Lasconsolidatednotes Digests

LABOR STANDARDS (Atty. Nolasco)J.SUAREZ II, 2ND SEM,SY ’12-‘13

oMIDTERMS

I.GENERAL CONCEPTSA.DEFINITION

a.LABOR1. exertion by human beings of physical or mental efforts or both towards the production of goods and services.2. that sector or group in society which derives its livelihood chiefly from rendition of work or services in exchange for compensation under managerial direction

b.LABOR LAW – the law governing the rights and duties of Ers and Ees, 1st with respect to the terms and conditions of employment, and 2nd, with respect to the labor disputes arising from CBA respecting such terms and conditions.Labor legislation are more specific than social legislation. All labor legislation are social legislation. As to effect of employment, it directly affects employment like wages. As to purpose, it designated to meet the daily needs of workers. As to coverage, covers employment for profit or gain. As to effect to EEs, affect their work as to payor, benefits are paid by the worker’s ER.

c.LABOR STANDARDS v. LABOR RELATION1.labstan – deals with the minimum standards as to wages, hours of work and other terms and conditions of employment that ERs must provide their EEs.2.Labrel – defines the status, rights and duties as well as the institutional mechanism that govern the individual and collective interactions between Ers, Ees and their representatives.

d.SOCIAL LEGISLATION1.laws that provide particular kinds of protection or benefits to society or segments thereof in furtherance of social justice.2.laws that requires payment of benefits by government agencies to the worker or his family when and while he connot work by reason of sickness, disability, old age, death and similar hazards.Broader than labor legislation. Not all social legislations are labor legislation. As to effect of employment, it governs the effect of employment like compensation for injuries. As to purpose, it involves long range benefits. As to coverage, covers employment for profit and non profit. As to effect to EE, affects life of EE. As to payor, benefits are paid by government agencies like EE’s compensation commission.

B.SOURCESa.CONSTITUTIONARTICLE II:Section 5. The maintenance of peace and order, the protection of life, liberty, and property, and promotion of the general welfare are essential for the enjoyment by all the people of the blessings of democracy.

Section 9. The State shall promote a just and dynamic social order that will ensure the prosperity and independence of the nation and free the people from poverty through policies that provide adequate social services, promote full employment, a rising standard of living, and an improved quality of life for all.

Section 10. The State shall promote social justice in all phases of national development.

Section 11. The State values the dignity of every human person and guarantees full respect for human rights.

Section 13. The State recognizes the vital role of the youth in nation-building and shall promote and protect their physical, moral, spiritual, intellectual, and social well-being. It shall inculcate in the youth patriotism and nationalism, and encourage their involvement in public and civic affairs.

Section 14. The State recognizes the role of women in nation-building, and shall ensure the fundamental equality before the law of women and men.

Section 18. The State affirms labor as a primary social economic force. It shall protect the rights of workers and promote their welfare.

Section 20. The State recognizes the indispensable role of the private sector, encourages private enterprise, and provides incentives to needed investments.

ARTICLE IIISection 1. No person shall be deprived of life, liberty, or property without due process of law, nor shall any person be denied the equal protection of the laws.

Section 4. No law shall be passed abridging the freedom of speech, of expression, or of the press, or the right of the people peaceably to assemble and petition the government for redress of grievances.

Section 8. The right of the people, including those employed in the public and private sectors, to form unions, associations, or societies for purposes not contrary to law shall not be abridged.

ARTICLE XIIISection 1. The Congress shall give highest priority to the enactment of measures that protect and enhance the right of all the people to human dignity, reduce social, economic, and

political inequalities, and remove cultural inequities by equitably diffusing wealth and political power for the common good. To this end, the State shall regulate the acquisition, ownership, use, and disposition of property and its increments.

Section 2. The promotion of social justice shall include the commitment to create economic opportunities based on freedom of initiative and self-reliance.

Section 3. The State shall afford full protection to labor, local and overseas, organized and unorganized, and promote full employment and equality of employment opportunities for all.It shall guarantee the rights of all workers to self-organization, collective bargaining and negotiations, and peaceful concerted activities, including the right to strike in accordance with law. They shall be entitled to security of tenure, humane conditions of work, and a living wage. They shall also participate in policy and decision-making processes affecting their rights and benefits as may be provided by law. The State shall promote the principle of shared responsibility between workers and ERs and the preferential use of voluntary modes in settling disputes, including conciliation, and shall enforce their mutual compliance therewith to foster industrial peace. The State shall regulate the relations between workers and ERs, recognizing the right of labor to its just share in the fruits of production and the right of enterprises to reasonable returns to investments, and to expansion and growth.

Section 14. The State shall protect working women by providing safe and healthful working conditions, taking into account their maternal functions, and such facilities and opportunities that will enhance their welfare and enable them to realize their full potential in the service of the nation.

b.STATUTES and JURISPRUDENCE –labor code, civil code, special law, irr.

c.COMPANY PRACTICE/POLICYAny benefit and supplement being enjoyed by EEs cannot be reduced, diminished, discontinued or eliminated by the ER. The principle of non-diminution of benefits is founded on the Constitutional mandate to "protect the rights of workers and promote their welfare,and to afford labor full protection. Said mandate in turn is the basis of Article 4 of the Labor Code which states that all doubts in the implementation and interpretation of this Code, including its implementing rules and regulations shall be rendered in favor of labor. Jurisprudence is replete with cases which recognize the right of EEs to benefits which were voluntarily given by the ER and which ripened into company practice.

e.CONTRACT/CBA

C.SOCIAL JUSTICE/SPIRIT OF INTENTIONa. SOCIAL JUSTICE is “neither communism, nor despotism, nor atomism, nor anarchy,” but the humanization of laws and the equalization of social and economic forces by the State so that justice in its rational and objectively secular conception may at least be approximated. Social justice means the promotion of the welfare of all the people, the adoption by the Government of measures calculated to insure economic stability of all the competent elements of society, through the maintenance of a proper economic and social equilibrium in the interrelations of the members of the community, constitutionally, through the adoption of measures legally justifiable, or extra-constitutionally, through the exercise of powers underlying the existence of all governments on the time-honored principle of salus populi est supremalex.

b.APPLICATIONThe policy of social justice is not intended to countenance wrongdoing simply because it is committed by the underprivileged. At best it may mitigate the penalty but it certainly will not condone the offense. Social justice cannot be permitted to be refuge of scoundrels any more than can equity be an impediment to the punishment of the guilty. Those who invoke social justice may do so only if their hands are clean and their motives blameless and not simply because they happen to be poor. (PLDT v. NLRC)

Even though strikes and lockouts have been recognized as effective bargaining tools, it is an antiquated notion that they are truly beneficial, as they only provide short-term solutions by forcing concessions from one party; but staging such strikes would damage the working relationship between ERs and EEs, thus endangering the business that they both want to succeed. The more progressive and truly effective means of dispute resolution, lies in mediation, conciliation, and arbitration, which do not increase tension but instead provide relief from them. In the end, an atmosphere of trust and understanding has much more to offer a business relationship than the traditional enmity that has long divided the ER and the EE,” (TOYOTA MOTORS PHIL. WORKERS ASSOC. v. NLRC)

It is true that there have been instances when the Court awarded financial assistance to EEs who were terminated for just causes, on grounds of equity and social justice. When the EE commits an act of dishonesty, depravity, or iniquity, the grant of financial assistance is misplaced compassion. It is tantamount not only to condoning a patently illegal or dishonest act, but an endorsement thereof. It will be an insult to all the laborers who, despite their economic difficulties,

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strive to maintain good values and moral conduct. (RENO v. NLM)

c.INTENTIONHowever, we opt for liberality in the application of the rules to the instant case in light of the following considerations. First, the rule that negligence of counsel binds the client may be relaxed where adherence thereto would result in outright deprivation of the client’s liberty or property or where the interests of justice so require.[Second, this Court is not a slave of technical rules, shorn of judicial discretion â€“ in rendering justice, it is guided by the norm that on the balance, technicalities take a backseat against substantive rights. Thus, if the application of the rules would tend to frustrate rather than promote justice, it is always within this Court’s power to suspend the rules or except a particular case from its application.(MAGALLANES v. SUN YAT SEN)

D.ER-EE RELATIONSHIP

a.FOUR-FOLD TEST: 1)Selection and engagement of the Ee; 2)payment of wages; 3)power of dismissal; and 4)power of control.

b.ECONOMIC REALITY/ DEPENDENCY TEST – whether the worker is dependent on the alleged ER for his continued employment in that line of business.

2-TIERED approach1.the putative ERs power to control EE with respect to means and methods by which the work is to be accomplished; and2.the underlying economic realities of the activity or relationship.

c.WHO DETERMINES ER-EE RELATIONSHIPIt can be assumed that the DOLE in the exercise of its visitorial and enforcement power somehow has to make a determination of the existence of an ER-EE relationship. Such prerogatival determination, however, cannot be coextensive with the visitorial and enforcement power itself. Indeed, such determination is merely preliminary, incidental and collateral to the DOLE’s primary function of enforcing labor standards provisions. The determination of the existence of ER-EE relationship is still primarily lodged with the NLRC. This is the meaning of the clause “in cases where the relationship of ER-EE still exists” in Art. 128 (b). (PEOPLE’S BROADCASTING v.SEC. OF DOLE)

e.ON CALL/RETAINERthe Court finds that the schedule of work and the requirement to be on call for emergency cases do not amount to such control, but are necessary incidents to the Retainership Agreement. The Court also notes that the Retainership Agreement granted to both parties the power to terminate their relationship upon giving a 30-day notice. Hence, petitioner company did not wield the sole power of dismissal or termination.

The Court agrees with the Labor Arbiter and the NLRC that there is nothing wrong with the employment of respondent as a retained physician of petitioner company and upholds the validity of the Retainership Agreement which clearly stated that no ER-EE relationship existed between the parties. The Agreement also stated that it was only for a period of 1 year beginning January 1, 1988 to December 31, 1998, but it was renewed on a yearly basis.Considering that there is no ER-EE relationship between the parties, the termination of the Retainership Agreement, which is in accordance with the provisions of the Agreement, does not constitute illegal dismissal of respondent. Consequently, there is no basis for the moral and exemplary damages granted by the Court of Appeals to respondent due to his alleged illegal dismissal.

E.MANAGEMENT PREROGATIVEa.DEFINITION/BASIS:We have held that management is free to regulate, according to its own discretion and judgment, all aspects of employment, including hiring, work assignments, working methods, time, place and manner of work, processes to be followed, supervision of workers, working regulations, transfer of EEs, work supervision, lay off of workers and discipline, dismissal and recall of workers. The exercise of management prerogative, however, is not absolute as it must be exercised in good faith and with due regard to the rights of labor. (JULIES BAKESHOP v. ARNAIZ)

An ER has the prerogative to prescribe reasonable rules and regulations necessary for the proper conduct of its business, to provide certain disciplinary measures in order to implement said rules and to assure that the same would be complied with. An ER enjoys a wide latitude of discretion in the promulgation of policies, rules and regulations on work-related activities of the EEs.

It is axiomatic that appropriate disciplinary sanction is within the purview of management imposition.Thus, in the implementation of its rules and policies, the ER has the choice to do so strictly or not, since this is inherent in its right to control and manage its business effectively. Consequently, management has the prerogative to impose sanctions lighter than those specifically prescribed by its rules, or to condone completely the violations of its erring EEs. Of course, this prerogative must be exercised free of grave abuse of discretion, bearing in mind the requirements of justice and fair

play. Indeed, we have previously stated:Management also has its own rights, which, as such, are entitled to respect and enforcement in the interest of simple fair play.(SMC v. NLRC)

LIMITATIONS:1.law2.Contract or CBA3.general principle of fair play and justice

b.GENERALLY NOT SUBJECT TO JUDICIAL INTERFERENCEThe state can’t interfere as to whether the management will strictly implement or not.(ARENO v. SKYCABLE)

c.EXERCISE IN GOOD FAITHDespite an apparent reason to implement a retrenchment program as a cost-cutting measure, respondent, however, did not outrightly dismiss the workers affected by the closure of Paper Mill No. 4 but gave them an option to be transferred to posts of equal rank and pay. As can be seen, retrenchment was utilized by respondent only as an available option in case the affected EE would not want to be transferred. Respondent did not proceed directly to retrench. This, to our mind, is an indication of good faith on respondent’s part as it exhausted other possible measures other than retrenchment. Besides, the ER’s prerogative to bring down labor costs by retrenching must be exercised essentially as a measure of last resort, after less drastic means have been tried and found wanting.(PANTOJA v. SCA HYGIENE)

d.TRANSFER OR FROMOTION (DEMOTION)respondent Reyes failed to justify petitioners’ transfer from the position of chief bakers to utility/security personnel. We find that the threat being alluded to by respondent Reyes – that the petitioners might introduce harmful foreign substances in baking bread – is imaginary and not real. We recall that what triggered the petitioners’ reassignment was the filing of their complaints against private respondents in the NLRC. The petitioners were not even given an opportunity to refute the reason for the transfer. The drastic change in petitioners’ nature of work unquestionably resulted in, as rightly perceived by them, a demeaning and humiliating work condition. The transfer was a demotion in rank, beyond doubt. There is demotion when an EE is transferred from a position of dignity to a servile or menial job. One does not need to stretch the imagination to distinguish the work of a chief baker to that of a security cum utility man.(JULIES BAKESHOP v. ARNAIZ)

F.EMPLOYMENT RESTRICTIONa.PROHIBITION AGAINST COMPETITIVE EMPLOYMENTin determining whether the contract is reasonable or not, the trial court should consider the following factors: (a) whether the covenant protects a legitimate business interest of the ER; (b) whether the covenant creates an undue burden on the EE; (c) whether the covenant is injurious to the public welfare; (d) whether the time and territorial limitations contained in the covenant are reasonable; and (e) whether the restraint is reasonable from the standpoint of public policy.(RIVERA v. SOLIDBANK)

b.PROHIBITION ON EMPLOYMENT OF RELATIVESi.BASED ON CONTRACT - If the terms of a CBA are clear and have no doubt upon the intention of the contracting parties, the literal meaning of its stipulation shall prevail. However, if, in a CBA, the parties stipulate that the hirees must be presumed of employment qualification standards but fail to state such qualification standards in said CBA, the VA may resort to evidence extrinsic of the CBA to determine the full agreement intended by the parties. When a CBA may be expected to speak on a matter, but does not, its sentence imports ambiguity on that subject. The VA is not merely to rely on the cold and cryptic words on the face of the CBA but is mandated to discover the intention of the parties. Recognizing the inability of the parties to anticipate or address all future problems, gaps may be left to be filled in by reference to the practices of the industry, and the step which is equally a part of the CBA although not expressed in it. In order to ascertain the intention of the contracting parties, their contemporaneous and subsequent acts shall be principally considered. The VA may also consider and rely upon negotiating and contractual history of the parties, evidence of past practices interpreting ambiguous provisions. The VA has to examine such practices to determine the scope of their agreement, as where the provision of the CBA has been loosely formulated. Moreover, the CBA must be construed liberally rather than narrowly and technically and the Court must place a practical and realistic construction upon it.(UNITED KIMBERLY v. KIMBERLY-CLARK)

ii.BONA FIDE OCCUPATIONAL QUALIFICATION EXCEOTION

c.PROHIBITION MARRYING EMPLOYESS OF COMPETITOR

G.ATTORNEY’S FEESwe have ruled that attorney's fees may be awarded only when the EE is illegally dismissed in bad faith and is compelled to litigate or incur expenses to protect his rights by reason of the unjustified acts of his ER. In this case, the NLRC deleted the award of moral and exemplary damages precisely because of the absence of evidence that respondent's suspension and eventual dismissal were tainted with bad faith and malice.

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We note that although the Labor Arbiter awarded attorney's fees, the basis for the same was not discussed in the decision nor borne out by the records of this case. There must always be a factual basis for the award of attorney's fees. This is consistent with the policy that no premium should be placed on the right to litigate. For these reasons, we believe and so rule that the award of attorney's fees should be deleted.(PEPSI v. SANTOS)

H.QUITCLAMS AND COMPROMISE AGREEMENTa.CONTENTS OF VALID QUITCLAIM/WAIVERb.VALID AND BINDING AGREEMENTc.QUITCLAIMS GENERALLY FROWNED UPON

II. THE LABOR CODE OF THE PHILIPPINES (PD442 as amended)A. PRELIMINARY TITLE

ART.1. Name of Decree – this Decree shall be known as the “Labor Code of the Philippines.”

ART.2. Date of Effectivity – this Code shall take effect six (6) months after its promulgation.

ART.5.Rules and regulation – the DOLE and other Government agencies charged with the administration and enforcement of this code or any of its parts shall promulgate the necessary implementing rules and regulation. Such rules and regulations shall become effective fifteen (15) days after announcement of their adoption in newspapers of general circulation.

ART.3. Declaration of Basic Policy – the State shall (APERA): 1.afford protection of Labor; 2.promote full employment;3.ensure equal work opportuniyies regardless of sex, age, or creed;4.regulate the relations between workers and ERs; and 5.assure the right of workers to (SCSJ):a.self-organization; b.collective bargaining; c.security of tenure; and d.just and humane condition of work.

i.CONSTRUCTION IN FAVOR OF LABORArt. 4. Construction in favor of labor. All doubts in the implementation and interpretation of the provisions of this Code, including its implementing rules and regulations, shall be resolved in favor of labor.

ii.SCOPE/APPLICATIONArt.6. Applicability – all rights and benefits granted to workers under this code shall, except as may otherwise de provided herein, apply alike to all workers, whether agricultural or non-agricultural.Exceptions: 1. Government EEs; 2.EEs of the government corporations(LRTA v. VENUS);3.Foreign governments;4.international agencies, EEs of intergovernmental or international organizations (SEAFDEC v. NLRC);5.Corporate officers/inter-corporate disputes which fall under the jurisdiction of the regular courts pursuant to Securities Regulation Code; and6.Local water districts except where NLRC jurisdiction is invoked.

Petitioner SEAFDEC-AQD is an international agency beyond the jurisdiction of public respondent NLRC. The RP became a signatory to the Agreement establishing SEAFDEC. The purpose of the Center is to contribute to the promotion of the fisheries development in Southeast Asia by mutual co-operation among the member governments. The Council shall be the supreme organ of the Center and all powers of the Center shall be vested in the Council.

Being an intergovernmental organization, SEAFDEC including its Departments (AQD), enjoys functional independence and freedom from control of the state in whose territory its office is located. Pursuant to its being a signatory to the Agreement, It expressly waived the application of the Philippine laws on the disbursement of funds of petitioner SEAFDEC-AQD.(SEAFDEC v. NLRC)

PAL never ceased to be operated as a private corporation, and was not subjected to the Civil Service Law. The Court can allow that PAL, during the period material, was a government-controlled corporation in the sense that the GSIS owned a controlling interest over its stocks. One stubborn fact, however, remains: Through the years, PAL functioned as a private corporation and managed as such for profit. Their personnel were never considered government EEs. It may perhaps not be amiss for the Court to take judicial notice of the fact that the civil service law and rules and regulations have not actually been made to apply to PAL and its EEs. Of governing application to them was the Labor Code. (PALOMA v. PAL)

B.BOOK I, TITLE I, CHAPTER 1 (Art. 13,14,18,221,22)READ: EO797

Art. 13. Definitions.a."Worker" means any member of the labor force, whether employed or unemployed.b."Recruitment and placement" refers to any act of canvassing, enlisting, contracting, transporting, utilizing, hiring or procuring workers, and includes referrals, contract services, promising or advertising for employment, locally or abroad, whether for profit or not: Provided, That any person or

entity which, in any manner, offers or promises for a fee, employment to two or more persons shall be deemed engaged in recruitment and placement.c."Private fee-charging employment agency" means any person or entity engaged in recruitment and placement of workers for a fee which is charged, directly or indirectly, from the workers or ERs or both.d."License" means a document issued by the Department of Labor authorizing a person or entity to operate a private employment agency.e."Private recruitment entity" means any person or association engaged in the recruitment and placement of workers, locally or overseas, without charging, directly or indirectly, any fee from the workers or ERs.f."Authority" means a document issued by the Department of Labor authorizing a person or association to engage in recruitment and placement activities as a private recruitment entity.g."Seaman" means any person employed in a vessel engaged in maritime navigation.h."Overseas employment" means employment of a worker outside the Philippines. i.Emigrant" means any person, worker or otherwise, who emigrates to a foreign country by virtue of an immigrant visa or resident permit or its equivalent in the country of destination.

Art. 14. Employment promotion. The Secretary of Labor shall have the power and authority:a.To organize and establish new employment offices in addition to the existing employment offices under the Department of Labor as the need arises;b.To organize and establish a nationwide job clearance and information system to inform applicants registering with a particular employment office of job opportunities in other parts of the country as well as job opportunities abroad;c.develop and organize a program that will facilitate occupational, industrial and geographical mobility of labor and provide assistance in the relocation of workers from one area to another; andd.To require any person, establishment, organization or institution to submit such employment information as may be prescribed by the Secretary of Labor.

Art. 18. Ban on direct-hiring. No ER may hire a Filipino worker for overseas employment except through the Boards and entities authorized by the Secretary of Labor. Direct-hiring by members of the diplomatic corps, international organizations and such other ERs as may be allowed by the Secretary of Labor is exempted from this provision.

NAME HIREES – individual workers who are able to secure contracts overseas employment on their own efforts and representations without assistance or participation of any agency. Their hiring nonetheless, shall pass through the POEA for processing purpose. Not covered by ban on direct hiring.

Art. 21. Foreign service role and participation. To provide ample protection to Filipino workers abroad, the labor attaches, the labor reporting officers duly designated by the Secretary of Labor and the Philippine diplomatic or consular officials concerned shall, even without prior instruction or advice from the home office, exercise the power and duty:a.To provide all Filipino workers within their jurisdiction assistance on all matters arising out of employment;b.To insure that Filipino workers are not exploited or discriminated against;c.To verify and certify as requisite to authentication that the terms and conditions of employment in contracts involving Filipino workers are in accordance with the Labor Code and rules and regulations of the Overseas Employment Development Board and National Seamen Board;d.To make continuing studies or researches and recommendations on the various aspects of the employment market within their jurisdiction;e.To gather and analyze information on the employment situation and its probable trends, and to make such information available; andf.To perform such other duties as may be required of them from time to time.

Art. 22. Mandatory remittance of foreign exchange earnings. It shall be mandatory for all Filipino workers abroad to remit a portion of their foreign exchange earnings to their families, dependents, and/or beneficiaries in the country in accordance with rules and regulations prescribed by the Secretary of Labor.

SEAMEN OR MARINERS – 80%WORKERS FOR FILIPINO CONTRACTORS/CONSTRUCTIOM CO. - 70%PROFESSIONALS WHOSE EMPLOYMENT CONTRACT PROVIDE FOR LODGING FACILITIES – 70%PROFESSIONALS WITHOUT BOARD AND LODGING – 50%DOMESTIC AND OTHER SERVICE WORKERS – 50%

C.BOOK I, TITLE I, CHAPTER 2 (Art. 25-35)Art. 25. Private sector participation in the recruitment and placement of workers. Pursuant to national development objectives and in order to harness and maximize the use of private sector resources and initiative in the development and implementation of a comprehensive employment program, the private employment sector shall participate in the recruitment and placement of workers,

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locally and overseas, under such guidelines, rules and regulations as may be issued by the Secretary of Labor.

Art. 26. Travel agencies prohibited to recruit. Travel agencies and sales agencies of airline companies are prohibited from engaging in the business of recruitment and placement of workers for overseas employment whether for profit or not.

Art. 27. Citizenship requirement. Only Filipino citizens or corporations, partnerships or entities at least seventy-five percent (75%) of the authorized and voting capital stock of which is owned and controlled by Filipino citizens shall be permitted to participate in the recruitment and placement of workers, locally or overseas.

Art. 28. Capitalization. All applicants for authority to hire or renewal of license to recruit are required to have such substantial capitalization as determined by the Secretary of Labor.

Art. 29. Non-transferability of license or authority. No license or authority shall be used directly or indirectly by any person other than the one in whose favor it was issued or at any place other than that stated in the license or authority be transferred, conveyed or assigned to any other person or entity. Any transfer of business address, appointment or designation of any agent or representative including the establishment of additional offices anywhere shall be subject to the prior approval of the Department of Labor.

Art. 30. Registration fees. The Secretary of Labor shall promulgate a schedule of fees for the registration of all applicants for license or authority.

Art. 31. Bonds. All applicants for license or authority shall post such cash and surety bonds as determined by the Secretary of Labor to guarantee compliance with prescribed recruitment procedures, rules and regulations, and terms and conditions of employment as may be appropriate.

Art. 32. Fees to be paid by workers. Any person applying with a private fee-charging employment agency for employment assistance shall not be charged any fee until he has obtained employment through its efforts or has actually commenced employment. Such fee shall be always covered with the appropriate receipt clearly showing the amount paid. The Secretary of Labor shall promulgate a schedule of allowable fees.

Art. 33. Reports on employment status. Whenever the public interest requires, the Secretary of Labor may direct all persons or entities within the coverage of this Title to submit a report on the status of employment, including job vacancies, details of job requisitions, separation from jobs, wages, other terms and conditions and other employment data.

Art. 35. Suspension and/or cancellation of license or authority. The Minister of Labor shall have the power to suspend or cancel any license or authority to recruit EEs for overseas employment for violation of rules and regulations issued by the Ministry of Labor, the Overseas Employment Development Board, or for violation of the provisions of this and other applicable laws, General Orders and Letters of Instructions.

D.BOOK I, TITLE I, CHAPTER 3 (Art. 36-38)Art. 36. Regulatory power. The Secretary of Labor shall have the power to restrict and regulate the recruitment and placement activities of all agencies within the coverage of this Title and is hereby authorized to issue orders and promulgate rules and regulations to carry out the objectives and implement the provisions of this Title.

Art. 37. Visitorial Power. The Secretary of Labor or his duly authorized representatives may, at any time, inspect the premises, books of accounts and records of any person or entity covered by this Title, require it to submit reports regularly on prescribed forms, and act on violation of any provisions of this Title.

i.ILLEGAL RECRUITMENTa.DEFINITION - Art. 38. Illegal recruitment.a.Any recruitment activities, including the prohibited practices enumerated under Article 34 of this Code, to be undertaken by non-licensees or non-holders of authority, shall be deemed illegal and punishable under Article 39 of this Code. The Department of Labor and Employment or any law enforcement officer may initiate complaints under this Article. b.Illegal recruitment when committed by a syndicate or in large scale shall be considered an offense involving economic sabotage and shall be penalized in accordance with Article 39 hereof. Illegal recruitment is deemed committed by a syndicate if carried out by a group of three (3) or more persons conspiring and/or confederating with one another in carrying out any unlawful or illegal transaction, enterprise or scheme defined under the first paragraph hereof. Illegal recruitment is deemed committed in large scale if committed against three (3) or more persons individually or as a group.c.The Secretary of Labor and Employment or his duly authorized representatives shall have the power to cause the arrest and detention of such non-licensee or non-holder of authority if after investigation it is determined that his

activities constitute a danger to national security and public order or will lead to further exploitation of job-seekers. The Secretary shall order the search of the office or premises and seizure of documents, paraphernalia, properties and other implements used in illegal recruitment activities and the closure of companies, establishments and entities found to be engaged in the recruitment of workers for overseas employment, without having been licensed or authorized to do so.

b.PROHIBITED ACTS - Art. 34. Prohibited practices. It shall be unlawful for any individual, entity, licensee, or holder of authority:a.To charge or accept, directly or indirectly, any amount greater than that specified in the schedule of allowable fees prescribed by the Secretary of Labor, or to make a worker pay any amount greater than that actually received by him as a loan or advance;b.To furnish or publish any false notice or information or document in relation to recruitment or employment;c.To give any false notice, testimony, information or document or commit any act of misrepresentation for the purpose of securing a license or authority under this Code.d.To induce or attempt to induce a worker already employed to quit his employment in order to offer him to another unless the transfer is designed to liberate the worker from oppressive terms and conditions of employment;e.To influence or to attempt to influence any person or entity not to employ any worker who has not applied for employment through his agency;f.To engage in the recruitment or placement of workers in jobs harmful to public health or morality or to the dignity of the Republic of the Philippines;g.To obstruct or attempt to obstruct inspection by the Secretary of Labor or by his duly authorized representatives;h.To fail to file reports on the status of employment, placement vacancies, remittance of foreign exchange earnings, separation from jobs, departures and such other matters or information as may be required by the Secretary of Labor.i.To substitute or alter employment contracts approved and verified by the Department of Labor from the time of actual signing thereof by the parties up to and including the periods of expiration of the same without the approval of the Secretary of Labor;j.To become an officer or member of the Board of any corporation engaged in travel agency or to be engaged directly or indirectly in the management of a travel agency; andk.To withhold or deny travel documents from applicant workers before departure for monetary or financial considerations other than those authorized under this Code and its implementing rules and regulations.

c.ELEMENTS OF ILLEGAL RECRUITMENT:1. the offender is a licensee/non-licensee or holder/non-holder of authority engaged in the recruitment and placement of workers2. the offender undertakes either any recruitment activities defined under Art.13b, or any prohibited practices enumerated under Art.34.

d.ILLEGAL RECRUITMENT IN LARGE SCALE OR BY A SYNDICATELARGE SCALE – illegal recruitment is committed AGAINST 3 or more persons individually or as a groupSYNDICATE – illegal recruitment is committed BY 3 or more person who conspire or confederate with one another in carrying out any unlawful or illegal transaction enterprise or scheme.

READ:RA8042, as amended by RA10022Section 5.Definition. - For purposes of this Act, illegal recruitment shall mean any act of canvassing, enlisting, contracting, transporting, utilizing, hiring, or procuring workers and includes referring, contract services, promising or advertising for employment abroad, whether for profit or not, when undertaken by non-licensee or non-holder of authority contemplated under Article 13(f) of Presidential Decree No. 442, as amended, otherwise known as the Labor Code of the Philippines: Provided, That any such non-licensee or non-holder who, in any manner, offers or promises for a fee employment abroad to two or more persons shall be deemed so engaged. It shall likewise include the following acts, whether committed by any person, whether a non-licensee, non-holder, licensee or holder of authority:"(a) To charge or accept directly or indirectly any amount greater than that specified in the schedule of allowable fees prescribed by the Secretary of Labor and Employment, or to make a worker pay or acknowledge any amount greater than that actually received by him as a loan or advance;"(b) To furnish or publish any false notice or information or document in relation to recruitment or employment;"(c) To give any false notice, testimony, information or document or commit any act of misrepresentation for the purpose of securing a license or authority under the Labor Code, or for the purpose of documenting hired workers with the POEA, which include the act of reprocessing workers through a job order that pertains to nonexistent work, work different from the actual overseas work, or work with a different ER whether registered or not with the POEA;"(d) To include or attempt to induce a worker already employed to quit his employment in order to offer him another unless the transfer is designed to liberate a worker from oppressive terms and conditions of employment;

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"(e) To influence or attempt to influence any person or entity not to employ any worker who has not applied for employment through his agency or who has formed, joined or supported, or has contacted or is supported by any union or workers' organization;"(f) To engage in the recruitment or placement of workers in jobs harmful to public health or morality or to the dignity of the Republic of the Philippines;"(h) To fail to submit reports on the status of employment, placement vacancies, remittance of foreign exchange earnings, separation from jobs, departures and such other matters or information as may be required by the Secretary of Labor and Employment;"(i) To substitute or alter to the prejudice of the worker, employment contracts approved and verified by the Department of Labor and Employment from the time of actual signing thereof by the parties up to and including the period of the expiration of the same without the approval of the Department of Labor and Employment;"(j) For an officer or agent of a recruitment or placement agency to become an officer or member of the Board of any corporation engaged in travel agency or to be engaged directly or indirectly in the management of travel agency;"(k) To withhold or deny travel documents from applicant workers before departure for monetary or financial considerations, or for any other reasons, other than those authorized under the Labor Code and its implementing rules and regulations;"(l) Failure to actually deploy a contracted worker without valid reason as determined by the Department of Labor and Employment;"(m) Failure to reimburse expenses incurred by the worker in connection with his documentation and processing for purposes of deployment, in cases where the deployment does not actually take place without the worker's fault. Illegal recruitment when committed by a syndicate or in large scale shall be considered an offense involving economic sabotage; and"(n) To allow a non-Filipino citizen to head or manage a licensed recruitment/manning agency.

"Illegal recruitment is deemed committed by a syndicate if carried out by a group of three (3) or more persons conspiring or confederating with one another. It is deemed committed in large scale if committed against three (3) or more persons individually or as a group.

"In addition to the acts enumerated above, it shall also be unlawful for any person or entity to commit the following prohibited acts:"(1) Grant a loan to an overseas Filipino worker with interest exceeding eight percent (8%) per annum, which will be used for payment of legal and allowable placement fees and make the migrant worker issue, either personally or through a guarantor or accommodation party, postdated checks in relation to the said loan;"(2) Impose a compulsory and exclusive arrangement whereby an overseas Filipino worker is required to avail of a loan only from specifically designated institutions, entities or persons;"(3) Refuse to condone or renegotiate a loan incurred by an overseas Filipino worker after the latter's employment contract has been prematurely terminated through no fault of his or her own;"(4) Impose a compulsory and exclusive arrangement whereby an overseas Filipino worker is required to undergo health examinations only from specifically designated medical clinics, institutions, entities or persons, except in the case of a seafarer whose medical examination cost is shouldered by the principal/shipowner;"(5) Impose a compulsory and exclusive arrangement whereby an overseas Filipino worker is required to undergo training, seminar, instruction or schooling of any kind only from specifically designated institutions, entities or persons, except fpr recommendatory trainings mandated by principals/shipowners where the latter shoulder the cost of such trainings;"(6) For a suspended recruitment/manning agency to engage in any kind of recruitment activity including the processing of pending workers' applications; and "(7) For a recruitment/manning agency or a foreign principal/ER to pass on the overseas Filipino worker or deduct from his or her salary the payment of the cost of insurance fees, premium or other insurance related charges, as provided under the compulsory worker's insurance coverage."The persons criminally liable for the above offenses are the principals, accomplices and accessories. In case of juridical persons, the officers having ownership, control, management or direction of their business who are responsible for the commission of the offense and the responsible EEs/agents thereof shall be liable."In the filing of cases for illegal recruitment or any of the prohibited acts under this section, the Secretary of Labor and Employment, the POEA Administrator or their duly authorized representatives, or any aggrieved person may initiate the corresponding criminal action with the appropriate office. For this purpose, the affidavits and testimonies of operatives or personnel from the Department of Labor and Employment, POEA and other law enforcement agencies who witnessed the acts constituting the offense shall be sufficient to prosecute the accused."In the prosecution of offenses punishable under this section, the public prosecutors of the Department of Justice shall collaborate with the anti-illegal recruitment branch of the POEA and, in certain cases, allow the POEA lawyers to take

the lead in the prosecution. The POEA lawyers who act as prosecutors in such cases shall be entitled to receive additional allowances as may be determined by the POEA Administrator."The filing of an offense punishable under this Act shall be without prejudice to the filing of cases punishable under other existing laws, rules or regulations."1avvphi1

Section 6.Penalties."(a) Any person found guilty of illegal recruitment shall suffer the penalty of imprisonment of not less than twelve (12) years and one (1) day but not more than twenty (20) years and a fine of not less than One million pesos (P1,000,000.00) nor more than Two million pesos (P2,000,000.00)."(b) The penalty of life imprisonment and a fine of not less than Two million pesos (P2,000,000.00) nor more than Five million pesos (P5,000,000.00) shall be imposed if illegal recruitment constitutes economic sabotage as defined therein."Provided, however, That the maximum penalty shall be imposed if the person illegally recruited is less than eighteen (18) years of age or committed by a non-licensee or non-holder of authority."(c) Any person found guilty of any of the prohibited acts shall suffer the penalty of imprisonment of not less than six (6) years and one (1) day but not more than twelve (12) years and a fine of not less than Five hundred thousand pesos (P500,000.00) nor more than One million pesos (P1,000,000.00)."If the offender is an alien, he or she shall, in addition to the penalties herein prescribed, be deported without further proceedings."In every case, conviction shall cause and carry the automatic revocation of the license or registration of the recruitment/manning agency, lending institutions, training school or medical clinic."

Section 7.Prescription. Illegal recruitment cases under this Rule shall prescribe in five (5) years; Provided, however, that illegal recruitment cases involving economic sabotage shall prescribed in twenty (20) years.

Section 8.Independent Action. The filing of an offense punishable under this section shall be without prejudice to the filing of cases punishable under other existing laws, rules or regulations.

e.ILLEGAL RECRUITMENT AND ESTAFAa person may be charged and convicted for both. Illegal recruitment is a malum prohibitum, whereas estafa is malum in se, meaning that the criminal intent is not necessary for conviction in the former but is required in the latter.

Acts constituting estafa – the accused represented themselves to complainants to have capacity to send workers abroad although they did not have authority or livense. It is by this representation that they induced complainants to pay a placement fee. Such acts constitute estafa under Art.315, par.2 of the RPC.

f.POWERS OF THE SECRETARY OF LABORWe reiterate that the Secretary of Labor, not being a judge, may no longer issue search or arrest warrants. Hence, the authorities must go through the judicial process. To that extent, we declare Article 38, paragraph (c), of the Labor Code, unconstitutional and of no force and effect.Exception: in cases of deportation of illegal and undesirable aliens whom the president or the commissioner of immigration may order arrested, following a final order of deportation. (SALAZAR v. ACHACOSO)

Note: the secretary of lanor may order closure of illegal recruitment establishment because it is only administrative and regulatory in nature.

g.MIGRANT WORKERS/OFW0FW-Person who is to be engaged, is engaged or has been engaged in a remunerated activity in a state of which he or she is not a citizen or on board a vessel navigating the foreign seas other than a government ship used for military or non-commercial purposes or on an installation located offshore or on the high seas; to be used interchangeably with MIGRANT WORKERS.

i.COMMENCEMENT OF EE-relationshipWe rule that distinction must be made between the perfection of the employment contract and the commencement of the ER-EE 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 ER-EE relationship, as earlier discussed, would have taken place had petitioner been actually deployed from the point of hire. Thus, even before the start of any ER-EE 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. (STOLT-NIELSEN v. MEDIGUILLO)

ii.SECTION 10 of RA8042the subject clause in the 5th paragraph of Section 10 of R.A. No. 8042 is violative of the right of petitioner and other OFWs

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to equal protection. The subject clause “or for three months for every year of the unexpired term, whichever is less” in the 5th paragraph of Section 10 of Republic Act No. 8042 is DECLARED UNCONSTITUTIONAL. (SERRANO v. GALLANT MARITIME SERVICES INC.)

iii.LIABILITY OF PRINCIPAL/AGENT FOR DAMAGESthe recruitment agency is solidarily liable with the foreign principal for unpaid salaries of a worker it recruited. Before recruiting, the agency is required to submit a document containing its power to sue and be sued jointly and solidarily with the principal or foreign based ER for any violation of the recruitment agreement and the contracts of employment. (Sec.10, Rule V of the implementing regulation of the LC)

Note: the recruitment agency may still be sued even if the agency agreement between the recruitment agency and the principal is already severed if no notice of the termination was given to the EE based on Art. 1921.

Exception: where the workers themselves insisted for the recruitment agency to send them back to their foreign ER despite their knowledge of its ability to pay their wages, the Court absolved the agency from liability.

Note: even if it was the principal of the manning agency who entered into contract with the EE, the manning agent in the Philippines is jointly and solidarily liable with the principal.

Note: a foreign corporation that, through unlicensed agents, recruits workers in the country may be sued in and found liable by Philippine Courts.

E. BOOK I, TITLE II, CHAPTER 3 (Art. 39-42)Art. 39. Penalties.a.The penalty of life imprisonment and a fine of One Hundred Thousand Pesos (P1000,000.00) shall be imposed if illegal recruitment constitutes economic sabotage as defined herein;b.Any licensee or holder of authority found violating or causing another to violate any provision of this Title or its implementing rules and regulations shall, upon conviction thereof, suffer the penalty of imprisonment of not less than two years nor more than five years or a fine of not less than P10,000 nor more than P50,000, or both such imprisonment and fine, at the discretion of the court;c.Any person who is neither a licensee nor a holder of authority under this Title found violating any provision thereof or its implementing rules and regulations shall, upon conviction thereof, suffer the penalty of imprisonment of not less than four years nor more than eight years or a fine of not less than P20,000 nor more than P100,000 or both such imprisonment and fine, at the discretion of the court;d.If the offender is a corporation, partnership, association or entity, the penalty shall be imposed upon the officer or officers of the corporation, partnership, association or entity responsible for violation; and if such officer is an alien, he shall, in addition to the penalties herein prescribed, be deported without further proceedings;e.In every case, conviction shall cause and carry the automatic revocation of the license or authority and all the permits and privileges granted to such person or entity under this Title, and the forfeiture of the cash and surety bonds in favor of the Overseas Employment Development Board or the National Seamen Board, as the case may be, both of which are authorized to use the same exclusively to promote their objectives.

Title IIEMPLOYMENT OF NON-RESIDENT ALIENS

Art. 40. Employment permit of non-resident aliens. Any alien seeking admission to the Philippines for employment purposes and any domestic or foreign ER who desires to engage an alien for employment in the Philippines shall obtain an employment permit from the Department of Labor.The employment permit may be issued to a non-resident alien or to the applicant ER after a determination of the 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.For an enterprise registered in preferred areas of investments, said employment permit may be issued upon recommendation of the government agency charged with the supervision of said registered enterprise.

Art. 41. Prohibition against transfer of employment.a.After the issuance of an employment permit, the alien shall not transfer to another job or change his ER without prior approval of the Secretary of Labor.b.Any non-resident alien who shall take up employment in violation of the provision of this Title and its implementing rules and regulations shall be punished in accordance with the provisions of Articles 289 and 290 of the Labor Code.In addition, the alien worker shall be subject to deportation after service of his sentence.

Art. 42. Submission of list. Any ER employing non-resident foreign nationals on the effective date of this Code shall submit a list of such nationals to the Secretary of Labor within thirty (30) days after such date indicating their names, citizenship, foreign and local addresses, nature of employment and status of stay in the country. The Secretary of Labor shall then determine if they are entitled to an employment permit.

F.BOOK II, TITLE II, CHAPTERS 1-3

a.DEFINITIONi. ART. 58. Definition of Terms. - As used in this Title: (a) "Apprenticeship" means practical training on the job supplemented by related theoretical instruction. (b) An "apprentice" is a worker who is covered by a written apprenticeship agreement with an individual ER or any of the entities recognized under this Chapter. (c) An "apprenticeable occupation" means any trade, form of employment or occupation which requires more than three (3) months of practical training on the job supplemented by related theoretical instruction. (d) "Apprenticeship agreement" is an employment contract wherein the ER binds himself to train the apprentice and the apprentice in turn accepts the terms of training.

ii.LEARNERS – ART. 73. Learners defined. - Learners are persons hired as trainees in semi-skilled and other industrial occupations which are non-apprenticeable and which may be learned through practical training on the job in a relatively short period of time which shall not exceed three (3) months.

ii.HANDICAPPED WORKERS - ART. 78. Definition. - Handicapped workers are those whose earning capacity is impaired by age or physical or mental deficiency or injury.

READ: RA7796(TESDA LAW), SEC.4.SEC. 4. Definition of Terms. - As used in this Act: "Skill" shall mean the acquired and practiced ability to carry out a task or job; "Skills Development" shall mean the process through which learners and workers are systematically provided with learning opportunities to acquire or upgrade, or both, their ability, knowledge and behavior pattern required as qualifications for a job or range of jobs in a given occupational area; "Technical Education" shall refer to the education process designed at post-secondary and lower tertiary levels, officially recognized as non-degree programs aimed at preparing technicians, para-professionals and other categories of middle-level workers by providing them with a broad range of general education, theoretical, scientific and technological studies, and related job skills training; "Trade" shall mean any group of interrelated jobs or any occupation which is traditionally or officially recognized as craft or artisan in nature requiring specific qualifications that can be acquired through work experience and/or training;

"Middle-Level Manpower" refers to those: 1.who have acquired practical skills and knowledge through formal or non-formal education and training equivalent to at least a secondary education but preferably at post-secondary education with a corresponding degree of diploma; or 2.skilled workers who have become highly competent in their trade or craft as attested by industry;

"Private Enterprises" refers to an economic system under which property of all kinds can be privately owned and in which individuals, alone or in association with another, can embark on a business activity. This includes industrial, agricultural, or agro-industrial establishments engaged in the production, manufacturing, processing, repacking or assembly of goods including service-oriented enterprises; "Trainers" shall mean persons who direct the practice of skills towards immediate improvement in some task; "Trainors/trainers" shall mean persons who provide training to trainers aimed at developing the latter's capacities for imparting attitudes, knowledge, skills and behavior patters required for specific jobs, tasks, occupations or group of related occupations. "Trainees" shall mean persons who are participants in a vocational, administrative or technical training program for the purpose of acquiring and developing job-related skills; "Apprenticeship" training within employment with compulsory related theoretical instruction involving a contract between an apprentice and an ER on an approved apprenticeable occupation; "Apprentice" is a person undergoing training for an approved apprenticeable occupation during an apprenticeship agreement; "Apprenticeship Agreement" is a contract wherein a prospective ER binds himself to train the apprentice who in turn accepts the terms of training for a recognized apprenticeable occupation emphasizing the rights, duties and responsibilities of each party; "Apprenticeable Occupation" is an occupation officially endorsed by a tripartite body and approved for apprenticeable by the Authority; "Learners" refers to persons hired as trainees in semi-skilled and other industrial occupations which are non-apprenticeable. Learnership programs must be approved by the Authority; "User-Led" or "Market-Driven Strategy" refers to a strategy which promotes strengthened linkages between educational/training institutions and industry to ensure that appropriate skills and knowledge are provided by the educational system; "Dual System/Training" refers to a delivery system of quality technical and vocational education which requires training to be carried out alternately in two venues: in-school and in the production plant. In- school training provides the trainee the theoretical foundation, basic training, guidance and human formation, while in-plant training develops his skills and proficiency in actual work conditions as it continues to inculcate personal discipline and work values;

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"Levy Grant System" refers to a legal contribution from participating ERs who would be beneficiaries of the program (often as a percentage of the payroll) which is subsequently turned over or rebated to enterprises offering EE training programs.

READ: RA7277(MAGNA CARTA FOR PERSONS WITH DISABILITY) SEC.4,5,7,32Sec. 4. Definition of Terms. — For purposes of this Act, these terms are defined as follows:(a) Disabled persons are those suffering from restriction or different abilities, as a result of a mental, physical or sensory impairment, to perform an activity in the manner or within the range considered normal for a human being; (b) Impairment is any loss, diminution or aberration of psychological, physiological, or anatomical structure or function; (c) Disability shall mean 1) a physical or mental impairment that substantially limits one or more psychological, physiological or anatomical function of an individual or activities of such individual; 2) a record of such an impairment; or 3) being regarded as having such an impairment; (d) Handicap refers to a disadvantage for a given individual, resulting from an impairment or a disability, that limits or prevents the function or activity, that is considered normal given the age and sex of the individual; (e) Rehabilitation is an integrated approach to physical, social, cultural, spiritual, educational and vocational measures that create conditions for the individual to attain the highest possible level of functional ability; (f) Social Barriers refer to the characteristics of institutions, whether legal, economic, cultural, recreational or other, any human group, community, or society which limit the fullest possible participation of disabled persons in the life of the group. Social barriers include negative attitudes which tend to single out and exclude disabled persons and which distort roles and inter-personal relationships; (g) Auxiliary Aids and Services include:(1) qualified interpreters or other effective methods of delivering materials to individuals with hearing impairments;(2) qualified readers, taped tests, or other effective methods of delivering materials to individuals with visual impairments;(3) acquisition or modification of equipment or devices; and (4) other similar services and actions or all types of aids and services that facilitate the learning process of people with mental disability. (h) Reasonable Accommodation include 1) improvement of existing facilities used by EEs in order to render these readily accessible to and usable by disabled persons; and 2) modification of work schedules, reassignment to a vacant position, acquisition or modification of equipment or devices, appropriate adjustments or modifications of examinations, training materials or company policies, rules and regulations, the provision of auxiliary aids and services, and other similar accommodations for disabled persons; (i) Sheltered Employment refers to the provision of productive work for disabled persons through workshops providing special facilities, income-producing projects or homework schemes with a view to giving them the opportunity to earn a living thus enabling them to acquire a working capacity required in open industry; (j) Auxiliary Social Services are the supportive activities in the delivery of social services to the marginalized sectors of society;(k) Marginalized Disabled Persons refer to disabled persons who lack access to rehabilitative services and opportunities to be able to participate fully in socioeconomic activities and who have no means of livelihood and whose incomes fall below the poverty threshold; (l) Qualified Individual with a Disability shall mean an individual with a disability who, with or without reasonable accommodations, can perform the essential functions of the employment position that such individual holds or desires. However, consideration shall be given to the ER's judgment as to what functions of a job are essential, and if an ER has prepared a written description before advertising or interviewing applicants for the job, this description shall be considered evidence of the essential functions of the job;(m) Readily Achievable means a goal can be easily attained and carried out without much difficulty or expense. In determining whether an action is readily achievable, factors to be considered include — (1) the nature and cost of the action;

(2) the overall financial resources of the facility or facilities involved in the action; the number of persons employed at such facility; the effect on expenses and resources, or the impact otherwise of such action upon the operation of the facility; (3) the overall financial resources of the covered entity with respect to the number of its EEs; the number, type and location of its facilities; and (4) the type of operation or operations of the covered entity, including the composition, structure and functions of the work force of such entity; the geographic separateness, administrative or fiscal relationship of the facility or facilities in question to the covered entity. (n) Public Transportation means transportation by air, land and sea that provides the public with general or special service on a regular and continuing basis;

(o) Covered Entity means an ER, employment agency, labor organization or joint-labor management committee; and

(p) Commerce shall be taken to mean as travel, trade, traffic, commerce, transportation, or communication among the provinces or between any foreign country or any territory or possession and any province.

Sec. 5. Equal Opportunity for Employment. — No disable person shall be denied access to opportunities for suitable employment. A qualified disabled EE shall be subject to the same terms and conditions of employment and the same compensation, privileges, benefits, fringe benefits, incentives or allowances as a qualified able bodied person.

Five percent (5%) of all casual emergency and contractual positions in the Departments of Social Welfare and Development; Health; Education, Culture and Sports; and other government agencies, offices or corporations engaged in social development shall be reserved for disabled persons.

Sec. 7. Apprenticeship. — Subject to the provisions of the Labor Code as amended, disabled persons shall be eligible as apprentices or learners: Provided, That their handicap is not as much as to effectively impede the performance of job operations in the particular occupation for which they are hired; Provided, further, That after the lapse of the period of apprenticeship, if found satisfactory in the job performance, they shall be eligible for employment.

Sec. 32. Discrimination on Employment. — No entity, whether public or private, shall discriminate against a qualified disabled person by reason of disability in regard to job application procedures, the hiring, promotion, or discharge of EEs, EE compensation, job training, and other terms, conditions, and privileges of employment. The following constitute acts of discrimination: (a) Limiting, segregating or classifying a disabled job applicant in such a manner that adversely affects his work opportunities;(b) Using qualification standards, employment tests or other selection criteria that screen out or tend to screen out a disabled person unless such standards, tests or other selection criteria are shown to be job-related for the position in question and are consistent with business necessity;(c) Utilizing standards, criteria, or methods of administration that:(1) have the effect of discrimination on the basis of disability; or (2) perpetuate the discrimination of others who are subject to common administrative control.(d) Providing less compensation, such as salary, wage or other forms of remuneration and fringe benefits, to a qualified disabled EE, by reason of his disability, than the amount to which a non-disabled person performing the same work is entitled;(e) Favoring a non-disabled EE over a qualified disabled EE with respect to promotion, training opportunities, study and scholarship grants, solely on account of the latter's disability; (f) Re-assigning or transferring a disabled EE to a job or position he cannot perform by reason of his disability;(g) Dismissing or terminating the services of a disabled EE by reason of his disability unless the ER can prove that he impairs the satisfactory performance of the work involved to the prejudice of the business entity: Provided, however, That the ER first sought to provide reasonable accommodations for disabled persons; (h) Failing to select or administer in the most effective manner employment tests which accurately reflect the skills, aptitude or other factor of the disabled applicant or EE that such tests purports to measure, rather than the impaired sensory, manual or speaking skills of such applicant or EE, if any; and(i) Excluding disabled persons from membership in labor unions or similar organizations.

READ: RA7610(PROTECTION AGAINST CHILD ABUSE) SEC.12Sec. 12. Employment of Children. – Children below fifteen (15) years of age may be employed except:(1) When a child works directly under the sole responsibility of his parents or legal guardian and where only members of the ER's family are employed: Provided, however, That his employment neither endangers his life, safety and health and morals, nor impairs his normal development: Provided, further, That the parent or legal guardian shall provide the said minor child with the prescribed primary and/or secondary education; or(2) When a child's employment or participation in public & entertainment or information through cinema, theater, radio or television is essential: Provided, The employment contract concluded by the child's parent or guardian, with the express agreement of the child concerned, if possible, and the approval of the Department of Labor and Employment: Provided, That the following requirements in all instances are strictly complied with:(a) The ER shall ensure the protection, health, safety and morals of the child;(b) the ER shall institute measures to prevent the child's exploitation or discrimination taking into account the system and level of remuneration, and the duration and arrangement of working time; and;(c) The ER shall formulate and implement, subject to the approval and supervision of competent authorities, a continuing program for training and skill acquisition of the child.In the above exceptional cases where any such child may be employed, the ER shall first secure, before engaging such child, a work permit from the Department of Labor and

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Employment which shall ensure observance of the above requirement.The Department of Labor Employment shall promulgate rules and regulations necessary for the effective implementation of this Sec.

b.REQUIREMENTS/EFFECT OF AN INVALID AGREEMENTSince Palad is not considered an apprentice because the apprenticeship agreement was enforced before the TESDA’s approval of petitioner’s apprenticeship program, Palad is deemed a regular EE performing the job of a "fish cleaner." Clearly, the job of a "fish cleaner" is necessary in petitioner’s business as a tuna and sardines factory. Under Article 28021 of the Labor Code, an employment is deemed regular where the EE has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the ER. (CENTURY CANNING v. CA)

Even if we recognize the company’s need to train its EEs through apprenticeship, we can only consider the first apprenticeship agreement for the purpose. With the expiration of the first agreement and the retention of the EEs, Atlanta had, to all intents and purposes, recognized the completion of their training and their acquisition of a regular EE status. To foist upon them the second apprenticeship agreement for a second skill which was not even mentioned in the agreement itself,is a violation of the Labor Code’s implementing rules60 and is an act manifestly unfair to the EEs, to say the least. This we cannot allow.(ATLANTA v. SEBOLINO)

c.DISABLED PERSONS ATTAINING REGULAR STATUSWithout a doubt, the task of counting and sorting bills is necessary and desirable to the business of respondent bank. As held by the Court, "Articles 280 and 281 of the Labor Code put an end to the pernicious practice of making permanent casuals of our lowly EEs by the simple expedient of extending to them probationary appointments, ad infinitum." The contract signed by petitioners is akin to a probationary employment, during which the bank determined the EEs' fitness for the job. When the bank renewed the contract after the lapse of the six-month probationary period, the EEs thereby became regular EEs. No ER is allowed to determine indefinitely the fitness of its EEs.(BERNARDO v. NLRC)

G.BOOK III(CONDITIONS OF EMPLOYMENT)1.TITLE I, CHAPTER I, ART.82-90ART. 83. Normal hours of work. - The normal hours of work of any EE shall not exceed eight (8) hours a day. Health personnel in cities and municipalities with a population of at least one million (1,000,000) or in hospitals and clinics with a bed capacity of at least one hundred (100) shall hold regular office hours for eight (8) hours a day, for five (5) days a week, exclusive of time for meals, except where the exigencies of the service require that such personnel work for six (6) days or forty-eight (48) hours, in which case, they shall be entitled to an additional compensation of at least thirty percent (30%) of their regular wage for work on the sixth day. For purposes of this Article, "health personnel" shall include resident physicians, nurses, nutritionists, dietitians, pharmacists, social workers, laboratory technicians, paramedical technicians, psychologists, midwives, attendants and all other hospital or clinic personnel. chanroblesvirtuallawlibraryART. 85. Meal periods. - Subject to such regulations as the Secretary of Labor may prescribe, it shall be the duty of every ER to give his EEs not less than sixty (60) minutes time-off for their regular meals. ART. 86. Night shift differential. - Every EE shall be paid a night shift differential of not less than ten percent (10%) of his regular wage for each hour of work performed between ten o’clock in the evening and six o’clock in the morning. ART. 87. Overtime work. - Work may be performed beyond eight (8) hours a day provided that the EE is paid for the overtime work, an additional compensation equivalent to his regular wage plus at least twenty-five percent (25%) thereof. Work performed beyond eight hours on a holiday or rest day shall be paid an additional compensation equivalent to the rate of the first eight hours on a holiday or rest day plus at least thirty percent (30%) thereof. ART. 88. Undertime not offset by overtime. - Undertime work on any particular day shall not be offset by overtime work on any other day. Permission given to the EE to go on leave on some other day of the week shall not exempt the ER from paying the additional compensation required in this Chapter. ART. 90. Computation of additional compensation. - For purposes of computing overtime and other additional remuneration as required by this Chapter, the "regular wage" of an EE shall include the cash wage only, without deduction on account of facilities provided by the ER.

a.COVERAGE - ART. 82. Coverage. - The provisions of this Title shall apply to EEs in all establishments and undertakings whether for profit or not, but not to government EEs, managerial EEs, field personnel, members of the family of the ER who are dependent on him for support, domestic helpers, persons in the personal service of another, and workers who are paid by results as determined by the Secretary of Labor in appropriate regulations. As used herein, "managerial EEs" refer to those whose primary duty consists of the management of the establishment in which they are employed or of a department or subdivision thereof, and to other officers or members of the managerial staff.

"Field personnel" shall refer to non-agricultural EEs who regularly perform their duties away from the principal place of business or branch office of the ER and whose actual hours of work in the field cannot be determined with reasonable certainty.

i.MANAGERIAL EES v. MANAGERIAL STAFF/SUPERVISORSREAD: TITLE I, BOOK III, RULE1,SEC.2(b) AND (c), OMNIBUS RULES OF THE LABOR CODESECTION 2. Exemption. — The provisions of this Rule shall not apply to the following persons if they qualify for exemption under the conditions set forth herein:(a) Government EEs whether employed by the National Government or any of its political subdivision, including those employed in government-owned and/or controlled corporations;

(b) Managerial EEs, if they meet all of the following conditions:(1) Their primary duty consists of the management of the establishment in which they are employed or of a department or sub-division thereof. (2) They customarily and regularly direct the work of two or more EEs therein. (3) They have the authority to hire or fire EEs of lower rank; or their suggestions and recommendations as to hiring and firing and as to the promotion or any other change of status of other EEs, are given particular weight.

(c) Officers or members of a managerial staff if they perform the following duties and responsibilities:(1) The primary duty consists of the performance of work directly related to management policies of their ER;(2) Customarily and regularly exercise discretion and independent judgment; and(3) (i) Regularly and directly assist a proprietor or a managerial EE whose primary duty consists of the management of the establishment in which he is employed or subdivision thereof; or (ii) execute under general supervision work along specialized or technical lines requiring special training, experience, or knowledge; or (iii) execute, under general supervision, special assignments and tasks; and(4) Who do not devote more than 20 percent of their hours worked in a work week to activities which are not directly and closely related to the performance of the work described in paragraphs (1), (2) and (3) above.

a.TEST OF MANAGERIAL/SUPERVISORY STATUSThe test of “supervisory” or “managerial status” depends on whether a person possesses authority to act in the interest of his ER and whether such authority is not merely routinary or clerical in nature, but requires the use of independent judgment.

ii.FIELD PERSONNELREAD: TITLE I, BOOK III, RULE1,SEC.2(f) OMNIBUS RULES OF THE LABOR CODE(f) Non-agricultural field personnel if they regularly perform their duties away from the principal or branch office or place of business of the ER and whose actual hours of work in the field cannot be determined with reasonable certaintya.DRIVER/CONDUCTORit serves as an amplification of the interpretation of the definition of field personnel under the Labor Code as those 'whose actual hours of work in the field cannot be determined with reasonable certainty. EEs engaged on task or contract basis or paid on purely commission basis are not automatically exempted from the grant of service incentive leave, unless, they fall under the classification of field personnel.

AUTOBUS’ contention that since he is paid on commission basis exempts him from service incentive pay is MISPLACED. To ascertain an EEs entitlement to service incentive pay is whether he is field personnel.

Accdg. to the Bureau of Working Conditions (BWC), Advisory Opinion to Philippine Technical-Clerical Commercial EEs Association :As a general rule, [field personnel] are those whose performance of their job/service is not supervised by the ER or his representative, the workplace being away from the principal office and whose hours and days of work cannot be determined with reasonable certainty; hence, they are paid specific amount for rendering specific service or performing specific work. If required to be at specific places at specific times, EEs including drivers cannot be said to be field personnel despite the fact that they are performing work away from the principal office of the EE.

it is not just about location but also with the fact that the EE's performance is unsupervised by the ER& if actual hours of work in the field can be determined with reasonable certainty by the ER. in every terminal or stop there is a person who will check the bus, punch the cards of the conductor. Thus, it shows control of Autobus over the driver, hence, he his not a field EE but a regular EE.(AUTOBUS v. BAUTISTA)

b.ACTUAL HOURS OF WORK CANNOT BE DETERMINED WITH REASONABLE CERTAINTYin the case at bar, during the entire course of their fishing voyage, fishermen employed by petitioner have no choice but to remain on board its vessel. Although they perform non-agricultural work away from petitioner's business offices, the

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fact remains that throughout the duration of their work they are under the effective control and supervision of petitioner through the vessel's patron or master as the NLRC correctly held.(MERCIDAR v. NLRC)

iii.FAMILY MEMBERSmembers of the family of the ER who are dependent on him for support. They are not covered by this title because the amount given by the ER by way of support may far exceed the benefits to which the EE is entitled under the provisions of law.

iv.DOMESTIC SERVANTS/PERSONS IN THE PERSONAL SERVICE OF ANOTHERUnder Rule XIII, Section 1(b), Book 3 of the Labor Code, as amended, the terms “househelper” or “domestic servant” are defined as follows:“The term ‘househelper’ as used herein is synonymous to the term ‘domestic servant’ and shall refer to any person, whether male or female, who renders services in and about the ER’s home and which services are usually necessary or desirable for the maintenance and enjoyment thereof, and ministers exclusively to the personal comfort and enjoyment of the ER’s family.”

The foregoing definition clearly contemplates such househelper or domestic servant who is employed in the ER’s home to minister exclusively to the personal comfort and enjoyment of the ER’s family. Such definition covers family drivers, domestic servants, laundry women, yayas, gardeners, houseboys and similar househelps.

READ: TITLE I, BOOK III, RULE1,SEC.2(d) OMNIBUS RULES OF THE LABOR CODE(d) Domestic servants and persons in the personal service of another if they perform such services in the ER's home which are usually necessary or desirable for the maintenance and enjoyment thereof, or minister to the personal comfort, convenience, or safety of the ER as well as the members of his ER's household

The criteria is the personal comfort and enjoyment of the family of the ER in the home of said ER. While it may be true that the nature of the work of a househelper, domestic servant or laundrywoman in a home or in a company staffhouse may be similar in nature, the difference in their circumstances is that in the former instance they are actually serving the family while in the latter case, whether it is a corporation or a single proprietorship engaged in business or industry or any other agricultural or similar pursuit, service is being rendered in the staffhouses or within the premises of the business of the ER. In such instance, they are EEs of the company or ER in the business concerned entitled to the privileges of a regular EE.

The mere fact that the househelper or domestic servant is working within the premises of the business of the ER and in relation to or in connection with its business, as in its staffhouses for its guest or even for its officers and EEs, warrants the conclusion that such househelper or domestic servant is and should be considered as a regular EE of the ER and not as a mere family househelper or domestic servant as contemplated in Rule XIII, Section 1(b), Book 3 of the Labor Code, as amended.

In the case at bar, the petitioner itself admits in its position paper [33] that respondent worked at the company premises and her duty was to cook and prepare its EEs’ lunch and merienda. Clearly, the situs, as well as the nature of respondent’s work as a cook, who caters not only to the needs of Mr. Tan and his family but also to that of the petitioner’s EEs, makes her fall squarely within the definition of a regular EE under the doctrine enunciated in the Apex Mining case. That she works within company premises, and that she does not cater exclusively to the personal comfort of Mr. Tan and his family, is reflective of the existence of the petitioner’s right of control over her functions, which is the primary indicator of the existence of an ER-EE relationship. (REMINGTON v. CASTANEDA)

v.WORKERS PAID BY RESULT(e) Workers who are paid by results, including those who are paid on piece-work, "takay," "pakiao" or task basis, and other non-time work if their output rates are in accordance with the standards prescribed under Section 8, Rule VII, Book Three of these regulations, or where such rates have been fixed by the Secretary of Labor and Employment in accordance with the aforesaid Section.

READ: TITLE I, BOOK III, RULE7, SEC.8 OMNIBUS RULES OF THE LABOR CODE

va.CATEGORIES1) those whose time and performance are supervised by the ER. (Here, there is an element of control and supervision over the manner as to how the work is to be performed. A piece-rate worker belongs to this category especially if he performs his work in the company premises.); and (2) those whose time and performance are unsupervised. (Here, the ER’s control is over the result of the work. Workers on pakyao and takay basis belong to this group.)

Both classes of workers are paid per unit accomplished. Piece-rate payment is generally practiced in garment factories where work is done in the company premises, while payment

on pakyao and takay basis is commonly observed in the agricultural industry, such as in sugar plantations where the work is performed in bulk or in volumes difficult to quantify. Petitioners belong to the first category, i.e., supervised EEs. (LAMBO v. NLRC)

vb.PAKYAW

b.HOURS WORK - ART. 84. Hours worked. - Hours worked shall include (a) all time during which an EE is required to be on duty or to be at a prescribed workplace; and (b) all time during which an EE is suffered or permitted to work. Rest periods of short duration during working hours shall be counted as hours worked. (same with R1S3 of the omnibus)

i.PRINCIPLES IN DETERMINING HOURS WORKEDREAD: TITLE I, BOOK III, RULE1, SEC.3-4 OMNIBUS RULES OF THE LABOR CODE

SECTION 4. Principles in determining hours worked. — The following general principles shall govern in determining whether the time spent by an EE is considered hours worked for purposes of this Rule:(a) All hours are hours worked which the EE is required to give his ER, regardless of whether or not such hours are spent in productive labor or involve physical or mental exertion.(basis of engage to wait and assembly time)(b) An EE need not leave the premises of the work place in order that his rest period shall not be counted, it being enough that he stops working, may rest completely and may leave his work place, to go elsewhere, whether within or outside the premises of his work place.(basis of meal break and assembly time)(c) If the work performed was necessary, or it benefited the ER, or the EE could not abandon his work at the end of his normal working hours because he had no replacement, all time spent for such work shall be considered as hours worked, if the work was with the knowledge of his ER or immediate supervisor.(basis of no off-setting rule)(d) The time during which an EE is inactive by reason of interruptions in his work beyond his control shall be considered working time either if the imminence of the resumption of work requires the EE's presence at the place of work or if the interval is too brief to be utilized effectively and gainfully in the EE's own interest.(basis of semestral break and powere interruption)

ii.ENGAGED TO WAIT RULE/IDLE TIMEREAD: TITLE I, BOOK III, RULE1, SEC.5(a) OMNIBUS RULES OF THE LABOR CODESECTION 5. Waiting time. — (a) Waiting time spent by an EE shall be considered as working time if waiting is an integral part of his work; (b)the EE is required or engaged by the ER to wait; and c) An EE who is required to remain on call in the ER's premises or so close thereto that he cannot use the time effectively and gainfully for his own purpose.

When the work is NOT CONTINUOS, the time during which the laborer is not working AND CAN LEAVE HIS WORKING PLACE and can rest completely, shall NOT TO BE COUNTED. For the purposes of this case, We do not need to set for seamen a criterion different from that applied to laborers on land, for under the provisions of the above quoted section, the only thing to be done is to determine the meaning and scope of the term "working place" used therein. As We understand this term, a laborer need not leave the premises of the factory, shop or boat in order that his period of rest shall not be counted, it being enough that he "cease to work", may rest completely and leave or may leave at his will the spot where he actually stays while working, to go somewhere else, whether within or outside the premises of said factory, shop or boat. If these requisites are complied with, the period of such rest shall not be counted. (LUZON STEVEDORING v. LUZON MARINE)

From these facts, the CIR correctly concluded that work in petitioner company was CONTINUOS and therefore the mealtime breaks should be COUNTED as working time for purposes of overtime compensation. (NDC v. CIR)

ENGAGED TO WAIT/REQUIRED TO WAIT.Waiting is an integral part of the job; the time spent waiting is compensable>WAITING TO BE ENGAGED/NOT REQUIRED TO WAITIdle time is not working time; it is not compensable.

iii.ON CALLREAD: TITLE I, BOOK III, RULE1, SEC.5(b) OMNIBUS RULES OF THE LABOR CODEb) An EE who is required to remain on call in the ER's premises or so close thereto that he cannot use the time effectively and gainfully for his own purpose shall be considered as working while on call. An EE who is not required to leave word at his home or with company officials where he may be reached is not working while on call.

However, if he is NOT REQUIRED TO REMAIN on call in the ER’s premises BUT IS MERELY REQUIRED TO LEAVE WORD AT HIS HOME OR WITH THE COMPANY OFFICIALS where he may be reached, he is not considered working while on call.

Further, management retains the prerogative, whenever exigencies of the service so require, to change the working hours of its EEs. So long as such prerogative is exercised in good faith for the advancement of the ER's interest and not

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for the purpose of defeating or circumventing the rights of the EEs under special laws or under valid agreements, this Court will uphold such exercise.(SIME DARBY v. NLRC)

iv.ASSEMBLY TIMEThe thirty (30)-minute assembly time long practiced and institutionalized by mutual consent of the parties under Article IV, Section 3, of theCBA cannot be considered as waiting time within the purview of Section 5, Rule I, Book III of the Rules and Regulations Implementing the Labor Code.

Furthermore, the thirty (30)-minute assembly is a deeply- rooted, routinary practice of the EEs, and the proceedings attendant thereto are not infected with complexities as to deprive the workers the time to attend to other personal pursuits. They are not new EEs as to require the company to deliver long briefings regarding their respective work assignments. Their houses are situated right on the area where the farm are located, such that after the roll call, which does not necessarily require the personal presence, they can go back to their houses to attend to some chores. In short, they are not subject to the absolute control of the company during this period, otherwise, their failure to report in the assembly time would justify the company to impose disciplinary measures. The CBA does not contain any provision to this effect; the record is also bare of any proof on this point. This, therefore, demonstrates the indubitable fact that the thirty (30)-minute assembly time was not primarily intended for the interests of the ER, but ultimately for the EEs to indicate their availability or non-availability for work during every working day.(ARICA v. NLRC)

v.COMMUTING TIME, TRAVEL TIME AT LECTURES, SEMINARS ETC.READ: TITLE I, BOOK III, RULE1, SEC.6 OMNIBUS RULES OF THE LABOR CODESECTION 6. Lectures, meetings, training programs. — Attendance at lectures, meetings, training programs, and other similar activities shall not be counted as working time if all of the following conditions are met:(a) Attendance is outside of the EE's regular working hours;(b) Attendance is in fact voluntary; and(c) The EE does not perform any productive work during such attendance.

TRAVEL FROM HOME TO WORK – normal travel from home to work which is NOT working time. Generally, not compensable because it is a normal incident of employment. Exception: a) made to work on an emergency call and travel is necessary in proceeding to the workplace; b) travel done through a conveyance provided by the ER; c) travel done under the supervision and control of the ER; and e) travel done under vexing and dangerous circumstance.

TRAVEL THAT IS ALL IN DAY’S WORK – the time spent by EE in travel as part of his principal activity, like travel from jobsite to jobsite during the workday. Compensable and must be counted as hours worked.

TRAVEL AWAY FROM HOME – travel that keeps an EE away from home overnight. Considered as working time when it cuts across an EE’s workday because it substitutes for the hours that the EE should have been in the office.

vi.SEMESTRAL BREAKcompensable hours worked apply to regular full-time teachers only. It is a form of interruption beyond their control.

The "No work, no pay" principle does not apply in the instant case. The petitioner's members received their regular salaries during this period. It is clear from the . . . law that it contemplates a "no work" situation where the EEs voluntarily absent themselves. Petitioners, in the case at bar, certainly do not, ad voluntatem absent themselves during semestral breaks. Rather, they are constrained to take mandatory leave from work. For this, they cannot be faulted nor can they be begrudged that which is due them under the law. To a certain extent, the private respondent can specify dates when no classes would be held. Surely, it was not the intention of the framers of the law to allow ERs to withhold EE benefits by the simple expedient of unilaterally imposing "no work" days and consequently avoiding compliance with the mandate of the law for those days. (UNIV. PANGASINAN FACULTY v. UNIV. PANGASINAN)

vii.POWER INTERRUPTION/BROWNOUT1. 1ST 20mins is compensable2. succeeding minutes not compensable3. if despite the lapse of 1st 20mins, the EEs are required to stay in their workplace, such time is compensable.

viii.EXCEPTION TO 8-HOUR RULEART. 89. Emergency overtime work. - Any EE may be required by the ER to perform overtime work in any of the following cases:chan robles virtual law library(a) When the country is at war or when any other national or local emergency has been declared by the National Assembly or the Chief Executive; (b) When it is necessary to prevent loss of life or property or in case of imminent danger to public safety due to an actual or impending emergency in the locality caused by serious accidents, fire, flood, typhoon, earthquake, epidemic, or other disaster or calamity;

(c) When there is urgent work to be performed on machines, installations, or equipment, in order to avoid serious loss or damage to the ER or some other cause of similar nature; (d) When the work is necessary to prevent loss or damage to perishable goods; and (e) Where the completion or continuation of the work started before the eighth hour is necessary to prevent serious obstruction or prejudice to the business or operations of the ER. Any EE required to render overtime work under this Article shall be paid the additional compensation required in this Chapter.

In addition:1.PART-TIME WORK – not prohibited. the 8-hour labor law prescribes the maximum but not the minimum.2.COMPRESSED WORK WEEK(CWW)3.FLEXIBLE WORK ARRANGEMENT4.12-HOUR WORKSHIFT W/ OT – is validated by consent and ots 4-hour OT pay becomes a contractual commitment(INTERPHIL LAB. EES UNION v. INTERPHIL)5.NORMAL HOURS OF WORK OF HEALTH PERSONNEL

ix. COMPRESSED WORK WEEK(CWW)requisites:1.it is expressly and voluntarily supported by majority of the EEs affected;2.if work is hazardous, a certification is needed from accredited safety organization or the firm’s safety committee that work beyond 8-hours is within the limits or levels of exposure set by DOLE’s occupational safety and health standards; and3.the DOLE is dyly notified

Reversion to the normal 8-hour workday shall not constitute a diminution of benefits but considered as a legitimate exercise of management prerogative provided that prior notice of suce reversion is given within a reasonable period of time.

x.FLEXIBLE SCHEDULE FOR SOLO PARENTSREAD: RA8972 SEC.3(a)(e)Section 3.Definition of Terms. - Whenever used in this Act, the following terms shall mean as follows:(a) "Solo parent" - any individual who falls under any of the following categories:(1) A woman who gives birth as a result of rape and other crimes against chastity even without a final conviction of the offender: Provided, That the mother keeps and raises the child;(2) Parent left solo or alone with the responsibility of parenthood due to death of spouse;(3) Parent left solo or alone with the responsibility of parenthood while the spouse is detained or is serving sentence for a criminal conviction for at least one (1) year;(4) Parent left solo or alone with the responsibility of parenthood due to physical and/or mental incapacity of spouse as certified by a public medical practitioner;(5) Parent left solo or alone with the responsibility of parenthood due to legal separation or de facto separation from spouse for at least one (1) year, as long as he/she is entrusted with the custody of the children;(6) Parent left solo or alone with the responsibility of parenthood due to declaration of nullity or annulment of marriage as decreed by a court or by a church as long as he/she is entrusted with the custody of the children;(7) Parent left solo or alone with the responsibility of parenthood due to abandonment of spouse for at least one (1) year;(8) Unmarried mother/father who has preferred to keep and rear her/his child/children instead of having others care for them or give them up to a welfare institution;(9) Any other person who solely provides parental care and support to a child or children;(10) Any family member who assumes the responsibility of head of family as a result of the death, abandonment, disappearance or prolonged absence of the parents or solo parent.A change in the status or circumstance of the parent claiming benefits under this Act, such that he/she is no longer left alone with the responsibility of parenthood, shall terminate his/her eligibility for these benefits.(b) "Children" - refer to those living with and dependent upon the solo parent for support who are unmarried, unemployed and not more than eighteen (18) years of age, or even over eighteen (18) years but are incapable of self-support because of mental and/or physical defect/disability.(c) "Parental responsibility" - with respect to their minor children shall refer to the rights and duties of the parents as defined in Article 220 of Executive Order No. 209, as amended, otherwise known as the "Family Code of the Philippines."(d) "Parental leave" - shall mean leave benefits granted to a solo parent to enable him/her to perform parental duties and responsibilities where physical presence is required.(e) "Flexible work schedule" - is the right granted to a solo parent EE to vary his/her arrival and departure time without affecting the core work hours as defined by the ER.

xi.MEAL BREAL, COFFEE BREAKART. 85. Meal periods. - Subject to such regulations as the Secretary of Labor may prescribe, it shall be the duty of every ER to give his EEs not less than sixty (60) minutes time-off for their regular meals. READ: TITLE I, BOOK III, RULE1, SEC.7 OMNIBUS RULES OF THE LABOR CODE

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SECTION 7. Meal and Rest Periods. — Every ER shall give his EEs, regardless of sex, not less than one (1) hour time-off for regular meals, except in the following cases when a meal period of not less than twenty (20) minutes may be given by the ER provided that such shorter meal period is credited as compensable hours worked of the EE:(a) Where the work is non-manual work in nature or does not involve strenuous physical exertion;(b) Where the establishment regularly operates not less than sixteen (16) hours a day;(c) In case of actual or impending emergencies or there is urgent work to be performed on machineries, equipment or installations to avoid serious loss which the ER would otherwise suffer; and(d) Where the work is necessary to prevent serious loss of perishable goods. Rest periods or coffee breaks running from five (5) to twenty (20) minutes shall be considered as compensable working time.

RULES ON MEAL PERIOD1.not be less than 60mins, it is compensable.Except where during the so-called meal period, the laborers are required to standby for emergency work or said meal period is not one of complete rest, such period is considered OT(hours worked)2.less than 60mins but not less than 20mins and the shortened mealtime must be with full pay under the following circumstances: a)non-manual work in nature or does not involve strenuous physical exertion; b)establishment regularly operates not less than 16hours a day; c)actual or impending emergencies or there is urgent work to be performed on machineries, equipments or installation to avoid serious loss which the ER would otherwise suffer; and d)necessary to prevent serious loss of perishable goods3.less than 20mins, it becomes only a rest period and is thus considered as work time.

Meal period during OT work is not given to workers performing OT for the reason that OT work is usually for a short period ranging from 1-3hours and to deduct from the same 1full hour as meal period may reduce the EEs OT work to nothing.

SHORTENED MEAL BREAK UPON EEs REQUEST – not compensable.Requisites:1.EEs voluntarily agree in writing and waived the OT pay;2.no diminution in the salary and other FB of the EEs already existing;3.work is not physically strenuous and they are provided with adequate coffee breaks in the AM and PM;4.value of benefits is equal to compensation due to them;5.OT pay will become due and demandable if ever they are permitted or made to work beyond 4:30 PM; and6.the arrangement is of temporary duration.

Thus, the 8-hour work period does not include the meal break. Nowhere in the law may it be inferred that EEs must take their meals within the company premises. EEs are not prohibited from going out of the premises as long as they return to their posts on time. Private respondent's act, therefore, of going home to take his dinner does not constitute abandonment. (PAL v. NLRC)

xii.REST PERIODREAD: TITLE I, BOOK III, RULE1, SEC.7(LAST PAR.)OMNIBUS RULES OF THE LABOR CODERest periods or coffee breaks running from five (5) to twenty (20) minutes shall be considered as compensable working time.

FINALS

e.SPECIAL LEAVESMATERNITY LEAVE(RA7322) A covered female EE (Ee) is entitled to a daily maternity benefit equivalent to 100% of her present basic salary, allowances and other benefits or the cash equivalent of such benefits for 60 days or 78 days in case of caesarian delivery.

Requirements:1)There is childbirth, abortion or miscarriage: and 2)She has paid at least 3 monthly contributions

Conditions for entitlement:1)The Ee shall have notified her ER (Er) of her pregnancy and the probable date of her childbirth which notice shall be transmitted to the SSS;2)The payment shall be advanced by the Er in 2 equal installments within 30 days from the filing of the maternity leave application;3)In case of caesarian delivery, the Ee shall be paid the daily maternity benefit for 78 days;4)Payment of daily maternity benefits shall be a bar to the recovery of sickness benefits for the same compensable period of 60 days for the same childbirth, abortion, or miscarriage;

5)The maternity benefits provided under Section 14‐A shall be paid

only for the first four deliveries;6) The SSS shall immediately reimburse the Er of 100% of the amount of maternity benefits advanced to the Ee by the Er upon receipt of satisfactory proof of such payment and legality thereof; and

7)If an Ee should give birth or suffer abortion or miscarriage without the required contributions having been remitted for her by her Er to the SSS, or without the latter having been previously notified by the Er of the time of the pregnancy, the Er shall pay to the SSS damages equivalent to the benefits which

PATERNITY LEAVE(RA8187) Notwithstanding any law, rules and regulations to the contrary, every married male EE in the private and public sectors shall be entitled to a paternity leave of 7 days with full pay for the first 4 deliveries of the legitimate spouse with whom he is cohabiting. purposes of enabling him to effectively lend support to his wife in her period of recovery and/or in the nursing of

the newly‐born child.

Requirements:The male EE (Ee) applying for paternity leave shall: 1.Notify his ER (Er) of the pregnancy of his legitimate spouse and 2.The expected date of such delivery.

Conditions for entitlement:The male Ee is; 1.Legally married to, and is cohabiting with the woman who delivers the baby 2.Ee of private or public sector; 3.Only for the first 4 deliveries of legitimate spouse with whom he is cohabiting; and 4.Notify his Er of the pregnancy of his legitimate spouse and the expected date of such delivery

delivery shall include childbirth or any miscarriage. Shall not be convertible to cash.

SOLO PARENT LEAVE(RA8972) SEC.8 - Parental Leave. - In addition to leave privileges under existing laws, parental leave of not more than seven (7) working days every year shall be granted to any solo parent EE who has rendered service of at least one (1) year.

Conditions for entitlement:1. He or she must fall among those referred to as solo parent2. Must have the actual and physical custody of the child or children3. Must have at least rendered service of one year to his or her ER4. He or she must remain a solo parent

A change in the status or circumstance of the parent claiming benefits under this Act, such that he/she is no longer left alone with the responsibility of parenthood, shall terminate his/her eligibility for these benefits. (Sec.3)

If unutilized, is not convertible to cash unless otherwise agreed. Non-compliance with the law may make ER liable for damages.

No ER shall discriminate against any solo parent EE with respect to terms and conditions of employment on account of his/her status.

BATTERED WOMAN LEAVE(RA9262) SEC.43 – Entitled Leave – Victims under this Act shall be entitled to take a paid leave of absence up to ten (10) days in addition to other paid leaves under the Labor Code and Civil Service Rules and Regulations, extendible when necessity arises as specified in the protection order.

Any ER who shall prejudice the right of the person under this section shall be penalized in accordance with the provisions of the Labor Code and Civil Service Rules and Regulations. Likewise, an ER who shall prejudice any person for assisting a co-EE who is a victim under this Act shall likewise be liable for discrimination.

EE has to submit a certification from punong barangay, kagawad, prosecutor or clerk of court that ang action under the said Act has been filed and is pending.

MAGNA CARTA OF WOMEN(RA9710) SEC.18 - Special Leave Benefits for Women. - A woman EE having rendered continuous aggregate employment service of at least six (6) months for the last twelve (12) months shall be entitled to a special leave benefit of two (2) months with full pay based on her gross monthly compensation following surgery caused by gynecological disorders.

Filing of complaint under this Act shall not preclude the offended party from pursuing other remedies available under the law and to invoke any provisions of existing laws especially those recently enacted laws protecting women and their children.

If violence has been proven to be perpetrated by agents of the state, including but not limited to extrajudicial kills, enforced disappearances, torture, and internal displacements, such shall be considered aggravating offenses with corresponding penalties depending on the severity of the offenses.

f.Service Charges: TipSART. 96. Service charges. - All service charges collected by hotels, restaurants and similar establishments shall be distributed at the rate of eighty-five percent (85%) for all covered EEs and fifteen percent (15%) for management. The share of the EEs shall be equally distributed among them. In case the service charge is abolished, the share of the covered EEs shall be considered integrated in their wages.

BOOKIII, RULEIVSECTION 1. Coverage. — This rule shall apply to all EEs except:

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(a) Those of the government and any of the political subdivision, including government-owned and controlled corporation;(b) Those of retail and service establishments regularly employing less than ten (10) workers;(c) Domestic helpers and persons in the personal service of another;(d) Managerial EEs as defined in Book Three of the Code;COVERED Ees MANAGEMENT

85% 15%

Equally distributed among them 1.To answer for losses and breakages and

2.Distributed to Ees receiving more than P2000 a month at the discretion of the management.

(e) Field personnel and other EEs whose time and performance is unsupervised by the ER including those who are engaged on task or contract basis, purely commission basis, or those who are paid a fixed amount for performing work irrespective of the time consumed in the performance thereof.cralaw

SECTION 2. Status of EEs paid by the month. — EEs who are uniformly paid by the month, irrespective of the number of working days therein, with a salary of not less than the statutory or established minimum wage shall be paid for all days in the month whether worked or not.cralaw

For this purpose, the monthly minimum wage shall not be less than the statutory minimum wage multiplied by 365 days divided by twelve.cralaw

SECTION 3. Holiday Pay. — Every ER shall pay his EEs their regular daily wage for any worked regular holidays.cralaw

As used in the rule, the term 'regular holiday' shall exclusively refer to: New Year's Day, Maundy Thursday, Good Friday, the ninth of April, the first of May, the twelfth of June, the last Sunday of August, the thirtieth of November, the twenty-fifth and thirtieth of December. Nationwide special days shall include the first of November and the last day of December.cralawAs used in this Rule legal or regular holiday and special holiday shall now be referred to as 'regular holiday' and 'special day', respectively.cralaw

SECTION 4. Compensation for holiday work. — Any EE who is permitted or suffered to work on any regular holiday, not exceeding eight (8) hours, shall be paid at least two hundred percent (200%) of his regular daily wage. If the holiday work falls on the scheduled rest day of the EE, he shall be entitled to an additional premium pay of at least 30% of his regular holiday rate of 200% based on his regular wage rate.cralaw

SECTION 5. Overtime pay for holiday work. — For work performed in excess of eight hours on a regular holiday, an EE shall be paid an additional compensation for the overtime work equivalent to his rate for the first eight hours on such holiday work plus at least 30% thereof.cralawWhere the regular holiday work exceeding eight hours falls on the scheduled rest day of the EE, he shall be paid an additional compensation for the overtime work equivalent to his regular holiday-rest day for the first 8 hours plus 30% thereof. The regular holiday rest day rate of an EE shall consist of 200% of his regular daily wage rate plus 30% thereof.cralaw

i.TIPS, DEFINEDA tip may range from pure gift out of benevolence or friendship, to a compensation for a service measured by its supposed value but not fixed by an agreement, although usually the word is applied to what is paid to a servant in addition to the regular compensation for his service in order to secure better service or in recognition of it. It has been said that a tip denotes a voluntary act, but it also has been said that from the very beginning of the practice of tipping it was evident that, whether considered from the standpoint of the giver or the recipient, a tip lacked the essential element of a gift, namely, the free bestowing of a gratuity without a consideration, and that, despite its apparent voluntariness, there is an element of compulsion in tipping.

Tipping is done to get the attention and secure the immediate services of a waiter, porter or others for their services. Since a tip is considered a pure gift out of benevolence or friendship, it can not be demanded from the customer. Whether or not tips will be given is dependent on the will and generosity of the giver. Although a customer may give a tip as a consideration for services rendered, its value still depends on the giver. They are given in addition to the compensation by the ER. A gratuity given by an ER in order to inspire the EE to exert more effort in his work is more appropriately called a bonus.

The contract of employment between petitioners and Orlando is categorical that the monthly salary of Orlando is US$450.00 flat rate. This already included his overtime pay which is integrated in his 12 hours of work. The words “plus tips of US$2.00 per passenger per day” were written at the line for overtime. Since payment for overtime was included in the monthly salary of Orlando, the supposed tips mentioned in the contract should be deemed included thereat.

It is presumed that the parties were aware of the plain, ordinary and common meaning of the word “tip.” As a bartender, Orlando can not feign ignorance on the practice of tipping and that tips are normally paid by customers and not by the ER. (ACE NAVIGATION CO. v. CA)

ii.WHEN NOT ENTITLEDAs regards the share of Damalerio in the service charges collected during the period of his preventive suspension, the same form part of his earnings, and his dismissal having been adjudged to be illegal, he is entitled not only to full backwages but also to other benefits, including a just share in the service charges, to be computed from the start of his preventive suspension until his reinstatement.

However, mindful of the animosity and strained relations between the parties, emanating from this litigation, we uphold the ruling a quo that in lieu of reinstatement, separation pay may be given to the private respondent, at the rate of one (1) month pay for every year of service. Should petitioner opt in favor of separation pay, the private respondent shall no longer be entitled to share in the service charges collected during his preventive suspension. (MARANAW HOTELS AND RESORT CORPORATION)

Q: What are service charges (SC)? A: These are charges collected by hotels, restaurants and similar establishments and shall be distributed at the rate of:

Q: Who are covered Ees? A: GR: All Ees are covered, regardless of their position, designation, employment status, irrespective of the method by which their wages are paid. Note: Applies only to hotels, restaurants and similar establishment collecting service charges. XPN: Managerial Ees. (Sec. 2, Rule VI, Book III, IRR)

Q: When is the share of EE distributed and paid to them? A: Not less than once every 2 weeks or twice a month at intervals not exceeding 16 days.

Q: What happens if the Service Charge is abolished?A: The share of the covered Ees shall be considered integrated in their wages on the basis of the average monthly share of each Ees for the past 12 months immediately preceding the abolition.Note: Service charges form part of the award in illegal dismissal cases.

f.13TH MONTH PAYREAD: PD851 Section 1. Payment of 13-month Pay All ERs covered by Presidential Decree No. 851, hereinafter referred to as the "Decree", shall pay to all their EEs receiving a basic salary of not more than P1,000 a month a thirteenth-month pay not later than December 24 of every year.

Section 2. Definition of certain terms As used in this issuance.(a) "Thirteenth-moth pay" shall mean one twelfth (1/12) of the basic salary of an EE within a calendar year;(b) "Basic salary" shall include all remunerations or earnings paid by an ER to an EE for services rendered but may not include cost-of-living allowances granted pursuant to Presidential Decree No. 525 or Letter of Instructions No. 174, profit-sharing payments, and all allowances and monetary benefits which are not considered or integrated as part of the regular or basic salary of the EE at the time of the promulgation of the Decree on December 16, 1975.

Section 3.ERs covered The Decree shall apply to all ERs except to:(a) Distressed ERs, such as (1) those which are currently incurring substantial losses or (2) in the case of non-profit institutions and organizations, where their income, whether from donations, contributions, grants and other earnings from any source, has consistently declined by more than forty (40%) percent of their normal income for the last two (2) years, subject to the provision of Section 7 of this issuance;(b) The Government and any of its political subdivisions, including government-owned and controlled corporations, except those corporations operating essentially as private subsidiaries of the Government;(c) ERs already paying their EEs 13-month pay or more in a calendar year of its equivalent at the time of this issuance;(d) ERs of household helpers and persons in the personal service of another in relation to such workers; and(e) ERs of those who are paid on purely commission, boundary, or task basis, and those who are paid a fixed amount for performing a specific work, irrespective of the time consumed in the performance thereof, except where the workers are paid on piece-rate basis in which case the ER shall be covered by this issuance insofar as such workers are concerned.As used herein, workers paid on piece-rate basis shall refer to those who are paid a standard amount for every piece or unit of work produced that is more or less regularly replicated, without regard to the time spent in producing the same.The term "its equivalent" as used in paragraph c) hereof shall include Christmas bonus, mid-year bonus, profit-sharing payments and other cash bonuses amounting to not less than 1/12th of the basic salary but shall not include cash and stock dividends, cost of living allowances and all other allowances regularly enjoyed by the EE, as well as non-monetary benefits. Where an ER pays less than 1/12th of the EEs basic salary, the ER shall pay the difference.

Section 4. EEs covered Except as provided in Section 3 of this issuance, all EEs of covered ERs shall be entitled to benefit provided under the Decree who are receiving not more than P1,000 a month,

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regardless of their position, designation or employment status, and irrespective of the method by which their wages are paid, provided that they have worked for at least one month during the calendar year.

Section 5. Option of covered ERs A covered ER may pay one-half of the 13th-month pay required by the Decree before the opening of the regular school year and the other half on or before the 24th day of December of every year.In any establishment where a union has been recognized or certified as the collective bargaining agent of the EEs therein, the periodicity or frequency of payment of the 13th month pay may be the subject of agreement.Nothing herein shall prevent ERs from giving the benefits provided in the Decree to their EEs who are receiving more than One Thousand (P1,000) Pesos a month or benefits higher than those provided by the Decree.

Section 6. Special feature of benefit The benefits granted under this issuance shall not be credited as part of the regular wage of the EEs for purposes of determining overtime and premium pay, fringe benefits, as well as premium contributions to the State Insurance Fund, social security, medicare and private welfare and retirement plans.

Section 7. Exemption of Distressed ERs Distressed ERs shall qualify for exemption from the requirement of the Decree upon prior authorization by the Secretary of Labor. Petitions for exemptions may be filed within the nearest regional office having jurisdiction over the ER not later than January 15, 1976. The regional offices shall transmit the petitions to the Secretary of Labor within 24 hours from receipt thereof.

Section 8. Report of compliance Every covered ER shall make a report of his compliance with the Decree to the nearest regional labor office not later than January 15 of each year.The report shall conform substantially with the following form:REPORT ON COMPLIANCE WITH PD NO. 8511. Name of establishment2. Address3. Principal product or business4. Total employment5. Total number of workers benefited6. Amount granted per EE7. Total amount of benefits granted8. Name, position and tel. no. of person giving information

Section 9. Adjudication of claims Non-payment of the thirteenth-month pay provided by the Decree and these rules shall be treated as money claims cases and shall be processed in accordance with the Rules Implementing the Labor Code of the Philippines and the Rules of the National Labor Relations Commission.

Section 10. Prohibition against reduction or elimination of benefits Nothing herein shall be construed to authorize any ER to eliminate, or diminish in any way, supplements, or other EE benefits or favorable practice being enjoyed by the EE at the time of promulgation of this issuance.

i.EES NOT ENTITLEDRespondent is not a rank-and-file EE and is, therefore, not entitled to thirteenth-month pay. However, the NLRC and the CA are correct in refusing to award 14th and 15th month pay as well as the “monthly salary increase of 10 percent per year for two years based on her latest salary rate.” The respondent must show that these benefits are due to her as a matter of right. Mere allegations by the respondent do not suffice in the absence of proof supporting the same. With respect to salary increases in particular, the respondent must likewise show that she has a vested right to the same, such that her salary increases can be made a component in the computation of backwages. What is evident is that salary increases are a mere expectancy. They are by nature volatile and dependent on numerous variables, including the company’s fiscal situation, the EE’s future performance on the job, or the EE’s continued stay in a position. In short, absent any proof, there is no vested right to salary increases.(HOUSE OF SARA LEE, vs. CYNTHIA F. REY)

The coverage of the Contract includes Compensation, Overtime, Sundays and Holidays, Vacations, Living Allowance, Sickness, Injury and Death, Transportation and Travel Expense, Subsistence and Living Quarters. It does not provide for the payment of 13th month pay. The Contract of Employment,[22] which is the standard employment contract of the POEA, likewise does not provide for the payment of 13th month pay. Hence, in the absence of any provision in his Contract governing the payment of 13th month pay, Tanchico is not entitled to the benefit.( PETROLEUM SHIPPING LIMITED(ESSO) vs. NLRC)

ii.BASIS FOR COMPUTATIONUnder the Revised Guidelines on the Implementation of the 13th month pay issued on November 16, 1987, the salary ceiling of P1,000.00 under P.D. No. 851 was removed. It further provided that the minimum 13th month pay required by law shall not be less than one-twelfth (1/12) of the total basic salary earned by an EE within a calendar year. The guidelines pertinently provides: The “basic salary” of an EE for the purpose of computing the 13th month pay shall include all remunerations or earnings paid by his ER for services rendered but does not include allowances and monetary benefits which are not considered or integrated as part of the regular or basic salary, such as the cash equivalent of unused vacation and sick leave credits, overtime premium, night differential and holiday pay, and cost-of-living allowances.

For EEs receiving regular wage, we have interpreted “basic salary” to mean, not the amount actually received by an EE, but 1/12 of their standard monthly wage multiplied by their length of service within a given calendar year. Thus, we exclude from the computation of “basic salary” payments for sick, vacation and maternity leaves, night differentials, regular holiday pay and premiums for work done on rest days and special holidays.

The revised guidelines also provided for a pro-ration of this benefit only in cases of resignation or separation from work. As the rules state, under these circumstances, an EE is entitled to a pay in proportion to the length of time he worked during the year, reckoned from the time he started working during the calendar year.The Court of Appeals thus held that: Considering the foregoing, the computation of the 13th month pay should be based on the length of service and not on the actual wage earned by the worker.(HONDA PHILS., INC., vs. SAMAHAN NG MALAYANG MANGGAGAWA SA HONDA)

iii.BONUSthe Christmas bonus was included in the 13th month pay, then there would be no need for having a specific provision on Christmas bonus in the CBA. But it did provide for a bonus in graduated amounts depending on the length of service of the EE. The intention is clear therefore that the bonus provided in the CBA was meant to be in addition to the legal requirement. Moreover, why exclude the payment of the 1978 Christmas bonus and pay only the 1979-1980 bonus. The classification of the company's workers in the CBA according to their years of service supports the allegation that the reason for the payment of bonus was to give bigger reward to the senior EEs — a purpose which is not found in P.D. 851. A bonus under the CBA is an obligation created by the contract between the management and workers while the 13th month pay is mandated by the law.(UNITED CMC TEXTILE WORKERS UNION vs.LA and VALENZUELA)

An ER cannot be forced to distribute bonuses which it can no longer afford to pay, a bonus is an amount granted and paid to anEE for his industry and loyalty which contributed to the success of the ERs business and made possible the realization of profile. It is an act of generosity and is a management prerogative, given in addition to what is ordinarily received by or strictly due the recipient. Thus, it is not a demandable and enforceable obligation, except when it is made part of the wage, salary or compensation of the EE. (PRODUCERS BANK OF THE PHILIPPINES vs. NLRC)

3. TITLE II, CHAPTER III, ART.96-105, 110-119, 123-129ART. 98. Application of Title. - This Title shall not apply to farm tenancy or leasehold, domestic service and persons working in their respective homes in needle work or in any cottage industry duly registered in accordance with law.

ART. 102. Forms of payment. - No ER shall pay the wages of an EE by means of promissory notes, vouchers, coupons, tokens, tickets, chits, or any object other than legal tender, even when expressly requested by the EE.Payment of wages by check or money order shall be allowed when such manner of payment is customary on the date of effectivity of this Code, or is necessary because of special circumstances as specified in appropriate regulations to be issued by the Secretary of Labor and Employment or as stipulated in a collective bargaining agreement.

ART. 103. Time of payment. - Wages shall be paid at least once every two (2) weeks or twice a month at intervals not exceeding sixteen (16) days. If on account of force majeure or circumstances beyond the ER’s control, payment of wages on or within the time herein provided cannot be made, the ER shall pay the wages immediately after such force majeure or circumstances have ceased. No ER shall make payment with less frequency than once a month. The payment of wages of EEs engaged to perform a task which cannot be completed in two (2) weeks shall be subject to the following conditions, in the absence of a collective bargaining agreement or arbitration award: (1) That payments are made at intervals not exceeding sixteen (16) days, in proportion to the amount of work completed; (2) That final settlement is made upon completion of the work.

ART. 104. Place of payment. - Payment of wages shall be made at or near the place of undertaking, except as otherwise provided by such regulations as the Secretary of Labor and Employment may prescribe under conditions to ensure greater protection of wages.

ART. 112. Non-interference in disposal of wages. - No ER shall limit or otherwise interfere with the freedom of any EE to dispose of his wages. He shall not in any manner force, compel, or oblige his EEs to purchase merchandise, commodities or other property from any other person, or otherwise make use of any store or services of such ER or any other person.

ART. 113. Wage deduction. - No ER, in his own behalf or in behalf of any person, shall make any deduction from the wages of his EEs, except: (a) In cases where the worker is insured with his consent by the ER, and the deduction is to recompense the ER for the amount paid by him as premium on the insurance; (b) For union dues, in cases where the right of the worker or his union to check-off has been recognized by the ER or authorized in writing by the individual worker concerned; and (c) In cases where the ER is authorized by law or regulations issued by the Secretary of Labor and Employment.

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ART. 114. Deposits for loss or damage. - No ER shall require his worker to make deposits from which deductions shall be made for the reimbursement of loss of or damage to tools, materials, or equipment supplied by the ER, except when the ER is engaged in such trades, occupations or business where the practice of making deductions or requiring deposits is a recognized one, or is necessary or desirable as determined by the Secretary of Labor and Employment in appropriate rules and regulations.

ART. 115. Limitations. - No deduction from the deposits of an EE for the actual amount of the loss or damage shall be made unless the EE has been heard thereon, and his responsibility has been clearly shown.

ART. 117. Deduction to ensure employment. - It shall be unlawful to make any deduction from the wages of any EE for the benefit of the ER or his representative or intermediary as consideration of a promise of employment or retention in employment.

ART. 118. Retaliatory measures. - It shall be unlawful for an ER to refuse to pay or reduce the wages and benefits, discharge or in any manner discriminate against any EE who has filed any complaint or instituted any proceeding under this Title or has testified or is about to testify in such proceedings.

ART. 119. False reporting. - It shall be unlawful for any person to make any statement, report, or record filed or kept pursuant to the provisions of this Code knowing such statement, report or record to be false in any material respect.

a.NO WORK, NO PAY PRINCIPLE; APPLICABILITY/NON-APPLICABILITY

GR: If there is no work performed by the Ee, without the fault of the Er, there can be no wage or pay.

XPN: The laborer was able, willing and ready to work but was:

1. Prevented by management;

2. Illegally locked out;

3. Illegally suspended;

4. Illegally dismissed

5. Otherwise illegally prevented from

The petitioners herein do not deny their participation in the June 15, 1993 strike. As such, they did not suffer any loss of earnings during their absence from work. Their reinstatement sans backwages is in order, to conform to the policy of a fair day’s wage for a fair day’s labor. Under the principle of a fair day’s wage for a fair day’s labor, the petitioners were not entitled to the wages during the period of the strike (even if the strike might be legal), because they performed no work during the strike. Verily, it was neither fair nor just that the dismissed EEs should litigate against their ER on the latter’s time. DANILO ESCARIO vs. NLRC)

b.WAGES/SALARIES, FACILITIES, SUPPLEMENTSpecifically, "wage" is defined in letter (f) as the remuneration or earnings, however designated, capable of being expressed in terms of money, whether fixed or ascertained on a time, task, piece, or commission basis, or other method of calculating the same, which is payable by an ER to an EE under a written or unwritten contract of employment for work done or to be done, or for services rendered or to be rendered and includes the fair and reasonable value, as determined by the Secretary of Labor, of board, lodging, or other facilities customarily furnished by the ER to the EE.

"Customary" is founded on long-established and constant practice connoting regularity. The receipt of an allowance on a monthly basis does not ipso facto characterize it as regular and forming part of salary because the nature of the grant is a factor worth considering. We agree with the observation of the OSG that the subject allowances were temporarily, not regularly, received by petitioners because —In the case of the housing allowance, once a vacancy occurs in the company-provided housing accommodations, the EE concerned transfers to the company premises and his housing allowance is discontinued . On the other hand, the transportation allowance is in the form of advances for actual transportation expenses subject to liquidation,given only to EEs who have personal cars. The Bislig allowance is given to Division Managers and corporate officers assigned in Bislig, Surigao del Norte. Once the officer is transferred outside Bislig, the allowance stops.(LIDUVINO M. MILLARES et al. vs. NLRC)

Q: When can the cost of facilities furnished by the Er be charged against an Ee? A: In order that the cost be charged against the Ee, the latter’s acceptance of such facilities must be voluntary.

Q: What are the requirements for deducting values for facilities?A:1.Proof must be shown that such facilities are customarily furnished by the trade 2.The provision of deductible facilities must be voluntarily accepted in writing 3.The facilities must be charged at fair and reasonable value (Mabeza v. NLRC, G.R. No. 118506, April 18, 1997)

In short, the benefit or privilege given to the EE which constitutes an extra remuneration above and over his basic or ordinary earning or wage is supplement; and when said benefit or privilege is part of the laborers' basic wages, it is a facility. The distinction lies not so much in the kind of benefit or item (food, lodging, bonus or sick leave) given, but in the purpose for which it is given.23 In the case

at bench, the items provided were given freely by SLL for the purpose of maintaining the efficiency and health of its workers while they were working at their respective projects

As a general rule, on payment of wages, a party who alleges payment as a defense has the burden of proving it.Specifically with respect to labor cases, the burden of proving payment of monetary claims rests on the ER, the rationale being that the pertinent personnel files, payrolls, records, remittances and other similar documents — which will show that OT, differentials, SIL and other claims of workers have been paid — are not in the possession of the worker but in the custody and absolute control of the ER. (SLL INTERNATIONAL CABLES SPECIALIST and SONNY L. LAGON, vs. NLRC)A: FACILITIES SUPPLEMENT Items of expenses necessary for the laborer’s and his family’s existence and subsistence Note: Does not include tools of trade or articles / services primarily for the benefit of the Er or necessary to the conduct of the Er’s business.

Extra remuneration or special privileges or benefits given to or received by the laborers over and above their ordinary earnings or wages (Atok Big Wedge Mining Co. v. Atok Big Wedge Mutual Benefit Assoc, G.R. No. L‐7349, July 19, 1955) .

Forms part of the wage Independent of wage Deductible from wage Not wage deductible For the benefit of the worker and his family.

Granted for the convenience of the Er.

WAGE SALARY

Compensation for manual labor (skilled or unskilled) also known as “blue collared workers”, paid at stated times and measured by the day, week, month or season.

Paid to “white collared workers” and denotes higher degree of employment or a superior grade of services and implies a position in office.

Considerable pay for a lower and less responsible character of employment.

Out gesture of a larger and more important service

GR: Not subject to execution XPN: Debts incurred for food, shelter, clothing and medical attendance.

Subject to execution.

i.BONUS INCLUDED/NOT INCLUDED; A DEMANDABLE OBLIGATIONThe general rule is that a bonus is a gratuity or an act of liberality which the recipient has no right to demand as a matter of right. 8 A bonus, however, is a demandable or enforceable obligation when it is made part of the wage or salary or compensation of the EE. 9 Whether or not a bonus forms part of wages depends upon the circumstances and conditions for its payment. If it is additional compensation which the ER promised and agreed to give without any conditions imposed for its payment, such as success of business or greater production or output, then it is part of the wage. But if it is paid only if profits are realized or if a certain level of productivity is achieved, it can not be considered part of the wage. Where it is not payable to all but only to some EEs and only when their labor becomes more efficient or more productive, it is only an inducement for efficiency, a prize therefor, not a part of the wage.( METRO TRANSIT ORGANIZATION, INC. vs. NLRC)

ii.SALES ON COMMISSIONConsidering the above circumstances, the Third Division held, correctly, that the sales commissions were an integral part of the basic salary structure of Philippine Duplicators' EEs-salesmen. These commissions are not overtime payments, nor profit-sharing payments nor any other fringe benefit. Thus, the salesmen's commissions, comprising a pre-determined percent of the selling price of the goods sold by each salesman, were properly included in the term "basic salary" for purposes of computing their 13th month pay. (PHIL. DUPLICATORS INC. vs. NLRC)

iii.MEAL COUPONSIn determining wheth¬er a benefit or privilege, is a supplement or a facility the criterion is not the kind of benefit or item but its purpose. The benefit or privilege given to the EEs which consti¬tutes an extra remuneration above and over his basic or or-dinary earning or wage is supplement; and if it forms part of the EE’s basic wage. It is facility. Therefore, no deduction should be made from the wages of the members of a commercial ship for meals freely given them by their em¬ployer not as part of their wages but as a necessary matter in the maintenance of their health and efficiency, such bene¬fit being in the nature of a supplement. (STATES MARINE CORP. vs. CEBU SEAMEN’S ASSOC.)

c.EQUAL PAY FOR EQUAL WORK OF EQUAL VALUEThe School contends that petitioner has not adduced evidence that local-hires perform work equal to that of foreign-hires. The Court finds this argument a little cavalier. If an ER accords EEs the same position and rank, the presumption is that these EEs perform equal work. This presumption is borne by logic and human experience. If the ER pays one EE less than the rest, it is not for that EE to explain why he receives less or why the others receive more. That would be adding insult to injury. The ER has discriminated against that EE; it is for the ER to explain why the EE is treated unfairly. (INT’L SCHOOL ALLIANCE OF EDUCATORS vs. QUISUMBING)

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d.WITHHOLDING OF WAGESART. 116. Withholding of wages and kickbacks prohibited. - It shall be unlawful for any person, directly or indirectly, to withhold any amount from the wages of a worker or induce him to give up any part of his wages by force, stealth, intimidation, threat or by any other means whatsoever without the worker’s consent.

Management prerogative refers “to the right of an ER to regulate all aspects of employment, such as the freedom to prescribe work assignments, working methods, processes to be followed, regulation regarding transfer of EEs, supervision of their work, lay-off and discipline, and dismissal and recall of work.” Although management prerogative refers to “the right to regulate all aspects of employment,” it cannot be understood to include the right to temporarily withhold salary/wages without the consent of the EE. To sanction such an interpretation would be contrary to Article 116 of the Labor Code, x x x Any withholding of an EE’s wages by an ER may only be allowed in the form of wage deductions under the circumstances provided in Article 113 of the Labor Code. (SHS PERFORATED MATERIALS vs. DIAZ)

e.DIRECT PAYMENT PRINCIPELEART. 105. Direct payment of wages. - Wages shall be paid directly to the workers to whom they are due, except: (a) In cases of force majeure rendering such payment impossible or under other special circumstances to be determined by the Secretary of Labor and Employment in appropriate regulations, in which case, the worker may be paid through another person under written authority given by the worker for the purpose; or (b) Where the worker has died, in which case, the ER may pay the wages of the deceased worker to the heirs of the latter without the necessity of intestate proceedings. The claimants, if they are all of age, shall execute an affidavit attesting to their relationship to the deceased and the fact that they are his heirs, to the exclusion of all other persons. If any of the heirs is a minor, the affidavit shall be executed on his behalf by his natural guardian or next-of-kin. The affidavit shall be presented to the ER who shall make payment through the Secretary of Labor and Employment or his representative. The representative of the Secretary of Labor and Employment shall act as referee in dividing the amount paid among the heirs. The payment of wages under this Article shall absolve the ER of any further liability with respect to the amount paid.

f.NON-DIMINUTION OF BENEFITS PRINCIPLEArticle 100 of the Labor Code, otherwise known as the Non-Dimi¬nution Rule, mandates that benefits given to EEs cannot be taken back or reduced unilaterally by the ER because the benefit has become part of the employment contract, written or unwritten. The rule against diminution of benefits applies if it is shown that the grant of the benefit is based on an express policy or has ripened into a practice over a long period of time and that the practice is consistent and deliberate. Nevertheless, the rule will not apply if the practice is due to error in the construction or application of a doubtful or difficult question of law. But even in cases of error, it should be shown that the correction is done soon after discovery of the error. (CENTRAL AZUCARERA DE TARLAC vs. CENTRAL AZUCARERA DE TARLAC LABOR UNION)

g.PREFERENTIAL RIGHT IN CASE OF BANKRUPTCYWe have repeatedly stressed that before the workers' preference provided by Article 110 may be invoked, there must first be a declaration of bankruptcy or a judicial liquidation of the ER's business. xxx xxx In DBP v. Santos, supra, the Court discussed the import of Article 110 and Section 10 of Rule VIII, Book III and stated: "It is quite clear from the provisions that a declaration of bankruptcy or ajudicial liquidation must be present before the worker's preference may be enforced. Thus, Article 110 of the Labor Code and its implementing rule cannot be invoked by the respondents in this case absent a formal declaration of bankruptcy or a liquidation order.

In the event of bankruptcy or liquidation of an ER's business, his workers shall enjoy first preference as regards their unpaid wages and other monetary claims, any provision of law to the contrary notwithstanding. Such unpaid wages,and monetary claims shall be paid in full before the claims of the Government and other creditors may be paid." (Italics ours.) We ruled in DBP v. NLRC, supra, that the amendment "expands worker preference to cover not only unpaid wages but also other monetary claims to which even claims of the Government must be deemed subordinate." Hence, under the new law, even mortgage credits are subordinate to workers' claims. In this connection, respondent NLRC ruled: "Lastly, while we are cognizant of the pronouncement of the Supreme Court with respect to Art. 110 and while we hold in respect said pronouncements, we are of the earnest view that considering that Art. 110 has been amended by RA 6715, complainants' preference over government claims and other creditors be adhered to." (Rollo, p. 65) R.A. No. 6715, however, took effect only on March 21; 1989. The amendment cannot therefore be retroactively applied to, nor can it affect, the mortgage credit which was secured by the petitioner several years prior to its effectivity. (DBP vs. NLRC)

h.ATTORNEY’S FEESART. 111. Attorney’s fees. - (a) In cases of unlawful withholding of wages, the culpable party may be assessed attorney’s fees equivalent to ten percent of the amount of wages recovered. (b) It shall be unlawful for any person to demand or accept, in any judicial or administrative proceedings for the recovery of wages, attorney’s fees which exceed ten percent of the amount of wages recovered.

ORDINARY vs. EXTRAORDINARY ATTY’S FEES: In its ordinary concept, an attorney's fee is the reasonable compensation paid to a lawyer by his client for the legal services he has rendered to the latter. The basis of this compensation is the fact of his employment

by and his agreement with the client. In its extraordinary concept, an attorney's fee is an indemnity for damages ordered by the court to be paid by the losing party in a litigation. The basis of this is any of the cases provided by law where such award can be made, such as those authorized in Article 2208, Civil Code, and is payable not to the lawyer but to the client, unless they have agreed that the award shall pertain to the lawyer as additional compensation or as part thereof.

As an adjunctive episode of the action for the recovery of bonus differentials in NLRC-NCR Certified Case No. 0466, private respondent's present claim for attorney's fees may be filed before the NLRC even though or, better stated, especially after its earlier decision had been reviewed and partially affirmed. It is well settled that a claim for attorney's fees may be asserted either in the very action in which the services of a lawyer had been rendered or in a separate action.

With respect to the first situation, the remedy for recovering attorney's fees as an incident of the main action may be availed of only when something is due to the client. Attorney's fees cannot be determined until after the main litigation has been decided and the subject of the recovery is at the disposition of the court. The issue over attorney's fees only arises when something has been recovered from which the fee is to be paid.

While a claim for attorney's fees may be filed before the judgment is rendered, the determination as to the propriety of the fees or as to the amount thereof will have to be held in abeyance until the main case from which the lawyer's claim for attorney's fees may arise has become final. Otherwise, the determination to be made by the courts will be premature. 24Of course, a petition for attorney's fees may be filed before the judgment in favor of the client is satisfied or the proceeds thereof delivered to the client.

GENERAL RETAINER/RETAINER FEE(COMPENSTATION FOR COMMITMENT TO RENDER LEGAL SERVICES) vs. SPECIAL RETAINER(REMUNERATION FOR LEGAL SERVICES ACTUALLY RENDERED)The difference between a compensation for a commitment to render legal services and a remuneration for legal services actually rendered can better be appreciated with a discussion of the two kinds of retainer fees a client may pay his lawyer. These are a general retainer, or a retaining fee, and a specialretainer.

A general retainer, or retaining fee, is the fee paid to a lawyer to secure his future services as general counsel for any ordinary legal problem that may arise in the routinary business of the client and referred to him for legal action. The future services of the lawyer are secured and committed to the retaining client. For this, the client pays the lawyer a fixed retainer fee which could be monthly or otherwise, depending upon their arrangement. The fees are paid whether or not there are cases referred to the lawyer. The reason for the remuneration is that the lawyer is deprived of the opportunity of rendering services for a fee to the opposing party or other parties. In fine, it is a compensation for lost opportunities.

A special retainer is a fee for a specific case handled or special service rendered by the lawyer for a client. A client may have several cases demanding special or individual attention. If for every case there is a separate and independent contract for attorney's fees, each fee is considered a special retainer.(TRB vs. NLRC)

i.WAGE ORDERART. 123. Wage Order. - Whenever conditions in the region so warrant, the Regional Board shall investigate and study all pertinent facts; and based on the standards and criteria herein prescribed, shall proceed to determine whether a Wage Order should be issued. Any such Wage Order shall take effect after fifteen (15) days from its complete publication in at least one (1) newspaper of general circulation in the region. In the performance of its wage-determining functions, the Regional Board shall conduct public hearings/consultations, giving notices to EEs’ and ERs’ groups, provincial, city and municipal officials and other interested parties. Any party aggrieved by the Wage Order issued by the Regional Board may appeal such order to the Commission within ten (10) calendar days from the publication of such order. It shall be mandatory for the Commission to decide such appeal within sixty (60) calendar days from the filing thereof. The filing of the appeal does not stay the order unless the person appealing such order shall file with the Commission, an undertaking with a surety or sureties satisfactory to the Commission for the payment to the EEs affected by the order of the corresponding increase, in the event such order is affirmed. (As amended by Republic Act No. 6727, June 9, 1989).

Q: What are the standards or criteria for minimum wage setting?A: In the determination of such regional minimum wages, the Regional Board shall, among other relevant factors consider the following:a)The demand for living wages

b)Wage adjustment vis‐a‐vis the consumer price index

c)The cost of living and changes or increases thereind)The needs of workers and their familiese)The need to induce industries to invest in the countrysidef)Improvements in standards of livingg)The prevailing wage levelsh)Fair return of the capital invested and capacity to pay of ERsi)Effects on employment generation and family income

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j)The equitable distribution of income and wealth along the imperatives of economic and social development

Q: What is salary ceiling method?A: A method of minimum wage adjustment whereby the wage adjustment is applied to Ees receiving a certain denominated ceiling. In other words, workers already being paid more than the existing minimum wage are also to be given a wage increase. (ECOP v. NWCP, G.R. No. 96169, Sep. 24, 1991)Q: What is a floor wage method?A: It involves the fixing of a determinate amount to be added to the prevailing statutory minimum wage rates.

j.WAGE DISTORTION

Elaborating on this statutory definition, this Court ruled: “Wage distortion presupposes a classification of positions and ranking of these positions at various levels. One visualizes a hierarchy of positions with corresponding ranks basically in terms of wages and other emoluments. Where a significant change occurs at the lowest level of positions in terms of basic wage without a corresponding change in the other level in the hierarchy of positions, negating as a result thereof the distinction between one level of position from the next higher level, and resulting in a parity between the lowest level and the next higher level or rank, between new entrants and old hires, there exists a wage distortion.

The concept of wage distortion assumes an existing grouping or classification of EEs which establishes distinctions among such EEs on some relevant or legitimate basis. This classification is reflected in a differing wage rate for each of the existing classes of EEs.”

Wage distortion involves four elements: 1. An existing hierarchy of positions with corresponding salary rates; 2. A significant change in the salary rate of a lower pay class without a concomitant increase in the salary rate of a higher one; 3. The elimination of the distinction between the two levels; 4. The existence of the distortion in the same region of the country.

A wage parity between EEs in different rungs is not at issue here, but a wage disparity between EEs in the same rung but located in different regions of the country. Contrary to petitioner’s postulation, a disparity in wages between EEs holding similar positions but in different regions does not constitute wage distortion as contemplated by law..

Petitioner’s claim of wage distortion must also be denied for one other reason. The difference in wages between EEs in the same pay scale in different regions is not the mischief sought to be banished by the law. In fact, Republic Act No. 6727 (the Wage Rationalization Act), recognizes “existing regional disparities in the cost of living.” Section 2 of said law provides: “SEC. 2. It is hereby declared the policy of the State to rationalize the fixing of minimum wages and to promote productivity-improvement and gain-sharing measures to ensure a decent standard of living for the workers and their families; to guarantee the rights of labor to its just share in the fruits of production; to enhance employment generation in the countryside through industry dispersal; and to allow business and industry reasonable returns on investment, expansion and growth.

Petitioner also avers that the implementation of the Wage Order in only one region violates the equal-pay-for-equal-work principle. This is not correct. At the risk of being repetitive, we stress that RA 6727 mandates that wages in every region must be set by the particular wage board of that region, based on the prevailing situation therein. Necessarily, the wages in different regions will not be uniform. Thus, under RA 6727, the minimum wage in Region 1 may be different from that in Region 13, because the socioeconomic conditions in the two regions are different. (PRUBANKERS ASSOC. vs. PRUDENTIAL BANK AND TRUST CO.)

Q: Can the issue of WD be raised in a notice of strike?

A: No. WD is non‐strikeable. (Ilaw at Buklod ng Manggagawa v.

NLRC, G.R. No. 91980, June 27, 1991.) WD is neither a deadlock in collective bargaining nor ULP.

Q: Is the Er legally obliged to correct WD?A: The Er and the union shall negotiate to correct the distortions. If there is no union, the Er and the workers shall endeavor to correct such distinctions.

A: Organized Establishment (with union)

Unorganized Establishments (without union)

The Er and the union shall negotiate to correct distortion.

The Er and the workers shall endeavor to correct the

distortion.

Any dispute shall be resolved through a grievance procedure

under the CBA.

Any dispute shall be settled through the NCMB.

If it remains unresolved, it shall be dealt with through

voluntary arbitration.

If it remains unresolved within 10 days it shall be referred to the

NLRC.

The dispute will be resolved within 10 days from the time the dispute was referred to

voluntary arbitration.

The NLRC shall conduct continuous hearings and decide the dispute within 20 days from the time the same was referred.

k.VISITORIAL/ENFORCEMENT/ADJUDICATORY POWER

A: Art. 128 VP and EP of

SLE

Art. 129 RD

Art. 217(a)(6) LA

Inspection of establishments and issuance of

orders to compel compliance with labor standards, wage orders and other labor laws

Adjudication of Ees claims for wages

and benefits

LA exercises original and

exclusive jurisdiction

Enforcement of labor legislation

in general

Limited to monetary claims

All other claims arising from Er‐

Ee relations

Proceeding is an offshoot of

routine inspections

Initiated by sworn complaints filed by

any interested party

LA decides case within 30

calendar days after submission of the case by the parties for

decision No jurisdictional

req’ts Jurisdictional req’ts: 1) Complaint arises

from Er‐Ee relationship

2) Claimant is an Ee or person employed

in domestic or household service or

a HH 3) Complaint does

NOT include a claim for reinstatement

4) Aggregate money claim of EACH

claimant does not exceed P5,000

1) All other claims arising

from Er‐Ee relations

2) Including those of persons in domestic or

household service

3) Involving an amount

exceeding P5,000 4) Whether or not

accompanied with a claim for reinstatement

Appealable to SLE (In case

compliance order is issued by

Regional Office)

Appealable to NLRC Appealable to NLRC

DOLE REGIONAL DIRECTORS(Small Money Claims)Q: What is the rule on the recovery of simple money claims?A:1.The aggregate money claim of each EE (Ee) or househelper (HH) does not exceed P5,000.2.The claim is presented by an Ee or person employed in the domestic or household service or HH.

3.The claim arises from Er‐Ee relationship.

4.The claimant does not seek reinstatement.

Note: In the absence of any of the ff. requisites, it is the labor arbiter (LA) who shall have the jurisdiction over the claims arising

from Er‐Ee relations, except claims for Ees compensation, SSS,

Philhealth, and maternity benefits, pursuant to Art.217 of the Labor Code.The proceedings before the Regional Office shall be summary and

non‐litigious in nature.

Q: What is the adjudicatory power of the Regional Director (RD)?A: The RD or any of his duly authorized hearing officer is empowered through summary proceeding and after due notice, to hear and decide cases involving recovery of wages and other monetary claims and benefits, including legal interests

DOLE SECRETARY OF LABOR(V/E)Q: What constitute visitorial power?A:1.Access to ER’s records and premises at any time of the day or night, whenever work is being undertaken2.To copy from said records3.Question any EE and investigate any fact, condition or matter which may be necessary to determine violations or which may aid in the enforcement of the Labor Code and of any labor law, wage order, or rules and regulation issued pursuant thereto.

Q: Give 4 instances where the visitorial power of the SLE may be exercised under the Labor Code.A: Power to:1.Inspect books of accounts and records of any person or entity engaged in recruitment and placement, require it to submit reports regularly on prescribed forms and act in violations of any provisions of the LC on recruitment and placement. (Art. 37)2.Have access to ER’s records and premises to determine violations of any provisions of the LC on recruitment and placement. (Art. 128)3.Conduct industrial safety inspections of establishments. (Art. 165)4.Inquire into the financial activities of legitimate labor organizations (LLO) and examine their books of accounts upon the filing of the complaint under oath and duly supported by the written

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consent of at least 20% of the total membership of the LO concerned.

Q: What is enforcement power?A: It is the power of the SLE to:1.Issue compliance orders2.Issue writs of execution for the enforcement of their orders, except in cases where the ER (Er) contests the findings of the labor officer and raise issues supported by documentary proof which were not considered in the course of inspection

3.Order stoppage of work or suspension of operation when non‐compliance with the law or implementing rules and regulations poses grave and imminent danger to health and safety of workers in the workplace4.Require Ers to keep and maintain such employment records as may be necessary in aid to the visitorial and enforcement powers5.Conduct hearings within 24 hours to determine whether:a.An order for stoppage of work or suspension of operations shall be lifted or not; and b.Er shall pay EEs concerned their salaries in case the violation is attributable to his fault. (As amended by RA 7730; Guico v. Secretary,

Q: What are the instances when enforcement power may not be used?A:1.Case does not arise from the exercise of visitorial power

2.When Er‐Ee relationship ceased to exist at the time of the

inspection3.If ER contests the finding of the Labor Regulation Officer and such contestable issue is not verifiable in the normal course of inspection

4.TITLE iii, ARTS. 122-155ART. 122. Creation of Regional Tripartite Wages and Productivity Boards. - There is hereby created Regional Tripartite Wages and Productivity Boards, hereinafter referred to as Regional Boards, in all regions, including autonomous regions as may be established by law. The Commission shall determine the offices/headquarters of the respective Regional Boards. The Regional Boards shall have the following powers and functions in their respective territorial jurisdictions: (a) To develop plans, programs and projects relative to wages, incomes and productivity improvement for their respective regions; (b) To determine and fix minimum wage rates applicable in their regions, provinces or industries therein and to issue the corresponding wage orders, subject to guidelines issued by the Commission; (c) To undertake studies, researches, and surveys necessary for the attainment of their functions, objectives and programs, and to collect and compile data on wages, incomes, productivity and other related information and periodically disseminate the same; (d) To coordinate with the other Regional Boards as may be necessary to attain the policy and intention of this Code; (e) To receive, process and act on applications for exemption from prescribed wage rates as may be provided by law or any Wage Order; and (f) To exercise such other powers and functions as may be necessary to carry out their mandate under this Code. Implementation of the plans, programs, and projects of the Regional Boards referred to in the second paragraph, letter (a) of this Article, shall be through the respective regional offices of the Department of Labor and Employment within their territorial jurisdiction; Provided, however, That the Regional Boards shall have technical supervision over the regional office of the Department of Labor and Employment with respect to the implementation of said plans, programs and projects. Each Regional Board shall be composed of the Regional Director of the Department of Labor and Employment as chairman, the Regional Directors of the National Economic and Development Authority and the Department of Trade and Industry as vice-chairmen and two (2) members each from workers’ and ERs’ sectors who shall be appointed by the President of the Philippines, upon the recommendation of the Secretary of Labor and Employment, to be made on the basis of the list of nominees submitted by the workers’ and ERs’ sectors, respectively, and who shall serve for a term of five (5) years. Each Regional Board to be headed by its chairman shall be assisted by a Secretariat. (As amended by Republic Act No. 6727, June 9, 1989).

ART. 130. Nightwork prohibition. - No woman, regardless of age, shall be employed or permitted or suffered to work, with or without compensation: (a) In any industrial undertaking or branch thereof between ten o’clock at night and six o’clock in the morning of the following day; or (b) In any commercial or non-industrial undertaking or branch thereof, other than agricultural, between midnight and six o’clock in the morning of the following day; or (c) In any agricultural undertaking at nighttime unless she is given a period of rest of not less than nine (9) consecutive hours.

ART. 131. Exceptions. - The prohibitions prescribed by the preceding Article shall not apply in any of the following cases: (a) In cases of actual or impending emergencies caused by serious accident, fire, flood, typhoon, earthquake, epidemic or other disasters or calamity, to prevent loss of life or property, or in cases of force majeure or imminent danger to public safety;

(b) In case of urgent work to be performed on machineries, equipment or installation, to avoid serious loss which the ER would otherwise suffer; (c) Where the work is necessary to prevent serious loss of perishable goods; (d) Where the woman EE holds a responsible position of managerial or technical nature, or where the woman EE has been engaged to provide health and welfare services; (e) Where the nature of the work requires the manual skill and dexterity of women workers and the same cannot be performed with equal efficiency by male workers; (f) Where the women EEs are immediate members of the family operating the establishment or undertaking; and (g) Under other analogous cases exempted by the Secretary of Labor and Employment in appropriate regulations.

ART. 132. Facilities for women. - The Secretary of Labor and Employment shall establish standards that will ensure the safety and health of women EEs. In appropriate cases, he shall, by regulations, require any ER to: (a) Provide seats proper for women and permit them to use such seats when they are free from work and during working hours, provided they can perform their duties in this position without detriment to efficiency; (b) To establish separate toilet rooms and lavatories for men and women and provide at least a dressing room for women; (c) To establish a nursery in a workplace for the benefit of the women EEs therein; and (d) To determine appropriate minimum age and other standards for retirement or termination in special occupations such as those of flight attendants and the like.

Article 134.Family Planning Services; Incentives for Family Planning.- (a) Establishments which are required by law to maintain a clinic or infirmary shall provide free family planning services to their EEs which shall include, but not be limited to, the application or use of contraceptive pills and intrauterine devices.

(b) In coordination with other agencies of the government engaged in the promotion of family planning, the Department of Labor and Employment shall develop and prescribe incentive bonus schemes to encourage family planning among female workers in any establishment or enterprise.

Article 135.Discrimination Prohibited. – It shall be unlawful for any ER to discriminate against any woman EE with respect to terms and conditions of employment solely on account of her sex.

The following are acts of discrimination:

(a) Payment of a lesser compensation, including wage, salary or other form of remuneration and fringe benefits, to a female EE as against a male EE, for work of equal value; and

(b) Favoring a male EE over a female EE with respect to promotion, training opportunities, study and scholarship grants solely on account of their sexes.

Criminal liability for the willful commission of any unlawful act as provided in this Article or any violation of the rules and regulations issued pursuant to Section 2 hereof shall be penalized as provided in Articles 288 and 289 of this Code: Provided, That the institution of any criminal action under this provision shall not bar the aggrieved EE from filing an entirely separate and distinct action for money claims, which may include claims for damages and other affirmative reliefs. The actions hereby authorized shall proceed independently of each other. (As amended by Republic Act No. 6725, May 12, 1989).

Article 137.Prohibited Acts. – (a) It shall be unlawful for any ER:

(1) To deny any woman EE the benefits provided for in this Chapter or to discharge any woman employed by him for the purpose of preventing her from enjoying any of the benefits provided under this Code;

(2) To discharge such woman on account of her pregnancy, or while on leave or in confinement due to her pregnancy;

(3) To discharge or refuse the admission of such woman upon returning to her work for fear that she may again be pregnant.

Article 138.Classification of Certain Women Workers.– Any woman who is permitted or suffered to work, with or without compensation, in any night club, cocktail lounge, massage clinic, bar or similar establishments under the effective control or supervision of the ER for a substantial period of time as determined by the Secretary of Labor and Employment, shall be considered as an EE of such establishment for purposes of labor and social legislation.

Article 139.Minimum Employable Age.- (a) No child below fifteen (15) years of age shall be employed, except when he works directly under the sole responsibility of his parents or guardian, and his employment does not in any way interfere with his schooling.

(b) Any person between fifteen (15) and eighteen (18) years of age may be employed for such number of hours and such periods of the day as determined by the Secretary of Labor and Employment in appropriate regulations.

(c) The foregoing provisions shall in no case allow the employment of a person below eighteen (18) years of age in an undertaking which is hazardous or deleterious in nature as determined by the Secretary of Labor and Employment.

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Article 140.Prohibition Against Child Discrimination. - No ER shall discriminate against any person in respect to terms and conditions of employment on account of his age.

Article 141.Coverage. - This Chapter shall apply to all persons rendering services in households for compensation.

“Domestic or household service” shall mean service in the ER’s home which is usually necessary or desirable for the maintenance and enjoyment thereof and includes ministering to the personal comfort and convenience of the members of the ER’s household, including services of family drivers.

Article 142.Contract of Domestic Service.– The original contract of domestic service shall not last for more than two (2) years but it may be renewed for such periods as may be agreed upon by the parties.

Article 143.Minimum Wage. – (a) Househelpers shall be paid the following minimum wage rates:

(1) Eight hundred pesos (P800.00) a month for househelpers in Manila, Quezon, Pasay, and Caloocan cities and municipalities of Makati, San Juan, Mandaluyong, Muntinlupa, Navotas, Malabon, Paranaque, Las Piñas, Pasig, Marikina, Valenzuela, Taguig and Pateros in Metro Manila and in highly urbanized cities;

(2) Six hundred fifty pesos (P650.00) a month for those in other chartered cities and first-class municipalities; and

(3) Five hundred fifty pesos (P550.00) a month for those in other municipalities.

Provided, That the ERs shall review the employment contracts of their househelpers every three (3) years with the end in view of improving the terms and conditions thereof.

Provided, further, That those househelpers who are receiving at least One thousand pesos (P1,000.00) shall be covered by the Social Security System (SSS) and be entitled to all the benefits provided thereunder. (As amended by Republic Act No. 7655, August 19, 1993).

Article 144.Minimum Cash Wage.– The minimum wage rates prescribed under this Chapter shall be the basic cash wages which shall be paid to the househelpers in addition to lodging, food and medical attendance.

Article 145.Assignment to Non-Household Work. – No househelper shall be assigned to work in a commercial, industrial or agricultural enterprise at a wage or salary rate lower than that provided for agricultural or non-agricultural workers as prescribed herein.

Article 146.Opportunity for Education. – If the househelper is under the age of eighteen (18) years, the ER shall give him or her an opportunity for at least elementary education. The cost of education shall be part of the househelper’s compensation, unless there is a stipulation to the contrary.

Article 147.Treatment of Househelpers.– The ER shall treat the househelper in a just and humane manner. In no case shall physical violence be used upon the househelper.

Article 148.Board, Lodging, and Medical Attendance.– The ER shall furnish the househelper, free of charge, suitable and sanitary living quarters as well as adequate food and medical attendance.

Article 149.Indemnity for Unjust Termination of Services.– If the period of household service is fixed, neither the ER nor the househelper may terminate the contract before the expiration of the term, except for a just cause. If the househelper is unjustly dismissed, he or she shall be paid the compensation already earned plus that for fifteen (15) days by way of indemnity.

If the househelper leaves without justifiable reason, he or she shall forfeit any unpaid salary due him or her not exceeding fifteen (15) days.

Article 150.Service of Termination Notice. – If the duration of the household service is not determined either in stipulation or by the nature of the service, the ER or the househelper may give notice to put an end to the relationship five (5) days before the intended termination of the service.

ANTI-SEXUAL HARASSMENT ACT(RA7877) SEC.3-6Q: Who may be held liable for sexual harassment?

A: In a work, education or training‐related environment sexual

harassment may be committed by an: 1.Ee ; 2.Manager ; 3.Supervisor ; 4. Agent of the (Er); 5. Teacher, instructor, professor; 6. Coach, trainer, or 7. Any other person who, having authority, influence or moral ascendancy over another in a work or training or education environment: a. Demands, b. Requests or c. Requires any sexual favor from the other, regardless of whether the demand, request or requirement for submission is accepted by the object of R.A. 7877. (Sec. 3)

Q: How is sexual harassment committed? A: Generally, a person liable demands, requests, or otherwise requires any sexual favor from the other, regardless of whether the

demand, request or requirement for submission is accepted by the latter.

Q: Under the Sexual Harassment Act, does the definition of sexual harassment require a categorical demand or request for sexual favor? A: No. It is true that the provision calls for a “demand, request or requirement of a sexual favor.” But it is not necessary that the demand, request or requirement of a sexual favor be articulated in a categorical manner. It may be discerned, with equal certitude, from the acts of the offender. Likewise, it is not essential that the demand, request or requirement be made as a condition for continued employment or for promotion to a higher position. It is enough that the respondent’s acts result in creating an intimidating, hostile or offensive environment for the EE. (Domingo v. Rayala, G.R. No. 155831, Feb. 18, 2008)

Q: When is sexual harassment committed? A: Specifically:

1. In a work‐related or employment environment:

a. The sexual favor is made as a condition in the hiring or in the

employment, re‐employment or continued employment of said

individual, or in granting said individual favorable compensation, terms, conditions, promotions, or privileges; or the refusal to grant the sexual favor results in limiting, segregating or classifying the Ee which in a way would discriminate, deprive or diminish employment opportunities or otherwise adversely affect said Ee; b. The above acts would impair the Ees’ rights or privileges under existing labor laws; or c. The above acts would result in an intimidating, hostile, or offensive environment for the Ee.

2. In an education or training environment: a. Against one who is under the care, custody or supervision of the offender; b. Against one whose education, training, apprenticeship or tutorship is entrusted to the offender; c. Sexual favor is made a condition to the giving of a passing grade, or the granting of honors and scholarships, or the payment of a stipend, allowance or other benefits, privileges, or considerations; or d. Sexual advances result in an intimidating, hostile or offensive environment for the student, trainee or apprentice.

Q: What are the duties of the Er or head of office in a work ‐related,

education or training environment? A: 1.Prevent or deter the commission of acts of sexual harassment and 2.Provide the procedures for the resolution, settlement or prosecution of acts of sexual harassment.

Towards this end, the Er or head of office shall: 1.Promulgate appropriate rules and regulations in consultation with the jointly approved by the Ees or students or trainees, through their duly designated representatives, prescribing the procedure for the investigation or sexual harassment cases and the administrative sanctions therefore. (Sec. 4)

Note: Administrative sanctions shall not be a bar to prosecution in the proper courts for unlawful acts of sexual harassment.

The said rules and regulations issued shall include, among others, guidelines on proper decorum in the workplace and educational or training institutions. 1.Create a committee on decorum and investigation of cases on sexual harassment. 2.The Er or head of office, education or training institution shall disseminate or post a copy of this R.A. 7877 for the information of all concerned

Q: What is the liability of the Er, head of office, educational or training institution? A: Ee shall be solidarily liable for damages arising from the acts of sexual harassment committed in the employment, education or training environment provided: 1.The Er or head of office, educational or training institution is informed of such acts by the offended party; and 2.No immediate action is taken thereon. (Sec. 5)

Q: Can an independent action for damages be filed? A: Yes. Nothing under R.A. 7877 shall preclude the victim of work,

education or training‐related sexual harassment from instituting a

separate and independent action for damages and other affirmative relief. (Sec. 6)

Q: What is the three‐fold liability rule in sexual harassment cases?

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A: An act of sexual harassment may give rise to civil, criminal and administrative liability on the part of the offender, each proceeding independently of the others.

Q: When does the action prescribe? A: Any action shall prescribe in 3 years.

Under Rule XIII, Section 1(b), Book 3 of the Labor Code, as amended, the terms “househelper” or “domestic servant” are defined as follows: “The term ‘househelper’ as used herein is synonymous to the term ‘domestic servant’ and shall refer to any person, whether male or female, who renders services in and about the ER’s home and which services are usually necessary or desirable for the maintenance and enjoyment thereof, and ministers exclusively to the personal comfort and enjoyment of the ER’s family.” The foregoing definition clearly contemplates such househelper or domestic servant who is employed in the ER’s home to minister exclusively to the personal comfort and enjoyment of the ER’s family. Such definition covers family drivers, domestic servants, laundry women, yayas, gardeners, houseboys and other similar househelps

RA10151

(APEX MINING vs. NLRC)(BARCENAS vs. NLRC)(BACSIN vs. WAHIMAN)

5.BOOK FOUR, ARTS-156-161Article 156.First-Aid Treatment. – Every ER shall keep in his establishment such first-aid medicines and equipment as the nature and conditions of work may require, in accordance with such regulations as the Department of Labor and Employment shall prescribe.

The ER shall take steps for the training of a sufficient number of EEs in first-aid treatment.

Article 157.Emergency Medical and Dental Services.– It shall be the duty of every ER to furnish his EEs in any locality with free medical and dental attendance and facilities consisting of:

(a) The services of a full-time registered nurse when the number of EEs exceeds fifty (50) but not more than two hundred (200) except when the ER does not maintain hazardous workplaces, in which case, the services of a graduate first-aider shall be provided for the protection of workers, where no registered nurse is available. The Secretary of Labor and Employment shall provide by appropriate regulations, the services that shall be required where the number of EEs does not exceed fifty (50) and shall determine by appropriate order, hazardous workplaces for purposes of this Article;

(b) The services of a full-time registered nurse, a part-time physician and dentist, and an emergency clinic, when the number of EEs exceeds two hundred (200) but not more than three hundred (300); and

(c) The services of a full-time physician, dentist and a full-time registered nurse as well as a dental clinic and an infirmary or emergency hospital with one bed capacity for every one hundred (100) EEs when the number of EEs exceeds three hundred (300).

In cases of hazardous workplaces, no ER shall engage the services of a physician or a dentist who cannot stay in the premises of the establishment for at least two (2) hours, in the case of those engaged on part-time basis, and not less than eight (8) hours, in the case of those employed on full-time basis. Where the undertaking is non-hazardous in nature, the physician and dentist may be engaged on retainer basis, subject to such regulations as the Secretary of Labor and Employment may prescribe to insure immediate availability of medical and dental treatment and attendance in case of emergency. (As amended by Section 26, Presidential Decree No. 570-A, November 1, 1974).

Article 158.When Emergency Hospital Not Required.– The requirement for an emergency hospital or dental clinic shall not be applicable in case there is a hospital or dental clinic which is accessible from the ER’s establishment and he makes arrangement for the reservation therein of the necessary beds and dental facilities for the use of his EEs.

Article 159.Health Program. – The physician engaged by an ER shall, in addition to his duties under this Chapter, develop and implement a comprehensive occupational health program for the benefit of the EEs of his ER.

Article 160.Qualifications of Health Personnel. – The physicians, dentists and nurses employed by ERs pursuant to this Chapter shall have the necessary training in industrial medicine and occupational safety and health. The Secretary of Labor and Employment, in consultation with industrial, medical, and occupational safety and health associations, shall establish the qualifications, criteria and conditions of employment of such health personnel.

ART. 161. Assistance of ER. - It shall be the duty of any ER to provide all the necessary assistance to ensure the adequate and immediate medical and dental attendance and treatment to an injured or sick EE in case of emergency.

(OCEAN BUILDERS vs. SPS. CUBCUB)(ECASINAS vs. SHANGRI-LA)

6.BOOK SIX, POST-EMPLOYMENTa.TERMINATION OF EMPLOYMENT (ARTS.278-286)

ART. 278. Coverage. - The provisions of this Title shall apply to all establishments or undertakings, whether for profit or not. ART. 279. Security of tenure. - In cases of regular employment, the ER shall not terminate the services of an EE except for a just cause or when authorized by this Title. An EE who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his compensation was withheld from him up to the time of his actual reinstatement. (As amended by Section 34, Republic Act No. 6715, March 21, 1989).. 1.CLASSIFICATION OF EESi.CONTRACTOR, INDEPENDENT CONTRACTOR, LABOR-ONLY CONTRACTOR (ARTS.-106-109)ART. 106. Contractor or subcontractor. - Whenever an ER enters into a contract with another person for the performance of the former’s work, the EEs of the contractor and of the latter’s subcontractor, if any, shall be paid in accordance with the provisions of this Code. In the event that the contractor or subcontractor fails to pay the wages of his EEs in accordance with this Code, the ER shall be jointly and severally liable with his contractor or subcontractor to such EEs to the extent of the work performed under the contract, in the same manner and extent that he is liable to EEs directly employed by him. The Secretary of Labor and Employment may, by appropriate regulations, restrict or prohibit the contracting-out of labor to protect the rights of workers established under this Code. In so prohibiting or restricting, he may make appropriate distinctions between labor-only contracting and job contracting as well as differentiations within these types of contracting and determine who among the parties involved shall be considered the ER for purposes of this Code, to prevent any violation or circumvention of any provision of this Code. There is "labor-only" contracting where the person supplying workers to an ER does not have substantial capital or investment in the form of tools, equipment, machineries, work premises, among others, and the workers recruited and placed by such person are performing activities which are directly related to the principal business of such ER. In such cases, the person or intermediary shall be considered merely as an agent of the ER who shall be responsible to the workers in the same manner and extent as if the latter were directly employed by him. ART. 107. Indirect ER. - The provisions of the immediately preceding article shall likewise apply to any person, partnership, association or corporation which, not being an ER, contracts with an independent contractor for the performance of any work, task, job or project. ART. 108. Posting of bond. - An ER or indirect ER may require the contractor or subcontractor to furnish a bond equal to the cost of labor under contract, on condition that the bond will answer for the wages due the EEs should the contractor or subcontractor, as the case may be, fail to pay the same. ART. 109. Solidary liability. - The provisions of existing laws to the contrary notwithstanding, every ER or indirect ER shall be held responsible with his contractor or subcontractor for any violation of any provision of this Code. For purposes of determining the extent of their civil liability under this Chapter, they shall be considered as direct ERs.

In declaring BMSI as an independent contractor, the CA, in the challenged Decision, heavily relied on the provisions of the Agreement, wherein BMSI declared that it was an independent contractor, with substantial capital and investment.De Los Santos v. NLRC, 372 SCRA 723 (2001), instructed us that the character of the business, i.e., whether as labor-only contractor or as job contractor, should be measured in terms of, and determined by, the criteria set by statute. The parties cannot dictate by the mere expedience of a unilateral declaration in a contract the character of their business.

Thus, in distinguishing between prohibited labor-only contracting and permissible job contracting, the totality of the facts and the surrounding circumstances of the case are to be considered. Labor-only contracting, a prohibited act, is an arrangement where the contractor or subcontractor merely recruits, supplies, or places workers to perform a job, work, or service for a principal. In labor-only contracting, the following elements are present: (a) the contractor or subcontractor does not have substantial capital or investment to actually perform the job, work, or service under its own account and responsibility; and (b) the EEs recruited, supplied, or placed by such contractor or subcontractor perform activities which are directly related to the main business of the principal. On the other hand, permissible job contracting or subcontracting refers to an arrangement whereby a principal agrees to put out or farm out with the contractor or subcontractor the performance or completion of a specific job, work, or service within a definite or predetermined period, regardless of whether such job, work, or service is to be performed or completed within or outside the premises of the principal.

A person is considered engaged in legitimate job contracting or subcontracting if the following conditions concur: (a) The contractor carries on a distinct and independent business and undertakes the contract work on his account under his own responsibility according to his own manner and method, free from the control and direction of his ER or principal in all matters connected with the performance of his work except as to the results thereof; (b) The contractor has substantial capital or investment; and (c) The agreement between the principal and the contractor or subcontractor assures the contractual EEs’ entitlement to all labor and occupational safety and health standards, free exercise of the right to self-organization, security of tenure, and social welfare benefits.

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EEs need not prove that the contractor does not have substantial capital,investment, and tools to engage in job-contracting.—LSC was unable to present proof that BMSI had substantial capital. The record before us is bereft of any proof pertaining to the contractor’s capitalization, nor to its investment in tools, equipment, or implements actually used in the performance or completion of the job, work, or service that it was contracted to render. What is clear was that the equipment used by BMSI were owned by, and merely rented from, LSC. In Mandaue Galleon Trade, Inc. v. Andales, 548 SCRA 17 (2008), we held: The law casts the burden on the contractor to prove that it has substantial capital, investment, tools, etc. EEs, on the other hand, need not prove that the contractor does not have substantial capital, investment, and tools to engage in job-contracting

The CA erred in considering BMSI’s Certificate of Registration as sufficient proof that it is an independent contractor. In San Miguel Corporation v. Vicente B. Semillano, Nelson Mondejas, Jovito Remada, Alilgilan Multi-Purpose Coop (AMPCO), and Merlyn N. Policarpio, 623 SCRA 114 (2010), we held that a Certificate of Registration issued by the Department of Labor and Employment is not conclusive evidence of such status. The fact of registration simply prevents the legal presumption of being a mere labor-only contractor from arising.

BMSI can only be classified as a labor-only contractor. The CA, therefore, erred when it ruled otherwise. Consequently, the workers that BMSI supplied to LSC became regular EEs of the latter. Having gained regular status, petitioners were entitled to security of tenure and could only be dismissed for just or authorized causes and after they had been accorded due process. Petitioners lost their employment when LSC terminated its Agreement with BMSI. However, the termination of LSC’s Agreement with BMSI cannot be considered a just or an authorized cause for petitioners’ dismissal. (BABAS vs. LORENZO SHIPPING)

In this case the Labor Arbiter, the NLRC, and the Court of Appeals were unanimous in finding that FVA was a legitimate job contractor. Among the circumstances that established the status of FVA as a legitimate job contractor are: (1) FVA is registered with the DOLE and the DTI; (2) FVA has a Contract for Services with Dusit for the supply of valet parking and door attendant services; (3) FVA has an independent business and provides valet parking and door attendant services to other clients like Mandarin Oriental, Manila Hotel, Peninsula Manila Hotel, Westin Philippine Plaza, Golden B Hotel, Pan Pacific Manila Hotel, and Strikezone Bowling Lane; and (4) FVA’s total assets from 1997 to 1999 amount toP1,502,597.70 to P9,021,335.13. In addition, it provides the uniforms and lockers of its EEs. (OREGAS vs. NLRC)

In determining whether there is labor-only contracting, the “control test” is merely one of the factors to consider; Finding that a contractor is a “labor-only” contractor, as opposed to permissible job contracting, is equivalent to declaring that there is an ER-EE relationship between the principal and the EEs of the supposed contractor, and the “labor-only” contractor is considered as a mere agent of the principal, the real ER (ALIVIADO vs. PROCTER AND GAMBLE)

Independent contractors often present themselves to possess unique skills, expertise or talent to distinguish them from ordinary EEs. The specific selection and hiring of SONZA, because of his unique skills, talent and celebrity status not possessed by ordinary EEs, is a circumstance indicative, but not conclusive, of an independent contractual relationship. If SONZA did not possess such unique skills, talent and celebrity status, ABS-CBN would not have entered into the Agreement with SONZA but would have hired him through its personnel department just like any other EE. In any event, the method of selecting and engaging SONZA does not conclusively determine his status. We must consider all the circumstances of the relationship, with the control test being the most important element.

All the talent fees and benefits paid to SONZA were the result of negotiations that led to the Agreement. If SONZA were ABS-CBN’s EE, there would be no need for the parties to stipulate on benefits such as “SSS, Medicare, x x x and 13th month pay” which the law automatically incorporates into every ER-EE contract. Whatever benefits SONZA enjoyed arose from contract and not because of an ER-EE relationship.

SONZA’s talent fees, amounting to P317,000 monthly in the second and third year, are so huge and out of the ordinary that they indicate more an independent contractual relationship rather than an ER-EE relationship. ABS-CBN agreed to pay SONZA such huge talent fees precisely because of SONZA’s unique skills, talent and celebrity status not possessed by ordinary EEs. Obviously, SONZA acting alone possessed enough bargaining power to demand and receive such huge talent fees for his services. The power to bargain talent fees way above the salary scales of ordinary EEs is a circumstance indicative, but not conclusive, of an independent contractual relationship.

Applying the control test to the present case, we find that SONZA is not an EE but an independent contractor. The control test is themost important test our courts apply in distinguishing an EE from an independent contractor. This test is based on the extent of control the hirer exercises over a worker. The greater the supervision and control the hirer exercises, the more likely the worker is deemed an EE. The converse holds true as well—the less control the hirer exercises, the more likely the worker is considered an independent contractor.

Being an exclusive talent does not by itself mean that SONZA is an EE of ABS-CBN. Even an independent contractor can validly provide

his services exclusively to the hiring party. In the broadcast industry, exclusivity is not necessarily the same as control. (SONZA vs. ABS-CBN)

(GARDEN OF MEMORIES vs. NLRC)

ii.REGULAR, PROJECT/SEASONAL, PROBATIONARY, CASUAL EES (ARTS.280-281)ART. 280. Regular and casual employment. - The provisions of written agreement to the contrary notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be regular where the EE has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the ER, except where the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the EE or where the work or service to be performed is seasonal in nature and the employment is for the duration of the season. An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided, That any EE who has rendered at least one year of service, whether such service is continuous or broken, shall be considered a regular EE with respect to the activity in which he is employed and his employment shall continue while such activity exists.ART. 281. Probationary employment. - Probationary employment shall not exceed six (6) months from the date the EE started working, unless it is covered by an apprenticeship agreement stipulating a longer period. The services of an EE who has been engaged on a probationary basis may be terminated for a just cause or when he fails to qualify as a regular EE in accordance with reasonable standards made known by the ER to the EE at the time of his engagement. An EE who is allowed to work after a probationary period shall be considered a regular EE

As can be gleaned from this provision, there are two kinds of regular EEs, namely: (1) those who are engaged to perform activities which are usually necessary or desirable in the usual business or trade of the ER; and (2) those who have rendered at least one year of service, whether continuous or broken, with respect to the activity in which they are employed. Simply stated, regular EEs are classified into: regular EEs by nature of work; and regular EEs by years of service. The former refers to those EEs who perform a particular activity which is necessary or desirable in the usual business or trade of the ER, regardless of their length of service; while the latter refers to those EEs who have been performing the job, regardless of the nature thereof, for at least a year. If the EE has been performing the job for at least one year, even if the performance is not continuous or merely intermittent, the law deems the repeated and continuing need for its performance as sufficient evidence of the necessity, if not indispensability, of that activity to the business.

A project EE is assigned to carry out a specific project or undertaking the duration and scope of which are specified at the time the EE is engaged in the project. A project is a job or undertaking which is distinct, separate and identifiable from the usual or regular undertakings of the company. A project EE is assigned to a project which begins and ends at determined or determinable times.

The principal test used to determine whether EEs are project EEs as distinguished from regular EEs, is whether or not the EEs were assigned to carry out a specific project or undertaking, the duration or scope of which was specified at the time the EEs were engaged for that project. In this case, apart from respondent’s bare allegation that petitioner was a project EE, it had not shown that petitioner was informed that he would be assigned to a specific project or undertaking. Neither was it established that he was informed of the duration and scope of such project or undertaking at the time of his engagement.

Respondent did not report the termination of petitioner’s supposed project employment to the Department of Labor and Employment (DOLE). Department Order No. 19 (as well as the old Policy Instructions No. 20) requires ERs to submit a report of an EE’s termination to the nearest public employment office every time the employment is terminated due to a completion of a project. Respondent’s failure to file termination reports, particularly on the cessation of petitioner’s employment, was an indication that the petitioner was not a project but a regular EE. (GOMA vs. PAMPLONA PLANTATION)

Seafarers are not covered by the term regular employment, as defined under Article 280 of the Labor Code—they are considered contractual EEs whose rights and obligations are governed primarily by the Philippine Overseas Employment Administration (POEA) Standard Employment Contract for Filipino Seamen (POEA Standard Employment Contract), the Rules and Regulations Governing Overseas Employment, and, more importantly, by R.A. No. 8042; It is an accepted maritime industry practice that the employment of seafarers is for a fixed period only.—It is well to remind both parties that, as early as Brent School, Inc. v. Zamora, 181 SCRA 702 (1990), we already held that seafarers are not covered by the term regular employment, as defined under Article 280 of the Labor Code. This was reiterated in Coyoca v. National Labor Relations Commission, 243 SCRA 190 (1995).Instead, they are considered contractual EEs whose rights and obligations are governed primarily by the POEA Standard Employment Contract for Filipino Seamen (POEA Standard Employment Contract)

the Rules and Regulations Governing Overseas Employment, and, more importantly, by Republic Act No. 8042, otherwise known as The Migrant Workers and Overseas Filipinos Act of 1995. Even the POEA Standard Employment Contract itself mandates that in no

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case shall a contract of employment concerning seamen exceed 12 months. It is an accepted maritime industry practice that the employment of seafarers is for a fixed period only. The Court acknowledges this to be for the mutual interest of both the seafarer and the ER. Seafarers cannot stay for a long and indefinite period of time at sea as limited access to shore activity during their employment has been shown to adversely affect them. Furthermore, the diversity in nationality, culture and language among the crew necessitates the limitation of the period of employment.

The Court quoted with favor the NLRC’s explanation that the reference to permanent and probationary masters and EEs was a misnomer. It did not change the fact that the contract for employment was for a definite period of time. In using the terms “probationary” and “permanent” vis-à-vis seafarers, what was really meant was “eligible for re-hire.” This is the only logical explanation possible as the parties cannot and should not violate the POEA’s directive that a contract of enlistment must not exceed 12 months. (DELA CRUZ vs. MAERSK FILIPINAS CREWING)

Thus, the work provided by petitioner depends on the availability of such contracts or projects. The duration of the employment of his work force is not permanent but coterminous with the projects to which the workers are assigned. Viewed in this context, the respondents are considered as project EEs of petitioner. Indeed, the status of respondents as project EEs was upheld by the Court of Appeals based on the findings of facts of the Labor Arbiter and the NLRC.

However, respondents, even if working as project EEs, enjoy security of tenure. Section 3, Article XIII, of the Constitution guarantees the right of workers to security of tenure, and because of this, an EE may only be terminated for just or authorized causes that must comply with the due process requirements mandated by law.

The employment of a project worker hired for a specific phase of a construction project is understood to be coterminous with the completion of such phase and not upon the accomplishment of the whole project, and a worker hired for a particular phase of a construction project can be dismissed upon the completion of such phase (SABEROLA vs. SUAREZ)

if petitioners were repeatedly and successively re-hired, still it did not qualify them as regular EEs, as length of service is not the controlling determinant of the employment tenure of a project EE, but whether the employment has been fixed for a specific project or undertaking, its completion has been determined at the time of the engagement of the EE. Further, the proviso in Article 280, stating that an EE who has rendered service for at least one (1) year shall be considered a regular EE, pertains to casual EEs and not to project EEs. (CASERES vs. UNIVERSAL ROBINA)(ARO vs. NLRC)

The Manual of Regulations for Private Schools, and not the Labor Code, determines whether or not a faculty member in an educational institution has attained regular or permanent status. In University of Santo Tomas v. National Labor Relations Commission the Court en banc said that under Policy Instructions No. 11 issued by the Department of Labor and Employment, “the probationary employment of professors, instructors and teachers shall be subject to the standards established by the Department of Education and Culture.” Said standards are embodied in paragraph 75 (now Section 93) of the Manual of Regulations for Private Schools.

Section 93 of the 1992 Manual of Regulations for Private Schools provides that full-time teachers who have satisfactorily completed their probationary period shall be considered regular or permanent. Moreover, for those teaching in the tertiary level, the probationary period shall not be more than six consecutive regular semesters of satisfactory service. The requisites to acquire permanent employment, or security of tenure, are (1) the teacher is a full-time teacher; (2) the teacher must have rendered three consecutive years of service; and (3) such service must have been satisfactory.

As previously held, a part-time teacher cannot acquire permanent status. Only when one has served as a full-time teacher can he acquire permanent or regular status. The petitioner was a part-time lecturer before she was appointed as a full-time instructor on probation. As a part-time lecturer, her employment as such had ended when her contract expired. Thus, the three semesters she served as part-time lecturer could not be credited to her in computing the number of years she has served to qualify her for permanent status.

Completing the probation period does not automatically qualify her to become a permanent EE of the university. Petitioner could only qualify to become a permanent EE upon fulfilling the reasonable standards for permanent employment as faculty member. Consistent with academic freedom and constitutional autonomy, an institution of higher learning has the prerogative to provide standards for its teachers and determine whether these standards have been met. At the end of the probation period, the decision to re-hire an EE on probation, belongs to the university as the ER alone.

We reiterate, however, that probationary EEs enjoy security of tenure, but only within the period of probation. Likewise, an EE on probation can only be dismissed for just cause or when he fails to qualify as a regular EE in accordance with the reasonable standards made known by the ER at the time of his hiring. Upon expiration of their contract of employment, academic personnel on probation cannot automatically claim security of tenure and compel their ERs to renew their employment contracts. In the instant case,

petitioner, did not attain permanent status and was not illegally dismissed. As found by the NLRC, her contract merely expired. (LACUESTA vs. ATENEO)

In the cases of Espiritu Santo Parochial School vs. NLRC and Colegio San Agustin vs. NLRC, the court recognized the distinction between a calendar year and a school year. InEspiritu Santo Parochial School, we held: x x x the petitioners can not talk of a “three-year probationary employment expiring each school year.” If it expires per school year, it is not a three-year period. Then in Colegio San Agustin, we said: x x x As applied to private school teachers, the probationary period is three years as provided in the Manual of Regulations for Private Schools. It must be stressed that the law speaks of three years not three school years. x x x Needless to say, a calendar year consists of twelve (12) months, while a school year consists only of ten (10) months. A school year begins in June of one calendar year and ends in March of the succeeding calendar year.

Public respondent therefore erred in finding that private respondent’s probationary employment was supposed to end in June 1992. The contract clearly states the duration of private respondent’s term—it shall begin at the opening of school year 1989-1990 (i.e., June 1989) and shall end at the closing of school year 1991-1992 (i.e., March, 1992). Hence, petitioners are not obliged to pay private respondent her salary for the months of April, May and June as her employment already ceased in March, in accordance with the provisions of her employment contract. (MT. CARMEL CPLLEGE vs. NLRC)

2.TERMINATION BY ERa.JUST CAUSEART.285B - An EE may put an end to the relationship without serving any notice on the ER for any of the following just causes: 1. Serious insult by the ER or his representative on the honor and person of the EE; 2. Inhuman and unbearable treatment accorded the EE by the ER or his representative; 3. Commission of a crime or offense by the ER or his representative against the person of the EE or any of the immediate members of his family; and 4. Other causes analogous to any of the foregoing.

b.WITHOUT CAUSEART.285A - An EE may terminate without just cause the EE-ER relationship by serving a written notice on the ER at least one (1) month in advance. The ER upon whom no such notice was served may hold the EE liable for damages.

i.RESIGNATIONGenerally, an EE who voluntarily resigns from employment is not entitled to separation pay. In the present case, however, upon the request of petitioner, private respondent agreed to a scheme whereby the former would receive separation pay despite having resigned voluntarily. Thus, the terms and conditions they both agreed upon constituted a contract freely entered into, which should be performed in good faith, as it constituted the law between the parties.

Not all waivers and quitclaims are invalid as against public policy. If the agreement was voluntarily entered into and represented a reasonable settlement, it is binding on the parties and may not later be disowned, simply because of a change of mind.

Voluntary resignation is defined as the act of an EE, who finds himself in a situation in which he believes that personal reasons cannot be sacrificed in favor of the exigency of the service; thus, he has no other choice but to disassociate himself from his employment. As discussed above, petitioner negotiated for a resignation with separation pay as the manner in which his employment relations with private respondent would end. He was already suffering from a lingering illness at the time he tendered his resignation. His continued employment would have been detrimental not only to his health, but also to his performance as an EE of private respondent.

Clearly then, the claim of petitioner that he was illegally dismissed cannot be sustained, considering that his voluntary resignation has been indubitably estab-lished as a fact by the three tribunals below. Indeed, illegal dismissal and voluntary resignation are adversely opposed modes of terminating employment relations, in that the presence of one precludes that of the other. (ALFARO vs. CA)

Clearly, therefore, private respondent Ernesto de la Cruz was required by the employment contract not only to pay his own repatriation expenses but also to give thirty (30) days notice should he decide to terminate his employment prior to the expiration of the period provided in the contract. When the Master approved his request for relief, the Master emphasized that private respondent was required to give thirty (30) days notice and to shoulder his own repatriation expenses. Approval of his request for relief, therefore, did not constitute a waiver by petitioners of the provisions of the contract, as private respondent would have us believe, for it was made clear to him that the provisions of the contract, insofar as the thirty (30) days notice and repatriation expenses were concerned, were to be enforced.

Resignations, once accepted and being the sole act of the EE, may not be withdrawn without the consent of the ER.

In the instant case, the Master had already accepted the resignation and, although the private respondent was being required to serve the thirty (30) days notice provided in the contract, his resignation was already approved. Private respondent cannot claim that his resignation ceased to be effective because he

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was not immediately discharged in Port Pylos, Greece, for he could no longer unilaterally withdraw such resignation. When he later signified his intention of continuing his work, it was already up to the petitioners to accept his withdrawal of his resignation. The mere fact that they did not accept such withdrawal did not constitute illegal dismissal for acceptance of the withdrawal of the resignation was their (petitioners’) sole prerogative.

Once an EE resigns and his resignation is accepted, he no longer has any right to the job. If the EE later changes his mind, he must ask for approval of the withdrawal of his resignation from his ER, as if he were re-applying for the job. It will then be up to the ER to determine whether or not his service would be continued. If the ER accepts said withdrawal, the EE retains his job. If the ER does not, as in this case, the EE cannot claim illegal dismissal for the ER has the right to determine who his EEs will be. To say that an EE who has resigned is illegally dismissed, is to encroach upon the right of ERs to hire persons who will be of service to them.

Under the terms of the employment contract, it is the ship’s Master who determines where a seaman requesting relief may be “signed off.” It is, therefore, erroneous for private respondent to claim that his resignation was effective only in Greece and that because he was not immediately allowed to disembark in Greece (as the ER wanted compliance with the contractual conditions for termination on the part of the EE), the resignation was to be deemed automatically withdrawn.(INTERTROD MARITIME vs. NLRC)

We are not unaware that the execution of the resignation letters was undisputed, but the aforementioned circumstances of this case and the fact that private respondents filed a complaint for illegal dismissal from employment against Blue Angel completely negate the claim that private respondents voluntarily resigned. Well-entrenched is the rule that resignation is inconsistent with the filing of a complaint for illegal dismissal. To constitute resignation, the resignation must be unconditional with the intent to operate as such. There must be clear intention to relinquish the position. In this case, private respondents actively pursued their illegal dismissal case against Blue Angel such that they cannot (BLUE ANGEL MANPOWER AND SECURITY SERVICES vs. CA)

From the totality of evidence on record, it was clearly demonstrated that respondent Cinderella has sufficiently discharged its burden to prove that petitioner’s resignation was voluntary. In voluntary resignation, the EE is compelled by personal reason(s) to disassociate himself from employment. It is done with the intention of relinquishing an office, accompanied by the act of abandonment. To determine whether the EE indeed intended to relinquish such employment, the act of the EE before and after the alleged resignation must be considered. 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 EE forced to resign.

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. Taken together, these circumstances are substantial proof that petitioner’s resignation was voluntary. Hence, petitioner cannot take refuge in the argument that it is the ER who bears the burden of proof that the resignation is voluntary and not the product of coercion or intimidation. Having submitted a resignation letter, it is then incumbent upon her to prove that the resignation was not voluntary but was actually a case of constructive dismissal with clear, positive, and convincing evidence. Petitioner failed to substantiate her claim of constructive dismissal.

We enumerated the requisites for intimidation to vitiate consent as follows: (1) that the intimidation caused the consent to be given; (2) that the threatened act be unjust or unlawful; (3) that the threat be real or serious, there being evident disproportion between the evil and the resistance which all men can offer, leading to the choice of doing the act which is forced on the person to do as the lesser evil; and (4) that it produces a well-grounded fear from the fact that the person from whom it comes has the necessary means or ability to inflict the threatened injury to his person or property. x x x

None of the above requisites was established by petitioner. Other than the allegation that Mr. Tecson intimidated petitioner into resigning, there were no other proofs presented to support a finding of forced resignation to stand against respondent’s denial and proof against dismissal. Neither can we consider the conduct of audits and other internal investigations as a form of harassment against petitioner. Said investigation was legitimate and justified, conducted in view of the discovery of the anomalous transaction involving the EEs of the respondent including petitioner. (VICENTE vs. CA)

C.CIVIC AND MILITARY DUTYART. 286. When employment not deemed terminated. - The bona-fide suspension of the operation of a business or undertaking for a period not exceeding six (6) months, or the fulfillment by the EE of a military or civic duty shall not terminate employment. In all such cases, the ER shall reinstate the EE to his former position without loss of seniority rights if he indicates his desire to resume his work not later than one (1) month from the resumption of operations of his ER or from his relief from the military or civic duty.

3.TERMINATION BY ER

a.SUBSTANTIVE DUE PROCESS1.JUST CAUSESART.282B - Termination by ER. - An ER may terminate an employment for any of the following causes: (a) Serious misconduct or willful disobedience by the EE of the lawful orders of his ER or representative in connection with his work; (b) Gross and habitual neglect by the EE of his duties; (c) Fraud or willful breach by the EE of the trust reposed in him by his ER or duly authorized representative; (d) Commission of a crime or offense by the EE against the person of his ER or any immediate member of his family or his duly authorized representatives; and (e) Other causes analogous to the foregoing.

1.1.SERIOUS MISCONDUCT (ART.282A)(COLEGIO DE SAN JUAN DE LETRAN-CALAMBA vs. VILLAS)

Misconduct is defined as “the transgression of some established and definite rule of action, a forbidden act, a dereliction of duty, willful in character, and implies wrongful intent and not mere error in judgment.” For serious misconduct to justify dismissal under the law, “(a) it must be serious, (b) must relate to the performance of the EE’s duties; and (c) must show that the EE has become unfit to continue working for the ER.”

We reject petitioners’claim that respondent company failed to observe the requirements of procedural due process. “In the dismissal of EEs, it has been consistently held that the twin requirements of notice and hearing are essential elements of due process. The ER must furnish the EE with two written notices before termination of employment can be legally effected: (a) a notice apprising the EE of the particular acts or omissions for which his dismissal is sought, and (b) a subsequent notice informing the EE of the ER’s decision to dismiss him.”

With regard to the requirement of a hearing, the essence of due process lies in an opportunity to be heard. Such opportunity was afforded the petitioner when she was asked to explain her side of the story. InMetropolitan Bank and Trust Company v. Barrientos, 481 SCRA 311 (2006), we held that, “the essence of due process lies simply in an opportunity to be heard, and not that an actual hearing should always and indispensably be held.” Similarly in Philippine Pasay Chung Hua Academy v. Edpan, 578 SCRA 262 (2009), we held that, “[e]ven if no hearing or conference was conducted, the requirement of due process had been met since he was accorded a chance to explain his side of the controversy.” (NAGKAKAISANG LAKAS NG MANGGAGAWA SA KEIHIN vs. KEIHIN PHIL)

We have consistently held that in order to constitute a valid dismissal, two requisites must concur: (a) the dismissal must be for any of the causes expressed in Art. 282 of the Labor Code, and (b) the EE must be accorded due process, basic of which are the opportunity to be heard and defend himself.

On the outset, it must be stressed that to constitute immorality, the circumstances of each particular case must be holistically considered and evaluated in light of the prevailing norms of conduct and applicable laws. American jurisprudence has defined immorality as a course of conduct which offends the morals of the community and is a bad example to the youth whose ideals a teacher is supposed to foster and to elevate, the same including sexual misconduct. Thus, in petitioner’s case, the gravity and seriousness of the charges against him stem from his being a married man and at the same time a teacher.

Consequently, it is but stating the obvious to assert that teachers must adhere to the exacting standards of morality and decency. There is no dichotomy of morality. A teacher, both in his official and personal conduct, must display exemplary behavior. He must freely and willingly accept restrictions on his conduct that might be viewed irksome by ordinary citizens. In other words, the personal behavior of teachers, in and outside the classroom, must be beyond reproach.

Accordingly, teachers must abide by a standard of personal conduct which not only proscribes the commission of immoral acts, but also prohibits behavior creating a suspicion of immorality because of the harmful impression it might have on the students. Likewise, they must observe a high standard of integrity and honesty.

the foregoing, it seems obvious that when a teacher engages in extra-marital relationship, especially when the parties are both married, such behavior amounts to immorality, justifying his termination from employment.

Having concluded that immorality is a just cause for dismissing petitioner, it is imperative that the private respondent prove the same. Since the burden of proof rests upon the ER to show that the dismissal was for a just and valid cause, the same must be supported by substantial evidence. (SANTOS vs. NLRC)(SAMSON vs. NLRC)

Petitioner’s reliance on the authorities it cited that sleeping on the job is always a valid ground for dismissal, is misplaced. The authorities cited involved security guards whose duty necessitates that they be awake and watchful at all times inasmuch as their function, to use the words in Luzon Stevedoring Corp. v. Court of Industrial Relations, is “to protect the company from pilferage or loss.” Accordingly, the doctrine laid down in those cases is not applicable to the case at bar.

While an ER enjoys a wide latitude of discretion in the promulgation of policies, rules and regulations on work-related activities of the EEs, those directives, however, must always be fair and reasonable,

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and the corresponding penalties, when prescribed, must be commensurate to the offense involved and to the degree of the infraction. In the case at bar, the dismissal meted out on private respondent for allegedly sleeping on the job, under the attendant circumstances, appears to be too harsh a penalty, considering that he was being held liable for first time, after nine (9) long years of unblemished service, for an alleged offense which caused no prejudice to the ER, aside from absence of substantiation of the alleged offense. The authorities cited by petitioner are also irrelevant for the reason that there is no evidence on the depravity of conduct, willfulness of the disobedience, or conclusiveness of guilt on the part of private respondent. Neither was it shown that private respondent’s alleged negligence or neglect of duty, if any, was gross and habitual. Thus, reinstatement is just and proper. (VH MANUFACTURING vs. NLRC)

1.2.WILLFUL DISOBEDIENCE (ART.282A)Willful disobedience of the ER’s lawful orders, as a just cause for the dismissal of an EE, envisages the concurrence of at least two requisites: (1) the EE’s assailed conduct must have been willful or intentional, the willfulness being characterized by a “wrongful and perverse attitude”; and (2) the order violated must have been reasonable, lawful, made known to the EE and must pertain to the duties which he had been engaged to discharge.(ROSARIO vs. VICTORY RICE MILL) (SMC vs. PONTILLAS)

1.3.GROSS AND HABITUAL NEGLECT OF DUTY (ART.282B)To quote petitioner National Bookstore’s Personnel Manager Padilla, Jr., “we are constrained to terminate your employment or services with the Company effective immediately for gross neglect of duty and loss of confidence.” Gross neglect of duty and loss of confidence are just causes for termination of employment by an ER. Gross negligence has been defined as the want or absence of or failure to exercise slight care or diligence, or the entire absence of care. It evinces a thoughtless disregard of consequences without exerting any effort to avoid them. A perusal of the records of the case does not in any way show that private respondents were even remotely negligent of their duties so as to cause the loss of petitioner National Bookstore’s funds. Private respondents were able to illustrate with candor and sincerity the procedure they took prior to the loss which was witnessed by an EE of petitioner National Bookstore. They were in fact subjected to a thorough body search by petitioner National Bookstore’s lady guard before leaving their place of work on the date in issue, a claim not controverted by petitioners. Moreover, it was not even shown that they had access to the vault where the money was kept.

Significantly, in order to constitute a just cause for the EE’s dismissal, the neglect of duties must not only be gross but also habitual. Thus, the single or isolated act of negligence does not constitute a just cause for the dismissal of the EE. Verily, assuming arguendo that private respondents were negligent, although we find otherwise, it could only be a single or an isolated act that cannot be categorized as habitual, hence, not a just cause for their dismissal.(NATIONAL BOOKSTORE vs. CA)

Aboitiz had run out of Large Quickbox. However, records show that Salas made a requisition for Quickboxas early as May 21, 2003; that he made several follow-ups with Eric Saclamitao regarding the request; and that he even talked to the supplier to facilitate the immediate delivery of the Quickbox. It cannot be gainsaid that Salas exerted efforts to avoid a stock out ofQuickbox. Accordingly, he cannot be held liable for gross negligence. If there is anything that Salas can be faulted for, it is his failure to promptly inform his immediate supervisor, Mr. Ed Dumago, of the non-delivery of the requisitioned items. Nevertheless, such failure did not amount to gross neglect of duty or to willful breach of trust, which would justify his dismissal from service.(SALAS vs. ABOITIZ)

repeated and habitual infractions, committed despite several warnings, constitute gross misconduct; Habitual absenteeism without leave constitutes gross negligence and is sufficient to justify termination of an EE.—Habitual neglect implies repeated failure to perform one’s duties for a period of time. Buguat’s repeated acts of absences without leave and her frequent tardiness reflect her indifferent attitude to and lack of motivation in her work. Her repeated and habitual infractions, committed despite several warnings, constitute gross misconduct. Habitual absenteeism without leave constitute gross negligence and is sufficient to justify termination of an EE.

We find the penalty of dismissal from the service reasonable and appropriate to Buguat’s infraction. Her repeated negligence is not tolerable; neither should it merit the penalty of suspension only. The record of an EE is a relevant consideration in determining the penalty that should be meted out. Buguat committed several infractions in the past and despite the warnings and suspension, she continued to display a neglectful attitude towards her work. An EE’s past misconduct and present behavior must be taken together in determining the proper imposable penalty. The totality of infractions or the number of violations committed during the period of employment shall be considered in determining the penalty to be imposed upon an erring EE. The offenses committed by him should not be taken singly and separately but in their totality. Fitness for continued employment cannot be compartmentalized into tight little cubicles of aspects of character, conduct, and ability separate and independent of each other. It is the totality, not the compartmentalization, of such company infractions that Buguat had consistently committed which justified her dismissal.

Management has the prerogative to discipline its EEs and to impose appropriate penalties on erring workers pursuant to company rules and regulations. On the other hand, the law also recognizes the right of the ER to expect from its workers not only good performance, adequate work and diligence, but also good conduct

and loyalty. The ER may not be compelled to continue to employ such persons whose continuance in the service will patently be inimical to his interests. (CHALLENGE SOCKS vs. CA)

We, therefore, agree with the Labor Arbiter’s findings, to wit: The imputed absence and tardiness of the complainant are documented. He faltered on his attendance 38 times of the 66 working days. His last absences on 11, 13, 14, 15 and 16 March 2000 were undertaken without even notice/permission from management. These attendance delinquencies may be characterized as habitual and are sufficient justifications to terminate the complainant’s employment. On this score, Valiao v. Court of Appeals, 435 SCRA 543 (2004), is instructive: xxx It bears stressing that petitioner’s absences and tardiness were not isolated incidents but manifested a pattern of habituality. xxx The totality of infractions or the number of violations committed during the period of employment shall be considered in determining the penalty to be imposed upon an erring EE. The offenses committed by him should not be taken singly and separately but in their totality. Fitness for continued employment cannot be compartmentalized into tight little cubicles of aspects of character, conduct, and ability separate and independent of each other.

We cannot simply tolerate injustice to ERs if only to protect the welfare of undeserving EEs. As aptly put by then Associate Justice Leonardo A. Quisumbing: Needless to say, so irresponsible an EE like petitioner does not deserve a place in the workplace, and it is within the management’s prerogative xxx to terminate his employment. Even as the law is solicitous of the welfare of EEs, it must also protect the rights of an ER to exercise what are clearly management prerogatives. As long as the company’s exercise of those rights and prerogative is in good faith to advance its interest and not for the purpose of defeating or circumventing the rights of EEs under the laws or valid agreements, such exercise will be upheld. (MANSION PRINTING vs. BITARA)

Under the circumstances, MERALCO’s sanction of dismissal will not be commensurate to Beltran’s inadvertence not only because there was no clear showing of bad faith and malice but also in consideration of her untainted record of long and dedicated service to MERALCO. In the similar case of Philippine Long Distance Telephone Company v. Berbano, Jr., 606 SCRA 81 (2009), we held that: The magnitude of the infraction committed by an EE must be weighed and equated with the penalty prescribed and must be commensurate thereto, in view of the gravity of the penalty of dismissal or termination from the service. The ER should bear in mind that in termination cases, what is at stake is not simply the EE’s job or position but [her] very livelihood. Where a penalty less punitive would suffice, whatever missteps may be committed by an EE ought not to be visited with a consequence so severe such as dismissal from employment. Hence, we find no reversible error or any grave abuse of discretion on the part of the CA in ordering Beltran’s reinstatement without backwages. The forfeiture of her salary is an equitable punishment for the simple negligence committed. (MERALCO vs. BELTRAN)

1.4.LOSS OF TRUST AND CONFIDENCE (ART.282C)MANAGERIAL vs. RANK AND FILE EESSignificantly, “(t)ampering with electric meters or metering installations of the Company or the installation of any device, with the purpose of defrauding the Company” is classified as an act of dishonesty from Meralco EEs, expressly prohibited under company rules. It is reasonable that its commission is classified as a severe act of dishonesty, punishable by dismissal even on its first commission, given the nature and gravity of the offense and the fact that it is a grave wrong directed against their ER.

The dismissal is also justified as the act imputed upon the petitioner qualifies as “fraud or willful breach by the EE of the trust reposed in him by his ER or duly authorized representative” under Article 282 (c) of the Labor Code. While the petitioner contests this ground by denying that his position is one of trust and confidence, it is undisputed that at the time of his dismissal, he was holding a supervisory position after he rose from the ranks since commencement of his employment with Meralco. As a supervisor with duty and power that included testing of service meters and investigation of violations of contract of customers, his position can be treated as one of trust and confidence, requiring a high degree of honesty as compared with ordinary rank-and-file EEs.

We emphasize that dismissal of a dishonest EE is to the best interest not only of the management but also of labor. As a measure of self-protection against acts inimical to its interest, a company has the right to dismiss its erring EEs. An ER cannot be compelled to continue employing an EE guilty of acts inimical to the ER’s interest, justifying loss of confidence in him. (YABUT vs. MERALCO)

The Bank should be reminded that for a dismissal based on loss of trust and confidence to be valid, the breach of trust must be willful, meaning it must be done intentionally, knowingly, and purposely, without justifiable excuse. Loss of trust and confidence stems from a breach of trust founded on dishonest, deceitful or fraudulent act. This is obviously not the case here. (PRUDENTIAL BANK vs. MAURICIO)

e quantum of proof required in determining the legality of an EE’s dismissal is only substantial evidence or such relevant evidence as a reasonable mind might accept as adequate to support a conclusion, even if other minds, equally reasonable, might conceivably opine otherwise.—Now, petitioners terminated his employment on the ground of loss of trust and confidence for supposedly committing acts inimical to the company’s interests. However, in termination cases, the burden of proof rests upon the ER to show that the dismissal is for a just and valid cause and failure to do so would necessarily mean that the dismissal was

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illegal. The ER’s case succeeds or fails on the strength of its evidence and not on the weakness of the EE’s defense. If doubt exists between the evidence presented by the ER and the EE, the scales of justice must be tilted in favor of the latter. Moreover, the quantum of proof required in determining the legality of an EE’s dismissal is only substantial evidence or such relevant evidence as a reasonable mind might accept as adequate to support a conclusion, even if other minds, equally reasonable, might conceivably opine otherwise. Thus, it is incumbent upon petitioners to prove by substantial evidence that valid grounds exist for terminating respondent’s employment on the ground of loss of trust and confidence. However, our review of the records of this case reveals that the CA correctly held that petitioners failed to discharge this burden.

To our mind, the failure to reach the monthly sales quota cannot be considered an intentional and unjustified act of respondent amounting to a willful breach of trust on his part that would call for his termination based on loss of confidence. This is simply not the willful breach of trust and confidence contemplated in Article 282(c) of the Labor Code. Indeed, the low sales performance could be attributed to several factors which are beyond respondent’s control. To be a valid ground for an EE’s dismissal, loss of trust and confidence must be based on a willful breach. To repeat, a breach is willful if it is done intentionally, knowingly and purposely, without justifiable excuse. Petitioners having failed to establish by substantial evidence any valid ground for terminating respondent’s services, we uphold the finding of the Labor Arbiter and the CA that respondent was illegally dismissed.(NORKIS DISTRIBUTOR vs. DESCALLAR)

We hold that petitioner Sy was validly dismissed on the ground of fraud and willful breach of trust under Article 282 of the Labor Code. Records show that as bank manager, he authorized “kiting” or drawing of checks against uncollected funds in wanton violation of the bank’s policies. It was sufficient basis for the bank to lose trust in him. Unlike a rank-and-file worker, where breach of trust as a ground for valid dismissal requires proof of involvement in the alleged anomaly and where mere uncorroborated accusation by the ER will not suffice, the sheer existence of a basis for believing that the ER’s trust has been breached is enough for the dismissal of a managerial EE.

Under the Labor Code, only unjustly dismissed EEs are entitled to retirement benefits and other privileges including reinstatement and backwages. Since petitioner’s dismissal was for a just cause, he is not entitled to any retirement benefit. To hold otherwise would be to reward acts of willful breach of trust by the EE. It would also open the floodgate to potential anomalous banking transactions by bank EEs whose employments have been extended. Since a bank’s operation is essentially imbued with public interest, it owes great fidelity to the public it deals with. In turn, it cannot be compelled to continue in its employ a person in whom it has lost trust and confidence and whose continued employment would patently be inimical to the bank’s interest. While the scale of justice is tilted in favor of workers, the law does not authorize blind submission to the claim of labor regardless of merit. (SY vs. METROBANK)

1.5. COMMISSION OF A CRIME (ART.282D)

1.6.ANALOGOUS CASES (ART.282E)In this case, petitioner dismissed respondent based on the NBI’s finding that the latter stole and used Yuseco’s credit cards. But since the theft was not committed against petitioner itself but against one of its EEs, respondent’s misconduct was not work-related and therefore, she could not be dismissed for serious misconduct. Nonetheless, Article 282(e) of the Labor Code talks of other analogous causes or those which are susceptible of comparison to another in general or in specific detail. For an EE to be validly dismissed for a cause analogous to those enumerated in Article 282, the cause must involve a voluntary and/or willful act or omission of the EE.

A cause analogous to serious misconduct is a voluntary and/or willful act or omission attesting to an EE’s moral depravity. Theft committed by an EE against a person other than his ER, if proven by substantial evidence, is a cause analogous to serious misconduct. (JOHN HANCOCK LIFE INSURANCE vs. DAVIS)

A reading of the weight standards of PAL would lead to no other conclusion than that they constitute a continuing qualification of an EE in order to keep the job. Tersely put, an EE may be dismissed the moment he is unable to comply with his ideal weight as prescribed by the weight standards. The dismissal of the EE would thus fall under Article 282(e) of the Labor Code. As explained by the CA: x x x [T]he standards violated in this case were not mere “orders” of the ER; they were the “prescribed weights” that a cabin crew must maintain in order to qualify for and keep his or her position in the company. In other words, they were standards that establish continuing qualifications for an EE’s position. By its nature, these “qualifying standards” are norms that apply prior to and after an EE is hired. They apply prior to employment because these are the standards a job applicant must initially meet in order to be hired. They apply after hiring because an EE must continue to meet these standards while on the job in order to keep his job. Under this perspective, a violation is not one of the faults for which an EE can be dismissed pursuant to pars. (a) to (d) of Article 282; the EE can be dismissed simply because he no longer “qualifies” for his job irrespective of whether or not the failure to qualify was willful or intentional. x x x

In fine, We hold that the obesity of petitioner, when placed in the context of his work as flight attendant, becomes an analogous cause under Article 282(e) of the Labor Code that justifies his dismissal from the service. His obesity may not be unintended, but

is nonetheless voluntary. As the CA correctly puts it, “[v]oluntariness basically means that the just cause is solely attributable to the EE without any external force influencing or controlling his actions. This element runs through all just causes under Article 282, whether they be in the nature of a wrongful action or omission. Gross and habitual neglect, a recognized just cause, is considered voluntary although it lacks the element of intent found in Article 282(a), (c), and (d).”

Employment in particular jobs may not be limited to persons of a particular sex, religion, or national origin unless the ER can show that sex, religion, or national origin is an actual qualification for performing the job. The qualification is called a bona fideoccupational qualification (BFOQ). In the United States, there are a few federal and many state job discrimination laws that contain an exception allowing an ER to engage in an otherwise unlawful form of prohibited discrimination when the action is based on a BFOQ necessary to the normal operation of a business or enterprise.

Bona Fide Occupational Qualification (BFOQ) is valid “provided it reflects an inherent quality reasonably necessary for satisfactory job performance; Under the “Meiorin Test,” (1) the ER must show that it adopted the standard for a purpose rationally connected to the performance of the job, (2) the ER must establish that the standard is reasonably necessary to the accomplishment of that work-related purpose, and, (3) the ER must establish that the standard is reasonably necessary in order to accomplish the legitimate work-related purpose. this Court held that in order to justify a BFOQ, the 470 ER must prove that (1) the employment qualification is reasonably related to the essential operation of the job involved; and (2) that there is factual basis for believing that all or substantially all persons meeting the qualification would be unable to properly perform the duties of the job. In short, the test of reasonableness of the company policy is used because it is parallel to BFOQ. BFOQ is valid “provided it reflects an inherent quality reasonably necessary for satisfactory job performance.”

There is no merit to the argument that BFOQ cannot be applied if it has no supporting statute. Too, the Labor Arbiter, NLRC, and CA are one in holding that the weight standards of PAL are reasonable. A common carrier, from the nature of its business and for reasons of public policy, is bound to observe extraordinary diligence for the safety of the passengers it transports. It is bound to carry its passengers safely as far as human care and foresight can provide, using the utmost diligence of very cautious persons, with due regard for all the circumstances. The law leaves no room for mistake or oversight on the part of a common carrier. Thus, it is only logical to hold that the weight standards of PAL show its effort to comply with the exacting obligations imposed upon it by law by virtue of being a common carrier.

The business of PAL is air transportation.As such, it has committed itself to safely transport its passengers. In order to achieve this, it must necessarily rely on its EEs, most particularly the cabin flight deck crew who are on board the aircraft. The weight standards of PAL should be viewed as imposing strict norms of discipline upon its EEs. In other words, the primary objective of PAL in the imposition of the weight standards for cabin crew is flight safety. It cannot be gainsaid that cabin attendants must maintain agility at all times in order to inspire passenger confidence on their ability to care for the passengers when something goes wrong. It is not farfetched to say that airline companies, just like all common carriers, thrive due to public confidence on their safety records. People, especially the riding public, expect no less than that airline companies transport their passengers to their respective destinations safely and soundly. A lesser performance is unacceptable.

The task of a cabin crew or flight attendant is not limited to serving meals or attending to the whims and caprices of the passengers. The most important activity of the cabin crew is to care for the safety of passengers and the evacuation of the aircraft when an emergency occurs. Passenger safety goes to the core of the job of a cabin attendant. Truly, airlines need cabin attendants who have the necessary strength to open emergency doors, the agility to attend to passengers in cramped working conditions, and the stamina to withstand grueling flight schedules. On board an aircraft, the body weight and size of a cabin attendant are important factors to consider in case of emergency. Aircrafts have constricted cabin space, and narrow aisles and exit doors. Thus, the arguments of respondent that “[w]hether the airline’s flight attendants are overweight or not has no direct relation to its mission of transporting passengers to their destination”; and that the weight standards “has nothing to do with airworthiness of respondent’s airlines,” must fail.

There is no need to individually evaluate their ability to perform their task. That an obese cabin attendant occupies more space than a slim one is an unquestionable fact which courts can judicially recognize without introduction of evidence. It would also be absurd to require airline companies to reconfigure the aircraft in order to widen the aisles and exit doors just to accommodate overweight cabin attendants like petitioner. The biggest problem with an overweight cabin attendant is the possibility of impeding passengers from evacuating the aircraft, should the occasion call for it. The job of a cabin attendant during emergencies is to speedily get the passengers out of the aircraft safely. Being overweight necessarily impedes mobility. Indeed,in an emergency situation, seconds are what cabin attendants are dealing with, not minutes. Three lost seconds can translate into three lost lives. Evacuation might slow down just because a wide-bodied cabin attendant is blocking the narrow aisles. These possibilities are not remote.

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Petitioner is also in estoppel. He does not dispute that the weight standards of PAL were made known to him prior to his employment. He is presumed to know the weight limit that he must maintain at all times. In fact, never did he question the authority of PAL when he was repeatedly asked to trim down his weight. Bona fides exigit ut quod convenit fiat. Good faith demands that what is agreed upon shall be done. Kung ang tao ay tapat kanyang tutuparin ang napagkasunduan. (YRASUEGI vs. PAL)

1.7.ABANDONMENTTo constitute abandonment, two elements must concur: (1) the failure to report for work or absence without valid or justifiable reason, and (2) a clear intention to sever the ER-EE relationship, with the second element as the more determinative factor and being manifested by some overt acts. Mere absence is not sufficient. The ER has the burden of proof to show a deliberate and unjustified refusal of the EE to resume his employment without any intention of returning. (RCBC CABLE MASTER SYSTEM vs. BALUYOT)

Mere absence or failure to work, even after notice to return, is not tantamount to abandonment. The records are bereft of proof that petitioners even furnished respondent such notice. Furthermore, it is a settled doctrine that the filing of a complaint for illegal dismissal is inconsistent with abandonment of employment. An EE who takes steps to protest his dismissal cannot logically be said to have abandoned his work. The filing of such complaint is proof enough of his desire to return to work, thus negating any suggestion of abandonment. (GSP MANUFACTURING vs. CABANBAN)

(SHIE JIE CORP. vs. NFL)

To constitute abandonment, there must be concurrence of the intention to abandon and some overt acts from which it may be inferred that the EE concerned has no more interest in working. In other words, there must be a clear, deliberate and unjustified refusal to resume employment and a clear intention to sever the ER-EE relationship on the part of the EE.

Where the findings of the National Labor Relations Commission contradict those of the labor arbiter, the Supreme Court, in the exercise of its equity jurisdiction, may look into the records of the case and reexamine the questioned findings

The rule that abandonment of work is inconsistent with the filing of a complaint for illegal dismissal is not applicable in this case. Such rule applies where the complainant seeks reinstatement as a relief. Corollarily, it has no application where the complainant does not pray for reinstatement and just asks for separation pay instead as in the present case. It goes without saying that the prayer for separation pay, being the alternative remedy to reinstatement, contradicts private respondent’s stance. That he was illegally dismissed is belied by his own pleadings as well as contemporaneous conduct. (JO vs. NLRC)

1.8.TOTALITY OF CIRCUMSTANCEThe totality of the circumstances obtaining in the case convinces us that Gala could not but have knowledge of the pilferage of company electrical supplies on May 25, 2006; he was complicit in its commission, if not by direct participation, certainly, by his inaction while it was being perpetrated and by not reporting the incident to company authorities. Thus, we find substantial evidence to support the conclusion that Gala does not deserve to remain in Meralco’s employ as a regular EE. He violated his probationary employment agreement, especially the requirement for him “to observe at all times the highest degree of transparency, selflessness and integrity in the performance of their duties and responsibilities[.]” He failed to qualify as a regular EE.(MERALCO vs. GALA)

1.9 PREVENTIVE SUSPENSIONWe, however, find no merit in the challenge made by Arlene and Joseph against the legality of the preventive suspension imposed by Blue Sky upon them pending the investigation of the alleged theft. In Mandapat v. Add Force Personnel Services, Inc., 624 SCRA 155 (2010), we explained that preventive suspension may be legally imposed on an EE whose alleged violation is the subject of an investigation. The purpose of the suspension is to prevent an EE from causing harm or injury to his colleagues and to the ER. The maximum period of suspension is 30 days, beyond which the EE should either be reinstated or be paid wages and benefits due to him. (BLUE SKY TRADING CO. vs. BLAS)

2.TERMINATION OF A PROBATIONARY EEIn International Catholic Migration Commission v. NLRC, 169 SCRA 606 (1989), the Court explained that a probationary EE, as understood under Article 281 of the Labor Code, is one who is on trial by an ER, during which, the latter determines whether or not he is qualified for permanent employment. A probationary appointment gives the ER an opportunity to observe the fitness of a probationer while at work, and to ascertain whether he would be a proper and efficient EE. Dalangin was barely a month on the job when the company terminated his employment. He was found wanting in qualities that would make him a “proper and efficient” EE or, as the company put it, he was unfit and unqualified to continue as its Immigration and Legal Manager.

The essence of a probationary period of employment fundamentally lies in the purpose or objective of both the ER and the EE during the period. While the ER observes the fitness, propriety and efficiency of a probationer to ascertain whether he is qualified for permanent employment, the latter seeks to prove to the former that he has the qualifications to meet the reasonable standards for permanent employment. The “trial period” or the length of time the probationary EE remains on probation depends on the parties’ agreement, but it shall not exceed six (6) months under Article 281

of the Labor Code, unless it is covered by an apprenticeship agreement stipulating a longer period. Article 281 provides: Probationary employment.—Probationary employment shall not exceed six (6) months from the date the EE started working, unless it is covered by an apprenticeship agreement stipulating a longer period. The services of an EE who has been engaged on a probationary basis may be terminated for a just cause or when he fails to qualify as a regular EE in accordance with reasonable standards made known by the ER to the EE at the time of his engagement. An EE who is allowed to work after a probationary period shall be considered a regular EE. (CANADIAN OPPORTUNITIES UNLIMITED vs. DALANGIN)

2.AUTHORIZED CAUSE (ARTS.283-284)ART. 283. Closure of establishment and reduction of personnel. - The ER may also terminate the employment of any EE due to the installation of labor-saving devices, redundancy, retrenchment to prevent losses or the closing or cessation of operation of the establishment or undertaking unless the closing is for the purpose of circumventing the provisions of this Title, by serving a written notice on the workers and the Ministry of Labor and Employment at least one (1) month before the intended date thereof. In case of termination due to the installation of labor-saving devices or redundancy, the worker affected thereby shall be entitled to a separation pay equivalent to at least his one (1) month pay OR to at least one (1) month pay for every year of service, whichever is higher. In case of retrenchment to prevent losses and in cases of closures or cessation of operations of establishment or undertaking not due to serious business losses or financial reverses, the separation pay shall be equivalent to one (1) month pay or at least one-half (1/2) month pay for every year of service, whichever is higher. A fraction of at least six (6) months shall be considered one (1) whole year.

2.1.RETRENCHEMENT TO PREVENT LOSSES (ART.283)a.DEFINITION, REQUISITES, RELOCATION OF BUSINESSBroadly speaking, there appears no complete dissolution of petitioner’s business undertaking but the relocation of petitioner’s plant to Batangas, in our view, amounts to cessation of petitioner’s business operations in Makati. It must be stressed that the phrase “closure or cessation of operation of an establishment or undertaking not due to serious business losses or reverses” under Article 283 of the Labor Code includes both the complete cessation of all business operations and the cessation of only part of a company’s business. In Philippine Tobacco Flue-Curing & Redrying Corp. vs. NLRC, a company transferred its tobacco processing plant in Balintawak, Quezon City to Candon, Ilocos Sur. The company therein did not actually close its entire business but merely relocated its tobacco processing and redrying operations to another place. Yet, this Court considered the transfer as closure not due to serious business losses for which the workers are entitled to separation pay.There is no doubt that petitioner has legitimate reason to relocate its plant because of the expiration of the lease contract on the premises it occupied. That is its prerogative. But even though the transfer was due to a reason beyond its control, petitioner has to accord its EEs some relief in the form of severance pay. Thus, inE. Razon, Inc. vs. Secretary of Labor and Employment, petitioner therein provides arrastre services in all piers in South Harbor, Manila, under a management contract with the Philippine Ports Authority. Before the expiration of the term of the contract, the PPA cancelled the said contract resulting in the termination of employment of workers engaged by petitioner. Obviously, the cancellation was not sought, much less desired by petitioner. Nevertheless, this Court required petitioner therein to pay its workers separation pay in view of the cessation of its arrastre operations.

Petitioner’s contention that private respondents resigned from their jobs, does not appear convincing. As public respondent observed, the subsequent transfer of petitioner to another place hardly accessible to its workers resulted in the latter’s untimely separation from the service not to their own liking, hence, not construable as resignation. Resignation must be voluntary and made with the intention of relinquishing the office, accompanied with an act of relinquishment. Indeed, it would have been illogical for private respondents herein to resign and then file a complaint for illegal dismissal. Resignation is inconsistent with the filing of the said complaint. (CHENIVER vs. NLRC)

“Redundancy” and “retrenchment” are not synonymous but distinct and separate grounds for termination of employment. Redundancy exists where the services of an EE are in excess of what is reasonably demanded by the actual requirements of the enterprise. A position is redundant where it is superfluous, and superfluity of a position or positions may be the outcome of a number of factors, such as overhiring of workers, decreased volume of business, or dropping of a particular product line or service activity previously manufactured or undertaken by the enterprise.

Retrenchment, on the other hand, is used interchangeably with the term “lay-off.” It is the termination of employment initiated by the ER through no fault of the EE’s and without prejudice to the latter, resorted to by management during periods of business recession, industrial depression, or seasonal fluctuations, or during lulls occasioned by lack of orders, shortage of materials, conversion of the plant for a new production program or the introduction of new methods or more efficient machinery, or of automation. Simply put, it is an act of the ER of dismissing EEs because of losses in the operation of a business, lack of work, and considerable reduction on the volume of his business, a right consistently recognized and affirmed by this Court.

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Under the aforequoted Article 283 of the Labor Code, there are three basic requisites for a valid retrenchment: (1) the retrenchment is necessary to prevent losses and such losses are proven; (2) written notice to the EEs and to the Department of Labor and Employment at least one month prior to the intended date of retrenchment; and (3) payment of separation pay equivalent to one month pay or at least 1/2 month pay for every year of service, whichever is higher

As for the first requisite, whether or not an ER would imminently suffer serious or substantial losses for economic reasons is essentially a question of fact for the Labor Arbiter and the NLRC to determine. Here, both the Labor Arbiter and the NLRC found that the private respondent was suffering and would continue to suffer serious losses, thereby justifying the retrenchment of some of its EEs, including the petitioners. We are not prepared to disregard this finding of fact. It is settled that findings of quasi-judicial agencies which have acquired expertise in the matters entrusted to their jurisdiction are accorded by this Court not only with respect but with finality if they are supported by substantial evidence. The latter means that amount of relevant evidence which a reasonable mind might accept as adequate to justify a conclusion.

Notice to both the EEs concerned and the Department of Labor and Employment is mandatory and must be written and given at least one month before the intended date of retrenchment—and the fact that the EEs were already on temporary lay-off at the time notice should have been given to them is not an excuse to forego the one-month written notice.—The requirement of notice to both the EEs concerned and the Department of Labor and Employment (DOLE) is mandatory and must be written and given at least one month before the intended date of retrenchment. In this case, it is undisputed that the petitioners were given notice of the temporary lay-off. There is, however, no evidence that any written notice to permanently retrench them was given at least one month prior to the date of the intended retrenchment. The NLRC found that GTI conveyed to the petitioners the impossibility of recalling them due to the continued unavailability of work. But what the law requires is a written notice to the EEs concerned and that requirement is mandatory. The notice must also be given at least one month in advance of the intended date of retrenchment to enable the EEs to look for other means of employment and therefore to ease the impact of the loss of their jobs and the corresponding income. That they were already on temporary lay-off at the time notice should have been given to them is not an excuse to forego the one-month written notice because by this time, their lay-off is to become permanent and they were definitely losing their employment.

The lack of written notice to the petitioners and to the DOLE does not, however, make the petitioners’ retrenchment illegal such that they are entitled to the payment of back wages and separation pay in lieu of reinstatement as they contend. Their retrenchment, for not having been effected with the required notices, is merely defective. In those cases where we found the retrenchment to be illegal and ordered the EEs’ reinstatement and the payment of back wages, the validity of the cause for retrenchment, that is the existence of imminent or actual serious or substantial losses, was not proven. But here, such a cause is present as found by both the Labor Arbiter and the NLRC. There is only a violation by GTI of the procedure prescribed in Article 283 of the Labor Code in effecting the retrenchment of the petitioners.

Where the dismissal of an EE is in fact for a just and valid cause but he is not accorded his right to due process, the dismissal shall be upheld but the ER must be sanctioned—in the nature of indemnification or penalty—for noncompliance with the requirements of or for failure to observe due process.—It is now settled that where the dismissal of an EE is in fact for a just and valid cause and is so proven to be but he is not accorded his right to due process, i.e., he was not furnished the twin requirements of notice and the opportunity to be heard, the dismissal shall be upheld but the ER must be sanctioned for non-compliance with the requirements of or for failure to observe due process. The sanction, in the nature of indemnification or penalty, depends on the facts of each case and the gravity of the omission committed by the ER. Accordingly, we affirm the deletion by the NLRC of the award of back wages. But because the required notices of the petitioners’ retrenchment were not served upon the petitioners and the DOLE, GTI must be sanctioned for such failure and thereby required to indemnify each of the petitioners the sum of P2,000.00 which we find to be just and reasonable under the circumstances of this case. (SEBUGUERO vs. NLRC)

b.PROOF REQUIREDUnder the first requisite, it is imperative and incumbent on the part of the ER to sufficiently and convincingly establish business reverses of the kind or in the amount that would justify retrenchment. To justify retrenchment, the ER must prove serious business losses, as not all business losses suffered by an ER would justify retrenchment under the aforesaid Article 283. The loss referred to in the said provision cannot be of just any kind or amount, otherwise, a company could easily feign excuses to suit its whims and prejudices or to rid itself of unwanted EEs. As consistently held by this Court, to guard against abuse, any claim of actual or potential business losses must satisfy the following established standards, to wit: (a) the losses incurred are substantial and not de minimis; (b) the losses are actual or reasonably imminent; (c) the retrenchment is reasonably necessary and is likely to be effective in preventing the expected losses; and (d) the alleged losses, if already incurred, or the expected imminent losses sought to be forestalled are proven by sufficient and convincing evidence. The Court has previously ruled that financial statements audited by independent external auditors constitute the normal method of proof of the profit and loss performance of a company. (PT&T vs. NLRC)

c.STANDARDS TO BE OBSERVEDThe rule is well-settled that labor laws discourage interference with an ER’s judgment in the conduct of his business. Even as the law is solicitous of the welfare of EEs, it must also protect the right of an ER to exercise what are clearly management prerogatives. 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 EEs under the laws or valid agreements, such exercise will be upheld.

It is not disputed that the LIFO rule applies to termination of employment in the line of work. Verily, what is contemplated in the LIFO rule is that when there are two or more EEs occupying the same position in the company affected by the retrenchment program, the last one employed will necessarily be the first to go. (MAYA FARMS EES ORG. vs. NLRC)

We have laid down the principle that in selecting the EEs to be dismissed, a fair and reasonable criteria must be used, such as but not limited to: (a) less preferred status (e.g., temporary EE), (b) efficiency, and (c) seniority. The records disclose that no criterion whatsoever was adopted by petitioners in dismissing Rivera and Macaspac. Another procedural lapse committed by petitioners is the lack of written notice to the DOLE required under Art. 283 of the Labor Code. The purpose of such notice is to ascertain the verity of the cause of termination of employment. (GOLDEN THREADS vs. NLRC)

d.SUBSTANTIAL LOSSThere should, in other words, be a certain degree of urgency for the retrenchment, which is after all a drastic recourse with serious consequences for the livelihood of the EEs retired or otherwise laid-off. Because of the consequential nature of retrenchment, it must, thirdly, be reasonably necessary and likely to effectively prevent the expected losses. The ER should have taken other measures prior or parallel to retrenchment to forestall losses, i.e., cut other costs than labor costs. An ER who, for instance,lays off substantial numbers of workers while continuing to dispense fat executive bonuses and perquisites or so-called “golden parachutes”, can scarcely claim to be retrenching in good faith to avoid losses. To impart operational meaning to the constitutional policy of providing “full protection” to labor, the ER’s prerogative to bring down labor costs by retrenching must be exercised essentially as a measure of last resort, after less drastic means—e.g., reduction of both management and rank-and-file bonuses and salaries, going on reduced time, improving manufacturing efficiencies, trimming of marketing and advertising costs, etc.—have been tried and found wanting.

Lastly, but certainly not the least important, alleged losses if already realized, and the expected imminent losses sought to be forestalled, must be proved by sufficient and convincing evidence. The reason for requiring this quantum of proof is readily apparent: any less exacting standard of proof would render too easy the abuse of this ground for termination of services of EEs.(LOPEZ SUGAR CORP. vs. FEDERATION OF FREE WORKERS)

The law speaks of serious business losses or financial reverses. Sliding incomes or decreasing gross revenues are not necessarily losses, much less serious business losses within the meaning of the law. The fact that an ER may have sustained a net loss, such loss, per se, absent any other evidence on its impact on the business, nor on expected losses that would have been incurred had operations been continued, may not amount to serious business losses mentioned in the law. The ER must show that its losses increased through a period of time and that the condition of the company will not likely improve in the near future, or that it expected no abatement of its losses in the coming years. Put simply,not every loss incurred or expected to be incurred by a company will justify retrenchment.

The ER must also exhaust all other means to avoid further losses without retrenching its EEs. Retrenchment is a means of last resort; it is justified only when all other less drastic means have been tried and found insufficient. Even assuming that the ER has actually incurred losses by reason of the Asian economic crisis, the retrenchment is not completely justified if there is no showing that the retrenchment was the last recourse resorted to. Where the only less drastic measure that the ERundertook was the rotation work scheme, or the three-day-work-per-EE-per-week schedule, and it did not endeavor at other measures, such as cost reduction, lesser investment on raw materials, adjustment of the work routine to avoid scheduled power failure, reduction of the bonuses and salaries of both management and rank-and-file, improvement of manufacturing efficiency, and trimming of marketing and advertising costs, the claim that retrenchment was done in good faith to avoid losses is belied. Alleged losses if already realized, and the expected imminent losses sought to be forestalled, must be proved by sufficient and convincing evidence. The reason for requiring this is readily apparent: any less exacting standard of proof would render too easy the abuse of this ground for termination of services of EEs; scheming ERs might be merely feigning business losses or reverses in order to ease out EEs.

It was grave error for the Labor Arbiter, the NLRC and the Court of Appeals, to have simply assumed that PAL was in grievous financial state, without requiring the latter to substantiate such claim. It bears stressing that in retrenchment cases, the presentation of proof of financial difficulties through the required documents, preferably audited financial statements prepared by independent auditors, may not summarily be done away with.

Applying this caveat, it is therefore incumbent for the ER, before putting into effect any retrenchment process on its work force, to

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show by convincing evidence that it was being wrecked by serious financial problems. Simply declaring its state of insolvency or its impending doom will not be sufficient. To do so would render the security of tenure of workers and EEs illusory. Any ER desirous of ridding itself of its EEs could then easily do so without need to adduce proof in support of its action. We can not countenance this. Security of tenure is a right guaranteed to EEs and workers by the Constitution and should not be denied on the basis of mere speculation. On the requirement that the prerogative to retrench must be exercised in good faith, we have ruled that the hiring of new EEs and subsequent rehiring of “retrenched” EEs constitute bad faith; that the failure of the ER to resort to other less drastic measures than retrenchment seriously belies its claim that retrenchment was done in good faith to avoid losses; and that the demonstrated arbitrariness in the selection of which of its EEs to retrench is further proof of the illegality of the ER’s retrenchment program, not to mention its bad faith.

This Court has repeatedly enjoined ERs to adopt and observe fair and reasonable standards to effect retrenchment. This is of paramount importance because an ER’s retrenchment program could be easily justi-fied considering the subjective nature of this requirement. The adoption and implementation of unfair and unreasonable criteria could not easily be detected especially in the retrenchment of large numbers of EEs, and in this aspect, abuse is a very distinct and real possibility. This is where labor tribunals should exercise more diligence; this aspect is where they should concentrate when placed in a position of having to judge an ER’s retrenchment program.

By discarding the cabin crew personnel’s previous years of service and taking into consideration only one year’s worth of job performance for evaluation, Philippine Airlines (PAL) virtually did away with the concept of seniority, loyalty and past efficiency, and treated all cabin attendants as if they were on equal footing, with no one more senior than the other.—In assessing the overall performance of each cabin crew personnel, PAL only considered the year 1997. This makes the evaluation of each cabin attendant’s efficiency rating capricious and prejudicial to PAL EEs covered by it. By discarding the cabin crew personnel’s previous years of service and taking into consideration only one year’s worth of job performance for evaluation, PAL virtually did away with the concept of seniority, loyalty and past efficiency, and treated all cabin attendants as if they were on equal footing,with no one more senior than the other. (FLIGHT ATTENDANT AND STEWARD ASSOC OF THE PHIL. vs. PAL)

e.RETRENCHMENT OF AN OFWPhilippine Law recognizes retrenchment as a valid cause for the dismissal of a migrant or overseas Filipino worker under Article 283 of the Labor Code, which provides: Closure of establishment and reduction of personnel. (INT’L MANAGEMENT vs. LOGARTA)

2.2.CLOSURE OF BUSINESS (ART.283)As already stated, Art. 283 of the Labor Code does not obligate an ER to pay separation benefits when the closure is due to losses. In the case before us, the basis for the claim of the additional separation benefit of 17.5 days is alleged discrimination, i.e., unequal treatment of EEs, which is proscribed as an unfair labor practice by Art. 248 (e) of said Code. Under the facts and circumstances of the present case, the grant of a lesser amount of separation pay to private respondent was done, not by reason of discrimination, but rather, out of sheer financial bankruptcy—a fact that is not controlled by management prerogatives. Stated differently, the total cessation of operation due to mind-boggling losses was a supervening fact that prevented the company from continuing to grant the more generous amount of separation pay. The fact that North Davao at the point of its forced closure voluntarily paid any separation benefits at all—although not required by law—and 12.5 days’ worth at that, should have elicited admiration instead of condemnation. But to require it to continue being generous when it is no longer in a position to do so would certainly be unduly oppressive, unfair and most revolting to the conscience. (NORTH DAVAO MINING vs. NLRC)

a.CESSATION OF BUSINESS OPERATIONSIn fact, even granting arguendo that respondent was not experiencing losses, it is still authorized by Article 283 of the Labor Code to cease its business operations. Explicit in the said provision is that closure or cessation of business operations is allowed even if the business is not undergoing economic losses. The owner, for any bona fide reason, can lawfully close shop anyone. Just as no law forces anyone to go into business, no law can compel anybody to continue in it. It would indeed be stretching the intent and spirit of the law if we were to unjustly interfere with the management’s prerogative to close or cease its business operations, just because said business operations are not suffering any loss or simply to provide the worker’s continued employment.

titioner’s proposition that she was not a union member and, therefore, not legally bound by the terms of the Collective Bargaining Agreement, is irrelevant in the instant controversy. Non-membership in a union does not exempt an EE from the application of Article 283 of the Labor Code which enumerates the au-thorized causes for terminating employment. In this case, petitioner was terminated pursuant to the retrenchment program implemented by respondent. As discussed above, the respondent complied with the legal requirements for a valid retrenchment. Therefore, petitioner’s separation from employment was legal and valid. (MANATAD vs. PT&T)

2.3.REDUNDANCY (ART.283)We do not believe that redundancy in an ER’s personnel force necessarily or even ordinarily refers to duplication of work. That no other person was holding the same position that private respondent

held prior to the termination of his services, does not show that his position had not become redundant. Indeed, in any well-organized business enterprise, it would be surprising to find duplication of work and two (2) or more people doing the work of one person. We believe that redundancy, for purposes of our Labor Code, exists where the services of an EE are in excess of what is reasonably demanded by the actual requirements of the enterprise. Succinctly put, a position is redundant where it is superfluous, and superfluity of a position or positions may be the outcome of a number of factors, such as overhiring of workers, decreased volume of .business, or dropping of a particular produet line or service activity previously manufactured or undertaken by the enterprise. The ER has no legal obligation to keep in its payroll more EEs than are necessary for the operation of its business.

It is of no legal moment that the financial troubles of the company were not of private respondent’s making. Private respondent cannot insist on the retention of his position upon the ground that he had not contributed to the financial problems of Wiltshire. The characterization of private respondent’s services as no longer necessary or sustainable, and therefore properly terminable, was an exercise of business judgment on the part of petitioner company. The wisdom or soundness of such characterization or decision was not subject to discretionary review on the part of the Labor Arbiter nor of the NLRC so long, of course, as violation of law or merely arbitrary and malicious action is not shown. It should also be noted that the position held by private respondent, Sales Manager, was clearly managerial in character.

Where, as in the instant case, the ground for dismissal or termination of services does not relate to a blameworthy act or omission on the part of the EE, there appears to us no need for an investigation and hearing to be conducted by the ER who does not, to begin with, allege any malfeasance or non-feasance on the part of the EE. In such case, there are no allegations which the EE should refute and defend himself from. Thus, to require petitioner Wiltshire to hold a hearing, at which private respondent would have had the right to be present, on the business and financial circumstances compelling retrenchment and resulting in redundancy, would be to impose upon the ER an unnecessary and inutile hearing as a condition for legality of termination.

This is not to say that the EE may not contest the reality or good faith character of the retrenchment or redundancy asserted as grounds for termination of services. The appropriate forum for such controversion would, however, be the Department of Labor and Employment and not an investigation or hearing to be held by the ER itself. It is precisely for this reason that an ER seeking to terminate services of an EE or EEs because of “closure of establishment and reduction of personnel”, is legally required to give a written notice not only to the EE but also to the Department of Labor and Employment at least one month before effectivity date of the termination. In the instant case, private respondent did controvert before the appropriate labor authorities the grounds for termination of services set out in petitioner’s letter to him dated 17 June 1985. (WILTSHIRE FILE CO. vs. NLRC)(ESCAREAL vs. NLRC)(DE OCAMPO vs. NLRC)

2.4.TEMPORARY CLOSUREART. 286. When employment not deemed terminated. - The bona-fide suspension of the operation of a business or undertaking for a period not exceeding six (6) months, or the fulfillment by the EE of a military or civic duty shall not terminate employment. In all such cases, the ER shall reinstate the EE to his former position without loss of seniority rights if he indicates his desire to resume his work not later than one (1) month from the resumption of operations of his ER or from his relief from the military or civic duty.

2.5.DISEASE (ART.284)ART. 284. Disease as ground for termination. - An ER may terminate the services of an EE who has been found to be suffering from any disease and whose continued employment is prohibited by law or is prejudicial to his health as well as to the health of his co-EEs: Provided, That he is paid separation pay equivalent to at least one (1) month salary or to one-half (1/2) month salary for every year of service, whichever is greater, a fraction of at least six (6) months being considered as one (1) whole year.

s this Court stated in Triple Eight Integrated Services, Inc. vs. NLRC,the requirement for a medical certificate under Article 284 of the Labor Code cannot be dispensed with; otherwise, it would sanction the unilateral and arbitrary determination by the ER of the gravity or extent of the EE’s illness and thus defeat the public policy in the protection of labor. (SY vs. CA)

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

It bears stressing that respondent was not an ordinary rank-and-file EE. With the nature of his position, he was reposed with managerial duties to oversee petitioner’s business in his assigned area. As a managerial EE, respondent was tasked to perform important and

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crucial functions and, thus, bound by more exacting work ethic. He should have realized that such sensitive position required the full trust and confidence of his ER in every exercise of managerial discretion insofar as the conduct of the latter’s business is concerned. The power to dismiss an EE is a recognized prerogative inherent in the ER’s right to freely manage and regulate his business. The law, in protecting the rights of the laborers, authorizes neither oppression nor self-destruction of the ER. The worker’s right to security of tenure is not an absolute right, for the law provides that he may be dismissed for cause. As a general rule, ERs are allowed wide latitude of discretion in terminating the employment of managerial personnel. The mere existence of a basis for believing that such EE has breached the trust and confidence of his ER would suffice for his dismissal. Needless to say, an irresponsible EE like respondent does not deserve a place in the workplace, and it is petitioner’s management prerogative to terminate his employment. To be sure, an ER cannot be compelled to continue with the employment of workers when continued employment will prove inimical to the ER’s interest.(WUERTH PHIL. vs. YNSON)

2.6.REORGANIZATION/ABOLITION(HANTEX TRADING CO. vs. CA)

b.PROCEDURAL DUE PROCESS1.TWIN-NOTICE REQUIREMENTTo stress, if the dismissal is based on a just cause under Article 282 of the Labor Code, the ER must give the EE (1) two written notices and (2) a hearing (or at least, an opportunity to be heard). The first notice is intended to inform the EE of the ER’s intent to dismiss and the particular acts or omissions for which the dismissal is sought. The second notice is intended to inform the EE of the ER’sdecision to dismiss. This decision, however, must come only after the EE has been given a reasonable period, from receipt of the first notice, within which to answer the charge; and ample opportunity to be heard with the assistance of counsel, if the EE so desires.

Neither Section 2 of Book V of Rule XXIII nor Section 2(d) of Rule 1 of Book VI of the Implementing Rules require strict literal compliance with the stated procedure; only substantial compliance is needed. On this basis, the Memoranda sent to respondents may be deemed to have sufficiently conformed to the first notice required under the Implementing Rules. The Memoranda served the purpose of informing them of the pending matters beclouding their employment and of extending to them an opportunity to clear the air. In fact, not only were respondents duly informed of the particular acts for which their dismissal was sought; they were, in truth and in fact, able to defend themselves and to respond to the charges with the assistance of a counsel of their own choosing. (GLAXO WELLCOME vs. NAGKAKAISANG EMPLEYADO NG WELLCOME)

The first written notice to be served on the EEs should contain the specific causes or grounds for termination against them, and a directive that the EEs are given the opportunity to submit their written explanation within a reasonable period. “Reasonable opportunity” under the Omnibus Rules means every kind of assistance that management must accord to the EEs to enable them to prepare adequately for their defense. This should be construed as a period of at least five (5) calendar days from receipt of the notice to give the EEs an opportunity to study the accusation against them, consult a union official or lawyer, gather data and evidence, and decide on the defenses they will raise against the complaint. Moreover, in order to enable the EEs to intelligently prepare their explanation and defenses, the notice should contain a detailed narration of the facts and circumstances that will serve as basis for the charge against the EEs. A general description of the charge will not suffice. Lastly, the notice should specifically mention which company rules, if any, are violated and/or which among the grounds under Art. 282 is being charged against the EEs.

In the instant case, KKTI admits that it had failed to provide respondent with a “charge sheet.” However, it maintains that it had substantially complied with the rules, claiming that “respondent would not have issued a written explanation had he not been informed of the charges against him.” We are not convinced. First, respondent was not issued a written notice charging him of committing an infraction. The law is clear on the matter. A verbal appraisal of the charges against an EE does not comply with the first notice requirement. In Pepsi Cola Bottling Co. v. NLRC, 210 SCRA 277 (1992), the Court held that consultations or conferences are not a substitute for the actual observance of notice and hearing. Also, in Loadstar Shipping Co., Inc. v. Mesano, 408 SCRA 478 (2003), the Court, sanctioning the ER for disregarding the due process requirements, held that the EE’s written explanation did not excuse the fact that there was a complete absence of the first notice. (KING OF KINGS vs. MAMAC)

1.1.CONTENTS OF A VALID NOTICE

1.2.FAILURE TO COMPLYTherefore statutory due process should be differentiated from failure to comply with constitutional due process.Constitutional due process protects the individual from the government and assures him of his rights in criminal, civil or administrative proceedings; while statutory due process found in the Labor Code and Implementing Rules protects EEs from being unjustly terminated without just cause after notice and hearing.

The violation of the petitioners’ right to statutory due process by the private respondent warrants the payment of indemnity in the form of nominal damages. The amount of such damages is

addressed to the sound discretion of the court, taking into account the relevant circumstances. Considering the prevailing circumstances in the case at bar, we deem it proper to fix it at P30,000.00. We believe this form of damages would serve to deter ERs from future violations of the statutory due process rights of EEs. At the very least, it provides a vindication or recognition of this fundamental right granted to the latter under the Labor Code and its Implementing Rules. (AGABON vs. NLRC)

It is, therefore, established that there was ground for respondents’ dismissal, i.e., retrenchment, which is one of the authorized causes enumerated under Article 283 of the Labor Code. Likewise, it is established that JAKA failed to comply with the notice requirement under the same Article. Considering the factual circumstances in the instant case and the above ratiocination, we, therefore, deem it proper to fix the indemnity at P50,000.00. (JAKA FOOD vs. PACOT)

2.AMPLE OPPORTUNITY TO BE HEARD; HEARINGThus, the opportunity to be heard afforded by law to the EE is qualified by the word “ample” which ordinarily means “considerably more than adequate or sufficient.” In this regard, the phrase “ample opportunity to be heard” can be reasonably interpreted as extensive enough to cover actual hearing or confer-ence. To this extent, Section 2(d), Rule I of the Implementing Rules of Book VI of the Labor Code is in conformity with Article 277(b).

Section 2(d), Rule I of the Implementing Rules of Book VI of the Labor Code should not be taken to mean that holding an actual hearing or conference is a conditionsine qua non for compliance with the due process requirement in termination of employment. The test for the fair procedure guaranteed under Article 277(b) cannot be whether there has been a formal pretermination confrontation between the ER and the EE. The “ample opportunity to be heard” standard is neither synonymous nor similar to a formal hearing. To confine the EE’s right to be heard to a solitary form narrows down that right. It deprives him of other equally effective forms of adducing evidence in his defense. Certainly, such an exclusivist and absolutist interpretation is overly restrictive. The “very nature of due process negates any concept of inflexible procedures universally applicable to every imaginable situation.”

Section 2(d), Rule I of the Implementing Rules of Book VI of the Labor Code itself provides that the so-called standards of due process outlined therein shall be observed “substantially,” not strictly. This is a recognition that while a formal hearing or conference is ideal, it is not an absolute, mandatory or exclusive avenue of due process.

A hearing means that a party should be given a chance to adduce his evidence to support his side of the case and that the evidence should be taken into account in the adjudication of the controversy. “To be heard” does not mean verbal argumentation alone inasmuch as one may be heard just as effectively through written explanations, submissions or pleadings. Therefore, while the phrase “ample opportunity to be heard” may in fact include an actual hearing, it is not limited to a formal hearing only. In other words, the existence of an actual, formal “trial-type” hearing, although preferred, is not absolutely necessary to satisfy the EE’s right to be heard.

The following are the guiding principles in connection with the hearing requirement in dismissal cases: (a) “ample opportunity to be heard” means any meaningful opportunity (verbal or written) given to the EE to answer the charges against him and submit evidence in support of his defense, whether in a hearing, conference or some other fair, just and reasonable way. (b) a formal hearing or conference becomes mandatory only when requested by the EE in writing or substantial evidentiary disputes exist or a company rule or practice requires it, or when similar circumstances justify it. (c) the “ample opportunity to be heard” standard in the Labor Code prevails over the “hearing or conference” requirement in the implementing rules and regulations. (PEREZ vs. PT&T)

That the workers involved in the incident were “mustered” or convened thereafter by the captain is inconsequential. It is insufficient compliance with the law which requires, as a vital component of due process, observance of the twin requirements of notice and hearing before dismissing an EE. As regards the notice requirement, the Court has stated: “On the issue of due process . . ., the law requires the ER to furnish the worker whose employment is sought to be terminated a written notice containing a statement of the cause or causes for termination and shall afford him ample opportunity to be heard and to defend himself with the assistance of a representative. Specifically, the ER must furnish the worker with two (2) written notices before termination of employment can be legally effected: (a) notice which apprises the EE of the particular acts or omissions for which his dismissal is sought; and (b) the subsequent notice which informs the EE of the ER’s decision to dismiss him.”

Neither is the ship captain’s having witnessed the altercation an excuse for dispensing with the notice and hearing requirements. Serving notice to private respondent under the circumstances cannot be regarded as an “absurdity and superfluity.” (WALLEM MARITIME SERVICES vs. NLRC)

The right to counsel and the assistance of one in investigations involving termination cases is neither indis-pensable nor mandatory, except when the EE himself requests for one or that he manifests that he wants a formal hearing on the charges against him. In petitioner’s case, there is no showing that he requested for a formal hearing to be conducted or that he be assisted by counsel. Verily, since he was furnished a second notice informing him of his dismissal and the grounds therefor, the twin-notice requirement had been complied with to call for a deletion of the appellate

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court’s award of nominal damages to petitioner. (LOPEZ vs. ALTURAS)

c.TERMINATING A PROBATIONARY EEWithin the limited legal six-month probationary period, probationary EEs are still entitled to security of tenure. It is expressly provided in the afore-quoted Article 281 that a probationary EE may be terminated only on two grounds: (a) for just cause, or (b) when he fails to qualify as a regular EE in accordance with reasonable standards made known by the ER to the EE at the time of his engagement. (PHIL.DAILY INQUIRER vs. MAGTIBAY)

4.FAILURE TO COMPLY WITH THE REQUIREMENT OF DUE PROCESSa.SUBSTANTIVE1.REINSTATEMENT, DOCTRINE OF STRAINED RELATIONSIt must be emphasized that the rules of dismissal for managerial EEs are different from those governing ordinary EEs for it would be unjust and inequitable to compel an ER to continue with the employment of a person who occupies a managerial and sensitive position despite loss of trust and confidence. At the very least, the relationship must be considered seriously strained, foreclosing the remedy of reinstatement. We find that the allegations of irregularities were sufficiently substantiated thus justifying petitioner’s separation.

his is not a case of dismissal. The situation is that of a corporate office having been declared vacant, and of TAN’s not having been elected thereafter. The matter of whom to elect is a prerogative that belongs to the Board, and involves the exercise of deliberate choice and the faculty of discriminative selection. Generally speaking, the relationship of a person to a corporation, whether as officer or agent or EE, is not determined by the nature of the services performed, but by the incidents of the relationship as they actually exist. (AURELIO vs. NLRC)

Under the law and prevailing jurisprudence, an illegally dismissed EE is entitled to reinstatement as a matter of right. However, if reinstatement would only exacerbate the tension and strained relations between the parties, or where the relationship between the ER and the EE has been unduly strained by reason of their irreconcilable differences, particularly where the illegally dismissed EE held a managerial or key position in the company, it would be more prudent to order payment of separation pay instead of reinstatement.

In such cases, it should be proved that the EE concerned occupies a position where he enjoys the trust and confidence of his ER; and that it is likely that if reinstated, an atmosphere of antipathy and antagonism may be generated as to adversely affect the efficiency and productivity of the EE concerned.

The principle of “strained relations” cannot be applied indiscriminately. Otherwise, reinstatement can never be possible simply because some hostility is invariably engendered between the parties as a result of litigation. That is human nature. Besides, no strained relations should arise from a valid and legal act of asserting one’s right; otherwise, an EE who shall assert his right could be easily separated from the service, by merely paying his separation pay on the pretext that his relationship with his ER had already become strained.

The doctrine of strained relations has been made applicable to cases where the EE decides not to be reinstated and demands for separation pay. The same, however, does not apply to herein petition, as petitioner is asking for his reinstatement despite his illegal dismissal. (CABIGTING vs. SAN MIGUEL FOODS, INC.)

However, if reinstatement would only exacerbate the tension and strained relations between the parties, or where the relationship between the ER and the EE has been unduly strained by reason of their irreconcilable differences, particularly where the illegally dismissed EE held a managerial or key position in the company, it would be more prudent to order payment of separation pay instead of reinstatement. Under the doctrine of strained relations, the payment of separation pay is considered an acceptable alternative to reinstatement when the latter option is no longer desirable or viable. On one hand, such payment liberates the EE from what could be a highly oppressive work environment. On the other hand, it releases the ER from the grossly unpalatable obligation of maintaining in its employ a worker it could no longer trust. In such cases, it should be proved that the EE concerned occupies a position where he enjoys the trust and confidence of his ER; and that it is likely that if reinstated, an atmosphere of antipathy and antagonism may be generated as to adversely affect the efficiency and productivity of the EE concerned. (BANK OF LUBAO vs. MANABAT)

2.BACKWAGES2.1.BASIS/RATIONALEn accordance with these provisions, backpay (the same as backwages) could be awarded where, in the opinion of the Court of Industrial Relations (CIR), such was necessary to effectuate the policies of the Industrial Peace Act. Only in one case was backpay a matter of right, and that was, when an ER had declared a lockout without having first bargained collectively with his EEs in accordance with the provisions of the Act.

As the CIR was given wide discretion to grant or disallow payment of backpay (backwages) to an EE, it also had the implied power of mitigating (reducing) the backpay where backpay was allowed. Thus, in the exercise of its jurisdiction, the CIR increased or diminished the award of backpay, depending on several circumstances, among them, the good faith of the ER, the EE's employment in other establishments during the period of illegal

dismissal, or the probability that the EE could have realized net earnings from outside employment if he had exercised due diligence to search for outside employment.

From this ruling came the burden of disposing of an illegal dismissal case on its merits and of determining whether or not the computation of the award of backwages is correct. In order not to unduly delay the disposition of illegal dismissal cases, this Court found occasion in the case of Mercury Drug Co., Inc., et al. v. CIR, et al.to rule that a fixed amount of backwages without further qualifications should be awarded to an illegally dismissed EE (hereinafter the Mercury Drug rule). This ruling was grounded upon considerations of expediency in the execution of the decision.

Under the abovequoted provision, it became mandatory to award backwages to illegally dismissed regular EEs. The law specifically declared that the award of backwages was to be computed from the time compensation was withheld from the EE up to the time of his reinstatement. This notwithstanding, the rule generally applied by the Court after the promulgation of theMercury Drug case, and during the effectivity of P.D. No. 442 was still the Mercury Drug rule. A survey of cases from 1974 until 1989, when the amendatory law to P.D. No. 442, namely, R.A. No. 6715 took effect, supports this conclusion.

In an even later case (1987) the Court declared that the general principle is that an EE is entitled to receive as backwages all the amounts he may have received from the date of his dismissal up to the time of his reinstatement. However, in compliance with the jurisprudential policy of fixing the amount of backwages to a just and reasonable level, the award of backwages equivalent to three (3) years, without qualification or deduction, was nonetheless followed in said case.

In a more direct approach to the rule on the award of backwages, this Court declared in the 1990 case of Medado v. Court of Appeals that "any decision or order-granting backwages in excess of three (3) years is null and void as to the excess."

"full backwages" as meaning exactly that, i.e., without deducting from back-wages the earnings derived elsewhere by the concerned EE during the period of his illegal dismissal. In other words, the provision calling for "full backwages" to illegally dismissed EEs is clear, plain and free from ambiguity and, therefore, must be applied without attempted or strained interpretation. Index animi sermo est. (BUSTAMANTE vs. NLRC)

2.2.NOT AVAILINGReinstatement and payment of backwages are distinct and separate reliefs given to alleviate the economic setback brought about by the EE’s dismissal. The award of one does not bar the other. Backwages may be awarded without reinstatement, and reinstatement may be ordered without awarding backwages. (PALTENG vs. UCPG)

2.3.PERIOD COVEREDThe backwages that should be awarded to the respondent should be modified. EEs who are illegally dismissed are entitled to full backwages, inclusive of allowances and other benefits or their monetary equivalent, computed from the time their actual compensation was withheld from them up to the time of their actual reinstatement. But if reinstatement is no longer possible, the backwages shall be computed from the time of their illegal termination up to the finality of the decision. Thus, when there is an order of reinstatement, the computation of backwages shall be reckoned from the time of illegal dismissal up to the time that the EE is actually reinstated to his former position. (BANK OF LUBAO vs. MANABAT)

3.SEPARATION PAY3.1.BASIS OF COMPUTATIONPrescinding from the above, we hold that petitioner is liable for illegal dismissal and should be responsible for the reinstatement of the Lubat group and the payment of their back wages. However, since reinstatement is no longer possible as peti-tioner has already closed its Balintawak plant, respondent members of the said group should instead be awarded normal separation pay (in lieu of reinstatement) equivalent to at least one month pay, or one month pay for every year of service, whichever is higher. It must be stressed that the separation pay being awarded to the Lubat group is due to illegal dismissal; hence, it is different from the amount of separation pay provided for in Article 283 in case of retrenchment to prevent losses or in case of closure or cessation of the ER’s business, in either of which the separation pay is equivalent to at least one (1) month or one-half (1/2) month pay for every year of service, whichever is higher.

The amount of separation pay is based on two factors: the amount of monthly salary and the number of years of service. Although the Labor Code provides different definitions as to what constitutes “one year of service,” Book Six does not specifically de-fine “one year of service” for purposes of computing separation pay. However, Articles 283 and 284 both state in connection with separation pay that a fraction of at least six months shall be considered one whole year. Applying this to the case at bar, we hold that the amount of separation pay which respondent members of the Lubat and Luris groups should receive is one-half (1/2) their respective average monthly pay during the last season they worked multiplied by the number of years they actually rendered service, provided that they worked for at least six months during a given year.(PHIL. TOBACCO FLU CURING vs. NLRC)

3.2.WHO IS LIABLEUnder Article 283 of the Labor Code, separation pay is required where the termination of employment relationship is occasioned by

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the “cessation of operations” of an establishment. The said article, therefore, puts the burden of paying separation pay on ERI/MPSI, the ER for whom services had been rendered by the EEs who were separated from employment in view of the cessation of its business operations by the cancellation of its management contract with the PPA. (E.RAZON, INC. vs. SEC. OF LABOR)

3.3.ER NOT LIABLEIt is clear that Article 283 of the Labor Code applies in cases of closures of establishment and reduction of personnel. The peculiar circumstances in the case at bar, however, involves neither the closure of an establishment nor a reduction of personnel as contemplated under the aforesaid article. When the Patalon Coconut Estate was closed because a large portion of the estate was acquired by DAR pursuant to CARP, the ownership of that large portion of the estate was precisely transferred to PEARA and ultimately to the petitioners as members thereof and as agrarian lot beneficiaries. Hence, Article 283 of the Labor Code is not applicable to the case at bench.

Since the closure was due to the act of the government to benefit the petitioners, as members of the Patalon Estate Agrarian Reform Association, by making them agrarian lot beneficiaries of said estate, the petitioners are not entitled to separation pay. The termination of their employment was not caused by the private respondents. The blame, if any, for the termination of petitioners’ employment can even be laid upon the petitioner-EEs themselves inasmuch as they formed themselves into a cooperative, PEARA, ultimately to take over, as agrarian lot beneficiaries, of private respondents’ landed estate pursuant to RA 6657. The resulting closure of the business establishment, Patalon Coconut Estate, when it was placed under CARP, occurred through no fault of the private respondents. (NATIONAL FEDERATION OF LABOR vs. NLRC)

5.CONSTRUCTIVE DISMISSALDismissal connotes a permanent severance or complete separation of the worker from the service on the initiative of the ER regardless of the reasons therefore. A constructive discharge is defined as a quitting because continued employment is rendered impossible, unreasonable or unlikely, as an offer involving demotion in rank and a diminution in pay. (JO CINEMA vs. ABELLANA)

Clearly, constructive dismissal had already set in when the suspension went beyond the maximum period allowed by law. Section 4, Rule XIV, Book V of the Omnibus Rules provides that preventive suspension cannot be more than the maximum period of 30 days. Hence, we have ruled that after the 30-day period of suspension, the EE must be reinstated to his former position because suspension beyond this maximum period amounts to constructive dismissal.

The strict adherence by the NLRC to the definition of constructive dismissal is erroneous. Apparently, the NLRC ruled out constructive dismissal in this case mainly because according to it “constructive dismissal consists in the act of quitting because continued employment is rendered impossible, unreasonable or unlikely as in the case of an offer involving demotion in rank and a diminution in pay.” Based on this definition, the NLRC concluded that since respondent neither resigned nor abandoned his job and the fact that respondent pursued his reinstatement negate constructive dismissal. What makes this conclusion tenuous is the fact that constructive dismissal does not always involve forthright dismissal or diminution in rank, compensation, benefit and privileges. There may be constructive dismissal if an act of clear discrimination, insensibility, or disdain by an ER becomes so unbearable on the part of the EE that it could foreclose any choice by him except to forego his continued employment.(HYATT TAXI SERVICES INC. vs. CATINOY)

A diminution of pay is prejudicial to the EE and amounts to constructive dismissal. The gauge for constructive dismissal is whether a reasonable person in the em-ployee’s position would feel compelled to give up his employment under the prevailing circumstances. Constructive dismissal is defined as quitting when continued employment is rendered impossible, unreasonable or unlikely as the offer of employment involves a demotion in rank or diminution in pay. It exists when the resignation on the part of the EE was involuntary due to the harsh, hostile and unfavorable conditions set by the ER. It is brought about by the clear discrimination, insensibility or disdain shown by an ER which becomes unbearable to the EE. An EE who is forced to surrender his position through the ER’s unfair or unreasonable acts is deemed to have been illegally terminated and such termination is deemed to be involuntary.

Ordinarily, when there is constructive dismissal, which is a form of illegal dismissal, the ER is liable for the full amount of backwages, if reinstatement is no longer possible, and separation pay. In the case at bar, we cannot hold Siemens Philippines liable for the monetary obligations of Siemens Germany. The circumstances surrounding this case necessitate a different treatment in the award of backwages and separation pay, since the companies involved are separate and distinct from each other. However, by Siemens Philippines’ failure to work for the renewal of Domingo’s consultancy contract with Siemens Germany, Siemens Philippines may be held answerable in damages to Domingo.

An illegally or constructively dismissed EE is entitled to: (1) either reinstatement, if viable, or separation pay if reinstatement is no longer viable; and (2) backwages. These two reliefs are separate and distinct from each other and are awarded conjunctively. (SIEMENS PHIL. vs. DOMINGO)

A floating status requires the dire exigency of the ER’s bona fide suspension of operation of a business or undertaking. In security

services, this happens when the security agency’s clients which do not renew their contracts are more than those that do and the new ones that the agency gets. Also, in instances when contracts for security services stipulate that the client may request the agency for the replacement of the guards assigned to it even for want of cause, the replaced security guard may be placed on temporary “offdetail” if there are no available posts under respondent’s existing contracts. When a security guard is placed on a “floating status,” he does not receive any salary or financial benefit provided by law. Due to the grim economic consequences to the EE, the ER should bear the burden of proving that there are no posts available to which the EE temporarily out of work can be assigned. This, respondent failed to discharge. (PIDO vs. NLRC)

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

3. RETIREMENT (ART.287)Court imposed two (2) essential requisites in order that R.A. 7641 may be given retroactive effect: (1) the claimant for retirement benefits was still in the employ of the ER at the time the statute took effect; and (2) the claimant had complied with the requirements for eligibility for such retirement benefits under the statute.

Retirement is the result of a bilateral act of the parties, a voluntary agreement between the ER and the EE whereby the latter, after reaching a certain age, agrees to sever his or her employment with the former. The age of retirement is primarily determined by the existing agreement between the ER and the EEs. However, in the absence of such agreement, the retirement age shall be fixed by law. Under Art. 287 of the Labor Code as amended, the legally mandated age for compulsory retirement is 65 years, while the set minimum age for optional retirement is 60 years.

In this case, it may be stressed that the CBA does not per se specifically provide for the compulsory retirement age nor does it provide for an optional retirement plan. It merely provides that the retirement benefits accorded to an EE shall be in accordance with law. Thus, we must apply Art. 287 of the Labor Code which provides for two types of retirement: (a) compulsory and (b) optional. The first takes place at age 65, while the second is primarily determined by the collective bargaining agreement or other employment contract or ER’s retirement plan. In the absence of any provision on optional retirement in a collective bargaining agreement, other employment contract, or ER’s retirement plan, an EE may optionally retire upon reaching the age of 60 years or more, but not beyond 65 years, provided he has served at least five years in the establishment concerned. That prerogative is exclusively lodged in the EE. (UNIVERSAL ROBINA SUGAR MILLING CO. vs. CABALLEDA)

Pursuant to the existing CBA, the School has the option to retire an EE upon reaching the age limit of sixty (60) or after having rendered at least twenty (20) years of service to the School, the last three (3) years of which must be continuous. Retirement is a different specie of termination of employment from dismissal for just or authorized causes under Articles 282 and 283 of the Labor Code. While in all three cases, the EE to be terminated may be unwilling to part from service, there are eminently higher standards to be met by the ER validly exercising the prerogative to dismiss for just or authorized causes. In those two instances, it is indispensable that the ER establish the existence of just or authorized causes for dismissal as spelled out in the Labor Code. Retirement, on the other hand, is the result of a bilateral act of the parties, a voluntary agreement between the ER and the EE whereby the latter after reaching a certain age agrees and/or consents to sever his employment with the former.

By their acceptance of the CBA, the Union and its members are obliged to abide by the commitments and limitations they had agreed to cede to management. The questioned retirement provisions cannot be deemed as an imposition foisted on the Union, which very well had the right to have refused to agree to allowing management to retire EEs with at least 20 years of service. It should not be taken to mean that retirement provisions agreed upon in the CBA are absolutely beyond the ambit of judicial review and nullification. A CBA, as a labor contract, is not merely contractual in nature but impressed with public interest. If the retirement provisions in the CBA run contrary to law, public morals, or public policy, such provisions may very well be voided. Certainly, a CBA provision or employment contract that would allow management to subvert security of tenure and allow it to unilaterally “retire” EEs after one month of service cannot be upheld. Neither will the Court sustain a retirement clause that entitles the retiring EE to benefits less than what is guaranteed under Article 287 of the Labor Code, pursuant to the provision’s express proviso thereto in the provision.

Yet the CBA in the case at bar contains no such infirmities which must be stricken down. There is no essential difference between the CBA provision in this case and those we affirmed in Pantranco and

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Progressive. Twenty years is a more than ideal length of service an EE can render to one ER. Under ordinary contemplation, a CBA provision entitling an EE to retire after 20 years of service and accordingly collect retirement benefits is “reward for services rendered since it enables an EE to reap the fruits of his labor—particularly retirement benefits, whether lump-sum or otherwise—at an earlier age, when said EE, in presumably better physical and mental condition, can enjoy them better and longer.” We affirm the continued validity of Pantranco and its kindred cases, and thus reiterate that under Article 287 of the Labor Code, a CBA may validly accord management the prerogative to optionally retire an EE under the terms and conditions mutually agreed upon by management and the bargaining union, even if such agreement allows for retirement at an age lower than the optional retirement age or the compulsory retirement age. The Court of Appeals gravely erred in refusing to consider this case from the perspective of Pantranco, or from the settled doctrine enunciated therein.

The exercise by management of its retirement prerogative is less susceptible to dubitability as to the question whether an EE could be validly retired. The only factual matter to consider then is whether the EE concerned had attained the requisite age or number of years in service pursuant to the CBA or employment agreement, or if none, pursuant to Article 287 of the Labor Code. In fact, the question of the amount of retirement benefits is more likely to be questioned than the retirement itself. Evidently, it more clearly emerges in the case of retirement that management would anyway have the right to retire an EE, no matter the degree of involvement of said EE in union activities

There is another point that militates against the Union. A ruling in its favor is tantamount to a concession that a validly drawn management prerogative to retire its EEs can be judicially interfered on a showing that the EE in question is highly valuable to the union. Such a rule would be a source of mischief, even if narrowly carved out by the Court, for it would imply that an active union member or officer may be, by reason of his/her importance to the union, somehow exempted from the normal standards of retirement applicable to the other, perhaps less vital members of the union. Indeed, our law’s protection of the right to organize labor does not translate into perpetual job security for union leaders by reason of their leadership role alone. Should we entertain such a notion, the detriment is ultimately to the union itself, promoting as it would a stagnating entrenched leadership. We can thus can comfortably uphold the principle, as reiterated in Philippine Airlines, that the exercise by the ER of a valid and duly established prerogative to retire an EE does not constitute unfair labor practice.(CAINTA CATHOLIC SCHOOL vs. CAINTA CATHOLIC SCHOOL EES UNION)

Republic Act No. 7641 which was enacted on December 9, 1992amended Article 287 of the Labor Code by providing for retirement pay to qualified private sector EEs in the absence of any retirement plan in the establishment. The pertinent provision of said law reads: x x x Admittedly, petitioner worked for 14 years for the bus company which did not adopt any retirement scheme. Even if petitioner as bus conductor was paid on commission basis then, he falls within the coverage of R.A. 7641 and its implementing rules. As thus correctly ruled by the Labor Arbiter, petitioner’s retirement pay should include the cash equivalent of the 5-day SIL and 1/12 of the 13th month pay. (SERRANO vs. SEVERINO SANTOS TRANSIT)

CASE DIGESTS

ARCO METAL PRODUCTS, CO., INC., and Mrs. Salvador Uy, VS. SAMAHAN NG MGA MANGGAGAWA SA ARCO METAL-NAFLU (SAMARM-NAFLU)G.R. No. 170734, May 14, 2008TINGA, J,:

FACTS: Petitioner is a company engaged in the manufacture of metal products, whereas respondent is the labor union of petitioner’s rank and file EEs. Sometime in December 2003, petitioner paid the 13th month pay, bonus, and leave encashment of three union members in amounts proportional to the service they actually rendered in a year, which is less than a full twelve (12) months. The EEs were:1. Rante Lamadrid Sickness 27 August 2003 to 27 February 20042. Alberto Gamban Suspension 10 June 2003 to 1 July 20033. Rodelio Collantes Sickness August 2003 to February 2004Respondent protested the prorated scheme, claiming that on several occasions petitioner did not prorate the payment of the same benefits to 7 EEs who had not served for the full 12 months. The payments were made in 1992-1994, 1996, 1999, and 2003-2004. According to respondent, the prorated payment violates the rule against diminution of benefits under Article 100 of the Labor Code. Thus, they filed a complaint before the National Conciliation and Mediation Board (NCMB). The parties submitted the case for voluntary arbitration.

The voluntary arbitrator, Apron M. Mangabat, ruled in favor of petitioner and found that the giving of the contested benefits in full, irrespective of the actual service rendered within one year has not ripened into a practice. He noted the affidavit of Joselito Baingan, manufacturing group head of petitioner, which states that the giving in full of the benefit was a mere error. He also interpreted the phrase for each year of service found in the pertinent CBA provisions to mean that an EE must have rendered one year of service in order to be entitled to the full benefits provided in the CBA.[5]

Unsatisfied, respondent filed a Petition for Review[6] under Rule 43 before the CA, imputing serious error to Mangabat’s conclusion. The CA ruled that the CBA did not intend to foreclose the application of prorated payments of leave benefits to covered EEs. The appellate court found that petitioner, however, had an existing voluntary practice of paying the aforesaid benefits in full to its EEs, thereby rejecting the claim that petitioner erred in paying full benefits to its seven EEs. The appellate court noted that aside from the affidavit of petitionerâ€™s officer, it has not presented any evidence in support of its position that it has no voluntary practice of granting the contested benefits in full and without regard to the service actually rendered within the year. It also questioned why it took petitioner eleven (11) years before it was able to discover the alleged error.

ISSUE/S:1)whether the intent of the CBA provisions is to grant full benefits regardless of service actually rendered by an EE to the company. 2) Whether Any benefit and supplement being enjoyed by EEs cannot be reduced, diminished, discontinued or eliminated by the ER

HELD: 1)There is no doubt that in order to be entitled to the full monetization of sixteen (16) days of vacation and sick leave, one must have rendered at least one year of service. The clear wording of the provisions does not allow any other interpretation. Anent the 13th month pay and bonus, we agree with the findings of Mangabat that the CBA provisions did not give any meaning different from that given by the law, thus it should be computed at 1/12 of the total compensation which an EE receives for the whole calendar year. The bonus is also equivalent to the amount of the 13thmonth pay given, or in proportion to the actual service rendered by an EE within the year.

2) yes .Any benefit and supplement being enjoyed by EEs cannot be reduced, diminished, discontinued or eliminated by the ER.[14] The principle of non-diminution of benefits is founded on the Constitutional mandate to "protect the rights of workers and promote their welfare,â€ �[15] and â€œto afford labor full protection.â€ �[16] Said mandate in turn is the basis of Article 4 of the Labor Code which states that â€œall doubts in the implementation and interpretation of this Code, including its implementing rules and regulations shall be rendered in favor of labor.â€ � Jurisprudence is replete with cases which recognize the right of EEs to benefits which were voluntarily given by the ER and which ripened into company practice.

We held that the ER cannot unilaterally withdraw the existing privilege of commutation or conversion to cash given to said workers, and as also noted that the ER had in fact granted and paid said cash equivalent of the unenjoyed portion of the sick leave benefits to some intermittent workers.

In the years 1992, 1993, 1994, 1999, 2002 and 2003, petitioner had adopted a policy of freely, voluntarily and consistently granting full benefits to its EEs regardless of the length of service rendered. True, there were only a total of seven EEs who benefited from such a practice, but it was an established practice nonetheless. Jurisprudence has not laid down any rule specifying a minimum number of years within which a company practice must be exercised in order to constitute voluntary company practice.[20] Thus, it can be six (6) years,[21] three (3) years,[22] or even as short as two (2) years.[23] Petitioner cannot shirk away from its responsibility by merely claiming that it was a mistake or an error, supported only by an affidavit of its manufacturing group head.

Indeed, if petitioner wants to prove that it merely erred in giving full benefits, it could have easily presented other proofs, such as the names of other EEs who did not fully serve for one year and thus were given prorated benefits. Experientially, a perfect attendance in the workplace is always the goal but it is seldom achieved. There must have been other EEs who had reported for work less than a full year and who, as a consequence received only prorated benefits. This could have easily bolstered petitioner’s theory of mistake/error, but sadly, no evidence to that effect was presented.PLDT COMPANY vs. NLRC and Marlyn BucayG.R. No. L-80609 August 23, 1988 CRUZ, J.:

FACTS: Marilyn Abucay, a traffic operator of the PLDT Company, was accused by two complainants of having demanded and received from them the total amount of P3,800.00 in consideration of her promise to facilitate approval of their applications for telephone installation. Investigated and heard, she was found guilty as charged and accordingly separated from the service. She went to the Ministry of Labor and Employment claiming she had been illegally removed. After consideration of the evidence and arguments of the parties, the company was sustained and the complaint was dismissed for lack of merit. Nevertheless, the dispositive portion of labor arbiter’s decision declared: “Considering that Dr. Helen Bangayan and Mrs. Consolacion Martinez are not totally blameless in the light of the fact that the deal happened outside the premises of respondent company and that their act of giving P3,800.00 without any receipt is tantamount to corruption of public officers, complainant must be given one month pay for every year of service as financial assistance.”

Both the petitioner and the private respondent appealed to the NLRC Board, which upheld the said decision in toto and dismissed the appeals. The private respondent took no further action, thereby impliedly accepting the validity of her dismissal. The petitioner, however, is now before us to question the affirmance of the above-quoted award as having been made with grave abuse of discretion. In its challenged resolution of September 22, 1987, the NLRC said:

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“Anent the award of separation pay as financial assistance in complainant’s favor, We find the same to be equitable, taking into consideration her long years of service to the company whereby she had undoubtedly contributed to the success of respondent. While we do not in any way approve of complainants (private respondent) malfeasance, for which she is to suffer the penalty of dismissal, it is for reasons of equity and compassion that we resolve to uphold the award of financial assistance in her favor.”

ISSUE: WON the award of financial assistance to an EE who had been dismissed for cause as found by the public respondent is legal.

HELD: The rule embodied in the Labor Code is that a person dismissed for cause as defined therein is not entitled to separation pay. We hold that henceforth separation pay shall be allowed as a measure of social justice only in those instances where the EE is validly dismissed for causes other than serious misconduct or those reflecting on his moral character. Where the reason for the valid dismissal is, for example, habitual intoxication or an offense involving moral turpitude, like theft or illicit sexual relations with a fellow worker, the ER may not be required to give the dismissed EE separation pay, or financial assistance, or whatever other name it-is called, on the ground of social justice.

A contrary rule would, as the petitioner correctly argues, have the effect, of rewarding rather than punishing the erring EE for his offense. And we do not agree that the punishment is his dismissal only and that the separation pay has nothing to do with the wrong he has committed. Of course it has. Indeed, if the EE who steals from the company is granted separation pay even as he is validly dismissed, it is not unlikely that he will commit a similar offense in his next employment because he thinks he can expect a like leniency if he is again found out. This

The policy of social justice is not intended to countenance wrongdoing simply because it is committed by the underprivileged. At best it may mitigate the penalty but it certainly will not condone the offense. Social justice cannot be permitted to be refuge of scoundrels any more than can equity be an impediment to the punishment of the guilty. Those who invoke social justice may do so only if their hands are clean and their motives blameless and not simply because they happen to be poor.

Applying the above considerations, we hold that the grant of separation pay in the case at bar is unjustified. The private respondent has been dismissed for dishonesty, as found by the labor arbiter and affirmed by the NLRC and as she herself has impliedly admitted. The fact that she has worked with the PLDT for more than a decade, if it is to be considered at all, should be taken against her as it reflects a regrettable lack of loyalty that she should have strengthened instead of betraying during all of her 10 years of service with the company. If regarded as a justification for moderating the penalty of dismissal, it will actually become a prize for disloyalty, perverting the meaning of social justice and undermining the efforts of labor to cleanse its ranks of all undesirables. TOYOTA MOTOR PHILS. CORP. WORKERS ASSOC.(TMPCWA),Ed Cubelo, et al. vs. NLRC COM.(2ND Division), TOYOTA MOTOR PHILS. CORP. et al.G. R. CASE NOS. 158786 & 158789x - - -- - - - - - - - - - - - - - - - - - - - - - - - xTOYOTA MOTOR PHIL. CORP., vs, ), ED CUBELO, et al. vs. NLRC COM.(2ND Division), TOYOTA MOTOR PHILSG.R. CASE NOS. 158798-99

URGENT PLEA/REQUEST FOR THE HON. SUPREME COURT EN BANC TO TAKE JURISDICTION OF THE MOTION FOR RECONSIDERATION ON COMPELLING AND URGENT REASONS

1) The petitioners filed a MR from the October 19, 2007 novel but strange decision of the Hon. Supreme Court’s (2nd Division) finding Petitioners February 22 & 23 2001 rally at the Bureau of Labor Relations an illegal strike,

“shrouded” as an exercise of freedom of expression and consequently dismissed 227 ordinary union members and officers for mere participation and suspended from work some 62 other union members.

2) The October 19, 2007 decision dismissing 218 ordinary union members who participated in the rally later declared as an illegal strike

is a reversal, substantial modification or alteration of prevailing jurisprudence that ordinary union members or EEs cannot be dismissed for mere participation in an illegal strike. This is a well settled rule in this jurisdiction in the string of cases.

3) The primacy of freedom of expression over the right to profit in the hierarchy of constitutional rights as enshrined in the case of Philippine Blooming Mills EEs Organization et.al. versus Philippine Blooming Mills, et.al. 51 SCRA 189, 205 was overturned. The October 19, 2007 decision reverse the prevailing doctrine by giving primacy to the right to profit over freedom of expression in declaring

“…we rule that the protest actions undertaken by the Union officials and members on February 21 to 23, 2001 are not valid and proper exercise of their right to assemble and ask government for redress of their complaints, but are illegal strikes in breach of the Labor Code. The Union’s position is weakened by the lack of permit from the City of Manila to hold “rallies”. Shrouded as demonstrations, they were in reality temporary stoppages of work perpetrated through the concerted

action of the EEs who deliberately failed to report for work on the convenient excuse that they will hold a rally at the BLR and DOLE offices in Intramuros, Manila …”

4) Similarly, the ruling that the Secretary of Labor’s assumption of jurisdiction or certification to compulsory arbitration enjoins the exercise of freedom of expression by some 60 dismissed EEs who are no longer working and did not disrupt production, and declaring their May 23 And 28 2001 picket in front of Toyota (more than a month after their strike on March 28 to April 12, 2001) - as illegal strike for violation of the directive that:

“ the Union and its members shall refrain from engaging in any activity that might exacerbate the tense labor situation in Toyota …” to preserve Toyota’s right to profit. – is sheer violation of the constitutional right to freedom of expression and the principles of constitutional hierarchy of values.

5) The October 19, 2007 decision turns upside down the prevailing thought on how the constitutional right to strike is judicially viewed and applied as enunciated in the case of Bisig ng Manggagawa sa Concrete Aggregates, Inc. (BIMCAI) et.al..versus National Labor Relations Commission, et.al.G.R. NO. 105090, September 16, 1993 (This Division) as eloquently penned by no less than the Chief Justice, (then Justice) the Hon. Reynato Puno and is quoted extensively: “The restoration of the right to strike is the most valuable gain of labor after the EDSA Revolution. It is the EEs sole weapon which can effectively protect their basic rights especially in a society where the levers of powers are nearly monopolized by the propertied few or their franchises. In recognition of its importance, our constitution has accorded the right to strike a distinct status while our laws have assured that its rightful exercise will not be negated by the issuance of unnecessary inunctions.

- with due respect, the prevailing thought is replaced, modified or altered by the thought applied by the Hon. Court to rationalize its October 19, 2007 decision, in page 48, that : “…Even though strikes and lockouts have been recognized as effective bargaining tools, it is an antiquated notion that they are truly beneficial, as they only provide short-term solutions by forcing concessions from one party; but staging such strikes would damage the working relationship between ERs and EEs, thus endangering the business that they both want to succeed. The more progressive and truly effective means of dispute resolution, lies in mediation, conciliation, and arbitration, which do not increase tension but instead provide relief from them. In the end, an atmosphere of trust and understanding has much more to offer a business relationship than the traditional enmity that has long divided the ER and the EE,”

6) It is respectfully submitted that the October 19, 2007 decision of the Second Division in the instant case, is unconstitutional as it infringes on the constitutional provision that “… no doctrines or principle of law laid down by the Court in a decision rendered en banc or division maybe modified or reversed by the Court except sitting en banc”

7) For compelling reasons and considering the constitutional issues raised, it is respectfully submitted that the Hon. Supreme Court En Banc must with utmost urgency take jurisdiction over the Motion for Reconsideration and resolved it with finality.RENO FOODS, INC., and/or Vicente Khu vs. NAGKAKAISANG LAKAS NG MANGGAGAW(NLM)G.R. No. 164016 March 15, 2010DEL CASTILLO, J.:

FACTS: Reno Foods is a manufacturer of canned meat products of which Vicente Khu is the president and is being sued in that capacity. Respondent Nenita Capor (Capor) was an EE of Reno Foods until her dismissal.

It is a standard operating procedure of RENO to subject all its EEs to reasonable search of their belongings upon leaving the company premises. On October 19, 1998, the guard on duty found 6 Reno canned goods wrapped in nylon leggings inside Capor’s fabric clutch bag. The only other contents of the bag were money bills and a small plastic medicine container.

RENO accorded Capor several opportunities to explain her side, often with the assistance of the union officers of NLM–Katipunan. In fact, after RENO sent a Notice of Termination to Capor, she was given yet another opportunity for reconsideration through a labor-management grievance conference. Unfortunately, RENO did not find reason to change its earlier decision to terminate Capor’s employment with the company. Thus, filed a complaint-affidavit against Capor for qualified theft in the Office of the City Prosecutor, Malabon-Navotas Substation. a Resolution was issued finding probable cause for the crime charged. Consequently, an Information was filed against Capor.

Meanwhile, NLM–Katipunan filed on behalf of Capor a complaint[4] for illegal dismissal and money claims against RENO with the Head Arbitration Office of the NLRC for the National Capital Region. The complaint prayed that Capor be paid her full backwages as well as moral and exemplary damages.

Ruling of the Labor Arbiter: finding Capor guilty of serious misconduct which is a just cause for termination. In this case, the Labor Arbiter found that theft of company property is tantamount to serious misconduct; as such, Capor is not entitled to reinstatement and backwages, as well as moral and exemplary damages under Art. 232 of LC.

Ruling of the NLRC: WHEREFORE, premises considered, the decision under review is hereby MODIFIED by granting an award of financial

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assistance in the form of separation pay equivalent to one-half month pay for every year of service. In all other respects the decision stands affirmed. All other claims of the complainant are dismissed for lack of merit.[8]

Both parties moved for a reconsideration of the NLRC Decision. Petitioners asked that the award of financial assistance be deleted, while Capor asked for a finding of illegal dismissal and for reinstatement with full backwages. the NLRC issued its Resolution denying both motions for reconsideration for lack of merit.

Ruling of the Court of Appeals: affirmed the NLRC’s award of financial assistance to Capor. It stressed that the laborer’s welfare should be the primordial and paramount consideration when carrying out and interpreting provisions of the Labor Code. It explained that the mandate laid down in PLDT vs. NLRC was not absolute, but merely directory.

ISSUE: whether the NLRC committed grave abuse of discretion amounting to lack or excess of jurisdiction in granting financial assistance to an EE who was validly dismissed for theft of company property.

HELD: Conviction in a criminal case is not necessary to find just cause for termination of employment. Criminal cases require proof beyond reasonable doubt while labor disputes require only substantial evidence, which means such relevant evidence as a reasonable mind might accept as adequate to justify a conclusion.[20]

We find no justification for the award of separation pay to Capor. This award is a deviation from established law and jurisprudence. The law is clear. Separation pay is only warranted when the cause for termination is not attributable to the EE’s fault, such as those provided in Articles 283 and 284 of the Labor Code, as well as in cases of illegal dismissal in which reinstatement is no longer feasible.[22] It is not allowed when an EE is dismissed for just cause,[23] such as serious misconduct. Jurisprudence has classified theft of company property as a serious misconduct and denied the award of separation pay to the erring EE.

It is true that there have been instances when the Court awarded financial assistance to EEs who were terminated for just causes, on grounds of equity and social justice. When the EE commits an act of dishonesty, depravity, or iniquity, the grant of financial assistance is misplaced compassion. It is tantamount not only to condoning a patently illegal or dishonest act, but an endorsement thereof. It will be an insult to all the laborers who, despite their economic difficulties, strive to maintain good values and moral conduct.

The fact that private respondent served petitioner for more than twenty years with no negative record prior to his dismissal, in our view of this case, does not call for such award of benefits, since his violation reflects a regrettable lack of loyalty and worse, betrayal of the company. If an EE’s length of service is to be regarded as justification for moderating the penalty of dismissal, such gesture will actually become a prize for disloyalty, distorting the meaning of social justice and undermining the efforts of labor to clean its ranks of undesirables. His length of service even aggravates his offense. He should have been more loyal to petitioner company from which he derived his family bread and butter for seventeen years.Azucena MAGALLANES, Evelyn Bacolod, and Heirs of Judith Cotecson vs. SUN YAT SEN ELEMENTARY SCHOOL, Paz Go, Elena Cubillan,Willy Gan Teng, Benito Ang, and Teotimo Tan G.R. No. 160876, January 18, 2008] SANDOVAL-GUTIERREZ, J.:

FACTS: Petitioners were all employed as teachers in SYSES in Surigao City. Respondent Paz Go and Elena Cubillan are principals of the said school, Willy Ang Gan Teng and Benito Ang are its directors, while Teotimo Tan is the school treasurer.

respondents terminated the services of petitioners. Thus, they filed with the Sub-Regional Arbitration Branch of NLRC, Butuan City, complaints against respondents for illegal dismissal, underpayment of wages, payment of backwages, 13th month pay, ECOLA, separation pay, moral damages, and attorney’s fees. Likewise, petitioner Cotecson filed a separate complaint praying for the same reliefs.

Labor Arbiter Rogelio P. Legaspi rendered a Decision declaring that petitioners were illegally dismissed from the service and ordering respondents to reinstate them to their former or equivalent positions without loss of seniority rights, and to pay them their backwages, salary differential, 13th month pay differential, and service incentive leave benefits. Respondents were likewise directed to pay petitioners moral and exemplary damages.

On appeal by respondents, the NLRC reversed the Arbiter’s judgment, holding that petitioners are contractual EEs and that respondents merely allowed their contracts to lapse.

Petitioners timely filed a MR, but it was denied by the NLRC. Petitioners then filed with the CA a petition for certiorari and ruled that Cotecson, Bacolod, and Magallanes shall be entitled to separation pay equivalent to one month salary and backwages computed from the time of their illegal dismissal up to the time of the promulgation of its Decision.

With respect to Bella Gonzales and Grace Gonzales, the CA found that that they have not acquired the status of regular EEs having rendered only two years of service. Consequently, their dismissal from the service is valid. Under the Manual of Regulations for

Private Schools, only full-time teachers who have rendered three (3) years of consecutive service shall be considered permanent.

Respondents then filed with this Court a petition for certiorari the same was dismissed for lack of merit. Their MR was denied with finality by this Court on July 19, 2000.

petitioners filed with the Labor Arbiter a motion for execution of his Decision as modified by the CA.In an Order dated January 8, 2001, the Labor Arbiter computed the petitioners’ monetary awards reckoned from the time of their illegal dismissal in June 1994 up to October 29, 1999, pursuant to the Decision of the CA. Respondents interposed an appeal to the NLRC contending that the computation should only be up to June 20, 1995. Thus, the NLRC modified the Labor Arbiter’s computation and ruled that the monetary awards due to petitioners should be computed from June 1994 up to June 20, 1995.

Petitioners then filed a petition for certiorari with the CA, raffled off to the Seventh Division. However, in its Resolution the petition was dismissed outright for their failure to attach to their petition copies of the pleadings filed with the Labor Arbiter.

Petitioners filed a MR, but they erroneously indicated therein the case number. Their error was compounded by stating that the petition was with the Special Sixteenth Division, instead of the Seventh Division. On realizing their mistake, petitioners then filed with the Seventh Division a Motion to Transfer The Case to it.

In a Resolution promulgated on May 8, 2003, the Seventh Division denied petitioners’ Motion To Transfer The Case on the ground, among others, that the motion is non-existent since it does not bear the correct case number, hence, could not be attached to the records.

ISSUE/S:1) whether the CA 7TH Division erred in holding that affixing a wrong docket number on a motion renders it non-existent;2) whether the issuance by the NLRC of the Order amending the amounts of separation pay and backwages, awarded by the CA 7 TH

Division to petitioners and computed by the Labor Arbiter, is tantamount to grave abuse of discretion amounting to lack or excess of jurisdiction.

HELD: the CA is correct when it ruled that petitioners MR is non-existent when Petitioner’s counsel placed a wrong case number in their motion. In Mega Land Resources and Development Corporation v. C-E Construction Corporation which involves a wrong docket number in a motion, we ruled that the duty to correct the mistake falls solely on the party litigant whose fault caused the anomaly. To hold otherwise would be to impose upon appellate courts the burden of being nannies to appellants, ensuring the absence of pitfalls that hinder the perfection of petitions and appeals. Strictly speaking, it is a dogma that the mistake or negligence of counsel binds the clients[4] and appellate courts have no share in that burden.

However, we opt for liberality in the application of the rules to the instant case in light of the following considerations. First, the rule that negligence of counsel binds the client may be relaxed where adherence thereto would result in outright deprivation of the client’s liberty or property or where the interests of justice so require.[5]Second, this Court is not a slave of technical rules, shorn of judicial discretion â€“ in rendering justice, it is guided by the norm that on the balance, technicalities take a backseat against substantive rights. Thus, if the application of the rules would tend to frustrate rather than promote justice, it is always within this Court’s power to suspend the rules or except a particular case from its application.[6]

2)It does not escape our attention that upon respondentsâ€™ appeal from the Labor Arbiterâ€™s Order computing the benefits due to petitioners, the NLRC modified the final and executory Decision of the CA (Special Sixteenth Division) when it decreed that the monetary award due to petitioners should be computed up to June 20, 1995 only (not October 28, 1999), thus, amounting to a lesser amount of P147,673.16.

We sustain petitionersâ€™ contention that the NLRC, in modifying the award of the CA, committed grave abuse of discretion amounting to lack or excess of jurisdiction. Quasi-judicial agencies have neither business nor power to modify or amend the final and executory Decisions of the appellate courts. Under the principle of immutability of judgments, any alteration or amendment which substantially affects a final and executory judgment is void for lack of jurisdiction.[8]We thus rule that the Order dated March 30, 2001 of the NLRC directing that the monetary award should be computed from June 1994, the date petitioners were dismissed from the service, up to June 20, 1995 only, is void.TELEVISION AND PRODUCTION EXPONENTS, INC. and/or Antonio P. Tuviera vs. ROBERTO C. SERVAG.R. No. 167648 January 28, 2008TINGA, J,:

FACTS: TAPE is a domestic corporation engaged in the production of television programs, such as the long-running variety program, Eat Bulaga. Its president is Antonio P. Tuviera (Tuviera). SERVA Roberto C. Serva had served as a security guard for TAPE.

SERVA filed a complaint for illegal dismissal and nonpayment of benefits against TAPE. He alleged that he was first connected with Agro-Commercial Security Agency but was later on absorbed by TAPE as a regular company guard. He was detailed at Broadway Centrum in QC where Eat Bulaga regularly staged its productions. SERVA received a memorandum informing him of his impending

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dismissal on account of TAPE’s decision to contract the services of a professional security agency. At the time of his termination, SERVA was receiving a monthly salary of P6,000.00. He claimed that the holiday pay, unpaid vacation and sick leave benefits and other monetary considerations were withheld from him. He further contended that his dismissal was undertaken without due process and violative of existing labor laws, aggravated by nonpayment of separation pay.[3]

In a motion to dismiss which was treated as its position paper, TAPE countered that the labor arbiter had no jurisdiction over the case in the absence of an EE Relationshipbetween the parties. TAPE made the following assertions: (1) that SERVA was initially employed as a security guard for RPN9; (2) that he was tasked to assist TAPE during its live productions, specifically, to control the crowd; (3) that when RPN-9 severed its relationship with the security agency, TAPE engaged SERVA’s services, as part of the support group and thus a talent, to provide security service to production staff, stars and guests of Eat Bulaga as well as to control the audience during the one-and-a-half hour noontime program; (4) that it was agreed that complainant would render his services until such time that SERVA company shall have engaged the services of a professional security agency; (5) that in 1995, when his contract with RPN-9 expired, SERVA was retained as a talent and a member of the support group, until such time that TAPE shall have engaged the services of a professional security agency; (6) that SERVA was not prevented from seeking other employment, whether or not related to security services, before or after attending to his Eat Bulaga functions; (7) that sometime in late 1999, TAPE started negotiations for the engagement of a professional security agency, the Sun Shield Security Agency; and (8) that on 2 March 2000, TAPE issued memoranda to all talents, whose functions would be rendered redundant by the engagement of the security agency, informing them of the management’s decision to terminate their services. (9)TAPE averred that SERVA was an independent contractor falling under the talent group category and was working under a special arrangement which is recognized in the industry.[5]

SERVA for his part insisted that he was a regular EE having been engaged to perform an activity that is necessary and desirable to TAPE’s business for thirteen (13) years.[6]

Labor Arbiter Daisy G. Cauton-Barcelona declared SERVA to be a regular EE of TAPE. The Labor Arbiter also ruled that the termination was valid on the ground of redundancy, and ordered the payment of SERVA’s separation pay equivalent to 1-month pay for every year of service.

SERVA filed a MR but it was denied. SERVA filed a petition for certiorari with the CA contending that the NLRC acted with grave abuse of discretion amounting to lack or excess of jurisdiction when it reversed the decision of the Labor Arbiter. SERVA asserted that he was a regular EE considering the nature and length of service rendered. Thus, Reversing the decision of the NLRC, the CA found SERVA to be a regular EE.

TAPE filed the instant petition for review raising substantially the same grounds as those in its petition for certiorari before the CA.

ISSUE: whether an EE Relationship exists between TAPE and SERVA.

HELD: At the outset, it bears emphasis that the existence of EE Relationshipis ultimately a question of fact. Generally, only questions of law are entertained in appeals by certiorari to the Supreme Court. This rule, however, is not absolute. Among the several recognized exceptions is when the findings of the CA and Labor Arbiters, on one hand, and that of the NLRC, on the other, are conflicting,[15] as obtaining in the case at bar.

The position of TAPE is untenable.. When the security agency’s contract with RPN-9 expired SERVA was retained as talent. Clearly, SERVA was hired by TAPE. SERVA presented his identification card[21] to prove that he is indeed an EE of TAPE. It has been in held that in a business establishment, an identification card is usually provided not just as a security measure but to mainly identify the holder thereof as a bona fideEE of the firm who issues it.[22]

Wages, as defined in the Labor Code, are remuneration or earnings, however designated, capable of being expressed in terms of money, whether fixed or ascertained on a time, task, piece or commission basis, or other method of calculating the same, which is payable by an ER to an EE under a written or unwritten contract of employment for work done or to be done, or for service rendered or to be rendered. It is beyond dispute that SERVA received a fixed amount as monthly compensation for the services he rendered to TAPE.

The Memorandum informing SERVA of the discontinuance of his service proves that TAPE had the power to dismiss SERVA.

Control is manifested in the bundy cards submitted by SERVA in evidence. He was required to report daily and observe definite work hours. TAPE failed to establish that SERVA is an independent contractor.

theory of private SERVAs that petitioner is an independent contractor runs counter to their very own allegation that petitioner is a talent or a program EE. An independent contractor is not an EE of the ER, while a talent or program EE is an EE. The only difference between a talent or program EE and a regular EE is the fact that a regular EE is entitled to all the benefits that are being prayed for. This is the reason why private SERVAs try to seek refuge under the concept of an independent contractor theory. For if petitioner were

indeed an independent contractor, private SERVAs will not be liable to pay the benefits prayed for in petitionerâ€™s complaint.

Regardless of whether or not SERVA had been performing work that is necessary or desirable to the usual business of TAPE, SERVA is still considered a regular EE under Article 280 of the Labor Code. An employment shall be deemed to be casual if it is not covered by Art. 280. Provided, that, any EE who has rendered at least one year of service, whether such service is continuous or broken, shall be considered a regular EE with respect to the activity in which he is employed and his employment shall continue while such activity exists.As a regular EE, SERVA cannot be terminated except for just cause or when authorized by law.[29] It is clear from the tenor of the 2 March 2000 Memorandum that SERVAâ€™s termination was due to redundancy. COCA COLA BOTTLERS (PHILS.), INC./ERIC MONTINOLA, Manager, vs. DR. DEAN N. CLIMACOG.R. No. 146881 February 5, 2007AZCUNA, J.:

FACTS: Respondent Dr. Dean N. Climaco is a medical doctor who was hired by petitioner Coca-Cola Bottlers Phils., Inc. by virtue of a Retainer Agreement The Retainer Agreement, which began on January 1, 1988, was renewed annually. The last one expired on December 31, 1993. Despite the non-renewal of the Retainer Agreement, respondent continued to perform his functions as company doctor to Coca-Cola until he received a letter4 dated March 9, 1995 from petitioner company concluding their retainership agreement effective 30 days from receipt thereof.

It is noted that as early as September 1992, petitioner was already making inquiries regarding his status with petitioner company. First, he wrote a letter addressed to Dr. Willie Sy, the Acting President and Chairperson of the Committee on Membership, Philippine College of Occupational Medicine. In response, Dr. Sy wrote a letter5 to the Personnel Officer of Coca-Cola Bottlers Phils., Bacolod City, stating that respondent should be considered as a regular part-time physician, having served the company continuously for four (4) years. He likewise stated that respondent must receive all the benefits and privileges of an EE under Article 157 (b)6 of the Labor Code.

Petitioner company, however, did not take any action. Hence, respondent made another inquiry directed to the Assistant Regional Director, Bacolod City District Office of the Department of Labor and Employment (DOLE), who referred the inquiry to the Legal Service of the DOLE, Manila. In his letter7 dated May 18, 1993, Director Dennis P. Ancheta, Legal Service, DOLE, stated that he believed that an ER-EE relationship existed between petitioner and respondent based on the Retainer Agreement and the Comprehensive Medical Plan, and the application of the "four-fold" test. However, Director Ancheta emphasized that the existence of ER-EE relationship is a question of fact. Hence, termination disputes or money claims arising from ER-EE relations exceeding P5,000 may be filed with the National Labor Relations Commission (NLRC). He stated that their opinion is strictly advisory.

An inquiry was likewise addressed to the Social Security System (SSS). Thereafter, Mr. Romeo R. Tupas, OIC-FID of SSS-Bacolod City, wrote a letter8 to the Personnel Officer of Coca-Cola Bottlers Phils., Inc. informing the latter that the legal staff of his office was of the opinion that the services of respondent partake of the nature of work of a regular company doctor and that he was, therefore, subject to social security coverage.

Respondent inquired from the management of petitioner company whether it was agreeable to recognizing him as a regular EE. The management refused to do so. respondent filed a Complaint9 before the NLRC, Bacolod City, seeking recognition as a regular EE of petitioner company and prayed for the payment of all benefits of a regular EE, including 13th Month Pay, Cost of Living Allowance, Holiday Pay, Service Incentive Leave Pay, and Christmas Bonus. While the complaint was pending before the Labor Arbiter, respondent received a letter dated March 9, 1995 from petitioner company concluding their retainership agreement effective thirty (30) days from receipt thereof. This prompted respondent to file a complaint for illegal dismissal against petitioner company with the NLRC, Bacolod City.

LA: DISMISSED THE CASE on illegal dismissal and found that petitioner company lacked the power of control over respondent’s performance of his duties, and recognized as valid the Retainer Agreement between the parties. NLRC dismissed the appeal in both cases for lack of merit. CA ruled that an ER-EE relationship existed between petitioner company and respondent after applying the four-fold test.

ISSUES:1) whether or not there exists an ER-EE relationship between the parties;2)whether the termination of respondent’s employment is illegal.

HELD: The Court agrees with the finding of the Labor Arbiter and the NLRC that the circumstances of this case show that no ER-EE relationship exists between the parties. The Labor Arbiter and the NLRC correctly found that petitioner company lacked the power of control over the performance by respondent of his duties. The Labor Arbiter reasoned that the Comprehensive Medical Plan, which contains the respondent’s objectives, duties and obligations, does not tell respondent "how to conduct his physical examination, how to immunize, or how to diagnose and treat his patients, EEs of [petitioner] company, in each case." In effect, the Labor Arbiter held that petitioner company, through the Comprehensive Medical Plan, provided guidelines merely to ensure that the end result was

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achieved, but did not control the means and methods by which respondent performed his assigned tasks.

The NLRC affirmed the findings of the Labor Arbiter and stated that it is precisely because the company lacks the power of control that the contract provides that respondent shall be directly responsible to the EE concerned and their dependents for any injury, harm or damage caused through professional negligence, incompetence or other valid causes of action.

allegation of complainant that since he is on call at anytime of the day and night makes him a regular EE is off-tangent. Complainant does not dispute the fact that outside of the two (2) hours that he is required to be at respondent company’s premises, he is not at all further required to just sit around in the premises and wait for an emergency to occur so as to enable him from using such hours for his own benefit and advantage. In fact, complainant maintains his own private clinic attending to his private practice in the city, where he services his patients, bills them accordingly -- and if it is an EE of respondent company who is attended to by him for special treatment that needs hospitalization or operation, this is subject to a special billing. More often than not, an EE is required to stay in the ER’s workplace or proximately close thereto that he cannot utilize his time effectively and gainfully for his own purpose. Such is not the prevailing situation here.

In addition, the Court finds that the schedule of work and the requirement to be on call for emergency cases do not amount to such control, but are necessary incidents to the Retainership Agreement. The Court also notes that the Retainership Agreement granted to both parties the power to terminate their relationship upon giving a 30-day notice. Hence, petitioner company did not wield the sole power of dismissal or termination.

The Court agrees with the Labor Arbiter and the NLRC that there is nothing wrong with the employment of respondent as a retained physician of petitioner company and upholds the validity of the Retainership Agreement which clearly stated that no ER-EE relationship existed between the parties. The Agreement also stated that it was only for a period of 1 year beginning January 1, 1988 to December 31, 1998, but it was renewed on a yearly basis.Considering that there is no ER-EE relationship between the parties, the termination of the Retainership Agreement, which is in accordance with the provisions of the Agreement, does not constitute illegal dismissal of respondent. Consequently, there is no basis for the moral and exemplary damages granted by the Court of Appeals to respondent due to his alleged illegal dismissal.ANGELINA FRANCISCO vs. NLRC, Kasei Corp., Seiichiro Takahashi, Timoteo Acedo, Delfin Liza, Irene Ballesteros, Trinidad Liza and Ramon EscuetaG.R. No. 170087August 31, 2006YNARES-SANTIAGO, J.:

FACTS: FRANCISCO was hired by Kasei Corporation during its incorporation stage. She was designated as Accountant and Corporate Secretary and was assigned to handle all the accounting needs of the company. She was also designated as Liaison Officer to the City of Makati to secure business permits, construction permits and other licenses for the initial operation of the company. Although she was designated as Corporate Secretary, she was not entrusted with the corporate documents; neither did she attend any board meeting nor required to do so. She never prepared any legal document and never represented the company as its Corporate Secretary. However, on some occasions, she was prevailed upon to sign documentation for the company.[6]

Later on, FRANCISCO was designated Acting Manager. The corporation also hired Gerry Nino as accountant in lieu of FRANCISCO. As Acting Manager, FRANCISCO was assigned to handle recruitment of all EEs and perform management administration functions; represent the company in all dealings with government agencies, especially with the BIR, SSS and in the city government of Makati; and to administer all other matters pertaining to the operation of Kasei Restaurant which is owned and operated by Kasei Corporation.[7]

For 5 years, FRANCISCO performed the duties of Acting Manager. As of December 31, 2000 her salary was P27,500.00 plus P3,000.00 housing allowance and a 10% share in the profit of Kasei Corporation. Subsequently, FRANCISCO was replaced by Liza R. Fuentes as Manager. FRANCISCO alleged that she was required to sign a prepared resolution for her replacement but she was assured that she would still be connected with Kasei Corporation. Timoteo Acedo, the designated Treasurer, convened a meeting of all EEs of KC and announced that nothing had changed and that FRANCISCO was still connected with KCas Technical Assistant to Seiji Kamura and in charge of all BIR matters.[9]

Thereafter, KC reduced her salary by P2,500.00 a month beginning January up to September 2001 for a total reduction of P22,500.00 as of September 2001. FRANCISCO was not paid her mid-year bonus allegedly because the company was not earning well. Thereafter, FRANCISCO did not receive her salary from the company. She made repeated follow-ups with the company cashier but she was advised that the company was not earning well. FRANCISCO asked for her salary from Acedo and the rest of the officers but she was informed that she is no longer connected with the company. Since she was no longer paid her salary, FRANCISCO did not report for work and filed an action for constructive dismissal before the labor arbiter.

The Labor Arbiter found that FRANCISCO was illegally dismissed, the NLRC affirmed with modification the Decision of the Labor Arbiter. On appeal, the CA reversed the NLRC decision, dismissing

the complaint filed by private respondent against Kasei Corporation, et al. for constructive dismissal.

ISSUE/S: (1) whether there was an ER-EE relationship between FRANCISCO and private respondent Kasei Corporation; and if in the affirmative, (2) whether FRANCISCO was illegally dismissed.

HELD: 1)By applying the control test, there is no doubt that FRANCISCO is an EE of KCbecause she was under the direct control and supervision of Seiji Kamura, the corporation’s Technical Consultant. She reported for work regularly and served in various capacities as Accountant, Liaison Officer, Technical Consultant, Acting Manager and Corporate Secretary, with substantially the same job functions, that is, rendering accounting and tax services to the company and performing functions necessary and desirable for the proper operation of the corporation such as securing business permits and other licenses over an indefinite period of engagement.

Under the broader economic reality test, the FRANCISCO can likewise be said to be an EE of respondent corporation because she had served the company for 6 years before her dismissal, receiving check vouchers indicating her salaries/wages, benefits, 13th month pay, bonuses and allowances, as well as deductions and SSS contributions from August 1, 1999 to December 18, 2000.[26] When FRANCISCO was designated General Manager, respondent corporation made a report to the SSS signed by Irene Ballesteros. FRANCISCO’s membership in the SSS as manifested by a copy of the SSS specimen signature card which was signed by the President of KC and the inclusion of her name in the on-line inquiry system of the SSS evinces the existence of an ER-EE relationship between FRANCISCO and respondent corporation. It is therefore apparent that FRANCISCO is economically dependent on respondent corporation for her continued employment in the latter’s line of business.

2)A diminution of pay is prejudicial to the EE and amounts to constructive dismissal. Constructive dismissal is an involuntary resignation resulting in cessation of work resorted to when continued employment becomes impossible, unreasonable or unlikely; when there is a demotion in rank or a diminution in pay; or when a clear discrimination, insensibility or disdain by an ER becomes unbearable to an EE.[35] In Globe Telecom, Inc. v. Florendo-Flores,[36] we ruled that where an EE ceases to work due to a demotion of rank or a diminution of pay, an unreasonable situation arises which creates an adverse working environment rendering it impossible for such EE to continue working for her ER. Hence, her severance from the company was not of her own making and therefore amounted to an illegal termination of employment.PEOPLE’S BROADCASTING (BOMBO RADYO PHILS., INC.), vs. SEC. OF DOLEG.R. No. 179652 March 6, 2012PEOPLE’S BROADCASTING (BOMBO RADYO PHILS., INC.), vs. SEC. OF DOLEG.R. No. 179652 May 8, 2009TINGA, J.:

FACTS: a complaint filed by JUEZA against BOMBO for illegal deduction, non-payment of service incentive leave, 13th month pay, premium pay for holiday and rest day and illegal diminution of benefits, delayed payment of wages and non-coverage of SSS, PAG-IBIG and Philhealth before the DOLE Regional Office No. VII, Cebu City.[2] On the basis of the complaint, the DOLE conducted a plant level inspection. In the Inspection Report Form,[3] the Labor Inspector wrote under the heading “Findings/Recommendations” “non-diminution of benefits” and “Note: Respondent deny ER-EE relationship with the complainant- see Notice of Inspection results.” In the Notice of Inspection Results the Labor Inspector made the following notations:

Management representative informed that complainant is a drama talent hired on a per drama “ participation basis” hence no ER-EEship [sic] existed between them. As proof of this, management presented photocopies of cash vouchers, billing statement, employments of specific undertaking (a contract between the talent director & the complainant), summary of billing of drama production etc. BOMBO had not control of the talent if he ventures into another contract w/ other broadcasting industries.

On the other hand, complainant Juezan’s alleged violation of non-diminution of benefits is computed as follows: P 2,000/15 days + 1.5 mos = P 6,000.

Petitioner was required to rectify/restitute the violations within five (5) days from receipt. No rectification was effected by petitioner; thus, summary investigations were conducted, with the parties eventually ordered to submit their respective position papers.[6]

DOLE Regional Director Atty. Rodolfo M. Sabulao (Regional Director) ruled that respondent is an EE of petitioner, and that the former is entitled to his money claims amounting to P203,726.30. Petitioner sought reconsideration of the Order, claiming that the Regional Director gave credence to the documents offered by respondent without examining the originals, but at the same time he missed or failed to consider petitioner’s evidence. Petitioner’s motion for reconsideration was denied. the Acting DOLE Secretary dismissed the appeal on the ground that petitioner did not post a cash or surety bond and instead submitted a Deed of Assignment of Bank Deposit.[9]

Petitioner elevated the case to the CA, claiming that it was denied due process when the DOLE Secretary disregarded the evidence it presented and failed to give it the opportunity to refute the claims

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of respondent. Petitioner maintained that there is no ER-EE relationship had ever existed between it and respondent because it was the drama directors and producers who paid, supervised and disciplined respondent. It also added that the case was beyond the jurisdiction of the DOLE and should have been considered by the labor arbiter because respondent’s claim exceeded P5,000.00.

The Court of Appeals held that petitioner was not deprived of due process.It further ruled that the latter had the power to order and enforce compliance with labor standard laws irrespective of the amount of individual claims because the limitation imposed by Article 29 of the Labor Code had been repealed by Republic Act No. 7730.[10] Petitioner sought reconsideration of the decision but its motion was denied.[11]

ISSUE: does the Secretary of Labor have the power to determine the existence of an ER-EE relationship?

HELD: To resolve this pivotal issue, one must look into the extent of the visitorial and enforcement power of the DOLE found in Article 128 (b) of the Labor Code, as amended by Republic Act 7730. The provision is quite explicit that the visitorial and enforcement power of the DOLE comes into play only “in cases when the relationship of ER-EE still exists.” It also underscores the avowed objective underlying the grant of power to the DOLE which is “to give effect to the labor standard provision of this Code and other labor legislation.” Of course, a person’s entitlement to labor standard benefits under the labor laws presupposes the existence of ER-EE relationship in the first place. The clause “in cases where the relationship of ER-EE still exists” signifies that the ER-EE relationship must have existed even before the emergence of the controversy. Necessarily, the DOLE’s power does not apply in two instances, namely: (a) where the ER-EE relationship has ceased; and (b) where no such relationship has ever existed.

In the first situation, the claim has to be referred to the NLRC because it is the NLRC which has jurisdiction in view of the termination of the ER-EE relationship. The same procedure has to be followed in the second situation since it is the NLRC that has jurisdiction in view of the absence of ER-EE relationship between the evidentiary parties from the start.

In the second situation especially, the existence of an ER-EE relationship is a matter which is not easily determinable from an ordinary inspection, necessarily so, because the elements of such a relationship are not verifiable from a mere ocular examination. The intricacies and implications of an ER-EE relationship demand that the level of scrutiny should be far above the cursory and the mechanical.

It can be assumed that the DOLE in the exercise of its visitorial and enforcement power somehow has to make a determination of the existence of an ER-EE relationship. Such prerogatival determination, however, cannot be coextensive with the visitorial and enforcement power itself. Indeed, such determination is merely preliminary, incidental and collateral to the DOLE’s primary function of enforcing labor standards provisions. The determination of the existence of ER-EE relationship is still primarily lodged with the NLRC. This is the meaning of the clause “in cases where the relationship of ER-EE still exists” in Art. 128 (b).

Thus, before the DOLE may exercise its powers under Article 128, two important questions must be resolved: (1) Does the ER-EE relationship still exist, or alternatively, was there ever an ER-EE relationship to speak of; and (2) Are there violations of the Labor Code or of any labor law? The existence of an ER-EE relationship is a statutory prerequisite to and a limitation on the power of the Secretary of Labor, one which the legislative branch is entitled to impose. The rationale underlying this limitation is to eliminate the prospect of competing conclusions of the Secretary of Labor and the NLRC, on a matter fraught with questions of fact and law, which is best resolved by the quasi-judicial body, which is the NRLC, rather than an administrative official of the executive branch of the government. If the Secretary of Labor proceeds to exercise his visitorial and enforcement powers absent the first requisite, as the dissent proposes, his office confers jurisdiction on itself which it cannot otherwise acquire.SAN MIGUEL CORPORATION and Geribern Abella vs. NLRC, Labor Arbiter Pedro Ramos and Ernesto IbiasG.R. Nos. 146121-22, April 16, 2008TINGA, J,:

FACTS: Ernesto M. Ibias (respondent) was employed by petitioner SMC on 24 December 1978 initially as a CRO operator in its Metal Closure and Lithography Plant. Respondent continuously worked therein until he advanced as Zamatic operator. He was also an active and militant member of a labor organization called Ilaw Buklod Manggagawa (IBM)-SMC Chapter.

It appears that per company records, respondent was AWOP for several occasions. respondent was alleged to have falsified his medical consultation card by stating therein that he was granted sick leave by the plant clinic on said dates when in truth he was not. He was given Notice to Explain through telegrams and was required to state in writing why he should not be subject to disciplinary action for falsifying his medical consultation card. Respondent did not comply with these notices. Subsequently, respondent submitted a handwritten explanation to the charges, to wit: "Tungkol po sa ibinibintang po ninyong [sic] sa akin na falsification of medical consultation card ito po hindi ko magagawa at sa mga araw na hindi ko po ipinasok ito po ay may kaukulang supporting paper[s]."

During the investigation, respondent admitted that he was absent on several dates and had not sought sick leave permission for those

dates, and also denied falsifying or having had anything to do with the falsification of his medical consultation card. However, upon verification with the plant clinic, Siwa found that respondent was not granted sick leaves on those dates. When Siwa confronted respondent about the falsification, respondent allegedly replied that he resorted to falsification to cover up his AWOPs which he was forced to incur because of personal problems.

After the completion of the investigation, SMC concluded that respondent committed the offenses of excessive AWOPs and falsification of company records or documents, and accordingly dismissed him. respondent filed a complaint for illegal dismissal against SMC and Geribern Abella.

ISSUE: whether the CA erred in sustaining the findings of the labor arbiter and the NLRC and in dismissing SMC's claims that respondent was terminated from service with just cause.

HELD: The settled rule in administrative and quasi-judicial proceedings is that proof beyond reasonable doubt is not required in determining the legality of an ER's dismissal of an EE, and not even a preponderance of evidence is necessary as substantial evidence is considered sufficient.

while there may be no denying that respondent's medical card had falsified entries in it, SMC was unable to prove, by substantial evidence, that it was respondent who made the unauthorized entries. Besides, SMC's (Your) Guide on EE Conduct[25] punishes the act of falsification of company records or documents; it does not punish mere possession of a falsified document.

while respondent has admitted these absences, before the Court, he also seeks to belittle the plain by countering that SMC has not been too rigid in its application of company rules pertaining to leave availments. These medical certifications, however, cannot work to erase his AWOPs; respondent had never submitted these documents to SMC and it is only when the case was pending before the Labor Arbiter that he produced the same.

even if he was not punished for his subsequent AWOPs, the same remained on record. He was aware of the number of AWOPs he incurred and should have known that these were punishable under company rules. The fact that he was spared from suspension cannot be used as a reason to incur further AWOPs and be absolved from the penalty therefor.

The Court of Appeals, NLRC, and the labor arbiter found that respondent incurred unauthorized absences, but concluded that the penalty of discharge or determination was disproportionate to respondent's absences in view of SMC's inconsistent and lax implementation of its policy on EEs attendance. The Court disagrees. Respondent's dismissal was well within the purview of SMC's management prerogative.

What the lower tribunals perceived as laxity, we consider as leniency. SMC's tendency to excuse justified absences actually redounded to the benefit of respondent since the imposition of the corresponding penalty would have been deleterious to him. In a world where "no work-no pay" is the rule of thumb, several days of suspension would be difficult for an ordinary working man like respondent. He should be thankful that SMC did not exact from him almost 70 days suspension before he was finally dismissed from work.

In any case, when SMC imposed the penalty of dismissal for the 12th and 13thAWOPs, it was acting well within its rights as an ER. An ER has the prerogative to prescribe reasonable rules and regulations necessary for the proper conduct of its business, to provide certain disciplinary measures in order to implement said rules and to assure that the same would be complied with.[35] An ER enjoys a wide latitude of discretion in the promulgation of policies, rules and regulations on work-related activities of the EEs.[36]

It is axiomatic that appropriate disciplinary sanction is within the purview of management imposition.[37] Thus, in the implementation of its rules and policies, the ER has the choice to do so strictly or not, since this is inherent in its right to control and manage its business effectively. Consequently, management has the prerogative to impose sanctions lighter than those specifically prescribed by its rules, or to condone completely the violations of its erring EEs. Of course, this prerogative must be exercised free of grave abuse of discretion, bearing in mind the requirements of justice and fair play. Indeed, we have previously stated:

Management also has its own rights, which, as such, are entitled to respect and enforcement in the interest of simple fair play. Out of its concern for those with [fewer] privileges in life, the Supreme Court has inclined more often than not toward the worker and upheld his cause in his conflicts with the ER. Such favoritism, however, has not blinded the Court to rule that justice is in every case for the deserving, to be dispensed in the light of the established facts and applicable law and doctrine.[38]All told, we find that SMC acted well within its rights when it dismissed respondent for his numerous absences. Respondent was afforded due process and was validly dismissed for cause.JIMMY ARENO, JR. vs. SKYCABLE PCC-BAGUIOG.R. No. 180302 February 5, 2010DEL CASTILLO, J.:

FACTS: petitioner was employed as a cable technician by respondent Skycable PCC-Baguio. an accounting clerk of respondent, Hyacinth Soriano (Soriano), sent to the human resource manager a letter-complaint[5]against petitioner alleging that on two separate occasions, the latter spread false rumors about her.

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she was again insulted by petitioner when the latter approached her and said that she was seen going out with Aldrin Estrada, their field service supervisor, at Central Park, Baguio City. During that incident, petitioner uttered, “Ikaw lang ang nakakaalam ng totoo” with malicious intent and in a provocative manner. Soriano averred that petitioner’s unscrupulous behavior constituted serious and grave offense in violation of the company’s Code of Discipline.

On the same day, respondent issued a Memorandum[6] requiring petitioner to submit an explanation within 76 hours from notice thereof. Petitioner submitted his written explanation[7] dated January 23, 2002 denying all the allegations in Soriano’s letter-complaint and further denying having uttered the statement imputed on him. An administrative investigation was accordingly conducted. In a Memo[9] dated February 6, 2002, the investigating committee found petitioner guilty of having made malicious statements against Soriano during the January 7, 2002conversation, which is categorized as an offense under the Company Code of Discipline. Consequently, petitioner was suspended for three days without pay. The Memo was allegedly served on February 7, 2002 but petitioner refused to sign it.

Notwithstanding the suspension order, however, petitioner still reported for work. By reason thereof, respondent sent petitioner a letter denominated as 1st Notice of Termination[10] requiring him to explain in writing why he should not be terminated for insubordination. petitioner inquired from respondent whether he is already dismissed or merely suspended since he was refused entry into the company premises. Respondent replied that petitioner was merely suspended and gave him additional time to tender his written explanation to the 1st Notice of Termination.

petitioner again wrote to respondent, this time requesting for further investigation on his alleged act of spreading rumors against Soriano in order for him to confront his accuser and present his witnesses with the assistance of counsel. Respondent denied the request reiterating that there has been substantial compliance with due process and that a reinvestigation is moot because the suspension was already served.

Anent the new charge of insubordination, petitioner submitted to respondent his written explanation[12] averring that he still reported for work on the first day of his suspension because the accusation of Soriano is baseless and her testimony is hearsay. Besides, according to petitioner, he did not defy any order related to his duties, no representative of the management prevented him from working and that reporting to work without being paid for the service he rendered on that day did not in any way affect the company’s productivity. an investigation on the insubordination case was conducted which was attended by the parties and their respective counsels. Through a Final Notice of Termination petitioner was dismissed from service on the ground of insubordination or willful disobedience in complying with the suspension order.

ISSUE: whether or not petitioner were validly dismissed.

HELD: The NLRC initially ruled that Soriano’s testimony during the investigation on the alleged act of petitioner in spreading rumors is hearsay. Nevertheless, it reversed itself by holding that while Soriano stated that her allegation with regard to the first two instances that petitioner was spreading false information about her is based on what she heard from other people, her narration of the third instance relating to what has transpired during their January 7, 2002 conversation is not hearsay. The NLRC ruled quoting in part the relevant testimony of Soriano as recorded in the transcript of the investigation:

evidence on record repudiates petitioner’s pretension. His insistence that he had no notice of his suspension is belied by evidence as it shows that the suspension order was served on petitioner on February 7, 2002 by his immediate superior, Al Luzano, but petitioner declined to sign it. No acceptable reason was advanced for doing so except petitioner’s shallow excuse that it should be sent to him by registered mail.

As a just cause for dismissal of an EE under Article 282[41] of the Labor Code, willful disobedience of the ER’s lawful orders requires the concurrence of two elements: (1) the EE’s assailed conduct must have been willful, i.e.,characterized by a wrongful and perverse attitude; and (2) the order violated must have been reasonable, lawful, made known to the EE, and must pertain to the duties which he had been engaged to discharge.[42] Both requisites are present in the instant case. It is noteworthy that upon receipt of the notice of suspension, petitioner did not question such order at the first instance. He immediately defied the order by reporting on the first day of his suspension. Deliberate disregard or disobedience of rules by the EE cannot be countenanced. It may encourage him to do even worse and will render a mockery of the rules of discipline that EEs are required to observe.[43]

Petitioner was served the first notice of termination and was given time to submit his written explanation. A hearing was conducted wherein both parties with their respective counsels were present. After finding cause for petitioner’s termination, a final notice apprising him of the decision to terminate his employment was served. All things considered, respondent validly dismissed petitioner for cause after complying with the procedural requirements of the law.

DANNIE M. PANTOJA vs. SCA HYGIENE PRODUCTS CORPORATIONG.R. No. 163554 April 23, 2010DEL CASTILLO, J.:

FACTS: Respondent, a corporation engaged in the manufacture, sale and distribution of industrial paper and tissue products, employed petitioner as a utility man on March 15, 1987. Petitioner was eventually assigned at respondent’s Paper Mill No. 4, the section which manufactures the company’s industrial paper products, as a back tender in charge of the proper operation of the section’s machineries.

In a Notice of Transfer dated March 27, 1999,respondent informed petitioner of its reorganization plan and offered him a position at Paper Mill No. 5 under the same terms and conditions of employment in anticipation of the eventual closure and permanent shutdown of Paper Mill No. 4 effective May 5, 1999. The closure and concomitant reorganization is in line with respondent’s decision to streamline and phase out the company’s industrial paper manufacturing operations due to financial difficulties brought about by the low volume of sales and orders for industrial paper products.

However, petitioner rejected respondent’s offer for his transfer. Thus, a notice of termination[6] of employment effectiveMay 5, 1999 was sent to petitioner as his position was declared redundant by the closure of Paper Mill No. 4. He then received his separation pay equivalent to two months pay for every year of service in the amount of P356,335.20 and thereafter executed a release and quitclaim[7] in favor of respondent.. respondent informed DOLE of its reorganization and partial closure by submitting with the said office an Establishment Termination Report[8] together with the list of 31 terminated EEs.

petitioner filed a complaint for illegal dismissal against respondent assailing his termination as without any valid cause. He averred that the alleged redundancy never occurred as there was no permanent shutdown of Paper Mill No. 4 due to its continuous operation since his termination. A co-EE, Nestor Agtang, confirmed this fact and further attested that several contractual workers were employed to operate Paper Mill No. 4. Petitioner also presented in evidence documents pertaining to the actual and continuous operation of Paper Mill No. 4 such as the Paper Mill Personnel Schedule for July 2-8, 2000[11] and 23-29, 2000[12] and Paper Machine No. 4 Production Report and Operating Data dated April 28, 2000 and May 18, 2000.

In its defense, respondent refuted petitioner’s claim of illegal dismissal. It argued that petitioner has voluntarily separated himself from service by opting to avail of the separation benefits of the company instead of accepting reassignment/transfer to another position of equal rank and pay. According to respondent, petitioner’s discussion on the alleged resumption of operation of Paper Mill No. 4 is rendered moot by the fact of petitioner’s voluntary separation.

ISSUE: whether or not respondent is guilty of illegal dismissal.

HELD: the abolishment of Paper Mill No. 4 was undoubtedly a business judgment arrived at in the face of the low demand for the production of industrial paper at the time. Despite an apparent reason to implement a retrenchment program as a cost-cutting measure, respondent, however, did not outrightly dismiss the workers affected by the closure of Paper Mill No. 4 but gave them an option to be transferred to posts of equal rank and pay. As can be seen, retrenchment was utilized by respondent only as an available option in case the affected EE would not want to be transferred. Respondent did not proceed directly to retrench. This, to our mind, is an indication of good faith on respondent’s part as it exhausted other possible measures other than retrenchment. Besides, the ER’s prerogative to bring down labor costs by retrenching must be exercised essentially as a measure of last resort, after less drastic means have been tried and found wanting. Giving the workers an option to be transferred without any diminution in rank and pay specifically belie petitioner’s allegation that the alleged streamlining scheme was implemented as a ploy to ease out EEs, thus, the absence of bad faith. Apparently, respondent implemented its streamlining or reorganization plan with good faith, not in an arbitrary manner and without prejudicing the tenurial rights of its EEs.

Petitioner harps on the fact that there was no actual shutdown of Paper Mill No. 4 but that it continued to be operational. No evidence, however, was presented to prove that there was continuous operation after the shutdown in the year 1999. What the records reveal is that Paper Mill No. 4 resumed its operation in 2000 due to a more favorable business climate. The resumption of its industrial paper manufacturing operations does not, however, make respondent’s streamlining/reorganization plan illegal because, again, the abolishment of Paper Mill No. 4 in 1999 was a business judgment arrived at to prevent a possible financial drain at that time. As long as no arbitrary or malicious action on the part of an ER is shown, the wisdom of a business judgment to implement a cost saving device is beyond this court’s determination. After all, the free will of management to conduct its own business affairs to achieve its purpose cannot be denied.[20]

We held that work reassignment of an EE as a genuine business necessity is a valid management prerogative.[21] After being given an option to be transferred, petitioner rejected the offer for reassignment to Paper Mill No. 5 even though such transfer would not involve any diminution of rank and pay. Instead, he opted and preferred to be separated by executing a release and quitclaim in consideration of which he received separation pay in the amount of P356,335.20 equal to two months pay for every year of service plus other accrued benefits. Clearly, petitioner freely and voluntarily consented to the execution of the release and quitclaim. Having done so apart from the fact that the consideration for the quitclaim is credible and reasonable, the waiver represents a valid and binding undertaking.[22] As aptly concluded by the CA, the

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quitclaim was not executed under force or duress and that petitioner was given a separation pay more than what the law requires from respondent.YMBONG vs. ABS-CBNG.R. No.184885, March 7, 2012TINIO vs. CAG.R. No.171764, June 8, 2007Julie’s Bakeshop and/or Edgar Reyes v. HENRY ARNAIZ, EDGAR NAPAL,and JONATHAN TOLORES,G.R. No. 173882, February 15, 2012DEL CASTILLO, J.:

FACTS: Reyes hired respondents as chief bakers in his 3 franchise branches of Julie’s Bakeshop in Sibalom and San Jose, Antique. respondents filed separate complaints against petitioners for underpayment of wages, payment of premium pay for holiday and rest day, service incentive leave pay, 13th month pay, cost of living allowance (COLA) and attorney’s fees. These complaints were later on consolidated.

Subsequently, in a memorandum Reyes reassigned respondents as utility/security personnel tasked to clean the outside vicinity of his bakeshops and to maintain peace and order in the area. Upon service of the memo, respondents, however, refused to sign the same and likewise refused to perform their new assignments by not reporting for work.

In a letter-memorandum directed respondents to report back for work and to explain why they failed to assume their duties as utility/security personnel. A second letter-memorandum of the same tenor was also sent to respondents. Respondents did not heed both memoranda.

Proceedings before the Labor Arbiter

Meanwhile, in the preliminary conference before the LA, respondents with their counsel, Atty. Delicana, on one hand, and Reyes on the other, appeared before the LA to explore the possibility of an amicable settlement. It was agreed that the parties would enter into a compromise agreement. However, respondents, who were then represented by a different counsel, Atty. Pefianco, amended their complaints by including in their causes of action illegal dismissal and a claim for reinstatement and backwages.

The supposed signing of the compromise agreement (which could have culminated in respondents receiving the total amount of P54,126.00 as payment for their 13th month pay and separation pay) was reset because of respondents’ non-appearance in the hearing . Atty. Pefianco failed to appear despite due notice. On the next hearing scheduled on, both Atty. Delicana and Atty. Pefianco appeared but the latter verbally manifested his withdrawal as counsel for respondents. Thus, respondents, through Atty. Delicana, and Reyes, continued to explore the possibility of settling the case amicably. Manifesting that they need to sleep on the proposed settlement, respondents requested for continuance of the hearing. Come said date, however, respondents did not appear.

Realizing the futility of further resetting the case to give way to a possible settlement, the Labor Arbiter ordered the parties to file their respective position papers.

Despite his earlier withdrawal as counsel, Atty. Pefianco filed a Joint Position Paper [5] on behalf of respondents alleging that they were dismissed from employment without valid cause. As for petitioners, they stated in their position paper [6] that respondents were never dismissed but that they abandoned their jobs after filing their complaints. Petitioners denied that Reyes is the ER of Arnaiz and Napal but admitted such fact insofar as Tolores is concerned.

LA: dismissed without prejudice. NLRC: overruled the Decision of the LA. NLRC: MR has merit, previous Decision is VACATED. NLRC: again reconsidered its own ruling and held that respondents were not dismissed, either actually or constructively, but instead willfully disobeyed the return to work order of their ER.

CA:, found merit in the petition, ruling that respondents were constructively dismissed since their designation from chief bakers to utility/security personnel is undoubtedly a demotion in rank which involved “a drastic change in the nature of work resulting to a demeaning and humiliating work condition.”

ISSUES: 1.WON CA in disturbing the findings of facts of LA as well as the NLRC committed GAD tantamount to lack of jurisdiction or did CA manifestly overlook relevant facts not disputed by the respondents, w/c if properly considered could justify a different conclusion. 2.Was the transfer/reassignment of respondent to another position w/o diminution in pay and other privileges tantamount to constructive dismissal.

HELD:We find no merit in the petition. 1.The Court of Appeals is correct in reviewing the findings of the National Labor Relations Commission. Indeed, “factual findings of labor officials who are deemed to have acquired expertise in matters within their respective jurisdictions are generally accorded not only respect, but even finality.” [25] It is a well-entrenched rule that findings of facts of the NLRC, affirming those of the Labor Arbiter, are accorded respect and due consideration when supported by substantial evidence. [26] We, however, find that the doctrine of great respect and finality has no application to the case at bar. As stated, the Labor Arbiter dismissed respondents’ complaints on mere technicality. The NLRC, upon appeal, then came up with three divergent rulings. At first, it remanded the case to the Labor Arbiter. However, in a subsequent resolution, it decided to resolve the case on the merits by ruling that

respondents were constructively dismissed. But later on, it again reversed itself in its third and final resolution of the case and ruled in petitioners’ favor. Therefore, contrary to Reyes’s claim, the NLRC did not, on any occasion, affirm any factual findings of the Labor Arbiter. The CA is thus correct in reviewing the entire records of the case to determine which findings of the NLRC is sound and in accordance with law. Besides, the CA, at any rate, may still resolve factual issues by express mandate of the law despite the respect given to administrative findings of fact. [27]

2.The transfer/reassignment of respondents constitutes constructive dismissal. We have held that management is free to regulate, according to its own discretion and judgment, all aspects of employment, including hiring, work assignments, working methods, time, place and manner of work, processes to be followed, supervision of workers, working regulations, transfer of EEs, work supervision, lay off of workers and discipline, dismissal and recall of workers. The exercise of management prerogative, however, is not absolute as it must be exercised in good faith and with due regard to the rights of labor. [28]

In constructive dismissal cases, the ER has the burden of proving that the transfer of an EE is for just or valid ground, such as genuine business necessity. The ER must demonstrate that the transfer is not unreasonable, inconvenient, or prejudicial to the EE and that the transfer does not involve a demotion in rank or a diminution in salary and other benefits. “If the ER fails to overcome this burden of proof, the EE’s transfer is tantamount to unlawful constructive dismissal.” [29]

In the case at bench, respondent Reyes failed to justify petitioners’ transfer from the position of chief bakers to utility/security personnel. We find that the threat being alluded to by respondent Reyes – that the petitioners might introduce harmful foreign substances in baking bread – is imaginary and not real. We recall that what triggered the petitioners’ reassignment was the filing of their complaints against private respondents in the NLRC. The petitioners were not even given an opportunity to refute the reason for the transfer. The drastic change in petitioners’ nature of work unquestionably resulted in, as rightly perceived by them, a demeaning and humiliating work condition. The transfer was a demotion in rank, beyond doubt. There is demotion when an EE is transferred from a position of dignity to a servile or menial job. One does not need to stretch the imagination to distinguish the work of a chief baker to that of a security cum utility man. [31]

“[D]emotion involves a situation in which an EE is relegated to a subordinate or less important position constituting a reduction to a lower grade or rank, with a corresponding decrease in duties and responsibilities, and usually accompanied by a decrease in salary.” [32] When there is a demotion in rank and/or a diminution in pay; when a clear discrimination, insensibility or disdain by an ER becomes unbearable to the EE; or when continued employment is rendered impossible, unreasonable or unlikely, the transfer of an EE may constitute constructive dismissal. [33]

We agree with the CA in ruling that the transfer of respondents amounted to a demotion. Although there was no diminution in pay, there was undoubtedly a demotion in titular rank. One cannot deny the disparity between the duties and functions of a chief baker to that of a utility/security personnel tasked to clean and manage the orderliness of the outside premises of the bakeshop. Respondents were even prohibited from entering the bakeshop. The change in the nature of their work undeniably resulted to a demeaning and humiliating work condition. ROLANDO C. RIVERA vs. SOLIDBANK CORPORATION,G.R. No. 163269 April 19, 2006CALLEJO, SR., J.:

FACTS: Petitioner had been working for Solidbank Corporation since July 1, 1977.[3] He was initially employed as an Audit Clerk, then as Credit Investigator, Senior Clerk, Assistant Accountant, and Assistant Manager. Prior to his retirement, he became the Manager of the Credit Investigation and Appraisal Division of the Consumer’s Banking Group. In the meantime, Rivera and his brother-in-law put up a poultry business in Cavite.

In December 1994, Solidbank offered two retirement programs to its EEs: (a) the Ordinary Retirement Program (ORP), under which an EE would receive 85% of his monthly basic salary multiplied by the number of years in service; and (b) the Special Retirement Program (SRP), under which a retiring EE would receive 250% of the gross monthly salary multiplied by the number of years in service.[4] Since Rivera was only 45 years old, he was not qualified for retirement under the ORP. Under the SRP, he was entitled to receive P1,045,258.95 by way of benefits.[5]

Deciding to devote his time and attention to his poultry business in Cavite, Rivera applied for retirement under the SRP. Solidbank approved the application and Rivera was entitled to receive the net amount of P963,619.28. This amount included his performance incentive award (PIA), and his unearned medical, dental and optical allowances in the amount of P1,666.67, minus his total accountabilities to Solidbank amounting to P106,973.00.[6] Rivera received the amount and confirmed his separation from Solidbank on February 25, 1995.[7]

Subsequently, Solidbank required Rivera to sign an undated Release, Waiver and Quitclaim, which was notarized on March 1, 1995.[8] Rivera acknowledged receipt of the net proceeds of his separation and retirement benefits and promised that “[he] would not, at any time, in any manner whatsoever, directly or indirectly engage in any unlawful activity prejudicial to the interest of Solidbank, its parent, affiliate or subsidiary companies, their stockholders, officers, directors, agents or EEs, and their

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successors-in-interest and will not disclose any information concerning the business of Solidbank, its manner or operation, its plans, processes, or data of any kind.”[9]

Aside from acknowledging that he had no cause of action against Solidbank or its affiliate companies, Rivera agreed that the bank may bring any action to seek an award for damages resulting from his breach of the Release, Waiver and Quitclaim, and that such award would include the return of whatever sums paid to him by virtue of his retirement under the SRP.[10] Rivera was likewise required to sign an undated Undertaking as a supplement to the Release, Waiver and Quitclaim in favor of Solidbank in which he declared that he received in full his entitlement under the law (salaries, benefits, bonuses and other emoluments), including his separation pay in accordance with the SRP. In this Undertaking, he promised that “[he] will not seek employment with a competitor bank or financial institution within one (1) year from February 28, 1995, and that any breach of the Undertaking or the provisions of the Release, Waiver and Quitclaim would entitle Solidbank to a cause of action against him before the appropriate courts of law.[11] Unlike the Release, Waiver and Quitclaim, the Undertaking was not notarized.

On May 1, 1995, the Equitable Banking Corporation (Equitable) employed Rivera as Manager of its Credit Investigation and Appraisal Division of its Consumers’ Banking Group.[12] Upon discovering this, Solidbank First Vice-President for Human Resources Division (HRD) Celia J.L. Villarosa wrote a letter dated May 18, 1995, informing Rivera that he had violated the Undertaking. She likewise demanded the return of all the monetary benefits he received in consideration of the SRP within five (5) days from receipt; otherwise, appropriate legal action would be taken against him.[13]

When Rivera refused to return the amount demanded within the given period, Solidbank filed a complaint for Sum of Money with Prayer for Writ of Preliminary Attachment[14] before the RTC of Manila on June 26, 1995. Solidbank, as plaintiff, alleged therein that in accepting employment with a competitor bank for the same position he held in Solidbank before his retirement, Rivera violated his Undertaking under the SRP. Considering that Rivera accepted employment with Equitable barely three months after executing the Undertaking, it was clear that he had no intention of honoring his commitment under said deed. Solidbank prayed that Rivera be ordered to return the net amount of P963,619.28 plus interests therein, and attorney’s fees.

In an Order dated July 6, 1995, the trial court issued a Writ of Preliminary Attachment[17] ordering Deputy Sheriff Eduardo Centeno to attach all of Rivera’s properties not exempt from execution. Thus, the Sheriff levied on a parcel of land owned by Rivera.

ISSUE/S:(1) whether the parties raised a genuine issue in their pleadings, affidavits, and documents, that is, whether the employment ban incorporated in the Undertaking which petitioner executed upon his retirement is unreasonable, oppressive, hence, contrary to public policy;(2) whether petitioner is liable to respondent for the restitution of P963,619.28 representing his retirement benefits, and interest thereon at 12% per annum as of May 23, 1995 until payment of the full amount.

HELD: (1) There is no factual basis for the trial court’s ruling, for the simple reason that it rendered summary judgment and thereby foreclosed the presentation of evidence by the parties to prove whether the restrictive covenant is reasonable or not. Moreover, on the face of the Undertaking, the post-retirement competitive employment ban is unreasonable because it has no geographical limits;respondent is barred from accepting any kind of employment in any competitive bank within the proscribed period. Although the period of one year may appear reasonable, the matter of whether the restriction is reasonable or unreasonable cannot be ascertained with finality solely from the terms and conditions of the Undertaking, or even in tandem with the Release, Waiver and Quitclaim.

Undeniably, petitioner retired under the SRP and received P963,619.28 from respondent. However, petitioner is not proscribed, by waiver or estoppel, from assailing the post-retirement competitive employment ban since under Article 1409 of the New Civil Code, those contracts whose cause, object or purpose is contrary to law, morals, good customs, public order or public policy are inexistent or void from the beginning. Estoppel cannot give validity to an act that is prohibited by law or one that is against public policy.[51]

in determining whether the contract is reasonable or not, the trial court should consider the following factors: (a) whether the covenant protects a legitimate business interest of the ER; (b) whether the covenant creates an undue burden on the EE; (c) whether the covenant is injurious to the public welfare; (d) whether the time and territorial limitations contained in the covenant are reasonable; and (e) whether the restraint is reasonable from the standpoint of public policy.[62]

“A restriction in the contract which does not preclude the EE from engaging in competitive activity, but simply provides for the loss of rights or privileges if he does so is not in restraint of trade.” (emphasis added)[65]

(2)On the assumption that the competitive employment ban in the Undertaking is valid, petitioner is not automatically entitled to return the P963,619.28 he received from respondent. To reiterate,

the terms of the Undertaking clearly state that any breach by petitioner of his promise would entitle respondent to a cause of action for protection in the courts of law; as such, restitution of theP963,619.28 will not follow as a matter of course. Respondent is still burdened to prove its entitlement to the aforesaid amount by producing the best evidence of which its case is susceptible.UNITED KIMBERLY-CLARK EES UNION – PHILIPPINE TRANSPORT GENERAL WORKERS’ ORGANIZATION (UKCEU-PTGWO), vs.KIMBERLY – CLARK PHILIPPINES, INC.,G.R. No. 162957 March 6, 2006CALLEJO, SR., J.:

FACTS:UKCEU, a local chapter affiliate of the PTGWO, is the certified collective bargaining agent of all rank-and-file EEs of the San Pedro milling plant of KCPI, a multinational corporation engaged in the manufacture of bathroom and facial tissues, paper napkins, feminine care products, disposable diapers and absorbent cotton.

Way back in 1980, KCPI and the UKCEU executed a CBA. Article XX, Section 1 of the CBA reads:Section 1. The Company agrees to employ, regardless of sex, the immediate member of the family of an EE provided qualified, upon the EE's resignation, retirement, disability or death. In case of resignation, however, employment of an immediate member of the family of an EE may be allowed provided the EE has rendered a service of ten (10) years and above and the resignation is not a forced resignation. For the purpose of this section, the phrase "immediate member of the family of an EE" shall refer to the EE's legitimate children and in default thereof to the EE's collateral relative within the third civil degree. The recommendee of the retired/resigned EE shall, if qualified, be hired on probationary status. (Emphasis added)3

However, KCPI did not set any other employment qualifying standards for the recommendees of retired, resigned, deceased or disabled EEs and agreed to hire such recommendees who were high school graduates as an act of liberality and generosity. The provision remained unchanged.4 Through the years, several UKCEU members who resigned or were disabled availed of the said benefits and recommended their successors. Although such recommendees were merely high school graduates, KCPI nonetheless employed them.

KCPI rejected Guerrero’s recommendation because his nephew was not a member of his (Guerrero’s) immediate family. The matter was brought to Voluntary Arbitrator Danilo Lorredo who ruled that Guerrero’s nephew should be employed as his replacement in accordance with the CBA. KCPI brought the matter to the Court w/c Affirmed the ruling of the VA in Kimberly Clark Philippines v. Lorredo,5 where it was held that:the phrase "in default thereof" has not been intended or contemplated by the parties as having a preclusive effect within the group. It simply sets a priority on who can possibly be recommendees for employment. The EE, in fine, need not be childless at all for him to be allowed to nominate a third degree collateral relative; otherwise, his ability to designate such relative is all but suddenly lost by the birth of an only child and regained by the latter's demise. This situation could not have been intended.6

However, the Court also ruled that KCPI was not obliged to unconditionally accept the recommendee since the latter must still meet the required employment standard theretofore set by it. Even a qualified recommendee would be hired only on a "probationary status." As such, KCPI was not left without its own safeguards under the agreement.

KCPI issued Guidelines on the Hiring of Replacements of Retired/Resigned EEs8 for the effective implementation of Article XX, Section 1 of the existing CBA, to take effect on January 1, 1996. The Guidelines require, among others, that: (a) such recommendees must be at least 18 years of age but not more than 30 years old at the time of the hiring, and (b) have completed, after graduating from high school, at least a two-year technical/vocational course or a third year level of college education. Moreover, where both husband and wife are EEs of the company, they shall be treated as one family; hence, only one of the spouses would be allowed to avail of the benefit.

UKCEU, through its President, Reynaldo B. Hermoso, requested for a grievance meeting, UKCEU specifically requested the deferment of the implementation of the Guidelines until January 1, 1997, after the next CBA negotiations in 1997 during which the matter will be taken up. KCPI agreed to postpone the implementation of the Guidelines until January 1, 1997 but only with respect to the educational qualification.

During the negotiation for the 1997 CBA, UKCEU proposed the amendment of Article XX, Section 1 of the existing CBA. After the negotiation, KCPI and UKCEU executed a CBA to cover the period from July 1, 1997 to June 30, 1999. The educational qualifications contained in the Guidelines prepared and issued by KCPI were not incorporated in the CBA. Neither were the proposed amendment of UKCEU. Article XX, Section 1 of the preceding CBA was retained without any modification.KCPI continued to hire EEs pursuant to the CBA up to 1998. It had employed 44 EEs from 1995 to 1998.

However, in the second half of 1998, KCPI started to suspend the implementation of the CBA. This was partly due to the depressed economic conditions then prevailing in the Philippines, and in compliance with the freeze hiring policy of its Asia-Pacific headquarters. It refused to hire, as regular EEs, 80 recommendees of retiring EEs.KCPI and UKCEU failed to settle the matter through the existing grievance machinery.

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the parties filed before the NCMB, a Submission Agreement referring to arbitration the issue of whether KCPI violated Article XX, Section 1 of the CBA. The parties agreed not to appeal any resolution/decision of the VA.

Meantime, in August 1999, KCPI and UKCEU executed a new CBA. Article XX, Section 1 of the preceding CBA was incorporated in the new CBA, governing the relation of the parties up to June 30, 2002.

HELD: We rule against petitioner.As a general proposition, an arbitrator is confined to the interpretation and application of the collective bargaining agreement. He does not sit to dispense his own brand of industrial justice: his award is legitimate only in so far as it draws its essence from the CBA,i.e., when there is a rational nexus between the award and the CBA under consideration. It is said that an arbitral award does not draw its essence from the CBA; hence, there is an unauthorized amendment or alteration thereof, if:1. It is so unfounded in reason and fact;2. It is so unconnected with the working and purpose of the agreement;3. It is without factual support in view of its language, its context, and any other indicia of the parties' intention;4. It ignores or abandons the plain language of the contract;5. It is mistakenly based on a crucial assumption which concededly is a nonfact;6. It is unlawful, arbitrary or capricious; and 7. It is contrary to public policy.

A CBA is more than a contract; it is a generalized code to govern a myriad of cases which the draftsmen cannot wholly anticipate. It covers the whole employment relationship and prescribes the rights and duties of the parties. It is a system of industrial self-government with the grievance machinery at the very heart of the system. The parties solve their problems by molding a system of private law for all the problems which may arise and to provide for their solution in a way which will generally accord with the variant needs and desires of the parties.

If the terms of a CBA are clear and have no doubt upon the intention of the contracting parties, the literal meaning of its stipulation shall prevail. However, if, in a CBA, the parties stipulate that the hirees must be presumed of employment qualification standards but fail to state such qualification standards in said CBA, the VA may resort to evidence extrinsic of the CBA to determine the full agreement intended by the parties. When a CBA may be expected to speak on a matter, but does not, its sentence imports ambiguity on that subject. The VA is not merely to rely on the cold and cryptic words on the face of the CBA but is mandated to discover the intention of the parties. Recognizing the inability of the parties to anticipate or address all future problems, gaps may be left to be filled in by reference to the practices of the industry, and the step which is equally a part of the CBA although not expressed in it. In order to ascertain the intention of the contracting parties, their contemporaneous and subsequent acts shall be principally considered. The VA may also consider and rely upon negotiating and contractual history of the parties, evidence of past practices interpreting ambiguous provisions. The VA has to examine such practices to determine the scope of their agreement, as where the provision of the CBA has been loosely formulated. Moreover, the CBA must be construed liberally rather than narrowly and technically and the Court must place a practical and realistic construction upon it.

In the present case, the parties are in agreement that, on its face, Article XX, Section 1 of their 1997 CBA does not contain any provision relative to the employment qualification standards of recommendees of retired/resigned, deceased or disabled EEs of respondent who are members of petitioner. However, in determining the employment qualification standards for said recommendees, the VA should have relied on the November 7, 1995 Guidelines issued by respondent, which reads:D. Definition of the phrase "immediate member of the family of an EE"1. The phrase "immediate member of the family of an EE" shall refer to the EE’s legitimate children and in default thereof to the EE’s collateral relatives within the third civil degree.2. A resigned/retired EE may be allowed to recommend a collateral relative within the third civil degree (e.g., brother, sister, nephew or niece) as his/her replacement only in the following cases:a. Where the retired/resigned EE is single or if married has no legitimate children.b. Where the retired/resigned EE’s children are still minors (below 18 years old) at the time of his/her separation from the company.

E. General Provisions1. The privilege to recommend a replacement can be exercised by the EE concerned only once. Thus, in the following cases, a recommendee who has been hired on probationary status can no longer be substituted with another recommendee.a. where the recommendee fails to pass in his performance evaluation.b. where the recommendee resigns without completing his probationary period.c. where the recommendee is dismissed for cause.d. where the recommendee dies during his probationary period.48

Respondent issued said Guidelines in light of the ruling of this Court in Kimberly Clark Philippines v. Lorredo. Respondent saw it imperative to do away with its practice of accommodating recommendees who were mere high school graduates, and to require higher employment standards for them.

By agreement of the parties, the implementation of the Guidelines was deferred until January 1, 1997, unless revoked or amended by

the 1997 CBA. Petitioner proposed that the practice of hiring recommendees of retired/resigned, deceased or disabled EEs who were union members, who were at least high school graduates, be included in their CBA, but respondent did not agree. Hence, Article XX, Section 1 of the 1997 CBA of the parties remained intact. There was thus no more legal bar for respondent to implement the November 7, 1995 Guidelines. By executing the 1997 CBA, in its present form, petitioner is bound by the terms and conditions therein set forth.

The VA, however, ignored the plain language of the 1997 CBA of the parties, as well as the Guidelines issued by respondent. He capriciously based his resolution on the respondent’s practice of hiring which, however, by agreement of petitioner and respondent, was discontinued.The Court has recognized in numerous instances the undoubted right of the ER to regulate, according to his own discretion and best judgment, all aspects of employment, including but not limited to, work assignments and supervision, working methods and regulations, time, place and manner of work, processes to be followed, and hiring, supervision, transfer, discipline, lay off, dismissal and recall of workers. Encompassing though it could be, the exercise of this right is not absolute. Management prerogative must be exercised in good faith for the advancement of the ER’s interest and not for the purpose of defeating or circumventing the rights of the EEs under special laws, valid agreements such as the individual contract of employment and the collective bargaining agreement, and general principles of justice and fair play. In this case, the Court finds that respondent acted in accord with the CBA and the November 7, 1995 Guidelines, which, by agreement of the parties, may be implemented by respondent after January 1, 1997.STAR PAPER CORPORATION et al. vs. RONALDO D. SIMBOL et al.G.R. No. 164774 April 12, 2006PUNO, J.:

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

The evidence for the petitioners show that respondents Ronaldo D. Simbol (Simbol), Wilfreda N. Comia (Comia) and Lorna E. Estrella (Estrella) were all regular EEs of the company. Simbol was employed by the company on October 27, 1993. He met Alma Dayrit, also an EE of the company, whom he married on June 27, 1998. Prior to the marriage, Ongsitco advised the couple that should they decide to get married, one of them should resign pursuant to a company policy promulgated in 1995. Simbol resigned on June 20, 1998 pursuant to the company policy.4

Comia was hired by the company on February 5, 1997. She met Howard Comia, a co-EE, whom she married on June 1, 2000. Ongsitco likewise reminded them that pursuant to company policy, one must resign should they decide to get married. Comia resigned on June 30, 2000.5

Estrella was hired on July 29, 1994. She met Luisito Zuñiga (Zuñiga), also a co-worker. Petitioners stated that Zuñiga, a married man, got Estrella pregnant. The company allegedly could have terminated her services due to immorality but she opted to resign on December 21, 1999.6

The respondents each signed a Release and Confirmation Agreement. They stated therein that they have no money and property accountabilities in the company and that they release the latter of any claim or demand of whatever nature.7

Respondents offer a different version of their dismissal. Simbol and Comia allege that they did not resign voluntarily; they were compelled to resign in view of an illegal company policy. As to respondent Estrella, she alleges that she had a relationship with co-worker Zuñiga who misrepresented himself as a married but separated man. After he got her pregnant, she discovered that he was not separated. Thus, she severed her relationship with him to avoid dismissal due to the company policy. On November 30, 1999, she met an accident and was advised by the doctor at the Orthopedic Hospital to recuperate for 21 days. She returned to work on December 21, 1999 but she found out that her name was on-hold at the gate. She was denied entry. She was directed to proceed to the personnel office where one of the staff handed her a memorandum. The memorandum stated that she was being dismissed for immoral conduct. She refused to sign the memorandum because she was on leave for twenty-one (21) days and has not been given a chance to explain. The management asked her to write an explanation. However, after submission of the explanation, she was nonetheless dismissed by the company. Due to her urgent need for money, she later submitted a letter of resignation in exchange for her thirteenth month pay.8

Respondents later filed a complaint for unfair labor practice, constructive dismissal, separation pay and attorney’s fees. They averred that the aforementioned company policy is illegal and contravenes Article 136 of the Labor Code. They also contended that they were dismissed due to their union membership.

LA- dismissed the complaint for lack of merit, that the policy was pursuant to management prerogative.NLRC-affirmed LA’s decision and denied the subsequent MR.CA-reversed,declaring illegal dismissal and ordering to reinstate petitioners without loss of seniority rights with full backwages from the time of their dismissal until actual reinstatement plus ordering respondents to pay petitioner attorney;s fees.

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Petitioner’s appeal: policy/regulation is violative of the constitutional rights towards marriage and the family of EEs and of Article 136 of the Labor Code; and respondents’ resignations were far from voluntary.14

ISSUE: whether the policy of the ER banning spouses from working in the same company violates the rights of the EE under the Constitution and the Labor Code or is a valid exercise of management prerogative

HELD: The courts that have broadly26 construed the term "marital status" rule that it encompassed the identity, occupation and employment of one's spouse. They strike down the no-spouse employment policies based on the broad legislative intent of the state statute. They reason that the no-spouse employment policy violate the marital status provision because it arbitrarily discriminates against all spouses of present EEs without regard to the actual effect on the individual's qualifications or work performance.27 These courts also find the no-spouse employment policy invalid for failure of the ER to present any evidence of business necessity other than the general perception that spouses in the same workplace might adversely affect the business.28 They hold that the absence of such a bona fide occupational qualification29 invalidates a rule denying employment to one spouse due to the current employment of the other spouse in the same office.30 Thus, they rule that unless the ER can prove that the reasonable demands of the business require a distinction based on marital status and there is no better available or acceptable policy which would better accomplish the business purpose, an ER may not discriminate against an EE based on the identity of the EE’s spouse.31 This is known as the bona fide occupational qualification exception.

We note that since the finding of a bona fide occupational qualification justifies an ER’s no-spouse rule, the exception is interpreted strictly and narrowly by these state courts. There must be a compelling business necessity for which no alternative exists other than the discriminatory practice.32 To justify a bona fide occupational qualification, the ER must prove two factors: (1) that the employment qualification is reasonably related to the essential operation of the job involved; and, (2) that there is a factual basis for believing that all or substantially all persons meeting the qualification would be unable to properly perform the duties of the job.33

The concept of a bona fide occupational qualification is not foreign in our jurisdiction. We employ the standard of reasonableness of the company policy which is parallel to the bona fide occupational qualification requirement. We do not find a reasonable business necessity in the case at bar.

It is significant to note that in the case at bar, respondents were hired after they were found fit for the job, but were asked to resign when they married a co-EE. Petitioners failed to show how the marriage of Simbol, then a Sheeting Machine Operator, to Alma Dayrit, then an EE of the Repacking Section, could be detrimental to its business operations. Neither did petitioners explain how this detriment will happen in the case of Wilfreda Comia, then a Production Helper in the Selecting Department, who married Howard Comia, then a helper in the cutter-machine. The policy is premised on the mere fear that EEs married to each other will be less efficient. If we uphold the questioned rule without valid justification, the ER can create policies based on an unproven presumption of a perceived danger at the expense of an EE’s right to security of tenure.

The questioned policy may not facially violate Article 136 of the Labor Code but it creates a disproportionate effect and under the disparate impact theory, the only way it could pass judicial scrutiny is a showing that it is reasonable despite the discriminatory, albeit disproportionate, effect. The failure of petitioners to prove a legitimate business concern in imposing the questioned policy cannot prejudice the EE’s right to be free from arbitrary discrimination based upon stereotypes of married persons working together in one company.40DUNCAN ASSOCIATION OF DETAILMAN-OTGWO vs. GLAXO WELLCOMEG.R.No. 162994, September 17, 2004

PEPSI COLA PRODUCTS PHILIPPINES, INC. and Ernesto F. Gochuico vs. EMMANUEL V. SANTOS[G.R. No. 165968, April 14, 2008] QUISUMBING, J.:

FACTS: Respondent Emmanuel V. Santos was employed by petitioner Pepsi Cola Products Phils., Inc. sometime in July 1989. In March 1996, he was promoted as Acting Regional Sales Manager at the Libis Sales Office.

On February 14, 1997, respondent received from petitioner Ernesto F. Gochuico a memorandum[4] charging him with violation of company rules and regulations and Article 282(a)[5] of the Labor Code, as follows: Falsifying company records or documents or knowingly using falsified records or documents/ Breach of trust and confidence/ Engaging in fictitious transactions, fake invoicing, deals padding and other sales malpractices/ Misappropriation or embezzlement of company funds or property and other acts of dishonesty. Article 282 (a) Serious misconduct or willful disobedience to the lawful orders of his ER.[6]

The charges arose out of alleged artificial sales by the sales personnel of the Libis Sales Office in March 1996 allegedly upon the instruction of respondent. The alleged artificial sales resulted in damage to petitioners amounting to P795,454.54. The memorandum also apprised respondent of his preventive

suspension and the scheduled hearings of the administrative investigation. After the termination of the hearings, petitioners found respondent guilty of the aforesaid charges with the exception of falsifying company records. As a result, respondent was dismissed on June 27, 1997.

Respondent filed a case for illegal dismissal which the Labor Arbiter dismissed on April 30, 1998.[8] On appeal, the NLRC remanded the case to the Labor Arbiter for further proceedings. Which it decided that, In addition, as his suspension and dismissal is illegal, and apparently tainted with malice and bad faith, an award of P100,000.00 as moral damages and P50,000.00 as exemplary damages is hereby granted.

Petitioners appealed to the NLRC which affirmed the Labor Arbiter's finding of illegal dismissal. It observed that after the case was remanded, the Labor Arbiter immediately conducted hearings. Moreover, in the hearing dated September 7, 1999,[11] petitioners agreed to submit the case for resolution based on the additional pleadings submitted by the parties. Nevertheless, the NLRC deleted the award of moral and exemplary damages in the absence of evidence that respondent's suspension and eventual dismissal were tainted with bad faith and malice.

ISSUE/S: (1) whether respondent was validly dismissed; (2) whether a trial on the merits was necessary; and (3) whether the award of attorney's fees was proper.

HELD: 1)In any event, we have carefully reviewed the records of this case and found no compelling reason to disturb the uniform findings and conclusions of the Labor Arbiter, the NLRC, and the Court of Appeals. In an illegal dismissal case, the onus probandirests on the ER to prove that its dismissal of an EE is for a valid cause.[16] In the instant case, petitioners failed to present evidence to justify respondent's dismissal. Save for the notice of termination, we could not find any evidence which would clearly and convincingly show that respondent was guilty of the charges imputed against him. There appears to be no compelling reason why petitioners would rather present their witnesses on direct testimony rather than reduce their testimonies into affidavits. The submission of these affidavits appears to be the more prudent course of action particularly when the Labor Arbiter informed the parties that no further trial will be conducted in the case.

2) we reiterate that it is not legally objectionable, for being violative of due process, for the Labor Arbiter to resolve a case based solely on the position papers, affidavits or documentary evidence submitted by the parties.[17] The holding of a formal hearing or trial is discretionary with the Labor Arbiter and is something that the parties cannot demand as a matter of right. The requirements of due process are satisfied when the parties are given the opportunity to submit position papers wherein they are supposed to attach all the documents that would prove their claim in case it be decided that no hearing should be conducted or was necessary.[18]

3) we have ruled that attorney's fees may be awarded only when the EE is illegally dismissed in bad faith and is compelled to litigate or incur expenses to protect his rights by reason of the unjustified acts of his ER.[19]In this case, the NLRC deleted the award of moral and exemplary damages precisely because of the absence of evidence that respondent's suspension and eventual dismissal were tainted with bad faith and malice.

We note that although the Labor Arbiter awarded attorney's fees, the basis for the same was not discussed in the decision nor borne out by the records of this case. There must always be a factual basis for the award of attorney's fees. This is consistent with the policy that no premium should be placed on the right to litigate. For these reasons, we believe and so rule that the award of attorney's fees should be deleted.[20]EDI-STAFFBUILDERS INTERNATIONAL, INC.,vs.. NLRC and Eleazar S. Gran[G.R. No. 145587, October 26, 2007] VELASCO JR., J.:

FACTS: Petitioner EDI is a corporation engaged in recruitment and placement of Overseas Filipino Workers (OFWs).[5] ESI is another recruitment agency which collaborated with EDI to process the documentation and deployment of private respondent to Saudi Arabia.

Private respondent Gran was an OFW recruited by EDI, and deployed by ESI to work for OAB, in Riyadh, Kingdom of Saudi Arabia.[6]

It appears that OAB asked EDI through its October 3, 1993 letter for curricula vitae of qualified applicants for the position of â€œComputer Specialist.â€ �[7] In a facsimile transmission dated November 29, 1993, OAB informed EDI that, from the applicants’ curricula vitae submitted to it for evaluation, it selected Gran for the position of â€œComputer Specialist.â€ � The faxed letter also stated that if Gran agrees to the terms and conditions of employment contained in it, one of which was a monthly salary of SR (Saudi Riyal) 2,250.00 (USD 600.00), EDI may arrange for Gran’s immediate dispatch.[8]

After accepting OAB’s offer of employment, Gran signed an employment contract[9] that granted him a monthly salary of USD 850.00 for a period of two years. Gran was then deployed to Riyadh, Kingdom of Saudi Arabia on February 7, 1994.

Upon arrival in Riyadh, Gran questioned the discrepancy in his monthly salary his employment contract stated USD 850.00; while his Philippine Overseas Employment Agency (POEA) Information

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Sheet indicated USD 600.00 only. However, through the assistance of the EDI office in Riyadh, OAB agreed to pay Gran USD 850.00 a month.[10]

After Gran had been working for about five months for OAB, his employment was terminated through OAB’s July 9, 1994 letter,[11] on the following grounds: Non-compliance to contract requirements by the recruitment agency primarily on your salary and contract duration/ Non-compliance to pre-qualification requirements by the recruitment agency/ Insubordination or disobedience to Top Management Order and/or instructions (non-submittal of daily activity reports despite several instructions).

On July 11, 1994, Gran received from OAB the total amount of SR 2,948.00 representing his final pay, and on the same day, he executed a Declaration[13] releasing OAB from any financial obligation or otherwise, towards him.

After his arrival in the Philippines, Gran instituted a complaint, on July 21, 1994, against ESI/EDI, OAB, Country Bankers Insurance Corporation, and Western Guaranty Corporation with the NLRC-NCR-QC, for underpayment of wages/salaries and illegal dismissal.

The Ruling of the Labor Arbiter that there was neither underpayment nor illegal dismissal. Thus, the NLRC reversed the Labor Arbiter’s Decision and rendered a new one

ISSUE/S:

1) whether the failure of gran to furnish a copy of his appeal memorandum to petitioner EDI would constitute a

jurisdiction defect and a deprivation of petitioner EDI’s right to due process as would justify the dismissal of gran’s

appeal.

2) whether petitioner EDI has established by way of substantial evidence that gran’s termination was justifiable by

reason of incompetence corollary hereto, whether the Prieto vs. NLRC as applied by CA is applicable.

3) whether petitioner has established by way of substantial evidence that gran’s termination was justified by reason

of insubordination and disobedience.

4) whether gran was afforded due process prior to termination.

5) whether gran is entitled to backwages for the unexpired portion of his contract.

HELD: The petition lacks merit except with respect to Gran’s failure to furnish EDI with his Appeal Memorandum filed with the NLRC.1) In a catena of cases, it was ruled that failure of appellant to furnish a copy of the appeal to the adverse party is not fatal to the appeal.

Thus, the doctrine that evolved from several cases is that failure to furnish the adverse party with a copy of the appeal is treated only as a formal lapse, an excusable neglect, and hence, not a jurisdictional defect. Accordingly, in such a situation, the appeal should not be dismissed; however, it should not be given due course either. the duty that is imposed on the NLRC, in such a case, is to require the appellant to comply with the rule that the opposing party should be provided with a copy of the appeal memorandum.

The glaring failure of NLRC to ensure that Gran should have furnished petitioner EDI a copy of the Appeal Memorandum before rendering judgment reversing the dismissal of Gran’s complaint constitutes an evasion of the pertinent NLRC Rules and established jurisprudence. Worse, this failure deprived EDI of procedural due process guaranteed by the Constitution which can serve as basis for the nullification of proceedings in the appeal before the NLRC. One can only surmise the shock and dismay that OAB, EDI, and ESI experienced when they thought that the dismissal of Gran’s complaint became final, only to receive a copy of Gran’s Motion for Execution of Judgment which also informed them that Gran had obtained a favorable NLRC Decision. This is not level playing field and absolutely unfair and discriminatory against the ER and the job recruiters. The rights of the ERs to procedural due process cannot be cavalierly disregarded for they too have rights assured under the Constitution.

2) In the present case, the employment contract signed by Gran specifically states that Saudi Labor Laws will govern matters not provided for in the contract (e.g. specific causes for termination, termination procedures, etc.). Being the law intended by the parties (lex loci intentiones) to apply to the contract, Saudi Labor Laws should govern all matters relating to the termination of the employment of Gran.

In international law, the party who wants to have a foreign law applied to a dispute or case has the burden of proving the foreign law. The foreign law is treated as a question of fact to be properly pleaded and proved as the judge or labor arbiter cannot take judicial notice of a foreign law. He is presumed to know only domestic or forum law. Unfortunately for petitioner, it did not prove the pertinent Saudi laws on the matter; thus, the International Law doctrine of presumed-identity approach or processual presumption comes into play.Where a foreign law is not pleaded or, even if pleaded, is not proved, the presumption is that foreign law is the same as ours.[37] Thus, we apply Philippine labor laws in determining the issues presented before us.

In illegal dismissal cases, it has been established by Philippine law and jurisprudence that the ER should prove that the dismissal of EEs or personnel is legal and just. In the instant case, petitioner claims that private respondent Gran was validly dismissed for just cause, due to incompetence and insubordination or disobedience. To prove its allegations, EDI submitted two letters as evidence. Petitioner claims that Gran was incompetent for the Computer Specialist position because he had insufficient knowledge in programming and zero knowledge of [the] ACAD system.â€ �[45] Petitioner also claims that Gran was justifiably dismissed due to insubordination or disobedience because he continually failed to submit the required Daily Activity Reports �[46] However, other than the abovementioned letters, no other evidence was presented to show how and why Gran was considered incompetent,

insubordinate, or disobedient. Petitioner EDI had clearly failed to overcome the burden of proving that Gran was validly dismissed.

Petitioner’s imputation of incompetence on private respondent due to his insufficient knowledge in programming and zero knowledge of the ACAD systemâ€ � based only on the above mentioned letters, without any other evidence, cannot be given credence. An allegation of incompetence should have a factual foundation. Incompetence may be shown by weighing it against a standard, benchmark, or criterion. However, EDI failed to establish any such bases to show how petitioner found Gran incompetent.

3)the elements that must concur for the charge of insubordination or willful disobedience to prosper were not present. the following twin elements must concur: (1) the EE's assailed conduct must have been willful, that is, characterized by a wrongful and perverse attitude; and (2) the order violated must have been reasonable, lawful, made known to the EE and must pertain to the duties which he had been engaged to discharge. In the case at bar, petitioner failed to show that the order of the company which was violatedâ€”the submission of Daily Activity Reports �â€”was part of Gran’s duties as a Computer Specialist. Before the Labor Arbiter, EDI should have provided a copy of the company policy, Gran’s job description, or any other document that would show that the Daily Activity Reports � were required for submission by the EEs, more particularly by a Computer Specialist. The burden devolves not only upon the foreign-based ER but also on the employment or recruitment agency for the latter is not only an agent of the former, but is also solidarily liable with the foreign principal for any claims or liabilities arising from the dismissal of the worker.[48]

The CA is correct in applying Prieto. The purpose of the required trade test is to weed out incompetent applicants from the pool of available workers. It is supposed to reveal applicants with false educational backgrounds, and expose bogus qualifications. Since EDI deployed Gran to Riyadh, it can be presumed that Gran had passed the required trade test and that Gran is qualified for the job. Even if there was no objective trade test done by EDI, it was still EDI’s responsibility to subject Gran to a trade test; and its failure to do so only weakened its position but should not in any way prejudice Gran. In any case, the issue is rendered moot and academic because Gran’s incompetency is unproved.

4)Under the twin notice requirement, the EEs must be given two (2) notices before their employment could be terminated: (1) a first notice to apprise the EEs of their fault, and (2) a second notice to communicate to the EEs that their employment is being terminated. In between the first and second notice, the EEs should be given a hearing or opportunity to defend themselves personally or by counsel of their choice.[55]

A careful examination of the records revealed that, indeed, OAB’s manner of dismissing Gran fell short of the two notice requirement. While it furnished Gran the written notice informing him of his dismissal, it failed to furnish Gran the written notice apprising him of the charges against him, as prescribed by the Labor Code.[56] Consequently, he was denied the opportunity to respond to said notice. In addition, OAB did not schedule a hearing or conference with Gran to defend himself and adduce evidence in support of his defenses. Moreover, the July 9, 1994 termination letter was effective on the same day. This shows that OAB had already condemned Gran to dismissal, even before Gran was furnished the termination letter. It should also be pointed out that OAB failed to give Gran the chance to be heard and to defend himself with the assistance of a representative in accordance with Article 277 of the Labor Code. Clearly, there was no intention to provide Gran with due process. Summing up, Gran was notified and his employment arbitrarily terminated on the same day, through the same letter, and for unjustified grounds. Obviously, Gran was not afforded due process.5) We reiterate the rule that with regard to EEs hired for a fixed period of employment, in cases arising before the effectivity of R.A. No. 8042 [58] (Migrant Workers and Overseas Filipinos Act) on August 25, 1995, that when the contract is for a fixed term and the EEs are dismissed without just cause, they are entitled to the payment of their salaries corresponding to the unexpired portion of their contract.[59] On the other hand, for cases arising after the effectivity of R.A. No. 8042, when the termination of employment is without just, valid or authorized cause as defined by law or contract, the worker 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.[60]

In the present case, the employment contract provides that the employment contract shall be valid for a period of two (2) years from the date the EE starts to work with the ER.[61] Gran arrived in Riyadh, Saudi Arabia and started to work on February 7, 1994;[62] hence, his employment contract is until February 7, 1996. Since he was illegally dismissed on July 9, 1994, before the effectivity of R.A. No. 8042, he is therefore entitled to backwages corresponding to the unexpired portion of his contract, which was equivalent to USD 16,150.

It is made clear that the foregoing rules on quitclaim or waiver shall apply only to labor contracts of OFWs in the absence of proof of the laws of the foreign country agreed upon to govern said contracts. Otherwise, the foreign laws shall apply.AUJERO vs. PHILCOMSATG.R. No. 193484, JaNUARY 18, 2012LAND AND HOUSING DEV’T CO. vs. ESQUILLOG.R. No. 152012AL ARELLANO et al. vs. POWERTECH CORPORATION, Wille Cabobos and CA

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[G.R. No. 150861, January 22, 2008] REYES, R.T., J.:

FACTS: The case stems from a complaint for illegal dismissal and other money claims filed by the Nagkakaisang Manggagawa Ng Powertech Corporation in behalf of its 52 individual members and non-union members against their ER, Powertech. The case was dismissed as to twenty-seven (27) EEs by virtue of duly executed affidavits of repudiation and quitclaim. The case proceeded with respect to the remaining twenty-five (25) EEs, petitioners in this case.

Labor Arbiter Renell Joseph R. Dela Cruz rendered a Decision[3]declaring illegal the termination of twenty (20) of petitioners and granting their monetary claims in the total amount of P2,538,728.84.

Powertech appealed to the NLRC. During its pendency, Carlos Gestiada, for himself and on behalf of other petitioners, executed a quitclaim, release and waiver[4] in favor of Powertech in consideration of the amount of P150K Earlier, Gestiada was appointed by his co-petitioners as their attorney-in-fact. The appointment was evidenced by a SPA. The compromise amount was paid to Gestiada by check.

Relying on the quitclaim and release, Powertech filed a motion for the withdrawal of the appeal and cash bond. The NLRC granted[6] the motion, dismissed the appeal and ordered the release of the cash bond. The P150K check, however, bounced due to a stop payment order of Powertech.[7]

Aggrieved, petitioners moved to nullify the release and quitclaim for lack of consideration. the NLRC declared the quitclaim, release and waiver void for lack of consideration, reinstated the appeal and ordered Powertech to post a cash or surety bond for the monetary judgment less the amount it had previously posted.[8]

Gestiada terminated the services of their counsel, Atty. Evangelista and, instead, retained Atty. Manuel Luis Felipe of the PAO. A day later, Powertech paid P150K to Gestiada purportedly as compromise amount for all of petitioners. That same day, Gestiada, through Atty. Felipe, and Powertech filed a joint motion to dismiss[10] with the NLRC based on the compromise agreement. Atty. Evangelista opposed[11] the motion, alleging that the compromise agreement is unconscionable, that he was illegally terminated as counsel for the other petitioners without their consent, and that the P150K was received by Gestiada as payment solely for his backwages and other monetary claims.

In denying the joint motion to dismiss, the NLRC held that the P150Kreceived by Gestiada did not cover the monetary claim of petitioners against Powertech. Evidence show that there was no voluntary severance of attorney-client relationship between Gestiada representing the other complainants and Atty. Evangelista. The other complainants in this case have never indicated any objection to the continued appearance of Atty. Evangelista. Hence, it must be presumed that Atty. Evangelista’s appearance is with the consent of all the complainants herein.

ISSUE: whether the compromise agreement between powertech and gestiada is valid.

HELD: The P150K was paid to Gestiada solely as payment for his backwages,not those of petitioners; there is evident collusion between Powertech and Gestiada, hence, the compromise agreement is void.

First, the P150Kcompromise is rather measly when taken in light of the more than P2.5 million judgment on appeal to the NLRC. Petitioners already won on the arbiter level P2.5 million pesos. It is highly improbable that they would suddenly agree to accept P150Kas compromise for the P2.5 million. That translates to a paltry sum of P6,000.00 each for petitioners. From this amount will still be deducted attorneys fees and other litigation expenses. In effect, petitioners agreed to waive more than 94% of what they expect to receive from Powertech. We note that the compromise is a mere 6% of the contingent sum that may be received by petitioners. This minuscule amount is certainly questionable because, to Our mind, it does not represent a true and fair amount which a reasonable agent may bargain for his principal.

We contrast the monetary judgment to the P150Kreceived by Gestiada, which appears to be his share in the P2.5 million based on the calculation of the NLRC.[25]We find no plausible reason to disbelieve his claim that the sum represents payment solely of his backwages.

Second, even granting for the mere sake of argument that the P150Kwas a fair and reasonable compromise for all, petitioners failed to receive a single centavo from the compromise. This conclusively indicates that Gestiada received the P150Kin payment of his backwages and no other.

Third, We give credence to the admission of Gestiada that he received the P150Kas payment for his own backwages. In his letter to Atty. Evangelista, Gestiada said that he was pressured by Powertech to sign the waiver and quitclaim for petitioners in order to receive his share in the P2.5 million judgment. Having no stable job after his dismissal, Gestiada had no other choice but to breach his fiduciary obligation to petitioners. He succumbed to the pressure of Powertech in signing the waiver, release and quitclaim in exchange for the P150K. In short, he colluded with Powertech to the detriment of petitioners. Powertech knew that Gestiada had plenary authority to act for petitioners in the labor case. It had prior dealings with him. It also knew that Gestiada was authorized

to negotiate for any amount he may deem just and reasonable and to sign waivers and quitclaims on behalf of petitioners. Powertech obviously used that knowledge, capitalized on the vulnerable position of Gestiada in entering into the agreement and took advantage of the situation to the disadvantage of petitioners.

Fourth, the events that led to the execution of the compromise agreement show that Powertech was negotiating in bad faith. More importantly, they show that Powertech colluded with Gestiada to defraud petitioners of their share of the P2.5 million Labor Arbiter judgment.

Evidently, Powertech never intended to pay the P150Kcompromise agreement. It was minded to do so only after the NLRC declared the compromise void and reinstated the P2.5 million judgment of the Labor Arbiter. It cannot escape Our notice that Powertech even ordered a stop payment for the P150Kcheck issued to Gestiada without any sufficient reason. Worse, it was recalcitrant in making good the check despite due demand.

To Our mind, what prompted Powertech to agree to pay the P150Kwas the NLRC order voiding the compromise agreement and reinstating the Labor Arbiter P2.5 million judgment. By then, Powertech was faced with the possibility of paying P2.5 million to petitioners. It was also required by law to post a surety bond for the same amount in order to perfect its appeal with the NLRC.

Armed with the NLRC order, petitioners were bent on pursuing their appeal. Powertech panicked. It negotiated with Gestiada offering him P150Kin exchange for a waiver and quitclaim for himself and for petitioners. Powertech knew that Gestiada was authorized by petitioners to negotiate for â€œany sum he may deem just and reasonableâ€ � and to sign quitclaims and waivers for them. Jobless and having no regular income, Gestiada succumbed to the pressure. He connived with Powertech and agreed to receive the P150Kfor himself in exchange for signing a quitclaim and waiver in the name of petitioners.

To give effect to the collusion, Gestiada had to get rid of Atty. Evangelista, who had previously succeeded in nullifying the compromise agreement. He fired Atty. Evangelista without cause basing his dismissal on his plenary authority as agent of petitioners. He then procured the services of another lawyer, Atty. Felipe. We find it striking that Gestiada was not authorized under the SPAto terminate or retain another counsel for petitioners in the labor dispute. The SPAmerely authorized Gestiada to negotiate with Powertech, nothing more.

All these circumstances indicate that the P150Kwas received by Gestiada solely as payment for his backwages and not a whit of a settlement for the monetary claim of petitioners.

In line with Our conclusion that Powertech colluded with Gestiada, the CA gravely erred in upholding the compromise agreement. The appellate court decision was premised on the compromise agreement being entered into by Powertech and Gestiada in good faith. It is now clear that there is ample evidence indicating that Powertech was negotiating in bad faith and, worse, it colluded with Gestiada in shortchanging, nay, fraudulently depriving petitioners of their just share in the award.

MARIA BUENA OBRA, vs. SOCIAL SECURITY SYSTEMG.R. No. 147745. April 9, 2003J. Puno

FACTS: Juanito Buena Obra, husband of petitioner, worked as a driver for twenty-four (24) years and five (5) months. His first and second ERs were logging companies. Thereafter, he was employed at Jollar Industrial Sales and Services Inc. as a dump truck driver from January 1980 to June 1988. He was assigned to the following projects:[4]

1. January 1980 to December 1981 – F.F. Cruz Project, Nabua, Camarines Sur – hauling/delivery of filling materials from quarry to job site2. January 1982 to December 1983 – F.F. Cruz, 300 MW Coal Fire Thermal Plant, Calaca, Bacungan and Makban Geothermal Plant, Los Baños, Laguna – hauling/delivery of filling materials from quarry to job site3. January 1984 to December 1985 – Dizon Copper Silver Mines, Pili, San Marcelino, Zambales – hauling/delivery filling materials from quarry to job site4. January 1986 to June 1988 – Metro Manila Hauling Project

On 27 June 1988, Juanito suffered a heart attack while driving a dump truck inside the work compound, and died shortly thereafter. In the Report of Death[5] submitted by his ER to the Social Security System (SSS), Juanito expired at the Worker's Quarters at 10:30 a.m., of Myocardial Infarction.

Petitioner Maria M. Buenaobra immediately filed her claim for death benefits under the SSS law. She started receiving her pension in November 1988. Petitioner was, however, unaware of the other compensation benefits due her under Presidential Decree No. 626, as amended, or the Law on EEs’ Compensation. In September 1998, or more than ten (10) years after the death of her husband, that she learned of the benefits under P.D. No. 626 through the television program of then broadcaster Ted Failon who informed that one may claim for EEs Compensation Commission (ECC) benefits if the spouse died while working for the company. Petitioner prepared the documents to support her claim for ECC benefits. On 23 April 1999, she filed with the SSS her claim for funeral benefits under P.D. No. 626, as amended, which was docketed as SSS # 04-0089326-0.[6]

On 28 July 1999, the SSS denied the claim of petitioner for funeral benefits ruling that the cause of death of Juanito was not work-connected, absent a causal relationship between the illness

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and the job. Caridad R. Borja, Assistant Vice-President National Capital Region (AVP – NCR) Central of the SSS Member Assistance Center in Quezon City wrote:“Please be informed that funeral claim under the EEs Compensation is hereby denied. Per medical evaluation, cause of death of subject member’s (sic) cannot be considered work connected since there is no causal relationship between the illness and the job.”

On 8 October 1999, petitioner wrote to Atty. Teofilo E. Hebron, Executive Director of the ECC, appealing the denial of her claim. On 11 November 1999, Atty. Hebron ordered Dr. Simeon Z. Gonzales, Assistant Vice-President (AVP) of the Medical Services Group of the SSS to review the claim of petitioner.

On 23 November 1999, the Medical Services Group through Dr. Perla A. Taday, AVP for Medical Operations, concluded its re-evaluation and affirmed the denial of petitioner’s claim. It reiterated that “there is no causal relationship between the cause of death/illness and member’s job as dump truck driver.”[7] Pursuant to Section 5, Rule XVIII of the Implementing Rules of PD 626, the records of the deceased Juanito were elevated to the Commission.

On 13 April 2000, the Commission rendered a decision, dismissing the appeal.[8] It ruled that petitioner failed to show by substantial evidence that her husband’s cause of death was due to, or the risk of contracting his ailment was increased by his occupation and working conditions, as per Section 1(b), Rule III of P.D. No. 626, as amended. In addition, the Commission declared that petitioner’s claim has prescribed, citing ECC Resolution No. 93-08-0068.

Petitioner appealed to the Court of Appeals. She alleged that her cause of action had not prescribed because the filing of her claim for SSS benefits shortly after Juanito’s death suspended the running of the prescriptive period for filing EC claims, as per Item No. III of ECC Resolution No. 90-03-0022 dated 23 March 1990. The appellate court dismissed the petition. It ruled that petitioner's filing of her claim for SSS benefits shortly after Juanito’s death did not suspend the running of the prescriptive period for filing EC claims. It interpreted the aforementioned ECC Resolutions to mean that a claimant must indicate the kind of claim filed before the running of the prescriptive period for filing EC claims may be interrupted. In the case at bar, petitioner indeed filed a claim with SSS. In fact, she has been receiving her pension since November 1988. However, she failed to specify whether the basis of her claim was any contingency which may be held compensable under the EC Program.[9]

In addition, the Court of Appeals cited P.D. No. 626 which states that a contingency may be held compensable if listed in Annex "A" of the Rules Implementing EEs' Compensation as an occupational disease, and satisfying all conditions set forth therein; or if not listed as an occupational disease, or listed but has not satisfied the conditions set forth therein, it must be proven by substantial evidence that the risk of contracting the disease which caused the death of the member, was increased by the member's working conditions.[10]

The appellate court likewise held that the three-year prescriptive period does not apply in the instant case. Instead, it applied Art. 1142(2) of the Civil Code which reads:“Art. 1144. The following actions must be brought within ten (10) years from the time the right of action accrues:(1) Upon a written contract;(2) Upon an obligation created by law;(3) Upon a judgment. [Emphasis supplied.]

The appellate court then held that the petitioner's cause of action has prescribed. Petitioner's husband died on 27 June 1988. She filed her claim for funeral benefits under P.D. No. 626 or the Law on EEs' Compensation only on 23 April 1999, or more than ten (10) years from his death.

Lastly, the appellate court ruled that even assuming petitioner's cause of action has not prescribed, her claim for EEs' Compensation benefits cannot prosper because of her failure to prove by substantial evidence that her husband's working conditions increased the risk of contracting the myocardial infarction that caused his death.

Petitioner’s Motion for Reconsideration dated 27 September 2000 was denied by the appellate court in a Resolution promulgated on 6 March 2001.ISSUES

1. WHETHER, INDEED, THE CLAIM OF PETITIONER, HAD PRESCRIBED.

2. WHETHER OR NOT THE ILLNESS OF PETITIONER’S HUSBAND, MYOCARDIAL INFARCTION, IS WORK-RELATED.

HELD

1. The claim of petitioner for funeral benefits under P.D. No. 626, as amended, has not yet prescribed.The issue of prescription in the case at bar is governed by P.D. No. 626, or the Law on EEs' Compensation. Art. 201 of P.D. No. 626 and Sec. 6, Rule VII of the 1987 Amended Rules on EEs' Compensation both read as follows:“No claim for compensation shall be given due course unless said claim is filed with the System within three years from the time the cause of action accrued.”We agree with the petitioner that her claim for death benefits under the SSS law should be considered as the EEs’ Compensation claim itself. This is but logical and reasonable because the claim for death benefits which petitioner filed with the SSS is of the same nature as her claim before the ECC. Furthermore, the SSS is the same agency with which EEs’ Compensation claims are filed. As correctly contended by the petitioner, when

she filed her claim for death benefits with the SSS under the SSS law, she had already notified the SSS of her EEs’ compensation claim, because the SSS is the very same agency where claims for payment of sickness/disability/death benefits under P.D. No. 626 are filed.Section 4(b)(2), Rule 3 of the ECC Rules of Procedure for the Filing and Disposition of the EEs’ Compensation Claims, quoted above, also provides for the conditions when EC claims filed beyond the three-year prescriptive period may still be given due course. Section 4(b)(2) states the condition for private sector EEs, requiring that a claim for Medicare, sickness, burial, disability or death should be filed within three (3) years from the occurrence of the contingency. In the instant case, the petitioner was able to file her claim for death benefits under the SSS law within the three-year prescriptive period. In fact, she has been receiving her pension under the SSS law since November 1988.

2. Myocardial infarction is also known as heart attack. It results in permanent heart damage or death. A heart attack is called myocardial infarction because part of the heart muscle (myocardium) may literally die (infarction). This occurs when a blood clot blocks one of the coronary arteries (the blood vessels that bring blood and oxygen to the heart muscle). When the heart muscle does not obtain the oxygen-rich blood that it needs, it will begin to die. The severity of a heart attack usually depends on how much of the heart muscle is injured or dies during the heart attack. Heart attack accounts for 1 out of every 5 deaths. It is a major cause of sudden death in adults. Heavy exertion or emotional stresscan trigger a heart attack.[16]

In the case at bar, the petitioner’s husband’s heart disease falls under the second condition of ECC Resolution No. 432 dated July 20, 1977 which states that the strain of work that brought about the acute attack must be of sufficient severity and must be followed within 24 hours by the clinical signs of a cardiac insult to constitute causal relationship. Petitioner’s husband was driving a dump truck within the company premises where they were stacking gravel and sand when he suffered the heart attack. He had to be taken down from the truck and brought to the workers’ quarters where he expired at 10:30 a.m., just a few minutes after the heart attack, which is much less than the 24 hours required by ECC Resolution No. 432. This is a clear indication that severe strain of work brought about the acute attack that caused his death.Professional drivers, especially truck drivers like the decedent in the instant case, carry the burden of being more exposed and subjected to the stress and strain of everyday traffic, and the greater physical exertion brought about by driving a large and heavy vehicle. In addition, according to the petitioner, her husband was under a lot of stress in the workplace. He was a model worker and his ER highly depended on him. He became the object of envy of his co-workers which caused him much emotional stress. Add to this the fact that he has been a truck driver for more than twenty-four (24) years. Due to the combination of emotional stress and vigorous physical exertion, it was easy for him to succumb to the heart ailment. We hold that the illness of the decedent which caused his death is work-connected, and thus compensable by virtue of ECC Resolution No. 432 dated 20 July 1977.As a final note, we find it necessary to reiterate that P.D. No. 626, as amended, is a social legislation whose primordial purpose is to provide meaningful protection to the working class against the hazards of disability, illness and other contingencies resulting in the loss of income.

PETITION GRANTED.

SEAFDEC v NLRCG.R. No. 86773 February 14, 1992NOCON, J.: FACTS: SEAFDEC-AQD is a department of an international organization, the Southeast Asian Fisheries Development Center, organized through an agreement entered into in Bangkok, Thailand on December 28, 1967 by the governments of Malaysia, Singapore, Thailand, Vietnam, Indonesia and the Philippines with Japan as the sponsoring country.

private respondent Juvenal Lazaga was employed as a Research Associate an a probationary basis by the SEAFDEC-AQD and was appointed Senior External Affairs Officer on January 5, 1983 with a monthly basic salary of P8,000.00 and a monthly allowance of P4,000.00. Thereafter, he was appointed to the position of Professional III and designated as Head of External Affairs Office with the same pay and benefits.

petitioner Lacanilao in his capacity as Chief of SEAFDEC-AQD sent a notice of termination to private respondent informing him that due to the financial constraints being experienced by the department, his services shall be terminated at the close of office hours on May 15, 1986 and that he is entitled to separation benefits equivalent to one (1) month of his basic salary for every year of service plus other benefits.

Upon petitioner SEAFDEC-AQD's failure to pay private respondent his separation pay, the latter filed on March 18, 1987 a complaint against petitioners for non-payment of separation benefits plus

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moral damages and attorney's fees with the Arbitration Branch of the NLRC.

Petitioners in their answer with counterclaim alleged that the NLRC has no jurisdiction over the case inasmuch as the SEAFDEC-AQD is an international organization and that private respondent must first secure clearances from the proper departments for property or money accountability before any claim for separation pay will be paid, and which clearances had not yet been obtained by the private respondent.

A formal hearing was conducted whereby private respondent alleged that the non-issuance of the clearances by the petitioners was politically motivated and in bad faith. On the other hand, petitioners alleged that private respondent has property accountability and an outstanding obligation to SEAFDEC-AQD in the amount of P27,532.11. Furthermore, private respondent is not entitled to accrued sick leave benefits amounting to P44,000.00 due to his failure to avail of the same during his employment with the SEAFDEC-AQD.

ISSUE: whether NLRC has no jurisdiction to hear and decide respondent Lazaga's complaint since SEAFDEC-AQD is immune from suit owing to its international character and the complaint is in effect a suit against the State which cannot be maintained without its consent.The petition is impressed with merit.

HELD: Petitioner SEAFDEC-AQD is an international agency beyond the jurisdiction of public respondent NLRC. The RP became a signatory to the Agreement establishing SEAFDEC. The purpose of the Center is to contribute to the promotion of the fisheries development in Southeast Asia by mutual co-operation among the member governments. The Council shall be the supreme organ of the Center and all powers of the Center shall be vested in the Council.

Being an intergovernmental organization, SEAFDEC including its Departments (AQD), enjoys functional independence and freedom from control of the state in whose territory its office is located. Pursuant to its being a signatory to the Agreement, It expressly waived the application of the Philippine laws on the disbursement of funds of petitioner SEAFDEC-AQD.

Respondent Lazaga's invocation of estoppel with respect to the issue of jurisdiction is unavailing because estoppel does not apply to confer jurisdiction to a tribunal that has none over a cause of action. Jurisdiction is conferred by law. Where there is none, no agreement of the parties can provide one. Settled is the rule that the decision of a tribunal not vested with appropriate jurisdiction is null and void.

WHEREFORE, finding SEAFDEC-AQD to be an international agency beyond the jurisdiction of the courts or local agency of the Philippine government.

LIGHT RAIL TRANSIT AUTHORITY vs. PERFECTO H. VENUS etc.G.R. No. 163782 March 24, 2006METRO TRANSIT ORGANIZATION, INC. vs. COURT OF APPEALS, PERFECTO H. VENUS, G.R. No. 163881 March 24, 2006PUNO, J.:

FACTS: Petitioner LRTA is a GOCCS created by EO603 to construct and maintain a light rail transit system and provide the commuting public with an efficient, economical, dependable and safe transportation. Petitioner METRO, formerly Meralco Transit Organization, Inc., was a qualified transportation corporation duly organized in accordance with the provisions of the Corporation Code, registered with the SEC and existing under Philippine laws.

petitioner LRTA constructed a light rail transit system from Monumento in Kalookan City to Baclaran in Parañaque, Metro Manila. To provide the commuting public with an efficient and dependable light rail transit system, petitioner LRTA, after a bidding process, entered into a 10year Agreement for the Management and Operation of the Metro Manila Light Rail Transit System with petitioner METRO.The Agreement provided, METRO shall be free to employ such EEs and officers as it shall deem necessary in order to carry out the requirements of the Agreement. Such EEs and officers shall be the EEs of METRO and not of the LRTA. METRO shall prepare a compensation schedule and the corresponding salaries and fringe benefits of its personnel in consultation with the LRTA. Pursuant to the above Agreement, petitioner METRO hired its own EEs, including herein private respondents. Petitioner METRO thereafter entered into a CBA with Pinag-isang Lakas ng Manggagawa sa METRO, Inc. – National Federation of Labor, otherwise known as PIGLAS-METRO, INC. – NFL – KMU (Union), the certified exclusive collective bargaining representative of the rank-and-file EEs of petitioner METRO.

Meanwhile,petitioners LRTA and METRO executed a Deed of Sale where petitioner LRTA purchased the shares of stocks in petitioner METRO. However, petitioners LRTA and METRO continued with their distinct and separate juridical personalities. Hence, when the above 10)-year Agreement expired on June 8, 1994, they renewed the same, initially on a yearly basis, and subsequently on a monthly basis.

On July 25, 2000, the Union filed a Notice of Strike with the National Conciliation and Mediation Board(NCMB) against petitioner METRO on account of a deadlock in the collective bargaining negotiation. On the same day, the Union struck The power supply switches in the different light rail transit substations were turned off. The

members of the Union picketed the various substations. They completely paralyzed the operations of the entire light rail transit system. As the strike adversely affected the mobility of the commuting public, then Secretary of Labor Bienvenido E. Laguesma issued on that same day an assumption of jurisdiction order directing all the striking EEs "to return to work immediately upon receipt of this Order and for the Company to accept them back under the same terms and conditions of employment prevailing prior to the strike."

In their memorandum,DOLE Sheriffs reported to Sec. Laguesma that they tried to personally serve the Order of assumption of jurisdiction to the Union through its officials and members, but the latter refused to receive the same. The sheriffs thus posted the Order in the different stations/terminals of the light rail transit system. Further, the Order of assumption of jurisdiction was published in Philippine Daily Inquirer6and the Philippine Star. Despite such,the Union officers and members, including herein private respondent workers, failed to return to work. Thus, they were considered dismissed from employment.

In the meantime, on July 31, 2000, the Agreement for the Management and Operation of the Metro Manila Light Rail Transit System between petitioners LRTA and METRO expired. The Board of Directors of petitioner LRTA decided not to renew the contract with petitioner METRO and directed the LRTA management instead to immediately take over the management and operation of the light rail transit system to avert the mass transportation crisis.

private respondents Venus, Jr., Santos, Jr., and Roy filed a complaint for illegal dismissal before the NLRC and impleaded both petitioners LRTA and METRO. LA rendered a consolidated judgment in favor of the private respondent workers.

NLRC found that the striking workers failed to heed the return to work order and reversed and set aside the decision of the LA. The suit against LRTA was dismissed since "LRTA is a GOCCS with an original charter" and "it had no participation whatsoever with the termination of complainants’ employment. In fine, the cases against the LRTA and METRO were dismissed, respectively, for lack of jurisdiction and for lack of merit. NLRC denied the workers’ Motion for Reconsideration "[t]here being no showing that the Commission committed, (and that) the Motion for Reconsideration was based on, palpable or patent errors, and the fact that (the) said motion is not under oath."

CA reversed the NLRC and reinstated the Decision rendered by the Labor Arbiter. Public respondent appellate court declared the workers’ dismissal as illegal, pierced the veil of separate corporate personality and held the LRTA and METRO as jointly liable for back wages.

HELD:We believe that METRO EEs are not covered by the prohibition against strikes applicable to EEs embraced in the Civil Service. It is not disputed, but in fact conceded, that METRO EEs are not covered by the Civil Service. This being so, METRO EEs are not covered by the Civil Service law, rules and regulations but are covered by the Labor Code and, therefore, the rights and prerogatives granted to private EEs there under, including the right to strike, are available to them.

Moreover, as noted by Secretary Benjamin E. Diokno, of the Department of Budget and Management, in his letter, the EEs of METRO are not entitled to the government amelioration assistance authorized by the President pursuant to AO37 for government EEs, because the EEs of METRO are not government EEs since Metro, Inc. "could not be considered as GOCCS as defined under Section 3 (b) of EO518.

The labor dispute only arose in 2000, after a deadlock occurred during the collective bargaining between petitioner METRO and the workers’ union. This alone is not a justification to pierce the corporate veil of petitioner METRO and make petitioner LRTA liable to private respondent workers. There are no badges of fraud or any wrongdoing to pierce the corporate veil of petitioner METRO. the test in determining the applicability of the doctrine of piercing the veil of corporate fiction is as follows:"1. Control, not mere majority or complete stock control, but complete domination, not only of finances but of policy and business practice in respect to the transaction attacked so that the corporate entity as to this transaction had at the time no separate mind, will or existence of its own; 2. Such control must have been used by the defendant to commit fraud or wrong, to perpetuate the violation of a statutory or other positive legal duty, or dishonest and unjust act in contravention of plaintiff’s legal rights; and 3. The aforesaid control and breach of duty must proximately cause the injury or unjust loss complained of.

The absence of any one of these elements prevents ‘piercing the corporate veil.’ Here, the records do not show that control was used to commit a fraud or wrong. In fact, it appears that piercing the corporate veil for the purpose of delivery of public service, would lead to a confusing situation since the outcome would be that Metro will be treated as a mere alter ego of LRTA, not having a separate corporate personality from LRTA, when dealing with the issue of strike, and a separate juridical entity not covered by the Civil Service when it comes to other matters. Under the Constitution, a government corporation is either one with original charter or one without original charter, but never both.

In sum, petitioner LRTA cannot be held liable to the EEs of petitioner METRO. The contention of the petitioner that the private respondents abandoned their position is also not acceptable. An EE who forthwith takes steps to protest his lay-off cannot by any logic

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be said to have abandoned his work. For abandonment to constitute a valid cause for termination of employment, there must be a deliberate, unjustified refusal of the EE to resume his employment. This refusal must be clearly established. As we stressed in a recent case, mere absence is not sufficient; it must be accompanied by overt acts unerringly pointing to the fact that the EE simply does not want to work anymore. In the instant case, private respondent workers could not have defied the return-to-work order of the Secretary of Labor simply because they were dismissed immediately, even before they could obey the said order.Paloma v. PAL [G.R. No. 148415, July 14, 2008] --------------------------------------------------PAL v. PalomaG.R. NO. 156764 VELASCO JR., J.:

FACTS: Paloma worked with PAL from September 1957, rising from the ranks to retire, after 35 years of continuous service, as senior vice president for finance. In March 1992, or some nine (9) months before Paloma retired on November 30, 1992, PAL was privatized.

By way of post-employment benefits, PAL paid Paloma the total amount of PhP 5,163,325.64 which represented his separation/retirement gratuity and accrued vacation leave pay. For the benefits thus received, Paloma signed a document denominated Release and Quitclaim[3] but inscribed the following reservation therein: "Without prejudice to my claim for further leave benefits embodied in my aide memoire transmitted to Mr. Roberto Anonas covered by my 27 Nov. 1992 letter’

The leave benefits Paloma claimed being entitled to refer to his 450-day accrued sick leave credits which PAL allegedly only paid the equivalent of 18 days. He anchored his entitlement on EO 1077 dated January 9, 1986, and his having accumulated a certain number of days of sick leave credits, as acknowledged in a letter of Alvia R. LeaÃ±o, then an administrative assistant in PAL. Lea’s letter dated November 12, 1992 pertinently reads: At your request, we are pleased to confirm herewith the balance of your sick leave credits as they appear in our records: 230 days. According to our existing policy, an EE is entitled to accumulate sick leave with pay only up to a maximum of 230 days.

Had there been no ceiling as mandated by Company policy, your sick leave credits would have totaled 450 days to date. Answering Paloma's written demands for conversion to cash of his accrued sick leave credits, PAL asserted having paid all of Paloma's commutable sick leave credits due him pursuant to company policy made applicable to PAL officers starting 1990.

The company leave policy adverted to grants PAL's regular ground personnel a graduated sick leave benefits, those having rendered at least 25 years of service being entitled to 20 days of sick leave for every year of service. An EE, under the policy, may accumulate sick leaves with pay up to 230 days. Subject to defined qualifications, sick leave credits in excess of 230 days shall be commutable to cash at the EE's option and shall be paid in lump sum on or before May 31st of the following year they were earned.[6] Per PAL's records, Paloma appears to have, for the period from 1990 to 1992, commuted 58 days of his sick leave credits, broken down as follows: 20 days each in 1990 and 1991 and 18 days in 1992.

Subsequently, Paloma filed before the Arbitration Branch of the NLRC Complaint[7] for Commutation of Accrued Sick Leaves Totaling 392 days. In the complaint, docketed as NLRC-NCR-Case No. 00-08-05792-94, Paloma alleged having accrued sick leave credits of 450 days commutable upon his retirement pursuant to EO 1077 which allows retiring government EEs to commute, without limit, all his accrued vacation and sick leave credits. And of the 450-day credit, Paloma added, he had commuted only 58 days, leaving him a balance of 392 days of accrued sick leave credits for commutation.

ISSUE: whether or not EO 1077 applies only to government EEs subject to civil service law which, as early as 1960 until its privatization, had been considered as a government-controlled corporation--is covered by and subject to the limitations peculiar under the civil service system.

HELD: PAL never ceased to be operated as a private corporation, and was not subjected to the Civil Service Law. The Court can allow that PAL, during the period material, was a government-controlled corporation in the sense that the GSIS owned a controlling interest over its stocks. One stubborn fact, however, remains: Through the years, PAL functioned as a private corporation and managed as such for profit. Their personnel were never considered government EEs. It may perhaps not be amiss for the Court to take judicial notice of the fact that the civil service law and rules and regulations have not actually been made to apply to PAL and its EEs. Of governing application to them was the Labor Code.

Paloma not entitled to the benefits granted in EO 1077; existing company policy on the matter applies which took effect in 1990. In our view, the only meaning and import of said rule and regulation is that if an EE does not choose to enjoy his yearly sick leave of thirty days, he may accumulate such sick leave up to a maximum of six months and enjoy this six months sick leave at the end of the sixth year but may not commute it to cash.

In fine, absent any provision in the applicable company policy authorizing the commutation of the 230 days accrued sick leave credits existing upon retirement, Paloma may not, as a matter of enforceable right, insist on the commutation of his sick leave credits to cash. As PAL's senior vice-president for finance upon his retirement, Paloma knew or at least ought to have known the

company policy on accrued sick leave credits and how it was being implemented. Had he acted on that knowledge in utmost good faith, these proceedings would have not come to pass.

PP vs.HON. DOMINGO PANIS G.R. Nos. L-58674-77 July 11, 1990CRUZ, J:

FACTS: Four informations were filed in the CFI of Zambales and Olongapo City alleging that Serapio Abug, private respondent herein, "without first securing a license from the Ministry of Labor as a holder of authority to operate a fee-charging employment agency, did then and there wilfully, unlawfully and criminally operate a private fee charging employment agency by charging fees and expenses (from) and promising employment in Saudi Arabia" to four separate individuals named therein, in violation of Article 16 in relation to Article 39 of the Labor Code.

RESPONDENT’S CONTENTION: Abug filed a M2Q on the ground that the informations did not charge an offense because he was accused of illegally recruiting only one person in each of the four informations. Under the proviso in Article 13(b), he claimed, there would be illegal recruitment only "whenever two or more persons are in any manner promised or offered any employment for a fee. " Denied at first, the motion was reconsidered and finally granted.

PETITIONER’S CONTENTION1: is that the private respondent is being prosecuted under Article 39 in relation to Article 16 of the Labor Code; hence, Article 13(b) is not applicable. However, as the first two cited articles penalize acts of recruitment and placement without proper authority, which is the charge embodied in the informations, application of the definition of recruitment and placement in Article 13(b) is unavoidable.

PETITIONER’S CONTENTION2: that the requirement of two or more persons is imposed only where the recruitment and placement consists of an offer or promise of employment to such persons and always in consideration of a fee. The other acts mentioned in the body of the article may involve even only one person and are not necessarily for profit.

ISSUE: WON the interpretation of both parties of Article 13(b) of P.D. 442 were correct.

HELD: Neither interpretation is acceptable. We fail to see why the proviso should speak only of an offer or promise of employment if the purpose was to apply the requirement of two or more persons to all the acts mentioned in the basic rule. For its part, the petitioner does not explain why dealings with two or more persons are needed where the recruitment and placement consists of an offer or promise of employment but not when it is done through "canvassing, enlisting, contracting, transporting, utilizing, hiring or procuring (of) workers.

As we see it, the proviso was intended neither to impose a condition on the basic rule nor to provide an exception thereto but merely to create a presumption. The presumption is that the individual or entity is engaged in recruitment and placement whenever he or it is dealing with two or more persons to whom, in consideration of a fee, an offer or promise of employment is made in the course of the "canvassing, enlisting, contracting, transporting, utilizing, hiring or procuring (of) workers. "

The number of persons dealt with is not an essential ingredient of the act of recruitment and placement of workers. Any of the acts mentioned in the basic rule in Article 13(b) will constitute recruitment and placement even if only one prospective worker is involved. The proviso merely lays down a rule of evidence that where a fee is collected in consideration of a promise or offer of employment to two or more prospective workers, the individual or entity dealing with them shall be deemed to be engaged in the act of recruitment and placement. The words "shall be deemed" create that presumption.

the word "shall be deemed" should by the same token be given the force of a disputable presumption or of prima facie evidence of engaging in recruitment and placement.

At any rate, the interpretation here adopted should give more force to the campaign against illegal recruitment and placement, which has victimized many Filipino workers seeking a better life in a foreign land, and investing hard- earned savings or even borrowed funds in pursuit of their dream, only to be awakened to the reality of a cynical deception at the hands of theirown countrymen.PP vs.RODOLFO GALLO y GADOT et al.G.R. No. 187730 June 29, 2010VELASCO, JR., J.:

FACTS: Originally, accused-appellant Gallo and accused Pacardo and Manta, together with Mardeolyn Mardeolyn and 9 others, were charged with syndicated illegal recruitment and 18 counts of estafa committed against 18 complainants, including Dela Caza, Guantero and Sare. the present appeal concerns solely accused-appellant’s conviction for syndicated illegal recruitment in Criminal Case No. 02-206293 and for estafa in Criminal Case No. 02-206297.

On May 22, 2001, Dela Caza was introduced by Eleanor Panuncio to accused-appellant Gallo, Pacardo, Manta, Mardeolyn, Lulu Mendanes, Yeo Sin Ung and another Korean national at the office of MPM Agency located in Malate, Manila. He was told that Mardeolyn was the President of MPM Agency, while Nelmar Martir was one of the incorporators. Also, that Marcelino Martir, Norman Martir, Nelson Martir and Ma. Cecilia Ramos were its board members. Lulu Mendanes acted as the cashier and accountant, while Pacardo acted as the agency’s EE who was in charge of the

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records of the applicants. Manta, on the other hand, was also an EE who was tasked to deliver documents to the Korean embassy.

Accused-appellant Gallo then introduced himself as a relative of Mardeolyn and informed Dela Caza that the agency was able to send many workers abroad. Together with Pacardo and Manta, he also told Dela Caza about the placement fee PhP 150,000 with a down payment of PhP 45,000 and the balance to be paid through salary deduction. Dela Caza, together with the other applicants, were briefed by Mardeolyn about the processing of their application papers for job placement in Korea as a factory worker and their possible salary. Accused Yeo Sin Ung also gave a briefing about the business and what to expect from the company and the salary. Dela Casa paid PhP 45,000 to MPM Agency through accused-appellant Gallo who, while in the presence of Pacardo, Manta and Mardeolyn, issued and signed OR41.

Two (2) weeks after paying MPM Agency, Dela Caza went back to the agency’s office in Malate, Manila only to discover that the office had moved to a new location at Batangas Street, Brgy. San Isidro, Makati. He proceeded to the new address and found out that the agency was renamed to New Filipino. At the new office, he talked to Pacardo, Manta, Mardeolyn, Lulu Mendanes and accused-appellant Gallo. He was informed that the transfer was done for easy accessibility to clients and for the purpose of changing the name of the agency.

Dela Caza decided to withdraw his application and recover the amount he paid but Mardeolyn, Pacardo, Manta and Lulu Mendanes talked him out from pursuing his decision. On the other hand, accused-appellant Gallo even denied any knowledge about the money. After 2 more months of waiting in vain to be deployed, Dela Caza and the other applicants decided to take action. The first attempt was unsuccessful because the agency again moved to another place. However, with the help of the Office of Ambassador Señeres and the Western Police District, they were able to locate the new address at 500 Prudential Building, Carriedo, Manila. The agency explained that it had to move in order to separate those who are applying as entertainers from those applying as factory workers. Accused-appellant Gallo, together with Pacardo and Manta, were then arrested.

The testimony of prosecution witness Armando Albines Roa, a POEA EE, was dispensed with after the prosecution and defense stipulated and admitted to the existence of the following documents:1. Certification issued by Felicitas Q. Bay, Director II, Licensing Branch of the POEA to the effect that "New Filipino Manpower Development & Services, Inc., with office address at 1256 Batangas St., Brgy. San Isidro, Makati City, was a licensedlandbased agency whose license expired on December 10, 2001 and was delisted from the roster of licensed agencies on December 14, 2001." It further certified that "Fides J. Pacardo was the agency’s Recruitment Officer";2. Certification issued by Felicitas Q. Bay of the POEA to the effect that MPM International Recruitment and Promotion is not licensed by the POEA to recruit workers for overseas employment;

For his defense, accused-appellant denied having any part in the recruitment of Dela Caza. In fact, he testified that he also applied with MPM Agency for deployment to Korea as a factory worker. According to him, he gave his application directly with Mardeolyn because she was his town mate and he was allowed to pay only PhP 10,000 as processing fee. Further, in order to facilitate the processing of his papers, he agreed to perform some tasks for the agency, such as taking photographs of the visa and passport of applicants, running errands and performing such other tasks assigned to him, without salary except for some allowance. He said that he only saw Dela Caza one or twice at the agency’s office when he applied for work abroad. Lastly, that he was also promised deployment abroad but it never materialized.

RTC rendered its Decision convicting the accused of syndicated illegal recruitment and estafa. CA: Decision of the RTC of Manila is AFFIRMED with the MODIFICATION.The CA held the totality of the prosecution’s evidence showed that the accused-appellant, together with others, engaged in the recruitment of Dela Caza. His actions and representations to Dela Caza can hardly be construed as the actions of a mere errand boy. As determined by the appellate court, the offense is considered economic sabotage having been committed by more than three (3) persons, namely, accused-appellant Gallo, Mardeolyn, Eleonor Panuncio and Yeo Sin Ung. More importantly, a personal found guilty of illegal recruitment may also be convicted of estafa.7 The same evidence proving accused-appellant’s commission of the crime of illegal recruitment in large scale also establishes his liability for estafa under paragragh 2(a) of Article 315 of the Revised Penal Code (RPC).

ISSUES:The court a quo gravely erred in finding the accused-appellant guilty of 1) illegal recruitment committed by a syndicate despite the failure of the prosecution to prove the same beyond reasonable doubt AND 2)estafa despite the failure of the prosecution to prove the same beyond reasonable doubt.

HELD: 1.The appeal has no merit. Evidence supports conviction of the crime of Syndicated Illegal Recruitment To commit syndicated illegal recruitment, three elements must be established: (1) the offender undertakes either any activity within the meaning of "recruitment and placement" defined under Article 13(b), or any of the prohibited practices enumerated under Art. 34 of the Labor Code; (2) he has no valid license or authority required by law to enable one to lawfully engage in recruitment and placement of workers;8 and (3) the illegal recruitment is committed by a group of 3 or more persons conspiring or confederating with one another.9 When illegal recruitment is committed by a syndicate or in large

scale, i.e., if it is committed against 3 or more persons individually or as a group, it is considered an offense involving economic sabotage.

After a thorough review of the records, we believe that the prosecution was able to establish the elements of the offense sufficiently. The evidence readily reveals that MPM Agency was never licensed by the POEA to recruit workers for overseas employment. Even with a license, however, illegal recruitment could still be committed under Section 6 of Republic Act No. 8042 ("R.A. 8042"), otherwise known as the Migrants and Overseas Filipinos Act of 1995. In the instant case, accused-appellant committed the acts enumerated in Sec. 6 of R.A. 8042. Testimonial evidence presented by the prosecution clearly shows that, in consideration of a promise of foreign employment, accused-appellant received the amount of Php 45,000.00 from Dela Caza. When accused-appellant made misrepresentations concerning the agency’s purported power and authority to recruit for overseas employment, and in the process, collected money in the guise of placement fees, the former clearly committed acts constitutive of illegal recruitment.

Additionally, accused-appellant cannot argue that the trial court erred in finding that he was indeed an EE of the recruitment agency. On the contrary, his active participation in the illegal recruitment is unmistakable. The fact that he was the one who issued and signed the official receipt belies his profession of innocence. This Court likewise finds the existence of a conspiracy between the accused-appellant and the other persons in the agency who are currently at large, resulting in the commission of the crime of syndicated illegal recruitment. Without a doubt, the nature and extent of the actions of accused-appellant, as well as with the other persons in MPM Agency clearly show unity of action towards a common undertaking. Hence, conspiracy is evidently present.

To reiterate, in establishing conspiracy, it is not essential that there be actual proof that all the conspirators took a direct part in every act. It is sufficient that they acted in concert pursuant to the same objective.14

2.The prosecution likewise established that accused-appellant is guilty of the crime of estafa as defined under Article 315 paragraph 2(a) of the Revised Penal Code. The elements of estafa in general are: (1) that the accused defrauded another (a) by abuse of confidence, or (b) by means of deceit; and (2) that damage or prejudice capable of pecuniary estimation is caused to the offended party or third person.15 Deceit is the false representation of a matter of fact, whether by words or conduct, by false or misleading allegations, or by concealment of that which should have been disclosed; and which deceives or is intended to deceive another so that he shall act upon it, to his legal injury.

All these elements are present in the instant case: the accused-appellant, together with the other accused at large, deceived the complainants into believing that the agency had the power and capability to send them abroad for employment; that there were available jobs for them in Korea as factory workers; that by reason or on the strength of such assurance, the complainants parted with their money in payment of the placement fees; that after receiving the money, accused-appellant and his co-accused went into hiding by changing their office locations without informing complainants; and that complainants were never deployed abroad. As all these representations of the accused-appellant proved false, paragraph 2(a), Article 315 of the Revised Penal Code is thus applicable.1avvphi1

PP vs. DOLORES OCDENG.R. No. 173198, June 1, 2011LEONARDO-DE CASTRO, J.:

FACTS:All seven cases against Ocden were consolidated on July 31, 2000 and were tried jointly after Ocden pleaded not guilty.The prosecution presented three witnesses namely: Mana-a and Ferrer), complainants; Golidan), mother of complainants Jeffries and Howard Golidan.

(1) Ocden informed Mana-a, Ferrer, and Golidan about the job opportunity in Italy and the list of necessary requirements for application; (2) Ocden required Mana-a, Ferrer, and Golidan’s sons, Jeffries and Howard, to attend the seminar conducted by Ramos at Ocden’s house in Baguio City; (3) Ocden received the job applications, pictures, bio-data, passports, and the certificates of previous employment (which was also issued by Ocden upon payment of P500.00), of Mana-a, Ferrer, and Golidan’s sons, Jeffries and Howard;(4) Ocden personally accompanied Mana-a, Ferrer, and Golidan’s sons, Jeffries and Howard, for their medical examinations in Manila; (5) Ocden received money paid as placement fees by Mana-a, Ferrer, and Golidan’s sons, Jeffries and Howard, and even issued receipts for the same; and (6) Ocden assured Mana-a, Ferrer, and Golidan’s sons, Jeffries and Howard, that they would be deployed to Italy.The defense presented the testimony of Ocden herself.

Ocden denied recruiting private complainants and claimed that she was also an applicant for an overseas job in Italy, just like them. Ocden identified Ramos as the recruiter.

Ocden recounted that she met Ramos at a seminar held in St. Theresa’s Compound, Navy Base, Baguio City, sometime in June 1998. The seminar was arranged by Comila, Ramos’s sub-agent. The seminar was attended by about 60 applicants, including Golidan. Ramos explained how one could apply as worker in a stuff toys factory in Italy. After the seminar, Comila introduced Ocden to Ramos. Ocden decided to apply for the overseas job, so she gave

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her passport and pictures to Ramos. Ocden also underwent medical examination at Zamora Medical Clinic in Manila, and completely submitted the required documents to Ramos in September 1998.

After the seminar, many people went to Ocden’s house to inquire about the jobs available in Italy. Since most of these people did not attend the seminar, Ocden asked Ramos to conduct a seminar at Ocden’s house. Two seminars were held at Ocden’s house, one in September and another in December 1998. After said seminars, Ramos designated Ocden as leader of the applicants. As such, Ocden received her co-applicants’ applications and documents; accompanied her co-applicants to Manila for medical examination because she knew the location of Zamora Medical Clinic; and accepted placement fees from Mana-a and Ferrer and from Golidan.

Ramos instructed Ocden that the applicants should each pay P250,000.00 and if the applicants could not pay the full amount, they would have to pay the balance through salary deductions once they start working in Italy. Ocden herself paid Ramos P50,000.00 as placement fee and executed a promissory note in Ramos’s favor for the balance, just like any other applicant who failed to pay the full amount. Ocden went to Malaysia with Ramos’s male friend but she failed to get her visa for Italy.

Ocden denied deceiving Mana-a and Ferrer. Ocden alleged that she turned over to Ramos the money Mana-a and Ferrer gave her, although she did not indicate in the receipts she issued that she received the money for and on behalf of Ramos.Ocden pointed out that she and some of her co-applicants already filed a complaint against Ramos before the NBI offices in Zamboanga City and Manila.13

RTC rendered a Decision finding Ocden guilty beyond reasonable doubt of the crimes of illegal recruitment in large scale and three counts of estafa.Aggrieved by the above decision, Ocden filed with the RTC a Notice of Appeal on August 15, 2001.15 The RTC erroneously sent the records of the cases to the Court of Appeals, which, in turn, correctly forwarded the said records to us.In our Resolution16 dated May 6, 2002, we accepted the appeal and required the parties to file their respective briefs. In the same resolution, we directed the Superintendent of the Correctional Institute for Women to confirm Ocden’s detention thereat. the appellate court promulgated its Decision, affirming Ocden’s conviction but modifying the penalties imposed upon her for the three counts of estafa.

ISSUES: THE TRIAL COURT ERRED IN CONVICTING ACCUSED-APPELLANT OF 1)ILLEGAL RECRUITMENT COMMITTED IN LARGE SCALE ALTHOUGH THE CRIME WAS NOT PROVEN BEYOND REASONABLE DOUBT and 2) ESTAFA.

HELD: 1.Ocden’s aforementioned contentions are without merit. It is well-settled that to prove illegal recruitment, it must be shown that 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.

It is not necessary for the prosecution to present a certification that Ocden is a non-licensee or non-holder of authority to lawfully engage in the recruitment and placement of workers. Section 6 of Republic Act No. 8042 enumerates particular acts which would constitute illegal recruitment "whether committed by any person, whether a non-licensee, non-holder, licensee or holder of authority." Among such acts, under Section 6(m) of Republic Act No. 8042, is the "[f]ailure to reimburse expenses incurred by the worker in connection with his documentation and processing for purposes of deployment, in cases where the deployment does not actually take place without the worker’s fault."Since illegal recruitment under Section 6(m) can be committed by any person, even by a licensed recruiter, a certification on whether Ocden had a license to recruit or not, is inconsequential. Ocden committed illegal recruitment as described in said provision by receiving placement fees from Mana-a, Ferrer, and Golidan’s two sons, Jeffries and Howard, evidenced by receipts Ocden herself issued; and failing to reimburse/refund to Mana-a, Ferrer, and Golidan’s two sons the amounts they had paid when they were not able to leave for Italy, through no fault of their own.

Contrary to Ocden’s claims, Golidan had personal knowledge of Ocden’s illegal recruitment activities, which she could competently testify to. Golidan herself had personal dealings with Ocden as Golidan assisted her sons, Jeffries and Howard, in completing the requirements for their overseas job applications, and later on, in getting back home from Zamboanga where Jeffries and Howard were stranded, and in demanding a refund from Ocden of the placement fees paid. That Golidan is seeking a reimbursement of the placement fees paid for the failed deployment of her sons Jeffries and Howard strengthens, rather than weakens, the prosecution’s case. Going back to illegal recruitment under Section 6(m) of Republic Act No. 8042, failure to reimburse the expenses incurred by the worker when deployment does not actually take place, without the worker’s fault, is illegal recruitment.

The affidavit of desistance purportedly executed by Jeffries and Howard does not exonerate Ocden from criminal liability when the prosecution had successfully proved her guilt beyond reasonable doubt. Generally, the Court attaches no persuasive value to affidavits of desistance, especially when it is executed as an afterthought. It would be a dangerous rule for courts to reject testimonies solemnly taken before the courts of justice simply because the witnesses who had given them, later on, changed their mind for one reason or another, for such rule would make solemn trial a mockery and place the investigation of truth at the mercy of unscrupulous witness. It is relevant to note that "the right of

prosecution and punishment for a crime is one of the attributes that by a natural law belongs to the sovereign power instinctly charged by the common will of the members of society to look after, guard and defend the interests of the community, the individual and social rights and the liberties of every citizen and the guaranty of the exercise of his rights." This cardinal principle which states that to the State belongs the power to prosecute and punish crimes should not be overlooked since a criminal offense is an outrage to the sovereign State.

In her bid to exculpate herself, Ocden asserts that she was also just an applicant for overseas employment; and that she was receiving her co-applicants’ job applications and other requirements, and accepting her co-applicants’ payments of placement fees, because she was designated as the applicants’ leader by Ramos, the real recruiter.

Ocden’s testimony is self-serving and uncorroborated. Ocden’s denial of any illegal recruitment activity cannot stand against the prosecution witnesses’ positive identification of her in court as the person who induced them to part with their money upon the misrepresentation and false promise of deployment to Italy as factory workers. Besides, despite several opportunities given to Ocden by the RTC, she failed to present Ramos, who Ocden alleged to be the real recruiter and to whom she turned over the placement fees paid by her co-applicants.

Between the categorical statements of the prosecution witnesses, on the one hand, and the bare denial of Ocden, on the other, the former must perforce prevail. An affirmative testimony is far stronger than a negative testimony especially when the former comes from the mouth of a credible witness. Denial, same as an alibi, if not substantiated by clear and convincing evidence, is negative and self-serving evidence undeserving of weight in law. It is considered with suspicion and always received with caution, not only because it is inherently weak and unreliable but also because it is easily fabricated and concocted.25

conviction for large scale illegal recruitment must be based on a finding in each case of illegal recruitment of three or more persons, whether individually or as a group. While it is true that the law does not require that at least three victims testify at the trial, nevertheless, it is necessary that there is sufficient evidence proving that the offense was committed against three or more persons. In this case, there is conclusive evidence that Ocden recruited Mana-a, Ferrer, and Golidan’s sons, Jeffries and Howard, for purported employment as factory workers in Italy.

And even though only Ferrer and Golidan testified as to Ocden’s failure to reimburse the placements fees paid when the deployment did not take place, their testimonies already established the fact of non-reimbursement as to three persons, namely, Ferrer and Golidan’s two sons, Jeffries and Howard.

2.We are likewise affirming the conviction of Ocden for the crime of estafa. The very same evidence proving Ocden’s liability for illegal recruitment also established her liability for estafa.In this jurisdiction, it is settled that a person who commits illegal recruitment may be charged and convicted separately of illegal recruitment under the Labor Code and estafa under par. 2(a) of Art. 315 of the Revised Penal Code. The offense of illegal recruitment is malum prohibitum where the criminal intent of the accused is not necessary for conviction, while estafa is malum in se where the criminal intent of the accused is crucial for conviction. Conviction for offenses under the Labor Code does not bar conviction for offenses punishable by other laws. Conversely, conviction for estafa under par. 2(a) of Art. 315 of the Revised Penal Code does not bar a conviction for illegal recruitment under the Labor Code. It follows that one’s acquittal of the crime of estafa will not necessarily result in his acquittal of the crime of illegal recruitment in large scale, and vice versa.31The elements of estafa are present in this case. Both these elements are present in the instant case. Ocden represented to Ferrer, Golidan, and Golidan’s two sons, Jeffries and Howard, that she could provide them with overseas jobs. Convinced by Ocden, Ferrer, Golidan, and Golidan’s sons paid substantial amounts as placement fees to her. Ferrer and Golidan’s sons were never able to leave for Italy, instead, they ended up in Zamboanga, where, Ocden claimed, it would be easier to have their visas to Italy processed. Despite the fact that Golidan’s sons, Jeffries and Howard, were stranded in Zamboanga for almost a month, Ocden still assured them and their mother that they would be able to leave for Italy. There is definitely deceit on the part of Ocden and damage on the part of Ferrer and Golidan’s sons, thus, justifying Ocden’s conviction for estafa in Criminal Case Nos. 16316-R, 16318-R, and 16964-R.Applying the Indeterminate Sentence Law, we take the minimum term from the penalty next lower than the minimum prescribed by law, or anywhere within prision correccional minimum and medium (i.e., from 6 months and 1 day to 4 years and 2 months).33 Consequently, both the RTC and the Court of Appeals correctly fixed the minimum term in Criminal Case Nos. 16316-R and 16318-R at 2 years, 11 months, and 10 days of prision correccional; and in Criminal Case No. 16964-R at 4 years and 2 months of prision correccional, since these are within the range of prision correccional minimum and medium.1avvphi1As for the maximum term under the Indeterminate Sentence Law, we take the maximum period of the prescribed penalty, adding 1 year of imprisonment for every P10,000.00 in excess of P22,000.00, provided that the total penalty shall not exceed 20 years. To compute the maximum period of the prescribed penalty, the time included in prision correccional maximum to prision mayor minimum shall be divided into three equal portions, with each portion forming a period. Following this computation, the maximum period for prision correccional maximum to prision mayor minimum is from 6 years, 8 months, and 21 days to 8 years. The incremental

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penalty, when proper, shall thus be added to anywhere from 6 years, 8 months, and 21 days to 8 years, at the discretion of the court.34In computing the incremental penalty, the amount defrauded shall be substracted by P22,000.00, and the difference shall be divided by P10,000.00. Any fraction of a year shall be discarded as was done starting with People v. Pabalan.35There being no aggravating circumstance, we apply the lowest of the maximum period, which is 6 years, 8 months, and 21 days. Adding the one year incremental penalty, the maximum term of Ocden’s indeterminate sentence in these two cases is only 7 years, 8 months, and 21 days of prision mayor.

HORTENCIA SALAZAR vs. HON. TOMAS D. ACHACOSOG.R. No. 81510 March 14, 1990

FACTS: On November 3, 1987, public respondent Atty. Ferdinand Marquez to whom said complaint was assigned, sent to the petitioner the following telegram: On the same day, having ascertained that the petitioner had no license tooperate a recruitment agency, public respondent Administrator Tomas D. Achacoso issued his challenged CLOSURE AND SEIZURE ORDER NO. 1205.

On January 26, 1988 POEA Director on Licensing and Regulation Atty. Estelita B. Espiritu issued an office order designating respondents Atty. Marquez, Atty. Jovencio Abara and Atty. Ernesto Vistro as members of a team tasked to implement Closure and Seizure Order No. 1205. Doing so, the group assisted by Mandaluyong policemen and mediamen Lito Castillo of the People's Journal and Ernie Baluyot of News Today proceeded to the residence of the petitioner at 615 R.O. Santos St., Mandaluyong, Metro Manila. There it was found that petitioner was operatin Hannalie Dance Studio. Before entering the place, the team served said Closure and Seizure order on a certain Mrs. Flora Salazar who voluntarily allowed them entry into the premises. Mrs. Flora Salazar informed the team that Hannalie Dance Studio was accredited with Moreman Development (Phil.). However, when required to show credentials, she was unable to produce any. Inside the studio,the team chanced upon twelve talent performers — practicing a dance number and saw about twenty more waiting outside, The team confiscated assorted costumes which were duly receipted for by Mrs. Asuncion Maguelan and witnessed by Mrs.Flora Salazar.

On January 28, 1988, petitioner filed with POEA a letter requesting that the personal properties seized at her residence last January 26, 1988 be immediately returned on the ground that said seizure was contrary to law and against the will of the owner thereof. Among our reasons are the following: 1. Our client has not been given any prior notice or hearing, hence the Closure and Seizure Order No. 1205 dated November 3, 1987 violates "due process of law" guaranteed under Sec. 1, Art. III, of the Philippine Constitution; 2. Your acts also violate Sec. 2, Art. III of the Philippine Constitution which guarantees right of the people "to be secure in their persons, houses, papers, and effects against unreasonable searches and seizures of whatever nature and for any purpose."; 3. The premises invaded by your Mr. Ferdi Marquez and five (5) others (including2 policemen) are the private residence of the Salazar family, and the entry, search as well as the seizure of the personal properties belonging to our client were without her consent and were done with unreasonable force and intimidation, together with grave abuse of the color of authority, and constitute robbery and violation of domicile under Arts. 293 and 128 of the Revised Penal Code. Unless said personal properties worth around TEN THOUSAND PESOS (P10,000.00) in all (and which were already due for shipment to Japan) are returned within twenty-four (24) hours from your receipt hereof, we shall feel free to take all legal action, civil and criminal, to protect our client's interests.

On February 2, 1988, before POEA could answer the letter, petitioner filed the instant petition. POEA filed a criminal complaint against her with the Pasig Provincial Fiscal. On February 2, 1988, the petitioner filed this suit for prohibition.

ISSUE: May the Philippine Overseas Employment Administration (or the Secretary of Labor) validly issue warrants of search and seizure (or arrest) under Article 38 of the Labor Code?

HELD: Under the new Constitution, which states:" no search warrant or warrant of arrest shall issue except upon probable cause to be determined personally by the judge after examination under oath or affirmation of the complainant and the witnesses he may produce, andparticularly describing the place to be searched and the persons or things to be seized. "

No longer does the mayor have at this time the power to conduct preliminary investigations, much less issue orders of arrest. Section 143 of the LGC has been rendered functus officio by the 1987 Constitution.

We agree that the Presidential Anti-Dollar Salting Task Force exercises, or was meant to exercise, prosecutorial powers, and on that ground, it cannot be said to be a neutral and detached "judge" to determine the existence of probable cause for purposes of arrest or search. Unlike a magistrate, a prosecutor is naturally interested in the success of his case. Although his office "is to see that justice is done and not necessarily to secure the conviction of the person accused," he stands, invariably, as the accused's adversary and his accuser. To permit him to issue search warrants and indeed, warrants of arrest, is to make him both judge and jury in his own right, when he is neither. That makes, to our mind and to that extent, Presidential Decree No. 1936 as amended by Presidential Decree No. 2002, unconstitutional. 5

We reiterate that the Secretary of Labor, not being a judge, may no longer issue search or arrest warrants. Hence, the authorities must go through the judicial process. To that extent, we declare Article 38, paragraph (c), of the Labor Code, unconstitutional and of no force and effect.

EXCEPTION TO THE RULE THAT ONLY A JUDGE COULD ISSUE WARRANTS: the Morano v. Vivo case involved a deportation case, governed by Section 69 of the defunct Revised Administrative Code and by Section 37 of the Immigration Law. We have ruled that in deportation cases, an arrest (of an undesirable alien) ordered by the President or his duly authorized representatives, in order to carry out a final decision of deportation is valid. It is valid, however, because of the recognized supremacy of the Executive in matters involving foreign affairs.

Another factor which makes the search warrants under consideration constitutionally objectionable is that they are in the nature of general warrants.

PAUL V. SANTIAGO vs. CF SHARP CREW MANAGEMENT, INC.G.R. No. 162419 July 10, 2007TINGA, J.:

FACTS: Petitioner had been working as a seafarer for Smith Bell Management, Inc. (respondent) for about five (5) years.2 On 3 February 1998, petitioner signed a new contract of employment with respondent, with the duration of nine (9) months. He was assured of a monthly salary of US$515.00, overtime pay and other benefits. The following day or on 4 February 1998, the contract was approved by the Philippine Overseas Employment Administration (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 scheduled date of departure, Capt. Pacifico Fernandez, respondent’s Vice President, sent a facsimile message to the captain of "MSV Seaspread," which reads: I received a phone call today from the wife of Paul Santiago in Masbate asking me not to send her husband to MSV Seaspread anymore. Other callers who did not reveal their identity gave me some feedbacks that Paul Santiago this time if allowed to depart will jump ship in Canada like his brother Christopher Santiago, O/S who jumped ship from the C.S. Nexus in Kita-kyushu, Japan last December, 1997.To this message the captain of "MSV Seaspread" replied: Many thanks for your advice concerning P. Santiago, A/B. Please cancel plans for him to return to Seaspread.4

On 9 February 1998, petitioner was thus told that he would not be leaving for Canada anymore, but he was reassured that he might be considered for deployment at some future date.

Petitioner filed a complaint for illegal dismissal, damages, and attorney's fees against respondent and its foreign principal, Cable and Wireless (Marine) Ltd.5 The case was raffled to Labor Arbiter TeresitaCastillon-Lora, who ruled that the employment contract remained valid but had not commenced since petitioner was not deployed. According to her, respondent violated the rules and regulations governing overseas employment when it did not deploy petitioner, causing petitioner to suffer actual damages representing lost salary income for nine (9) months and fixed overtime fee, all amounting to US$7, 209.00.

The labor arbiter held respondent liable. On appeal by respondent, the National Labor Relations Commission (NLRC) ruled that there is no ER-EE relationship between petitioner and respondent because under the Standard Terms and Conditions Governing the Employment of Filipino Seafarers on Board Ocean Going Vessels (POEA Standard Contract), the employment contract shall commence upon actual departure of the seafarer from the airport or seaport at the point of hire and with a POEA-approved contract. In the absence of an ER-EE relationship between the parties, the claims for illegal dismissal, actual damages, and attorney’s fees should be dismissed.7 On the other hand, the NLRC found respondent’s decision not to deploy petitioner to be a valid exercise of its management prerogative.

Petitioner moved for the reconsideration of the NLRC’s Decision but his motion was denied for lack of merit.10 He elevated the case to the Court of Appeals through a petition for certiorari. the Court of Appeals noted that there is an ambiguity in the NLRC’s Decision when it affirmed with modification the labor arbiter’s Decision, because by the very modification introduced by the Commission (vacating the award of actual damages and attorney’s fees), there is nothing more left in the labor arbiter’s Decision to affirm.12According to the appellate court, petitioner is not entitled to actual damages because damages are not recoverable by a worker who was not deployed by his agency within the period prescribed in the POEA Rules.13 It agreed with the NLRC’s finding that petitioner’s non-deployment was a valid exercise of respondent’s management prerogative.14 It added that since petitioner had not departed from the Port of Manila, no ER-EE relationship between the parties arose and any claim for damages against the so-called ER could have no leg to stand on.15

Petitioner’s subsequent motion for reconsideration was denied on 19 February 2004.16 Petitioner maintains that respondent violated the Migrant Workers Act and the POEA Rules when it failed to deploy him within thirty (30) calendar days without a valid reason. In doing so, it had unilaterally and arbitrarily prevented the consummation of the POEA- approved contract. Since it prevented his deployment without valid basis, said deployment being a condition to the consummation of the POEA contract, the contract is deemed consummated, and therefore he should be awarded actual damages, consisting of the stipulated salary and fixed overtime

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pay.18 Petitioner adds that since the contract is deemed consummated, he should be considered an EE for all intents and purposes, and thus the labor arbiter and/or the NLRC has jurisdiction to take cognizance of his claims.19

Petitioner additionally claims that he should be considered a regular EE, having worked for five (5) years on board the same vessel owned by the same principal and manned by the same local agent. He argues that respondent’s act of not deploying him was a scheme designed to prevent him from attaining the status of a regular EE.20

Petitioner submits that respondent had no valid and sufficient cause to abandon the employment contract, as it merely relied upon alleged phone calls from his wife and other unnamed callers in arriving at the conclusion that he would jump ship like his brother. He points out that his wife had executed an affidavit21 strongly denying having called respondent, and that the other alleged callers did not even disclose their identities to respondent.22 Thus, it was error for the Court of Appeals to adopt the unfounded conclusion of the NLRC, as the same was not based on substantial evidence.23

On the other hand, respondent argues that the Labor Arbiter has no jurisdiction to award petitioner’s monetary claims. His employment with respondent did not commence because his deployment was withheld for a valid reason. Consequently, the labor arbiter and/or the NLRC cannot entertain adjudication of petitioner’s case much less award damages to him. The controversy involves a breach of contractual obligations and as such is cognizable by civil courts.24

On another matter, respondent claims that the second issue posed by petitioner involves a recalibration of facts which is outside the jurisdiction of this Court.25

ISSUE: whether the seafarer, who was prevented from leaving the port of Manila and refused deployment without valid reason but whose POEA-approved employment contract provides that the ER-EE relationship shall commence only upon the seafarer’s actual departure from the port in the point of hire, is entitled to relief?

HELD:There is no question that the parties entered into an employment contract on 3 February 1998, whereby petitioner was contracted by respondent to render services on board "MSV Seaspread" for the consideration of US$515.00 per month for nine (9) months, plus overtime pay. However, respondent failed to deploy petitioner from the port of Manila to Canada. Considering that petitioner was not able to depart from the airport or seaport in the point of hire, the employment contract did not commence, and no ER-EE relationship was created between the parties.26

However, a distinction must be made between the perfection of the employment contract and the commencement of the ER-EE relationship. SAME with STOLT CASE.Moreover, while the POEA Standard Contract must be recognized and respected, neither the manning agent nor the ER 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.

We take exception to the Court of Appeals’ conclusion that damages are not recoverable by a worker who was not deployed by his agency. The fact that the POEA Rules27 are silent as to the payment of damages to the affected seafarer does not mean that the seafarer is precluded from claiming the same. The sanctions provided for non-deployment do not end with the suspension or cancellation of license or fine and the return of all documents at no cost to the worker. They do not forfend a seafarer from instituting an action for damages against the ER or agency which has failed to deploy him.

The POEA Rules only provide sanctions which the POEA can impose on erring agencies. It does not provide for damages and money claims recoverable by aggrieved EEs because it is not the POEA, but the NLRC, which has jurisdiction over such matters.

Despite the absence of an ER-EE 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 ER-EE 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 National Labor Relations Commission (NLRC) shall have the original and exclusive jurisdiction to hear and decide, within ninety (90) calendar days after the filing of the complaint, the claims arising out of an ER-EE relationship or by virtue of any law or contract involving Filipino workers for overseas deployment including claims for actual, moral, exemplary and other forms of damages. x xx [Emphasis supplied]

The Court also holds that petitioner is entitled to attorney’s fees in the concept of damages and expenses of litigation. Attorney's fees are recoverable when the defendant's act or omission has compelled the plaintiff to incur expenses to protect his interest.31

We note that 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. Time and again, this Court has upheld management prerogatives so long as they are exercised in good faith for the advancement of the ER’s interest and not for the

purpose of defeating or circumventing the rights of the EEs under special laws or under valid agreements.32 Respondent’s failure to deploy petitioner is unfounded and unreasonable, forcing petitioner to institute the suit below. The award of attorney’s fees is thus warranted.

However, moral damages cannot be awarded in this case. While respondent’s failure to deploy petitioner seems baseless and unreasonable, we cannot qualify such action as being tainted with bad faith, or done deliberately to defeat petitioner’s rights, as to justify the award of moral damages. At most, respondent was being overzealous in protecting its interest when it became too hasty in making its conclusion that petitioner will jump ship like his brother.

We likewise do not see respondent’s failure to deploy petitioner as an act designed to prevent the latter from attaining the status of a regular EE. Even if petitioner was able to depart the port of Manila, he still cannot be considered a regular EE, regardless of his previous contracts of employment with respondent. In Millares v. National Labor Relations Commission,33 the Court ruled that seafarers are considered contractual EEs and cannot be considered as regular EEs 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.34

STOLT-NIELSEN TRANSPORTATION GROUP vs. SULPECIO MEDEQUILLO,JR., G.R. No. 177498 January 18, 2012PEREZ, J.:

FACTS: On 6 March 1995, Sulpecio Madequillo filed a complaint before the Adjudication Office of the POEA against the petitioners for illegal dismissal under a first contract and for failure to deploy under a second contract. In his complaint-affidavit,4 respondent alleged that:

1.On 6 November 1991(First Contract), he was hired by STOLT on behalf of its principal Chung-Gai Ship Management of Panama as Third Assistant Engineer on board the vessel "Stolt Aspiration" for a period of nine (9) months;2.He would be paid with a monthly basic salary of $808.00 and a fixed overtime pay of $404.00 or a total of $1,212.00 per month during the employment period commencing on 6 November 1991;3.On 8 November 1991, he joined the vessel MV "Stolt Aspiration";4.On February 1992 or for nearly three (3) months of rendering service and while the vessel was at Batangas, he was ordered by the ship’s master to disembark the vessel and repatriated back to Manila for no reason or explanation;5.Upon his return to Manila, he immediately proceeded to the petitioner’s office where he was transferred employment with another vessel named MV "Stolt Pride" under the same terms and conditions of the First Contract;6.On 23 April 1992, the Second Contract was noted and approved by the POEA;7.The POEA, without knowledge that he was not deployed with the vessel, certified the Second Employment Contract on 18 September 1992.8.Despite the commencement of the Second Contract on 21 April 1992, petitioners failed to deploy him with the vessel MV "Stolt Pride";9.He made a follow-up with the petitioner but the same refused to comply with the Second Employment Contract.10.On 22 December 1994, he demanded for his passport, seaman’s book and other employment documents. However, he was only allowed to claim the said documents in exchange of his signing a document;11.He was constrained to sign the document involuntarily because without these documents, he could not seek employment from other agencies.

He prayed for actual, moral and exemplary damages as well as attorney’s fees for his illegal dismissal and in view of the Petitioners’ bad faith in not complying with the Second Contract.

The case was transferred to the LA of the DOLE upon the effectivity of the Migrant Workers and Overseas Filipinos Act of 1995.The parties were required to submit their respective position papers before the LA. However, petitioners failed to submit their respective pleadings despite the opportunity given to them.5

LA rendered a judgment6 finding that the respondent was constructively dismissed by the petitioners. LA found the first contract entered into by and between the complainant and the respondents to have been novated by the execution of the second contract. In other words, respondents cannot be held liable for the first contract but are clearly and definitely liable for the breach of the second contract.8 However, he ruled that there was no substantial evidence to grant the prayer for moral and exemplary damages. NLRC affirmed with modification the Decision of the LA.

Before the NLRC, the petitioners assailed that they were not properly notified of the hearings that were conducted before the LA. They further alleged that after the suspension of proceedings before the POEA, the only notice they received was a copy of the decision of the LA.The NLRC ruled that records showed that attempts to serve the various notices of hearing were made on petitioners’ counsel on record but these failed on account of their failure to furnish the Office of the LA a copy of any notice of change of address. There was also no evidence that a service of notice of change of address was served on the POEA.

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The NLRC upheld the finding of unjustified termination of contract for failure on the part of the petitioners to present evidence that would justify their non-deployment of the respondent.14 It denied the claim of the petitioners that the monetary award should be limited only to three (3) months for every year of the unexpired term of the contract. It ruled that the factual incidents material to the case transpired within 1991-1992 or before the effectivity of Republic Act No. 8042 or the Migrant Workers and Overseas Filipinos Act of 1995 which provides for such limitation.15

ISSUE1:THE COURT A QUO ERRED IN FINDING THAT THE SECOND CONTRACT NOVATED THE FIRST CONTRACT.HELD: We concur with the finding that there was a novation of the first employment contract. Novation is the extinguishment of an obligation by the substitution or change of the obligation by a subsequent one which extinguishes or modifies the first, either by changing the object or principal conditions, or, by substituting another in place of the debtor, or by subrogating a third person in the rights of the creditor. In order for novation to take place, the concurrence of the following requisites is indispensable: 1)There must be a previous valid obligation; 2)There must be an agreement of the parties concerned to a new contract; 3)There must be the extinguishment of the old contract, and 4)There must be the validity of the new contract.

We need not dwell on the issue of prescription. It was settled by the Court of Appeals with its ruling that recovery of damages under the first contract was already time-barred. Thus: Accordingly, the prescriptive period of three (3) years within which Medequillo Jr. may initiate money claims under the 1st contract commenced on the date of his repatriation. xxx The start of the three (3) year prescriptive period must therefore be reckoned on February 1992, which by Medequillo Jr.’s own admission was the date of his repatriation to Manila. It was at this point in time that Medequillo Jr.’s cause of action already accrued under the first contract. He had until February 1995 to pursue a case for illegal dismissal and damages arising from the 1st contract. With the filing of his Complaint-Affidavit on March 6, 1995, which was clearly beyond the prescriptive period, the cause of action under the 1st contract was already time-barred.

ISSUE2.THE COURT A QUO ERRED IN RULING THAT THERE WAS CONSTRUCTIVE DISMISSAL UNDER THE SECOND CONTRACT.HELD:The petitioners argue that under the POEA Contract, actual deployment of the seafarer is a suspensive condition for the commencement of the employment. We agree with petitioners on such point. However, even without actual deployment, the perfected contract gives rise to obligations on the part of petitioners.

The POEA Standard Employment Contract provides that employment shall commence "upon the actual departure of the seafarer from the airport or seaport in the port of hire."We adhere to the terms and conditions of the contract so as to credit the valid prior stipulations of the parties before the controversy started. Else, the obligatory force of every contract will be useless. Parties are bound not only to the fulfillment of what has been expressly stipulated but also to all the consequences which, according to their nature, may be in keeping with good faith, usage and law.

Thus, even if by the standard contract employment commences only "upon actual departure of the seafarer", this does not mean that the seafarer has no remedy in case of non-deployment without any valid reason. Parenthetically, the contention of the petitioners of the alleged poor performance of respondent while on board the first ship MV "Stolt Aspiration" cannot be sustained to justify the non-deployment, for no evidence to prove the same was presented.

We rule that distinction must be made between the perfection of the employment contract and the commencement of the ER-EE 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 ER-EE relationship, as earlier discussed, would have taken place had petitioner been actually deployed from the point of hire. Thus, even before the start of any ER-EE 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.

ISSUE3:THE COURT A QUO ERRED IN FAILING TO FIND THAT EVEN ASSUMING THERE WAS BASIS FOR HOLDING PETITIONER LIABLE FOR "FAILURE TO DEPLOY" RESPONDENT, THE POEA RULES PENALIZES SUCH OMISSION WITH A MERE "REPRIMAND."HELD:The appellate court correctly ruled that the penalty of reprimand provided under Rule IV, Part VI of the POEA Rules and Regulations Governing the Recruitment and Employment of Land-based Overseas Workers is not applicable in this case. The breach of contract happened on February 1992 and the law applicable at that time was the 1991 POEA Rules and Regulations Governing Overseas Employment. The penalty for non-deployment as discussed is suspension or cancellation of license or fine.

ISSUE4. How will the seafarer be compensated by reason of the unreasonable non-deployment of the petitioners?HELD:The POEA Rules Governing the Recruitment and Employment of Seafarers do not provide for the award of damages to be given in

favor of the EEs. The claim provided by the same law refers to a valid contractual claim for compensation or benefits arising from ER-EE relationship or for any personal injury, illness or death at levels provided for within the terms and conditions of employment of seafarers. However, the absence of the POEA Rules with regard to the payment of damages to the affected seafarer does not mean that the seafarer is precluded from claiming the same. The sanctions provided for non-deployment do not end with the suspension or cancellation of license or fine and the return of all documents at no cost to the worker. As earlier discussed, they do not forefend a seafarer from instituting an action for damages against the ER or agency which has failed to deploy him.

We thus decree the application of Section 10 of RA8042 (Migrant Workers Act) which provides for money claims by reason of a contract involving Filipino workers for overseas deployment. The law provides: Sec. 10. Money Claims. – Notwithstanding any provision of law to the contrary, the LAs of the National Labor Relations Commission (NLRC) shall have the original and exclusive jurisdiction to hear and decide, within ninety (90) calendar days after the filing of the complaint, the claims arising out of an ER-EE 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.

Following the law, the claim is still cognizable by the LAs of the NLRC under the second phrase of the provision. Applying the rules on actual damages, Article 2199 of the New Civil Code provides that one is entitled to an adequate compensation only for such pecuniary loss suffered by him as he has duly proved. Respondent is thus liable to pay petitioner actual damages in the form of the loss of nine (9) months’ worth of salary as provided in the contract.38 This is but proper because of the non-deployment of respondent without just cause.

SERRANO vs. GALLANT MARITIME SERVICES,INC.

FACTS:Serrano was hired by Gallant Maritime Services, Inc. and Marlow Navigation Co., Ltd. (respondents) under a POEA-approved Contract of Employment with the following terms and conditions: Duration of contract-12 months, Position Chief Officer, Basic Salary-US$1,400.00,Hours of work-48 hours a week,Overtime-US$700.00 per month, Vacation leave with pay 7.00 days per month .

On March 19, 1998, the date of his departure, petitioner was constrained to accept a downgraded employment contract for the position of Second Officer with a monthly salary of US$1,000.00, upon the assurance and representation of respondents that he would be made Chief Officer by the end of April 1998. Respondents did not deliver on their promise to make petitioner Chief Officer. Hence, petitioner refused to stay on as Second Officer and was repatriated to the Philippines. Petitioner's employment contract was for a period of 12 months, but at the time of his repatriation, he had served only two (2) months and seven (7) days of his contract, leaving an unexpired portion of nine (9) months and twenty-three (23) days.

Petitioner filed with the Labor Arbiter a Complaint against respondents for constructive dismissal and for payment of his money claims. Labor arbiter rendered decision in favor of Serrano, however the LA based his computation on the salary period of three months only rather than the entire unexpired portion of nine months and 23 days of petitioner's employment contract. the LA applied the salary rate of US$2,590.00, consisting of petitioner's basic salary, US$1,400.00/month + US$700.00/month, fixed overtime pay, + US$490.00/month, vacation leave pay = US$2,590.00/compensation per month.

Petitioner appealed to the NLRC on the sole issue that the LA erred in not applying that in case of illegal dismissal, OFWs are entitled to their salaries for the unexpired portion of their contracts.

The NLRC corrected the LA's computation of the lump-sum salary awarded to petitioner by reducing the applicable salary rate from US$2,590.00 to US$1,400.00 because R.A. No. 8042 does not provide for the award of overtime pay, which should be proven to have been actually performed, and for vacation leave pay.

Serrano filed a Motion for Partial Reconsideration, but this time he questioned the constitutionality of the last clause in the 5th paragraph of Section 10 of RA 8042, which reads: 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.

NLRC denied said petition. Petitioner filed a Petition for Certiorari with the CA, reiterating the constitutional challenge against the subject clause.CA affirmed the NLRC ruling on the reduction of the applicable salary rate; however, the CA skirted the constitutional issue raised by petitioner.

ISSUE/S: 1. WON the subject clause violates Section 10, Article III of the Constitution on non-impairment of contracts; 2. WON the subject clause violate Section 1, Article III of the Constitution, and Section 18, Article II and Section 3, Article XIII on labor as a protected sector; 3. WON The subject clause or for three months for every year of the unexpired term, whichever is less in the 5th paragraph of Section 10 of Republic Act No. 8042 constitutional.

HELD: 1) The answer is in the negative. Petitioner’s claim that the subject clause unduly interferes with the stipulations in his contract

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on the term of his employment and the fixed salary package he will receive is not tenable.

The prohibition is aligned with the general principle that laws newly enacted have only a prospective operation, and cannot affect acts or contracts already perfected; however, as to laws already in existence, their provisions are read into contracts and deemed a part thereof. Thus, the non-impairment clause under Section 10, Article II is limited in application to laws about to be enacted that would in any way derogate from existing acts or contracts by enlarging, abridging or in any manner changing the intention of the parties thereto.

As aptly observed by the OSG, the enactment of R.A. No. 8042 in 1995 preceded the execution of the employment contract between petitioner and respondents in 1998. Hence, it cannot be argued that R.A. No. 8042, particularly the subject clause, impaired the employment contract of the parties. Rather, when the parties executed their 1998 employment contract, they were deemed to have incorporated into it all the provisions of R.A. No. 8042.

But even if the Court were to disregard the timeline, the subject clause may not be declared unconstitutional on the ground that it impinges on the impairment clause, for the law was enacted in the exercise of the police power of the State to regulate a business, profession or calling, particularly the recruitment and deployment of OFWs, with the noble end in view of ensuring respect for the dignity and well-being of OFWs wherever they may be employed.

Police power legislations adopted by the State to promote the health, morals, peace, education, good order, safety, and general welfare of the people are generally applicable not only to future contracts but even to those already in existence, for all private contracts must yield to the superior and legitimate measures taken by the State to promote public welfare.

2)The answer is in the affirmative. Section 1, Article III of the Constitution guarantees: No person shall be deprived of life, liberty, or property without due process of law nor shall any person be denied the equal protection of the law.

Section 18, Article II and Section 3, Article XIII accord all members of the labor sector, without distinction as to place of deployment, full protection of their rights and welfare. To Filipino workers, the rights guaranteed under the foregoing constitutional provisions translate to economic security and parity: all monetary benefits should be equally enjoyed by workers of similar category, while all monetary obligations should be borne by them in equal degree; none should be denied the protection of the laws which is enjoyed by, or spared the burden imposed on, others in like circumstances.

Such rights are not absolute but subject to the inherent power of Congress to incorporate, when it sees fit, a system of classification into its legislation; however, to be valid, the classification must comply with these requirements: 1) it is based on substantial distinctions; 2) it is germane to the purposes of the law; 3) it is not limited to existing conditions only; and 4) it applies equally to all members of the class.

There are three levels of scrutiny at which the Court reviews the constitutionality of a classification embodied in a law: a) the deferential or rational basis scrutiny in which the challenged classification needs only be shown to be rationally related to serving a legitimate state interest; b) the middle-tier or intermediate scrutiny in which the government must show that the challenged classification serves an important state interest and that the classification is at least substantially related to serving that interest; and c) 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.

Upon cursory reading, the subject clause appears facially neutral, for it applies to all OFWs. However, a closer examination reveals that the subject clause has a discriminatory intent against, and an invidious impact on, OFWs at two levels: First, OFWs with employment contracts of less than one year vis-à-vis OFWs with employment contracts of one year or more; Second, among OFWs with employment contracts of more than one year; and Third, OFWs vis-à-vis local workers with fixed-period employment;

In sum, prior to R.A. No. 8042, OFWs and local workers with fixed-term employment who were illegally discharged were treated alike in terms of the computation of their money claims: they were uniformly entitled to their salaries for the entire unexpired portions of their contracts. But with the enactment of R.A. No. 8042, specifically the adoption of the subject clause, illegally dismissed OFWs with an unexpired portion of one year or more in their employment contract have since been differently treated in that their money claims are subject to a 3-month cap, whereas no such limitation is imposed on local workers with fixed-term employment.

3)The Court concludes that the subject clause contains a suspect classification in that, in the computation of the monetary benefits of fixed-term EEs who are illegally discharged, it imposes a 3-month cap on the claim of OFWs with an unexpired portion of one year or more in their contracts, but none on the claims of other OFWs or local workers with fixed-term employment. The subject clause singles out one classification of OFWs and burdens it with a peculiar disadvantage.

There being a suspect classification involving a vulnerable sector protected by the Constitution, the Court now subjects the classification to a strict judicial scrutiny, and determines whether it serves a compelling state interest through the least restrictive means. What constitutes compelling state interest is measured by the scale of rights and powers arrayed in the Constitution and calibrated by history. It is akin to the paramount interest of the state for which some individual liberties must give way, such as the public interest in safeguarding health or maintaining medical standards, or in maintaining access to information on matters of public concern.

In the present case, the Court dug deep into the records but found no compelling state interest that the subject clause may possibly serve.In fine, the Government has failed to discharge its burden of proving the existence of a compelling state interest that would justify the perpetuation of the discrimination against OFWs under the subject clause.

Assuming that, as advanced by the OSG, the purpose of the subject clause is to protect the employment of OFWs by mitigating the solidary liability of placement agencies, such callous and cavalier rationale will have to be rejected. There can never be a justification for any form of government action that alleviates the burden of one sector, but imposes the same burden on another sector, especially when the favored sector is composed of private businesses such as placement agencies, while the disadvantaged sector is composed of OFWs whose protection no less than the Constitution commands. The idea that private business interest can be elevated to the level of a compelling state interest is odious.

Moreover, even if the purpose of the subject clause is to lessen the solidary liability of placement agencies vis-a-vis their foreign principals, there are mechanisms already in place that can be employed to achieve that purpose without infringing on the constitutional rights of OFWs.

Thus, the subject clause in the 5th paragraph of Section 10 of R.A. No. 8042 is violative of the right of petitioner and other OFWs to equal protection. The subject clause “or for three months for every year of the unexpired term, whichever is less” in the 5th paragraph of Section 10 of Republic Act No. 8042 is DECLARED UNCONSTITUTIONAL. BECMEN SERVICE EXPORTER AND PROMOTIONS,INC., vs. SPS. CUARESMA

FACTS:On January 6, 1997, Jasmin Cuaresma (Jasmin) was deployed by Becmen Service Exporter and Promotion, Inc. (Becmen) to serve as assistant nurse in Al-Birk Hospital in the Kingdom of Saudi Arabia (KSA), for a contract duration of three years, with a corresponding salary of US$247.00 per month. Over a year later, she died allegedly of poisoning. Jessie Fajardo, a co-worker of Jasmin, narrated that on June 21, 1998, Jasmin was found dead by a female cleaner lying on the floor inside her dormitory room with her mouth foaming and smelling of poison.

Based on the police report and the medical report of the examining physician of the Al-Birk Hospital, who conducted an autopsy of Jasmin’s body, the likely cause of her death was poisoning. Jasmin’s body was repatriated to Manila on September 3, 1998. The following day, the City Health Officer of Cabanatuan City conducted an autopsy and the resulting medical report indicated that Jasmin died under violent circumstances, and not poisoning as originally found by the KSA examining physician. The toxicology report of the NBI, however, tested negative for non-volatile, metallic poison and insecticides.

Simplicio and Mila Cuaresma (the Cuaresmas), Jasmin’s parents and her surviving heirs, received from the Overseas Workers Welfare Administration (OWWA) the following amounts: P50,000.00 for death benefits; P50,000.00 for loss of life; P20,000.00 for funeral expenses; and P10,000.00 for medical reimbursement.

On November 22, 1999, the Cuaresmas filed a complaint against Becmen and its principal in the KSA, Rajab & Silsilah Company (Rajab), claiming death and insurance benefits, as well as moral and exemplary damages for Jasmin’s death, Jasmin’s death was work-related, having occurred at the ER’s premises; that under Jasmin’s contract with Becmen, she is entitled to “iqama insurance” coverage; that Jasmin is entitled to compensatory damages in the amount of US$103,740.00, which is the sum total of her monthly salary of US$247.00 per month under her employment contract, multiplied by 35 years (or the remaining years of her productive life had death not supervened at age 25, assuming that she lived and would have retired at age 60).

In their position paper, Becmen and Rajab insist that Jasmin committed suicide, citing a prior unsuccessful suicide attempt sometime in March or April 1998 and relying on the medical report of the examining physician of the Al-Birk Hospital. They likewise deny liability because the Cuaresmas already recovered death and other benefits totaling P130,000.00 from the OWWA. They insist that the Cuaresmas are not entitled to “iqama insurance” because this refers to the “issuance” – not insurance – of iqama, or residency/work permit required in the KSA. On the issue of moral and exemplary damages, they claim that the Cuaresmas are not entitled to the same because they have not acted with fraud, nor have they been in bad faith in handling Jasmin’s case.

LA dismiss complaint for lack of merit. NLRC reversed the decision of LA undeclared that, based on substantial evidence adduced, Jasmin was the victim of compensable work-connected criminal aggression.

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CA affirmed NLRC decision,and later on amended its decision,holding Petitioners are hereby adjudged jointly and solidarily liable with the ER for the monetary awards with Becmen Service Exporter and Promotions, Inc. having a right of reimbursement from White Falcon Services, Inc.

While the case was pending, Becmen filed a manifestation and motion for substitution alleging that Rajab terminated their agency relationship and had appointed White Falcon Services, Inc. (White Falcon) as its new recruitment agent in the Philippines. Thus, White Falcon was impleaded as respondent as well, and it adopted and reiterated Becmen’s arguments in the position paper it subsequently filed.

ISSUES:1.) WON the Cuaresmas are entitled to monetary claims, by way of benefits and damages, for the death of their daughter Jasmin; 2.) WON Jasmin’s death be considered as work-connected and thus compensable even while she was not on duty; 3.) WON employment agencies may be held jointly and solidarily liable.

HELD:1) Article 19 of the Civil Code provides that every person must, in the exercise of his rights and in the performance of his duties, act with justice, give everyone his due, and observe honesty and good faith. Article 21 of the Code states that any person who wilfully causes loss or injury to another in a manner that is contrary to morals, good customs or public policy shall compensate the latter for the damage. And, lastly, Article 24 requires that in all contractual, property or other relations, when one of the parties is at a disadvantage on account of his moral dependence, ignorance, indigence, mental weakness, tender age or other handicap, the courts must be vigilant for his protection.

Clearly, Rajab, Becmen and White Falcon’s acts and omissions are against public policy because they undermine and subvert the interest and general welfare of our OFWs abroad, who are entitled to full protection under the law. They set an awful example of how foreign ERs and recruitment agencies should treat and act with respect to their distressed EEs and workers abroad. Their shabby and callous treatment of Jasmin’s case; their uncaring attitude; their unjustified failure and refusal to assist in the determination of the true circumstances surrounding her mysterious death, and instead finding satisfaction in the unreasonable insistence that she committed suicide just so they can conveniently avoid pecuniary liability; placing their own corporate interests above of the welfare of their EE’s – all these are contrary to morals, good customs and public policy, and constitute taking advantage of the poor EE and her family’s ignorance, helplessness, indigence and lack of power and resources to seek the truth and obtain justice for the death of a loved one.

Giving in handily to the idea that Jasmin committed suicide, and adamantly insisting on it just to protect Rajab and Becmen’s material interest – despite evidence to the contrary – is against the moral law and runs contrary to the good custom of not denouncing one’s fellowmen for alleged grave wrongdoings that undermine their good name and honor.

Whether employed locally or overseas, all Filipino workers enjoy the protective mantle of Philippine labor and social legislation, contract stipulations to the contrary notwithstanding. This pronouncement is in keeping with the basic public policy of the State to afford protection to labor, promote full employment, ensure equal work opportunities regardless of sex, race or creed, and regulate the relations between workers and ERs. This ruling is likewise rendered imperative by Article 17 of the Civil Code which states that laws which have for their object public order, public policy and good customs shall not be rendered ineffective by laws or judgments promulgated, or by determinations or conventions agreed upon in a foreign country.

The relations between capital and labor are so impressed with public interest,and neither shall act oppressively against the other, or impair the interest or convenience of the public. In case of doubt, all labor legislation and all labor contracts shall be construed in favor of the safety and decent living for the laborer.

The grant of moral damages to the EE by reason of misconduct on the part of the ER is sanctioned by Article 2219 (10) of the Civil Code, which allows recovery of such damages in actions referred to in Article 21. Thus, in view of the foregoing, the Court holds that the Cuaresmas are entitled to moral damages, which Becmen and White Falcon are jointly and solidarily liable to pay, together with exemplary damages for wanton and oppressive behavior, and by way of example for the public good.

2)evidence indicates that it is not. At the time of her death, she was not on duty, or else evidence to the contrary would have been adduced. Neither was she within hospital premises at the time. Instead, she was at her dormitory room on personal time when she died. Neither has it been shown, nor does the evidence suggest, that at the time she died, Jasmin was performing an act reasonably necessary or incidental to her employment as nurse, because she was at her dormitory room. It is reasonable to suppose that all her work is performed at the Al-birk Hospital, and not at her dormitory room.While the “ER’s premises” may be defined very broadly not only to include premises owned by it, but also premises it leases, hires, supplies or uses, we are not prepared to rule that the dormitory wherein Jasmin stayed should constitute ER’s premises as would allow a finding that death or injury therein is considered to have been incurred or sustained in the course of or arose out of her employment. There are certainly exceptions, but they do not appear to apply here. Moreover, a complete determination would have to depend on the unique circumstances obtaining and the overall factual environment of the case, which are here

lacking.Thus we categorically hold, based on the evidence; the actual experiences of our OFWs; and the resilient and courageous spirit of the Filipina that transcends the vilest desecration of her physical self, that Jasmin did not commit suicide but a victim of murderous aggression.

3)Under Republic Act No. 8042 (R.A. 8042), or the Migrant Workers and Overseas Filipinos Act of 1995, the State shall, at all times, uphold the dignity of its citizens whether in country or overseas, in general, and Filipino migrant workers, in particular. The State shall provide adequate and timely social, economic and legal services to Filipino migrant workers. The rights and interest of distressed overseas Filipinos, in general, and Filipino migrant workers, in particular, documented or undocumented, are adequately protected and safeguarded. chanroblesvirtuallawlibr

Becmen and White Falcon, as licensed local recruitment agencies, miserably failed to abide by the provisions of R.A. 8042. Recruitment agencies are expected to extend assistance to their deployed OFWs, especially those in distress. Instead, they abandoned Jasmins case and allowed it to remain unsolved to further their interests and avoid anticipated liability which parents or relatives of Jasmin would certainly exact from them. They willfully refused to protect and tend to the welfare of the deceased Jasmin, treating her case as just one of those unsolved crimes that is not worth wasting their time and resources on. The evidence does not even show that Becmen and Rajab lifted a finger to provide legal representation and seek an investigation of Jasmins case. Worst of all, they unnecessarily trampled upon the person and dignity of Jasmin by standing pat on the argument that Jasmin committed suicide, which is a grave accusation given its un-Christian nature.

Private employment agencies are held jointly and severally liable with the foreign-based ER for any violation of the recruitment agreement or contract of employment. This joint and solidary liability imposed by law against recruitment agencies and foreign ERs is meant to assure the aggrieved worker of immediate and sufficient payment of what is due him. If the recruitment/placement agency is a juridical being, the corporate officers and directors and partners as the case may be, shall themselves be jointly and solidarily liable with the corporation or partnership for the aforesaid claims and damages.White Falcons assumption of Becmens liability does not automatically result in Becmens freedom or release from liability. This has been ruled in ABD Overseas Manpower Corporation v. NLRC. Instead, both Becmen and White Falcon should be held liable solidarily, without prejudice to each having the right to be reimbursed under the provision of the Civil Code that whoever pays for another may demand from the debtor what he has paid.SUN ACE vs. NLRCDoctrine of imputed knowledge

CENTURY CANNING CORPORATION vs. CA and GLORIA C. PALADG.R. No. 152894 August 17, 2007CARPIO, J.:

FACTS: On 15 July 1997, Century Canning Corporation (petitioner) hired Gloria C. Palad (Palad) as "fish cleaner" at petitioner’s tuna and sardines factory. Palad signed on 17 July 1997 an apprenticeship agreement3 with petitioner. Palad received an apprentice allowance of P138.75 daily. On 25 July 1997, petitioner submitted its apprenticeship program for approval to the TESDA of the. On 26 September 1997, the TESDA approved petitioner’s apprenticeship program.

According to petitioner, a performance evaluation was conducted on 15 November 1997, where petitioner gave Palad a rating of N.I. or "needs improvement" since she scored only 27.75% based on a 100% performance indicator. Furthermore, according to the performance evaluation, Palad incurred numerous tardiness and absences. As a consequence, petitioner issued a termination notice5 dated 22 November 1997 to Palad, informing her of her termination effective at the close of business hours of 28 November 1997.

Palad then filed a complaint for illegal dismissal, underpayment of wages, and non-payment of pro-rated 13th month pay for the year 1997.LA dismissed the complaint for lack of merit but ordered petitioner to pay Palad her last salary and her pro-rated 13th month pay. NLRC affirmed with modification the Labor Arbiter’s decision.

CA: the questioned decision of the NLRC is hereby SET ASIDE. that the apprenticeship agreement which Palad signed was not valid and binding because it was executed more than two months before the TESDA approved petitioner’s apprenticeship program. prior approval by the DOLE of the proposed apprenticeship program is a condition sine qua non before an apprenticeship agreement can be validly entered into. petitioner illegally dismissed Palad because it failed to show that Palad was properly apprised of the required standard of performance. The Court of Appeals likewise held that Palad was not afforded due process because petitioner did not comply with the twin requirements of notice and hearing.

ISSUES: 1. WHETHER THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR IN HOLDING THAT PRIVATE RESPONDENT WAS NOT AN APPRENTICE; and 2. WHETHER THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR IN HOLDING THAT PETITIONER HAD NOT ADEQUATELY PROVEN THE EXISTENCE OF A VALID CAUSE IN TERMINATING THE SERVICE OF PRIVATE RESPONDENT.

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HELD: 1.The petition is without merit. In the case at bench, the apprenticeship agreement between petitioner and private respondent was executed on May 28, 1990 allegedly employing the latter as an apprentice in the trade of "care maker/molder." On the same date, an apprenticeship program was prepared by petitioner and submitted to the Department of Labor and Employment. However, the apprenticeship agreement was filed only on June 7, 1990. Notwithstanding the absence of approval by the Department of Labor and Employment, the apprenticeship agreement was enforced the day it was signed.

Based on the evidence before us, petitioner did not comply with the requirements of the law. It is mandated that apprenticeship agreements entered into by the ER and apprentice shall be entered only in accordance with the apprenticeship program duly approved by the Minister of Labor and Employment.

Prior approval by the Department of Labor and Employment of the proposed apprenticeship program is, therefore, a condition sine qua non before an apprenticeship agreement can be validly entered into.

The act of filing the proposed apprenticeship program with the Department of Labor and Employment is a preliminary step towards its final approval and does not instantaneously give rise to an ER-apprentice relationship.

Hence, since the apprenticeship agreement between petitioner and private respondent has no force and effect in the absence of a valid apprenticeship program duly approved by the DOLE, private respondent’s assertion that he was hired not as an apprentice but as a delivery boy ("kargador" or "pahinante") deserves credence. He should rightly be considered as a regular EE of petitioner as defined by Article 280 of the Labor Code .

RA 7796 which created the TESDA, has transferred the authority over apprenticeship programs from the Bureau of Local Employment of the DOLE to the TESDA.16 RA 7796 emphasizes TESDA’s approval of the apprenticeship program as a pre-requisite for the hiring of apprentices. Such intent is clear under Section 4 of RA 7796:

Since Palad is not considered an apprentice because the apprenticeship agreement was enforced before the TESDA’s approval of petitioner’s apprenticeship program, Palad is deemed a regular EE performing the job of a "fish cleaner." Clearly, the job of a "fish cleaner" is necessary in petitioner’s business as a tuna and sardines factory. Under Article 28021 of the Labor Code, an employment is deemed regular where the EE has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the ER.

2. Under Article 27922 of the Labor Code, an ER may terminate the services of an EE for just causes23 or for authorized causes.24 Furthermore, under Article 277(b)25 of the Labor Code, the ER must send the EE who is about to be terminated, a written notice stating the causes for termination and must give the EE the opportunity to be heard and to defend himself. Thus, to constitute valid dismissal from employment, two requisites must concur: (1) the dismissal must be for a just or authorized cause; and (2) the EE must be afforded an opportunity to be heard and to defend himself.

In this case, the Labor Arbiter held that petitioner terminated Palad for habitual absenteeism and poor efficiency of performance. Under Section 25, Rule VI, Book II of the Implementing Rules of the Labor Code, habitual absenteeism and poor efficiency of performance are among the valid causes for which the ER may terminate the apprenticeship agreement after the probationary period.

However, the NLRC reversed the finding of the Labor Arbiter on the issue of the legality of Palad’s termination: As to the validity of complainant’s dismissal in her status as an apprentice, suffice to state that the findings of the Arbiter that complainant was dismissed due to failure to meet the standards is nebulous. What clearly appears is that complainant already passed the probationary status of the apprenticeship agreement of 200 hours at the time she was terminated on 28 November 1997 which was already the fourth month of the apprenticeship period of 1000 hours. As such, under the Code, she can only be dismissed for cause, in this case, for poor efficiency of performance on the job or in the classroom for a prolonged period despite warnings duly given to the apprentice.

We noted that no clear and sufficient evidence exist to warrant her dismissal as an apprentice during the agreed period. Besides the absence of any written warnings given to complainant reminding her of "poor performance," respondents’ evidence in this respect consisted of an indecipherable or unauthenticated xerox of the performance evaluation allegedly conducted on complainant. This is of doubtful authenticity and/or credibility, being not only incomplete in the sense that appearing thereon is a signature (not that of complainant) side by side with a date indicated as "1/16/98". From the looks of it, this signature is close to and appertains to the typewritten position of "Division/Department Head", which is below the signature of complainant’s immediate superior who made the evaluation indicated as "11-15-97."

The only conclusion We can infer is that this evaluation was made belatedly, specifically, after the filing of the case and during the progress thereof in the Arbitral level, as shown that nothing thereon indicate that complainant was notified of the results. Its authenticity therefor, is a big question mark, and hence lacks any credibility. Evidence, to be admissible in administrative

proceedings, must at least have a modicum of authenticity. This, respondents failed to comply with. As such, complainant is entitled to the payment of her wages for the remaining two (2) months of her apprenticeship agreement.27

Indeed, it appears that the Labor Arbiter’s conclusion that petitioner validly terminated Palad was based mainly on the performance evaluation allegedly conducted by petitioner. However, Palad alleges that she had no knowledge of the performance evaluation conducted and that she was not even informed of the result of the alleged performance evaluation. Palad also claims she did not receive a notice of dismissal, nor was she given the chance to explain. According to petitioner, Palad did not receive the termination notice because Palad allegedly stopped reporting for work after being informed of the result of the evaluation.

Under Article 227 of the Labor Code, the ER has the burden of proving that the termination was for a valid or authorized cause.28 Petitioner failed to substantiate its claim that Palad was terminated for valid reasons. In fact, the NLRC found that petitioner failed to prove the authenticity of the performance evaluation which petitioner claims to have conducted on Palad, where Palad received a performance rating of only 27.75%. Petitioner merely relies on the performance evaluation to prove Palad’s inefficiency. It was likewise not shown that petitioner ever apprised Palad of the performance standards set by the company. When the alleged valid cause for the termination of employment is not clearly proven, as in this case, the law considers the matter a case of illegal dismissal.29

Furthermore, Palad was not accorded due process. Even if petitioner did conduct a performance evaluation on Palad, petitioner failed to warn Palad of her alleged poor performance. In fact, Palad denies any knowledge of the performance evaluation conducted and of the result thereof. Petitioner likewise admits that Palad did not receive the notice of termination30 because Palad allegedly stopped reporting for work. The records are bereft of evidence to show that petitioner ever gave Palad the opportunity to explain and defend herself. Clearly, the two requisites for a valid dismissal are lacking in this case.

ATLANTA INDUSTRIES, INC. vs. APRILITO R. SEBOLINOG.R. No. 187320 January 26, 2011BRION, J.:

FACTS: complainants filed several complaints for illegal dismissal, regularization, underpayment, nonpayment of wages and other money claims, as well as claims for moral and exemplary damages and attorney’s fees against the petitioners Atlanta and its President and Chief Operating Officer Robert Chan. Atlanta is a domestic corporation engaged in the manufacture of steel pipes. The complaints were consolidated and were raffled to Labor Arbiter Daniel Cajilig, but were later transferred to Labor Arbiter Dominador B. Medroso, Jr.

The complainants alleged that they had attained regular status as they were allowed to work with Atlanta for more than 6 months from the start of a purported apprenticeship agreement between them and the company. They claimed that they were illegally dismissed when the apprenticeship agreement expired.

In defense, Atlanta and Chan argued that the workers were not entitled to regularization and to their money claims because they were engaged as apprentices under a government-approved apprenticeship program. The company offered to hire them as regular EEs in the event vacancies for regular positions occur in the section of the plant where they had trained. They also claimed that their names did not appear in the master list of EEs prior to their engagement as apprentices.

On May 24, 2005, dela Cruz, Magalang, Zaño and Chiong executed a Pagtalikod at Pagwawalang Saysay before Labor Arbiter Cajilig. Labor Arbiter Medroso dismissed the complaint with respect to dela Cruz, Magalang, Zaño and Chiong, but found the termination of service of the remaining nine to be illegal.6 Consequently, the arbiter awarded the dismissed workers backwages, wage differentials, holiday pay and service incentive leave pay.

Atlanta appealed to the NLRC. In the meantime Ramos, Alegria, Villagomez, Costales and Almoite allegedly entered into a compromise agreement with Atlanta.7 The agreement provided that except for Ramos, Atlanta agreed to pay the workers a specified amount as settlement, and to acknowledge them at the same time as regular EEs.

NLRC rendered a decision (1) withdrawing the illegal dismissal finding with respect to Sagun, Mabanag, Sebolino and Pedregoza; (2) affirming the dismissal of the complaints of dela Cruz, Zaño, Magalang and Chiong; (3) approving the compromise agreement entered into by Costales, Ramos, Villagomez, Almoite and Alegria, and (4) denying all other claims.

Sebolino, Costales, Almoite and Sagun moved for the reconsideration of the decision, but the NLRC denied the motion. The four then sought relief from the CA through a petition for certiorari under Rule 65 of the Rules of Court. They charged that the NLRC committed grave abuse of discretion in: (1) failing to recognize their prior employment with Atlanta; (2) declaring the second apprenticeship agreement valid; (3) holding that the dismissal of Sagun, Mabanag, Sebolino and Melvin Pedregoza is legal; and (4) upholding the compromise agreement involving Costales, Ramos, Villagomez, Almoite and Alegria.

The CA granted the petition based on the following findings:1. The respondents were already EEs of the company before they entered into the first and second apprenticeship agreements; 2. The first

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and second apprenticeship agreements were defective as they were executed in violation of the law and the rules.The agreements did not indicate the trade or occupation in which the apprentice would be trained; neither was the apprenticeship program approved by the TESDA; 3. The positions occupied by the respondents – machine operator, extruder operator and scaleman – are usually necessary and desirable in the manufacture of plastic building materials, the company’s main business. Costales, Almoite, Sebolino and Sagun were, therefore, regular EEs whose dismissals were illegal for lack of a just or authorized cause and notice; 4. The compromise agreement entered into by Costales and Almoite, together with Ramos, Villagomez and Alegria, was not binding on Costales and Almoite because they did not sign the agreement.The petitioners themselves admitted that Costales and Almoite were initially planned to be a part of the compromise agreement, but their employment has been regularized as early as January 11, 2006; hence, the company did not pursue their inclusion in the compromise agreement.

The CA faulted the NLRC for failing to appreciate the evidence regarding the respondents’ prior employment with Atlanta. The CA noted that Atlanta failed to challenge the authenticity of the two documents before it and the labor authorities.Atlanta and Chan moved for reconsideration, but the CA denied the motion in a resolution.

ISSUE1: whether or not the documents accompanying the petition sufficiently supported the allegations therein.HELD: The accompanying CA decision38 and resolution,39 as well as those of the labor arbiter40 and the NLRC,41 referred to the parties’ position papers and even to their replies and rejoinders. Significantly, the CA decision narrates the factual antecedents, defines the complainants’ cause of action, and cites the arguments, including the evidence the parties adduced. If any, the defect in the petition lies in the petitioners’ failure to provide legible copies of some of the material documents mentioned, especially several pages in the decisions of the labor arbiter and of the NLRC. This defect, however, is not fatal as the challenged CA decision clearly summarized the labor tribunal’s rulings. We, thus, find no procedural obstacle in resolving the petition on the merits.

ISSUE2: WON Costales, Almoite, Sebolino and Sagun were illegally dismissed and the apprenticeship agreements were invalid.HELD: We find no merit in the petition. The CA committed no reversible error in nullifying the NLRC decision42 and in affirming the labor arbiter’s ruling,43 as it applies to Costales, Almoite, Sebolino and Sagun. Specifically, the CA correctly ruled that the four were illegally dismissed because (1) they were already EEs when they were required to undergo apprenticeship and (2) apprenticeship agreements were invalid.

First. Based on company operations at the time material to the case, Costales, Almoite, Sebolino and Sagun were already rendering service to the company as EEs before they were made to undergo apprenticeship. The company itself recognized the respondents’ status through relevant operational records – Under the CPS monthly report, Atlanta assigned Costales and Almoite to the first shift 7am to 3pm of the Section’s work. The Production and Work Schedules, in addition to the one noted by the CA, showed that Sebolino and Sagun were scheduled on different shifts vis-à-vis the production and work of the company’s PE/Spiral Section for the for several periods

We stress that the CA correctly recognized the authenticity of the operational documents, for the failure of Atlanta to raise a challenge against these documents before the labor arbiter, the NLRC and the CA itself. The appellate court, thus, found the said documents sufficient to establish the employment of the respondents before their engagement as apprentices.

Second. The Master List of EEs that the petitioners heavily rely upon as proof of their position that the respondents were not Atlanta’s EEs, at the time they were engaged as apprentices, is unreliable and does not inspire belief.

The list, consisting of several pages, is hardly legible. It requires extreme effort to sort out the names of the EEs listed, as well as the other data contained in the list. For this reason alone, the list deserves little or no consideration. As the respondents also pointed out, the list itself contradicts a lot of Atlanta’s claims and allegations, thus: it lists only the names of inactive EEs; even the names of those the NLRC found to have been employed by Atlanta, like Costales and Almoite, and those who even Atlanta claims attained regular status do not appear in the list when it was supposed to account for all EEs. the list contains no entries of EEs who were hired or who resigned.

We cannot fault the CA for ignoring the Master List even if Bernardo, its head office accountant, swore to its correctness and authenticity.56 Its substantive unreliability gives it very minimal probative value. Atlanta would have been better served, in terms of reliable evidence, if true copies of the payroll (on which the list was based, among others, as Bernardo claimed in her affidavit) were presented instead.

Third. The fact that Costales, Almoite, Sebolino and Sagun were already rendering service to the company when they were made to undergo apprenticeship (as established by the evidence) renders the apprenticeship agreements irrelevant as far as the four are concerned. This reality is highlighted by the CA finding that the respondents occupied positions such as machine operator, scaleman and extruder operator - tasks that are usually necessary and desirable in Atlanta’s usual business or trade as manufacturer of plastic building materials. These tasks and their nature characterized the four as regular EEs under Article 280 of the Labor

Code. Thus, when they were dismissed without just or authorized cause, without notice, and without the opportunity to be heard, their dismissal was illegal under the law.

Even if we recognize the company’s need to train its EEs through apprenticeship, we can only consider the first apprenticeship agreement for the purpose. With the expiration of the first agreement and the retention of the EEs, Atlanta had, to all intents and purposes, recognized the completion of their training and their acquisition of a regular EE status. To foist upon them the second apprenticeship agreement for a second skill which was not even mentioned in the agreement itself,is a violation of the Labor Code’s implementing rules60 and is an act manifestly unfair to the EEs, to say the least. This we cannot allow.

Fourth. The compromise agreement allegedly entered into by Costales and Almoite, together with Ramos, Villagomez and Alegria, purportedly in settlement of the case before the NLRC, is not binding on Costales and Almoite because they did not sign it. The company itself admitted62 that while Costales and Almoite were initially intended to be a part of the agreement, it did not pursue their inclusion "due to their regularization.MARITES BERNARDO et al. vs. NLRC and FAR EAST BANK AND TRUST COMPANYG.R. No. 122917 July 12, 1999 PANGANIBAN, J.:

FACTS: Complainants numbering 43 are deaf-mutes who were hired on various periods from 1988 to 1993 by respondent FEBATCO as Money Sorters and Counters through a uniformly worded agreement called "Employment Contract for Handicapped Workers". The EE shall perform among others, the following duties and responsibilities: i. Sort out bills according to color;ii. Count each denomination per hundred, either manually or with the aid of a counting machine; iii. Wrap and label bills per hundred; iv. Put the wrapped bills into bundles; and v. Submit bundled bills to the bank teller for verification. The EE shall undergo a training period of one (1) month, after which the BANK shall determine whether or not he/she should be allowed to finish the remaining term of this Contract. The EE shall be entitled to an initial compensation of P118.00 per day, subject to adjustment in the sole judgment of the BANK, payable every 15th and end of the month. The regular work schedule of the EE shall be five (5) days per week, from Mondays thru Fridays, at eight (8) hours a day. The EE may be required to perform overtime work as circumstance may warrant, for which OT work he/she [shall] be paid an additional compensation of 125% of his daily rate if performed during ordinary days and 130% if performed during Saturday or [a] rest day. The EE shall likewise be entitled to the following benefits: i. Proportionate 13th month pay based on his basic daily wage.ii, Five (5) days incentive leave, iii. SSS premium payment. The Employment Contract shall be for a period of six (6) months unless earlier terminated by the BANK for any just or reasonable cause. Any continuation or extension of this Contract shall be in writing and therefore this Contract will automatically expire at the end of its terms unless renewed in writing by the BANK.

Their employment[s] were renewed every six months such that by the time this case arose, there were fifty-six (56) deaf-mutes who were employed by respondent under the said employment agreement.

NLRC: affirmed LA’s decision. We agree that Art. 280 is not controlling herein. We give due credence to the conclusion that complainants were hired as an accommodation to [the] recommendation of civic oriented personalities whose employment[s] were covered by Employment Contract[s] with special provisions on duration of contract as specified under Art. 80. Hence, as correctly held by the LA a quo, the terms of the contract shall be the law between the parties. that the Magna Carta for Disabled Persons was not applicable, "considering the prevailing circumstances/milieu of the case."

ISSUES: The Honorable Commission committed grave abuse of discretion in holding 1)that the petitioners were not regular EEs; 2)that the employment contracts signed and renewed by the petitioners were valid; and 3)in not applying the provisions of the Magna Carta for the Disabled on proscription against discrimination against disabled persons. 11

HELD: The petition is meritorious. However, only the 27 EEs, who worked for more than six months and whose contracts were renewed are deemed regular. Hence, their dismissal from employment was illegal. The facts, viewed in light of the Labor Code and the Magna Carta for Disabled Persons, indubitably show that the petitioners, except 16 of them, should be deemed regular EEs. As such, they have acquired legal rights that this Court is duty-bound to protect and uphold, not as a matter of compassion but as a consequence of law and justice.

Respondent bank entered into the aforesaid contract with a total of 56 handicapped workers and renewed the contracts of 37 of them. In fact, two of them worked from 1988 to 1993. Verily, the renewal of the contracts of the handicapped workers and the hiring of others lead to the conclusion that their tasks were beneficial and necessary to the bank. More important, these facts show that they were qualified to perform the responsibilities of their positions. In other words, their disability did not render them unqualified or unfit for the tasks assigned to them.

In this light, the Magna Carta for Disabled Persons mandates No disabled person shall be denied access to opportunities for suitable employment. A qualified disabled EE shall be subject to the same terms and conditions of employment and the same compensation,

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privileges, benefits, fringe benefits, incentives or allowances as a qualified able bodied person.

The fact that the EEs were qualified disabled persons necessarily removes the employment contracts from the ambit of Article 80. Since the Magna Carta accords them the rights of qualified able-bodied persons, they are thus covered by Article 280 of the Labor Code, which provides that The provisions of written agreement to the contrary notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be regular where the EE has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the ER, except where the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the EE or where the work or services to be performed is seasonal in nature and the employment is for the duration of the season.

An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided, That, any EE who has rendered at least one year of service, whether such service is continuous or broken, shall be considered as regular EE with respect to the activity in which he is employed and his employment shall continue while such activity exists.

The test of whether an EE is regular was laid down in De Leon v. NLRC: The primary standard, therefore, of determining regular employment is the reasonable connection between the particular activity performed by the EE in relation to the usual trade or business of the ER. The test is whether the former is usually necessary or desirable in the usual business or trade of the ER. The connection can be determined by considering the nature of the work performed and its relation to the scheme of the particular business or trade in its entirety. Also if the EE has been performing the job for at least one year, even if the performance is not continuous and merely intermittent, the law deems repeated and continuing need for its performance as sufficient evidence of the necessity if not indispensibility of that activity to the business. Hence, the employment is considered regular, but only with respect to such activity, and while such activity exist.

Without a doubt, the task of counting and sorting bills is necessary and desirable to the business of respondent bank. As held by the Court, "Articles 280 and 281 of the Labor Code put an end to the pernicious practice of making permanent casuals of our lowly EEs by the simple expedient of extending to them probationary appointments, ad infinitum." 15 The contract signed by petitioners is akin to a probationary employment, during which the bank determined the EEs' fitness for the job. When the bank renewed the contract after the lapse of the six-month probationary period, the EEs thereby became regular EEs. 16 No ER is allowed to determine indefinitely the fitness of its EEs.

As regular EEs, the twenty-seven petitioners are entitled to security of tenure; that is, their services may be terminated only for a just or authorized cause. Because respondent failed to show such cause, 17 these twenty-seven petitioners are deemed illegally dismissed and therefore entitled to back wages and reinstatement without loss of seniority rights and other privileges. 18 Considering the allegation of respondent that the job of money sorting is no longer available because it has been assigned back to the tellers to whom it originally belonged, 18 petitioners are hereby awarded separation pay in lieu of reinstatement. 20

Because the other sixteen worked only for six months, they are not deemed regular EEs and hence not entitled to the same benefits.

it must be emphasized that a contract of employment is impressed with public interest. Provisions of applicable statutes are deemed written into the contract, and the "parties are not at liberty to insulate themselves and their relationships from the impact of labor laws and regulations by simply contracting with each other." Clearly, the agreement of the parties regarding the period of employment cannot prevail over the provisions of the Magna Carta for Disabled Persons, which mandate that petitioners must be treated as qualified able-bodied EEs.Respondent's reason for terminating the employment of petitioners is instructive. Because the Bangko Sentral ng Pilipinas (BSP) required that cash in the bank be turned over to the BSP during business hours from 8:00 a.m. to 5:00 p.m., respondent resorted to nighttime sorting and counting of money. Thus, it reasons that this task "could not be done by deaf mutes because of their physical limitations as it is very risky for them to travel at night." 24 We find no basis for this argument. Travelling at night involves risks to handicapped and able-bodied persons alike. This excuse cannot justify the termination of their employment.CLIENTLOGIC PHILPPINES, INC. (now known as SITEL) et al. vs. BENEDICT CASTROG.R. No. 186070, April 11, 2011NACHURA, J.:

FACTS: Respondent was employed by petitioner SITEL as a call center agent for its Bell South Account. After 6 months, he was promoted to the “Mentor” position, and thereafter to the “Coach” position. A “Coach” is a team supervisor who is in charge of dealing with customer complaints which cannot be resolved by call center agents. In June 2006, he was transferred to the Dot Green Account.

During respondent’s stint at the Dot Green Account, respondent noticed that some of the call center agents under him would often make excuses to leave their work stations. Their most common excuse was that they would visit the company’s medical clinic. To verify that they were not using the clinic as an alibi to cut their work hours, respondent sent an e-mail to the clinic’s personnel

requesting for the details of the agents’ alleged medical consultation. His request was denied on the ground that medical records of EEs are highly confidential and can only be disclosed in cases involving health issues, and not to be used to build any disciplinary case against them.

respondent received a notice requiring him to explain why he should not be penalized for: (1) violating Green Dot Company’s Policy and Procedure for Direct Deposit Bank Info Request when he accessed a customer’s online account and then gave the latter’s routing and reference numbers for direct deposit; and (2) gravely abusing his discretion when he requested for the medical records of his team members. Respondent did not deny the infractions imputed against him. He, however, justified his actuations by explaining that the customer begged him to access the account because she did not have a computer or an internet access and that he merely requested for a patient tracker, not medical records.

a poster showing SITEL’s organizational chart was posted on the company’s bulletin board, but respondent’s name and picture were conspicuously missing, and the name and photo of another EE appeared in the position which respondent was supposedly occupying.

On January 22, 2007, SITEL posted a notice of vacancy for respondent’s position, and on February 12, 2007, he received a Notice of Termination. These events prompted him to file a complaint for illegal dismissal; non-payment of overtime pay, rest day pay, holiday pay, service incentive leave pay; full backwages; damages; and attorney’s fees before the Labor Arbiter (LA) against herein petitioners SITEL and its officers, Joseph Velasquez (Velasquez), Irene Roa (Roa), and Rodney Spires (Spires). [5]

In their position paper, [petitioners averred that respondent was dismissed on account of valid and justifiable causes. He committed serious misconduct which breached the trust and confidence reposed in him by the company. He was duly furnished the twin notices required by the Labor Code. Further, he is not entitled to overtime pay, rest day pay, night shift differential, holiday pay, and service incentive leave pay because he was a supervisor, hence, a member of the managerial staff.

In his Position Paper, (respondent) states that he worked from 8PM to 10AM or 4PM to 12AM of the following day; he was also required to work during his restdays and during holidays but he was not paid; he was also not paid overtime pay; night shift differentials, and service incentive leave. He was employed as call center agent on 14 February 2005, then promoted as “Mentor” in August 2005, and again promoted to “Coach” position in September 2005, which was the position he had when he was terminated.

LA:illegally dismissed and ordering petitioners to pay his full backwages and, in lieu of reinstatement, his separation pay. The LA further awarded respondent’s money claims upon finding that he was not occupying a managerial position.

NLRC, reversed and set aside the decision of the LA by dismissing the complaint for lack of merit on the ground that respondent’s employment was terminated for a just cause. The NLRC failed to discuss the money claims.

CA affirmed the NLRC’s finding that there was no illegal dismissal. Anent the money claims, however, the CA concurred with the LA’s ruling.

ISSUE: whether the duties and responsibilities performed by respondent qualify him as a member of petitioners’ managerial staff.

HELD: This is clearly a question of fact, the determination of which entails an evaluation of the evidence on record. The alleged errors of the CA lengthily enumerated in the petition [13] are essentially factual in nature and, therefore, outside the ambit of a petition for review on certiorari under Rule 45 of the Rules of Civil Procedure.

Petitioners claim exception to the foregoing rule and assert that the factual findings of the LA and the NLRC were conflicting. This is not correct. The labor tribunals’ decisions were at odds only with respect to the issue of illegal dismissal. Anent the money claims issue, it cannot be said that their rulings were contradictory because the NLRC, disappointingly, did not make any finding thereon and it erroneously construed that the resolution of the money claims was intertwined with the determination of the legality of respondent’s dismissal. Nonetheless, the CA has already rectified such lapse when it made a definitive review of the LA’s factual findings on respondent’s money claims.

EEs are considered occupying managerial positions if they meet all of the following conditions, namely:1) Their primary duty consists of management of the establishment in which they are employed or of a department or subdivision thereof;2) They customarily and regularly direct the work of two or more EEs therein;3) They have the authority to hire or fire other EEs of lower rank; or their suggestions and recommendations as to the hiring and firing and as to the promotion or any other change of status of other EEs are given particular weight.

They are considered as officers or members of a managerial staff if they perform the following duties and responsibilities:1) The primary duty consists of the performance of work directly related to management of policies of their ER;2) Customarily and regularly exercise discretion and independent judgment;

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3) (i) Regularly and directly assist a proprietor or a managerial EE whose primary duty consists of management of the establishment in which he is employed or subdivision thereof; or (ii) execute under general supervision work along specialized or technical lines requiring special training, experience, or knowledge; or (iii) execute, under general supervision, special assignment and tasks.4) Who do not devote more than 20 percent of their hours worked in a workweek to activities which are not directly and closely related to the performance of the work described in paragraphs (1), (2), and (3) above

(Respondent’s) duties do not fall under any of the categories enumerated above. His work is not directly related to management policies. Even the circumstances shown by the instant case reveal that (respondent) does not regularly exercise discretion and independent judgment. (Petitioners) submitted a list of the responsibilities of “HR Manager/Supervisor” and “Division Manager/Department Manager/Supervisors” but these do not pertain to (respondent) who does not have any of the said positions. He was just a team Supervisor and not (an) HR or Department Supervisor. [15]

We find no reversible error in the above ruling. The test of “supervisory” or “managerial status” depends on whether a person possesses authority to act in the interest of his ER and whether such authority is not merely routinary or clerical in nature, but requires the use of independent judgment. [16] The position held by respondent and its concomitant duties failed to hurdle this test.

This job description does not indicate that respondent can exercise the powers and prerogatives equivalent to managerial actions which require the customary use of independent judgment. There is no showing that he was actually conferred or was actually exercising the following duties attributable to a “member of the managerial staff

According to petitioners, respondent also performed the following duties, as shown in the company’s Statement of Policy on Discipline:a. Know and understand in full the Policy on Discipline including their underlying reasons.b. Implement strictly and consistently the Policy on Discipline.c. Ensure that the said Policy on Discipline is communicated to and understood by all EEs.d. Monitor compliance by EEs with the said Policy.e. Advise HR Manager on the state of discipline in their respective departments; problems, if any, and recommend solution(s) and corrective action(s).

As correctly observed by the CA and the LA, these duties clearly pertained to “Division Managers/Department Managers/ Supervisors,” which respondent was not, as he was merely a team supervisor. Petitioners themselves described respondent as “the superior of a call center agent; he heads and guides a specific number of agents, who form a team.” From the foregoing, respondent is thus entitled to his claims for holiday pay, service incentive leave pay, overtime pay and rest day pay, AUTOBUS vs. BAUTISTAG.R. No. 156367May 16, 2005

FACTS:Antonio Bautista has been employed as driver-conductor he was paid on commission basis, seven percent (7%) of the total gross income per travel, on a twice a month basis. while driving Autobus No. 114 along Sta. Fe, Nueva Vizcaya, his bus accidentally bumped the rear portion of Autobus No. 124 because it suddenly stopped w/o any warning sign

BAUTISTA: “kasalan ng Autobus dahil pinilit akong magtrabaho kahit wala akong tulog for 24hours dahil kadarating ko lang mula sa Isabela” he was not allowed to work until he fully paid the amount of P75,551.50, representing thirty percent (30%) of the cost of repair of the damaged buses. the management sent him a termination letter. Thus, Bautista instituted a complaint for ILLEGAL DISMISSAL with Money Claims for nonpayment of 13th month pay and service incentive leave pay against Autobus

AUTOBUS: Bautista’s employment was replete with offenses involving reckless imprudence, gross negligence, and dishonesty. To support its claim, petitioner presented copies of letters, memos, irregularity reports, and warrants of arrest pertaining to several incidents wherein he was involved. in the exercise of its management prerogative, respondent's employment was terminated only after the latter was provided with an opportunity to explain his side regarding the accident on 03 January 2000. “hindi siya entitled sa service incentive pay kasi on commission basis siya binabayaran”

LA: no illegal dismissal but Autobus must pay Bautista his a. 13th month pay & b. his service incentive leave pay

NLRC: affirmed the LA but deleted the award of 13th month pay because Bautista is not covered by the provision on [T]he Rules and Regulations Implementing Presidential Decree No. 851, particularly Sec. 3: Section 3. ERs covered. ' The Decree shall apply to all ERs except to: e) ERs of those who are paid on purely commission, boundary, or task basis, performing a specific work, irrespective of the time consumed in the performance thereof. xxx.-Bautista admitted that he is paid on commission basis

CA: denied the MR

ISSUES: 1)Whether or not respondent is entitled to service incentive leave; 2)WON the three (3)-year prescriptive period provided under Article 291 of the Labor Code, as amended, is applicable to respondent's claim of service incentive leave pay.

HELD: 1)Article 95 of the Labor Code vis--vis Section 1(D), Rule V, Book III of the Implementing Rules and Regulations of the Labor Code gives the conclusion that the grant of service incentive leave has been delimited by the Implementing Rules and Regulations of the Labor Code to apply only to those EEs not explicitly excluded by Section 1 of Rule V. According to the Implementing Rules, Service Incentive Leave shall not apply to EEs classified as 'field personnel.

Art. 95. RIGHT TO SERVICE INCENTIVE LEAVE: (a)Every EE who has rendered at least one year of service shall be entitled to a yearly service incentive leave of five days with pay.

Book III, Rule V: SERVICE INCENTIVE LEAVE: SECTION 1. Coverage. ' This rule shall apply to all EEs except: (d) Field personnel and other EEs whose performance is unsupervised by the ER including those who are engaged on task or contract basis, purely commission basis, or those who are paid in a fixed amount for performing work irrespective of the time consumed in the performance thereof; .

it serves as an amplification of the interpretation of the definition of field personnel under the Labor Code as those 'whose actual hours of work in the field cannot be determined with reasonable certainty. EEs engaged on task or contract basis or paid on purely commission basis are not automatically exempted from the grant of service incentive leave, unless, they fall under the classification of field personnel.

AUTOBUS’ contention that since he is paid on commission basis exempts him from service incentive pay is MISPLACED. To ascertain an EEs entitlement to service incentive pay is whether he is field personnel.

Accdg. to the Bureau of Working Conditions (BWC), Advisory Opinion to Philippine Technical-Clerical Commercial EEs Association :As a general rule, [field personnel] are those whose performance of their job/service is not supervised by the ER or his representative, the workplace being away from the principal office and whose hours and days of work cannot be determined with reasonable certainty; hence, they are paid specific amount for rendering specific service or performing specific work. If required to be at specific places at specific times, EEs including drivers cannot be said to be field personnel despite the fact that they are performing work away from the principal office of the EE.

it is not just about location but also with the fact that the EE's performance is unsupervised by the ER& if actual hours of work in the field can be determined with reasonable certainty by the ER. in every terminal or stop there is a person who will check the bus, punch the cards of the conductor. Thus, it shows control of Autobus over the driver, hence, he his not a field EE but a REGULAR EE

2) Art. 291 of the LC provides the 3 year prescription period for money claims arising out of an ER-EE relationship. cause of action has three elements: (1) a right in favor of the plaintiff by whatever means and under whatever law it arises or is created; (2) an obligation on the part of the named defendant to respect or not to violate such right; and (3) an act or omission on the part of such defendant violative of the right of the plaintiff or constituting a breach of the obligation of the defendant to the plaintiff. To properly construe Article 291 of the Labor Code, it is essential to ascertain the time when the third element of a cause of action transpired.

in cases of nonpayment of allowances and other monetary benefits, if it is established that the benefits being claimed have been withheld from the EE for a period longer than three (3) years, the amount pertaining to the period beyond the three-year prescriptive period is therefore barred by prescription.

IN THE CASE OF SERVICE INCENTIVE LEAVE, the EE may choose to either use his leave credits or commute it to its monetary equivalent if not exhausted at the end of the year. if the EE entitled to service incentive leave does not use or commute the same, he is entitled upon his resignation or separation from work to the commutation of his accrued service incentive leave.

RECKONING POINT: from the time the ER refuses to pay its monetary equivalent after demand of commutation or upon termination of the EE's services, as the case may be.

BAUSTISTA: had not made use of his service incentive leave nor demanded for its commutation until his employment was terminated by AUTOBUS, he filed only after 1 month of his termination. Thus, he filed within the prescriptive period.MERCIDAR FISHING CORPORATION vs.NATIONAL LABOR RELATIONS COMMISSIONG.R. No. 112574 October 8, 1998MENDOZA, J.:

FACTS: Private respondent alleged that he had been sick and thus allowed to go on leave without pay for one month from April 28, 1990 but that when he reported to work at the end of such period with a health clearance, he was told to come back another time as he could not be reinstated immediately. Thereafter, petitioner refused to give him work. For this reason, private respondent asked for a certificate of employment from petitioner on September 6, 1990. However, when he came back for the certificate on September 10, petitioner refused to issue the certificate unless he submitted his resignation. Since private respondent refused to submit such letter unless he was given separation pay, petitioner prevented him from entering the premises. 2

Petitioner, on the other hand, alleged that it was private respondent who actually abandoned his work. It claimed that the latter failed to

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report for work after his leave had expired and was, in fact, absent without leave for three months until August 28, 1998. Petitioner further claims that, nonetheless, it assigned private respondent to another vessel, but the latter was left behind on September 1, 1990. Thereafter, private respondent asked for a certificate of employment on September 6 on the pretext that he was applying to another fishing company. On September 10, 1990, he refused to get the certificate and resign unless he was given separation pay.

Petitioner argues essentially that since the work of private respondent is performed away from its principal place of business, it has no way of verifying his actual hours of work on the vessel. It contends that private respondent and other fishermen in its employ should be classified as "field personnel" who have no statutory right to service incentive leave pay.

the petitioner nevertheless attempted to show that its affected members are not covered by the abovementioned rule. The petitioner asserts that the company's sales personnel are strictly supervised as shown by the SOD (Supervisor of the Day) schedule and the company circular. The petitioner maintains that the period between 8:00 a.m. to 4:00 or 4:30 p.m. comprises the sales personnel's working hours which can be determined with reasonable certainty.

LA:respondents are ordered to reinstate complainant with backwages, pay him his 13th month pay and incentive leave pay for 1990. All other claims are dismissed. NLRC: petitioner’s appeal was dismissed for lack of merit. The NLRC dismissed petitioner's claim that it cannot be held liable for service incentive leave pay by fishermen in its employ as the latter supposedly are "field personnel" and thus not entitled to such pay under the Labor Code.

ISSUES: 1)won the commission erred in ruling and sustaining that fishing crew members like Agao, cannot be classified as field personnel; 2)won commission acted with GAD amounting to Lack of jurisdiction when it upheld the findings pf LA that petitioner had cinstructively dismissed Agao.

HELD:2)The petition has no merit. Art. 82. Coverage. — The provisions of this Title [Working Conditions and Rest Periods] shall apply to EEs in all establishments and undertakings whether for profit or not, but not to government EEs, field personnel, members of the family of the ER who are dependent on him for support, domestic helpers, persons in the personal service of another, and workers who are paid by results as determined by the Secretary of Labor in appropriate regulations.

"Field personnel" shall refer to non-agricultural EEs who regularly perform their duties away from the principal place of business or branch office of the ER and whose actual hours of work in the field cannot be determined with reasonable certainty.

the requirement that "actual hours of work in the field cannot be determined with reasonable certainty" must be read in conjunction with Rule IV, Book III Section 1e of the Implementing Rules which provides that Field personnel and other EEs whose time and performance is unsupervised by the ER.

the Court finds that the aforementioned rule did not add another element to the Labor Code definition of field personnel. The clause "whose time and performance is unsupervised by the ER" did not amplify but merely interpreted and expounded the clause "whose actual hours of work in the field cannot be determined with reasonable certainty." The former clause is still within the scope and purview of Article 82 which defines field personnel. Hence, in deciding whether or not an EE's actual working hours in the field can be determined with reasonable certainty, query must be made as to whether or not such EE's time and performance is constantly supervised by the ER. 6

in the case at bar, during the entire course of their fishing voyage, fishermen employed by petitioner have no choice but to remain on board its vessel. Although they perform non-agricultural work away from petitioner's business offices, the fact remains that throughout the duration of their work they are under the effective control and supervision of petitioner through the vessel's patron or master as the NLRC correctly held. 8

2)Neither did petitioner gravely abuse its discretion in ruling that private respondent had constructively been dismissed by petitioner. Such factual finding of both the NLRC and the Labor Arbiter is based not only on the pleadings of the parties but also on a medical certificate of fitness which, contrary to petitioner's claim private respondent presented when he reported to work on May 28, 1990.

the respondent, in a nutshell, would like us to believe that the Arbiter abused his discretion in giving credence to the factual version of the complainant. But it is settled that "(W)hen confronted with conflicting versions of factual matters," the Labor Arbiter has the "discretion to determine which party deserves credence on the basis of evidence received.” And besides, it is settled in this jurisdiction that "to constitute abandonment of position, there must be concurrence of the intention to abandon and some overt acts from which it may be inferred that the EE concerned has no more interest in working" and that the filing of the complaint which asked for reinstatement plus backwages is inconsistent with respondents' defense of abandonment.

It is trite to say that the factual findings of quasi-judicial bodies are generally binding as long as they are supported substantially by evidence in the record of the case. This is especially so where, as here, the agency and its subordinate who heard the case in the first instance are in full agreement as to the facts.

As regards the labor arbiter's award which was affirmed by respondent NLRC, there is no reason to apply the rule that reinstatement may not be ordered if, as a result of the case between the parties, their relation is strained. 13 Even at this late stage of this dispute, petitioner continues to reiterate its offer to reinstate private respondent.REMINTON INDUSTRIAL SALES vs. CASTANEDAG.R. No.169295-96, November 20, 2006LAMBO vs. NLRCG.R. no. 111042, October 26 1999

FACTS: Petitioners Avelino Lambo and Vicente Belocura were employed as tailors by private respondents J.C. Tailor Shop and/or Johnny Co on September 10, 1985 and March 3, 1985, respectively. They worked from 8:00 a.m. to 7:00 p.m. daily, including Sundays and holidays. As in the case of the other 100 EEs of private respondents, petitioners were paid on a piece-work basis, according to the style of suits they made. Regardless of the number of pieces they finished in a day, they were each given a daily pay of at least P64.00.

On January 17, 1989, petitioners filed a complaint against private respondents for illegal dismissal and sought recovery of overtime pay, holiday pay, premium pay on holiday and rest day, service incentive leave pay, separation pay, 13th month pay, and attorney’s fees.

LA:found private respondents guilty of illegal dismissal and accordingly ordered them to pay petitioners’ claims.

NLRC: reversed the decision of the Labor Arbiter. It found that petitioners had not been dismissed from employment but merely threatened with a closure of the business if they insisted on their demand for a “straight payment of their minimum wage,” after petitioners, on January 17, 1989, walked out of a meeting with private respondents and other EEs. According to the NLRC, during that meeting, the EEs voted to maintain the company policy of paying them according to the volume of work finished at the rate of P18.00 per dozen of tailored clothing materials. Only petitioners allegedly insisted that they be paid the minimum wage and other benefits. The NLRC held petitioners guilty of abandonment of work and accordingly dismissed their claims except that for 13th month pay. The appealed decision is vacated and a new one entered ordering respondents to pay each of the complainants their 13th month pay. All other monetary awards are deleted.Petitioners allege that they were dismissed by private respondents as they were about to file a petition with the Department of Labor and Employment (DOLE) for the payment of benefits such as Social Security System (SSS) coverage, sick leave and vacation leave. They deny that they abandoned their work.

ISSUE/S: 1.) WON petitioners are paid on the basis of time spent on the job and not according to the quantity and the quality of work produced;2.) WON petitioners abandoned their work;3.)WON the compromise agreement,between petitioner and respondent,absolving private respondents from liability for many claims or any other obligations is valid;4.) WON petitioners are entitled to the monetary benefits as awarded by the labor arbiter.

HELD: 1)There is no dispute that petitioners were EEs of private respondents although they were paid not on the basis of time spent on the job but according to the quantity and the quality of work produced by them. There are two categories of EEs paid by results: (1) those whose time and performance are supervised by the ER. (Here, there is an element of control and supervision over the manner as to how the work is to be performed. A piece-rate worker belongs to this category especially if he performs his work in the company premises.); and (2) those whose time and performance are unsupervised. (Here, the ER’s control is over the result of the work. Workers on pakyao and takay basis belong to this group.) Both classes of workers are paid per unit accomplished. Piece-rate payment is generally practiced in garment factories where work is done in the company premises, while payment on pakyao and takay basis is commonly observed in the agricultural industry, such as in sugar plantations where the work is performed in bulk or in volumes difficult to quantify. Petitioners belong to the first category, i.e., supervised EEs.

In determining the existence of an ER-EE relationship, the following elements must be considered: (1) the selection and engagement of the EE; (2) the payment of wages; (3) the power of dismissal; and (4) the power to control the EE’s conduct. Of these elements, the most important criterion is whether the ER controls or has reserved the right to control the EE not only as to the result of the work but also as to the means and methods by which the result is to be accomplished.

In this case, private respondents exercised control over the work of petitioners. As tailors, petitioners worked in the company’s premises from 8:00 a.m. to 7:00 p.m. daily, including Sundays and holidays. The mere fact that they were paid on a piece-rate basis does not negate their status as regular EEs of private respondents. The term “wage” is broadly defined in Art. 97 of the Labor Code as remuneration or earnings, capable of being expressed in terms of money whether fixed or ascertained on a time, task, piece or commission basis. Payment by the piece is just a method of compensation and does not define the essence of the relations. Nor does the fact that petitioners are not covered by the SSS affect the ER-EE relationship.

Indeed, the following factors show that petitioners, although piece-rate workers, were regular EEs of private respondents: (1) within the contemplation of Art. 280 of the Labor Code, their work as tailors was necessary or desirable in the usual business of private respondents, which is engaged in the tailoring business; (2)

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petitioners worked for private respondents throughout the year, their employment not being dependent on a specific project or season; and, (3) petitioners worked for private respondents for more than one year.

2) To justify a finding of abandonment of work, there must be proof of a deliberate and unjustified refusal on the part of an EE to resume his employment. The burden of proof is on the ER to show an unequivocal intent on the part of the EE to discontinue employment. Mere absence is not sufficient. It must be accompanied by manifest acts unerringly pointing to the fact that the EE simply does not want to work anymore.Private respondents failed to discharge this burden. Other than the self-serving declarations in the affidavits of their two EEs, private respondents did not adduce proof of overt acts of petitioners showing their intention to abandon their work. On the contrary, the evidence shows that petitioners lost no time in filing the case for illegal dismissal against private respondent. This fact negates any intention on their part to sever their employment relationship. Abandonment is a matter of intention; it cannot be inferred or presumed from equivocal acts.

3)Private respondents invoke the compromise agreement, dated March 2, 1993, between them and petitioner Avelino Lambo, whereby in consideration of the sum of P10,000.00, petitioner absolved private respondents from liability for money claims or any other obligations.To be sure, not all quitclaims are per se invalid or against public policy. But those (1) where there is clear proof that the waiver was wangled from an unsuspecting or gullible person or (2) where the terms of settlement are unconscionable on their face are invalid. In these cases, the law will step in to annul the questionable transaction. However, considering that the Labor Arbiter had given petitioner Lambo a total award of P94,719.20, the amount of P10,000.00 to cover any and all monetary claims is clearly unconscionable. As we have held in another case, the subordinate position of the individual EE vis-a-vis management renders him especially vulnerable to its blandishments, importunings, and even intimidations, and results in his improvidently waiving benefits to which he is clearly entitled. Thus, quitclaims, waivers or releases are looked upon with disfavor for being contrary to public policy and are ineffective to bar claims for the full measure of the workers’ legal rights. An EE who is merely constrained to accept the wages paid to him is not precluded from recovering the difference between the amount he actually received and that amount which he should have received.

4) As petitioners were illegally dismissed, they are entitled to reinstatement with backwages. Considering that petitioners were dismissed from the service on January 17, 1989, i.e., prior to March 21, 1989, the Labor Arbiter correctly applied the rule in the Mercury Drug case, according to which the recovery of backwages should be limited to three years without qualifications or deductions. Any award in excess of three years is null and void as to the excess.

The Labor Arbiter correctly ordered private respondents to give separation pay. Considerable time has lapsed since petitioners’ dismissal, so that reinstatement would now be impractical and hardly in the best interest of the parties. In lieu of reinstatement, separation pay should be awarded to petitioners at the rate of one month salary for every year of service, with a fraction of at least six (6) months of service being considered as one (1) year.

The awards for overtime pay, holiday pay and 13th month pay are in accordance with our finding that petitioners are regular EEs, although paid on a piece-rate basis.Except for the award of attorney’s fees in the amount based on the computation of the labor arbiter is affirmed. The award of attorney’s fees should be disallowed, it appearing that petitioners were represented by the Public Attorney’s Office. With regard to petitioner Avelino Lambo, the amount of P10,000.00 paid to him under the compromise agreement should be deducted from the total award due to him.

The decision of the National Labor Relations Commission is SET ASIDE and another one is RENDERED ordering private respondents to pay petitioners the total amount of One Hundred Eighty-One Thousand One Hundred Two Pesos and 40/100 (P181,102.40), as computed.JAVIER vs. FLY ACE CO.G.R. No. 192558LUZON STEVEDORING CO., INC vs. LUZON MARINE DEPARTMENT UNION G.R. No. L-9265 April 29, 1957FELIX, J.:

FACTS: UNION filed a petition with the Court of Industrial Relations containing several demands against herein petitioner LSCI, among which were the petition for full recognition of the right of COLLECTIVE bargaining, close shop and check off. However, while the case was still pending with the CIR, said labor union declared a strike which was ruled down as illegal by this Coourt. In view of said ruling, the Union filed a "Constancia" with the Court of Industrial Relations praying that the remaining unresolved demands of the Union presented in their original petition, be granted. Said unresolved demands are the following:

a) That the work performed in excess of eight (8) hours he paid an overtime pay of 50 per cent the regular rate of pay, and that work performed on Sundays and legal holidays be paid double the regular rate of pay.

b) That all officers, engineers and crew members of motor tugboats who have

not received their pay corresponding to the second half of December, 1941, be paid accordingly.

c) That Ciriaco Sarmiento, Chief Mate, M/V Marlin, Rafael Santos, Port Engineer, and Lorenzo de la Cruz, Chief Engineer, M/V Shark who have been suspended without justifiable cause and for union activities, be reinstated with pay from time of suspension.

d) That all officers, engineers and crew members of the motor tugboats "Shark", "Hearing", "Pike" and "Ray", who have been discharged without justifiable cause and for union activities, be reinstate with pay from time of discharge.

On the basis of these demands, the case was set for hearing and the parties submitted their respective evidence, both oral and documentary, from June 8,1951, to January 7, 1954. In one of the hearings of the case, the original intervenor in Union de Obreros Estibadores de Filipinas (UOEF), through counsel, moved for the withdraw al of said Union from the case, which motion was granted by the Court.

The EEs are only entitled to receive overtime pay for work rendered in excess of 8 hours on ordinary days including Sundays and legal holidays. However, the respondent company has proved to the satisfaction of the Court that it has paid its EEs for such overtime work as shown above. It is, therefore, only a matter of computation whether such over time pay by the respondent for overtime services rendered covers the actual overtime work performed by the EEs concerned equivalent to 25 per cent which is the minimum rate fixed by law in the absence of other proof to justify the granting of more beyond said minimum rate.

Demands regarding the reinstatement to the service of the EEs named therein were denied and respondent Company was only or to pay the separation pay and overtime work rendered by Ciriaco Sarmiento, Rafael Santos and Lorenzo de la Cruz, after making the pronouncement that their separation or dismissal was not due to union activities but for valid and legal grounds.

ISSUE- I: Is the definition for "hours of work" as presently applied to dryland laborers equally applicable to seamen?Section 1 of Commonwealth Act No. 444, known as the Eight-Hour Labor Law, provides: The legal working day for any person employed by another shall be of not more than eight hours daily. When the work is not continuous, the time during which the laborer is not working AND CAN LEAVE HIS WORKING PLACE and can rest completely, shall not be counted.

For the purposes of this case, We do not need to set for seamen a criterion different from that applied to laborers on land, for under the provisions of the above quoted section, the only thing to be done is to determine the meaning and scope of the term "working place" used therein. As We understand this term, a laborer need not leave the premises of the factory, shop or boat in order that his period of rest shall not be counted, it being enough that he "cease to work", may rest completely and leave or may leave at his will the spot where he actually stays while working, to go somewhere else, whether within or outside the premises of said factory, shop or boat. If these requisites are complied with, the period of such rest shall not be counted.

ISSUE- II: Should a person be penalized for following an opinion issued by the Secretary of Justice in the absence of any judicial pronouncement whatsoever?

The opinion has no bearing on the case at bar because it refers to officers and crew on board interisland boats whose situation is different from that of mariners or sailors working in small tugboats that ply along bays and rivers and have no cabins or places for persons that man the same. Moreover, We can not pass upon this second issue because, aside from the fact that there appears nothing on record that would support petitioner's assertion that in its dealing with its EEs, it was guided by an opinion of the Secretary of Justice, the issue involves a mere theoretical question.

ISSUE- III: When EEs with full knowledge of the law, voluntarily agreed to work for so many hours in consideration of a certain definite wage, and continue working without any protest for a period of almost two years, is said compensation as agreed upon legally deemed and retroactively presumed to constitute full payment for all services rendered, including whatever overtime wages might be due? Especially so if such wages, though received years before the enactment of the Minimum Wage Law, were already set mostly above said minimum wage?

ISSUE- IV: The members set of respondent Union having expressly manifested acquiescence over a period of almost two years with reference to the sufficiency of their wages and having made no protest whatsoever with reference to said compensation does the legal and equitable principle of estoppel operate to bar them from making a claim for, or making any recovery of, back overtime compensation?

Section 6 of Commonwealth Act No. 444 provides: Any agreement or contract between the ER and the laborer or EE contrary to the provisions of this Act shall be null and void ab initio.

The principles of estoppel and laches cannot be, invoked against EEs or laborers in an action for the recovery of compensation for

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past overtime work. In the first place, it would be contrary to the spirit of the Eight-Hour Labor Law, under which. as already seen, the laborers cannot waive their right to extra compensation. In the second place, the law principally obligates the ER to observe it, so much so that it punishes the ER for its violation and leaves the EE free and blameless. In the third place, the EE or laborer is in such a disadvantageous position as to be naturally reluctant or even apprehensive in asserting a claim which may cause the ER to devise a way for exercising his right to terminate the employment.

There is no question that the right of the laborers to overtime pay cannot be waived. But there may be cases in which the silence of the EE or laborer who lets the time go by for quite a long period without claiming or asserting his right to overtime compensation may favor the inference that he has not worked any such overtime or that his extra work has been duly compensated. But this is not so in the case at bar. The complaining laborers have declared that long before the filing of this case, they had informed Mr. Martinez, a sort of overseer of the petitioner, that they had been working overtime and claiming the corresponding compensation therefor, and there is nothing on record to show that the claimants, at least the majority of them, had received wages in excess of the minimum wage. On the contrary, in the decision of the trial Judge, it appears that 34 out of the 58 claimants received salaries less than the minimum wage authorized by said Minimum Wage Law.

ISSUE-V: Granting, without conceding, that any overtime pay in arrears is due, what is the extent and rule of retro-activity with reference to overtime pay in arrears as set forth and established by the precedents and policies of the Court of Industrial Relations in past decisions duly affirmed by the Honorable Supreme Court?

It is of common occurrence that a workingman has already rendered services in excess of the statutory period of 8 hours for some time before he can be led or he can muster enough courage to confront his ER with a demand for payment thereof. Fear of possible unemployment sometimes is a very strong factor that gags the man from asserting his right under the law and it may take him months or years before he could be made to present a claim against his ER. To allow the workingman to be compensated only from the date of the filing of the petition with the court would be to penalize him for his acquiescence or silence which We have declared in the case of the Manila Terminal Co. vs. CIR, supra, to be beyond the intent of the law. It is not just and humane that he should be deprived of what is lawfully his under the law, for the true intendent of Commonwealth Act No. 444 is to compensate the worker for services rendered beyond the statutory period and this should be made to retroact to the date when such services were actually performed.

ISSUE-VI: Is the grant of a sizeable amount as back overtime wages by the Court of Industrial Relations in consonance with the dictates of public policy and the avowed national and government policy on economic recovery and financial stability?

It is sufficient for Us to state here that Congress in enacting a particular piece of legislation. It may be alleged, however, that the delay in asserting the right to back overtime compensation may cause an unreasonable or irreparable injury to the ER, because the accumulation of such back overtime wages may become so great that their payment might cause the bankruptcy or the closing of the business of the ER who might not be in a position to defray the same. Perhaps this situation may occur, but We shall not delve on it this time because petitioner does not claim that the payment of the back overtime wages it is ordered to pay to its claimant laborers will cause the injury it foresees or force it to close its business, a situation which it speaks of theoretically and in general.

ISSUE- VII: Should not a Court of Industrial Relations' resolution, en banc, which is clearly unsupported in fact and in law, patently arbitrary and capricious and absolutely devoid of sustaining reason, be declared illegal? Especially so, if the trial court's decision which the resolution en banc reversed, is most detailed, exhaustive and comprehensive in its findings as well as most reasonable and legal in its conclusions?

The law also provides that after a judge of the Court of Industrial Relations, duly designated by the Presiding Judge therein to hear a particular case, had rendered a decision, any agrieved party may request for reconsideration thereof and the judges of said Court shall sit together, the concurrence of the 3 of them being necessary for the pronouncement of a decision, order or award (See. 1, Com. Act No. 103). It was in virtue of these rules and upon motions for reconsideration presented by both parties that resolution subject of the present petition was issued, the Court en banc finding it necessary to modify a part of the decision of February 10, 1955, which is clearly within its power to do.

On the other hand, the issue under consideration is predicated on a situation which is not obtaining in the case at bar, for, it presupposes that the resolutions en banc of the respondent Court "are clearly unsupported in fact and in law, patently arbitrary and capricious and absolutely devoid of any sustaining reason", which does not seem to be the case as a matter of fact.NATIONAL DEVELOPMENT COMPANY vs. COURT OF INDUSTRIAL RELATIONS and NATIONAL TEXTILE WORKERS UNIONG.R. No. L-15422, November 30, 1962REGALA, J.:

At the National Development Co., a GOCC, there were four shifts of work. One shift was from 8AM to 4PM., while the three other shifts were from 6AM to 2PM; then from 2PM to 10PM. and, finally, from 10PM to 6AM. In each shift, there was a 1 hour mealtime period, to wit: From (1) 11AM to 12 noon for those working between 6AM to 2PM and from 7PM to 8PM for those working between 2PM and 10PM.

The records disclose that although there was a 1-hour mealtime, petitioner nevertheless credited the workers with 8 hours of work for each shift and paid them for the same number of hours. However, since 1953, whenever workers in 1 shift were required to continue working until the next shift, petitioner instead of crediting them with 8 hours of OT work, has been paying them for 6 hours only, petitioner that the 2 hours corresponding to the mealtime periods should not be included in computing compensation. On the other hand, respondent National Textile Workers Union whose members are employed at the NDC, maintained the opposite view and asked the CIR to order the payment of additional OT pay corresponding to the mealtime periods.

After hearing, the CIR issued an order, holding that mealtime should be counted in the determination of OT work and accordingly ordered petitioner to pay P101,407.96 by way of OT compensation. Petitioner filed a MR but the same was dismissed by the CIR en banc on the ground that petitioner failed to furnish the union a copy of its motion.

Thereafter, petitioner appealed to this Court, contending, first, that the CIR has no jurisdiction over claims for OT compensation and, secondary that the CIR did not make "a correct appraisal of the facts, in the light of the evidence" in holding that mealtime periods should be included in overtime work because workers could not leave their places of work and rest completely during those hours.

In support of its contention that the CIR lost its jurisdiction over claims for OT pay upon the enactment of the Industrial Peace Act (Republic Act No. 875), petitioner cites a number of decisions of this Court. On May 23, 1960, however, We ruled in Price Stabilization Corp. v. Court of Industrial Relations, et al., G.R. No. L-13206, that

ISSUE: won CIR has jurisdiction.HELD:Analyzing these cases, the underlying principle, it will be noted in all of them, though not stated in express terms, is that where the ER-EE relationship is still existing or is sought to be reestablished because of its wrongful severance, (as where the EE seeks reinstatement) the CIR has jurisdiction over all claims arising out of, or in connection with the employment, such as those related to the Minimum Wage Law and the Eight-Hour Labor Law. After the termination of their relationship and no reinstatement is sought, such claims become mere money claims, and come within the jurisdiction of the regular courts,

A more recent definition of the jurisdiction of the CIR is found in Campos, et al. v. Manila Railroad Co., et al., G.R. No. L-17905, May 25, 1962, in which We held that, for such jurisdiction to come into play, the following requisites must be complied with:(a) there must exist between the parties an ER-EE relationship or the claimant must seek his reinstatement; and (b) the controversy must relate to a case certified by the President to the CIR as one involving national interest, or must arise either under the 8-Hour Labor Law, or under the Minimum Wage Law.

In default of any of these circumstances, the claim becomes a mere money claim that comes under the jurisdiction of the regular courts. Here, petitioner does not deny the existence of an ER-EE relationship between it and the members of the union. Neither is there any question that the claim is based on the Eight-Hour Labor Law (Com. Act No. 444, as amended). We therefore rule in favor of the jurisdiction of the CIR over the present claim.

ISSUE: whether or not, on the basis of the evidence, the mealtime breaks should be considered working time under the following provision of the law;HELD: The legal working day for any person employed by another shall be of not more than eight hours daily. When the work is not continuous, the time during which the laborer is not working and can leave his working place and can rest completely shall not be counted. It will be noted that, under the law, the idle time that an EE may spend for resting and during which he may leave the spot or place of work though not the premises of his ER, is not counted as working time only where the work is broken or is not continuous.

the CIR found: While it may be correct to say that it is well-high impossible for an EE to work while he is eating, yet under Section 1 of Com. Act No. 444 such a time for eating can be segregated or deducted from his work, if the same is continuous and the EE can leave his working place rest completely. The time cards show that the work was continuous and without interruption. There is also the evidence adduced by the petitioner that the pertinent EEs can freely leave their working place nor rest completely. There is furthermore the aspect that during the period covered the computation the work was on a 24-hour basis and previously stated divided into shifts.

From these facts, the CIR correctly concluded that work in petitioner company was continuous and therefore the mealtime breaks should be counted as working time for purposes of overtime compensation.

There is another reason why this appeal should dismissed and that is that there is no decision by the CIR en banc from which petitioner can appeal to this Court. As already indicated above, the records show that petitioner's MR of the order of March 19, 1959 was

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dismissed by the CIR en banc because of petitioner's failure to serve a copy of the same on the union.

Section 15 of the rules of the CIR, in relation to Section 1 of Commonwealth Act No. 103, states: The movant shall file the MR in 6 copies within 5 days from the date on which he receives notice of the order or decision, object of the MR, the same to be verified under oath with respect to the correctness of the allegations of fact, and serving a copy thereof personally or by registered mail, on the adverse party. The latter may file an answer, in six (6) copies, duly verified under oath.

Petitioner's MR having been dismissed for its failure to serve a copy of the same on the union, there is no decision of the CIR en banc that petitioner can bring to this Court for review.SIME DARBY PILIPINAS, INC. vs. NLRC and SIME DARBY SALARIED EES ASSOCIATION (ALU-TUCP)G.R. No. 119205 April 15, 1998BELLOSILLO, J.:

ISSUE: Is the act of management in revising the work schedule of its EEs and discarding their paid lunch break constitutive of unfair labor practice?

FACTS: Sime Darby Pilipinas, Inc., petitioner, is engaged in the manufacture of automotive tires, tubes and other rubber products. ALU-TUCP, private respondent, is an association of monthly salaried EEs of petitioner at its Marikina factory. Prior to the present controversy, all company factory workers in Marikina including members of private respondent union worked from 7:45AM to 3:45PM with a 30-minute paid "on call" lunch break.

On 14 August 1992 petitioner issued a memorandum to all factory-based EEs advising all its monthly salaried EEs in its Marikina Tire Plant, except those in the Warehouse and Quality Assurance Department working on shifts, a change in work schedule.

Since private respondent felt affected adversely by the change in the work schedule and discontinuance of the 30-minute paid "on call" lunch break, it filed on behalf of its members a complaint with the LA for unfair labor practice, discrimination and evasion of liability pursuant to the resolution of this Court in Sime Darby International Tire Co., Inc. v. NLRC.

LA: dismissed the complaint on the ground that the change in the work schedule and the elimination of the 30-minute paid lunch break of the factory workers constituted a valid exercise of management prerogative and that the new work schedule, break time and 1-hour lunch break did not have the effect of diminishing the benefits granted to factory workers as the working time did not exceed 8 hours.

The factory workers would be unjustly enriched if they continued to be paid during their lunch break even if they were no longer "on call" or required to work during the break. He also ruled that the decision in the earlier Sime Darby case was not applicable to the instant case because the former involved discrimination of certain EEs who were not paid for their 30-minute lunch break while the rest of the factory workers were paid; hence, this Court ordered that the discriminated EEs be similarly paid the additional compensation for their lunch break.

NLRC: sustained the LA and dismissed the appeal. However, upon MR by private respondent, it reversed its earlier decision as well as the decision of the LA. The NLRC considered the decision of this Court in the Sime Darby case of 1990 as the law of the case wherein petitioner was ordered to pay "the money value of these covered EEs deprived of lunch and/or working time breaks." The public respondent declared that the new work schedule deprived the EEs of the benefits of a time-honored company practice of providing its EEs a 30-minute paid lunch break resulting in an unjust diminution of company privileges prohibited by Art. 100 of the Labor Code, as amended.

Hence, this petition alleging that public respondent committed GAD amounting to lack or excess of jurisdiction: (a) in ruling that petitioner committed unfair labor practice in the implementation of the change in the work schedule of its EEs from 7:45AM — 3:45PM to 7:45AM — 4:45PM with 1-hour lunch break from 12:00NN to 1:00PM.; (b) in holding that there was diminution of benefits when the 30-minute paid lunch break was eliminated; (c) in failing to consider that in the earlier Sime Darby case affirming the decision of the NLRC, petitioner was authorized to discontinue the practice of having a 30-minute paid lunch break should it decide to do so; and, (d) in ignoring petitioner's inherent management prerogative of determining and fixing the work schedule of its EEs which is expressly recognized in the collective bargaining agreement between petitioner and private respondent.

OSG: filed in a lieu of comment a manifestation and motion recommending that the petitioner be granted, alleging that the 14 August 1992 memorandum which contained the new work schedule was not discriminatory of the union members nor did it constitute unfair labor practice on the part of petitioner.

ISSUE: whether the change of work schedule, which management deems necessary to increase production, constitutes unfair labor practice.

As shown by the records, the change effected by management with regard to working time is made to apply to all factory EEs engaged in the same line of work whether or not they are members of private respondent union. Hence, it cannot be said that the new scheme adopted by management prejudices the right of private respondent to self-organization.

Every business enterprise endeavors to increase its profits. In the process, it may devise means to attain that goal. Even as the law is solicitous of the welfare of the EEs, it must also protect the right of an ER to exercise what are clearly management prerogatives. 10 Thus, management is free to regulate, according to its own discretion and judgment, all aspects of employment, including hiring, work assignments, working methods, time, place and manner of work, processes to be followed, supervision of workers, working regulations, transfer of EEs, work supervision, lay off of workers and discipline, dismissal and recall of workers. Further, management retains the prerogative, whenever exigencies of the service so require, to change the working hours of its EEs. So long as such prerogative is exercised in good faith for the advancement of the ER's interest and not for the purpose of defeating or circumventing the rights of the EEs under special laws or under valid agreements, this Court will uphold such exercise. 12

While the Constitution is committed to the policy of social justice and the protection of the working class, it should not be supposed that every dispute will be automatically decided in favor of labor. Management also has rights which, as such, are entitled to respect and enforcement in the interest of simple fair play. Although this Court has inclined more often than not toward the worker and has upheld his cause in his conflicts with the ER, such favoritism has not blinded the Court to the rule that justice is in every case for the deserving, to be dispensed in the light of the established facts and the applicable law and doctrine.TEOFILO ARICA, et al. vs. NLRC et al.G.R. No. 78210 February 28, 1989PARAS, J.:

FACTS: Petitioners contend that the preliminary activities as workers of respondents STANFILCO in the assembly area is compensable as working time (from 5:30AM to 6:00AM) since these preliminary activities are necessarily and primarily for private respondent's benefit. These preliminary activities of the workers are as follows:(a) First there is the roll call. This is followed by getting their individual work assignments from the foreman.(b) Thereafter, they are individually required to accomplish the Laborer's Daily Accomplishment Report during which they are often made to explain about their reported accomplishment the following day.(c) Then they go to the stockroom to get the working materials, tools and equipment.(d) Lastly, they travel to the field bringing with them their tools, equipment and materials.All these activities take 30 minutes to accomplish

Contrary to this contention, respondent avers that the instant complaint is not new, the very same claim having been brought against herein respondent by the same group of rank and file EEs in the case of Associated Labor Union and Standard Fruit Corporation, NLRC Case No. 26-LS-XI-76 which was filed way back April 27, 1976 when ALU was the bargaining agent of respondent's rank and file workers.

Noteworthy is the decision of the Minister of Labor, on May 12, 1978 in the aforecited case (Associated Labor Union vs. Standard (Phil.) Fruit Corporation, NLRC Case No. 26-LS-XI-76 where significant findings of facts and conclusions had already been made on the matter.

The Minister of Labor held: The thirty (30)-minute assembly time long practiced and institutionalized by mutual consent of the parties under Article IV, Section 3, of the Collective Bargaining Agreement cannot be considered as waiting time within the purview of Section 5, Rule I, Book III of the Rules and Regulations Implementing the Labor Code. ...

Furthermore, the thirty (30)-minute assembly is a deeply- rooted, routinary practice of the EEs, and the proceedings attendant thereto are not infected with complexities as to deprive the workers the time to attend to other personal pursuits. They are not new EEs as to require the company to deliver long briefings regarding their respective work assignments. Their houses are situated right on the area where the farm are located, such that after the roll call, which does not necessarily require the personal presence, they can go back to their houses to attend to some chores. In short, they are not subject to the absolute control of the company during this period, otherwise, their failure to report in the assembly time would justify the company to impose disciplinary measures. The CBA does not contain any provision to this effect; the record is also bare of any proof on this point. This, therefore, demonstrates the indubitable fact that the thirty (30)-minute assembly time was not primarily intended for the interests of the ER, but ultimately for the EEs to indicate their availability or non-availability for work during every working day.

Accordingly, the issues are reduced to the sole question as to whether public respondent National Labor Relations Commission committed a grave abuse of discretion in its resolution of December 17, 1986. The facts on which this decision was predicated continue to be the facts of the case in this questioned resolution of the National Labor Relations Commission.

It is clear that herein petitioners are merely reiterating the very same claim which they filed through the ALU and which records show had already long been considered terminated and closed by this Court in G.R. No. L-48510. Therefore, the NLRC can not be faulted for ruling that petitioners' claim is already barred by res-judicata.

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Be that as it may, petitioners' claim that there was a change in the factual scenario which are "substantial changes in the facts" makes respondent firm now liable for the same claim they earlier filed against respondent which was dismissed. It is thus axiomatic that the non-compensability of the claim having been earlier established, constitute the controlling legal rule or decision between the parties and remains to be the law of the case making this petition without merit.

As aptly observed by the Solicitor General that this petition is "clearly violative of the familiar principle of res judicata. There will be no end to this controversy if the light of the Minister of Labor's decision dated May 12, 1979 that had long acquired the character of finality and which already resolved that petitioners' thirty (30)-minute assembly time is not compensable, the same issue can be re-litigated again." (Rollo, p. 183)

ISSUES: 1) Whether or not the 30-minute activity of the petitioners before the scheduled working time is compensable under the Labor Code.2) Whether or not res judicata applies when the facts obtaining in the prior case and in the case at bar are significantly different from each other in that there is merit in the case at bar.3) Whether or not there is finality in the decision of Secretary Ople in view of the compromise agreement novating it and the withdrawal of the appeal.4) Whether or not estoppel and laches lie in decisions for the enforcement of labor standards

HELD:In this connection account should be taken of the cognate principle that res judicata operates to bar not only the relitigation in a subsequent action of the issues squarely raised, passed upon and adjudicated in the first suit, but also the ventilation in said subsequent suit of any other issue which could have been raised in the first but was not. The law provides that 'the judgment or order is, with respect to the matter directly adjudged or as to any other matter that could have been raised in relation thereto, conclusive between the parties and their successors in interest by title subsequent to the commencement of the action .. litigating for the same thing and in the same capacity.' So, even if new causes of action are asserted in the second action (e.g. fraud, deceit, undue machinations in connection with their execution of the convenio de transaccion), this would not preclude the operation of the doctrine of res judicata. Those issues are also barred, even if not passed upon in the first. They could have been, but were not, there raised.

Moreover, as a rule, the findings of facts of quasi-judicial agencies which have acquired expertise because their jurisdiction is confined to specific matters are accorded not only respect but at times even finality if such findings are supported by substantial evidence

The records show that the Labor Arbiters' decision dated October 9, 1985 (Annex "E", Petition) pointed out in detail the basis of his findings and conclusions, and no cogent reason can be found to disturb these findings nor of those of the National Labor Relations Commission which affirmed the same.

SARMIENTO, J., Dissenting:It is my opinion that res judicata is not a bar.The decision penned by then Minister Blas Ople in ALU v. STANFILCO (NLRC Case No. 26-LS-XI-76) relied upon by the respondents as basis for claims of res judicata, is not, to my mind, a controlling precedent. In that case, it was held that the thirty-minute "waiting time" complained of was a mere "assembly time" and not a waiting time as the term is known in law, and hence, a compensable hour of work. Thus:

Precisely, it is the petitioners' contention that the assembly time in question had since undergone dramatic changes, thus:(a) First there is the roll call. This is followed by getting their individual work assignments from the foreman.(b) Thereafter,they are individually required to accomplish the Laborer's Daily Accomplishment Report during which they are often made to explain about their reported accomplishment the following day.(c) Then they go to the stockroom to get the working materials, tools and equipment.(d) Lastly, they travel to the field bringing with them their tools, equipment and materials. (Supra, 4-5.)

The petitioners have vehemently maintained that in view thereof, the instant case should be distinguished from the first case. And I do not believe that the respondents have successfully rebutted these allegations. The Solicitor General relies solely on the decision of then Minister Ople, the decision the petitioners precisely reject in view of the changes in the conditions of the parties. The private respondent on the other hand insists that these practices were the same practices taken into account in ALU v. STANFILCO. If this were so, the Ople decision was silent thereon.

It is evident that the Ople decision was predicated on the absence of any insinuation of obligatoriness in the course or after the assembly activities on the part of the EEs.(" . . [T]hey are not subject to the absolute control of the company during this period, otherwise, their failure to report in the assembly time would justify the company to impose disciplinary measures;" supra, 6.) As indicated, however, by the petitioners, things had since changed, and remarkably so, and the latter had since been placed under a number of restrictions. My considered opinion is that the thirty-minute assembly time had become, in truth and fact, a "waiting time" as contemplated by the Labor Code.UNIVERSITY OF PANGASINAN FACULTY UNION vs. NLRCG.R. Nos. 64821-23 January 29, 1993ROMERO, J.:

The uncontroverted facts show that on various dates, petitioner filed the following complaints against the University of Pangasinan (University for brevity) before the Arbitration Branch of the NLRC in Dagupan City:1. October 14, 1980: for nonpayment of benefits under P.D. No. 1713 and emergency cost of living allowance (ecola) to part-time teachers, and for prompt and accurate computation of benefits under P.D. No. 451 and the payment of ecolas;2. November 7, 1980: for nonpayment of all ecolas to instructors from October 18-31, 1980;3. November 20, 1980: for nonpayment of ecolas under P.D. Nos. 525, 1123, 1614, 1634, 1678 and 1713 for November 1-15, 1980, and extra loads during typhoons "Nitang" and "Osang" on July 21 and 25, 1980, respectively;4. April 13, 1981: for violation of P.D. No. 1751 and nonpayment of extra loads on February 12-13, 1980 (Anniversary celebration);5. April 27, 1981: for nonpayment of all ecolas for April 1-15, 1981 to faculty members who were also members of the union;6. May 21, 1981: for violation of Wage Order No. 1 and delayed payment of salaries; and7. June 17, 1981: for nonpayment of salary differentials for summer under P.D. No. 451. 1

The Regional Director in San Fernando, La Union certified six (6) of these complaints to LA of the Dagupan City District Office of the then Ministry of Labor and Employment for compulsory arbitration. According to the petitioner, it was made to understand by Fernandez that the 7TH complaint should also be discussed in its position paper. Accordingly, petitioner filed a position paper discussing the merits of all the seven complaints. On the other hand, the University limited its discussion to only four: nos.4,5,6, and 7. Petitioner was of the view that Executive LA adopted the stand of the University on the four complaints and accordingly dismissed them.

Observing that in its position paper, the petitioner included matters which were "beyond the scope of the issues alleged in the complaints," said LA discussed the four complaints individually. On complain NO.4 , he ruled that because at the time P.D. No. 1123 took effect on May 1, 1977, the University had not increased its tuition fees, there was of "nothing to integrate." 4 However, from June 16, 1979 when the University increased its tuition fees, it was obligated to cause the integration of the across-the-board increase of P60.00 in emergency allowance into the basic pay as mandated by P.D. Nos. 1123 and 1751.

On the alleged nonpayment of extra loads handled by the EEs on February 12 and 13, 1981 when classes were suspended, LA stated that Consuelo Abad, the petitioner's president, had no cause to complain because her salary was fully paid and that, since there were "no complainants for the alleged nonpayment of extra loads for two days," the issue had become academic.

With respect to the complaint NO.5, LA said that since the salary paid to Consuelo Abad and other faculty members for the April 1-15, 1981 period had been earned "as part of their salary for the 10-month period," she was no longer entitled to an emergency cost of living allowance. He added that "payment of emergency cost of living allowance is based on actual work performed except when they (EEs) are on leave with pay." Hence, because classes ended in March 1981, the teachers who did not report for work could not be considered on leave with pay and, therefore, they were not entitled to an emergency cost of living allowance.

With regard to complaint NO.6 alleging violation of Wage Order No. 1, LA found that the University had actually implemented the additional living allowance of P2.00 a day required therein. On the alleged delay in the payment of salaries of the EEs, he rationalized that delays could not be avoided but he reminded the University to pay its EEs on time.

Complaint NO.7 was also resolved in favor of the University. Stating that P.D. No. 451 which mandates salary increases is dependent on enrollment and allowable deductions, LA ruled that, again, Consuelo Abad had no cause to complain as she had been paid out of the allowable 12.74% for distribution which was a "substantial compliance with P.D. No. 451." 5 The dispositive portion of the decision states: NLRC: affirmed the decision .

ISSUE: NLRC should have, in the exercise of its appellate jurisdiction, resolved the issues raised in the first 3 complaints or, in the alternative, ordered the LA to hear and decide the aforementioned three (3) complaints, it having the power of supervision over LAs.HELD: As succinctly provided in this RULE65, SEC.3 OF ROC,, anyone who wishes to avail of the remedy of mandamus must state in a verified petition "the facts with certainty." On account of this requirement, mandamus is never issued in doubtful cases and showing of a clear and certain right on the part of the petitioner is required. 7 Indeed, while the LA is duty bound to resolve all complaints referred to him for arbitration and, therefore, he may be compelled by mandamus to decide them (although not in any particular way or in favor of anyone), 8 we find that the peculiar circumstances in this case do not merit the issuance of the writ of mandamus.

From these facts, one may infer that there must have been a mishandling of the complaints and/or the records of the cases. However, the petitioner failed to substantiate by evidence such negligence on the part of the public respondents as to warrant the issuance of a writ of mandamus. 10 Its officials even neglected the simple act of verifying from the MOLE office in Dagupan City whether the records of all the cases filed had been forwarded to the proper official who should resolve them. 11 Infact, nowhere in its pleadings 12 is there an allegation to that effect.

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On the contrary, the petitioner took Fernandez' words seriously and allowed the proceedings to reach its inevitable conclusion. When it received a copy of the decision, the petitioner should have taken note of Executive LA observation therein that it had discussed matters "beyond the scope of the issues alleged in the complaints." In its memorandum of appeal, it should have prayed for the inclusion of the three complaints inasmuch as in labor cases, an appeal may be treated as a motion for reconsideration or vice-versa. 13 The fact that three complaints had been omitted did not escape the attention of the NLRC which stated in its resolution that "since those cases were not consolidated it is now too late to consolidate them" with the four decided cases. 14 We agree with the NLRC that the said complaints should proceed separately as long as their resolution would not conflict with the resolved cases. 15 It should be added that under Art. 217(b) of the Labor Code, the NLRC has "exclusive appellate jurisdiction over all cases decided by the LAs." Needless to say, the NLRC could not have acted on matters outside of the cases appealed to it.

Petitioner's contention that the cases filed by Consuelo Abad as its president should affect, not only herself, but all the other union members similarly situated as she was, is well taken. The uncontroverted allegation of the petitioner is that it is the holder of Registration Certificate No. 9865-C, having been registered with the then Ministry of Labor and Employment on February 16, 1978. As such, petitioner possessed the legal personality to sue and be sued under its registered name. 16 Corollarily, its president, Consuelo Abad, correctly filed the complaints even if some of them involved rights and interest purely or exclusively appertaining to individual EEs, it appearing that she signed the complaints "for and in behalf of the University of Pangasinan Faculty Union." 17

The University's contention that petitioner had no legal personality to institute and prosecute money claims must, therefore, fail. To quote then Associate Justice Teehankee w]hat should be borne in mind is that the interest of the individual worker can be better protected on the whole by a strong union aware of its moral and legal obligations to represent the rank and file faithfully and secure for them the best wages and working terms and conditions. . . . Although this was stated within the context of collective bargaining, it applies equally well to cases, such as the present wherein the union, through its president, presented its individual members' grievances through proper proceedings. While the complaints might not have disclosed the identities of the individual EEs claiming monetary benefits, 19 such technical defect should not be taken against the claimants, especially because the University appears to have failed to demand a bill of particulars during the proceedings before the LA.

ISSUE: won NLRC did abuse its discretion in resolving the appeal from the decision of Executive LA.HELD: the NLRC did not abuse its discretion in resolving the appeal from the decision of Executive LA except for the disallowance of the emergency cost of living allowance to members of the petitioner. The Rules Implementing P.D. No. 1713 which took effect on August 18, 1980 provide:

Sec. 6. Allowances of full-time and part-time EEs. — EEs shall be paid in full the monthly allowance on the basis of the scales provided in Section 3 hereof, regardless of the number of their regular working days if they incur no absences during the month. If they incur absences without pay, the amounts corresponding to the absences may be deducted from the monthly allowance provided that in determining the equivalent daily allowance of such deduction, the applicable monthly allowance shall be divided by thirty (30) days.

This Section, which is a virtual reproduction of Section 12 of the old Rules Implementing P.D. No. 1123, has been interpreted by this Court as requiring that the full amount of the cost of living allowance mandated by law should be given monthly to each EE if the latter has worked continuously for each month, regardless of the number of the regular working days. But more apropos is the ruling of this Court in University of Pangasinan Faculty Union v. University of Pangasinan and NLRC, a case involving the same parties as in the instant petition and dealing with a complaint filed by the petitioner on December 18, 198. The Court held therein:

. . . The "No work, no pay" principle does not apply in the instant case. The petitioner's members received their regular salaries during this period. It is clear from the . . . law that it contemplates a "no work" situation where the EEs voluntarily absent themselves. Petitioners, in the case at bar, certainly do not, ad voluntatem absent themselves during semestral breaks. Rather, they are constrained to take mandatory leave from work. For this, they cannot be faulted nor can they be begrudged that which is due them under the law. To a certain extent, the private respondent can specify dates when no classes would be held. Surely, it was not the intention of the framers of the law to allow ERs to withhold EE benefits by the simple expedient of unilaterally imposing "no work" days and consequently avoiding compliance with the mandate of the law for those days.

As interpreted and emphasized in the same case, the law granting emergency cost of living allowances was designed to augment the income of the EEs to enable them to cope with the rising cost of living and inflation. Clearly, it was enacted in pursuance of the State's duty to protect labor and to alleviate the plight of the workers. To uphold private respondent's interpretation of the law would be running counter to the intent of the law and the Constitution.PAL vs. NLRCG.R. No. 132805 February 2, 1999PUNO, J.:

FACTS: Private respondent was employed as flight surgeon at petitioner company. He was assigned at the PAL Medical Clinic at Nichols and was on duty from 4PM to12MN.

at around 7PM, private respondent left the clinic to have his dinner at his residence, which was about five-minute drive away. A few minutes later, the clinic received an emergency call from the PAL Cargo Services. One of its EEs, Mr. Manuel Acosta, had suffered a heart attack. The nurse on duty, Mr. Merlino Eusebio, called private respondent at home to inform him of the emergency. The patient arrived at the clinic at 7:50PM and Mr. Eusebio immediately rushed him to the hospital. When private respondent reached the clinic at around 7:51PM.Mr. Eusebio had already left with the patient. Mr. Acosta died the following day.

Upon learning about the incident, PAL Medical Director ordered the Chief Flight Surgeon to conduct an investigation. The Chief Flight Surgeon, in turn, required private respondent to explain why no disciplinary sanction should be taken against him.

In his explanation, private respondent asserted that he was entitled to a 30-minute meal break; that he immediately left his residence upon being informed by Mr. Eusebio about the emergency and he arrived at the clinic a few minutes later; that Mr. Eusebio panicked and brought the patient to the hospital without waiting for him.

Finding private respondent's explanation unacceptable, the management charged private respondent with abandonment of post while on duty. He was given 10 days to submit a written answer to the administrative charge.

In his answer, private respondent reiterated the assertions in his previous explanation. He further denied that he abandoned his post. He said that he only left the clinic to have his dinner at home. In fact, he returned to the clinic at 7:51 in the evening upon being informed of the emergency.

After evaluating the charge as well as the answer of private respondent, petitioner company decided to suspend private respondent for 3 months.

Private respondent filed a complaint for illegal suspension against petitioner.

LA:declaring the suspension of private respondent illegal. It also ordered petitioner to pay private respondent the amount equivalent to all the benefits he should have received during his period of suspension plus P500,000.00 moral damages.

NLRC: dismissed petitioner’s appeal after finding that the decision of the LA is supported by the facts on record and the law on the matter. 3 The NLRC likewise denied petitioner's MR.

ISSUES:1. The public respondents acted without or in excess of their jurisdiction and with grave abuse of discretion in nullifying the 3-month suspension of private respondent despite the fact that the private respondent has committed an offense that warranted the imposition of disciplinary action; 2. The public respondents acted without or in excess of their jurisdiction and with GAD in holding the petitioner liable for moral damages:(a) Despite the fact that no formal hearing whatsoever was conducted for complainant to substantiate his claim;(b) Despite the absence of proof that the petitioner acted in bad faith in imposing the 3-month suspension; and (c) Despite the fact that the Labor Arbiter's award of moral damages is highly irregular, considering that it was more than what the private respondent prayed for.

HELD: 1)We find that public respondents did not err in nullifying the 3-month suspension of private respondent. They, however, erred in awarding moral damages to private respondent. The facts do not support petitioner's allegation that private respondent abandoned his post. Private respondent left the clinic that night only to have his dinner at his house, which was only a few minutes' drive away from the clinic. His whereabouts were known to the nurse on duty so that he could be easily reached in case of emergency. Upon being informed of Mr. Acosta's condition, private respondent immediately left his home and returned to the clinic. These facts belie petitioner's claim of abandonment.

Petitioner argues that being a full-time EE, private respondent is obliged to stay in the company premises for not less than eight (8) hours. Hence, he may not leave the company premises during such time, even to take his meals.

Art. 83. Normal hours of work. — The normal hours of work of any EE shall not exceed eight (8) hours a day.Health personnel in cities and municipalities with a population of at least one million (1,000,000) or in hospitals and clinics with a bed capacity of at least one hundred (100) shall hold regular office hours for eight (8) hours a day, for five (5) days a week, exclusive of time for meals, except where the exigencies of the service require that such personnel work for six (6) days or forty-eight (48) hours, in which case they shall be entitled to an additional compensation of at least thirty per cent (30%) of their regular wage for work on the sixth day. For purposes of this Article, "health personnel" shall include: resident physicians, nurses, nutritionists, dieticians, pharmacists, social workers, laboratory technicians, paramedical technicians, psychologists, midwives, attendants and all other hospital or clinic personnel. (emphasis supplied)

Art. 85. Meal periods. — Subject to such regulations as the Secretary of Labor may prescribe, it shall be the duty of every ER to give his EEs not less than sixty (60) minutes time-off for their regular meals.

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Sec. 7, Rule I, Book III of the Omnibus Rules Implementing the Labor Code further states: Every ER shall give his EEs, regardless of sex, not less than one (1) hour time-off for regular meals, except in the following cases when a meal period of not less than twenty (20) minutes may be given by the ER provided that such shorter meal period is credited as compensable hours worked of the EE;(a) Where the work is non-manual work in nature or does not involve strenuous physical exertion;(b) Where the establishment regularly operates not less than sixteen hours a day;(c) In cases of actual or impending emergencies or there is urgent work to be performed on machineries, equipment or installations to avoid serious loss which the ER would otherwise suffer; and(d) Where the work is necessary to prevent serious loss of perishable goods.

Rest periods or coffee breaks running from five (5) to twenty (20) minutes shall be considered as compensable working time.

Thus, the 8-hour work period does not include the meal break. Nowhere in the law may it be inferred that EEs must take their meals within the company premises. EEs are not prohibited from going out of the premises as long as they return to their posts on time. Private respondent's act, therefore, of going home to take his dinner does not constitute abandonment.

2)Not every EE who is illegally dismissed or suspended is entitled to damages. As a rule, moral damages are recoverable only where the dismissal or suspension of the EE was attended by bad faith or fraud, or constituted an act oppressive to labor, or was done in a manner contrary to morals, good customs or public policy. 6 Bad faith does not simply mean negligence or bad judgment. It involves a state of mind dominated by ill will or motive. It implies a conscious and intentional design to do a wrongful act for a dishonest purpose or some moral obliquity. 7 The person claiming moral damages must prove the existence of bad faith by clear and convincing evidence for the law always presumes good faith. 8

In the case at bar, there is no showing that the management of petitioner company was moved by some evil motive in suspending private respondent. It suspended private respondent on an honest, albeit erroneous, belief that private respondent's act of leaving the company premises to take his meal at home constituted abandonment of post which warrants the penalty of suspension. Also, it is evident from the facts that petitioner gave private respondent all the opportunity to refute the charge against him and to defend himself. These negate the existence of bad faith on the part of petitioner. Under the circumstances, we hold that private respondent is not entitled to moral damages.LETRAN CALAMBA FACULTY and EES ASSOCIATION vs. NLRC [G.R. No. 156225, January 29, 2008]AUSTRIA-MARTINEZ, J.:

FACTS: Letran Calamba Faculty and EEs Association filed with Regional Arbitration Branch No. IV of the National Labor Relations Commission (NLRC) a Complaint[3] against Colegio de San Juan de Letran, Calamba, Inc. for collection of various monetary claims due its members. Petitioner alleged in its Position Paper that:

a) [It] has filed this complaint in behalf of its members whose names and positions appear in the list hereto attached as Annex A

b) the computation of the thirteenth month pay of its academic personnel, respondent does not include as basis therefor their compensation for overloads. It only takes into account the pay the faculty members receive for their teaching loads not exceeding eighteen (18) units. The teaching overloads are rendered within eight (8) hours a day.

c) Respondent has not paid the wage increases required by Wage Order No. 5 to its EEs who qualify thereunder.

d) Respondent has not followed the formula prescribed by DECS Memorandum Circular No. 2 dated March 10, 1989 in the computation of the compensation per unit of excess load or overload of faculty members. This has resulted in the diminution of the compensation of faculty members.

e) The salary increases due the non-academic personnel as a result of job grading has not been given. Job grading has been an annual practice of the school since 1980; the same is done for the purpose of increasing the salaries of non-academic personnel and as the counterpart of the ranking systems of faculty members.

f) Respondent has not paid to its EEs the balances of seventy (70%) percent of the tuition fee increases for the years 1990, 1991 and 1992.

g) Respondent has not also paid its EEs the holiday pay for the ten (10) regular holidays as provided for in Article 94 of the Labor Code.

h) Respondent has refused without justifiable reasons and despite repeated demands to pay its obligations mentioned in paragraphs 3 to 7 hereof.

respondent filed its Position Paper denying all the allegations of petitioner. petitioner filed its Reply. Prior to the filing of the above-mentioned complaint, petitioner filed a separate complaint against the respondent for money claims with Regional Office of DOLE. On the other hand, pending resolution of NLRC Case respondent filed with Regional Arbitration of the NLRC a petition to declare as illegal

a strike staged by petitioner in January 1994. Subsequently, these three cases were consolidated. The case for money claims originally filed by petitioner with the DOLE, while the petition to declare the subject strike illegal filed by respondent was docketed as NLRC Case. On September 28, 1998, the Labor Arbiter (LA) handling the consolidated cases rendered a Decision with the following dispositive portion:

The money claims cases are hereby dismissed for lack of merit; The petition to declare strike illegal is hereby dismissed, but the officers of the Union, particularly its President, Mr. Edmundo F. Marifosque, Sr., are hereby reprimanded and sternly warned that future conduct similar to what was displayed in this case will warrant a more severe sanction from this Office.

ISSUES: 1)The CA gravely erred in holding that the factual findings of NLRC cannot be reviewed in certiorari proceedings; 2) whether or not the pay of faculrty members for teaching overloads should be included as basis in the computation of the 13th month pay; 3) that it gravely erred in holding that the decision of NLRC is supported by substantial evidence in not granting petitioner’s monetary claims.

HELD: 1 and 3) the Court finds no error in the ruling of the CA that since nowhere in the petition is there any acceptable demonstration that the LA or the NLRC acted either with grave abuse of discretion or without or in excess of its jurisdiction, the appellate court has no reason to look into the correctness of the evaluation of evidence which supports the labor tribunals' findings of fact.

Settled is the rule that the findings of the LA, when affirmed by the NLRC and the CA, are binding on the Supreme Court, unless patently erroneous.[16] It is not the function of the Supreme Court to analyze or weigh all over again the evidence already considered in the proceedings below.[17] In a petition for review on certiorari, this Courtâ€™s jurisdiction is limited to reviewing errors of law in the absence of any showing that the factual findings complained of are devoid of support in the records or are glaringly erroneous.[18] Firm is the doctrine that this Court is not a trier of facts, and this applies with greater force in labor cases.[19] Findings of fact of administrative agencies and quasi-judicial bodies, which have acquired expertise because their jurisdiction is confined to specific matters, are generally accorded not only great respect but even finality.[20] They are binding upon this Court unless there is a showing of grave abuse of discretion or where it is clearly shown that they were arrived at arbitrarily or in utter disregard of the evidence on record.[21] We find none of these exceptions in the present case.

2)Where a teacher is required to perform such overload within the eight (8) hours normal working day, such overload compensation shall be considered part of the basic pay for the purpose of computing the teacher's 13th-month pay. Overload work � is sometimes misunderstood as synonymous to œovertime work as� this term is used and understood in the Labor Code. These two terms are not the same because overtime work is work rendered in excess of normal working hours of eight in a day (Art. 87, Labor Code). Considering that overload work may be performed either within or outside eight hours in a day, overload work may or may not be overtime work.

In the light of the foregoing discussions, it is the position of this Department that all basic salary/wage representing payments earned for actual work performed during or within the eight hours in a day, including payments for overload work within eight hours, form part of basic wage and therefore are to be included in the computation of 13th-month pay mandated by PD 851, as amended.

On the other hand, the Legal Services Department of the DOLE holds in its opinion of March 4, 1992 that remunerations for teaching in excess of the regular load shall be excluded in the computation of the 13th-month pay unless, by school policy, the same are considered as part of the basic salary of the qualified teachers.[25]

Under a later set of Supplementary Rules and Regulations Implementing Presidential Decree 851 issued by the then Labor Secretary Blas Ople, overtime pay, earnings and other remunerations are excluded as part of the basic salary and in the computation of the 13th-month pay.

The exclusion of cost-of-living allowances under Presidential Decree 525 and Letter of Instruction No. 174 and profit sharing payments indicate the intention to strip basic salary of other payments which are properly considered as fringe � benefits. Likewise, the catch-all exclusionary phrase all allowances and monetary benefits which are not considered or integrated as part of the basic salary shows al� so the intention to strip basic salary of any and all additions which may be in the form of allowances or fringe benefits.

While doubt may have been created by the prior Rules and Regulations Implementing Presidential Decree 851 which defines basic salary to include all remunerations or earnings paid by an ER to an EE, this cloud is dissipated in the later and more controlling Supplementary Rules and Regulations which categorically, exclude from the definition of basic salary earnings and other remunerations paid by ER to an EE. A cursory perusal of the two sets of Rules indicates that what has hitherto been the subject of a broad inclusion is now a subject of broad exclusion. The Supplementary Rules and Regulations cure the seeming tendency of the former rules to include all remunerations and earnings within the definition of basic salary.

The all-embracing phrase â€œearnings and other remunerationsâ€ � which are deemed not part of the basic salary includes within its meaning payments for sick, vacation, or maternity leaves, premium

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for works performed on rest days and special holidays, pay for regular holidays and night differentials. As such they are deemed not part of the basic salary and shall not be considered in the computation of the 13th-month pay. If they were not so excluded, it is hard to find any â€œearnings and other remunerationsâ€ � expressly excluded in the computation of the 13th-month pay. Then the exclusionary provision would prove to be idle and with no purpose.

It is likewise clear that premium for special holiday which is at least 30% of the regular wage is an additional compensation other than and added to the regular wage or basic salary. For similar reason it shall not be considered in the computation of the 13th -month pay.[30]

In the same manner that payment for overtime work and work performed during special holidays is considered as additional compensation apart and distinct from an EE's regular wage or basic salary, an overload pay, owing to its very nature and definition, may not be considered as part of a teacher's regular or basic salary, because it is being paid for additional work performed in excess of the regular teaching load.

CALTEX REGULAR EES AT MANILA OFFICE vs. CALTEX (PHILIPPINES) and NLRCG.R. No. 111359 August 15, 1995FELICIANO, J.:

FACTS: On 12 December 1985, petitioner Union and private respondent Caltex (Philippines), Inc. ("Caltex") entered into a"1985 CBA" which was to be in effect until midnight of 31 December 1988. The CBA included, among others, the following provision:

HOURS OF WORKIn conformity with Presidential Decree 442, otherwise known as the Labor Code of the Philippines, as amended, the regular work week shall consist of eight (8) hours per day, seven (7) days, Monday through Sunday, during which regular rates of pay shall be paid in accordance with Annex B and work on the EE's one "Day of Rest," shall be considered a special work day, during which "Day of Rest" rates of pay shall be paid as provided in Annex B. Daily working schedules shall be established by management in accordance with the requirements of efficient operations on the basis of eight (8) hours per day for any five (5) days. Provided, however EEs required to work in excess of forty (40) hours in any week shall be compensated in accordance with Annex B of thisAgreement. Annex "B" Computation of: Regular Day Pay, OT, NSD Pay, Day Off Pay, Excess of 40 hours within a calendar week, Sunday Premium Pay, Holiday Premium Pay, EE's Basic Hourly Wage Rate:Monthly Base Pay

the Union called Caltex's attention to alleged violations by Caltex of Annex "B" of the 1985 CBA, e.g. non-payment of night-shift differential, non-payment of overtime pay and non-payment at "first day-off rates" for work performed on a Saturday. Caltex's Industrial Relations manager immediately evaluated petitioner's claims and accordingly informed petitioner Union that differential payments would be timely implemented. In the implementation of the re-computed claims, however, no differential payment was made with respect to work performed on the first 2 1/2 hours on a Saturday.

the Union instituted a complaint for unfair labor practice against Caltex alleging violation of the provisions of the 1985 CBA. Petitioner Union charged Caltex with shortchanging its EEs when Caltex compensated work performed on the first 2 1/2 hours of Saturday, an EEs' day of rest, at regular rates, when it should be paying at "day of rest" or "day off" rates.

Caltex denied the accusations of the Union. It averred that Saturday was never designated as a day of rest, much less a "day-off". It maintained that the 1985 CBA provided only 1 day of rest for EEs at the Manila Office, as well as EEs similarly situated at the Legazpi and Marinduque Bulk Depots. This day of rest, according to Caltex, was Sunday.

LA: ruled in favor of petitioner Union, while finding at the same time that private respondent Caltex was not guilty of any unfair labor practice. interpreting Article III and Annex "B" of the 1985 CBA, concluded that Caltex's EEs had been given two (2) days (instead of one [1] day) of rest, with the result that work performed on the EE's first day of rest, viz. Saturday, should be compensated at "First day-off" rates.

NLRC set aside the decision of LA.. The NLRC found that the conclusions of the Labor Arbiter were not supported by the evidence on record. The NLRC, interpreting the provisions of the 1985 CBA, concluded that that CBA granted only one (1) day of rest, e.g., Sunday.

ISSUE: WON LA correctly interpreted Article III in relation to Annex "B" of the parties' 1985 CBA.

HELD: After carefully examining the language of Article III, in relation to Annex "B" of the 1985 CBA, quoted in limine, as well as relevant portions of earlier CBAs between the parties, we agree with the NLRC that the intention of the parties to the 1985 CBA was to provide the EEs with only one (1) day of rest. The plain and ordinary meaning of the language of Article III is that Caltex and the Union had agreed to pay "day of rest" rates for work performed on "an EE's one day of rest". To the Court's mind, the use of the word "one" describing the phrase "day of rest [of an EE]" emphasizes the

fact that the parties had agreed that only a single day of rest shall be scheduled and shall be provided to the EE.

It is useful to note that the contract clauses governing hours of work in previous CBAs executed between private respondent Caltex and petitioner Union in 1973, 1976, 1979 and 1982 contained provisions parallel if not identical to those set out in Article III of the 1985 CBA. In all these CBAs (1973, 1976, 1979, 1982), Article III provide that only "work on an EE's one day of rest "shall be paid on the basis of "day of rest rates". The relevant point here is that petitioner Union had never suggested that more than 1 day of rest had been agreed upon, and certainly Caltex had never treated Article III or any other portion of the CBAs as providing two (2) days of rest. It is well settled that the contemporaneous and subsequent conduct of the parties may be taken into account by a court called upon to interpret and apply a contract entered into by them.

We note that LA surmised that the intention he implied from the contents of Annex "B" was in conflict with the intention expressed in Article III (which, the Labor Arbiter admitted, stipulated only one day of rest). According to the Labor Arbiter, when Annex "B" referred to "First Day-off Rates" and "Second Day-off Rates", these were meant to express an agreement that the parties intended to provide EEs two (2) days of rest. He then declared that Annex "B" should prevail over Article III because the former was a more specific provision than the latter.

An annex expresses the idea of joining a smaller or subordinate thing with another, larger or of higher importance. 8 An annex has a subordinate role, without any independent significance separate from that to which it is tacked on. Annex "B," in the case at bar, is one such document. It is not a memorandum of amendments or a codicil containing additional or new terms or stipulations. Annex "B" cannot be construed as modifying or altering the terms expressed in the body of the agreement contained in the 1985 CBA. It did not confer any rights upon EEs represented by petitioner Union; neither did it impose any obligations upon private respondent Caltex. In fact, the contents of Annex "B" have no intelligible significance in and of themselves when considered separately from the 1985 CBA.

Private respondent also points out that the mathematical formulae contained in Annex "B" are not all applicable to all classes of EEs, there being some formulae applicable only to particular groups or classes of EEs. Thus, "First Day-off rates" and "Second Day-off rates" are applicable only to EEs stationed at the refinery and associated facilities like depots and terminals which must be in constant twenty-four (24) hours a day, seven (7) days a week, operation, hence necessitating the continuous presence of operations personnel. The work of such operations personnel required them to be on duty for six (6) consecutive days. Upon the other hand, "First Day-off rates" and "Second Day-off rates" are not applicable to personnel of the Manila Office which consisted of other groups or categories of EEs (e.g., office clerks, librarians, computer operators, secretaries, collectors, etc.), 9 since the nature of their work did not require them to be on duty for six (6) consecutive days.

We find, under the foregoing circumstances, that the purported intention inferred from Annex "B" by the Labor Arbiter was based merely on conjecture and speculation.

We also note that the Labor Arbiter merely suspected that the parties agreed to provide two (2) days of rest on the ground that they had so stipulated in their 1970 CBA. 10 A principal difficulty with this view is that it disregards the fact that Article III of the 1985 CBA no longer contained a particular proviso found in the 1970 CBA. In fact, all the CBAs subsequent to 1970 (1973, 1976, 1979, 1982) had similarly deleted the proviso in the 1970 CBA providing for two (2) days-off. To the Court's mind, such deletion means only one thing — that is — the parties had agreed to remove such stipulation. Accordingly, the proviso found in Article III of the 1970 CBA ceased to be a demandable obligation. Petitioner Union cannot now unilaterally re-insert such a stipulation by strained inference from Annex "B." Upon the foregoing circumstances, we must hold that the Labor Arbiter's suspicion is without basis in the facts of record.

ISSUE: won Caltex in the instant petition was violating the statutory prohibition against off-setting undertime for overtime work on another day. Union counsel attempted to establish this charge by asserting that the EEs had been required to render "overtime work" on a Saturday but compensated only at regular rates of pay, because they had not completed the eight (8)-hour work period daily from Monday thru Friday.

HELD: The Court finds petitioner's contention bereft of merit. Overtime work consists of hours worked on a given day in excess of the applicable work period, which here is eight (8) hours. 12 It is not enough that the hours worked fall on disagreeable or inconvenient hours. In order that work may be considered as overtime work, the hours worked must be in excess of and in addition to the eight (8) hours worked during the prescribed daily work period, or the forty (40) hours worked during the regular work week Monday thru Friday.

In the present case, under the 1985 CBA, hours worked on a Saturday do not, by that fact alone, necessarily constitute overtime work compensable at premium rates of pay, contrary to petitioner's assertion. These are normal or regular work hours, compensable at regular rates of pay, as provided in the 1985 CBA; under that CBA,

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Saturday is not a rest day or a "day off". It is only when an EE has been required on a Saturday to render work in excess of the forty (40) hours which constitute the regular work week that such EE may be considered as performing overtime work on that Saturday. We consider that the statutory prohibition against offsetting undertime one day with overtime another day has no application in the case at bar. 13

Petitioner's counsel, in his final attempt to lay a basis for compelling private respondent to pay premium rates of pay for all hours worked on a Saturday, regardless of the number of hours actually worked earlier during the week, i.e., on Monday to Friday, insists that private respondent cannot require its EEs to complete the 40-hour regular work week on a Saturday, after it has allowed its EEs to render only 37-1/2 hours of work.

The company practice of allowing EEs to leave thirty (30) minutes earlier than the scheduled off-time had been established primarily for the convenience of the EEs most of whom have had to commute from work place to home and in order that they may avoid the heavy rush hour vehicular traffic. There is no allegation here by petitioner Union that such practice was resorted to by Caltex in order to escape its contractual obligations. This practice, while it effectively reduced to 37-1/2 the number of hours actually worked by EEs who had opted to leave ahead of off-time, is not be construed as modifying the other terms of the 1985 CBA. As correctly pointed out by private respondent, the shortened work period did not result in likewise shortening the work required for purposes of determining overtime pay, as well as for purposes of determining premium pay for work beyond forty (40) hours within the calendar week. It follows that an EE is entitled to be paid premium rates, whether for work in excess of eight (8) hours on any given day, or for work beyond the forty (40)-hour requirement for the calendar week, only when the EE had, in fact already rendered the requisite number of hours — 8 or 40 — prescribed in the 1985 CBA.

LEGAHI vs. NLRCG.R. No. 122240, NOVEMBER 18, 1999

ABDULJUAHID R. PIGCAULAN, vs. SECURITY and CREDITINVESTIGATION, INCG.R. No. 173648, January 16, 2012DEL CASTILLO, J.:

FACTS: Canoy and Pigcaulan were both employed by SCII as security guards and were assigned to SCII’s different clients. Subsequently, however, Canoy and Pigcaulan filed with the LA separate complaints[7] for underpayment of salaries and non-payment of overtime, holiday, rest day, service incentive leave and 13th month pays. These complaints were later on consolidated as they involved the same causes of action.

Canoy and Pigcaulan, in support of their claim, submitted their respective daily time records reflecting the number of hours served and their wages for the same. They likewise presented itemized lists of their claims for the corresponding periods served.

Respondents, however, maintained that Canoy and Pigcaulan were paid their just salaries and other benefits under the law; that the salaries they received were above the statutory minimum wage and the rates provided by the Philippine Association of Detective and Protective Agency Operators (PADPAO) for security guards; that their holiday pay were already included in the computation of their monthly salaries; that they were paid additional premium of 30% in addition to their basic salary whenever they were required to work on Sundays and 200% of their salary for work done on holidays; and, that Canoy and Pigcaulan were paid the corresponding 13th month pay for the years 1998 and 1999. In support thereof, copies of payroll listings[8] and lists of EEs who received their 13th month pay for the periods December 1997 to November 1998 and December 1998 to November 1999[9] were presented. In addition, respondents contended that Canoy’s and Pigcaulan’s monetary claims should only be limited to the past three years of employment pursuant to the rule on prescription of claims.

LA: Asuncion awarded them their monetary claims in his Decision[10] dated June 6, 2002. The LA held that the payroll listings presented by the respondents did not prove that Canoy and Pigcaulan were duly paid as same were not signed by the latter or by any SCII officer. The 13th month payroll was, however, acknowledged as sufficient proof of payment, for it bears Canoy’s and Pigcaulan’s signatures. Thus, without indicating any detailed computation of the judgment award, the LA ordered the payment of overtime pay, holiday pay, service incentive leave pay and proportionate 13th month pay for the year 2000 in favor of Canoy and Pigcaulan, viz:

NLRC: dismissed respondent’s appeal and held that the evidence show underpayment of salaries as well as non-payment of service incentive leave benefit. Accordingly, the LA’s Decision was sustained. The motion for reconsideration thereto was likewise dismissed by the NLRC in a Resolution[15] dated June 14, 2004.

CA: set aside the rulings of both the LA and the NLRC after noting that there were no factual and legal bases mentioned in the questioned rulings to support the conclusions made.

ISSUE: The Honorable Court of Appeals erred when it [made] complainants suffer the consequences of the alleged non-observance by the LA and NLRC of the prescribed forms of decisions

considering that they have complied with all needful acts required to support their claims.

HELD: We have examined the petition and find that same was filed by Pigcaulan solely on his own behalf. This is very clear from the petition’s prefatory which is phrased as follows: COMES NOW Petitioner Abduljuahid R. Pigcaulan, by counsel, unto this Honorable Court.

Also, under the heading “Parties”, only Pigcaulan is mentioned as petitioner and consistent with this, the body of the petition refers only to a “petitioner” and never in its plural form “petitioners”. Aside from the fact that the Verification and Certification of Non-Forum Shopping attached to the petition was executed by Pigcaulan alone, it was plainly and particularly indicated under the name of the lawyer who prepared the same, Atty. Josefel P. Grageda, that he is the “Counsel for Petitioner Adbuljuahid Pigcaulan” only. In view of these, there is therefore, no doubt, that the petition was brought only on behalf of Pigcaulan. Since no appeal from the CA Decision was brought by Canoy, same has already become final and executory as to him.

Canoy cannot now simply incorporate in his affidavit a verification of the contents and allegations of the petition as he is not one of the petitioners therein. Suffice it to state that it would have been different had the said petition been filed in behalf of both Canoy and Pigcaulan. In such a case, subsequent submission of a verification may be allowed as non-compliance therewith or a defect therein does not necessarily render the pleading, or the petition as in this case, fatally defective.[24] “The court may order its submission or correction, or act on the pleading if the attending circumstances are such that strict compliance with the Rule may be dispensed with in order that the ends of justice may be served thereby. Further, a verification is deemed substantially complied with when one who has ample knowledge to swear to the truth of the allegations in the complaint or petition signs the verification, and when matters alleged in the petition have been made in good faith or are true and correct.”[25] However, even if it were so, we note that Canoy still failed to submit or at least incorporate in his affidavit a certificate of non-forum shopping.

, we held that in some cases, execution by only one of the petitioners on behalf of the other petitioners constitutes substantial compliance with the rule on the filing of a certificate of non-forum shopping on the ground of common interest or common cause of action or defense.[28] We, however, find that common interest is not present in the instant petition. To recall, Canoy’s and Pigcaulan’s complaints were consolidated because they both sought the same reliefs against the same respondents. This does not, however, mean that they share a common interest or defense. The evidence required to substantiate their claims may not be the same. A particular evidence which could sustain Canoy’s action may not effectively serve as sufficient to support Pigcaulan’s claim.

Besides, assuming that the petition is also filed on his behalf, Canoy failed to show any reasonable cause for his failure to join Pigcaulan to personally sign the Certification of Non-Forum Shopping. It is his duty, as a litigant, to be prudent in pursuing his claims against SCII, especially so, if he was indeed suffering from financial distress. However, Canoy failed to advance any justifiable reason why he did not inform anyone of his whereabouts when he knows that he has a pending case against his former ER. Sadly, his lack of prudence and diligence cannot merit the court’s consideration or sympathy. It must be emphasized at this point that procedural rules should not be ignored simply because their non-observance may result in prejudice to a party’s substantial rights. The Rules of Court should be followed except only for the most persuasive of reasons.[29]

Having declared the present petition as solely filed by Pigcaulan, this Court shall consider the subsequent pleadings, although apparently filed under his and Canoy’s name, as solely filed by the former.

ISSUE: The Honorable Court of Appeals erred when it dismissed the complaint allegedly due to absence of legal and factual [bases] despite attendance of substantial evidence in the records.HELD: There was no substantial evidence to support the grant of overtime pay.

The LA ordered reimbursement of overtime pay, holiday pay, service incentive leave pay and 13th month pay for the year 2000 in favor of Canoy and Pigcaulan. The LA relied heavily on the itemized computations they submitted which he considered as representative daily time records to substantiate the award of salary differentials. The NLRC then sustained the award on the ground that there was substantial evidence of underpayment of salaries and benefits.

We find that both the LA and the NLRC erred in this regard. The handwritten itemized computations are self-serving, unreliable and unsubstantial evidence to sustain the grant of salary differentials, particularly overtime pay. Unsigned and unauthenticated as they are, there is no way of verifying the truth of the handwritten entries stated therein. Written only in pieces of paper and solely prepared by Canoy and Pigcaulan, these representative daily time records, as termed by the LA, can hardly be considered as competent evidence to be used as basis to prove that the two were underpaid of their salaries. We find nothing in the records which could substantially support Pigcaulan’s contention that he had rendered service beyond eight hours to entitle him to overtime pay and during Sundays to entitle him to restday pay. Hence, in the absence of any concrete proof that additional service beyond the normal working

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hours and days had indeed been rendered, we cannot affirm the grant of overtime pay to Pigcaulan.

with respect to the award for holiday pay, service incentive leave pay and 13th month pay, we affirm and rule that Pigcaulan is entitled to these benefits.Under the Labor Code, Pigcaulan is entitled to his regular rate on holidays even if he does not work.[30] Likewise, express provision of the law entitles him to service incentive leave benefit for he rendered service for more than a year already. Furthermore, under Presidential Decree No. 851,[31] he should be paid his 13th month pay. As ER, SCII has the burden of proving that it has paid these benefits to its EEs.[32]

SCII presented payroll listings and transmittal letters to the bank to show that Canoy and Pigcaulan received their salaries as well as benefits which it claimed are already integrated in the EEs’ monthly salaries. However, the documents presented do not prove SCII’s allegation. SCII failed to show any other concrete proof by means of records, pertinent files or similar documents reflecting that the specific claims have been paid. With respect to 13th month pay, SCII presented proof that this benefit was paid but only for the years 1998 and 1999. To repeat, the burden of proving payment of these monetary claims rests on SCII, being the ER. It is a rule that one who pleads payment has the burden of proving it. “Even when the plaintiff alleges non-payment, still the general rule is that the burden rests on the defendant to prove payment, rather than on the plaintiff to prove non-payment.”[33] Since SCII failed to provide convincing proof that it has already settled the claims, Pigcaulan should be paid his holiday pay, service incentive leave benefits and proportionate 13th month pay for the year 2000.

It is not for an EE to prove non-payment of benefits to which he is entitled by law. Rather, it is on the ER that the burden of proving payment of these claims rests.

ISSUE: The CA erred in dismissing the claims instead of remanding the case to the LA for a detailed computation of the judgment award.HELD: Indeed, the LA failed to provide sufficient basis for the monetary awards granted. Such failure, however, should not result in prejudice to the substantial rights of the party. While we disallow the grant of overtime pay and restday pay in favor of Pigcaulan, he is nevertheless entitled, as a matter of right, to his holiday pay, service incentive leave pay and 13th month pay for year 2000. Hence, the CA is not correct in dismissing Pigcaulan’s claims in its entirety.

Consistent with the rule that all money claims arising from an ER-EE relationship shall be filed within three years from the time the cause of action accrued,[34] Pigcaulan can only demand the amounts due him for the period within three years preceding the filing of the complaint in 2000. Furthermore, since the records are insufficient to use as bases to properly compute Pigcaulan’s claims, the case should be remanded to the LA for a detailed computation of the monetary benefits due to him.

ASSOC. OF INTERNATIONAL SHIPPING LINES, INC. vs. UNITED HARBOR’S PILOT ASSOC.G.R. No.172029, August 6,2008DACUT vs. CAG.R. No.169434, March 28, 2008ASIAN TRANSMISSION CO. vs. CAG.R. No.144644, March 15, 2004JOSE RIZAL COLLEGE vs.NLRC and NATIONAL ALLIANCE OF TEACHERS/OFFICE WORKERSG.R. No. L-65482 December 1, 1987PARAS, J.:

FACTS:Petitioner is a non-stock, non-profit educational institution duly organized and existing under the laws of the Philippines. It has three groups of EEs categorized as follows: (a) personnel on monthly basis, who receive their monthly salary uniformly throughout the year, irrespective of the actual number of working days in a month without deduction for holidays; (b) personnel on daily basis who are paid on actual days worked and they receive unworked holiday pay and (c) collegiate faculty who are paid on the basis of student contract hour. Before the start of the semester they sign contracts with the college undertaking to meet their classes as per schedule.

Unable to receive their corresponding holiday pay, as claimed, from 1975 to 1977, private respondent National Alliance of Teachers and Office Workers (NATOW) in behalf of the faculty and personnel of Jose Rizal College filed with the Ministry of Labor a complaint against the college for said alleged non-payment of holiday pay. Due to the failure of the parties to settle their differences on conciliation, the case was certified for compulsory arbitration.

After the parties had submitted their respective position papers, the Labor Arbiter rendered a decision: 1. The faculty and personnel of the respondent Jose Rizal College who are paid their salary by the month uniformly in a school year, irrespective of the number of working days in a month, without deduction for holidays, are presumed to be already paid the 10 paid legal holidays and are no longer entitled to separate payment for the said regular holidays; 2. The personnel of the respondent Jose Rizal College who are paid their wages daily are entitled to be paid the 10 unworked regular holidays according to the pertinent provisions of the Rules and Regulations Implementing the Labor Code; 3. Collegiate faculty of the respondent Jose Rizal College who by contract are paid compensation per student contract hour are not entitled to unworked regular holiday pay considering that these regular

holidays have been excluded in the programming of the student contact hours.

On appeal, respondent National Labor Relations Commission, modified the decision appealed from, in the sense that teaching personnel paid by the hour are declared to be entitled to holiday pay.

ISSUE: whether or not the school faculty who according to their contracts are paid per lecture hour are entitled to unworked holiday pay.

HELD: LC--Art. 94. Right to holiday pay — (a) Every worker shall be paid his regular daily wage during regular holidays, except in retail and service establishments regularly employing less than ten (10) workers; xxx

LC Implementing Rules and Regulations---SEC. 8. Holiday pay of certain EEs. — (a) Private school teachers, including faculty members of colleges and universities, may not be paid for the regular holidays during semestral vacations. They shall, however, be paid for the regular holidays during Christmas vacations.

Under the foregoing provisions, apparently, the petitioner, although a non-profit institution is under obligation to give pay even on unworked regular holidays to hourly paid faculty members subject to the terms and conditions provided for therein.

We believe that the aforementioned implementing rule is not justified by the provisions of the law which after all is silent with respect to faculty members paid by the hour who because of their teaching contracts are obliged to work and consent to be paid only for work actually done (except when an emergency or a fortuitous event or a national need calls for the declaration of special holidays). REGULAR HOLIDAY specified as such by law are known to both school and faculty members as no class days;" certainly the latter do not expect payment for said unworked days, and this was clearly in their minds when they entered into the teaching contracts.

On the other hand, both the law and the Implementing Rules governing holiday pay are silent as to payment on Special Public Holidays.faculty member, although forced to take a rest, does not earn what he should earn on that day. Be it noted that when a SPECIAL PUBLIC HOLIDAYis declared, the faculty member paid by the hour is deprived of expected income, and it does not matter that the school calendar is extended in view of the days or hours lost, for their income that could be earned from other sources is lost during the extended days. Similarly, when classes are called off or shortened on account of typhoons, floods, rallies, and the like, these faculty members must likewise be paid, whether or not extensions are ordered.

There was no deprivation of due process as petitioner claims that he was not given notice of appeal to the NLRC. The records show petitioner JRC was amply heard and represented in the instant proceedings. It submitted its position paper before the Labor Arbiter and the NLRC and even filed a motion for reconsideration of the decision of the latter, as well as an "Urgent Motion for Hearing En Banc" (Rollo, p. 175). Thus, petitioner's claim of lack of due process is unfounded.SMC vs. CAG.R. No.146775, January 30, 2002WELLINGTON INVESTMENT vs. TRAJANOG.R. No.114698, July 3, 1995FERNANDEZ vs. NLRCG.R. No.105892, January 28, 1998JPL MARKETING PROMOTIONS vs. CAG.R. No.151966, July 8, 2005ACE NAVIGATION CO., INC. and/or CONNING SHIPPING LTD., vs. CA, NLRC and ORLANDO ALONSAGAY, [G.R. No. 140364. August 15, 2000]PUNO, J.:

FACTS: Ace Nav recruited private respondent Orlando Alonsagay to work as a bartender on board the vessel M/V "Orient Express" owned by its principal, Conning Shipping Ltd. (Conning). Under their POEA approved contract of employment, Orlando shall receive a monthly basic salary of U.S. $450.00, flat rate, including overtime pay for 12 hours of work daily plus tips of U.S. $2.00 per passenger per day. He, was also entitled to 2.5 days of vacation leave with pay each month. The contract was to last for 1 year.

Petitioners alleged that on June 13, 1994, Orlando was deployed and boarded M/V "Orient Express" at the seaport of Hong Kong. After the expiration of the contract on June 13, 1995, Orlando returned to the Philippines and demanded from Ace Nav his vacation leave pay. Ace Nav did not pay him immediately. It told him that he should have been paid prior to his disembarkation and repatriation to the Philippines. Moreover, Conning did not remit any amount for his vacation leave pay. Ace Nav, however, promised to verify the matter and asked Orlando to return after a few days. Orlando never returned.

Orlando filed a complaint[3] before the labor arbiter for vacation leave pay of U.S. $450.00 and unpaid tips amounting to U.S. $36,000.00. Labor Arbiter Felipe P. Pati ordered Ace Nav and Conning to pay jointly and severally Orlando his vacation leave pay of US$450.00. The claim for tips of Orlando was dismissed for lack of merit.

Orlando appealed[6] to the NLRC. In a decision[7] promulgated on November 26, 1997, the NLRC ordered Ace Nav and Conning to pay

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the unpaid tips in addition to his vacation leave pay. Ace Nav and Conning filed a motion for reconsideration on February 2, 1998 which was denied on May 20, 1999.

Ace Nav and Conning filed a petition for certiorari before the CA to annul the decision of the NLRC. CA promulgated a three-page resolution[9] dismissing the petition. Their motion for reconsideration filed on September 8, 1999 was denied on October 8, 1999. Hence this appeal.

They also contend that the respondent court erred in ruling that they are the ones liable to pay tips to Orlando. They point out that if tips will be considered as part of the salary of Orlando, it will make him the highest paid EE on M/V "Orient Express." It will create an unfavorable precedent detrimental to the future recruitment, hiring and deployment of Filipino overseas workers specially in service oriented businesses. It will also be a case of double compensation that will unjustly enrich Orlando at the expense of petitioners. They also stress that Orlando never complained that they should pay him the said tips.

ISSUE: whether petitioners are liable to pay the tips to Orlando.

HELD: A tip may range from pure gift out of benevolence or friendship, to a compensation for a service measured by its supposed value but not fixed by an agreement, although usually the word is applied to what is paid to a servant in addition to the regular compensation for his service in order to secure better service or in recognition of it. Since a tip is considered a pure gift out of benevolence or friendship, it can not be demanded from the customer. Whether or not tips will be given is dependent on the will and generosity of the giver. Although a customer may give a tip as a consideration for services rendered, its value still depends on the giver. They are given in addition to the compensation by the ER. A gratuity given by an ER in order to inspire the EE to exert more effort in his work is more appropriately called a bonus.

The contract of employment between petitioners and Orlando is categorical that the monthly salary of Orlando is US$450.00 flat rate. This already included his overtime pay which is integrated in his 12 hours of work. The words "plus tips of US$2.00 per passenger per day" were written at the line for overtime. Since payment for overtime was included in the monthly salary of Orlando, the supposed tips mentioned in the contract should be deemed included thereat.

The actuations of Orlando during his employment also show that he was aware his monthly salary is only US$450.00, no more no less. He did not raise any complaint about the non-payment of his tips during the entire duration of his employment. After the expiration of his contract, he demanded payment only of his vacation leave pay. He did not immediately seek the payment of tips. He only asked for the payment of tips when he filed this case before the labor arbiter. This shows that the alleged non-payment of tips was a mere afterthought to bloat up his claim. The records of the case do not show that Orlando was deprived of any monthly salary. It will now be unjust to impose a burden on the ER who performed the contract in good faith.

Furthermore, it is presumed that the parties were aware of the plain, ordinary and common meaning of the word "tip." As a bartender, Orlando can not feign ignorance on the practice of tipping and that tips are normally paid by customers and not by the ER.

It is also absurd that petitioners intended to give Orlando a salary higher than that of the ship captain. However, Orlando should be paid his vacation leave pay. Petitioners denied this liability by raising the defense that the usual practice is that vacation leave pay is given before repatriation. But as the labor arbiter correctly observed, petitioners did not present any evidence to prove that they already paid the amount. The burden of proving payment was not discharged by the petitioners.MARANAW HOTELS AND RESORT CORPORATION, (Owner of Century Park Sheraton Manila) vs. NLRCG.R. No. 123880 February 23, 1999PURISIMA, J.:

FACTS: Eddie Damalerio (Damalerio), a room attendant of the Century Park Sheraton Hotel, operated by Maranaw Hotel and Resort Corporation, was seen by hotel guest Jamie Glaser (Glaser) with left hand inside the latter's suitcase. Confronted with what he was doing, Damalerio explained that he was trying to tidy up the room. Not satisfied with the explanation of Damalerio, Glaser lodged a written complaint before William D. Despuig, chief-in-charge of security of the hotel. Glaser also reported that Damalerio had previously asked from him souvenirs, cassettes, and other giveaways. The complaint was later brought by Despuig to the attention of Major Eddie Buluran, chief of Security of the hotel.

Damalerio was given a Disciplinary Action Notice (DAN). The next day, an administrative hearing was conducted on the matter. Taking the witness stand on his own behalf, Damalerio denied the accusation against him, theorizing that when he found the room of Glaser in disarray, and was about to make the bed, he noticed some belongings, such as socks and T-shirts of the said hotel guest scattered around, so much so that he thought of placing the some in his luggage. While doing so, Glaser arrived. When asked by the latter if something was wrong, he (Damalerio) said "I'm just cleaning your room," and Glaser remarked, "Good work," and then, the two of them chatted about Glaser's concert at the Araneta Coliseum.

Damalerio received a memorandum 3 issued by Alfredo San Gabriel, Sr., Floor Supervisor, bearing the approval of Nicolas R.

Kirit, Executive Housekeeper, stating that he (Damalerio) was found to have committed qualified theft in violation of House Rule No. 1, Section 3 of Hotel Rules and Regulations. The same memorandum served as a notice of termination of his employment.Damalerio filed with the Labor Arbiter a Complaint for illegal dismissal against the petitioner.

LA: WHEREFORE, judgment is hereby rendered finding the dismissal of complainant to be illegal and ordering the respondents to reinstate him to his former or equivalent position without loss of seniority rights and with backwages from April 15, 1992 when he was preventively suspended up to actual reinstatement and other benefits, including but not limited to his share in the charges and or tips which he failed to receive, and all other CBA benefits that have accrued since his dismissal.

NLRC: modified the appealed decision by giving petitioner the option of paying Damalerio a separation pay equivalent to one (1) month pay for every year of service, instead of reinstating him.

ISSUE: won NLR committed GAD amounting to lack of jurisdiction in holding petitioner failed to adduce conclusive evidence in support of its version of the incident, considering the fact that the evidence on record ineluctably shows that private respondent was caught in flagrante delicto; and in not reversing that portion of the decision of LA ordering petitioner to pay private respondent his share in the service charge which was collected during the time he was not working in the hotel.

HELD: Records disclose petitioner's failure to substantiate such imputation against him. During the investigation presided over by the Labor LA, Damalerio narrated a plausible and satisfactory explanation for his behavior complained of. Glaser did not bother to testify as all his things were intact.

Although it was not completely proper for Damalerio to be touching the things of a hotel guest while cleaning the hotel rooms, personal belongings of hotel guests being off-limits to roomboys, under the attendant facts and circumstances, we believe that the dismissal of Damalerio was unwarranted. To be sure, the investigation held by the hotel security people did not unearth enough evidence of culpability. Unsubstantiated suspicions and baseless conclusions by ERs are not legal justification for dismissing EEs. The burden of proving the existence of a valid and authorized cause of termination is on the ER. 5 Any doubt should be resolved in favor of the EE, in keeping with the principle of social justice enshrined in the Constitution.

As regards the share of Damalerio in the service charges collected during the period of his preventive suspension, the same form part of his earnings, and his dismissal having been adjudged to be illegal, he is entitled not only to full backwages but also to other benefits, including a just share in the service charges, to be computed from the start of his preventive suspension until his reinstatement.

However, mindful of the animosity and strained relations between the parties, emanating from this litigation, we uphold the ruling a quo that in lieu of reinstatement, separation pay may be given to the private respondent, at the rate of one (1) month pay for every year of service. Should petitioner opt in favor of separation pay, the private respondent shall no longer be entitled to share in the service charges collected during his preventive suspension.HOUSE OF SARA LEE, vs. CYNTHIA F. REY,G.R. No. 149013 August 31, 2006AUSTRIA-MARTINEZ, J.:

FACTS: The House of Sara Lee is engaged in the direct selling of a variety of product lines for men and women, including cosmetics, intimate apparels, perfumes, ready to wear clothes and other novelty items, through its various outlets nationwide. In the pursuit of its business, the petitioner engages and contracts with dealers to sell the aforementioned merchandise. These dealers, known either as “Independent Business Managers” (IBMs) or “Independent Group Supervisors” (IGSs), depending on whether they sell individually or through their own group, would obtain at discounted rates the merchandise from the petitioner on credit or then sell the same products to their own customers at fixed prices also determined by the petitioner.

In turn, the dealers are paid “Services Fees,” or sales commissions, the amount of which depends on the volume and value of their sales. Under existing company policy, the dealers must remit to the petitioner the proceeds of their sales within a designated credit period, which would either be 38 days for IGSs or 52 days for IBMs, counted from the day the said dealers acquired the merchandise from the petitioner. To discourage late remittances, the petitioner imposes a “Credit Administration Charge,” or simply, a penalty charge, on the value of the unremitted payment. The dealers under this system earn income through a profit margin between the discounted purchase price they pay on credit to the petitioner and the fixed selling price their customers will have to pay. On top of this margin, the dealer is given the Service Fee, a sales commission, based on the volume of sales generated by him or her. Due to the sheer volume of sales generated by all of its outlets, the petitioner has found the need to strictly monitor the 38- or 52-day “rolling due date” of each of its IBMs and IGSs through the employment of “Credit Administration Supervisors” (CAS) for each branch. The primary duty of the CAS is to strictly monitor each of these deadlines, to supervise the credit and collection of payments and outstanding accounts due to the petitioner from its independent dealers and various customers, and to screen prospective IBMs. To discharge these responsibilities, the CAS is provided with a computer equipped with control systems through which data is readily generated. Under this organizational setup,

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the CAS is under the direct and immediate supervision of the Branch Operations Manager (BOM). Cynthia Rey at the time of her dismissal from employment, held the position of Credit Administration Supervisor or CAS at the Cagayan de Oro City branch of the petitioner. She was first employed by the petitioner as an Accounts Receivable Clerk at its Caloocan City branch. In November 1993, respondent was transferred to the Cagayan de Oro City branch retaining the same position. In January 1994, respondent was elevated to the position of CAS. At that time, the Branch Operations Manager or BOM of the Cagayan de Oro City branch was a certain Mr. Jeremiah Villagracia. In March 1995, respondent was temporarily assigned to the Butuan City branch.

Sometime in June 1995, while respondent was still working in Butuan City, she allegedly instructed the Accounts Receivable Clerk of the Cagayan de Oro outlet to change the credit term of one of the IBMs of the petitioner who happens to be respondent’s sister-in-law, from the 52-day limit to an “unauthorized” term of 60 days. The respondent made the instruction just before the computer data for the computation of the Service Fee accruing to Ms. Rey-Petilla was about to be generated. Ms. Mendoza then reported this allegedly unauthorized act of respondent to her Branch Operations Manager, Mr. Villagracia. Acting on the report, as the petitioner alleges, BOM Villagracia discreetly verified the records and discovered that it was not only the 52-day credit term of IBM Rey-Petilla that had been extended by the respondent, but there were several other IBMs whose credit terms had been similarly extended beyond the periods allowed by company policy. BOM Villagracia then summoned the respondent and required her to explain the unauthorized credit extensions.

ISSUE: WON the respondent is entitled to 13th month pay.

HELD: The award of 13th month pay must be deleted. Respondent is not a rank-and-file EE and is, therefore, not entitled to thirteenth-month pay. However, the NLRC and the CA are correct in refusing to award 14th and 15th month pay as well as the “monthly salary increase of 10 percent per year for two years based on her latest salary rate.” The respondent must show that these benefits are due to her as a matter of right. Mere allegations by the respondent do not suffice in the absence of proof supporting the same. With respect to salary increases in particular, the respondent must likewise show that she has a vested right to the same, such that her salary increases can be made a component in the computation of backwages. What is evident is that salary increases are a mere expectancy. They are by nature volatile and dependent on numerous variables, including the company’s fiscal situation, the EE’s future performance on the job, or the EE’s continued stay in a position. In short, absent any proof, there is no vested right to salary increases. PETROLEUM SHIPPING LIMITED(ESSO) vs. NLRCG.R. No. 148130 June 16, 2006CARPIO, J.:

FACTS: Esso International Shipping (Bahamas) Co., Ltd., (“Esso”) through Trans-Global Maritime Agency, Inc. (“Trans-Global”) hired Florello W. Tanchico (“Tanchico”) as First Assistant Engineer. Tanchico became Chief Engineer. Tanchico returned to the Philippines for a two-month vacation after completing his eight-month deployment. Tanchico underwent the required standard medical examination prior to boarding the vessel. The medical examination revealed that Tanchico was suffering from “Ischemic Heart Disease, Hypertensive Cardio-Muscular Disease and Diabetes Mellitus.” Tanchico took medications for two months and a subsequent stress test showed a negative result. However, Esso no longer deployed Tanchico. Instead, Esso offered to pay him benefits under the Career Employment Incentive Plan. Tanchico accepted the offer.

Tanchico filed a complaint against Esso, Trans-Global and Malayan Insurance Co., Inc. (“Malayan”) before the POEA for illegal dismissal with claims for backwages, separation pay, disability and medical benefits and 13th month pay. In view of the enactment of RA 8042 transferring to theNLRC the jurisdiction over money claims of overseas workers, the case was indorsed to the Arbitration Branch of the National Capital Region.

LA: dismissed the complaint for lack of merit. NLRC: affirmed, MR granted and ruled On the claim of illegal dismissal, the same is unavailing as complainant had been declared as one with partial permanent disability. Thus, he should be entitled to disability benefit of 18 days for every year of credited service of fourteen (14) years less the amount he already received under the Company’s Disability Plan.

On the claim of 13th month pay, the respondent Agency not falling under the enumerated exempted ERs under P.D. 851 and in the absence of any proof that respondent is already paying its EEs a 13th month pay or more in a calendar year, perforce, respondent agency should pay complainant his monthly pay computed at [sic] the actual month [sic] worked, which is 8 months. Since complainant was forced to litigate his case, he is hereby awarded 10% of the total award as attorney’s fees.

CA: affirmed. Then modified that The petitioners are ordered to pay to the private respondent the following:(1) disability wages equivalent to 18 days per year multiplied by 10 years less any amount already received under the company’s disability plan; prorated 13th month pay corresponding to eight (8) months of actual work; and attorney’s fee equivalent to 10% of the total award.

ISSUES:1. Whether Tanchico is a regular EE of petitioners; and 2. Whether Tanchico is entitled to 13th month pay, disability benefits and attorney’s fees.

HELD: 1)The issue on whether seafarers are regular EEs is already a settled matter. The Court squarely passed upon the issue in Millares v. NLRC where one of the issues raised was whether seafarers are regular or contractual EEs whose employment are terminated everytime their contracts of employment expire. The Court explained:

[I]t is clear that seafarers are considered contractual EEs. They can not be considered as regular EEs 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 EE or where the work or services to be performed is seasonal in nature and the employment is for the duration of the season. 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.

Brent case has, however, held that there are certain forms of employment which also require the performance of usual and desirable functions and which exceed one year but do not necessarily attain regular employment status under Article 280. Overseas workers including seafarers fall under this type of employment which are governed by the mutual agreements of the parties.

The Standard Employment Contract governing the employment of All Filipino Seamen on Board Ocean-Going Vessels of the POEA, particularly in Part I, Sec. C specifically provides that the contract of seamen shall be for a fixed period. And in no case should the contract of seamen be longer than 12 months. It reads: Section C. Duration of Contract:: The period of employment shall be for a fixed period but in no case to exceed 12 months and shall be stated in the Crew Contract. Any extension of the Contract period shall be subject to the mutual consent of the parties. Moreover, it is an accepted maritime industry practice that employment of seafarers are for a fixed period only. Constrained by the nature of their employment which is quite peculiar and unique in itself, it is for the mutual interest of both the seafarer and the ER why the employment status must be contractual only or for a certain period of time. Seafarers spend most of their time at sea and understandably, they can not stay for a long and an indefinite period of time at sea. Limited access to shore society during the employment will have an adverse impact on the seafarer. The national, cultural and lingual diversity among the crew during the COE is a reality that necessitates the limitation of its period.

Undeniably, this circumstance of continuous re-hiring was dictated by practical considerations that experienced crew members are more preferred. Petitioners were only given priority or preference because of their experience and qualifications but this does not detract the fact that herein petitioners are contractual EEs. They can not be considered regular EEs. Thus, in the present case, the Court of Appeals erred in ruling that Tanchico was a regular EE of Petroleum Shipping.

2. The coverage of the Contract includes Compensation, Overtime, Sundays and Holidays, Vacations, Living Allowance, Sickness, Injury and Death, Transportation and Travel Expense, Subsistence and Living Quarters. It does not provide for the payment of 13th month pay. The Contract of Employment,[22] which is the standard employment contract of the POEA, likewise does not provide for the payment of 13th month pay. Hence, in the absence of any provision in his Contract governing the payment of 13th month pay, Tanchico is not entitled to the benefit.

The duration of the Contract was for eight months. The Contract also provides: Vacation days shall be earned at the rate of seven and one-half days (7.5) days for each thirty (30) days of continuous service, calculated from date of departure from Manila and until date of return to Manila. Vacation begins on the day following arrival in Manila.

Every effort will be made to grant earned vacations promptly after eight (8) months of service; however, the COMPANY shall have the right to advance or delay vacations to coincide with vessel repairs, for operational reasons or due to personal requirements. SEAFARER shall receive vacation compensation for each thirty (30) days of continuous service in accordance with the rates listed in Addendum No. 1, Column (12), to be paid in Manila. Amounts shall be pro-rated according to the ranks/ratings and period of time in which the SEAFARER served. For period of less than thirty (30) days service, vacations and compensation shall be reduced proportionately.

Time off for illness, injury, vacation, leave of absence or stand-by shall not be considered service under the provisions of this Article. It is the COMPANY’s intention that each SEAFARER enjoy his full vacation period. Because of urgent fleet needs, however, it occasionally may be necessary to recall a SEAFARER early from vacation.[24]

Since Tanchico received compensation during his vacation, the Contract did not terminate on the day he returned to Manila. The Contract remained in force during Tanchico’s vacation period. However, the Court of Appeals erred when it ruled that Tanchico is entitled to disability benefits of 18 days for every year of service. The Court of Appeals ruled that Tanchico’s employment was continuous and that his tenure with petitioners was for 14 years. Again, the Court of Appeals assumed that Tanchico was a regular

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EE. The Court of Appeals failed to consider that Tanchico’s employment terminated with the end of each contract.

Indications that Tanchico was suffering from ischemia were detected on 8 December 1992 during Tanchico’s vacation period. Thus, petitioners paid him disability benefits for 18 days in accordance with the Contract. Tanchico cannot claim that he only acquired the illness during his last deployment since the Medical Report[26] he submitted to the NLRC showed that he has been hypertensive since 1983 and diabetic since 1987. In the absence of concrete proof that Tanchico acquired his disability during his last deployment and not during his vacation, he is only entitled to disability benefits for 18 days.

Petitioners claim that they already paid Tanchico his disability benefits for 18 days but he refused to sign the receipt.[27] Tanchico alleged that he was only paid under the Career Employment Incentive Plan.[28] This is a factual matter which this Court cannot resolve. This matter has to be remanded to the Labor Arbiter for resolution.HONDA PHILS., INC., vs. SAMAHAN NG MALAYANG MANGGAGAWA SA HONDA[G.R. No. 145561. June 15, 2005]YNARES-SANTIAGO, J.:

As found by the Court of Appeals, the case stems from the CBA forged between petitioner Honda and respondent union Samahan ng Malayang Manggagawa sa Honda (respondent union) which contained the following provisions:Section 3. 13th Month Pay: The COMPANY shall maintain the present practice in the implementation [of] the 13th month pay.Section 6. 14th Month Pay: The COMPANY shall grant a 14th Month Pay, computed on the same basis as computation of 13th Month Pay.Section 7. The COMPANY agrees to continue the practice of granting, in its discretion, financial assistance to covered EEs in December of each year, of not less than 100% of basic pay.

This CBA is effective until year 2000. In the latter part of 1998, the parties started re-negotiations for the fourth and fifth years of their CBA. When the talks between the parties bogged down, respondent union filed a Notice of Strike on the ground of bargaining deadlock. Thereafter, Honda filed a Notice of Lockout. On March 31, 1999, DOLE Secretary Laguesma assumed jurisdiction over the labor dispute and ordered the parties to cease and desist from committing acts that would aggravate the situation. Both parties complied accordingly.

however, respondent union filed a second Notice of Strike on the ground of unfair labor practice alleging that Honda illegally contracted out work to the detriment of the workers. Respondent union went on strike and picketed the premises of Honda. DOLE Acting Secretary Felicisimo Joson, Jr. assumed jurisdiction over the case and certified the same to the NLRC for compulsory arbitration. The striking EEs were ordered to return to work and the management accepted them back under the same terms prior to the strike staged.

the management of Honda issued a memorandum[4] announcing its new computation of the 13th and 14th month pay to be granted to all its EEs whereby the thirty-one (31)-day long strike shall be considered unworked days for purposes of computing said benefits. As per the company’s new formula, the amount equivalent to 1/12 of the EEs’ basic salary shall be deducted from these bonuses, with a commitment however that in the event that the strike is declared legal, Honda shall pay the amount deducted.

Respondent union opposed the pro-rated computation of the bonuses in a letter. Honda sought the opinion of the Bureau of Working Conditions (BWC) on the issue. In a letter, the BWC agreed with the pro-rata payment of the 13th month pay as proposed by Honda. The matter was brought before the Grievance Machinery in accordance with the parties’ existing CBA but when the issue remained unresolved, it was submitted for voluntary arbitration. In his decision[6] dated May 2, 2000, Voluntary Arbitrator Herminigildo C. Javen invalidated Honda’s computation, to wit: The Company is thus ordered to compute each provision in full month basic pay and pay the amounts in question within ten (10) days after this Decision shall have become final and executory. The three (3) days Suspension of the twenty one (21) EEs is hereby affirmed.

ISSUE: whether the pro-rated computation of the 13th month pay and the other bonuses in question is valid and lawful.

HELD: A collective bargaining agreement refers to the negotiated contract between a legitimate labor organization and the ER concerning wages, hours of work and all other terms and conditions of employment in a bargaining unit.[8] As in all contracts, the parties in a CBA may establish such stipulations, clauses, terms and conditions as they may deem convenient provided these are not contrary to law, morals, good customs, public order or public policy.[9] Thus, where the CBA is clear and unambiguous, it becomes the law between the parties and compliance therewith is mandated by the express policy of the law.[10]

In some instances, however, the provisions of a CBA may become contentious, as in this case. Honda wanted to implement a pro-rated computation of the benefits based on the “no work, no pay” rule. According to the company, the phrase “present practice” as mentioned in the CBA refers to the manner and requisites with respect to the payment of the bonuses, i.e., 50% to be given in May and the other 50% in December of each year. Respondent union, however, insists that the CBA provisions relating to the implementation of the 13th month pay necessarily relate to the computation of the same.

We agree with the findings of the arbitrator that the assailed CBA provisions are far from being unequivocal. A cursory reading of the provisions will show that they did not state categorically whether the computation of the 13th month pay, 14th month pay and the financial assistance would be based on one full month’s basic salary of the EEs, or pro-rated based on the compensation actually received. The arbitrator thus properly resolved the ambiguity in favor of labor as mandated by Article 1702 of the Civil Code.[11] The Court of Appeals affirmed the arbitrator’s finding and added that the computation of the 13th month pay should be based on the length of service and not on the actual wage earned by the worker.

Presidential Decree No. 851, otherwise known as the 13th Month Pay Law, which required all ERs to pay their EEs a 13th month pay, was issued to protect the level of real wages from the ravages of worldwide inflation. It was enacted on December 16, 1975 after it was noted that there had been no increase in the minimum wage since 1970 and the Christmas season was an opportune time for society to show its concern for the plight of the working masses so that they may properly celebrate Christmas and New Year.[13]

Under the Revised Guidelines on the Implementation of the 13th month pay issued on November 16, 1987, the salary ceiling of P1,000.00 under P.D. No. 851 was removed. It further provided that the minimum 13th month pay required by law shall not be less than one-twelfth (1/12) of the total basic salary earned by an EE within a calendar year. The guidelines pertinently provides:

The “basic salary” of an EE for the purpose of computing the 13th month pay shall include all remunerations or earnings paid by his ER for services rendered but does not include allowances and monetary benefits which are not considered or integrated as part of the regular or basic salary, such as the cash equivalent of unused vacation and sick leave credits, overtime premium, night differential and holiday pay, and cost-of-living allowances.[14] (Emphasis supplied)

For EEs receiving regular wage, we have interpreted “basic salary” to mean, not the amount actually received by an EE, but 1/12 of their standard monthly wage multiplied by their length of service within a given calendar year. Thus, we exclude from the computation of “basic salary” payments for sick, vacation and maternity leaves, night differentials, regular holiday pay and premiums for work done on rest days and special holidays.[15] In Hagonoy Rural Bank v. NLRC,[16] St. Michael Academy v. NLRC,[17] Consolidated Food Corporation v. NLRC,[18] and similar cases, the 13th month pay due an EE was computed based on the EE’s basic monthly wage multiplied by the number of months worked in a calendar year prior to separation from employment.

The revised guidelines also provided for a pro-ration of this benefit only in cases of resignation or separation from work. As the rules state, under these circumstances, an EE is entitled to a pay in proportion to the length of time he worked during the year, reckoned from the time he started working during the calendar year.[19] The Court of Appeals thus held that:

Considering the foregoing, the computation of the 13th month pay should be based on the length of service and not on the actual wage earned by the worker. In the present case, there being no gap in the service of the workers during the calendar year in question, the computation of the 13th month pay should not be pro-rated but should be given in full.[20] (Emphasis supplied)

More importantly, it has not been refuted that Honda has not implemented any pro-rating of the 13th month pay before the instant case. Honda did not adduce evidence to show that the 13th month, 14th month and financial assistance benefits were previously subject to deductions or pro-rating or that these were dependent upon the company’s financial standing. As held by the Voluntary Arbitrator:

The Company (Honda) explicitly accepted that it was the strike held that prompt[ed] them to adopt a pro-rata computation, aside [from] being in [a] state of rehabilitation due to 227M substantial losses in 1997, 114M in 1998 and 215M lost of sales in 1999 due to strike. This is an implicit acceptance that prior to the strike, a full month basic pay computation was the “present practice” intended to be maintained in the CBA.[21]

The memorandum dated November 22, 1999 which Honda issued shows that it was the first time a pro-rating scheme was to be implemented in the company. It was a convenient coincidence for the company that the work stoppage held by the EEs lasted for thirty-one (31) days or exactly one month. This enabled them to devise a formula using 11/12 of the total annual salary as base amount for computation instead of the entire amount for a 12-month period.

That a full month payment of the 13th month pay is the established practice at Honda is further bolstered by the affidavits executed by Feliteo Bautista and Edgardo Cruzada. Both attested that when they were absent from work due to motorcycle accidents, and after they have exhausted all their leave credits and were no longer receiving their monthly salary from Honda, they still received the full amount of their 13th month, 14th month and financial assistance pay.[22]

With regard to the length of time the company practice should have been exercised to constitute voluntary ER practice which cannot be unilaterally withdrawn by the ER, we hold that jurisprudence has not laid down any rule requiring a specific minimum number of years. In the above quoted case of Davao Fruits Corporation vs. Associated Labor Unions, the company practice lasted for six (6)

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years. In another case, Davao Integrated Port Stevedoring Services vs. Abarquez, the ER, for three (3) years and nine (9) months, approved the commutation to cash of the unenjoyed portion of the sick leave with pay benefits of its intermittent workers. While in Tiangco vs. Leogardo, Jr. the ER carried on the practice of giving a fixed monthly emergency allowance from November 1976 to February 1980, or three (3) years and four (4) months. In all these cases, this Court held that the grant of these benefits has ripened into company practice or policy which cannot be peremptorily withdrawn. In the case at bar, petitioner Sevilla Trading kept the practice of including non-basic benefits such as paid leaves for unused sick leave and vacation leave in the computation of their 13th-month pay for at least two (2) years. This, we rule likewise constitutes voluntary ER practice which cannot be unilaterally withdrawn by the ER without violating Art. 100 of the Labor Code.[25] (Emphasis supplied)UNITED CMC TEXTILE WORKERS UNION vs.THE HONORABLE LABOR ARBITER, RAYMUNDO VALENZUELAG.R. No. 70763 April 30, 1987PARAS, J.:

FACTS: Sometime in 1979, petitioner filed a complaint against Central Textile Mills, Inc. (CTMI, for brevity) at the Ministry of Labor and Employment for non-payment of Christmas bonus of the rank and file EEs of said company as provided in Art. XI of the then existing CBA between petitioner and CTMI. Among the provisions of the said collective agreement is the payment of Christmas bonus based on the following schedule:10 years and above...............................P 70.007 years and up but less than 10 years.......60.002 years but less than 7..............................50.006 months and up but less than 2 y...........20.00

To be paid to all EEs on or before the beginning of the Christmas vacation.

LA: we find that Sec. 1, Art XI of the CBA concluded between the parties dealing on the payment of Christmas Bonus is violated by the refusal of respondent Central Textile Mills, Inc. to pay the same despite demand by complainant United CMC Textile Workers Union. Consequently, respondent, Central Textile Mills, Inc. should be as it is hereby ordered to implement the same by paying the workers covered by said CBA the total amount of ONE HUNDRED TWENTY TWO THOUSAND EIGHT HUNDRED FORTY PESOS (P122,840.00) corresponding to the 1978 Christmas Bonus, the break down of which is reflected in the list attached to this decision the accuracy of the termination of which by complainant union is not, in the least, disputed by the respondent company. (p. 106, Rollo)

NLRC: affirmed with modification that the complainant (petitioner herein) was ordered to furnish a copy of the computation list in order that respondents may verify the correctness and/or validity of the individual claims and for the latter to present their objection, if any, to the LA of origin, prior to the execution of the decision.

HELD: We find the contentions of petitioner more meritorious than the contentions of respondents. When We dismissed the petition for review of private respondents in G.R. No. 58666 on January 20,1982, for lack of merit, We did so upon the doctrine laid down in the Marcopper Case which was promulgated on June 11, 1981. Before the dismissal of said case became final and executory, We decided the La Carlota case on May 31, 1982 wherein We ruled that EEs are no longer entitled to an additional Christmas bonus or other Christmas benefits if they are already entitled to a 13th month pay. Meanwhile in Case No. 58666 the company filed their MR of the dismissal of their petition which We denied as per Our resolution on August 18, 1982. Subsequently, said dismissal became final and executory as per Entry of Judgment dated September 22, 1982. Thus, it can be seen that despite the La Carlota ruling We denied the company's MR and We reiterated Our previous dismissal of the petition for review for lack of merit. This only goes to show that We refused to apply or did not choose to apply the La Carlota doctrine to the case at bar. And We have consistently held in a number of Our decisions that judgments which had long become final and executory can no longer be amended or modified by the courts. Such is the doctrine known as "the law of the case."

Furthermore, the findings of the NLRC as stated in its decision 4 show that the claim is for Christmas bonus for the year 1978 only. It appears from the records that the EEs of the respondent company had been paid their bonuses in accordance with the CBA, in addition to the 13th month pay, for the years 1979 and 1980. The Page 431 CBA in question took effect on November 1, 1978, 3 years after the promulgation of P.D. No. 851. If the Christmas bonus was included in the 13th month pay, then there would be no need for having a specific provision on Christmas bonus in the CBA. But it did provide for a bonus in graduated amounts depending on the length of service of the EE. The intention is clear therefore that the bonus provided in the CBA was meant to be in addition to the legal requirement. Moreover, why exclude the payment of the 1978 Christmas bonus and pay only the 1979-1980 bonus. The classification of the company's workers in the CBA according to their years of service supports the allegation that the reason for the payment of bonus was to give bigger reward to the senior EEs — a purpose which is not found in P.D. 851. A bonus under the CBA is an obligation created by the contract between the management and workers while the 13th month pay is mandated by the law (P.D. 851).

Likewise We find no merit in respondent's allegations that the applicability of the said La Carlota ruling to the case at bar is explicitly recognized by herein petitioner. A cursory reading of the CBA signed on November 2, 1983 5 shows that petitioner Union recognizes only the application of the La Carlota doctrine in so far as it had agreed to the deletion of the provision on payment of

Christmas bonus in the new CBA of 1983 without necessarily giving up their claim for their 1978 bonus under their former CBA.PRODUCERS BANK OF THE PHILIPPINES vs. NLRC[G.R. No. 100701. March 28, 2001]GONZAGA-REYES, J.:

FACTS:The EE of the producer bank file a petition to the NLRC that the PBP not complied the wage#6 and non payment of holiday pay. The petitioner contends that the NLRC gravely abused its discretion in ruling as it did for the succeeding reasons:1. It contravened the SC decision in traders Royal bank vs NLRC2. Its ruling is not justified by law and Art. 100 of the labor code3. Its ruling is contrary to the BA4. The so called “company practice invoked by its has no legal and

moral bases”Petitioner under conservatorship and distressed is exempted under wage#6.

ISSUES::Alleged diminution of benefits, - Christmas and 13th bonus; Non compliance with the wage order#6; Non payment of legal holiday pay

HELD: :The granting of a bonus is a management prerogative, something given in addition to what is ordinarily received by or strictly due the recipient.

Section 28 A Appointment of conservator – whenever, on the basis of a report submitted b appropraiate supervising and examining department, the MB fins that a bank is in a state of continuing in ability or unwillingness to maintain a condition of solvency and liquidity deemed adequate to protect the depositors and creditors, the MB may appoint a conservator to take charge of the asses, liabilities and the management of that banking institution all monies and debs due said bank exercise all powers necessary to preserve the assets of the bank reorganize the management thereof and resorted.

He shall have the power to overrule or revoke the actions of the previous management and board of directors of the bank, any provision of law to the notwithstanding, and such other powers as the monetary board shall deemed necessary.

Doctrine: An ER cannot be forced to distribute bonuses which it can no longer afford to pay, a bonus is an amount granted and paid to anEE for his industry and loyalty which contributed to the success of the ERs business and made possible the realization of profile. It is an act of generosity and is a management prerogative, given in addition to what is ordinarily received by or strictly due the recipient. Thus, it is not a demandable and enforceable obligation, except when it is made part of the wage, salary or compensation of the EE.

The conservator was justified in reducing the mid-year and Christmas bonuses of petitioner’s EEs. Ultimately, it is to the EE’s advantage that the conservatorship achieve its purposes otherwise, the closure of the company would result in the EEs losing their jobs.

PD 851 requires all EEs to pay their EEs a basic salary of not more than P1, 000 at 13th monthly pay. However, EEsalready paying their EEs a 13th month pay are not covered by the law. The term “equivalent” shall be constructed to include Christmas bonus, mid year bonus, cash bonuses and other payments amounting to not less than 1 /12 of the basic salary. The intention was to grant relief to those not actually paid a bonus, by whatevername called. Thus, petitioner is justified in crediting the mid year bonus and Christmas bones as part of the 13th month pay.

The divisor used by petitioner in arriving at the EE’s daily ratefor the purpose of computing salary related benefits is 314 days. This finding was not disputed by the NLRC. However, the divisor was for the sole purpose of increasing the EE’s overtime pay and was not meant to replace the use of 314 as the divisor in the computation of the daily rate for salary –related benefits.DANILO ESCARIO vs. NLRCG.R. No. 160302 September 27, 2010BERSAMIN, J.:

FACTS: The petitioners were among the regular EEs of respondent Pinakamasarap Corporation (PINA), a corporation engaged in manufacturing and selling food seasoning. They were members of petitioner Malayang Samahan ng mga Manggagawa sa Balanced Foods (Union).In the morning of March 1993, all the officers and some 200 members of the Union walked out of PINA’s premises and proceeded to the barangay office to show support for Juanito Cañete, an officer of the Union charged with oral defamation by PINA’s personnel manager Manor’s secretary. It appears that the proceedings in the barangay resulted in a settlement, and the officers and members of the Union all returned to work thereafter. As a result of the walkout, PINA preventively suspended all officers of the Union because of the March 13, 1993 incident. PINA terminated the officers of the Union after a month.PINA filed a complaint for unfair labor practice (ULP) and damages. The complaint was assigned to then Labor Arbiter Raul Aquino, who ruled in his decision that the incident was an illegal walkout constituting ULP; and that all the Union’s officers, except Cañete, had thereby lost their employment. The Union filed a notice of strike, claiming that PINA was guilty of union busting through the constructive dismissal of its officers. The Union held a strike vote, at which a majority of 190 members of the Union voted to strike.PINA retaliated by charging the petitioners with ULP and abandonment of work, stating that they had violated provisions on strike of the collective bargaining agreement (CBA), such as: (a) sabotage by the insertion of foreign matter in the bottling of

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company products; (b) decreased production output by slowdown; (c) serious misconduct, and willful disobedience and insubordination to the orders of the Management and its representatives; (d) disruption of the work place by invading the premises and perpetrating commotion and disorder, and by causing fear and apprehension; (e) abandonment of work since June 28, 1993 despite notices to return to work individually sent to them; and (f) picketing within the company premises on June 15, 1993 that effectively barred with the use of threat and intimidation the ingress and egress of PINA’s officials, EEs, suppliers, and customers. The Third Division of the National Labor Relations Commission (NLRC) issued a temporary restraining order (TRO), enjoining the Union’s officers and members to cease and desist from barricading and obstructing the entrance to and exit from PINA’s premises, to refrain from committing any and all forms of violence, and to remove all forms of obstructions such as streamers, placards, or human barricade. NLRC granted the writ of preliminary injunction.[10]Labor Arbiter Jose G. de Vera (LA) rendered a decision: The complainant’s prayer for decertification of the respondent union being outside of the jurisdiction of this Arbitration Branch may not be given due course.On appeal, the NLRC sustained the finding that the strike was illegal, but reversed the LA’s ruling that there was abandonment. However, we disagree with the conclusion that respondents’ union members should be considered to have abandoned their employment. The CA affirmed the NLRC in denying the petitioners’ claim for full backwages.ISSUE: WON petitioners are entitled to full backwages from the date of dismissal until the date of actual reinstatement due to their not being found to have abandoned their jobsHELD: CA’s decision affirmed but the decision on the amount of the backwages in order to accord with equity and jurisprudence is modified. The petitioners were terminated for joining a strike that was later declared to be illegal. The NLRC ordered their reinstatement or, in lieu of reinstatement, the payment of their separation pay, because they were mere rank-and-file workers whom the Union’s officers had misled into joining the illegal strike. They were not unjustly dismissed from work. Based on the text and intent of the two aforequoted provisions of theLabor Code, therefore, it is plain that Article 264(a) is the applicable one.Petitioners not entitled to backwages despite their reinstatement. The petitioners’ participation in the illegal strike was precisely what prompted PINA to file a complaint to declare them, as striking EEs, to have lost their employment status. However, the NLRC ultimately ordered their reinstatement after finding that they had not abandoned their work by joining the illegal strike. They were thus entitled only to reinstatement, regardless of whether or not the strike was the consequence of the ER’s ULP. As a general rule, backwages are granted to indemnify a dismissed EE for his loss of earnings during the whole period that he is out of his job. Considering that an illegally dismissed EE is not deemed to have left his employment, he is entitled to all the rights and privileges that accrue to him from the employment. The grant of backwages to him is in furtherance and effectuation of the public objectives of theLabor Code, and is in the nature of a command to the ER to make a public reparation for his illegal dismissal of the EE in violation of the Labor Code. That backwages are not granted to EEs participating in an illegal strike simply accords with the reality that they do not render work for the ER during the period of the illegal strike. Under the principle of a fair day’s wage for a fair day’s labor, the petitioners were not entitled to the wages during the period of the strike (even if the strike might be legal), because they performed no work during the strike. Verily, it was neither fair nor just that the dismissed EEs should litigate against their ER on the latter’s time.[25] Appropriate Amount for Separation Pay is One Month per Year of Service. The petitioners were ordered reinstated because they were union members merely instigated or induced to participate in the illegal strike. By joining the strike, they did not renounce their employment relation with PINA but remained as its EEs.The absence from an order of reinstatement of an alternative relief should the ER or a supervening event not within the control of the EE prevent reinstatement negates the very purpose of the order. The judgment favorable to the EE is thereby reduced to a mere paper victory, for it is all too easy for the ER to simply refuse to have the EE back. To safeguard the spirit of social justice that the Court has advocated in favor of the working man, therefore, the right to reinstatement is to be considered renounced or waived only when the EE unjustifiably or unreasonably refuses to return to work upon being so ordered or after the ER has offered to reinstate him.RP vs. MINERVA M.P. PACHEOG.R. No. 178021 January 25, 2012MENDOZA, J.:

FACTS: Pacheo was a Revenue Attorney IV, Assistant Chief of the Legal Division of the BIR in Revenue Region No. 7 (RR7), Quezon City. the BIR issued Revenue Travel Assignment Order (RTAO) No. 25-2002,[3] ordering the reassignment of Pacheo as Assistant Chief, Legal Division from RR7 in Quezon City to RR4 in San Fernando, Pampanga. The BIR cited exigencies of the revenue service as basis for the issuance of the said RTAO.

Pacheo questioned the reassignment through her Letter addressed to Rene G. Banez, then CIR. She complained that the transfer would mean economic dislocation since she would have to spend �200.00 on daily travel expenses or approximately �4,000.00 a month. It would also mean physical burden on her part as she would be compelled to wake up early in the morning for her daily travel from Quezon City to San Fernando, Pampanga, and to return home late at night from San Fernando, Pampanga to Quezon City. She was of the view that that her reassignment was merely intended to harass and force her out of the BIR in the guise of exigencies of the revenue service. In sum, she considered her transfer from Quezon City to Pampanga as amounting to a constructive dismissal.

Due to the then inaction of the BIR, Pacheo filed a complaint before the CSC-NCR, praying for the nullification of RTAO No. 25-2002. In its July 22, 2002 Order,[6] the CSC-NCR treated Pacheo’s Complaint as an appeal and dismissed the same, without prejudice, for failure to comply with Sections 73 and 74 of Rule V(b) of the Uniform Rules on Administrative Cases in the Civil Service.[7]

In its Letter-reply[8] dated September 13, 2002, the BIR, through its Deputy Commissioner for Legal and Inspection Group, Edmundo P. Guevara (Guevara), denied Pacheo’s protest for lack of merit. It contended that her reassignment could not be considered constructive dismissal as she maintained her position as Revenue Attorney IV and was designated as Assistant Chief of Legal Division. It emphasized that her appointment to the position of Revenue Attorney IV was without a specific station. Consequently, she could properly be reassigned from one organizational unit to another within the BIR. Lastly, she could not validly claim a vested right to any specific station, or a violation of her right to security of tenure.

ISSUES: whether or not Pacheo’s assignment constitutes constructive dismissal and, thus, entitling her to reinstatement and backwages. Was Pacheo constructively dismissed by reason of her reassignment?

HELD: While a temporary transfer or assignment of personnel is permissible even without the EE's prior consent, it cannot be done when the transfer is a preliminary step toward his removal, or a scheme to lure him away from his permanent position, or when it is designed to indirectly terminate his service, or force his resignation. Such a transfer would in effect circumvent the provision which safeguards the tenure of office of those who are in the Civil Service.[19]

Significantly, Section 6, Rule III of CSC Memorandum Circular No. 40, series of 1998, defines constructive dismissal as a situation when an EE quits his work because of the agency head’s unreasonable, humiliating, or demeaning actuations which render continued work impossible. Hence, the EE is deemed to have been illegally dismissed. This may occur although there is no diminution or reduction of salary of the EE. It may be a transfer from one position of dignity to a more servile or menial job.

Anent the first argument of CSC, the Court cannot sustain the proposition. It was legally impossible for Pacheo to report to her original place of assignment in Quezon City considering that the subject RTAO No. 25-2002 also reassigned Amado Rey B. Pagarigan (Pagarigan) as Assistant Chief, Legal Division, from RR4, San Fernando, Pampanga to RR7, Quezon City, the very same position Pacheo formerly held. The reassignment of Pagarigan to the same position palpably created an impediment to Pacheo’s return to her original station.

DETAIL vs. REASSIGNMENTThe Court finds Itself unable to agree to CSC’s argument that the subject RTAO was immediately executory. The Court deems it necessary to distinguish between a detail and reassignment, as they are governed by different rules.

A detail is defined and governed by Executive Order 292, Book V, Title 1, Subtitle A, Chapter 5, Section 26 (6), thus: (6) Detail. A detail is the movement of an EE from one agency to another without the issuance of an appointment and shall be allowed, only for a limited period in the case of EEs occupying professional, technical and scientific positions. If the EE believes that there is no justification for the detail, he may appeal his case to the Commission. Pending appeal, the decision to detail the EE shall be executory unless otherwise ordered by the Commission. [Underscoring supplied]

On the other hand, a reassignment is defined and governed by E.O. 292, Book V, Title 1, Subtitle A, Chapter 5, Section 26 (7), thus: (7) Reassignment.—An EE may be reassigned from one organizational unit to another in the same agency; Provided, That such reassignment shall not involve a reduction in rank, status or salaries.

The principal distinctions between a detail and reassignment lie in the place where the EE is to be moved and in its effectivity pending appeal with the CSC. Based on the definition, a detail requires a movement from one agency to another while a reassignment requires a movement within the same agency. Moreover, pending appeal with the CSC, an order to detail is immediately executory, whereas a reassignment order does not become immediately effective.

Reassignments involving a reduction in rank, status or salary violate an EE’s security of tenure, which is assured by the Constitution, the Administrative Code of 1987, and the Omnibus Civil Service Rules and Regulations. Security of tenure covers not only EEs removed without cause, but also cases of unconsented transfers and reassignments, which are tantamount to illegal/constructive removal.[21]

Having ruled that Pacheo was constructively dismissed, is she entitled to reinstatement and back wages? The Court agrees with the CA that she is entitled to reinstatement, but finds Itself unable to sustain the ruling that she is entitled to full back wages and benefits. It is a settled jurisprudence[22] that an illegally dismissed civil service EE is entitled to back salaries but limited only to a maximum period of five (5) years, and not full back salaries from his illegal dismissal up to his reinstatement.SLL INTERNATIONAL CABLES SPECIALIST and SONNY L. LAGON, vs. NLRCG.R. No. 172161 March 2, 2011

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MENDOZA, J.:

FACTS: private respondents Roldan Lopez (Lopez for brevity) and Danilo Cañete (Cañete for brevity), and Edgardo Zuñiga (Zuñiga for brevity) respectively, were hired by petitioner Lagon as apprentice or trainee cable/lineman. The three were paid the full minimum wage and other benefits but since they were only trainees, they did not report for work regularly but came in as substitutes to the regular workers or in undertakings that needed extra workers to expedite completion of work. After their training, Zuñiga, Cañete and Lopez were engaged as project EEs by the petitioners in their Islacom project in Bohol. Private respondents started on March 15, 1997 until December 1997. Upon the completion of their project, their employment was also terminated. Private respondents received the amount of P145.00, the minimum prescribed daily wage for Region VII. In July 1997, the amount of P145 was increased to P150.00 by the Regional Wage Board (RWB) and in October of the same year, the latter was increased to P155.00. Sometime in March 1998, Zuñiga and Cañete were engaged again by Lagon as project EEs for its PLDT Antipolo, Rizal project, which ended sometime in (sic) the late September 1998. As a consequence, Zuñiga and Cañete’s employment was terminated. For this project, Zuñiga and Cañete received only the wage of P145.00 daily. The minimum prescribed wage for Rizal at that time was P160.00.

private respondents re-applied in the Racitelcom project of Lagon in Bulacan. Zuñiga and Cañete were re-employed. Lopez was also hired for the said specific project. For this, private respondents received the wage of P145.00. Again, after the completion of their project in March 1999, private respondents went home to Cebu City.

private respondents for the 4th time worked with Lagon’s project in Camarin, Caloocan City with Furukawa Corporation as the general contractor. Their contract would expire on February 28, 2000, the period of completion of the project. From May 21, 1997-December 1999, private respondents received the wage of P145.00. At this time, the minimum prescribed rate for Manila was P198.00. In January to February 28, the three received the wage of P165.00. The existing rate at that time was P213.00.

For reasons of delay on the delivery of imported materials from Furukawa Corporation, the Camarin project was not completed on the scheduled date of completion. Face[d] with economic problem[s], Lagon was constrained to cut down the OT work of its worker[s][,] including private respondents. Thus, when requested by private respondents to work OT, Lagon refused and told private respondents that if they insist, they would have to go home at their own expense and that they would not be given anymore time nor allowed to stay in the quarters. This prompted private respondents to leave their work and went home to Cebu. private respondents filed a complaint for illegal dismissal, non-payment of wages, holiday pay, 13th month pay for 1997 and 1998 and SIL pay as well as damages and attorney’s fees.

In their answers, petitioners admit employment of private respondents but claimed that the latter were only project EEs[,] for their services were merely engaged for a specific project or undertaking and the same were covered by contracts duly signed by private respondents. Petitioners further alleged that the food allowance of P63.00 per day as well as private respondents allowance for lodging house, transportation, electricity, water and snacks allowance should be added to their basic pay. With these, petitioners claimed that private respondents received higher wage rate than that prescribed in Rizal and Manila.

Lastly, petitioners alleged that since the workplaces of private respondents were all in Manila, the complaint should be filed there. Thus, petitioners prayed for the dismissal of the complaint for lack of jurisdiction and utter lack of merit. (Citations omitted.)

LA: ruled that it had jurisdiction because the "workplace," as defined in the said rule, included the place where the EE was supposed to report back after a temporary detail, assignment or travel, which in this case was Cebu. private respondents were regular EEs because they were repeatedly hired by petitioners and they performed activities which were usual, necessary and desirable in the business or trade of the ER. Private respondents were underpaid. It ruled that the free board and lodging, electricity, water, and food enjoyed by them could not be included in the computation of their wages because these were given without their written consent. found that petitioners were not liable for illegal dismissal. The LA viewed private respondents’ act of going home as an act of indifference when petitioners decided to prohibit OT work. NLRC:affirmed

CA: affirmed. they were clearly members of a work pool from which petitioners drew their project EEs. the failure of petitioners to comply with the simple but compulsory requirement to submit a report of termination to the nearest Public Employment Office every time private respondents’ employment was terminated was proof that the latter were not project EEs but regular EEs. the CA noted that respondent Roldan Lopez did not work in the Antipolo project and, thus, was not entitled to wage differentials. Also, in computing the differentials for the period January and February 2000, the CA disagreed in the award of differentials based on the minimum daily wage of P223.00, as the prevailing minimum daily wage then was only P213.00.

ISSUE: WON value of the facilities that the private respondents enjoyed should be included in the computation of the "wages" received by them and that the lack of written acceptance of the EEs of the facilities enjoyed by them should not mean that the value of the facilities could not be included in the computation of the private respondents’ "wages."

HELD: BURDEN OF PROVING PAYMENT:As a general rule, on payment of wages, a party who alleges payment as a defense has the burden of proving it.Specifically with respect to labor cases, the burden of proving payment of monetary claims rests on the ER, the rationale being that the pertinent personnel files, payrolls, records, remittances and other similar documents — which will show that OT, differentials, SIL and other claims of workers have been paid — are not in the possession of the worker but in the custody and absolute control of the ER.

In this case, petitioners, aside from bare allegations that private respondents received wages higher than the prescribed minimum, failed to present any evidence, such as payroll or pay slips, to support their defense of payment. Thus, petitioners utterly failed to discharge the onus probandi.

Private respondents, on the other hand, are entitled to be paid the minimum wage, whether they are regular or non-regular EEs. Section 3, Rule VII of the Rules to Implement the Labor Code specifically enumerates those who are not covered by the payment of minimum wage. Project EEs are not among them.

INCLUSION OF FACILITIES IN THE COMPUTATION OF WAGES: Section 1 of DOLE Memorandum Circular No. 2 provides that an ER may provide subsidized meals and snacks to his EEs provided that the subsidy shall not be less that 30% of the fair and reasonable value of such facilities. In such cases, the ER may deduct from the wages of the EEs not more than 70% of the value of the meals and snacks enjoyed by the latter, provided that such deduction is with the written authorization of the EEs concerned.

Moreover, before the value of facilities can be deducted from the EEs’ wages, the following requisites must all be attendant: first, proof must be shown that such facilities are customarily furnished by the trade; second, the provision of deductible facilities must be voluntarily accepted in writing by the EE; and finally, facilities must be charged at reasonable value.Mere availment is not sufficient to allow deductions from EEs’ wages.

These requirements, however, have not been met in this case. SLL failed to present any company policy or guideline showing that provisions for meals and lodging were part of the EE’s salaries. It also failed to provide proof of the EEs’ written authorization, much less show how they arrived at their valuations. At any rate, it is not even clear whether private respondents actually enjoyed said facilities.

FACILITIES vs> SUPPLEMENTS: The Court, at this point, makes a distinction between "facilities" and "supplements." It is of the view that the food and lodging, or the electricity and water allegedly consumed by private respondents in this case were not facilities but supplements. "Supplements," therefore, constitute extra remuneration or special privileges or benefits given to or received by the laborers over and above their ordinary earnings or wages. "Facilities," on the other hand, are items of expense necessary for the laborer's and his family's existence and subsistence so that by express provision of law (Sec. 2[g]), they form part of the wage and when furnished by the ER are deductible therefrom, since if they are not so furnished, the laborer would spend and pay for them just the same.

In short, the benefit or privilege given to the EE which constitutes an extra remuneration above and over his basic or ordinary earning or wage is supplement; and when said benefit or privilege is part of the laborers' basic wages, it is a facility. The distinction lies not so much in the kind of benefit or item (food, lodging, bonus or sick leave) given, but in the purpose for which it is given.23 In the case at bench, the items provided were given freely by SLL for the purpose of maintaining the efficiency and health of its workers while they were working at their respective projects.1avvphi1

For said reason, the cases of Agabon and Glaxo are inapplicable in this case. At any rate, these were cases of dismissal with just and authorized causes. The present case involves the matter of the failure of the petitioners to comply with the payment of the prescribed minimum wage.LIDUVINO M. MILLARES et al. vs. NLRCG.R. No. 122827 March 29, 1999BELLOSILLO, J.:

FACTS: Petitioners numbering one hundred sixteen (116) occupied the position of Technical Staff, Unit Manager, Section Manager, Department Manager, Division Manager and Vice President in the mill site of respondent Paper Industries Corporation of the Philippines (PICOP) in Bislig, Surigao del Sur. PICOP suffered a major financial setback allegedly brought about by the joint impact of restrictive government regulations on logging and the economic crisis. To avert further losses, it undertook a retrenchment program and terminated the services of petitioners. Accordingly, petitioners received separation pay computed at the rate of one (1) month basic pay for every year of service. Believing however that the allowances they allegedly regularly received on a monthly basis during their employment should have been included in the computation thereof they lodged a complaint for separation pay differentials.

The allowances in question pertained to the following :1. Staff/Manager's Allowance —Respondent PICOP provides free housing facilities to supervisory and managerial EEs assigned in Bislig. The privilege includes free water and electric consumption. Owing however to shortage of such facilities, it was constrained to grant Staff allowance instead to those who live in rented houses outside but near the vicinity of the mill site. But the allowance ceases whenever a vacancy occurs in the company's housing facilities. The former grantee is then directed to fill the vacancy. For

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Unit, Section and Department Managers, respondent PICOP gives an additional amount to meet the same kind of expenses called Manager's allowance.

2. Transportation Allowance —To relieve respondent PICOP's motor pool in Bislig from a barrage of requests for company vehicles and to stabilize company vehicle requirements it grants transportation allowance to key officers and Managers assigned in the mill site who use their own vehicles in the performance of their duties. It is a conditional grant such that when the conditions no longer obtain, the privilege is discontinued. The recipients of this kind of allowance are required to liquidate it by submitting a report with a detailed enumeration of expenses incurred.

3. Bislig Allowance —The Bislig Allowance is given to Division Managers and corporate officers assigned in Bislig on account of the hostile environment prevailing therein. But once the recipient is transferred elsewhere outside Bislig, the allowance ceases.

LA: Applying Art. 97, par. (f), of the Labor Code which defines "wage," the Executive Labor Arbiter opined that the subject allowances, being customarily furnished by respondent PICOP and regularly received by petitioners, formed part of the latter's wages. Resolving the controversy from another angle, on the strength of the ruling in Santos v. NLRC and Soriano v. NLRC 3 that in the computation of separation pay account should be taken not just of the basic salary but also of the regular allowances that the EE had been receiving, he concluded that the allowances should be included in petitioners' base pay. Thus respondent PICOP was ordered on to pay petitioners 4,481,000.00 representing separation pay differentials plus ten per cent (10%) thereof as attorney's fees. 4

NLRC: set aside the assailed decision by decreeing that the allowances did not form part of the salary base used in computing separation pay. 5 Its ruling was based on the finding that the cases relied upon by the Executive Labor Arbiter were inapplicable since they involved illegal dismissal where separation pay was granted in lieu of reinstatement which was no longer feasible. Instead, what it considered in point was Estate of the late Eugene J. Kneebone v. NLRC 6 where the Court held that representation and transportation allowances were deemed not part of salary and should therefore be excluded in the computation of separation benefits. Relating the present case with Art. 97, par. (f), of the Labor Code, the NLRC likewise found that petitioners' allowances were contingency-based and thus not included in their salaries.

PETITIONER’S CONTENTION: petitioners submit that their allowances are included in the definition of "facilities" in Art. 97, par. (f), of the Labor Code, being necessary and indispensable for their existence and subsistence. Furthermore they claim that their availment of the monetary equivalent of those "facilities" on a monthly basis was characterized by permanency, regularity and customariness. And to fortify their arguments they insist on the applicability of Santos, Soriano, The Insular Life Assurance Company, Planters Products, Inc. and Songco which are all against the NLRC holding that the salary base in computing separation pay includes not just the basic salary but also the regular allowances.

HELD: In case of retrenchment to prevent losses, Art. 283 of the Labor Code imposes on the ER an obligation to grant to the affected EEs separation pay equivalent to one (1) month pay or at least one-half (1/2) month pay for every year of service, whichever is higher. Since the law speaks of "pay," the question arises, "What exactly does the term connote?" We correlate Art. 283 with Art. 97 of the same Code on definition of terms. "Pay" is not defined therein but "wage." In Songco the Court explained that both words (as well as salary) generally refer to one and the same meaning, i.e., a reward or recompense for services performed. Specifically, "wage" is defined in letter (f) as the remuneration or earnings, however designated, capable of being expressed in terms of money, whether fixed or ascertained on a time, task, piece, or commission basis, or other method of calculating the same, which is payable by an ER to an EE under a written or unwritten contract of employment for work done or to be done, or for services rendered or to be rendered and includes the fair and reasonable value, as determined by the Secretary of Labor, of board, lodging, or other facilities customarily furnished by the ER to the EE.

"Customary" is founded on long-established and constant practice connoting regularity. The receipt of an allowance on a monthly basis does not ipso facto characterize it as regular and forming part of salary because the nature of the grant is a factor worth considering. We agree with the observation of the OSG that the subject allowances were temporarily, not regularly, received by petitioners because —In the case of the housing allowance, once a vacancy occurs in the company-provided housing accommodations, the EE concerned transfers to the company premises and his housing allowance is discontinued . On the other hand, the transportation allowance is in the form of advances for actual transportation expenses subject to liquidation,given only to EEs who have personal cars. The Bislig allowance is given to Division Managers and corporate officers assigned in Bislig, Surigao del Norte. Once the officer is transferred outside Bislig, the allowance stops. We add that in the availment of the transportation allowance, respondent PICOP set another requirement that the personal cars be used by the EEs in the performance of their duties. When the conditions for availment ceased to exist, the allowance reached the cutoff point. The finding of the NLRC along the same line likewise merits concurrence, i.e., petitioners' continuous enjoyment of the disputed allowances was based on contingencies the occurrence of which wrote finis to such enjoyment.

Although it is quite easy to comprehend "board" and "lodging," it is not so with "facilities." Thus Sec. 5, Rule VII, Book III, of the Rules

Implementing the Labor Code gives meaning to the term as including articles or services for the benefit of the EE or his family but excluding tools of the trade or articles or service primarily for the benefit of the ER or necessary to the conduct of the ER's business. The Staff/Manager's allowance may fall under "lodging" but the transportation and Bislig allowances are not embraced in "facilities" on the main consideration that they are granted as well as the Staff/Manager's allowance for respondent PICOP's benefit and convenience, i.e., to insure that petitioners render quality performance. In determining whether a privilege is a facility, the criterion is not so much its kind but its purpose. That the assailed allowances were for the benefit and convenience of respondent company was supported by the circumstance that they were not subjected to withholding tax. Revenue Audit Memo Order No. 1-87 pertinently provides —3.2.:transportation, representation or entertainment expenses shall not constitute taxable compensation if:(a) It is for necessary travelling and representation or entertainment expenses paid or incurred by the EE in the pursuit of the trade or business of the ER, and(b) The EE is required to, and does, make an accounting/liquidation for such expense in accordance with the specific requirements of substantiation for such category or expense.

Board and lodging allowances furnished to an EE not in excess of the latter's needs and given free of charge, constitute income to the latter except if such allowances or benefits are furnished to the EE for the convenience of the ER and as necessary incident to proper performance of his duties in which case such benefits or allowances do not constitute taxable income.

The Secretary of Labor and Employment under Sec. 6, Rule VII, Book III, of the Rules Implementing the Labor Code may from time to time fix in appropriate issuances the "fair and reasonable value of board, lodging and other facilities customarily furnished by an ER to his EEs." Petitioners' allowances do not represent such fair and reasonable value as determined by the proper authority simply because the Staff/Manager's allowance and transportation allowance were amounts given by respondent company in lieu of actual provisions for housing and transportation needs whereas the Bislig allowance was given in consideration of being assigned to the hostile environment then prevailing in Bislig.

The inevitable conclusion is that, as reached by the NLRC, subject allowances did not form part of petitioners' wages.

In Santos 19 the Court decreed that in the computation of separation pay awarded in lieu of reinstatement, account must be taken not only of the basic salary but also of transportation and emergency living allowances. Later, the Court in Soriano, citing Santos, was general in its holding that the salary base properly used in computing separation pay where reinstatement was no longer feasible should include not just the basic salary but also the regular allowances that the EE had been receiving. Insular merely reiterated the aforementioned rulings. The rationale is not difficult to discern. It is the obligation of the ER to pay an illegally dismissed EE the whole amount of his salaries plus all other benefits, bonuses and general increases to which he would have been normally entitled had he not been dismissed and had not stopped working. 20 The same holds true in case of retrenched EEs. And thus we applied Insular and Soriano in Planters in the computation of separation pay of retrenched EEs. Songco likewise involved retrenchment and was relied upon in Planters, Soriano and Santos in determining the proper amount of separation pay. As culled from the foregoing jurisprudence, separation pay when awarded to an illegally dismissed EE in lieu of reinstatement or to a retrenched EE should be computed based not only on the basic salary but also on the regular allowances that the EE had been receiving. But in view of the previous discussion that the disputed allowances were not regularly received by petitioners herein, there was no reason at all for petitioners to resort to the above cases.

Neither is Kneebone applicable, contrary to the finding of the NLRC, because of the difference in factual circumstances. In Kneebone, the Court was tasked to resolve the issue whether there presentation and transportation allowances formed part of salary as to be considered in the computation of retirement benefits. The ruling was in the negative on the main ground that the retirement plan of the company expressly excluded such allowances from salary.METRO TRANSIT ORGANIZATION, INC. vs. NLRC G.R. No. 116008 July 11, 1995FELICIANO, J.:

FACTS: Petitioner Metro is the operator and manager of the LRT System in Metro Manila. It employs close to 1,000 rank-and-file and over 200 supervisory EEs. Private respondent t Supervisory EEs Association Metro(SEAM) is a union composed of supervisory EEs of petitioner Metro. In May 1989, SEAM was certified as the sole bargaining unit for the supervisory EEs of Metro.the first CBA between petitioner Metro and private respondent SEAM took effect. Prior to December 1989, Metro had a CBA only with its rank-and-file EEs. During the period when no CBA governed the terms and conditions of employment between Metro and its supervisory EEs, whenever rank-and-file EEs were paid a statutorily mandated salary increase, supervisory EEs were, as a matter of practice, also paid the same amount plus P50.00.

Metro paid its rank-and-file EEs a salary increase of P500.00 per month in accordance with the terms of their CBA. Metro, however, did not extend a corresponding salary increase to its supervisory EEs. Metro, in compliance with its CBA with SEAM, paid its supervisory EEs a salary increase of P800.00 per month.

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Metro paid its rank-and-file and supervisory EEs a P600.00 monthly increase. The payment thus made to rank-and-file EEs was in compliance with the second year salary increase provided in their CBA. the P600.00 per month paid to supervisory EEs was advanced from their second year salary increase, provided in their CBA, of P1,000.00 per month. Metro paid its supervisory EEs the remaining balance of P400.00 per month in addition to the P600.00 a month it had earlier started to pay. The third year salary increases due rank-and-file and supervisory EEs were paid, respectively, as scheduled in their corresponding CBAs.

private respondent SEAM filed a Notice of Strike before the National Conciliation and Mediation Board ("NCMB") charging petitioner Metro with (a) discrimination in terms of wages; (b) underpayment of salary increase per CBA for 1990 and/or adjustment of salaries for correction of disparity/inequity in pay with rank-and-file EEs and (c) harassment and demotion of union officers. Conciliation and mediation efforts before the NCMB failed.

acting on a petition filed by Metro, the Secretary of Labor assumed jurisdiction over the labor dispute and certified the same to public respondent NLRC for same compulsory arbitration.

NLRC:Company is hereby ordered to pay the amount of P550.00 per month wage increase effective April 17, 1989 and onwards to each supervisory EE and likewise pay the sum of P600.00 per month representing underpayment in the correction of inequities in pay or underpayment of CBA wage increase effective December 1, 1990 and onwards. The charge of harassment and demotion was dismissed for "lack of basis."

On 22 June 1994, NLRC denied the motion for reconsideration filed by Metro.

The instant Petition for Certiorari was filed on 14 July 1994 accompanied by a prayer for issuance of a temporary restraining order to enjoin public respondents from enforcing their award.

On 31 August 1994, the Court, after an oral hearing, issued a Resolution encouraging petitioner Metro and private respondent SEAM to vigorously and earnestly exercise their best efforts to reach an amicable and mutually acceptable settlement of their claims and counterclaims. In the meantime, the disputants were to maintain the status quo, in particular, private respondent SEAM and public respondent NLRC were to refrain from seeking and granting, respectively, the issuance of a writ of execution in respect of the decision of the NLRC.

On 29 and 30 September 1994, petitioner Metro and private respondent SEAM respectively informed the Court that their efforts amicably to settle their dispute had failed. Cognizant of (a) the huge disparity between the financial capability of Metro and the amount awarded to SEAM, 3 (b) the essential public services being rendered by the parties and (c) in the interest of avoiding any disruption of these basic services, the Court reiterated its Order of 31 August 1994 enjoining respondents SEAM and the NLRC from seeking and granting a writ of execution until further orders from this Court.

ISSUES: 1)whether or not a wage distortion existed in respect of the salaries of the rank-and-file and supervisory EEs of petitioner Metro; and 2) assuming a wage distortion existed, whether or not it has been corrected by petitioner Metro in accordance with law. 4

HELD: 1)the Court finds and so holds that a wage distortion did occur when the salaries of rank-and-file EEs were increased by P500.00 per month on 17 April 1989 as stipulated in their CBA and no corresponding increase was paid to the supervisory EEs. This fact was admitted by Atty. Virgilio C. Abejo, counsel for petitioner Metro, during the oral hearing and Metro is bound by that admission. In addition, Atty. Abejo explained that his client, as a matter of practice, granted its supervisory EEs a salary increase (and a premium) whenever it paid its rank-and-file EEs a salary increase. 6

The defense of management prerogative or discretion invoked by petitioner Metro in asserting that it is not obligated to grant supervisory EEs a salary increase whenever rank-and-file EE are granted an increase is, in this case, unavailing. Basically, Metro's argument is that such increase was merely a bonus given to supervisory EEs. A "bonus" is an amount granted and paid to an EE for his industry and loyalty which contributed to the success of the ER's business and made possible the realization of profits. It is something given in addition to what is ordinarily received by or strictly due to therecipient. 7

The general rule is that a bonus is a gratuity or an act of liberality which the recipient has no right to demand as a matter of right. 8 A bonus, however, is a demandable or enforceable obligation when it is made part of the wage or salary or compensation of the EE. 9 Whether or not a bonus forms part of wages depends upon the circumstances and conditions for its payment. If it is additional compensation which the ER promised and agreed to give without any conditions imposed for its payment, such as success of business or greater production or output, then it is part of the wage. But if it is paid only if profits are realized or if a certain level of productivity is achieved, it can not be considered part of the wage. Where it is not payable to all but only to some EEs and only when their labor becomes more efficient or more productive, it is only an inducement for efficiency, a prize therefor, not a part of the wage. 10

In the case at bar, the increase of P550.00 sought by private respondent SEAM was neither an inducement nor was it contingent

on (a) the success of the business of petitioner Metro; or (b) the increased production or work output of the company or (c) the realization of profits. The demand for this increase was based on a company practice, admitted by Metro, of granting a salary increase (and a premium) to supervisory EEs whenever rank-and-file EEs were granted a salary increase. That those increases were precisely designed to correct or minimize the wage distortion effects of increases given to rank-and-file EEs (under their CBA or under Wage Orders), highlights the fact that those increases were part of the wage structure of supervisory EEs. The demanded increase therefore is not a bonus that is generally not demandable as a matter of right. The demanded increase, in this instance, is an enforceable obligation so far as the supervisory EEs of Metro are concerned.

We conclude that the supervisory EEs, who then had, unlike the rank-and-file EEs, no CBA governing the terms and conditions of their employment, had the right to rely on the company practice of unilaterally correcting the wage distortion effects of a salary increase given to the rank-and-file EEs, by giving the supervisory EEs a corresponding salary increase plus a premium. For reasons, however, shortly to be stated in the disposition of the second issue, we hold that the P550.00 increase is demandable by SEAM only in respect of the period beginning 17 April 1989 and ending on 30 November 1989.

It is true enough that, in the present case, the wage distortion to be corrected by the award of P550.00 increase for supervisory EEs beginning 17 April 1989, was due to the time gap between the effectivity date (17 April 1989) of the increase of P500.00 per month given to rank-and-file EEs under their CBA and the effectivity date (1 December 1989) of the P800.00 increase given to supervisory EEs under their own CBA. It is also true that had the P800.00 increase to supervisory EEs been made retroactive to 17 April 1989 by an appropriate synchronizing provision in the Metro-SEAM CBA, no wage distortion would have arisen. The fact, however, remains that Metro and SEAM did not agree upon such remedy in their CBA and that the CBA increase given to rank-and-file EEs did produce a distortion effect by obliterating or drastically reducing the previous gap between the salary rates of rank-and-file and supervisory EEs. The point to be stressed is that considering the prior practice of petitioner Metro, its supervisory EEs had the right to expect rectification of that distortion.

2) In the instant case, the CBA-stipulated increase of P800.00 a month was intended as the countervailing increase for supervisory EEs, the rank-and-file EEs having already received their own increase approximately eight (8) months earlier. In other words, the wage distortion in the present case arose not because of a government-decreed increase in minimum wages or because Metro simply refused to treat its supervisory EEs, differently from its rank-and-file workers, but rather because of a failure to synchronize the CBA-stipulated increases for rank-and-file and for supervisory EEs. Moreover, as more than once pointed out above, the P800.00 monthly increase given to supervisory EEs should be taken in conjunction with the P550.00 month increase already awarded to supervisory EEs under Part I above. When these are taken together, the wage distortion which occurred on 17 April 1989 was completely and permanently corrected. There is no legal basis for requiring Metro to pay not only the P800.00 month increase, but also, on top thereof, the P550.00 monthly increase to supervisory EEs, after 1 December 1989 and forever after.

From the foregoing, we conclude that beginning 1 December 1989, by the grant of the award of P550.00 to supervisory EEs in Part I (supra) and by the operation of the Metro-SEAM CBA, the wage distortion which occurred on 17 April 1989 had been corrected. By 1 December 1991, a substantial gap or differential had been re-established between the salaries of the rank-and-file and supervisory EEs of petitioner Metro. It was, therefore, grievous abuse of discretion for the NLRC to disregard such rectification and to rule that petitioner Metro was liable to its supervisory EEs for P550.00 monthly increase beyond 1 December 1989 and "onwards." That distortion, as already pointed out, lasted only from 17 April 1989 up to 30 November 1989, since the following day, 1 December 1989, the CBA of Metro and SEAM went into effect.

Similarly, we believe that the NLRC committed a grave abuse of discretion in requiring Metro to pay the sum of P600.00 per month from 1 December 1990 and onwards, i.e., forever after. It will be recalled that Metro, upon request of SEAM, had agreed that of the P1,000.00 monthly increase originally scheduled to be effective under the CBA on 1 December 1990, P600.00 would take effect instead on 17 April 1990. Metro agreed to do so precisely to remedy the distortion that would otherwise have resulted (see Tables III and IV, supra) and so, starting 17 April 1990, supervisory EEs received a monthly increase of P600.00; and starting 1 December 1990, they started receiving an additional P400.00 or the total stipulated CBA increase of P1,000.00 per month.

Again, for the same reasons set out earlier, we consider that these additional payments of P600.00 per month to supervisory EEs from 17 April 1990 up to 1 December 1990 should be deemed included in the P1,000.00 monthly increase effective from 1 December 1990 and onwards. Compelling Metro to pay, starting 1 December 1990, not only the P1,000.00 per month increase stipulated in the CBA but also an additional P600.00 per month, amounts to allowing unjust enrichment of supervisory EEs at the expense of their ER Metro.EASTERN TELECOMMUNICATIONS PHILIPPINES, INC., vs. EASTERN TELECOMS EES UNION,G.R. No. 185665 February 8, 2012MENDOZA, J.:

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FACTS: Eastern Telecommunications Phils., Inc. (ETPI) is a corporation engaged in the business of providing telecommunications facilities, particularly leasing international date lines or circuits, regular landlines, internet and data services, employing approximately 400 EEs. Eastern Telecoms EEs Union (ETEU) is the certified exclusive bargaining agent of the company’s rank and file EEs with a strong following of 147 regular members. It has an existing collecti[ve] bargaining agreement with the company to expire in the year 2004 with a Side Agreement signed on September 3, 2001.

In essence, the labor dispute was a spin-off of the company’s plan to defer payment of the 2003 14th, 15th and 16th month bonuses sometime in April 2004. The company’s main ground in postponing the payment of bonuses is due to allege continuing deterioration of company’s financial position which started in the year 2000. However, ETPI while postponing payment of bonuses sometime in April 2004, such payment would also be subject to availability of funds.

Invoking the Side Agreement of the existing Collective Bargaining Agreement for the period 2001-2004 between ETPI and ETEU which stated as follows: “4. Employment Related Bonuses. The Company confirms that the 14th, 15th and 16th month bonuses (other than 13th month pay) are granted.”

The union strongly opposed the deferment in payment of the bonuses by filing a preventive mediation complaint with the NCMB on July 3, 2003, the purpose of which complaint is to determine the date when the bonus should be paid.

In the conference held at the NCMB, ETPI reiterated its stand that payment of the bonuses would only be made in April 2004 to which date of payment, the union agreed. Thus, considering the agreement forged between the parties, the said agreement was reduced to a Memorandum of Agreement. The union requested that the President of the company should be made a signatory to the agreement, however, the latter refused to sign. In addition to such a refusal, the company made a sudden turnaround in its position by declaring that they will no longer pay the bonuses until the issue is resolved through compulsory arbitration.

The company’s change in position was contained in a letter dated April 14, 2004 written to the union by Mr. Sonny Javier, Vice-President for Human Resources and Administration, stating that “the deferred release of bonuses had been superseded and voided due to the union’s filing of the issue to the NCMB on July 18, 2003.” He declared that “until the matter is resolved in a compulsory arbitration, the company cannot and will not pay any ‘bonuses’ to any and all union members.”

ETEU filed a Notice of Strike on the ground of unfair labor practice for failure of ETPI to pay the bonuses in gross violation of the economic provision of the existing CBA. the Secretary of Labor and Employment, finding that the company is engaged in an industry considered vital to the economy and any work disruption thereat will adversely affect not only its operation but also that of the other business relying on its services, certified the labor dispute for compulsory arbitration pursuant to Article 263 (q) of the Labor Code as amended.

Acting on the certified labor dispute, a hearing was called on July 16, 2004 wherein the parties have submitted that the issues for resolution are (1) unfair labor practice and (2) the grant of 14th, 15th and 16th month bonuses for 2003, and 14th month bonus for 2004. Thereafter, they were directed to submit their respective position papers and evidence in support thereof after which submission, they agreed to have the case considered submitted for decision.[4]

ISSUES:whether the members of ETEU are entitled to the payment of 14th, 15th and 16th month bonuses for the year 2003 and 14th month bonus for year 2004.

HELD: From a legal point of view, a bonus is a gratuity or act of liberality of the giver which the recipient has no right to demand as a matter of right.[12] The grant of a bonus is basically a management prerogative which cannot be forced upon the ER who may not be obliged to assume the onerous burden of granting bonuses or other benefits aside from the EE’s basic salaries or wages.[13]

A bonus, however, becomes a demandable or enforceable obligation when it is made part of the wage or salary or compensation of the EE.[14] Particularly instructive is the ruling of the Court in Metro Transit Organization, Inc. v. National Labor Relations Commission,[15] where it was written: Whether or not a bonus forms part of wages depends upon the circumstances and conditions for its payment. If it is additional compensation which the ER promised and agreed to give without any conditions imposed for its payment, such as success of business or greater production or output, then it is part of the wage. But if it is paid only if profits are realized or if a certain level of productivity is achieved, it cannot be considered part of the wage. Where it is not payable to all but only to some EEs and only when their labor becomes more efficient or more productive, it is only an inducement for efficiency, a prize therefore, not a part of the wage.

In the case at bench, it is indubitable that ETPI and ETEU agreed on the inclusion of a provision for the grant of 14th, 15th and 16th month bonuses in the 1998-2001 CBA Side Agreement,[16] as well as in the 2001-2004 CBA Side Agreement,[17] which was signed on September 3, 2001. The provision, which was similarly worded,

states:The Company confirms that the 14th, 15th and 16th month bonuses (other than the 13th month pay) are granted.

A reading of the above provision reveals that the same provides for the giving of 14th, 15th and 16th month bonuses without qualification. The wording of the provision does not allow any other interpretation. There were no conditions specified in the CBA Side Agreements for the grant of the benefits contrary to the claim of ETPI that the same is justified only when there are profits earned by the company. Terse and clear, the said provision does not state that the subject bonuses shall be made to depend on the ETPI’s financial standing or that their payment was contingent upon the realization of profits. Neither does it state that if the company derives no profits, no bonuses are to be given to the EEs. In fine, the payment of these bonuses was not related to the profitability of business operations.

The records are also bereft of any showing that the ETPI made it clear before or during the execution of the Side Agreements that the bonuses shall be subject to any condition. Indeed, if ETPI and ETEU intended that the subject bonuses would be dependent on the company earnings, such intention should have been expressly declared in the Side Agreements or the bonus provision should have been deleted altogether. In the absence of any proof that ETPI’s consent was vitiated by fraud, mistake or duress, it is presumed that it entered into the Side Agreements voluntarily, that it had full knowledge of the contents thereof and that it was aware of its commitment under the contract. Verily, by virtue of its incorporation in the CBA Side Agreements, the grant of 14th, 15th and 16th month bonuses has become more than just an act of generosity on the part of ETPI but a contractual obligation it has undertaken. Moreover, the continuous conferment of bonuses by ETPI to the union members from 1998 to 2002 by virtue of the Side Agreements evidently negates its argument that the giving of the subject bonuses is a management prerogative.

From the foregoing, ETPI cannot insist on business losses as a basis for disregarding its undertaking. It is manifestly clear that although it incurred business losses of �149,068,063.00 in the year 2000, it continued to distribute 14th, 15th and 16th month bonuses for said year. Notwithstanding such huge losses, ETPI entered into the 2001-2004 CBA Side Agreement on September 3, 2001 whereby it contracted to grant the subject bonuses to ETEU in no uncertain terms. ETPI continued to sustain losses for the succeeding years of 2001 and 2002 in the amounts of �348,783,013.00 and �315,474,444.00, respectively. Still and all, this did not deter it from honoring the bonus provision in the Side Agreement as it continued to give the subject bonuses to each of the union members in 2001 and 2002 despite its alleged precarious financial condition. Parenthetically, it must be emphasized that ETPI even agreed to the payment of the 14th, 15th and 16th month bonuses for 2003 although it opted to defer the actual grant in April 2004. All given, business losses could not be cited as grounds for ETPI to repudiate its obligation under the 2001-2004 CBA Side Agreement.

The Court finds no merit in ETPI’s contention that the bonus provision confirms the grant of the subject bonuses only on a single instance because if this is so, the parties should have included such limitation in the agreement. Nowhere in the Side Agreement does it say that the subject bonuses shall be conferred once during the year the Side Agreement was signed.

Granting arguendo that the CBA Side Agreement does not contractually bind petitioner ETPI to give the subject bonuses, nevertheless, the Court finds that its act of granting the same has become an established company practice such that it has virtually become part of the EEs’ salary or wage. A bonus may be granted on equitable consideration when the giving of such bonus has been the company’s long and regular practice. In Philippine Appliance Corporation v. Court of Appeals,[21] it was pronounced:To be considered a “regular practice,” however, the giving of the bonus should have been done over a long period of time, and must be shown to have been consistent and deliberate. The test or rationale of this rule on long practice requires an indubitable showing that the ER agreed to continue giving the benefits knowing fully well that said EEs are not covered by the law requiring payment thereof.

The records show that ETPI, aside from complying with the regular 13th month bonus, has been further giving its EEs 14th month bonus every April as well as 15th and 16th month bonuses every December of the year, without fail, from 1975 to 2002 or for 27 years whether it earned profits or not. The considerable length of time ETPI has been giving the special grants to its EEs indicates a unilateral and voluntary act on its part to continue giving said benefits knowing that such act was not required by law. Accordingly, a company practice in favor of the EEs has been established and the payments made by ETPI pursuant thereto ripened into benefits enjoyed by the EEs.

The rule is settled that any benefit and supplement being enjoyed by the EEs cannot be reduced, diminished, discontinued or eliminated by the ER. The principle of non-diminution of benefits is founded on the constitutional mandate to protect the rights of workers and to promote their welfare and to afford labor full protection.[22]

Interestingly, ETPI never presented countervailing evidence to refute ETEU’s claim that the company has been continuously paying bonuses since 1975 up to 2002 regardless of its financial state. Its failure to controvert the allegation, when it had the opportunity and resources to do so, works in favor of ETEU. Time and again, it has been held that should doubts exist between the evidence presented by the ER and the EE, the scales of justice must be tilted in favor of the latter.PHILIPPINE DUPLICATORS, INC. vs. NLRC

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G.R. No. 110068 February 15, 1995FELICIANO, J.:

FACTS: On 11 November 1993, this Court, through its 3RD Division, rendered a decision dismissing the Petition for Certiorari filed by petitioner Duplicators in GRN110068. The Court upheld the decision of public respondent NLRC, which affirmed the order of LA directing petitioner to pay 13th month pay to private respondent EEs computed on the basis of their fixed wages plus sales commissions. The 3RD Division also denied with finality the MR filed by petitioner.

On 17 January 1994, petitioner Duplicators filed (a) a Motion for Leave to Admit Second MR and (b) a Second MR. This time, petitioner invoked the decision handed down by this Court, through its 2ND Division, in the two (2) consolidated cases of Boie-Takeda Chemicals, Inc. vs. Hon. Dionisio de la Serna and Philippine Fuji Xerox Corp. vs. Hon. Cresenciano B. Trajano, in GRN92174 and 102552, respectively. In its decision, the 2ND Division inter alia declared null and void the second paragraph of Section 5 (a) 1 of the Revised Guidelines issued by then Secretary of Labor Drilon. Petitioner submits that the decision in the Duplicators case should now be considered as having been abandoned or reversed by the Boie-Takeda decision, considering that the latter went "directly opposite and contrary to" the conclusion reached in the former. Petitioner prays that the decision rendered in Duplicators be set aside and another be entered directing the dismissal of the money claims of private respondent Philippine Duplicators' EEs' Union.

In view of the nature of the issues raised, the 3RD Division of this Court referred the petitioner's Second MR, and its Motion for Leave to Admit the Second MR, to the Court en banc en consulta. The Court en banc, after preliminary deliberation, and inorder to settle the condition of the relevant case law, accepted GRN110068 as a banc case.

HELD: Deliberating upon the arguments contained in petitioner's Second MR, as well as its Motion for Leave to Admit the Second MR, and after review of the doctrines embodied, respectively, in Duplicators and Boie-Takeda, we consider that these Motions must fail.

The decision rendered in Boie-Takeda cannot serve as a precedent under the doctrine of stare decisis. The Boie-Takeda decision was promulgated a month after this Court, (through its 3RD Division), had rendered the decision in the instant case. Also, the petitioner's 1st MR of the decision had already been denied, with finality before the Boie-Takeda decision became final.

Preliminarily, we note that petitioner Duplicators did not put in issue the validity of the Revised Guidelines on the Implementary on of the 13th Month Pay Law, issued on November 16, 1987, by then Labor Secretary Franklin M. Drilon, either in its Petition for Certiorari or in its 1st MR. In fact, petitioner's counsel relied upon these Guidelines and asserted their validity in opposing the decision rendered by public respondent NLRC. Any attempted change in petitioner's theory, at this late stage of the proceedings, cannot be allowed.

More importantly, we do not agree with petitioner that the decision in Boie-Takeda is "directly opposite or contrary to" the decision in the present (Philippine Duplicators). To the contrary, the doctrines enunciated in these two (2) cases in fact co-exist one with the other. The two (2) cases present quite different factual situations (although the same word "commissions" was used or invoked) the legal characterizations of which must accordingly differ.

In the instant case, there is no question that the sales commission earned by the salesmen who make or close a sale of duplicating machines distributed by petitioner corporation, constitute part of the compensation or remuneration paid to salesmen for serving as salesmen, and hence as part of the "wage" or salary of petitioner's salesmen. Indeed, it appears that petitioner pays its salesmen a small fixed or guaranteed wage; the greater part of the salesmen's wages or salaries being composed of the sales or incentive commissions earned on actual sales closed by them. No doubt this particular salary structure was intended for the benefit of the petitioner corporation, on the apparent assumption that thereby its salesmen would be moved to greater enterprise and diligence and closes more sales in the expectation of increasing their sales commissions. The portion of the salary structure representing commissions simply comprised an automatic increment to the monetary value initially assigned to each unit of work rendered by a salesman. These commissions are not OT payments, nor profit-sharing payments nor any other FB. Thus, the salesmen's commissions, comprising a pre-determined percent of the selling price of the goods sold by each salesman, were properly included in the term "basic salary" for purposes of computing their 13th month pay.

In Boie-Takeda the so-called commissions "paid to or received by medical representatives of Boie-Takeda Chemicals or by the rank and file EEs of Philippine Fuji Xerox Co.," were excluded from the term "basic salary" because these were paid to the medical representatives and rank-and-file EEs as "productivity bonuses." The 2ND Division characterized these payments as additional monetary benefits not properly included in the term "basic salary" in computing their 13th month pay. We note that productivity bonuses are generally tied to the productivity, or capacity for revenue production, of a corporation; such bonuses closely resemble profit-sharing payments and have no clear director necessary relation to the amount of work actually done by each individual EE.

It is also important to note that the purported "commissions" paid by the Boie-Takeda Company to its medical representatives could

not have been "sales commissions" in the same sense that Philippine Duplicators paid its salesmen Sales commissions. Medical representatives are not salesmen; they do not effect any sale of any article at all. In common commercial practice, in the Philippines and elsewhere, of which we take judicial notice, medical representatives are EEs engaged in the promotion of pharmaceutical products or medical devices manufactured by their ER. They promote such products by visiting identified physicians and inform much physicians, orally and with the aid of printed brochures, of the existence and chemical composition and virtues of particular products of their company. They commonly leave medical samples with each physician visited; but those samples are not "sold" to the physician and the physician is, as a matter of professional ethics, prohibited from selling such samples to their patients. Thus, the additional payments made to Boie-Takeda's medical representatives were not in fact sales commissions but rather partook of the nature of profit-sharing bonuses.

The doctrine set out in the decision of the 2ND Division is, accordingly, that additional payments made to EEs, to the extent they partake of the nature of profit-sharing payments, are properly excluded from the ambit of the term "basic salary" for purposes of computing the 13th month pay due to EEs. Such additional payments are not "commissions" within the meaning of the second paragraph of Section 5 (a) of the Revised Guidelines Implementing 13th Month Pay.

We observe that the 3RD item excluded from the term "basic salary" is cast in open ended and apparently circular terms: "other remunerations which are not part of the basic salary." However, what particular types of earnings and remuneration are or are not properly included or integrated in the basic salary are questions to be resolved on a case to case basis, in the light of the specific and detailed facts of each case. In principle, where these earnings and remuneration are closely akin to fringe benefits, overtime pay or profit-sharing payments, they are properly excluded in computing the 13th month pay. However, sales commissions which are effectively an integral portion of the basic salary structure of an EE, shall be included in determining his 13th month pay.

PRODUCTIVE BONUS vs. SALES COMMISSIONWe recognize that both productivity bonuses and sales commissions may have an incentive effect. But there is reason to distinguish one from the other here. Productivity bonuses are generally tied to the productivity or profit generation of the ER corporation. Productivity bonuses are not directly dependent on the extent an individual EE exerts himself. A productivity bonus is something extra for which no specific additional services are rendered by any particular EE and hence not legally demandable, absent a contractual undertaking to pay it. Sales commissions, on the other hand, such as those paid in Duplicators, are intimately related to or directly proportional to the extent or energy of an EE's endeavors. Commissions are paid upon the specific results achieved by a salesman-EE. It is a percentage of the sales closed by a salesman and operates as an integral part of such salesman's basic pay.

Finally, the statement of the 2ND Division in Boie-Takeda declaring null and void the second paragraph of Section 5(a) of the Revised Guidelines Implementing the 13th Month Pay issued by former Labor Secretary Drilon, is properly understood as holding that that second paragraph provides no legal basis for including within the term "commission" there used additional payments to EEs which are, as a matter of fact, in the nature of profit-sharing payments or bonuses. If and to the extent that such second paragraph is so interpreted and applied, it must be regarded as invalid as having been issued in excess of the statutory authority of the Secretary of Labor. That same second paragraph however, correctly recognizes that commissions, like those paid in Duplicators, may constitute part of the basic salary structure of salesmen and hence should be included in determining the 13th month pay; to this extent, the second paragraph is and remains valid.STATES MARINE CORPORATION and ROYAL LINE, INC. vs. CEBU SEAMEN'S ASSOCIATION, INC.,G.R. No. L-12444 February 28, 1963PAREDES, J.:

FACTS: Petitioners States Marine Corporation and Royal Line, Inc. were engaged in the business of marine coastwise transportation, employing therein several steamships of Philippine registry. They had a collective bargaining contract with the respondent Cebu Seamen's Association, Inc. the respondent union filed with the CIR, a petition against the States Marine Corporation, later amended, by including as party respondent, the petitioner Royal Line, Inc. The Union alleged that the officers and men working on board the petitioners' vessels have not been paid their sick leave, vacation leave and OT pay; that the petitioners threatened or coerced them to accept a reduction of salaries, observed by other shipowners; that after the Minimum Wage Law had taken effect, the petitioners required their EEs on board their vessels, to pay the sum of P.40 for every meal, while the masters and officers were not required to pay their meals and that because Captain Carlos Asensi had refused to yield to the general reduction of salaries, the petitioners dismissed said captain who now claims for reinstatement and the payment of back wages from December 25, 1952, at the rate of P540.00, monthly.

It was shown by substantial evidence, that since the beginning of the operation of the petitioner's business, all the crew of their vessels have been signing "shipping articles" in which are stated opposite their names, the salaries or wages they would receive. All seamen, whether members of the crew or deck officers or engineers, have been furnished free meals by the ship owners or operators. All the shipping articles signed by the master and the crew members, contained, among others, a stipulation, that "in

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consideration of which services to be duly performed, the said master hereby agrees to pay to the said crew, as wages, the sums against their names respectively expressed in the contract; and to supply them with provisions as provided herein ..." (Sec. 8, par. [b], shipping articles), and during the duration of the contract "the master of the vessel will provide each member of the crew such daily subsistence as shall be mutually agreed daily upon between said master and crew; or, in lieu of such subsistence the crew may reserve the right to demand at the time of execution of these articles that adequate daily rations be furnished each member of the crew." (Sec. 8, par. [e], shipping articles). It is, therefore, apparent that, aside from the payment of the respective salaries or wages, set opposite the names of the crew members, the petitioners bound themselves to supply the crew with ship's provisions, daily subsistence or daily rations, which include food.

This was the situation before August 4, 1951, when the Minimum Wage Law became effective. After this date, however, the companies began deducting the cost of meals from the wages or salaries of crew members; but no such deductions were made from the salaries of the deck officers and engineers in all the boats of the petitioners.

The petitioners' shipping companies, answering, averred that very much below 30 of the men and officers in their employ were members of the respondent union; that the work on board a vessel is one of comparative ease; that petitioners have suffered financial losses in the operation of their vessels and that there is no law which provides for the payment of sick leave or vacation leave to EEs or workers of private firms; that as regards the claim for OT pay, the petitioners have always observed the provisions of Comm. Act No. 444, (Eight-Hour Labor Law), notwithstanding the fact that it does not apply to those who provide means of transportation; that the shipowners and operators in Cebu were paying the salaries of their officers and men, depending upon the margin of profits they could realize and other factors or circumstances of the business; that in enacting Rep. Act No. 602 (Minimum Wage Law), the Congress had in mind that the amount of P.40 per meal, furnished the EEs should be deducted from the daily wages; that Captain Asensi was not dismissed for alleged union activities, but with the expiration of the terms of the contract between said officer and the petitioners, his services were terminated.

A decision was rendered on February 21, 1957 in favor of the respondent union. The MR thereof, having been denied, the companies filed the present writ of certiorari, to resolve legal question involved. Always bearing in mind the deep-rooted principle that the factual findings of the CIR should not be disturbed, if supported by substantial evidence.

ISSUE: won the deduction were illegal and reimbursement should be made.

HELD: We hold that such deductions are not authorized. In the coastwise business of transportation of passengers and freight, the men who compose the complement of a vessel are provided with free meals by the shipowners, operators or agents, because they hold on to their work and duties, regardless of "the stress and strain concomitant of a bad weather, unmindful of the dangers that lurk ahead in the midst of the high seas."

At first blush, it would appear that there exists a contradiction between the provisions of section 3(f) and section 19 of Rep. Act No. 602; but from a careful examination of the same, it is evident that Section 3(f) constitutes the general rule, while section 19 is the exception. In other words, if there are no supplements given, within the meaning and contemplation of section 19, but merely facilities, section 3(f) governs. There is no conflict; the two provisions could, as they should be harmonized. And even if there is such a conflict, the respondent CIR should resolve the same in favor of the safety and decent living laborers (Art. 1702, new Civil Code)..

It is argued that the food or meals given to the deck officers, marine engineers and unlicensed crew members in question, were mere "facilities" which should be deducted from wages, and not "supplements" which, according to said section 19, should not be deducted from such wages, because it is provided therein: "Nothing in this Act shall deprive an EE of the right to such fair wage ... or in reducing supplements furnished on the date of enactment." In the case of Atok-Big Wedge Assn. v. Atok-Big Wedge Co., L-7349, July 19, 1955; 51 O.G. 3432, the two terms are defined as follows —

SUPPLEMENTS vs. FACILITIES"Supplements", therefore, constitute extra remuneration or special privileges or benefits given to or received by the laborers over and above their ordinary earnings or wages. "Facilities", on the other hand, are items of expense necessary for the laborer's and his family's existence and subsistence so that by express provision of law (Sec. 2[g]), they form part of the wage and when furnished by the ER are deductible therefrom, since if they are not so furnished, the laborer would spend and pay for them just the same.

The criterion is not so much with the kind of the benefit or item (food, lodging, bonus or sick leave) given, but its purpose. Considering, therefore, as definitely found by the respondent court that the meals were freely given to crew members prior to August 4, 1951, while they were on the high seas "not as part of their wages but as a necessary matter in the maintenance of the health and efficiency of the crew personnel during the voyage", the deductions therein made for the meals given after August 4, 1951, should be returned to them, and the operator of the coastwise vessels affected should continue giving the same benefit..

One should not overlook a fact fully established, that only unlicensed crew members were made to pay for their meals or food, while the deck officers and marine engineers receiving higher pay and provided with better victuals, were not. This pictures in no uncertain terms, a great and unjust discrimination obtaining in the present case (Pambujan Sur United Mine Workers v. CIR, et al., L-7177, May 31, 1955).INTERNATIONAL SCHOOL ALLIANCE OF EDUCATORS (ISAE), vs. HON. LEONARDO A. QUISUMBINGG.R. No. 128845 June 1, 2000KAPUNAN, J.:

FACTS: Private respondent International School, Inc. (the School, for short), pursuant to Presidential Decree 732, is a domestic educational institution established primarily for dependents of foreign diplomatic personnel and other temporary residents. To enable the School to continue carrying out its educational program and improve its standard of instruction, Section 2(c) of the same decree authorizes the School to employ its own teaching and management personnel selected by it either locally or abroad, from Philippine or other nationalities, 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 EEs.

Accordingly, the School hires both foreign and local teachers as members of its faculty, classifying the same into two: (1) foreign-hires and (2) local-hires. The School employs four tests to determine whether a faculty member should be classified as a foreign-hire or a local hire:a. What is one's domicile? b. Where is one's home economy? c. To which country does one owe economic allegiance? d. Was the individual hired abroad specifically to work in the School and was the School responsible for bringing that individual to the Philippines? Should the answer to any of these queries point to the Philippines, the faculty member is classified as a local hire; otherwise, he or she is deemed a foreign-hire.

The School grants foreign-hires certain benefits not accorded local-hires.These include housing, transportation, shipping costs, taxes, and home leave travel allowance. Foreign-hires are also paid a salary rate twenty-five percent (25%) more than local-hires. The School justifies the difference on two "significant economic disadvantages" foreign-hires have to endure, namely: (a) the "dislocation factor" and (b) limited tenure. The School explains:

When negotiations for a new CBA, petitioner International School Alliance of Educators, "a legitimate labor union and the collective bargaining representative of all faculty members"4 of the School, contested the difference in salary rates between foreign and local-hires. This issue, as well as the question of whether foreign-hires should be included in the appropriate bargaining unit, eventually caused a deadlock between the parties.

petitioner filed a notice of strike. The failure of the NCMB to bring the parties to a compromise prompted the DOLE to assume jurisdiction over the dispute. the DOLE Acting Secretary, Crescenciano B. Trajano, issued an Order resolving the parity and representation issues in favor of the School. Then DOLE Secretary Leonardo A. Quisumbing subsequently denied petitioner's motion for reconsideratio.

The School disputes these claims and gives a breakdown of its faculty members, numbering 38 in all, with nationalities other than Filipino, who have been hired locally and classified as local hires.5 The Acting Secretary of Labor found that these non-Filipino local-hires received the same benefits as the Filipino local-hires. The compensation package given to local-hires has been shown to apply to all, regardless of race. Truth to tell, there are foreigners who have been hired locally and who are paid equally as Filipino local hires.6

The Acting secretary upheld the point-of-hire classification for the distinction in salary rates:The Principle "equal pay for equal work" does not find applications in the present case. The international character of the School requires the hiring of foreign personnel to deal with different nationalities and different cultures, among the student population.

We also take cognizance of the existence of a system of salaries and benefits accorded to foreign hired personnel which system is universally recognized. We agree that certain amenities have to be provided to these people in order to entice them to render their services in the Philippines and in the process remain competitive in the international market.

Furthermore, we took note of the fact that foreign hires have limited contract of employment unlike the local hires who enjoy security of tenure. To apply parity therefore, in wages and other benefits would also require parity in other terms and conditions of employment which include the employment which include the employment contract.

A perusal of the parties' 1992-1995 CBA points us to the conditions and provisions for salary and professional compensation wherein the parties agree as follows: All members of the bargaining unit shall be compensated only in accordance with Appendix C hereof provided that the Superintendent of the School has the discretion to recruit and hire expatriate teachers from abroad, under terms and conditions that are consistent with accepted international practice.

Appendix C of said CBA further provides: The new salary schedule is deemed at equity with the Overseas Recruited Staff (OSRS) salary schedule. The 25% differential is reflective of the agreed value of system displacement and contracted status of the OSRS as differentiated from the tenured status of Locally Recruited Staff (LRS).

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To our mind, these provisions demonstrate the parties' recognition of the difference in the status of two types of EEs, hence, the difference in their salaries.

The Union cannot also invoke the equal protection clause to justify its claim of parity. It is an established principle of constitutional law that the guarantee of equal protection of the laws is not violated by legislation or private covenants based on reasonable classification. A classification is reasonable if it is based on substantial distinctions and apply to all members of the same class. Verily, there is a substantial distinction between foreign hires and local hires, the former enjoying only a limited tenure, having no amenities of their own in the Philippines and have to be given a good compensation package in order to attract them to join the teaching faculty of the School.7

ISSUE: that the point-of-hire classification employed by the School is discriminatory to Filipinos and that the grant of higher salaries to foreign-hires constitutes racial discrimination.

HELD: Notably, the International Covenant on Economic, Social, and Cultural Rights, supra, in Article 7 thereof, provides:

The States Parties to the present Covenant recognize the right of everyone to the enjoyment of just and favourable conditions of work, which ensure, in particular:a. Remuneration which provides all workers, as a minimum, with:(i) Fair wages and equal remuneration for work of equal value without distinction of any kind, in particular women being guaranteed conditions of work not inferior to those enjoyed by men, with equal pay for equal work;

The foregoing provisions impregnably institutionalize in this jurisdiction the long honored legal truism of "equal pay for equal work." Persons who work with substantially equal qualifications, skill, effort and responsibility, under similar conditions, should be paid similar salaries. This rule applies to the School, its "international character" notwithstanding.

The School contends that petitioner has not adduced evidence that local-hires perform work equal to that of foreign-hires. The Court finds this argument a little cavalier. If an ER accords EEs the same position and rank, the presumption is that these EEs perform equal work. This presumption is borne by logic and human experience. If the ER pays one EE less than the rest, it is not for that EE to explain why he receives less or why the others receive more. That would be adding insult to injury. The ER has discriminated against that EE; it is for the ER to explain why the EE is treated unfairly.

The ER in this case has failed to discharge this burden. There is no evidence here that foreign-hires perform 25% more efficiently or effectively than the local-hires. Both groups have similar functions and responsibilities, which they perform under similar working conditions. The School cannot invoke the need to entice foreign-hires to leave their domicile to rationalize the distinction in salary rates without violating the principle of equal work for equal pay.

While we recognize the need of the School to attract foreign-hires, salaries should not be used as an enticement to the prejudice of local-hires. The local-hires perform the same services as foreign-hires and they ought to be paid the same salaries as the latter. For the same reason, the "dislocation factor" and the foreign-hires' limited tenure also cannot serve as valid bases for the distinction in salary rates. The dislocation factor and limited tenure affecting foreign-hires are adequately compensated by certain benefits accorded them which are not enjoyed by local-hires, such as housing, transportation, shipping costs, taxes and home leave travel allowances.

In this case, we find the point-of-hire classification employed by respondent School to justify the distinction in the salary rates of foreign-hires and local hires to be an invalid classification. There is no reasonable distinction between the services rendered by foreign-hires and local-hires. The practice of the School of according higher salaries to foreign-hires contravenes public policy and, certainly, does not deserve the sympathy of this Court.1avvphi1

We agree, however, that foreign-hires do not belong to the same bargaining unit as the local-hires. A bargaining unit is "a group of EEs of a given ER, comprised of all or less than all of the entire body of EEs, consistent with equity to the ER, indicate to be the best suited to serve the reciprocal rights and duties of the parties under the collective bargaining provisions of the law." 29 The factors in determining the appropriate collective bargaining unit are (1) the will of the EEs (Globe Doctrine); (2) affinity and unity of the EEs' interest, such as substantial similarity of work and duties, or similarity of compensation and working conditions (Substantial Mutual Interests Rule); (3) prior collective bargaining history; and (4) similarity of employment status. 30 The basic test of an asserted bargaining unit's acceptability is whether or not it is fundamentally the combination which will best assure to all EEs the exercise of their collective bargaining rights. 31

It does not appear that foreign-hires have indicated their intention to be grouped together with local-hires for purposes of collective bargaining. The collective bargaining history in the School also shows that these groups were always treated separately. Foreign-hires have limited tenure; local-hires enjoy security of tenure. Although foreign-hires perform similar functions under the same working conditions as the local-hires, foreign-hires are accorded certain benefits not granted to local-hires. These benefits, such as housing, transportation, shipping costs, taxes, and home leave travel allowance, are reasonably related to their status as foreign-hires, and justify the exclusion of the former from the latter. To

include foreign-hires in a bargaining unit with local-hires would not assure either group the exercise of their respective collective bargaining rights.SHS PERFORATED MATERIALS, INC. et al vs. MANUEL F. DIAZG.R. No. 185814 October 13, 2010MENDOZA, J.:

Petitioner SHS Perforated Materials, Inc. (SHS) is a start-up corporation organized and existing under the laws of the Republic of the Philippines and registered with the Philippine Economic Zone Authority. Petitioner Winfried Hartmannshenn (Hartmannshenn), a German national, is its president, in which capacity he determines the administration and direction of the day-to-day business affairs of SHS. Petitioner Hinrich Johann Schumacher (Schumacher), also a German national, is the treasurer and one of the board directors. As such, he is authorized to pay all bills, payrolls, and other just debts of SHS of whatever nature upon maturity. Schumacher is also the Executive Vice-President of the European Chamber of Commerce of the Philippines (ECCP) which is a separate entity from SHS. Both entities have an arrangement where ECCP handles the payroll requirements of SHS to simplify business operations and minimize operational expenses. Thus, the wages of SHS EEs are paid out by ECCP, through its Accounting Services Department headed by Juliet Taguiang (Taguiang).

Manuel F. Diaz (respondent) was hired by petitioner SHS as Manager for Business Development on probationary status from July 18, 2005 to January 18, 2006, with a monthly salary of P100,000.00. Respondent’s duties, responsibilities, and work hours were described in the Contract of Probationary Employment.

respondent was also instructed by Hartmannshenn to report to the SHS office and plant at least two (2) days every work week to observe technical processes involved in the manufacturing of perforated materials, and to learn about the products of the company, which respondent was hired to market and sell.During respondent’s employment, Hartmannshenn was often abroad and, because of business exigencies, his instructions to respondent were either sent by electronic mail or relayed through telephone or mobile phone. When he would be in the Philippines, he and the respondent held meetings. As to respondent’s work, there was no close supervision by him.

During meetings with the respondent, Hartmannshenn expressed his dissatisfaction over respondent’s poor performance. Respondent allegedly failed to make any concrete business proposal or implement any specific measure to improve the productivity of the SHS office and plant or deliver sales except for a meagre P2,500.00 for a sample product. In numerous electronic mail messages, respondent acknowledged his poor performance and offered to resign from the company. Respondent, however, denied sending such messages but admitted that he had reported to the SHS office and plant only eight (8) times from July 18, 2005 to November 30, 2005.

On November 16, 2005, in preparation for his trip to the Philippines, Hartmannshenn tried to call respondent on his mobile phone, but the latter failed to answer. On November 18, 2005, Hartmannshenn arrived in the Philippines from Germany, and on November 22 and 24, 2005, notified respondent of his arrival through electronic mail messages and advised him to get in touch with him. Respondent claimed that he never received the messages. On November 29, 2005, Hartmannshenn instructed Taguiang not to release respondent’s salary. Later that afternoon, respondent called and inquired about his salary. Taguiang informed him that it was being withheld and that he had to immediately communicate with Hartmannshenn. Again, respondent denied having received such directive.The next day, on November 30, 2005, respondent served on SHS a demand letter and a resignation letter.

In the evening of the same day, November 30, 2005, respondent met with Hartmannshenn in Alabang. The latter told him that he was extremely disappointed for the following reasons: his poor work performance; his unauthorized leave and malingering from November 16 to November 30, 2005; and failure to immediately meet Hartmannshenn upon his arrival from Germany.

Petitioners averred that respondent was unable to give a proper explanation for his behavior. Hartmannshenn then accepted respondent’s resignation and informed him that his salary would be released upon explanation of his failure to report to work, and proof that he did, in fact, work for the period in question. He demanded that respondent surrender all company property and information in his possession. Respondent agreed to these “exit” conditions through electronic mail. Instead of complying with the said conditions, however, respondent sent another electronic mail message to Hartmannshenn and Schumacher on December 1, 2005, appealing for the release of his salary.

Respondent, on the other hand, claimed that the meeting with Hartmannshenn took place in the evening of December 1, 2005, at which meeting the latter insulted him and rudely demanded that he accept P25,000.00 instead of his accrued wage and stop working for SHS, which demands he refused. Later that same night, he sent Hartmannshenn and Schumacher an electronic mail message appealing for the release of his salary. Another demand letter for respondent’s accrued salary for November 16 to November 30, 2005, 13th month pay, moral and exemplary damages, and attorney’s fees was sent on December 2, 2005.

To settle the issue amicably, petitioners’ counsel advised respondent’s counsel by telephone that a check had been prepared in the amount of P50,000.00, and was ready for pick-up on December 5, 2005. On the same date, a copy of the formal reply letter relating to the prepared payment was sent to the

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respondent’s counsel by facsimile transmission. Despite being informed of this, respondent never picked up the check.

Respondent countered that his counsel received petitioners’ formal reply letter only on December 20, 2005, stating that his salary would be released subsequent to the turn-over of all materials owned by the company in his possession. Respondent claimed that the only thing in his possession was a sample panels folder which he had already returned and which was duly received by Taguiang on November 30, 2005.

On December 9, 2005, respondent filed a Complaint[7] against the petitioners for illegal dismissal; non-payment of salaries/wages and 13th month pay with prayer for reinstatement and full backwages; exemplary damages, and attorney’s fees, costs of suit, and legal interest.

ISSUES: whether or not respondent was constructively dismissed by petitioners, which determination is, in turn, hinged on finding out (i) whether or not the temporary withholding of respondent’s salary/wages by petitioners was a valid exercise of management prerogative; and (ii) whether or not respondent voluntarily resigned.

HELD: 1)Management prerogative refers “to the right of an ER to regulate all aspects of employment, such as the freedom to prescribe work assignments, working methods, processes to be followed, regulation regarding transfer of EEs, supervision of their work, lay-off and discipline, and dismissal and recall of work.” Although management prerogative refers to “the right to regulate all aspects of employment,” it cannot be understood to include the right to temporarily withhold salary/wages without the consent of the EE. To sanction such an interpretation would be contrary to Article 116 of the Labor Code, which provides: ART. 116. Withholding of wages and kickbacks prohibited. – It shall be unlawful for any person, directly or indirectly, to withhold any amount from the wages of a worker or induce him to give up any part of his wages by force, stealth, intimidation, threat or by any other means whatsoever without the worker’s consent.

Any withholding of an EE’s wages by an ER may only be allowed in the form of wage deductions under the circumstances provided in Article 113 of the Labor Code, as set forth below: ART. 113. Wage Deduction. – No ER, in his own behalf or in behalf of any person, shall make any deduction from the wages of his EEs, except: (a) In cases where the worker is insured with his consent by the ER, and the deduction is to recompense the ER for the amount paid by him as premium on the insurance;(b) For union dues, in cases where the right of the worker or his union to check-off has been recognized by the ER or authorized in writing by the individual worker concerned; and (c) In cases where the ER is authorized by law or regulations issued by the Secretary of Labor.

As correctly pointed out by the LA, “absent a showing that the withholding of complainant’s wages falls under the exceptions provided in Article 113, the withholding thereof is thus unlawful.”[13]

Although it cannot be determined with certainty whether respondent worked for the entire period from November 16 to November 30, 2005, the consistent rule is that if doubt exists between the evidence presented by the ER and that by the EE, the scales of justice must be tilted in favor of the latter[24] in line with the policy mandated by Articles 2 and 3 of the Labor Code to afford protection to labor and construe doubts in favor of labor. For petitioners’ failure to satisfy their burden of proof, respondent is presumed to have worked during the period in question and is, accordingly, entitled to his salary. Therefore, the withholding of respondent’s salary by petitioners is contrary to Article 116 of the Labor Code and, thus, unlawful.

2)There is constructive dismissal if an act of clear discrimination, insensibility, or disdain by an ER becomes so unbearable on the part of the EE that it would foreclose any choice by him except to forego his continued employment. It exists where there is cessation of work because continued employment is rendered impossible, unreasonable or unlikely, as an offer involving a demotion in rank and a diminution in pay. [25]

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

It is worthy to note that in his resignation letter, respondent cited petitioners’ “illegal and unfair labor practice”[26] as his cause for resignation. As correctly noted by the CA, respondent lost no time in submitting his resignation letter and eventually filing a complaint for illegal dismissal just a few days after his salary was withheld. These circumstances are inconsistent with voluntary resignation and bolster the finding of constructive dismissal.

Respondent was constructively dismissed and, therefore, illegally dismissed. Although respondent was a probationary EE, he was still entitled to security of tenure. Section 3 (2) Article 13 of the Constitution guarantees the right of all workers to security of tenure. In using the expression “all workers,” the Constitution puts no distinction between a probationary and a permanent or regular EE. This means that probationary EEs cannot be dismissed except for cause or for failure to qualify as regular EEs.[28]

This Court has held that probationary EEs who are unjustly dismissed during the probationary period are entitled to reinstatement and payment of full backwages and other benefits and privileges from the time they were dismissed up to their actual reinstatement.[29] Respondent is, thus, entitled to reinstatement without loss of seniority rights and other privileges as well as to full backwages, inclusive of allowances, and other benefits or their monetary equivalent computed from the time his compensation was withheld up to the time of actual reinstatement. Respondent, however, is not entitled to the additional amount for 13th month pay, as it is clearly provided in respondent’s Probationary Contract of Employment that such is deemed included in his salary. The compensation package defined in this paragraph shall represent all that is due and demandable under this Contract and includes all benefits required by law such as the 13th month pay. No other benefits, bonus or allowance shall be due the EE.

Respondent’s reinstatement, however, is no longer feasible as antagonism has caused a severe strain in their working relationship. Under the doctrine of strained relations, the payment of separation pay is considered an acceptable alternative to reinstatement when the latter option is no longer desirable or viable. Payment liberates the EE from what could be a highly oppressive work environment, and at the same time releases the ER from the obligation of keeping in its employ a worker it no longer trusts. Therefore, a more equitable disposition would be an award of separation pay equivalent to at least one month pay, in addition to his full backwages, allowances and other benefits.[31]

With respect to the personal liability of Hartmannshenn and Schumacher, this Court has held that corporate directors and officers are only solidarily liable with the corporation for termination of employment of corporate EEs if effected with malice or in bad faith.[32] Bad faith does not connote bad judgment or negligence; it imports dishonest purpose or some moral obliquity and conscious doing of wrong; it means breach of unknown duty through some motive or interest or ill will; it partakes of the nature of fraud.[33] To sustain such a finding, there should be evidence on record that an officer or director acted maliciously or in bad faith in terminating the EE.[34]

Petitioners withheld respondent’s salary in the sincere belief that respondent did not work for the period in question and was, therefore, not entitled to it. There was no dishonest purpose or ill will involved as they believed there was a justifiable reason to withhold his salary. Thus, although they unlawfully withheld respondent’s salary, it cannot be concluded that such was made in bad faith. Accordingly, corporate officers, Hartmannshenn and Schumacher, cannot be held personally liable for the corporate obligations of SHS.CENTRAL AZUCARERA DE TARLAC vs. CENTRAL AZUCARERA DE TARLAC LABOR UNION-NLU,G.R. No. 188949 July 26, 2010NACHURA, J.:

FACTS: Petitioner is a domestic corporation engaged in the business of sugar manufacturing, while respondent is a legitimate labor organization which serves as the exclusive bargaining representative of petitioner’s rank-and-file EEs. The controversy stems from the interpretation of the term “basic pay,” essential in the computation of the 13th-month pay.

In compliance with Presidential Decree (P.D.) No. 851, petitioner granted its EEs the mandatory thirteenth (13th) - month pay since 1975. The formula used by petitioner in computing the 13th-month pay was: Total Basic Annual Salary divided by twelve (12). Included in petitioner’s computation of the Total Basic Annual Salary were the following: basic monthly salary; first eight (8) hours overtime pay on Sunday and legal/special holiday; night premium pay; and vacation and sick leaves for each year. Throughout the years, petitioner used this computation until 2006.[3]

respondent staged a strike. During the pendency of the strike, petitioner declared a temporary cessation of operations. all the striking union members were allowed to return to work. Subsequently, petitioner declared another temporary cessation of operations. The suspension of operation was lifted, but the rank-and-file EEs were allowed to report for work on a fifteen (15) day-per-month rotation basis. petitioner gave the EEs their 13th-month pay based on the EE’s total earnings during the year divided by 12.

Respondent objected to this computation. It averred that petitioner did not adhere to the usual computation of the 13th-month pay. It claimed that the divisor should have been eight (8) instead of 12, because the EEs worked for only 8 months in 2006. It likewise asserted that petitioner did not observe the company practice of giving its EEs the guaranteed amount equivalent to their one month pay, in instances where the computed 13th-month pay was less than their basic monthly pay.[5]

Petitioner and respondent tried to thresh out their differences in accordance with the grievance procedure as provided in their CBA. During the grievance meeting, the representative of petitioner explained that the change in the computation of the 13th-month pay was intended to rectify an error in the computation, particularly

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the concept of basic pay which should have included only the basic monthly pay of the EEs.

For failure of the parties to arrive at a settlement, respondent applied for preventive mediation before the NCMB. However, despite four (4) conciliatory meetings, the parties still failed to settle the dispute. respondent filed a complaint against petitioner for money claims based on the alleged diminution of benefits/erroneous computation of 13th-month pay before the Regional Arbitration Branch of the NLRC.

LA:dismissed. declaring that the petitioner had the right to rectify the error in the computation of the 13th-month pay of its EEs. NLRC: reversed. CA: affirmed.

HELD: The 13th-month pay mandated by Presidential Decree (P.D.) No. 851 represents an additional income based on wage but not part of the wage. It is equivalent to one-twelfth (1/12) of the total basic salary earned by an EE within a calendar year. All rank-and-file EEs, regardless of their designation or employment status and irrespective of the method by which their wages are paid, are entitled to this benefit, provided that they have worked for at least one month during the calendar year. If the EE worked for only a portion of the year, the 13th-month pay is computed pro rata.[16]

13th-month pay for 2006. Admittedly, it was an error that was repeatedly committed for almost thirty (30) years. Petitioner insists that the length of time during which an ER has performed a certain act beneficial to the EEs, does not prove that such an act was not done in error. It maintains that for the claim of mistake to be negated, there must be a clear showing that the ER had freely, voluntarily, and continuously performed the act, knowing that he is under no obligation to do so. Petitioner asserts that such voluntariness was absent in this case.

the Supplementary Rules and Regulations Implementing P.D. No. 851 was issued. The Supplementary Rules clarifies that OT pay, earnings, and other remuneration that are not part of the basic salary shall not be included in the computation of the 13th-month pay. the Revised Guidelines on the Implementation of the 13th-Month Pay Law was issued. Significantly, under this Revised Guidelines, it was specifically stated that the minimum 13th-month pay required by law shall not be less than one-twelfth (1/12) of the total basic salary earned by an EE within a calendar year.

Furthermore, the term “basic salary” of an EE for the purpose of computing the 13th-month pay was interpreted to include all remuneration or earnings paid by the ER for services rendered, but does not include allowances and monetary benefits which are not integrated as part of the regular or basic salary, such as the cash equivalent of unused vacation and sick leave credits, overtime, premium, night differential and holiday pay, and cost-of-living allowances. However, these salary-related benefits should be included as part of the basic salary in the computation of the 13th-month pay if, by individual or collective agreement, company practice or policy, the same are treated as part of the basic salary of the EEs.

Based on the foregoing, it is clear that there could have no erroneous interpretation or application of what is included in the term “basic salary” for purposes of computing the 13th-month pay of EEs. From the inception of P.D. No. 851 on December 16, 1975, clear-cut administrative guidelines have been issued to insure uniformity in the interpretation, application, and enforcement of the provisions of P.D. No. 851 and its implementing regulations.

As correctly ruled by the CA, the practice of petitioner in giving 13th-month pay based on the EEs’ gross annual earnings which included the basic monthly salary, premium pay for work on rest days and special holidays, night shift differential pay and holiday pay continued for almost thirty (30) years and has ripened into a company policy or practice which cannot be unilaterally withdrawn.

Article 100 of the Labor Code, otherwise known as the Non-Diminution Rule, mandates that benefits given to EEs cannot be taken back or reduced unilaterally by the ER because the benefit has become part of the employment contract, written or unwritten. [18] The rule against diminution of benefits applies if it is shown that the grant of the benefit is based on an express policy or has ripened into a practice over a long period of time and that the practice is consistent and deliberate. Nevertheless, the rule will not apply if the practice is due to error in the construction or application of a doubtful or difficult question of law. But even in cases of error, it should be shown that the correction is done soon after discovery of the error.[19]

The argument of petitioner that the grant of the benefit was not voluntary and was due to error in the interpretation of what is included in the basic salary deserves scant consideration. No doubtful or difficult question of law is involved in this case. The guidelines set by the law are not difficult to decipher. The voluntariness of the grant of the benefit was manifested by the number of years the ER had paid the benefit to its EEs. Petitioner only changed the formula in the computation of the 13th-month pay after almost 30 years and only after the dispute between the management and EEs erupted. This act of petitioner in changing the formula at this time cannot be sanctioned, as it indicates a badge of bad faith.

Furthermore, petitioner cannot use the argument that it is suffering from financial losses to claim exemption from the coverage of the law on 13th-month pay, or to spare it from its erroneous unilateral computation of the 13th-month pay of its EEs. Under Section 7 of the Rules and Regulations Implementing P.D. No. 851, distressed ERs shall qualify for exemption from the requirement of the Decree

only upon prior authorization by the Secretary of Labor.[20] In this case, no such prior authorization has been obtained by petitioner; thus, it is not entitled to claim such exemption.DEVELOPMENT BANK OF THE PHILIPPINES vs. NLRCG.R. Nos. 100264-81 January 29, 1993GUTIERREZ, JR., J.:

FACTS: the private respondents filed with the Provincial Extension Office of the DOLE in Daet, Camarines Norte 17 individual complaints against Republic Hardwood Inc.(RHI) for unpaid wages and separation pay. These complaints were thereafter endorsed to the Regional Arbitration Branch of the NLRC since the petitioners had already been terminated from employment.

In its position paper, RHI alleged that it had ceased to operate due to the government ban against tree-cutting. It further alleged that its sawmill was totally burned resulting in enormous losses and that due to its financial setbacks, RHI failed to pay its loan with the DBP. RHI contended that since DBP foreclosed its mortgaged assets, then any adjudication of monetary claims in favor of its former EEs must be satisfied against DBP.

the private respondents filed a motion to implead DBP. On July 13, 1987, DBP filed its opposition to said motion.

LA: endered a joint decision on the complaints, the relevant and dispositive portions of which read: To require petitioners to file insolvency proceedings against RHI and later file against DBP their claims is to prolong the agony of petitioners. To give a technical and legal meaning to the words of Art. 110 is to subvert the rights of the petitioners. We hold therefore that as against the contention of respondent DBP, Art. 4 of the Labor Code is the answer. The social justice clause of the Constitution is our guide. NLRC: affirmed.

Whether or not the Joint Decision of Executive Labor Arbiter Gelacio L. Rivera is violative of procedural due process on the part of DBP;There is no merit to this contention of DBP. Denial of due process means the total lack of opportunity to be heard. There is no denial of due process where a party is given an opportunity to be heard and to present his case. The petitioner in this case filed an opposition to the motion to implead it as a party defendant. It likewise filed a motion for reconsideration of the labor arbiter's decision. Thereafter, DBP filed an appeal with the NLRC and, later on, a motion for reconsideration of the NLRC decision. The petitioner, thus, was given ample opportunity to present its case. It was not denied due process.

Whether or not the complainant-private respondents are entitled to separation pay;There is no merit to DBP's contention that the workers are not entitled to separation pay. Despite the enormous losses incurred by RHI due to the fire that gutted the sawmill in 1981 and despite the logging ban in 1983, the uncontroverted claims for separation pay show that most of the private respondents still worked up to the end of 1985. RHI would still have continued its business had not the petitioner foreclosed all of its assets and properties. Thus, the closure of RHI's business was not primarily brought about by serious business losses. Such closure was a consequence of DBP's foreclosure of RHI's assets. We therefore apply Article 283 which provides: in cases of closures or cessation of operations of establishment or undertaking not due to serious business losses or financial reverses, the separation pay shall be equivalent to one (1) month pay or at least one-half (1/2) month pay for every year of service, whichever is higher.

Whether or not Executive Labor Arbiter Gelacio L. Rivera and the NLRC correctly applied Article 110 of the Labor Code in this case; However, because of the petitioner's assertion that the labor arbiter and respondent NLRC incorrectly applied the provisions of Article 110 of the Labor Code, we are constrained to grant the petition for certiorari. Article 110, prior to its amendment by Republic Act No. 6715, reads: Worker preference in case of bankruptcy. — In the event of bankruptcy or liquidation of an ER's business, his workers shall enjoy first preference as regards wages due them for services rendered during the period prior to the bankruptcy or liquidation, any provision of law to the contrary notwithstanding. Unpaid wages shall be paid in full before other creditors may establish any claim to a share in the assets of the ER.

It is quite clear from the provisions that a declaration of bankruptcy or a judicial liquidation must be present before the worker's preference may be enforced. Thus, Article 110 of the Labor Code and its implementing rule cannot be invoked by the respondents in this case absent a formal declaration of bankruptcy or a liquidation order.

Moreover, the reason behind the necessity for a judicial proceeding or a proceeding in rem before the concurrence and preference of credits may be applied was explained by this Court in the case of Philippines Savings Bank v. Lantin (124 SCRA 476 [1983]). We said:The proceedings in the court below do not partake of the nature of the insolvency proceedings or settlement of a decedent's estate. The action filed by Ramos was only to collect the unpaid cost of the construction of the duplex apartment. It is far from being a general liquidation of the estate of the Tabligan spouses.

In the case at bar, although the lower court found that "there were no known creditors other than the plaintiff and the defendant herein", this can not be conclusive. It will not bar other creditors in the event they show up and present their claims against the petitioner bank, claiming that they also have preferred liens against the property involved. Consequently, Transfer Certificate of Title No. 101864 issued in favor of the bank which is supposed to be

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indefeasible would remain constantly unstable and questionable. Such could not have been the intention of Article 2243 of the Civil Code although it considers claims and credits under Article 2242 as statutory liens. Neither does the De Barreto case: The claims of all creditors whether preferred or non-preferred, the identification of the preferred ones and the totality of the ER's asset should be brought into the picture. There can then be an authoritative, fair, and binding adjudication instead of the piece meal settlement which would result from the questioned decision in this case.

The NLRC, therefore, committed grave abuse of discretion when it affirmed the labor arbiter's ruling that the workers' preference espoused in Article 110 may be applied even in the absence of a declaration of bankruptcy or a liquidation order.

A distinction should be made between a preference of credit and a lien. A preference applies only to claims which do not attach to specific properties. A lien creates a charge on a particular property. The right of first preference as regards unpaid wages recognized by Article 110 does not constitute a lien on the property of the insolvent debtor in favor of workers. It is but a preference of credit in their favor, a preference in application. It is a method adopted to determine and specify the order in which credits should be paid in the final distribution of the proceeds of the insolvent's assets. It is a right to a first preference in the discharge of the funds of the judgment debtor.

Article 110 of the Labor Code does not purport to create a lien in favor of workers or EEs for unpaid wages either upon all of the properties or upon any particular property owned by their ER. Claims for unpaid wages do not therefore fall at all within the category of specially preferred claims established under Articles 2241 and 2242 of the Civil Code, except to the extent that such claims for unpaid wages are already covered Article 2241, number 6: "claims for laborers" wages, on the goods manufactured or the work done; or by Article 2242, number 3: "claims of laborers and other workers engaged in the construction, reconstruction or repair of buildings, canals and other works, upon said buildings, canals and other works. To the extent that claims for unpaid wages fall outside the scope of Article 2241, number 6 and 2242, number 3, they would come within the ambit of the category of ordinary preferred credits under Article 2244.

The DBP anchors its claim on a mortgage credit. A mortgage directly and immediately subjects the property upon which it is imposed, whoever the possessor may be, to the fulfillment of the obligation for whose security it was constituted (Article 2176, Civil Code). It creates a real right which is enforceable against the whole world. It is a lien on an identified immovable property, which a preference is not. A recorded mortgage credit is a special preferred credit under Article 2242 (5) of the Civil Code on classification of credits. The preference given by Article 110, when not falling within Article 2241 (6) and Article 2242 (3) of the Civil Code and not attached to any specific property, is an ordinary preferred credit although its impact is to move it from second priority to first priority in the order of preference established by Article 2244 of the Civil Code (Republic v. Peralta, supra).

Clearly, even if DBP and the private respondents assert their preferred credits in a judicial proceeding, the former's claim must first be satisfied.

Whether or not there was retroactive application of Executive Order No. 81 in this case; Article 110 of the Labor Code has been amended by R.A. No. 6715 and now reads:

Art. 110. Worker preference in case of bankruptcy. — In the event of bankruptcy or liquidation of an ER's business, his workers shall enjoy first preference as regards their unpaid wages and other monetary claims, any provision of law to the contrary notwithstanding. Such unpaid wages, and monetary claims shall be paid in full before the claims of the Government and other creditors may be paid. (Emphasis ours.)

We ruled in DBP v. NLRC, supra, that the amendment "expands worker preference to cover not only unpaid wages but also other monetary claims to which even claims of the Government must be deemed subordinate." Hence, under the new law, even mortgage credits are subordinate to workers' claims.

Lastly, while we are cognizant of the pronouncement of the Supreme Court with respect to Art. 110 and while we hold in respect said pronouncements, we are of the earnest view that considering that Art. 110 has been amended by RA 6715, complainants' preference over government claims and other creditors be adhered to. (Rollo, p. 65)

R.A. No. 6715, however, took effect only on March 21, 1989. The amendment cannot therefore be retroactively applied to, nor can it affect, the mortgage credit which was secured by the petitioner several years prior to its effectivity. The public respondent, therefore, committed grave abuse of discretion when it retroactively applied the amendment introduced by R.A. No. 6715 to the case at bar.With the foregoing discussion, we no longer find it necessary to discuss the two other issues raised by the petitioner.TRADERS ROYAL BANK EES UNION-INDEPENDENT vs. NLRCG.R. No. 120592 March 14, 1997REGALADO, J.:

FACTS: Petitioner TRB EEs Union and private respondent Atty. Emmanuel Noel A. Cruz, head of the E.N.A. Cruz and Associates law firm, entered into a retainer agreement whereby the former obligated itself to pay the latter a monthly retainer fee of P3,000.00 in consideration of the law firm's undertaking to render the services

enumerated in their contract. Parenthetically, said retainer agreement was terminated by the union on April 4, 1990. During the existence of that agreement, petitioner union referred to private respondent the claims of its members for holiday, mid-year and year-end bonuses against their ER, appropriate complaint was filed by private respondent.

NLRC: rendered a decision in the foregoing case in favor of the EEs, awarding them holiday pay differential, mid-year bonus differential, and year-end bonus differential. The NLRC, acting on a motion for the issuance of a writ of execution filed by private respondent as counsel for petitioner union, raffled the case to Labor Arbiter Oswald Lorenzo. However, pending the hearing of the application for the writ of execution, TRB challenged the decision of the NLRC before the Supreme Court.

SC:modified the decision of the NLRC by deleting the award of mid-year and year-end bonus differentials while affirming the award of holiday pay differential. The bank voluntarily complied with such final judgment and determined the holiday pay differential to be in the amount of P175,794.32. Petitioner never contested the amount thus found by TRB. The latter duly paid its concerned EEs their respective entitlement in said sum through their payroll. 9After private respondent received the above decision of the Supreme Court,he notified the petitioner union, the TRB management and the NLRC of his right to exercise and enforce his attorney's lien over the award of holiday pay differential through a letter. private respondent filed a motion before Labor Arbiter Lorenzo for the determination of his attorney's fees, praying that ten percent (10%) of the total award for holiday pay differential computed by TRB at P175,794.32, or the amount of P17,579.43, be declared as his attorney's fees, and that petitioner union be ordered to pay and remit said amount to him.

LA:The TRB management manifested before the labor arbiter that they did not wish to oppose or comment on private respondent's motion as the claim was directed against the union, while petitioner union filed a comment and opposition to said motion. After considering the position of the parties, the labor arbiter issued an order granting the motion of private respondent. NLRC: affirmrd.

Although petitioner union concedes that the NLRC has jurisdiction to decide claims for attorney's fees, it contends that the award for attorney's fees should have been incorporated in the main case and not after the Supreme Court had already reviewed and passed upon the decision of the NLRC. Since the claim for attorney's fees by private respondent was neither taken up nor approved by the Supreme Court, no attorney's fees should have been allowed by the NLRC.Thus, petitioner posits that the NLRC acted without jurisdiction in making the award of attorney's fees, as said act constituted a modification of a final and executory judgment of the Supreme Court which did not award attorney's fees. It then cited decisions of the Court declaring that a decision which has become final and executory can no longer be altered or modified even by the court which rendered the same.

On the other hand, private respondent maintains that his motion to determine attorney's fees was just an incident of the main case where petitioner was awarded its money claims. The grant of attorney's fees was the consequence of his exercise of his attorney's lien. Such lien resulted from and corresponds to the services he rendered in the action wherein the favorable judgment was obtained. To include the award of the attorney's fees in the main case presupposes that the fees will be paid by TRB to the adverse party. All that the non-inclusion of attorney's fees in the award means is that the Supreme Court did not order TRB to pay the opposing party attorney's fees in the concept of damages. He is not therefore precluded from filing his motion to have his own professional fees adjudicated.

HELD: ORDINARY vs. EXTRAORDINARY ATTY’S FEES: There are two commonly accepted concepts of attorney's fees, the so-called ordinary and extraordinary. In its ordinary concept, an attorney's fee is the reasonable compensation paid to a lawyer by his client for the legal services he has rendered to the latter. The basis of this compensation is the fact of his employment by and his agreement with the client. In its extraordinary concept, an attorney's fee is an indemnity for damages ordered by the court to be paid by the losing party in a litigation. The basis of this is any of the cases provided by law where such award can be made, such as those authorized in Article 2208, Civil Code, and is payable not to the lawyer but to the client, unless they have agreed that the award shall pertain to the lawyer as additional compensation or as part thereof.

As an adjunctive episode of the action for the recovery of bonus differentials in NLRC-NCR Certified Case No. 0466, private respondent's present claim for attorney's fees may be filed before the NLRC even though or, better stated, especially after its earlier decision had been reviewed and partially affirmed. It is well settled that a claim for attorney's fees may be asserted either in the very action in which the services of a lawyer had been rendered or in a separate action.

With respect to the first situation, the remedy for recovering attorney's fees as an incident of the main action may be availed of only when something is due to the client. Attorney's fees cannot be determined until after the main litigation has been decided and the subject of the recovery is at the disposition of the court. The issue over attorney's fees only arises when something has been recovered from which the fee is to be paid.

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While a claim for attorney's fees may be filed before the judgment is rendered, the determination as to the propriety of the fees or as to the amount thereof will have to be held in abeyance until the main case from which the lawyer's claim for attorney's fees may arise has become final. Otherwise, the determination to be made by the courts will be premature. 24Of course, a petition for attorney's fees may be filed before the judgment in favor of the client is satisfied or the proceeds thereof delivered to the client.

En contra, private respondent contends that a retainer fee is not the attorney's fees contemplated for and commensurate to the services he rendered to petitioner. He asserts that although there was no express agreement as to the amount of his fees for services rendered in the case for recovery of differential pay, Article 111 of the Labor Code supplants this omission by providing for an award of ten percent (10%) of a money judgment in a labor case as attorney's fees.

GENERAL RETAINER/RETAINER FEE(COMPENSTATION FOR COMMITMENT TO RENDER LEGAL SERVICES) vs. SPECIAL RETAINER(REMUNERATION FOR LEGAL SERVICES ACTUALLY RENDERED)The difference between a compensation for a commitment to render legal services and a remuneration for legal services actually rendered can better be appreciated with a discussion of the two kinds of retainer fees a client may pay his lawyer. These are a general retainer, or a retaining fee, and a specialretainer.

A general retainer, or retaining fee, is the fee paid to a lawyer to secure his future services as general counsel for any ordinary legal problem that may arise in the routinary business of the client and referred to him for legal action. The future services of the lawyer are secured and committed to the retaining client. For this, the client pays the lawyer a fixed retainer fee which could be monthly or otherwise, depending upon their arrangement. The fees are paid whether or not there are cases referred to the lawyer. The reason for the remuneration is that the lawyer is deprived of the opportunity of rendering services for a fee to the opposing party or other parties. In fine, it is a compensation for lost opportunities.

A special retainer is a fee for a specific case handled or special service rendered by the lawyer for a client. A client may have several cases demanding special or individual attention. If for every case there is a separate and independent contract for attorney's fees, each fee is considered a special retainer.

As to the first kind of fee, the Court has had the occasion to expound on its concept in Hilado vs. David29in this wise:There is in legal practice what is called a "retaining fee," the purpose of which stems from the realization that the attorney is disabled from acting as counsel for the other side after he has given professional advice to the opposite party, even if he should decline to perform the contemplated services on behalf of the latter. It is to prevent undue hardship on the attorney resulting from the rigid observance of the rule that a separate and independent fee for consultation and advice was conceived and authorized. "A retaining fee is a preliminary fee given to an attorney or counsel to insure and secure his future services, and induce him to act for the client. It is intended to remunerate counsel for being deprived, by being retained by one party, of the opportunity of rendering services to the other and of receiving pay from him, and the payment of such fee, in the absence of an express understanding to the contrary, is neither made nor received in payment of the services contemplated; its payment has no relation to the obligation of the client to pay his attorney for the services for which he has retained him to perform." (Emphasis supplied).

Evidently, the P3,000.00 monthly fee provided in the retainer agreement between the union and the law firm refers to a general retainer, or a retaining fee, as said monthly fee covers only the law firm's pledge, or as expressly stated therein, its "commitment to render the legal services enumerated." The fee is not payment for private respondent's execution or performance of the services listed in the contract, subject to some particular qualifications or permutations stated there.

We, therefore, cannot favorably consider the suggestion of petitioner that private respondent had already waived his right to charge additional fees because of their failure to come to an agreement as to its payment.

Firstly, there is no showing that private respondent unequivocally opted to waive the additional charges in consonance with Part D of the agreement. Secondly, the prompt actions taken by private respondent, i.e., serving notice of charging lien and filing of motion to determine attorney's fees, belie any intention on his part to renounce his right to compensation for prosecuting the labor case instituted by the union. And, lastly, to adopt such theory of petitioner may frustrate private respondent's right to attorney's fees, as the former may simply and unreasonably refuse to enter into any special agreement with the latter and conveniently claim later that the law firm had relinquished its right because of the absence of the same.

The fact that petitioner and private respondent failed to reach a meeting of the minds with regard to the payment of professional fees for special services will not absolve the former of civil liability for the corresponding remuneration therefor in favor of the latter. A quasi-contract between the parties in the case at bar arose from private respondent's lawful, voluntary and unilateral prosecution of petitioner's cause without awaiting the latter's consent and approval. Petitioner cannot deny that it did benefit from private respondent's efforts as the law firm was able to obtain an award of holiday pay differential in favor of the union. It cannot even hide

behind the cloak of the monthly retainer of P3,000.00 paid to private respondent because, as demonstrated earlier, private respondent's actual rendition of legal services is not compensable merely by said amount.

A quasi-contract is based on the presumed will or intent of the obligor dictated by equity and by the principles of absolute justice. Some of these principles are: (1) It is presumed that a person agrees to that which will benefit him; (2) Nobody wants to enrich himself unjustly at the expense of another; and (3) We must do unto others what we want them to do unto us under the same circumstancesP.I. MANUFACTURING, INCORPORATED vs. P.I. MANUFACTURING SUPERVISORS AND FOREMAN ASSOCIATION and the NATIONAL LABOR UNION[G.R. No. 167217, February 04, 2008]SANDOVAL-GUTIERREZ, J.:

FACTS:RA 6640 was signed into law on 10 December 1987, providing, among others, an increase in the statutory minimum wage and salary rates of EEs and workers in the private sector. It provides that the minimum wage of workers and EEs in the private sector shall be increased by P10, except those outside Manila who shall receive an increase of P11, provided those that are already receiving above the minimum wage shall receive an increase of P10. PI Manufacturing Supervisors and Foremen Association (PIMASUFA) entered into a new CBAwhereby the supervisors were granted an increase of P625 per month and the foremen, P475 per month. Theincreases were made to retroact to 12 May 1987, or prior to the passage of RA 6640. The application of said CBAresulted in a wage distortion, which prompted the PIMASUFA together with the National Labor Union to file a case against PIMA for violation of RA 6640. PIMA asseverates that the The Company and Supervisors and Foremen Contract absolves, quitclaims, and releases the company for any monetary claim that the supervisors and theforemen may have previous to the signing of the agreement on 17 December 1987The Labor Arbiter ruled in favor of PIMASUFA and ordered PIMA to give the PIMASUFA members wage increases equivalent to 13.5% of their basic pay. The CA affirmed, but raised the wage increase to 18.5%.

ISSUE:1 W/N the PIMASUFA, by signing The Company and Supervisors and Foremen Contract, has waived any benefit itmay have under RA 6640. 2 W/N the 13.5% increase in the supervisors and foremen’s basic salary should be increased to 18.5% to correctthe wage distortion brought about by the implementation of RA 6640.

HELD:1 NO. The increase resulting from any wage distortion brought about by the implementation of the new minimumwage law is not waivable.2. NO. Although there was a wage distortion, the same was cured or remedied when PIMASUFA entered into the1987 CBA with PIMA after the effectivity of RA 6640. The 1987 CBA increased the monthly salaries of the supervisors by P626 and P475, which re-establishes the gap not only between supervisors and foremen but alsobetween them and the rank-and-file EEs. Such gap as re-established by virtue of the CBA is more than asubstantial compliance with RA 6640. Moreover, requiring PIMA to pay 18.5%, over and above the negotiated wage increases provided under the 1987 CBA, is highly unfair and oppressive to the former.

A CBA constitutes the law between the parties when freely and voluntarily entered into. It was not shown that PIMASUFA was coerced or forced by PIMA to sign the 1987 CBA. All of its 13 officers signed the CBA with theassistance of NLU. They signed it fully aware of the passage of RA 6640. The duty to bargain requires that theparties deal with each other with open and fair minds. PIMASUFA cannot invoke the beneficial provisions of the1987 CBA but disregard the concessions it voluntarily extends to PIMA.

Doctrine:Quitclaims by laborers are generally frowned upon as contrary to public policy and are held to be ineffective to bar recovery for the full measure of the worker’s rights. The reason for the rule is that the ER and the EE do not stand on the same footing. Article 1149 of the Civil Code states that: When the law sets, or authorizes the setting of a minimum wage for laborers, and a contract is agreed upon by which a laborer accepts a lower wage, he shall be entitled to recover thedeficiency.

According to RA 6727, wage distortion is a situation where an increase in prescribed wage results in theelimination or severe contraction of intentional quantitative differences in wage or salary rates between and among EE groups in an establishment as to effectively obliterate the distinctions embodied in such wagestructure based on skills, length of service, or other logical bases of differentiation. Otherwise stated, wagedistortion means the disappearance or virtual disappearance of pay differentials between lower and higherpositions in an enterprise because of compliance with a wage order. The goal of collective bargaining is the making of agreements that will stabilize business conditions and fix fairstandards of working conditions.PRUBANKERS ASSOCIATION vs. PRUDENTIAL BANK & TRUST COMPANYG.R. No. 131247 January 25, 1999PANGANIBAN, J.:

FACTS: the REGIONal Tripartite Wages and Productivity Board (RTWPB) of REGION5 issued WO RB 05-03 which provided for a Cost of Living Allowance (COLA) to workers in the private sector who ha[d] rendered service for at least 3 months before its effectivity, and for the same period [t]hereafter, in the following categories: P17.50 in the cities of Naga and Legaspi; P15.50 in the municipalities of Tabaco, Daraga, Pili and the city of Iriga; and P10.00 for all other areas in the Bicol REGION.

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Subsequently the RTWPB of REGION7 issued WO RB 07-03, which directed the integration of the COLA mandated pursuant to WO. RO07-02-A into the basic pay of all workers. It also established an increase in the minimum wage rates for all workers and and EEs in the private sector as follows: by P10.00 in the cities of Cebu, Mandaue and Lapulapu; P5.00 in the municipalities of Compostela, Liloan, Consolacion, Cordova, Talisay, Minglanilla, Naga and the cities of Davao, Toledo, Dumaguete, Bais, Canlaon and Tagbilaran.

The petitioner then granted a COLA of P17.50 to its EEs at its Naga Branch, the only branch covered by WO RB 05-03, and integrated the P150.00 per month COLA into the basic pay of its rank-and-file EEs at its Cebu, Mabolo and P. del Rosario branches, the branches covered by WO RB 07-03.

respondent Prubankers Association wrote the petitioner requesting that the Labor Management Committee be immediately convened to discuss and resolve the alleged wage distortion created in the salary structure upon the implementation of the said WO. Respondent Association then demanded in the Labor Management Committee meetings that the petitioner extend the application of the WO to its EEs outside REGIONs 5 and 7, claiming that the REGIONal implementation of the said orders created a wage distortion in the wage rates of petitioner's EEs nationwide. As the grievance could not be settled in the said meetings, the parties agreed to submit the matter to voluntary arbitration. The Arbitration Committee formed for that purpose. The issue presented before the Committee was whether or not the bank's separate and REGIONal implementation of WO 05-03 at its Naga Branch and WO 07-03 at its Cebu, Mabolo and P. del Rosario branches, created a wage distortion in the bank nationwide.

CA: no wage distortion, the Court of Appeals held that the variance in the salary rates of EEs in different REGIONs of the country was justified by RA 6727. It noted that "the underlying considerations in issuing the WO are diverse, based on the distinctive situations and needs existing in each REGION. Hence, there is no basis to apply the salary increases imposed by WO 07-03 to EEs outside of REGION7." Furthermore, the Court of Appeals ruled that "the distinctions between each EE group in the REGION are maintained, as all EEs were granted an increase in minimum wage rate. 5

ISSUE: 1)whether or not a wage distortion resulted from respondent's implementation of the aforecited WO. 2)As a preliminary matter, we shall also take up the question of forum-shopping.

HELD: 1) Art. 124. Standards/Criteria for Minimum Wage Fixing — As used herein, a wage distortion shall mean a situation where an increase in prescribed wage results in the elimination of severe contraction of intentional quantitative differences in wage or salary rates between and among EE groups in an establishment as to effectively obliterate the distinctions embodied in such wage structure based on skills, length of service, or other logical bases of differentiation.

"Wage distortion presupposes a classification of positions and ranking of these positions at various levels. One visualizes a hierarchy of positions with corresponding ranks basically in terms of wages and other emoluments. Where a significant change occurs at the lowest level of positions in terms of basic wage without a corresponding change in the other level in the hierarchy of positions, negating as a result thereof the distinction between one level of position from the next higher level, and resulting in a parity between the lowest level and the next higher level or rank, between new entrants and old hires, there exists a wage distortion. The concept of a wage distortion assumes an existing grouping or classification of EEs which establishes distinctions among such EEs on some relevant or legitimate basis. This classification is reflected in a differing wage rate for each of the existing classes of EEs"

Wage distortion involves four elements:1. An existing hierarchy of positions with corresponding salary rates; 2. A significant change in the salary rate of a lower pay class without a concomitant increase in the salary rate of a higher one; 3. The elimination of the distinction between the two levels; 4. The existence of the distortion in the same REGION of the country

In the present case, it is clear that no wage distortion resulted when respondent implemented the subject WO in the covered branches. In the said branches, there was an increase in the salary rates of all pay classes. Furthermore, the hierarchy of positions based on skills, lengh of service and other logical bases of differentiation was preserved. In other words, the quantitative difference in compensation between different pay classes remained the same in all branches in the affected REGION. Put differently, the distinction between Pay Class 1 and Pay Class 2, for example, was not eliminated as a result of the implementation of the two WO in the said REGION. Hence, it cannot be said that there was a wage distortion.

The Court is not persuaded. A wage parity between EEs in different rungs, is not at issue here, but a wage disparity between EEs in the same rung but located in different REGIONs of the country.

Contrary to petitioner's postulation, a disparity in wages between EEs holding similar positions but in different REGIONs does not constitute wage distortion as contemplated by law. As previously enunciated, it is the hierarchy of positions and the disparity of their corresponding wages and other emoluments that are sought to be preserved by the concept of wage distortion. Put differently, a wage distortion arises when a wage order engenders wage parity between EEs in different rungs of the organizational ladder of the same establishment. It bears emphasis that wage distortion

involves a parity in the salary rates of different pay classes which, as a result, eliminates the distinction between the different ranks in the same REGION.

It must be understood that varying in each REGION of the country are controlling factors such as the cost of living; supply and demand of basic goods, services and necessities; and the purchasing power of the peso. Other considerations underscore the necessity of the law. Wages in some areas may be increased in order to prevent migration to the National Capital REGION and, hence, to decongest the metropolis. Therefore, what the petitioner herein bewails is precisely what the law provides in order to achieve its purpose.

Equal Pay for Equal WorkPetitioner also avers that the implementation of the Wage Order in only one REGION violates the equal-pay-for-equal-work principle. This is not correct. At the risk of being repetitive, we stress that RA 6727 mandates that wages in every REGION must be set by the particular wage board of that REGION, based on the prevailing situation therein. Necessarily, the wages in different REGIONs will not be uniform. Thus, under RA 6727, the minimum wage in REGION 1 may be different from that in REGION 13, because the socioeconomic conditions in the two REGIONs are different.

Meaning of "Establishment"Petitioner further contends that the Court of Appeals erred in interpreting the meaning of "establishment" in relation to wage distortion. It quotes the RA 6727 Implementing Rules, specifically Section 13 thereof which speaks of "workers working in branches or agencies of establishments in or outside the National Capital REGION." Petitioner infers from this that the REGIONal offices of the Bank do not themselves constitute, but are simply branches of, the establishment which is the whole bank. In effect, petitioner argues that wage distortion covers the pay scales even of EEs in different REGIONs, and not only those of EEs in the same REGION or branch. We disagree.

Sec. 13 provides that the "minimum wage rates of workers working in branches or agencies of establishments in or outside the National Capital REGION shall be those applicable in the place where they are sanctioned" The last part of the sentence was omitted by petitioner in its argument. Given the entire phrase, it is clear that the statutory provision does not support petitioner's view that "establishment" includes all branches and offices in different REGIONs.

Further negating petitioner's theory is NWPC Guideline No. 1 (S. 1992) entitled "Revised Guidelines on Exemption From Compliance With the Prescribed Wage/Cost of Living Allowance Increases Granted by the RTWPB," which states that "establishment" "refers to an economic unit which engages in one or predominantly one kind of economic activity with a single fixed location."

Management PracticePetitioner also insists that the Bank has adopted a uniform wage policy, which has attained the status of an established management practice; thus, it is estopped from implementing a wage order for a specific REGION only. We are not persuaded. Said nationwide uniform wage policy of the Bank had been adopted prior to the enactment of RA 6727. After the passage of said law, the Bank was mandated to REGIONalize its wage structure. Although the Bank implemented Wage Order Nos.NCR-01 and NCR-02 nationwide instead of REGIONally even after the effectivity of RA 6727, the Bank at the time was still uncertain about how to follow the new law. In any event, that single instance cannot be constitutive of "management practice."

2)The voluntary arbitration case involved the issue of whether the adoption by the Bank of REGIONalized hiring rates was valid and binding. On the other hand, the issue now on hand revolves around the existence of a wage distortion arising from the Bank's separate and REGIONal implementation of the two WO in the affected branches. A closer look would show that, indeed, the requisites of forum-shopping are present.

First, there is identity of parties. Both cases are between the Bank and the Association acting on behalf of all its members. Second, although the respective issues and reliefs prayed for in the two cases are stated differently, both actions boil down to one single issue: the validity of the Bank's REGIONalization of its wage structure based on RA 6727. Even if the voluntary arbitration case calls for striking, down the Bank's REGIONalized hiring scheme while the instant petition calls for the correction of the alleged wage distortion caused by the REGIONal implementation of Wage Order No. VII-03, the ultimate relief prayed for in both cases is the maintenance of the Bank's national wage structure. Hence, the final disposition of one would constitute res judicata in the other. Thus, forum-shopping is deemed to exist and, on this basis, the summary dismissal of both actions is indeed warranted.

Nonetheless, we deem it appropriate to pass upon the main issue on its merit in view of its importance.BAY HAVEN, INC. VS. FLORENTINO ABUAN[G.R. No. 160859, July 30, 2008]AUSTRIA-MARTINEZ, J.:

FACTS: This is a petition for certiorari on the decision of the CA, who denied their petition to annul the resolution of theDOLE .Upon complaint of Florentino Abuan, one of herein respondents, the DOLE, in the exercise of its visitorial,inspection and enforcement powers, through its Regional Director for the National Capital Region (NCR), issued anOrder commanding petitioners to pay respondents a total of P638,187.15 corresponding to the latter's claims forunderpayment as petitioners' workers. The Regional

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Director based his Order on the results of the inspectionconducted on April 23, 1997 by one of its inspectors who found that petitioner New Bay Haven Restaurant,committed the following violations under the labor standards law which are Underpayment of minimum wage,Underpayment of thirteenth month pay, Underpayment of regular holiday pay, Underpayment of special holidaypay, Non-payment of night shift differential pay and Non-registration of the firm under Rule of Occupational Safetyand Health Standards. The petitioners filed with the DOLE-NCR Regional Office a Motion for Reconsideration,alleging that the office had no jurisdiction over the case and that the order was issued in denial of petitioners' rightto due process, and the jurisdiction rest on the NLRC. they added that their right to due process was also deniedbecause the order was issued without them being furnished copies of the complaint and the inspection report andwithout being notified of the hearings held in the case. The DOLE-NCR Assistant Regional Director, acting for theRegional Director, issued an Order granting petitioners' motion for reconsideration as he found merit inpetitioners' allegation of absence of due process in the issuance of the first order. The order, however, stated thatthe DOLE had jurisdiction over the case, pursuant to the Labor Code. The next hearing was set wherein thepetitioners showed payroll sheets and waivers of quitclaims which were signed by the respondents. However, thelatter denied of the amount stated in the payroll as they contend they receive lesser that what is stated there andalso they were forced to sign the quitclaims. The DOLE issues an order holding the petitioners liable to therespondents. The case was elevated to the CA. The CA ruled in dismissing the petition, ruling that the DOLE hadjurisdiction over the labor standards case and that petitioners did not present enough evidence to refute theclaims made by respondents.

ISSUE/S:1) whether the DOLE Secretary and her authorized representatives have jurisdiction to impose the monetaryliability against petitioners; and2) whether the DOLE-NCR, as upheld by the DOLE Secretary and the CA committed an error in awarding the claimsof respondents.

HELD:1.The DOLE Secretary and her authorized representatives such as the DOLE-NCR Regional Director, havejurisdiction to enforce compliance with labor standards laws under the broad visitorial and enforcementpowers. The Court has held that the visitorial and enforcement powers of the Secretary, exercisedthrough his representatives, encompass compliance with all labor standards laws and other laborlegislation,regardlessof the amount of the claims filed by workers.

2.The mere disagreement by the ER with the findings of the labor officer, or the simple act of presenting controverting evidence, does not automatically divest the DOLE Secretary or any of hisauthorized representatives such as the regional directors, of jurisdiction to exercise their visitorial andenforcement powers under the Labor Code. Thus, the key requirement for the Regional Director and theDOLE Secretary to be divested of jurisdiction is that the evidentiary matters are not verifiable in thecourse of inspection. Where the evidence presented was verifiable in the normal course of inspection,even if presented belatedly by the ER, the Regional Director, and later the DOLE Secretary, may stillexamine them; and these officers are not divested of jurisdiction to decide the case.

In the present case, petitioners' pieces of evidence of the alleged contract of lease, payroll sheets, andquitclaims were all verifiable in the normal course of inspection and, granting that they were notexamined by the labor inspector, they have nevertheless been thoroughly examined by the RegionalDirector and the DOLE Secretary. For these reasons, the exclusion clause of Art. 128(b) does not apply.CIRINEO BOWLING PLAZA, INC. vs. GERRY SENSING et al[G.R. No. 146572. January 14, 2005]AUSTRIA-MARTINEZ, J.:

FACTS: On November 27, 1995, Eligio Paolo, Jr., an EE of petitioner, filed a letter complaint with the DOLE, Dagupan District Office, requesting for the inspection/investigation of petitioner for various labor law violations. In his inspection report,[4] Labor and Employment Officer III, Crisanto Rey Dingle, found that petitioner has 13 EEs and had committed the following violations: underpayment of minimum wage, 13th month pay, holiday premiums, overtime premiums, and non-payment of rest day. The findings in the inspection report were explained to petitioner’s officer-in-charge, Ma. Fe Boquiren, who signed the same.

On the first hearing petitioner failed to appear, thus, the hearing was reset. On the date set, Boquiren, as petitioner’s representative, appeared with the information that petitioner’s President/General Manager Luisito Cirineo was sick and confined in a hospital. On the second hearing, Cirineo appeared and asked for more time to settle with his EEs. The case was reset, but Cirineo failed to appear.

DOLE Regional Office -is hereby ordered to pay them the total amount of P377,500.58, representing their unpaid/underpaid wages, 13th month pay, holiday premiums, rest day pay and overtime premiums and to submit the proof of payment to this Office within ten (10) days from receipt hereof. Otherwise, a Writ of Execution will be issued to enforce this order. Respondent is further ORDERED to adjust the salaries of its EEs to the applicable daily minimum wages and to submit the proof thereof within the same period. No motion for reconsideration or appeal memorandum was filed by petitioner.

petitioner’s representative, appeared before the DOLE Regional Office and submitted the quitclaims, waivers and releases of EEs-awardees, however, the EEs wrote DOLE a letter denying having received any amount from petitioner. Thus, DOLE’s inspector Dingle went to petitioner’s establishment to confirm the authenticity of the

quitclaims and releases and talked to the EEs concerned who stated that they signed the document without knowing its contents but they are willing to settle if they will be given the amount computed by DOLE.

Respondent wrote DOLE a letter requesting that the case be endorsed to the National Labor Relations Commission since the resolution of the case required evidentiary matters not disclosed or verified in the normal course of inspection. They also submitted documents to show that petitioner and Esperanza Seafoods Kitchenette are separate and distinct business entities and that some of the EEs-awardees are actually EEs of the Esperanza Seafoods Kitchenette.they never once mentioned the issue of separate juridical personalities. Respondent had always been bent on settling the respective claims of all thirteen (13) concerned EEs. In the process, however, he acknowledged being their ER. He cannot at this juncture therefore say, that some of the awardees in our ORDER are EEs of another business entity. This being the case, we cannot grant his request for indorsement to the NLRC.

DOLE Regional issued a writ of execution seeking to satisfy the monetary awards given to EEs who are not EEs of Cirineo Bowling Plaza, Inc.; to satisfy monetary awards given to EEs of Fe Esperanza C. Octaviano who was not impleaded; to satisfy monetary awards wrongfully given to EEs employed by establishments employing less than ten (10) EEs, who are not for this reason entitled to holiday and holiday premium pay, nor to underpayment of wages; to satisfy the award of benefits in excess of the jurisdictional amount allowed by law; to enforce an Order issued beyond the quasi-judicial authority of the Regional Director[12].

DOLE Regional Director Lim denied petitioner’s motion to quash the writ of execution. Petitioner filed its Memorandum of Appeal to the Secretary of Labor and Employment[14] who dismissed the appeal on the ground that same was filed out of time.[15] On MR, the appeal was granted and the appeal was given due course. However, the same was dismissedand affirmed the order pf DOLE

In support thereof, respondent alleges that it had only eight (8) EEs as the “other claimants of labor benefits are EEs of Fe Esperanza Octaviano doing business under the name and style “Esperanza Seafoods Kitchenette.”We do not agree.

ISSUE: PUBLIC RESPONDENT ACTED WITH GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION WHEN IT DISMISSED THE INSTANT PETITION AND OUTRIGHT DISMISSAL OF PETITIONER’S MOTION FOR RECONSIDERATION DUE TO MERE TECHNICALITIES.

HELD: We find no grave abuse of discretion committed by the CA in issuing the assailed resolutions. The CA dismissed the petition for certiorari for failure of petitioner to attach certain documents and to state the material date. While petitioner filed its motion for reconsideration, attaching the required documents, the CA correctly found that it still did not state the material date when it received the DOLE’s Resolution dated April 18, 2000 denying its motion for reconsideration. Thus, without the date of receipt of the denial of such motion, the CA could not determine whether the petition was filed within the reglementary period of 60 days for filing the petition for certiorari under Rule 65 of the Rules of Court. Under Section 3, Rule 46 of the 1997 Rules of Civil Procedure, as amended by SC Circular No. 39-98, in original actions for certiorari filed with the CA, the petition must include the following material dates.

The failure to perfect an appeal as required by law renders the judgment final and executory. While there are exceptional cases where we set aside procedural defects to correct a patent injustice, there should be an effort on the part of the party invoking liberality to at least explain its failure to comply with the rules.[20] It appears that petitioner’s new counsel failed to state the material date twice. Petitioner’s explanation focused on the fact that its President, Luisito Cirineo, only learned of the DOLE’s denial of its motion for reconsideration on August 1, 2000 when he came back from a trip from Europe; that efforts to communicate with its former counsel remained futile. We find such explanation unsatisfactory since the material dates can easily be verified from the files of the DOLE office.

Even if we disregard technicality, we find the arguments raised by petitioner without merit. records show that petitioner never refuted the findings of the labor inspector as to the identity of the 13 EEs nor raised the issue of separate juridical personalities of petitioner Cirineo and Esperanza Seafoods Kitchenette during the investigation and on the hearings conducted.

Likewise, we sustain the jurisdiction of the DOLE Regional Director. The visitorial and enforcement powers of the DOLE Regional Director to order and enforce compliance with labor standard laws can be exercised even where the individual claim exceeds P5,000.00. While it is true that under Articles 129 and 217 of the Labor Code, the Labor Arbiter has jurisdiction to hear and decide cases where the aggregate money claims of each EE exceeds P5,000.00, said provisions of law do not contemplate nor cover the visitorial and enforcement powers of the Secretary of Labor or his duly authorized representatives.APEX MINING COMPANY, INC. vs. NLRCG.R. No. 94951 April 22, 1991GANCAYCO, J.:

FACTS: Sinclita Candida was employed by Apex Mining Company, Inc. to perform laundry services at its staff house. Atfirst, she was paid on a piece rate basis. Later, she was paid on a monthly basis at P250.00 a month which was ultimately increased to P575.00 a

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month..- While she was hanging her laundry, she accidentally slipped and hit her back on a stone. She reported theaccident to her immediate supervisor and to the personnel officer. As a result of the accident she was not able tocontinue with her work.- She was permitted to go on leave for medication and was offered P2k which was eventually increased to P5k to persuade her to quit her job, but she refused the offer and preferred to return to work. Petitioner did not allowher to return to work and dismissed her.- Labor arbiter ordered Apex Mining Company to pay the complainant Salary Differential, Emergency LivingAllowance, 13th Month Pay Differential and separation pay of one month for every year of service or in a total of P55,161.42. NLRC affirmed.

ISSUE: WON the househelper in the staff houses of an industrial company is a domestic helper

HELD: NO- Petitioner is a regular EE- Rule XIII, Section l(b), Book 3 of the Labor Code:The term "househelper" as used herein is synonymous to the term "domestic servant" and shall refer to anyperson, whether male or female, who renders services in and about the ER's home and which services areusually necessary or desirable for the maintenance and enjoyment thereof, and ministers exclusively to thepersonal comfort and enjoyment of the ER's family.

The foregoing definition clearly contemplates such househelper or domestic servant who is employed in theER's home to minister exclusively to the personal comfort and enjoyment of the ER's family. Thedefinition cannot be interpreted to include househelp or laundrywomen working in staffhouses of a company- The criteria is the personal comfort and enjoyment of the family of the ER in the home of said ER.- While it may be true that the nature of the work of a househelper, domestic servant or laundrywoman in a homeor in a company staffhouse may be similar in nature, the difference in their circumstances is that in the formerinstance they are actually serving the family while in the latter case, whether it is a corporation or a singleproprietorship engaged in business or industry or any other agricultural or similar pursuit, service is being renderedin the staffhouses or within the premises of the business of the ER. In such instance, they are EEs of the company or ER in the business concerned entitled to the privileges of a regular EE.Disposition

Petitioner denies having illegally dismissed private respondent and maintains that respondent abandoned her work. This argument notwithstanding, there is enough evidence to show that because of an accident which took place while private respondent was performing her laundry services, she was not able to work and was ultimately separated from the service. She is, therefore, entitled to appropriate relief as a regular EE of petitioner. Inasmuch as private respondent appears not to be interested in returning to her work for valid reasons, the payment of separation pay to her is in order.FILOMENA BARCENAS vs. NLRC (REV SIM DEE)G.R. No. 87210 July 16, 1990MEDIALDEA, J.:

FACTS: In 1978, Chua Se Su (Su, for short) in his capacity as the Head Monk of the Buddhist Temple of Manila and BaguioCity and as President and Chairman of the Board of Directors of the Poh Toh Buddhist Association of the Phils. Inc.hired the petitioner, Filomena Barcenas, who speaks the Chinese language as secretary and interpreter.- Her position required her to receive and assist Chinese visitors to the temple, act as tourist guide for foreignChinese visitors, attend to the callers of the Head Monk as well as to the food for the temple visitors, run errandsfor the Head Monk such as paying the Meralco, PLDT, MWSS bills and act as liaison in some government offices.Aside from her pay and allowances under the law, she received an amount of P500 per month plus free board andlodging in the temple.- In December, 1979, Su assumed the responsibility of paying for the education of Barcenas nephew. In 1981, Suand Barcenas had amorous relations. In May, 1982, or five months before giving birth to the alleged son of Su onOctober 12, 1982, she was sent home to Bicol. Upon the death of Su in July, 1983, she remained and continued inher job.- . In 1985, Manuel Chua (Chua, for short) was elected President and Chairman of the Board of the Poh TohBuddhist Association of the Philippines, Inc. and Rev. Sim Dee (Dee, for short) was elected Head Buddhist Priest.Thereafter, Chua and Dee discontinued payment of her monthly allowance and the additional P500 effective 1983.In addition, Barcenas and her son were evicted forcibly from their quarters in the temple by six police officers. Shewas brought first to the Police precinct in Tondo and then brought to Aloha Hotel where she was compelled to signa written undertaking not to return to the Buddhist temple in consideration of the sum of P10,000. She refusedand Chua shouted threats against her and her son. Her personal belongings including assorted jewelries werenever returned.- The Labor Arbiter ruled for Barcenas but the NLRC reversed.

ISSUES: 1. WON Barcenas was a regular EE of the Manila Buddhist Temple2. WON Barcenas was illegally dismissed

HELD:1. YES. We agree with the petitioner's claim that she was a regular EE of the Manila Buddhist Temple as secretaryand interpreter of its Head Monk, Su. As Head Monk, President and Chairman of the Board of Directors of the PohToh Buddhist Association of the Philippines, Su was empowered to hire the petitioner under Article V of the By-laws of the Association which states:"The President or in his absence, the Vice President shall represent the Association in all its dealings with thepublic, subject to the Board, shall have the power to enter into any contract or agreement in the name of theAssociation, shall manage the active business operation of the Association, shall deal with the bank or banks."- Chua and Dee, on the other hand, claimed that Barcenas was never an EE of the Poh Toh Temple but aservant who confined

herself to the temple and to the personal needs of the late Chua Se Su and thus, her positionis co-terminus with that of her master. However, the work that she performed in the temple could not becategorized as mere domestic work. Barcenas, being proficient in the Chinese language, attended to the visitors,mostly Chinese, who came to pray or seek advice before Buddha for personal or business problems; arrangedmeetings between these visitors and Su and supervised the preparation of the food for the temple visitors; acted

as tourist guide of foreign visitors; acted as liaison with some government offices; and made the payment for thetemple, Meralco, MWSS and PLDT bills. Indeed, these tasks may not be deemed activities of a household helper.They were essential and important to the operation and religious functions of the temple.

2. NO.Her status as a regular EE ended upon her return to Bicol in May, 1982 to await the birth of her lovechildallegedly by Su. The records do not show that she filed any leave from work or that a leave was granted her.Neither did she return to work after the birth of her child on October 12,1982, whom she named Robert Chua aliasChua Sim Tiong [Whoa, wait a minute! If youre alert youll realize that Sim is the NEW Head Monks name!Hmmm dont you think something elses going on here?

The NLRC found that it was only in July, 1983 after Sudied that she went back to the Manila Buddhist Temple.- She herself supplied the reason for her return. She stated:"It was the death-bed instruction to her by Chua Se So to stay at the temple and to take care of the two boys andto see to it that they finish their studies to become monks and when they are monks to eventually take over thetwo temples as their inheritance from their father."- Thus, her return to the temple was no longer as an EE but rather as Su's mistress who is bent onprotecting the proprietary and hereditary rights of her son and nephew. In her pleadings, the petitioner claims thatthey were forcefully evicted from the temple, harassed and threatened by respondents and that the Poh TohBuddhist Association is a trustee corporation with the children as cestui que trust. These claims are not proper inthis labor case. They should be appropriately threshed out in the complaints already filed by the petitioner beforethe civil courts. Due to these claims, we view the respondents' offer of P10,000 as indicative more of their desire toevict the petitioner and her son from the temple rather than an admission of an ER-EE relation.- The petitioner's claim for unpaid wages since May, 1982 which she filed only in 1986, has already prescribed.Under Article 292 of the Labor Code, all money claims arising from ER-EE relations must be filedwithin three years from the time the cause of action accrued, otherwise they shall forever be barred.- Finally, while petitioner contends that she continued to work in the temple after Su died, there is, however, noproof that she was re-hired by the new Head Monk. In fact, she herself manifested that respondents made it clearto her in no uncertain terms that her services as well as her presence and that of her son were no longer needed.However, she persisted and continued to work in the temple without receiving her salary because she expectedChua and Dee to relent and permit the studies of the two boys. Consequently, under these circumstances, noER-EE relationship could have arisen.Disposition

Decision of the NLRC is AFFIRMEDDIOSCORO F. BACSIN VS. EDUARDO O. WAHIMAN[G.R. No. 146053, April 30, 2008]VELASCO, JR., J.:

FACTS: Petitioner is a public school teacher of Pandan Elementary School, Pandan, Mambajao, Camiguin Province. Respondent Eduardo O. Wahiman is the father of AAA, an elementary school student of the petitioner. AAA claimed that petitioner asked her to be at his office to do an errand.[2] Once inside, she saw him get a folder from one of the cartons on the floor near his table, and place it on his table. He then asked her to come closer, and when she did, held her hand, then touched and fondled her breast. She stated that he fondled her breast five times, and that she felt afraid.[3] A classmate of hers, one Vincent B. Sorrabas, claiming to have witnessed the incident, testified that the fondling incident did happen just as AAA related it.[4]

Petitioner was charged with Misconduct. In his defense, petitioner claimed that the touching incident happened by accident, just as he was handing AAA a lesson book.[6] He further stated that the incident happened in about two or three seconds, and that the girl left his office without any complaint. CSC found petitioner guilty of grave misconduct(sexual harassment) and dismissed him from the service. Petitioner filed a MR but the same was denied

the CA determined that the issue revolved around petitioner's right to due process, and based on its finding that petitioner had the opportunity to be heard, found that there was no violation of that right. The CA ruled that, even if petitioner was formally charged with "disgraceful and immoral conduct and misconduct," the CSC found that the allegations and evidence sufficiently proved petitioner's guilt of grave misconduct, punishable by dismissal from the service.

ISSUE/S: 1.won the petitioner could be guilty of acts of sexual harassment, grave misconduct, which was different from or an offense not alleged in the formal charge filed against him at the inception of the administrative case. 2.won the penalty of dismissal from the service imposed by the Civil Service Commission and affirmed by the Court of Appeals is in accord with Rule XIV, Section (23) of the Omnibus Civil Service Rules and applicable rulings.

HELD:1.YES. The charge against the respondent in an administrative case need not be drafted with the precision of an information in a criminal prosecution. It is sufficient that he is apprised of the substance of the charge against him; what is

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controlling is the allegation of the acts complained of, not the designation of the offense.It is clear that petitioner was sufficiently informed of the basis of the charge against him, which washis act of improperly touching one of his students. Thus informed, he defended himself from such charge. The failure to designate the offense specifically and with precision is of no moment in thisadministrative case. Charges against him imputes acts covered and penalized under Anti-sexual harassment act of 1995*Domingo v. Rayala: it is not necessary that the demand, request, or requirement of a sexual favor bearticulated in a categorical oral or written statement. It may be discerned, with equal certitude, from theacts of the offender. act of mashing the breast, in an education environment, upon a student, who felt fear at the time Bacsin touched her, are sufficient grounds for grave misconduct. The act of petitioner of fondling one of his students is against a law, RA7877, and is doubtless inexcusable. The particular act of petitioner cannot in any way be construed as acase of simple misconduct. Sexually molesting a child is, by any norm, a revolting act that it cannot butbe categorized as a grave offense. Parents entrust the care and molding of their children to teachers,and expect them to be their guardians while in school. Petitioner has violated that trust.

2.The charge of grave misconduct proven against petitioner demonstrates his unfitness to remain as a teacher and continue to discharge the functions of his office.*no denial of due process: The essence of due process is simply an opportunity to be heard, or, asapplied to administrative proceedings, an opportunity to explain one's side or an opportunity to seek fora reconsideration of the action or ruling complained of. These elements are present in this case, wherepetitioner was properly informed of the charge and had a chance to refute it, but failed.A teacher who perverts his position by sexually harassing a student should not be allowed, under anycircumstance, to practice this noble profession. So it must be here. Disposition: DISMISS Petition.

OCEAN BUILDERS CONSTRUCTION CORP. VS. SPS. CUBACUB[G.R. No. 150898, April 13, 2011]CARPIO MORALES, J.:

FACTS: Bladimir Cubacub (Bladimir) was employed as maintenance man by petitioner company Ocean Builders Construction Corp. at its office in Caloocan City.Bladimir was afflicted with chicken pox. He was thus advised by petitioner Dennis Hao (Hao), the companys general manager, to rest for 3days which he did at the companys barracks where he lives free of charge.

Three days later, Bladimir went about his usual chores of manning the gate of the company premises and even cleaned the company vehicles. Later in the afternoon, however, he asked a co-worker, Ignacio Silangga (Silangga), to accompany him to his house in Capas, Tarlac so he could rest. Informed by Silangga of Bladimir’s intention, Hao gave Bladimir P1,000.00 and ordered Silangga to instead bring Bladimir to the nearest hospital.

Along with co-workers Narding and Tito Vergado, Silangga thus brought Bladimir to the Caybiga Community Hospital (Caybiga Hospital), a primary-care hospital around one kilometer away from the office of the company.

The hospital did not allow Bladimir to leave the hospital. He was then confined, with Narding keeping watch over him. The next day, April 13, 1995, a doctor of the hospital informed Narding that they needed to talk to Bladimir’s parents, hence, on Silangga’s request, their co-workers June Matias and Joel Edrene fetched Bladimir’s parents from Tarlac.

At about 8:00in the evening of the same day, April 13, 1995, Bladimirs parents-respondent spouses Cubacub, with their friend Dr. Hermes Frias (Dr. Frias), arrived at the Caybiga Hospital and transferred Bladimir to the Quezon City General Hospital (QCGH) where he was placed in the intensive care unit and died the following day, April 14, 1995.

The death certificate issued by the QCGH recorded Bladimir’s immediate cause of death as cardio-respiratory arrest and the antecedent cause as pneumonia. On the other hand, the death certificate issued by Dr. Frias recorded the causes of death as cardiac arrest, multiple organ system failure, septicemia and chicken pox.

Bladimirs parents-herein respondents later filed on August 17, 1995 before the Tarlac RTC a complaint for damages against petitioners, alleging that Hao was guilty of negligence which resulted in the deterioration of Bladimirs condition leading to his death.

RTC- dismissed the complaint, holding that Hao was not negligent. It ruled that Hao was not under any obligation to bring Bladimir to better tertiary hospitals, and assuming that Bladimir died of chicken pox aggravated by pneumonia or some other complications due to lack of adequate facilities at the hospital, the same cannot be attributed to Hao.

CA-reversed, rendered holding the defendants solidarily liable to plaintiffs-appellants. MR denied.

ISSUE: whether the ER isnegligent, thus liable for the death of his EE.

HELD: At the onset, the Court notes that the present case is one for damages based on torts, the ER-EE relationship being merely incidental. To successfully prosecute an action anchored on torts, three elements must be present, viz: (1) duty (2) breach (3) injury and proximate causation. The assailed decision of the appellate court held that it was the duty of petitioners to provide adequate

medical assistance to the EEs under Art. 161 of the Labor Code, failing which a breach is committed.

In the present case, there is no allegation that the company premises are hazardous. Neither is there any allegation on the number of EEs the company has. If Hao’s testimony[4] would be believed, the company had only seven regular EEs and 20 contractual EEs - still short of the minimum 50 workers that an establishment must have for it to be required to have a full-time registered nurse.

The Court can thus only determine whether the actions taken by petitioners when Bladimir became ill amounted to the necessary assistance � to ensure adequate and immediate medical attendance to Bladimir as required under Art. 161 of the Labor Code. As found by the trial court and borne by the records, petitioner Haoâ€™s advice for Bladimir to, as he did, take a 3-day rest and to later have him brought to the nearest hospital constituted adequate and immediate medical � attendance that he is mandated, under Art. 161, to provide to a sick EE in an emergency.

AT ALL EVENTS, the alleged negligence of Hao cannot be considered as the proximate cause of the death of Bladimir. Proximate cause is that which, in natural and continuous sequence, unbroken by an efficient intervening cause, produces injury, and without which, the result would not have occurred.[5] An injury or damage is proximately caused by an act or failure to act, whenever it appears from the evidence in the case that the act or omission played a substantial part in bringing about or actually causing the injury or damage, and that the injury or damage was either a direct result or a reasonably probable consequence of the act or omission.[6]

Verily, the issue in this case is essentially factual in nature. The dissent, apart from adopting the appellate courtâ€™s findings, finds that Bladimir contracted chicken pox from a co-worker and Hao was negligent in not bringing that co-worker to the nearest physician, or isolating him as well. This finding is not, however, borne by the records. Nowhere in the appellate courtâ€™s or even the trial courtâ€™s decision is there any such definite finding that Bladimir contracted chicken pox from a co-worker. At best, the only allusion to another EE being afflicted with chicken pox was when Hao testified that he knew it to heal within three days as was the case of another worker, without reference, however, as to when it happened.[7]

the petition is GRANTED. The challenged Decision of the Court of Appeals is REVERSED, and the complaint is hereby DISMISSED.ROMIE D. ESCASINAS and EVAN RIGOR SINGCO vs. SHANGRI-LA’S MACTAN ISLAND RESORT G.R. No. 178827 March 4, 2009CARPIO MORALES, J.:

FACTS: Registered nurses Jeromie D. Escasinas and Evan Rigor Singco (petitioners) were engaged in 1999 and 1996, respectively, by Dr. Jessica Joyce R. Pepito (respondent doctor) to work in her clinic at respondent Shangri-la’s Mactan Island Resort (Shangri-la) in Cebu of which she was a retained physician.

petitioners filed with the NLRC Regional Arbitration Branch a complaint for regularization, underpayment of wages, non-payment of holiday pay, night shift differential and 13th month pay differential against respondents, claiming that they are regular EEs of Shangri-la. Shangri-la claimed, however, that petitioners were not its EEs but of respondent doctor whom it retained via Memorandum of Agreement (MOA)[2] pursuant to Article 157 of the Labor Code, as amended. Respondent doctor for her part claimed that petitioners were already working for the previous retained physicians of Shangri-la before she was retained by Shangri-la; and that she maintained petitioners’ services upon their request.

LA-regular EE of shangre-la as they usually perform work which is necessary and desirable to Shangri-la’s business; that they observe clinic hours and render services only to Shangri-la’s guests and EEs; that payment for their salaries were recommended to Shangri-la’s Human Resource Department (HRD); that respondent doctor was Shangri-la’s “in-house” physician, hence, also an EE; and that the MOA between Shangri-la and respondent doctor was an “insidious mechanism in order to circumvent [the doctor’s] tenurial security and that of the EEs under her.” ordered the shang to grant them wages and benefits from the time their service were engaged.

NLRC-Brushing aside petitioners’ contention that since their application for employment was addressed to Shangri-la, it was really Shangri-la which hired them and not respondent doctor, the NLRC noted that the applications for employment were made by persons who are not parties to the case and were not shown to have been actually hired by Shangri-la.

for some months, payment of petitioners’ wages were recommended by Shangri-la’s HRD did not prove that it was Shangri-la which pays their wages. It thus credited respondent doctor’s explanation that the recommendations for payment were based on the billings she prepared for salaries of additional nurses during Shangri-la’s peak months of operation, in accordance with the retainership agreement, the guests’ payments for medical services having been paid directly to Shanrgi-la.

CA-affirmed NLRC’s decision that no ER-EE relationship exists between Shangri-la and petitioners. The appellate court concluded that all aspects of the employment of petitioners being under the supervision and control of respondent doctor and since Shangri-la is not principally engaged in the business of providing medical or

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healthcare services, petitioners could not be regarded as regular EEs of Shangri-la. Petitioner’s MR was denied.

ISSUE:1,that Article 157 of the Labor Code does not make it mandatory for a covered establishment to employ health personnel; that the services of nurses is not germane nor indispensable to its operations; 2.that respondent doctor is a legitimate individual independent contractor who has the power to hire, fire and supervise the work of the nurses under her.

HELD:Under the foregoing provision, Shangri-la, which employs more than 200 workers, is mandated to “furnish” its EEs with the services of a full-time registered nurse, a part-time physician and dentist, and an emergency clinic which means that it should provide or make available such medical and allied services to its EEs, not necessarily to hire or employ a service provider.

The term “full-time” in Art. 157 cannot be construed as referring to the type of employment of the person engaged to provide the services, for Article 157 must not be read alongside Art. 280[9] in order to vest ER-EE relationship on the ER and the person so engaged.

The phrase “services of a full-time registered nurse” should thus be taken to refer to the kind of services that the nurse will render in the company’s premises and to its EEs, not the manner of his engagement.

2. The existence of an independent and permissible contractor relationship is generally established by considering the following determinants: whether the contractor is carrying on an independent business; the nature and extent of the work; the skill required; the term and duration of the relationship; the right to assign the performance of a specified piece of work; the control and supervision of the work to another; the ER's power with respect to the hiring, firing and payment of the contractor's workers; the control of the premises; the duty to supply the premises, tools, appliances, materials and labor; and the mode, manner and terms of payment.[11]

On the other hand, existence of an ER- EE relationship is established by the presence of the following determinants: (1) the selection and engagement of the workers; (2) power of dismissal; (3) the payment of wages by whatever means; and (4) the power to control the worker's conduct, with the latter assuming primacy in the overall consideration.[12]

Against the above-listed determinants, the Court holds that respondent doctor is a legitimate independent contractor. That Shangri-la provides the clinic premises and medical supplies for use of its EEs and guests does not necessarily prove that respondent doctor lacks substantial capital and investment. Besides, the maintenance of a clinic and provision of medical services to its EEs is required under Art. 157, which are not directly related to Shangri-la’s principal business – operation of hotels and restaurants.

With respect to the supervision and control of the nurses and clinic staff, it is not disputed that a document, “Clinic Policies and EE Manual”[16] claimed to have been prepared by respondent doctor exists, to which petitioners gave their conformity[17] and in which they acknowledged their co-terminus employment status. It is thus presumed that said document, and not the EE manual being followed by Shangri-la’s regular workers, governs how they perform their respective tasks and responsibilities.

In fine, as Shangri-la does not control how the work should be performed by petitioners, it is not petitioners’ ER.

OCEAN BUILDERS CONSTRUCTION CORP. VS. SPS. CUBACUB[G.R. No. 150898, April 13, 2011]CARPIO MORALES, J.:

FACTS: Bladimir Cubacub (Bladimir) was employed as maintenance man by petitioner company Ocean Builders Construction Corp. at its office in Caloocan City.Bladimir was afflicted with chicken pox. He was thus advised by petitioner Dennis Hao (Hao), the companys general manager, to rest for 3days which he did at the companys barracks where he lives free of charge.

Three days later, Bladimir went about his usual chores of manning the gate of the company premises and even cleaned the company vehicles. Later in the afternoon, however, he asked a co-worker, Ignacio Silangga (Silangga), to accompany him to his house in Capas, Tarlac so he could rest. Informed by Silangga of Bladimir’s intention, Hao gave Bladimir P1,000.00 and ordered Silangga to instead bring Bladimir to the nearest hospital.

Along with co-workers Narding and Tito Vergado, Silangga thus brought Bladimir to the Caybiga Community Hospital (Caybiga Hospital), a primary-care hospital around one kilometer away from the office of the company.

The hospital did not allow Bladimir to leave the hospital. He was then confined, with Narding keeping watch over him. The next day, April 13, 1995, a doctor of the hospital informed Narding that they needed to talk to Bladimir’s parents, hence, on Silangga’s request, their co-workers June Matias and Joel Edrene fetched Bladimir’s parents from Tarlac.

At about 8:00in the evening of the same day, April 13, 1995, Bladimirs parents-respondent spouses Cubacub, with their friend Dr. Hermes Frias (Dr. Frias), arrived at the Caybiga Hospital and transferred Bladimir to the Quezon City General Hospital (QCGH)

where he was placed in the intensive care unit and died the following day, April 14, 1995.

The death certificate issued by the QCGH recorded Bladimir’s immediate cause of death as cardio-respiratory arrest and the antecedent cause as pneumonia. On the other hand, the death certificate issued by Dr. Frias recorded the causes of death as cardiac arrest, multiple organ system failure, septicemia and chicken pox.

Bladimirs parents-herein respondents later filed on August 17, 1995 before the Tarlac RTC a complaint for damages against petitioners, alleging that Hao was guilty of negligence which resulted in the deterioration of Bladimirs condition leading to his death.

RTC- dismissed the complaint, holding that Hao was not negligent. It ruled that Hao was not under any obligation to bring Bladimir to better tertiary hospitals, and assuming that Bladimir died of chicken pox aggravated by pneumonia or some other complications due to lack of adequate facilities at the hospital, the same cannot be attributed to Hao.

CA-reversed, rendered holding the defendants solidarily liable to plaintiffs-appellants. MR denied.

ISSUE: whether the ER isnegligent, thus liable for the death of his EE.

HELD: At the onset, the Court notes that the present case is one for damages based on torts, the ER-EE relationship being merely incidental. To successfully prosecute an action anchored on torts, three elements must be present, viz: (1) duty (2) breach (3) injury and proximate causation. The assailed decision of the appellate court held that it was the duty of petitioners to provide adequate medical assistance to the EEs under Art. 161 of the Labor Code, failing which a breach is committed.

In the present case, there is no allegation that the company premises are hazardous. Neither is there any allegation on the number of EEs the company has. If Hao’s testimony[4] would be believed, the company had only seven regular EEs and 20 contractual EEs - still short of the minimum 50 workers that an establishment must have for it to be required to have a full-time registered nurse.

The Court can thus only determine whether the actions taken by petitioners when Bladimir became ill amounted to the necessary assistance � to ensure adequate and immediate medical attendance to Bladimir as required under Art. 161 of the Labor Code. As found by the trial court and borne by the records, petitioner Haoâ€™s advice for Bladimir to, as he did, take a 3-day rest and to later have him brought to the nearest hospital constituted adequate and immediate medical � attendance that he is mandated, under Art. 161, to provide to a sick EE in an emergency.

AT ALL EVENTS, the alleged negligence of Hao cannot be considered as the proximate cause of the death of Bladimir. Proximate cause is that which, in natural and continuous sequence, unbroken by an efficient intervening cause, produces injury, and without which, the result would not have occurred.[5] An injury or damage is proximately caused by an act or failure to act, whenever it appears from the evidence in the case that the act or omission played a substantial part in bringing about or actually causing the injury or damage, and that the injury or damage was either a direct result or a reasonably probable consequence of the act or omission.[6]

Verily, the issue in this case is essentially factual in nature. The dissent, apart from adopting the appellate courtâ€™s findings, finds that Bladimir contracted chicken pox from a co-worker and Hao was negligent in not bringing that co-worker to the nearest physician, or isolating him as well. This finding is not, however, borne by the records. Nowhere in the appellate courtâ€™s or even the trial courtâ€™s decision is there any such definite finding that Bladimir contracted chicken pox from a co-worker. At best, the only allusion to another EE being afflicted with chicken pox was when Hao testified that he knew it to heal within three days as was the case of another worker, without reference, however, as to when it happened.[7]

the petition is GRANTED. The challenged Decision of the Court of Appeals is REVERSED, and the complaint is hereby DISMISSED.ROMIE D. ESCASINAS and EVAN RIGOR SINGCO vs. SHANGRI-LA’S MACTAN ISLAND RESORT G.R. No. 178827 March 4, 2009CARPIO MORALES, J.:

FACTS: Registered nurses Jeromie D. Escasinas and Evan Rigor Singco (petitioners) were engaged in 1999 and 1996, respectively, by Dr. Jessica Joyce R. Pepito (respondent doctor) to work in her clinic at respondent Shangri-la’s Mactan Island Resort (Shangri-la) in Cebu of which she was a retained physician.

petitioners filed with the NLRC Regional Arbitration Branch a complaint for regularization, underpayment of wages, non-payment of holiday pay, night shift differential and 13th month pay differential against respondents, claiming that they are regular EEs of Shangri-la. Shangri-la claimed, however, that petitioners were not its EEs but of respondent doctor whom it retained via Memorandum of Agreement (MOA)[2] pursuant to Article 157 of the Labor Code, as amended. Respondent doctor for her part claimed that petitioners were already working for the previous retained physicians of Shangri-la before she was retained by Shangri-la; and that she maintained petitioners’ services upon their request.

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LA-regular EE of shangre-la as they usually perform work which is necessary and desirable to Shangri-la’s business; that they observe clinic hours and render services only to Shangri-la’s guests and EEs; that payment for their salaries were recommended to Shangri-la’s Human Resource Department (HRD); that respondent doctor was Shangri-la’s “in-house” physician, hence, also an EE; and that the MOA between Shangri-la and respondent doctor was an “insidious mechanism in order to circumvent [the doctor’s] tenurial security and that of the EEs under her.” ordered the shang to grant them wages and benefits from the time their service were engaged.

NLRC-Brushing aside petitioners’ contention that since their application for employment was addressed to Shangri-la, it was really Shangri-la which hired them and not respondent doctor, the NLRC noted that the applications for employment were made by persons who are not parties to the case and were not shown to have been actually hired by Shangri-la.

for some months, payment of petitioners’ wages were recommended by Shangri-la’s HRD did not prove that it was Shangri-la which pays their wages. It thus credited respondent doctor’s explanation that the recommendations for payment were based on the billings she prepared for salaries of additional nurses during Shangri-la’s peak months of operation, in accordance with the retainership agreement, the guests’ payments for medical services having been paid directly to Shanrgi-la.

CA-affirmed NLRC’s decision that no ER-EE relationship exists between Shangri-la and petitioners. The appellate court concluded that all aspects of the employment of petitioners being under the supervision and control of respondent doctor and since Shangri-la is not principally engaged in the business of providing medical or healthcare services, petitioners could not be regarded as regular EEs of Shangri-la. Petitioner’s MR was denied.

ISSUE:1,that Article 157 of the Labor Code does not make it mandatory for a covered establishment to employ health personnel; that the services of nurses is not germane nor indispensable to its operations; 2.that respondent doctor is a legitimate individual independent contractor who has the power to hire, fire and supervise the work of the nurses under her.

HELD:Under the foregoing provision, Shangri-la, which employs more than 200 workers, is mandated to “furnish” its EEs with the services of a full-time registered nurse, a part-time physician and dentist, and an emergency clinic which means that it should provide or make available such medical and allied services to its EEs, not necessarily to hire or employ a service provider.

The term “full-time” in Art. 157 cannot be construed as referring to the type of employment of the person engaged to provide the services, for Article 157 must not be read alongside Art. 280[9] in order to vest ER-EE relationship on the ER and the person so engaged.

The phrase “services of a full-time registered nurse” should thus be taken to refer to the kind of services that the nurse will render in the company’s premises and to its EEs, not the manner of his engagement.

2. The existence of an independent and permissible contractor relationship is generally established by considering the following determinants: whether the contractor is carrying on an independent business; the nature and extent of the work; the skill required; the term and duration of the relationship; the right to assign the performance of a specified piece of work; the control and supervision of the work to another; the ER's power with respect to the hiring, firing and payment of the contractor's workers; the control of the premises; the duty to supply the premises, tools, appliances, materials and labor; and the mode, manner and terms of payment.[11]

On the other hand, existence of an ER- EE relationship is established by the presence of the following determinants: (1) the selection and engagement of the workers; (2) power of dismissal; (3) the payment of wages by whatever means; and (4) the power to control the worker's conduct, with the latter assuming primacy in the overall consideration.[12]

Against the above-listed determinants, the Court holds that respondent doctor is a legitimate independent contractor. That Shangri-la provides the clinic premises and medical supplies for use of its EEs and guests does not necessarily prove that respondent doctor lacks substantial capital and investment. Besides, the maintenance of a clinic and provision of medical services to its EEs is required under Art. 157, which are not directly related to Shangri-la’s principal business – operation of hotels and restaurants.

With respect to the supervision and control of the nurses and clinic staff, it is not disputed that a document, “Clinic Policies and EE Manual”[16] claimed to have been prepared by respondent doctor exists, to which petitioners gave their conformity[17] and in which they acknowledged their co-terminus employment status. It is thus presumed that said document, and not the EE manual being followed by Shangri-la’s regular workers, governs how they perform their respective tasks and responsibilities.

In fine, as Shangri-la does not control how the work should be performed by petitioners, it is not petitioners’ ER.EMMANUEL BABAS v. LORENZO SHIPPING CORPORATIONG.R. No. 186091 | December 15, 2010 |FACTS: Respondent Lorenzo Shipping Corporation (LSC) is a duly organized domestic corporation engaged in the shipping industry; it owns several equipment necessary for its business. On September

29, 1997, LSC entered into a General Equipment Maintenance Repair and Management Services Agreement3 (Agreement) with Best Manpower Services, Inc. (BMSI). Under the Agreement, BMSI undertook to provide maintenance and repair services to LSC’s container vans, heavy equipment, trailer chassis, and generator sets. BMSI further undertook to provide checkers to inspect all containers received for loading to and/or unloading from its vessels.Simultaneous with the execution of the Agreement, LSC leased its equipment, tools, and tractors to BMSI.4 The period of lease was coterminous with the Agreement.BMSI then hired petitioners on various dates to work at LSC as checkers, welders, utility men, clerks, forklift operators, motor pool and machine shop workers, technicians, trailer drivers, and mechanics. Six years later, or on May 1, 2003, LSC entered into another contract with BMSI, this time, a service contract.5In September 2003, petitioners filed with the Labor Arbiter (LA) a complaint for regularization against LSC and BMSI. On October 1, 2003, LSC terminated the Agreement, effective October 31, 2003. Consequently, petitioners lost their employment.BMSI asserted that it is an independent contractor. It averred that it was willing to regularize petitioners; however, some of them lacked the requisite qualifications for the job. BMSI was willing to reassign petitioners who were willing to accept reassignment. BMSI denied petitioners’ claim for underpayment of wages and non-payment of 13th month pay and other benefits.LSC, on the other hand, averred that petitioners were EEs of BMSI and were assigned to LSC by virtue of the Agreement. BMSI is an independent job contractor with substantial capital or investment in the form of tools, equipment, and machinery necessary in the conduct of its business. The Agreement between LSC and BMSI constituted legitimate job contracting. Thus, petitioners were EEs of BMSI and not of LSC.After due proceedings, the LA rendered a decision6 dismissing petitioners’ complaint. The LA found that petitioners were EEs of BMSI. It was BMSI which hired petitioners, paid their wages, and exercised control over them.Petitioners appealed to the National Labor Relations Commission (NLRC), arguing that BMSI was engaged in labor-only contracting. They insisted that their ER was LSC. On January 16, 2008, the NLRC promulgated its decision. NLRC reversed the LA’s decision.NLRC’s finding: BMSI is not engaged in legitimate job contracting. BMSI has no equipment, no office premises, no capital and no investments as shown in the Agreement itself.BMSI has no independent business or activity or job to perform in respondent LSC free from the control of respondent LSC except as to the results thereof. In view of the absence of such independent business or activity or job to be performed by respondent BMSI in respondent LSC [petitioners] performed work that was necessary and desirable to the main business of respondent LSC. Respondents were not able to refute the allegations of [petitioners] that they performed the same work that the regular workers of LSC performed and they stood side by side with regular EEs of respondent LSC performing the same work. Necessarily, the control on the manner and method of doing the work was exercised by respondent LSC and not by respondent BMSI since the latter had no business of its own to perform in respondent LSC.LSC went to the CA via certiorari. On October 10, 2008, the CA rendered the now challenged Decision, reversing the NLRC. In holding that BMSI was an independent contractor, the CA relied on the provisions of the Agreement, wherein BMSI warranted that it is an independent contractor, with adequate capital, expertise, knowledge, equipment, and personnel necessary for the services rendered to LSC. According to the CA, the fact that BMSI entered into a contract of lease with LSC did not ipso facto make BMSI a labor-only contractor; on the contrary, it proved that BMSI had substantial capital. The CA was of the view that the law only required substantial capital or investment. Since BMSI had substantial capital, as shown by its ability to pay rents to LSC, then it qualified as an independent contractor. It added that even under the control test, BMSI would be the real ER of petitioners, since it had assumed the entire charge and control of petitioners’ services. The CA further held that BMSI’s Certificate of Registration as an independent contractor was sufficient proof that it was an independent contractor. Hence, the CA absolved LSC from liability and instead held BMSI as ER of petitioners. Petitioners filed a motion for reconsideration, but the CA denied it on January 21, 2009. Hence, this appeal by petitioners.ISSUE: WON CA ERRED IN IGNORING THE CLEAR EVIDENCE OF RECORD THAT RESPONDENT WAS ENGAGED IN LABOR-ONLY CONTRACTING TO DEFEAT PETITIONERS’ RIGHT TO SECURITY OF TENURE.HELD: We dismiss the petition insofar as petitioners Soriano and Anajao are concerned. In declaring BMSI as an independent contractor, the CA, in the challenged Decision, heavily relied on the provisions of the Agreement, wherein BMSI declared that it was an independent contractor, with substantial capital and investment.De Los Santos v. NLRC instructed us that the character of the business, i.e., whether as labor-only contractor or as job contractor, should be measured in terms of, and determined by, the criteria set by statute. The parties cannot dictate by the mere expedience of a unilateral declaration in a contract the character of their business.Despite the fact that the service contracts contain stipulations which are earmarks of independent contractorship, they do not make it legally so. The language of a contract is neither determinative nor conclusive of the relationship between the parties. Petitioner SMC and AMPCO cannot dictate, by a declaration in a contract, the character of AMPCO's business, that is, whether as labor-only contractor, or job contractor. AMPCO's character should be measured in terms of, and determined by, the criteria set by statute.Thus, in distinguishing between prohibited labor-only contracting and permissible job contracting, the totality of the facts and the surrounding circumstances of the case are to be considered.Labor-only contracting, a prohibited act, is an arrangement where the contractor or subcontractor merely recruits, supplies, or places

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workers to perform a job, work, or service for a principal. In labor-only contracting, the following elements are present: (a) the contractor or subcontractor does not have substantial capital or investment to actually perform the job, work, or service under its own account and responsibility; and (b) the EEs recruited, supplied, or placed by such contractor or subcontractor perform activities which are directly related to the main business of the principal.20On the other hand, permissible job contracting or subcontracting refers to an arrangement whereby a principal agrees to put out or farm out with the contractor or subcontractor the performance or completion of a specific job, work, or service within a definite or predetermined period, regardless of whether such job, work, or service is to be performed or completed within or outside the premises of the principal. A person is considered engaged in legitimate job contracting or subcontracting if the following conditions concur:(a) The contractor carries on a distinct and independent business and undertakes the contract work on his account under his own responsibility according to his own manner and method, free from the control and direction of his ER or principal in all matters connected with the performance of his work except as to the results thereof;(b) The contractor has substantial capital or investment; and(c) The agreement between the principal and the contractor or subcontractor assures the contractual EEs' entitlement to all labor and occupational safety and health standards, free exercise of the right to self-organization, security of tenure, and social welfare benefits.22Given the above standards, we sustain the petitioners’ contention that BMSI is engaged in labor-only contracting.First, petitioners worked at LSC’s premises, and nowhere else. Other than the provisions of the Agreement, there was no showing that it was BMSI which established petitioners’ working procedure and methods, which supervised petitioners in their work, or which evaluated the same. There was absolute lack of evidence that BMSI exercised control over them or their work, except for the fact that petitioners were hired by BMSI.Second, LSC was unable to present proof that BMSI had substantial capital. The record before us is bereft of any proof pertaining to the contractor’s capitalization, nor to its investment in tools, equipment, or implements actually used in the performance or completion of the job, work, or service that it was contracted to render. What is clear was that the equipment used by BMSI were owned by, and merely rented from, LSC.The law casts the burden on the contractor to prove that it has substantial capital, investment, tools, etc. EEs, on the other hand, need not prove that the contractor does not have substantial capital, investment, and tools to engage in job-contracting.Third, petitioners performed activities which were directly related to the main business of LSC. The work of petitioners as checkers, welders, utility men, drivers, and mechanics could only be characterized as part of, or at least clearly related to, and in the pursuit of, LSC’s business. Logically, when petitioners were assigned by BMSI to LSC, BMSI acted merely as a labor-only contractor.Lastly, as found by the NLRC, BMSI had no other client except for LSC, and neither BMSI nor LSC refuted this finding, thereby bolstering the NLRC finding that BMSI is a labor-only contractor.The CA erred in considering BMSI’s Certificate of Registration as sufficient proof that it is an independent contractor. In San Miguel Corporation v. Vicente B. Semillano, Nelson Mondejas, Jovito Remada, Alilgilan Multi-Purpose Coop (AMPCO), and Merlyn N. Policarpio, we held that a Certificate of Registration issued by the Department of Labor and Employment is not conclusive evidence of such status. The fact of registration simply prevents the legal presumption of being a mere labor-only contractor from arising.Indubitably, BMSI can only be classified as a labor-only contractor. The CA, therefore, erred when it ruled otherwise. Consequently, the workers that BMSI supplied to LSC became regular EEs of the latter. Having gained regular status, petitioners were entitled to security of tenure and could only be dismissed for just or authorized causes and after they had been accorded due process.Accordingly, we hold that the NLRC committed no grave abuse of discretion in its decision. Conversely, the CA committed a reversible error when it set aside the NLRC ruling. Petition granted.OREGAS v. NLRC, 559 SCRA 153FACTS: Petitioners Rommel C. Oregas, Darwin R. Hilario and Sherwin A. Arboleda worked as valet parking and door attendants in respondent Dusit Hotel Nikko. They have employment contracts with respondent FVA. In 2000, FVA recalled petitioners from Dusit. Petitioners then instituted a complaint for illegal dismissal, regularization, premium pay for holiday and rest day, holiday pay, service incentive leave pay, 13th month pay and attorney's fees against respondents Dusit, Philippine Hotelier's, Inc. and FVA.

Petitioners alleged that despite the length of their service, Dusit never granted them the status and benefits of a regular EE. Thus, when the rank and file EEs' union of Dusit learned that petitioners were entitled to regularization, Dusit immediately terminated their services due to "end of contract."

On 3/6/2001, Labor Arbiter Potenciano S. Canizares, Jr. dismissed the complaint for lack of merit. Petitioners failed to prove that they were EEs of Dusit. Petitioners admitted that they transferred to FVA after their previous placement agencies terminated their contracts of services with Dusit. Labor Arbiter Canizares also noted that petitioners signed application and employment contracts with FVA and were under its payrolls and accounts. Thus, FVA was petitioners' ER. Finally, he ruled that petitioners were merely recalled and not dismissed from the service by FVA.

On appeal, the NLRC issued a Resolution dated August 25, 2003, modifying the decision of Labor Arbiter. The NLRC observed that the four-fold test in determining the existence of an ER-EE relationship is present in petitioners' relationship with FVA. On the matter of

selection and engagement, records showed that petitioners applied with and were employed by FVA. Although they were required to test drive by Dusit, it was done only to verify if they had the necessary skills and competence required by the job. On the matter of control, it was established that petitioners maintained their daily time records with FVA. On the matter of dismissal, FVA exercised its power to dismiss when it recalled petitioners from Dusit. Finally, on the matter of payment of wages, it is undisputed that petitioners were under the payrolls and accounts of FVA. Nevertheless, the NLRC noted that after petitioners' recall, they were no longer given new assignments. Since more than six months have already lapsed, petitioners were deemed to have been constructively dismissed and therefore entitled to separation pay of one-half month pay for every year of service.

Petitioners elevated the case to the CA which affirmed the NLRC resolution. Reconsideration having been denied, petitioners raises the instant petition.

ISSUESWON Respondent FVA is an independent contractorWON there an ER-EE RELATIONSHIP exists between Petitioners and Respondent Hotel

HELD

1.YES. the Labor Arbiter, NLRC and the CA were unanimous in finding that FVA was a legitimate job contractor. Among the circumstances that established the status of FVA as a legitimate job contractor are: (1) FVA is registered with the DOLE and the DTI;(2) FVA has a Contract for Services with Dusit for the supply of valet parking and door attendant services;(3) FVA has an independent business and provides valet parking and door attendant services to other clients like Mandarin Oriental, Manila Hotel, Peninsula Manila Hotel, Westin Philippine Plaza, Golden B Hotel, Pan Pacific Manila Hotel, and Strikezone Bowling Lane;and (4) FVA's total assets from 1997 to 1999 amount to P1,502,597.70 to P9,021,335.13.In addition, it provides the uniforms and lockers of its EEs.

2.NO. By applying the four-fold test used in determining an ER-EE relationship, the status of FVA as the ER of petitioners is indubitably established.

a.Petitioners applied and signed employment contracts with FVA. They were merely assigned to Dusit conformably with the Contract for Services between FVA and Dusit.

b.FVA assigned a supervisor in Dusit to monitor petitioners' attendance, leaves of absence, performance and conduct. Petitioners also maintained their daily time records with FVA.

c. Petitioners were duly notified by FVA that they would be assigned to Dusit for five months only. Thereafter, they may either be recalled for transfer to other clients or be reassigned to Dusit depending on the result of FVA's evaluation of their performance. In this case, FVA opted to recall petitioners from Dusit.

d.While FVA billed Dusit for the services rendered, it was actually FVA which paid petitioners' salaries. Worthy of note, FVA registered petitioners with the Bureau of Internal Revenue and the Social Security System as its EEs.

In summary, this Court accepts as established the fact that FVA is a legitimate job contractor and, in contemplation of law, the ER of petitioners.

DISPOSITION: The instant petition is DENIED for lack of merit. CA’s decision is AFFIRMED.

ALIVIADO v. PROCTER and GAMBLE PHILSG.R. No. 160506, JUNE 6, 2011

FACTS: Petitioners worked as merchandisers of P&G from various dates, allegedly starting as early as 1982 or as late as June 1991, to either May 5, 1992 or March 11, 1993. They all individually signed employment contracts with either Promm-Gem or SAPS for periods of more or less five months at a time. They were assigned at different outlets, supermarkets and stores where they handled all the products of P&G. They received their wages from Promm-Gem or SAPS.SAPS and Promm-Gem imposed disciplinary measures on erring merchandisers for reasons such as habitual absenteeism, dishonesty or changing day-off without prior notice.

P&G is principally engaged in the manufacture and production of different consumer and health products, which it sells on a wholesale basis to various supermarkets and distributors.[8] To enhance consumer awareness and acceptance of the products, P&G entered into contracts with Promm-Gem and SAPS for the promotion and merchandising of its products.

In December 1991, petitioners filed a complaint against P&G for regularization, service incentive leave pay and other benefits with damages. The complaint was later amended to include the matter of their subsequent dismissal.

Ruling of the Labor Arbiter: Labor Arbiter dismissed the complaint for lack of merit and ruled that there was no ER-EE relationship between petitioners and P&G. He found that the selection and engagement of the petitioners, the payment of their wages, the power of dismissal and control with respect to the means and methods by which their work was accomplished, were all done and

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exercised by Promm-Gem/SAPS. He further found that Promm-Gem and SAPS were legitimate independent job contractors.

Ruling of the NLRC: The appeal of complainants is hereby DISMISSED and the decision appealed from AFFIRMED.

Ruling of the Court of Appeals: CA likewise denied the petition. Hence, this petition.Petitioners’ Arguments: Petitioners insist that they are EEs of P&G. They claim that they were recruited by the salesmen of P&G and were engaged to undertake merchandising chores for P&G long before the existence of Promm-Gem and/or SAPS. They further claim that when the latter had its so-called re-alignment program, petitioners were instructed to fill up application forms and report to the agencies which P&G created. Respondents’ Arguments: On the other hand, P&G points out that the instant petition raises only questions of fact and should thus be thrown out as the Court is not a trier of facts. It argues that findings of facts of the NLRC, particularly where the NLRC and the Labor Arbiter are in agreement, are deemed binding and conclusive on the Supreme Court. ISSUES: (1) whether P&G is the ER of petitioners; (2) whether petitioners were illegally dismissed; and (3) whether petitioners are entitled for payment of actual, moral and exemplary damages as well as litigation costs and attorney’s fees. HELD: The petition has merit. As a rule, the Court refrains from reviewing factual assessments of lower courts and agencies exercising adjudicative functions, such as the NLRC. Occasionally, however, the Court is constrained to wade into factual matters when there is insufficient or insubstantial evidence on record to support those factual findings; or when too much is concluded, inferred or deduced from the bare or incomplete facts appearing on record.[23] In the present case, we find the need to review the records to ascertain the facts. In order to resolve the issue of whether P&G is the ER of petitioners, it is necessary to first determine whether Promm-Gem and SAPS are labor-only contractors or legitimate job contractors. In the event that the contractor or subcontractor fails to pay the wages of his EEs in accordance with this Code, the ER shall be jointly and severally liable with his contractor or subcontractor to such EEs to the extent of the work performed under the contract, in the same manner and extent that he is liable to EEs directly employed by him. There is “labor-only” contracting where the person supplying workers to an ER does not have substantial capital or investment in the form of tools, equipment, machineries, work premises, among others, and the workers recruited and placed by such person are performing activities which are directly related to the principal business of such ER. In such cases, the person or intermediary shall be considered merely as an agent of the ER who shall be responsible to the workers in the same manner and extent as if the latter were directly employed by him. Clearly, the law and its implementing rules allow contracting arrangements for the performance of specific jobs, works or services. Indeed, it is management prerogative to farm out any of its activities, regardless of whether such activity is peripheral or core in nature. However, in order for such outsourcing to be valid, it must be made to an independent contractor because the current labor rules expressly prohibit labor-only contracting.

In the instant case, the financial statements of Promm-Gem show that ithas authorized capital stock of P1 million and a paid-in capital, or capital available for operations, of P500,000.00 as of 1990. It also has long term assets worth P432,895.28 and current assets ofP719,042.32. Promm-Gem has also proven that it maintained its own warehouse and office space with a floor area of 870 square meters. It also had under its name three registered vehicles which were used for its promotional/merchandising business. Promm-Gem also has other clients aside from P&G. Under the circumstances, we find that Promm-Gem has substantial investment which relates to the work to be performed. These factors negate the existence of the element specified in Section 5(i) of DOLE Department Order No. 18-02.

The records also show that Promm-Gem supplied its complainant-workers with the relevant materials, such as markers, tapes, liners and cutters, necessary for them to perform their work. Promm-Gem also issued uniforms to them. It is also relevant to mention that Promm-Gem already considered the complainants working under it as its regular, not merely contractual or project, EEs. This circumstance negates the existence of element (ii) as stated in Section 5 of DOLE Department Order No. 18-02, which speaks of contractual EEs. This, furthermore, negates – on the part of Promm-Gem – bad faith and intent to circumvent labor laws which factors have often been tipping points that lead the Court to strike down the employment practice or agreement concerned as contrary to public policy, morals, good customs or public order. Under the circumstances, Promm-Gem cannot be considered as a labor-only contractor. We find that it is a legitimate independent contractor. Furthermore, the petitioners have been charged with the merchandising and promotion of the products of P&G, an activity that has already been considered by the Court as doubtlessly directly related to the manufacturing business, which is the principal business of P&G. Considering that SAPS has no substantial capital or investment and the workers it recruited are performing activities which are directly related to the principal business of P&G, we find that the former is engaged in “labor-only contracting”.

WHEREFORE, the petition is GRANTED. The case be REMANDED to the Labor Arbiter for the computation.

SONZA vs. ABS-CBNGR 138051 June 10, 2004

FACTS: ABS-CBN and MJMDC entered into a contract on may 1994. ABS-CBN was represented by its officers while MJMDC was represented by Sonza, as president and general manager and Mel Tiangco, as EVP and treasurer referred to in the agreement as “agent”, MJDC agreed to provide Sonza’s services exclusively ABS-CBN as talent for radio and television. The agreement listed the services Sonza would render.On April 1996, Sonza wrote a letter to ABS-CBN’s president in regard to his resignation in view of the events concerning his programs and career.April 30, 1996, Sonza filed a complaint against the ABS-CBN before the DOLE. Sonza complained that the ABS-CBN did not pay his salaries, separation pay, and service incentive, leave pay, signing bonus, travel allowances and amounts due under the EE stock option plan (ESOP).On July 10 1996, ABS-CBN filed a motion to dismiss on the ground that there is no ER-EE relationship. Sonza filed an opposition to the motion on July 19, 1996.Meanwhile, ABS-CBN opened a account to continually remit Sonza fee’s under the agreement.Labor arbiter denied the motion to dismiss; however in his decision labor arbiter dismissed the complaint for lack of jurisdiction and that there is not ER-EE relationship.On appeal, the NLRC affirmed the decision of the labor arbiter. The same was also denied upon the motion for reconsideration.

ISSUE: WON there was an ER-EE relationship between ABS-CBN and Sonza?

HELD: No ER-EE relationship.SONZA maintains that all essential elements of an ER-EE relationship are present in this case. The last element, the so-called control test, is the most important element

Power of ControlThe Agreement required SONZA to attend only rehearsals and tapings of the shows, as well as pre- and post-production staff meetings. ABS-CBN could not dictate the contents of SONZAs script. However, the Agreement prohibited SONZA from criticizing in his shows ABS-CBN or its interests. The clear implication is that SONZA had a free hand on what to say or discuss in his shows provided he did not attack ABS-CBN or its interests.

The Agreement stipulates that SONZA shall abide with the rules and standards of performance covering talents of ABS-CBN. The Agreement does not require SONZA to comply with the rules and standards of performance prescribed for EEs of ABS-CBN.

In any event, not all rules imposed by the hiring party on the hired party indicate that the latter is an EE of the former. In this case, SONZA failed to show that these rules controlled his performance. We find that these general rules are merely guidelines towards the achievement of the mutually desired result, which are top-rating television and radio programs that comply with standards of the industry. We have ruled that:

Further, not every form of control that a party reserves to himself over the conduct of the other party in relation to the services being rendered may be accorded the effect of establishing an ER-EE relationship. The facts of this case fall squarely with the case of Insular Life Assurance Co., Ltd. vs. NLRC. In said case, we held that:

Logically, the line should be drawn between rules that merely serve as guidelines towards the achievement of the mutually desired result without dictating the means or methods to be employed in attaining it, and those that control or fix the methodology and bind or restrict the party hired to the use of such means. The first, which aim only to promote the result, create no ER-EE relationship unlike the second, which address both the result and the means used to achieve it.

Lastly, SONZA insists that the exclusivity clause in the Agreement is the most extreme form of control which ABS-CBN exercised over him.

This argument is futile. Being an exclusive talent does not by itself mean that SONZA is an EE of ABS-CBN. Even an independent contractor can validly provide his services exclusively to the hiring party. In the broadcast industry, exclusivity is not necessarily the same as control.

SONZA seeks the recovery of allegedly unpaid talent fees, 13th month pay, separation pay, service incentive leave, signing bonus, travel allowance, and amounts due under the EE Stock Option Plan. These claims are all based on the May 1994 Agreement and stock option plan, and not on the Labor Code. This case call for an interpretation and implementation of the May 1994 Agreement. In effect, SONZAs cause of action is for breach of contract which is intrinsically a civil dispute cognizable by the regular courts.GARDEN OF MEMORIES vs. NLRCG.R. No. 160278, February 8, 2012BIENVENIDO D. GOMA v. PAMPLONA PLANTATION INCORPORATED557 SCRA 124

FACTS: Petitioner commenced the instant suit by filing a complaint for illegal dismissal, underpayment of wages, non-payment of premium pay for holiday and rest day, five (5) days incentive leave pay, damages and attorney's fees, against the respondent. The

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case was filed with the Sub-Regional Arbitration Branch No. VII of Dumaguete City. Petitioner claimed that he worked as a carpenter at the Hacienda Pamplona since 1995; that he worked from 7:30 a.m. to 12:00 noon and from 1:00 p.m. to 5:00 p.m. daily with a salary rate of P90.00 a day paid weekly; and that he worked continuously until 1997 when he was not given any work assignment.[4] On a claim that he was a regular EE, petitioner alleged to have been illegally dismissed when the respondent refused without just cause to give him work assignment. Thus, he prayed for backwages, salary differential, service incentive leave pay, damages and attorney's fees.

On the other hand, respondent denied having hired the petitioner as its regular EE. It instead argued that petitioner was hired by a certain Antoy CaÃ±averal, the manager of the hacienda at the time it was owned by Mr. Bower and leased by Manuel Gonzales, a jai-alai pelotari known as "Ybarra."[6] Respondent added that it was not obliged to absorb the EEs of the former owner.

In 1995, Pamplona Plantation Leisure Corporation (PPLC) was created for the operation of tourist resorts, hotels and bars. Petitioner, thus, rendered service in the construction of the facilities of PPLC. If at all, petitioner was a project but not a regular EE.[7]

On June 28, 1999, Labor Arbiter Geoffrey P. Villahermosa dismissed the case for lack of merit.[8] The Labor Arbiter concluded that petitioner was hired by the former owner, hence, was not an EE of the respondent. Consequently, his money claims were denied.[9]

On appeal to the National Labor Relations Commission (NLRC), the petitioner obtained favorable judgment when the tribunal reversed and set aside the Labor Arbiter's decision.

The NLRC upheld the existence of an ER-EE relationship, ratiocinating that it was difficult to believe that a simple carpenter from far away Pamplona would go to Dumaguete City to hire a competent lawyer to help him secure justice if he did not believe that his right as a laborer had been violated.

Contrary to the NLRC's finding, the CA concluded that there was no ER-EE relationship. The CA stressed that petitioner having raised a positive averment, had the burden of proving the existence of an ER-EE relationship.

ISSUE: 1) Is the petitioner a regular EE of the respondent? 2) If so, was he illegally dismissed from employment? and 3) Is he entitled to his monetary claims?

HELD: A thorough examination of the records compels this Court to reach a conclusion different from that of the CA. It is true that petitioner admitted having been employed by the former owner prior to 1993 or before the respondent took over the ownership and management of the plantation, however, he likewise alleged having been hired by the respondent as a carpenter in 1995 and having worked as such for two years until 1997.

He is a project EE as he was hired - 1) for a specific project or undertaking, and 2) the completion or termination of such project or undertaking has been determined at the time of engagement of the EE.

In other words, as regards those workers who worked in 1995 specifically in connection with the construction of the facilities of Pamplona Plantation Leisure Corporation, their employment was definitely "temporary" in character and not regular employment. Their employment was deemed terminated by operation of law the moment they had finished the job or activity under which they were employed.[22]Thus, departing from its initial stand that it never hired petitioner, the respondent eventually admitted the existence of ER-EE relationship before the CA. It, however, qualified such admission by claiming that it was PPLC that hired the petitioner and that the nature of his employment therein was that of a "project" and not "regular" EE.

The employment relationship having been established, the next question we must answer is: Is the petitioner a regular or project EE?

We find the petitioner to be a regular EE provided in Article 280 of the Labor Code, as amended.

Respondent is engaged in the management of the Pamplona Plantation as well as in the operation of tourist resorts, hotels, inns, restaurants, etc. Petitioner, on the other hand, was engaged to perform carpentry work. His services were needed for a period of two years until such time that the respondent decided not to give him work assignment anymore. Owing to his length of service, petitioner became a regular EE, by operation of law.

A project EE is assigned to carry out a specific project or undertaking the duration and scope of which are specified at the time the EE is engaged in the project. A project is a job or undertaking which is distinct, separate and identifiable from the usual or regular undertakings of the company. A project EE is assigned to a project which begins and ends at determined or determinable times.[30]

The principal test used to determine whether EEs are project EEs as distinguished from regular EEs, is whether or not the EEs were assigned to carry out a specific project or undertaking, the duration or scope of which was specified at the time the EEs were engaged for that project.[31] In this case, apart from respondent's bare allegation that petitioner was a project EE, it had not shown that petitioner was informed that he would be assigned to a specific

project or undertaking. Neither was it established that he was informed of the duration and scope of such project or undertaking at the time of his engagement.

Most important of all, based on the records, respondent did not report the termination of petitioner's supposed project employment to the Department of Labor and Employment (DOLE). Department Order No. 19 (as well as the old Policy Instructions No. 20) requires ERs to submit a report of an EE's termination to the nearest public employment office every time the employment is terminated due to a completion of a project. Respondent's failure to file termination reports, particularly on the cessation of petitioner's employment, was an indication that the petitioner was not a project but a regular EE.[32]

We stress herein that the law overrides such conditions which are prejudicial to the interest of the worker whose weak bargaining position necessitates the succor of the State. What determines whether a certain employment is regular or otherwise is not the will or word of the ER, to which the worker oftentimes acquiesces. Neither is it the procedure of hiring the EE nor the manner of paying the salary or the actual time spent at work. It is the character of the activities performed by the ER in relation to the particular trade or business of the ER, taking into account all the circumstances, including the length of time of its performance and its continued existence. Given the attendant circumstances in the case at bar, it is obvious that one year after he was employed by the respondent, petitioner became a regular EE by operation of law.[33]

As to the question of whether petitioner was illegally dismissed, we answer in the affirmative.

Well-established is the rule that regular EEs enjoy security of tenure and they can only be dismissed for just cause and with due process, i.e., after notice and hearing. In cases involving an EE's dismissal, the burden is on the ER to prove that the dismissal was legal. This burden was not amply discharged by the respondent in this case.

Obviously, petitioner's dismissal was not based on any of the just or authorized causes enumerated under Articles 282, 283 and 284 of the Labor Code, as amended. After working for the respondent for a period of two years, petitioner was shocked to find out that he was not given any work assignment anymore. Hence, the requirement of substantive due process was not complied with.

Apart from the requirement that the dismissal of an EE be based on any of the just or authorized causes, the procedure laid down in Book VI, Rule I, Section 2 (d) of the Omnibus Rules Implementing the Labor Code, must be followed. Failure to observe the rules is a violation of the EE's right to procedural due process.

Having shown that petitioner is a regular EE and that his dismissal was illegal, we now discuss the propriety of the monetary claims of the petitioner. An illegally dismissed EE is entitled to: (1) either reinstatement, if viable, or separation pay if reinstatement is no longer viable, and (2) backwages.

In the instant case, we are prepared to concede the impossibility of the reinstatement of petitioner considering that his position or any equivalent position may no longer be available in view of the length of time that this case has been pending. Moreover, the protracted litigation may have seriously abraded the relationship of the parties so as to render reinstatement impractical. Accordingly, petitioner may be awarded separation pay in lieu of reinstatement.

Petitioner's separation pay is pegged at the amount equivalent to petitioner's one (1) month pay, or one-half (1/2) month pay for every year of service, whichever is higher, reckoned from his first day of employment up to finality of this decision. Full backwages, on the other hand, should be computed from the date of his illegal dismissal until the finality of this decision.

On petitioner's entitlement to attorney's fees, we must take into account the fact that petitioner was illegally dismissed from his employment and that his wages and other benefits were withheld from him without any valid and legal basis. As a consequence, he was compelled to file an action for the recovery of his lawful wages and other benefits and, in the process, incurred expenses. On these bases, the Court finds that he is entitled to attorney's fees equivalent to ten percent (10%) of the monetary award.[42]

Lastly, we affirm the NLRC's award of salary differential. In light of our foregoing disquisition on the illegality of petitioner's dismissal, and our adoption of the NLRC's findings, suffice it to state that such issue is a question of fact, and we find no cogent reason to disturb the findings of the labor tribunal. Petition granted.DELA CRUZ v. MAERSK FILIPINAS CREWING, INC.551 SCRA 284

FACTS: Respondent Elite Shipping A.S. hired petitioner Dante D. de la Cruz as third engineer for the vessel M/S Arktis Morning through its local agency in the Philippines, co-respondent Maersk Filipinas Crewing Inc. Dela Cruz was deployed to Jebel Ali, United Arab Emirates and boarded M/S Arktis Morning. In a logbook entry, chief engineer Normann Per Nielsen expressed his dissatisfaction over Dela Cruz 's performance: he has been informed that if he does not improve his Job/Working performance within [a] short time he will be signed off according to CBA Article 1 (7)1. Entry was followed by another one which was similar in content

And then, Dela Cruz was finally informed of his discharge through a notice captioned "Notice according to CBA Article 1 (7)”: Reason for the decision is… The chief engineer has… made 2 entries in the engine logbook, regarding your insufficient job/working, which you are well aware of. Dela Cruz was then made to disembark at the

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port of Houston, Texas and was repatriated to Manila Dela Cruz thereafter filed a complaint for illegal dismissal

Labor Arbiter: ruled that Dela Cruz was dismissed without just cause and due process as the logbook entry (which respondents claimed to be the first notice to petitioner) was vague.NLRC: upheld LA decision CA: reversed the decision. CA deemed the logbook entries to be sufficient compliance with the first notice requirement of the law Issues

ISSUES:

1. WON Dela Cruz was illegally dismissed

2. WON Dela Cruz was a regular ER fee Held and Ratio

HELD: 1. Yes. An ER has the burden of proving that an EE's dismissal was for a just cause and that it complied with the rudimentary requirements of due process, that is, the opportunity to be heard and to defend oneself. Procedural due process requires that a seaman must be given a written notice of the charges against him and afforded a formal investigation where he can defend himself personally or through a representative before he can be dismissed and disembarked from the vessel The ER is bound to furnish him two notices: (1) the written charge and (2) the written notice of dismissal (in case that is the penalty imposed) in accordance with the POEA Revised Standard Employment Terms and Conditions Governing the Employment of Filipino Seafarers on Board Ocean-Going Vessels (POEA Revised Standard Employment Terms and Conditions)

The notice must state with particularity the acts or omissions for which his dismissal is being sought In this case, the logbook entries did not substantially comply with the first notice, or the written notice of charge(s). Respondents should have indicated the grounds for the threatened termination, the specific acts or omissions illustrating the same, along with the date and the approximate time of their occurrence.

The same thing may be said of the written notice of dismissal. It sorely lacked the necessary details that should accompany it. The records were devoid of any proof indicating that petitioner was ever given an opportunity to present his side. Respondents dismally failed to prove that petitioner's termination from employment was for cause Hence, not only was Dela Cruz's dismissal procedurally flawed, it was also without just cause. The first sixty (60) days of service is to be considered a probationary period which entitles a shipowner or his representative to terminate the contract by giving fourteen (14) days of written notice.

2.No. Seafarers are not covered by the term regular employment, as defined under Article 280 of the Labor Code Instead, they are considered contractual EEs whose rights and obligations are governed primarily by the POEA Standard Employment Contract for Filipino Seamen, the Rules and Regulations Governing Overseas Employment, and, more importantly, by Republic Act No. 8042, otherwise known as The Migrant Workers and Overseas Filipinos Act of 1995.

It is an accepted maritime industry practice that the employment of seafarers is for a fixed period only. The Court acknowledges this to be for the mutual interest of both the seafarer and the ER. Seafarers cannot stay for a long and indefinite period of time at sea as limited access to shore activity during their employment has been shown to adversely affect them. Furthermore, the diversity in nationality, culture and language among the crew necessitates the limitation of the period of employment.

While the court recognizes that petitioner was a member of Seamen's Union of the Philippines which had a CBA with respondent Elite Shipping A.S. providing for a probationary period of employment, the CBA cannot override the provisions of the POEA Standard Employment Contract. The law is read into, and forms part of, contracts. And provisions in a contract are valid only if they are not contrary to law, morals, good customs, public order or public policy. This is the only logical explanation possible as the parties cannot and should not violate the POEA's directive that a contract of enlistment must not exceed 12 months.GREGORIO S. SABEROLA, vs. RONALD SUAREZG.R. No. 151227 July 14, 2008NACHURA, J.:

FACTS: The case stemmed from a Complaint3 for illegal dismissal with money claims filed by respondents against petitioner before the Regional Arbitration Branch of Davao City. Petitioner is the owner and manager of G.S. Saberola Electrical Services, a firm engaged in the construction business specializing in installing electrical devices in subdivision homes and in commercial and non-commercial buildings. Respondents were employed by petitioner as electricians. They worked from Monday to Saturday and, occasionally, on Sundays, with a daily wage of P110.00.

Respondent Ronald Suarez (Suarez) was employed by petitioner from February 1995 until October 1997; while respondent Raymundo Lirasan, Jr. (Lirasan) worked from February 1995 until September 1997.4 Respondent Lirasan alleged that he was dismissed without cause and due process. He was merely informed by petitioner that his services were no longer needed without any explanation why he was terminated. Both respondents claimed that they received compensation below the minimum wage. They were given a fixed rate of P110.00 while the mandated minimum wage was P135.00, per Wage Order No. 5 issued by the Regional Tripartite and Productivity Board of Region XI. They also alleged that they did not receive 13th month pay for the entire period of their

employment.5 Both likewise claimed payment of overtime and service incentive leave.

In his defense, petitioner averred that respondents were part-time project EEs and were employed only when there were electrical jobs to be done in a particular housing unit contracted by petitioner. He maintained that the services of respondents as project EEs were coterminous with each project. As project EEs, the time of rendition of their services was not fixed. Thus, there was no practical way of determining the appropriate compensation of the value of respondents’ accomplishment, as their work assignment varied depending on the needs of a specific project.6

LA:dismissed. respondents were project EEs and were not entitled to their monetary claims. NLRC: affirmed. maintained that respondents were project EEs of petitioner. However, it declared that respondent Suarez was illegally dismissed from employment. It also awarded the monetary claims of respondents. CA: dismissed.

ISSUES: (1) whether respondent Suarez was illegally terminated, and (2) whether respondents are entitled to their monetary claims.1) Petitioner, as an electrical contractor, depends for his business on the contracts that he is able to obtain from real estate developers and builders of buildings. Thus, the work provided by petitioner depends on the availability of such contracts or projects. The duration of the employment of his work force is not permanent but coterminous with the projects to which the workers are assigned.

HELD: A project EE is one whose "employment has been fixed for a specific project or undertaking, the completion or termination of which has been determined at the time of the engagement of the EE or where the work or service to be performed is seasonal in nature and the employment is for the duration of the season."However, respondents, even if working as project EEs, enjoy security of tenure. Section 3, Article XIII, of the Constitution guarantees the right of workers to security of tenure, and because of this, an EE may only be terminated for just or authorized causes that must comply with the due process requirements17 mandated by law.

In Archbuild Masters and Construction, Inc. v. NLRC,18 we held that the employment of a project worker hired for a specific phase of a construction project is understood to be coterminous with the completion of such phase and not upon the accomplishment of the whole project. A worker hired for a particular phase of a construction project can be dismissed upon the completion of such phase. Project workers in the construction industry may also be terminated as the phase of a construction project draws nearer to completion when their services are no longer needed, provided they are not replaced.19

Nonetheless, when a project EE is dismissed, such dismissal must still comply with the substantive and procedural requirements of due process. Termination of his employment must be for a lawful cause and must be done in a manner which affords him the proper notice and hearing.20

In this regard, we hold that respondent Suarez was illegally terminated by petitioner. A project EE must be furnished a written notice of his impending dismissal and must be given the opportunity to dispute the legality of his removal.21 In termination cases, the burden of proof rests on the ER to show that the dismissal was for a just or authorized cause. ERs who hire project EEs are mandated to state and prove the actual basis for the EE’s dismissal once its veracity is challenged. Petitioner failed to present any evidence to disprove the claim of illegal dismissal. It was uncontested that the last work of the respondents with petitioner’s company was the electrical installation in some housing units at the Ciudad Esperanza Housing Project.

2)We have consistently held that as a rule, one who pleads payment has the burden of proving it. Even when the plaintiff alleges non-payment, still the general rule is that the burden rests on the defendant to prove payment, rather than on the plaintiff to prove non-payment. The debtor has the burden of showing with legal certainty that the obligation has been discharged by payment.

In the instant case, the burden of proving payment of the monetary claims rests on petitioner, being the ER of respondents. This is because the pertinent personnel files, payrolls, records, remittances and other similar documents that would show that the claims have been paid are not in the possession of the worker but in the custody and absolute control of the ER.24 Sadly, the petitioner failed to do so.PEDY CASERES and ANDITO vs. UNIVERSAL ROBINA SUGAR MILLING CORPORATION (URSUMCO)G.R.NO. 159343 September 28, 2007AUSTRIA-MARTINEZ, J.:

FACTS: Universal Robina Sugar Milling Corporation (respondent) is a corporation engaged in the cane sugar milling business. Petitioner Pedy Caseres first applied with private respondent URSUMCO on January 9, 1989 as a worker assisting the crane operator at the transloading station. while Andito Pael (petitioner Pael). in 1993Upon application, Caseres was interviewed and made to understand that his employment would be co-terminus with the phase of work to which he would be then assigned, that is until February 5, 1989 and thereafter he would be free to seek employment elsewhere. Caseres agreed and signed the contract of employment for specific project or undertaking. After an absence of more than five (5) months, Caseres re-applied with respondent as a seasonal project worker assisting in the general underchassis reconditioning to transport units on July 17, 1989. Like his first assignment, Caseres was made to understand that his services

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would be co-terminus with the work to which he would be then assigned that is from July 17, 1989 to July 20, 1989 and that thereafter he is free to seek employment elsewhere to which Caseres agreed and readily signed the contract of employment for specific project or undertaking issued to him. Thereafter Caseres voluntarily signed several other employment contracts for various undertakings with a determinable period. As in the first contract, Caseres' services were co-terminus with the work to which he was assigned, and that thereafter, he was free to seek employment with other sugar millers or elsewhere.

Petitioners' contracts were renewed from time to time, until May 1999 when they were informed that their contracts will not be renewed anymore. Petitioners filed a complaint for illegal dismissal, regularization, incentive leave pay, 13th month pay, damages and attorney’s fees.

LA: dismissed the complaint “for not being substantiated with clear and convincing evidence. NLRC: affirmed the LA's dismissal. CA: dismissed the petition filed before it.

ISSUES: 1)WON THE PETITIONERS ARE SEASONAL/PROJECT/TERM EES NOT REGULAR EES OF RESPONDENTS; 2)PETITIONERS WERE ILLEGALLY DISMISSED AND ARE ENTITLED TO BACKWAGES AND OTHER MONETARY BENEFITS PRAYED FOR IN THE COMPLAINT.

HELD: ART.280 provides for three kinds of EEs: (a) regular EEs or those who have been “engaged to perform activities which are usually necessary or desirable in the usual business or trade of the ER”; (b) project EEs or those “whose employment has been fixed for a specific project or undertaking, the completion or termination of which has been determined at the time of the engagement of the EE or where the work or services to be performed is seasonal in nature and the employment is for the duration of the season”; and (c) casual EEs or those who are neither regular nor project EEs.

The principal test for determining whether an EE is a project EE or a regular EE is whether the employment has been fixed for a specific project or undertaking, the completion or termination of which has been determined at the time of the engagement of the EE.

In the case at bar, We note that complainants never bothered to deny that they voluntarily, knowingly and willfully executed the contracts of employment. Neither was there any showing that respondents exercised moral dominance on the complainants, x x x it is clear that the contracts of employment are valid and binding on the complainants.

The execution of these contracts in the case at bar is necessitated by the peculiar nature of the work in the sugar industry which has an off milling season. The very nature of the terms and conditions of complainants' hiring reveals that they were required to perform phases of special projects for a definite period after, their services are available to other farm owners. This is so because the planting of sugar does not entail a whole year operation, and utility works are comparatively small during the off-milling season. x x x[14]

The fact that petitioners were constantly re-hired does not ipso facto establish that they became regular EEs. Their respective contracts with respondent show that there were intervals in their employment. In petitioner Caseres's case, while his employment lasted from August 1989 to May 1999, the duration of his employment ranged from one day to several months at a time, and such successive employments were not continuous. With regard to petitioner Pael, his employment never lasted for more than a month at a time. These support the conclusion that they were indeed project EEs, and since their work depended on the availability of such contracts or projects, necessarily the employment of respondent’s work force was not permanent but co-terminous with the projects to which they were assigned and from whose payrolls they were paid. As ruled in Palomares v. National Labor Relations Commission,[18] it would be extremely burdensome for their ER to retain them as permanent EEs and pay them wages even if there were no projects to work on.

Moreover, even if petitioners were repeatedly and successively re-hired, still it did not qualify them as regular EEs, as length of service is not the controlling determinant of the employment tenure of a project EE,[19] but whether the employment has been fixed for a specific project or undertaking, its completion has been determined at the time of the engagement of the EE.[20] Further, the proviso in Article 280, stating that an EE who has rendered service for at least one (1) year shall be considered a regular EE, pertains to casual EEs and not to project EEs.[21]

Accordingly, petitioners cannot complain of illegal dismissal inasmuch as the completion of the contract or phase thereof for which they have been engaged automatically terminates their employment.LEYTE GEOTHERMAL POWER PROGRESSIVE EES UNION vs. PNOC-EDCG.R. No.170351, March 30, 2011ARO vs. NLRCG.R. No.174792, March 7, 2012

LOLITA R. LACUESTA vs. ATENEO DE MANILA UNIVERSITYG.R. No. 152777, Dec. 9, 2005

FACTS:Respondent Ateneo hired, on a contractual basis, petitioner Lolita R. Lacuesta as a part-time lecturer for the 2nd semester of school year 1988-1989. She was re-hired, still on a contractual basis, for the 1st and 2nd semesters of school year 1989-1990. Petitioner was appointed as full-time instructor on probation effective June 1, 1990 until March 31, 1991. Her contract as faculty on probation was renewed on April 1, 1991 until March 31, 1992

and again from April 1, 1992 until March 31, 1993. During years she was on probation status. In a letter dated January 27, 1993, respondent notified petitioner that her contract would no longer be renewed because she did not integrate well with the English Department and that she was not being terminated, but her contract would simply expire; hence, Lacuesta’s petition.

ISSUE:Whether or not petitioner has already acquired permanent employment and was illegally dismissed.

HELD:The requisites to acquire permanent employment, or security of tenure, are (1) the teacher is a full-time teacher; (2) the teacher must have rendered three consecutive years of service; and (3) such service must have been satisfactory. Only when one has served as a full-time teacher can he acquire permanent or regular status. The petitioner was a part-time lecturer before she was appointed as a full-time instructor on probation. As a part-time lecturer, her employment as such had ended when her contract expired. Thus, the three semesters she served as part-time lecturer could not be credited to her in computing the number of years she has served to qualify her for permanent status. Moreover, completing the probation period does not automatically qualify her to become a permanent EE of the university. Petitioner could only qualify to become a permanent EE upon fulfilling the reasonable standards for permanent employment as faculty member. Consistent with academic freedom and constitutional autonomy, an institution of higher learning has the prerogative to provide standards for its teachers and determine whether these standards have been met. In the instant case, petitioner, did not attain permanent status and was not illegally dismissed.MT. CARMEL COLLEGE vs. NLRCG.R. No. 117514 October 4, 1996PUNO, J.:p

FACTS: petitioner school hired private respondent as grade school teacher under a written Contract of Probationary Employment. Paragraph 5 of the contract provides for private respondent's salary and the duration of her employment, thus:

5. That my salary or wage shall be P1,675 per month and until such time as the School decides to retain me in its permanent employ, my employment therein shall be deemed to run from SY 1989-1990 to SY 1991-1992 (day to day of month to month) and my service may be terminated at any time after I fail to comply with the foregoing conditions laid down by the School. The School shall have no further liability to me whatsoever, either by way of separation pay or otherwise.

In March 1992, petitioner school terminated the services of private respondent as she did not pass the National Teacher's Board examination. Private respondent filed a complaint for illegal dismissal against the petitioners.

LA: guilty of illegal dismissal and ordered them to reinstate private respondent with full backwages. NLRC: reversed the decision of the LA. It found private respondent's dismissal from service to be legal. Public respondent, however, ordered petitioners to pay private respondent the amount of P10,200.00, representing her salary for the unexpired portion of her probationary period. According to public respondent, private respondent's probationary employment was supposed to end in June 1992, but her services were terminated three (3) months earlier, in March 1992. Hence, it ordered petitioners to pay private respondent her salary corresponding to those months. 5

ISSUE: WON the NLRC gravely abused its discretion in finding an "unexpired portion" in private respondent's probationary contract, which expires at the end of the school year 1991-1992, and holding petitioners liable for the payment of her salary equivalent to that "unexpired portion". 6

HELD: Under Section 48 of the Manual of Regulations for Private Schools, a school year or academic year begins on the second Monday of June and shall consist of "approximately 40 weeks of normally 5 school days each, exclusive of approved vacations and including legal and special holidays, and special activities."

a calendar year consists of twelve (12) months, while a school year consists only of ten (10) months. A school year begins in June of one calendar year and ends in March of the succeeding calendar year.

Public respondent therefore erred in finding that private respondent's probationary employment was supposed to end in June 1992. The contract clearly states the duration of private respondent's term — it shall begin at the opening of school year 1989-1990 (i.e., June 1989) and shall end at the closing of school year 1991-1992 (i.e., March, 1992). Hence, petitioners are not obliged to pay private respondent her salary for the months of April, May and June as her employment already ceased in March, in accordance with the provisions of her employment contract.ALFARO vs. CAGR No. 140182, Aug. 28, 2001

FACTS: Petitioner Candido Alfaro (Alfaro) was employed as a helper/operator of private respondent Star Paper Corp. (Star Paper). When Alfaro reported back to work after availing a sick leave, he wassurprised to find out that another worker was recruited to take his place. Consequently, he wastransferred to the wrapping section of Star Paper. Subsequently, he was assigned to a new work whichwas even more difficult.One day, Alfaro alleged that he was pressured to sign a resignation letter, and a ´Release andQuit Claim in exchange for P3,000 as his 13th month pay and 15 days sick leave pay. After a few months, he filed a complaint to the Labor Arbiter (LA) for non-payment of separation pay andcomplaint for

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illegal dismissal. Contrastingly, Star Paper contends that, because of his illness, it wasAlfaro who asked the company to allow him to resign. The LA, National Labor Relations Commission(NLRC) and the Court of Appeals (CA) all ruled that Alfaro did resign voluntarily.

Respondent, in the lower court, alleged that Petitioner contracted PTB Minimal Active while still under its employ for which reasons petitioner applied for SSS benefits. Subsequently, complainant asked the respondent that he be allowed to resign with benefits. After getting a favorable reply, complainant submitted a written resignation letter.The LA ruled for the respondent, which was later upheld by the CA.

ISSUE:Whether or not the CA is correct in holding that the respondent was not illegally dismissed by the private respondent.

HELD: Petition DENIED. The factual findings of the LA, NLRC, as affirmed by CA, reveal that Alfaro resigned from hiswork due to his illness, with the understanding that Star Paper would give him a separation pay³whichunfortunately, Star Paper did not comply with. The claim of Alfaro that he was illegally dismissedcannot be sustained, considering that his voluntary resignation has been indubitably established as a factby the three tribunals..Voluntary resignation is defined as an act of an EE, who finds himself in a situation inwhich he believes that personal reasons cannot be sacrificed in favor of the exigency of the service; thus,he has no other choice but to disassociate himself from his employment. Based on the facts, it wasAlfaro who negotiated for a resignation with separation pay as the manner in which his employmentrelations with Star Paper would end. Alfaro was already suffering from a lingering illness at the time hetendered his resignation. Alfaro·s continued employment would have been detrimental not only to hishealth, but also to his performance as an EE of Star Paper. Alfaro·s resignation with separationpay was the best option for him under the said circumstances.The Court adds further that not all waivers and quitclaims are invalid as against public policy. If the agreement was voluntarily entered into and represented a reasonable settlement, it is binding on theparties and may not later be disowned, simply because of a change of mind. Moreover, an EE whoresigns and executes a quitclaim in favor of the ER is generally estopped from filing any furthermoney claims against the ER arising from the employment. Considering, however, that Star Paperdid not comply with its agreement with Alfaro, the Court ordered Star Paper to pay Alfaro his separationpay amounting to P8,452.50INTERTROD MARITIME, INC. and TROODOS SHIPPING CO. vs. NLRC and ERNESTO DE LA CRUZG.R. No. 81087 June 19, 1991PADILLA, J.:p

FACTS: On 10 May 1982, private respondent Ernesto de la Cruz signed a shipboard employment contract with petitioner Troodos Shipping Company as principal and petitioner Intertrod Maritime, Inc., as agent to serve as Third Engineer on board the M/T "BREEDEN" for a period of twelve (12) months with a basic monthly salary of US$950.00. Private respondent eventually boarded a sister vessel, M/T "AFAMIS" and proceeded to work as the vessel's Third Engineer under the same terms and conditions of his employment contract previously referred to. 2

On 26 August 1982, while the ship M/T "Afamis was at Port Pylos, Greece, private respondent requested for relief, due to "personal reason." 3 The Master of the ship approved his request but informed private respondent that repatriation expenses were for his account and that he had to give 30 days notice in view of the Clause 5 of the employment contract so that a replacement for him (private respondent) could be arranged. 4

On 30 August 1982, while the vessel was at Port Said in Egypt and despite the fact that it was only 4 days after private respondent's request for relief, the Master "signed him off" and paid him in cash all amounts due him less the amount of US$780.00 for his repatriation expenses, as evidenced by the wages account signed by the private respondent. 5

On his return to the Philippines, private respondent filed a complaint with the National Seamen Board (NSB)(now POEA) charging petitioners for breach of employment contract and violation of NSB rules and regulations. Private respondent alleged that his request for relief was made in order to take care of a Filipino member of the crew of M/T "AFAMIS" who was hospitalized on 25 August 1982 in Athens, Greece. However, the Master of the ship refused to let him immediately disembark in Greece so that the reason for his request for relief ceased to exist. Hence, when the Master of the ship forced him to step out in Egypt despite his protestations to the contrary, there being no more reason to request for relief, an illegal dismissal occurred and he had no other recourse but to return to the Philippines at his own expense.

In its Answer to the complaint, petitioners denied the allegations of the complainant and averred that the contract was cut short because of private respondent's own request for relief so that it was only proper that he should pay for his repatriation expenses in accordance with the provisions of their employment contract.

ISSUE: whether or not complainant's termination is illegal.

HELD: Article 21(c) of the Labor Code requires that the Philippine Overseas Employment Administration (formerly NSB) should approve and verify a contract for overseas Employment. 11 A contract, which is approved by the National Seamen Board, such as the one in this case, is the law between the contracting parties; and where there is nothing in it which is contrary to law, morals, good customs, public policy or public order, the validity of said contract must be sustained. 12

Clearly, therefore, private respondent Ernesto de la Cruz was required by the employment contract not only to pay his own repatriation expenses but also to give 30 days notice should he decide to terminate his employment prior to the expiration of the period provided in the contract. When the Master approved his request for relief, the Master emphasized that private respondent was required to give 30 days notice and to shoulder his own repatriation expenses. Approval of his request for relief, therefore, did not constitute a waiver by petitioners of the provisions of the contract, as private respondent would have us believe, for it was made clear to him that the provisions of the contract, insofar as the thirty 30days notice and repatriation expenses were concerned, were to be enforced.

Private respondent claims that his request for relief was only for the reason of taking care of a fellow member of the crew so much so that when he was not allowed to disembark in Port Pylos, Greece, the reason no longer existed and, therefore, when he was forced to "sign off" at Port Said, Egypt even when he signified intentions of continuing his work, he was illegally dismissed. We sympathize with the private respondent; however, we cannot sustain such contention. Resignation is the voluntary act of an EE who "finds himself in a situation where he believes that personal reasons cannot be sacrificed in favor of the exigency of the service, then he has no other choice but to disassociate himself from his employment." 16 The ER has no control over resignations and so, the notification requirement was devised in order to ensure that no disruption of work would be involved by reason of the resignation. This practice has been recognized because "every business enterprise endeavors to increase its profits by adopting a device or means designed towards that goal." 17

Resignations, once accepted and being the sole act of the EE, may not be withdrawn without the consent of the ER. In the instant case, the Master had already accepted the resignation and, although the private respondent was being required to serve the t30 days notice provided in the contract, his resignation was already approved. Private respondent cannot claim that his resignation ceased to be effective because he was not immediately discharged in Port Pylos, Greece, for he could no longer unilaterally withdraw such resignation. When he later signified his intention of continuing his work, it was already up to the petitioners to accept his withdrawal of his resignation. The mere fact that they did not accept such withdrawal did not constitute illegal dismissal for acceptance of the withdrawal of the resignation was their (petitioners') sole prerogative.

Under the terms of the employment contract, it is the ship's Master who determines where a seaman requesting relief may be "signed off." It is, therefore, erroneous for private respondent to claim that his resignation was effective only in Greece and that because he was not immediately allowed to disembark in Greece (as the ER wanted compliance with the contractual conditions for termination on the part of the EE), the resignation was to be deemed automatically withdrawn.

The decision of the NLRC is therefore set aside. To sustain it would be to authorize undue oppression of the ER. After all, "the law, in protecting the rights of the laborer, authorizes neither oppression nor self-destruction of the ER." 19BLUE ANGEL MANPOWER AND SECURITY SERVICES, INC. vs. CAG.R. No. 161196 July 28, 2008VELASCO, JR., J.:

FACTS: Blue Angel, a messengerial and security agency, hired private respondents Romel Castillo, Wilson Ciriaco, Gary Garces, and Chesterfield Mercader as security guards and detailed them at the National College of Business and Arts (NCBA) in Cubao, Quezon City.

On April 20, 1999, Castillo and Mercader, later joined by Ciriaco and Garces, filed a complaint for illegal deductions and other money claims against Blue Angel. Eventually, they amended their complaint to include illegal dismissal. According to the four guards, they were required, while still with Blue Angel, to work from 7:00 a.m. to 7:00 p.m. without OT and premium holiday pay, among other benefits. They also alleged receiving only PhP 5,000 a month or PhP 166 per day and, from this amount, Blue Angel deducted PhP 100 as cash bond. They further averred that Blue Angel, when apprised of their original complaint, illegally terminated Garces and Ciriaco on April 11 and 12, 1999, respectively, and Castillo and Mercader on April 28, 1999. The four guards prayed for (1) payment of backwages, wage differentials, premium and overtime pay for holidays, and 13th month pay; (2) reimbursement of their cash bond; (3) reinstatement or separation pay; and (4) damages.

Blue Angel, for its part, denied the charges of illegal dismissal. It alleged that, on two occasions, the officer-in-charge (OIC) of the Security Force of NCBA, Reynaldo Dayag, reported that the four complaining guards had, while on guard duty detail with the school, committed several infractions, among them: insubordination, sleeping while on duty, and absence without leave (AWOL). When summoned to explain their side on the derogatory report, only Castillo, Ciriaco, and Garces, according to Blue Angel, showed up, but not Mercader who had since stopped reporting for work and thus considered on AWOL. Continuing, Blue Angel alleged that when told that they would be subjected to an investigation, Castillo, Ciriaco, and Garces pleaded that they be allowed to resign instead. The three, so Blue Angel claimed, then tendered their pro-forma letters of resignation followed by handwritten resignation letters in the nature of quitclaims. To refute the guards’ claims of non-payment of what was due them, Blue Angel presented the payrolls

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and vouchers from July 1997 to April 1999 that showed the four guards’ respective gross salaries and deductions.

LA: ordered to immediately reinstate them with backwages. NLRC: affirmed with modification that of the LA.

ISSUE: WON private respondents were illegally dismissed hinges on the determination of whether or not they freely and voluntarily resigned as shown by the two sets of resignation letters.

HELD: Blue Angel insists that the guards had pleaded to be allowed to resign when they were told of the pending investigation, and that they eventually tendered their pro-forma resignation letters followed by their own handwritten resignation letters. Our review of the circumstances surrounding these resignation letters does not support Blue Angel’s contentions that these letters are indications that private respondents had voluntarily resigned. We agree with the labor arbiter when he pointed out that the undated, similarly worded resignation letters tended to show that the guards were made to copy the pro-forma letters, in their own hand, to make them appear more convincing that the guards had voluntarily resigned. As the labor arbiter noted, the element of voluntariness of the resignations is even more suspect considering that the second set of resignation letters were pre-drafted, similarly worded, and with blank spaces filled in with the effectivity dates of the resignations.5 In their Comment, private respondents claimed being forced to sign and copy the pro-forma resignation letters and quitclaims on pain that they would not get their remaining compensations.6

We are more inclined to believe the dismissed guards. Other circumstances have been aptly pointed out by respondents-guards in their Comment that we are wont to agree that they were forced into a situation where to refuse to sign the resignation letters and quitclaims meant loss of money for the immediate and urgent basic needs of their family. To buttress the conclusion that the resignation letters were involuntary on the part of the guards, we find convincing the circumstances mentioned in the Comment of respondents-guards. For one, it seemed unlikely and improbable that Garces and Ciriaco would voluntarily resign on April 26, 1999 when they had 15 and 12 days earlier, or on April 11 and 12, 1999, already been terminated. Then again, it was likewise inconsistent and implausible that Castillo would voluntarily tender his resignation and sign a quitclaim on April 28, 1999, when Mercader and he had in fact already filed a complaint against Blue Angel with the NLRC regarding illegal deductions of their salary eight days earlier, or on April 20, 1999.7 Lastly, there is nothing on record showing that Blue Angel provided any proof that Castillo, Ciriaco, and Garces had indeed committed the infractions attributed to them. Blue Angel merely enumerated the offenses without providing particulars as to the date and place these infractions were committed. Neither did Blue Angel present written notices, warnings, and affidavits of the OIC to support its allegations against the guards.

With the finding that private respondents were illegally dismissed, they are entitled to reinstatement to their positions without loss of their seniority rights and with full backwages, inclusive of allowances, and to other benefits or their monetary equivalent computed from the time private respondents’ compensation was withheld from them up to the time of their actual reinstatement as provided for in Article 279 of the Labor Code.

As the law now stands, illegally dismissed EEs are entitled to two reliefs, namely: backwages and reinstatement.lawph!l They are entitled to reinstatement, if viable, or separation pay, if reinstatement is no longer feasible, and backwages.10 The award of one does not preclude the other as the Court had, in proper cases, ordered the payment of both.11 Where an EE would have been entitled to reinstatement with full backwages, but circumstances, i.e., strained relationships, make reinstatement impossible, the more equitable disposition would be to award separation pay equivalent to at least one month pay, or one month pay for every year of service, whichever is higher, in addition to full backwages, inclusive of allowances, and benefits or their monetary equivalent, computed from the time the EE’s compensation was withheld up to the time of the EE’s actual reinstatement.12

As to the other money claims of private respondents, the vouchers,13 payrolls,14 and other documentary evidence15 show that the other monetary benefits being claimed by private respondents have already been duly paid.MA. FININA E. VICENTE vs. CAG.R. No. 175988 August 24, 2007YNARES-SANTIAGO, J.:

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.[6]

Petitioner alleged that it has been a practice among the EEs of Cinderella to obtain cash advances by charging the amount from the net sales of Cinderella’s suppliers/consignors. Mr. Miguel Tecson (AVP-Finance) approves the requests for cash advances, Mr. Arthur Coronel (AVP-Merchandising) issues the memos instructing the accounting department to issue the corporate checks and finally, Ms. Theresa Santos (General Manager) rediscounts them by issuing her personal checks.

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. As a result of this alleged force and intimidation, petitioner tendered her resignation letter.

On January 13, 2003, or three 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. It claimed that petitioner voluntarily resigned from office before the internal audit was completed and before any formal investigation was initiated. She tendered her resignation on February 7, 2000, then submitted another resignation letter on February 15, 2000 where she confirmed the first resignation letter. Respondent alleged that the complaint for constructive dismissal was a mere afterthought demonstrated by the long delay of filing the same.

LA: constructively and illegally dismissed. NLRC:affirmed the decision of the LA.

ISSUE: whether petitioner was constructively dismissed.

HELD: From the totality of evidence on record, it was clearly demonstrated that respondent Cinderella has sufficiently discharged its burden to prove that petitioner’s resignation was voluntary. In voluntary resignation, the EE is compelled by personal reason(s) to disassociate himself from employment. It is done with the intention of relinquishing an office, accompanied by the act of abandonment.[21] To determine whether the EE indeed intended to relinquish such employment, the act of the EE before and after the alleged resignation must be considered.[22]

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 EE forced to resign.

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. Taken together, these circumstances are substantial proof that petitioner’s resignation was voluntary.

Hence, petitioner cannot take refuge in the argument that it is the ER who bears the burden of proof that the resignation is voluntary and not the product of coercion or intimidation. Having submitted a resignation letter, it is then incumbent upon her to prove that the resignation was not voluntary but was actually a case of constructive dismissal with clear, positive, and convincing evidence.[26] Petitioner failed to substantiate her claim of constructive dismissal.

We agree with the Court of Appeals that it was grave error on the part of the NLRC to rely on the allegation that Mr. Tecson threatened and forced petitioner to resign. Other than being unsubstantiated and self-serving, the allegation does not suffice to support the finding of force, intimidation, and ultimately constructive dismissal. Bare allegations of constructive dismissal, when uncorroborated by the evidence on record, cannot be given credence.

In St. Michael Academy v. National Labor Relations Commission,[28] we ruled that mere allegations of threat or force do not constitute substantial evidence to support a finding of forced resignation. We enumerated the requisites for intimidation to vitiate consent as follows: (1) that the intimidation caused the consent to be given; (2) that the threatened act be unjust or unlawful; (3) that the threat be real or serious, there being evident disproportion between the evil and the resistance which all men can offer, leading to the choice of doing the act which is forced on the person to do as the lesser evil; and (4) that it produces a well-grounded fear from the fact that the person from whom it comes has the necessary means or ability to inflict the threatened injury to his person or property. x x x[29]

None of the above requisites was established by petitioner. Moreover, we note that petitioner is holding a managerial position with a salary of P27,000.00 a month. Hence, she is not an ordinary EE with limited understanding such that she would be easily maneuvered or coerced to resign against her will. Thus, we find no compelling reason to disturb the findings and conclusions of the Court of Appeals that petitioner voluntarily resigned and was not constructively dismissed by respondent.COLEGIO DE SAN JUAN DE LETRAN – CALAMBA vs. BELEN P. VILLAS G.R. No. 137795 March 26, 2003CORONA, J.:

FACTS: The antecedent facts show that respondent Belen Villas was employed by the petitioner School as high school teacher in September 1985. On May 15, 1995, she applied for a study leave for six months, from June to December 31, 1995. In a letter dated June 2, 1995, Mrs. Angelina Quiatchon, principal of the high school

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department, told Villas that her request for study leave was granted for one school year subject to the following conditions:1. The requested study leave takes effect on June 5, 1995 and ends on March 31, 1996;2. The requested study leave involves no remuneration on the part of the School;3. The documents that justify the requested study leave should be submitted upon return on April 1, 1996;4. Faculty Manual – Section 40 Special Provisions on the Granting of Leave of Absence should be observed:

a. Once proven beyond reasonable doubt during the period of the approved leave of absence that the faculty member shall engage himself in employment outside the institution, the administration shall regard the faculty member on leave as resigned;b. The maximum length of leave of absence that may be applied for by the faculty member and granted by administration is twelve (12) months. If, at the lapse of the period, the faculty member fails to return for work, the administration shall regard the faculty member as resigned.4

Respondent alleged that she intended to utilize the first semester of her study leave to finish her masteral degree at the Philippine Women’s University (PWU). Unfortunately, it did not push through so she took up an Old Testament course in a school of religion and at the same time utilized her free hours selling insurance and cookware to augment her family’s income. However, during the second semester of her study leave, she studied and passed 12 units of education subjects at the Golden Gate Colleges in Batangas City. In response to the letters sent her by petitioner to justify her study leave, she submitted a certification from Golden Gate Colleges and a letter explaining why she took up an Old Testament course instead of enrolling in her masteral class during the first semester.

On June 3, 1996, the President and Rector of the School, Fr. Ramonclaro G. Mendez, O. P., wrote her, stating that her failure to enroll during the first semester was a violation of the conditions of the study leave and that the reasons she advanced for failure to enroll during the first semester were not acceptable, thus:

In the first place, prudence dictates that you should have ascertained first that you are still eligible to study at PWU to finish your masteral degree before applying and securing the approval of your leave by the School. In the second place, you should have informed the School at once that you could not enroll in the first semester so that your leave could have been adjusted for only one-half (1/2) year. Thirdly, your engaging in some part-time business instead of studying in the first semester of your leave is sufficient justification for the School to consider you as resigned under the Faculty Manual. And lastly, your failure to study in the first semester of your study leave without informing the School beforehand constitutes deception, to say the least, which is not a good example to the other teachers.5

Her case was subsequently referred to the grievance committee, as provided for in the collective bargaining agreCBA, and the report was submitted on July 12, 1996, both to the union and the School. However, since the grievance committee could not reach a decision, the case was referred for voluntary arbitration.

Respondent then filed a case for illegal dismissal and the case was assigned to VA Mayuga who found that respondent was illegally dismissed.

ISSUE:whether or not respondent’s alleged violation of the conditions of the study grant constituted serious misconduct which justified her termination from petitioner School.

HELD: Under the Labor Code, there are twin requirements to justify a valid dismissal from employment: (a) the dismissal must be for any of the causes provided in Article 282 of the Labor Code (substantive aspect) and (b) the EE must be given an opportunity to be heard and to defend himself (procedural aspect).7 The procedural aspect requires that the EE be given two written notices before she is terminated consisting of a notice which apprises the EE of the particular acts/omissions for which the dismissal is sought and the subsequent notice which informs the EE of the ER’s decision to dismiss him.In the case at bar, the requirements for both substantive and procedural aspects were not satisfied.

We affirm the findings of the Court of Appeals that there was no violation of the conditions of the study leave grant. Thus, respondent could not be charged with serious misconduct warranting her dismissal as a teacher in petitioner School. Petitioner has failed to convince us that the three alleged violations of the study leave grant constituted serious misconduct which justified the termination of respondent’s employment.

Misconduct is improper or wrongful conduct. It is the transgression of some established and definite rule of action, a forbidden act, a dereliction of duty, willful in character, and implies wrongful intent and not mere error of judgment.9 Under Article 282 of the Labor Code, the misconduct, to be a just cause for termination, must be serious. This implies that it must be of such grave and aggravated character and not merely trivial or unimportant.10 Examples of serious misconduct justifying termination, as held in some of our decisions, include: sexual harassment (the manager’s act of fondling the hands, massaging the shoulder and caressing the nape of a secretary);11 fighting within company premises;12 uttering obscene, insulting or offensive words against a superior;13 misrepresenting that a student is his nephew and pressuring and intimidating a co-teacher to change that student’s failing grade to passing.14

In this light, the alleged infractions of the respondent could hardly be considered serious misconduct.

With regard to respondent’s alleged failure to report for work on April 1, 1996 and failure to enroll during the first semester, the Court of Appeals and the Voluntary Arbitrator found that she did in fact report for work on April 1, 1996 and that she was in fact enrolled during the first semester. Assuming arguendo that she did fail to report for work on April 1, 1996 and enroll during the first semester, the most respondent could be charged with was simple misconduct. In both instances, there was evidence of substantial compliance by respondent.

Her alleged failure to report for work exactly on April 1, 1996 is not equivalent to "failure to return for work," a sanctionable offense under the Faculty Manual. As correctly pointed out by the VA, petitioner failed to establish that there was a distinct and definite assignment that needed to be done personally by respondent, and specifically on April 1, 1996, which she failed to do on said date. Although we give credence to petitioner’s argument that a private high school teacher still has work at the end of the schoolyear – to assist in the graduation preparations – and in the beginning of the school year – to assist in the enrollment – such tasks cannot be considered a teacher’s main duties, the failure to perform which would be tantamount to dereliction of duty or abandonment. Besides, there is no disagreement that respondent reported for work on May 15, 1996 at which time petitioner School could have asked her to assist in the enrollment period. At most, respondent failed to help out during the preparations for graduation and this, to us, was not a significant reason for terminating or dismissing her from her job.

With regard to her alleged failure to enroll during the first semester, although we agree with the President and Rector, Fr. Mendez, that respondent should have first ascertained whether she was still eligible to study at the PWU before applying for a study leave,17 such lapse was more of an error in judgment rather than an act of serious misconduct. If respondent intended to use her study leave for other unauthorized purposes, as petitioner would like us to believe, she would not have enrolled at the Golden Gate Colleges during the second semester. Yet she did, as borne out by the certification18 prepared by the Registrar of Golden Gate Colleges.

Furthermore, we find that respondent did not violate the prohibition on engaging in employment outside the school as specified in her study leave grant and as provided in the Faculty Manual. We find the provision of the Faculty Manual ambiguous as the term "employment" connotes a number of meanings. Employment in its general sense connotes any work or service rendered in exchange for money. The loose connotation of employment may therefore cover jobs without an ER-EE relationship. However, inasmuch as in this case, petitioner School drafted the said policy, the term "employment" should be strictly construed against it.20 Moreover, it is a settled rule that in controversies between a laborer and his master, doubts reasonably arising from the evidence, or in the interpretation of agreements and writings should be resolved in the former’s favor.21 The act of respondent in selling insurance and cookware was not the "employment" prohibited by the Faculty Manual. The prohibition against outside employment was enacted to prevent the teacher from using the study leave period for unsanctioned purposes since the School pays the teacher while pursuing further studies. That rationale was not violated by respondent for the reason that her part-time activity of selling insurance and cookware could not have prevented her in any way from studying and, more importantly, she was not being paid by the School while on leave. How did the school expect her and her family to survive without any income for one whole year?

Considering that these notices are mandatory, the absence of one renders any management decision to terminate null and void. Petitioner failed to give respondent the first notice which should have informed the latter of the former’s intention to dismiss her. Petitioner argues that it complied with this requirement as there were several exchanges of communication between the School and respondent regarding the cause of her termination. However, we find that these letters did not apprise respondent that her dismissal was being sought by petitioner School as said letters only required respondent to submit proof of enrollment.

With regard to the respondent’s claim for the six-month study leave and vacation pay, we affirm the decision25 of the Voluntary Arbitrator that respondent is not entitled to such benefits:

While it is true that the CBA between respondent and complainant’s union provides for six months’ pay for qualified teachers who will go on sabbatical or study leave, the same was expressly waived by complainant when she signed conforme to the letter dated June 2, 1995 approving her study leave which states among others, to wit: ‘2. The requested study leave involves no remuneration on the part of the school.’ And considering that her leave of absence for the whole school year 1995-1996 was presumed to be a leave of absence without pay, then she did not earn her vacation leave incentive for the next coming summer. We find it just, fair and reasonable to grant vacation pay on April and May of every calendar as additional incentive only to those teachers who rendered continuous service to the Collegio the preceding school year.

We similarly affirm the Voluntary Arbitrator’s decision that respondent is not entitled to moral and exemplary damages and attorney’s fees because there is no evidence showing that bad faith or malice attended the dismissal of respondent. Moral damages are recoverable only where the dismissal is attended by bad faith or fraud, or constitutes an act oppressive to labor, or is done in a manner contrary to morals, good customs or public policy. A

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dismissal may be contrary to law but, by itself alone, it does not necessarily establish bad faith.26

NAGKAKAISANG LAKAS NG MANGGAGAWA SA KEIHIN (NLMK-OLALIA-KMU) and HELEN VALENZUELA vs. KEIHIN PHILIPPINES CORPORATION,GR No. 171115, August 9, 2010DEL CASTILLO, J.:

FACTS: Petitioner Helen Valenzuela (Helen) was a production associate in respondent Keihin Philippines Corporation (Keihin), a company engaged in the production of intake manifold and throttle body used in motor vehicles manufactured by Honda.

It is a standard operating procedure of Keihin to subject all its EEs to reasonable search before they leave the company premises. On September 5, 2003, while Helen was about to leave the company premises, she saw a packing tape near her work area and placed it inside her bag because it would be useful in her transfer of residence. When the lady guard on duty inspected Helen’s bag, she found the packing tape inside her bag. The guard confiscated it and submitted an incident report dated September 5, 2003 to the Guard-in-Charge, who, in turn, submitted a memorandum regarding the incident to the Human Resources and Administration Department on the same date.

The following day, or on September 6, 2003, respondent company issued a show cause notice to Helen accusing her of violating F.2 of the company’s Code of Conduct, which says, "Any act constituting theft or robbery, or any attempt to commit theft or robbery, of any company property or other associate’s property. Penalty: D (dismissal)." Helen’s supervisor, called her to his office and directed her to explain in writing why no disciplinary action should be taken against her.Helen, in her explanation, admitted the offense and even manifested that she would accept whatever penalty would be imposed upon her. She, however, did not reckon that respondent company would terminate her services for her admitted offense.

On September 26, 2003, Helen received a notice of disciplinary action informing her that Keihin has decided to terminate her services. On October 15, 2003, petitioners filed a complaint against respondent for illegal dismissal, non-payment of 13th month pay, with a prayer for reinstatement and payment of full backwages, as well as moral and exemplary damages. Petitioners alleged that Helen’s act of taking the packing tape did not constitute serious misconduct, because the same was done with no malicious intent. Keihin, on the other hand, maintained that Helen was guilty of serious misconduct because there was a deliberate act of stealing from the company.

LA:dismissing the complaint of illegal dismissal. NLRC: dismissed the appeal of the petitioners and affirmed in toto the Decision of the Labor Arbiter. CA: dismissed the petition outright for not having been filed by an indispensable party in interest under Section 2, Rule 3 of the Rules of Court.

ISSUE:1) Whether, in taking the packing tape for her own personal use, Helen committed serious misconduct, which is a just cause for her dismissal from service. (substantive aspect of the case); 2)Whether the petition of petitioners is out rightly dismissible for not having been filed by an indispensable party in interest (procedural aspect of the case)

HELD:1. Yes. Article 282 of the Labor Code enumerates the just causes for termination. Misconduct is defined as "the transgression of some established and definite rule of action, a forbidden act, a dereliction of duty, willful in character, and implies wrongful intent and not mere error in judgment." For serious misconduct to justify dismissal under the law, "(a) it must be serious, (b) must relate to the performance of the EE’s duties; and (c) must show that the EE has become unfit to continue working for the ER."

In the case at bar, Helen took the packing tape with the thought that she could use it for her own personal purposes. When Helen was asked to explain in writing why she took the tape, she stated, "Kumuha po ako ng isang packing tape na gagamitin ko sa paglilipat ng gamit ko sa bago kong lilipatang bahay." In other words, by her own admission, there was intent on her part to benefit herself when she attempted to bring home the packing tape in question.

It is noteworthy that prior to this incident, there had been several cases of theft and vandalism involving both respondent company’s property and personal belongings of other EEs. In order to address this issue of losses, respondent company issued two memoranda implementing an intensive inspection procedure and reminding all EEs that those who will be caught stealing and performing acts of vandalism will be dealt with in accordance with the company’s Code of Conduct. Despite these reminders, Helen took the packing tape and was caught during the routine inspection. All these circumstances point to the conclusion that it was not just an error of judgment on the part of Helen, but a deliberate act of theft of company property.

The petitioners also argue that the penalty of dismissal is too harsh and disproportionate to the offense committed since the value of the thing taken is very minimal. Petitioners cite the case of Caltex Refinery EEs Association v. National Labor Relations Commission where Arnelio M. Clarete (Clarete) was found to have willfully breached the trust and confidence reposed in him by taking a bottle of lighter fluid. In said case, we refrained from imposing the supreme penalty of dismissal since the EE had no violations "in his

eight years of service and the value of the lighter fluid is very minimal compared to his salary.After a closer study of both cases, we are convinced that the case of Caltex is different from the case at hand. Although both Clarete and Helen had no prior violations, the former had a clean record of eight years with his ER. On the other hand, Helen was not even on her second year of service with Keihin when the incident of theft occurred. And what further distinguishes the instant case from Caltex is that respondent company was dealing with several cases of theft, vandalism, and loss of company and EEs’ property when the incident involving Helen transpired.

Regarding the requirement of procedural due process in dismissal of EEs, petitioners argue that the first notice failed to explain the charge being leveled against Helen. According to the petitioners, the notice was vague and lacked sufficient definitiveness.

2. It is clear that petitioners failed to include the name of the dismissed EE Helen Valenzuela in the caption of their petition for certiorari filed with the CA as well as in the body of the said petition. Instead, they only indicated the name of the labor union Nagkakaisang Lakas ng Manggagawa sa Keihin (NLMK-OLALIA) as the party acting on behalf of Helen. As a result, the CA rightly dismissed the petition based on a formal defect.

Under Section 7, Rule 3 of the Rules of Court, "parties in interest without whom no final determination can be had of an action shall be joined as plaintiffs or defendants." If there is a failure to implead an indispensable party, any judgment rendered would have no effectiveness.31 It is "precisely ‘when an indispensable party is not before the court (that) an action should be dismissed.’ The absence of an indispensable party renders all subsequent actions of the court null and void for want of authority to act, not only as to the absent parties but even to those present."32 The purpose of the rules on joinder of indispensable parties is a complete determination of all issues not only between the parties themselves, but also as regards other persons who may be affected by the judgment. A decision valid on its face cannot attain real finality where there is want of indispensable parties.Loss of Trust and ConfidenceJOSE S. SANTOS, JR.,vs. NLRC, HAGONOY INSTITUTE INC., et alG.R. No. 115795. March 6, 1998

FACTS: Petitioner, a married man, was employed as a teacher by the private respondent Hagonoy Institute Inc. from June 1980 until his dismissal on June 1, 1991. Likewise working as a teacher for the private respondent was Mrs. Arlene T. Martin, also married. In the course of their employment, the couple fell in love. Thereafter, rumors regarding the couples relationship spread, especially among the faculty members and school officials.Concerned about the rumors, private respondent advised Mrs. Martin to take a leave of absence which she ignored, as she continued to report for work. Consequently, on November 9, 1990, she was barred from reporting for work and was not allowed to enter the private respondents premises, effectively dismissing her from her employment.In view of her termination from the service, Mrs. Martin filed a case for illegal dismissal before the NLRC Regional Arbitration Branch No. III, San Fernando, Pampanga2 against the private respondent. After the parties had submitted their respective evidence and position paper, Labor Arbiter Ariel Santos rendered a decision dismissing the complaint. NLRC reversed LA.

The reversal was anchored on the failure by the private respondent, in dismissing Mrs. Martin, to accord her the necessary procedural due process. Private respondent set up a committee to investigate the veracity of the rumors. After two weeks of inquiry, the committee rendered its report confirming the illicit relationship between the petitioner and Mrs. Martin.

In view of the committees finding, on December 19, 1990, petitioner was charged administratively for immorality and was required to present his side on the controversy. Five months later or in May 1991, petitioner was informed by the private respondents Board of Directors of his dismissal effective June 1, 1991.6 Unable to accept such verdict, petitioner filed a complaint for illegal dismissal on August 12, 1991 before the NLRC Regional Arbitration Branch No. III, San Fernando, Pampanga. After a full blown trial was conducted, Labor Arbiter Quintin C. Mendoza rendered a decision dated January 12, 1993, dismissing petitioners’ complaint but at the same time awarding monetary sums as financial assistance.

ISSUE: WON petitioner should be dismissed.

HELD: We have consistently held that in order to constitute a valid dismissal, two requisites must concur: (a) the dismissal must be for any of the causes expressed in Art. 282 of the Labor Code, and (b) the EE must be accorded due process, basic of which are the opportunity to be heard and defend himself.9Private respondent, in justifying the termination of the petitioner, contends that being a teacher, he must live up to the high moral standards required of his position. In other words, it asserts that its purpose in dismissing the petitioner was to preserve the respect of the community towards the teachers and to strengthen the educational system.11On the other hand, petitioner merely argues that the alleged illicit relationship was not substantially proven by convincing evidence by the private respondent as to justify his dismissal.On the outset, it must be stressed that to constitute immorality, the circumstances of each particular case must be holistically considered and evaluated in light of the prevailing norms of conduct and applicable laws.12 American jurisprudence has defined immorality as a course of conduct which offends the morals of the community and is a bad example to the youth whose ideals a

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teacher is supposed to foster and to elevate,13 the same including sexual misconduct. Thus, in petitioners case, the gravity and seriousness of the charges against him stem from his being a married man and at the same time a teacher.

We cannot overemphasize that having an extra-marital affair is an afront to the sanctity of marriage, which is a basic institution of society. Even our Family Code provides that husband and wife must live together, observe mutual love, respect and fidelity. This is rooted in the fact that both our Constitution and our laws cherish the validity of marriage and unity of the family. Our laws, in implementing this constitutional edict on marriage and the family underscore their permanence, inviolability and solidarity. As a teacher, petitioner serves as an example to his pupils, especially during their formative years and stands in loco parentis to them. To stress their importance in our society, teachers are given substitute and special parental authority under our laws.

Consequently, it is but stating the obvious to assert that teachers must adhere to the exacting standards of morality and decency. There is no dichotomy of morality. A teacher, both in his official and personal conduct, must display exemplary behavior. He must freely and willingly accept restrictions on his conduct that might be viewed irksome by ordinary citizens. In other words, the personal behavior of teachers, in and outside the classroom, must be beyond reproach. It seems obvious that when a teacher engages in extra-marital relationship, especially when the parties are both married, such behavior amounts to immorality, justifying his termination from employment.

Having concluded that immorality is a just cause for dismissing petitioner, it is imperative that the private respondent prove the same. Since the burden of proof rests upon the ER to show that the dismissal was for a just and valid cause, the same must be supported by substantial evidence.

Undoubtedly, the question of immorality by the petitioner is factual in nature. Thus, we reiterate the well-settled rule that factual findings by the NLRC, particularly when it coincides with those by the Labor Arbiter, are accorded respect, even finality, and will not be disturbed for as long as such findings are supported by substantial evidence. A scrutiny of the records of the instant petition leads us to concur with the NLRCs finding that petitioner indeed entered into an illicit relationship with his co-teacher. This fact was attested to by the testimonies of nine witnesses (a fourth year student, a security guard, a janitor and six co-teachers) which petitioner failed to rebut.

We hold henceforth separation pay shall be as a measure of social justice only in these instances where the EE is validly dismissed for cause other than serious misconduct or those reflecting his moral character. Where the reason for the valid dismissal is, for example, habitual intoxication or an offense involving moral turpitude, like theft or illicit sexual relationship with a fellow worker, the ER may not be required to give the dismissed EE separation pay, or financial assistance, or whatever other name it is called, on the ground of social justice. DISMISSED.RUFINO NORBERTO F. SAMSON vs. NLRC[G.R. No. 121035. April 12, 2000]

FACTS: This pertains to the case (NCR-00-01-00652-94) filed by the complainant Rufino Norberto F. Samson against the respondents Schering – Plough Corp. (‘SPC’ for brevity) and Mr. Leo C. Riconalla, National Sales Manager, for money equivalent of rice subsidy for the period April 1990 to December 1992 and holiday pay, now deemed submitted for resolution based on records available.

On February 1, 1994, said complainant filed another case (NCR-00-02-00887-94) for illegal preventive suspension raffled to the Honorable Labor Arbiter Donato G. Quinto, Jr. and consolidated to the above case number. Likewise, on February 4, 1994, complainant filed a Motion to Amend Complaint and averred pertinently that ‘x x x complainant was placed under an indefinite preventive suspension on 25 January 1994’; and ‘x x x was arbitrarily and summarily terminated from employment on 03 February 1994 on ground of loss of confidence.

In a letter dated 25 January 1994 (Annex ‘A’) addressed to the complainant Mr. Samson signed by one J.L. Estingor, the latter called the attention of (sic) the complainant’s conduct ‘x x x in a manner inimical to the interests of SPC’(made utterances of obscene, insulting, and offensive words, referring to or directed against SPC’s Management Committee, in the presence of several co-EEs, threats to some co-EEs, advising them to watch out for some disruptive actions to happen during the National Sales Conference.)

Complainant was given two (2) days from receipt of the foregoing letter and to explain ‘x x x why no disciplinary action, including termination’, should be taken against the complainant and in the meantime was placed on preventive suspension effective immediately, until further notice.

On the basis of the pleadings filed by the parties and evidence on record, the labor arbiter rendered his Decision, dated 25 August 1994, declaring the dismissal of petitioner illegal. The labor arbiter ruled that petitioner’s conduct is not so serious as to warrant his dismissal because: 1) the alleged offensive words were uttered during an informal and unofficial get-together of EEs where there was social drinking and petitioner was already tipsy; 2) the words were uttered to show disapproval over management’s decision on the "Cua Lim" case; 3) the penalty for the offense is only "verbal reminder" under respondent company’s rules and regulations; and 4) petitioner was already admonished during a meeting on 4 January 1994. Accordingly, respondent company was ordered to

reinstate petitioner as District Sales Manager and to pay him backwages.

Both parties appealed said decision to the NLRC. Petitioner filed a partial appeal of the denial of his claim for holiday pay and the cash equivalent of the rice subsidy. For its part, respondent company sought the reversal of the decision of the labor arbiter alleging that the latter erred in ruling that petitioner’s employment was terminated without valid cause and in ordering his reinstatement. In reversing the labor arbiter’s decision, the NLRC found that there was just cause, i.e., gross misconduct, for petitioner’s dismissal.

ISSUE: WON petitioner is validly dismissed

RULING: Factual findings of the NLRC are accorded respect. In this case, however, there is compelling reason to deviate from this salutary principle because the findings of facts of the NLRC are in conflict with that of the labor arbiter. Accordingly, this Court must of necessity review the records to determine which findings should be preferred as more conformable to the evidentiary facts.

As borne by the records, petitioner’s dismissal was brought about by the utterances he made during an informal Christmas gathering of respondent company’s Sales and Marketing Division on 17 December 1993. Petitioner was heard to have uttered, "Si EDT (referring to Epitacio D. Titong, General Manager and President of respondent company), bullshit yan," "sabihin mo kay EDT yan" and "sabihin mo kay EDT, bullshit yan," while making the "dirty finger" gesture. Petitioner likewise told his co-EEs that the forthcoming national sales conference of respondent company would be a "very bloody one."

The NLRC ruled that the foregoing actuation of petitioner constituted gross misconduct warranting his dismissal. Citing jurisprudence, the NLRC held that "in terminating the employment of managerial EEs, the ER is allowed a wider latitude of discretion than in the case of ordinary rank-and-file." We do not agree with the findings of the NLRC.

Misconduct is improper or wrong conduct. It is the transgression of some established and definite rule of action, a forbidden act, a dereliction of duty, willful in character, and implies wrongful intent and not mere error in judgment. The misconduct to be serious must be of such grave and aggravated character and not merely trivial and unimportant. Such misconduct, however serious, must, nevertheless, be in connection with the EE’s work to constitute just cause for his separation.

In this case, the alleged misconduct of petitioner, when viewed in its context, is not of such serious and grave character as to warrant his dismissal. First, petitioner made the alleged offensive utterances and obscene gesture during an informal Christmas gathering of respondent company’s district sales managers and marketing staff. The gathering was just a casual get-together of EEs. It is to be expected during this kind of gatherings, where tongues are more often than not loosened by liquor or other alcoholic beverages, that EEs freely express their grievances and gripes against their ERs. EEs should be allowed wider latitude to freely express their sentiments during these kinds of occasions which are beyond the disciplinary authority of the ER. Significantly, it does not appear in the records that petitioner possessed any ascendancy over the EEs who heard his utterances as to cause demoralization in the ranks.

Second, petitioner’s outburst was in reaction to the decision of the management in the "Cua Lim" case. Admittedly, using the words "bullshit" and "putang ina" and making lewd gesture to express his dissatisfaction over said management decision were clearly in bad taste but these acts were not intended to malign or cast aspersion on the person of respondent company’s president and general manager.

Third, respondent company itself did not seem to consider the offense of petitioner serious and grave enough to warrant an immediate investigation on the matter. It must be recalled that petitioner uttered the alleged offensive language at an informal gathering on 17 December 1993. He then allegedly made threatening remarks about the forthcoming sales conference on 3 January 1994. During a meeting on 4 January 1994, Mr. Titong, Jr., the president and general manager of respondent company and allegedly to whom the offensive words were directed, merely admonished petitioner stating that, "when there is a disagreement, act in a professional and civilized manner." Respondent company allowed several weeks to pass before it deemed it necessary to require petitioner to explain why no disciplinary action should be taken against him for his behavior. This seeming lack of urgency on the part of respondent company in taking any disciplinary action against petitioner negates its charge that the latter’s misbehavior constituted serious misconduct. There being no just cause for petitioner’s dismissal, the same is consequently unlawful. Petitioner is thus entitled to reinstatement to his position as District Sales Manager, unless such position no longer exists, in which case he shall be given a substantially equivalent position without loss of seniority rights. He is likewise entitled to the payment of his full backwages. With respect to petitioner’s other monetary claims, however, we agree with the findings of the labor arbiter that he failed to establish his entitlement thereto. GRANTED.VH MANUFACTURING INC V NLRC (GAMIDO)322 SCRA 417DE LEON; January 19, 2000

FACTS: Since November 5, 1985 Gamido was employed in VHManufacturing’s business of manufacturing liquefied petroleumgas (LPG) cylinders. He served as a quality control inspectorwith the principal duty of inspecting LPG cylinders for anypossible defects. His service with the company was abruptlyinterrupted on February 14, 1995, when he was served a

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noticeof termination of his employment.- His dismissal stemmed from an incident on February 10, 1995wherein VH’s company President, Alejandro Dy Juanco,allegedly caught private Gamido sleeping on the job. On thatsame day, private respondent was asked through a writtennotice from the petitioner’s Personnel Department to explainwithin twenty-four (24) hours why no disciplinary action shouldbe taken against him for his violation of Company Rule 15-bwhich provides for a penalty of separation for sleeping duringworking hours. Without delay, private respondent replied in aletter which reads:"Sir, ipagpaumanhin po ninyo kungnakapikit ako sa aking puwesto dahil hinihintay ko po ang nilihahi Abreu para i quality pasensiya na po kung hindi ko ponamalayan ang pagdaan ninyo dahil maingay po ang paintingbooth."Notwithstanding his foregoing reply, he wasterminated.- Feeling aggrieved, he filed a complaint for illegal dismissal,praying for reinstatement to his position as quality controlinspector. Labor Arbiter declared that Gamido’s dismissal isanchored on a valid and just cause. NLRC reversed thedecision.

ISSUE:WON Gamido’s dismissal was too harsh a penaltly for hisviolation of company rule 15-b

HELD: YES- Basically, the reason cited for the dismissal of privaterespondent is sleeping on the job in violation of Company Rule15-b. But according to Gamido, he was not sleeping on the jobbut was merely idle, waiting for the next cylinder to be checked.- In view of the gravity of the penalty of separation, as providedby the Company Rules and Regulation., in termination disputes,the burden of proof is always on the ER to prove that thedismissal was for a just and valid cause. What is at stake here isnot only the job itself of the EE but also his regularincome therefrom which is the means of livelihood of his family.- A thorough review of the record discloses that, contrary to thefindings of the Labor Arbiter, petitioner’s claim that privaterespondent slept on the job was not substantiated by anyconvincing evidence other than the bare allegation of theofficer.- Next, VH’s reliance on the authorities it cited that sleeping onthe job is always a valid ground for dismissal, is misplaced. Theauthorities cited involved security guards whose dutynecessitates that they be awake and watchful at all timesinasmuch as their function, to use the words inLuzonStevedoring Corp. v. Court of Industrial Relations, is "to protectthe company from pilferage or loss." Accordingly, the doctrinelaid down in those cases is not applicable to the case at bar.- Finally, while an ER enjoys a wide latitude of discretionin the promulgation of policies, rules and regulations on work-related activities of the EEs, those directives, however,must always be fair and reasonable,and the corresponding penalties, when prescribed, must be commensurate to theoffense involved and to the degree of the infraction. In the caseat bar, the dismissal meted out on private respondent for allegedly sleeping on the job, under the attendant circumstances, appears to be too harsh a penalty, consideringthat he was being held liable for first time, after nine 9 of unblemished service, for an alleged offense which caused no prejudice to the ER, aside from absence of substantiationof the alleged offense.Neither was it shown that privaterespondent’s alleged negligence or neglect of duty, if any, wasgross and habitual. Thus, reinstatement is just and proper.

petition is hereby DISMISSED and the challengedDecision and Order of public respondent NLRC are AFFIRMEDROSARIO vs. VICTORY RICEMILL397 SCRA 760 CALLEJO; February 19, 2003

FACTS Emilio Uy owned Victory Ricemill. He employed Rosario astruck driver. Petitioner was tasked to, among others, haul palayfrom various points and bring them to respondent’s ricemill. Inaddition, petitioner acted as personal driver to the family of Mr.Uy during their trips to Manila Uy dismissed Rosario. According to respondent, petitioner wasguilty of insubordination when he refused to serve as driver ofMr. Uy’s son when the latter needed a driver. Also, petitionerwas instructed to deliver 600 bags of cement to Felix Hardware.Instead, petitioner delivered the same to one Eduardo Interior,who had not since then paid for P60k. Because of petitioner’stendency to disobey the orders to him, Uy was constrained toengage the services of another driver. Petitioner resented thenew driver and became uncooperative, disrespectful andquarrelsome. Petitioner, armed with a dagger, fought with theother driver and inflicted an injury on the latter. Petitionerlikewise inflicted injuries on the head of a co EE, whenhe intervened in the fight and tried to pacify petitioner.A complaint for illegal dismissal with money claims was filed by petitioner

Labor arbiter found that there were valid causes for the termination of petitioner’s employment.The NLRC found that petitioner was denied due process duringthe proceedings with the regional labor arbiter as petitioner wasnot given the opportunity to present his additional rebuttalevidence. On the other hand, respondent was allowed to submitin evidence various exhibits to discredit the rebuttal testimonyof petitioner. Case was remanded. Petitioner submitted the affidavit ofRoque, who averred thatthe 600 bags of cement delivered to Eduardo Interior had beenpaid as evidenced by in the sum of P58,950.00 payable torespondent.

Regional labor arbiter promulgated his decision stating that he found no reason to deviate from his previous decision. NLRC affirmed the ruling of the regional labor arbiter. CA found that respondent had justifiable cause to dismisspetitioner. CA also observed that although there was no strictcompliance with the two notice rule, it could be gleaned fromthe records that petitioner was given ample opportunity toexplain his side. Moreover, even granting that respondent fellshort of the two notice requirement,

such irregularity, accordingto the CA, does not militate against the legality of the dismissal.

ISSUES 1. WON petitioner’s termination was for a just and lawful cause; 2. WON petitioner’s dismissal from his employment was inaccordance with the due process requirement of the law; 3. WON petitioner is entitled to backwages

HELD 1. YES Petitioner’s actuations clearly constituted willful disobedienceand serious misconduct justifying his dismissal under Article282(a) of the Labor Code which provides:Art. 282. Termination by ER. – An ER mayterminate an employment for any of the following causes: (a) Serious misconduct or willful disobedience by theEE of the lawful orders of his ER orrepresentative in connection with his work; Willful disobedience of the ER’s lawful orders, as a justcause for the dismissal of an EE, envisages theconcurrence of at least two requisites: (1) the EE’sassailed conduct must have been willful or intentional, thewillfulness being characterized by a "wrongful and perverseattitude;" and (2) the order violated must have beenreasonable, lawful, made known to the EE and mustpertain to the duties which he had been engaged to discharge.

2. NO To effect the dismissal of an EE the law requires notonly that there be just and valid cause as provided under Article282. It likewise enjoins the ER to afford the EE theopportunity to be heard and to defend himself. The ER ismandated to furnish the EE with two written notices: (a)a written notice containing a statement of the cause for thetermination to afford the EE ample opportunity to beheard and defend himself with the assistance of hisrepresentative, if he so desires; (b) if the ER decides toterminate the services of the EE, the ER mustnotify him in writing of the decision to dismiss him, statingclearly the reason therefore.

While respondent furnished petitioner the written noticeinforming him of his dismissal, respondent failed to furnishpetitioner the written notice apprising him of the charge orcharges against him. Consequently, petitioner was deprived ofthe opportunity to respond thereto. When the dismissal is effected for a just and valid cause, thefailure to observe procedural requirements does not invalidatenor nullify the dismissal of an EE. The consequence ofthe failure either of the ER or the EE to live up tothis precept is to make him liable in damages, not to render hisact void. The measure of damages is the amount of wages theEE should have received were it not for the terminationof his employment without prior notice. If warranted, nominaland moral damages may also be awarded.

3. YES Under the Labor Code, only the absence of a just cause for thetermination of employment can make the dismissal of anEE illegal.Art. 279. Security of Tenure. – In cases of regularemployment, the ER shall not terminate the services ofan EE except for a just cause or when authorized bythis Title. An EE who is unjustly dismissed from workshall be entitled to reinstatement without loss of seniorityrights and other privileges and to his full backwages,inclusive of allowances, and to his other benefits or theirmonetary equivalent computed from the time hiscompensation was withheld from him up to the time of hisactual reinstatement.

Thus, only if the termination of employment is not for any ofthe causes provided by law is it illegal and, therefore, theEE should be reinstated and paid backwages. On the other hand, if it is shown that the EE wasdismissed for any of the just causes mentioned in said Art. 282,then, in accordance with that article, he should not bereinstated. However, he must be paid backwages from the timehis employment was terminated until it is determined that thetermination of employment is for a just cause because thefailure to hear him before he is dismissed renders thetermination of his employment without legal effect. .SMC vs. PONTILLASG.R. No.155178, May 7, 2008NATIONAL BOOKSTORE INC V CA (YMASA,GABRIEL)378 SCRA 194 BELLOSILLO; February 27, 2002

FACTS Petitioner National Bookstore employed private respondentsYmasa and Gabriel as Cash Custodian and Head Cashier. Theywere routinely tasked with counting the previous day’s salesand placing them in separate plastic bags to be deposited inINTERBANK and PCIB. The bags were held for safekeeping in theBranch vault but upon retrieval to deposit the money withroving tellers, the money was counted again but the amount forPCIB was short of P42,758. Private respondents were asked by Management to explain inwriting why they should not be dismissed for the loss ofcompany funds and were placed under preventive suspension.Private respondents in turn denied responsibility, emphasizingthey had no access to the vault and that they were thoroughlysearched by the guard before leaving. They also asserted theirloyalty and sincerity in their work as they had been employedthere over 13 years.Petitioner found their explanation unsatisfactory and terminated them for gross neglect of duty and loss of confidence. Private respondents filed a complaint for illegaldismissal. The Labor Arbiter found in their favor, stating that thedismissal was not founded on valid and justifiable grounds.Petitioners appeal with the NLRC was denied, as was theirpetition for certiorari with the CA for lack of merit.

ISSUE: WON private respondents were illegally dismissed

HELD: YES The onus of proving that the dismissal of the EE was fora valid and authorized cause rests on the ER. Failure todischarge the same would mean the dismissal was not justifiedand therefore illegal.The requisites for a valid dismissal are (a) the EE mustbe afforded due process (b) the dismissal must be for a validcause.

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Petitioner complied with the first requisite by furnishingthe EEs with written notices stating cause fortermination, and having decided to do so, the reasons therefor. Petitioner accused private respondents of gross neglect ofduty and loss of confidence. Gross negligence is defined as thefailure to exercise slight care or diligence. A perusal of therecords show they weren’t even remotely negligent of theirduties. They were able to illustrate with candor and sinceritythe procedure they took prior to the loss—petitioner’sallegations on the other hand, were not supported by anysubstantive evidence. Assuming arguendo they were negligent,a single act cannot be categorized as habitual and thus cannotbe a just cause for dismissal. Loss of confidence on the other hand must be based on thewillful breach of trust and founded on clearly established facts.Petitioner failed to establish with certainty the facts upon whichsuch a breach of confidence could be based. Privaterespondents were thus illegally dismissed. Petition is DENIED for lack of merit.SALAS vs. ABOITIZ ONE556 SCRA 376

FACTS: Salas was a material controller of Aboitiz, and was tasked with monitoring andmaintaining the availability and supply of Quickbox needed by Aboitiz in its day-to-day operations. At one point, Salas had run out of Large Quickbox, hamperingAboitiz’ business operation. Aboitiz then wrote Salas a memorandum requiringhim to explain in writing within seventy-two hours why he should not bedisciplinarily dealt with for his (i) failure to monitor the stock level of LargeQuickbox which led to inventory stock out; and (ii) failure to report to [his]immediate superior the Large Quickbox problem when the stock level wasalready critical, when the Large Quickbox level was near stock out, and the stocklevel had a stock out. Five days after, an administrative hearing was conductedto give Salas opportunity to explain his side. Twenty-two days after, Aboitiz senthim a decision notice, terminating him for loss of trust and confidence, effectivemid-month. Salas then sent a letter to Mr. Hamoy requesting reconsideration of the decision, asking if he could avail of the early retirement plan, having workedfor Aboitiz for ten years already. He also asked to be allowed to tender hisresignation instead of being terminated. Lastly, he asked to be employed untilthe end of the month, so as to have enough time to look for another job. Mr.Hamoy denied the request for early retirement plan, stating that the company'stable of discipline provided the penalty of dismissal for the offenses he hadcommitted. The extension, however, was granted, and even extended for amonth.Claiming termination without cause, Salas filed with the Labor Arbiter a complaintagainst Aboitiz and its president Sabin Aboitiz for illegal dismissal with prayer forreinstatement, and for payment of full backwages, moral and exemplarydamages, as well as attorney’s fees. Aboitiz responded that there was validtermination, asserting that Salas was dismissed for just cause and with dueprocess, Salas having willfully breached his duty when he ran out of LargeQuickbox , justifying the termination of his employment.The Labor Arbiter sustained Salas' dismissal. On appeal, the NLRC reversed.Gross negligence being characterized by want of even slight care acting oromitting to act in a situation where there is a duty to act, willfully andintentionally with a conscious indifference to consequence, Salas could not beheld guilty, having done his duty to make proper requisition in advance. Failureto follow-up is not an indicator of remission of duty. Salas can only be guilty of negligence, for failing to properly monitor and document the stocks in hiscustody. As he admitted during the administrative hearing, there were thosewhich were even missing. Worst, he tampered the records to show that the stockon 31 May 2003 is for 02 June 2003. While there was no intention to defraud thecompany. The NLRC thus denied his prayer for backwages, and ordered thepayment of separation pay instead of reinstatementAboitiz filed a motion for reconsideration, while Salas sought partialreconsideration of the decision, both of which were denied by the NLRC. Salasand Aboitiz filed petitions for certiorari with the CA. Salas questioned the denialof his prayer for backwages and other monetary benefits, ad the order directingpayment of separation pay instead of reinstatement. Aboitiz questioned NLRC'sreversal. The CA sustained Salas' dismissal, holding that Salas was guilty of serious misconduct under Art. 282(a) for tampering the records to show that thestock on May 31 2003 was for June 2 2003, gross and habitual neglect under Art.282(b), and willful breach of the trust (Art. 282 (c)) reposed on Salas by Aboitiz, because as "warehouseman", and therefore a confidential EE, Salasconcededly tampered company records to hide his gross and habitual neglect,and worse, sold the company’s eight units of used airconditioners withoutauthority.

ISSUE: Whether simple negligence can be a basis for dismissal on ground of loss of trust and confidence.

HELD: Salas was terminated for neglect of duty and willful breach of trust. Grossnegligence connotes want or absence of or failure to exercise slight care ordiligence, or the entire absence of care. To warrant removal from service, thenegligence should not merely be gross , but also habitualAlthough it was Salas'duty to monitor and maintain the availability and supply of Quickbox, recordsshow that Salas had made a requisition as early as May 21, 2003, even makingseveral follow-ups. If there is anything that Salas can be faulted for, it is hisfailure to promptly inform his immediate supervisor of the non-delivery of therequisitioned items. Nevertheless, such failure did not amount to gross neglectof duty or to willful breach of trust, which would justify his dismissal fromservice.Moreover, there appears nothing to suggest that Salas’ position was a highly oreven primarily confidential position, so that he can be removed for loss of trustand confidence by the ER. A "position of trust and confidence” is onewhere a person is "entrusted with confidence on delicate matters," or with thecustody, handling, or care and protection of the ER’s property. In therecords of the case, there is no semblance

of willful breach of trust on the partof Salas. It is true that there was erasure or alteration on the bin card. Aboitiz,however, failed to demonstrate that it was done to cover up Salas’ allegednegligence. Other than the bin card and Aboitiz’s barefaced assertion, no otherevidence was offered to prove the alleged cover-up. The CA, therefore, erred inadopting Aboitiz’s unsubstantiated assertion to justify Salas’ dismissal. The lossof trust must be based not on ordinary breach but, in the language of Article282(c) of the Labor Code, on willful breach. A breach is willful if it is doneintentionally, knowingly and purposely, without justifiable excuse, asdistinguished from an act done carelessly, thoughtlessly, heedlessly orinadvertently. In this case, Aboitiz utterly failed to establish the requirementsprescribed by law and jurisprudence for a valid dismissal on the ground of breach of trust and confidence.Neither can Aboitiz validate Salas’ dismissal on the ground of seriousmisconduct for his alleged failure to account for unused accountable forms. Thecharge came only after Salas’ dismissal. The subject accountable forms wereissued to Salas in 2001. Inexplicably, this alleged infraction was never includedas ground in the notice of termination. It was only three (3) months after thefiling of the complaint for illegal dismissal that Aboitiz asserted that Salas failedto account for these unused accountable forms. It is clear that such assertion of serious misconduct was a mere afterthought to justify the illegal dismissal.Aboitiz’s reliance on the past offenses of Salas for his eventual dismissal islikewise unavailing. The correct rule has always been that such previousoffenses may be used as valid justification for dismissal from work only if theinfractions are related to the subsequent offense upon which the basis of termination is decreed. While it is true that Salas had been suspended on for failure to meet the security requirements of the company, and for his failure toassist in the loading at the fuel depot , such offenses are not related to Salas’latest infraction, hence, cannot be used as added justification for the dismissal.Undoubtedly, no just cause exists to warrant Salas’ dismissal. Consequently, heis entitled to reinstatement to his former position without loss of seniorityrights, and to payment of backwages. However, the award of backwages is modified because Salas was not entirelyfaultless.

***As stated in the decision notice, Salas was terminated for neglect of duty and willful breach of trust. Gross negligence connotes want or absence of or failure to exercise slight care or diligence, or the entire absence of case. IT evinces a thoughtless disregard of consequences without exerting any effort to avoid them. To warrant removal from service, the negligence should not merely be gross, but also habitual. If there is anything that Salas can be faulted for, it is his failure to promptly inform his immediate supervisor of the non-delivery of the requisitioned items. Nevertheless, such failure did not amount to gross neglect of duty or to willful breach of trust, which would justify his dismissal from service. The CA also justified Salas' dismissal on ground of willful breach of trust. It lent credence to Aboitiz's posture that Salas was a warehouseman holding a position of trust and confidence. We disagree. Salas, as material controller was tasked with monitoring and maintaining the availability and supply of Quickbox. There appears nothing to suggest that Salas' position was a highly or even primarily confidential position, so that he can be removed for loss of trust and confidence by the ER.

Indeed, an ER has the right, under the law, to dismiss an EE based on fraud or willful breach of the trust bestowed upon him by his ER or the latter's authorized representative. However, the loss of trust must be based not on ordinary breach but, in the language of Article 282(c) of the Labor Code, on willful breach. a breach is willful if it is done intentionally, knowingly, and purposely, withouth justifiable excuse, as distinguished from an act done carelessly, thoughtlessly, heedlessly, or inadvertently. It must rest on substantial grounds and not on the ER's arbitrariness, whims, caprices, or suspicion; otherwise, the EE would eternally remain at the mercy of the ER. It should be genuine and not simulated; now should it appear as a mere afterthought to justify an earlier action taken in bad faith or a subterfuge for causes which are improper, illegal, or unjustified. It has never been intended to afford an occasion for abuse because of its subjective nature. There must, therefore, be an actual breach of duty committed by the EE which must be established by substantial evidence. In this case, Aboitiz utterly failed to establish the requirements prescribed by law and jurisprudence for a valid dismissal on the ground of breach of trust and confidence. Undoubtedly, no just cause exists to warrant Salas' dismissal. Consequently, he is entitled to reinstatement to his former position without loss of seniority rights, and to payment of backwages. However, as Salas was not entirely faultless, and although such negligence would not justify Salas' termination from employment in view of the stringent condition imposed by the Labor Code on termination of employment due to gross and habitual neglect, the same cannot be condoned, much less tolerated.CHALLENGE SOCKS CORP. VS. CAGRN165268 NOV.8,2005

FACTS CHALLENGE SOCKS CORP (CSC) hired Elvie Buguat as knittingoperator. In the course of her employment, she incurred absences andtardiness without prior approval and had been neglectful of herduties. May 25, 1998: she failed to check the socks she was workingon causing excess use of yarn and damage to the socks’design. She was suspended for 5 days and warned that a repetition of the same act would mean dismissal from the service. February 2, 1999: she committed the same infraction and wasgiven a warning. Despite the previous warnings, Buguat continued to behabitually absent and inattentive to her task. March 1, 1999: she again failed to properly count the bundleof socks assigned to her. March 2, 1999: CSC terminated her services on grounds of habitual

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absenteeism without prior leave, tardiness and neglectof work. Thereafter, Buguat filed a complaint for illegal dismissal.[8] LA: Buguat was illegally dismissed; ordered CSC to reinstateher without loss of seniority rights and benefits, but w/obackwages; ruled that mistake in counting bundles of socks istolerable and should be punished by suspension only. NLRC: adopted the findings of LA. Denied CSC's Appeal andMR. CA: reversed and set aside LA’s and NLRC’s decisions; CSCwas ordered to pay BUGUAT full backwages; remanded to theRegional LA for the computation of the backwages. CA also noted that petitioner failed to comply with the twinnotice requirement in terminating an EE hence, thedismissal was considered ineffectual.ISSUE:WON Buguat’s termination is valid

HELD: YES. One of the just causes for terminating an employment underArticle 282 of the Labor Code is gross and habitual neglect bythe EE of her duties. This cause includes grossinefficiency, negligence and carelessness. Such just causes isderived from the right of the ER to select and engage hisEEs. As a knitting operator, Elvie was required to check the socksshe was working on and to count the bundles of socks she hadto pack to be forwarded to the Looping Section. Her repeated commission of the same offense could beconsidered willful disobedience. Elvie, despite the suspensionand warning, continued to disregard the company rules andregulations

Habitual neglect implies repeated failure to perform one’sduties for a period of time. Buguat’s repeated acts of absenceswithout leave and her frequent tardiness reflect her indifferentattitude to and lack of motivation in her work. Her repeatedand habitual infractions, committed despite several warnings,constitute gross misconduct. Habitual absenteeism withoutleave constitute gross negligence and is sufficient to justifytermination of an EE. Her repeated negligence is not tolerable; neither should itmerit the penalty of suspension only. The record of an EE is a relevant consideration indetermining the penalty that should be meted out. An EE’s past misconduct and present behavior must betaken together in determining the proper imposable penalty. The totality of infractions or the number of violations committedduring the period of employment shall be considered indetermining the penalty to be imposed upon an erringEE.The offenses committed by him should not be takensingly and separately but in their totality.Fitness for continuedemployment cannot be compartmentalized into tight littlecubicles of aspects of character, conduct, and ability separateand independent of each other. It is the totality, not the compartmentalization, of suchcompany infractions that Buguat had consistently committedwhich justified her dismissal. Terminating an employment is one of petitioner’sprerogatives. Management has the prerogative to discipline its EEsand to impose appropriate penalties on erring workers pursuantto company rules and regulations. The Court has upheld a company’s management prerogativesso long as they are exercised in good faith for the advancementof the ER’s interest and not for the purpose of defeatingor circumventing the rights of the EEs under special lawsor under valid agreements. In the case at bar, petitioner exercised in good faith itsmanagement prerogative as there is no dispute that Buguathad been habitually absent, tardy and neglectful of her work, tothe damage and prejudice of the company. Her dismissal wastherefore proper. The law imposes many obligations on the ER such asproviding just compensation to workers, observance of theprocedural requirements of notice and hearing in thetermination of employment. On the other hand, the law alsorecognizes the right of the ER to expect from its workersnot only good performance, adequate work and diligence, butalso good conduct and loyalty.The ER may not becompelled to continue to employ such persons whosecontinuance in the service will patently be inimical to hisinterests. The ER has the burden of proving that the dismissedworker has been served two notices : ( 1) one to apprise him of the particular acts or omissions for which his dismissal issought, and (2) the other to inform him of his ER’sdecision to dismiss him. A review of the records shows that private respondent wasserved a written termination notice on the very day she wasactually dismissed from the service. It was not shown that CSCnotified Elvie in advance of the charge or charges against hernor was she given an opportunity to refute the charges madeagainst her.

Agabon v. National Labor Relations Commission: Upheld asvalid the dismissal for just cause even if there was nocompliance with the requirements of procedural due process.While the procedural infirmity cannot be cured, it should notinvalidate the dismissal.However, the ER should be heldliable for noncompliance with the procedural requirements of due process.Disposition

CA’S DECISION ISAFFIRMED;backwages isDELETED; Nominal damages (for violation of Buguat’s statutorydue process) in the amount of P30,000.00.MANSION PRINTING CENTER vs. BITARA, Jr.G.R. No.168120, January 25, 2012MERALCO vs. BELTRANG.R. No.173774, January 30, 2012NORMAN YABUT vs. MANILA ELECTRIC COMPANY and MANUEL M. LOPEZ,G.R. No. 190436 January 16, 2012REYES, J.:

FACTS: On October 4, 2003, Meralco's Inspection Office issued a memorandum3 addressed to Meralco's Investigation-Legal Office, informing it of an illegal service connection at the petitioner's residence. The Inspection Office claimed discovering shunting wires installed on the meter base, registered under petitioner Yabut's name. These wires allegedly allowed power transmission to the petitioner's residence despite the fact that Meralco had earlier

disconnected his electrical service due to his failure to pay his electric bills.

Given this report, Meralco's Head of Investigation-Litigation Office issued to the petitioner a notice4 dated November 3, 2003, received by the petitioner's wife on the same day and with pertinent portions that read: Please report to our Mr. Rodolfo C. Serra of the Investigation-Litigation on November 11, 2003, at 9:00 a.m. as the Inspection had found your disconnected electric service directly connected by a shunting wire to energize your empty meter base. If proven true, such act constitutes dishonesty in violation of Section 7 (3) of the Company Code on EE Discipline and/or serious misconduct or an act analogous to fraud or commission of a crime under Article 282 (a) and (e) of the Labor Code of the Philippines.

In this investigation, you are entitled to be assisted by a counsel or an authorized union representative. You are also allowed to present evidence and material witnesses to testify in your favor. Should you fail to appear on the aforementioned date, we shall take it to mean that you are waiving your right to present your side and refute the aforesaid charge and evidence against you. If you appear alone, we shall take it to mean that you are waiving your right to be represented by such counsel or union representative.5

The offense under Section 7 (3) of Meralco's Company Code on EE Discipline referred to in the aforequoted notice is with penalty of dismissal on the first offense and is defined as follows:

While Yabut denied responsibility about the illegal connection, the pictures taken specifically showing the shunted wires on the meter base and his wife's admission that he was the one responsible are sufficient proofs of his guilt. We give credit to the admission of his wife as she did it with spontaneity without force or intimidation in our part. His alibi that he seldom stayed in his house is controverted by his admission that within the period in question from July to October 3, 2003, he stayed home for 24 times. It is surprising that, being a field representative who has knowledge about illegal connection, it escaped from his attention the said illegal connection when it could easily be detected since his metering point is installed in front of his house.

We are not inclined to believe that he resorted to flying connection as it is apparent that at the time his electric service was disconnected in April, 2003, the Balagtas Branch found his service to have registered KWHR consumption from 1555 to 2194 for a total of 639 KWHR indicating that although his electric service was disconnected, it continued to register electricity. Moreover, the burden of proof is upon him to present to us the one responsible but he failed to do so. In the absence of such proof, it is concluded that he, being the registered customer and a resident, was the one who installed the illegal connection purposely to alleviate the sickly condition of his wife and two children.9

In view of these findings, respondent Meralco, through its Senior Assistant Vice President for Human Resources Administration R. A. Sapitula, issued on February 4, 2004 a notice of dismissal10 addressed to the petitioner. The notice cites violation of Section 7, paragraph 3 of Meralco's Company Code on EE Discipline and Article 282 (a), (c), (d) and (e) of the Labor Code of the Philippines as bases for the dismissal.

LA: illegally dismissed from the service and hence, entitled to reinstatement plus backwages and attorney's fees. NLRC: dismissing the herein respondents' appeal for lack of merit. CA:dismissal lawful, the appellate court attributed unto Yabut authorship of the meter tampering and illegal use of electricity – acts which it regarded as serious misconduct. The Court observed:

ISSUE: Whether or not the CA committed an error of law in annulling and setting aside the resolutions of the NLRC that declared the herein petitioner illegally dismissed by the respondents.

HELD: Significantly, “(t)ampering with electric meters or metering installations of the Company or the installation of any device, with the purpose of defrauding the Company” is classified as an act of dishonesty from Meralco EEs, expressly prohibited under company rules. It is reasonable that its commission is classified as a severe act of dishonesty, punishable by dismissal even on its first commission, given the nature and gravity of the offense and the fact that it is a grave wrong directed against their ER.

To reiterate, Article 282 (a) provides that an ER may terminate an employment because of an EE's serious misconduct, a cause that was present in this case in view of the petitioner's violation of his ER's code of conduct. Misconduct is defined as the “transgression of some established and definite rule of action, a forbidden act, a dereliction of duty, willful in character, and implies wrongful intent and not mere error in judgment.” For serious misconduct to justify dismissal, the following requisites must be present: (a) it must be serious; (b) it must relate to the performance of the EE's duties; and (c) it must show that the EE has become unfit to continue working for the ER.22

In reviewing the CA’s Decision, we again consider the petitioner's duties and powers as a Meralco EE. And we conclude that he committed a serious misconduct. Installation of shunting wires is without doubt a serious wrong as it demonstrates an act that is willful or deliberate, pursued solely to wrongfully obtain electric power through unlawful means. The act clearly relates to the petitioner's performance of his duties given his position as branch field representative who is equipped with knowledge on meter operations, and who has the duty to test electric meters and handle customers' violations of contract. Instead of protecting the company’s interest, the petitioner himself used his knowledge to

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illegally obtain electric power from Meralco. His involvement in this incident deems him no longer fit to continue performing his functions for respondent-company.

While the installation of the shunted wires benefited the herein petitioner as a customer of Meralco, his act cannot be fully severed from his status as the respondent's EE. As correctly observed by the CA, “(i)t is an offense against the Company Code of EE Discipline. As a field representative, he is knowledgeable on the mechanics of meter and metering installation.”23

The dismissal is also justified as the act imputed upon the petitioner qualifies as “fraud or willful breach by the EE of the trust reposed in him by his ER or duly authorized representative” under Article 282 (c) of the Labor Code. While the petitioner contests this ground by denying that his position is one of trust and confidence, it is undisputed that at the time of his dismissal, he was holding a supervisory position after he rose from the ranks since commencement of his employment with Meralco. As a supervisor with duty and power that included testing of service meters and investigation of violations of contract of customers, his position can be treated as one of trust and confidence, requiring a high degree of honesty as compared with ordinary rank-and-file EEs.

Considering the foregoing, this Court agrees that there were just causes for the petitioner's dismissal. We emphasize that dismissal of a dishonest EE is to the best interest not only of the management but also of labor. As a measure of self-protection against acts inimical to its interest, a company has the right to dismiss its erring EEs. An ER cannot be compelled to continue employing an EE guilty of acts inimical to the ER’s interest, justifying loss of confidence in him.26

On the matter of procedural due process, it is well-settled that notice and hearing constitute the essential elements of due process in the dismissal of EEs. The ER must furnish the EE with two written notices before termination of employment can be legally effected. The first apprises the EE of the particular acts or omissions for which dismissal is sought. The second informs the EE of the ER's decision to dismiss him. With regard to the requirement of a hearing, the essence of due process lies simply in an opportunity to be heard, and not that an actual hearing should always and indispensably be held.27

These requirements were satisfied in this case. The first required notice was dated November 3, 2003, sufficiently notifying the petitioner of the particular acts being imputed against him, as well as the applicable law and the company rules considered to have been violated. Notably, in his sworn statement dated November 17, 2003, the petitioner admitted receiving Meralco's notice of investigation dated November 3, 2003.

On November 17, 2003, Meralco conducted a hearing on the charges against the petitioner. During said time, the petitioner was accorded the right to air his side and present his defenses on the charges against him. Significantly, a high-ranking officer of the supervisory union of Meralco assisted him during the said investigation. His sworn statement29 that forms part of the case records even listed the matters that were raised during the investigation.

Finally, Meralco served a notice of dismissal dated February 4, 2004 upon the petitioner. Such notice notified the latter of the company's decision to dismiss him from employment on the grounds clearly discussed therein.

PRUDENTIAL BANK vs. MAURICIOG.R. No.183350, January 18, 2012NORKIS DISTRIBUTORS, INC. vs. DELFIN S. DESCALLAR,G.R. No. 185255 March 14, 2012VILLARAMA, JR., J.:

FACTS: On April 26, 1993, respondent Delfin S. Descallar was assigned at the Iligan City Branch of petitioner Norkis Distributors, Inc., a distributor of Yamaha motorcycles. He became a regular EE on February 1, 1994 and was promoted as Branch Manager on June 30, 1997. He acted as branch administrator and had supervision and control of all the EEs. Respondent was also responsible for sales and collection.

In a memorandum dated June 20, 2002, petitioners required respondent to explain in writing within 48 hours why he should not be penalized or terminated for being AWOL or rendering under-time service on certain dates from April 3, 2002 to June 11, 2002.[4] On June 21, 2002, respondent submitted his written explanation wherein he stated that he reported to the office on those dates, but he either went to the bank or followed-up on prospects. As he was still within city limits, he did not file any official leave or travel record. He added that on June 11, 2002, he was at the pier pulling out ten units of MC stocks.

On July 5, 2002, Norkis conducted an investigation through Mr. Edmund Y. Pingkian. Finding that respondent was not able to prove that he was really in the branch or on official travel, petitioners suspended him for 15 days without pay beginning July 8, 2002. According to petitioners, respondent admitted during the investigation that he used company time for his personal affairs, but only for a few hours and not the whole day.

While respondent was still serving his suspension, the Internal Auditor of the company made a random operational review and audit of the Iligan City Branch. Several findings against respondent were noted by the auditor, to wit:

1. Refusal to accept redemption payment from customer Gamboa on their deposited motorcycle unit and unauthorized use of said deposited motorcycle unit;2. Requiring customer Amy Pastor to pay an amount in excess of her account balance;3. Disbursement of sales commissions to unauthorized persons;4. Application of sales commission on the down payments of several walk-in customers.[7]

On July 20, 2002, petitioners asked respondent to explain the findings against him within 4 hours from receipt of notice. Respondent found the time given to be cruel but nevertheless submitted his written explanation on the same day.

Later, respondent and Branch Control Officer Rosanna Lanzador received a memorandum dated July 23, 2002, informing them that during a cash count conducted on July 12, 2002, a shortage of P800 in the company’s TNT fund was discovered. Likewise, an irregularity was found in the disbursement of sales commissions amounting to P1,700. These amounts were charged equally to the accounts of respondent and Lanzador.

Thereafter, in another memorandum dated July 25, 2002, respondent was placed under preventive suspension for 15 working days without pay. On August 12, 2002, petitioners issued a “Notice to Show Cause” to respondent. On August 21, 2002, petitioners terminated respondent’s services for loss of trust and confidence and gross inefficiency.[12]

LA: illegally dismissed. NLRC: reversed the LA’s decision and found respondent to have been validly dismissed. The NLRC, however, upheld the Labor Arbiter’s finding that petitioners are liable to respondent for unpaid wages. CA: reinstated with modification the decision of the LA.

HELD: petitioners terminated his employment on the ground of loss of trust and confidence for supposedly committing acts inimical to the company’s interests. However, in termination cases, the burden of proof rests upon the ER to show that the dismissal is for a just and valid cause and failure to do so would necessarily mean that the dismissal was illegal.[20] The ER’s case succeeds or fails on the strength of its evidence and not on the weakness of the EE’s defense. If doubt exists between the evidence presented by the ER and the EE, the scales of justice must be tilted in favor of the latter. Moreover, the quantum of proof required in determining the legality of an EE’s dismissal is only substantial evidence or such relevant evidence as a reasonable mind might accept as adequate to support a conclusion, even if other minds, equally reasonable, might conceivably opine otherwise.[21] Thus, it is incumbent upon petitioners to prove by substantial evidence that valid grounds exist for terminating respondent’s employment on the ground of loss of trust and confidence. However, our review of the records of this case reveals that the CA correctly held that petitioners failed to discharge this burden.

In terminating respondent’s services, petitioners relied on several grounds. First, petitioners relied on the affidavit of customer Ludy Gamboa. In her affidavit, Ludy Gamboa accused respondent of refusing to accept payment of P7,000 to redeem a motorcycle unit sometime on May 21-23, 2001.[22] However, respondent was able to prove by submitting the Monthly Inventory Report[23] that the motorcycle unit had already been repossessed by the company due to Gamboa’s failure to settle her account. Respondent’s refusal to receive the partial payment was therefore undeniably justified. And the motorcycle already having been repossessed, it could also be sold to any person who might like to buy it including respondent’s nephew.

Second, petitioners also allege that respondent charged customer Amy Pastor an excessive amount. In her affidavit, Pastor claimed that sometime on January 2002, respondent required her to pay the amount of P5,566, while her outstanding balance was only P378.[24] However, a closer look at the audit report conducted by the internal auditor of petitioner Norkis, Joelito L. Florenosos, would show that there was no over-collection.[25] Said exculpatory finding was also made after the internal auditor noted that the official receipt respondent issued to cover the said collection showed no such over-collection. Why petitioners chose to believe Pastor’s affidavit over the findings of its own internal auditor which was duly supported by documentary evidence is perplexing.

Third, petitioners accuse respondent of giving unauthorized commissions to Mr. Gary Bellen. Respondent however asserted, and petitioners did not rebut, that Bellen is a legitimate Personalized Sales Representative of Norkis Distributors, as evidenced by the contract they signed.[26] Respondent also explained, and petitioners again did not rebut, that Bellen tutored the staff in computer programming and operation free of charge, on the condition that he may entertain customers and receive commissions. Clearly, therefore, the arrangement made with Bellen was even beneficial to the company. Hence, in giving commissions to Bellen, as sales representative, it cannot be said that respondent willfully breached petitioners’ trust and confidence in him.

Fourth, petitioners argue that respondent’s failure to reach his monthly sales quota is a valid basis for loss of trust and confidence. In his explanation, respondent asserted that certain factors were to be considered for the low sales performance in their branch such as the existence of other competitors which offered low down payments, low monthly installments, and other promotional items. Respondent also emphasized that the customers’ capacity to pay had been affected by the financial crisis at the time, thus making it more difficult to collect from them.

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To our mind, the failure to reach the monthly sales quota cannot be considered an intentional and unjustified act of respondent amounting to a willful breach of trust on his part that would call for his termination based on loss of confidence. This is simply not the willful breach of trust and confidence contemplated in Article 282(c) of the Labor Code. Indeed, the low sales performance could be attributed to several factors which are beyond respondent’s control. To be a valid ground for an EE’s dismissal, loss of trust and confidence must be based on a willful breach.[27] To repeat, a breach is willful if it is done intentionally, knowingly and purposely, without justifiable excuse.[28]

The normal consequences of respondent’s illegal dismissal, then, are reinstatement without loss of seniority rights, and payment of back wages computed from the time compensation was withheld from him up to the date of actual reinstatement. Where reinstatement is no longer viable as an option, separation pay equivalent to one month salary for every year of service should be awarded as an alternative. The payment of separation pay is in addition to payment of back wages.[29]Sy v. Metrobank 506 SCRA 580

FACTS: Petitioner Dennis D. Sy, herein substituted by his heirs Soledad Y. Sy, Ronald Allan Y. Sy, and Melinda S. Pompenada, was the branch manager in Bajada, Davao City, of respondent Metropolitan Bank and Trust Company.

Under the bank’s Retirement Plan, an EE must retire upon reaching the age of 55 years or after rendering 30 years of service, whichever comes first. Sy would have rendered 30 years of service by August 18, 1999.However, on February 5, 1999, he was reappointed as branch manager for a term of one year starting August 18, 1999 until August 18, 2000. His monthly compensation was accordingly increased from P50,400 to P54,500, effective August 16, 1999. Meanwhile, on November 10 and 15, 1999, the bank released the results of the audit conducted in its Bajada branch. On November 15, 1999, Sy tendered an irrevocable letter of retirement. In his letter, he requested the timely release of his retirement pay and other benefits. His request was denied.

The bank alleged that Sy allowed spouses Gorgonio and Elizabeth Ong to conduct "kiting" activities in their account with the bank. Thus, the bank placed Sy under preventive suspension and gave him 48 hours to submit a written explanation. In response, Sy wrote a letter explaining that he only made a wrong credit judgment.Not satisfied with his answer, the bank notified Sy of other alleged violations of company policies.

In reply, Sy explained in writing that the accommodation granted to spouses Samuel Aquino and Charito Sy-Aquino was only P650,000, not P9.11M as claimed by the bank. He added that the spouses even offered a parcel of land as collateral and were willing to sell a vehicle in settlement of their obligation with the bank.Unconvinced, the bank dismissed Sy on December 15, 1999.

Sy filed against the bank a complaint for illegal suspension, illegal dismissal and money claims, docketed as RAB-11-01-00024-0. However, the Labor Arbiter dismissed the case for lack of merit.

On appeal, the National Labor Relations Commission (NLRC) deemed Sy compulsorily retired. Thus, the NLRC awarded him retirement benefits, unpaid salary, monetary value of unused leave credits, 13th month pay, Christmas bonus, and refund of provident fund.

The parties sought reconsideration, which were both denied for lack of merit. Respondent bank elevated the matter to the Court of Appeals, which set aside the ruling of the NLRC and reinstated the Decision of the Labor Arbiter. On motion for reconsideration, however, the Court of Appeals modified its ruling and ordered the bank to reimburse Sy’s contribution to the provident fund.

ISSUES: (1) Was petitioner illegally terminated? (2) If his dismissal was valid, would he still be entitled to retirement benefits?

HELD: Sy was validly dismissed on the ground of fraud and willful breach of trust under Article 282 of the Labor Code. Records show that as bank manager, he authorized "kiting" or drawing of checks against uncollected funds in wanton violation of the bank’s policies. 19 It was sufficient basis for the bank to lose trust in him.

Unlike a rank-and-file worker, where breach of trust as a ground for valid dismissal requires proof of involvement in the alleged anomaly and where mere uncorroborated accusation by the ER will not suffice, the sheer existence of a basis for believing that the ER’s trust has been breached is enough for the dismissal of amanagerial EE.

Petitioner’s conduct betrays his culpability. Shortly after the audit conducted in the Bajada branch, he tendered an "irrevocable letter of retirement." In the said letter, he requested that his retirement be made effective December 1, 1999. Said request arouses suspicion considering that he had previously agreed to the extension of his employment as branch manager until August 18, 2000. Petitioner’s evident failure to offer any reasonable explanation for such sudden shift in his plans is prejudicial to his cause.

As for the requirement of due process, records show that it has been fully satisfied in the instant case. The bank had complied with the two-notice requirement, i.e.: (a) a written notice of the cause for his dismissal to afford him ample opportunity to be heard and to defend himself with the assistance of counsel, if he so desires; and (b) a written notice of the decision to terminate him, stating clearly the reason therefor.

Petitioner, however, theorizes that having been compulsorily retired, he could no longer be dismissed by the bank. His premise is absurd. Indeed, he would have qualified for compulsory retirement under the bank’s Retirement Plan. However, he opted to accept the bank’s offer of extending his employment for another year with a corresponding salary increase. Thus, in effect, he had never retired. Unfortunately for him, while serving such extended term, the bank discovered his unauthorized grant of accommodation to accounts engaged in "kiting" activity. Such act is a clear breach of the trust reposed in him by the bank. He cannot now elude dismissal for a just cause by claiming he was already retired compulsorily.

Is petitioner nevertheless entitled to retirement benefits? Under the Labor Code, only unjustly dismissed EEs are entitled to retirement benefits and other privileges including reinstatement and backwages. Since petitioner’s dismissal was for a just cause, he is not entitled to any retirement benefit. To hold otherwise would be to reward acts of willful breach of trust by the EE. It would also open the floodgate to potential anomalous banking transactions by bank EEs whose employments have been extended. Since a bank’s operation is essentially imbued with public interest, it owes great fidelity to the public it deals with. In turn, it cannot be compelled to continue in its employ a person in whom it has lost trust and confidence and whose continued employment would patently be inimical to the bank’s interest. While the scale of justice is tilted in favor of workers, the law does not authorize blind submission to the claim of labor regardless of merit.

While the Court commiserates with petitioner who has spent with the bank the best three decades of his employable life, we find no room to accord him compassionate justice. Records showed that he violated the bank policies prior to his compulsory retirement. Thus, there can be no earned retirement benefits to speak of. No such provision is provided for by the Labor Code. In fact, even the Civil Service Law imposes forfeiture of retirement benefits in valid dismissal cases.

Notably, the Court has also disallowed claims for retirement benefits in valid dismissal cases because the retirement plan itself precluded EEs dismissed for cause from availing it. Although no such prohibition in the retirement plan was alleged or proved in this case, we nevertheless deny petitioner’s claims because his offenses, vis-à-vis his long years of service with the bank, reflect a regrettable lack of loyalty which he should have strengthened instead of betrayed.The petition is hereby DENIED.

John Hancock Life Insurance Corp. v. DavisGR 169549 | Sept. 3, 2008

FACTS: Respondent Joanna Cantre Davis was agency administration officer of petitioner John Hancock Life Insurance Corporation.On October 18, 2000, Patricia Yuseco, petitioner's corporate affairs manager, discovered that her wallet was missing. She immediately reported the loss of her credit cards to AIG and BPI Express. To her surprise, she was informed that "Patricia Yuseco" had just made substantial purchases using her credit cards in various stores in the City of Manila. She was also told that a proposed transaction in Abenson's-Robinsons Place was disapproved because "she" gave the wrong information upon verification.

Because loss of personal property among its EEs had become rampant in its office, petitioner sought the assistance of the National Bureau of Investigation (NBI). The NBI, in the course of its investigation, obtained a security video from Abenson's showing the person who used Yuseco's credit cards. Yuseco and other witnesses positively identified the person in the video as respondent.

Consequently, the NBI and Yuseco filed a complaint for qualified theft against respondent in the office of the Manila city prosecutor. But because the affidavits presented by the NBI (identifying respondent as the culprit) were not properly verified, the city prosecutor dismissed the complaint due to insufficiency of evidence.

Meanwhile, petitioner placed respondent under preventive suspension and instructed her to cooperate with its ongoing investigation. Instead of doing so, however, respondent filed a complaint for illegal dismissalalleging that petitioner terminated her employment without cause.

The labor arbiter, in a decision dated May 21, 2002, found that respondent committed serious misconduct (she was the principal suspect for qualified theft committed inside petitioner's office during work hours). There was a valid cause for her dismissal. Thus, the complaint was dismissed for lack of merit.

Respondent appealedthe labor arbiter's decision to the National Labor Relations Commission (NLRC) which affirmed the assailed decision on July 31, 2003. Respondent moved for reconsideration but it was denied in a resolution dated October 30, 2003.

Aggrieved, respondent filed a petition for certiorariin the Court of Appeals (CA) claiming that the NLRC committed grave abuse of discretion in affirming the decision of the labor arbiter. She claimed there was no valid cause for her termination because the city

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prosecutor of Manila "did not find probable cause for qualified theft against her." The dismissal of the complaint proved that the charges against her were based on suspicion.

The CA, in its July 4, 2005 decision found that the labor arbiter and NLRC merely adopted the findings of the NBI regarding respondent's culpability. Because the affidavits of the witnesses were not verified, they did not constitute substantial evidence. The labor arbiter and NLRC should have assessed evidence independently as "unsubstantiated suspicions, accusations and conclusions of ERs (did) not provide legal justification for dismissing an EE." Thus, the CA granted the petition.Petitioner moved for reconsideration but it was denied. Hence, this petition.

ISSUE: WON petitioner substantially proved the presence of valid cause for respondent's termination.

HELD: We grant the petition.Misconduct involves "the transgression of some established and definite rule of action, forbidden act, a dereliction of duty, willful in character, and implies wrongful intent and not mere error in judgment."

In this case, petitioner dismissed respondent based on the NBI's finding that the latter stole and used Yuseco's credit cards. But since the theft was not committed against petitioner itself but against one of its EEs, respondent's misconduct was not work-related and therefore, she could not be dismissed for serious misconduct.

Nonetheless, Article 282(e) of the Labor Code talks of other analogous causes or those which are susceptible of comparison to another in general or in specific detail. For an EE to be validly dismissed for a cause analogous to those enumerated in Article 282, the cause must involve a voluntary and/or willful act or omission of the EE.

A cause analogous to serious misconduct is a voluntary and/or willful act or omission attesting to an EE's moral depravity. Theft committed by an EE against a person other than his ER, if proven by substantial evidence, is a cause analogous to serious misconduct.

Did petitioner substantially prove the existence of valid cause for respondent's separation? Yes. The labor arbiter and the NLRC relied not only on the affidavits of the NBI's witnesses but also on that of respondent. They likewise considered petitioner's own investigative findings. Clearly, they did not merely adopt the findings of the NBI but independently assessed evidence presented by the parties. Their conclusion (that there was valid cause for respondent's separation from employment) was therefore supported by substantial evidence.All things considered, petitioner validly dismissed respondent for cause analogous to serious misconduct. Petition is hereby GRANTED.YRASUEGUI VS. PAL

FACTS:Armando G. Yrasuegui was an international flight steward of Philippine Airlines, Inc. (PAL). He stands five feet and eight inches (5'8") with a large body frame. The proper weight for a man of his height and body structure is from 147 to 166 pounds, the ideal weight being 166 pounds, as mandated by the Cabin and Crew Administration Manualof PAL.

Yrasegui’s weight problem: Yrasegui encountered a great deal of weight problem. From meeting the required weight limit of 166 pounds, he ballooned, reaching the weights upto 215 to 217 pounds. PAL was lenient enough to grant him a number of vacation leaves to address his weight concerns. He was thus required to report for periodical weight checks. However, instead of losing, he gained more weight. It was when he reached 217 pounds where he made a commitment in writing to lose 17 pounds in 90 days and continue reducing from then on. He remained overweight despite the 90-day period given him to reach his ideal weight. Time and again, Yrasuegui refused to comply with the weight checks. When he finally tipped the scale, he weighed at 212 pounds. Clearly, he was still way over his ideal weight of 166 pounds. From then on, nothing was heard from petitioner until he followed up his case requesting for leniency. He continuously gained weight. On November 13, 1992, PAL finally served petitioner a Notice of Administrative Charge for violation of company standards on weight requirements. Ultimately, Yrasuegui was formally informed by PAL that due to his inability to attain his ideal weight, "and considering the utmost leniency" extended to him "which spanned a period covering a total of almost five years," his services were considered terminated "effective immediately."

1. The Labor Arbiter ruled in favor of Yrasuegui stating that although reasonable, the weight standards need not be complied with under pain of dismissal since his weight did not hamper the performance of his duties.

2. The NLRC AFFIRMED the decision of the LA. According to the NLRC, "obesity, or the tendency to gain weight uncontrollably regardless of the amount of food intake, is a disease in itself. As a consequence, there can be no intentional defiance or serious misconduct by petitioner to the lawful order of PAL for him to lose weight.

3. The CA reversedthe NLRC opining that the weight standards of PAL are meant to be a continuing qualification for an EE's position. The failure to adhere to the weight standards is an analogous cause for the dismissal of an EE under Article 282(e) of the Labor Code in relation to Article 282(a).

ISSUE: Is obesity a just cause in terminating the EE’s services?

HELD:The obesity of petitioner is a ground for dismissal under Article 282(e)of the Labor Code.

It is a continuing qualification. Tersely put, an EE may be dismissed the moment he is unable to comply with his ideal weight as prescribed by the weight standards. The dismissal of the EE would thus fall under Article 282(e) of the Labor Code. The standards violated in this case were not mere "orders" of the ER; they were the "prescribed weights" that a cabin crew must maintain in order to qualify for and keep his or her position in the company.

In this sense, the failure to maintain these standards does not fall under Article 282(a) whose express terms require the element of willfulness in order to be a ground for dismissal. The failure to meet the ER's qualifying standards is in fact a ground that falls under Article 282(e) - the "other causes analogous to the foregoing."

By its nature, these "qualifying standards" are norms that apply prior to and after an EE is hired. They apply prior to employment because these are the standards a job applicant must initially meet in order to be hired. They apply after hiring because an EE must continue to meet these standards while on the job in order to keep his job. Under this perspective, a violation is not one of the faults for which an EE can be dismissed pursuant to pars. (a) to (d) of Article 282; the EE can be dismissed simply because he no longer "qualifies" for his job irrespective of whether or not the failure to qualify was willful or intentional.

In fine, We hold that the obesity of petitioner, when placed in the context of his work as flight attendant, becomes an analogous cause under Article 282(e) of the Labor Code that justifies his dismissal from the service. His obesity may not be unintended, but is nonetheless voluntary. As the CA correctly puts it, voluntariness basically means that the just cause is solely attributable to the EE without any external force influencing or controlling his actions. This element runs through all just causes under Article 282, whether they be in the nature of a wrongful action or omission. Gross and habitual neglect, a recognized just cause, is considered voluntary although it lacks the element of intent found in Article 282(a), (c), and (d).

Extra:Yrasegui’s contentions are interesting enough to take note of:

1. Obesity is a "physical abnormality and/or illness. Relying on Nadura v. Benguet Consolidated, Inc.. The reliance on Nadura is off-tangent. The factual milieu in Nadura is substantially different from the case at bar. First, Nadura was not decided under the Labor Code. The law applied in that case was Republic Act (RA) No. 1787. Second, the issue of flight safety is absent in Nadura, thus, the rationale there cannot apply here. Third, in Nadura, the EE who was a miner, was laid off from work because of illness, i.e., asthma. Here, petitioner was dismissed for his failure to meet the weight standards of PAL. He was not dismissed due to illness. Fourth, the issue in Nadura is whether or not the dismissed EE is entitled to separation pay and damages. Here, the issue centers on the propriety of the dismissal of petitioner for his failure to meet the weight standards of PAL. Fifth, in Nadura, the EE was not accorded due process. Here, petitioner was accorded utmost leniency. He was given more than four (4) years to comply with the weight standards of PAL.

2. On Discrimination .Petitioner cites Bonnie Cook v. State of Rhode Island, Department of Mental Health, Retardation and Hospitals, decided by the United States Court of Appeals. In that case, Cook worked from 1978 to 1980 and from 1981 to 1986 as an institutional attendant for the mentally retarded at the Ladd Center that was being operated by respondent. She twice resigned voluntarily with an unblemished record. Even respondent admitted that her performance met the Center's legitimate expectations. In 1988, Cook re-applied for a similar position. At that time, "she stood 5'2" tall and weighed over 320 pounds." Respondent claimed that the morbid obesity of plaintiff compromised her ability to evacuate patients in case of emergency and it also put her at greater risk of serious diseases.

Unlike Cook, however, petitioner is not morbidly obese. In the words of the District Court for the District of Rhode Island, Cook was sometime before 1978 "at least one hundred pounds more than what is considered appropriate of her height." According to the Circuit Judge, Cook weighed "over 320 pounds" in 1988. Clearly, that is not the case here. At his heaviest, petitioner was only less than 50 pounds over his ideal weight.RBC CABLE MASTER SYSTEM vs. BALUYOTG.R. No.172670, January 20, 2006GSP Manufacturing Corp. v. CabanbanGR 150454 | July 14, 2006

FACTS: Respondent Paulina Cabanban worked with petitioner GSP Manufacturing Corporation (GSP) as a sewer from February 7, 1985 until her alleged termination on March 1, 1992. On June 16, 1992, respondent filed with the National Labor Relations Commission (NLRC), National Capital Region Arbitration Branch, a complaint against petitioners for illegal dismissal, non-payment of holiday pay, service incentive leave pay and 13th month pay.

Respondent claimed she was terminated by petitioners because she failed to dissuade her daughter from continuing her employment at the Sylvia Santos Company, a business competitor of petitioners. In their defense, petitioners argued that respondent abandoned her work on March 14, 1992 and that they reported this to the Department of Labor and Employment on May 15, 1992.

On May 7, 1993, labor arbiter Melquiades Sol D. del Rosario found petitioners guilty of illegal dismissal. Petitioners appealed to the

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NLRC. On August 10, 1995, the NLRC issued a resolution affirming in toto the decision of the labor arbiter. Hence, this petition.

ISSUE: WON the findings of fact of the Court of Appeals were arrived at arbitrarily

HELD: The petition is without merit. As petitioners are well aware of, factual findings of the NLRC, particularly when they are in agreement with those of the labor arbiter, are deemed binding and conclusive on this Court. As long as their decisions are devoid of any unfairness or arbitrariness in their evaluation of the evidence all that is left for us to do is stamp our affirmation and declare its finality. Having perused the records, we find no such arbitrariness here.

We would like to reiterate some salient points laid down in our prior pronouncements concerning abandonment of employment. Abandonment as a just ground for dismissal requires the deliberate, unjustified refusal of the EE to perform his employment responsibilities. Mere absence or failure to work, even after notice to return, is not tantamount to abandonment. The records are bereft of proof that petitioners even furnished respondent such notice.

Furthermore, it is a settled doctrine that the filing of a complaint for illegal dismissal is inconsistent with abandonment of employment. An EE who takes steps to protest his dismissal cannot logically be said to have abandoned his work. The filing of such complaint is proof enough of his desire to return to work, thus negating any suggestion of abandonment.

Clearly, petitioners’ claim that respondent’s complaint was "an afterthought," having been filed a long time after the date of the supposed abandonment, was utterly without merit. As the Court of Appeals correctly pointed out, citing the case of Pare v. NLRC, respondent had four years within which to institute her action for illegal dismissal. Compared to the six months it took the aggrieved EE in that case to file his complaint for illegal dismissal, respondent’s 84 days was not unreasonably long at all. The petition is hereby DENIED.

Shie Jie Corp. v. NFL GR 153148, July 15, 2005

FACTS: Respondents, in their complaint, alleged that they were employed as fish processors by petitioners. On July 20, 1998, Sammy Yang and Michael Yang, petitioners, confronted them about their union activities. Immediately, they were ordered to go home. The next day, petitioners suspended them for one week effective July 22 to 28, 1998 (except respondent Wilfredo Toribio). Upon their return, they were served with a notice of petitioners’ memorandum terminating their services for abandonment of work.

Petitioners, in their answer, denied respondents’ allegations. They claimed that on July 20, 1998, about 2:45 o’clock in the afternoon, 13 rank-and-file EEs staged a walk-out and abandoned their work. Among them were respondents Wilfredo Toribio, Nida Toribio, Yolanda Lorenzo, Sorraya Amping, Vivian Mendoza, Merylene Delos Reyes, Arnold Francisco, and Manuel Francisco. As a consequence, petitioners’ business operations were interrupted and paralyzed, prompting them to issue a memorandum suspending respondents for one week or from July 22 to 28, 1998. However, on July 24, 1998, petitioners, in another memorandum, directed them to report for work on July 27, 1998. Instead, respondents Ernesto Etrata, Sorraya Amping, Yasher Taning, Yolanda Lorenzo, Merylene Delos Reyes, and Wilfredo Toribio submitted their resignation letters and quitclaims. Subsequently or on July 28, 1998, petitioners sent respondents Arnold Francisco, Nida Toribio, Vivian Mendoza, and Manuel Francisco a notice terminating their services for abandonment of work.

On August 20, 1999, the Labor Arbiter rendered a Decision finding respondents guilty of unfair labor practice (for dismissing petitioners illegally); and ordering them, jointly and severally, to pay petitioners P843, 960.62.

On appeal, the National Labor Relations Commission (NLRC) promulgated its Decision dated April 27, 2000 reversing the Labor Arbiter’s Decision and dismissing respondents’ complaint.Respondents then filed a motion for reconsideration but were denied by the NLRC in a Resolution dated June 29, 2000. Hence, they filed with the Court of Appeals a petition for certiorari.On November 29, 2001, the Appellate Court rendered a Decision reversing and setting aside the NLRC’s Decision and reinstating the Labor Arbiter’s Decision. On December 21, 2001, petitioners filed a motion for reconsideration, but were denied by the Appellate Court in a Resolution dated April 9, 2002.

ISSUE: WON the CA erred in holding that petitioners failed to prove by substantial evidence that respondents voluntarily resigned and/or abandoned their work.

HELD: Voluntary resignation is defined as the act of an EE, who finds himself in a situation in which he believes that personal reasons cannot be sacrificed in favor of the exigency of the service; thus, he has no other choice but to disassociate himself from his employment. Acceptance of a resignation tendered by an EE is necessary to make the resignation effective. No such acceptance, however, was shown in the instant case.

Moreover, the fact that respondents immediately filed a complaint for illegal dismissal against petitioners and repudiated their alleged

resignation completely negated petitioners’ claim that they voluntarily resigned.

In Molave Tours Corporation vs. National Labor Relations Commission, it was held: “By vigorously pursuing the litigation of his action against petitioner, private respondent clearly manifested that he has no intention of relinquishing his employment, which act is wholly incompatible to petitioner’s assertion that he voluntarily resigned.”

Neither do we find any indication that respondents have shown by some overt acts their intention to sever their employment in petitioner company.

In this case, respondents did not report back for work on July 27, 1998 because they were suspended by petitioners for one week effective July 22 to 28, 1998. Verily, their absence cannot be considered abandonment of work, a just cause for termination of employment.

In fine, considering that respondents did not abandon their work, their dismissal from the service is illegal. The petition is DENIED. JO vs. NLRC324 SCRA 437MERALCO vs. GANAG.R. No.191288, March 7, 2012BLUE SKY TRADING CO. vs. BLASG.R. No.190559, March 7, 2012CANADIAN OPPORTUNITIES vs. DALANGIN, jr.G.R. No.172223, February 6, 2012

Ung wala ako:

Meralco v. ganaBlue sky trading co v. blasSabuguero v. nlrcInt’l management v. logartaWuert phil. v. ynsonHantex trading v. caBank of lubao v. manabatMorales v. harbor center

Social legislation cases.

CHENIVER DECO PRINT TECHNICS CORP. vs. NLRCFACTS:Cheniver operates a printing business. Cheniverinformed its workers about the transfer of the companyfrom its site in Makati to Batangas. Cheniver decided torelocate its business in view of the expiration of the leasecontract on the premises it occupied in Makati and therefusal of the lessor to renew the same. Earlier, the localauthorities also took action to force out Cheniver fromMakati because of the alleged hazards petitioner's plantposed to the residents nearby.In view of the impending transfer, Cheniver gave itsEEs up to the end of June 1992 to informmanagement of their willingness to go with Cheniver,otherwise, it would hire replacements. Cheniver wrote itsEEs to report to the new location within 7 days,otherwise, they would be considered to have lost interestin their work and would be replaced. Five days later, theunion advised Cheniver that its members are not willingto go along with the transfer to the new site. Nonetheless,Cheniver gave its workers additional time within whichto report to the new work place. Later on, the laborfederation informed petitioner that the EEsdecided to continue working for petitioner. However, notone reported for work at petitioner's new site. It appearsthat several EEs namely, decided not to work atthe new site but just opted to be paid financial assistanceoffered by petitioner. ŸBroadly speaking, there appears no completedissolution of Cheniver's business undertaking butthe relocation of petitioner's plant to Batangas, in ourview, amounts to cessation of petitioner's businessoperations in Makati.HELD: It must be stressed that thephrase "closure or cessation of operation of anestablishment or undertaking not due to seriousbusiness losses or reverses" under Article 283 of theLabor Code includes both the complete cessation ofall business operations and the cessation of only partof a company's business.There is no doubt that petitioner has legitimatereason to relocate its plant because of the expirationof the lease contract on the premises it occupied. Thatis its prerogative. But even though the transfer wasdue to a reason beyond its control, Cheniver has toaccord its EEs some relief in the form ofseverance pay. Now, let it be noted that thetermination of employment by reason of closure orcessation of business is authorized under Article 283of the Labor Code.Consequently, Cheniver must pay his EEstheir termination pay in the amount correspondingto their length of service. Since the closure ofpetitioner's business is not on account of seriousbusiness losses, petitioner shall give privaterespondents separation pay equivalent to at least one(1) month or one-half (1/2) month pay for every yearof service, whichever is higher.Cheniver's contention that private respondentsresigned from their jobs, does not appear convincing.As public respondent observed, the subsequenttransfer of petitioner to another place hardlyaccessible to its workers resulted in the latter'suntimely separation from the service not to their ownliking, hence, not construable as resignation.Resignation must be voluntary and made with theintention of relinquishing the office, accompaniedwith an act of relinquishment. Indeed, it would havebeen illogical for private respondents herein to resignand then file a complaint for illegal dismissal.Resignation is inconsistent with the filing of the saidcomplaint. ŸThe phrase "closure or cessation of operations ofestablishment or undertaking" includes a partial ortotal closure or cessation. Ordinarily, the closing of awarehouse facility and the termination of theservices of EEs there assigned is a matter thatis left to the determination of the ER in thegood faith exercise of its management prerogatives.And the phrase "closure or cessation not due toserious business losses or financial

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reverses"recognizes the right of the ER to close or ceaseits business operations or undertaking even in absence of serious business losses or financialreverses, as long as he pays his EEs theirtermination pay in the amount corresponding totheir length of service. It has been ruled that anER may adopt policies or changes oradjustments in the operations to insure profit to itselfor protect the investments of its stockholders, and inthe exercise of such management prerogative, theER may merge or consolidate its business withanother, or sell or dispose all or substantially all of itsassets and properties which may bring about thedismissal or termination of its EEs in theprocess.PT&T, vs. NLRC[G.R. No. 147002. April 15, 2005]CALLEJO, SR., J.:

FACTS: Agnes Bayao and Mildred Castillo were hired by the PT&T in November 1991 and August 1995, respectively, both as account executives stationed in Baguio City. They received a Memorandum inviting them to consider a 2-3-month assignment to the provinces of Rizal and Laguna in view of PT&T’s expansion in the aforesaid area. They refused the offer, on the ground that the transfer would entail additional expense on their part and there were no clear guidelines and procedures for its implementation.

Meanwhile, the expansion project of PT&T failed to materialize due to lack of capital. PT&T realized that it needed to undertake measures against losses to prevent the company from going bankrupt, particularly by reducing its workforce from 2,500 to 900 EEs. Pursuant thereto, it implemented a Voluntary Staff Reduction Program (VSRP) which was availed of by 478 EEs. Failing to attain its target, PT&T implemented an extended VSRP, but still not enough EEs availed of the program. PT&T decided to implement a temporary retrenchment of some EEs dubbed as Temporary Staff Reduction Program (TSRP) lasting for not more than 5½ months. Pursuant to the program, affected EEs would receive financial assistance equivalent to 15 days salary and a loan equivalent to 2 months salary chargeable to the account of the EE concerned.

Bayao and Castillo received a Letter informing them that the cumulative net losses of PT&T for the last 4 years had reached P293.4 million and that they were among the EEs affected by the TSRP. When they reported for work they were informed that the position of account executive no longer existed; in its stead, the positions of Service Account Representatives (SAR) and Service Account Specialists (SAS) were created and had already been filled up.

That same day, they promptly filed a complaint for illegal dismissal with the NLRC against PT&T and Delia Oficial in her capacity as manager for Baguio City.

In the interim, Del Rosario sent a Letter stating that they were part of the Temporary Staff Reduction Program (TSRP) for a period of 5½ months in order to help ease the severe financial problems of the company. That the management and the Union agreed that 80 EEs who would not be recalled will be paid the following: 2. The grant of financial assistance equivalent to one and one half month inclusive of the one half month pay previously offered by management to the 80 EEs who will be separated; 3. The payment of separation pay for every year of service to the 80 EEs to be identified by the union, and shall be paid under the same terms and conditions as provided under the extended VSRP.”

While you are not part of the bargaining unit, management is extending to you the same separation package provided we receive a formal letter from you applying for the Staff Reduction Program package. Please submit said letter on or before 15 November 1998. Payments shall be released only upon receipt of said letter. Your separation from the company is effective.

LA: Complainants were constructively dismissed. NLRC: dismissed the appeal and affirmed the decision of the LA and denied MR. CA: Affirmed NLRCthat there was no valid ground for retrenchment, considering that when Bayao and Castillo returned, their positions were already filled up; at the same time, PT&T did not inform its EEs and the DOLE of the scheduled retrenchment at least one month before its implementation. MR denied.Hence this petition.

ISSUE: whether or not the retrenchment program implemented by petitioner PT&T is valid.

HELD: in order that retrenchment due to serious business losses may be validly exercised, the following requisites must concur: (a) necessity of the retrenchment to prevent losses, and proof of such losses; (b) written notice to the EEs and to the DOLE at least one (1) month prior to the intended date of retrenchment; and (c) payment of separation pay equivalent to one (1) month pay or at least one-half (1/2) month pay for every year of service, whichever is higher.[14]

Under the first requisite, it is imperative and incumbent on the part of the ER to sufficiently and convincingly establish business reverses of the kind or in the amount that would justify retrenchment.[15] To justify retrenchment, the ER must prove serious business losses, as not all business losses suffered by an ER would justify retrenchment under the aforesaid Article 283.[16] The loss referred to in the said provision cannot be of just any kind or amount, otherwise, a company could easily feign excuses to suit its whims and prejudices or to rid itself of unwanted EEs.[17] As consistently held by this Court, to guard against abuse, any claim of actual or potential business losses must satisfy the following established standards, to wit; (a) the losses incurred are substantial and not de minimis; (b) the losses are actual or reasonably

imminent; (c) the retrenchment is reasonably necessary and is likely to be effective in preventing the expected losses; and (d) the alleged losses, if already incurred, or the expected imminent losses sought to be forestalled are proven by sufficient and convincing evidence.[18]

The Court has previously ruled that financial statements audited by independent external auditors constitute the normal method of proof of the profit and loss performance of a company. In this case, PT&T incurred losses, it presented its audited financial statements and the auditing firm declared PT&T incurred a substantial loss. The foregoing clearly indicates that the petitioner PT&T sufficiently complied with its burden to prove that it incurred substantial losses as to warrant the exercise of the extreme measure of retrenchment to prevent the company from totally going under.

mandatory written notice served both to the EE concerned and the DOLE at least one month prior to the intended date of retrenchment.[24] The purpose of this requirement is not only to give EEs some time to prepare for the eventual loss of their jobs and their corresponding income, look for other employment and ease the impact of the loss of their jobs[25] but also to give the DOLE the opportunity to ascertain the verity of the alleged cause of termination.[26]

In the case at bar, the memorandum of Del Rosario, to Bayao and Castillo informing the latter that they were included in the TSRP to be implemented The said memorandum was received but they had barely two weeks’ notice of the intended retrenchment program. Clearly then, the one-month notice rule was not complied with. At the same time, the petitioners never showed that any notice of the retrenchment was sent to the DOLE.

This provision, however, speaks of a permanent retrenchment as opposed to a temporary lay-off as is the case here. There is no specific provision of law which treats of a temporary retrenchment or lay-off and provides for the requisites in effecting it or a period or duration therefor. These EEs cannot forever be temporarily laid-off. To remedy this situation or fill the hiatus, Article 286 may be applied but only by analogy to set a specific period that EEs may remain temporarily laid-off or in floating status. Six months is the period set by law that the operation of a business or undertaking may be suspended thereby suspending the employment of the EEs concerned. The temporary lay-off wherein the EEs likewise cease to work should also not last longer than six months. After six months, the EEs should either be recalled to work or permanently retrenched following the requirements of the law, and that failing to comply with this would be tantamount to dismissing the EEs and the ER would thus be liable for such dismissal.[30]

The law requires two notices ― one to the EE/s concerned and another to the DOLE ― not just one. The notice to the DOLE is essential because the right to retrench is not an absolute prerogative of an ER but is subject to the requirement of law that retrenchment be done to prevent losses. The DOLE is the agency that will determine whether the planned retrenchment is justified and adequately supported by facts.[32]

Interestingly enough, the evidence on record indicates that respondents Bayao and Castillo were not merely temporarily laid-off. Letter of Del Rosario addressed to the respondents clearly stated that the latter were to be considered separated from the company and that they were each being extended a separation package. It must be stressed, however, that compliance with the one-month notice rule is mandatory regardless of whether the retrenchment is temporary or permanent. This is so because Article 283 itself does not speak of temporary or permanent retrenchment; hence, there is no need to qualify the term. Ubi lex non distinguit nec nos distinguere debemus (when the law does not distinguish, we must not distinguish).

However, the ER’s failure to comply with the one month notice requirement prior to retrenchment does not render the termination illegal; it merely renders the same defective, entitling the dismissed EE to payment of indemnity in the form of nominal damages.[35] Based on prevailing jurisprudence, the amount of indemnity is pegged at P30,000.00.[36]

Finally, since petitioner PT&T was able to establish that it incurred serious business losses, justifying the retrenchment, the final requisite is the payment of separation pay. Pursuant to Section 283 of the Labor Code, as amended, the retrenchment having been effected due to serious business losses, respondents Bayao and Castillo are each entitled to one month pay or to at least one-half month pay for every year of service, whichever is higher. A fraction of at least six months shall be considered one whole year.MAYA FARMS EES ORGANIZATION et al vs.NLRCG.R. No. 106256 December 28, 1994KAPUNAN, J.:

FACTS: private respondents announced the adoption of an early retirement program as a cost-cutting measure considering that their business operations suffered major setbacks over the years. The program was voluntary and could be availed of only by EEs with at least eight (8) years of service. 1 Dialogues were thereafter conducted to give the parties an opportunity to discuss the details of the program. Accordingly, the program was amended to reduce the minimum requirement of eight (8) years of service to only five (5) years.

However, the response to the program was nil. There were only a few takers. To avert further losses, private respondents were constrained to look into the companies' organizational set-up in order to streamline operations. Consequently, the early retirement program was converted into a special redundancy program

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intended to reduce the work force to an optimum number so as to make operations more viable. a total of 69 EEs from the two companies availed of the special redundancy program. the two companies sent letters to 66 EEs informing them that their respective positions had been declared redundant. The notices likewise stated that their services would be terminated effective 30 days from receipt thereof. Separation benefits, including the conversion of all earned leave credits and other benefits due under existing CBAs were thereafter paid to those affected.

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. the two companies filed a petition with the Secretary of Labor and Employment asking the latter to assume jurisdiction over the case and/or certify the same for compulsory arbitration. The acting secretary certified the case to herein public respondent for compulsory arbitration.

the parties were called to a hearing to identify the issues involved in the case. Thereafter, they were ordered to submit their respective position papers. Petirioners averred that, 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 and also alleged that the companies' claim that they were in economic crisis was fabricated because in 1990, a net income of over 83 million pesos was realized by Liberty Flour Mills Group of Companies. 2 Furthermore, with the termination of the sixty-six (66) EEs pursuant to the special redundancy program, the remaining work force, especially the drivers, became overworked and overburdened so much so that they found themselves doing overtime work and reporting for duty even during rest days.

Invoking the workers' constitutional right to security of tenure, petitioners prayed for the reinstatement of the sixty-six (66) EEs and the payment of attorney's fees as they were constrained to hire the services of counsel in order to protect the workers' rights.

On their part, private respondents contend that their decision to implement a special redundancy program was an exercise of management prerogative which could not be interfered with unless it is shown to be tainted with bad faith and ill motive. Private respondents explained that they had no choice but to reduce their work force, otherwise, they would suffer more losses. Furthermore, they denied that the program violated CBA provisions.

SEC: confirmed the legality of the separation of the 66 EEs of management thereby dismissing the charges of violation of CBA and unfair labor practice on the part of management. Not satisfied with the above-quoted decision, petitioners interposed that public respondent grossly erred and gravely abused its discretion when it ruled that: (a) the termination of the sixty-six (66) EEs was in accordance with the LIFO rule in the CBA; (b) the termination of the sixty-six (66) EEs 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

HELD:The termination of the sixty-six EEs was done in accordance with Article 283 of the Labor Code. The basis for this was the companies' study to streamline operations so as to make them more viable. Positions which overlapped each other, or which are in excess of the requirements of the service, were declared redundant. We sustain the companies' prerogative to adopt the alleged redundancy/retrenchment program to minimize if not, to avert losses in the conduct of its operations. However, the companies' decision on this matter is not absolute. The basis for such an action must be far from being whimsical and the same must be proved by substantial evidence. In addition, the implementation of such a decision or policy must be in accordance with existing laws, rules and procedure and provisions of the CBA between the parties, if there be any. Short of any of these conditions, management policy to pursue and terminate its EEs allegedly to avert losses, must fail.

While it may be true that the Liberty Flour Mills Group of Companies as a whole posted a net income of P83.3 Million, it is admitted that with respect to operations of the meat processing and livestock which were undertaken by herein companies sustained losses in the sum of P2,257,649.88 (Exh. "3"). This is the reason, as advanced by management, for its decision to streamline positions resulting in the reduction of manpower compliment (sic). 9

The NLRC correctly held that private respondents did not violate the LIFO 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 EEs occupying the same position in the company affected by the retrenchment program, the last one employed will necessarily be the first to go.

In the case of packers, prior to the involuntary redundancy program,21 EEs occupied the position of packers. Out of this number, only 5 were retained. In this group of EEs, the earliest date of employment was October 27, 1969, and the latest packer was employed in 1989. The most senior EEs occupying the position of packers were retained. The same is true with respect to egg sorters. The egg sorters employed on or before April 26, 1972 were retained. All those employed after said date were separated. With respect to the position of drivers, there were eight drivers prior to the involuntary redundancy program. Thereafter only 3 positions were retained. Accordingly, the three drivers who were most senior in terms of period of employment, were retained.

However, it is maintained that in meat processing department there were 3 Asst. Superintendents assigned as head of the 3 sections thereat. The reason advanced by the company in retaining Bandong

was that as Asst. Superintendent for meat processing she could "already take care of the operations of the other sections." The nature of work of each assistant superintendent as well as experience were taken into account by management. Such criteria was not shown to be whimsical nor carpricious.

Finally, contrary to petitioners' contention, there is nothing on record to show that the 30-day notice of termination to the workers was disregarded and that the same substituted with separation pay by private respondents. As found by public respondent, written notices of separation were sent to the EEs on January 17, 1992. The notices expressly stated that the termination of employment was to take effect one month from receipt thereof. Therefore, the allegation that separation pay was given in lieu of the 30-day notice required by law is baseless.GOLDEN THREAD KNITTING INDUSTIRES v. NLRC | 304 SCRA 720 | March 11, 1999

FACTS several EEs of Golden Thread Knitting Industries (GTK) were dismissed for different reasons. 2 EEs were allegedly for slashing the company’s products (towels), 2 for redundancy, 1 for threatening the personnel manager and violating the company rules, and 1 for abandonment of work. The laborers filed complaints for illegal dismissal. They allege that the company dismissed them in retaliation for establishing and being members of the Labor Union. GTK, on the other hand, contend that there were valid causes for the terminations. The dismissals were allegedly a result of the slashing of their products, rotation of work, which in turn was caused by the low demand for their products, and abandonment of work. WRT to the cases involving the slashing of their products and threats to the personnel manager, the dismissals were in effect a form of punishment. The labor arbiter ruled partially in favor of GTK. He said that there was no showing that the dismissals were in retaliation for establishing a union. He, however, awarded separation pay to some EEs. NLRC, however, appreciated the evidence differently. It held that there was illegal dismissal and ordered reinstatement.

ISSUE: WON there was illegal dismissal

HELD: YESRatioDismissal is the ultimate penalty that can be meted to an EE. It must therefore be based on a clear and not on an ambiguous or ambivalent ground.Reasoning WRT to the case involving slashing of towels, the EEs were not given procedural due process. There was no notice and hearing, only outright denial of their entry to the work premises by the security guards. The charges of serious misconduct were not sufficiently proved. WRT to the EEs dismissed for redundancy, there was also denial of procedural due process. Hearing and notice were not observed. Thus, although the characterization of an EE’s services is a management function, it must first be proved with evidence, which was not done in this case. the company cannot merely declare that it was overmanned. WRT to the EE dismissed for disrespect, the SC believed the story version of the company (which essentially said that the personnel manager was threatened upon mere service of a suspension order to the EE), but ruled that the dismissal could not be upheld.

“the dismissal will not be upheld where it appears that the EE’s act of disrespect was provoked by the ER. xxx the EE hurled incentives at the personnel manager because she was provoked by the baseless suspension imposed on her. The penalty of dismissal must be commensurate with the act, conduct, or omission to the EE.”

The dismissal was too harsh a penalty; a suspension of 1 week would have sufficed.

“GTK exercised their authority to dismiss without due regard to the provisions of the Labor Code. The right to terminate should be utilized with extreme caution because its immediate effect is to put an end to an EE's present means of livelihood while its distant effect, upon a subsequent finding of illegal dismissal, is just as pernicious to the ER who will most likely be required to reinstate the subject EE and grant him full back wages and other benefits.

Disposition Decision AFFIRMED

FLIGHT ATTENDANTS AND STEWARDS ASSOCIATION OF THEPHILIPPINES (FASAP), vs. PALYNARES-SATIAGO, J.:

FACTS: Petitioner FASAP is the duly certified collective bargaining representative of PAL flight attendants and stewards, or collectively known as PAL cabin crew personnel. PAL retrenched 5,000 of its EEs, including more than 1,400 of its cabin crew personnel. PAL adopted the retrenchment scheme allegedly to cut costs and mitigate huge financial losses as a result of a downturn in the airline industry brought about by the Asian financial crisis. During said period, PAL claims to have incurred P90 billion in liabilities, while its assets stood at P85 billion.[3]

PAL adopted its so-called "Plan 14" whereby PAL's fleet of aircraft would be reduced from 54 to 14, thus requiring the services of only 654 cabin crew personnel.[4] PAL admits that the retrenchment is wholly premised upon such reduction in fleet,[5] and to "the strike staged by PAL pilots since this action also translated into a reduction of flights."[6] PAL claims that the scheme resulted in "savings x x x amounting to approximately P24 million per month - savings that would greatly alleviate PAL's financial crisis."[7]

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Prior to the full implementation of the assailed retrenchment program, FASAP and PAL conducted a series of consultations and meetings and explored all possibilities of cushioning the impact of the impending reduction in cabin crew personnel. However, the parties failed to agree on how the scheme would be implemented. Thus PAL unilaterally resolved to utilize the criteria set forth in the CBA in retrenching cabin crew personnel: that is, that retrenchment shall be based on the individual EE's efficiency rating and seniority. PAL determined the cabin crew personnel efficiency ratings through an evaluation of the individual cabin crew member's overall performance for the year 1997 alone.[9] Their respective performance during previous years, i.e., the whole duration of service with PAL of each cabin crew personnel, was not considered. The factors taken into account on whether the cabin crew member would be retrenched, demoted or retained were: 1) the existence of excess sick leaves; 2) the crew member's being physically overweight; 3) seniority; and 4) previous suspensions or warnings imposed.[10]

While consultations between FASAP and PAL were ongoing, the latter began implementing its retrenchment program by initially terminating the services of 140 probationary cabin attendants only to rehire them in April 1998. Moreover, their employment was made permanent and regular. On July 15, 1998, however, PAL carried out the retrenchment of its more than 1,400 cabin crew personnel. , PAL was placed under corporate rehabilitation and a rehabilitation plan was approved per SEC.

PAL, through its Chairman and Chief Executive Officer (CEO) Lucio Tan, made an offer to transfer shares of stock to its EEs and three seats in its Board of Directors, on the condition that all the existing CBA’s with its EEs would be suspended for 10 years, but it was rejected by the EEs. PAL informed its EEs that it was shutting down its operations effective despite the previous approval of its rehabilitation plan.

PAL ceased its operations and sent notices of termination to its EEs. Two days later, PAL EEs, through the Philippine Airlines EEs Association (PALEA) board, sought the intervention of then President Joseph E. Estrada. PALEA offered a 10-year moratorium on strikes and similar actions and a waiver of some of the economic benefits in the existing CBA. Lucio Tan, however, rejected this counter-offer.[14]

the PALEA board again wrote the President proposing the following terms and conditions, subject to ratification by the general membership:1.Each PAL EE shall be granted 60,000 shares of stock with a par value of P5.00, from Mr. Lucio Tan's shareholdings, with three (3) seats in the PAL Board and an additional seat from government shares as indicated by His Excellency;2.Likewise, PALEA shall, as far as practicable, be granted adequate representation in committees or bodies which deal with matters affecting terms and conditions of employment;3.To enhance and strengthen labor-management relations, the existing Labor-Management Coordinating Council shall be reorganized and revitalized, with adequate representation from both PAL management and PALEA;4.To assure investors and creditors of industrial peace, PALEA agrees, subject to the ratification by the general membership, (to) the suspension of the PAL-PALEA CBA for a period of ten (10) years, provided the following safeguards are in place:a.PAL shall continue recognizing PALEA as the duly certified bargaining agent of the regular rank-and-file ground EEs of the Company;b.The `union shop/maintenance of membership' provision under the PAL-PALEA CBA shall be respected.c.No salary deduction, with full medical benefits.5.PAL shall grant the benefits under the 26 July 1998 Memorandum of Agreement forged by and between PAL and PALEA, to those EEs who may opt to retire or be separated from the company.6.PALEA members who have been retrenched but have not received separation benefits shall be granted priority in the hiring/rehiring of EEs.7.In the absence of applicable Company rule or regulation, the provisions of the Labor Code shall apply.[15]

In a referendum conducted on October 2, 1998, PAL EEs ratified the above proposal. PAL resumed domestic operations and, soon after, international flights as well.[16]

five months after the mass dismissal of its cabin crew personnel, PAL began recalling to service those it had previously retrenched. PAL 820, FASAP 20. PAL submitted a "stand-alone" rehabilitation plan to the SEC by which it undertook a recovery on its own while keeping its options open for the entry of a strategic partner in the future. Accordingly, it submitted an amended rehabilitation plan to the SEC with a proposed revised business and financial restructuring plan, which required the infusion of US$200 million in new equity into the airline.

the SEC approved the proposed "Amended and Restated Rehabilitation Plan" of PAL and appointed a permanent rehabilitation receiver for the latter. the cash infusion of US$200 million made by Lucio Tan on June 4, 1999 was acknowledged.[22] PAL officially exited receivership

FASAP filed a Complaint for unfair labor practice, illegal retrenchment with claims for reinstatement and payment of salaries, allowances and backwages of affected FASAP members. respondents filed a Motion to Dismiss and/or Consolidation with NCMB pending with the Office of the Secretary of the Department of Labor and Employment and/or Suspension and Referral of Claims to the interim rehabilitation proceedings (motion to dismiss).[26]

LA: denying respondents' motion to dismiss; granting a writ of preliminary injunction against PAL's implementation of its retrenchment program with respect to FASAP members; setting aside the respective notices of retrenchment addressed to the cabin crew; directing respondents to restore the said retrenched cabin crew to their positions and PAL's payroll until final determination of the case; and directing respondents to file their position paper.

NLRC: reversed the decision of the Labor Arbiter. The NLRC directed the lifting of the writ of injunction and to vacate the directive setting aside the notices of retrenchment and reinstating the dismissed cabin crew to their respective positions and in the PAL payroll.[28]

Respondents appealed to the NLRC. Meanwhile, FASAP moved for the implementation of the reinstatement aspect of the Labor Arbiter's decision. Despite respondents' opposition, the Labor Arbiter issued a writ of execution with respect to the reinstatement directive in his decision. Respondents moved to quash the writ, but the Labor Arbiter denied the same. Again, respondents took issue with the NLRC.

ISSUE: whether PAL's retrenchment scheme was justified.

HELD: The burden clearly falls upon the ER to prove economic or business losses with sufficient supporting evidence. Its failure to prove these reverses or losses necessarily means that the EE's dismissal was not justified.[43] Any claim of actual or potential business losses must satisfy certain established standards, all of which must concur, before any reduction of personnel becomes legal.[44] These are:(1) That retrenchment is reasonably necessary and likely to prevent business losses which, if already incurred, are not merely de minimis, but substantial, serious, actual and real, or if only expected, are reasonably imminent as perceived objectively and in good faith by the ER;(2) That the ER served written notice both to the EEs and to the Department of Labor and Employment at least one month prior to the intended date of retrenchment;(3) That the ER pays the retrenched EEs separation pay equivalent to one (1) month pay or at least one-half (Â½) month pay for every year of service, whichever is higher;(4) That the ER exercises its prerogative to retrench EEs in good faith for the advancement of its interest and not to defeat or circumvent the EEs' right to security of tenure; and,(5) That the ER used fair and reasonable criteria in ascertaining who would be dismissed and who would be retained among the EEs, such as status, efficiency, seniority, physical fitness, age, and financial hardship for certain workers.[45]

FIRST ELEMENT: PAL failed to substantiate its claim of actual and imminent substantial losses which would justify the retrenchment of more than 1,400 of its cabin crew personnel. Although the Philippine economy was gravely affected by the Asian financial crisis, however, it cannot be assumed that it has likewise brought PAL to the brink of bankruptcy. Likewise, the fact that PAL underwent corporate rehabilitation does not automatically justify the retrenchment of its cabin crew personnel.

Records show that PAL was not even aware of its actual financial position when it implemented its retrenchment program. It initially decided to cut its fleet size to only 14 ("Plan 14") and based on said plan, it retrenched more than 1,400 of its cabin crew personnel. Later on, however, it abandoned its "Plan 14" and decided to retain 22 units of aircraft ("Plan 22"). Unfortunately, it has retrenched more than what was necessary. PAL admits that:

To prove that PAL was financially distressed, it could have submitted its audited financial statements but it failed to present the same with the Labor Arbiter. Instead, it narrated a litany of woes without offering any evidence to show that they translated into specific and substantial losses that would necessitate retrenchment. Interestingly, PAL submitted its audited financial statements only when the case was the subject of certiorari proceedings in the Court of Appeals by attaching in its Comment[76] a copy of its consolidated audited financial statements for the years 2002, 2003 and 2004.[77] However, these are not the financial statements that would have shown PAL's alleged precarious position at the time it implemented the massive retrenchment scheme in 1998. PAL should have submitted its financial statements for the years 1997 up to 1999; and not for the years 2002 up to 2004 because these financial statements cover a period markedly distant to the years in question, which make them irrelevant and unacceptable.

By submitting a "stand-alone" rehabilitation plan, PAL acknowledged that it could undertake recovery on its own and that it possessed enough resources to weather the financial storm, if any.

FOURTH ELEMENT: When PAL implemented Plan 22, instead of Plan 14, which was what it had originally made known to its EEs, it could not be said that it acted in a manner compatible with good faith. It offered no satisfactory explanation why it abandoned Plan 14; instead, it justified its actions of subsequently recalling to duty retrenched EEs by making it appear that it was a show of good faith; that it was due to its good corporate nature that the decision to consider recalling EEs was made. The truth, however, is that it was unfair for PAL to have made such a move; it was capricious and arbitrary, considering that several thousand EEs who had long been working for PAL had lost their jobs, only to be recalled but assigned to lower positions (i.e., demoted), and, worse, some as new hires, without due regard for their long years of service with the airline.

The irregularity of PAL's implementation of Plan 14 becomes more apparent when it rehired 140 probationary cabin attendants whose

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services it had previously terminated, and yet proceeded to terminate the services of its permanent cabin crew personnel.

Moreover, the management's September 4, 1998 offer to transfer PAL shares of stock in the name of its EEs in exchange for the latter's commitment to suspend all existing CBAs for 10 years; the closure of its operations when the offer was rejected; and the resumption of its business after the EEs relented; all indicate that PAL had not acted in earnest in regard to relations with its EEs at the time.

FIFTH ELEMENT: In the implementation of its retrenchment scheme, PAL evaluated the cabin crew personnel's performance during the year preceding the retrenchment (1997), based on the following set of criteria or rating variables found in the Performance Evaluation Form of the cabin crew personnel's Grooming and Appearance Handbook:A.INFLIGHT PROFICIENCY EVALUATION - 30%; B.JOB PERFORMANCE - 35%;C.ATTENDANCE - 35%

we do not agree with the findings of the appellate court that the criteria utilized by PAL in the actual retrenchment were reasonable and fair. retrenchment of cabin crew personnel due to "other reasons" which, however, are not specifically stated and shown to be for a valid cause. This is not allowed because it has no basis in fact and in law.

Moreover, in assessing the overall performance of each cabin crew personnel, PAL only considered the year 1997. This makes the evaluation of each cabin attendant's efficiency rating capricious and prejudicial to PAL EEs covered by it. By discarding the cabin crew personnel's previous years of service and taking into consideration only one year's worth of job performance for evaluation, PAL virtually did away with the concept of seniority, loyalty and past efficiency, and treated all cabin attendants as if they were on equal footing, with no one more senior than the other.

In sum, PAL's retrenchment program is illegal because it was based on wrongful premise (Plan 14, which in reality turned out to be Plan 22, resulting in retrenchment of more cabin attendants than was necessary) and in a set of criteria or rating variables that is unfair and unreasonable when implemented. It failed to take into account each cabin attendant's respective service record, thereby disregarding seniority and loyalty in the evaluation of overall EE performance.

Anent the claim of unfair labor practices committed against petitioner, we find the same to be without basis. Article 261 of the Labor Code provides that violations of a CBA, except those which are gross in character, shall no longer be treated as unfair labor practice and shall be resolved as grievances under the parties' CBA. Moreover, "gross violations of CBA" under the same Article referred to flagrant and/or malicious refusal to comply with the economic provisions of such agreement, which is not the issue in the instant case.

Quitclaims executed as a result of PAL's illegal retrenchment program are likewise annulled and set aside because they were not voluntarily entered into by the retrenched EEs; their consent was obtained by fraud or mistake, as volition was clouded by a retrenchment program that was, at its inception, made without basis.

As to PAL's recall and rehire process (of retrenched cabin crew EEs), the same is likewise defective. Considering the illegality of the retrenchment, it follows that the subsequent recall and rehire process is likewise invalid and without effect.

A corporate officer is not personally liable for the money claims of discharged corporate EEs unless he acted with evident malice and bad faith in terminating their employment.[97] We do not see how respondent Patria Chiong may be held personally liable together with PAL, it appearing that she was merely acting in accordance with what her duties required under the circumstances. Being an Assistant Vice President for Cabin Services of PAL, she takes direct orders from superiors, or those who are charged with the formulation of the policies to be implemented.

LOPEZ SUGAR CORPORATION vs. FEDERATION OF FREE WORKERSG.R. Nos. 75700-01 August 30, 1990FELICIANO, J.:

FACTS: Petitioner, allegedly to prevent losses due to major economic problems, and exercising its privilege under CBA entered into between petitioner and private respondent Philippine Labor Union Association ("PLUA-NACUSIP"), caused the retrenchment and retirement of a number of its EEs. petitioner filed with the Bacolod District Office of the then MOLE a combined report on retirement and application for clearance to retrench, affecting 86 of its EEs. Of these 86 EEs, 59 were retired and 27 were to be retrenched "in order to prevent losses."

private respondent Federation of Free Workers ("FFW"), as the certified bargaining agent of the rank-and-file EEs of petitioner, filed a complaint for unfair labor practices and recovery of union dues. FFW claimed that the terminations undertaken by petitioner were violative of the security of tenure of its members and were intended to "bust" the union and hence constituted an unfair labor practice. FFW claimed that after the termination of the services of its members, petitioner advised 110 casuals to report to its personnel office. FFW further argued that to justify retrenchment, serious business reverses must be "actual, real and amply supported by sufficient and convincing evidence." FFW prayed for reinstatement of its members who had been retired or retrenched.

Petitioner denied having hired casuals to replace those it had retired or retrenched. It explained that the announcement calling for 110 workers to report to its personnel office was only for the purpose of organizing a pool of extra workers which could be tapped whenever there were temporary vacancies by reason of leaves of absence of regular workers.

another report on retirement affecting an additional 25 EEs was filed by petitioner. petitioner filed its Position Paper in NLRC contending that certain economic factors jeopardizing its very existence rendered the dismissals necessary. As a business firm, the Applicant must earn [a] fair return of (sic) its investment. Its income is generated from the sales of the Central's shares of sugar and molasses production. It has however no control of the selling price of both products. It is of common knowledge that for the past years the price of sugar has been very low. In order to survive, the Applicant has effected several forms of cost reduction. Now that there is hope in the price of sugar the applicant is again faced with two major economic problems, i.e., the stoppage of its railway operation and the spiralling cost of production.

The Applicant was forced to stop its railway operation because the owners of the land upon which the Applicant's railway lines traverse are no longer willing to allow the Applicant to make further use of portions of their lands. The other economic problem that confronted the Applicant is the rising cost of labor, materials, supplies, equipment, etc. These two major economic problems the rising cost of production and the stoppage of its railway facilities, put together pose a very serious threat against the economic survival of the Applicant. In view of this, the Applicant was constrained to touch on the last phase of its cost reduction program which is the reduction of its workforce.

LA: denied petitioner's application for clearance to retrench its EEs on the ground that for retrenchment to be valid, the ER's losses must be serious, actual and real and must be amply supported by sufficient and convincing evidence. The application to retire was also denied on the ground that petitioner's prerogative to so retire its EEs was granted by the CBA which agreement had long ago expired. Petitioner was, therefore, ordered to reinstate 27 retired or retrenched EEs represented by private respondent Philippine Labor Union Association ("PLUA") and FFW and to pay them full backwages from the time of termination until actual reinstatement.

NLRC: petitioner and respondent FFW appealed the case to public respondent NLRC. finding no justifiable reason for disturbing the decision of the Labor Arbiter, affirmed that decision.

HELD: In ts ordinary connotation, he phrase "to revent losses" means hat retrenchment or termination of the services of some EEs is authorized to be undertaken by the ER sometime before the losses anticipated are actually sustained or realized. It is not, in other words, the intention of the lawmaker to compel the ER to stay his hand and keep all his EEs until sometime after losses shall have in fact materialized ; 7 if such an intent were expressly written into the law, that law may well be vulnerable to constitutional attack as taking property from one man to give to another. This is simple enough.

To determination of when, or under what circumstances, the ER becomes legally privileged to retrench and reduce the number of his EEs: 1, the losses expected should be substantial and not merely de minimis in extent. 2, the substantial loss apprehended must be reasonably imminent, as such imminence can be perceived objectively and in good faith by the ER. 3, be reasonably necessary and likely to effectively prevent the expected losses. The ER should have taken other measures prior or parallel to retrenchment to forestall losses.An ER who, for instance, lays off substantial numbers of workers while continuing to dispense fat executive bonuses and perquisites or so-called "golden parachutes", can scarcely claim to be retrenching in good faith to avoid losses. retrenching must be exercised essentially as a measure of last resort, 4.but certainly not the least important, alleged if already realized, and the expected imminent losses sought to be forestalled, must be proved by sufficient and convincing evidence. The reason for requiring this quantum of proof is readily apparent: any less exacting standard of proof would render too easy the abuse of this ground for termination of services of EEs.

these losses must be serious, actual and real. We find the answer to be negative. We have scanned the records but failed to find evidence submitted to show that applicant company would suffer serious business losses or reverses as a consequence of the alleged major economic problems. In fact, applicant company asseverated that these problems only threatens its survival, hence, it had to reduce its work force. Another thing, while applicant company was retrenching its regular EEs, it also hired the services of casuals. This militated its claim to reduce its work force to set up cost reduction. It must be stated that settled is the rule that serious business losses or reverses must be actual, real and amply supported by sufficient and convincing evidence.

that no proof of actual declining gross and net revenues was submitted. No audited financial statements showing the financial condition of petitioner corporation during the above mentioned crop years were submitted. Since financial statements audited by independent external auditors constitute the normal method of proof of the profit and loss performance of a company, it is not easy to understand why petitioner should have failed to submit such financial statements.

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it fairly conspicuously failed to specify the cost-reduction measures actually undertaken in good faith before resorting to retrenchment. Upon the other hand, it appears from the record that petitioner, after reducing its work force, advised 110 casual workers to register with the company personnel officer as extra workers.

We conclude that because the attempted retrenchment on the part of the petitioner was legally ineffective, all retrenched EEs should be reinstated and backwages paid them corresponding to a period of three (3) years without qualification or deduction, in accordance with the three-year rule laid down in a long line of cases. 17 In the case of EEs who had received payments for which they had executed quitclaims, the amount of such payments shall be deducted from the backwages due to them. Where reinstatement is no longer possible because the positions they had previously filled are no longer in existence, petitioner shall pay backwages plus, in lieu of reinstatement, separation pay in the amount of one-month's pay for every year of service including the three (3) year-period of putative service for which backwages will be paid. Upon the other hand, we find valid the retirement of those EEs who were retired by petitioner pursuant to the applicable provisions of the CBA.NORTH DAVAO MINING CORPORATION vs. NLRC [G.R. No. 112546. March 13, 1996]

FACTS: North Dava) was incorporated in 1974 as a 100% privately-owned company. Later, PNB became part owner thereof as a result of a conversion into equity of a portion of loans obtained by North Davao from said bank. PNB transferred all its loans to and equity in North Davao in favor of the national government which, by virtue of Proclamation No. 50 later turned them over to petitioner Asset Privatization Trust (APT). the national government held 81.8% of the common stock and 100% of the preferred stock of said company.[4]

Respondent Wilfredo Guillema is one among several EEs of North Davao who were separated by reason of the company’s closure, and who were the complainants in the cases before the respondent labor arbiter.

North Davao completely ceased operations due to serious business reverses. From 1988 until its closure in 1992, North Davao suffered net losses averaging P3B per year, for each of the 5 years prior to its closure. five months prior to its closure, its total liabilities had exceeded its assets by 20.392 billion pesos, as shown by its financial statements audited by the Commission on Audit. When it ceased operations, its remaining EEs were separated and given the equivalent of 12.5 days’ pay for every year of service, computed on their basic monthly pay, in addition to the commutation to cash of their unused vacation and sick leaves. However, it appears that, during the life of the petitioner corporation, from the beginning of its operations in 1981 until its closure in 1992, it had been giving separation pay equivalent to 30 days’ pay for every year of service. Moreover, inasmuch as the region where North Davao operated was plagued by insurgency and other peace and order problems, the EEs had to collect their salaries at a bank in Tagum, Davao del Norte, some 58 kilometers from their workplace and about 2 ½hours’ travel time by public transportation; this arrangement lasted from 1981 up to 1990.

Subsequently, a complaint was filed with respondent labor arbiter by respondent Wilfredo Guillema and 271 other seperated EEs for: (1) additional separation pay of 17.5 days for every year of service; (2) back wages equivalent to two days a month; (3) transportation allowance; (4) hazard pay; (5) housing allowance; (6) food allowance; (7) post-employment medical clearance; and (8) future medical allowance, all of which amounted to P58,022,878.31 as computed by private respondent.[5]

LA: rendered a decision ordering petitioner North Davao to pay the complainants the same which amounted to P10,240,517.75. Attorney’s fees equivalent to ten percent (10%) thereof were also granted.[6]

NLRC: affirmed the decision in toto. MR deinied.

“1. Whether or not an ER whose business operations ceased due to serious business losses or financial reverses is obliged to pay separation pay to its EEs separated by reason of such closure.The underscored portion of Art. 283 governs the grant of seperation benefits “in case of closures or cessation of operation” of business establishments “NOT due to serious business losses or financial reverses x x x”. Where, however, the closure was due to business losses - as in the instant case, in which the aggregate losses amounted to over P20 billion - the Labor Code does not impose any obligation upon the ER to pay separation benefits, for obvious reasons. There is no need to belabor this point. Even the public respondents, in their Comment[10] filed by the Solicitor General, impliedly concede this point.

the basis for the claim of the additional separation benefit of 17.5 days is alleged discrimination, i.e., unequal treatment of EEs, which is proscribed as an unfair labor practice by Art. 248 (e) of said Code. the total cessation of operation due to mind-boggling losses was a supervening fact that prevented the company from continuing to grant the more generous amount of separation pay. The fact that North Davao at the point of its forced closure voluntarily paid any separation benefits at all - although not required by law - and 12.5-days’ worth at that, should have elicited admiration instead of condemnation. But to require it to continue being generous when it is no longer in a position to do so would certainly be unduly oppressive, unfair and most revolting to the conscience.

At this juncture, we note that the Solicitor General in his Comment challenges the petitioners assertion that North Davao, having

closed down, no longer has the means to pay for the benefits. The Solicitor General stresses that North Davao was among the assets transferred by PNB to the national government, and that by virtue of Proclamation No. 50 dated December 8, 1986, the APT was constituted trustee of this government asset. He then concludes that “(i)t would, therefore, be incongruous to declare that the National Government, which should always be presumed to be solvent, could not pay now private respondents’ money claims.” Such argumentation is completely misplaced. Even if the national government owned or controlled 81.8% of the common stock and 100% of the preferred stock of North Davao, it remains only a stockholder thereof, and under existing laws and prevailing jurisprudence, a stockholder as a rule is not directly, individually and/or personally liable for the indebtedness of the corporation. The obligation of North Davao cannot be considered the obligation of the national government, hence, whether the latter be solvent or not is not material to the instant case. The respondents have not shown that this case constitutes one of the instances where the corporate veil may be pierced.[14] From another angle, the national government is not the ER of private respondent and his co-complainants, so there is no reason to expect any kind of bailout by the national government under existing law and jurisprudence.

2. Whether or not time spent in collecting wages in a place other than the place of employment is compensable notwithstanding that the same is done during official time. ‘From the evidence on record, we find that the hours spent by complainants in collecting salaries at a bank in Tagum, Davao del Norte shall be considered compensable hours worked. Considering further the distance between Amacan, Maco to Tagum which is 2½ hours by travel and the risks in commuting all the time in collecting complainants’ salaries, would justify the granting of backwages equivalent to two (2) days in a month as prayed for.

3. Whether or not private respondents are entitled to transportation expenses in the absence of evidence that these expenses were incurred.”‘Corollary to the above findings, and for equitable reasons, we likewise hold respondents liable for the transportation expenses incurred by complainants at P40.00 round trip fare during pay days.’MANATDA v. PT&T548 SCRA 64

FACTS: In September 1988, petitioner was employed by respondent Philippine Telegraph and Telephone Corporation (PT&T) as junior clerk with a monthly salary of P3, 839.74. She was later promoted as Account Executive, the position she held until she was temporarily laid off from employment on 1 September 1998.

Petitioner temporary separation from employment was pursuant to the Temporary Staff Reduction Program adopted by respondent due to serious business reverses. On 16 November 1998, petitioner received a letter from respondent inviting her to avail herself of its Staff Reduction Program Package equivalent to one-month salary for every year of service, one and one-half month salary, pro-rated 13th month pay, conversion to cash of unused vacation and sick leave credits, and Health Maintenance Organization and group life insurance coverage until full payment of the separation package. Petitioner, however, did not opt to avail herself of the said package. On 26 February 1999, petitioner received a Notice of Retrenchment from respondent permanently dismissing her from employment effective 16 February 1999.

Petitioner filed illegal dismissal before the Labor Arbiter. Petitioner submitted evidence that the respondents have no grounds for retrenchment and that the company is not suffering from serious losses. However, the respondent also submitted financial reports to sustain its ground of a valid retrenchment. The Labor Arbiter held in favor of the petitioner which was affirmed by the NLRC. It further noted that the Department of Labor and Employment (DOLE) was not notified by the respondent of its retrenchment program as required by law.

On appeal to CA, the decision of the NLRC was reversed. It held that the company is suffering serious financial losses as reflected on its financial statements submitted and prepared by independent auditors of the company. Hence, this petition.

ISSUE:Whether there is a valid retrenchment by the respondent company

HELD:Pertinent provision is Article 283 of the Labor Code.For a valid retrenchment, the following requisites must be complied with: (a) the retrenchment is necessary to prevent losses and such losses are proven; (b) written notice to the EEs and to the DOLE at least one month prior to the intended date of retrenchment; and (c) payment of separation pay equivalent to one-month pay or at least one- half month pay for every year of service, whichever is higher.

The financial statements reflect that respondent suffered substantial loss in the amount of P558 Million by 30 June 1998. The Report of SGV & Co. substantiates the alleged precarious financial condition of the respondent. The financial statements audited by independent external auditors constitute the normal method of proving the profit and loss performance of a company.

The respondent complied with the requisite notices to the EE and the DOLE to effect a valid retrenchment. Petitioner failed to refute that she received the written notice of retrenchment from respondent on 16 November 1998. Although respondent failed to furnish DOLE with a formal letter notifying it of the retrenchment, it still substantially complied with the requirement. Since the National Conciliation and Mediation Board, the reconciliatory arm of DOLE, supervised the negotiation for separation package, we agree with

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the Court of Appeals that it would be superfluous to still require respondent to serve notice of the retrenchment to DOLE.

In fact, even granting arguendo that respondent was not experiencing losses, it is still authorized by Article 283[26] of the Labor Code to cease its business operations. Explicit in the said provision is that closure or cessation of business operations is allowed even if the business is not undergoing economic losses. The owner, for any bona fide reason, can lawfully close shop anyone. Just as no law forces anyone to go into business, no law can compel anybody to continue in it. It would indeed be stretching the intent and spirit of the law if we were to unjustly interfere with the management prerogative to close or cease its business operations, just because said business operations are not suffering any loss or simply to provide the workers continued employment.

WILTSHIRE FILE CO INC vs. NLRC193 SCRA 665 February 7, 1991FELICIANO;

FACTS - Private respondent Vicente T. Ong was the Sales Manager of petitioner Wiltshire File Co., Inc. ("Wiltshire") from 16 March 1981 up to 18 June 1985. On 13 June 1985, upon private respondent's return from a business and pleasure trip abroad, he was informed by the President of petitioner Wiltshire that his services were being terminated. Private respondent maintains that he tried to get an explanation from management of his dismissal but to no avail. On 18 June 1985, when private respondent again tried to speak with the President of Wiltshire, the company's security guard handed him a letter which formally informed him that his services were being terminated upon the ground of redundancy. - Private respondent filed, on 21 October 1985, a complaint before the Labor Arbiter for illegal dismissal alleging that his position could not possibly be redundant because nobody (save himself) in the company was then performing the same duties. Private respondent further contended that retrenching him could not prevent further losses because it was in fact through his remarkable performance as Sales Manager that the Company had an unprecedented increase in domestic market share the preceding year. For that accomplishment, he continued, he was promoted to Marketing Manager and was authorized by the President to hire four (4) Sales Executives five (5) months prior to his termination. - In its answer, petitioner company alleged that the termination of respondent's services was a cost-cutting measure: that in December 1984, the company had experienced an unusually low volume of orders: and that it was in fact forced to rotate its EEs in order to save the company. Despite the rotation of EEs, petitioner alleged; it continued to experience financial losses and private respondent's position, Sales Manager of the company, became redundant. - On 2 December 1986, during the proceedings before the Labor Arbiter, petitioner, in a letter1 addressed to the Regional Director of the then Ministry of Labor and Employment, notified that official that effective 2 January 1987, petitioner would close its doors permanently due to substantial business losses. - In a decision dated 11 March 1987, the Labor Arbiter declared the termination of private respondent's services illegal and ordered petitioner to pay private respondent backwages, unpaid salaries in the amount of, accumulated sick and vacation leaves in the amount of, hospitalization benefit package in the amount, unpaid commission in the amount of, moral damages in the amount of and attorney's fees in the amount of. On appeal by petitioner Wiltshire, the National Labor Relations Commission ("NLRC") affirmed in toto on 9 February 1988 the decision of the Labor Arbiter. - In this Petition forCertiorari, it is submitted that private respondent's dismissal was justified and not illegal. Petitioner maintains that it had been incurring business losses beginning 1984 and that it was compelled to reduce the size of its personnel force. Petitioner also contends that redundancy as a cause for termination does not necessarily mean duplication of work but a "situation where the services of an EE are in excess of what is demanded by the needs of an undertaking

ISSUE WON private respondent’s dismissal was justified on the ground of retrenchment

HELD YES - The Court resolved to grant due course to the Petition for Certiorari. The Resolutions of the National Labor Relations Commission dated 9 February 1988 and 7 March 1988 are hereby SET ASIDE and NULLIFIED. The Temporary Restraining Order issued by this Court on 21 March 1988 is hereby made PERMANENT. Ratio. Having reviewed the record of this case, the Court has satisfied itself that indeed petitioner had serious financial difficulties before, during and after the termination of the services of private respondent. For one thing, the audited financial statements of the petitioner for its fiscal year ending on 31 July 1985 prepared by a firm of independent auditors, showed a net loss in the amount of P4,431,321.00 and a total deficit or capital impairment at the end of year of P6,776,493.00.2 In the preceding fiscal year (1983-1984), while the company showed a net after tax income of P843,506.00, it actually suffered a deficit or capital impairment of P2,345,172.00. Most importantly, petitioner Wiltshire finally closed its doors and terminated all operations in the Philippines on January 1987, barely two (2) years after the termination of private respondent's employment. We consider that finally shutting down business operations constitutes strong confirmatory evidence of petitioner's previous financial distress. The Court finds it very difficult to suppose that petitioner Wiltshire would take the final and irrevocable step of closing down its operations in the Philippines simply for the sole purpose of easing out a particular officer or EE, such as the private respondent. Labor Law 1 A2010 - 4 - Disini - Turning to the legality of the termination of private respondent's employment, we find merit in petitioner's basic argument. The Court was unable to sustain public respondent NLRC's holding that private respondent's dismissal was

not justified by redundancy and hence illegal. In the first place, while the letter informing private respondent of the termination of his services used the word "redundant", that letter also referred to the company having "incur[red] financial losses which [in] fact has compelled [it] to resort to retrenchment to prevent further losses".3 Thus, what the letter was in effect saying was that because of financial losses, retrenchment was necessary, which retrenchment in turn resulted in the redundancy of private respondent's position. - In the second place, the Court does not believe that redundancy in an ER's personnel force necessarily or even ordinarily refers to duplication of work. That no other person was holding the same position that private respondent held prior to the termination of his services, does not show that his position had not become redundant. Indeed, in any well- organized business enterprise, it would be surprising to find duplication of work and two (2) or more people doing the work of one person. Redundancy, for purposes of our Labor Code, exists where the services of an EE are in excess of what is reasonably demanded by the actual requirements of the enterprise. Succinctly put, a position is redundant where it is superfluous, and superfluity of a position or positions may be the outcome of a number of factors, such as overhiring of workers, decreased volume of business, or dropping of a particular product line or service activity previously manufactured or undertaken by the enterprise.4 The ER has no legal obligation to keep in its payroll more EEs than are necessarily for the operation of its business. - In the third place, in the case at bar, petitioner Wiltshire, in view of the contraction of its volume of sales and in order to cut down its operating expenses, effected some changes in its organization by abolishing some positions and thereby effecting a reduction of its personnel. Thus, the position of Sales Manager was abolished and the duties previously discharged by the Sales Manager simply added to the duties of the General Manager, to whom the Sales Manager used to report. - It is of no legal moment that the financial troubles of the company were not of private respondent's making. Private respondent cannot insist on the retention of his position upon the ground that he had not contributed to the financial problems of Wiltshire. The characterization of private respondent's services as no longer necessary or sustainable, and therefore properly terminable, was an exercise of business judgment on the part of petitioner company. The wisdom or soundness of such characterization or decision was not subject to discretionary review on the part of the Labor Arbiter nor of the NLRC so long, of course, as violation of law or merely arbitrary and malicious action is not shown. It should also be noted that the position held by private respondent, Sales Manager, was clearly managerial in character.ESCAREAL V NLRC (PHILIPPINE REFINING CO INC) 213 SCRA 472 September 2, 1992 DAVIDE JR;

FACTS - Escareal was hired by the PRC for the position of Pollution Control Manager effective on 16 September 1977 with a starting monthly pay of P4,230 00; the employment was made permanent effective on 16 March 1978. The contract of employment provides, inter alia, that his "retirement date will be the day you reach your 60th birthday, but there is provision (sic) for voluntary retirement when you reach your 50th birthday. Bases for the hiring of Escareal are LOI No. 588 implementing the National Pollution Control Decree, P.D No. 984, and Memorandum Circular No. 02, implementing LOI No. 588, which amended Memorandum Circular No. 007, Series of 1977, issued by the National Pollution Control Commission (NPCC). - 1 April 1979: Escareal was also designated as Safety Manager pursuant to Article 162 of the Labor Code (P.D. 442, as amended) and the pertinent implementing rule thereon. At the time of such designation, Escareal was duly accredited as a Safety Practitioner by the Bureau of Labor Standards, Department of Labor and Employment (DOLE) and the Safety Organization of the Philippines. - In addition, the pertinent rules on Occupational Health and Safety implementing the Labor Code provide for the designation of full-time safety men to ensure compliance with the safety requirements prescribed by the Bureau of Labor Standards. Consequently, Escareal's designation was changed to Pollution Control and Safety Manager. - In the course of his employment, Escareal's salary was regularly upgraded; the last pay hike was granted on 28 March Labor Law 1 A2010 - 7 - Disini 1988 when he was officially informed that his salary was being increased to P23,100.00 per month effective 1 April 1988. This last increase is indisputably a far cry from his starting monthly salary of P4,230.00. - Sometime in the first week of November 1987, PRC's Personnel Administration Manager George B. Ditching informed Escareal about the company's plan to declare the position of Pollution Control and Safety Manager redundant. Ditching attempted to convince Escareal to accept the redundancy offer or avail of the company's early retirement plan. Escareal refused and instead insisted on completing his contract as he still had about three and a half (3 1/2) years left before reaching the mandatory retirement age of sixty (60). - 15 June 1988: Escareal's immediate superior, PRC's Engg Dept Manager Jesus P. Javelona, formally informed Escareal that the position of "Safety and Pollution Control Manager will be declared redundant effective at the close of work hours on 15th July 1988." Escareal was also notified that the functions and duties of the position to be declared redundant will be absorbed and integrated with the duties of the Industrial Engineering Manager; as a result thereof, Escareal "will receive full separation benefits provided under the PRC Retirement Plan and additional redundancy payment under the scheme applying to EEs who are 50 years old and above and whose jobs have been declared redundant by Management." - Escareal protested his dismissal via his 22 June 1988 letter to Javelona. This notwithstanding, the PRC unilaterally circulated a clearance dated 12 July 1988, to take effect on 15 July 1988, indicating therein that its purpose is for Escareal's "early retirement" and not redundancy. Escareal confronted Javelona; the latter, in his letter dated 13 July 1988, advised the former that the

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employment would be extended for another month, or up to 15 August 1988. Escareal responded with a letter dated 25 July 1988 threatening legal action. - 14 July 1988: PRC's Industrial Relations Manager Bernardo N. Jambalos III sent a Notice of Termination to the DOLE informing the latter that Escareal was being terminated on the ground of redundancy effective 16 August 1988. - 5 August 1988:Escareal had a meeting with Cesar Bautista and Dr. Reynaldo Alejandro, PRC's President and Corporate Affairs Director, respectively. To his plea that he be allowed to finish his contract of employment as he only had three (3) years left before reaching the mandatory retirement age, Bautista retorted that the termination was final. - 8 August 1988: Escareal presented to Javelona a computation showing the amount of P2,436,534.50 due him (Escareal) by way of EE compensation and benefits. - On the date of the effectivity of his termination, Escareal was only fifty-seven (57) years of age. He had until 21 July 1991, his sixtieth (60th) birth anniversary, before he would have been compulsorily retired. Also, on the date of effectivity of Escareal's termination, 16 August 1988, (UP Chemical Engg graduate) Miguelito S. Navarro, PRC's Industrial Engineering Manager, was designated as the Pollution Control and Safety Officer. - In view of all this, Escareal filed a complaint for illegal dismissal with damages against the private respondent PRC before the NLRC. Labor Arbiter Manuel P. Asuncion rendered a decision ordering PRC to pay Escareal his redundancy pay in accordance with existing company policy on the matter, without prejudice to the grant of additional benefits offered by PRC during the negotiation stage of the case, though it never materialized for failure of the parties to reach an agreement. - On appeal, NLRC affirmed the Labor Arbiter's decision, with modification ordering PRC to pay Escareal his retirement pay in accordance with the company policy and other benefits granted to him thereunder, less outstanding obligations of the complainant with the company at the time of his dismissal. Separate MFRs of PRC and Escareal were both dismissed. Hence, this petition.

ISSUES 1. WON PRC had valid and acceptable basis to declare the position of Pollution Control and Safety Manager redundant 2. WON Escareal's right to security of tenure was violated by PRC 3. WON Escareal's employment was for a fixed definite period to end at his 60th birthday because of the stipulation as to the retirement age of sixty (60) years 4. WON Escareal is entitled to backwages and retirement benefits 5. WON Escareal is entitled to damages and attorney's fees

HELD 1. NO - Wiltshire File Co., Inc. vs. NLRC: Redundancy, for purposes of the Labor Code, exists where the services of an EE are in excess of what is reasonably demanded by the actual requirements of the enterprise; a position is redundant when it is superfluous, and superfluity of a position or positions may be the outcome of a number of factors, such as 257the overhiring of workers, a decreased volume of business or the dropping of a particular product line or service activity previously manufactured or undertaken by the enterprise. - Redundancy in an ER's personnel force, however, does not necessarily or even ordinarily refer to duplication of work. That no other person was holding the same position which the dismissed EE held prior to the termination of his services does not show that his position had not become redundant. - PRC had no valid and acceptable basis to declare the position of Pollution Control and Safety Manager redundant as the same may not be considered as superfluous; said positions are required by law. Thus, it cannot be gainsaid that the services of Escareal are in excess of what is reasonably required by the enterprise. Otherwise, PRC would not have allowed ten (10) long years to pass before opening its eyes to that fact; neither would it have increased the Escareal's salary to P23,100.00 a month effective 1 April 1988. That Escareal's positions were not duplicitous is best evidenced by PRC's recognition of their imperative need thereof, this is underscored by the fact that Miguelito S. Navarro, the company's Industrial Engineering Manager, was designated as Pollution Control and Safety Manager on the very same day of Escareal's termination. - Indeed, the proposition that a department manned by a number of engineers presumably because of the heavy workload, could still take on the additional responsibilities which were originally reposed in an altogether separate section headed by Escareal, is difficult to accept. - If PRC felt that either Escareal was incompetent or that the task could be performed by someone more qualified, then why is it that the person designated to the position hardly had any experience in the field concerned? And why reward Escareal, barely five (5) months before the dismissal, with an increase in salary? - If based on the ground of redundancy, such a move would be invalid as the creation of said position is mandated by the law; the same cannot therefore be declared redundant. - If the aim was to generate savings in terms of the salaries that PRC would not be paying Escareal any more as a result of the streamlining of operations for improved efficiency, such a move could hardly be justified in the face of PRC's hiring of ten (10) fresh graduates for the position of Management Trainee and advertising for vacant positions in the Engineering/Technical Division at around the time of the termination. - There would seem to be no compelling reason to save money by removing such an important position. As shown by their recent financial statements, PRC's year-end net profits had steadily increased from 1987 to 1990. - While concededly, Article 283 of the Labor Code does not require that the ER should be suffering financial losses before he can terminate the services of the EE on the ground of redundancy, it does not mean either that a company which is doing well can effect such a dismissal whimsically or capriciously. The fact that a

company is suffering from business losses merely provides stronger justification for the termination. 2. YES - It is evident that Escareal's right to security of tenure was violated by the private respondent PRC. Both the Constitution Labor Law 1 A2010 - 8 - Disini (Section 3, Article XIII) and the Labor Code (Article 279, P.D. 442, as amended) enunciate this right as available to an EE. - Security of tenure is a right which may not be denied on mere speculation of any unclear and nebulous basis. - In this regard, it could be concluded that the respondent PRC was merely in a hurry to terminate the services of Escareal as soon as possible in view of the latter's impending retirement; it appears that said company was merely trying to avoid paying the retirement benefits Escareal stood to receive upon reaching the age of sixty (60). PRC acted in bad faith. 3. NO - There is no indication that PRC intended to offer uninterrupted employment until Escareal reached the mandatory retirement age, the contract of employement merely informs Escareal of the compulsory retirement age and the terms pertaining to the retirement. - The letter to Escareal confirming his appointment does not categorically state when the period of employment would end. It stands to reason then that Escareal's employment was not one with a specific period. 4. YES - Article 279, LC: an "EE who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his compensation was withheld from him up to the time of his actual reinstatement." - Torillo vs. Leagardo, Jr. / Santos vs. NLRC: "The normal consequences of a finding that an EE has been illegally dismissed are, firstly, that the EE becomes entitled to reinstatement to his former position without loss of seniority rights and, secondly, the payment of backwages corresponding to the period from his illegal dismissal up to actual reinstatement. xxx Though the grant of reinstatement commonly carries with it an award of backwages, the inappropriateness or non-availability of one does not carry with it the inappropriateness or non-availability of the other. xxx Put a little differently, payment of backwages is a form of relief that restores the income that was lost by reason of unlawful dismissal, separation pay, in contrast, is oriented towards the immediate future, the transitional period the dismissed EE must undergo before locating a replacement job." - Reinstatement of Escareal would have been proper. However, since he reached the mandatory retirement age on 21 July 1991, reinstatement is no longer feasible. He should thus be awarded his backwages from 16 August 1988 to 21 July 1991, inclusive of allowances and the monetary equivalent of the other benefits due him for that period, plus retirement benefits under the PRC's compulsory retirement scheme which he would have been entitled to had he not been illegally dismissed. 5. NO - In his complaint and the attached Affidavit-Complaint, Escareal does not mention any claim for damages and attorney s fees; furthermore, no evidence was offered to prove them. An award therefor would not be justified. Disposition Petition grantedCECILE DE OCAMPO vs. NLRCG.R. No. 101539 September 4, 1992MEDIALDEA, J.:

FACTS: Baliwag Mahogany Corporation (company eith 900 total work force) and Baliwag Mahogany Corporation Union-CFW( union) entered into a collective bargaining agreement containing, among other things, provisions on conversion into cash of unused vacation and sick leaves; grievance machinery procedure; and the right of the company to schedule work on Sundays and holidays.

the union made several requests from the company, one of which was the cash conversion of unused vacation and sick leave. the company ruled to allow payment of unused vacation and sick leaves for the period of 1987-1988 but disallowed cash conversion of the 1988-1989 unused leaves. the company issued suspension orders affecting 20 EEs for failure to render overtime work. The suspension was for a period of 3 days. On the same day, the union filed a notice of strike on the grounds of unfair labor practice particularly the violation of the CBA provisions on non-payment of unused leaves and illegal dismissal of 7 EEs.

the company issued a notice of termination to 3 EEs or union members allegedly to effect cost reduction and redundancy. The members of the union conducted a picket at the main gate of the company. On the same day, the company filed a petition to declare the strike illegal with prayer for injunction against the union, Cecile de Ocampo et al. During the conciliation meeting held at National Conciliation and Mediation Board (NCMB) relative to the notice of strike filed by the union, the issue pertaining to the legality of the termination of 3 union members was raised by the union. However, both parties agreed to discuss it separately.

Subsequently, in a letter, the union requested for the presence of a NCMB representative during a strike vote held by the union. The strike vote resulted to 388 votes out of 415 total votes in favor of the strike. Consequently, the union staged a strike. the company filed a petition to assume jurisdiction with the Department of Labor and Employment. the company filed an amended petition, praying among other things, that the strike staged by the union be declared illegal, there being no genuine strikeable issue and the violation of the no-strike clause of the existing CBA between the parties.

The Secretary of Labor: certified the entire labor dispute to the respondent Commission for compulsory arbitration and directed all striking workers including the dismissed EEs to return to work and the management to accept them back. The company filed an urgent motion for assignment of a sheriff to enforce the order of the

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Secretary. Which assigned a sheriff to implement the order, it removed the barricades and opened the main gate of the company.

Criminal complaints for illegal assembly, grave threats, and grave coercion were filed against ocampo et al. the company caused the publication of his return to work order in two (2) newspapers, namely NGAYON and ABANTE. the union, through its President Cecile de Ocampo, requested the Regional Director of DOLE, Region III to intervene in the existing dispute with management. the company extended the deadline for the workers to return to work.

NLRC: declared the strikes illegal. Company filed MR that public respondent seriously erred in not dismissing the EEs particularly the union officers, who participated in the illegal strike. In its supplemental motion for reconsideration, the company contended that as a result of the strike, it failed to meet the purchase orders for the quarter valued at fifteen million pesos. Petitioners filed an opposition to the company's motion for reconsideration and subsequently a supplemental comment/opposition to motion for reconsideration.

NLRC directed the Labor Arbiter to receive evidence on the issues raised in the motion for reconsideration and additional evidence on the issues already passed upon and to submit a report thereon. NLRC affirmed its decision.

ISSUE: Whether or not the dismissals of petitioners from their positions by the company on the ground of redundancy was done in good faith.

HELD: We sustain respondent Commission's finding that petitioners' dismissal was justified by redundancy due to superfluity and hence legal. We believe that redundancy, for purposes of our Labor Code, exists where the services of an EE are in excess of what is reasonably demanded by the actual requirement of the enterprise. Succinctly put, a position is redundant where it is superfluous, and superfluity of a position or positions may be the outcome of a number of factors, such as over hiring of workers, decreased volume of business, or dropping of a particular product line or service activity previously manufactured or undertaken by the enterprise. The ER had no legal obligation to keep in its payroll more EEs, than are necessary for the operation of its business.

The reduction of the number of workers in a company made necessary by the introduction of the services of Gemac Machineries in the maintenance and repair of its industrial machinery is justified. There can be no question as to the right of the company to contract the services of Gemac Machineries to replace the services rendered by the terminated mechanics with a view to effecting more economic and efficient methods of production.

In contracting the services of Gemac Machineries, as part of the company's cost-saving program, the services rendered by the mechanics became redundant and superfluous, and therefore properly terminable. The company merely exercised its business judgment or management prerogative. And in the absence of any proof that the management abused its discretion or acted in a malicious or arbitrary manner, the court will not interfere with the exercise of such prerogative.

Well-settled is the rule that the factual findings of administrative bodies are entitled to great weight, and these findings are accorded not only respect but even finality when supported by substantial evidence. Hence, the truth or the falsehood of alleged facts is not for this Court now to re-examine.VICENTE SY vs. CAG.R. No. 142293 February 27, 2003QUISUMBING, J.:

FACTS: Sometime in 1958, private respondent Jaime Sahot5 started working as a truck helper for petitioners’ family-owned trucking business named Vicente Sy Trucking. In 1965, he became a truck driver of the same family business, renamed T. Paulino Trucking Service, later 6B’s Trucking Corporation in 1985, and thereafter known as SBT Trucking Corporation since 1994. Throughout all these changes in names and for 36 years, private respondent continuously served the trucking business of petitioners.

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

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

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

Sahot filed a complaint for illegal dismissal. He prayed for the recovery of separation pay and attorneys fees against Vicente Sy and Trinidad Paulino-Sy, Belen Paulino, Vicente Sy Trucking, T. Paulino Trucking Service, 6B’s Trucking and SBT Trucking, herein petitioners.

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

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

NLRC:modified the judgment of the Labor Arbiter. It declared that private respondent was an EE, not an industrial partner, since the start. Private respondent Sahot did not abandon his job but his employment was terminated on account of his illness, pursuant to Article 2849 of the Labor Code. Accordingly, the NLRC ordered petitioners to pay private respondent separation pay in the amount of P60,320.00, at the rate of P2,080.00 per year for 29 years of service.

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

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

HELD: 1)Before a case for illegal dismissal can prosper, an ER-EE relationship must first be established. there was error committed by the Labor Arbiter when he concluded that complainant was an industrial partner prior to 1994.How can we entertain in our mind that a twenty-three (23) year old man, working as a truck helper, be considered an industrial partner. Hence we rule that complainant was only an EE, not a partner of respondents from the time complainant started working for respondent.17

they determined private respondent’s wages and rest day.20 Records of the case show that private respondent actually engaged in work as an EE. During the entire course of his employment he did not have the freedom to determine where he would go, what he would do, and how he would do it. He merely followed instructions of petitioners and was content to do so, as long as he was paid his wages. Indeed, said the CA, private respondent had worked as a truck helper and driver of petitioners not for his own pleasure but under the latter’s control.

Article 176721 of the Civil Code states that in a contract of partnership two or more persons bind themselves to contribute money, property or industry to a common fund, with the intention of dividing the profits among themselves.22 Not one of these circumstances is present in this case. No written agreement exists to prove the partnership between the parties. Private respondent did not contribute money, property or industry for the purpose of engaging in the supposed business. There is no proof that he was receiving a share in the profits as a matter of course, during the period when the trucking business was under operation. Neither is there any proof that he had actively participated in the management, administration and adoption of policies of the business. Thus, the NLRC and the CA did not err in reversing the finding of the Labor Arbiter that private respondent was an industrial partner from 1958 to 1994.

Petitioners contend that it was private respondent who refused to go back to work. The decision of the Labor Arbiter pointed out that during the conciliation proceedings, petitioners requested respondent Sahot to report back for work. However, in the same proceedings, Sahot stated that he was no longer fit to continue working, and instead he demanded separation pay. Petitioners then retorted that if Sahot did not like to work as a driver anymore, then he could be given a job that was less strenuous, such as working as a checker. However, Sahot declined that suggestion. Based on the foregoing recitals, petitioners assert that it is clear that Sahot was not dismissed but it was of his own volition that he did not report for work anymore.

2) While it was very obvious that complainant did not have any intention to report back to work due to his illness which incapacitated him to perform his job, such intention cannot be construed to be an abandonment. Instead, the same should have been considered as one of those falling under the just causes of terminating an employment. The insistence of respondent in making complainant work did not change the scenario.

Since the burden of proving the validity of the dismissal of the EE rests on the ER, the latter should likewise bear the burden of showing that the requisites for a valid dismissal due to a disease have been complied with. In the absence of the required certification by a competent public health authority, this Court has ruled against the validity of the EE’s dismissal. It is therefore

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incumbent upon the private respondents to prove by the quantum of evidence required by law that petitioner was not dismissed, or if dismissed, that the dismissal was not illegal; otherwise, the dismissal would be unjustified. This Court will not sanction a dismissal premised on mere conjectures and suspicions, the evidence must be substantial and not arbitrary and must be founded on clearly established facts sufficient to warrant his separation from work.32

procedural due process was not observed in the separation of private respondent by the management of the trucking company. The ER is required to furnish an EE with two written notices before the latter is dismissed: (1) the notice to apprise the EE of the particular acts or omissions for which his dismissal is sought, which is the equivalent of a charge; and (2) the notice informing the EE of his dismissal, to be issued after the EE has been given reasonable opportunity to answer and to be heard on his defense.33 These, the petitioners failed to do, even only for record purposes. What management did was to threaten the EE with dismissal, then actually implement the threat when the occasion presented itself because of private respondent’s painful left thigh.

3)is entitled to separation pay. The law is clear on the matter. An EE who is terminated because of disease is entitled to "separation pay equivalent to at least one month salary or to one-half month salary for every year of service, whichever is greater. To avoid further delay in the payment due the separated worker, whose claim was filed way back in 1994, this decision is immediately executory. Otherwise, six percent (6%) interest per annum should be charged thereon, for any delay, pursuant to provisions of the Civil Code.ROMEO VILLARUEL ,vs YEO HAN GUANG.R. No. 169191 June 1, 2011PERALTA, J.:

FACTS: On February 15, 1999, herein petitioner filed with the NLRC, National Capital Region, Quezon City a Complaint[3] for payment of separation pay against Yuhans Enterprises. Subsequently, in his Amended Complaint and Position Paper[4] dated December 6, 1999, petitioner alleged that in June 1963, he was employed as a machine operator by Ribonette Manufacturing Company, an enterprise engaged in the business of manufacturing and selling PVC pipes and is owned and managed by herein respondent Yeo Han Guan. Over a period of almost twenty (20) years, the company changed its name four times. Starting in 1993 up to the time of the filing of petitioner's complaint in 1999, the company was operating under the name of Yuhans Enterprises. Despite the changes in the company's name, petitioner remained in the employ of respondent. Petitioner further alleged that on October 5, 1998, he got sick and was confined in a hospital; on December 12, 1998, he reported for work but was no longer permitted to go back because of his illness; he asked that respondent allow him to continue working but be assigned a lighter kind of work but his request was denied; instead, he was offered a sum of P15,000.00 as his separation pay; however, the said amount corresponds only to the period between 1993 and 1999; petitioner prayed that he be granted separation pay computed from his first day of employment in June 1963, but respondent refused. Aside from separation pay, petitioner prayed for the payment of service incentive leave for three years as well as attorney's fees.

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

LA: judgment is hereby rendered in favor of the complainant and against herein respondent. NLRC: dismissed appeal and affirmed LA's Decision, denied MR.CA: partially GRANTED. The award of separation pay is hereby DELETED, but the Decision insofar as it awards private respondent [herein petitioner] service incentive leave pay stands. MR denied.

ISSUE: whether respondent, in fact, dismissed petitioner from his employment.

HELD:On the other hand, the Court agrees with the CA in its observation of the following circumstances as proof that respondent did not terminate petitioner's employment: first, the only cause of action in petitioner's original complaint is that he was “offered a very low separation pay”; second, there was no allegation of illegal dismissal, both in petitioner's original and amended complaints and position paper; and, third, there was no prayer for reinstatement. In consonance with the above findings, the Court finds that petitioner was the one who initiated the severance of his employment relations with respondent. It is evident from the various pleadings filed by petitioner that he never intended to return to his employment with respondent on the ground that his health is failing. Indeed, petitioner did not ask for reinstatement. In fact, he rejected respondent's offer for him to return to work. This is tantamount to resignation.

It may not be amiss to point out at this juncture that aside from Article 284 of the Labor Code, the award of separation pay is also authorized in the situations where there is illegal dismissal and reinstatement is no longer feasible. By way of exception, this Court has allowed grants of separation pay to stand as “a measure of social justice” where the EE is validly dismissed for causes other

than serious misconduct or those reflecting on his moral character.[18] However, there is no provision in the Labor Code which grants separation pay to voluntarily resigning EEs. In fact, the rule is that an EE who voluntarily resigns from employment is not entitled to separation pay, except when it is stipulated in the employment contract or CBA, or it is sanctioned by established ER practice or policy.[19] In the present case, neither the abovementioned provisions of the Labor Code and its implementing rules and regulations nor the exceptions apply because petitioner was not dismissed from his employment and there is no evidence to show that payment of separation pay is stipulated in his employment contract or sanctioned by established practice or policy of herein respondent, his ER.

The foregoing notwithstanding, this Court, in a number of cases, has granted financial assistance to separated EEs as a measure of social and compassionate justice and as an equitable concession. Taking into consideration the factual circumstances obtaining in the present case, the Court finds that petitioner is entitled to this kind of assistance. respondent had been employed with the petitioner for almost twelve (12) years. On February 13, 1996, he suffered from a "fractured left transverse process of fourth lumbar vertebra," while their vessel was at the port of Yokohama, Japan. After consulting a doctor, he was required to rest for a month. When he was repatriated to Manila and examined by a company doctor, he was declared fit to continue his work. When he reported for work, petitioner refused to employ him despite the assurance of its personnel manager. Respondent patiently waited for more than one year to embark on the vessel as 2nd Engineer, but the position was not given to him, as it was occupied by another person known to one of the stockholders. Consequently, for having been deprived of continued employment with petitioner's vessel, respondent opted to apply for optional retirement. In addition, records show that respondent's seaman's book, as duly noted and signed by the captain of the vessel was marked "Very Good," and "recommended for hire." Moreover, respondent had no derogatory record on file over his long years of service with the petitioner.

Thus, the award of P100,000.00 to respondent as financial assistance is deemed equitable under the circumstances.the Court agrees with the findings of the Labor Arbiter and the NLRC that respondent company is not distinct from its predecessors but, in fact, merely continued the operation of the latter under the same owners and the same business venture. The Court further notes that there is no evidence on record to show that petitioner has any derogatory record during his long years of service with respondent and that his employment was severed not by reason of any infraction on his part but because of his failing physical condition. Add to this the willingness of respondent to give him financial assistance. Hence, based on the foregoing, the Court finds that the award of P50,000.00 to petitioner as financial assistance is deemed equitable under the circumstances.GLAXO WELLCOME PHILIPPINES INC v. NAGKAKAISANG EMPLEYADO NG WELLCOME DFA,453 SCRA 256 | March 11, 2005

FACTS Union NAGKAKAISANG EMPLEYADO NG WELLCOME DFA (NEW DFA) filed a Petition for Certification Election with the DOLE NCR seeking to represent the bargaining unit comprised of all the regular rank and file EEs of [petitioner] company GLAXO WELLCOME. Several days before the election GLAXO WELLCOME issued a circular relative to the improvement of the company’s retirement policy bringing different EEs to different resorts. In the meantime, GLAXO WELLCOME adopted a new Car Allocation Policy. Under the provisions of the said car plan, a prioritization schedule in the assignment of company vehicles is to be fixed based on the sales performance of the EEs. Pursuant to the same, several company cars had to be re assessed and re assigned in favor of other EEs more qualified under the priority list. Incidentally, included among the vehicles that had to be re allocated in accordance with the priority schedule of the new car plan were [those] of union officers Norman Cerezo and Jossie Roda de Guzman. Accordingly, a memorandum was sent by the company to [Respondent] de Guzman advising her that she would have to surrender the vehicle assigned to her in light of the new car policy. De Guzman refused to turn over said car and instead sought reconsideration from the company’s National Sales Manager. The latter did not accede to de Guzman’s request. De Guzman, thru counsel, wrote the company, asking that the withdrawal of her car be held in abeyance. The company, however, rejected her petition. On December 7, 1990, de Guzman received another memorandum from the company, again instructing her to return the vehicle. The following day, de Guzman sent a letter to the company reiterating her plea for the suspension of the withdrawal of her car. On December 17, 1990, a final warning was sent to de Guzman instructing her to return her assigned vehicle or else she would be charged for insubordination and be dismissed. Finally, because of de Guzman’s staunch refusal to comply with the order, through a letter dated December 20, 1990, she was cited, and at the same time, terminated for gross insubordination. Norman Cerezo was of the same case. The Union alleged undue interference due to a massive electioneering and manipulative acts of GLAXO WELLCOME prior to and during the certification election and that the new Car Allocation Policy adopted by the company was intended to harass, retaliate and discriminate against union officers and members. Union also challenged the legality of the suspension and dismissal of two of its officers, namely: Norman Cerezo and Jossie Roda de Guzman. It argued that the suspension and dismissal were effected without any prior hearing (Which was the only sticking issue in this case). Labor Arbiter dismissed the charges of unfair labor practice, illegal dismissal and illegal suspension filed against GLAXO WELLCOME by union. NLRC affirmed the dismissal of the complaint. NLRC likewise

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denied the motion for reconsideration.The CA affirmed the ruling of the National Labor Relations Commission (NLRC) adopted the findings of the labor arbiter. It held that respondents had failed to proffer convincing evidence to prove that petitioner’s assailed acts were ill motivated and deliberately orchestrated to interfere with or otherwise influence the conduct of the certification elections. Moreover, the CA ruled that there was nothing objectionable per se about the programs or incentive schemes that the company had provided for the EEs. The appellate court said that the grant of benefits to the EEs, as well as the adoption of the Car Allocation Policy, constituted a proper exercise of the company’s management prerogatives. This plain company practice had been set up to make petitioner’s EE benefits competitive with those of other pharmaceutical corporations. De Guzman and Cerezo were among those adversely affected by the policy, because they had failed to meet the sales performance required thereunder, not because they were officers of the union. However, the CA held that the dismissal of De Guzman and the suspension of Cerezo had not been validly effected. Opining that their defiant actuation toward management constituted willful disobedience, which was a just cause for the termination of their employment, the appellate court conceded the validity of the dismissal and suspension. Nonetheless, the CA said that those actions (dismissal and suspension) effected by petitioner could not be deemed legal, because it had failed to comply with procedural due process mandated by the Labor Code and with the two notice requirement under the Implementing Rules. According to the CA, petitioner did not accord private respondents the benefit of a proper charge, an opportunity to defend themselves, and a formal investigation. The appellate court opined that the Memoranda were merely demands for respondents to comply with the order to turn over their assigned cars. Those Memoranda merely intimated the possibility that De Guzman and Cerezo might be charged and dismissed if they continued to disobey the order.

ISSUE: WON the Court of Appeals erred in ruling that petitioner did not observe procedural due process in terminating and suspending the employment of de Guzman and Cerezo, respectively

HELD: YES, since there was substantial compliance through the memoranda. In the present case, petitioner sent respondents a total of three Memoranda stating that their stubborn refusal to comply with the car policy and to surrender the subject vehicle constituted gross insubordination, for which they could be dismissed. The December 5, 1990 Memorandum sent to Respondent De Guzman specified her acts that constituted gross insubordination. To each Memorandum, respondents were able to reply and expla sincein, with the aid of their counsel, why they had refused to return the vehicles; and, in effect, why they should not be dismissed for gross insubordination. Initially, they asked petitioner not to implement the car policy in the light of the Complaint and the Motion for the Issuance of a Writ of Preliminary Injunction that they had filed. They explained that they could not work effectively and efficiently for the company without the cars that had been assigned to them. In their written replies to petitioner’s succeeding Memoranda which reiterated that their actions constituted gross insubordination and could result in their termination respondents, still through their counsel,reasoned that they were not claiming ownership of the car. They said that their refusal to surrender the car to the company could not be denominated as gross insubordination, because they were merely acting upon the advice of their counsel. They added that, to enjoin the implementation of the car policy, they had already lodged with the NLRC a complaint for unfair labor practice. Their counsel further alleged that De Guzman was apprehensive that she might not immediately be given a replacement upon the return of the car. He stressed that the vehicle was necessary to prevent adverse effects on the sales performance of respondents. Ultimately, after petitioner had sent them a final warning, to which they also ably replied, it served them a letter terminating their employment. Neither Section 2 of Book V of Rule XXIII nor Section 2(d) of Rule 1 of Book VI of the Implementing Rules require strict literal compliance with the stated procedure; only substantial compliance is needed. On this basis, the Memoranda sent to respondents may be deemed to have sufficiently conformed to the first notice required under the Implementing Rules. The Memoranda served the purpose of informing them of the pending matters beclouding their employment and of extending to them an opportunity to clear the air. In fact, not only were respondents duly informed of the particular acts for which their dismissal was sought; they were, in truth and in fact, able to defend themselves and to respond to the charges with the assistance of a counsel of their own choosing.Respondents were amply informed of the cause of their dismissal. Their correspondence with petitioner took almost a month, which was sufficient “cooling time” within which the parties could have, and in fact had, tried to settle the problem amicably. Moreover, petitioner’s Memoranda amply gave them a distinct, different and effective first level of remedy (which was to surrender the vehicles) to protect their jobs. Furthermore, they were still able to file a Complaint with the labor arbiter, with better knowledge of the cause of their dismissal, with longer time to prepare their case, and with greater opportunity to take care of the financial needs of their family pendente lite. Agabon v. NLRC effectively reverted to Wenphil and ruled that a dismissal due to abandonment a just cause was not illegal or ineffectual, even if done without due process; but that the ER should indemnify the EE with “nominal damages for non compliance with statutory due process.” To stress, if the dismissal is based on a just cause under Article 282 of the Labor Code, the ER must give the EE (1) two written notices and (2) a hearing (or at least, an opportunity to be heard).

The first notice is intended to inform the EE of the ER’s intent to dismiss and the particular acts or omissions for which the dismissal is sought. The second notice is intended to inform the EE of the ER’s decision to dismiss. This decision, however, must come only after the EE has been given a reasonable period, from receipt of the first notice, within which to answer the charge; and ample opportunity to be heard with the assistance of counsel, if the EE so desires. The twin requirements of (a) two notices and (b) hearing are necessary to protect the EE’s security of tenure, which is enshrined in the Constitution, the Labor Code and related laws. Disposition Petition is GRANTED and the challenged Decision REVERSED. The Decision of the NLRC dated August 28, 1998, affirming that of the labor arbiter dated August 15, 1995, is REINSTATED. KING OF KINGS vs. MAMACG.R. No. 166208, June 29, 2007

FACTS: Petitioner KKTI is a corporation engaged in public transportation and managed by Claire Dela Fuente and Melissa Lim. Respondent Mamac was hired as bus conductor of Don Mariano Transit Corporation (DMTC) on April 29, 1999. The DMTC EEs including respondent formed the Damayan ng mga Manggagawa, Tsuper at Conductor-Transport Workers Union and registered it with the Department of Labor and Employment. Pending the holding of a certification election in DMTC, petitioner KKTI was incorporated with the Securities and Exchange Commission which acquired new buses. Many DMTC EEs were subsequently transferred to KKTI and excluded from the election. The KKTI EEs later organized the Kaisahan ng mga Kawani sa King of Kings (KKKK) which was registered with DOLE. Respondent was elected KKKK president. Respondent was required to accomplish a “Conductor’s Trip Report” and submit it to the company after each trip. As a background, this report indicates the ticket opening and closing for the particular day of duty. After submission, the company audits the reports. Once an irregularity is discovered, the company issues an “Irregularity Report” against the EE, indicating the nature and details of the irregularity. Thereafter, the concerned EE is asked to explain the incident by making a written statement or counter-affidavit at the back of the same Irregularity Report. After considering the explanation of the EE, the company then makes a determination of whether to accept the explanation or impose upon the EE a penalty for committing an infraction. That decision shall be stated on said Irregularity Report and will be furnished to the EE. Upon audit of the October 28, 2001 Conductor’s Report of respondent, KKTI noted an irregularity. It discovered that respondent declared several sold tickets as returned tickets causing KKTI to lose an income of eight hundred and ninety pesos. While no irregularity report was prepared on the October 28, 2001 incident, KKTI nevertheless asked respondent to explain the discrepancy. In his letter,[3] respondent said that the erroneous declaration in his October 28, 2001 Trip Report was unintentional. He explained that during that day’s trip, the windshield of the bus assigned to them was smashed; and they had to cut short the trip in order to immediately report the matter to the police. As a result of the incident, he got confused in making the trip report.

On November 26, 2001, respondent received a letter terminating his employment effective November 29, 2001. The dismissal letter alleged that the October 28, 2001 irregularity was an act of fraud against the company. On December 11, 2001, respondent filed a Complaint for illegal dismissal, illegal deductions, nonpayment of 13th-month pay, service incentive leave, and separation pay. He denied committing any infraction and alleged that his dismissal was intended to bust union activities. Moreover, he claimed that his dismissal was effected without due process.

In its April 3, 2002 Position Paper, KKTI contended that respondent was legally dismissed after his commission of a series of misconducts and misdeeds. It claimed that respondent had violated the trust and confidence reposed upon him by KKTI. Also, it averred that it had observed due process in dismissing respondent and maintained that respondent was not entitled to his money claims such as service incentive leave and 13th-month pay because he was paid on commission or percentage basis.

On September 16, 2002, Labor Arbiter Ramon Valentin C. Reyes rendered judgment dismissing respondent’s Complaint for lack of merit. Aggrieved, respondent appealed to the National Labor Relations Commission (NLRC). On August 29, 2003, the NLRC rendered a Decision, respondent King of Kings Transport Inc. is hereby ordered to indemnify complainant in the amount of ten thousand pesos (P10, 000) for failure to comply with due process prior to termination.

CA: held that there was just cause for respondent’s dismissal. Moreover, the CA held that respondent is entitled to the 13th-month pay benefit.

ISSUE: WON CA erred in ruling that KKTI did not comply with the requirements of procedural due process before dismissing the services of the complainant/private respondent. HELD: The petition is partly meritorious.Non-compliance with the Due Process Requirements: Due process under the Labor Code involves two aspects: first, substantive––the valid and authorized causes of termination of employment under the Labor Code; and second, procedural––the manner of dismissal. In the present case, the CA affirmed the findings of the labor arbiter and the NLRC that the termination of employment of respondent was based on a “just cause.” This ruling is not at issue in this case. The question to be determined is whether the procedural requirements were complied with.

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AGABON VS. NATIONAL LABOR RELATIONS COMMISSIONG.R. No. 158693. November 17, 2004

Facts: Private respondent Riviera Home Improvements, Inc. is engaged in the business of selling and installing ornamental and construction materials. It employed petitioner Virgilio Agabon and Jenny Agabon as gypsum board and cornice installers on January 2, 1992 until February 23, 1999 when they were dismissed for abandonment of work. Petitioners then filed a complaint for illegal dismissal. The Labor Arbiter rendered a decision declaring the dismissal illegal. On appeal, the NLRC reversed the decision because it found that the petitioners had abandoned their work and were not entitled to backwages and separation pay. The Court of Appeals in turn ruled that the dismissal of the petitioners was not illegal because they had abandoned their employment.

Issue: Whether or not petitioners were illegally dismissed.

Held: The dismissal should be upheld because it was established that the petitioners abandoned their jobs to work for another company. Private respondent, however, did not follow the notice requirements and instead argued that sending notices to the last known addresses would have been useless because they did not reside there anymore. Unfortunately for the private respondent, this is not a valid excuse because the law mandates the twin notice requirements to the EE’s last known address. Thus, it should be held liable for non-compliance with the procedural requirements of due process.When the dismissal is for a just cause, the lack of statutory due process should not nullify the dismissal, or render it illegal, or ineffectual. However, the ER should indemnify the EE for the violation of his statutory rights.JAKA FOOD PROCESSING CORPORATION, vs. DARWIN PACOT, ROBERT PAROHINOG, DAVID BISNAR, MARLON DOMINGO, RHOEL LESCANO and JONATHAN CAGABCAB.G.R. No. 151378. March 28, 2005

Facts: Respondents were earlier hired by petitioner JAKA Foods Processing Corporation until the latter terminated their employment because the corporation was “in dire financial straits”. It is not disputed, however, that the termination was effected without JAKA complying with the requirement under Article 283 of the Labor Code regarding the service of a written notice upon the EEs and the Department of Labor and Employment at least one (1) month before the intended date of termination. Respondents filed complaints for illegal dismissal, underpayment of wages and nonpayment of service incentive leave and 13th month pay against JAKA. The Labor Arbiter rendered a decision declaring the termination illegal and ordering JAKA to reinstate respondents with full backwages, and separation pay if reinstatement is not possible. The Court of Appeals reversed said decision and ordered respondent JAKA to pay petitioners separation pay equivalent to one (1) month salary, the proportionate 13th month pay and, in addition, full backwages from the time their employment was terminated.

Issue: What are the legal implications of a situation where an EE is dismissed for cause but such dismissal was effected without the ER’s compliance with the notice requirement under the Labor Code?

Held: It was established that there was ground for respondents’ dismissal, i.e., retrenchment, which is one of the authorized causes enumerated under Article 283 of the Labor Code. Likewise, it is established that JAKA failed to comply with the notice requirement under the same Article. Considering the factual circumstances in the instant case, the Court deem it proper to fix the indemnity at P50, 000.00. The Court of Appeals have been in error when it ordered JAKA to pay respondents separation pay equivalent to one (1) month salary for every year of service. “In all cases of business closure or cessation of operation or undertaking of the ER, the affected EE is entitled to separation pay. This is consistent with the state policy of treating labor as a primary social economic force, affording full protection to its rights as well as its welfare. The exception is when the closure of business or cessation of operations is due to serious business losses or financial reverses; duly proved, in which case, the right of affected EEs to separation pay is lost for obvious reasons.” WALLEM MARITIME SERVICES INC. vs. NLRCG.R. No. 108433 | October 15, 1996

FACTS: Private respondent Joselito V. Macatuno was hired by Wallem Shipmanagement Limited thru its local manning agent, Wallem Maritime Services, Inc., as an able-bodied seaman on board the M/T Fortuna, a vessel of Liberian registry. Pursuant to the contract of employment, private respondent was employed for ten (10) months covering the period February 26, 1989 until December 26, 1989 with a monthly salary of two hundred seventy-six US dollars (US $276); hourly overtime rate of one dollar and seventy-two cents (US $1.72), and a monthly tanker allowance of one hundred twenty-seven dollars and sixty cents (US $127.60), with six (6) days leave with pay for each month.On June 24, 1989, while the vessel was berthed at the port of Kawasaki, Japan, an altercation took place between private respondent and fellow Filipino crew member, Julius E. Gurimbao, on the one hand, and a cadet/apprentice officer of the same nationality as the captain of the vessel on the other hand. The master entered the incident in the tanker’s logbook.As a consequence, private respondent and Gurimbao were repatriated to the Philippines where they lost no time in lodging separate complaints for illegal dismissal with the POEA. According to the affidavit private respondent executed before a POEA administering officer, the following facts led to the filing of the complaint.

At about 5:50 a.m. of June 24, 1989, private respondent was on duty along with Gurimbao, checking the manifold of the vessel and looking for oil leakages, when a cadet/apprentice who was of the same nationality as the vessel’s captain (Singh), approached them. He ordered Gurimbao to use a shovel in draining the water which, mixed with oil and dirt, had accumulated at the rear portion of the upper deck of the vessel.Gurimbao explained to the cadet/apprentice that throwing dirty and oily water overboard was prohibited by the laws of Japan; in fact, port authorities were roaming and checking the sanitary conditions of the port. The cadet/apprentice got mad and, shouting, ordered Gurimbao to get a hose and siphon off the water. To avoid trouble, Gurimbao used a shovel in throwing the dirty water into the sea.Having finished his job, Gurimbao complained to private respondent about the “improper and unauthorized act” of the cadet/apprentice. The two went to the cadet/apprentice who was idly standing in a corner. They reminded him that as a mere apprentice and not an officer of the vessel, he had no right whatsoever to order around any member of the crew. However, the cadet/apprentice reacted violently - shouting invectives and gesturing “as if challenging” the two to a fight. To prevent him from “intimidating” them, private respondent pushed twice the cadet/apprentice’s chest while Gurimbao “mildly hit” his arm. Frantic and shouting, the cadet/apprentice ran to the captain “who happened to witness the incident” from the cabin’s window.The captain summoned private respondent and Gurimbao. With their bosun (head of the deck crew), they went to the captain’s cabin. The captain told them to pack up their things as their services were being terminated. They would disembark at the next port, the Port of Ube, from where they would be flown home to the Philippines, the repatriation expenses to be shouldered by them. The two attempted to explain their side of the incident but the captain ignored them and firmly told them to go home.Before disembarking, they were entrusted by the bosun with a letter of their fellow crew members, addressed to Capt. Diño, attesting to their innocence. At the Port of Ube, an agent of the company handed them their plane tickets and accompanied them the following day to the Fukoka Airport where they boarded a Cathay Pacific airplane bound for Manila.A few days after their arrival in Manila or on July 1, 1989, the two gave the letter to Capt. Diño and conferred with him and Mr. James Nichols. The latter told private respondent that they could not secure a reimbursement of their repatriation expenses nor could they get their salaries for the month of June. Private respondent, in a letter addressed to Capt. Diño, asked for a reconsideration of their dismissal but the latter did not respond. Frustrated, private respondent sought the assistance of a lawyer who wrote Wallem a demand letter dated August 28, 1989 but the same was ignored.[4]Petitioners, defending their position, alleged that the incident was not the first infraction committed by the two. In his aforementioned decision of September 14, 1990 finding private respondent’s dismissal to be illegal.Granting that the entries in the logbook are true, a perusal thereof will readily show that complainant was not afforded due process. The warnings allegedly given to complainant were not submitted in evidence. Likewise, no investigation report was presented to prove that complainant was given the opportunity to air his side of the incident.It is also noteworthy to mention that complainant was able to describe with particularity the circumstances which led to his misunderstanding with the cadet/apprentice and which we believe is not sufficient to warrant his dismissal.” NLRC affirmed the decision of the POEA, adopting as its own the latter’s findings and conclusions.

ISSUE: WON private respondent was validly dismissed. No.

HELD: An ER may dismiss or lay off an EE only for just and authorized causes enumerated in Articles 282 and 283 of the Labor Code. However, this basic and normal prerogative of an ER is subject to regulation by the State in the exercise of its paramount police power inasmuch as the preservation of lives of citizens, as well as their means of livelihood, is a basic duty of the State more vital them the preservation of corporate profits. One’s employment, profession, trade or calling is a property right within the protection of the constitutional guaranty of due process of law.The ship captain’s logbook is vital evidence as Article 612 of the Code of Commerce requires him to keep a record of the decisions he had adopted as the vessel’s head. Under the Table of Offenses and Corresponding Administrative Penalties appended to the contract of employment entered into by petitioners and private respondent, the offense described by the logbook entry may well fall under insubordination and may constitute assaulting a superior officer “with the use of deadly weapon” punishable with dismissal if the victim is indeed a “superior officer.” However, an “apprentice officer” cannot be considered a “superior officer.” An apprentice is a person bound in the form of law to a master, to learn from him his art, trade, or business, and to serve him during the time of his apprenticeship. Physical violence against anyone at any time and any place is reprehensible. However, in cases such as this, where a person’s livelihood is at stake, strict interpretation of the contract of employment in favor of the worker must be observed to affirm the constitutional provision on protection to labor. Moreover, the aforequoted entry in the logbook is so sketchy that, unsupported by other evidence, it leaves so many questions unanswered. Although private respondent candidly admitted in his affidavit having hit Sason on the chest twice, he did not admit using a spanner. Hence, as the typewritten excerpts from the “logbook” were the only pieces of evidence presented by petitioners to support the dismissal of private respondent, have no probative value at all, petitioners’ cause must fail. Petitioners’ failure to substantiate the grounds for a valid dismissal was aggravated by the manner by

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which the employment of private respondent was terminated. It must be borne in mind that the right of an ER to dismiss an EE is to be distinguished from and should not be confused with the manner in which such right is exercised. Dismissal from employment must not be effected abusively and oppressively as it affects one’s person and property. Neither is the ship captain’s having witnessed the altercation an excuse for dispensing with the notice and hearing requirements. Serving notice to private respondent under the circumstances cannot be regarded as an “absurdity and superfluity.” The petition at bar is DISMISSED.

LOPEZ vs. ALTURASGR 191008, April 11, 2011

FACTS: Quirico Lopez was hired by respondent Alturas Group of Companies in 1997 as truck driver. Ten years later or sometime in November 2007, he was dismissed after he was allegedly caught by respondent’s security guard in the act of attempting to smuggle out of the company premises 60 kilos of scrap iron worth P840 aboard respondents Isuzu Cargo Aluminum Van with Plate Number PHP 271 that was then assigned to him. When questioned, petitioner allegedly admitted to the security guard that he was taking out the scrap iron consisting of lift springs out of which he would make axes.

Petitioner, in compliance with the Show Cause Notice dated December 5, 2007 issued by respondent company’s Human Resource Department Manager, denied the allegations by a handwritten explanation written in the Visayan dialect.

Finding petitioner’s explanation unsatisfactory, respondent company terminated his employment by Notice of Termination effective December 14, 2007 on the grounds of loss of trust and confidence, and of violation of company rules and regulations. In issuing the Notice, respondent company also took into account the result of an investigation showing that petitioner had been smuggling out its cartons which he had sold, in conspiracy with one Maritess Alaba, for his own benefit to thus prompt it to file a criminal case for Qualified Theft against him before the Regional Trial Court (RTC) of Bohol. It had in fact earlier filed another criminal case for Qualified Theft against petitioner arising from the theft of the scrap iron.

Petitioner thereupon filed a complaint against respondent company for illegal dismissal and underpayment of wages.Labor Arbiter held that petitioner’s dismissal was justified, for he, a truck driver, held a position of trust and confidence, and his act of stealing company property was a violation of the trust reposed upon him. NLRC set aside said decision.

ISSUE: WON there were invalid dismissal and underpayment of wages

HELD: Dismissals have two facets: the legality of the act of dismissal, which constitutes substantive due process, and the legality of the manner of dismissal which constitutes procedural due process.As to substantive due process, the Court finds that respondent company’s loss of trust and confidence arising from petitioner’s smuggling out of the scrap iron, confounded by his past acts of unauthorized selling cartons belonging to respondent company, constituted just cause for terminating his services.

Loss of trust and confidence as a ground for dismissal of EEs covers EEs occupying a position of trust who are proven to have breached the trust and confidence reposed on them. Petitioner, a driver assigned with a specific vehicle, was entrusted with the transportation of respondent company goods and property, and consequently with its handling and protection, hence, even if he did not occupy a managerial position, he can be said to be holding a position of responsibility.

Procedural due process has been defined as giving an opportunity to be heard before judgment is rendered. Important:After receiving the first notice apprising him of the charges against him, the EE may submit a written explanation(which may be in the form of a letter, memorandum, affidavit or position paper) and offer evidence in support thereof, like relevant company records (such as his 201 file and daily time records) and the sworn statements of his witnesses. For this purpose, he may prepare his explanation personally or with the assistance of a representative or counsel. He may also ask the ER to provide him copy of records material to his defense. His written explanation may also include a request that a formal hearing or conference be held. In such a case, the conduct of a formal hearing or conference becomes mandatory, just as it is where there exist substantial evidentiary disputes or where company rules or practice requires an actual hearing as part of employment pretermination procedure.

Petitioner was given the opportunity to explain his side when he was informed of the charge against him and required to submit his written explanation with which he complied. Parenthetically, the Court finds that it was error for the NLRC to opine that petitioner should have been afforded counsel or advised of the right to counsel. In petitioner’s case, there is no showing that he requested for a formal hearing to be conducted or that he be assisted by counsel. An EE’s acquittal in a criminal case does not automatically preclude a determination that he has been guilty of acts inimical to the ER’s interest resulting in loss of trust and confidence. Corollarily, the ground for the dismissal of an EE does not require proof beyond reasonable doubt; as noted earlier, the quantum of proof required is merely substantial evidence. Petition is denied.

PHILIPPINE DAILY INQUIRER, INC., v. LEON M. MAGTIBAY, JR. and PHILIPPINE DAILY INQUIRER EES UNION (PDIEU), 528 SCRA 355, July 24, 2007

FACTS: PDI hired Magtibay, on contractual basis, to assist, for a period of five months from February 17, 1995, the regular phone operator. Before the expiration of Magtibay’s contractual employment, he and PDI agreed to a fifteen-day contract extension, or from July 17, 1995 up to July 31, 1995, under the same conditions as the existing contract. After the expiration of Magtibay’s contractual employment, as extended, PDI announced the creation and availability of a new position for a second telephone operator who would undergo probationary employment. Apparently, it was PDI’s policy to accord regular EEs preference for new vacancies in the company. Thus, Ms. Regina M. Layague, a PDI EE and member of respondent PDI EEs Union (PDIEU), filed her application for the new position. However, she later withdrew her application, paving the way for outsiders or non-PDI EEs, like Magtibay in this case, to apply. After the usual interview for the second telephone operator slot, PDI chose to hire Magtibay on a probationary basis for a period of six (6) months. The signing of a written contract of employment followed. A week before the end the agreed 6-month probationary period, PDI officer Benita del Rosario handed Magtibay his termination paper, grounded on his alleged failure to meet company standards. Aggrieved, Magtibay immediately filed a complaint for illegal dismissal and damages before the Labor Arbiter. PDIEU later joined the fray by filing a supplemental complaint for unfair labor practice. Magtibay anchored his case principally on the postulate that he had become a regular EE by operation of law, considering that he had been employed by and had worked for PDI for a total period of ten months, i.e., four months more than the maximum six-month period provided for by law on probationary employment. He also claimed that he was not apprised at the beginning of his employment of the performance standards of the company, hence, there was no basis for his dismissal. Finally, he described his dismissal as tainted with bad faith and effected without due process. PDI, denied all the factual allegations of Magtibay, adding that his previous contractual employment was validly terminated upon the expiration of the period stated therein. Pressing the point, PDI alleged that the period covered by the contractual employment cannot be counted with or tacked to the period for probation, inasmuch as there is no basis to consider Magtibay a regular EE. PDI additionally claimed that Magtibay was dismissed for violation of company rules and policies, such as allowing his lover to enter and linger inside the telephone operator’s booth and for failure to meet prescribed company standards which were allegedly made known to him at the start through an orientation seminar conducted by the company. LA found for PDI and accordingly dismissed Magtibay’s complaint for illegal dismissal. LA further ruled that Magtibay’s dismissal from his probationary employment was for a valid reason. ISSUE: THE COURT OF APPEALS COMMITTED GRAVE ERROR IN FINDING THAT A PROBATIONARY EE’S FAILURE TO FOLLOW AN ER’S RULES AND REGULATIONS CANNOT BE DEEMED FAILURE BY SAID EE TO MEET THE STANDARDS OF HIS ER THUS EMASCULATING PETITIONER’S RIGHT TO CHOOSE ITS EES.

HELD: We GRANT the petition. This Court, to be sure, has for a reason, consistently tended to be partial in favor of workers or EEs in labor cases whenever social legislations are involved. Management and labor, or the ER and the EE are more often not situated on the same level playing field, so to speak. Recognizing this reality, the State has seen fit to adopt measures envisaged to give those who have less in life more in law. Article 279 of LC which gives EEs the security of tenure is one playing field leveling measure:Security of Tenure . �� In cases of regular employment, the ER shall not terminate the services of an EE except for a just cause or when authorized by this Title. x x x.

Within the limited legal six-month probationary period, probationary EEs are still entitled to security of tenure. It is expressly provided in the afore-quoted Article 281 that a probationary EE may be terminated only on two grounds: (a) for just cause, or (b) when he fails to qualify as a regular EE in accordance with reasonable standards made known by the ER to the EE at the time of his engagement. Magtibay had previously worked for PDI as telephone operator from February 7, 1995 to July 31, 1995 as a contractual EE. Thus, the Court entertains no doubt that when PDI took him in on September 21, 1995, Magtibay was already very much aware of the level of competency and professionalism PDI wanted out of him for the entire duration of his probationary employment. PDI was only exercising its statutory hiring prerogative when it refused to hire Magtibay on a permanent basis upon the expiration of the six-month probationary period. This was established during the proceedings before the labor arbiter and borne out by the records and the pleadings before the Court. When the NLRC disregarded the substantial evidence establishing the legal termination of Magtibay’s probationary employment and rendered judgment grossly and directly contradicting such clear evidence, the NLRC commits grave abuse of discretion amounting to lack or excess of jurisdiction. It was, therefore, reversible error on the part of the appellate court not to annul and set aside such void judgment of the NLRC. REVISED and SET ASIDE.

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AURELIO vs. NLRC221 SCRA 432

FACTS: Petitioner started as clinical instructor of the College of Nursing of Northwestern College (NWC) in June 1917 with a basic salary of P600.00 a month. In October 1979, petitioner was appointed Dean of the College of Nursing with a starting salary of P3, 000.00 a month. In September 1981, petitioner was promoted to College Administrator or Vice-President for Administration, retaining concurrently her position of Dean of the College of Nursing, with an increased salary of P3, 500.00 per month. She was later promoted to Executive Vice-President with the corresponding salary of P7, 500.00.On April 10, 1988, petitioner's husband, Oscar Aurelio, a stockholder of respondent NWC, was elected Auditor. On May 1, 1988, the individual respondents, as Board of Directors, took over the management of respondent NWC. This new management unleashed a series of reorganization affecting the petitioner and her husband, Oscar Aurelio. On May 30, 1988, petitioner's husband, then in the United States, was removed as Auditor of the college. Without prior notice, petitioner's office was stripped of its facilities. Petitioner's salary was reduced from P7, 500.00 to P5,000.00 then to P2,500.00 a month, among others.Because of the indignities and humiliation suffered by the petitioner, she wrote a letter on September 20, 1988 informing the President of Northwestern College that she was going on an indefinite leave, Petitioner sent a copy of the above letter to the Secretary of Education, Culture and Sports praying for assistance. The representatives of the Regional Director submitted their official findings and recommendations confirming the truth of the allegations of petitioner in her September 20, 1988 letter. The DECS also confirmed the willingness of petitioner to withdraw her indefinite leave of absence. The matter of petitioner's resumption of her position as Dean of the College of Nursing was addressed by the DECS to the attention of respondents but Private respondents did not answer. They refused to accept petitioner. On November 16, 1988, petitioner filed her complaint for illegal dismissal against private respondents and prayed for reinstatement plus backwages, moral and exemplary damages, and attorney's fees. At the arbitration level, petitioner and private respondents submitted their respective position papers. On December 29, 1989, the labor arbiter issued a decision dismissing the complaint.On April 30, 1988, the annual regular meeting of stockholders was held at the principal office of the corporation in Laoag City. Since their election into office, the Board members have taken effective control of the management of the college and have regularly exercised their corporate powers. The new Board conducted a preliminary audit which revealed that the college was financially distressed, unable to meet its maturing obligations with its creditor bank. The new management headed by its President, Ben Nicolas, embarked on a realignment of positions and functions of the different department in order to minimize expenditures.As a result of the audit, NWC was compelled to abolish the administrative positions held by petitioner, which she did not contest.

ISSUE: WON the dismissal of the petitioner was for a just and valid cause

HELD: Respondent had alleged and submitted evidence of irregularities of complainant during her tenure at the college. The complainant instead of refuting the charges cited alleged irregularities committed by the respondents in their respective offices. It must be emphasized that the rules of dismissal for managerial EEs are different from those governing ordinary EEs for it would be unjust and inequitable to compel an ER to continue with the employment of a person who occupies a managerial and sensitive position despite loss of trust and confidence. At the very least, the relationship must be considered seriously strained, foreclosing the remedy of reinstatement. We find that the allegations of irregularities were sufficiently substantiated thus justifying petitioner's separation.Moreover, and still on the issue of dismissal, the records disclose that in holding on to the two positions, petitioner violated the Administrative Manual for Private Schools. Thus, the respondent had no other recourse but to take away one of the positions from her or abolish the same. Undoubtedly, the College Board of Directors has the authority to reorganize and streamline the operations of the college with the end in view of minimizing expenditures.The NLRC found that complainant was a managerial EE who has to have the complete trust and confidence of respondents. However, we find that complainant was not accorded notice and investigation prior to termination. Except for the allegation on constructive dismissal, this petition is a repetition of what petitioner had already alleged below and which the labor arbiter and the NLRC dismissed for lack of merit.Petitioner's claim of constructive dismissal stems from her alleged removal from the positions of Administrator, Vice President for Administration and Executive Vice President. The management of NWC rests on its Board of Directors including the selection of members of the faculty who may be allowed to assume other positions in the college aside from that of teacher or instructor. In 1988, when the then new Board of Directors abolished the additional positions held by the petitioner, it was merely exercising its right.The Board abolished the positions not because the petitioner was the occupant thereof but because the positions had become redundant with functions overlapping those of the President of the college. The Board realized that the college was violating the Administrative Manual for Private School which requires that all collegiate departments should have a full-time head.

The Board of Directors of NWC merely exercised rights vested in it by the Articles of Incorporation. Petitioner failed to refute the evidence proffered by NWC before the labor arbiter. In her appeal to the NLRC, petitioner also failed to rebut the findings of the labor arbiter. In the instant petition, she has again failed to overturn private respondents' evidence as well as the findings of the labor arbiter which were affirmed by the NLRC.Petitioner's application for an indefinite leave of absence was not approved by the college authorities, but this notwithstanding, she failed to follow-up her application and did not report for work. Believing she was dismissed, petitioner filed the complaint for illegal dismissal, illegal deductions, underpayment, unpaid wages or commissions and for moral damages and attorney's fees on November 16, 1988.As pointed out earlier, the rules on termination of employment, penalties for infractions, and resort to concerted actions, insofar as managerial EEs are concerned, are not necessarily the same as those applicable to termination of employment of ordinary EEs. Both the labor arbiter and the public respondent NLRC found that there is some basis for respondent NWC's loss of trust and confidence on petitioner.The dismissal of the petitioner was for a just and valid cause. It appears on record that the investigation of petitioner's alleged irregularities was conducted after the filing of the complaint for illegal dismissal.Public respondent's finding that petitioner was not afforded due process is correct but the Commission erred when it awarded separation pay in the amount of P32,750.00. In the Pacific Mills, Inc. and Wenphil cases, this Court merely awarded P1,000.00 as penalty for non-observance of due process.The Board of Directors, composed of the individual private respondents herein, has the power granted by the Corporation Code to implement a reorganization of respondent college's offices, including the abolition of various positions, since it is implied or incidental to its power to conduct the regular business affairs of the corporation.The prerogative of management to conduct its own business affairs to achieve its purposes cannot be denied. When petitioner was stripped by the Board of her positions as Executive Vice President and Vice President for Administration, with a corresponding reduction in salary, the Board did not act in a capricious, whimsical, and arbitrary manner, thus negating malice and bad faith.WHEREFORE, the decision under review is hereby AFFIRMED with the MODIFICATION that the award of separation pay is DELETED

CABIGTING vs. SAN MIGUEL FOODSGR 167706, Nov. 5, 2009

FACTS: Petitioner Reynaldo G. Cabigting was hired as a receiver/ issuer at the San Miguel Corporation, Feeds and Livestock Division (B-Meg) on February 16, 1984 and after years of service, he was promoted as inventory controller. On June 26, 2000, respondent San Miguel Foods, Inc., through its President, Mr. Arnaldo Africa, sent petitioner a letter informing him that his position as sales office coordinator under its logistic department has been declared redundant. Simultaneously, respondent terminated the services of petitioner effective July 31, 2000, and offered him an early retirement package. Thereafter, petitioner was included in the list of retrenched EEs (for reason of redundancy) submitted by respondent to the Department of Labor and Employment. Petitioner was surprised upon receipt of the letter because he was not a sales office coordinator, and yet he was being terminated as such. Accordingly, petitioner refused to avail of the early retirement package. Prior to petitioner’s termination on July 31, 2000, he was an inventory controller, performing at the same time the function of a warehouseman. Furthermore, petitioner was an active union officer of respondent’s union but upon his termination, was only a member thereof.

With the support of his union, petitioner filed a Complaint questioning his termination primarily because he was not a sales office coordinator, but an inventory controller, performing the functions of both an inventory controller and a warehouseman. In reply, respondent reiterated its declaration that petitioner’s position as sales office coordinator was redundant as a result of respondent’s effort to streamline its operations.

Labor Arbiter (LA) rendered a Decision, where it ruled that petitioner was illegally dismissed. Accordingly, the LA ordered respondent to pay petitioner backwages, separation pay in lieu of reinstatement and attorney’s fees. NLRC rendered a Decision affirming the LA’s finding that petitioner was illegally dismissed by respondent. CA rendered a Decision partially granting respondent’s petition ISSUE: WON “strained relations” bar petitioner’s reinstatement. HELD: Under the law and prevailing jurisprudence, an illegally dismissed EE is entitled to reinstatement as a matter of right. However, if reinstatement would only exacerbate the tension and strained relations between the parties, or where the relationship between the ER and the EE has been unduly strained by reason of their irreconcilable differences, particularly where the illegally dismissed EE held a managerial or key position in the company, it would be more prudent to order payment of separation pay instead of reinstatement. In Globe-Mackay Cable and Radio Corporation v. National Labor Relations Commission, this Court discussed the limitations and qualifications for the application of the “strained relations” principle, in this wise:

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x x x If, in the wisdom of the Court, there may be a ground or grounds for non-application of the above-cited provision, this should be by way of exception, such as when the reinstatement may be inadmissible due to ensuing strained relations between the ER and the EE.

In such cases, it should be proved that the EE concerned occupies a position where he enjoys the trust and confidence of his ER; and that it is likely that if reinstated, an atmosphere of antipathy and antagonism may be generated as to adversely affect the efficiency and productivity of the EE concerned.

In order for the doctrine of strained relations to apply, it should be proved that the EE concerned occupies a position where he enjoys the trust and confidence of his ER and that it is likely that if reinstated, an atmosphere of antipathy and antagonism may be generated as to adversely affect the efficiency and productivity of the EE concerned.

After a perusal of the LA Decision, this Court finds that the LA had no hard facts upon which to base the application of the doctrine of strained relations, as the same was not squarely discussed nor elaborated on. Also, it is of notice that said issue was addressed by the LA in just one sentence without indicating factual circumstances why strained relations exist. The same is also true for the CA Decision which disposed of the issue in just one sentence without any elaboration. Accordingly, this Court is of the opinion that both the LA and the CA based their conclusions on impression alone.

Finally, it is noted that the position of warehouseman and inventory controller still exists up to date. The nature of the controversy where the parties to this case were engaged is not of such nature that would spawn a situation where the relations are severely strained between them as would bar the complainant to his continued employment. Neither may it be said that his position entails a constant communion with the respondent such that hostilities may bar smooth interactions between them. There is no basis for an award of separation pay in lieu of reinstatement. The claim of respondent is not meritorious. This Court shares petitioner’s view that the words allegedly imputing malice and bad faith towards the respondent cannot be made a basis for denying his reinstatement. The doctrine of strained relations has been made applicable to cases where the EE decides not to be reinstated and demands for separation pay. The same, however, does not apply to herein petition, as petitioner is asking for his reinstatement despite his illegal dismissal. In conclusion, it bears to stress that it is human nature that some hostility will inevitably arise between parties as a result of litigation, but the same does not always constitute strained relations in the absence of proof or explanation that such indeed exists. Petition is granted.

BUSTAMANTE v. NLRC265 SCRA 1 | March 15, 1996

FACTS Petitioners Bustamante, Bantayan, Sumunod and Lamaran were employed as laborers, harvesters and sprayers in private respondent company’s banana plantation in Davao del Norte. They all signed contracts of employment for 6 months from Jan.2, 1990 to July 2, 1990 but they had started working in Sept. 1989. They were previously hired to do the same work for periods lasting a month or more, from 1985 to 1989. Before the employment contracts expired on July 2, 1990, petitioners’ employments were terminated on the ground of poor performance due to age, as none of them was allegedly below 40 years old. Petitioners then filed a complaint for illegal dismissal which the Labor Arbiter decided in their favor. The judgment declared the dismissal illegal, and ordered Evergreen Farms to reinstate them immediately with 6 months backwages. Private respondent company appealed to the NLRC but the appeal was dismissed for lack of merit. A subsequent MFR filed by respondent company was similarly disposed of with the modification that the award for backwages was deleted, as there was no bad faith on the part of Evergreen Farms. The removal of the award of backwages prompted petitioners to file this case, alleging that public respondent NLRC gravely abused its discretion.

ISSUE: WON petitioners are entitled to backwages

HELD: YES, because petitioners are regular EEs. Ratio Regular EEs dismissed for no valid cause are entitled to full backwages and other benefitsfrom the time their compensation was withheld from them up to the time of their actual reinstatement.Reasoning Petitioners were employed at various periods from 1985 1989 for the same work they were hired to perform. They were engaged to perform activities which are necessary in the usual business of the ER. The contract for probationary employment was utilized by respondent company as a chicanery to deny petitioners their status as regular EEs and to evade paying them the benefits attached to such status. They were hired and re hired in a span of from 2 4 years to do the same type of work which conclusively shows the necessity of petitioners’ services to the respondent. The act of hiring and re hiring the petitioners over a period of time without considering them as regular EEs evidences bad faith on the part of private respondent. The public respondent made a finding to

this effect when it stated that the subsequent rehiring of petitioners on a probationary status “clearly appears to be a convenient subterfuge on the part of management to prevent complainants (petitioners) from becoming regular EEs.”Disposition Resolution of NLRC is modified, the deletion of the award for backwages is set aside. LA decision is AFFIRMED, with modification that backwages shall be paid to petitioners from the time of their illegal dismissal up to the date of their reinstatement.

PALTENG vs. UCPBGR 172199, February 27, 2009

FACTS: Palteng was the Senior Assistant Manager/Branch Operations Officer of UCPB. After conducting a diligence audit, the Internal Audit and Credit Review Division reported that Palteng committed several offenses under the EE Discipline Code in connection with Mercado’s (a client) Past Due Domestic Bills Purchased (BP). Palteng explained that at the time the BP accommodation was extended, she was not aware that Mercado’s Omnibus Line has been reduced to P50 Million and that it contained a P5 Million sublimit on BP. Nevertheless, she accepted full responsibility for granting the BP accommodation against Mercado’s personal checks beyond her authority. While she admitted committing a major offense that may cause her dismissal, she claimed that it was an honest mistake. Palteng was dismissed with forfeiture of all benefits. Palteng filed a complaint for illegal dismissal.

The Labor Arbiter declared her dismissal illegal, entitling her to, among others, full backwages from the time of her dismissal until finality of judgment. The CA modified the decision, declaring that backwages should be computed until the labor arbiter’s decision.

ISSUE: Is Palteng entitled to backwages?

HELD: No. An EE who is illegally dismissed from work is entitled to reinstatement without loss of seniority rights, and other privileges as well as to full backwages, inclusive of allowances, and to other benefits or their monetary equivalent computed from the time his compensation was withheld from him up to the time of his actual reinstatement. However, in the event that reinstatement is no longer possible, the EE may be given separation pay instead.

Reinstatement and payment of backwages are distinct and separate reliefs given to alleviate the economic setback brought about by the EE’s dismissal. The award of one does not bar the other. Backwages may be awarded without reinstatement, and reinstatement may be ordered without awarding backwages.

In a number of cases, the Court, despite ordering reinstatement or payment of separation pay in lieu of reinstatement, has not awarded backwages as penalty for the misconduct or infraction committed by the EE.

In the case at bar, petitioner admitted that she granted the BP accommodation against Mercado’s personal checks beyond and outside her authority. The Labor Arbiter, the NLRC and the Court of Appeals all found her to have committed an "error of judgment," "honest mistake," vis-à-vis a "major offense." Since petitioner was not faultless in regard to the offenses imputed against her, she is entitled to separation pay only, without backwages.PHIL TOBACCO FLUE CURING vs. NLRC300 SCRA 37

These refer to the consolidated cases for payment of separation pay lodged by [the] Lubat Group, and for illegal dismissal and underpayment of separation pay by [the] Luris group, with prayers for damages and attorney’s fees against the above respondents.

FACTS: There are two groups of EEs, namely, the Lubat group and the Luris group. The Lubat group is composed of petitioner’s seasonal EEs who were not rehired for the 1994 tobacco season. At the start of that season, they were merely informed that their employment had been terminated at the end of the 1993 season. They claimed that petitioner’s refusal to allow them to report for work without mention of any just or authorized cause constituted illegal dismissal. In their Complaint, they prayed for separation pay, back wages, attorney’s fees and moral damages.On the other hand, the Luris group is made up of seasonal EEs who worked during the 1994 season. On August 3, 1994, they received a notice informing them that, due to serious business losses, petitioner planned to close its Balintawak plant and transfer its tobacco processing and redrying operations to Ilocos Sur. Although the closure was to be effective September 15, 1994, they were no longer allowed to work starting August 4, 1994. Instead, petitioner awarded them separation pay computed according to the following formula: total no. of days actually worked

----------------------------------------------------- x daily rate x 15 days

total no. of working days in one year In their Complaint, they claimed that the computation should be based not on the above mathematical equation, but on the actual number of years served. In addition, they contended that they were illegally dismissed, and thus they prayed for back wages.Against these factual antecedents, the labor arbiter ordered the petitioner to pay complainants’ separation pay differential plus attorney’s fees in the total amount of P3,092,896.76. Dissatisfied with said Decision, Philippine Tobacco and the complainants filed their respective appeals before the NLRC.

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As noted earlier, the NLRC affirmed the labor arbiter’s Decision. Before this Court, only Philippine Tobacco filed the present recourse, as the complainants did not question the NLRC Decision.

ISSUES: In the Court’s view, three issues must be tackled: First, did petitioner prove “serious business losses,” its justification for the nonpayment of separation pay? Second, was the dismissal of the EEs valid? Third, how should the separation pay of illegally dismissed seasonal EEs be computed?

HELD: First Issue: Serious Business Losses Not ProvenArticle 283 of the Labor Code prescribes the requisites and the procedure for an EE’s dismissal arising from the closure or cessation of operation of the establishment.It must be noted that the present case involves the closure of merely a unit or division, not the whole business of an otherwise viable enterprise. Although Article 283 uses the phrase “closure or cessation of operation of an establishment or undertaking,” this Court previously ruled in Coca-Cola Bottlers (Phils.), Inc. v. NLRC that said statutory provision applies in cases of both complete and partial cessation of the business operation.Petitioner did not actually close its entire business. It merely transferred or relocated its tobacco processing and redrying operations. Moreover, it was also engaged in, among others, corn and rental operations, which were unaffected by the closure of its Balintawak plant.Tested against the aforecited standards, we hold that herein petitioner was not able to prove serious financial losses arising from its tobacco operations. A close examination of its Statement of Income and Expenses and its recasted version thereof, which were presented in support of its contention, suggests its failure to show business losses.On the contrary, the Statement of Income and Expenses shows that the selling and administrative expenses pertain not only to the tobacco business of petitioner, but also to its corn and rental operations, and that the interest expenses pertain to all of its business operations. In fact, the aforementioned Statement shows that there was a net gain from operations in each year covered by the report. In other words, the recasted financial statement effectively modified the Statement of Income and Expenses by deducting from the tobacco operations alone the operating costs pertaining to all businesses of petitioner. The contention of petitioner that tobacco was its main business does not justify the devious contents of the recasted financial statement. It is difficult to accept that it could not have incurred any expense in its other operations. Common sense revolts against such proposition.

Second Issue: Lubat Group Illegally DismissedPetitioner illegally dismissed the members of the Lubat group when it refused to allow them to work during the 1994 season. It follows that the ER-EE relationship between herein petitioner and members of the Lubat group was not terminated at the end of the 1993 season. From the end of the 1993 season until the beginning of the 1994 season, they were considered only on leave but nevertheless still in the employ of petitioner.Petitioner is liable for illegal dismissal and should be responsible for the reinstatement of the Lubat group and the payment of their back wages. However, since reinstatement is no longer possible as petitioner has already closed its Balintawak plant, respondent members of the said group should instead be awarded normal separation pay (in lieu of reinstatement) equivalent to at least one month pay, or one month pay for every year of service, whichever is higher. It must be stressed that the separation pay being awarded to the Lubat group is due to illegal dismissal; hence, it is different from the amount of separation pay provided for in Article 283 in case of retrenchment to prevent losses or in case of closure or cessation of the ER’s business, in either of which the separation pay is equivalent to at least one (1) month or one-half (1/2) month pay for every year of service, whichever is higher.

Third Issue: Amount of Separation PayThe amount of separation pay is based on two factors: the amount of monthly salary and the number of years of service. Although the Labor Code provides different definitions as to what constitutes “one year of service,” Book Sixdoes not specifically define “one year of service” for purposes of computing separation pay. However, Articles 283 and 284 both state in connection with separation pay that a fraction of at least six months shall be considered one whole year. Applying this to the case at bar, we hold that the amount of separation pay which respondent members of the Lubat and Luris groups should receive is one-half (1/2) their respective average monthly pay during the last season they worked multiplied by the number of years they actually rendered service, provided that they worked for at least six months during a given year.The formula that petitioner proposes, wherein a year of work is equivalent to actual work rendered for 303 days, is both unfair and inapplicable, considering that Articles 283 and 284 provide that in connection with separation pay, a fraction of at least six months shall be considered one whole year. Under these provisions, an EE who worked for only six months in a given year -- which is certainly less than 303 days -- is considered to have worked for one whole year. NLRC Decision is affirmed with modifications.

E. RAZON, INC. [formerly known as Metro Services, Inc.], vs. THE HONORABLE SECRETARY OF LABOR AND EMPLOYMENT (DOLE) and MARINA PORT SERVICES, INC. (MARINA), G.R. No. 85867 May 13, 1993FACTS: ERI became Metro Port Services, Inc. (MPSI) in 1978 when parties close to then Presient Marcos, specifically his brother-in-law, Alfredo "Bejo" Romualdez, allegedly coerced Enrique Razon, who owned 93% of ERI's equity, into endorsing in blank stock

certificates covering 60% of such equity. Upon the expiration of the management contract in 1978, it was extented to June 30, 1980. The PPA then executed a new contract with ERI/MPSI for a term of eight (8) years beginning July 1, 1980 two years before the expiration of the eight-year term, the PPA cancelled the management contract for alleged violations thereof. PPA took over the cargo-handling operations as well as all the equipment of MPSI.PPA issued a Permit. The permit, which was to take effect for one-year period or until July 20, 1987, 1 contained the following pertinent paragraph as part of the additional terms and conditions: Labor and personnel of previous operator, except those positions of trust and confidence, shall be absorbed by grantee. Labor or EEs benefits provided for under existing CBA shall likewise be honored.MARINA began the arrastre services and required all workers of ERI/MPSI to accomplish individual information sheets. Weeks later, the bulk of the 2,700 EEs concerned discovered that they had been hired by MARINA as new EEs effective July 21, 1986. Hence, they clamored for the payment of their separation pay but both the MARINA and ERI/MPSI refused to be liable therefor. In a bid to prevent disruption of work, PPA authorized MARINA to deduct P2,000,000.00 from the amount due the MPSI as MARINA's rentals for MPSI equipment, as partial payment of the EEs' separation payThe EEs who were members of the Associated Workers Union (AWU) filed a notice of strike on October 12, 1987. This move prompted the PPA, MARINA, ERI, and representatives of the AWU, Associated Port Checkers Workers Union (ASTEU), and Marina Management EEs (MARINE ME) to meet and forge an Agreement on November 3, 1987 for the "immediate and reasonable resolution of the long standing claim of separation benefits which resulted in impending labor strikes". The agreement provided that the separation benefits would be computed at "one (1) month for every year of service".MPSI then requested the Secretary of Labor and Employment to immediately assume jurisdiction over the dispute to prevent paralyzation of the vital operations of the Port of Manila. Invoking Article 263(g) of the Labor Code, then Secretary of Labor Franklin M. Drilon issued the order of December 23, 1987 holding that the labor dispute was "imbued with national interest" and ordering the striking workers to return to work within 24 hours and the management to accept them back. He also directed the parties to comply faithfully with the Agreement of November 3, 1987 and, pending the appraisal of the reasonable rental and market value of the MPSI equipment, the amount of P5 million which the Presidential Commission on Good Government (PCGG) had committed to unfreeze from the account of MPSI was made available. He also directed the National Conciliation and Mediation Board to form a committee to monitor and assist in the implementation of the November 3, 1987 Agreement.The separation pay of the workers was later taken from the proceeds of the sale to PPA of ERI cargo-handling equipment and the rentals from July 21, 1986 to January 29,1988 of MARINA for the said equipment.ISSUE: whether or not separation pay should be paid to the workers of ERI/MPSI. The controversy actually is: which of the contending corporations, petitioner ERI/MPSI or private respondent MARINA, should pay such benefit to the EEs concerned.HELD: Separation or severance pay is an allowance usually based on length or service that is payable to an EE on severance except usually in case of disciplinary discharge, or as compensation due an EE upon the severance of his employment status with the ER (Marcopper Mining Corporation vs. NLRC , 200 SCRA 167 [1991]). Under Article 283 of the Labor Code, separation pay is required where the termination of employment relationship is occasioned by the "cessation of operations" of an establishment. The said article, therefore, puts the burden of paying separation pay on ERI/MPSI, the ER for whom services had been rendered by the EEs who were separated from employment in view of the cessation of its business operations by the cancellation of its management contract with the PPA. Petitioner, however, argues otherwise and would shift liability for separation pay to MARINA on the strength of Paragraph 7 of the additional terms and conditions appended to the permit to operate granted to MARINA.By absorbing ERI/MPSI EEs and honoring the terms and conditions in the collective bargaining agreement between ERI/MPSI and the EEs, MARINA did not assume the responsibility of ERI/MPSI to pay separation pay to its EEs. As correctly put by public respondent, Paragraph 7, insofar as it refers to EEs' benefits, should be applied prospectively with respect to MARINA. This conclusion is supported by Paragraph 14 of Permit No. 104286 granted to MARINA which states: 14. Grantee shall be responsible for all obligations, liabilities or claims arising out of any transactions or undertakings in connections with their cargo handling operations as of the actual date of transfer thereof to grantee. MARINA might have been impelled not only by compassion for the EEs but also by their tested skills in hiring them back upon their separation from the employment of ERI/MPSI.The situation in this case is completely different from that obtaining in Filipinas Port Services, Inc. vs. NLRC (200 SCRA 773 [1991]), where the petitioner was obligated "not only to absorb the workers of the dissolved companies but also to include the length of service earned by the absorbed EEs with their former ERs as well" because said case involved a merger of different companies into a single company as a result of the PPA's integration of stevedoring/arastre services. On the other hand, in the case at bar, there is no privity of contract between ERI/MPSI and MARINA so as to make the latter a common or even substitute ER that it should be burdened with the obligations of the former. DISMISSED.

NATIONAL FEDERATION OF LABOR vs. NLRCG.R. No. 127718 (March 2, 2000)

FACTS: Petitioners are EEs of the Patalon Coconut Estate in Zamboanga. With the advent of the RA No. 6657 or the Comprehensive Agrarian Reform Law, the government sought the compulsory acquisition of the land for agrarian reform. Because of this, the private respondents who are owners of the estate decided

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to shut down its operation. Petitioners did not receive any separation pay. Now, the petitioners pray, with the representation of their labor group, claiming that they were illegally dismissed. They cite Article 283 of the Labor code where an ER “may” terminate the employment of any EE due to the installation of labor saving devices, redundancy, and retrenchment to prevent losses or the closing or cessation of operation. Petitioners became co-owners of the land and subsequently filed complaints for illegal dismissal. The Regional Arbitration Branch of the NLRC dismissed the charge for illegal dismissal but ordered the payment of separation pay. The NLRC reversed the decision.

ISSUES:

a. Whether or not the Court should apply the legal maxim verbal legis in construing Article 283 of the Labor Code as regards its applicability to the case at bar.

b. W/N an ER that was compelled to cease its operation because of compulsory acquisition by the government of its land purposes of agrarian reform is liable to pay separation pay its affected EEs.

HELD:a. Yes, the legal maxim is applicable in this case. The use of the word “May,” in its plain meaning, denotes that it is directory in nature and generally permissive only. Also, Article 283 of the Labor Code does not contemplate a situation where the closure of the business establishment is forced upon the ER and ultimately for the benefit of the EEs. The Patalon Coconut Estate was closed down because a large portion of the said estate was acquired by the DAR pursuant to the CARP. The severance of ER-EE relationship between the parties came about involuntarily, as a result of an act of the State. Consequently, complainants are not entitled to any separation pay. Reasoning: Where the words of a statute are clear, plain and free from ambiguity, it must be given its literal meaning and applied without attempted interpretation.Policy: Article 283 of the Labor Code applies in cases of closures of establishment and reduction of personnel. The peculiar circumstances in the case at bar, however, involves neither the closure of an establishment nor a reduction of personnel as contemplated under the article.

b. No. The peculiar circumstance in the case at bar involves neither the closure of an establishment nor a reduction in personnel as contemplated in Article 283. The closure contemplated in 283 is a voluntary act on the part of the ER as may be gleaned for the wording, “the ER MAY also terminate,” denoting that it is directory in nature. The Labor Code does not contemplate a situation where the closure is forced upon the ER. As such, petitioners are not entitled to separation pay as private respondents did not voluntary shut down operation as they even sought to be exempted from the coverage of RA 6657.JO CINEMA vs. NLRCJune 28, 2001

FACTS: Petitioner is in the movie business. Respondent was a theater porter. A memo wasissued saying that no checks should be encashed but respondent, for her friend, encashedwithout permission 4 checks with the ticket seller. The checks bounced so she was asked toshow cause why she shouldn’t be disciplined but she didn’t answer so she was preventivelysuspended. An investigation was held where she participated in. During the investigation shefiled a case for illegal dismissal bec when she was suspended, she was allegedly terminatedalso. The LA and NLRC ruled that there was illegal dismissal or at least constructive dismissaland ordered separation pay and full backwages. The LA ruled that since the company insisted on making her pay the amount she couldn’t come back to work even if she wanted to. The NLRC ruled that even though respondent had no cause of action against the company as shewas merely placed on preventive suspension she was still illegally dismissed.

ISSUE: W/N respondent was illegally dismissed

HELD: It is clear that respondent was not dismissed but merely placed under preventivesuspension. It cannot be construed as dismissal since the cessation from work is onlytemporary. She could not have been dismissed because a formal investigation was still beingconducted. She even attended the investigation admitted the allegations. If she was indeeddismissed the investigation wouldn’t have continued. There was also no constructive dismissal.

Constructive discharge is quitting because continued employment is rendered impossible,unreasonable or unlikely. This does not hold. The demand for payment out of her own pocketswas reasonable as it was attributed to her. As she was not illegally dismissed, separation payand backwages are not in order.

HYATT TAXI SERVICES INC. vs. CATINOYJune 26, 2001

FACTS: Catinoy was a taxi driver of Hyatt Taxi Services, Inc. He is also a member and officer ofHyatt Taxi EEs Association, a legitimate labor organization registered with the DOLE andis the exclusive bargaining representative of all taxi drivers of the company. One day he foundout that his desk was forcibly opened and he found out that it was the acting union presidentwho opened it so an argument began that ended in blows where he was injured so he filed acriminal complaint against the president. The union asked the company to suspend them bothfor fighting and a memo was issued. It said that company rules and the union’s by-laws hadbeen violated so they were put on indefinite suspension. Catinoy then filed a complaint for illegalsuspension. After 30 days of suspension, he reported for work but he was not allowed to bec ofthe 2 cases he

filed. He then amended his complaint to constructive dismissal. The LA ruled thatthere was illegal dismissal and the NLRC affirmed it but did not award backwages bec therewas no concrete showing of illegal dismissal and it was only constructive illegal dismissal. TheCA reversed it and ruled that there was illegal dismissal and awarded full backwages.

ISSUE: W/N there was illegal dismissal or constructive dismissal.

HELD: The SC ruled that there was illegal dismissal, not merely constructive dismissal. Therewas no justification for the deletion of the award of backwages. The factual findings of the LA,which the NLRC initially adopted, show that respondent was not taken back after the 30-daysuspension. The LA appreciated the events as badges of constructive dismissal. Constructivedismissal is when the EE wants to work but cannot due to the prevailing conditions. Buthere, what made it impossible or unacceptable for respondent to resume work was aninsistence that he first desist from filing his complaints before he be allowed to return. Herefused and amended his complaint to include constructive dismissal. His refusal to yield isunderstandable for he has every right not to bargain away his right to prosecute his complaintsin exchange for the employment to which he was in the first place rightfully entitled.

SIEMENS PHILIPPINES, INC. AND MR. ERNST H. BEHRENS, VS. ENRICO A. DOMINGO[G.R. No. 150488, July 28, 2008]

FACTS: Domingo signed an Employment Contract with Maschinen & Technik, Inc. (MATEC) as a consultant, with a compensation package of Php8,000.00/month salary and an allowance of Php400.00/month. MATEC is a subsidiary of Siemens Philippines.[4] Thereafter, Domingo was given additional work by MATEC, in which he was paid DM1,800.00/month on top of his original salary. The extra work was the result of a contract entered into by MATEC and Siemens Aktiengesellschaft[5] (Siemens Germany), whereby MATEC, at the request of Siemens Germany, hired Domingo to handle the operation of OEN OEV TD.[6] Siemens Germany is a German company which has an investment in Siemens Philippines.Electronic Telephone System Industries, Inc. (ETSI) availed of Domingo's services as assistant manager. ETSI, like MATEC is a subsidiary of Siemens Philippines.[8] The Contract of Employment[9] of Domingo with ETSI provides that the latter shall have the right to assign the said contract in favor of Siemens Philippines, which is a corporation to be incorporated under the laws of the Philippines. While still an assistant manager of ETSI, Domingo was hired as a consultant by Siemens Germany in the field of text and data networks for a period of twelve (12) months.[11] As compensation, he received DM20,000.00, payable once for every twelve-month period. Siemens Germany sent a letter to ETSI guaranteeing the consultancy agreement between Siemens Germany and Domingo.Domingo filed a complaint for illegal dismissal and prayed for the payment of salaries, 13th month pay, backwages, damages, separation pay and attorney's fees.[22] Domingo alleged that he was forced to resign because of the act of Siemens Philippines of not renewing the consultancy agreement.[23] Siemens Philippines countered that Domingo's resignation was voluntary and that they were not privy to the consultancy agreement between Domingo and Siemens Germany. LA: illegal dismissal. NLRC: affirmed.

ISSUE: whether there was constructive dismissal that would entitle Domingo to his monetary claims.

VHELD: We believe, and so hold, that Domingo was constructively dismissed from employment.A diminution of pay is prejudicial to the EE and amounts to constructive dismissal.[35] The gauge for constructive dismissal is whether a reasonable person in the EE's position would feel compelled to give up his employment under the prevailing circumstances. Constructive dismissal is defined as quitting when continued employment is rendered impossible, unreasonable or unlikely as the offer of employment involves a demotion in rank or diminution in pay.[36] It exists when the resignation on the part of the EE was involuntary due to the harsh, hostile and unfavorable conditions set by the ER. It is brought about by the clear discrimination, insensibility or disdain shown by an ER which becomes unbearable to the EE. An EE who is forced to surrender his position through the ER's unfair or unreasonable acts is deemed to have been illegally terminated and such termination is deemed to be involuntary.[37]

We have, under the law's mandate, consistently resolved this situation in favor of the EE in order to protect his rights and interests from the coercive acts of the ER.While admittedly, Siemens Philippines is not a party to the arrangement between Siemens Germany, ETSI and Domingo, knowledge of and acquiescence to - if not actual concurrence in - the arrangement can be imputed to Siemens Philippines as to bind it to the arrangement. This conclusion finds support in the following:

First, based on the findings of facts of the LA, NLRC and CA â€• MATEC, ETSI, Siemens Philippines and Siemens Germany are related companies, the first three being subsidiaries of the parent company, and the fourth, Siemens Germany, having an investment in Siemens Philippines. Short of piercing the veil of corporate fiction, we note the intimate corporate relationship of Siemens Germany and Siemens Philippines, including the practice of the two companies of integrating their workforce.Second, in Domingo's contract of employment with Siemens Philippines, it is provided that Domingo shall not be connected in any other work capacity or employment or be otherwise involved, directly or indirectly, with any other business or concern without first having obtained the written consent of the company. Yet,

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Siemens Philippines never questioned the continued consultancy work of Domingo with Siemens Germany, not even when the consultancy agreement was renewed twice during the lifetime of Domingo's contract of employment with Siemens Philippines.Third, the guarantee letter issued by Siemens Germany in favor of Domingo was never questioned, much less revoked by Siemens Philippines when it assumed the employment of Domingo. The Guarantee Letter was a security given to Domingo by Siemens Germany assuring Domingo that Siemens Philippines would ensure that Siemens Germany would extend the consultancy agreement as long as Domingo was under its employ.Fourth, the consultancy agreement was a form of benefit or privilege given to Domingo by ETSI, a privilege that was allowed by Siemens Philippines to continue when it took over the majority of the business activities of ETSI and, consequently, became Domingo's ER. The outright removal of the privilege contravenes the law, because it resulted in the effective diminution of Domingo's salary.Domingo's constructive dismissal entitles him to his monetary claims, subject to the following modifications:First, we are not in accord with the Decision of the LA finding Behrens, the President and Chief Executive Officer of Siemens Philippines, solidarily liable with the company. A corporation, being a juridical entity, may act only through its directors, officers and EEs. Obligations incurred by them, while acting as corporate agents, are not their personal liability but the direct accountability of the corporation they represent. As a rule, they are only solidarily liable with the corporation for the termination of EEs if they acted with malice or bad faith.[38] In the case at bar, malice or bad faith on the part of Behrens in the constructive dismissal of Domingo was not sufficiently proven to justify a ruling holding him solidarily liable with Siemens Philippines.

Second, an illegally or constructively dismissed EE is entitled to: (1) either reinstatement, if viable, or separation pay if reinstatement is no longer viable; and (2) backwages. These two reliefs are separate and distinct from each other and are awarded conjunctivelyAs a rule, separation pay is awarded to an illegally dismissed EE, computed at the rate of one month pay per year of service. Accordingly, the LA decision granting separation pay equivalent to two months salary per year of service must be modified. There is nothing on record that even remotely suggests that it is the company policy of Siemens Philippines to grant its EEs separation pay of two months' salary for every year of service. Thus, in consonance with our previous rulings,[40] Domingo shall be awarded separation pay in the amount of one month pay for every year of service, but consultancy fees shall not be included in the computation of his separation pay. As discussed above, the evidence presented by Domingo is not sufficient to pierce the veil of corporate fiction between Siemens Philippines and Siemens AG, which would make Siemens Philippines liable for the monetary obligations of Siemens AG.

Third, the backwages that should be awarded to Domingo shall be reckoned from the time his constructive dismissal took effect until the finality of this decision. This is in conformity with Article 279 of the Labor Code which provides that an EE who is unjustly dismissed from work shall be entitled to full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent, computed from the time his compensation was withheld from him up to the time of his actual reinstatement. Since reinstatement of Domingo is no longer possible due to his strained relations with the management of Siemens Philippines, and considering the position he held in the company, he is lawfully entitled to receive backwages. For the same reason cited above, consultancy fees shall be excluded in the computation of Domingo's backwages.Finally, moral damages may be recovered when the dismissal of the EE was tainted by bad faith or fraud; or when it constituted an act oppressive to labor or done in a manner contrary to morals, good customs or public policy. Exemplary damages are recoverable if the dismissal was done in a wanton, oppressive, or malevolent manner.[41] In this case, we have found that there was bad faith in the failure or refusal of Siemens Philippines to work for the renewal of Domingo's consultancy contract with Siemens Germany. But while we affirm Domingo's entitlement to these damages, they are not intended to enrich the dismissed EE. Consequently, we find the amount of P50,000.00 for moral damages and P50,000.00 for exemplary damages sufficient to allay the sufferings experienced by Domingo and by way of example or correction for public good, respectively.FEDERITO B. PIDO v. NLRC et al.G.R. No. 169812, 23 February 2007CARPIO MORALES, J.:

FACTS:Federito B. Pido (petitioner) was hired on October 1, 1995 by Cherubim Security and General Services, Inc. (respondent) as a security guard. He was assigned at the Ayala Museum, but was later transferred on December 1, 1995 to the Tower and Exchange Plaza of Ayala Center where he worked as a computer operator at the Console Room, responsible for observing occurrences that transpire inside elevators and other areas in buildings which are recorded by surveillance cameras and relayed to monitors.

Like the other guards deployed by respondent at the Ayala Center, petitioner was under the operational control and supervision of the Ayala Security Force (ASF) of the Ayala Group of Companies.

On January 21, 2000, petitioner had an altercation with Richard Alcantara (Alcantara) of the ASF, arising from a statement of Alcantara that petitioner’s security license for his .38 caliber revolver service firearm and duty detail order had already expired. On even date, Alcantara filed a complaint for Gross Misconduct, claiming that when he directed petitioner to present his security license, petitioner angrily and on top of his voice questioned his

authority. And Alcantara recommended that petitioner be relieved from his post, and that immediate disciplinary action against him be taken.

On January 23, 2000, petitioner reported for work at the Ayala Center but he was not allowed to stay in the premises, a Recall Order having been issued by respondent through its Operations Manager. Petitioner thus filed an information report wherein he narrated that Alcantara confronted him on January 21, 2000 about his right to carry a firearm and afterwards tried to grab it from its holster, resulting in a heated argument between them.

As more than nine months had elapsed since the investigation was conducted by respondent with no categorical findings thereon made, petitioner filed on October 23, 2000 a complaint for illegal constructive dismissal, illegal suspension, and non-payment and underpayment of salaries, holiday pay, rest day, service incentive leave, 13th month pay, meal and travel allowance and night shift differential against respondent, along with its EE Rosario K. Balais (Rosario) who was allegedly responsible for running the day to day affairs of respondent’s business. Petitioner likewise prayed for reinstatement and payment of full backwages, attorney’s fees and other money claims.

In its position paper, respondent denied that it dismissed petitioner from the service, it claiming that while it was still in the process of investigating the January 21, 2000 incident, it offered petitioner another assignment which he declined, saying “pahinga muna ako [I will in the meantime take a rest].”

The Labor Arbiter ruled that petitioner’s suspension for more than nine months had ripened into constructive termination, on account of which he ordered the payment of separation pay equivalent to one month salary of P8,000 for every year of service, or for the total amount of P32,000. The Arbiter, however, found that there was insufficient evidence to support petitioner’s assertion that he was entitled to his money claims.

Both parties appealed to the National Labor Relations Commission (NLRC).

The NLRC modified the decision of the Labor Arbiter. While it found that petitioner was indeed constructively dismissed, it set aside the award of separation pay, given respondent’s willingness to assign petitioner to another post which he declined. On the same ground, the NLRC denied petitioner’s claim for backwages. It merely ordered his reinstatement.

Petitioner’s motion for reconsideration having been denied by the NLRC by Resolution, he filed a petition for certiorari with the Court of Appeals, maintaining that his suspension for more than nine months amounted to constructive dismissal to entitle him to separation pay and backwages.

The appellate court upheld the NLRC decision and accordingly dismissed petitioner’s appeal. The appellate court sustained the findings of the Labor Arbiter and the NLRC that while a security guard, like petitioner, may be lawfully placed on a “floating status,” the same should continue only for six months, otherwise the security agency could be liable for constructive dismissal under Article 286 of the Labor Code, viz:

ART. 286. When employment not deemed terminated. - The bona fide suspension of the operation of a business or undertaking for a period not exceeding six (6) months, or the fulfillment of the EE of a military or civic duty shall not terminate employment. In all such cases, the ER shall reinstate the EE to his former position without loss of seniority rights if he indicates his desire to resume his work not later than one (1) month from the resumption of operations of his ER or from his relief from the military or civic duty.

ISSUE: Whether or not petitioner’s nine-month suspension is tantamount to constructive dismissal.

HELD: The Supreme Court finds that, indeed, petitioner was constructively dismissed, but not on the grounds advanced by the appellate court, which echoed those of the NLRC and the Labor Arbiter.

Article 286 applies only when there is a bona fide suspension of the ER's operation of a business or undertaking for a period not exceeding six (6) months. In such a case, there is no termination of employment but only a temporary displacement of EEs, albeit the displacement should not exceed six (6) months. The paramount consideration should be the dire exigency of the business of the ER that compels it to put some of its EEs temporarily out of work. In security services, the temporary "off-detail" of guards takes place when the security agency's clients decide not to renew their contracts with the security agency, resulting in a situation where the available posts under its existing contracts are less than the number of guards in its roster.

Verily, a floating status requires the dire exigency of the ER's bona fide suspension of operation of a business or undertaking. In security services, this happens when the security agency’s clients which do not renew their contracts are more than those that do and the new ones that the agency gets. Also, in instances when contracts for security services stipulate that the client may request the agency for the replacement of the guards assigned to it even for want of cause, the replaced security guard may be placed on temporary “off-detail” if there are no available posts under respondent’s existing contracts.

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When a security guard is placed on a “floating status,” he does not receive any salary or financial benefit provided by law. Due to the grim economic consequences to the EE, the ER should bear the burden of proving that there are no posts available to which the EE temporarily out of work can be assigned. This, respondent failed to discharge.

As per the Recall Order, it can be gathered that respondent intended to put petitioner under preventive suspension for an indefinite period of time pending the investigation of the complaint against him. The allowable period of suspension in such a case is not six months but only 30 days, following Sections 8 and 9 of Rule XXIII, Book V of the Omnibus Rules Implementing the Labor Code (Implementing Rules). Hence, in the event the ER chooses to extend the period of suspension, he is required to pay the wages and other benefits due the worker and the worker is not bound to reimburse the amount paid to him during the extended period of suspension even if, after the completion of the hearing or investigation, the ER decides to dismiss him.

Respondent did not inform petitioner that it was extending its investigation, nor did it pay him his wages and other benefits after the lapse of the 30-day period of suspension. Neither did respondent issue an order lifting petitioner’s suspension, or any official assignment, memorandum or detail order for him to assume his post or another post. Respondent merely chose to dawdle with the investigation, in absolute disregard of petitioner’s welfare.

At the time petitioner filed the complaint for illegal suspension and/or constructive dismissal on October 23, 2000, petitioner had already been placed under preventive suspension for nine months. To date, there is no showing or information that, if at all, respondent still intends to conclude its investigation.

This Court thus rules that petitioner’s prolonged suspension, owing to respondent’s neglect to conclude the investigation, had ripened to constructive dismissal.UNIVERSAL ROBINA SUGAR MILLING CORP. vs. CABALLEDA

FACTS:Agripino Caballeda was a welder for URSUMCO from March1989 until June 23, 1997 with a salary of P124 per day while Alejandro Cadalin was a crane operator from 1976 to June 15, 1997, with a salary of P209.30 per day. John Gokongwei Jr., President of URSUMCO, issued aMemorandum establishing the age of compulsory retirement at 60. Subsequently, RA 7641 set the compulsory retirement age, in the absence of a retirement plan or agreement, at 65and that an EE may retire upon reaching 60.

The National Labor Federation, the labor union of the workers of URSUMCO, of which Alejandro Cadalin was a member entered into a CBA with URSUMCO. Article XV of said CBA particularly provided that the retirement benefits of the members of the collective bargaining unit shall be in accordance with law. Agripino and Alejandro subsequently reached the age of 60 and were allegedly forced to retire. They accepted their separation pays and applied for retirement benefits with the SSS. Alejandro also executed a quitclaim in favor of URSUMCO. They subsequently filed Complaints for illegal dismissal with the LA of Dumaguete City.

URSUMCO claimed that Agripino and Alejandro voluntarily retired, that the Memorandum was no longer in effect when they did so, and that RA 7641 cannot be given retroactive effect since there was an existing CBA that covered the retirement benefits of the EEs.

It further alleged that Agripino was merely a seasonal or project worker and not a casual worker since the sugar millingbusiness is seasonal in nature. Thus, he was not actually forced to retire. The termination of his employment was essentially based on the fact that the period in his contract had expired.

ISSUE&RULING: WON RA 7641 has retroactive effect: Yes. The issue of the retroactive effect of RA 7641 has long been settled. It is a curative statute. It is evident from the records that when respondents were compulsorily retired from the service, R.A. 7641 was already in full force and effect. The petitioners failed to prove that the respondents did not comply with the requirements for eligibility under the law for such retirement benefits. In sum, the aforementioned requisites were adequately satisfied, thus, warranting the retroactive application of R.A. 7641 in this case.

WON Agripino is a seasonal or project EE: No. He is a regular EE.WON the Agripino and Alejandro voluntarily retired: No. Retirement is the result of a bilateral act of the parties, a voluntary agreement between the ER and the EE whereby the latter, after reaching a certain age, agrees to sever his or her employment with the former.[29] The age of retirement is primarily determined by the existing agreement between the ER and the EEs. However, in the absence of such agreement, the retirement age shall be fixed by law. Under Art. 287 of the Labor Code as amended; the legally mandated age for compulsory retirement is 65 years, while the set minimum age for optional retirement is 60 years. The law generally looks with disfavor on quitclaims and releases of EEs who have been inveigled or pressured into signing them by unscrupulous ERs seeking to evade their responsibilities.

Ratio: (On nature of issue – to the best of my understanding)Whether or not Agripino was a seasonal/project EE or a regular EE is a question of fact. Time and again, we have held that the Court is not a trier of facts. In this case, it is noteworthy that the LA, the NLRC and the CA are one in ruling that Agripino was not a casual EE, much less a seasonal or project EE. In their findings, Agripino was considered a regular EE of URSUMCO. Consequently, such uniform finding of the LA, the NLRC, and the CA binds this Court. Petition DENIED.

CAINTA CATHOLIC SCHOOL V. CAINTA CATHOLIC SCHOOL EES UNION

FACTS: On March 6, 1986, a Collective Bargaining Agreement (CBA) was entered into between Cainta Catholic School and the Cainta Catholic EEs Union effective January 1, 1986 to May 31, 1989. This CBA provided, among others that:This CBA shall become effective and binding upon the parties from January 1, 1986 up to May 31, 1989. At least 60 days before the expiration of this agreement, the parties hereto shall submit written proposals which shall be made the basis of negotiations for the execution of new agreement.

If no new agreement is reached by the parties at the expiration of this agreement, all the provisions of this agreement shall remain full force and in effect, up to the time a new agreement shall be executed. Msgr. Mariano Balbago was appointed School Director in April 1987. The Union became inactive.

September 10, 1993, the union held an election of officers and Mrs. RosalindaLlagas was elected as President; Paz Javier, VicePresident; Fe Villegas,Treasurer; and Maria Luisa Santos, Secretary. The other elected officers wereRizalina Fernandez, Ester Amigo, secretaries; Nena Marvilla, treasurer; GuildaGalange and Jimmy del Rosario, auditors; Filomeno Dacanay and AdelinaAndres, P.R.O.s; and Danilo Amigo and Arturo Guevarra, business managers.

Llagas was the Dean of of Student Affairs while Villegas and Santos were Year- Level Chairmen. October 15, 1993, the school retired Llagas and Javier who had rendered more than twenty years of continous service. Three days later, the Union filed a notice of strike with the National Concillation and Mediation Board (NCMB) docketed as NCMB-RB-12-NS-10-124-93. On November 8, 1993, the Union struck and picketed the school’s entrances. On November 11, 1993, the Secretary of Labor Ma. Nieves R. Confesor issued an order certifying the labor dispute to the NLRC.ISSUE: Whether the forced retirement of Llagas and Javier was a valid exercise of management prerogative. Whether the strike was legal is highly dependent on whether the retirement was valid.HELD: We are impelled to reverse the CA and affirm the validity of the termination of employment of Llagas and Javier, arising as it did from a management prerogative granted by the mutually-negotiated CBA between the School and the Union. Pursuant to the existing CBA, the School has the option to retire an EE upon reaching the age limit of sixty (60) or after having rendered at least twenty (20) years of service to the School, the last three (3) years of which must be continuous. Retirement is different species of termination of employment from dismissal for just or authorized causes under Articles 282 and 283 of the Labor Code. While in all three cases, the EE to be terminated may be unwilling to part from service, there are eminently higher standards to be met by the ER validly exercising the prerogative to dismiss for just or authorized causes. In those two instances, it is indispensable that the ER establish the existence of just or authorized causes for dismissal as spelled out in the Labor Code. Retirement, on the other hand, is the result of a bilateral act of the parties, a voluntary agreement between the ER and the EE whereby the latter after reaching a certain age agrees and/or consents to sever his employment with the former.The CBA in the case at bar established 60 as the compulsory retirement age. However, it is not alleged that either Javier or Llagas had reached the compulsory retirement age of 60 years, but instead that they had rendered at least 20 years of service in the School, the last three (3) years continuous. Clearly, the CBA provision allows the EE to be retired by the School even before reaching the age of 60, provided that he/she had rendered 20 years of service. Would such a stipulation be valid? Jurisprudence affirms the position of the School.

Llagas and Javier were indeed managerial and supervisory EEs.Having established that Llagas is a managerial EE, she is proscribed from joining a labor union,38 more so being elected as union officer. In the case of Javier, a supervisory EE, she may join a labor union composed only of supervisory EEs.39 Finding both union officers to be EEs not belonging to the rank-and-file, their membership in the Union has become questionable, rendering the Union inutile to represent their cause.

Since the strike has been declared as illegal based on the foregoing discussion, we need not dwell on its legality with respect to the means employed by the Union. There is neither legal nor factual justification in awarding backwages to some union officers who have lost their employment status, in light of our finding that the strike is illegal. The ruling of the NLRC is thus upheld on this point. We are also satisfied with the disposition of the NLRC that mandates that Llagas and Javier (or her heirs) receive their retirement benefits.

RODOLFO J. SERRANO vs.SEVERINO SANTOS TRANSITG.R. No. 187698, August 9, 2010

FACTS: Petitioner Rodolfo Serrano has been an EE of Severino Santos Transit for 14 years. Petitioner applied for optional retirement from the company whose representative advised him that he must first sign the already prepared Quitclaim before his retirement pay could be released. As petitioner’s request to first go over the computation of his retirement pay was denied, he signed the Quitclaim on which he wrote "U.P." (under protest) after his signature, indicating his protest to the amount of P75,277.45 which he received, computed by the company at 15 days per year of service. Petitioner soon after filed a complaint before the Labor Arbiter, alleging that the company erred in its computation since under Republic Act No. 7641, otherwise known as the Retirement Pay Law, his retirement pay should have been computed at 22.5

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days per year of service to include the cash equivalent of the 5-day service incentive leave (SIL) and 1/12 of the 13th month pay which the company did not. The company maintained, however, that the Quitclaim signed by petitioner barred his claim and, in any event, its computation was correct since petitioner was not entitled to the 5-day SIL and pro-rated 13th month pay for, as a bus conductor, he was paid on commission basis.The Labor Arbiter ruled in favor of Serrano. In the same Labor Advisory on Retirement Pay Law, it was likewise decisively made clear that "the law expanded the concept of "one-half month salary" from the usual one-month salary divided by two. However, the National Labor Relations Commission (NLRC) to which respondents appealed reversed the Labor Arbiter’s ruling and dismissed petitioner’s complaint.

ISSUE: Whether or not petitioner is entitled to the computation of retirement pay as given by RA 7641

HELD: Yes. Admittedly, petitioner worked for 14 years for the bus company which did not adopt any retirement scheme. Even if petitioner as bus conductor was paid on commission basis then, he falls within the coverage of R.A. 7641 and its implementing rules. As thus correctly ruled by the Labor Arbiter, petitioner’s retirement pay should include the cash equivalent of the 5-day SIL and 1/12 of the 13th month pay. For purposes, however, of applying the law on SIL, as well as on retirement, the Court notes that there is a difference between drivers paid under the "boundary system" and conductors who are paid on commission basis.In practice, taxi drivers do not receive fixed wages. They retain only those sums in excess of the "boundary" or fee they pay to the owners or operators of the vehicles.7 Conductors, on the other hand, are paid a certain percentage of the bus’ earnings for the day.A careful perusal of said provisions of law will result in the conclusion that the grant of service incentive leave has been delimited by the Implementing Rules and Regulations of the Labor Code to apply only to those EEs not explicitly excluded by Section 1 of Rule V. According to the Implementing Rules, Service Incentive Leave shall not apply to EEs classified as "field personnel." The phrase "other EEs whose performance is unsupervised by the ER" must not be understood as a separate classification of EEs to which service incentive leave shall not be granted. Rather, it serves as an amplification of the interpretation of the definition of field personnel under the Labor Code as those "whose actual hours of work in the field cannot be determined with reasonable certainty." The same is true with respect to the phrase "those who are engaged on task or contract basis, purely commission basis." Said phrase should be related with "field personnel," applying the rule on ejusdem generis that general and unlimited terms are restrained and limited by the particular terms that they follow. Hence, EEs engaged on task or contract basis or paid on purely commission basis are not automatically exempted from the grant of service incentive leave, unless, they fall under the classification of field personnel.As a general rule, [field personnel] are those whose performance of their job/service is not supervised by the ER or his representative, the workplace being away from the principal office and whose hours and days of work cannot be determined with reasonable certainty; hence, they are paid specific amount for rendering specific service or performing specific work. If required to be at specific places at specific times, EEs including drivers cannot be said to be field personnel despite the fact that they are performing work away from the principal office of the EE.

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