I. Fundamental Principles and Policies II.
Issues
a. Constitutional Provisions
Tirazona v. Phil. EDS Techno-Service Inc.
G.R. No. 169712; 20 January 2009; Chico-Nazario, J.
Digest prepared by Maggy Gan
I. Facts
- Wenelita Tirazona is an Administrative Manager of Philippine EDS
Techno-Service, Inc. (PET). As a managerial employee, she held a
position of trust and confidence.
- After PET officers/directors called her attention to her improper
handling of a situation involving a rank-and-file employee, she
claimed that she was denied due process for which she demanded P
2M indemnity from PET and its officers/directors. This was coupled
with a threat of a lawsuit if the same was not promptly paid within 5
days.
- She admitted to reading a confidential letter addressed to PET
officers/directors containing the legal opinion of the counsel of PET
regarding her case
- In the Court’s March 14, 2008 Decision, it was decided that she was
validly terminated from her employment on the ground that she
willfully breached the trust and confidence reposed in her by her
employer
- Tirazona moved for reconsideration and argued that the Court failed
to consider the length of her service to PET in affirming her
termination from employment. She prayed that her dismissal be
declared illegal OR if her dismissal shall be upheld as legal, she be
awarded separation pay and retirement benefits, out of
humanitarian considerations. However, this was still denied by the
Court.
- Tirazona filed the instant Motion for Leave to File a Second MR, with
the Second MR incorporated therein raising essentially the same
arguments and prayers.
1. WON the filing of the Motion for Leave to File a Second MR was
valid. – No, it is not valid.
2. WON the Tirazona’s dismissal from PET’s employ was justified. Yes, it
was fully justified.
III. Held
Motion for Leave to File a Second MR is DENIED.
IV. Ratio
1. No, the filing of the Motion for Leave to File a Second MR was not
valid.
- Section 2, Rule 52 of the Rules of Court: a second MR is a prohibited
pleading, which shall not be allowed, except for extraordinarily
persuasive reasons and only after an express leave shall have first
been obtained.
- In this case, there is no such extraordinarily persuasive reason to
allow Tirazona’s Second MR
2. Yes, Tirazona’s dismissal from PET’s employ was fully justified and
hence, not entitled to separation pay.
- As a general rule, an employee who has been dismissed for any of
the just causes enumerated under Art. 282 of the Labor Code is not
entitled to separation pay. Only unjustly dismissed employees are
entitled to retirement benefits and other privileges including
reinstatement and backwages.
- Although by way of exception, the grant of separation pay or some
other financial assistance may be allowed to an employee dismissed
for just causes on the basis of equity. Particularly, separation pay
shall be allowed as a measure of social justice only in those
instances where the employee is validly dismissed for causes other
than serious misconduct or those reflecting on his moral character.
(PLDT v. NLRC). Therefore, Tirazona is not entitled to the award of
separation pay
- The actions of Tirazona reflected an obdurate character that is
arrogant, uncompromising, and hostile. PET was fully justified in
terminating her employment for loss of trust and confidence.
 - Tirazona also failed to persuade the Court to consider in her favor
her length of service to PET. She claims that she has been in the
employ of PET for 26 years but retracted this saying that it was
committed through inadvertence and claimed that she has been
working for PET for 8 years, more or less.
- However, the Court found that she only rendered a little more than
2 years and 9 months of service to PET.
- The award of separation pay or any other kind of financial
assistance to Tirazona, under a guise of compassionate justice, is
not warranted in this case. To hold otherwise would only cause a
disturbance of the sound jurisprudence on the matter and a
perversion of the noble dictates of social justice.
Best Wear Garments v. Lemos & Ocubillo
G.R. No. 191281; Dec. 5, 2012; Villarama, Jr., J.
Digest prepared by Paolo Tamase
A. Facts
1. BEST WEAR is a sole proprietorship garments company; Cecile
OCUBILLO and Adelaida DE LEMOS were sewers hired on a piece-
rate basis hired in 1993 and 1994, respectively.
2. 2004: OCUBILLO and DE LEMOS filed complaints for illegal
dismissal; according to them, they were arbitrarily transferred to
other areas of operations, and that the transfer amounted to
constructive dismissal as it resulted in less earnings.
a. DE LEMOS: Transfer was because of her refusal to render
overtime work up to 7pm
b. OCUBILLO: Transfer was because she incurred excessive
absences since 2001 when her father became very sick (he
later died) and she herself became very sick
3. BEST WEAR says that (1) DE LEMOS and OCUBILLO committed
numerous absences without leave (AWOL); (2) they signified their
intention to resign and asked for separation pay, but when
informed that the company did not have a policy for it, they stopped
reporting for work; (3) re: overtime, they were piece-rate workers
and therefore not paid accdg. to hours worked
4. LA found (constructive) illegal dismissal and ordered payment of
sep. pay and backwages
5. NLRC reversed LA, holding that the transfers were a valid exercise
of management prerogative
6. CA reversed NLRC/reinstated LA, finding no valid and legitimate
business reason for transfers, and the transfer was unreasonable,
inconvenient, and prejudicial as to amount to constructive dismissal
B. Issue: WON OCUBILLO and DE LEMOS were illegally dismissed. – NO
C. Held: Petition granted. Decision of the CA reversed.
D. Ratio
1. The right of employees to security of tenure does not give them
vested rights over their positions. Hence, an employer may transfer
an employee to another area of operation provided (1) there is no
demotion or diminution and (2) it was not motivated by
discrimination, bad faith, or not a form of punishment without
sufficient cause; it cannot be used as a subterfuge
2. That the work output might have been affected by the change in
work does not necessarily mean a reduction in pay tantamount to
constructive dismissal. Assigning the sewers to work on different
types of garments as determined by the needs of the company is
within the ambit of management prerogative.
3. Objecting to the transfer on the ground that it is inconvenient to the
employees is not a valid reason to disobey an order of transfer.
4. There was no evidence that the two were dismissed; BEST
GARMENTS even expressed its desire to accept them back to work.
JAMER v NLRC
FACTS: Petitioners are cashiers of Isetann Department Store who were
dismissed for having accumulated shortages. Petitioners admitted this in
their affidavits. The labor arbiter ruled them having been illegally dismissed.
The NLRC reversed the ruling.
ISSUE: Were the petitioners validly dismissed?
HELD: Yes. The failure of the petitioners to report to the management the
irregularities constitute "fraud or willful breach of the trust reposed in them
by their employer or duly authorized representative"--one of the just causes
of valid termination of employment. The employer cannot be compelled to
retain employees who were guilty of malfeasance as their continued
employment will be prejudicial to the former's best interest. The law, in
protecting the rights of the employees, authorizes neither oppression nor
self-destruction of the employer.
“The cause of social justice is not served by upholding the interest of
petitioners in disregard of the right of private respondents. Social justice
ceases to be an effective instrument for the equalization of the social and
economic forces by the State when it is used to shield wrongdoing. [29] While
it is true that compassion and human consideration should guide the
disposition of cases involving termination of employment since it affects
ones source or means of livelihood, it should not be overlooked that the
benefits accorded to labor do not include compelling an employer to retain
the services of an employee who has been shown to be a gross liability to
the employer. 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
inequality between labor and management. The intent is to balance the
scale of justice; to put up the two parties on relatively equal positions. There
may be cases where the circumstances warrant favoring labor over the
interests of management but never should the scale be so tilted if the result
is an injustice to the employer, Justicia remini regarda est (Justice is to be
denied to none).”
GANDARA v NLRC
FACTS: Private respondent Silvestre Germane did not report for work
because his wife delivered their first child. He did not however notify his
employer, causing a disruption in the business of the latter. When the
respondent returned to work he was surprised upon knowing that someone
has been hired to take his place.
ISSUE: Was there a case of illegal dismissal?
HELD: Yes. It appeared that the respondent was illegally dismissed. While a
prolonged absence without leave may constitute as a just cause for
dismissal, its illegality stems from the non-observance of due process.
Applying the WenPhil Doctrine by analogy, where dismissal was not
preceded by the twin requirement of notice and hearing, the illegality of the
dismissal in question, is under heavy clouds and therefore illegal.
“In holding the constitutional mandate of protection to labor, the rigid rules
of procedure may sometimes be dispensed with to give room for
compassion. The doctrine of compassionate justice is applicable under the
premises, private respondent being the breadwinner of his family. The Social
Justice policy mandates a compassionate attitude toward the working class
in its relation to management. In calling for the protection to labor, the
Constitution does not condone wrongdoing by the employee, it nevertheless
urges a moderation of the sanctions that may be applied to him in the light
of the many disadvantages that weigh heavily on him like an albatross on his
neck.”
b. Civil Code
c. Labor Code
d. Concept of Shared Responsibility
PAL v. NLRC
G.R. No. 85985
August 13, 1993
Facts:
PAL completely revised its 1966 Code of Discipline. The Code was circulated
among the employees and was immediately implemented, and some
employees were forthwith subjected to the disciplinary measures embodied
therein. The Philippine Airlines Employees Association (PALEA) filed a
complaint before the National Labor Relations Commission (NLRC). PALEA
contended that PAL, by its unilateral implementation of the Code, was guilty
of unfair labor practice, specifically Paragraphs E and G of Article 249 and
Article 253 of the Labor Code. PALEA alleged that copies of the Code had
been circulated in limited numbers; that being penal in nature the Code
must conform with the requirements of sufficient publication, and that the
Code was arbitrary, oppressive, and prejudicial to the rights of the
employees. It prayed that implementation of the Code be held in abeyance;
that PAL should discuss the substance of the Code with PALEA; that
employees dismissed under the Code be reinstated and their cases
subjected to further hearing; and that PAL be declared guilty of unfair labor
practice and be ordered to pay damages.
PAL asserted its prerogative as an employer to prescibe rules and regulations
regarding employees' conduct in carrying out their duties and functions, and
alleging that by implementing the Code, it had not violated the collective
bargaining agreement (CBA) or any provision of the Labor Code. Assailing
the complaint as unsupported by evidence, PAL maintained that Article 253
of the Labor Code cited by PALEA refered to the requirements for
negotiating a CBA which was inapplicable as indeed the current CBA had
been negotiated.
Issue: W/N the formulation of a Code of Discipline among employees is a
shared responsibility of the employer and the employees. – YES
Ruling: Petitioner's assertion that it needed the implementation of a new
Code of Discipline considering the nature of its business cannot be
overemphasized. In fact, its being a local monopoly in the business demands
the most stringent of measures to attain safe travel for its patrons.
Nonetheless, whatever disciplinary measures are adopted cannot be
properly implemented in the absence of full cooperation of the employees.
Such cooperation cannot be attained if the employees are restive on
account, of their being left out in the determination of cardinal and
fundamental matters affecting their employment.
Industrial peace cannot be achieved if the employees are denied their just
participation in the discussion of matters affecting their rights. Thus, even
before Article 211 of the labor Code was amended by Republic Act No. 6715,
it was already declared a policy of the State, "(d) To promote the
enlightenment of workers concerning their rights and obligations . . . as
employees." This was, of course, amplified by Republic Act No 6715 when it
decreed the "participation of workers in decision and policy making
processes affecting their rights, duties and welfare." PAL's position that it
cannot be saddled with the "obligation" of sharing management
prerogatives as during the formulation of the Code, Republic Act No. 6715
had not yet been enacted cannot thus be sustained. While such "obligation"
was not yet founded in law when the Code was formulated, the attainment
of a harmonious labor-management relationship and the then already
existing state policy of enlightening workers concerning their rights as
employees demand no less than the observance of transparency in
managerial moves affecting employees' rights.
e. Preference for Labor; Liberal Interpretation
FUENTES v NLRC
FACTS:
Petitioners were regular employees of Agusan Plantations Inc. claiming it
was suffering from business losses, the head office undertook retrenchment
measures and sent notices of termination to the petitioners and to DOLES.
Petitioners then filed a complaint for illegal dismissal.
ISSUE: W/N there was a valid retrenchment – NO
Retrenchment may be valid only when the following requisites are met: (a) it
is to prevent losses; (b) written notices were served on the workers and the
Department of Labor and Employment (DOLE) at least one (1) month before
the effective date of retrenchment; and, (c) separation pay is paid to the
affected workers.
There is no question that an employer may reduce its work force to prevent
losses. However, these losses must be serious, actual and real. [3] Otherwise,
this ground for termination of employment would be susceptible to abuse
by scheming employers who might be merely feigning losses in their
business ventures in order to ease out employees. [4]
Indeed, private respondents failed to prove their claim of business
losses. What they submitted to the Labor Arbiter were mere self-serving
documents and allegations. Private respondents never adduced evidence
which would show clearly the extent of losses they suffered as a result of
lack of capital funding, which failure is fatal to their cause.
The State is bound under the Constitution to afford full protection to labor
and when conflicting interests of labor and capital are to be weighed on the
scales of social justice the heavier influence of the latter should be
counterbalanced with the sympathy and compassion the law accords the
less privileged workingman. This is only fair if the worker is to be given the
opportunity and the right to assert and defend his cause not as a
subordinate but as part of management with which he can negotiate on
even plane. Thus labor is not a mere employee of capital but its active and
equal partner.
PLDT v NLRC
Private respondent Lettie Corpuz was employed as traffic operator at the
Manila International Traffic Division (MITD) by the Philippine Long Distance
Telephone Company (PLDT). MITD Manager Erlinda Kabigting directed
respondent to explain her alleged infraction, that is, facilitating 34 calls using
the disconnected number.
Instead of tendering the required explanation, respondent requested a
formal investigation to allow her to confront the witnesses and rebut the
proofs that may be brought against her. On grounds of serious misconduct
and breach of trust, the Legal Department recommended her dismissal. In a
letter dated June 16, 1989, respondent was terminated from employment
effective the following day.
ISSUE: W/N there was illegal dismissal – YES
Time and again, this Court has reminded employers that while the power to
dismiss is a normal prerogative of the employer, the same is not without
limitations.[3] The right of an employer to freely discharge his employees is
subject to regulation by the State, basically through the exercise of its police
power. This is so because the preservation of the lives of citizens is a basic
duty of the State, an obligation more vital than the preservation of corporate
profits.[4]
This Court will not sanction a dismissal premised on mere conjectures and
suspicions. To be a valid ground for respondents dismissal, the evidence
must be substantial and not arbitrary and must be founded on clearly
established facts sufficient to warrant his separation from work.
In carrying out and interpreting the Labor Codes provisions and its
implementing regulations, the working mans welfare should be the
primordial and paramount consideration. This kind of interpretation gives
meaning and substance to the liberal and compassionate spirit of the law as
provided for in Article 4 of the Labor Code, as amended, which states that all
doubts in the implementation and interpretation of the provisions of the
Labor Code including its implementing rules and regulations shall be
resolved in favor of labor,[11] as well as the Constitutional mandate that the
State shall afford full protection to labor and promote full employment
opportunities for all. Likewise, it shall guarantee the rights of all workers to
security of tenure. Such constitutional right should not be denied on mere
speculation of any unclear and nebulous basis. [12]
f. Application of Technical Rules: Burden of Proof
Manila Electric Company v. Jan Carlo Gala
G.R. No. 191288; February 29,2012; Brion, J.
Digest prepared by Carlo Roman
I. Facts
 On March 2, 2006, respondent Jan Carlo Gala commenced
employment with petitioner Meralco as a probationary lineman
and member of the crew of Meralco truck No. 1823, assigned to the
Valenzuela Sector.
 On July 27, 2006, barely four months into the job, Gala was
dismissed for alleged complicity in pilferages of Meralco’s electrical
supplies
 The supposed incident occurred on May 25, 2006, when
Gala and other Meralco workers were instructed to replace
a worn-out electrical pole at Pacheco Subdivision,
Valenzuela City.
 While work was ongoing, one Norberto “Bing” Llanes, a
non-Meralco employee, arrived. He appeared to be known
to the Meralco foremen as they were seen conversing with
him. Llanes boarded the truck and took electrical supplies
without being stopped.
 Unknown to the workers, a Meralco surveillance task force
was monitoring their activities and recording everything
with a video camera. Gala, the foremen, and the other
linemen at the worksite when the pilferage happened were
later charged with misconduct and dishonesty for their
involvement in the incident.
 Upon an investigation by Meralco, Gala denied involvement,
contending that even if his superiors had committed a
wrongdoing, he had no participation. He maintained that
mere presence was not sufficient to hold him liable as a
conspirator, claiming that: (1) he was some distance away
when the incident occurred, (2) he had no inkling that an
illegal activity was taking place, since he thought his
superiors knew Llanes, (3) he did not call their attention
because he was a mere lineman, and (4) he was just
 following instructions as to his work and had no control over
the disposition of company supplies.
 Despite Gala’s explanation, Meralco terminated his employment on
said date, relying on an affidavit by the Meralco task force testifying
that Gala knew Llanes. Meralco argued that: (1) Gala did not
intervene to stop Llanes, and (2) Gala did not report the incident to
Meralco management.
 Gala filed a complaint for illegal dismissal against Meralco.
 On September 7, 2007, the Labor Arbiter (LA) dismissed the
complaint for lack of merit, holding that Gala’s participation
in the pilferage rendered him unqualified to become a
regular employee
 On appeal to the NLRC, the LA decision was reversed; Gala
had been illegally dismissed since there was “no concrete
showing of complicity with the alleged misconduct.” The
NLRC awarded Gala backwages and attorney’s fees, but
ruled out his reinstatement, since his tenure lasted only up
to the end of his probationary period.
 Both Gala and Meralco moved for reconsideration. Gala asked for
reinstatement, and Meralco argued that the NLRC had erred in
finding that Gala had been illegally dismissed, since the company
was well within its rights in terminating Gala’s employment as a
probationary employee for his failure to meet basic standards for
regularization. Both motions were denied, and both appealed to the
CA.
 CA denied Meralco’s petition. Granting Gala’s petition, the CA
ordered his reinstatement with full back wages and other benefits.
The CA also denied Meralco’s motion for reconsideration.
 Hence, this petition.
II. Issues
1. W/N Gala was illegally dismissed
2. W/N Gala was entitled to reinstatement despite his probationary
status
Note: Gala asked for dismissal of Meralco’s petition on technical grounds, as
the petition did not contain details of the Community Tax Certificates of
the affiants, nor updated MCLE certificate numbers. Anent this contention,
the SC held that “the application of technical rules of procedure in labor
cases may be relaxed to serve the demands of substantial justice.”
III. Held
 Meralco’s petition is GRANTED. CA ruling set aside; Gala’s complaint
DISMISSED for lack of merit.
IV. Ratio
 There is substantial evidence supporting Meralco’s position that
Gala was unfit to continue employment.
 Gala argues that mere presence was not enough to make him a
conspirator in the pilferage, but that is beside the point. As a
probationary employee, his overall job performance was being
monitored according to the standards set in his employment
agreement.
 Paragraph 10 – required workers to observe at all times the
highest degree of transparency, selflessness, and integrity
in the performance of his duties, free from any form of
conflict or contradicting with his own personal interest.
 Evidence showed that Gala could not have possibly been
unaware of the crime, as he admitted that he had seen
Llanes before, on previous operations. Llanes was there
during operations for one purpose only: to serve as the
conduit of the Meralco crew for pilfered supplies to be sold
to ready buyers outside Meralco worksites.
 The totality of the circumstances convinces us that Gala was
complicit in the pilferage, if not by direct participation, then by his
inaction while it was being perpetrated. This is enough to support
the conclusion that Gala failed to qualify as a regular employee of
Meralco.
PRICE v INNODATA PHIL
Price v. Innodata Phils., Inc.
Facts: Innodata Philippines Inc. was a domestic corporation engaged in the
data encoding and data conversion business. Cherry Price, Stephanie
Domingo, and Lolita Arbilera (petitioners) were employed as formatters by
Innodata. They entered into a contract denominated as a
“Contract of Employment for a Fixed Period” stipulating that the contract
shall be for a period of
one year (February 16, 1999 to February 16, 2000). During their
employment, petitioners were assigned to handle jobs for various clients of
Innodata and once they finished the job for one client, they were
immediately assigned to do a new job for another client.
On February 16, 2009, the Human Resource Manager of Innodata wrote to
petitioners informing them of their last day of work (February 16, 2000).
According to Innodata, this was due to the end of their contract. Petitioners
then filed a complaint for illegal dismissal claiming that they should be
considered regular employees since their positions as formatters were
necessary and desirable to the usual business of Innodata as an encoding,
conversion and data processing company. They also invoked the decisions in
Villanueva v. NLRC and Servidad v. NLRC in
which the Court already purportedly ruled that “the nature if employment
at Innodata is regular.”
They were also neither considered project employees since their
employment was not coterminous with any project or undertaking. On the
other hand, respondents contended that Innodata was engaged in the
business of data processing, type-setting, indexing and abstracting for its
foreign clients and the bulk of the work was data processing, which involved
data encoding, which half of its employees did. Due to the wide range of
services, Innodata was constrained to hire new employees for a fixed period
not more than one year like the petitioners whose contracts of employment
were for a limited period only. Moreover, they claimed that the petitioners
were estopped since they entered into the contracts knowingly and
voluntarily. The Labor Arbiter held that as formatters, petitioners occupied
jobs that were necessary, desirable and indispensable to the data processing
and encoding business and should be considered regular employees who
were entitled to security of tenure. NLRC, on appeal, reversed finding that
petitioners were not regular employees but fixed-term employees as
stipulated in their contracts. CA affirmed the NLRC ruling. Issue: Whether or
not petitioners were illegally dismissed - YES Held/Ratio: This issue is
ultimately dependent on the question of whether petitioners were hired by
Innodata under valid fixed-term employment contracts. The Court found
that there were no valid fixed-term employment contracts, and petitioners
were regular employees of Innodata who could not dismiss them except for
just or authorized cause. The employment status of a person is defined and
prescribed by law and not by what the parties say it should be. Based on Art.
280, the following employees are accorded regular status: (1) those who are
engaged to perform activities which are necessary or desirable in the usual
business or trade of the employer, regardless of the length of their
employment; and (2) those who were initially hired as casual employees, but
have rendered at least one year of service, whether continuous or broken,
with respect to the activity in which they are employed. Petitioners belong
to the first type. The applicable test to determine whether an employment
should be considered regular or non-regular is the
reasonable connection between the particular activity performed by the
employee in relation to the usual business or trade of the employee.
In this case, petitioners were employed as formatters while the primary
business of Innodata is encoding. The formatting of the data entered into
the computers is an essential part of the process of data encoding.
Formatting organizes the data encoded, making it easier to understand for
the clients and/or the intended users, and therefore necessary and desirable
in the business or trade of Innodata. However, it is also true that while
certain forms of employment require the performance of usual or desirable
functions and exceed one year, these do not necessarily result in regular
employment under Article 280 of the Labor Code. Under the Civil Code,
fixed-term employment contracts are not limited, as they are under the
present Labor Code, to those by nature seasonal or for specific projects with
predetermined dates of completion; they also include those to which the
parties by free choice have assigned a specific date of termination. A fixed-
term employment is valid only under certain circumstances, and where,
from the circumstances, it is apparent that the period was imposed to
preclude the acquisition of tenurial security by the employee, then it should
be struck down as being contrary to law, morals, good customs, public order
and public policy. The terms of the contracts of employment of the
petitioners were found to be meant only to
circumvent petitioner’s right of tenure and are therefore valid. This is
supported by the fact that
the contracts were not only ambiguous but also appeared to be tampered
with. Petitioners alleged and the contracts themselves state that the
petitioners were employed on February 17, 1999. However, respondents
asserted before the Labor Arbiter that the contracts were effective only on
September 6, 1999. While they submitted employment contracts with
September 6, 1999 as beginning of date of effectivity, in one of them, the
original date, February 16, 1999,w as merely crossed out and replaced with
September 6. The alterations were very obvious and have not initialed by
the petitioners to indicate their assent to the same. If the contracts were
truly fixed-term contracts, then a change in the term or period agreed upon
is material and would already constitute a novation of the original contract.
Innodata further contends that petitioners were project employees whose
employment ceased at the end of the specific project or undertaking. This is
devoid of merit. In Philex Mining Corp v.
NLRC, “project employees” are those hired: (1) for a specific project or
undertaking, and
wherein (2) the completion or termination of such project has been
determined at the time of the engagement of the employee. The
employment contracts did not mention what specific project or undertaking
petitioners were hired for. The conclusion by the Court of Appeals that
petitioners were hired for the Earthweb project is not supported by any
evidence on record. More importantly, there is also a dearth of evidence
that such project or undertaking had already been completed or terminated
to justify the dismissal of petitioners. In fact, petitioners did not work on just
one project, but continuously worked for a series of projects for various
clients. Petitioners, being regular employees, are entitled to security of
tenure.
MARCOPPER MINING v NLRC
Facts:
On 23 August 1984, Marcopper Mining Corporation, a corporation duly
organized and existing under the laws of the Philippines, engaged in the
business of mineral prospecting, exploration and extraction, and private
respondent NAMAWU-MIF, a labor federation duly organized and...
registered with the Department of Labor and Employment (DOLE), to which
the Marcopper Employees Union (the exclusive bargaining agent of all rank-
and-file workers of petitioner) is affiliated, entered into a Collective
Bargaining Agreement (CBA) effective from 1 May 1984 until
30 April 1987.
Prior to the expiration of the aforestated Agreement, on 25 July 1986,
petitioner and private respondent executed a Memorandum of Agreement
(MOA) wherein the terms of the CBA, specifically on matters of wage
increase and facilities allowance, were modified
In compliance with the amended CBA, petitioner implemented the initial 5%
wage increase due on 1 May 1986.
On 1 June 1987, Executive Order (E.O.) No. 178 was promulgated mandating
the integration of the cost of living allowance under Wage Orders Nos. 1, 2,
3, 5 and 6 into the basic wage of workers, its effectivity retroactive to 1 May
1987. Consequently, effective on 1 May 1987, the basic wage rate of
petitioner's laborers categorized as non-agricultural workers was increased
by P9.00 per day.[6]
Petitioner implemented the second five percent (5%) wage increase due on
1 May 1987 and thereafter added the integrated COLA.
Private respondent, however, assailed the manner in which the second wage
increase was effected. It argued that the COLA should first be integrated
into the basic wage before the 5% wage increase is computed.
Consequently, on 15 December 1988, the union filed a complaint for
underpayment of wages before the Regional Arbitration Branch IV, Quezon
City.
On 24 July 1989, the Labor Arbiter promulgated a decision in favor of the
union.
Petitioner appealed the Labor Arbiter's decision and on 18 November 1991
the NLRC rendered its decision sustaining the Labor Arbiter's ruling.
It is petitioner's contention that the basic wage referred to in the CBA
pertains to the "unintegrated" basic wage. Petitioner maintains that the
rules on interpretation of contracts, particularly Art. 1371 of the New Civil
Code which states that:
Art. 1371. In order to judge the intention of the contracting parties, their
contemporaneous and subsequent acts shall be principally considered.
Siding with the petitioner, the Solicitor General opines that for the purpose
of complying with the obligations imposed by the CBA, the integrated COLA
should not be considered due to the exclusivity of the benefits under the
said CBA and E.O. No. 178.
Private respondent counters by asserting that the purpose, nature and
essence of CBA negotiation is to obtain wage increases and benefits over
and above what the law provides and that the principle of non-diminution of
benefits should prevail.
Issues:
what should be the basis for the computation of the CBA increase, the basic
wage without the COLA or the so-called "integrated" basic wage which, by
mandate of E.O. No. 178, includes the COLA.
Ruling:
We rule for the respondents.
The principle that the CBA is the law between the contracting parties stands
strong and true. However, the present controversy involves not merely an
interpretation of CBA provisions. More importantly, it requires a
determination of the effect of... an executive order on the terms and the
conditions of the CBA.
It is unnecessary to delve too much on the intention of the parties as to
what they allegedly meant by the term "basic wage" at the time the CBA and
MOA were executed because there is no question that as of 1 May 1987, as
mandated by E.O. No. 178, the basic wage of workers, or... the statutory
minimum wage, was increased with the integration of the COLA. As of said
date, then, the term "basic wage" includes the COLA. This is what the law
ordains and to which the collective bargaining agreement of the parties
must conform.
Petitioner's arguments eventually lose steam in the light of the fact that
compliance with the law is mandatory and beyond contractual stipulation by
and between the parties; consequently, whether or not petitioner intended
the basic wage to include the COLA becomes... immaterial. There is
evidently nothing to construe and interpret because the law is clear and
unambiguous. Unfortunately for petitioner, said law, by some uncanny
coincidence, retroactively took effect on the same date the CBA increase
became effective.
Therefore, there cannot be any doubt that the computation of the CBA
increase on the basis of the "integrated" wage does not constitute a
violation of the CBA.
What E.O. No. 178 did was exactly to integrate the COLA under Wage Orders
Nos. 1, 2, 3, 5 and 6 into the basic pay so as to increase the statutory daily
minimum wage.
Integration of monetary benefits into the basic pay of workers is not a new
method of increasing the minimum wage.
The purpose of E.O. No. 178 is to improve the lot of the workers covered by
the said statute. We are bound to ensure its fruition.
WHEREFORE, premises considered, the petition is hereby DISMISSED.
Principles:
While the terms and conditions of the CBA constitute the law between the
parties, it is not, however, an ordinary contract to which is applied the
principles of law governing ordinary contracts. A CBA, as a labor contract
within the contemplation of Article
1700 of the Civil Code of the Philippines which governs the relations
between labor and capital, is not merely contractual in nature but impressed
with public interest, thus, it must yield to the common good. As such, it
must be construed liberally rather than narrowly and... technically, and the
courts must place a practical and realistic construction upon it, giving due
consideration to the context in which it is negotiated and purpose which it is
intended to serve.
ASUNCION v NLRC
FACTS:
Petitioner Ester M. Asuncion was employed as an accountant/bookkeeper by
the respondent Mabini Medical Clinic. Sometime in May 1994, certain
officials of the NCR-Industrial Relations Division of the Department of Labor
and Employment conducted a routine inspection of the premises of the
respondent company and discovered upon the disclosure of the petitioner
of (documents) violations of the labor standards law such as the non-
coverage from the SSS of the employees. Consequently, respondent
Company was made to correct these violations.
On August 9, 1994, the private respondent, Medical Director Wilfrido Juco,
issued a memorandum to petitioner charging her with the following
offenses:
1. Chronic Absentism (sic) – You have incurred since Aug. 1993 up to
the present 35 absences and 23 half-days.
2. Habitual tardiness – You have late (sic) for 108 times. As shown on
the record book.
3. LoiteRing and wasting of company time – on several occasions and
witnessed by several employees.
4. Getting salary of an absent employee without acknowledging or
signing for it.
5. Disobedience and insubordination – continued refusal to sign
memos given to you.[1]
Petitioner was required to explain within two (2) days why she should not
be terminated based on the above charges.
Three days later, in the morning of August 12, 1994, petitioner submitted
her response to the memorandum. On the same day, respondent Dr. Juco,
through a letter dated August 12, 1994, dismissed the petitioner on the
ground of disobedience of lawful orders and for her failure to submit her
reply within the two-day period. This prompted petitioner to file a case for
illegal termination
ISSUES:
WHETHER OR NOT THE PETITIONER WAS VALIDLY DISMISSED
HELD:
The petition is impressed with merit.
Although, it is a legal tenet that factual findings of administrative bodies are
entitled to great weight and respect, we are constrained to take a second
look at the facts before us because of the diversity in the opinions of the
Labor Arbiter and the NLRC.[5] A disharmony between the factual findings of
the Labor Arbiter and those of the NLRC opens the door to a review thereof
by this Court.[6]
It bears stressing that a worker’s employment is property in the
constitutional sense. He cannot be deprived of his work without due
process. In order for the dismissal to be valid, not only must it be based on
just cause supported by clear and convincing evidence,[7] the employee
must also be given an opportunity to be heard and defend himself. [8] It is
the employer who has the burden of proving that the dismissal was with just
or authorized cause.[9] The failure of the employer to discharge this burden
means that the dismissal is not justified and that the employee is entitled to
reinstatement and backwages.[10]
In the case at bar, there is a paucity of evidence to establish the charges of
absenteeism and tardiness. We note that the employer company submitted
mere handwritten listing and computer print-outs. The handwritten listing
was not signed by the one who made the same. As regards the print-outs,
while the listing was computer generated, the entries of time and other
annotations were again handwritten and unsigned.[11]
The record is bereft of any showing that complainant was ever warned of
her absences prior to her dismissal on August 9, 1994. The alleged notices
of her absences from August 17, until September 30, 1993, from October
until November 27, 1993, from December 1, 1993 up to February 26, 1994
and the notice dated 31 May 1994 reminding complainant of her five (5)
days absences, four (4) half-days and tardiness for 582 minutes (Annex “1”
to “1-D” attached to respondent’ Rejoinder), fail to show that the notices
were received by the complainant. The allegation of the respondents that
the complainant refused to received (sic) the same is self-serving and merits
scant consideration
The Court, likewise, takes note of the fact that the two-day period given to
petitioner to explain and answer the charges against her was most
unreasonable, considering that she was charged with several offenses and
infractions (35 absences, 23 half-days and 108 tardiness), some of which
were allegedly committed almost a year before, not to mention the fact that
the charges leveled against her lacked particularity.
Apart from chronic absenteeism and habitual tardiness, petitioner was also
made to answer for loitering and wasting of company time, getting salary of
an absent employee without acknowledging or signing for it and
disobedience and insubordination.[18] Thus, the Labor Arbiter found that
actually petitioner tried to submit her explanation on August 11, 1994 or
within the two-day period given her, but private respondents prevented her
from doing so by instructing their staff not to accept complainant’s
explanation, which was the reason why her explanation was submitted a day
later.[19]
The law mandates that every opportunity and assistance must be
accorded to the employee by the management to enable him to prepare
adequately for his defense.[20] In Ruffy v. NLRC,[21] the Court held that
what would qualify as sufficient or “ample opportunity,” as required by
law, would be “every kind of assistance that management must accord to
the employee to enable him to prepare adequately for his defense.” In the
case at bar, private respondents cannot be gainsaid to have given
petitioner the ample opportunity to answer the charges leveled against
her.
From the foregoing, there are serious doubts in the evidence on record as to
the factual basis of the charges against petitioner. These doubts shall be
resolved in her favor in line with the policy under the Labor Code to afford
protection to labor and construe doubts in favor of labor.[22] The consistent
rule is that if doubts exist between the evidence presented by the
employer and the employee, the scales of justice must be tilted in favor of
the latter. The employer must affirmatively show rationally adequate
evidence that the dismissal was for a justifiable cause.[23] Not having
satisfied its burden of proof, we conclude that the employer dismissed the
petitioner without any just cause. Hence, the termination is illegal.
PNCC v NLRC
From July 14, 1981 until September 23, 1982, Petitioner PNCC
employed Private Respondent Mendoza as Driver II at its Magat Dam
Project. A few days after, on September 27, 1982, private respondent was
again employed as Driver II at PNCCs LRT Project until January 31, 1983. The
following day, February 1, 1983, UNTIL August 1, 1984, petitioner deployed
private respondent, also as Driver II, in its Saudi Arabia Project. It took more
than six months for private respondent to be repatriated to the
Philippines. Upon his return, he resumed his work as Driver II in the PG-7B
Project of petitioner from February 22, 1985 until May 18, 1986.
For more than two years afterwards, private respondent was not given
any work assignment. On August 17, 1988, he was hired anew as Driver II for
the Molave Project of petitioner. This lasted until June 15, 1989.
Thereafter, private respondent claimed the benefits of petitioners
Retrenchment Program. This was denied.
ISSUE: W/N petitioner may claim the benefits – YES
The clear provisions in his employment contracts have no other import than
that private respondent was a regular employee as of September 23, 1982
and, as such, also covered by the separation program. These employment
contracts ineludibly strengthen the right of private respondent to separation
pay under the PNCC program. Whether as a regular or as a project
employee, private respondent is clearly covered by the said program.
In the interpretation of an employers program providing for separation
benefits, all doubts should be construed in favor of labor. After all, workers
are the intended beneficiaries of such program and our Constitution
mandates a clear bias in favor of the working class.
GURANGO v BEST CHEMICALS
FACTS:
Respondent (Best) is a corporation engaged in the manufacture of biaxally
oriented polypropylene and related products.
Petitioner Gurango was hired as a boiler operator of respondent
corporation.
Respondent Best issued a memorandum order prohibiting its employees
bringing personal items to their work area. A suspension of 6 days without
pay shall be its sanction to erring employees.
On May 5, 2003, Petitioner Gurango was caught bringing a camera without a
film inside the production area. Romeo Albao, the security guard, tried to
confiscate the camera from him but Gurango refuses to give up the camera.
Thus, it turns out into a heated argument and a fistfight between them
occurred. Other security guards tried to pacify them thus their brawl ended.
Because of that incident, Respondent corporation dismissed Petitioner
Gurango from his job on the ground of gross misconduct.
Petitioner Gurango filed a complaint for illegal dismissal against respondent.
The Labor Arbiter (LA) ruled in favor of Petitioner that he was illegally
dismissed from his job. LA also ordered respondent to pay petitioner
backwages and separation pay.
On appeal, NLRC affirmed LA's decision. That the bringing of camera is not
included in the memorandum order and contending that an unloaded
camera will not disrupt nor obstruct company services and operations.
Court of Appeals (CA) set aside NLRC's ruling. Asserting that fistfight with
fellow employees is a serious misconduct.
A Motion for Reconsideration was filed by Petitioner but was denied.
ISSUE:
WON petitioner was illegally dismissed.
RULING:
Yes. Respondent Best failed miserably to prove by substantial evidence its
charges to Petitioner Gurango. Respondent Best did not present any
evidence to show that Gurango engaged in a fistfight. Based on the findings
of the LA, Gurango’s statement is credible and unblemished but Albao’s
statement is contradictory. Moreover, there was no showing that Gurango’s
actions were performed with wrongful intent. Note that the Court held that
factual findings of labor officials, who are deemed to have acquired
expertise in matters within their jurisdiction, are accorded not only respect
but finality when supported by susbstantial evidence.
LABADAN v FOREST HILLS
While in cases of illegal dismissal, the employer bears the burden of proving
that the dismissal is for a valid or authorized cause, the employee must
first establish by substantial evidence the fact of dismissal.
Lilian L. Labadan (Labadan) was hired by Forest Hills Mission Academy
(Forest Hills) as an elementary school teacher in 1989. After one year of
employment, she was made registrar and secondary school teacher. In 2003,
Labadan filed a complaint against Forest Hills for illegal dismissal, non-
payment of overtime pay, holiday pay, allowances, 13th month pay, service
incentive leave, illegal deductions, and damages. She alleged that she was
allowed to go on leave, and albeit she had exceeded her approved leave
period, its extension was impliedly approved by the school principal because
Labadan received no warning or reprimand, and was in fact retained in the
payroll. Labadan further alleged that since 1990, tithes to the Seventh
Day Adventist church, of which she was a member, have been illegally
deducted from her salary; and she was not paid overtime pay for overtime
service, 13th month pay, five days service incentive leave pay, and holiday
pay; and that her SSS contributions have not been remitted.
Forest Hills claims that Labadan was permitted to go on leave for two weeks
but did not return for work after the expiration of the period granted.
Because of Labadan’s failure to report to work despite promises to do
so, Forest Hills hired a temporary employee to accomplish the needed
reports. When Labadan did return for work, classes for the school year were
already underway. With regard to the charge for illegal deduction, Forest
Hillsclaimed that the Seventh Day Adventist church requires its members to
pay tithes equivalent to 10% of their salaries, and that Labadan never
questioned the deduction of the tithe from her salary. As regards the non-
payment of overtime pay, holiday pay, and allowances, Forest Hills noted
that petitioner proffered no evidence to support the same.
The Labor Arbiter decided in favor of Labadan, and found that she was
illegally dismissed, and dismissed her claims for overtime pay, holiday pay,
allowances, 13th month pay, service incentive leave. The National Labor
Relations Commission (NLRC) reversed and set aside the Labor Arbiter’s
decision with regard to the finding of illegal dismissal. Labadan then filed a
Petition for Certiorari with the Court of Appeals, which was dismissed by the
same. Hence, this Petition for Review on Certiorari.
ISSUES:
Whether or not Labadan was illegally dismissed by Forest Hills
HELD:
While in cases of illegal dismissal, the employer bears the burden of proving
that the dismissal is for a valid or authorized cause, the employee must
first establish by substantial evidence the fact of dismissal.
The records do not show that petitioner was dismissed from the service.
They in fact show that despite petitioner’s absence from July 2001 to March
2002 which, by her own admission, exceeded her approved leave, she was
still considered a member of the Forest Hills faculty which retained her in its
payroll.
Labadan argues, however, that she was constructively dismissed
when Forest Hills merged her class with another “so much that when she
reported back to work, she has no more claims to hold and no more work to
do.” Labadan, however, failed to refute Forest Hills’ claim that when she
expressed her intention to resume teaching, classes were already ongoing
for School Year 2002-2003. It bears noting that petitioner simultaneously
held the positions of secondary school teacher and registrar and, as the
NLRC noted, she could have resumed her work as registrar had she really
wanted to continue working with Forest Hills.
Labadan’s affidavit and those of her former colleagues, which she attached
to her Position Paper, merely attested that she was dismissed from her job
without valid cause, but gave no particulars on when and how she was
dismissed.
WATCHMAN v LUMAHAN
PENAFLOR v OUTDOOR CLOTHING
FACTS:
Peñaflor was hired on September 2, 1999 as probationary HRD Manager of
respondent Outdoor Clothing Manufacturing Corporation. Peñaflor claimed
that his relationship with Outdoor Clothing went well during the first few
months of his employment. His woes began when the company’s Vice
President for Operations, Edgar Lee, left the company after a big fight
between Lee and Chief Corporate Officer Nathaniel Syfu. Because of his
close association with Lee, Peñaflor claimed that he was among those who
bore Syfu’s ire.
After Peñaflor returned from his field work on March 13, 2000, his
officemates informed him that while he was away, Syfu had appointed
Nathaniel Buenaobra as the new HRD Manager. He tried to talk to Syfu to
clarify the matter, but was unable to do so. Peñaflor claimed that under
these circumstances, he had no option but to resign. He submitted a letter
to Syfu declaring his irrevocable resignation from his employment with
Outdoor Clothing effective at the close of office hours on March 15, 2000.
Peñaflor then filed a complaint for illegal dismissal with the labor arbiter,
claiming that he had been constructively dismissed. Outdoor Clothing
denied Peñaflor’s allegation of constructive dismissal. It posited instead that
Peñaflor had voluntarily resigned from his work. The labor arbiter agreed
with Penaflor and issued a decision in his favor. On appeal, the NLRC
reversed the arbiter’s decision and the CA affirmed the NLRC’
s decision. Hence, petitioner filed a petition for review before the SC.
ISSUE: W/N there was constructive dismissal – YES
The first is the settled rule that in employee termination disputes, the
employer bears the burden of proving that the employee’s dismissal was for
just and valid cause. That Peñaflor did indeed file a letter of resignation does
not help the company’s case as, other than the fact of resignation, the
company must still prove that the employee voluntarily resigned. There can
be no valid resignation where the act was made under compulsion or under
circumstances approximating compulsion, such as when an employee’s act
of handing in his resignation was a reaction to circumstances leaving him no
alternative but to resign. In sum, the evidence does not support the
existence of voluntariness in Peñaflor’s resignation
While the letter states that Peñaflor’s resignation was irrevocable, it does
not necessarily signify that it was also voluntarily executed. The fact of filing
a resignation alone does not shift the burden of proving that the employee’s
dismissal was for a just and valid cause from the employer to the employee.
As ruled in Mora v. Avesco, should the employer interpose the defense of
resignation, it is still incumbent upon the employer to prove that the
employee voluntarily resigned.
VICENTE v CA AND CINDERELLA MARKETING
FACTS: Petitioner Finina E. Vicente was employed by respondent Cinderella
Marketing Corporation (Cinderella) as Management Coordinator in January
1990. Prior to her resignation in February 2000, she held the position of
Consignment Operations Manager with a salary of P27,000.00 a month.5
She was tasked with the oversight, supervision and management of the
Consignment Department dealing directly with Cinderella’s consignors.
Petitioner alleged that it has been a practice among the employees of
Cinderella to obtain cash advances by charging the amount from the net
sales of Cinderella’s suppliers/consignors. Request for cash advances are
approved by Mr. TECSON (AVP-Finance).
After some time, one of Cinderella’s suppliers complained about the
unauthorized deductions from the net sales due them. Accordingly, an
investigation was conducted and upon initial review of respondent’s
business records, it appears that petitioner was among those involved in the
irregular and fraudulent preparation and encashment of respondent’s
corporate checks amounting to at least P500,000.00.
Petitioner alleged that Mr. Tecson demanded her resignation on several
occasions. On February 15, 2000, Mr. Tecson allegedly told her “MAG-
RESIGN KANA AGAD KASI MAIIPIT KAMI,” in the presence of Lizz Villafuerte,
the Accounting Manager.9 As a result of this alleged force and intimidation,
petitioner tendered her resignation letter.
Three (3) years after her resignation, petitioner filed a complaint against
Cinderella alleging that her severance from employment was involuntary
amounting to constructive dismissal. Cinderella denied the charge of
constructive dismissal.
LA ruled in favour of petitioner; NLRC affirmed. MR denied;
CA reversed on stating that, “totality of evidence on record showed that
petitioner voluntarily resigned from her employment; that the subsequent
acts of petitioner belie the claim of constructive dismissal; that after the
alleged forced resignation, petitioner attended the meetings concerning her
involvement in the anomalous transactions and even arranged for the
settlement of her consequent liabilities as may be determined during the
investigation; that the belated filing of the complaint militates against
petitioner because it is hardly expected from an aggrieved employee to wait
three years before instituting the case.” MR denied.
Petitioner relinquished her position when she submitted the letters of
resignation.The resignation letter submitted on February 15, 2000 confirmed
the earlier resignation letter she submitted on February 7, 2000. The
resignation letter contained words of gratitude which can hardly come from
an employee forced to resign.
A careful scrutiny of the said letter shows that it bears the signature of
petitioner (contrary to what the LA stated). More importantly, petitioner
admitted having submitted the said letter, albeit, due to an alleged
intimidation.
Subsequently, petitioner stopped reporting for work although she met with
the officers of the corporation to settle her accountabilities but never raised
the alleged intimidation employed on her. Also, though the complaint was
filed within the 4-year prescriptive period, its belated filing supports the
contention of respondent that it was a mere afterthought.24 Taken together,
these circumstances are substantial proof that petitioner’s resignation was
voluntary.

Having submitted a resignation letter, it is then incumbent upon her to prove

Hence, this petition for review on certiorari.
that the resignation was not voluntary but was actually a case of
constructive dismissal with clear, positive, and convincing evidence.26
ISSUE: WON petitioner was constructively dismissed by Cinderella (or was Petitioner failed to substantiate her claim of constructive dismissal.
there voluntary resignation on the part of petitioner?)
HELD: NO, respondent voluntarily resigned.
Bare allegations of constructive dismissal, when uncorroborated by the
In termination cases, burden of proof rests upon the employer to show that
evidence on record, cannot be given credence.
the dismissal is for a just and valid cause and failure to do so would
necessarily mean that the dismissal was illegal.19 In Mobile Protective &
Detective Agency v. Ompad, the Court ruled that should an employer In St. Michael Academy v. National Labor Relations Commission,28 we ruled
interpose the defense of resignation, as in the present case, it is still that mere allegations of threat or force do not constitute substantial
incumbent upon respondent company to prove that the employee evidence to support a finding of forced resignation. We enumerated the
voluntarily resigned. requisites for intimidation to vitiate consent as follows:
From the totality of evidence on record, it was clearly demonstrated that
respondent Cinderella has sufficiently discharged its burden to prove that
(1) that the intimidation caused the consent to be given; (2) that the
petitioner’s resignation was voluntary. In voluntary resignation, the
threatened act be unjust or unlawful; (3) that the threat be real or serious,
employee is compelled by personal reason(s) to disassociate himself from
there being evident disproportion between the evil and the resistance which
employment. It is done with the intention of relinquishing an office,
all men can offer, leading to the choice of doing the act which is forced on
accompanied by the act of abandonment.21 To determine whether the
the person to do as the lesser evil; and (4) that it produces a well-grounded
employee indeed intended to relinquish such employment, the act of the
fear from the fact that the person from whom it comes has the necessary
employee before and after the alleged resignation must be considered.
means or ability to inflict the threatened injury to his person or property. x x  LA, which was affirmed by the NLRC held: that the payroll listings
x presented were not signed by Canoy or Pigcaulan or any SCII officer.
SCII must pay petitioners the salary differentials.
 CA reversed LA & NLRC: dismissed all monetary claims of Canoy
None of the above requisites was established by petitioner. Neither can we
and Pigcaulan due to lack of evidence. SC affirm CA.
consider the conduct of audits and other internal investigations as a form of
harassment against petitioner. Said investigation was legitimate and justified
ISSUE: WON Pigcaulan should be awarded overtime pay? NO!
WON Pigcaulan should be awarded holiday pay, service incentive
Moreover, we note that petitioner is holding a managerial position with a pay and 13th month pay? YES!
salary of P27,000.00 a month. Hence, she is not an ordinary employee with Note: Canoy is not included because after the CA decision, he failed to
limited understanding such that she would be easily maneuvered or coerced appeal, therefore the decision is binding and final upon him. Only pigcaulan
to resign against her will. appealed in behalf of himself.
PETITION DENIED.
_________ HELD:
1. Pigcaulan cannot be awarded overtime pay because there is nothing
in the records/evidence that supports his contention that he
rendered service beyond 8 hours to entitle him to overtime pay and
Pigcaluan v. Security and Credit Investigation, Inc.
during Sundays to entitle him to restday pay. In the absence of any
January 16, 2012; Del Castillo, J.
concrete proof that additional service beyond the normal working
hours and days had indeed been rendered, we cannot affirm the
Parties:
grant of overtime.
Petitioner: Abduljuahid Pigcaulan
 The Labor Arbiter relied heavily on the itemized computations
Respondents: Security and Credit Investigation, Inc. (SCII) and Rene Amby
Pigcaulan submitted which he considered as representative daily
Reyes
time records to substantiate the award of salary differentials.
 The handwritten itemized computations are self serving,
FACTS:
unreliable and unsubstantial evidence to sustain the grant
 Oliver Canoy and Abduljuahid Pigcaulan were employed by SCII as
of salary differentials, particularly overtime pay. Unsigned
security guards for different clients. Canoy and Pigcaulan filed
and unauthenticated as they are, there is no way of
complaints with the LA for underpayment of salaries and
verifying the truth of the handwritten entries stated
nonpayment of overtime, holiday, restday, service incentive leave
therein. It is written only in pieces of paper and solely
and 13th month pays. In support of their claim, they submitted their
prepared by Canoy and Pigcaulan.
respective daily time records reflecting the number of hours served
 Thus, these representative daily time records can hardly be
and their wages for the same.
considered as competent evidence to be used as basis to
 SCII claims that the two were paid and received their just salaries,
prove that the two were underpaid of their salaries.
which was above minimum wage and included their holiday pay in
2. Under the LC (Art. 94 and 95 respectively), Pigcaulan is entitled to
the computation of their monthly salaries, and were given an
his regular rate on holidays even if he does not work. Also, the law
additional 30% for work on Sundays and 200% of their salary for
states that he is entitled to service incentive leave benefit after he
work on holidays. In support of their claim, they presented copies of
has rendered service for more than a year. And under PD 851, he
payroll listings and lists of employees who received their 13 th
should be paid his 13th month salary.
month pays.
  SCII presented payroll listings and transmittal letters to the bank to
show that Canoy and Pigcaulan received their salaries as well as Date Event
benefits which it claimed are already integrated in the employees’
monthly salaries. However, the documents presented do not
January Respondents and other workers of AKELCO engaged in illegal
prove SCII’s allegation. SCII failed to show any other concrete
31, strikes and refused to report for work in Kalibo, but continuously
proof by means of records, pertinent files or similar documents
1992 reported for work in Lezo.
reflecting that the specific claims have been paid. With respect to
13th month pay, SCII presented proof that this benefit was paid Sept 9, Resolution #411. AKELCO board dismissed all employees including
but only for the years 1998 and 1999. To repeat, the burden of 1992 respondents who were on illegal strike, and refused to report for
proving payment of these monetary claims rests on SCII, being the work at Kalibo office, since January 31, 1992, despite NEA directive.
employer.
 As the employer, SCII has the burden of proving that these
benefits have been paid to its employees. “Even when the March AKELCO returns operations to main office in Lezo.
plaintiff alleges non-payment, still the general rule is that 1993
the burden rests on the defendant to prove payment, rather
than on the plaintiff to prove non-payment”. SCII has failed
to convincing proof that it has settled these claims.
March Resolution #477 AKELCO allows Respondent workers who were
10, dismissed in the previous resolution to return to the company out
g. No Work No Pay 1993 of compassion, subject to the condition of ‘no work, no pay’

Aklan Electric Cooperative Incorporated v NLRC June, Respondent workers, demanded for the payment of back wages
G.R. No. 121439, January, 25, 2000. 1993 from June 1992 - March 1993.
Ponente: Gonzaga- Reyes, J. Digester: Roxas June 4, Resolution #496 AKELCO rejects the demands of respondent
1993 workers for unpaid wages from June 16, 1992 - March 1993.
Facts

Petitioner: Aklan Electric Cooperative Incorportated (AKELCO)

Respondents: NLRC, Retiso and 165 other AKELCO employees - Following the timeline, respondent workers, were not working in AKELCO,
Kalibo from January 31, 1992 until the time they were allowed to return to
Timeline the company in March 10, 1993.
- They are however, only claiming that the company failed to pay them for
Date Event services rendered from June 1992- March 1993.
- Respondents are not claiming wages for the period from January 1992 -
May 1992.
January AKELCO temporarily transfers holding of office from main office
22, in Lezo, Aklan (Lezo) to Amon theater, Kalibo, Aklan (Kalibo) on Ruling of the lower courts:
1992 the ground that the office at Lezo was dangerous and unsafe. LA: Respondent workers refused to work under lawful orders of AKELCO,
hence they are covered by the ‘no work, no pay principle’ and are not
entitled to claim for unpaid wages from June 1992- March 1993.
NLRC: Reversed findings of the LA. Ordered AKELCO to pay wages.
AKELCO is now appealing the decision of the NLRC, alleging grave abuse of
discretion under rule 65.
Issue:
1. WON respondent workers refused to work under the lawful orders of
petitioner AKELCO. Yes, workers refused lawful orders.
2. WON respondent workers are covered by the “no work, no pay principle”
and are not entitled to unpaid wages from June 1992 - March 1993. Yes,
not entitled to wages.
Held:
Respondents unjustly refused to render services from June - March 1993,
thus, they are not entitled to payment of wages for that period.
Ratio:
Transfer of office from Lezo to Kalibo justified.
 Office was unsafe and posed a serious and imminent threat to
AKELCO officials and employees
 Transfer of office was done in the exersice of a management
perogative
o It is withint the right of management to move its operations.
o In the absence of evidence showing that the transfer is
unjustified, it is presumed a valid exersice of management
perogative.
NLRC wrongly found that respondent workers rendered services from June
to March.
 NLRC’s finding that respondent workers had rendered services from
June to March was based on:
1. Letter of Leyson, office manager of AKELCO requesting for
payment of respondent’s unpaid wages.
2. Memorandum of Atty. Mationg, in answer to the
aforementioned letter of Leyson, assuring Leyson that his
request for payment of wages would be recommended to
the board.
3. Respondent workers own computation of their unpaid
wages.
 The aforementioned evidence is not substantial enough. It did not
establish that they in fact rendered services in the Kalibo office
during said period.
Respondents did not work during the period in question
 Having established that the office was validly transfered it was
incumbent upon respondent workers to prove that they had
rendered services, its a basic rule that each party must prove their
affirmative allegations.
o Respondents merely relied on their own computations as
evidence. There must be competent proof such as time
cards or office records to show that they actually rendered
office service.
o It is impossible that they were able to work in the Lezo
office, since all the equipment of AKELCO was moved to the
Kalibo office.
 Respondents had been dismissed from January 31, 1992 – March
1993 and yet only claimed backwages for June – March.
o Respondents claim that they had been paid for services
rendered by them in the Lezo office from January – June,
1992.
o They were not however able to rebut petitioners claim that
respodents illegally collected fees and charges legally due to
AKELCO and appropriated the collections among themselves
to satisfy their salaries from January to June 1992.
No work no pay principle
 the age-old rule governing the relation between labor and
management of “a fair days wage for a fair day’s labor” remains the
basic factor in determining employee’s wages.
 If there is no work performed by the employee, there can be no
wage or pay, unless the laborer was willing and able but was illegally
locked out or dimissed.
 Such exception, is not present in this case.
 It would not be fair nor just to allow respondent workers to reconver
something they did not near and could not have earned because
 they did not render services at Kalibo during the stated period.
LAO CONSTRUCTION v NLRC
Private respondents were filed complaints for illegal dismissal against
petitioners with NLRC.Respondents were hired for various periods as
construction workers in different capacities theydescribed in the terms. They
alternately worked for Tomas Lao Corp., Tomas and James Developer,
LVMConstruction, altogether as Lao Group of Companies. They engaged in
construction of public roads andbridges. Each one would also allow the
utilization of the employees. With the arrangement workerswere transferred
whenever necessary to on-going projects of the same company or rehired
after thecompletion of the project or project phase which they were
assigned. In 1989 issued memorandumrequiring all workers and company
personnel to sign employment contracts forms and clearances. Toensure
compliance with the directive, the company ordered the withholding of the
salary of anyemployee who refused to sign. All respondents refused to sign
contending that this scheme wasdesigned by their employer to downgrade
their status from their regular employees to mere projectemployees. Their
salaries were withheld. Since the workers stood firm in their refusal to
comply withthe directives their services were terminated. The NLRC
dismissed the complaint finding thatrespondents were project employees
whose employees could be terminated upon the completion of the project.
However the decision of LA was reversed on appeal finding that respondents
were regularemployees who were dismissed without just cause and denied
due process. The petitionersexpostulation is that respondents have no valid
cause to complain about their employment contractssince documents
formalized their status as project employees. They cite Policy Instruction No.
20 of DOLE which defines project employees as those employed in
connection with particular constructionproject
ISSUE: W/N dismissal of private respondents were illegal
RULING:
The court ruled that, the principal test in determining whether particular
employees are project employees distinguished from regular employees is
whether the project employees are assigned to carry out specific project or
undertaking, the duration of which are specified at the time of the
employees are engaged for the project. Project in the realm of industry and
business refers to a particular job or undertaking that it is within the regular
or usual business of employer, but which is distinct and separate and
identifiable as such from the undertakings of the company. They allowed to
workers hired for specific projects and hence can be classified as project
employees, the repeated re-hiring and the continuing need for the services
over a long span of time have undeniably made them regular employees.
Length of time may not be a controlling test for project employment, it can
be a strong actor in determining whether the employee was hired for a
specific undertaking or in fact tasked to perform functions which are vital,
necessary and indispensable to the usual business or trade of the employer.
In the case at bar, private respondents had already gone through the status
of project employees. But their employments became non-coterminous with
specific projects when they started to be continuously re-hired due to
demands of petitioners’ business and were re-engaged for many more
projects without interruption.
IMBUIDO v NLRC
Petitioner was employed as a date encoder by private respondent. From
1988 until 1991, she entered into 13 employment contracts with private
respondent, each contract for a period of 3 months. In September 1991,
petitioner and 12 other employees allegedly agreed to the filing of a PCE of
the rank and file employees of private respondent. Subsequently, petition
received a termination latter due to “low volume of work.” Petitioner filed a
complaint for illegal dismissal. The labor Arbiter found in favor of petitioner
ruling that she was a regular employee. The NLRC reversed the decision
stating that although petitioner is a regular employee, she has no tenurial
security beyond the period for which she was hired (only up to the time the
specific project for which she was hired was completed). Petitioner filed the
present appeal.
ISSUE: W/N petitioner is a regular employee entitled to tenurial security and
was therefore unjustly dismissed.
HELD: Yes. Even though petitioner is a project employee, as in the case of
Maraguinot, Jr. v. NLRC, the court held that a project employee or member
of a work pool may acquire the status of a regular employee when the
following concur:
1. there is continuous rehiring of project employees even after the cessation
of a project,
2. the tasks performed by the alleged “project employee” are vital,
necessary and indispensable to the usual business and trade of the
employer.
Private respondent was employed as a data encoder performing duties,
which are usually necessary or desirable in the usual business or trade of the
employer, continuously for a period of more than 3 years. Being a regular
employee, petitioner is entitled to security of tenure and could only be
dismissed for a just and authorized cause; low volume of work is not a valid
cause for dismissal under Art. 282 or 283. Having worked for more than 3
years, petitioner is also entitled to service incentive leave benefits from 1989
until her actual reinstatement since such is demandable after one year of
service, whether continuous or broken.
Project or work pool employees who have gained the status of regular
employees are subject to the "no work-no pay" principle, to repeat:
"A work pool may exist although the workers in the pool do not receive
salaries and are free to seek other employment during temporary breaks in
the business, provided that the worker shall be available when called to
report for a project. Although primarily applicable to regular seasonal
workers, this set-up can likewise be applied to project workers insofar as the
effect of temporary cessation of work is concerned. This is beneficial to both
the employer and employee for it prevents the unjust situation of "coddling
labor at the expense of capital" and at the same time enables the workers to
attain the status of regular employees.
h. Equal Pay for Equal Work
International School Alliance of Educators v. Leonardo Quisumbing
(Secretary of DOLE) and International School, Inc.
G.R. No. 128845; June 1 2000; Kapunan
Digest Prepared by Hans Cedric I. Santos
I. Facts
 International School is authorized by sec 2(c) of PD 732 to “employ its
own teaching and management personnel selected by it either locally or
abroad, such personnel being exempt from otherwise applicable laws
and regulations attending their employment, except laws that have been
or will be enacted for the protection of employees”.
 The school hires both foreign and local teachers, classifying them as
foreign-hires and local-hires by asking the ff questions:
1. What is one’s domicile?
2. Where is one’s home country?
3. To which country does one owe economic allegiance?
4. Was the individual hired abroad specifically to work in the
School and was the School responsible for bringing him/her to
the Philippines?
 “If the answer to any of these questions points to the Philippines, the
teacher is deemed a local hire.” (NOTE: Verbatim from the case; for #4 I
assume that if the answer is “No”, the person is a local-hire)
 Foreign-hires are accorded certain benefits that local-hires are not such
as housing, transportation, shipping costs, taxes and home leave travel
allowance as well as salary which is 25% higher. The school justifies
these on the basis of the “dislocation factor” in leaving one’s home
country, family and friends, in taking a risk on one’s career and in
incurring additional expenses, and in the limited tenure in having to
eventually return to one’s home country with uncertain chances of
obtaining suitable employment after a long absence.
 When negotiations for the Collective Bargaining Agreement were held
in 1995, petitioner contested the difference in the salary rates. There
was also a question as to whether the foreign-hires should be included
in the bargaining unit. There was a deadlock between the parties. ISAE
filed a notice of strike and the failure of the National Conciliation and
 Mediation Board to mediate the dispute brought the DOLE to assume
jurisdiction.
 Acting Secretary Trajano issued an order resolving the issues in favor of
the school and Secretary Quisumbing denied the motion for
reconsideration. Petitioners appealed to the SC.
II. Issues-Held
WON the classification and higher salary given to foreign-hires constitute
discrimination: Yes, it does. Discrimination is abhorred in various sources of
law such as the Constitution, Civil Code, Labor Code and international law.
The legal truism of ‘Equal Pay for Equal Work” must apply. The employer in
this case failed to justify the classification employed.
WON the foreign hires belong to different bargaining units from the local
hires: Yes, they do. There is a lack of intention to be grouped together and a
difference in collective bargaining histories between the parties. These show
that grouping them together would not assure exercise of respective
collective bargaining rights.
III. Ratio
The Constitution says that the State shall “promote equal employment
opportunities for all”. Article 19 of the Civil Code requires every person, “in
the exercise of his rights and in the performance of duties to act with justice,
give everyone his due, and observe honesty and good faith”. The Labor Code
prohibits discrimination based on gender in article 135 and based on
membership in labor organizations in article 248, declaring it unfair labor
practice.
The Universal Declaration of Human Rights, the Convention against
Discrimination in Education and the Convention Concerning Discrimination
in Respect to Employment and Occupation are some international
instruments which embody the general principle against discrimination. In
particular, the International Covenant on Economic, Social and Cultural
Rights provides in Article 7 that the State Parties shall recognize the right to
just and favourable conditions of work in particular remuneration which
provides fair wages and equal remuneration for work of equal value without
distinction of any kind.
These institutionalize the truism of “Equal pay for Equal work” such that
persons who work with substantially equal qualifications, skill, effort and
responsibility under similar conditions should be paid similar salaries. If
any employer accords employees the same position and rank, the
presumption is that these employees perform equal work. If he pays one
less than the rest, it is for the employer to explain why the employee is
treated differently.
The employer cannot invoke the need of foreign hires to leave their domicile
to rationalize the distinction. “Salary” is defined as reward or remuneration
“for services performed”. There is no reasonable distinction between the
services rendered by foreign-hires and local hires. The dislocation factor and
limited tenure are adequately compensated in the additional benefits
accorded to the foreign-hires.
A bargaining unit is a “group of employees of a given employer, comprised of
all or less than all of the entire body of employees, consistent with equity to
the employer indicated to be the best suited to serve the reciprocal rights
and duties of the parties under the collective bargaining provisions of the
law”. The factors in determining the appropriate collective bargaining unit
are:
1. the Will of the Employees
2. Affinity and Unity of the Employees Interests (substantial similarity
of work and duties or of compensation and working conditions
3. Prior Collective Bargaining History
4. Similarity of Employment Status
In this case, it does not appear that the foreign-hires have indicated their
intention to be grouped with the local-hires for purposes of collective
bargaining. Furthermore, they have different collective bargaining histories,
having always been treated separately with regard to security of tenure and
benefits.
Petition is GRANTED in part and Orders of the Secretary are REVERSED and
SET ASIDE insofar as they uphold the practice of giving higher salary to
foreign-hires.
i. Last In First Out
MAYA FARMS EMPLOYEES ORGANIZATION v NLRC
An early retirement program was converted into a special redundancy
program intended to reduce the work force to an optimum number so as to
make operations more viable.
In December 1991, a total of sixty-nine (69) employees from the two
companies availed of the special redundancy program. a notice of strike was
filed by the petitioners which accused private respondents, among others, of
unfair labor practice, violation of CBA and discrimination. Conciliation
proceedings were held by the National Conciliation and Mediation Board
(NCMB) but the parties failed to arrive at a settlement.
Petitioners maintain that public respondent grossly erred and gravely
abused its discretion when it ruled that: (a) the termination of the sixty-six
(66) employees was in accordance with the LIFO rule in the CBA; (b) the
termination of the sixty-six (66) employees was in accordance with Article
283 of the Labor Code; and (c) the payment or offer of payment can
substitute for the 30-day required notice prior to termination. 5
ISSUE: W/N there was a violation of the LIFO rule – no
The NLRC correctly held that private respondents did not violate the LIFO
rule under Section 2, Article III of the CBA which provides:
Sec. 2. LIFO RULE. In all cases of lay-off or retrenchment
resulting in termination of employment in the line of work,
the
Last-in-First-Out (LIFO) Rule must always be strictly
observed.
It is not disputed that the LIFO rule applies to termination of employment in
the line of work. 12 Verily, what is contemplated in the LIFO rule is that when
there are two or more employees occupying the same position in the
company affected by the retrenchment program, the last one employed will
necessarily be the first to go.
Moreover, the reason why there was no violation of the LIFO rule was amply
explained by public respondent in this wise:
. . . . The LIFO rule under the CBA is explicit. It is ordained
that in cases of retrenchment resulting in termination of
employment in line of work, the employee who was
employed on the latest date must be the first one to go. The
provision speaks of termination in the line of work. This
contemplates a situation where employees occupying the
same position in the company are to be affected by the
retrenchment program. Since there ought to be a reduction
in the number of personnel in such positions, the length of
service of each employees is the determining factor, such
that the employee who has a longer period of employment
will be retained.
j. One Company One Union
PHILTRANCO SERVICES v BLR
On February 15, 1988, the Kapisanan ng mga Kawani, Assistant,
Manggagawa at Konpidensyal sa Philtranco (KASAMA KO), a registered labor
organization filed a petition for certification election with the Department of
Labor and Employment. On February 24, 1988, the National Mines and
Allied Workers Union (NAMAWU-MIF) filed a motion for intervention
alleging that it is the bargaining agent of the workers at Philtranco and as
such it has a substantial interest in the outcome of the petition. This petition
was denied by the med arbiter, and ordered the members of KASAMA KO to
join the other union.
ISSUE: W/N philtranco should only have one labor union – YES
We see no need for the formation of another union in PHILTRANCO. The
qualified members of the KASAMA KO may join the NAMAWU-MIF if they
want to be union members, and to be consistent with the one-union, one-
company policy of the Department of Labor and Employment, and the laws
it enforces. As held in the case of General Rubber and Footwear Corp. v.
Bureau of Labor Relations (155 SCRA 283 [1987]):
... It has been the policy of the Bureau to encourage the
formation of an employer unit 'unless circumstances
 otherwise require. The proliferation of unions in an
employer unit is discouraged as a matter of policy unless
there are compelling reasons which would deny a certain
class of employees the right to self-organization for
purposes of collective bargaining. This case does not fall
squarely within the exception. (Emphasis supplied).
There are no compelling reasons in this case such as a denial to the KASAMA
KO group of the right to join the certified bargaining unit or substantial
distinctions warranting the recognition of a separate group of rank and file
workers.
We quote with favor Med-Arbiter Adap's rationale, to wit:
... It is against the policy of the Department of Labor to
dismember the already wide existing bargaining unit
because of its well established goal towards a single
employer wide unit which is more to the broader and
greater benefit of the employees working force.
The philosophy is to avoid fragmentation of the bargaining
unit so as to strengthen the employees bargaining power
with the management. To do otherwise, would be contrary,
inimical and repugnant to the objectives of a strong and
dynamic unionism. Let there be a unified whole rather than
a divisive one, let them speak as one in a clear resonant
voice unmarred by dissension towards progressive
unionism. (Rollo, p. 29)
k. Four Fold Test
Lirio v. Genovia
G.R. No. 169757; 23 November 2011; Peralta, J.
Digest prepared by Ron San Juan
Facts
Respondent Genovia was hired as a studio manager by Petitioner Lirio,
owner of Celkor Recording Studio. He received a monthly salary of P7,000
and an additional commission of P100/hour as recording technician. He was
made to report to work from Monday to Friday 9am-6pm and half day on
Saturday. Lirio never kept a daily time record of his employees.
A few days after respondent started working as a studio manager, he was
asked by Petitioner to compose and arrange songs for his 15-year old
daughter; Petitioner assured him that he will be fully compensated.
After he finished the job and after the album was released (and aired over
the radio), respondent reminded petitioner about the contract on his
compensation, but the latter told him that he doesn’t deserve a high
compensation and was only entitled to 20% of the net profit and not of the
gross sales of the album. Respondent insisted that he be properly
compensated. Petitioner then verbally terminated his services.
Respondent filed a complaint for illegal dismissal. He claimed that since he
has worked for 6 months, he was already a regular employee. Petitioner, in
his defense, said that his relationship with respondent is one of informal
partnership under Article 1767 NCC (as a co-producer of his daughter’s
album).
Labor Arbiter found that there’s an employer-employee relationship and
respondent was illegally dismissed. LA awarded respondent separation pay
and backwages. NLRC reversed the LA decision. CA reversed the NLRC
resolution and reinstated the LA decision. Hence, this petition.
ISSUES:
1. Whether or not there’s an employer-employee relationship. (YES)
2. Whether or not Respondent was illegally dismissed. (YES)
HELD: Petition denied.
1. YES. The elements to determine the existence of an employment
relationship are:
(a) the selection and engagement of the employee;
(b) the payment of wages;
(c) the power of dismissal; and
(d) the employer’s power of control.
The most important element is the employer’s control of the employee’s
conduct, not only as to the result of the work to be done, but also as to the
means and methods to accomplish it. No particular form of evidence is
required to prove the existence of an employer-employee relationship. Any
competent and relevant evidence to prove the relationship may be
admitted.
Documents adduced in the present case are: payroll showing the
respondent’s monthly salary with corresponding deductions for absences
incurred, and copies of the amounts he received and signed for in the
payrolls. Petitioner’s power to dismiss is clear from the fact that he verbally
dismissed respondent.
The power of control refers merely to the existence of the power. It is not
essential for the employer to actually supervise the performance of duties of
the employee, as it is sufficient that the former has a right to wield the
power. Petitioner himself sad in his position paper that he would help teach
respondent how to use the studio equipment. This shows his power to
check on the progress and work of respondent.
Regarding the claim of an informal partnership, it was not proved in this
case. The payroll indicating deductions from the wages for respondent’s
absences negates his claim that the 7,000 monthly payments were mere
advances for respondent’s work in the partnership.
2. YES. Since the Petitioner failed to establish that respondent was validly
dismissed and afforded due process, the findings of the LA (affirmed by
CA) that respondent was illegally dismissed and entitled to separation
pay and backwages is affirmed.
In termination cases, the burden is upon the employer to show substantial
evidence that the termination was for lawful cause and validly made.
MARTICIO SEMBLANTE v CA
Petitioners Marticio Semblante and Dubrick Pilar worked in the Gallera de
Mandaue owned by the respondents-spouses Vicente and Maria Luisa Loot.
The petitioners rendered their services as the official massiador and
sentenciador in 1993. As the masiador, Semblante calls and takes the bets
from the gamecock owners and other bettors and orders the start of the
cockfight. He also distributes the winnings after deducting the arriba, or the
commission for the cockpit. Meanwhile, as the sentenciador, Pilar oversees
the proper gaffing of fighting cocks, determines the fighting cocks' physical
condition and capabilities to continue the cockfight, and eventually declares
the result of the cockfight. As masiador and sentenciador, Semblante
receives PhP2,000 per week or a total of PhP8,000 per month, while Pilar
gets PhP3,500 a week or PhP14,000 per month. They work every Tuesday,
Wednesday, Saturday, and Sunday every week, excluding monthly derbies
and cockfights held on special holidays. Their working days start at 1:00 p.m.
and last until 12:00 midnight, or until the early hours of the morning
depending on the needs of the cockpit. Petitioners had both been issued
employees' identification cards that they wear every time they report for
duty. However on November 14,1993, petitioners were denied entry into
the cockpit upon the instructions of respondents and were informed of the
termination of their employment effective that date.
Respondents denied that petitioners were their employees and alleged that
they were associates of respondents’ independent contractor, Tomas Vega.
They claimed that petitioners have no regular working time or day and they
are free to decide for themselves whether to report for work or not on any
cockfighting day. And the identification card issued was only to free them
from the normal entrance fees and to differentiate them from the general
public.
The Labor Arbiter found that there exist an employer-employee relationship
between the petitioner and the respondents because the latter performed
the works necessary and indispensable to the usual trade or business of the
respondents for a number of years. It has ruled that petitioners were illegally
dismissed and are entitled to their backwages and separation pay. However,
the NLRC reversed the Labor Arbiter’s decision. It held that respondents
having no power on the selection and engagement of petitioners and that
no separate individual contract with respondents was ever executed by
petitioners. In its appeal to the CA, the latter ruled in favor for the
respondents and held that referees and bet-takers in a cockfight need to
have the kind of expertise that is characteristic of the game to interpret
messages conveyed by mere gestures. Hence, petitioners are akin to
independent contractors who possess unique skills , expertise and talent to
distinguish them from ordinary employees. Further, petitioners were not
provided by tools and instrumentalities they needed to perform their work.
They only need their unique skills and talents in the performance of their job
as masiador and sentenciador.
Issue:
Whether or not the dismissal of the petitioners is illegal on the ground that
that they are regular employees of the respondents?
Ruling:
Respondents had no part in petitioners' selection and management;
petitioners' compensation was paid out of the arriba (which is a percentage
deducted from the total bets), not by petitioners; and petitioners performed
their functions as masiador and sentenciador free from the direction and
control of respondents. In the conduct of their work, petitioners relied
mainly on their "expertise that is characteristic of the cockfight
gambling," and were never given by respondents any tool needed for the
performance of their work. Respondents, not being petitioners' employers,
could never have dismissed, legally or illegally, petitioners, since
respondents were without power or prerogative to do so in the first place.
The rule on the posting of an appeal bond cannot defeat the substantive
rights of respondents to be free from an unwarranted burden of answering
for an illegal dismissal for which they were never responsible.
l. Management Prerogative
DLSU v DLSU EMPLOYEES ASSOCIATION
SAN MIGUEL BREWERY SALES FORCE UNION v OPLE
For 3 years, a collective bargaining agreement was being implemented by
San Miguel Corporation Sales Force Union (PTGWO), and San Miguel
Corporation. Section 1, of Article IV of which provided “Employees within
the appropriate bargaining unit shall be entitled to a basic monthly
compensation plus commission based on their respective sales.” Then, the
company introduced a marketing scheme known as “Complementary
Distribution System”(CDS) whereby its beer products were offered for sale
directly to wholesalers through San Miguel’s Sales Offices. The union alleged
that the new marketing scheme violates Sec 1, Art IV f the CBA because the
introduction of the CDS would reduce the take home pay of the salesmen.
ISSUE:
Whether or not the new marketing scheme should be upheld considering
that the act was unilaterally made by the employer.
RULING:
Yes, because it is a valid exercise of managerial prerogative. So long as a
company’s management prerogatives are exercised in good faith for the
advancement of the employer’s interest and not for the purpose of
defeating or circumventing the rights of the employees under special laws or
under valid agreements, this Court will uphold them. San Miguel
Corporation’s offer to compensate the members of its sales force who will
be adversely affected by the implementation of the CDS by paying them a
so-called “back adjustment commission” to make up for the commissions
they might lose as a result of the CDS proves the company’s good faith and
lack of intention to bust their union.
G.R. No. 155098 September 16, 2005
CAPITOL MEDICAL CENTER, INC. and DR. THELMA NAVARETTE-
CLEMENTE, Petitioners,
vs.
DR. CESAR E. MERIS, Respondent.
Capitol Medical Center, Inc. hired Dr. Cesar Meris, one of its stockholders, 5 as
in charge of its Industrial Service Unit (ISU) at a monthly salary of
₱10,270.00.
On March 31, 1992, Dr. Meris received from Capitol’s president and
chairman of the board, Dr. Thelma Navarette-Clemente (Dr. Clemente), a
notice advising him of the management’s decision to close or abolish the ISU
and the consequent termination of his services as Chief thereof, effective
April 30, 1992.8
Dr. Meris sought his reinstatement but it was unheeded. Dr. Meris thus filed
a complaint against Capitol and Dr. Clemente for illegal dismissal and
reinstatement with claims for backwages, moral and exemplary damages,
plus attorney’s fees.
LA: Dismissed the complaint. The abolition of the ISU was a valid and lawful
exercise of management prerogatives and there was convincing evidence to
show that ISU was being operated at a loss. Dr. Meris was to be paid all sums
due him under the hospital retirement plan.
NLRC: Modified the LA decision. No payment of retirement benefits because
he did not retire. Dr. Meris was to be paid separation pay, to be charged
against the retirement fund.
CA: Dr. Meris was illegally dismissed
ISSUE: W/N there was illegal dismissal – YES
As will be reflected in the following discussions, this Court finds that the
Labor Arbiter and the NLRC overlooked some material facts decisive of the
instant controversy.
Work is a necessity that has economic significance deserving legal
protection. The social justice and protection to labor provisions in the
Constitution dictate so.
Employers are also accorded rights and privileges to assure their self-
determination and independence and reasonable return of capital. This
mass of privileges comprises the so-called management prerogatives.
Although they may be broad and unlimited in scope, the State has the right
to determine whether an employer’s privilege is exercised in a manner that
complies with the legal requirements and does not offend the protected
rights of labor. One of the rights accorded an employer is the right to close
an establishment or undertaking.
The right to close the operation of an establishment or undertaking is
explicitly recognized under the Labor Code as one of the authorized causes
in terminating employment of workers, the only limitation being that the
closure must not be for the purpose of circumventing the provisions on
termination of employment embodied in the Labor Code.
It would indeed be stretching the intent and spirit of the law if a court were
to unjustly interfere in management’s prerogative to close or cease its
business operations just because said business operation or undertaking is
not suffering from any loss.37 As long as the company’s exercise of the same
is in good faith to advance its interest and not for the purpose of defeating
or circumventing the rights of employees under the law or a valid
agreement, such exercise will be upheld.38
Clearly then, the right to close an establishment or undertaking may be
justified on grounds other than business losses but it cannot be an unbridled
prerogative to suit the whims of the employer.
The ultimate test of the validity of closure or cessation of establishment or
undertaking is that it must be bona fide in character.39 And the burden of
proving such falls upon the employer. 40
In the case at bar, Capitol failed to sufficiently prove its good faith in closing
the ISU.
If there was extinct demand for the ISU medical services as what Capitol and
Dr. Clemente purport to convey, why the number of client companies of the
ISU increased from 11 to 18 from 1986 to 1991, as well as the number of
patients from both industrial corporations and Capitol employees, they did
not explain.
The foregoing disquisition notwithstanding, as reflected above, the existence
of business losses is not required to justify the closure or cessation of
establishment or undertaking as a ground to terminate employment of
employees. Even if the ISU were not incurring losses, its abolition or closure
could be justified on other grounds like that proffered by Capitol – extinct
demand. Capitol failed, however, to present sufficient and convincing
evidence to support such claim of extinct demand.
The closure of ISU then surfaces to be contrary to the provisions of the
Labor Code on termination of employment.
The termination of the services of Dr. Meris not having been premised on a
just or authorized cause, he is entitled to either reinstatement or separation
pay if reinstatement is no longer viable, and to backwages.
MANILA PAVILION HOTEL v. HENRY DELADA
G.R. No. 189947, January 25, 2012; Sereno, J.
Digest prepared by Jackie Canlas
FACTS:
1. Manila Pavilion Supervisors Association Union Pres Henry Delada was
the Head Waiter of Rotisserie, a restaurant in Manila Pavilion Hotel
(MPH). Pursuant to a supervisory personnel reorganization program, he
was reassigned to Seasons Coffee Shop, also operated by MPH at the
same hotel.
2. Delada declined the transfer and instead asked for a grievance meeting
on the matter, pursuant to their CBA. He also requested his retention at
Rotisserie while the grievance procedure was ongoing.
3. MPH told Delada to report to his new post for the time being, without
prejudice to the resolution of the grievance re: transfer, but Delada
refused, and instead continued to report to his previous post.
4. With Delada still rebuffing orders, MPH initiated a disciplinary action
against him. Delada’s defense was that since the grievance machinery
under their CBA had already been initiated, his transfer must be held in
abeyance.
5. Meanwhile, since the parties failed to reach a settlement at the lower
levels of the grievance procedure (see # 2), Delada elevated his
grievance to NCMB.
o While Delada’s complaint was pending before the Panel of Voluntary
Arbitrators (PVA), MPH continued with the disciplinary action. Citing
security and safety reasons (Delada might sabotage the food),
Delada was placed on a 30d preventive suspension.
6. Eventually, MPH found Delada guilty of insubordination, and imposed a
penalty of 90d suspension. Delada opposed, arguing that MPH had lost
its authority to proceed with the disciplinary action, since the matter
had already been included in the voluntary arbitration.
7. Subsequently, PVA ruled that:
A. Delada’s transfer was a valid exercise of management prerogative,
done in good faith.
o He refused to transfer because he asked for additional monetary
benefits.
o Furthermore, his transfer did not prejudice or inconvenience him
(in the same hotel). Neither did it result in diminution of salaries
or demotion in rank.
B. There was no legal and factual basis to support the preventive
suspension of Delada.
C. MPH went beyond the 30d preventive suspension prescribed by the
IRR when it proceeded to impose a separate penalty of 90d
suspension.
D. MPH lost its authority to continue with the administrative
proceedings because PVA acquired exclusive jurisdiction over the
issue when the parties submitted the issue before it.
E. Since the 30d preventive suspension and the penalty of 90d
suspension were invalid, MPH was liable to pay back wages and
other benefits.
8. CA affirmed PVA.
9. MPH – Rule 45 to SC.
o It did not lose its authority to discipline Delada. The specific issue of
WON Delada could be held liable for his refusal to transfer was not
raised before the PVA, and that the panel's ruling was limited to the
validity of the transfer order.
ISSUES/RULING:
1. WON MPH retained the authority to continue with the administrative
case against Delada for insubordination and willful disobedience of the
transfer order – YES
2. WON MPH is liable to pay back wages - NO
PETITION GRANTED.
RATIO:
 Sime Darby Pilipinas, Inc. v. Deputy Administrator Magsalin - Voluntary
Arbitrator had plenary jurisdiction and authority to interpret the
agreement to arbitrate and to determine the scope of his own authority
subject only, in a proper case, to the certiorari jurisdiction of this Court.
 Ludo & Luym Corporation v. Saornido - Voluntary Arbitrators are
generally expected to decide only those questions expressly delineated
by the submission agreement; that, nevertheless, they can assume that
they have the necessary power to make a final settlement on the related
issues, since arbitration is the final resort for the adjudication of
disputes.
 Pursuant to said doctrines, the PVA was authorized to assume
jurisdiction over the related issue of insubordination and willful
disobedience of the transfer order. Nevertheless, the doctrine in the
aforementioned cases is inapplicable to the present Petition. In those
cases, the voluntary arbitrators did in fact assume jurisdiction over the
related issues and made rulings on the matter. In the present case,
however, the PVA did not make a ruling on the specific issue of
insubordination and willful disobedience of the transfer order. The PVA
merely said that its disagreement with the 90day penalty of suspension
 stemmed from the fact that the penalty went beyond the 30day limit for
preventive suspension.
 Employees may object to, negotiate and seek redress against employers
for rules or orders that they regard as unjust or illegal. However, until
and unless these rules or orders are declared illegal or improper by
competent authority, the employees ignore or disobey them at their
peril.
o Unless the order of MPH is rendered invalid, there is a presumption
of the validity of that order.
o Since the PVA eventually ruled that the transfer order was a valid
exercise of management prerogative, MPH had the authority to
continue with the administrative proceedings for insubordination
and willful disobedience against Delada and to impose on him the
penalty of suspension.
 Consequently, MPH is not liable to pay back wages and other benefits
for the period corresponding to the penalty of 90d suspension.
 Regarding the PVA’s ruling that MPH went beyond the 30d preventive
suspension in the IRR, the Court said that the basis of the 30d
preventive suspension was different from that of the 90d penalty of
suspension. The 30d preventive suspension was imposed on the
assertion that Delada might sabotage hotel operations, pending
investigation of the administrative proceeding. On the other hand, the
penalty of 90d suspension was imposed as a form of disciplinary action
as outcome of the administrative proceedings conducted against him.
The employer exercises its right to discipline erring employees pursuant
to company rules and regulations. Thus, a finding of validity of the
penalty of 90d suspension will not embrace the issue of the validity of
the 30d preventive suspension. In any event, MPH no longer assails the
ruling of the CA on the illegality of the 30d preventive suspension.
BLUE DAIRY CORPORATION v NLRC
Almodiel v. NLRC and Raytheon Phils., Inc.
June 14, 1993; Nocon
Prepared by Tobie Reynes
Doctrine: Art. 40 of the Labor Code applies only to non-resident aliens. It
does not apply to resident aliens.
Facts
 Farle Almodiel is a certified public accountant.
o Used to work as the accounts executive of Integrated
Microelectronics; but left in view of a promising career
offered by Raytheon.
o He was hired in Oct. 1987 as Cost Accounting Manager of
Raytheon through a reputable placement firm, John
Clements Consultants, with a starting salary of P18,000 a
month.
 Job description: (1) plan, coordinate and carry out
year and physical inventory; (2) formulate and issue
out hard copies of Standard Product costing and
other analysis; and (3) set up the written Cost
Accounting System for the whole company.
 His salary was increased to P21,600/month.
 Aug. 17, 1988 - He recommended a Cost Accounting/Finance
Reorganization, but was not approved.
o He was assured, upon disapproval, that should his position
become untenable or unable to deliver the needed service,
he would be given a three-year advance notice.
 Raytheon adopted a standard cost accounting system used
worldwide by Raytheon plants.
o As a consequence, the services of a Cost Accounting
Manager would entail only the submission of periodic
reports
 Jan. 27, 1989 – Almodiel was summoned and told of the abolition of
his position on the ground of redundancy.
o He pleaded to be transferred to another department, but
was told that the decision was final and has been conveyed
to the DOLE.
 Almodiel filed a complaint for illegal dismissal, and that bad faith,
malice and irregularity crept in the abolition of his position on the
ground of redundancy.
o Claimed that the functions of his position were absorbed by
the Finance Dept. under the management of Danny Ang Tan
Chai, a resident alien without any working permit from the
DOLE.
o Claimed that he should have been the manager of the
Finance Dept.
 o Also claimed that he was better qualified as a CPA with MBA
units and a natural born Filipino, rather than Ang Tan Chai,
who was a B.S. Industrial Eng’g graduate, who was just
promoted in the middle part of 1988 and a resident alien.
 LA: There was illegal dismissal.
 NLRC: No illegal dismissal; Almodiel entitled to separation pay.
Issues/Held/Ratio
W/N Almodiel’s dismissal on the ground of redundancy was tainted with bad
faith, malice, and irregularity – NO, IT WAS NOT.
 No dispute that Almodiel was advised, one month before, of his
termination on the ground of redundancy.
o Compliant with Art. 283 of the Labor Code.
 The characterization of an employee’s services as no longer
necessary or sustainable, and therefore, properly terminable, was
an exercise of business judgment on the part of an employer.
o Only subject to review by the NLRC if a violation of law or
merely arbitrary of malicious action is shown.
 An employer has no legal obligation to keep more employees than
are necessary for the operation of its business.
 Considering that Almodiel held a position that was definitely
managerial (as opposed to a rank-and-file) in character, Raytheon
had a broader latitude of discretion in abolishing his position.
o Officers in such key positions perform functions which
require not only full trust and confidence but also functions
that spell the success or failure of an enterprise.
W/N there was unlawful discrimination when Raytheon caused functions
appertaining to cost accounting to be absorbed by Ang Tan Chai, a resident
alien without a working permit – NO, THERE WAS NONE.
 Art. 40 of the Labor Code applies only to non-resident aliens.
o The permit is required for entry into the country for
employment purposes and is issued after the determination
of non-availability of a person in the Philippines who is
competent, able and willing at the time of application to
perform the services for which the alien is desired.
 Since Ang Tan Chai is a resident alien, he does not fall within the
ambit of the provision.
W/N Almodiel was better qualified to head the Finance Dept. – OF NO
MOMENT.
 Objections founded on the ground that one has better credentials
over the appointee is frowned upon so long as the latter has the
minimum qualifications.
 Ang Tan Chai was promoted before the abolition Almodiel’s position.
The assailed NLRC decision was affirmed.
INTERPHIL LABORATORIES (FFW) v INTERPHIL
Petitioner is the sole and exclusive bargaining agent of the rank-and-file
employees of Respondent. They had a CBA.
Prior to the expiration of the CBA, respondent company was approached by
the petitioner, through its officers. The Union inquired about the stand of
the company regarding the duration of the CBA which was set to expire in a
few months. Salazar told the union officers that the matter could be best
discussed during the formal negotiations which would start soon.
All the rank-and-file employees of the company refused to follow their
regular two-shift work schedule. The employees stopped working and left
their workplace without sealing the containers and securing the raw
materials they were working on.
To minimize the damage the overtime boycott was causing the company,
Salazar immediately asked for a meeting with the union officers. In the
meeting, Enrico Gonzales, a union director, told Salazar that the employees
would only return to their normal work schedule if the company would
agree to their demands as to the effectivity and duration of the new CBA.
Salazar again told the union officers that the matter could be better
discussed during the formal renegotiations of the CBA. Since the union was
apparently unsatisfied with the answer of the company, the
overtime boycott continued. In addition, the employees started to engage in
a work slowdown campaign during the time they were working, thus
substantially delaying the production of the company.
Respondent company filed with the National NLRC a petition to declare
illegal petitioner union’s “overtime boycott” and “work slowdown” which,
according to respondent company, amounted to illegal strike. It also filed
with Office Secretary of Labor a petition for assumption
of jurisdiction. Secretary of Labor Nieves Confesor issued an assumption
order over the labor dispute.
Labor Arbiter Caday submitted his recommendation to the then Secretary of
Labor Leonardo A. Quisumbing. Then Secretary Quisumbing approved and
adopted the report in his Order, finding illegal strike on the part of petitioner
Union.
Issue: WON the Labor Secretary has jurisdiction to rule over an illegal strike.
Held:
On the matter of the authority and jurisdiction of the Secretary of Labor and
Employment to rule on the illegal strike committed by petitioner union, it
cannot be denied that the issues of “overtime boycott” and “work
slowdown” amounting to illegal strike before Labor Arbiter
Caday are intertwined with the labor dispute before the Labor Secretary.
The appellate court also correctly held that the question of the Secretary of
Labor and Employment’s jurisdiction over labor-related disputes was already
settled in International Pharmaceutical, Inc. vs. Hon. Secretary of Labor and
Associated Labor Union (ALU) where the Court declared:
In the present case, the Secretary was explicitly granted by Article 263(g) of
the Labor Code the authority to assume jurisdiction over a labor dispute
causing or likely to cause a strike or lockout in an industry indispensable to
the national interest, and decide the same accordingly. Necessarily, this
authority to assume jurisdiction over the said labor dispute must include
and extend to all questions and controversies arising therefrom, including
cases over which the labor arbiter has exclusive jurisdiction.
Moreover, Article 217 of the Labor Code is not without, but contemplates,
exceptions thereto. This is evident from the opening proviso therein reading
‘(e)xcept as otherwise provided under this Code x x x.’ Plainly, Article 263(g)
of the Labor Code was meant to make both the Secretary (or the various
regional directors) and the labor arbiters share jurisdiction,
subject to certain conditions. Otherwise, the Secretary would not be able to
effectively and efficiently dispose of the primary dispute. To hold the
contrary may even lead to the absurd and undesirable result wherein the
Secretary and the labor arbiter concerned may have diametrically
opposed rulings. As we have said, ‘it is fundamental that a statute is to be
read in a manner that would breathe life into it, rather than defeat it.
In fine, the issuance of the assailed orders is within the province of the
Secretary as authorized by Article 263(g) of the Labor Code and Article
217(a) and (5) of the same Code, taken conjointly and rationally construed
to subserve the objective of the jurisdiction vested in the
Secretary.
Petition denied
II. Recruitment and Placement
a. Recruitment of Local and Migrant Workers
PEOPLE v ANGELES
Accused-appellant Samina Angeles y Calma was charged with four (4) counts
of estafa and one (1) count of illegal recruitment
In her defense, accused-appellant averred that, contrary to the prosecutions
allegations, she never represented to the complainants that she can provide
them with work abroad. She insisted that she was a marketing consultant
and an international trade fair organizer. In June 1994, she went to Paris,
France to organize a trade fair. There she met Priscilla Agoncillo, a domestic
helper, and they became friends. Priscilla asked her to assist her siblings,
Maria and Marceliano, particularly in the processing of their travel
documents for France. Accused-appellant told Priscilla that she can only help
in the processing of travel documents and nothing more. It was Priscilla who
promised employment to Maria and Marceliano. She received money from
complainants not in the form of placement fees but for the cost of tickets,
hotel accommodations and other travel requirements.
After trial on the merits, the trial court found accused-appellant guilty of
illegal recruitment and four (4) counts of estafa.
ISSUE: W/N there was illegal recruitment – NO
To prove illegal recruitment, it must be shown that the accused-
appellant gave complainants the distinct impression that he had the power
or ability to send complainants abroad for work such that the latter were
convinced to part with their money in order to be employed. [4] To be
engaged in the practice of recruitment and placement, it is plain that there
must at least be a promise or offer of an employment from the person
posing as a recruiter whether locally or abroad.
In the case at bar, accused-appellant alleges that she never promised
nor offered any job to the complainants.
We agree. A perusal of the records reveals that not one of the
complainants testified that accused-appellant lured them to part with their
hard-earned money with promises of jobs abroad. On the contrary, they
were all consistent in saying that their relatives abroad were the ones who
contacted them and urged them to meet accused-appellant who would
assist them in processing their travel documents. Accused-appellant did not
have to make promises of employment abroad as these were already done
by complainants relatives.
Although Samina Angeles did not deceive complainants into
believing that she could find employment for them abroad, nonetheless, she
made them believe that she was processing their travel documents for
France and Canada. They parted with their money believing that Samina
Angeles would use it to pay for their plane tickets, hotel accommodations
and other travel requirements. Upon receiving various amounts from
complainants, Samina Angeles used it for other purposes and then
conveniently disappeared.
Clearly, Samina Angeles defrauded complainants by falsely pretending to
possess the power and capacity to process their travel documents.
PEOPLE v ONG
PEOPLE v CALONZO
REYDANTE CALONZO Y AMBROSIO was charged with Illegal Recruitment in
Large Scale and five (5) counts of Estafa by Bernardo Miranda, Danilo de los
Reyes, Elmer Clamor, Belarmino Torregrosa and Hazel de Paula
Accused-appellant in this appeal assails his conviction by the trial
court. He claims that the court below erred in disregarding the testimony of
Nenita Mercado, an employee of the Philippine Overseas Employment
Administration (POEA), who categorically stated that their records indicated
that Calonzo never processed complainants' applications for employment
abroad. He concludes from that fact alone that he cannot be deemed to
have engaged in the recruitment of workers for employment abroad.
As regards the estafa cases, accused-appellant contends that the
court a quo erred in giving credence to the testimonies of prosecution
witnesses considering that the amounts claimed to have been collected by
him did not correspond to the amounts indicated in the receipts presented
by the complaining witnesses.
ISSUE: W/N there was large scale illegal recruitment – YES
llegal recruitment in large scale is committed when a person "(a) undertakes
any recruitment activity defined under Article 13(b) or any prohibited
practice enumerated under Article 34 of the Labor Code; (b) does not have a
license or authority to lawfully engage in the
recruitment and placement of workers; and (c) commits the same
against three or more persons, individually or as a group."[3] The testimony
of complainants evidently showed that Calonzo was engaged
in recruitment activities in large scale. Firstly, he deluded complainants into
believing that jobs awaited them in Italy by distinctly impressing upon them
that he had the facility to send them for work abroad. He even showed them
his passport to lend credence to his claim. To top it all, he brought them to
Bangkok and not to
Italy. Neither did he have anyarrangements in Bangkok for the transfer of his
recruits to Italy. Secondly, POEA likewise certified that neither Calonzo nor R.
A. C. Business Agency was licensed to recruit workers for employment
abroad. Appellant admitted this fact himself. Thirdly, appellant recruited five
(5) workers thus making the crime illegal recruitment in large scale
constituting economic sabotage.
In the case before us, we are convinced that Calonzo defrauded
complainants through deceit. They were obviously misled into believing that
he could provide them employment in Italy. As a result, the five (5)
complainants who desperately wanted to augment their income and
improve their lot parted with their hard-earned money.
Serrano vs. Gallant Maritime Services
G.R. No. 167614; March 4, 2009; Austria-Martinez, J.
Digest prepared by Laurence A. Mopera
I. FACTS
1. Petitioner Serrano was hired by Gallant Maritime Services Inc. and
Marlow Navigation Co, Ltd., under a POEA approved employment
contract. He was to work for 12 months as Chief Officer.
2. On the date of his departure, he was constrained to accept a
downgraded employment contract. On the assurance that he would
become a Chief Officer by the end of April 1998 as originally
promised, he took the position of Second Officer.
3. Because of the non-fulfilment by the employer that he would be the
Chief Officer by the end of April, he refused to continue his
employment as a Second Officer. On May 26, 1998, he was
repatriated to the Philippines. He was only able to serve for 2
months and 7 days, leaving an unexpired portion of 9 months and
23 days. Hence, he filed a complaint on the Labor Arbiter for
constructive dismissal and for payment of money claims, covering
the unexpired portion of his employment contract.
4. However, the Labor Arbiter awarded him only 3-month worth of
salary. The Labor Arbiter, in computing the amount of award, opted
to grant 3-month worth of salary instead of the amount
corresponding the total unexpired period.
5. Upon appeal to the NLRC, the NLRC merely modified the decision of
the Labor Arbiter. The NLRC reduced the amount of the salary rate
because according to it, overtime pay (which was included in the 3-
month worth of salary awarded by the Labor Arbiter) is not provided
by the applicable law, RA 8042.
6. Hence, petitioner raised the case to the Court of Appeals,
questioning the constitutionality of a certain provision in RA 8042.
However, the Court of Appeals upheld the reduction made by the
NLRC and skirted the constitutional issue.
7. On the appeal to the Supreme Court, the petitioner said that in
previously decided cases, the illegally dismissed employees were
entitled to the entire salary for the unexpired portion. Further, he
questions CA’s lack of pronouncement as to the constitutional issue.
Lastly, he said that even if the constitutional issue is disregarded, the
reduction (exclusion of overtime pay from salary rate) is erroneous
as under their employment contract, such forms part of his salary.
8. However, petitioner filed a motion to withdraw the appeal as
according to him, he was already old and sickly. Hence, he needed
the monetary award to attend to his medical expenses and needs.
II.ISSUES
Whether or not he is entitled to the salaries for the unexpired portion of the
employment contract
III. HELD
Yes. The decision of the Court of Appeals is reversed. Section 10 of RA 8042
is declared unconstitutional for being violative of the equal protection and
due process clauses.
IV. RATIO
The bone of contention is the constitutionality of Section 10 of RA 8042. It
states:
Sec. 10. Money Claims. - x x x In case of termination of
overseas employment without just, valid or authorized
cause as defined by law or contract, the workers shall be
entitled to the full reimbursement of his placement fee with
interest of twelve percent (12%) per annum, plus his salaries
for the unexpired portion of his employment contract or for
three (3) months for every year of the unexpired term,
whichever is less.
The Labor Arbiter, NLRC and CA awarded petitioner Serrano a 3-month
worth of salary because according to them, this is the lesser amount.
As to the timeliness of the constitutional challenge
The court ruled that the constitutional issue is timely, even if it was merely
raised on the Court of Appeals, as it is the first competent court which can
decide on the constitutionality of the law. Yes, NLRC decided the case first,
but NLRC does not have the power to declare the law unconstitutional.
Hence, it was raised at the earliest possible opportunity.
As to the issue on non-impairment of contracts
The court agreed with the solicitor general that since the enactment of the
law preceded the employment contract, the provisions thereof are deemed
incorporated on the contract itself. However even if we disregard the
timeline, the law is an exercise of the state’s police power and hence it was
not unconstitutional.
As to the due process and equal protection issues
The court said that there indeed was a violation. The court presented the
three tests in determining if a law is violative of the equal protection clause
specifically, on the propriety of classification.
1. Rational Basis Scrutiny in which the challenged classification needs
only be shown as rationally related to a legitimate state interest.
2. Intermediate Scrutiny in which the government must show that the
challenge classification serves an important state interest and that
the classification is at least substantially related to serving that
interest.
3. Strict Judicial Scrutiny in which a legislative classification which
impermissibly interferes with the exercise of a fundamental right or
operates to the peculiar disadvantage of a suspect class is presumed
unconstitutional, and the burden is upon the government to prove
that the classification is necessary to achieve a compelling state
interest and that it is the least restrictive means to protect such
interest.
The constitution gives special protection to a number of sectors, one of
which is the labor sector. This is the suspect classification. In such a case, the
strict scrutiny test must be applied.
Is there a classification that would warrant the application of the strict
scrutiny test?
Yes. The court found three different classifications.
1. OFWs with employment contracts of less than 1 year vis-à-vis OFWs
with employment contracts of 1 year or more
a. The overseas workers who have fixed period of less than a
year would automatically be entitled to the salary for the
unexpired portion of the contract in case of illegal dismissal
as the “3 months for every unexpired term” cannot be
applied. If the contract is for less than a year, there is no
“every year” to speak of.
b. The overseas workers who have a fixed period of 1 year or
more would only be entitled to a 3 month worth of salary in
case it is the lesser amount, pursuant to Section 10 of RA
8042.
c. Prior to the enactment of RA 8042, these two sets of
employees are treated alike. However because of RA 8042,
the second class is being singled out while the first one is
spared from it, simply because the period involved falls
short of one year.
2. Among OFWs with employment contract of more than 1 year
a. The OFWs who were illegally dismissed with less than 1 year
left shall be entitled to the entire unexpired portion because
in this case, there is no more “for every year of unexpired
term” to speak of.
b. The OFWs who were illegally dismissed with a year or more
left shall only be entitled to a 3-month worth of salary for
every year of the unexpired term.
c. Thus, the second class is at a disadvantage just because he
was terminated when there was still a year left on his
contract.
3. OFWs vis-à-vis Local Workers with fixed employment
a. Local workers, in accordance with our existing laws, are
entitled to the salaries corresponding to the unexpired
portion in case of illegal dismissal.
 b. OFWs on the other hand are entitled only to a 3-month
worth of salary in case they have a year or more left in their
employment contracts.
c. Prior to RA 8042, these sets of workers are treated similarly,
that is, they are both entitled to the salary for the unexpired
portion in case of illegal dismissal. RA 8042 created a
classification.
Is there a compelling state interest to create classifications?
Since the existence of classifications due to the enactment of RA 8042 is
established, the court endeavoured to determine if there is a compelling
state interest to justify the classification. However, the court found no
compelling state interest to justify the classification.
The solicitor general argues that the subject clause will be beneficial to the
overseas workers in the long run because the reduction of the liability for
money claims of the placement agencies will keep the latter alive and hence,
more and continuous opportunities for the migrant workers. However, the
court said that this is an insufficient justification and even if it was not, the
court cannot sanction the alleviation of one sector’s burden by transferring
it to another, especially that the receiving sector should be favoured and
protected.
In any case, there are already sufficient measures that can be employed to
achieve the same purpose, without infringing on the constitutional rights of
the OFWs like POEA Rules and Regulations Governing the Recruitment and
Employment of Land-Based Overseas Workers and POEA Rules and
Regulations Governing the Recruitment and Employment of Seafarers, both
of which impose administrative and disciplinary measures against erring
foreign employers. These are less restrictive means of achieving the same
purpose. The lack of clear governmental purpose results to the due process
being violated as well.
There was an idea of using Section 3, Article 13 of the Constitution to solve
the entire dilemma, but the court said that such provision is not a direct
source of right as it is not self-executing.
Should the overtime pay be included in the computation of the petitioner’s
salary?
No. Based on DOLE Department Order No. 33, series of 1996 (Standard
Employment Contract of Seafarers), salary is understood as the basic wage,
exclusive of overtime, leave pay, and other bonuses. There is no basis then
to automatically include them.
SEPARATE OPINIONS
CARPIO
1. Agrees with the conclusion but on a different ground. Emphasis was
given on the violation of the due process clause.
2. The right to bargain is a property right. If the state will take it, that is
tantamount to deprivation of property without due process of law.
3. The law may set a minimum recoverable amount, but not a
maximum.
4. The assailed provision is unduly oppressive, unreasonable and
repugnant to the Constitution. Hence, it can hardly be considered as
a valid exercise of police power.
5. It is a curtailment to freedom to enter into employment contract as
they cannot bargain for better terms.
BRION
1. Agrees with the conclusion but on a different ground. Emphasis was
given on the sufficiency of the use of Section 3, Article 13 of the
Constitution and the due process. No need to use strict scrutiny and
declare the provision as unconstitutional due to violation of the
equal protection clause.
MILLARES v NLRC
Facts:
On March 14, 2000, the court promulgated its decision ruling in favor of the
petitioners setting aside and reversing the decision of NLRC over the case of
the case between parties.
A motion for reconsideration was filed by the private respondents to which
petitioners filed an opposition.
Court resolve to deny the motion for reconsideration with finality.
Subsequently, FAME filed a motion for leave to intervene and to admit a
motion for reconsideration in intervention. Private respondents also filed a
motion for leave to file a second motion for reconsideration of our decision.
In both petitions of respondent and FAME pray to reconsider the court's
ruling that"Filipino seafarers are considered regular employees within the
context of Article 280 of the Labor Code." They claim that the decision may
establish a precedent that will adversely affect the maritime industry.
Millares was employed by ESSO through its local manning agency, Trans-
global on November 1968 as a machinist, in 1975 he was promoted as chief
engineer until he retired in 1989.
On June 1989, Millares applied for leave of absence for one month which
was approved byt trans-globa. Then Millares wrote to the operations
managerinforming hijm of his intention to avail the optional retirement
considering that he rendered more than 20 years of service to the company.
But ESSO denied the retirement for the following grounds: (1) he was
employed on a contractual basis (2) his contract of enlistment did not
provide for retirement before age of 60 and (3) he did not comply with
requirement for claiming benefits under CEIP.
On August 1989 Millares requested for an extension of his leave of absence
and the crewing manager then wrote to Millares advising him that
respondent ESSO "has corrected the deficiency in its manpower requirement
specifically in the Chief Engineer rank by promoting a First Assistant Engineer
to this position as a result of (his) previous leave of absence which expired
last August 8, 1989. The adjustment in said rank was required in order to
meet manpower schedules as a result of (his) inability."
On September 26, 1989, ESSO advised MIllares that in view of his absence
without leave, which is equivalent to abandonment of his position, he had
been dropped from the roster of crew members effective September 1,
1989.
On the other hand. Lagda was employed by ESSO as wiper in June 1969,
promoted as Chief engineer in 1980 until his last COE expired on April 10,
1989. On May 1989, Lagda applied for a leave of absence which was
approved by Trans-global and advised him to report for re-assignment on
July 21, 1989.
On June 26, 1989 Lagda wrote to ESSO through Trans-global oresident
informing him of his intention to avail of the optional retirement plan in vies
of his 20 years of service. It was denied by Trans-global on the same grounds
as with Millares. He requested to extend his leave of absence and was
approved but later informed by ESSO that in view of his "unavailability for
contractual sea service" he had been droppped from the roster of crew
memebers effective September 1, 1989.
On October 5, 1989, Millares and LAgda filed a complaint-affidavit before
POEA for illegal dismissal and non-payment of employee benefits against
ESSO and Trans-global.POEA dismissed the complaint for lack of merit, which
was affirmed by NLRC. So petitioners elevated their case to this court and
obtained favorable action.
Issues: (1) are the petitioners regular or contractual employees? (2)
assuming that they are regular employees, were they dismissed without just
cause? (3) does provision of POEA standard contract for sea farers on board
foreign vessels preclude the attainment by seamen of the status of regular
employees? (4) does the decision to contravene international maritime las,
allegedly part of the land?
Ruling:
(1) Petitioners contends that they performed activities which are usually
necessary to the usual business or trade of the company and the fact that
they served for 20 years already is an express acknowledgment that they are
regular employees by the private respondents.Respondents invoke that
under the POEA rules and regulation governing overseas employment
seafarers are not regular employees based on international maritime
practice. While intervenor FAME avers that our decision of not reconsidered
will have negative consequence of the manning industry in the Philippines.
From the foregoing cases, it is clear that seafarers are considered
contractual employees. They can not be considered as regular employees
under Article 280 of the Labor Code. Their employment is governed by the
contracts they sign everytime they are rehired and their employment is
terminated when the contract expires. Their employment is contractually
fixed for a certain period of time. They fall under the exception of Article 280
whose employment has been fixed for a specific project or undertaking the
completion or termination of which has been determined at the time of
engagement of the employee or where the work or services to be
performed is seasonal in nature and the employment is for the duration of
the season.19 We need not depart from the rulings of the Court in the two
aforementioned cases which indeed constitute stare decisis with respect to
the employment status of seafarers.
From all the foregoing, we hereby state that petitioners are not considered
regular or permanent employees under Article 280 of the Labor Code.
Petitioners' employment have automatically ceased upon the expiration of
their contracts of enlistment (COE). Since there was no dismissal to speak of,
it follows that petitioners are not entitled to reinstatement or payment of
separation pay or backwages, as provided by law.
With respect to the benefits under the Consecutive Enlistment Incentive
Plan (CEIP), we hold that the petitioners are still entitled to receive 100% of
the total amount credited to him under the CEIP. Considering that we have
declared that petitioners are contractual employees, their compensation
and benefits are covered by the contracts they signed and the CEIP is part
and parcel of the contract.
In our March 14, 2000 Decision, we, however, found that petitioners Millares
and Lagda were not guilty of "abandonment" or "unavailability for
contractual sea service," as we have stated:
The absence of petitioners was justified by the fact that they secured the
approval of private respondents to take a leave of absence after the
termination of their last contracts of enlistment. Subsequently, petitioners
sought for extensions of their respective leaves of absence. Granting
arguendo that their subsequent requests for extensions were not approved,
it cannot be said that petitioners were unavailable or had abandoned their
work when they failed to report back for assignment as they were still
questioning the denial of private respondents of their desire to avail of the
optional early retirement policy, which they believed in good faith to exist.26
Neither can we consider petitioners guilty of poor performance or
misconduct since they were recipients of Merit Pay Awards for their
exemplary performances in the company.
SANTIAGO v CF SHARP
Petitioner had been working as a seafarer for Smith Bell Management, Inc.
(respondent) for about 5 yrs. In February 3, 1998, petitioner signed a new
contract of employment with respondent, with the duration of 9 months.
The contract was approved by POEA. Petitioner was to be deployed on
board the “MSV Seaspread” which was scheduled to leave the port of
Manila for Canada on 13 February 1998.
A week before the date of departure, Capt. Pacifico Fernandez, respondent’s
Vice President, sent a facsimile message to the captain of “MSV Seaspread,”,
saying that it received a phone call from Santiago’s wife and some other
callers who did not reveal their identity and gave him some feedbacks that
Paul Santiago this time, if allowed to depart, will jump ship in Canada like his
brother Christopher Santiago. The captain of “MSV Seaspread replied that it
cancel plans for Santiago to return to Seaspread.
Petitioner thus told that he would not be leaving for Canada anymore.
Petitioner filed a complaint for illegal dismissal, damages, and attorney’s
fees against respondent and its foreign principal, Cable and Wireless
(Marine) Ltd. The Labor Arbiter (LA) favored petitioner and ruled that the
employment contract remained valid but had not commenced since
petitioner was not deployed and that respondent violated the rules and
regulations governing overseas employment when it did not deploy
petitioner, causing petitioner to suffer actual damages. On appeal by
respondent, NLRC ruled that there is no employer-employee relationship
between petitioner and respondent because the employment contract shall
commence upon actual departure of the seafarer from the airport or
seaport at the point of hire and with a POEA-approved contract. In the
absence of an employer-employee relationship between the parties, the
claims for illegal dismissal, actual damages, and attorney’s fees should be
dismissed. But the NLRC found respondent’s decision not to deploy
petitioner to be a valid exercise of its management prerogative. Petitioner
filed MR but it was denied. He went to CA. CA affirmed the decision of NLRC.
Petitioner’s MR was denied. Hence this case.
ISSUE:
When does an employer- employee relationship begin in the case at bar.
RULING:
There is some merit in the petition. The parties entered into an employment
contract whereby petitioner was contracted by respondent to render
services on board “MSV Seaspread” for the consideration of US$515.00 per
month for 9 months, plus overtime pay. However, respondent failed to
deploy petitioner from the port of Manila to Canada. Considering that
petitioner was not able to depart from the airport or seaport in the point of
hire, the employment contract did not commence, and no employer-
employee relationship was created between the parties. However, a
distinction must be made between the perfection of the employment
contract and the commencement of the employer-employee relationship.
The perfection of the contract, which in this case coincided with the date of
execution thereof, occurred when petitioner and respondent agreed on the
object and the cause, as well as the rest of the terms and conditions therein.
The commencement of the employer-employee relationship would have
taken place had petitioner been actually deployed from the point of hire.
Thus, even before the start of any employer-employee relationship,
contemporaneous with the perfection of the employment contract was the
birth of certain rights and obligations, the breach of which may give rise to a
cause of action against the erring party. Thus, if the reverse had happened,
that is the seafarer failed or refused to be deployed as agreed upon, he
would be liable for damages.
Neither the manning agent nor the employer can simply prevent a seafarer
from being deployed without a valid reason. Respondent’s act of preventing
petitioner from departing the port of Manila and boarding “MSV Seaspread”
constitutes a breach of contract, giving rise to petitioner’s cause of action.
Respondent unilaterally and unreasonably reneged on its obligation to
deploy petitioner and must therefore answer for the actual damages he
suffered.
Despite the absence of an employer-employee relationship between
petitioner and respondent, the Court rules that the NLRC has jurisdiction
over petitioner’s complaint. The jurisdiction of labor arbiters is not limited to
claims arising from employer-employee relationships. Section 10 of R.A. No.
8042 (Migrant Workers Act), provides that:
Sec. 10. Money Claims. – Notwithstanding any provision of law to the
contrary, the Labor Arbiters of the NLR) shall have the original and exclusive
jurisdiction to hear and decide, within 90 calendar days after the filing of the
complaint, the claims arising out of an employer-employee relationship or by
virtue of any law or contract involving Filipino workers for overseas
deployment including claims for actual, moral, exemplary and other forms of
damages.”
Since the present petition involves the employment contract entered into by
petitioner for overseas employment, his claims are cognizable by the labor
arbiters of the NLRC.
Respondent is liable to pay petitioner only the actual damages in the form of
the loss of nine (9) months’ worth of salary as provided in the contract. He is
not, however, entitled to overtime pay. While the contract indicated a fixed
overtime pay, it is not a guarantee that he would receive said amount
regardless of whether or not he rendered overtime work. Even though
petitioner was prevented without valid reason from rendering regular much
less overtime service, the fact remains that there is no certainty that
petitioner will perform overtime work had he been allowed to board the
vessel. The amount stipulated in the contract will be paid only if and when
the employee rendered overtime work. Realistically speaking, a seaman, by
the very nature of his job, stays on board a ship or vessel beyond the regular
eight-hour work schedule. For the employer to give him overtime pay for the
extra hours when he might be sleeping or attending to his personal chores
or even just lulling away his time would be extremely unfair and
unreasonable.
The Court also holds that petitioner is entitled to attorney’s fees in the
concept of damages and expenses of litigation. Respondent’s basis for not
deploying petitioner is the belief that he will jump ship just like his brother, a
mere suspicion that is based on alleged phone calls of several persons
whose identities were not even confirmed. This Court has upheld
management prerogatives so long as they are exercised in good faith for the
advancement of the employer’s interest and not for the purpose of
defeating or circumventing the rights of the employees under special laws or
under valid agreements. Respondent’s failure to deploy petitioner is
unfounded and unreasonable However, moral damages cannot be awarded
in this case. because respondent’s action was not tainted with bad faith, or
done deliberately to defeat petitioner’s rights, as to justify the award of
moral damages.
Seafarers are considered contractual employees and cannot be considered
as regular employees under the Labor Code. Their employment is governed
by the contracts they sign every time they are rehired and their employment
is terminated when the contract expires. The exigencies of their work
necessitates that they be employed on a contractual basis.
WHEREFORE, petition is GRANTED IN PART.
b. Regulation and Enforcement
c. Jurisdiction of the POEA and the Labor Arbiter
 d. Repatriation of Workers Third. It is also stated in the above-mentioned Service Contracts that it is the
respondent cooperative which has the power to investigate, discipline and
EQUI ASIA PLACEMENT INC v DFA AND DOLE remove the owners-members and its team leaders who were rendering
services at Stanfilco.
Fourth. In the case at bar, it is the respondent cooperative which has the
III. Employer-Employee Relationship sole control over the manner and means of performing the services under
a. Four Fold Test the Service Contracts with Stanfilco as well as the means and methods of
work. Also, the respondent cooperative is solely and entirely responsible for
REPUBLIC OF THE PHILIPPINES v SSS its owners-members, team leaders and other representatives at Stanfilco. All
these clearly prove that, indeed, there is an employer-employee relationship
Respondent Asiapro Cooperative is composed of owners-members with between the respondent cooperative and its owners-members.
primary objectives of providing them savings and credit facilities and
livelihood services. In discharge of said objectives, Asiapro entered into
several service contracts with Stanfilco. Sometime later, the cooperative GREPALIFE v NLRC
owners-members requested Stanfilco’s help in registering them with SSS and
remitting their contributions. Petitioner SSS informed Asiapro that being
actually a manpower contractor supplying employees to Stanfilco, it must be
the one to register itself with SSS as an employer and remit the
contributions. Respondent continuously ignoring the demand of SSS the
latter filed before the SSC. Asiapro alleges that there exists no employer-
employee relationship between it and its owners-members. SSC ruled in
favor of SSS. On appeal, CA reversed the decision.
Issue:
Whether or not there is employer-employee relationship between Asiapro
and its owners-members.
Ruling: YES.
In determining the existence of an employer-employee relationship, the
following elements are considered: (1) the selection and engagement of the
workers; (2) the payment of wages by whatever means; (3) the power of
dismissal; and (4) the power to control the worker‘s conduct, with the latter
assuming primacy in the overall consideration. All the aforesaid elements
are present in this case.
First. It is expressly provided in the Service Contracts that it is the
respondent cooperative which has the exclusive discretion in the selection
and engagement of the owners-members as well as its team leaders who
will be assigned at Stanfilco.
Second. It cannot be doubted then that those stipends or shares in the
service surplus are indeed wages, because these are given to the owners-
members as compensation in rendering services to respondent
cooperative‘s client, Stanfilco.