1. MILLARES VS.

NLRC and PICOP

G.R. No. 122827

March 29, 1999

FACTS:
Petitioners numbering 116 occupied different positions in the mill site of respondent Paper
Industries Corporation of the Philippines (PICOP) in Bislig, Surigao del Sur.
In 1992 PICOP suffered a major financial setback. To avert further losses, it undertook
a retrenchment program and terminated the services of petitioners. Accordingly, petitioners
received separation pay. 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.

ISSUE:
Does the subject allowances form part of petitioners’ “wages” for the computation of
separation pay?

HELD:
NO. In order to ascertain whether the subject allowances form part of petitioner’s “wages,”
we divide the discussion on the following — “customarily furnished;” “board, lodging or
other facilities;” and, “fair reasonable value as determined by the Secretary of Labor.”
customarily furnished
“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 employee 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 employees 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 employees in the performance of their
duties.

2. Arco Metal Products Co., Inc., et al., vs. Samahan ng Mga Manggagawa sa Arco-Metal-
NAFLU
G.R. No. 170734
May 14, 2008

Facts: Petitioner is a company engaged in the manufacture of metal products, whereas respondent
is the labor union of petitioner’s rank and file employees. 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. Respondent protested the prorated scheme, claiming that on several occasions petitioner did
not prorate the payment of the same benefits to seven (7) employees who had not served for the full
12 months. 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).

Issue: Whether or not the grant of 13th month pay, bonus, and leave encashment in full regardless
of actual service rendered constitutes voluntary employer practice and, consequently, whether or not
the prorated payment of the said benefits constitute diminution of benefits under Article 100 of the
Labor Code.

Ruling: Any benefit and supplement being enjoyed by employees cannot be reduced, diminished,
discontinued or eliminated by the employer. The principle of non-diminution of benefits is founded on
the Constitutional mandate to "protect the rights of workers and 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 employees to benefits which were
voluntarily given by the employer and which ripened into company practice. Thus in DavaoFruits
Corporation v. Associated Labor Unions, et al. where an employer had freely and continuously
included in the computation of the 13th month pay those items that were expressly excluded by the
law, we held that the act which was favorable to the employees though not conforming to law had
thus ripened into a practice and could not be withdrawn, reduced, diminished, discontinued or
eliminated. In Sevilla Trading Company v. Semana, we ruled that the employer’s act of including non-
 basic benefits in the computation of the 13th month pay was a voluntary act and had ripened into a
company practice which cannot be peremptorily withdrawn.

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 employees regardless of the length of service
rendered. True, there were only a total of seven employees 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. Thus, it can be six (6) years, three (3) years, or even as short as two (2)
years. 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. Hence, petition was denied.

3. PEDRO SOLIS V. NLRC

331 Phil. 928

Facts:

Petitioner, Pedro Solis was employed since August of 1972 as an underground miner
by private respondent Philex. Due to constant exposure to the elements in the
mining area, Solis became ill and was medically diagnosed sometime in 1983 to be
afflicted with "Koch's infection, exudative type, minimal.The illness of Solis
aggravated. In his medical check-up at the Baguio General Hospital and Medical
Center, on March 21, 1991, Solis was diagnosed to be suffering from:

- Koch's pulmonary bronchiectasis (PTB) commonly known as tuberculosis

and was declared "unfit to continue working for underground mine".[7] Solis was
accordingly dismissed by Philex from service on April 5, 1991, and given the amount
of P55,121.85 as "separation pay".

After his dismissal from service, Solis submitted himself for medical examination in
another hospital, the Baguio Flipino Chinese Hospital, which issued a medical
certificate declaring him physically fit.[9] Armed with this new medical certificate, he
went back to Philex demanding reinstatement, but to no avail. On May 6, 1991,
Solis sued Philex for illegal dismissal. The Labor Arbiter found that Solis' dismissal
was illegal. Philex appealed to the NLRC which also ruled that Solis was illegally
dismissed.
Article 284 of the Labor Code provides:

"Disease as ground for termination. -- An employer may terminate the

services of an employee who has been found to be suffering from any
disease and whose continued employment is prohibited by law or is
prejudicial to his health as well as to the health of his co-employees:
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."

The above rule states several requirements before the dismissal of an employee due
to disease will be considered valid. Two of which are: (a) the employee is afflicted
with a disease that cannot be cured within six (6) months, and (b) a certification to
that effect must be issued by a competent public health authority.

We find nothing in the medical certificate issued by the Baguio General Hospital
which states that Solis' ailment cannot be cured within six months. The statement
that Solis was "unfit to work underground" does not mean that his ailment cannot be
cured within six months. In fact, a subsequent medical examination from another
hospital[17] less than six months from the first medical check-up showed that Solis
was still physically fit. This negates Philex's assertion that the dismissal is valid.
In dismissal cases, the employer has the burden of proving that the termination from
service of an employee is for a valid or authorized cause.[18] Philex failed to
discharge that burden in the case at bench.

Nevertheless, despite the lack of the required certification and the absence of
estoppel, it cannot be ignored that Solis was afflicted with tuberculosis, a contagious
disease. His continued employment as underground miner would be harmful to his
health and his co-workers. Hence, although Solis is legally entitled to reinstatement
such reinstatement must be subject not only to his physical fitness, but also to his
fitness to work underground, requirements which have to be certified by competent
public health authority. We have imposed the same condition on prior cases.[24]

4. BUSTAMANTE ET AL VS. NLRC

G.R. No. 111651 March 15, 1996

FACTS: Respondent company is engaged in the business of producing high grade bananas
in its plantation in Davao del Norte. Petitioners Paulino Bantayan, Fernando Bustamante,
Mario Sumonod and Osmalik Bustamante were employed as laborers and harvesters while
petitioner Sabu Lamaran was employed as a laborer and sprayer in respondent company’s
plantation. All the petitioners signed contracts of employment for a period of six (6) months
from 2 January 1990 to 2 July 1990, but they had started working sometime in September
1989. Previously, they were hired to do the same work for periods lasting a month or more,
from 1985 to 1989. Before the contracts of employment expired on 2 July 1990, petitioners’
employments were terminated on 25 June 1990 on the ground of poor performance on
account of age, as not one of them was allegedly below forty (40) years old.
Petitioners filed a complaint for illegal dismissal.

ISSUE: Whether or not private respondent exercises its power to terminate in good faith so
as to make the award of backwages improper in this case.

RULING: We do not sustain public respondent’s theory that private respondent should not
be made to compensate petitioners for backwages because its termination of their
employment was not made in bad faith. The act of hiring and re-hiring the petitioners over a
period of time without considering them as regular employees 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 employees.”

In the case at bar, there is no valid cause for dismissal. The employees (petitioners) have
not performed any act to warrant termination of their employment. Consequently,
petitioners are entitled to their full backwages and other benefits from the time their
compensation was withheld from them up to the time of their actual reinstatement.

5. Francisco v. NLRC (G.R.

No. 170087)
Facts:
Petitioner Angelina Francisco was hired by respondent Kasei Corporation during its incorporation
stage as Accountant and Corporate Secretary and later as Liaison Officer. Subsequently she was also
designated Acting Manager until replaced, but was assured by the company that she was still
connected as Technical Consultant. Thereafter, Kasei Corporation reduced petitioner’s salary until it
was later withheld despite repeated follow-ups. Petitioner once again asked for her salary but was
informed that she is no longer connected with the company. Petitioner thus filed an action for
constructive dismissal before the Labor Arbiter. Respondent Kasei Corporation averred that
petitioner is not their employee as she performed her work at her own discretion without their control
and supervision. Both the Labor Arbiter and NLRC tribunal found for petitioner. CA reversed the
decision.

Issue:

Whether or not there was employer-employee relationship between the parties.

Ruling: YES.

In certain cases the control test is not sufficient to give a complete picture of the relationship between
the parties, owing to the complexity of such a relationship where several positions have been held by
the worker. The better approach would therefore be to adopt a two-tiered test involving: (1) the
putative employer’s power to control the employee with respect to the means and methods by which
the work is to be accomplished; and (2) the underlying economic realities of the activity or
relationship.

By applying the control test, there is no doubt that petitioner is an employee of Kasei Corporation
because 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 petitioner can likewise be said to be an employee of
respondent corporation because she had served the company for six years before her dismissal,
receiving check vouchers indicating her salaries/wages, benefits, 13th month pay, bonuses and
allowances, as well as deductions and Social Security contributions. Petitioner’s membership in the
SSS as manifested by a copy of the SSS specimen signature card which was signed by the President
of Kasei Corporation and the inclusion of her name in the on-line inquiry system of the SSS evinces
the existence of an employer-employee relationship between petitioner and respondent corporation. It
is therefore apparent that petitioner is economically dependent on respondent corporation for her
continued employment in the latter’s line of business.

6. PHILIPPINE INDUSTRIAL SECURITY

AGENCY CORPORATION v. AGUINALDO
G.R. No. 149974 June 15, 2005
FACTS:

Philippine Industrial Security Agency Corporation (PISAC) hired Percival Aguinaldo

as a security guard. He was assigned to secure the premises of Far East Bank & Trust
Company (FEBTC) Branch in Santiago City, where he was promoted as Branch Head
Guard.

Petitioner’s roving personnel, caught respondent without headgear and smoking while
on duty. Respondent explained his side in a Memorandum.

petitioner security agency issued a memorandum to respondent directing him to report

to the FEBTC main office in Malabon City for investigation. The following day,
petitioner issued a Relief Order relieving Aguinaldo from his post at FEBTC Br.,
Santiago City.

The Branch Head of FEBTC wrote a Memorandum to petitioner requesting the

retention of respondent in the same office but it was denied.
Petitioner assigned respondent temporarily to FEBTC Malabon City Branch pending
the opening of another Branch in Santiago City where according to said petitioner, he
will be re-assigned.

This prompted respondent to file with the Office of the Labor Arbiter a complaint for
illegal dismissal and non-payment of separation pay with damages against petitioner.
However, it was denied for lack of merit.

On appeal, the NLRC reversed the appealed Decision

Hence, respondent filed with the CA a petition for certiorari under Rule 65. The CA
granted the petition and setting aside the Decision of the NLRC.

ISSUE:

Whether or not Aguinaldo’s reassignment to another post that was not yet open
amounted to constructive dismissal.

Whether the transfer of Aguinaldo was a valid exercise of management prerogative.

RULING:

A constructive dismissal is a quitting because continued employment is rendered

impossible, unreasonable or unlikely, as an offer involving a demotion in rank and a
diminution in pay

‘In case of constructive dismissal, the employer has the burden of proving that the
transfer and demotion of an employee are for valid and legitimate grounds such as
genuine business necessity. Particularly, for a transfer not to be considered a
constructive dismissal, the employer must be able to show that such transfer is not
unreasonable, inconvenient, or prejudicial to the employee; nor does it involve a
demotion in rank or a diminution of his salaries, privileges and other benefits. Failure
 of the employer to overcome this burden of proof, the employee’s demotion shall no
doubt be tantamount to unlawful constructive dismissal.’

In the case at bar, petitioner was validly relieved from his post for violating a company
policy. The petitioner did not contest this violation as he in fact admitted to
committing it during the investigation, though with a valid and plausible explanation.

What tarnishes the whole scene is the fact that after petitioner was relieved from his
old post in Santiago City, Isabela, he was temporarily reassigned to the head office of
private respondent PISA in Malabon, Metro Manila pending the opening of another
bank in Isabela. This act is unfair and downright oppressive considering that
petitioner, along with his family, is a long-time resident of Santiago City, Isabela. The
transfer would mean that petitioner would be away from his family or that he would
bring his entire family to Manila entailing expenses.

In the pursuit of its legitimate business interest, management has the prerogative to
transfer or assign employees from one office or area of operation to another –
provided there is no demotion in rank or diminution of salary, benefits, and other
privileges; and the action is notmotivated by discrimination, made in bad faith, or
effected as a form of punishment or demotion without sufficient cause.

By transferring respondent to the Malabon City FEBTC Branch, petitioner resorted to

constructive dismissal. A transfer amounts to constructive dismissal when the transfer
is unreasonable, unlikely, inconvenient, impossible, or prejudicial to the
employee, as in this case. It is defined as an involuntary resignation resorted when a
clear discrimination, insensibility or disdain by an employer becomes unbearable to
the employee.

In the case at bar, petitioner failed to overcome this burden of proof. Foremost,
respondent explained that he was in complete attire that morning. However, the bank
personnel informed him that the FEBTC armor car, on its way to deliver cash to the
Central Bank Office in Tuguegarao, incurred mechanical trouble. So he immediately
went outside to fetch a mechanic. It was then raining, hence, he got wet – the reason
why he was not wearing his perching cap. Under the circumstances, his failure to wear
his perching cap is justified. Thus, he should not be held liable for any violation of
office regulations which warrants his transfer to another work place.

7. Gold City Integrated Port Service, Inc (INPORT) vs. NLRC

GR No. 103560
July 6, 1995

Facts: Petitioner’s employees stopped working and gathered in a mass action to express their grievances regarding wages,
thirteenth month pay and hazard pay. Said employees were all members of the Macajalar Labor Union — Federation of Free
Workers (MLU-FFW) with whom petitioner had an existing collective bargaining agreement.

Petitioner was engaged in stevedoring and arrastre services at the port of Cagayan de Oro. The strike paralyzed operations at said
port.

The strikers filed individual notices of strike (“Kaugalingon nga Declarasyon sa Pag-Welga”) with the then Ministry of Labor and
Employment.

With the failure of conciliation conferences between petitioner and the strikers, INPORT filed a complaint before the Labor Arbiter
for Illegal Strike with prayer for a restraining order/preliminary injunction.

The National Labor Relations Commission issued a temporary restraining order. Thereafter, majority of the strikers returned to
work, leaving herein private respondents who continued their protest.

For not having complied with the formal requirements in Article 264 of the Labor Code, 3 the strike staged by petitioner’s workers on
April 30, 1985 was found by the Labor Arbiter to be illegal. 4 The workers who participated in the illegal strike did not, however, lose
their employment, since there was no evidence that they participated in illegal acts. After noting that petitioner accepted the other
striking employees back to work, the Labor Arbiter held that the private respondents should similarly be allowed to return to work
without having to undergo the required screening to be undertaken by their union (MLU-FFW).

As regards the six private respondents who were union officers, the Labor Arbiter ruled that they could not have possibly been
“duped or tricked” into signing the strike notice for they were active participants in the conciliation meetings and were thus fully
aware of what was going on. Hence, said union officers should be accepted back to work after seeking reconsideration from herein
petitioner. 5

The NLRC affirmed with modification 8 the Arbiter’s decision. It held that the concerted action by the workers was more of a “protest
action” than a strike. Private respondents, including the six union officers, should also be allowed to work unconditionally to avoid
discrimination. However, in view of the strained relations between the parties, separation pay was awarded in lieu of reinstatement.

Upon petitioner’s motion for reconsideration, public respondent modified the above resolution.

The Commission ruled that since private respondents were not actually terminated from service, there was no basis for
reinstatement. However, it awarded six months’ salary as separation pay or financial assistance in the nature of “equitable relief.”
The award for backwages was also deleted for lack of factual and legal basis. In lieu of backwages, compensation equivalent to
P1,000.00 was given.

Issue: Whether separation pay and backwages be awarded by public respondent NLRC to participants of an illegal strike?

Held: Reinstatement and backwages or, if no longer feasible, separation pay, can only be granted if sufficient bases exist under
the law, particularly after a showing of illegal dismissal. However, while the union members may thus be entitled under the law to
be reinstated or to receive separation pay, their expulsion from the union in accordance with the collective bargaining agreement
renders the same impossible.

In the case at bench, INPORT accepted the majority of the striking workers, including union officers, back to work. Private
respondents were left to continue with the strike after they refused to submit to the “screening” required by the company.
Under Article 264 of the Labor Code, a worker merely participating in an illegal strike may not be terminated from his employment.
It is only when he commits illegal acts during a strike that he may be declared to have lost his employment status. Since there
appears no proof that these union members committed illegal acts during the strike, they cannot be dismissed. The striking union
members among private respondents are thus entitled to reinstatement, there being no just cause for their dismissal.

However, considering that a decade has already lapsed from the time the disputed strike occurred, we find that to award separation
pay in lieu of reinstatement would be more practical and appropriate.

No backwages will be awarded to private respondent-union members as a penalty for their participation in the illegal strike. Their
continued participation in said strike, even after most of their co-workers had returned to work, can hardly be rewarded by such an
award.

8. PERMEX INC. and/or JANE (JEAN) PUNZALAN, PERSONNEL

MANAGER and EDGAR LIM, MANAGER, petitioners, vs. NATIONAL
LABOR RELATIONS COMMISSION and EMMANUEL
FILOTEO, respondents.

[G.R. No. 125031. January 24, 2000]

Petitioner, Permex Producer and Exporter Corporation (hereinafter Permex), is a company

engaged in the business of canning tuna and sardines, both for export and domestic consumption.

Private respondent Emmanuel Filoteo, an employee of Permex, was terminated by petitioners

allegedly for flagrantly and deliberately violating company rules and regulations. More
specifically, he was dismissed allegedly for falsifying his daily time record.

Filoteo appealed to the NLRC. Finding merit therein, the Commission's Fifth Division
promulgated its resolution, reversing and setting aside the Labor Arbiter's decision, by disposing
as follows.

We will now consider these assigned errors to resolve the principal issue of whether or not
private respondent was illegally terminated from his employment.

Whether private respondent was illegally dismissed or not is governed by Article 282 of the
Labor Code.[7] To constitute a valid dismissal from employment, two requisites must concur: (a)
the dismissal must be for any of the causes provided for in Article 282 of the Labor Code; and
(b) the employee must be afforded an opportunity to be heard and defend himself.[8] This means
that an employer can terminate the services of an employee for just and valid causes, which must
be supported by clear and convincing evidence.[9] It also means that, procedurally, the employee
must be given notice, with adequate opportunity to be heard,[10] before he is notified of his actual
dismissal for cause.

In the present case, the NLRC found that the two-fold requirements for a valid dismissal were
not satisfied by the petitioners.
First, petitioner's charge of serious misconduct of falsification or deliberate misrepresentation
was not supported by the evidence on the record contrary to Art. 277 of the Labor Code which
provides that:

Such dismissal, in our view, was too harsh a penalty for an unintentional infraction, not to
mention that it was his first offense committed without malice, and committed also by others
who were not equally penalized.[12]

It is clear that the alleged false entry in private respondent's DTR was actually the result of
having logged his scheduled time-out in advance on July 31, 1994. But it appears that when he
timed in, he had no idea that his work schedule (night shift) would be cancelled. When it was
confirmed at 10:00 p.m. that there was no "butchering" of tuna to be done, those who reported
for work were allowed to go home, including private respondent. In fact, Filoteo even obtained
permission to leave from the Assistant Production Manager.

Considering the factory practice which management tolerated, we are persuaded that Filoteo, in
his rush to catch the service vehicle, merely forgot to correct his initial time-out entry. Nothing is
shown to prove he deliberately falsified his daily time record to deceive the company. The
NLRC found that even management's own evidence reflected that a certain Felix Pelayo, a co-
worker of private respondent, was also allowed to go home that night and like private respondent
logged in advance 7:00 a.m. as his time-out. This supports Filoteo's claim that it was common
practice among night-shift workers to log in their usual time-out in advance in the daily time
record.

9. Aparente vs. NLRC

Petitioner Rolando Aparante, Sr. was first employed by private respondent Coca-
Cola Bottlers Phils., Inc. (CCBPI), General Santos City Plant as assistant mechanic in
April 1970. He rose through the ranks to eventually hold the position of advertising
foreman until his termination on May 12, 1988 for alleged violation of company rules
and regulations

On November 9, 1987 at around 10:30 in the morning, petitioner drove private

respondent's advertising truck with plate number LBV-970 to install a panel sign.
While traversing Zenia St. Ext., Polomolok, South Cotabato, petitioner sideswiped
Marilyn Tejero, a ten-year old girl.

On November 14, 1987 or five days after the accident, petitioner reported the
incident to private respondent. At about the same time, petitioner submitted himself
to the police authorities at Polomolok, South Cotabato for investigation[6] where it
was discovered that petitioner had no driver's license at the time of the accident.
On May 12, 1988, private respondent dismissed petitioner from employment for
having violated the company rules and regulations particularly Sec. 12 of Rule 005-
85[8] for blatant disregard of established control procedures resulting in company
damages amounting to P19,534.45.

Aggrieved, petitioner instituted a case for illegal dismissal[10] against private

respondent before the Labor Arbiter. After the parties filed their respective position
papers, the Labor Arbiter rendered a decision, the dispositive portion of which
reads:

Dissatisfied, both parties appealed to the NLRC which dismissed both appeals and
affirmed the decision of the Labor Arbiter in a resolution dated June 27, 1994.

Private respondent filed a motion for reconsideration of the said resolution which
was granted by the NLRC on September 19, 1994. In reversing its previous
resolution, the NLRC ruled:

We answer in the affirmative.

In order that an employer may dismiss an employee on the ground of willful

disobedience, there must be concurrence of at least two requisites: The employee's
assailed conduct must have been willful or intentional, the willfulness being
characterized by a wrongful and perverse attitude; and the order violated must have
been reasonable, lawful, made known to the employee and must pertain to the duties
which he had been engaged to discharge.[24] We have found these requisites to be
present in the case at bar. The extant evidence on record clearly reveals the willful
act of petitioner Aparente in driving without a valid driver's license, a fact that he
even tried to conceal during the investigation conducted by private respondent. Such
misconduct should not be rewarded with re-employment and backwages, for to do so
would wreak havoc on the disciplinary rules that employees are required to observe.
The law warrants the dismissal of an employee without making any distinction
between a first offender and a habitual delinquent where the totality of the evidence
was sufficient to warrant his dismissal. In protecting the rights of the laborer, the law
authorizes neither oppression nor self-destruction of the employer.[25]

10. Jang Lim v. NLRC (G.R.

No. 124630)
Facts:

Respondent Cotabato Timberland Company Inc is a company engaged in the production

and manufacture of plywood and veneer. Respondent tapped and hired Teddy Arabi whose
main task is simply to recruit herein petitioners to perform milling and pilling works. Being
exploited and underpaid, a group of disgruntled workers filed a complaint for unpaid labor
standards benefits against CTCI. The parties settled but CTCI made it appear that Arabi
was petitioners’ employer and the one who paid their claims. Subsequently, after being
warned that management was dissatisfied with their work performance, CTCI terminated
petitioners without due process. Thus, petitioners filed a complaint for illegal dismissal and
payment of monetary claims against CTCI. The Labor Arbiter found in favor of petitioners.
NLRC tribunal reversed the decision stating that no employer-employee relationship existed
between petitioners and CTCI, and that Teddy Arabi being an independent contractor was
the real employer of petitioners.

Issues:

(1) Whether or not petitioners are employees of CTCI.

(2) Whether or not Teddy Arabi is an independent contractor.

Ruling:

(1) YES. CTCI exercised the power of control over the employees. The work activities and
schedules of petitioners were set by CTCI. Evidence of CTCI’s absolute control and
supervision over the manner and conduct of work of the petitioners can be established from
the following: (1) the manning/shifting schedules of the petitioners were entirely prepared
and approved by CTCI; and (2) photocopies of the company identification cards bearing the
name of the CTCI and likewise countersigned by CTCI’s Personnel Officer. Also, the fact
that petitioners herein were advised that “the management of CTCI has been dissatisfied
with their work performance and production output results” undoubtedly indicate CTCI’s
power to regulate and direct the means and methods to be utilized in petitioners’ work. We
find that the petitioners performed usual, regular and necessary services for petitioner’s
production of goods. In Zanotte Shoes v. NLRC, it was held that there is an employer-
employee relationship where the work performed is clearly related to, and in the pursuit of,
the principal business activity of the employer.
(2) NO. The allegations that Arabi has sufficient capitalization or that he has investments in
the form of tools, equipment, machineries, and work premises, are entirely unsubstantiated.
In our view what clearly appears here is that Arabi is a mere agent of CTCI. His only job is
to recruit and hire manpower as needed. Arabi is definitely not an independent contractor.
Therefore, it is not Arabi but CTCI which is responsible to petitioners who must be deemed
employed not by Arabi but by the company.

11. JAT General Services vs. NLRC

Petitioner Jesusa Adlawan Trading & General Services (JAT) is a single

proprietorship engaged in the business of selling second-hand heavy equipment.
Sometime in April 1997, JAT hired private respondent Jose F. Mascarinas as helper
tasked to coordinate with the cleaning and delivery of the heavy equipment sold to
customers. Initially, private respondent was hired as a probationary employee and
was paid P165 per day that was increased to P180 in July 1997 and P185 in January
1998.

In October 1997, the sales of heavy equipment declined because of the Asian
currency crisis. Consequently, JAT temporarily suspended its operations. It advised
its employees, including private respondent, not to report for work starting on the
first week of March 1998. JAT indefinitely closed shop effective May 1998.

A few days after, private respondent filed a case for illegal dismissal and
underpayment of wages against petitioners before the NLRC.

The relevant issues for our resolution are: (a) whether or not private respondent was
illegally dismissed from employment due to closure of petitioners' business, and (b)
whether or not private respondent is entitled to separation pay, backwages and other
monetary awards.

Closure of business as an authorized cause for termination of employment aims to

prevent further financial drain upon an employer who cannot pay anymore his
employees since business has already stopped. On the other hand, retrenchment is
reduction of personnel usually due to poor financial returns so as to cut down on
costs of operations in terms of salaries and wages to prevent bankruptcy of the
company. It is sometimes also referred to as down-sizing. Retrenchment is an
authorized cause for termination of employment which the law accords an employer
who is not making good in its operations in order to cut back on expenses for salaries
and wages by laying off some employees. The purpose of retrenchment is to save a
financially ailing business establishment from eventually collapsing.[16]

In the present case, we find the issues and contentions more centered on closure of
business operation rather than retrenchment. Closure or cessation of operation of
the establishment is an authorized cause for terminating an employee under
Article 283 of the Labor Code, to wit:

Considering that private respondent was not illegally dismissed, however, no

backwages need to be awarded. Backwages in general are granted on grounds of
equity for earnings which a worker or employee has lost due to illegal dismissal.[31] It
is well settled that backwages may be granted only when there is a finding of illegal
dismissal.[32]

12. La Union Cement Worker’s Union vs. NLRC

Private respondent Bacnotan Cement Corporation (respondent company), now

known as Holcim Philippines, Inc., is engaged in the manufacture of cement. Prior to
1994, respondent company had been utilizing the "wet process technology" in its
operations. Sometime in 1992, respondent company introduced the "dry process
technology" as part of its modernization program.

Amid this backdrop of cost inefficiencies was the increasing competition in the
cement industry due to the trade liberalization, the expansion of other plants and the
entry of new industry players. Thus, after studying the situation, respondent
company concluded that it would be uncompetitive and impractical to operate the
wet line and decided to close it down.[5]

To implement the closure of the wet line, respondent company and petitioner La
Union Cement Workers Union (petitioner Union) entered into a Memorandum of
Agreement on 19 July 1997, whereby respondent company committed to grant
separation pay equivalent to 150% of the monthly basic pay for every year of service
plus the additional fixed amount of P27,000.00 to employees who would be
terminated as a result of the closure of the wet line.

They further alleged that after the closure of the wet line, respondent company
contracted out the services performed by the employees who were terminated.

Only 31 of the 80 employees pursued the complaints before the Labor Arbiter. After
submission of the parties' position papers and pleadings, Labor Arbiter Irenarco R.
The remaining issue to be resolved in this petition pertains to petitioner Almoite's
claim that petitioner Union has failed to prove that his work as an oiler for both the
wet and dry lines has become redundant with the closure of the wet line.

Petitioner Almoite's claim is clearly a factual question which is beyond the province
of a Rule 45 petition. As an overture, clear and unmistakable is the rule that the
Supreme Court is not a trier of facts. Just as well entrenched is the doctrine that pure
issues of fact may not be the proper subject of appeal by certiorari under Rule 45 of
the Revised Rules of Court as this mode of appeal is generally confined to questions
of law. We therefore take this opportunity again to reiterate that only questions of
law, not questions of fact, may be raised before the Supreme Court in a petition for
review under Rule 45 of the Rules of Court. This Court cannot be tasked to go over
the proofs presented by the petitioners in the lower courts and analyze, assess and
weigh them to ascertain if the court a quo and the appellate court were correct in
their appreciation of the evidence.[15]

In any event, the Court finds no cogent reason to disturb the judgment of the Court
of Appeals affirming the Labor Arbiter and NLRC rulings that the termination of
petitioner Almoite and the other employees of respondent company. As explained by
the NLRC, the termination of petitioner Almoite was a necessary consequence of the
partial closure of operations of respondent company. Petitioner Almoite's work as an
oiler for both the wet line and dry line has become redundant or superfluous
following the closure of the wet line. By and large, the determination of whether to
maintain or phase out an entire department or section or to reduce personnel lies
with the management.[16]Thus, his termination on the ground of redundancy is an
authorized cause for termination under Article 283 of the Labor Code.

13. MAC ADAMS UNION VS. MAC ADAMS

The present controversy stemmed from two separate complaints: the first complaint,
filed on November 9, 1993 by petitioner MAMEWU and its president, petitioner
Mario A. Garcia, for and in behalf of 29 other petitioners, charged private
respondents MAME and GBS with unfair labor practices (ULP) committed through
union busting and illegal closure, and illegal dismissal. The second complaint, filed
on November 9, 1993 by the last eight petitioners led by Halim Roldan, alleged that
aside from ULP and illegal dismissal, private respondents were likewise liable for
non-payment of premium pay for holidays and rest days, night differential pay and
13th month pay.

Insisting that the closure of MAME and GBS was illegal as it was calculated to bust
their union, petitioners claimed that MAME and GBS continued doing business
under new business names, i.e., MBS Machine and Industrial Supply (MBS) and
MVS Heavy Equipment Rental and Builders (MVS). Thus, MBS and MVS were
impleaded as respondents in the complaint for allegedly being run-away shops of
MAME and GBS.

The foregoing assignments of error boil down to the lone issue of whether the
closure of private respondents' business was done in good faith and for legitimate
business reasons.

The applicable law is Article 283 of the Labor Code which provides:

ART. 283. CLOSURE OF ESTABLISHMENT AND REDUCTION OF

PERSONNEL. - The employer may also terminate the employment of any
employee due to the installation of labor-saving devices, redundancy,
retrenchment to prevent losses or the closing or cessation of operation of
the establishment or undertaking unless the closing is for the purpose of
circumventing the provisions of this Title, by serving a written notice on the
worker 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 as one (1) whole year.

The records reveal that private respondents complied with the aforecited
requirements. MAME's employees were adequately informed of the intended
business closure and a written notice to the Regional Director of the Department of
Labor and Employment (DOLE) was filed by private respondents, informing the
DOLE that except for winding-up operations, MAME will be closed effective March
8, 1993. Similar notices were served by Lydia V. Sison to the Social Security System
(SSS), Bureau of Internal Revenue (BIR), Department of Trade and Industry (DTI)
and the Municipal Licensing Division of Antipolo, Rizal. Thus, the licenses and
registration of respondent MAME with the SSS, the Municipality of Antipolo, Rizal
and the DTI were subsequently canceled and/or withdrawn.

Finally, since private respondents' cessation and closure of business was lawful,
there was no illegal dismissal to speak of. This fact negated the obligation to pay
backwages. Instead private respondents were required to give separation pay, which
they already did, to all their regular employees except petitioners Rolando Cortes,
Herminigildo Justo, Guillermo Macaraeg, Felixberto Mirana, Arsenio Ortiz, Manuel
Pranada, Ruben Saringan and Ramon Seraspi who refused to accept their separation
pay.

14. National Sugar Refineries Corp v NLRC (220 SCRA

452) 1993
National Sugar Refineries Corp v NLRC (220 SCRA 452) 1993

It is the submission of petitioner that while the members of respondent union, as

supervisors, may not be occupying managerial positions, they are clearly officers or
members of the managerial staff because they meet all the conditions prescribed by law
and, hence, they are not entitled to overtime, rest day and supervisory employees
under Article 212 (m) should be made to apply only to the provisions on Labor
Relations, while the right of said employees to the questioned benefits should be
considered in the light of the meaning of a managerial employee and of the officers or
members of the managerial staff, as contemplated under Article 82 of the Code and
Section 2, Rule I Book III of the implementing rules.

1) In other words, for purposes of forming and joining unions, certification elections,
collective bargaining, and so forth, the union members are supervisory employees.

2) In terms of working conditions and rest periods and entitlement to the questioned
benefits, however, they are officers or members of the managerial staff, hence they are
not entitled thereto.

HELD: United Pepsi cola ruling was adopted here: “Managerial employees are
ranked as Top managers, Middle managers and First Line Managers. Top and Middle
Managers have the authority to devise, implement and control strategic and operational
 policies while the task of First-Line Managers is simply to ensure that such policies are
carried out by the rank-and-file employees of an organization.

Under this distinction, “managerial employees” therefore fall in two (2) categories,
namely,
-- the “managers” per se composed of Top and Middle Managers, and the
-- “supervisors” composed of First-Line Managers.

Thus, the mere fact that an employee is designated “manager” does not ipso facto
make him one. Designation should be reconciled with the actual job description of the
employee, for it is the JOB DESCRIPTION that determines the nature of employment.”

“In this case, a thorough dissection of the job description of the concerned
supervisory employees and section heads indisputably show that they are NOT actually
managerial employees BUT ONLY supervisory employees SINCE THEY DO NOT LAY
DOWN COMPANY POLICIES.”

“PICOP’s contention that the subject section heads and managers exercise the
authority to hire and fire is ambiguous and quiet misleading for the reason that any
authority they exercise is NOT SUPREME but merely ADVISORY in character. Theirs is
not a FINAL DETERMINATION of the company policies inasmuch as any action taken
by them on matters relative to hiring, promotion, transfer, suspension and termination of
employees is still subject to confirmation and approval by their respective superior.”

“Thus, where such power, which is in effect RECOMMENDATORY in character, is

SUBJECT TO EVALUATION, REVIEW, and FINAL ACTION by department heads and
other higher executives of the company. The same, although present, is not effective
and not an exercise of INDEPENDENT JUDGMENT as required by law.”

15. FALGUERA VS. LINSANGAN

The petitioner was an employee of private respondent Philippine

Refining Co., Inc., now known as Unilever Philippines (PRC), Inc.
(hereinafter Company). He was hired in 1977 as a craftsman helper.
During his employment, he was twice promoted -- first, as mechanic and
then as warehouseman, which was his position at the time he was
terminated from employment. As a warehouseman, he received a salary
of P340.00 a day and reported to work five times a week.[3]
 The

Sometime in August 1991, the assistant soapery engineer of the Company observed
an unusual increase in the reported requisitions by the soapery department of Parker
packing materials for the month of June. Upon his examination of the green copies
of the MRs of the soapery department, he discovered that P27,025.00 worth of
Parker packing materials chargeable to his department could not be accounted for
and were not reflected in the said copies. He therefore sought the original white
copies of the MRs from the accounting department. A meticulous scrutiny disclosed
that while the original MRs contained entries of the packing items worth
P27,050.00, they, however, showed alterations, superimpositions, and erasures.[6]

]The audit team concluded that the insertions were made with the connivance of at
least two employees after the approval of the MRs by the manager of the soapery
department.

On 10 October 1991, the petitioner filed with the NLRC Regional Arbitration Branch
a complaint for illegal dismissal and damages with prayer for attorney's fees against
the Company, private respondent Javelona, and the Company's president, Cesar
Bautista

The Labor Arbiter held that the petitioner occupied a position of trust and
confidence, as he had in his custody and care certain company properties. The loss
of goods in the amount of P105,225.00 while in the petitioner's custody was
sufficient basis for the Company to lose its trust and confidence in the petitioner.
His dismissal was, therefore, justified.[18]

The petitioner appealed the decision to the NLRC which, however, sustained the
Labor Arbiter in its 29 October 1993 decision.

We see no merit in the instant petition.

The petitioner's basic grievance is the findings of fact of the public respondents. It is
settled that the factual findings of quasi-judicial agencies, such as the NLRC, which
have acquired expertise in the matters entrusted to their jurisdiction are accorded by
this Court not only respect but even finality if they are supported by substantial
evidence,[26] or that amount of relevant evidence which a reasonable mind might
accept as adequate to justify a conclusion.[27]

It is not disputed that the petitioner is a rank-and-file employee. Ordinarily, a rank-

and-file employee is not reposed with a high degree of trust and confidence expected
of a supervisory or managerial employee. It must, however, be noted that the
petitioner served as a warehouseman and was in charge of the custody, safekeeping,
and release of the Company's materials. The nature of his work and the scope and
special character of his duties, therefore, involved utmost trust and confidence.

We uphold the finding of both the Labor Arbiter and the NLRC that the petitioner
was not accorded the due process requirements prescribed in paragraph (b), Article
277 of the Labor Code. It is not enough that the petitioner was apprised of the results
of the investigations and asked to explain his side. This, definitely, is not the kind of
notice contemplated by the Labor Code.