be
harsh or oppressive curtailing the ees’ legitimate efforts
So an action was filed against Rivera.
to earn a livelihood & must be reasonable in light of
sound public policy . Balance must also be made by the
Rivera Contention: prior date, Solidbank was not
courts that the freedom to contract is not unreasonably
informed about the employment ban. The ban is
unocnsti, oppressive, unreasonable and arbitrary
restraint of trade as it prohibits him to work for one year In determining whether the contract is reasonable or not,
in the Philippines and deprives him of his means to the trial court should consider the ff:
support his family. The ban was not necessary to
protect the interest of Solidbank, as in the first place, 1. Whether the covenant protects a legitimate business
Rivera had no access to any secret info which if interest of the er,
revealed would be prejudicial to Solid Bank. 2. Whether the covenant creates an undue burden on
the ee,
Solidbank Contention : The undertaking is the law 3. Whether the covenant is injurious to public welfare,
between them, Rivera executed it knowing fully the 4. whether the time and territorial limitations contained in
contents of the undertaking. the covenant are reasonable, and
5. whether the restraint is reasonable from the
RTC: Valid prohibition standpoint of public policy
GR 196539, Oct. 2012,
Issue: Whether the post –retirement competitive Facts:
employment ban incorporated in the Undertaking is
against public policy Marietta is employed as sales rep of Lietz Inc and was
made to sign in upon her employment that she will not
SC Says: The undertaking is valid. seek gainful employment with a competitor of Leitz in
case she separates from Leitz Inc. On her 10th yr as
A post retirement competitive employment restriction is
employee she was again made to sign such undertaking
designated to protect the employer against competition
containing a “Goodwill Cause”
by former ees who may retire & obtain retirement or
pension benefits & at the same time, engage in
The clause provided for prohibition for period of 3 years
competitive employment.
for Marietta to seek the employment of a company which
is directly or indirectly a competitive business with Lietz.
It also included a provi that upon breach, Marietta will be

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liable to pay as liquidated damages Lietz in an amount MGMT PREROG AND SEPARATION BENEFITS
equivalent to 100% of the gross compensation over the
past 12 months it being just and reasonable. NATIONAL TRANSMISSION GRP v. COA
GR 223625, NOVEMBER 2016
Marietta resigned and claimed that she was going into Facts:
rice dealership, but Lietz Inc later found out that Marietta
was with a competitor, Ed Keller Phils. Portillo’s NTC (Transco) is a GOCC created under RA 9136 or the
payments of salaries and other benefits from Leitz was Electric Industry Reform Act of 2001 (EPIRA). It began
not yet fully paid, her demands were unheeded, reasons operation on power transmission on March 1, 2003.
of ongoing computation was given to Portillo by Leitz Inc.
Miranda was engaged by Transco from April 1, 2003 to
Portillo filed before LA for non papyment of slary, June 30, 2009 but from April 1 to March 1, 2004 Miranda
commission, 13th month pay plus damages against Lietz. was a contractual ee under a service agreement.
Leitz in reply admitted the claims but raised the issue of
the breach of the Goodwill Clause. Due to RA 9511 which was on the enhancement of
transmission network, some operation of Transco was
LA: Ifo Portillo, awarded to National Grid via a franchise granted by
Congrees. Transco then turned over mgmt and
NLRC : Affirmed LA but operation of its nationwide transmission to NGP and as a
result several Transco personnel, including Miranda
CA: affirmed NLRC with modification as it upheld the were terminated on June 30, 2009. Miranda received his
Goodwill Clause and the consequent payment of its separation pay pursuant to Transco Resolution.
breach. It also applied the offsetting of the damages due
to the breach against the money claims of Portillo In a Notice of Disallowance by COA, an amount of P55K
which corresponds to the inclusion of Miranda’s services
Issue : Whether CA was correct to offset the money from April 1, 2003 to April 15, 2004 was disallowed.
claims of Portillo against the claim for liquidated damage
of Leitz against Portillo COA CGS Ruling : upheld the ND stating that the terms
of the Service Agreement clearly stated that there shall
SC Says: NO AH! be no er-ee between MIranda and Transco thus there
can be no corresponding separation pay for that period.
Because Portillos claim arose from unpaid salaries, it is
a money claim that arises from the er-ee relationship COA: sustained COA CGS and emphasized that the
while Lietz’s claim is for violation of the goodwill clause, grant of separation benefits to separated displaced
which is a money claim arising after the cessation of the Transco ees as a result of the restructuring of the
er-ee relationship. The cause of action of Lietz is under electric industry must be in accordance with EPIRA.
Civil Code and thus jurisdiction lies with regular courts, Under EPIRA, separation pay may be extended to
so in short, Leitz must file a separate action with the contractual ees provided that they had rendered services
regular courts for its claim against Portillo. Note that for at least 1 year at the time of effectivity of the EPIRA.
breach of contract is not under jurisdiction of the Labor Good faith cannot be appreciated in favor of Miranda
tribunals. and the BOD thus the money is to be returned.

Also the offset is barred by article 113 of the Labor TRANSCO Contention : It is within its corporate powers
Code. to grant separation benefits to its personnel separated
due to the privatization of its operation. Miranda is
Art 113. Wage Deductions: No er in his own behalf, or in entitled to the separation pay benefit whether they were
behalf of any person, shall make any deductions from appointed, contractual or permanent.
wages of his ees, except:
COA Contention: The disbursement is contrary to law
a. In cases where the worker is insured with his consent as Miranda’s appointment for the period in question was
by the er, & the deduction is to recompense the er for not approved by the CSC and the contract service
the amount paid by him as premium on the insurance, explicitly stated that there is no er-ee relationship under
that contract.
b. for union dues, in cases where the right of the worker
or his union to check-off has been recognized by the er ISSUE : IS The ND proper
or authorized in writing by the individual worker
concerned, and, SC Says : Yes, the ND is proper.

c. In cases where the er is authorized by law or This is because EPIRA and IRR provides that all ees are
regulations issued by the Secretary of Labor. entitled to separation pay benefits with additional
requirements that in cases of casual ees or contractual
ees – their appointment must have been approved or

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attested by CSC. The failure to submit the documents for ISSUE : Is ee’s job description the standard of measure
approval of the CSC cannot militate against the of standard for regularization
existence of er-ee relationship.
SC Says : NO
Lopez Case
It is not the job description but the adequate
The ruling held that the primary standard of determining performance of his duties and responsibilities which
regular employment is the reasonable connection constitute the inherent and implied standards for
between the particular activity performed in relation to regularization. If the probationary ee had been fully
the usual business or trade of the er. The connection apprised by his er of these duties and responsibilities,
can be determined by considering the nature of the work then basic knowledge and common sense dictate that he
performed and its relation to the scheme of the particular must adequately perform the same, else he fails to pass
business or trade in its entirety. Likewise the repeated the probationary trial and may therefore be subject to
and continuing need for the performance of the job has termination.
been deemed sufficient evidence of the necessity, if not
indispensability of the activity to the business. Adequate performance- is not in all cases measurable
by quantitative specification such as that of a sales
Abandon Lopez And replace it with the FF: quota in Alcaraz’s example. It is also hinged on the
qualitative assessment of the the ee’s work ; by its
Er-ee relationship in the public sector is primarily nature, this largely rests on the reasonable exercise of
determined by special laws and service laws, rules and the er’s mgmt prerogative. Not all standards are
regulations. While the four-fold test and other standards reducible to hard figures or are readily articulable in in
set forth in the labor code may aid in ascertaining the specific pre-engagement descriptions.
relationship between the govt and its purported ees, they
cannot be overriding factor over the conditions and Same applies to probationary managerial ee who is
requirements for public ees as provided for by civil tasked to supervise a particular department as Alcaraz is
service laws, rules and regulations. (in short the charter in this case.
creating the GOCC or its Articles must be harmonized
with the CSC laws and rules especially since at the end MGMT PREROG AND DRUGS POLICY
of the day they are ees of the government. MIRANT CORP. V. CARO
Gr. No. 181490, April 23, 2014
So return the P55K? Facts:

No, SC ruled that Miranda was a mere passive recipient Respondent Caro filed a complaint for illegal dismissal
and Transco acted in good faith in its reliance with Lopez and money claims for 13th and 14th month pay, bonuses
which at the time was the jurisprudence. and other benefits, as well as payment of moral and
exemplary damages and attorney’s fees. Respondent
MGMT PREROG & STANDARD FOR Caro was terminated from employment after 10 years of
REGULARIZATION service to petitioner corporation because of unjustified
refusal to submit random drug testing. Caro explained
ABBOT LABORATORIES v ALCARAZ that he was unable to attend the scheduled date for drug
GR 192571, JULY 2013, Perlas-Bernabe., J., testing because he received an emergency call from
Facts : abroad saying that there was a bombing incident near at
his wife’s work in Israeli. And that he had to verify
Abbot Laboratories had a vacancy for Regulatory Affairs immediately the incident on the same day of scheduled
Manager and Alcaraz applied and was placed on date for drug test. Before severance of respondent Caro
probation for 6 months beginning Fen 15, 2005 to Aug from his employment, the employer gave notice the
14, 2005. Alcaraz coming from another pharmaceutical respondent to give show cause requiring him to explain
company she was not really apprised of the standard of in writing why he should not be charged with unjustified
evaluation and that she was fired as a regular ee and not refusal to submit to random drug testing and even
as a probationary ee. Alcaraz assigned an investigating panel to conduct study on the
said matter. The Investigating panel come up with a
ALCARAZ Contention: one’s job description cannot penalty of 4 weeks suspension and made
by and of itself be treated as a standard for recommendations as to the ambiguity of the phrase
regularization as a standard denotes a measure of “unjustified refusal.”
quantity or quality.
However, the petitioner decided to terminate respondent
NLRC: no actual info of performance standards of from employment since under Anti-Drugs Policy, such
Abbott to Alcaraz failure of the latter to submit himself to random drug test
CA: affirmed NLRC metes the penalty of termination for the first offense.
Also, it is contended by Petitioner Corporation that
respondent Caro had no more cause of action against

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the former due to the execution of quitclaims signed by

Caro. Lastly, a review of the records show that the alluded
quitclaim, which was undated and not even notarized
Issue: whether or not there is illegal dismissal. although signed by the petitioner, was for the amount of
₱59,630.05. The said quitclaim was attached as Annex
Held: Yes. 26 in the [petitioners’] Position Paper filed before the
Labor Arbiter. As fully explained by [respondent] in his
While the adoption and enforcement by Mirant of its Anti- Reply filed with the Labor Arbiter, the amount stated
Drugs Policy is recognized as a valid exercise of its therein was his last pay due to him when he was
management prerogative as an employer, such exercise terminated, not the amount representing his legitimate
is not absolute and unbridled. Managerial prerogatives claims in this labor suit x x x. To bolster his defense,
are subject to limitations provided by law, collective [respondent] submitted the pay form issued to him by the
bargaining agreements, and the general principles of fair [petitioner corporation], showing his net pay at
play and justice. In the exercise of its management ₱59,630.05 exactly the amount stated in the quitclaim x
prerogative, an employer must therefore ensure that the x x. Then, too, as stated on the quitclaim itself, the
policies, rules and regulations on work-related activities intention of the waiver executed by the [respondent] was
of the employees must always be fair and reasonable to release [petitioner corporation] from any liability only
and the corresponding penalties, when prescribed, on the said amount representing [respondent’s] "full and
commensurate to the offense involved and to the degree final payment of [his] last salary/separation pay" x x x. It
of the infraction.The Anti-Drugs Policy of Mirant fell short did not in any way waive [respondent’s] right to pursue
of these requirements. his legitimate claims regarding his dismissal in a labor
suit. Thus, We gave no credence to [petitioners’] private
Petitioner corporation’s subject Anti-Drugs Policy fell defense that alleged quitclaim rendered the instant
short of being fair and reasonable. petition moot.

First. The policy was not clear on what constitutes Mgmt Prerogatives and Temporary Withholding of
"unjustified refusal" when the subject drug policy Wages
prescribed that an employee’s "unjustified refusal" to
submit to a random drug test shall be punishable by the SHS PERFORATED MATERIALS, INC., WINFRIED
penalty of termination for the first offense. To be sure, HARTMANNSHENN v. MANUEL F. DIAZ
the term "unjustified refusal" could not possibly cover all G.R. No. 185814, October 13, 2010
forms of "refusal" as the employee’s resistance, to be
punishable by termination, must be "unjustified." To the FACTS:
mind of the Court, it is on this area where petitioner Petitioner SHS Perforated Materials, Inc. (SHS)
corporation had fallen short of making it clear to its is a start-up corporation organized and existing under
employees – as well as to management – as to what the laws of the Republic of the Philippines and registered
types of acts would fall under the purview of "unjustified with the Philippine Economic Zone Authority. Petitioner
refusal." Winfried Hartmannshenn (Hartmannshenn), a German
national, is its president. Thus, the wages of SHS
It is not a mere jurisprudential principle, but an enshrined employees are paid out by ECCP, through its
provision of law, that all doubts shall be resolved in favor Accounting Services Department headed by Juliet
of labor. Thus, in Article 4 of the Labor Code, as Taguiang (Taguiang). Manuel F. Diaz (respondent) was
amended, "[a]ll doubts in the implementation and hired by petitioner SHS as Manager for Business
interpretation of the provisions of [the Labor] Code, Development on probationary status.
including its implementing rules and regulations, shall be
resolved in favor of labor." In Article 1702 of the New During respondent’s employment,
Civil Code, a similar provision states that "[i]n case of Hartmannshenn was often abroad and, because of
doubt, all labor legislation and all labor contracts shall be business exigencies, his instructions to respondent were
construed in favor of the safety and decent living for the either sent by electronic mail or relayed through
laborer." Applying these provisions of law to the telephone or mobile phone. During meetings with the
circumstances in the case at bar, it is not fair for this respondent, Hartmannshenn expressed his
Court to allow an ambiguous policy to prejudice the dissatisfaction over respondent’s poor performance.
rights of an employee against illegal dismissal. To hold respondent acknowledged his poor performance and
otherwise and sustain the stance of petitioner offered to resign from the company.
corporation would be to adopt an interpretation that goes On November 18, 2005, Hartmannshenn
against the very grain of labor protection in this arrived in the Philippines from Germany, and on
jurisdiction. As correctly stated by the Labor Arbiter, November 22 and 24, 2005, notified respondent of his
"when a conflicting interest of labor and capital are arrival through electronic mail messages and advised
weighed on the scales of social justice, the heavier him to get in touch with him. Respondent claimed that he
influence of the latter must be counter-balanced by the never received the messages. Hartmannshenn
sympathy and compassion the law must accord the instructed Taguiang not to release respondent’s salary.
underprivileged worker.

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Respondent served on SHS a demand letter and MGMT Prerogative and Choice to Discipline
a resignation letter. It is precisely because of illegal and
unfair labor practices such as these that I offer my Tabuk Multipurpose Coop. Inc, v Magdalena Duclan
resignation with neither regret nor remorse. Appealing Gr. 203005, March 14, 2016
for the release of his salary respondent filed a Complaint Facts :
against the petitioners for illegal dismissal; non-payment
of salaries/wages and 13th month pay with prayer for Duclan is employed as cashier of Tabuk Multipurpose
reinstatement and full backwages; exemplary damages, Coop. Inc (TAMPCO), a duly registered cooperative in
and attorney’s fees, costs of suit, and legal interest. Tabuk City. TAMPCO introduced Special Investments
Loan (SIL ) to its members the SIL had to be capped at
ISSUE: P5M following a finding that many SILs were being
Whether or not the temporary withholding of granted and yet not being fully collected. The BOD then
respondent’s salary/wages by petitioners was a valid issued BA 28 and 55 which put in force the P5 M cap,
exercise of management prerogative. however, despite the BA, SILs exceeding the cap were
still granted by the branch. Duclan and the others were
summoned to proceedings investigating the matter.
Withholding respondent’s salary was not a valid Duclan and the others readily admitted to the charge.
exercise of management prerogative. Management They were thus given two suspensions. The first
prerogative refers “to the right of an employer to regulate suspension was initially indefinite but brought down to 15
all aspects of employment, such as the freedom to days but was eventually lifted. The second suspension
prescribe work assignments, working methods, was for the discovery of the release of loan despite lack
processes to be followed, regulation regarding transfer of paper requirements. They were also given ultimatum
of employees, supervision of their work, lay-off and that if they were to collect the P1.5M loan issued
discipline, and dismissal and recall of work.” Although irregularly and failure to do so will result to their
management prerogative refers to “the right to regulate termination. The termination was effected after their
all aspects of employment,” it cannot be understood to failure to collect the sums of money.
include the right to temporarily withhold salary/wages
without the consent of the employee. Duclan filed illegal dismissal and illegal suspension
alleging that that she was merely a cashier performing a
Any withholding of an employee’s wages by an
ministerial function and that the general manager who
employer may only be allowed in the form of wage
approved the SILs in issue was in fact accorded leniency
deductions under the circumstances provided in Article
and was allowed to exit gracefully. TAMPCO contends
113 of the Labor Code, as set forth below:
that there was just and valid cause to dismiss her and
ART. 113. Wage Deduction. – No employer, in his own that as cashier she was still duty bound to comply with
behalf or in behalf of any person, shall make any the coopertaives’ rules and policies. As to the leniency to
deduction from the wages of his employees, except: the general manager, such was an exercise of
(a) In cases where the worker is insured with management prerogative.
his consent by the employer, and the deduction is to
Issue :
recompense the employer for the amount paid by him as
premium on the insurance; Is TAMPCO’s contention of management prerogative
(b) For union dues, in cases where the right of valid ?
the worker or his union to check-off has been recognized
by the employer or authorized in writing by the individual Ruling : YES
worker concerned;
SC held that the law protects both the welfare of the
There is constructive dismissal if an act of clear employees and the prerogatives of the management.
discrimination, insensibility, or disdain by an employer Courts will not interfere with prerogatives of
becomes so unbearable on the part of the employee that management on the discipline of employee, as long as
it would foreclose any choice by him except to forego his they do not violate labor laws, collective bargaining
continued employment. It exists where there is cessation agreements if any and general principles of fairness and
of work because continued employment is rendered justice. Management is not precluded from condoning
impossible, unreasonable or unlikely, as an offer the infractions of its employees; as with any other legal
involving a demotion in rank and a diminution in pay right, the management prerogative to discipline
In this case, the withholding of respondent’s employees, impose punishment may be waived.
salary does not fall under any of the circumstances
provided under Article 113. Neither was it established As far as Duclan is concerned, the cooperative chose
with certainty that respondent did not work from not to waive its right to discipline and punish her; this is
November 16 to November 30, 2005. Hence, the Court its privilege as the holder of such right. Finally, it cannot
agrees with the LA and the CA that the unlawful be said that Duclan was discriminated against or singled
withholding of respondent’s salary amounts to out, as only the former General Manager was accorded
constructive dismissal. leniency, the rest including her were treated with equal
footing. As to the wisdom of allowing graceful exit to the

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former General Manager, this falls within the realm of 1. The case mentioned that NLRC used ‘stare decisis’
management prerogative, what matters for the court was when it applied a previous ruling by NLRC on the De
that Duclan was not treated unfairly nor singled out. Chavez v Tritan Inc., note that ‘stare decisis’ applies only
Duclan’s termination was not irregular and was for a to final judgments/decisions by the Supreme Court and
valid cause. not to tribunals not even to the lower courts.

MGMT Prerogative and Closure of Business 2. Probative value of Audited Financial Statements
(AFS) by external auditors in proving economic status of
Guerino Yukit, et al, v. Tritan Inc. a corp./ entity :
Gr. No. 184841, Nov.21, 2016 That the financial statements are audited by
Facts: independent auditors safeguards the same from the
manipulation of the figures therein to suit the company’s
Guerino et al., are employees of Tritan Inc, a duly needs. Auditing of financial reports by independent
registered corporation engaged in the business of external auditors are strictly governed by national and
transportation operating a fleet of buses. In May of international standards and regulations for the
2004, Tritan Inc filed before the DOLE Notice of accounting profession.
Cessation/Closure of Business on the ground of
business losses. This was supported by an Audited MGMT PREROG & REMOVAL OF CHAIRS
Financial Statement(AFS) by its external auditors. Tritan Royal Plant Workers Union v Coca-cola Bottlers Phil
undertook to pay separation pay of its employees. The Facts:
closure took effect earlier, Jan 2004, due to lay off of 114
employees. Respondents are bottling operators in CCBPI. The
bottling operators work in two shifts. – 8am to 5pm and
Employees filed illegal dismissal complaint alleging 5pm up to the time productions is finished. hus, the
(without any proof presented) that there was no financial second shift varies and may end beyond eight (8) hours.
losses as the AFS showed bloated expenses of the However, the bottling operators are compensated with
company and that Tritan never ceased its operation as it overtime pay if the shift extends beyond eight (8) hours.
continued its operation under JAM Transit Inc. Tritan In September 2008 and up to the present, the rotation of
even asked its employees to resign voluntarily to avail work and breaktime has changed and bottling operators
employment with JAM Transit. Tritan maintains its are now given a 30-minute break after one and one half
financial losses and JAM Transit Inc. bought the assets (1 1⁄2) hours of work instead of the usual 30-min break
and buses of Tritan. after 2 ½ hours of work.

Issue : In 1974, the bottling operators of then Bottling Line 2

were provided with chairs upon their request. In 1988,
Is the dismissal of Yukit, et al valid, granting that there the bottling operators of then Bottling Line 1 followed suit
was valid business closure of Tritan Inc? and asked to be provided also with chairs. Their request
was likewise granted. Sometime in September 2008, the
Ruling: YES, closure of business due to financial losses chairs provided for the operators were removed pursuant
was valid. to a national directive of petitioner. With this task of
moving constantly to check on the machinery and
Employees can lawfully close establishments at any time equipment assigned to him, a bottling operator does not
and for any reason. The law considers the decision to need a chair anymore, hence, petitioner’s directive to
close and cease business operations as a management remove them. Furthermore, CCBPI rationalized that the
prerogative that courts cannot interfere with . The review removal of the chairs is implemented so that the bottling
of decision to close business is limited to the operators will avoid sleeping, thus, prevent injuries to
determination of whether the closure was made in good their persons.
faith to advance the employer’s interest and not for the
purpose of circumventing the rights of the employee. In Through the representation of herein respondent, they
this case, the external audited AFS of Tritan justified the initiated the grievance machinery of the Collective
losses. Yukit et al, never presented evidence to their Bargaining Agreement (CBA) in November 2008. Even
allegations, as “suspicious figures” cannot destroy the after exhausting the remedies contained in the grievance
credibility of the documents especially considering the machinery, the parties were still at a deadlock with
strict national and international standards governing the petitioner still insisting on the removal of the chairs and
accounting and auditing profession. AS the closure is respondent still against such measure. As such,
for legitimate purpose, the dismissal is also valid, respondent sent a Notice to Arbitrate, dated 16 July
separation pay to be paid pursuant to Tritan’s 2009, to petitioner stating its position to submit the issue
undertaking to pay separation pay. on the removal of the chairs for arbitration. Nevertheless,
before submitting to arbitration the issue, both parties
NOTE the ff : availed of the conciliation/mediation proceedings before
the National Conciliation and Mediation Board (NCMB)
Regional Branch No. VII. They failed to arrive at an
amicable settlement.

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Arbitration: the removal of the chairs is not valid and because of the fact that the chairs were not necessary
CCBPI is ordered to restore the same. The use of chairs considering that the operators constantly move about
by the operators had been a company practice for 34 while working. In short, the removal of the chairs was
years in Bottling Line 2, from 1974 to 2008, and 20 years designed to increase work efficiency. Hence, CCBPI’s
in Bottling Line 1, from 1988 to 2008; that the use of the exercise of its management prerogative was made in
chairs by the operators constituted a company practice good faith without doing any harm to the workers’ rights.
favorable to the Union; that it ripened into a benefit after
it had been enjoyed by it. Although the removal of the The rights of the Union under any labor law were not
chairs was done in good faith, CCBPI failed to present violated. There is no law that requires employers to
evidence regarding instances of sleeping while on duty. provide chairs for bottling operators. Labor Code,
There were no specific details as to the number of specifically Article 13211 thereof, only requires
incidents of sleeping on duty, who were involved, when employers to provide seats for women. No similar
these incidents happened, and what actions were taken. requirement is mandated for men or male workers. It
must be stressed that all concerned bottling operators in
CA: the removal of the chairs from the this case are men.
manufacturing/production lines by CCBPI is within the
province of management prerogatives; that it was part of There is no violation of the CBA because the CBA
its inherent right to control and manage its enterprise between the Union and CCBPI contains no provision
effectively; and that since it was the employer’s requiring the management to provide chairs for the
discretion to constantly develop measures or means to operations while performing therir duties and
optimize the efficiency of its employees and to keep its responsibilities.
machineries and equipment in the best of conditions, it
was only appropriate that it should be given wide latitude There is no violation of Article 100 of the Labor Code
in exercising it. It opined that the principles of justice and because the operators’ cjairs cannot be considered as
fair play were not violated because, when the chairs one of the employee benefits covered under Article 100.
were removed, there was a commensurate reduction of In the Court’s view, the term "benefits" mentioned in the
the working time for each rotation in each shift. non-diminution rule refers to monetary benefits or
privileges given to the employee with monetary
the Union argues that there is no connection between equivalents.
CCBPI’s "I Operate, I Maintain, I Clean" program and the
removal of the chairs because the implementation of the MGMT Prerog & Medical Examination
program was in 2006 and the removal of the chairs was
done in 2008. The 30-minute break is part of an Marina’s Creation vs Ancheta
operator’s working hours and does not make any GR 21833, Dec. 7,2016
difference. The frequency of the break period is not Facts :
advantageous to the operators because it cannot Marina hired respondednt Romeo Ancheta as a sole
compensate for the time they are made to stand attacher. In March 2011, Ancheta suffered n intra-cranial
throughout their working time. The bottling operators get hemorrhage and was placed under home care. Ancheta
tired and exhausted after their tour of duty even with filed a Sickness Notification with the Social Security
chairs around. How much more if the chairs are System (SSS) and was paid sickness benefits in the
removed? amount of Eight Thousand One Hundred Pesos
(P8,100). The physician who physically examined
SC: The removal of the chairs is a valid exercise of Man. Ancheta stated that Ancheta would be fit to resume work
Prer. after ninety (90) days or on 12 August 2011.
On 13 August 2011, Ancheta reported for work. Marina,
In the present controversy, it cannot be denied that however, wanted Ancheta to submit a new medical
CCBPI removed the operators’ chairs pursuant to a certificate before he could resume his work in Marina.
national directive and in line with its "I Operate, I Ancheta did not comply and was not able to resume his
Maintain, I Clean" program, launched to enable the work in Marina. On 8 November 2011, Ancheta filed a
Union to perform their duties and responsibilities more complaint with the Labor Arbiter against Marina and its
efficiently. The chairs were not removed indiscriminately. registered owner Jerry B. Alfonso for illegal dismissal
They were carefully studied with due regard to the and non- payment of separation pay.
welfare of the members of the Union. The removal of the
chairs was compensated by: a) a reduction of the Marina claimed that Ancheta was employed on a piece
operating hours of the bottling operators from a two-and- rate basis and was not terminated but instead was
one-half (2 1⁄2)-hour rotation period to a one-and-a-half refused job assignments due to his failure to submit a
(1 1⁄2) hour rotation period; and b) an increase of the medical clearance showing that he was fit to resume his
break period from 15 to 30 minutes between rotations. work. Marina claimed that the medical certificate was a
precautionary measure imposed by the company to
Apparently, the decision to remove the chairs was done avoid any incident that could happen to Ancheta who
with good intentions as CCBPI wanted to avoid already had a pre-existing medical condition.
instances of operators sleeping on the job while in the
performance of their duties and responsibilities and

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Labor Arbiter: Dismissed the complaint. Anchet failed to position that Ancheta's employment would not continue if
convincingly prove that he was illegally dismissed. Ancheta would not submit a new medical certificate.
Affirmed by NLRC
The Implementing Rules of the Labor Code impose upon
CA: the absence of a medical certificate did not justify the employer the duty not to terminate an employee until
Marina's refusal to furnish Ancheta work assignments. there is a certification by a competent public health
According to the Implementing Rules of the Labor Code, authority that the employee's disease is of such nature
it was Marina and not Ancheta who had the burden of or at such a stage that it cannot be cured within a period
proving that Ancheta's disease could not be cured within of six months even with proper medical treatment. In this
a period of at least six months in order to justify case, Marina terminated Ancheta from employment
Ancheta's dismissal. Finally, the CA ruled since Ancheta without seeking a prior certification from a competent
was illegally dismissed, Ancheta was entitled to public health authority that Ancheta's disease is of such
backwages and separation pay from Marina. nature or at such a stage that it cannot be cured within a
period of six months even with proper medical treatment.
SC: Ancheta was illegally dismissed by Marina. Hence, Ancheta was illegally dismissed by Marina.
Article 280 of the Labor Code provides for the two types
of regular employees, to wit: (1) employees who have SEC OF TENURE AND EMPLOYMENT RELATIONS
been engaged to perform activities which are usually
necessary or desirable in the usual business or trade of JACK C. VALENCIA, v. CLASSIQUE VINYL
the employer, and (2) employees who have rendered at PRODUCTS CORPORATION, JOHNNY CHANG
least one year of service, whether such service is (Owner) and/or CANTINGAS MANPOWER SERVICES
continuous or broken, with respect to the activity in
G.R. No. 206390, January 30, 2017
which they are employed. The test of determining the
regular status of an employee is whether the employee FACTS:
performs work which is usually necessary or desirable in On March 24,2010, Valencia filed with the Labor
the usual business or trade of the employer. The Arbiter a Complaint for Underpayment of Salary and
connection can be determined by considering the nature Overtime Pay; Non-Payment of Holiday Pay, Service
of the work performed and its relation to the scheme of Incentive Leave Pay, 13th Month Pay; Regularization;
the particular business or trade. Also, if the employee Moral and Exemplary Damages; and, Attorney’s Fees
has been performing the job for at least one year, even if against respondents Classique Vinyl Products
the performance is not continuous or merely intermittent, Corporation (Classique Vinyl) and its owner Johnny
the law deems the repeated and continuing need for its Chang (Chang) and/ or respondent Cantingas
performance as sufficient evidence of the necessity if not Manpower Services (CMS). When Valencia, however,
indispensability of the activity to the business. asked permission from Chang to attend the hearing in
connection with the said complaint on April 17, 2010, the
Applying Article 280 of the Labor Code, Ancheta was a
latter allegedly scolded him and told him not to report for
regular employee of Marina. Ancheta, who was working
work anymore. Hence, Valencia amended his complaint
in Marina as a sole attacher, was performing work that
to include illegal dismissal.
was usually necessary or desirable in the usual business
or trade of Marina which was engaged in the business of In his Sinumpaang Salaysay,5 Valencia alleged
making shoes and bags. Moreover, Ancheta had been that he applied for work with Classique Vinyl but was told
performing work as a sole attacher in Marina since by the latter’s personnel office to proceed to CMS, a
January 2010 up to March 2011 when he suffered his local manpower agency, and therein submit the
first stroke. Thus, Ancheta had acquired regular requirements for employment. Upon submission thereof,
employment status by performing work in Marina for at CMS made him sign a contract of employment6 but no
least one year. copy of the same was given to him. He then proceeded
to Classique Vinyl for interview and thereafter started
Marina argues that the company's action of requiring working for the company in June 2005 as felitizer
Ancheta to undergo a medica1 examination and to operator. Valencia claimed that he worked 12 hours a
submit a medical certificate was a valid exercise of day from Monday to Saturday and was receiving
management prerogative. Marina's contention is not P187,52 for the first eight hours and an overtime pay of
correct. Article 279 of the Labor Code provides: "In P117.20 for the next four hours, or beyond the then
cases of regular employment, the employer shall not minimum wage mandated by law. Five months later, he
terminate the services of an employee except for a just was made to serve as extruder operator but without the
cause or when authorized by this title. x x x." Since corresponding increase in salary. He was neither paid
Ancheta was a regular employee of Marina, Ancheta's his holiday pay, service incentive leave pay, and 13th
employment can only be terminated by Marina based on month pay. Worse, premiums for Philhealth and Pag-
just or authorized causes provided in the Labor Code. In IBIG Fund were not paid and his monthly deductions for
its position paper, Marina admitted that the company had Social Security System (SSS) premiums were not
refused to give Ancheta work assignments until Ancheta properly remitted. He was also being deducted the
submitted a new medical certificate. It is Marina's amounts of P100.00 and P60.00 a week for Cash Bond
and Agency Fee, respectively. Valencia averred that his

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salary was paid on a weekly basis but his pay slips Valencia's selection and engagement was undertaken
neither bore the name of Classique Vinyl nor of CMS; by CMS and conversely, this negates the existence of
that all the machineries that he was using/operating in such element insofar as Classique Vinyl is concerned. It
connection with his work were all owned by Classique bears to state, in addition, that as opposed to Valencia's
Vinyl; and, that his work was regularly supervised by argument, the lack of notarization of the said
Classique Vinyl. He further averred that he worked for employment contract did not adversely affect its veracity
Classique Vinyl for four years until his dismissal. Hence, and effectiveness since significantly, Valencia does not
by operation of law, he had already attained the status of deny having signed the same. The CA, therefore, did not
a regular employee of his true employer, Classique err in relying on the said employment contract in its
Vinyl, since according to him. CMS is a mere labor-only determination of the merits of this case. For another,
contractor. Valencia, therefore, argued that Classique Valencia himself acknowledged that the pay slips he
Vinyl should be held guilty of illegal dismissal for failing submitted do not bear the name of Classique Vinyl.
to comply with the twin-notice requirement when it While the Court in Vinoya v. National Labor Relations
dismissed him from the service and be made to pay for Commission took judicial notice of the practice of
his monetary claims. employer to course through the purported contractor the
ISSUE: act of paying wages to evade liabilities under the Labor
Code, hence, the non-appearance of employer's name
Whether there exists an employer-employee in the pay slip, the Court is not inclined to rule that such
relationship between Classique Vinyl and Valencia. is the case here. This is considering that although CMS
claimed in its supplemental Position Paper/Comment
that the money it used to pay Valencia's wages came
RULING: from Classique Vinyl the same is a mere allegation
None. "It is an oft-repeated rule that in labor without proof. Moreover, such allegation is inconsistent
cases, as in other administrative and quasi-judicial with CMS's earlier assertion in its Position Paper that
proceedings, 'the quantum of proof necessary is Valencia received from it non-cash wages in an
substantial evidence, or such amount of relevant approximate amount of P3,000.00. A clear showing of
evidence which a reasonable mind might accept as the element of payment of wages by Classique Vinyl is
adequate to justify a conclusion.' 'The burden of proof therefore absent.
rests upon the party who asserts the affirmative of an
issue'." Since it is Valencia here who is claiming to be an Aside from the afore-mentioned inconsistent allegations
employee of Classique Vinyl, it is thus incumbent upon of Valencia, his claim that his work was supervised by
him to proffer evidence to prove the existence of Classique Vinyl does not hold water. Again, the Court
employer-employee relationship between them. He finds the same as a self-serving assertion unworthy of
"needs to show by substantial evidence that he was credence. On the other hand, the employment contract
indeed an employee of the company against which he which Valencia signed with CMS categorically states that
claims illegal dismissal." Corollary, the burden to prove the latter possessed not only the power of control but
the element of an employer employee relationship, viz.: also of dismissal over him.
(l) the selection and engagement of the employee; (2)
the payment of wages; (3) the power of dismissal; and
(4) the power of control, lies upon Valencia. ALLAN BAZAR V. CARLOS RUIZOL
G.R. no. 198782, October 19, 2016
Indeed, there is no hard and fast rule designed
to establish the afore-mentioned elements of employer- Facts:
employee relationship. "Any competent and relevant Respondent Ruizol was employed as mechanic at
evidence to prove the relationship may be admitted." In Norkis Distributors, Inc. (NDI) while petitioner Bazar is a
this case however, Valencia failed to present competent manger in the Surigao City branch of the business.
evidence, documentary or otherwise, to support his Respondent alleged that he was dismissed by the
claimed employer employee relationship between him petitioner because the latter wanted to appoint his
and Classique Vinyl. All he advanced were mere tactual protégé as a mechanic. Thus, respondent Ruizol filed a
assertions unsupported by proof. complaint for illegal dismissal and other monetary claims
with National Labor Relations Commission.
In fact, most of Valencia's allegations even
militate against his claim that Classique Vinyl was his Petitioner, on the other hand, countered that respondent
true employer. For one, Valencia stated in his Ruizol is not an employee but a franchised mechanic of
Sinumpaang Salaysay that his application was actually NDI pursuant to a retainership agreement and that NDI
received and processed by CMS which required him to terminated the retainership contract with respondent
submit the necessary requirements for employment. because they were no longer satisfied with
Upon submission thereof, it was CMS that caused him to The latter’s services.
sign an employment contract, which upon perusal, is
actually a contract between him and CMS. It was only Issue: Is there employer-employee relationship.
after he was engaged as a contractual employee of CMS
that he was deployed to Classique Vinyl. Clearly, Held: Yes.

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Petitioner argues that the appellate court erred in holding

Assuming that respondent signed the retainership that respondent is an employee of NDI based on the
agreement, it is not indicative of his employment status. identification card issued to him. While it is true that
It is the law that defines and governs an employment identification cards do not prove employer- employee
relationship, whose terms are not restricted by those relationship, the application of the four-fold test in this
fixed in the written contract, for other factors, like the case proves that an employer-employee relationship did
nature of the work the employee has been called upon to exist between respondent and NDI.
perform, are also considered. The law affords protection
to an employee, and does not countenance any attempt Since it was sufficiently established that petitioner is an
to subvert its spirit and intent. Any stipulation in writing employee of NDI, he is entitled to security of tenure. He
can be ignored when the employer utilizes the stipulation can only be dismissed for a just or authorized cause.
to deprive the employee of his security of tenure. The Petitioner was dismissed through a letter informing him
inequality that characterizes employer-employee of termination of contract of retainership which we
relations generally tips the scales in favor of the construe as a termination notice. For lack of a just or
employer, such that the employee is often scarcely authorized cause coupled with failure to observe the
provided real and better options. twin-notice rule in termination cases, respondent's
dismissal is clearly illegal.
Petitioner claims that respondent was receiving
1!2,050.00 as his monthly retainer's fee as of his An illegally dismissed employee is entitled to two reliefs:
termination in March 2002. This fee is covered by the backwages and reinstatement. The two reliefs provided
term "wages" and defined as remuneration or earnings, are separate and distinct. In instances where
however designated, capable of being expressed in reinstatement is no longer feasible because of strained
terms of money, whether· fixed or ascertained on a time, relations between the employee and the employer,
task, piece or commission basis, or other method of separation pay is granted. In effect, an illegally
calculating the same, which is payable by an employer dismissed employee is entitled to either reinstatement, if
to an employee under a written or unwritten contract 'of viable, or separation pay if reinstatement is no longer
employment for work done or to be done, or for service viable, and backwages.
rendered or to be rendered. For services rendered to
NDI, respondent received compensation. NDI could HSY MARKETING LTD. v. VIRGILIO O.
have easily disproved that respondent was its employee VILLASTIQUE +
by presenting the manner by which such compensation GR No. 219569, Aug 17, 2016
was paid to respondent. NDI did not do so.
That NDI had the power to dismiss respondent was
clearly evidenced by the fact that respondent's services Petitioner hired respondent as a field driver for Fabulous
were terminated. Jeans. On January 10, 2011, respondent figured in an
accident when the service vehicle he was driving in
The control test is the most crucial and determinative
Iligan City bumped a pedestrian, Dorataryo. Fabulous
indicator of the presence or absence of an employer-
Jeans shouldered the hospitalization and medical
employee relationship. Under the control test, an
expenses of Dorataryo in the amount of P64,157.15,
employer-employee relationship exists where the person which respondent was asked to reimburse, but to no
for whom the services are performed reserves the right
avail. On February 24, 2011, respondent was allegedly
to control not only the end achieved, but also the manner
required to sign a resignation letter, which he refused to
and means to be used in reaching that end.
do. A couple of days later, he tried to collect his salary
for that week but was told that it was withheld because
Petitioner asserts that NDI did not exercise the power of of his refusal to resign. Convinced that he was already
control over respondent because he is free to use his terminated on February 26, 2011, he lost no time in filing
own means and methods by which his work is to be
a complaint for illegal dismissal with money claims
accomplished. The records show the contrary. It was
against petitioner, Fabulous Jeans, and its owner,
shown that respondent had to abide by the standards
sets by NDI in conducting repair work on Yamaha
motorbikes done in NDI's service shop. As a matter of
fact, on allegations that respondent failed to live up to ISSUE: whether or not he was dismissed
the demands of the work, he was sent several
memoranda by NDI. HELD:

Petitioner points out that respondent actually owns a No. Other than the latter's unsubstantiated allegation of
motor repair shop where he performs repair warranty having been verbally terminated from his work, no
service and back job repairs of Yamaha motorcycles for substantial evidence was presented to show that he was
NDI and other clients. This allegation was indeed dismissed or was prevented from returning to his
unsubstantiated. We cannot give credit to such claim. work. In the absence of any showing of an overt or
positive act proving that petitioner had dismissed

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respondent, the latter's claim of illegal dismissal cannot complaint for illegal dismissal with money claims against
be sustained, as such supposition would be self-serving, respondent before the NLRC.
conjectural, and of no probative value. Similarly,
petitioner's claims of respondent's voluntary resignation In his defense, respondent denied the existence
and/or abandonment deserve scant consideration, of an employer-employee relationship between him and
considering petitioner's failure to discharge the burden of petitioner, considering that petitioner was: (a) paid
proving the deliberate and unjustified refusal of merely on a per trip "percentage" basis and was not
respondent to resume his employment without any required to regularly report for work; (b) free to offer his
intention of returning. It was incumbent upon petitioner to services to other companies; and (c) not under
ascertain respondent's interest or non-interest in the respondent's control with respect to the means and
continuance of his employment, but to no avail. Hence, methods by which he performed his job as a truck driver.
since there is no dismissal or abandonment to speak of, Respondent added that petitioner's company ID did not
the appropriate course of action is to reinstate the indicate that the latter was his employee, but only served
employee without, however, the payment of backwages. the purpose of informing the GPT's clients that petitioner
Notably, the reinstatement ordered here should not be was one of respondent's authorized drivers. Finally,
construed as a relief proceeding from illegal dismissal; respondent averred that it no longer engaged petitioner's
instead, it should be considered as a declaration or services due to the latter's "serious transgressions and
affirmation that the employee may return to work misconduct."
because he was not dismissed in the first place. For this
reason, the Court agrees with petitioner that the LA, the The Labor Arbiter ruled in petitioner's favor and,
NLRC, and the CA erred in awarding separation pay in accordingly, ordered respondent to pay the aggregate
spite of the finding that respondent had not been sum of P80,145.52 representing his backwages and
dismissed. Properly speaking, liability for the payment of separation pay. Finding that petitioner's service as truck
separation pay is but a legal consequence of illegal driver was indispensable to respondent's business
dismissal where reinstatement is no longer viable or operations, the LA concluded that petitioner was
feasible. As a relief granted in lieu of reinstatement, it respondent's regular employee and, thus, may only be
goes without saying that an award of separation pay is dismissed for just or authorized cause and with due
inconsistent with a finding that there was no illegal process. Absent any showing of a clear and valid cause
dismissal. This is because an employee who had not to terminate petitioner's employment, respondent was,
been dismissed, much less illegally dismissed, cannot therefore, guilty of illegal dismissal.
be reinstated. Moreover, as there is no reinstatement to
speak of, respondent cannot invoke the doctrine of The NLRC affirmed the LA ruling. It ruled that an
strained relations to support Ms prayer for the award of employer-employee relationship existed between the
separation pay. In the case of Capili v. NLRC, the Court parties, considering that: (a) respondent engaged
explained that: The award of separation pay cannot be petitioner's services without the aid of a third party or a
justified solely because of the existence of "strained manpower agency; (b) the payment of wages on a
relations" between the employer and the employee. It percentage basis did not negate such existence; (c)
must be given to the employee only as an alternative to respondent's power to dismiss petitioner was inherent in
reinstatement emanating from illegal dismissal. When his selection and engagement of the latter as truck
there is no illegal dismissal, even if the relations are driver; and (d) respondent exercised control and
strained, separation pay has no legal basis. supervision over petitioner's work as shown in the
former's determination of the latter's delivery areas and
schedules. Considering that respondent failed to show a
MARIO N. FELICILDA v. MANCHESTEVE H. UY lawful cause for petitioner's dismissal, the NLRC
G.R. No. 221241, September 14, 2016 sustained the order of payment of monetary awards in
Facts: petitioner's favor.
Manchesteve H. Uy hired Mario Felicilda as a
truck driver for the latter's trucking service under the The CA set aside the NLRC ruling and, instead,
business name "Gold Pillars Trucking". In connection, dismissed petitioner's complaint for illegal dismissal with
therewith, petitioner was issued a company identification money claims for lack of merit. Contrary to the findings
card, assigned in one of GPT's branches in Manila, and of the LA and the NLRC, the CA held that the elements
paid on a percentage basis. of payment of wages and control in determining an
employer-employee relationship were absent,
One day, petitioner took a nap at the work considering that petitioner was not paid wages, but
station while waiting for his truck to be loaded with commissions only, which amounts varied depending on
cargoes, all of which were delivered to respondent's the kind of cargo, length of trip, and fuel consumption.
clients on schedule. The next day, respondent's helper The CA observed that there was no evidence to show
told petitioner that his employment was already that respondent exercised control over the means and
terminated due to his act of sleeping while on the job. methods by which petitioner was to perform his duties.
Claiming that he was dismissed without just cause and
due process, and that his act of taking a nap did not Issue: Whether or not an employer-employee
prejudice respondent's business, petitioner filed a relationship existed between petitioner and respondent

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Held: essential for the employer to actually supervise the

Yes. To ascertain the existence of an employer- performance of duties of the employee, as it is sufficient
employee relationship, jurisprudence has invariably that the former has a right to wield the power, as in this
adhered to the four-fold test, to wit: (1) the selection and case.
engagement of the employee; (2) the payment of wages;
(3) the power of dismissal; and (4) the power to control For a dismissal to be valid, the rule is that the
the employee's conduct, or the so-called "control test." employer must comply with both the substantive and
Verily, the power of the employer to control the work of procedural due process requirements. In this case,
the employee is considered the most significant suffice it to say that aside from respondent's averment
determinant of the existence of an employer-employee that petitioner committed "serious transgressions and
relationship. This is the so-called "control test," and is misconduct" resulting in the former's loss of trust and
premised on whether the person for whom the services confidence, no other evidence was shown to
are performed reserves the right to control both the end substantiate the same. Such averment should be
achieved and the manner and means used to achieve properly deemed as a self serving assertion that
that end. It must, however, be stressed that the "control deserves no weight in law. Neither was petitioner
test" merely calls for the existence of the right to control, accorded procedural due process as he was merely
and not necessarily the exercise thereof. To be clear, the informed by respondent's helper that he was already
test does not require that the employer actually terminated from his job. Clearly, respondent illegally
supervises the performance of duties by the dismissed petitioner, and as such, the latter is entitled to
employee.hanrobleslaw backwages and separation pay in lieu of reinstatement,
as correctly ruled by the labor tribunals.
Contrary to respondent's submission, which was
upheld by the CA, the Court agrees with the labor
tribunals that all the four (4) elements are present in this Enrique Sagun v. ANZ Global Services
case: G.R. No. 220399 August 22, 2016

First. It is undisputed that respondent hired petitioner to Facts: Petitioner was employed at Hongkong and
work as a truck driver for his private enterprise, GPT. Shanghai Banking Corporation Electronic Data
Processing Philippines, Inc. when he applied online for
Second. Petitioner received compensation from the position of Payments and Cash Processing Lead at
respondent for the services he rendered. Contrary to the respondent ANZ Global Services and Operations Manila,
findings of the CA, while the wages paid was determined Inc. (ANZ), a domestic corporation whose businesses
on a "per trip" or commission basis, it has been involve a full range of banking products and services.
constantly ruled that such does not negate employment After passing the interview and online examination, ANZ,
relationship. That petitioner was paid on a "per trip" or through its Senior Vice President for Operations, Gay
commission basis is insignificant as this is merely a Cruzada, offered petitioner the position of Customer
method of computing compensation and not a basis for Service Officer, Payments and Cash Resolution, which
determining the existence or absence of an employer- the latter accepted on June 8, 2011. In the letter of
employee relationship.hanrobleslaw confirmation of the offer which constituted petitioner's
employment agreement with ANZ, the terms and
Third. Respondent's power to dismiss was inherent in conditions of his employment required, among others, a
the selection and engagement of petitioner as truck satisfactory result of his pre-employment screening. In
driver. addition, the Schedules, which likewise formed part of
the employment agreement, provided that petitioner was
Fourth. The presence of the element of control, which is to be placed on a probationary status for a period of six
the most important element to determine the existence (6) months and that his appointment would take effect
or absence of employment relationship, can be safely from the date of reporting, which was to be not later than
deduced from the fact that: (a) respondent owned the July 11, 2011. Accordingly, on June 11, 2011, petitioner
trucks that were assigned to petitioner; (b) the cargoes tendered his resignation at HSBC-EDPI and the
loaded in the said trucks were exclusively for acknowledged copy thereof was transmitted to ANZ
respondent's clients; and (c) the schedule and route to together with his other pre-employment documentary
be followed by petitioner were exclusively determined by requirements. On July 11, 2011, petitioner was
respondent. The latter's claim that petitioner was instructed to report to ANZ and was handed a letter of
permitted to render service to other companies was not retraction signed by ANZ's Human Resources Business
substantiated and there was no showing that he indeed Partner, Paula Alcaraz, informing him that the job offer
worked as truck driver for other companies. Given all had been withdrawn on the ground that the company
these considerations, while petitioner was free to carry found material inconsistencies in his declared
out his duties as truck driver, it cannot be pretended that information and documents provided after conducting a
respondent, nonetheless, exercised control over the background check with his previous employer,
means and methods by which the former was to particularly at Siemens. Asserting that his employment
accomplish his work. To reiterate, the power of control contract had already been perfected upon his
refers merely to the existence of the power. It is not acceptance of the offer on June 8, 2011, and as such,

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Labor Review Digest 2017

was already deemed an employee of ANZ who can only SOUTH COTABATO COMMUNICATIONS
be dismissed for cause, petitioner filed a complaint for CORPORATION and GAUVAIN J. BENZONAN v.
illegal dismissal with money claims against ANZ, HON. PATRICIA A. STO. TOMAS, G.R. No. 173326
Cruzada, and Alcaraz before the NLRC. Labor Arbiter December 15, 2010
dismissed the complaint, holding that there was no
perfected employment contract between petitioner and FACTS: An inspection was conducted at the premises
respondents since there was a valid cause for the of DXCP Radio Station where the following violations of
withdrawal of the offer that was made prior to the labor standards laws were noted: 1. Underpayment of
commencement of petitioner's service with the company. minimum wage; 2. Underpayment of 13th month pay; 3.
The LA held that the material misrepresentation Non-payment 5 days service incentive leave pay; 4.
committed by petitioner was a reasonable ground to Non-remittance of SSS premiums; 5. Non-payment of
withdraw the employment offer and as such, no rest day premium pay of some employee; 6. Non-
employer-employee relationship was created between payment of holiday premium pay; and 7. Some
them. The NLRC and the CA affirmed. Hence, this employees are paid on commission basis aside from
petition. their allowances.

Issue: Whether or not CA erred in not finding grave A copy of the Notice of Inspection Results was explained
abuse of discretion on the part of the NLRC in holding to and received by DXCP. A summary investigation was
that no employer-employee relationship existed between scheduled, the Regional Director directed DXCP to pay
petitioner and respondent. appellees the aggregate amount of Php759,752.00.
Petitioners appealed case to then DOLE Secretary Sto.
Ruling: No. There was already a perfected contract of Tomas was dismissed as well as its MR.
employment when petitioner signed ANZ's employment
offer and agreed to the terms and conditions that were Petitioners elevated their case to the Court of Appeals
but their petition was dismissed because of several
embodied therein. Nonetheless, the offer of employment
procedural infirmities that were explicitly cited in the
extended to petitioner contained several conditions
same, to wit: 1. The petition was not properly verified
before he may be deemed an employee of ANZ. Among
those conditions for employment was the "satisfactory and the Certification of Non-Forum Shopping was not
completion of any checks (e.g. background, bankruptcy, executed by the plaintiff or principal party; 2. Annexes A,
sanctions and reference checks) that may be required by B, C, E and its attachments and F are not certified true
ANZ." Accordingly, petitioner's employment with ANZ copies contrary; 3. Petitioners counsel failed to indicate
the date of issue of his IBP Official Receipt.
depended on the outcome of his background check,
which partakes of the nature of a suspensive condition,
and hence, renders the obligation of the would-be
employer, conditional. Here, the subject employment
HELD: In the slew of cases we have held that the
contract required a satisfactory completion of petitioner's
following officials or employees of the company can sign
background check before he may be deemed an
the verification and certification without need of a board
employee of ANZ. Considering, however, that petitioner
resolution: (1) the Chairperson of the Board of Directors,
failed to explain the discrepancies in his declared
(2) the President of a corporation, (3) the General
information and documents that were required from him
relative to his work experience at Siemens, ANZ's Manager or Acting General Manager, (4) Personnel
Officer, and (5) an Employment Specialist in a labor
obligations as a would-be employer were held in
suspense and thus, had yet to acquire any obligatory
force. To reiterate, in a contract with a suspensive
While the above cases do not provide a complete listing
condition, if the condition does not happen, the
obligation does not come into effect. Thus, until and of authorized signatories to the verification and
unless petitioner complied with the satisfactory certification required by the rules, the determination of
the sufficiency of the authority was done on a case to
background check, there exists no obligation on the part
case basis. The rationale applied in the foregoing cases
of ANZ to recognize and fully accord him the rights
is to justify the authority of corporate officers or
under the employment contract. In fact, records also
representatives of the corporation to sign the verification
show that petitioner failed to report for work on or before
July 11, 2011, which was also a suspensive condition or certificate against forum shopping, being in a position
mandated under sub-paragraph 4 of Schedule 1 of the to verify the truthfulness and correctness of the
allegations in the petition.
contract. Consequently, no employer-employee
relationship was said to have been created between
Nonetheless, under the circumstances of this case, it
petitioner and ANZ under the circumstances, and the
bears reiterating that the requirement of the certification
dismissal of the farmer's complaint for illegal termination
from work, as held by the NLRC, was correctly sustained of non-forum shopping is rooted in the principle that a
by the CA. party-litigant shall not be allowed to pursue simultaneous
remedies in different fora, as this practice is detrimental
to an orderly judicial procedure. However, the Court has
relaxed, under justifiable circumstances, the rule

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requiring the submission of such certification considering uses of the marketing advances from Nuvoland. It,
that, although it is obligatory, it is not jurisdictional. Not however, assured that all sales commissions earned by
being jurisdictional, it can be relaxed under the rule of Silvericon personnel would be released as per existing
substantial compliance. policy. After the issuance of the said termination letter,
De Castro and all the sales and marketing personnel of
In the case at bar, the Court holds that there has been Silvericon were barred from entering the office premises.
substantial compliance with Sections 4 and 5, Rule 7 of Nuvoland, eventually, was able to secure the settlement
the 1997 Revised Rules on Civil Procedure on the of all sales and marketing personnel's commissions and
petitioners. Petitioner Benzonan clearly satisfies the wages with the exception of those of De Castro and
aforementioned jurisprudential requirement because he Platon.
is the President of petitioner South Cotabato De Castro and Platon filed a complaint for illegal
Communications Corporation. Moreover, he is also dismissal before the LA, demanding the payment of their
named as co-respondent of petitioner-corporation in the unpaid wages, commissions and other benefits with
labor case which is the subject matter of the special civil prayer for the payment of moral and exemplary damages
action for certiorari filed in the Court of Appeals. and attorney's fees against Silvericon, Nuvoland,
Martinez, Bienvenida, and the Board of Directors of
Contracting and Subcontracting Nuvoland. Nuvoland and its directors and officers denied
a direct contractual relationship with De Castro and
LABOR RELATIONS COMMISSION, G.R.No. 204261, Whether Silvericon was engaged in independent
GR 217575 ,October 05, 2016 contracting or a labor-only scheme.
Sometime in 2007, Martinez (president of Labor-only contractor.
Nuvoland) recruited petitioner De Castro, to handle its
sales and marketing operations, including the hiring and There is "labor-only" contracting where the
supervision of the sales and marketing personnel. De person supplying workers to an employer does not have
Castro was made to sign a MOA, denominated as substantial capital or investment in the form of tools,
Shareholders Agreement, wherein Martinez proposed to equipment, machineries, work premises, among others,
create a new corporation, through which the latter's and the workers recruited and placed by such person
compensation, benefits and commissions, including are performing activities which are directly related to the
those of other sales personnel, would be coursed. As it principal business of such employer. In such cases, the
turned out, the supposedly new corporation person or intermediary shall be considered merely as an
contemplated was Silvericon. De Castro was appointed agent of the employer who shall be responsible to the
the President and majority stockholder of Silvericon workers in the same manner and extent as if he directly
while Bienvenida and Martinez were named as employed the latter.
stockholders and incorporators thereof, each owning 1 The "right to control" shall refer to the right
share of subscribed capital stock. reserved to the person for whom the services of the
In the same MOA, Martinez was designated as contractual parties are performed to determine, not only
Chairman of the new corporation to whom De Castro, as the end to be achieved, but also the manner and means
President and Chief Operating Officer, would directly to be used in reaching that end.
report. De Castro was tasked to manage the day-to-day First. D.O. 18-02 expressly provides for a
operations of the new corporation based on policies, registration requirement. Remarkably, the respondents
procedures and strategies set by Martinez. do not deny the apparent non-compliance with the rules
De Castro recruited 40 sales and marketing governing independent contractors. This failure on the
personnel. One of them was petitioner. De Castro and part of Silvericon reinforces the Court's view that it was
his team of sales personnel were responsible for the engaged in labor-only contracting. Nuvoland did not
sale of 100% of the projects owned and developed by even bother to make Silvericon comply with this vital
Nuvoland. Thereafter, the Sales and Marketing requirement had it really entered into a legitimate
Agreement (SMA), dated February 26, 2008, was contracting arrangement with a truly independent outfit.
purportedly executed by Nuvoland and Silvericon, Second. D.O. No. 18-A, series of 2011, defines
stipulating that all payments made for the condominium substantial capital as the paid-up capital stocks/shares
projects of Nuvoland were to be given directly to it. of at least P3,000,000.00 in the case of corporations,
partnerships and cooperatives. This amount was set with
specifically to avoid the subterfuge resorted to by entities
In a Letter, dated December 12, 2008 and with the intention to circumvent the law. It is important to
signed by Bienvenida, Nuvoland terminated the SMA on note that at the time Nuvoland engaged the services of
the ground that Silvericon personnel committed an Silvericon, the latter's authorized stock capital was
unauthorized walkout and abandonment of the Nuvo City P4,000,000.00, out of which only P1,000,000.00 was
Showroom for 2 days. In the same letter, Nuvoland subscribed. The paid-in capitalization of Silvericon
demanded that Silvericon make a full accounting of all its amounting to P1 million was woefully inadequate to be

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considered as substantial capital. Thus, Silvericon could payaos. Sometime in August 1997, Lu proposed the
not qualify as an independent contractor. signing of a Joint Venture Fishing Agreement between
Third. Silvericon had no substantial equipment in them, but petitioners refused to sign the same as they
the form of tools, equipment, machinery, and work opposed the one-year term provided in the agreement.
premises. Records reveal that Nuvoland itself designed According to petitioners, during a dialogue on August 18,
and constructed the model units used in the sales and 1997, Lu terminated their services because of their
marketing of its condominium units. This indisputably refusal to sign the agreement. On the other hand, Lu
proves that at the time of its engagement, Silvericon had alleged that the master fisherman Ruben Salili informed
no such investment necessary for the conduct of its him that petitioners still refused to sign the agreement
business. and have decided to return the vessel F/B MG-28. On
August 25, 1997, petitioners filed their complaint for
Fourth. If Silvericon was an independent
illegal dismissal, monetary claims and damages. Lu
contractor, it is only but logical that it should have also
denied having dismissed petitioners, claiming that their
offered its services to the public.
relationship was one of joint venture where he provided
Fifth. The respondents do not deny that the vessel and other fishing paraphernalia, while
Nuvoland and Silvericon shared the same officers and petitioners, as industrial partners, provided labor by
employees: respondents Bienvenida and Martinez were fishing in the high seas. Lu alleged that there was no
stockholders and incorporators thereof while De Castro employer-employee relationship as its elements were
was the President and majority stockholder of Silvericon. not present.
At the same time, Bienvenida was a principal
stockholder and member of the Board of Directors of ISSUE:
Nuvoland while Martinez was Nuvoland's President. Whether or not an employer-employee relationship
Admittedly, this fact alone does not give rise to an exists between Lu and the respondents
inference that Nuvoland and Silvericon are one and the
same. HELD:
The termination of the SMA was actually a ruse Yes. In determining the existence of an employer-
to make it appear that Silvericon was an independent employee relationship, the following elements are
entity. It was simply a way to terminate the employment considered: (1) the selection and engagement of the
of several employees altogether and escape liability as workers; (2) the power to control the worker's conduct;
an employer. In the interest of justice and equity, the (3) the payment of wages by whatever means; and (4)
conclusion that Silvericon was a mere labor-only the power of dismissal. All these elements are present in
conractor and a business conduit of Nuvoland warrants this case. petitioner exercised control over respondents.
that veil of corporate fiction must be pierced, and It should be remembered that the control test merely
Nuvoland and Silvericon be regarded as one and the calls for the existence of the right to control, and not
same entity to prevent a denial of what the petitioners necessarily the exercise thereof. Petitioner had contact
are entitled to. In a situation like this, an employer- with respondents at sea via the former's radio operator
employee relationship between the principal and the and their checker. However, such communication would
dismissed employees arises by operation of law. establish that he was constantly monitoring or checking
Silvericon being merely an agent, its employees were in the progress of respondents' fishing operations
fact those of Nuvoland. Stated differently, Nuvoland was throughout the duration thereof, which showed their
the principal employer of the petitioners. control and supervision over respondents' activities. The
The case be remanded to the labor arbiter for payment of respondents' wages based on the
the computation of separation pay and back wages. percentage share of the fish catch would not be
sufficient to negate the employer-employee relationship
existing between them. Such compensation falls within
Regular Employment
the scope and meaning of the term "wage" as defined
under Article 97(f) of the Labor Code.
G.R. No. 197899, Mar 6, 2017 Petitioner also wielded the power of dismissal
over respondents when he dismissed them after they
FACTS: refused to sign the joint fishing venture agreement.
Respondents' jobs as fishermen-crew members of F/B
Respondents were hired from January 20, 1994 to MG 28 were directly related and necessary to
March 20, 1996 as crew members of the fishing mother petitioner's deep-sea fishing business and they had
boat F/B MG-28 owned by respondent Joaquin "Jake" been performing their job for more than one year.
Lu who is the sole proprietor of Mommy Gina Tuna MGTR's line of business could not possibly exist, let
Resources based in General Santos City. Petitioners alone flourish without people like the fishermen crew
and Lu had an income-sharing arrangement wherein members of its fishing vessels who actually undertook
55% goes to Lu, 45% to the crew members, with an the fishing activities in the high seas. Petitioners'
additional 4% as "backing incentive." They also equally services to MGTR are so indispensable and necessary
share the expenses for the maintenance and repair of that without them MGTR's deep-sea fishing industry
the mother boat, and for the purchase of nets, ropes and would not have come to existence, much less fruition.

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Labor Review Digest 2017

UST vs. SAMAHANG MANGGAGAWA NG UST manpower agencies: Lipercon Services, Inc., People’s
Gr. No. 184262, April 24, 2017 Services Inc., ROMAC, and the latest being Interserve
Facts: Management and Manpower Resources, Inc. The
Department of Labor and Employment (Dole) inspected
From various periods, 1990-1999, respondents Coca-Cola to determine whether it is complying with
were hired to perform various maintenance duties within mandated labor standards. Coca-Cola was held liable to
UST campus as labourer, mason, tinsmith, painter, pay petitioners underpayment of 13th month pay,
electrician, welder, carpenter. They insist that since emergency cost of living allowance, and other claims. As
there performance of such maintenance tasks soon as respondents learned of the filing of the claims
throughout the years, they should be deemed regular with Dole, petitioners were dismissed on various dates in
employees. Petitioner admitted that it repeatedly hired January 2004. They filed on Nov. 10, 2006 their
respondents in different capacities throughout the years, complaint for illegal dismissal claiming they are
but maintained that they were hired on a per-project regular employees of Coca-Cola. Did their complaint
basis as evidenced by the Contractual Employee find merit?
Appointments signed by them.
Issue: Yes. Contrary to the position taken by Coca-Cola, it
Whether respondents are regular employees cannot be said that route helpers no longer enjoy the
of UST. employee-employer relationship since they became
employees of Interserve. In May 2003, the Court in
Held: Magsalin struck down Coca-Cola’s defense that the
complainants therein, who were route-helpers, were its
Yes. Article 295 of the Labor Code contemplates “temporary” workers. In that decision, the Court
two types of regular employees: a.) those who are explained: x x x Coca-Cola Bottlers Phils., Inc. is one of
engaged to perform activities which are usually the leading and largest manufacturers of softdrinks in the
necessary or desirable in the usual business or trade of country. Respondent workers have long been in the
the employer; and b.) trhose who have rendered at least service of petitioner company. The workers would go
one year of service, whether continous or broken, with with route salesmen on board delivery trucks and
respect to the activity in which they are employed. The undertake the task of loading and unloading products to
respondents in this case fall under the second category various delivery points. While the language of law might
of regular employees. The nature of their work is not have been more definitive, the clarity of its spirit and
necessary and desirable to petitioner’s usual business intent, i.e., to ensure a “regular” worker’s security of
as an educational institution, thus remove them froim the tenure, however, can hardly be doubted. In determining
first caterogy. Nevertheless, it is clear that their whether employment should be considered regular or
respective cumulative periods of employment as per not, the applicable test is the reasonable connection
their respective contract each exceed one year. Hence, between the activity performed by the employee in
they should be consider as regular employees only with relation to the usual business or trade of the employer.
respect to the activities for which they were hired and for The standard, supplied by the law itself, is whether the
as long as such activities exist. work is necessary or desirable in the usual business of
the employer, a fact that can be assessed by looking into
They are not project employees, who are
the nature of the services rendered and its relation to the
terminated upon completion of their respective
general scheme under which the business is usually
projects/undertaking because the specific undertakings
pursued. Coca-Cola’s argument that its usual trade is
or projects for which they were assigned/employed were
softdrink manufacturing and that work assigned to
not clearly delineated. This was evidenced by the
workers as sales route helpers involves merely
vagueness of the project descriptions set forth in their
“postproduction activities,” one which is not
respective contract, which states that they were tasked
indispensable in the manufacture of its products,
to “assist” in the various carpentry, electrical and
scarcely can be persuasive. If, as argued by petitioner,
masonry wor.
only those whose work are directly involved in the
production of softdrinks may be held performing
Quintanar v Coca-cola functions necessary and desirable in its usual business,
Gr. 210565, June 28, 2016 there would have then been no need for it to even
(Digest taken from Sunstar Article by Almirante(a former maintain regular truck sales route helpers. The nature of
labor arbiter) the work performed must be viewed from a perspective
Facts : of the business or trade in its entirety and not on a
PETITIONER Emmanuel D. Quintanar and 29 others confined scope (Mendoza, J., SC En Banc, Emmanuel
were hired by Coca-Cola Bottlers Philippines Inc. from D. Quintanar, et. al. vs. Coca-Cola Bottlers, Philippines,
1994 up to 2000 as route helpers. Their duties consist of Inc., G.R. No. 210565, June 28, 2016, quoting Magsalin
distributing bottled Coca-Cola products to customers in vs. National Organization of Workingmen, 451 Phil. 254
their assigned areas. They were paid salaries and (2003).
commissions at the average of P3,000 per month. Coca-
Cola transferred them successively as workers to Read

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Labor Review Digest 2017

more: http://www.sunstar.com.ph/cebu/business/2017/01 paper, Melivo alleged that Oyster Plaza was a business
/13/almirante-route-helpers-are-regular-employees- entity engaged in the business of hotel operation, under
520025 the ownership/management of Go and Ampel; that in
Follow us: @sunstaronline on Twitter | SunStar August 2008, Oyster Plaza hired him as a trainee room
Philippines on Facebook boy; that in November 2008, Oyster Plaza hired him as a
probationary room boy and he was made to sign an
Fallarme vs. San Juan de Dios Educational employment contract but he was not furnished a copy,
Foundation, Inc. that the said contract expired in March 2009 and his
G.R. No. 190015; September 14, 2016 work ended; that on April 7, 2009, Oyster Plaza hired
FACTS: him again as a room boy, but without any employment
contract or document; and that in September 2009, his
Petitioners were hired by San Juan for full-time teaching supervisor Ampel verbally told him that his contract was
positions. Fallarme was appointed to a faculty position, expiring, thus, he must stop reporting for work.
to perform administrative work as personnel officer and Issue:
to serve as head of the Human Development Counseling
Services. However, it was not specified if she was Whether Melivo was illegally dismissed by Oyster Plaza?
employed on a regular or a probationary status. Despite
having served as a faculty member since SY 2003-2004, Ruling:
Fallarme was asked only on March 1, 2006 to sign a
written contract which was denominated as Appointment Yes. Melivo was Illegally Dismissed. CA correctly ruled
and Contract for Faculty on Probation. After the that probation is the period during which the employer
expiration of the contract, San Juan informed her that it may determine if the employee is qualified for possible
would not be renewed for the first semester of SY 2006- inclusion in the regular force.The employer has the right
2007. It was the same for Martinez-Gacos. or is at liberty to choose who will be hired and who will
be denied employment. In that sense, it is within the
ISSUE: Were petitioners regular employees of San exercise of the right to select his employees that the
Juan? employer may set or fix a probationary period within
which the latter may test and observe the conduct of the
HELD: former before hiring him permanently. An employee
Yes. Petitioners were considered as regular employees allowed to work beyond the probationary period is
since Day One of their employment. The Labor Code deemed a regular employee.
provides the general rules as to probationary
employment which is supplemented by the Manual of In this case, Melivo was first hired as a trainee in August
Regulations for Private Schools with respect to the 2008. His training lasted for three (3) months. As a room
period of probationary employment of private school boy, his performance was certainly under observation.
teachers. A teacher must satisfy the following requisites Thus, it can be reasonably deduced that Melivo's
to be entitled to regular faculty status: (1) must be a full- probationary employment actually started in August
time teacher; (2) must have rendered 3 years of service 2008, at the same time he started working as a trainee.
(or 6 consecutive semesters of service for teachers on Therefore, when he was re-hired as room boy after his
the tertiary level); and (3) that service must have been training period sometime in November 2008 he attained
satisfactory. regular employment status.
The first 2 requisites are present. Applying
Article 281 of the Labor Code, a school must not only set Assuming arguendo that the 3-month training period
reasonable standards that will determine whether a could be considered a probationary period, the
probationary teacher rendered satisfactory service and is conclusion would still be the same. It should be
qualified for regular status; it must also communicate remembered that Melivo was again employed as a room
these standards to the teacher at the start of the boy in November 2008 under probationary status for five
probationary period. Should it fail to do so, the teacher (5) months or until March 2009. Records would show
shall be deemed a regular employee from Day One. that Melivo had completed his probationary employment.
However, the records lack evidence that respondent Thus, when Oyster Plaza re-hired him for the third time
college clearly and directly communicated to petitioners, on April 7, 2009, he became its regular employee
at the time they were hired, what reasonable standards thereof.
they must meet for the school to consider their
performance satisfactory and for it to grant them The petitioners' contention that Melivo was hired as a
regularization as a result. project employee is untenable. Under Article 280 of the
Labor Code, as amended, a project employee is one
OYSTER PLAZA HOTEL v ERROL O. MELIVO whose employment has been fixed for a specific project
G.R. No. 217455, October 05, 2016 or undertaking, the completion or termination of which
Facts: has been determined at the time of the engagement of
the employee. As a regular employee, Melivo could only
Melivo filed before the NLRC a Complaint for illegal be dismissed for just or authorized causes after affording
dismissal against petitioners Oyster Plaza. In his position him the procedural requirement of notice and hearing.

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The petitioners failed to adduce evidence that Melivo's RULING : Yes

dismissal was for a just or authorized cause, or that he
was sufficiently notified and given opportunity to be The issue has already been resolved in Magsalin v.
heard why his employment should not be terminated. National Organization of Working Men, wherein this
Hence, Melivo's dismissal was illegal. Court has categorically declared that the nature of
work of route helpers hired by Coca Cola Bottlers
Felicilda vs Uy Philippines, Inc. is necessary and desirable in its
GR. 221241, Sept 14, 2016 usual business or trade thereby qualifying them as
Facts : regular employees.

Felicida, a truck driver for Gold Pillar Trucking (GPT) , Whether the work undertaken is necessary or
was terminated because mangament alleged that he desirable in the usual business or trade of the
was caught in the act of sleeping on the job. Felicilda employer is a fact that can be assessed by looking
then filed a complaint for illegal dismissal. Defense of into the nature of the services rendered and its
respondent alleges no employee-employer relationship relation to the general scheme under which the
between them giving averments that there was no power business or trade is pursued in the usual course. It
of control over Felicida’s means and methods of doing is distinguished from a specific undertaking that is
his tasks, he was paid on a per trip basis. divorced from the normal activities required in
carrying on the particular business or trade. But,
Issue: although the work to be performed is only for a
Is Felicida a regular employee of Gold Pillar Trucking ? specific projector seasonal, where a person thus
engaged has been performing the job for at least
Ruling : YES one year, even if the performance is not continuous
Felicilda’s services as truck driver was indispensable to or is merely intermittent, the law deems the
GPT’s business operations, thus, he is a regular repeated and continuing need for its performance as
employee who may only be dismissed for just and being sufficient to indicate the necessity or
authorized cause and with due process. desirability of that activity to the business or trade of
the employer.
Basan v Coca-Cola Bottlers Phils.
Gr 174365-6, Feb. 4, 2015 The repeated rehiring of respondent workers and
the continuing need for their services clearly attest
Petitioners filed a complaint for illegal dismissal with to the necessity or desirability of their services in
money claims against respondent Coca-Cola Bottlers the regular conduct of the business or trade of
Philippines, alleging that respondent dismissed them petitioner company.
without just cause and prior written notice required
by law.
EMPLOYMENT. - The provisions of written
Respondent corporation, however, countered that it agreement to the contrary notwithstanding and
hired petitioners as temporary route helpers to act regardless of the oral agreement of the parties, an
as substitutes for its absent regular route helpers employment shall be deemed to be regular where
merely for a fixed period in anticipation of the high the employee has been engaged to perform activities
volume of work in its plants or sales offices.6 As which are usually necessary or desirable in the
such, petitioners’ claims have no basis for they usual business or trade of the employer, except
knew that their assignment as route helpers was where the employment has been fixed for a specific
temporary in duration. projector undertaking, the completion or termination
of which has been determined at the time of the
According to the CA, the fact that the petitioners engagement of the employee or where the work or
"performed duties which are necessary or desirable services to be performed is seasonal in nature and
in the usual trade or business of Coca-Cola," is of the employment is for the duration of the season.
no moment. This is not the only standard for An employment shall be deemed to be casual if it
determining the status of one’s employment. Such is not covered by the preceding paragraph: Provided,
fact does not prevent them from being considered That, any employee who has rendered at least one
as fixed term employees of Coca-Cola whose year of service, whether such service is continuous
engagement was "fixed" for a specific period. The or broken, shall be considered a regular employee
respondent’s repeated hiring for various periods with respect to the activity in which he is employed
(ranging from more than six months for private and his employment shall continue while such
respondent Basan to eight years in the case of activity exists. Thus, pursuant to the Article quoted
private respondent Dizon) would not automatically above, there are two kinds of regular employees,
categorize them as REGULAR EMPLOYEES. namely: (1) those who are engaged to perform
activities which are usually necessary or desirable in
Issue the usual business or trade of the employer; and
(2) those who have rendered at least one year of
W/N petitioners are regular employees service, whether continuous or broken, with respect

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to the activities in which they are employed.24 A. NATE CASKET MAKER AND/OR ARMANDO AND
Simply stated, regular employees are classified into: ANELY NATE, Petitioners, v. ELIAS V. ARANGO et
(1) regular employees by nature of work; and (2) al, Respondents, G.R. No. 192282, October 05, 2016
regular employees by years of service. The former (from 2017 SLU –BarAcads Labor)
refers to those employees who perform a particular Facts:
activity which is necessary or desirable in the usual Respondents were hired as carpenters,
business or trade of the employer, regardless of mascilladors and painters in petioners’casket-making
their length of service; while the latter refers to business from 1998 until their alleged termination in
those employees who have been performing the job, March 2007. Petitioners alleged that respondents are
regardless of the nature thereof, for at least a year. "stay-in" workers with free board and lodging, but they
would "always" drink, quarrel with each other on petty
Petitioners, in this case, fall under the first kind of things such that they could not accomplish the job orders
regular employee above. As route helpers who are on time. Hence, petitioners would then be compelled to
engaged in the service of loading and unloading "contract out" to other workers for the job to be
softdrink products of respondent company to its finished. While the respondents alleged that they worked
various delivery points, which is necessary or from Monday to Saturday, from 7:00a.m. to 10:00 p.m.,
desirable in its usual business or trade, petitioners with no overtime pay and any monetary benefits despite
are considered as regular employees. That they having claimed for such. On March 15, 2007, they were
merely rendered services for periods of less than a called by petitioners and were made to sign a Contract
year is of no moment since for as long as they of Employment. Respondents then alleged that when
were performing activities necessary to the business they were adamant and eventually refused to sign the
of respondent, they are deemed as regular contract, petitioners told them to go home because their
employees under the Labor Code, irrespective of employment has been terminated.They later on filed an
the length of their service. illegal dismissal case.

Coca-cola , in asserting that it is a fixed term The LA dismissed the case stating that no
employment, invoked the ruling in Brent vs Zamora: substantial evidence was presented to show that
petitioners terminated the employment of respondents. It
There is, on the other hand, the Civil Code, stated that pakyaw workers are not entitled to money
which has always recognized, and continues claims because their work depends on the availability of
to recognize, the validity and propriety of job orders from petitioners' clients. Also, there was no
contracts and obligations with a fixed or proof that overtime work was rendered by
definite period, and imposes no restraints on respondents.This was affirmed by the NLRC.
the freedom of the parties to fix the duration
of a contract, whatever its object, be it Issue:
specie, goods or services, except the Whether the respondent are regular employees
general admonition against stipulations of petitioner hence, was illegally dismissed.
contrary to law, morals, good customs,
public order or public policy. Ruling:
Yes. There is no dispute that the tasks
performed by respondents as carpenters, painters, and
Fixed term employment is not illegal per se. Considering, mascilladors were necessary and desirable in the usual
however, the possibility of abuse by employers in business of petitioners who are engaged in the
the utilization of fixed-term employment contracts, manufacture and selling of caskets. Considering also the
this Court, in Brent, laid down the following criteria length of time that respondents worked for petitioners,
to prevent the circumvention of the employee’s commencing on various dates from 1998 to 2007. In
security of tenure: addition, the power of control of petitioners over
respondents is clearly present in this case. Respondents
1) The fixed period of employment was knowingly follow the steps in making a casket, as instructed by the
and voluntarily agreed upon by the parties without petitioners, like carpentry, mascilla, rubbing and painting.
any force, duress, or improper pressure being They had their own notebooks where they listed the
brought to bear upon the employee and absent any work completed with their signature and the date
other circumstances vitiating his consent; or finished. The same would be checked by petitioners as
basis for the compensation for the day. Thus, petitioners
2) It satisfactorily appears that the employer and wielded control over the respondents in the discharge of
the employee dealt with each other on more or less their work. It should be remembered that the control test
equal terms with no moral dominance exercised by merely calls for the existence of the right to control, and
the former or the latter.29 Unfortunately, however, not necessarily the exercise thereof. It is not essential
the records of this case is bereft of any proof that the employer actually supervises the performance of
which will show that petitioners freely entered into duties by the employee. It is enough that the former has
agreements with respondent to perform services for a right to wield the power. Hence, pakyaw workers are
a specified length of time. considered regular employees for as long as their

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employers exercise control over them. Thus, while dismissal, regularization and non-payment of Service
respondents' mode of compensation was on a per-piece Incentive Leaves with prayer for back wages and
basis, the status and nature of their employment was attorneys fees.
that of regular employees. As regular employees,
respondents were entitled to security of tenure and could Defense of Herma Shipyard: Respondents were
be dismissed only for just or authorized causes and after project based employees in shipbuilding contracts and
the observance of due process. for specific project, which has been completed. May
contract of employment pa nga eh , “Kasunduang
Petitioners violated respondents' rights to Paglilingkod (Pang –Proyektong Kawani)”. Length of
security of tenure and constitutional right to due process service does not determine employment status, what is
in not even serving them with a written notice of controlling of project-based employment is whether the
termination which would recite any valid or just cause for employment has been fixed for a specific project of
their dismissal. Respondents were merely told that their undertaking , its completion having been determined and
services are terminated. made known to the employees.

Employees’ Stand: They are not project employees

because: a) fixed period of 1-4 months was only to make
them appear like project employees, b) they never
ceased working for Herma Shipyard due to expiration of
project-based employment contracts, c) if they were
project employees, Herma Shipyard should have
reported to DOLE the completion of the project, and d)
they perform services that are necessary and desirable
to the services of Herma Shipyard.

Are the respondents project-based employees?

Ruling: YES

Supreme Court ruled that the employees are project-

based employees whose employment is coterminous
with the project where they are assigned. The court also
ruled upon the contentions:

a. Who are project based employees?

Project-based employee is one whose employment
has been fixed for a specific project or undertaking, the
completion or termination of which has been determined
at the time of the engagement of the employee.

The services are coterminous with the project and may

be terminated upon the end or completion of the project
or phase for which they were hired. DETERMINATIVE
TEST to determine regular employee from project-based
employee : whether they were assigned to carry out a
specific project or undertaking, the duration and scope of
which was specified and made known to them, at the
time of their engagement. The next question then is to
answer did they voluntarily enter the contract.

b. Did the Employees voluntarily enter the contract?

Project Employment YES
The SC ruled that the employees knowingly and
Herma Shipyard Inc. v. Danilo Oliveros, et al voluntarily entered into and signed the project based
GR. 208936, April 17, 2017 employment contracts as it was shown that they were
Facts : fully apprised of the terms and conditions of the contract
and their scope of work and their status. The
Herma Shipyard Inc. is a domestic corporation engaged contract(mostly written in Filipino language) clearly
in the business of shipbuilding and repair. The stated that they were hired as project-based employees,
respondents are its employees occupying various the date of commencement and specific task, and the
positions. The respondents filed a complaint for illegal completion date. There was no proof shown that they

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were coerced to sign the contracts, thus , the project It is enough that Herma Shipyard gave the
employment contracts must be upheld as valid. approximate or target completion date in the project
employment contract. Given the nature of its business
c. Necessarily and Desirable tasks performed = and the scope of its projects which takes months or even
automatic regularization ? NO! years, the court cannot expect Herma Shipyard to give a
definite and exact completion date. What is important is
Project-based employees may or may not be that the project-based employees were apprised at the
performing tasks usually necessary or desirable to the time of their engagement that their employment is
usual business or trade of the employer. The fact that coterminous with the specific project.
the job is necessary and desirable does not
automatically imply regular employment, neither does it f. But in par 10 of contract, it provides extension, is
impair validity of the project employment contract. that valid? YES
Valid because the purpose of the extension is to
d. What is “project”? complete the same specific project, and not to keep
Project, as held in ALU-TUCP v NLRC , could refer them employed even after the completion of the project.
to one or the other of at least two distinguishable types
of activities. These are: Quebral v Angbus Construction
GR No. 221897, November 2016
d.1 Project referring to a particular job or (case digest from sunstarcebu.com, article by Almirante)
undertaking that is within the regular or usual business
of the employer company, but, which is distinct and Facts :
separate and identifiable, as such, from other
undertakings of the company. Undertaking begins and PETITIONERS Isidro Quebral and eight others filed a
ends at determined or determinable times. complaint for illegal dismissal with prayer for
reinstatement, money claims, damages and attorney’s
d.2 Project referring to a particular job or fees against respondents Angbus Construction, Inc. and
undertaking that is not within the regular business of the Angelo Bustamante. Not contented with the decision
corporation. Such a job or undertaking must be dated March 27, 2013 of the Labor Arbiter (LA),
identifiably separate and distinct from the ordinary or petitioners filed an appeal to the National Labor
regular business operations of the employer. It begins Relations Commission (NLRC). Their appeal
and ends at a determinable time. memorandum was mailed on May 20, 2013, the last day
of the reglementary period to appeal as appearing on the
d. Repeated rehiring = regular employment? NO! mailing envelope and on the registry receipt. It was
The repeated and successive rehiring of the accompanied by a certification of postmaster Larry S.
employees as project-based ees does not by itself, Laureta, the custodian of records at the Philippine
qualify them as regular employees. The principle that Overseas Employment Administration (POEA) post
employees initially hired on a temporary basis may office at the time the mail matter was posted, that
become permanent employees by reason of their length confirmed the said mailing date. The Court of Appeals
of service is not applicable to project-based employees. (CA) ruled that the appeal was filed out of time. It
The rationale is that this principle will not be fair, in case ascribed no evidentiary value to the registry receipt due
of project-based employees because when a project is to the lack of an authenticating affidavit by the person
completed, it would be unjust to require the employer to who mailed it. It refused to give weight to Laureta’s
maintain these employees in their payroll since this certification olding that it was issued only on Feb. 17,
would be tantamount to making the employee a 2014 when Laureta was no longer assigned at the POEA
privileged retainer who collects payment from his office.
employer for work not done, and amounts to labor
coddling at the expense of management. Did the CA commit a reversible error?

In Herma Shipyards’ case, they only hire Ruling: Yes.

workers when it has existing contracts for repair and After reviewing the evidence on record, the Court
shipbuilding. It must be allowed “to reduce its work force disagrees with the CA that the appeal was not timely
into number suited for the remaining work to be done filed. Section 3, Rule 13 of the Rules of Court provides
upon the completion or proximate accomplishment of that where pleadings are filed by registered mail, the
(each particular) project. The ees here were assigned to date of mailing as shown by the post office stamp on the
a project or a phase thereof which begins and ends at a envelope or the registry receipt shall be considered as
determined or determinable time, their services were the date of filing. Based on this provision, the date of
lawfully terminated. filing is determinable from two sources: (1) from the post
office stamp on the envelope or (2) from the registry
e. But Herma Shipyard did not determine, in the receipt, either of which may suffice to prove the
employment contract, the completion date of the timeliness of the filing of the pleadings. The Court
project…. previously ruled that if the date stamped on one is earlier
than the other, the former may be accepted as the date

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of filing. This presupposes, however, that the envelope Issue 1: W/N Largado and Estrellado were illegally
or registry receipt and the dates appearing thereon are terminated by Zytron
duly authenticated before the tribunal where they are
presented. When the photocopy of a registry receipt No. When Largado and Estrella refused to renew their
bears an earlier date but is not authenticated, the Court contract with Zytron by applying with AC Sicat, they
held that the later date stamped on the envelope shall be effectively resigned from Zytron. Hence, they were not
considered as the date of filing. In the present case, the illegally dismissed because they voluntary terminated
petitioners submitted these pieces of evidence to show their employment with the latter.
the timeliness of their appeal: (a) the registry receipt; (b)
a copy of the envelope that contained the memorandum Issue 2: W/N Largado and Estrellado were illegally
of appeal and appeal fee; and (c) Laureta’s certification. terminated by AC Sicat
As the CA noted, all three documents indicate May 20,
2013 as the date of mailing at the POEA Post Office in
Mandaluyong City. Considering that there is no variance No. There is no illegal dismissal to speak of since AC
in the dates stated on these documents, there is no Sicat is a legitimate job contractor and their termination
reason for the Court to mark another date as the date of is merely brought about by the expiration of their
mailing. Laureta’s certification corroborates the date of employment contracts with AC Sicat.
filing specified in the registry receipt and on the
envelope. The Court recognizes that, ideally, the First, Largado and Estrellado were hired as fixed-term
incumbent postmaster in the POEA Post Office should or project employees of AC Sicat. The determining factor
be the one to certify the date of mailing based on the of such employment is not the duty of the employee but
post office records, considering that he or she is the the day certain agreed upon by the parties for the
person duly authorized to do so. Nevertheless, the Court commencement and termination of the employment
finds that Laureta’s certification as the postmaster at the relationship. Second, the non-renewal of their contracts
time of mailing, together with the pieces of evidence by AC Sicat is a management prerogative, and failure of
earlier mentioned, constitutes substantial compliance respondents to prove that such was done in bad faith
with the authentication requirement (Perlas-Bernabe, J., militates against their contention that they were illegally
SC 1st Division, Isidro Quebral et.al. vs. Angbus dismissed.
Construction, Inc. and Angelo Bustamante, G.R. No.
221897, November 07, 2016). Hence, the expiration of their contract with AC Sicat
simply caused the natural cessation of their fixed-term
Read employment thereat.
more: http://www.sunstar.com.ph/cebu/business/2017/09
/16/almirante-evidence-date-mailing-564394 Felipe v. Danilo Divina Konstract
Follow us: @sunstaronline on Twitter | SunStar GR. 218009, Sept. 21, 2016
Philippines on Facebook (from sunstarcebu.com, art. by Almirante)
Fonterra Brand Phils, Inc. vs Largado and Estrellado Facts:
Case Digest GR 205300 March 18 2015
(from barexamphil.com) RESPONDENT Danilo Divina Tamayo Konstract, Inc.
Facts: (DDTKI) hired on Dec. 19, 2005, petitioner Marvin G.
Fonterra contracted the services of Zytron to provide for Felipe as formworks aide and petitioner Reynante L.
trade merchandising representatives (TMRs) in the Velasco on March 14, 2007 as warehouse aide.
marketing and promotion of its milk and dairy products. Petitioners claimed regular employment status for having
Among those TMRs whose services were engaged are continuously worked for DDTKI until September 2010,
Largado and Estrellado, who are the respondents in this when they were no longer given working assignments. In
case. After 4 years, Fonterra terminated its contract with a letter dated Sept. 28, 2010 they inquired from
Zytron and entered into an agreement for manpower respondents about their employment status and why
supply with AC Sicat. Desirous of continuing their work they were not transferred to the Glorieta project, which
as TMRs in Fonterra, Largado and Estrellado submitted supposedly started on Sept. 17, 2010. The respondents
their job application with AC Sicat, a legitimate job did not reply to their letter. Hence, on Oct. 12, 2010 they
contracting company. AC Sicat hired their services as filed their complaint for illegal dismissal, non-payment of
TMRs for a term of 5 months. service incentive leave and 13th month pay against the
When their 5-month contract with AC Sicat were about to
expire, they allegedly sought renewal thereof, which was The respondents, on the other hand, claimed that the
allegedly refused. This prompted them to file for petitioners were their former project employees who
complaints of illegal dismissal, regularization, were hired for a particular project. They presented
nonpayment of service incentive leave, 13thmonth pay, various project employment contracts duly signed by the
and actual and moral damages against Fonterra, Zytron petitioners to support their claim that they were hired on
and AC Sicat. specific construction projects for specific periods and
that they were informed of the nature and duration of

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their employment from the beginning of their required to be in the office from 9:00 o’clock in the
engagement. morning to 6:00 o’clock in the evening, but most of the
time, they worked beyond 6:00 o’clock without receiving
Whose claim finds merit? the corresponding overtime pay. These office based
tasks were not on a per project basis and petitioners did
Ruling: That of respondent DDTKI not sign any contract for these jobs. These assignments
were not reported to the DOLE either. Later they were
As correctly noted by the Court of Appeals (CA), told that all old FIs assigned in the "tracking" projects
petitioners’ employment was terminated due to the would be pulled out eventually and replaced by new FIs
expiration of the period for which they were contracted. contracted from an agency. Old FIs would be assigned
Considering that their employment contract for the US only to "ad hoc" projects which were seasonal. This
Embassy New Office Annex 1 Project (MNOX-1) had prompted petitioners to file a consolidated complaint for
been terminated on Sept. 18, 2010, the CA correctly regularization before the LA. On October 21, 2008,
ruled that their termination from work was not illegal but petitioners were advised by TNS not to report for work
that the project for which they were hired merely expired. anymore because they were being pulled out from their
current assignments and that they were not being lined
On their contention that they were regular employees up for any continuing or incoming projects because it no
due to their uninterrupted service for DDTKI for four longer needed their services. They were also asked to
years and the continuous employment contract renewal surrender their company IDs. Petitioners, thereafter, filed
every month, petitioners are mistaken. In Aro v. NLRC, a complaint for illegal dismissal, overtime pay, damages,
683 Phil. 605 (2012), the Court explained: The length of and attorney’s fees against TNS.
service or the re-hiring of construction workers on a
project-to-project basis does not confer upon them ISSUE: whether or not the petitioners are regular
regular employment status, since their re-hiring is only a employees
natural consequence of the fact that experienced
construction workers are preferred. Employees who are HELD:
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 Yes. The project employment scheme used by TNS
to the employees at the time of the employment, are easily circumvented the law and precluded its
properly treated as project employees and their services employees from attaining regular employment status in
may be lawfully terminated upon the completion of a the subtlest way possible. Petitioners were rehired not
project. intermittently, but continuously, contract after contract,
month after month, involving the very same tasks. They
xxx Therefore, being project employees who have been practically performed exactly the same functions over
validly terminated by reason of the completion of the several years. Ultimately, without a doubt, the functions
specific project, MNOX-1, for which they were hired, they performed were indeed vital and necessary to the
petitioners Felipe and Velasco are not entitled to very business or trade of TNS. In determining the true
reinstatement and back wages. (Mendoza, J., SC 2nd nature of an employment, the entirety of the contract, not
Div., Marvin G. Felipe and Reynante L. Velasco vs. merely its designation or by which it was denominated, is
Danilo Divina Tamayo Konstract, Inc. (DDTKI), et. al., controlling. Though there is a rule that conflicting
G.R. No. 218009, Sept. 21, 2016). provisions in a contract should be harmonized to give
effect to all, in this case, however, harmonization is
Read impossible because project employment and
more: http://www.sunstar.com.ph/cebu/business/2017/07 probationary employment are distinct from one another
/07/almirante-project-employment-551734 and cannot co-exist with each other. Hence, should
Follow us: @sunstaronline on Twitter | SunStar there be ambiguity in the provisions of the contract, the
Philippines on Facebook ruleis that all doubts, uncertainties, ambiguities and
insufficiencies should be resolved in favor of labor. This
JEANETTE V. MANALO, VILMA P. BARRIOS, is in consonance with the constitutional policy of
LOURDES LYNN MICHELLE FERNANDEZ and LEILA providing full protection to labor.
OCAMPO, Seasonal Employees
G.R. No. 208567, November 26, 2014
G.R. No. 199554, February 18, 2015
Petitioners were hired by TNS as field personnel on CO., INC., AND/OR ANGELO ANG
various dates starting 1996 for several projects. They LEONEN, J.
were made to sign a project-to-project employment
contract. Thereafter, TNS would file the corresponding Facts:
termination report with the DOLE-RO. Petitioners were Northern Tobacco Redrying Co., Inc. (NTRCI), a flue-
likewise assigned office-based tasks for which they were curing and redrying of tobacco leaves business, employs

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approximately 100 employees with seasonal workers employer; (2) project employees or those whose
“tasked to sort, process, store and transport tobacco employment has been fixed for a specific project or
leaves during the tobacco season of March to undertaking, the completion or termination of which
September.” has been determined at the time of the engagement
of the employee or where the work or service to be
NTRCI hired Zenaida Paz as a seasonal sorter, performed is seasonal in nature and the employment
paid P185.00 daily. NTRCI regularly re-hired her every is for the duration of the season; and (3) casual
tobacco season since then. She signed a seasonal job employees or those who are neither regular nor
contract at the start of her employment and a pro-forma project employees.” Jurisprudence also recognizes
application letter prepared by NTRCI in order to qualify the status of regular seasonal employees.
for the next season. Paz was 63 years old when NTRCI
informed her that she was considered retired under This court explained that the proviso in the
company policy. A year later, NTRCI told her she would second paragraph of Article 280 in that “any
receive P12,000.00 as retirement pay. employee who has rendered at least one year of
service, whether such service is continuous or
Paz, with two other complainants, filed a broken, shall be considered a regular employee”
Complaint for illegal dismissal against NTRCI. She applies only to “casual” employees and not “project”
amended her Complaint into a Complaint for payment of and regular employees in the first paragraph of
retirement benefits, damages, and attorney’s fees as Article 280.
P12,000.00 seemed inadequate for her 29 years of
service. The Complaint impleaded NTRCI’s Plant On the other hand, the workers of La Union
Manager, Angelo Ang, as respondent. Tobacco Redrying Corporation in Abasolo v.
National Labor Relations Commission were
NTRCI countered that no Collective Bargaining considered regular seasonal employees since they
Agreement (CBA) existed between NTRCI and its performed services necessary and indispensable to
workers. Thus, it computed the retirement pay of its the business for over 20 years, even if their work
seasonal workers based on Article 287 of the Labor was only during tobacco season. This court applied
Code. NTRCI raised the requirement of at least six the test laid down in De Leon v. National Labor
months of service a year for that year to be considered Relations Commission for determining regular
in the retirement pay computation. It claimed that Paz employment status:
only worked for at least six months in 1995, 1999, and
2000 out of the 29 years she rendered service. Thus, The test of whether or not an employee
Paz’s retirement pay amounted to P12,487.50 after is a regular employee has been laid down in De
multiplying her 185.00 daily salary by 22½ working days Leon v. NLRC, in which this Court held:
in a month, for three years. The primary standard, therefore, of determining
regular employment is the reasonable connection
The Labor Arbiter in his Decision “confirmed that between the particular activity performed by the
the correct retirement pay of Zenaida M. Paz was employee in relation to the usual trade or business of the
12,487.50.” The National Labor Relations Commission in employer. The test is whether the former is usually
its Decision modified the Labor Arbiter’s Decision. It necessary or desirable in the usual business or trade of
likewise denied reconsideration. The Court of Appeals the employer. The connection can be determined by
dismissed the Petition and modified the National Labor considering the nature of the work performed and its
Relations Commission’s Decision in that “financial relation to the scheme of the particular business or trade
assistance is awarded to . . . Zenaida Paz in the amount in its entirety. Also if the employee has been performing
of P60,356.25” and that the dismissal of private the job for at least a year, even if the performance is not
respondent Teresa Lopez is declared illegal, and thus, continuous and merely intermittent, the law deems
she is awarded backwages and separation pay, in repeated and continuing need for its performance as
accordance with the foregoing discussion. sufficient evidence of the necessity if not indispensability
of that activity to the business. Hence, the employment
Issues: is considered regular, but only with respect to such
a. Whether or not the computation of the CA was activity, and while such activity exists. Thus, the nature
proper of one’s employment does not depend solely on the will
b. Whether or not there was illegal dismissal or word of the employer. Nor on the procedure for hiring
and the manner of designating the employee, but on the
Held: nature of the activities to be performed by the employee,
The Court affirmed the Court of Appeals’ considering the employer's nature of business and the
decision with modification. duration and scope of work to be done.
a. Article 28038 of the Labor Code and jurisprudence
identified three types of employees, namely: “(1) The services petitioner Paz performed as a
regular employees or those who have been engaged sorter were necessary and indispensable to respondent
to perform activities which are usually necessary or NTRCI’s business of flue-curing and redrying tobacco
desirable in the usual business or trade of the leaves. She was also regularly rehired as a sorter

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during the tobacco seasons for 29 years since 1974. never abandoned her argument of illegal dismissal
These considerations taken together allowed the despite the amendment of her Complaint. This
conclusion that petitioner Paz was a regular seasonal implied lack of intent to retire until she reached the
employee, entitled to rights under Article 27953 of the compulsory age of 65. Thus, she should be
Labor Code: considered as illegally dismissed from May 18, 2003
until she reached the compulsory retirement age of
Art. 279. Security of Tenure. In cases of regular 65 in 2005 and should be entitled to full backwages
employment, the employer shall not terminate the for this period. An award of full backwages is
services of an employee except for a just cause or when “inclusive of allowances and other benefits or their
authorized by this Title. An employee who is unjustly monetary equivalent, from the time their actual
dismissed from work shall be entitled to reinstatement compensation was withheld. . . .”
without loss of seniority rights and other privileges and to
his full backwages, inclusive of allowances, and to his Backwages, considered as actual damages,
other benefits or their monetary equivalent computed requires proof of the loss suffered. The Court of
from the time his compensation was withheld from him Appeals found “no positive proof of the total number
up to the time of his actual reinstatement. of months that she actually rendered work.”
Nevertheless, petitioner Paz’s daily pay of P185.00
was established. She also alleged that her
b. Illegal dismissal and backwages employment periods ranged from three to seven
Since petitioner Paz was “unlearned and not
knowledgeable in law, she just accepted such fact Since the exact number of days petitioner Paz
and waited to be paid her separation/retirement would have worked between May 18, 2003 until she
benefit as promised by . . . NTRCI.” Unfortunately, would turn 65 in 2005 could not be determined with
after a year of waiting, respondent NTRCI only specificity, this court thus awards full backwages in
offered her around P12,000.00 for all her services the amount of P22,200.00 computed by multiplying
since 1974. P185.00 by 20 days, then by three months, then by
two years.
The National Labor Relations Commission
recognized that like the other complainants against UNIVERSAL ROBINA V. ACIBO
respondent NTRCI, petitioner Paz “was at a loss in GR 186439, JAN. 15, 2015
what cause of action to take — whether illegal
dismissal or payment of retirement pay.” FACTS: Complainants were employees of
URSUMCO. They were hired on various dates (between
Petitioner Paz’s amendment of her Complaint February 1988 and April 1996) and on different
was not fatal to her cause of action for illegal capacities, i.e., drivers, crane operators, bucket hookers,
dismissal. First, petitioner Paz never abandoned her welders, mechanics, laboratory attendants and aides,
argument that she had not reached the compulsory steel workers, laborers, carpenters and masons, among
retirement age of 65 pursuant to Article 287, as others. At the start of their respective engagements, the
amended, when respondent NTRCI made her retire complainants signed contracts of employment for a
on May 18, 2003. Second, the National Labor period of one month or for a given season. URSUMCO
Relations Commission found that respondent NTRCI repeatedly hired the complainants to perform the same
failed to prove a valid company retirement policy, yet duties and, for every engagement, required the latter to
it required its workers to retire after they had sign new employment contracts for the same duration of
reached the age of 60.60 The Court of Appeals also one month or a given season. On August 23, 2002, the
discussed that while respondent NTRCI produced complainants filed before the LA complaints for
guidelines on its retirement policy for seasonal regularization, entitlement to the benefits under the
employees, it never submitted a copy of its existing CBA and attorney’s fees. The LA dismissed the
Collective Bargaining Agreement and even alleged complaint for lack of merit. The NLRC reversed.
in its Position Paper that none existed. Petitioner Petitioners went to CA via petition for certiorari to which
Paz was only 63 years old on May 18, 2003 with two the CA granted partly.
more years remaining before she would reach the
compulsory retirement age of 65. “Retirement is the
result of a bilateral act of the parties, a voluntary ISSUE: Whether not the employees are regular
agreement between the employer and the employee seasonal employees.
whereby the latter, after reaching a certain age,
agrees to sever his or her employment with the RULING: Yes. The nature of the employment
former.” Article 287, as amended, allows for optional does not depend solely on the will or word of the
retirement at the age of at least 60 years old. employer or on the procedure for hiring and the manner
Consequently, if “the intent to retire is not clearly of designating the employee. Rather, the nature of the
established or if the retirement is involuntary, it is to employment depends on the nature of the activities to be
be treated as a discharge.” Again, petitioner Paz performed by the employee, considering the nature of

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the employer’s business, the duration and scope to be

done, and, in some cases, even the length of time of the ISSUE: WON the repetitive seasonal hiring of
performance and its continued existence. Rosario made her a regular employee.

In light of the above legal parameters laid down by the HELD:

law and applicable jurisprudence, the respondents are YES. It was settled that there is no particular form of
neither project, seasonal nor fixed-term employees, but evidence required to prove the existence of the
regular seasonal workers of URSUMCO. The following employer-employee relationship. Any competent and
factual considerations from the records support this relevant evidence to prove such relationship may be
conclusion: admitted. This may entirely be testimonial. SSS Form
R-1A merely reflected the time in which the petitioners
1. Respondents were made to perform various tasks reported the respondent for coverage of the SSS benefit.
that did not at all pertain to any specific phase of Thus there lies no reason for this Court not to afford full
URSUMCO’s strict milling operations that would faith and credit to Denaga and Jugue’s testimonies.
ultimately cease upon completion of a particular
phase in the milling of sugar; rather, they were Farm workers generally fall under the definition of
tasked to perform duties regularly and habitually seasonal employees. It was also consistently held that
needed in URSUMCO’s operations during the milling seasonal employees may be considered as regular
season. employees when they are called to work from time to
time. They are in regular employment because of the
2. The respondents were regularly and repeatedly nature of the job, and not because of the length of
hired to perform the same tasks year after year. This time they have worked. However, seasonal workers
regular and repeated hiring of the same workers who have worked for one season only may not be
(two different sets) for two separate seasons has put considered regular employees. The nature of the
in place, principally through jurisprudence, the services performed and not the duration thereof, is
system of regular seasonal employment in the sugar determinative of coverage under the law.
industry and other industries with a similar nature of
operations. The test for regular employees to be considered as
3. While the petitioners assert that the respondents such is the presence of a reasonable connection
were free to work elsewhere during the off-season, between the particular activity performed by the
the records do not support this assertion. There is employee in relation to the usual business or trade
no evidence on record showing that after the of the employer. The test is whether the former is
completion of their tasks at URSUMCO, the usually necessary or desirable in the usual business or
respondents sought and obtained employment trade of the employer. The connection can be
elsewhere. determined by considering the nature of the work
performed and its relation to the scheme of the
HACIENDA CATAYWA/MANUEL VILLANUEVA, particular business or trade in its entirety. Also, if the
owner, JOEMARIE VILLANUEVA, manager, MANCY employee has been performing the job for at least one
AND SONS ENTERPRISES, INC. vs. ROSARIO year, even if the performance is not continuous or
LOREZO merely intermittent, the law deems the repeated and
G.R. No. 179640, March 18, 2015 continuing need for its performance as sufficient
evidence of the necessity if not indispensability of that
FACTS: activity to the business. Hence, the employment is also
Respondent Rosario Lorezo received a letter from the considered regular, but only with respect to such
SSS informing her that she cannot avail of their activity and while such activity exists.
retirement benefits since per their record she has only
paid 16 months. Such is 104 months short of the Thus farm workers are regular seasonal employees
minimum requirement of 120 months payment to be who are called to work from time to time and the
entitled to the benefit. Respondent then filed her nature of their relationship with the employer is such
Amended Petition before the SSC. She alleged that she that during the off season, they are temporarily laid
was employed as laborer in Hda. Cataywa managed by off; but reemployed during the summer season or
Jose Marie Villanueva in 1970 but was reported to the when their services may be needed.
SSS only in 1978. Demetria Denaga and Susano Jugue
in their Joint Affidavit narrated that respondent had been
a worker from 1970. She alleged that SSS contributions Fixed Term Employees
were deducted from her wages from 1970 to 1995, but
not all were remitted. Petitioners insist that after thirty ATTY. MARCOS D. RISONAR, JR. vs. COR JESU
long years, all the records of the farm were already COLLEGE AND/OR EDGARDO S. ESCURIL
destroyed, thus, they relied on the SSS Form R-1A as G.R. No. 198350, September 14, 2016
the only remaining source of information available. FACTS:
Petitioners also alleged that respondent was a very Atty. Risonar was initially appointed as Dean of
casual worker. the School of Law of Cor Jesu College (CJC). After his

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three-year term, the petitioner had not received any employees has been fixed prior to engagement while the
notice of termination from CJC. Thus, despite the lapse project employees' employment has been fixed for a
of the term of his appointment as Law School Dean, the specific project or undertaking, the completion or
petitioner continued to perform his duties and proceeded termination of which has been determined likewise at the
to prepare for the forthcoming firs semester. time of the engagement. They enjoy security of tenure
The petitioner then received a letter from Escuril, albeit limited to the duration of the term indicated in the
the new president of CJC, informing him that his employment contract. Thus, a fixed-term employ prior to
services as Law School Dean was already terminated the expiration of the term specified in the employment
and that the new Dean will report in a week for a formal contract, may not be dismissed except for a just or an
turn-over of office and responsibilities. The petitioner authorized cause provided by law or the employment
wrote Escuril to protest the termination of his services. contract and after due process has been afforded to
He pointed out that, pursuant to the stipulations in his employee.
appointment letter, it is required for CJC to give him a Clearly, the petitioner was illegally dismissed
written notice informing him that the administration does since there was no just or authorized cause for
not intend to renew/extend his appointment as Law dismissal. The petitioner is, entitled to backwages
School Dean within 30 days prior to the expiration of the computed from the time his compensation was withheld
term of his previous appointment. until May 31, 2010. Further, considering that
On July 20, 2007, the petitioner filed a complaint reinstatement is no longer feasible not only because the
for illegal dismissal and damages. Petitioner posited that relationship between the parties already been strained,
he should have been considered as a regular employee but also the term of the petitioner's second appointment
since he had continuously and uninterruptedly worked had already lapsed, he is entitled to separation pay
for CJC for four years and that he performed activities, equivalent one (1) month salary for every year of
which are necessary and desirable in the usual business service. The petitioner is further entitled to attorney's
or trade of CJC. Moreover, the petitioner averred that the fees in the amount often percent (10%) of the total
respondents' failure to send him the required written monetary awards pursuant to Article 111 of the Labor
notice of termination resulted in the automatic renewal of Code.
his appointment as Law School Dean for another three-
year term. ALUMAMAY O. JAMIAS, et al., vs. NLRC; INNODATA
Was the petitioner illegally dismissed? TODD SOLOMON
HELD: G.R. No. 159350 March 09, 2016
The petitioner’s appointment as Law School Respondent Innodata Philippines, Inc.
Dean is a fixed-term employment. Indeed, where the (Innodata), a domestic corporation engaged in the
duties of the employee consist of activities, which are business of data processing and conversion for foreign
necessary or desirable in the usual business of the clients, hired the following individuals on various dates
employer, the parties are not prohibited from agreeing and under the following terms, to wit:
on the duration of employment.
A contract of employment with a fixed period Duration of
Name Position
necessitates that: (1) the fixed period of employment Contract
was knowingly and voluntarily agreed upon by the
parties without any force, duress or improper pressure 8/7, 1995 to 8 /7
Alumamay Jamias Manual Editor
being brought to bear on the employee and without any 1996
circumstances vitiating consent; or (2) it satisfactorily
appears that the employer and employee dealt with each Marietha V. Delos 8/7, 1995 to 8/ 7,
Manual Editor
other on more or less equal terms with no moral Santos 1996
dominance whatever being exercised by the former on
the latter. 8/16, 1995 to8/
Lilian R. Guamil Manual Editor
It is indisputable that the petitioner and CJC 16, 1996
knowingly and voluntarily agreed upon the petitioner's
8/7, 1995 to 8/7,
fixed period of employment as the Law School Dean Rina C. Duque Manual Editor
and, in doing so, they dealt with each other on equal
8/ 23, 1995 to 8/
The fixed-term employment of the petitioner was Marilen Agabayani Manual Editor
23, 1996
impliedly renewed after its expiration. If indeed CJC
never intended to renew the petitioner's appointment,
Production 9/1, 1995 to 9/r 1,
CJC, should have sent the petitioner the required written Alvin V. Patnon
Personnel 1996
notice of termination in accordance with the appointment
9/18, 1995 to
Fixed-term employees are akin to project Analyn I. Beter Type Reader
9/18, 1996
employees. The period of employment of fixed-term

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business of data processing. We reject this position. For

Production 9/18, 1995 to
Jerry O. Soldevilla one, it would be unusual for a company like Innodata to
Personnel 9/18, 1996
undertake a project that had no relationship to its usual
business. Also, the necessity and desirability of the work
Ma. Concepcion A. Production 9/18, 1995 to
performed by the employees are not the determinants in
Dela Cruz Personnel 9/18, 1996
term employment, but rather the "day certain" voluntarily
11/20, 1995 to agreed upon by the parties. In fine, the employment of
Jennifer Cruz Data Encoder the petitioners who were engaged as project employees
11/20, 1996
for a fixed term legally ended upon the expiration of their
11/20, 1995 to 11r contract. Their complaint for illegal dismissal was plainly
Jennifer Matuguinas Data Encoder lacking in merit.
20, 1996
After their respective contracts expired, they filed a COLEGIO DEL SANTISIMO ROSARIO AND SR.
complaint for illegal dismissal claiming that Innodata had ZENAIDA S. MOFADA, OP, v. EMMANUEL ROJO,
made it appear that they had been hired as project G.R. No. 170388 : September 4, 2013
employees in order to prevent them from becoming
regular employees. FACTS:

ISSUE: Petitioner Colegio del Santisimo Rosario (CSR) hired

Were the employees regular? respondent as a high school teacher on probationary
HELD: basis for the school years 1992-1995. On April 5, 1995,
NO. CSR, through petitioner Sr. Zenaida S. Mofada, OP
A fixed period in a contract of employment does (Mofada), decided not to renew respondents services.
not by itself signify an intention to circumvent Article 280
of the Labor Code Respondent filed a Complaint for illegal dismissal. He
Under Article 280 of the Labor Code, the alleged that since he had served three consecutive
provision contemplates three kinds of employees, school years which is the maximum number of terms
namely: (a) regular employees; (b) project employees; allowed for probationary employment, he should be
and (c) casuals who are neither regular nor project extended permanent employment. Citing paragraph 75
employees. The nature of employment of a worker is of the 1970 Manual of Regulations for Private Schools
determined by the factors provided in Article 280 of (1970 Manual), respondent asserted that "full- time
the Labor Code, regardless of any stipulation in the teachers who have rendered three (3) consecutive years
contract to the contrary. Obviously, Article 280 does not of satisfactory services shall be considered permanent."
preclude an agreement providing for a fixed term of
employment knowingly and voluntarily executed by the On the other hand, petitioners argued that respondent
parties. knew that his Teachers Contract for school year 1994-
A fixed term agreement, to be valid, must strictly 1995 with CSR would expire on March 31,
conform to the requirements and conditions provided in 1995.Accordingly, respondent was not dismissed but his
Article 280 of the Labor Code. The fixed period of probationary contract merely expired and was not
employment must be knowingly and voluntarily agreed renewed. Petitioners also claimed that the "three years"
upon by the parties, without any force, duress or mentioned in paragraph 75 of the 1970 Manual refer to
improper pressure being brought to bear upon the "36 months," not three school years.And since
employee and absent any other circumstances vitiating respondent served for only three school years of 10
his consent, or it must satisfactorily appear that the months each or 30 months, then he had not yet served
employer and employee dealt with each other on more the "three years" or 36 months mentioned in paragraph
or less equal terms with no moral dominance 75 of the 1970 Manual.
whatsoever being exercised by the former on the latter.
LA ruled in favor of respondent. The decision was
Hence, the petitioners knowingly agreed to the affirmed by the NLRC and the CA respectively on appeal
terms of and voluntarily signed their respective hence this petition before the SC.
contracts. Indeed, the petitioners could not presume that
the fixing of the one-year term was intended to evade or ISSUE: Whether or not respondent has become a
avoid the protection to tenure under Article 280 of permanent employee upon three years of service
the Labor Code in the absence of other evidence
establishing such intention. This presumption must HELD: Yes. CA decision affirmed.
ordinarily be based on some aspect of the agreement
other than the mere specification of the fixed term of the Labor Law- Manual of Regulations for Private
employment agreement, or on evidence aliunde of the Schools (the Manual) in relation to the Labor Code
intent to evade.
Lastly, the petitioners posit that they should be In Mercado v. AMA Computer College-Paraque City,
accorded regular status because their work as editors Inc.,we had occasion to rule that cases dealing with
and proofreaders were usually necessary to Innodata's employment on probationary status of teaching

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personnel are not governed solely by the Labor Code as evaluation, as no evidence were adduced to show the
the law is supplemented, with respect to the period of reasonable standards with which respondents
probation, by special rules found in the Manual of performance was to be assessed or that he was
Regulations for Private Schools (the Manual). With informed thereof. Notably too, none of the supposed
regard to the probationary period, Section 92 of the 1992 performance evaluations were presented. These flaws
Manual provides violated respondent's right to due process. As such, his
dismissal is, for all intents and purposes, illegal.
Section 92. Probationary Period. Subject in all instances
to compliance with the Department and school It should be pointed out that absent any showing of
requirements, the probationary period for academic unsatisfactory performance on the part of respondent, it
personnel shall not be more than three (3) consecutive can be presumed that his performance was satisfactory,
years of satisfactory service for those in the elementary especially taking into consideration the fact that even
and secondary levels, six (6) consecutive regular while he was still more than a year into his probationary
semesters of satisfactory service for those in the tertiary employment, he was already designated Prefect of
level, and nine (9) consecutive trimesters of satisfactory Discipline. In such capacity, he was able to uncover the
service for those in the tertiary level where collegiate existence of a drug syndicate within the school and
courses are offered on a trimester basis. lessen the incidence of drug use therein. Yet despite
respondent's substantial contribution to the school,
However, this scheme "of fixed-term contract is a system petitioners chose to disregard the same and instead
that operates during the probationary period and for this terminated his services; while most of those who were
reason is subject to Article 281 of the Labor Code," involved in drug activities within the school were
which provides- punished with a slap on the wrist as they were merely
made to write letters promising that the incident will not
x x x The services of an employee who has been happen again.
engaged on a probationary basis may be terminated for
a just cause or when he fails to qualify as a regular OKS DESIGNTECH vs. CACCAM
employee in accordance with reasonable standards Gr. No. 211263 August 5, 2015
made known by the employer to the employee at the
time of his engagement. An employee who is allowed to Facts:
work after a probationary period shall be considered a Petitioner hired Respondent as an accountant
regular employee. under a Contract of Employment for a Fixed Period for 6
months. Her contract was thereafter renewed for another
However, for teachers on probationary employment, in 6 months. About nineteen days before the expiration of
which case a fixed term contract is not specifically used her second contract, Respondent received a letter from
for the fixed term it offers, it is incumbent upon the Company Manager Pongad informing her of the
school to have not only set reasonable standards to be impending expiration of her contract. As Respondent felt
followed by said teachers in determining qualification for that she was summarily dismissed by the aforestated
regular employment, the same must have also been letter, she filed a complaint for illegal dismissal.
communicated to the teachers at the start of the
probationary period, or at the very least, at the start of Respondent claimed that she was a regular
the period when they were to be applied. Corollarily, employee and argued that the nature of her work was
should the teachers not have been apprised of such necessary and desirable to the business of the
reasonable standards at the time specified above, they Petitioner. On the other hand, herein Petitioner claims
shall be deemed regular employees. that the present labor case was only filed in retaliation of
the criminal case of Qualified Theft and Falsification of
In this case, glaringly absent from petitioner's evidence Private Documents after having discovered several
are the reasonable standards that respondent was unauthorized withdrawals amounting to Php500,000.00
expected to meet that could have served as proper from its bank in violation of the trust and confidence
guidelines for purposes of evaluating his performance. reposed in her. Further, the Petitioner interposed that the
Nowhere in the Teacher's Contract could such standards letter received by the Respondent was a mere notice of
be found.Neither was it mentioned that the same were the expiration of her contract, and not a termination
ever conveyed to respondent. Even assuming that notice.
respondent failed to meet the standards set forth by
CSR and made known to the former at the time he was Issue:
engaged as a teacher on probationary status, still, the Whether or not the Respondent was a fixed-
termination was flawed for failure to give the required period employee.
notice to respondent.
Curiously, despite the absence of standards, Mofada Yes. The Supreme Court held that even if an
mentioned the existence of alleged performance employee is engaged to perform activities that are
evaluations in respondent's case. We are, however, in a necessary or desirable in the usual trade or business of
quandary as to what could have been the basis of such the employer, the same does not preclude the fixing of

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employment for a definite period. Article 280 [now, Indeed, the power of the employer to terminate a
Article 294] of the Labor Code does not proscribe or probationary employee is subject to 3 limitations,
prohibit an employment contract with a fixed period namely: (1) it must be exercised in accordance with
provided the same is entered into by the parties, without specific requirements of the contract; (2) the
any force, duress or improper pressure being brought to dissatisfaction on the part of the employer must be real
bear upon the employee and absent any other and in good faith, not feigned so as to circumvent the
circumstance vitiating consent. contract or the law; and (3) there must be no unlawful
discrimination in the dismissal. In this case, not oinly did
In fact, the Court, in Brent, had already petitioner fail to show that respondent was apprised of
pronounced that the decisive determinant in fixed-term the standards for regularization but it was likewise not
employment should not be the activities that the shown how these standards have been applied in his
employee is called upon to perform, but the day certain case.
agreed upon by the parties for the commencement and
termination of their employment relationship. Pursuant to well settled doctrine, petitioner’s failure to
specify the reasonable standards by which Soriano’s
alleged poor performance was evaluated as well as to
Probationary Employee prove that such standards were made known to him at
the start of his employment, makes respondent a regular
Univac Development v. Soriano employee. In other words because of this omission of
Gr. 182072, June 19, 2013 Univac, Soriano is deemed to have been hired from day
(Case Digest from Course Hero) one as a regular employee.
Facts :
Abbot Laboratories Philippines, et al. vs
Soriano was hired by Univac on probationary basis as PerlieAlcaraz
legal assistant of the company on a certain. 8 days prior GR No. 192571, July 23, 2013
to the completion of his six months probationary period, (Digest From : talkaboutphilippinelaw.blogspot.com)
the Dept. head informed him that he was being
terminated from employment due to the company’s cost- Case Doctrine:
cutting measures. He allegedly asked for a 30-day notice Compliance with the certification against forum shopping
but his termination was ordered to be effective is separate from and independent of the avoidance of
immediately. Thus, he was left with no choice but to the act of forum shopping itself.
leave the company. Petitioner, however, denied the
allegations of Soriano and claimed instead that prior to Facts:
his employment; he was informed of the standards The respondent Alcaraz was the Regulatory Affairs and
required for regularization. Univac also said that Soriano Information Manager of Aventis Pasteur Philippines who
abandoned his work due to his plan of reviewing for the showed interest in applying as a Medical and Regulatory
bar. Affairs Manager, a position that was published by the
petitioner Abbot Laboratories in the newspaper. When
Issue : whether or not a probationary employee’s the petitioner formally offered the position to the
dismissal is with a valid ground considering he was not respondent, the latter accepted the position. It was on
informed of the standards required for regularization May 23, 2005 that Walsh, Almazar and Bernardo
formally handed to the respondent a letter terminating
Ruling : her employment with the detailed explanation for her
No. It is primordial that at the start of the probationary termination. The respondent then filed a complaint for
period, the standards for regularization be made known illegal dismissal with damages against the petitioner and
to the probationary employee. In this case, as held by its officers. The Labor Arbiter upheld the termination of
the CA, petitioner failed to present adequate evidence to probationary employment of the respondent holding that
substantiate his claim that respondent was apprised of the termination was justified with no evidence showing
said standards. It is evident from the LA and NLRC that the officers of the Abbot Lab acted in bad faith when
decisions that they merely relied on surmises and terminating her services.
presumptions in concluding that respondent should have
known the standards considering his educational The NLRC annulled and set aside the ruling of the Labor
background as a law graduate. Equally important is the Arbiter which prompted the petitioners to file before the
requirement that in order to invoke “failure to meet the Court of Appeals a petition for certiorari with prayer for
probationary standards’ as a justification for dismissal, issuance of a temporary restraining order and writ of
the employer must show these standards have been preliminary injunction. Meanwhile, the action of the
applied to the subject employee. In this case, aside from petitioner on its motion for reconsideration of the CA’s
its bare allegation, it was not shown that a performance resolution in the second CA petition was denied that
evaluation was conducted to prove that his performance became final on January 10, 2011 because the petitioner
was indeed unsatisfactory. failed to file a timely appeal on the said decision.
Alcaraz, in her comment, raised the issue on forum
shopping when the petitioner filed its second petition to

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the CA pending the resolution of the motion for matter and causes of action, therefore there was no
reconsideration that they filed earlier in the December violation of the said provision of the rules of court.
10, 2009 decision. Alcaraz further contends that the
petitioners failed to comply with certification requirement
under Section 5, Rule 7 of the rules of court when they Dagasdas vs. Grand Placement & General Services,
failed to disclose in their petition filed on June 16, 2010 Corp. (GPGS)
Memorandum of Appeal filed before the NLRC. G.R. No. 205727; January 18, 2017

Issue: FACTS:
GPGS, for and on behalf of ITM, employed Dagasdas as
Whether or not the petitioner violated the rule against Network Technician. He was deployed in Saudi Arabia
forum shopping and have violated the certification under a 1 year contract. Before leaving the Philippines,
requirement under Section 5, Rule 7 of the Rules of Dagasdas underwent shill training and pre-departure
Court. orientation as Network Technician. When he arrived in
Saudi Arabia, he signed with ITM a new employment
Ruling: contract which stipulated that the latter contracted him
as Superintendent. Under this contract, Dagasdas shall
The court emphasized that the compliance with the be placed under a 3 month probationary period; and, this
certification against forum shopping is different and new contract shall cancel all contracts prior to its date
separate from the avoidance of the act of forum from any source. However when he reported for work,
shopping itself. There is difference in the treatment he was given tasks suited for a Mechanical Engineer
between the two situations in terms of the imposable which is foreign to the job he applied for as such he
sanctions and the means of enforcing them. The failure would not be able to perform well in his work.
to comply with the certification requirement against Consequently, he was transferred to the Civil
forum shopping is sufficient cause for the dismissal of Engineering Department. However, on march 9, 2008,
the complaint without prejudice to the filing of the he was directed to exit the worksite and his employment
complaint or initiatory pleading upon motion and after was severed with ITM.
hearing. The failure to avoid the act of forum shopping, Later, he was given a termination notice
on the other hand, is a sufficient ground for a summary pursuant to his contract which provided that ITM
dismissal and direct contempt. reserved the right to terminate any employee within the 3
month probationary period without need of any notice to
In the first situation, forum shopping takes place when the employee. He was then repatriated back to the
the party files multiple suits that involve the same parties Philippines. Thereafter, he filed an illegal dismissal case.
with the same issue, either simultaneously or
successively, in order to obtain a favorable judgment. It ISSUE: Was Dagasdas validly dismissed from work?
is present when there is the requisites of litis pendentia
namely : (1) identity of parties is the same with the same HELD:
interests in both actions, (2) identity of rights asserted No. Security of tenure remains even if employees,
and reliefs prayed for and founded on the same facts, (3) particularly the OFW, work in a different jurisdiction.
identity of the two preceding cases where a judgment Since the employment contracts of OFWs are perfected
rendered in the pending case will amount to res judicata in the Philippines, and following the principle of lex loci
in the other case. Taking into account these requisites, contractus (the law of the place where the contract is
the court found no elements of a forum shopping. The made), these contracts are governed by our laws,
first petition before the CA was instituted in order to prin1arily the Labor Code of the Philippines and its
question the NLRC ruling with respect to the illegal implementing rules and regulations. In this case, prior to
dismissal of Alcaraz. The second petition before the CA his deployment and while still in the Philippines,
involves the issue on the propriety of the enforcement of Dagasdas was made to sign a POEA-approved contract
the judgment award pending the resolution of the first with GPGS, on behalf of ITM; and, upon arrival in Saudi
CA petition and the finality of the decision in the labor Arabia, ITM made him sign a new employment contract.
dispute between the parties. The decision on the first CA Nonetheless, this new contract, which was used as basis
petition does not amount to res judicata with respect to for dismissing Dagasdas, is void.
the second petition before the CA as the two petitions There is no clear justification for the dismissal of
involve different subject matter and cause of action, Dagasdas other than the exercise of ITM's right to
hence there is no forum shopping. terminate him within the probationary period.
Constitution guarantees that employees, local or
In the second situation, section 5 of Rule 7 of the Rules overseas, are entitled to security of tenure. To allow
of Court requires the plaintiff to disclose/declare under employers to reserve a right to terminate employees
oath that the best of his knowledge no such other action without cause is violative of this guarantee of security of
or claim is pending before other courts. Records show tenure.
that the issues raised in the petition before the CA and Moreover, even assuming that Dagasdas was
those raised in the June 16, 2010 Memorandum of still a probationary employee when he was terminated,
Appeal filed before the NLRC cover different subject his dismissal must still be with a valid cause. As regards

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a probationary employee, his or her dismissal may be accordance with reasonable standards made known to
allowed only if there is just cause or such reason to him by the employer at the time of his
conclude that the employee fails to qualify as regular engagement. Apart from the protection this last ground
employee pursuant to reasonable standards made in the dismissal of a probationary employee affords the
known to the employee at the time of engagement. employee, it is also in line with the right or privilege of
Dagasdas was not sufficiently informed of the work the employer to choose who will be accorded with
standards for which his performance will be measured. regular or permanent status and who will be denied
Even his position based on the job title given him was employment after the period of probation. It is within the
not fully explained by his employer. Simply put, ITM exercise of this right that the employers may set or fix a
failed to show that it set and communicated work probationary period within which it may test and observe
standards for Dagasdas to follow, and on which his the employee's conduct before hiring him permanently.
efficiency (or the lack thereof) may be determined.
Here, PNOC-EDC exercised its prerogative to hire
PNOC v Buenviaje Buenviaje as a permanent employee right from the start
Gr 183200-91, June 29, 2016 or on February 1, 2004, the effectivity date of her
Facts: appointment. In her appointment letter, PNOC-EDC's
President expressly instructed the HRMD to amend
PNOC hired Amelyn Buenviaje as Assistant to the then Buenviaje's status from co-terminous to regular. He also
President and Chief Executive Officer Apostol, her informed her that her regular status shall be retroactive
father. Buenviaje's employment contract provided that to July 1, 2001. Nowhere in the appointment letter did
she will serve a co-terminous tenure with Apostol. A new PNOC-EDC say that Buenviaje was being hired on
Marketing Division was created, one position was that of probationary status. Upon evaluation on two (2)
a Marketing Division Manager. Buenviaje assumed this occasions, PNOC-EDC used a performance appraisal
position as early as the time of the creation of the form intended for permanent managerial employees,
Marketing Division. Apostol filed his Certificate of even if the company had a form for probationary
Candidacy as Governor for the province of Leyte, yet employees. The intention, therefore, all along was to
continued to discharge his functions as President in grant Buenviaje regular or permanent employment.
PNOC-EDC. Buenviaje also continued to perform her
duties as Assistant to the Chairman/President and D.O. 174
Marketing Division Manager in PNOC-EDC. Thereafter,
Buenviaje was appointed to the position of Senior DOLE’s D.O. 174: Rules on Contractualization
Manager for Marketing Division.In line with PNOC-EDC's Written by Marilou Antonio
policies, Buenviaje was subjected to a performance. In From htpps://medium.com
her subsequent performance appraisal, she received an
unsatisfactory grade of four (4). Thus, Ester Guerzon, On April 6, 2017, we were privileged to have Atty. Benjo
Vice President for Corporate Affairs of PNOC-EDC, Santos Benavidez, bureau of labor relations director of
informed Buenviaje that she did not qualify for regular the Department of Labor and Employment, as resource
employment. PNOC-EDC, through Guerzon, speaker for the labor update on the Department of Labor
communicated in writing to Buenviaje her non- and Employment’s Department Order №174 (D.O. 174),
confirmation of appointment as well as her separation which took effect last April 3, 2017.
from the company.
In a nutshell, here’s what D.O. 174 covers:
Whether Buenviaje was a permanent employee; 1. Reiterates the prohibition against labor-only
contracting (LOC) based on statutory definition and
Ruling: jurisprudence.

Buenviaje was a permanent employee. Buenviaje was 2. Expands illicit forms of employment arrangements:
a. Contracting out of work to an in-house cooperative
hired as a Marketing Division Manager, a position that
performs activities that are usually necessary and b. Requiring employees to become members of a
desirable to the business of PNOC-EDC and is thusly, cooperative
c. Other schemes, practices, or arrangements designed
regular. As an employer, PNOC-EDC has an exclusive
to circumvent the worker’s right to security of tenure
management prerogative to hire someone for the
position, either on a permanent status right from the start
3. Removes the provision for an employment contract to
or place him first on probation. In either case, the
employee's right to security of tenure immediately be co-terminus with the service agreement.
attaches at the time of hiring. As a permanent employee,
4. In case of termination due to the expiration of a
he may only be validly dismissed for a just or
service agreement, the contractor is required to provide
authorizedcause. As a probationary employee, he may
new employment to the employee within three months
also be validly dismissed for a just or authorized cause,
and pay the latter of separation benefits.
or when he fails to qualify as a regular employee in

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5. Adds the violation of any of the provisions of the Labor concerning occupational safety and health in the said
Code as grounds for cancellation of registration. industry.

6. Reduces the time period within which regional As regards the issue of registration of contractors, the
directors shall resolve filed complaints from 10 to 7 days. Philippine Contractors Accreditation Board (“PCAB”),
pursuant to regulatory powers granted by Presidential
7. Blacklists a contractor, including any of its officers, Decree No. 1746, Series of 1980, registers all types of
whose registration has been cancelled, to operate or contractors and ensures their compliance with DOLE
apply for new registration as a contractor under either issuances. Thus, contractors licensed by PCAB are not
the same or different name. required to register under D.O. No. 174 unless they are
also engaged in other contracting or subcontracting
8. Increases the substantial capital requirement from 3M arrangements not related to the construction industry.
to 5M pesos. Findings of violation/s of labor or occupational health
and safety standards, such shall be coordinated with the
9. Increases the registration fee from 25,000 to 100,000 PCAB for appropriate action, which may include
pesos. cancellation/suspension of the violating contractor’s
10. Shortens the validity of contractors’ certificate of
registration from three to two years. Third, D.C. No. 1 clarifies that D.O. No. 174 is only
Compliance to the implementing rules of D.O. 174 will be applicable and relevant to the private security industry
the primary focus of the Department of Labor and insofar as it requires these private security agencies to
Employment. comply with the registration requirements under D.O.
No. 174.
SCOPE OF APPLICATION OF THE NEW RULES ON D.C. No. 1 clarifies that contracting or subcontracting
CONTRACTING AND SUBCONTRATCING arrangements in the private security industry shall be
FROM: cruzmarcelo.com governed by Department Order No. 150, Series of 2016
(Revised Guidelines Governing the Employment and
On 13 June 2017, the Department of Labor and Working Conditions of Security Guards and other Private
Employment (“DOLE”) issued Department Circular No. Security Personnel in the Private Security Industry).
01, Series of 2017 (“D.C. No. 1”) clarifying the scope and
application of Department Order No. 174, Series of 2017 Applicability as to Contractual Relationship
(“D.O. No. 174”), otherwise known as the Rules
Implementing Articles 106 to 109 of the Labor Code. D.C. No. 1 clarifies that D.O. No. 174 does not cover
D.O. No. 174, which was issued last 16 March 2017, contractual relationships which do not bear the “trilateral
effectively superseded D.O. No. 18-A setting the new relationship” distinct in contracting and subcontracting
rules and regulations on contracting and subcontracting. arrangements. Thus, D.O. No. 174 does not contemplate
applicability over contracts of sale or purchase, contract
Notably, D.C. No. 1 clarified and further refined the of lease, contract of carriage, contract
applicability of D.O. No. 174 as to industry, contractual growing/growership agreement, toll manufacturing,
relationship, and as to persons. contract of management, operation and maintenance
and such other contracts governed by the Civil Code of
Applicability as to Industry the Philippines and other special laws.
First, D.C. No. 1 clarifies that D.O. No. 174 does not
apply to business entities engaged in Business Process Applicability as to Persons
Outsourcing (“BPO”), Legal Process Outsourcing
(“LPO”), and Knowledge Process Outsourcing (“KPO”). D.C. No. 1 clarifies that D.O. 174 does not cover
DOLE clarified that D.O. No. 174 does not contemplate contracting out of work to professionals or individuals
information-technology services which involve an entire with distinctive skills/talents provided that they perform
business process. the job or work for the principal.
Second, D.C. No. 1 clarifies that D.O. No. 174 does not
apply and govern on contracting or subcontracting Analysis
arrangements in the construction industry which shall
continue to be governed by the following: It was imperative on the part of DOLE to issue a
1. D.O. No 19, Series of 1993 (Guidelines Governing the clarification as the issuance of D.O. No. 174 sent chilling
Employment of Workers in the Construction Industry); effect to the employers as DOLE, through its Regional
2. D.O. No. 13, Series of 1998 (Guidelines Governing the Offices, intensified their inspection and assessment on
Occupational Safety and Health in the Construction entities pursuant to the campaign promise of President
Industry); and Rodrigo Duterte to end contractualization. Easy target on
3. DOLE-DPWH-DILG-DTI and PCAB Memorandum of these inspections and assessments are the BPOs or in
Agreement-Joint Administrative Order Series of 2011 common parlance the “Call Centers”. These BPOs are
dealing with coordination and harmonization of policies known for providing support services or business

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processes for corporations based domestically or prohibition of all forms of contractualization. But as
abroad. Secretary Bello himself recognized, the DoLE secretary
has no power to do so because this is a function of the
Even under Articles 106 to 109 of the Labor Code, the legislature. In short, the DoLE secretary can only
services provided by these BPOs or Call Centers fall regulate, but not totally prohibit contracting.
under legitimate job contracting which is not prohibited.
What is prohibited is engaging in contracting and Nonetheless, some of the changes introduced by DO
subcontracting for the purpose of circumventing labor 174 are worth noting. They may appear innocent at first
standards and preventing the workers to have security of but there seems to be more to them than meets the eye.
tenure. The BPOs or Call Centers became the subject of
inspection and assessment because during heavy or For instance, DO 174 expanded DO 18-enumeration of
peak season, they engage contractors to provide them illicit employment arrangements. Other arrangements
with manpower to augment their regular workforce. declared by DO 174 as prohibited are: contracting out of
These workers are employees of the contractors but are work through an in-house cooperative, thus, apparently
deployed in the sites of the principals and more often recognizing the proliferation of cooperatives engage in
than not, receive instructions, being evaluated and even contracting; requiring contractor’s/subcontractor’s
subjected to disciplinary action by the principals. These employees to perform functions which are currently
circumstances usually lead to a finding of the existence being performed by regular employees; and such other
of prohibited labor-only contracting. schemes meant to circumvent security of tenure.

However, with the issuance of D.C. No. 1, some quarters While the other prohibited arrangements under DO 18-A,
within DOLE are even taking the position that an other than labor-only contracting, are qualified by the
arrangement wherein these BPOs, LPOs and KPOs phrase “not done in good faith and not justified by the
engage contractors to supply them workers during heavy exigencies of the business”, the other illicit forms of
or peak season is still not covered and is exempted from employment arrangements under DO 174 were
the application of D.O. No. 174. It remains to be seen if unqualifiedly declared as prohibited for being contrary to
DOLE will cease and back off from inspecting and law or public policy.
assessing these BPOs, LPOs and KPOs including their
contractors as the Labor Sector may find D.C. No. 1 a The strict and literal interpretation of Section 6 (f) on
step backward and contrary to the campaign promise of contracting out of regular functions will wield to the
the President. conclusion that as long as the functions are currently
being performed by regular employees, they can no
DO 174: More than meets the eye longer be outsourced to contractors regardless of the
from www.bworldonline.com good faith of the company and the presence of any
Posted on May 10, 2017 business exigencies that may justify one’s resort to
Finally the long wait is over. After almost nine (9) months
of numerous dialogues and consultations, DoLE This interpretation, however, seems to contradict the
Secretary Silvestre H. Bello III already issued Supreme Court’s ruling in De Ocampo v. NLRC, Asian
Department Order No. 174, series of 2017. It sets out Alcohol v. NLRC, Serrano v. NLRC and Aliviado v. P&G.
the new rules implementing Articles 106 to 109 of the These cases readily reveal that it is a valid exercise of
Labor Code, thus, replacing Department Order 18-A, management prerogative to avail of the services of an
series of 2011. The new Order became effective last independent contractor to promote economy and
April 2, 2017. efficiency in the business regardless of whether the
activity to be contracted out is peripheral or core in
At first reading, it appears that DO 174 did not deviate to
a great extent from DO 18-A. It would seem that it simply This author believes that the prohibition under Section 6
borrowed the provisions of the old order and tweaked it a (f) should not be interpreted in a strict and absolute
little to adjust to the current conditions. For instance, DO manner. Three main reasons may be provided for this.
174 no longer provides for a Net Financial Contracting
Capacity (NFCC) or requires that the same be included First, Article 106 of the Labor Code does not distinguish
in Service Agreements. The required substantial as to the kind of services that can be contracted out. It
capitalization of contractors was increased from at least only mentions of “performance of work” without any
P3,000,000.00 to at least P5,000,000.00. Moreover, the distinction as to whether such work is peripheral or core
registration and renewal fee was increased from in nature. As such, DO 174 which supposedly
P25,000.00 to P100,000.00. Also, the Certificate of implements the same must not also make any
Registration shall now be effective for only two (2) years. distinction. Needless to say, an administrative issuance
cannot extend nor amend a legislative enactment.
Banking on the President’s vow to stop
“contractualization” and the “endo,” labor groups had Second, the definition of labor-only contracting under the
high hopes that the new Order will contain a total Labor Code effectively recognizes that even core

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Labor Review Digest 2017

functions or services can be contracted out. In fact, even Labor Standards : Migrant Workers
if the contracted services are directly related to the
business of the principal, an entity may still be deemed SAMEER OVERSEAS PLACEMENT AGENCY, INC.,
legitimate and not a labor-only contractor if it has vs.JOY C. CABILES,
substantial capitalization and exercises control over its G.R. No. 170139 August 5, 2014
employees. (from lawtechworld.com)

Lastly, we must consider the policy behind the issuance PONENTE: Leonen
of DO 174: to avoid the displacement of workers and to TOPIC: Section 10 of RA 8042 vis-a-vis Section 7 of RA
prevent employers from resorting to contractualization. 10022

If we are to strictly apply the prohibition then, this might FACTS:

just aggravate the problem of contracting in the country Petitioner, Sameer Overseas Placement
because employers will no longer regularize positions Agency, Inc., is a recruitment and placement agency.
and just contract them out altogether. Such situation will
definitely not guarantee industrial peace and prosperity Respondent Joy Cabiles was hired thus signed a one-
in the long run. year employment contract for a monthly salary of
NT$15,360.00. Joy was deployed to work for Taiwan
Ma. Clarissa Excelsis S. Villanueva is an associate of Wacoal, Co. Ltd. (Wacoal) on June 26, 1997. She
the Labor and Employment Department of the Angara alleged that in her employment contract, she agreedto
Abello Concepcion Regala & Cruz Law Offices work as quality control for one year. In Taiwan, she was
(ACCRALAW). asked to work as a cutter.

Sameer claims that on July 14, 1997, a certain Mr.

Huwang from Wacoal informed Joy, without prior notice,
that she was terminated and that “she should
immediately report to their office to get her salary and
passport.” She was asked to “prepare for immediate
repatriation.” Joy claims that she was told that from June
26 to July 14, 1997, she only earned a total of
NT$9,000.15 According to her, Wacoal deducted
NT$3,000 to cover her plane ticket to Manila.

On October 15, 1997, Joy filed a complaint for illegal

dismissal with the NLRC against petitioner and Wacoal.
LA dismissed the complaint. NLRC reversed LA’s
decision. CA affirmed the ruling of the National Labor
Relations Commission finding respondent illegally
dismissed and awarding her three months’ worth of
salary, the reimbursement of the cost of her repatriation,
and attorney’s fees

Whether or not Cabiles was entitled to the
unexpired portion of her salary due to illegal dismissal.

YES. The Court held that the award of the
three-month equivalent of respondent’s salary should be
increased to the amount equivalent to the unexpired
term of the employment contract.
In Serrano v. Gallant Maritime Services, Inc.
and Marlow Navigation Co., Inc., this court ruled that the
clause “or for three (3) months for every year of the
unexpired term, whichever is less” is unconstitutional for
violating the equal protection clause and substantive due
A statute or provision which was declared
unconstitutional is not a law. It “confers no rights; it
imposes no duties; it affords no protection; it creates no
office; it is inoperative as if it has not been passed at all.”

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The Court said that they are aware that the clause “or *Sections 29 and 30 were repealed by RA 8042.
for three (3) months for every year of the unexpired term, Consequently, these 2 cases were dismissed for
whichever is less” was reinstated in Republic Act No. being moot and academic.
8042 upon promulgation of Republic Act No. 10022 in
2010. 1. G.R. 167590

Ruling on the constitutional issue Issue is on the constitutionality of Sections 6 (for being
vague as it fails to distinguish licensed & non-licensed
In the hierarchy of laws, the Constitution is recruiters), 7 (for being sweeping in its application of
supreme. No branch or office of the government may penalties), and 9 (for allowing the offended parties to
exercise its powers in any manner inconsistent with the file the criminal case in their place of residence instead
Constitution, regardless of the existence of any law that of filing it at the place where the crime or any of its
supports such exercise. The Constitution cannot be essential elements were committed) of R.A. 8042.
trumped by any other law. All laws must be read in light
of the Constitution. Any law that is inconsistent with it is Section 6 defines the crime of “illegal recruitment” and
a nullity. enumerates the acts constituting the same. Section 7
Thus, when a law or a provision of law is null provides the penalties for prohibited acts.
because it is inconsistent with the Constitution, the nullity
For Section 6 – Illegal recruitment, as defined, is
cannot be cured by reincorporation or reenactment of
clear and unambiguous and, contrary to the RTC’s
the same or a similar law or provision. A law or provision
finding, actually makes a distinction between
of law that was already declared unconstitutional
licensed and non-licensed recruiters.
remains as such unless circumstances have so changed
as to warrant a reverse conclusion. By its terms, persons who engage in “canvassing,
enlisting, contracting, transporting, utilizing, hiring,
The Court observed that the reinstated clause, or procuring workers” without the appropriate
this time as provided in RepublicAct. No. 10022, violates government license or authority are guilty of illegal
the constitutional rights to equal protection and due recruitment whether or not they commit the wrongful
process.96 Petitioner as well as the Solicitor General acts enumerated in that section. On the other hand,
have failed to show any compelling change in the recruiters who engage in the canvassing, enlisting,
circumstances that would warrant us to revisit the etc. of OFWs, although with the appropriate
precedent. government license or authority, are guilty of illegal
recruitment only if they commit any of the wrongful
The Court declared, once again, the clause, acts enumerated in Section 6.
“or for three (3) months for every year of the unexpired
term, whichever is less” in Section 7 of Republic Act No. For Section 7 – Congress was within its prerogative
10022 amending Section 10 of Republic Act No. 8042 is to determine what individual acts are equally
declared unconstitutional and, therefore, null and void. reprehensible, consistent with the State policy of
according full protection to labor, and deserving of
STO. TOMAS V. SALAC the same penalties. It is not within the power of the
GR No. 152642 Court to question the wisdom of this kind of choice.
(from vbdiaz.wordpress.com)
Section 9 of R.A. 8042 allowed the filing of criminal
Facts: actions arising from “illegal recruitment” before the RTC
of the province or city where the offense was committed
These consolidated cases pertain to the constitutionality or where the offended party actually resides at the time
of certain provisions of R.A. No. 8042, or the Migrant of the commission of the offense.
Workers and Overseas Filipinos Act of 1995.
* There is nothing arbitrary or unconstitutional in
1. G.R. 152642 and G.R. 152710 Congress fixing an alternative venue for violations
of Section 6 of R.A. 8042 that differs from the venue
Respondents question the constitutionality of Sections established by the Rules on Criminal Procedure.
29 and 30, R.A. 8042 Rule 110 Sec. 15 (a) of the Rules of Court allows
exceptions. Thus:
Sections 29 and 30 of the Act commanded the
Department of Labor and Employment (DOLE) to begin SEC. 15. Place where action is to be instituted.— (a)
deregulating within one year of its passage the business Subject to existing laws, the criminal action shall be
of handling the recruitment and migration of overseas instituted and tried in the court of the municipality or
Filipino workers and phase out within five years the territory where the offense was committed or where any
regulatory functions of the Philippine Overseas of its essential ingredients occurred.
Employment Administration (POEA).
Section 9 of R.A. 8042, as an exception to the rule on
venue of criminal actions is, consistent with that law’s

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declared policy of providing a criminal justice system that chargeable to the employers had long been
protects and serves the best interests of the victims of implemented pursuant to Letter of Instructions (LOI) No.
illegal recruitment. 537 signed by then President Ferdinand E. Marcos on
May 1, 1977, which was formalized by the issuance of
1. G.R. 167590, G.R. 182978-79, and G.R. Presidential Decree (PD) No. 1694 on May 1, 1980, as
184298-99 amended by PD No. 1809 issued on January 16, 1981,
creating the Welfare Fund for Overseas Workers
(Constitutionality of Section 10, last sentence of 2nd (hereinafter referred to as the "Welfund").
paragraph on the liability of the principal/employer and
the recruitment/placement agency)
The liability of corporate directors and officers is not
automatic. To make them jointly and solidarily liable Whether or not the OWWA resolution was valid?
with their company, there must be a finding that they
were remiss in directing the affairs of that company, Ruling:
such as sponsoring or tolerating the conduct of
illegal activities (MAM Realty Development Corp. v. No. In this case, respondents did not act in any judicial
National Labor Relations Commission, 314 Phil. 838, or quasi-judicial capacity in issuing the assailed
845 (1995). resolution. They were not called upon to adjudicate the
rights of contending parties to exercise, in any manner,
discretion of a judicial nature. Instead, their issuance of
PHILIPPINE MIGRANTS RIGHTS WATCH vs. the challenged resolution was done in the exercise of
OVERSEAS WELFARE WORKERS their quasi-legislative and administrative functions within
ADMINISTRATION the confines of the granting law. Hence, contrary to the
GR. 166293, Nov. 26, 2014 lower court’s contention, certiorari is not the proper
Facts: remedy in the instant case.
OWWA issued Board Resolution No. 038 entitled the
OWWA Omnibus Policies to provide guidelines on The jurisdiction of regular courts involving the validity or
matters concerning OWWA membership and its constitutionality of a rule or regulation cannot be denied.
coverage, collection of contributions, and availment of It was, therefore, erroneous for the RTC to abruptly
benefits. dismiss the complaint filed by petitioners on the basis of
lack of jurisdiction since said court clearly had the power
to take cognizance of the same.
Petitioners Philippine Migrants Rights Watch, Inc., filed a
Complaint seeking to annul the Omnibus Policies,
specifically Sections 4, 5, 6, 7, and 8 of Article II, Republic vs. Principalia Management
Sections 5(C) (H) of Article III, and Articles IV, V, VI, G.R. No. 198426; September 2, 2015
Principalia, a recruitment agency, was found by the
According to petitioners, respondents acted with grave POEA to have collected from Ramos an excessive
abuse of discretion amounting to lack or excess of placement fee. It was thus declared to have violated the
jurisdiction in issuing the Omnibus Policies, the POEA Rules, a serious offense which carries the penalty
provisions of which are contrary to the Constitution and of cancellation of license for the first offense.
its enabling laws. Because of the passage of the Accordingly, upon Principalia’s receipt of the order, the
Omnibus Policies, the OWWA benefits shall be available POEA immediately cancelled its license. Two days later,
only to those overseas contract workers who have paid Principalia sought to stay the implementation of the
their monetary contribution on a per contract basis. It POEA Order by filing with the RTC a Complaint for
imposed on the overseas workers the compulsory Injunction with application for Issuance of a TRO and/or
payment of OWWA membership contribution in the Writ of Preliminary Prohibitory and Mandatory Injunction.
amount of US$25.00, which was originally collected from It contended that the immediate cancellation of its
their employers. This, petitioners contend, is violative of license not only deprived it of due process but also
the Equal Protection Clause of the Constitution for it jeopardized the deployment of hundreds of overseas
created a distinction between Filipino overseas workers Filipino workers. That same day, the Executive Judge of
who contributed to the OWWA Fund and those who RTC issued a 72 hour TRO to allow deployment of 6
have not. workers who were already scheduled to leave for work
Respondents countered that the assailed Omnibus
Policies do not violate the equal protection clause for the ISSUE: Does the RTC has jurisdiction over the
same is germane to the purpose of the law, which injunction case?
requires registration and documentation of overseas
workers for their protections from exploitation in foreign HELD:
countries. Moreover, the prescribed membership fees

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Yes. The RTC can take cognizance of the injunction Whether or not respondent was validly
complaint, which is a suit which has for its purpose the dismissed pursuant to the employment contract.
enjoinment of the defendant, perpetually or for a Held:
particular time, from the commission or continuance of a
specific act, or his compulsion to continue performance R.A. No. 8042, or the Migrant Workers Act, was
of a particular act. Actions for injunction and damages lie enacted to institute the policies on overseas employment
within the exclusive and original jurisdiction of the RTC. and to establish a higher standard of protection and
While well-entrenched is the rule that courts will promotion of the welfare of migrant workers. It
not interfere in matters which are addressed to the emphasized that while recognizing the significant
sound discretion of the government agency entrusted contribution of Filipino migrant workers to the national
with the regulation of activities coming under the special economy through their foreign exchange remittances,
and technical training and knowledge of such agency, it the State does not promote overseas employment as a
is not entirely correct to say that an action by an means to sustain economic growth and achieve national
administrative agency, such as in the case at bar, cannot development. Although it acknowledged claims arising
be questioned in an injunction suit. It has been held that out of law or contract involving Filipino workers, it does
courts cannot enjoin an agency from performing an act not categorically provide that foreign laws are absolutely
within its prerogative, except when in the exercise of its and automatically applicable in overseas employment
authority it gravely abused or exceeded its contracts.
jurisdiction. Indeed, administrative decisions on matters
within the executive jurisdiction can be set aside on The general rule is that Philippine laws apply
proof of grave abuse of discretion, fraud, or error of law, even to overseas employment contracts. This rule is
and in such cases, injunction may be granted. rooted in the constitutional provision of Section 3, Article
Anent the failure of Principalia to observe the XIII that the State shall afford full protection to labor,
principle of exhaustion of administrative remedies, whether local or overseas. Hence, even if the OFW has
suffice it to say that this principle admits of his employment abroad, it does not strip him of his rights
exceptions, and notably, Principalia raised one of these to security of tenure, humane conditions of work and a
exceptions, i.e., deprivation of due process, as an issue living wage under our Constitution.
in its suit. And since this issue is a question of fact which
the Court can only determine after the trial is had, the As an exception, the parties may agree that a foreign
RTC was correct in not dismissing the case and in law shall govern the employment contract. A synthesis of
allowing the same to proceed to trial. Significantly, this the existing laws and jurisprudence reveals that this
likewise goes true with respect to the main relief for exception is subject to the following requisites:
injunction. As the elements for its issuance, i.e., (1) there chanRoblesvirtualLawlibrary
must be a right to be protected; and (2) the acts against
which the injunction is to be directed are violative of said 1. That it is expressly stipulated in the
right, are matters that must be proved during trial, the overseas employment contract that a
RTC merely acted in its judicial sphere when it specific foreign law shall govern;
proceeded to try the case.
2. That the foreign law invoked must be
INDUSTRIAL PERSONNEL & MANAGEMENT proven before the courts pursuant to the
SERVICES, INC. (IPAMS), , v. JOSE G. DE VERA AND Philippine rules on evidence;
G.R. No. 205703, March 07, 2016 3. That the foreign law stipulated in the
Facts: overseas employment contract must not
be contrary to law, morals, good
Arriola was offered by SNC-Lavalin position of customs, public order, or public policy of
Safety Officer in its Ambatovy Project site in the Philippines; and
Madagascar. Arriola was then hired by SNC-Lavalin,
through its local manning agency, IPAMS, and his 4. That the overseas employment contract
overseas employment contract was processed with the must be processed through the POEA
Philippine Overseas Employment Agency (POEA).
According to Arriola, he signed the contract of
The records of the case demonstrates that the
employment in the Philippines. After three months,
petitioners were able to observe the second requisite, or
Arriola received a notice of pre-termination of
that the foreign law must be proven before the court
employment. It stated that his employment would be pre- pursuant to the Philippine rules on evidence. The
terminated due to diminishing workload in the area of his petitioners were able to present the ESA, duly
expertise and the unavailability of alternative
authenticated by the Canadian authorities and certified
assignments. Consequently, Arriola was repatriated.
by the Philippine Embassy, before the LA. The fourth
Aggrieved, Arriola filed a complaint against the
requisite was also followed because Arriola's
petitioners for illegal dismissal. employment contract was processed through the POEA.

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Unfortunately for the petitioners, those were the employment contract as void and she will be
only requisites that they complied with. As correctly held terminated due to lack of medical fitness…
by the CA, even though an authenticated copy of the
ESA was submitted, it did not mean that said foreign law
On November 8, 2007, respondents filed a
could be automatically applied to this case. The
Complaint against Saudia and its officers for illegal
petitioners miserably failed to adhere to the two other dismissal and for underpayment of salary, overtime pay,
requisites. premium pay for holiday, rest day, premium, service
incentive leave pay, 13th month pay, separation pay,
In fine, as the petitioners failed to meet all the
night shift differentials, medical expense
four (4) requisites on the applicability of a foreign law,
then the Philippine labor laws must govern the overseas reimbursements, retirement benefits, illegal deduction,
lay-over expense and allowances, moral and exemplary
employment contract of Arriola.
damages, and attorney’s fees.
The Court finds that Arriola was not validly
dismissed. The petitioners simply argued that they were Issue:
suffering from financial losses and Arriola had to be Whether the Philippine courts have jurisdiction
dismissed. It was not even clear what specific authorized over the case.
cause, whether retrenchment or redundancy, was used
to justify Arriola's dismissal. Worse, the petitioners did Held:
not even present a single credible evidence to support Yes. Summons were validly served on Saudia
their claim of financial loss. They simply offered an and jurisdiction over it validly acquired. Forum non
unreliable news article which deserves scant conveniens finds no application and does not operate to
consideration as it is undoubtedly hearsay. Time and divest Philippine tribunals of jurisdiction and to require
again the Court has ruled that in illegal dismissal cases the application of foreign law. Though Article 1306 of the
like the present one, the onus of proving that the Civil Code provides that parties may stipulate terms they
employee was dismissed and that the dismissal was not may deem convenient which the Philippine tribunals
illegal rests on the employer, and failure to discharge the must respect the parties' choice of governing law, such
same would mean that the dismissal is not justified and, respect must not be so permissive as to lose sight of
therefore, illegal. considerations of law, morals, good customs, public
order, or public policy that underlie the contract central to
SAUDI ARABIAN AIRLINES (SAUDIA) vs. the controversy.
Gr. No. 198587, January 14, 2015 Article II, Sections 1 and 14 of the 1987 Constitution
Facts: ensures the equal protection of persons, and the equality
between men and women. Though pregnancy does
Respondents were recruited and hired by Saudia as present physical limitations that may render difficult the
Temporary Flight Attendants with the accreditation and performance of functions associated with being a flight
approval of the Philippine Overseas Employment attendant, it would be the height of iniquity to view
Administration. After undergoing seminars required by pregnancy as a disability so permanent and immutable
the Philippine Overseas Employment Administration for that, it must entail the termination of one's employment.
deployment overseas, as well as training modules
offered by, and after working as Temporary Flight Furthermore, there is no basis for concluding that
Attendants, respondents became Permanent Flight the case can be more conveniently tried elsewhere. As
Attendants. They then entered into Cabin Attendant established, Saudia is doing business in the Philippines.
contracts with Saudia. For their part, all four (4) respondents are Filipino
citizens maintaining residence in the Philippines and,
Respondents continued their employment with Saudia apart from their previous employment with Saudia, have
until they were separated from service on various dates no other connection to the Kingdom of Saudi Arabia. It
in 2006. Respondents contended that the termination of would even be to respondents' inconvenience if this
their employment was illegal. They alleged that the case were to be tried elsewhere.
termination was made solely because they were
pregnant. Second, the records are bereft of any indication that
respondents filed their Complaint in an effort to engage
Saudia anchored its disapproval of respondents’ in forum shopping or to vex and inconvenience Saudia.
maternity leaves and demand for their resignation on its
“Unified Employment Contract for Female Cabin Third, there is no indication of "unwillingness to
Attendants” (Unified Contract). Under the Unified extend local judicial facilities to non-residents or aliens."
Contract, the employment of a Flight Attendant who That Saudia has managed to bring the present
becomes pregnant is rendered void. It provides: controversy all the way to this court proves this.

…if the Air Hostess becomes pregnant at any time Fourth, it cannot be said that the local judicial
during the term of this contract, this shall render her machinery is inadequate for effectuating the right sought
to be maintained. Summons was properly served on

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Saudia and jurisdiction over its person was validly the person of Basso, notwithstanding his citizenship,
acquired. when he filed his complaint against CMI. On the other
hand, jurisdiction over the person of CMI was acquired
Lastly, there is not even room for considering foreign through the coercive process of service of summons. We
law. Philippine law properly governs the present dispute. note that CMI never denied that it was served with
Philippine court then is the most convenient tribunal to summons. CMI has, in fact, voluntarily appeared and
decide the case. participated in the proceedings before the courts.

CONTINENTAL MICRONESIA v BASSO Though a foreign corporation, CMI is licensed to do

Sept 23, 2015 business in the Philippines and has a local business
address here. The purpose of the law in requiring that
Almirante: Jurisdiction over foreign corporation Friday, foreign corporations doing business in the country be
March 04, 2016 By DOMINADOR ALMIRANTE LABOR licensed to do so, is to subject the foreign corporations
CASE DIGEST PETITIONER to the jurisdiction of our courts. Considering that the
Labor Arbiter and the NLRC have jurisdiction over the
FACTS: parties and the subject matter of this case, these
tribunals may proceed to try the case even if the rules of
Continental Micronesia, Inc. (CMI) is a foreign conflict-of-laws or the convenience of the parties point to
corporation organized and existing under the laws of and a foreign forum, this being an exercise of sovereign
domiciled in the United States of America. It is licensed prerogative of the country where the case is filed
to do business in the Philippines. Respondent Joseph (Jardeleza, J.:, SC Third Division, Continental
Basso, a US citizen, resided in the Philippines prior to Micronesia, Inc. vs. Joseph Basso, G.R. Nos. 178382-
his death. In 1990, Basso was employed by Mr. Keith R. 83, September 23, 2015)
Braden, managing director-Asia of Continental Airlines,
Inc. (Continental), as the general manager of its Read
Philippine branch. more: http://www.sunstar.com.ph/cebu/business/2016/03
In Nov. 7, 1992, CMI took over the Philippine operations 460815
of Continental with Basso retaining his position as Follow us: @sunstaronline on Twitter | SunStar
general manager. For failure to agree on the new terms Philippines on Facebook
and conditions of his employment, Basso was dismissed
from the service effective Jan. 31, 1996. Basso filed a
complaint for illegal dismissal with moral and exemplary C.F. SHARP & CO. INC. and JOHN J. ROCHA, vs.
damages against CMI. Alleging the presence of foreign PIONEER INSURANCE & SURETY CORPORATION,
elements, CMI filed a motion to dismiss on the ground of WILFREDO C. AGUSTIN and HERNANDO G. MINIMO
lack of jurisdiction over the person of CMI and the G.R. No. 179469 , February 15, 2012
subject matter of the controversy.
Does the motion find merit? Respondents Wilfredo C. Agustin and Hernando
G. Minimo applied with C.F. Sharp sometime in August
Ruling: No. Jurisdiction is defined as the power and 1990. After passing the interviews and submitting the
authority of the courts to hear, try and decide cases. requirements, a Contract of Employment was executed
Jurisdiction over the subject matter is conferred by the between them and C.F. Sharp. After a month, petitioners
Constitution or by law and by the material allegations in were yet to be deployed, prompting them to request the
the complaint, regardless of whether or not the plaintiff is release of the documents, which C.F. Sharp allegedly
entitled to recover all or some of the claims or reliefs refused to do. Such led the private respondents to file a
sought therein. It cannot be acquired through a waiver or complaint before the POEA. POEA issued an Order
enlarged by the omission of the parties or conferred by finding C.F. Sharp guilty of violation of Article 34(k) of
the acquiescence of the court. That the employment the Labor Code, which makes it unlawful for any entity
contract of Basso was replete with references to US "to withhold or deny travel documents from applicant
laws, and that it originated from and was returned to the workers before departure for monetary or financial
US, do not automatically preclude our labor tribunals considerations other than those authorized under this
from exercising jurisdiction to hear and try this case. Code and its implementing rules and regulations."
Consequently, C.F. Sharp’s license was suspended until
This case stemmed from an illegal dismissal complaint. the return of the disputed documents to respondents.
The Labor Code, under Article 217, clearly vests original Respondents then filed a Complaint for breach of
and exclusive jurisdiction to hear and decide cases contract and damages against C.F. Sharp and its surety,
involving termination disputes to the Labor Arbiter. Pioneer Insurance and Surety Corporation (Pioneer
Hence, the Labor Arbiter and the NLRC have jurisdiction Insurance), before the Regional Trial Court.
over the subject matter of the case. As regards
jurisdiction over the parties, we agree with the Court of ISSUE:
Appeals that the Labor Arbiter acquired jurisdiction over

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Labor Review Digest 2017

Whether there was a perfected contract of was either underpaid or not paid at all, (4) their housing
employment. accommodations were cramped, (5) their lodging house
far from their jobsite in Dubai, leaving them only three to
HELD: four hours of sleep a day, (6) there was no potable water
YES. and the air was polluted.
The contract of employment entered into by the
plaintiffs and the defendant C.F. Sharp is an actionable Respondents expressed to Modern Metal their desire to
document, the same contract having the essential resign. Out of fear, as they put it, that Modern Metal
requisites for its validity. It is worthy to note that there would not give them their salaries and release papers,
are three stages of a contract: (1) preparation, the respondents cited personal/family problems for their
conception, or generation which is the period of resignation. It took the agency several weeks to
negotiation and bargaining ending at the moment of repatriate the respondents to the Philippines. They all
agreement of the parties. (2) Perfection or birth of the returned to Manila in September 2007. All the
contract, which is the moment when the parties come to respondents shouldered their own airfare.
agree on the terms of the contract. (3) Consummation or
death, which is the fulfillment or performance of the For its part, the agency countered that the respondents
terms agreed upon in the contract. were not illegally dismissed; they voluntarily resigned
By the contract, C.F. Sharp, on behalf of its principal, from their employment to seek a better paying job. The
International Shipping Management, Inc., hired agency further alleged that the respondents even
respondents as Sandblaster/Painter for a 3-month voluntarily signed affidavits of quitclaim and release after
contract, with a basic monthly salary of US$450.00. they resigned.
Thus, the object of the contract is the service to be
rendered by respondents on board the vessel while the ISSUE: WON there was illegal recruitment.
cause of the contract is the monthly compensation they
expect to receive. These terms were embodied in the HELD: YES. The agency and its principal, Modern
Contract of Employment which was executed by the Metal, committed flagrant violations of the law on
parties. The agreement upon the terms of the contract overseas employment, as well as basic norms of
was manifested by the consent freely given by both decency and fair play in an employment relationship,
parties through their signatures in the contract. Neither pushing the respondents to look for a better employment
parties disavow the consent they both voluntarily gave. and, ultimately, to resign from their jobs.
Thus, there is a perfected contract of employment.
First. The agency and Modern Metal are guilty of
contract substitution. The respondents entered into a
PERT/CPM MANPOWER EXPONENT CO., INC. vs. POEA-approved two-year employment contract. Modern
ARMANDO A. VINUY A, LOUIE M. ORDOVEZ, Metal issued to them appointment letters whereby the
ARSENIO S. LUMANTA,. JR., ROBELITO S. ANIPAN, respondents were hired for a longer three-year period.
VIRGILIO R. ALCANTARA, MARINO M. ERA, SANDY Then they were required to sign new employment
0. ENJAMBRE and NOEL T. LADEA contracts no longer as aluminum fabricator/installer but
G.R. No. 197528 September 5, 2012 as an "ordinary laborer."

FACTS: Art. 34. Prohibited Practices. It shall be unlawful for any

Respondents filed a complaint for illegal dismissal individual, entity, licensee, or holder of authority: x x x x
against the petitioner Pert/CPM Manpower Exponent (i) To substitute or alter employment contracts approved
Co., Inc. (agency), and its President Nacino alleging that and verified by the Department of Labor from the time of
the agency deployed them to work as aluminum actual signing thereof by the parties up to and including
fabricator/installer for Modern Metal in Dubai, United the periods of expiration of the same without the
Arab Emirates. Their employment contracts were approval of the Secretary of Labor.
approved by the POEA provided for a two-year
employment, nine hours a day, salary of 1,350 AED with Art.38 as amended by R.A. 8042, defined "illegal
overtime pay, food allowance, free and suitable housing, recruitment" to include the following act: (i) To substitute
free transportation, free laundry, and free medical and or alter to the prejudice of the worker, employment
dental services. They each paid a ₱ 15,000.00 contracts approved and verified by the Department of
processing fee. Labor and Employment from the time of actual signing
thereof by the parties up to and including the period of
However Modern Metal gave the respondents the expiration of the same without the approval of the
appointment letters with terms different from those in the Department of Labor and Employment.
employment contracts which they signed at the agency’s
office in the Philippines, their employment was increased Second. The agency and Modern Metal committed
to three years at 1,000 to 1,200 AED and food allowance breach of contract. Aggravating the contract
of 200 AED. Their living and working conditions were substitution imposed upon them by their employer, the
unbearable (2) they were required to work from 6:30 respondents were made to suffer substandard working
a.m. to 6:30 p.m., (3) most of the time overtime work and living arrangements. Both the original contracts the

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respondents signed in the Philippines and the airfare, but not their other claims. On the surface, the
appointment letters issued to them by Modern Metal in compromise agreements appear to confirm the agency’s
Dubai provided for free housing and transportation to position, yet a closer examination of the documents
and from the jobsite. The original contract mentioned would reveal their true nature.
free and suitable housing. Although no description of the
housing was made in the letters of appointment except: The uniform insubstantial amount for each of the
"Accommodation: Provided by the company," it is but signatories to the agreement lends credence to their
reasonable to think that the housing or accommodation contention that the settlement pertained only to their
would be "suitable." claim for refund of the airfare which they shouldered
when they returned to the Philippines. The compromise
Third. With their original contracts substituted and their agreement, apparently, was intended by the agency as a
oppressive working and living conditions unmitigated or settlement with the respondents and others with similar
unresolved, the respondents’ decision to resign is not claims. Under the circumstances, we cannot see how
surprising. They were compelled by the dismal state of the compromise agreements can be considered to have
their employment to give up their jobs; effectively, they fully settled the respondents’ claims before the NLRC —
were constructively dismissed. A constructive dismissal illegal dismissal and monetary benefits arising from
or discharge is "a quitting because continued employment.
employment is rendered impossible, unreasonable or
unlikely, as, an offer involving a demotion in rank and a Fifth. The agency’s objection to the application of the
diminution in pay." Serrano ruling in the present case is of no moment. Its
Without doubt, the respondents’ continued employment argument that the ruling cannot be given retroactive
with Modern Metal had become unreasonable. A effect, because it is curative and remedial, is untenable.
reasonable mind would not approve of a substituted It points out, in this respect, that the respondents filed
contract that pays a diminished salary or an the complaint in 2007, while the Serrano ruling was
extended employment at such inferior terms, or a handed down in March 2009. The Serrano ruling has
"free and suitable" housing which is hours away retroactive application when We declared the
from the job site, cramped and crowded, without unconstitutional Section 10, paragraph 5 of R.A. 8042,
potable water and exposed to air pollution. limiting to three months the payment of salaries to
illegally dismissed Overseas Filipino Workers.
We thus cannot accept the agency’s insistence that the
respondents voluntarily resigned since they personally The agency posits the Serrano ruling has been nullified
prepared their resignation letters in their own by R.A. No. 10022 which restored the subject clause in
handwriting, citing family problems as their common the 5th paragraph, Section 10 of R.A. 8042. This
ground for resigning. We find the resignation letters argument fails to persuade us. Laws shall have no
"dubious," not only for having been lopsidedly worded to retroactive effect, unless the contrary is provided. By its
ensure that the employer is rendered free from any very nature, the amendment introduced by R.A. 10022
liability, but also for the odd coincidence that all the — restoring a provision of R.A. 8042 declared
respondents had, at the same time, been confronted unconstitutional — cannot be given retroactive effect, not
with urgent family problems so that they had to give up only because there is no express declaration of
their employment and go home. The truth, as the retroactivity in the law, but because retroactive
respondents maintain, is that they cited family problems application will result in an impairment of a right that had
as reason out of fear that Modern Metal would not give accrued to the respondents by virtue of the Serrano
them their salaries and their release papers. ruling - entitlement to their salaries for the unexpired
portion of their employment contracts.
The acts of respondents of requiring the signing of new
contracts upon reaching the place of work and requiring
employees to sign quitclaims before they are paid and
repatriated to the Philippines are all too familiar stories of SUSANA SY V. PHILIPPINE TRANSMARINE
despicable labor practices which our employees are CARRIERS
subjected to abroad. While it is true that quitclaims are GR. 191740, FEB. 15, 2013
generally given weight, however, given the facts of the
case, We are of the opinion that the complainants- FACTS:
appellants executed the same under duress and fear Sy was hired by respondent PTC for and in
that they will not be allowed to return to the Philippines. behalf of its foreign principal, SSC-SMP. In their contract
of employment, SY was assigned to work as Able
Fourth. The compromise agreements (with quitclaim Seaman (AB). Considered incorporated in AB Sy's
and release) between the respondents and the agency Philippine Overseas Employment Administration-
before the POEA did not foreclose their employer- Standard Employment Contract (POEA-SEC) is a set of
employee relationship claims before the NLRC. The standard provisions established and implemented by the
respondents aver that they all paid for their own airfare POEA, called the “Amended Standard Terms and
when they returned home and that the compromise Conditions Governing the Employment of Filipino
agreements settled only their claim for refund of their Seafarers on Board Ocean-Going Vessels.”

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On October 1, 2005, while the vessel was at the Port of relation to his duty as a seaman or engaged in the
Jakarta, Indonesia, AB Sy went on shore leave and left performance of any act incidental thereto. It was not also
the vessel at about 1300 hours. At 1925 hours, the established that, at the time of the accident, he was
vessel’s agent from Jardine received an advice from the doing work which was ordered by his superior ship
local police that one of the vessel’s crew members died officers to be done for the advancement of his
ashore. A forensic pathologist certified that AB Sy's employer's interest. On the contrary, it was established
death was an accident due to drowning, and that there that he was on shore leave when he drowned and
was "alcohol 20mg%" in his urine. AB Sy's body was because of the 20% alcohol found in his urine upon
repatriated to the Philippines. On October 8, 2005, the autopsy of his body, it can be safely presumed that he
Medico-Legal Officer of the NBI conducted a post- just came from a personal social function which was not
mortem examination on AB Sy's body and certified that related at all to his job as a seaman. Consequently, his
the cause of death was Asphyxia by drowning. Petitioner death could not be considered work-related to be
Susana R. Sy, widow of AB Sy, demanded from compensable.
respondents’ payment of her husband's death benefits
and compensation. Respondents denied such claim, CAREER PHILIPPINES SHIPMANAGEMENT, INC.
since AB Sy's death occurred while he was on a shore and/or SAMPAGUITA MARAVE, and SOCIETE
leave, hence, his death was not work-related and, ANONYME MONEGASQUE ADMINISTRATIO
therefore, not compensable. As her repeated demands MARITIME FT. AERIENNEMONACO, v.SALVADOR T.
were denied, petitioner filed, on March 1, 2006, a SERNA,
complaint against respondents for death benefits, burial
assistance, moral and exemplary damages, and G.R. No. 172086 : December 3, 2012
attorney's fees. The LA ruled in favor of Sy. The NLRC
affirmed LA’s ruling. The CA reversed holding that Sy’s
death was not work-related. FACTS:
On October 20, 1998, Serna entered into a nine-month
contract of employment with petitioners. He was
ISSUE: Whether or not petitioner is entitled to death
employed as a bosun for M/V Hyde Park. Serna was
compensation benefits from respondents.
pronounced fit to work after the required pre-
employment medical examination, and boarded the
RULING: vessel. While on board M/V Hyde Park, Serna
No. The “Standard Terms and Conditions experienced weakness and shortness of breath. He lost
Governing the Employment of Filipino Seafarers on much weight. On several occasions, he requested for
Board Ocean-Going Vessels” provides that: In the case medical attention, but his immediate superior, Captain
of work-related death of the seafarer during the term of Jyong, denied his requests. Serna had no choice but to
his contract, the employer shall pay his beneficiaries the wait for his contract to finish on July 12, 1999. On July
Philippine Currency equivalent to the amount of 14, 1999, upon his repatriation, he reported to the office
US$50,000 and an additional amount of Seven of Career Phils. to communicate his physical complaints
Thousand US dollars US$7,000 to each child under the and to seek medical assistance. On July 27, 1999, while
age of twenty-one but not exceeding four children, at the waiting for the referral and with his condition worsening,
exchange rate prevailing during the time of payment. Serna visited UPHMC. Dr. Cynthia V. Halili-Manabat
diagnosed him to be suffering from toxic goiter. On
Clearly, to be entitled for death compensation benefits August 3, 1999, Serna received instructions from Career
from the employer, the death of the seafarer (1) must be Phils. for him to report to the Seamans Hospital for a
work-related; and (2) must happen during the term of the pre-employment medical examination on August 5,
employment contract. Under the Amended POEA 1999. The hospitals company-designated physicians
Contract, work-relatedness is now an important diagnosed him with atrial fibrillation and declared him
requirement. The qualification that death must be work- unfit to work. Not fully aware of his rights, Serna sought
related has made it necessary to show a causal legal assistance only in March 2001. On April 3, 2001,
connection between a seafarer’s work and his death to his counsel sent Career Phils. a written demand for the
be compensable. Under the 2000 POEA Amended payment of disability benefits. Denial of the demand
Employment Contract, work-related injury is defined as prompted him to file a complaint for disability benefits
an injury(ies) resulting in disability or death arising out of and damages. Serna underwent a medical examination
and in the course of employment. Thus, there is a need at Supra Care Medical Specialists. Dr. Jocelyn Myra R.
to show that the injury resulting to disability or death Caja stated that he has had a history of goiter with
must arise (1) out of employment, and (2) in the course thyrotoxicosis since 1999, and further diagnosed him
of employment. with thyrotoxic heart disease, chronic atrial fibrillation,
and hypertensive cardiovascular disease. She gave him
AB Sy was hired as a seaman on board M/V Chekiang a disability rating of Grade 3 which under the parties
on June 23, 2005 and was found dead on October 1, CBA ½llis classified as permanent medical unfitness that
2005, with drowning as the cause of death. Notably, at entitles the covered seafarer to a 100% compensation.
the time of the accident, AB Sy was on shore leave and
there was no showing that he was doing an act in ISSUE: whether or not he is entitled to disability benefits

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Labor Review Digest 2017

OWWA membership fee of US$25 now valid for two
Yes. Under the 1996 POEA-SEC, it is enough that the years regardless of contract duration or change of
seafarer proves that his or her injury or illness was employer, principal or manning agent
acquired during the term of employment to support a
claim for disability benefits. He was not well and was ---------------------------------------------------------------------------
really ill after his disembarkation from petitioners vessel. ----
This is confirmed by the fact that he immediately went to Supreme Court upholds disability assessment issued by
see a doctor, approximately fifteen (15) days after his the company-designated physician; rules that disability
arrival in the Philippines, i.e., July 27, 1999, and was schedule in POEA Contract should be seriously
diagnosed of having toxic goiter. Again, when private observed
respondent Serna was examined by a company-
designated physician during the pre-employment (FACTS )
medical examination on August 5, 1999 at the Seamans
Hospital, he was found to be suffering from Atrial The seafarer suffered a fracture to his right hand while
Fibrillation and was declared unfit to work. These facts securing a mooring rope. He was brought to a shore
could only suggest, considering that the tests were medical facility where his affected hand was placed in a
conducted closely near to private respondent Sernas cast and thereafter repatriated.
disembarkation from the vessel of his latest employment,
that the causative circumstances leading to his illness Upon his repatriation, he was referred to the company-
transpired prior to his disembarkation and during the designated doctor for examination and treatment. After
course of his employment with the petitioners. 85 days of treatment, the company-designated doctor
issued to the seafarer an interim disability assessment of
The 1996 POEA-SEC, specifically Section grade “10”. The seafarer, on the 107th day of his
treatment, filed a case for disability benefits with the
20(B)(3),rνll requires that a disability claim be
NLRC against the company. Thereafter, the company-
supported by a proper post-employment medical
designated physician declared the seafarer to have
report;rνll otherwise, the seafarer forfeits the right to
reached maximum medical cure with a grade “10”
claim the benefits. The labor arbiter, the NLRC, and the
CA are one in finding that on July 14, 1999, or two days disability.
after his repatriation, Serna reported to the office of
More than 2 months after filing the complaint, the
Career Phils. specifically to report his medical
seafarer sought the medical opinion of his personal
complaints, only to be told to wait for his referral to
doctor who assessed him to be physically unfit to
company-designated physicians. The referral came not
perform the job of the seaman. On this basis, he
on the following day, but nearly three (3) weeks after, on
August 3, 1999. The petitioners failed to perform their anchors his claim for maximum disability benefits. On
obligation of providing timely medical examination, thus the other hand, the company maintains that the seafarer
should only be entitled to US$10,075 based on the
rendering meaningless Sernas compliance with the
grade “10” disability assessment of the company-
mandatory reporting requirement. With his July 14, 1999
designated physician.
visit, Serna clearly lived up to his end of the agreement;
it was the petitioners who defaulted on theirs. They
cannot now be heard to claim that Serna should forfeit The Labor Arbiter, the NLRC and the Court of Appeals
all found for the seafarer and awarded him maximum
the right to claim disability benefits under the POEA-SEC
disability benefits. They argued that since the seafarer
and their CBA.
was unable to work for more than 120 days, and that the
medical opinion of seafarer’s personal doctor that he
FOR : TSM PHILS v PATINO was unfit to work was credible.
GR. 210-289, March 10, 2017
(from www. delrosario-pandiphil.com) When the case reached the Supreme Court, the award
Philippine Shipping Update – Manning Industry of disability benefits was modified to US$10,075 based
By: Ruben Del Rosario, President, Del Rosario on the grade “10” assessment of the company-
Pandiphil Inc., May 4, 2017 (Issue 2017/07) designated physician.
Supreme Court upholds disability assessment (RULING)
issued by the company-designated physician; rules
that disability schedule in POEA Contract should be The complaint has no cause of action and was
seriously observed prematurely filed
In this issue: The Court again explained the manner by which the
Supreme Court upholds disability assessment issued by 120/240 day rule works. For the duration of the
the company-designated physician; rules that disability treatment but in no case to exceed 120 days, the
schedule in POEA Contract should be seriously seaman is on temporary total disability as he is totally
observed unable to work. If the 120 days initial period is exceeded

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Labor Review Digest 2017

and no such declaration is made because the seafarer knowledge of seafarer’s medical condition. Under the
requires further medical attention, then the temporary supervision of the company-designated physician,
total disability period may be extended up to a maximum seafarer underwent surgery and physical therapy. On
of240 days, subject to the right of the employer to the basis of the medical records and the results obtained
declare within this period that a permanent partial or total from the medical treatment, said doctor arrived at a
disability already exists. The seaman may of course also definite assessment of seafarer's condition. Having
be declared fit to work at any time such declaration is extensively monitored and treated seafarer's injury, the
justified by his medical condition. company-designated physician’s diagnosis deserves
more weight than seafarer's own doctor.
The Court noted that upon seafarer’s repatriation, he
was given extensive medical attention by the company- Schedule of Disability under the POEA Contract should
designated physician. Thereafter, an interim assessment be respected
of Grade 10 was given by the company-designated
physician as seafarer was still undergoing further In closing the Court held that Section 32 of the POEA-
treatment and physical therapy. However, 107 days after SEC provides for a schedule of disability compensation
repatriation, seafarer filed a complaint for total and which is often ignored or overlooked in maritime
permanent disability benefits. During this time, he was compensation cases. Section 32 laid down a Schedule
considered under temporary total disability inasmuch as of Disability or Impediment for Injuries Suffered and
the 120/240-day period had not yet lapsed when the Diseases including Occupational Diseases or Illness
complaint was filed. Evidently, the complaint was Contracted which provides that in case of a permanent
prematurely filed. total or partial disability, the seafarer shall be
compensated in accordance with Section 32. Section 32
Moreover, it is significant to note that when the seafarer further declares that any item in the schedule classified
filed his complaint, he was armed only with the interim under Grade 1 shall be considered or shall constitute
medical assessment of the company-designated total and permanent disability. Therefore, any other
physician and his belief that his injury had already grading constitutes otherwise. It should be stressed that
rendered him permanently disabled. It was only after the it is about time that the schedule of disability
filing of such complaint that he sought the opinion of his compensation under Section 32 be seriously observed.
own physician.
TSM Shipping Phils., Inc. and/or Dampskibsselskabet
As such, the complaint should have been dismissed at Norde A/S and/or Capt. Castillo vs. Louie Patino, G.R.
the first instance or lack of cause of action. No. 210289,March 20, 2017; First Division, Associate
Justice Mariano Del Castillo, ponente (Attys. Charles
The company-designated doctor’s opinion should prevail Dela Cruz and Jerome Pampolina of Del Rosario & Del
Rosario handled for vessels interests)
The POEA-SEC clearly provides that when a seafarer
sustains a work-related illness or injury while on board OWWA membership fee of US$25 now valid for two
the vessel, his fitness or unfitness for work shall be years regardless of contract duration or change of
determined by the company-designated physician. employer, principal or manning agent
However, if the doctor appointed by the seafarer makes
a finding contrary to that of the assessment of the The Implementing Rules and Regulations (IRR) of the
company-designated physician, a third doctor may be Overseas Workers Welfare Administration Act has now
agreed jointly between the employer and the seafarer been issued.
and the latter's decision shall be final and binding on
both of them. The Court has held that non-observance of As stated in our previous update, a salient provision of
the requirement to have the conflicting assessments the IRR is that OWWA membership contribution of
determined by a third doctor would mean that the US$25 is now valid for two (2) years regardless of
assessment of the company-designated physician contract duration, change of employer or principal or
prevails. recruitment/manning agency. Previously, the
contribution of US$25 was valid for 2 years or upon
In the absence of a third and binding opinion, the Court expiration of contract, whichever comes first.
was left with no option but to hold the assessment of the
company-designated doctor of seafarer's disability final Update: Zambales / Provincial Coast Watch
and binding. Environmental Monitoring System User Fee; inter-
agency group to ask for opinion from the Office of the
The Court further added that at any rate, more weight President
should be given to this assessment as the company-
designated physician was able to closely monitor The Maritime and Ocean Affairs Office (MOAO) of the
seafarer’s condition from the time he was repatriated Department of Foreign Affairs called for an inter-agency
until the issuance of the final medical assessment. The meeting last 7 April 2017 to discuss the Zambales
extensive medical attention given by the company- Ordinance which imposes “environmental charges” to all
designated doctor enabled him to acquire a detailed vessels that enter the “territorial waters’ of the province

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Labor Review Digest 2017

of Zambales. Present in the meeting were

representatives from the Office of the President,
Department of Interior and Local Government and the
Philippines’ Permanent Representative to the
International Maritime Organization. Del Rosario & Del
Rosario was likewise invited to the inter-agency meeting.

MOAO’s position is that the Ordinance is not consistent

with Article 26 of the UNCLOS which prohibits the
imposition of the “environmental fees”. In collecting said
fees, the ordinance may be seen as a “disguised toll” on
passage since it in effect places a restraint on the
exercise of innocent passage in the territorial sea
(including the freedom of navigation in the exclusive
economic zone), a situation which Article 26 precisely
aims to pre-empt. We have seconded this observation
of the MOAO.

However, MOAO notes that the Province of Zambales

may implement the Ordinance unless and until a court
orders the suspension of such action pending the
determination of its legality.

We advised all concerned that we have formally

informed MARINA, the Department of Justice and the
Philippine Coast Guard regarding the revised Ordinance
of Zambales and have sought their position on the same.

It was agreed in the meeting that a formal opinion must

be sought from the Office of the President as well as
through the Office of the Deputy Executive Secretary for
Legal Affairs regarding the legality of the said Ordinance.

We shall report updates in future issues.

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