1. Abuda v. L. Natividad
2. Claret v. Sinday
3. Fuji Television v. Espiritu, G.R. No. 204944-45, December 3, 2014
Doctrine: In determining whether an employment should be considered regular or
non-regular, the applicable test is the reasonable connection between the
particular activity performed by the employee in relation to the usual business or
trade of the employer. It is distinguished from a specific undertaking that is
divorced from the normal activities required in carrying on the particular business
or trade. However, there may be a situation where an employee’s work is necessary
but is not always desirable in the usual course of business of the employer. In this
situation, there is no regular employment.
ER: Arlene was engaged by Fuji as a news correspondent/producer tasked to report
to PH news to Fuji through its Manila Bureau field office. Arlene’s contract initially
provided for a 1 year term but successively renewed on a yearly basis with salary
adjustment upon every renewal. Arlene was diagnosed with cancer. Arlene and Fuji
signed a non-renewal contract where it was stipulated that her contract would no
longer renewed after its expiration. Arlene filed a complaint for illegal dismissal.
Issue is WON Arlene is a regular employee.
4. Hacienda Leddy v. Villegas, G.R. No. 179654, September 22, 2014
Doctrine: If the employee 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.
Notwithstanding any agreements to the contrary, what determines whether a
certain employment is regular or casual is not the will and word of the employer, to
which the desperate worker often accedes, much less the procedure of hiring the
employee or the manner of paying his salary. It is the nature of the activities
performed in relation to the particular business or trades considering all
circumstances, and in some cases the length of time of its performance and its
continued existence.
ER: Paquito Villegas was an employee at Hacienda Leddy. After 20 years, he was
told that his services were no longer needed without prior notice or valid reason..
Hence, he fiiled for Illegal Dismissal. Petitioner Gamboa said he was a casual EE
doing odd jobs. He later retracted his last statement saying that villegas only
worked during 1993. LA found Illegal Dismissal, NLRC = set aside LA, CA = Set aside
NLRC and reinstate LA decision.
WON PAQUITO IS CASUAL OR REGULAR EE? REGULAR EE..
● Villegas worked for more than 20 years. His length of service is an
indication of the regularity of his employment.
● Payment on a piece-rate basis does not negate regular employment.
5. FVR Skills and Services v. Seva, G.R. No. 200857, October 22, 2014
FACTS:Skillex entered into contract with Robinsons to supply the latter with
janitorial services to be performed by the 28 Respondents. At the end of the service
contract, Respondents lost their jobs – thus they filed illegal dismissal complaint
against Skillex. Skillex argues that Respondents are mere project EEs, as evidenced
by a late contract executed halfway into the service contract with Robinsons. SC
held that Respondents are Skillex’ Regular EEs, in light of the necessity of their
functions to the business and in light of the length of service. A belatedly executed
“project” contract is not valid, as to alter the employment status of Respondents to
project EEs.
DOCTRINE: The primary standard in deterring regular employment is the
reasonable connection between the particular activity performed by the EE and the
ER's business. This connection can be ascertained by considering the nature of the
work performed and its relation to the business.
For an EE to be validly categorized as a project EE, it is necessary that the specific
project had been identified and made known to the EE at the time of his
engagement to ensure the EE is completely aware of his employment status. 

Under DO 18-02, contractual EEs are regular EEs of the contractor. The contractor
has primary liability for the enforcement of claims under the LC. 

6. Manalo v. TSN Philippines, G.R. No. 208567, November 26, 2014
Doctrine: Once a project employee has been continuously, as opposed to
intermittently, rehired by the same employer for the same tasks or nature of tasks
and these tasks are vital, necessary and indispensable to the usual business or trade
of the employer, then the employee must be deemed a regular employee.
ER: Petitioners were hired by respondent TNS Philippines, Inc. as field personnel on
various dates starting 1996 for several projects. Petitioners’ were successively re-
engaged in order to perform the same kind of work in the usual business of TNS as a
market research facility. Further, petitioners were assigned office-based tasks from
9am-6pm, at the earliest, without any corresponding remuneration.
SC: In Maraguinot, Jr. v. NLRC, 348 Phil. 580 (1998), the Court held that once a
project or work pool employee has been: (1) continuously, as opposed to
intermittently, rehired by the same employer for the same tasks or nature of tasks;
and (2) these tasks are vital, necessary and indispensable to the usual business or
trade of the employer, then the employee must be deemed a regular employee.
Although it is true that the length of time of the employee’s service is not a
controlling determinant of project employment, it is vital in determining whether
he was hired for a specific undertaking or in fact tasked to perform functions vital,
necessary and indispensable to the usual business or trade of the employer.
In this case, the project employment scheme used by TNS is a circumvention of law
which precluded petitioners attain regular status. Petitioners were rehired not
intermittently, but continuously, contract after contract, month after month,
performing same tasks and functions over several years. These functions were
indeed vital and necessary to the very business or trade of TNS. Hence, petitioners
are regular employees.
7. Basan v. Coca-Cola Bottlers, G.R. Nos. 174365- 66, February 4, 2015
CASE LAW/ DOCTRINE: Under the above Brent doctrine, while it was not expressly
mentioned in the Labor Code, this Court has recognized a fixed-term type of
employment embodied in a contract specifying that the services of the employee
shall be engaged only for a definite period, the termination of which occurs upon
the expiration of said period irrespective of the existence of just cause and
regardless of the activity the employee is called upon to perform. Considering,
however, the possibility of abuse by employers in the utilization of fixed-term
employment contracts, this Court, in Brent, laid down the following criteria to
prevent the circumvention of the employee’s security of tenure:
1) The fixed period of employment was knowingly and voluntarily agreed upon by
the parties without any force, duress, or improper pressure being brought to bear
upon the employee and absent any other circumstances vitiating his consent; or
2) It satisfactorily appears that the employer and the employee dealt with each
other on more or less equal terms with no moral dominance exercised by the
former or the latter.
ER: Petitioners were dismissed by ER. They filed illegal dismissal on the ground that
they are regular EEs who enjoy security of tenure. Apparently, they worked as route
helpers, a job necessary and desirable to ER’s business. SC held that they are
regular EEs. SC discussed the Brent doctrine which allowed fixed- term EEs subject
to qualifications. ER, in ths case, failed to prove evidence that EEs are fixed- term
EEs
8. Hacienda Cataywa v. Lorezo, G.R. No. 179640, March 18, 2015
Doctrine: The nature of the services performed and not the duration thereof, is
determinative of coverage under the law. To be exempted on the basis of casual
employment, the services must not merely be irregular, temporary or intermittent,
but the same must not also be in connection with the business or occupation of the
employer. Thus, it is erroneous for the petitioners to conclude that the respondent
was a very casual worker simply because the SSS form revealed that she had 16
months of contributions. It does not, in any way, prove that the respondent
performed a job, which is not in connection with the business or occupation of the
employer to be considered as casual employee.
Three types of employees under the Labor Code:
(1) Regular employees – those who have been engaged to perform activities
that are usually necessary or desirable in the usual business or trade of the
employer;
(2) Project employees – 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 their engagement, or those whose work or service is
seasonal in nature and is performed for the duration of the season;
(3) Casual employees – those who are neither regular nor project employees.
ER: Rosario alleged that she was employed as laborer in Hacienda Cataywa
managed by Villanueva and that SSS contributions were deducted from her wages
from 1970 to 1995 but not all were remitted to the SSS, which caused the rejection
of her claim. Petitioners alleged that she is only a casual employee. The Supreme
Court held that Lorezo is a regular employee. [see doctrine]
9. Paz v. Northern Tobacco Redrying, G.R. No. 199554, Feb. 18, 2015
Doctrine: Art. 280 of the Labor Code and jurisprudence identified 3 types of
employees, namely: "(1) regular employees or those who have been engaged to
perform activities which are usually necessary or desirable in the usual business or
trade of the employer; (2) project employees 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 employee or where the
work or service to be performed is seasonal in nature and the employment is for
the duration of the season; and (3) casual employees or those who are neither
regular nor project employees."
The Court used the rule laid down in the case of De Leon: “while it may appear that
the work of petitioners is seasonal, inasmuch as petitioners have served the
company for many years, some for over 20 years, performing services necessary
and indispensable to LUTORCO’s business, serve as badges of regular
employment. Moreover, the fact that petitioners do not work continuously for
one whole year but only for the duration of the tobacco season does not detract
from considering them in regular employment”
ER: (case was mainly about computation of retirement pay, but tried not to include
this and sticked to the topic under the syllabus)
TRCI hired Paz sometime in 1974 as a seasonal sorter. NTRCI, a tobbaco business,
regularly re-hired her every tobacco season since then. Paz was 63 years old when
NTRCI informed her that she was considered retired under company policy. A year
later, NTRCI told her she would receive Php 12k as retirement pay. Paz filed a
Complaint for payment of retirement benefits, damages, and attorney’s fees as Php
12k seemed inadequate for her 29 years of service. NTRCI countered that no CBA
existed between NTRCI and its workers. Thus, it computed the retirement pay of its
seasonal workers based on Art. 287 of the Labor Code. LA ruled in favour of NTRCI.
NLRC modified the decision of the LA. Paz’s retirement pay should be computed
pursuant to RA 7641 and that all the months she was engaged to work for NTRCI for
the last 28 years should be added and divided by 6 (for a fraction of 6 months is
considered as 1 year). CA dismissed the Petition and modified the NLRC’s Decision.
One-half-month pay multiplied by 29 years of service divided by two yielded
P60,356.25 as Paz’s retirement pay.
Paz argues that regular seasonal employees are still considered employees during
off season, and length of service determination should be applied in retiree’s favor.
Consequently, Article 287, as amended by Republic Act No. 7641, applies and
entitles her to “retirement pay . . . equivalent to [at least] one-half month salary for
every year of service, a fraction of at least six (6) months being considered as one
whole year.” “an employee should have at least worked for six (6) months for a
particular season for that season to be included in the computation of retirement
pay[.]”
SC ruled in favour of Paz. She is a regular seasonal employee.
RATIO: Mercado, Sr. v. National Labor Relations Commission did not consider as
regular employees the rice and sugar farmland workers who were paid with daily
wages. This was anchored on the Labor Arbiter’s findings that “petitioners were
required to perform phases of agricultural work for a definite period, after which
their services [were] available to any farm owner.”
On the other hand, the workers of La Union Tobacco Redrying Corporation in
Abasolo v. National Labor Relations Commission were considered regular seasonal
employees since they performed services necessary and indispensable to the
business for over 20 years, even if their work was only during tobacco season. This
court applied the test laid down in De Leon v. National Labor Relations
Commission46 for determining regular employment status:
[T]he test of whether or not an employee is a regular employee has been laid
down in De Leon v. NLRC, in which this Court held:
The primary standard, therefore, of determining regular employment is the
reasonable connection between the particular activity performed by the employee
in relation to the usual trade or business of the employer. The test is whether the
former is usually necessary or desirable in the usual business or trade of the
employer. 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 employee has been performing the job for at least a 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 indispensability of that activity to the business. Hence, the
employment is considered regular, but only with respect to such activity, and while
such activity exists.
Thus, the nature of one’s employment does not depend solely on the will or word
of the employer. Nor on the procedure for hiring and the manner of designating
the employee, but on the nature of the activities to be performed by the employee,
considering the employer's nature of business and the duration and scope of work
to be done.
In the case at bar, while it may appear that the work of petitioners is seasonal,
inasmuch as petitioners have served the company for many years, some for over
20 years, performing services necessary and indispensable to LUTORCO’s business,
serve as badges of regular employment. Moreover, the fact that petitioners do
not work continuously for one whole year but only for the duration of the tobacco
season does not detract from considering them in regular employment since in a
litany of cases this Court has already settled that seasonal workers who are called
to work from time to time and are temporarily laid off during off-season are not
separated from service in said period, but are merely considered on leave until re-
employed.
NTRCI’s reliance on the case of Mercado v. NLRC is misplaced considering that
since in said case of Mercado, although the respondent company therein
consistently availed of the services of the petitioners therein from year to year, it
was clear that petitioners therein were not in respondent company's regular
employ. Petitioners therein performed different phases of agricultural work in a
given year. However, during that period, they were free to contract their services
to work for other farm owners, as in fact they did. Thus, the Court ruled in that
case that their employment would naturally end upon the completion of each
project or phase of farm work for which they have been contracted.
The sugarcane workers in Hacienda Fatima v. National Federation of Sugarcane
Workers-Food and General Trade were also considered as regular employees since
they performed the same tasks every season for several years
10. Dela Cruz v. Maersk Filipinas Crewing, Inc., 551 SCRA 284
DOCTRINE: Seafarers are not covered by the term regular employment, as defined
under Article 280 of the Labor Code—they are considered contractual employees
whose rights and obligations are governed primarily by the 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.
ER: Petitioner was hired as a seafarer through its local agency, Maersk Filipinas
Crewing. A chief engineer expressed his dissatisfaction over petitioner’s
performance so he was informed that if he does not improve his Job/Working
performance he will be signed off according to CBA which provides that the first 60
days of service is to be considered a probationary period. Petitioner was later
informed of his discharge. He filed a complaint for illegal dismissal arguing that he
was already a regular employee when his services were terminated; BUT
respondents insist that he was then still on probationary status thus entitling them
to dismiss him in accordance with the CBA (allows master to terminate the contract
of one under probation by merely serving a written notice 14 days prior to the
contemplated discharge). SC held that Seafarers are not regular employees, nor
probationary; they are considered contractual employees. The CBA providing for
probationary employment cannot override the POEA Standard Employment
Contract
11. Gadia v. Sykes Asia, G.R. No. 209499, January 28, 2015
Doctrine: For an employee to be considered project-based, the employer must
show compliance with two (2) requisites, namely that: (a) the employee was
assigned to carry out a specific project or undertaking; and (b) the duration and
scope of which were specified at the time they were engaged for such project.
ER: Alltel Inc. (Alltel), a US-based telecommunications firm, contracted Sykes Asia’s
services to accommodate the needs and demands of Alltel clients for its postpaid
and prepaid services (Alltel Project). Sykes Asia hired petitioners as customer
service representatives, team leaders, and trainers for the Alltel Project. When
Alltel terminated the services of Sykes Asia, the latter also terminated the
petitioners.So petitioners filed a case for illegal Dismissal. Respondents averred that
petitioners were not regular employees but merely project-based employees, and
as such, the termination of the Alltel Project served as a valid ground for their
dismissal. LA ruled valid termination because project-based ee. NLRC held regular
employees but valid termination due to redundancy. CA ruled valid termination
because project-based ee. Issue is WN project-based ee who were validly
terminated. SC held that valid termination because project-based ee. The two
requisites for valid project-based ee were complied with. The petitioners were
informed at the start of their engagement as proven by the employment contract.
The phrase ‘determinable times’ simply means capable of being determined or
fixed." In this case, Sykes Asia substantially complied with this requisite when it
expressly indicated in petitioners’ employment contracts that their positions were
"co-terminus with the project."
12. Lynvil Fishing Enterprises v. Ariola, G.R. No. 181974, February 1, 2012
Doctrine: The EE’s were regular EE’s and not for a fixed term because (1) were
doing tasks necessarily to Lynvil’s fishing business with positions ranging from
captain of the vessel to bodegero; (2) after the end of a trip, they will again be hired
for another trip with new contracts; and (3) this arrangement continued for more
than ten years, the clear intention is to go around the security of tenure of the
respondents as regular employees. And respondents are so by the express
provisions of the second paragraph of LC 280, thus: “xxx any employee who has
rendered at least one year of service, whether such service is continuous or broken,
shall be considered a regular employee with respect to the activity in which he is
employed and his employment shall continue while such activity exists.
ER: Ariola et.al, EEs of the vessel Analyn III on a per trip basis, conspired with one
another and stole 8 tubs of fish and delivered them to another vessel to the
prejudice of Lynvil. Said EEs were summoned and notified to explain why they
should not be dismissed but they refused to sign the receipt of notice. Hence, Lynvil
dismissed Ariola, et. al. and filed a criminal complaint against the latter for violation
of PD 532. Ariola, et. al filed a complaint for illegal dismissal. Lynvil contends that it
cannot be guilty of illegal dismissal because the EE’s were employed for a fixed term
which expired per trip.
13. Innodata v. Quejada-Lopez, G.R. No. 162839, October 12, 2006
Doctrine: While this Court has recognized the validity of fixed-term employment
contracts in a number of cases, it has consistently emphasized that when the
circumstances of a case show that the periods were imposed to block the
acquisition of security of tenure, they should be struck down for being contrary to
law, morals, good customs, public order or public policy.
ER: Innodata hired respondents as formatters. They worked for 1 year. They then
filed a complaint for illegal dismissal. Innodata claimed that they were employed
under valid fixed-term contracts. SC held otherwise (SEE DOCTRINE) and said that it
is worth noting that after its past employment contracts had been declared void by
this Court (Villanueva and Servidad cases), petitioner was expected to ensure that
the subsequent contracts would already comply with the standards set by law and
by this Court. Regrettably, petitioner failed to do so
14. Lacuesta v. Ateneo de Manila, G.R. No. 152777, December 9, 2005
DOCTRINE: 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.
FACTS: Ateneo hired, on a contractual basis, Lolita R. Lacuesta as a part-time
lecturer in its English Department 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. She was then appointed as a full-time instructor and was
subsequently rehired yet again. In the 3 years she was with areneo, she was on
probation stattus. The dean of areneo grad school stated that she will not be
renewed anymore since she did not integrate well with the english department.
Such was allegedly not a termination but merely an expiration of her contract. She
then became a book editor in the same school. Upon expiry of her contract, she did
not report back to work and filed a complaint for illegal dismissal with prayer for
reinstatement, back wages, and moral and exemplary damages.
LA held that petitioner may not be terminated by mere lapse of the probationary
period but only for just cause or failure to meet the employer’s standards and that
the quitclaim, discharge and release executed by petitioner was not a bar to filing a
complaint for illegal dismissal. He ordered reinstatement with payment of full back
wages.
The NLRC reversed LA’s decision and ruled that petitioner was not illegally
dismissed, and that her quitclaim was valid. Petitioner sought MR but it was
denied. She went to CA but it affirmed NLRC’s decision. Hence, this petition
ISSUE: W/N the LACUESTA became a regular employee of Ateneo – NO.
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.
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. [SEE DOCTRINE]
Completing the probation period does not automatically qualify her to become a
permanent employee of the university. Petitioner could only qualify to become a
permanent employee 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 employee
on probation, belongs to the university as the employer alone.
15. Mt. Carmel College, Inc. v. NLRC, G.R. No. 117514, October 4, 1996 [H.
Types of Employees]
D: The court recognized the distinction between a calendar year and a school year.
In Espiritu Santo Parochial School, we held: . . . 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. 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.
ER: Petitioner school MT. CARMEL COLLEGE hired private respondent MRS.
NORMITA A. BAÑEZ as grade school teacher under a written Contract of
Probationary Employment. Petitioner school terminated the services of private
respondent as she did not pass the National Teacher's Board examination. Private
respondent MRS. NORMITA A. BAÑEZ filed a complaint for illegal dismissal against
the petitioners. According to MRS. NORMITA A. BAÑEZ, her 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.
Public respondent NATIONAL LABOR RELATIONS COMMISSION 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.
16. Begino v. ABS-CBN, G.R. No. 199166, April 20, 2015
Doctrine: The Four-Fold test is the distinguishing factor to determine whether
employee or independent contractor. In this case the test is present, thus,
petitioners are employees.
ER: Begnio et al were hired by ABS CBN as camera men, editors and TV reporters. In
their contract a clause provides that “nothing therein shall establish employer-
employee relationship”. Despite that, Begino et al filed for regularization saying
they are under ABS’ control, earned wages, and they are required to wear IDs,
provided with equipment, informed of news coverage and bound by company
policies. ABS CBN countered that they are mere Independent Contractor.
SUPREME COURT held that Begino et al are employees because of the presence of
control gleaned from Begino et al’s arguments. Aside from that, Begino et al are
deemed regular because of the nature of their jobs being usually necessary or
desirable to the usual trade or business and were continuously re-hired for more
than 1 year. As compared with Sonza case, employees herein do not possess unique
skills or talents for which they are hired. Begino et al are hired because of the
nature of their jobs being necessary to the industry.
17. Sonza v. ABS-CBN, G.R. No. 138051, June 10, 2004
Doctrine: SONZA is not an employee but an independent contractor. The control
test is the most important test in distinguishing an employee from an independent
contractor. The greater the supervision and control the hirer exercises, the more
likely the worker is deemed an employee. The converse holds true as well the less
control the hirer exercises, the more likely the worker is considered an independent
contractor.
In a labor-only contract, there are three parties involved: (1) the labor-only
contractor; (2) the employee who is ostensibly under the employ of the labor-only
contractor; and (3) the principal who is deemed the real employer. Under this
scheme, the labor-only contractor is the agent of the principal. The law makes the
principal responsible to the employees of the labor-only contractor as if the
principal itself directly hired or employed the employees. These circumstances are
not present in this case.
ER: Sonza was hired as a talent for the radio and TV programs of ABS-CBN through
an Agreement. However, Sonza rescinded the contract because of the violative acts
of the station that led to his resignation. ABS continued paying his talent fees. He
filed a complaint because ABS failed to pay his separation pay, stock option plan
etc. LA denied his petition for lack of jurisdiction because he was not considered an
employee of ABS. NLRC and CA had the same ruling. SC held that Sonza is an
independent contractor. SC cannot also take the argument of Sonza tha he is a
talent of MJMDC and not an employee. That MJMDC is a labor only contractor and
ABS is his employer.
18. Fonterra Brands v. Largado, G.R. No. 205300, March 18, 2015
Doctrine: A person is considered engaged in legitimate job contracting or
subcontracting if the following conditions concur:
a.) The contractor or subcontractor carries on a distinct and independent business
and undertakes to perform the job, work or service on its own account and under
its own responsibility according to its own manner and method, and free from the
control and direction of the principal in all matters connected with the performance
of the work except as to the results thereof;
b.) The contractor or subcontractor has substantial capital or investment; and
c.) The agreement between the principal and contractor or subcontractor assures
the contractual employees entitlement to all labor and occupational safety and
health standards, free exercise of the right to self-organization, security of tenure,
and social and welfare benefits.
Contracting is prohibited when the contractor or subcontractor merely recruits,
supplies or places workers to perform a job, work or service for a principal and if
any of the following elements are present, thus:
a.) The contractor or subcontractor does not have substantial capital or investment
which relates to the job, work or service to be performed and the employees
recruited, supplied or placed by such contractor or subcontractor are performing
activities which are directly related to the main business of the principal; or
b.) The contractor does not exercise the right to control over the performance of
the work of the contractual employee.
ER: Fonterra Brands contracted Zytron Marketing Promotion for marketing and
promotion of its milk and dairy product wherein Zytron provided Fonterra with
trade merchandising representatives including herein respondents.
Fonterra terminated its contract with Zytron and contracted A.C. Sicat, where
respondents applied to continue their employment with Fonterra. Respondents
signed 5-month contract with A.C. Sicat and allegedly refused to be renewed by the
latter. Hence, respondents filed illegal dismissal against Fonterra, Zytron and A.C.
Sicat.
LA and NLRC ruled that they were not illegally dismissed and Fonterra is not their
employer. CA ruled that AC Sicat satisfies the requirements of legitimate job
contracting, but Zytron does not. Also, it ruled that respondents were illegally
dismissed by Zytron and since it failed to satisfy as legitimate job contractor,
Fonterra as their employer is liable.
WON Zytron and A. C. Sicat were merely labor-only contractor, thus, Fonterra is the
employer of the respondents? SC ruled that Zytron’s status is immaterial, A.C. Sicat
is legitimate job contractor. CA correctly found that A.C. Sicat is engaged in
legitimate job contracting. It duly noted that A.C. Sicat was able to prove its status
as a legitimate job contractor for having presented evidence (Certificate of
Business Registration, Certificate of Registration with the BIR, Mayor’s Permit,
Certificate of Membership with the SSS, Certificate of Registration with the DOLE,
Company Profile and Certifications issued by its clients).It also has substantial
capital.
Fonterra’s issuance of Merchandising Guidelines, stock monitoring and inventory
forms, and promo mechanics, for compliance and use of A.C. Sicat’s employees
assigned to them, does not establish that Fonterra exercises control over A.C. Sicat.
These were imposed only to ensure the effectiveness of the promotion services to
be rendered by the merchandisers. Hence, it was A.C. Sicat who is the employer.
SC ruled no illegal dismissal but merely expiration of contract as fixed-term
employees.
19. Bernarte v. PBA, G.R. No. 192084, September 14, 2011
FACTS:Petitioner Bernarte was hired by PBA as a referee under a Contract of
Retainer in 2003. When PBA did not renew the contract for his unsatisfactory
performance, Bernarte filed a case for illegal dismissal. LA and NLRC both ruled that
he was an employee who was illegally dismissed. CA ruled that he is an
independent contractor for lack of control. SC agreed with the CA.
DOCTRINE:Theapplicableforeigncaselawdeclaresthatarefereeisanindependent
contractor, whose special skills and independent judgment arerequired
specificallyforsuchpositionandcannotpossiblybecontrolledbythehiring party
20. Alilin v. Petron Corp., G.R. No. 177592, June 9, 2014
Doctrine: "Permissible job contracting or subcontracting refers to an arrangement
whereby a principal agrees to farm out with a contractor or subcontractor the
performance 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.
Labor-only contracting, on the other hand, is a prohibited act, defined as "supplying
workers to an employer who 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 employer."
Generally, the contractor is presumed to be a labor-only contractor, unless such
contractor overcomes the burden of proving that it has the substantial capital,
investment, tools and the like. However, where the principal is the one claiming
that the contractor is a legitimate contractor, as in the present case, said principal
has the burden of proving that supposed status.
ER:
● Romualdo D. Gindang Contractor recruited the petitioners to work for
Petron in 1968. In 1989, the owner Romualdo D. Gindang died, and his
son Romeo D Gindang took over the company and it became Romeo D.
Gindang Services (RDG).
● Petron and RDG entered into a Contract for Services (utility services) for
the period June 1, 2000 to May 31, 2002. The contract was extended
until September 30, 2002. It was no longer renewed after it expired.
● The petitioners filed a case in the Labor Arbiter for illegal dismissal. They
did not deny that RDG hired them and paid their salaries. However, they
claimed that RDG is a labor-only contractor, which merely acted as an
agent of Petron, their true employer.
● RDG corroborated petitioners claim that they are regular employees of
Petron. It alleged that Petron directly supervised their activities and
provided them with their equipment.
● LA ruling : Petitioners are regular employees of Petron. Their jobs were
directly related to Petron’s business operations; they worked under the
supervision of Petron’s foreman and supervisor; and they were using
Petron’s tools and equipment in the performance of their work | NLRC:
Affirmed LA’s ruling | CA: Reversed NLRC’s ruling. It found no employer-
employee relationship between the parties.It also found RDG to be an
independent labor contractor with sufficient capitalization and investment
as shown by its financial statement for year
-end 2000
● SC: RDG a labor-only contractor. As such, it is considered merely as an agent of
Petron. Consequently, the employer-employee relationship which the Court
 finds to exist in this case is between petitioners as employees and Petron as
their employer. Petron therefore, being the principal employer and RDG, being
the labor-only contractor, are solidarily liable for petitioners' illegal dismissal
and monetary claims.
● Petron failed to prove that RDG was a legitimate contractor.
○ First, Petron submitted RDG’s financial statements for the years 1998-
2000, but these statements only covered those years. Petron failed to
establish the financial capability of RDG at the time when petitioners
actually started to work for Petron in 1968, 1979, 1981, 1987, 1990, 1992
and 1993.
○ Second, the works performed by petitioners were directly related to
Petron’s business, another factor which negates Petron’s claim that RDG is
an independent contractor. While the jobs performed by petitioners may
be menial and mechanical, they are nevertheless necessary and related to
Petron’s business operations. If not for these tasks, Petron’s products will
not reach the consumers in their proper state. Indeed, petitioners’ roles
were vital inasmuch as they involve the preparation of the products that
Petron will distribute to its consumers.
● Furthermore, while it may be true that any able-bodied individual can perform
the tasks assigned to petitioners, the Court notes the undisputed fact that for
many years, it was the same able-bodied individuals (petitioners) who
performed the tasks for Petron. The engagement of petitioners for the same
works for a long period of time is a strong indication that such works were
indeed necessary to Petron’s business. In view of these, and considering further
that petitioners’ length of service entitles them to become regular employees
under the Labor Code, petitioners are deemed by law to have already attained
the status as Petron’s regular employees
21. Alfaro v. CA, 363 SCRA 799
ER: Petitioner filed a case of illegal dismissal and payment of separation pay against
his employer for allegedly forcing him to resign from his post by transferring him to
another and more difficult job after he went back to work upon treatment of his
sickness. He posited that he was forced to sign a supposed resignation letter. LA,
NLRC and CA ruled that the petitioner has voluntarily resigned from his position.
The Supreme Court affirmed the findings of the lower tribunals. Generally, an
employee 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.
22. Intertrod Maritime v. NLRC, 198 SCRA 318
Doctrine: Resignation is the voluntary act of an employee who “finds himself in a
situation where he believes that personal reasons cannot be sacrificed in favor of
the exigency of the service, then he has no other choice but to disassociate himself
from his employment.” The employer 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.
Once an employee resigns and his resignation is accepted, he no longer has any
right to the job. If the employee later changes his mind, he must ask for approval of
the withdrawal of his resignation from his employer, as if he were re-applying for
the job. It will then be up to the employer to determine whether or not his service
would be continued. If the employer accepts said withdrawal, the employee retains
his job. If the employer does not, as in this case, the employee cannot claim illegal
dismissal for the employer has the right to determine who his employees will be. To
say that an employee who has resigned is illegally dismissed, is to encroach upon
the right of employers to hire persons who will be of service to them.
ER: Private Respondent filed a complaint with POEA charging petitioners for breach
of employment contract. He alleged that the Master of the ship forced him to step
out in Egypt despite his protests there being no more reason to request for relief,
an illegal dismissal occurred and he had no other recourse but to return to the PH
at his own expense. The petitioners denied the allegations and averred that the
contract was cut short because of his 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. Supreme Court held that the Master had
already accepted the resignation and, although the private respondent was being
required serve the 30 days notice provided in the contract, his resignation was
already approved. He 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
his sole prerogative.
23. Blue Angel Manpower & Security Svcs. v. CA, 560 SCRA 157
TOPIC: Severance of ER-E relationship by Employee; Without cause
DOCTRINE: 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.
ER: EEs (4 security guards) filed for illegal dismissal. But ER Blue Angel said that the
guards voluntarily resigned when they were told regarding the pending
investigation for the infractions they committed (sleeping on duty, insubordination,
etc) and according to the ER, they tendered 2 sets of letters of resignation; the pro
forma resignation and the handwritten resignation. But the guards were claiming
that they were coerced and pressured to writing those resignation letters or else
they would not get their remaining compensations. LA ruled they were illegally
dismissed but NLRC ruled otherwise. Hence the issue W/N the guards voluntarily
resigned. SC held that although the execution of the resignation letters was
undisputed, the circumstances (see ratio (a, b, c)) of the case and the fact that the
EEs filed a complaint for illegal dismissal negate the claim that they voluntarily
resigned.
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, the guards actively pursued their illegal dismissal case against Blue Angel such
that they cannot be said to have voluntarily resigned from their jobs.
RATIO: The 2 kinds of resignation letters were undated, similarly worded and tends
to show they were made to copy the pro forma letters in their own hand to make it
appear more convincing that they voluntarily resigned.
· SC was doubtful regarding the voluntariness of those resignations since the
letters were pre-drafted, similarly worded, and with blank spaces filled in
with the effectivity dates of the resignations
Circumstances that led the SC to believe that the argument (they didn’t voluntarily
resign) of the guards were more convincing:
1. Unlikely & improbable that Garces & Ciracio would voluntarily resign on
April 26 when in fact, they were already terminated on April 11 & 12 or 15
days earlier.
2. Inconsistent & implausible that Castillo would voluntarily tender his
resignation & sign a quitclaim on April 28 when in fact, they already filed a
complaint against the ER April 20 or 8 days earlier.
3. ER didn’t submit any proof showing that the guards indeed committed the
infractions attributed to them. ER merely enumerated the offenses.
HENCE, although the execution of the letters was undisputed the circumstances
about and the fact the fact that the guards filed a complaint for illegal dismissal
negates the claim that they voluntarily resigned.
· Resignation is inconsistent w/ the filing of a complaint for illegal
dismissal. The resignation must be unconditional WITH intent to operate
as such. There must be clear intention to relinquish the position.
· IN THIS CASE, the guards actively pursued their illegal dismissal case
against Blue Angel such that they cannot be said to have voluntarily
resigned from their jobs.
SC ordered ER for them to be reinstated to their former positions without loss of
seniority rights + full back wages including allowances & other benefits from the
time they were withheld until their actual reinstatement. If reinstatement is no
longer possible.
24. Northwest Airlines v. del Rosario, G.R. No. 157633, Sept. 10, 2014
DOCTRINE: Verbal argument is not a serious misconduct.
ER: Flight attendants had a heated argument over a wine bottle opener while
passengers were already boarding. It was alleged respondent Del Rosario even
challenged the other to a brawl/sabunutan. So, she was dismissed. SC ruled that
their animated discussion was not tantamount to a fight constituting serious
misconduct. Even assuming it was the kind of fight prohibited by their rules, it was
not so serious to tarnish Northwest’s image and call for her dismissal.
25. Colegio de San Juan de Letran-Calamba v. Villas, G.R. No. 137795, March
26, 2003
Doctrine: 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. To
be a just cause for termination, it must be serious-- of such grave and aggravated
character and not merely trivial or unimportant.simple misconduct.
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 formers favor.
ER: Villas was employed by the petitioner School as high school teacher. She applied
for six-month leave from school to enroll for her masteral studies. The school
approved the leave on the condition that, among others, she would enroll in for the
said masteral course. However, she could not enroll for the course, so Villas
enrolled in a different course and sold insurance and cookware to augment her
family’s income. Colegio, however, dismissed her on the ground of serious
misconduct for violating the conditions of her study leave. VA held illegal dismissal,
affirmed by CA. The issue is W/N non compliance with the condition for study leave
constitutes serious misconduct. SC held that she was illegally dismissed for the
school’s failure to comply with both substantive and procedural due process. There
was no violation of the conditions of the study leave grant because of Villas’
substantial compliance with the conditions. At most, she could only be charged of
simple misconduct. Even if Villas sold insurance and cookware during time of
absence, it cannot be construed as employment which is prohibited by the Faculty
Manual, such that it prevented her from complying with the conditions of the study
leave.
26. Leus v. St. Scholastica’s College, G.R. No. 187226, January 28, 2015
Doctrine: The determination of whether a conduct is disgraceful or immoral
involves a two-step process: first, a consideration of the totality of the
circumstances surrounding the conduct; and second, an assessment of the said
circumstances vis-à-vis the prevailing norms of conduct, i.e., what the society
generally considers moral and respectable. That the petitioner was employed by a
Catholic educational institution per se does not absolutely determine whether her
pregnancy out of wedlock is disgraceful or immoral. There is still a necessity to
determine whether the petitioner’s pregnancy out of wedlock is considered
disgraceful or immoral in accordance with the prevailing norms of conduct.
ER: Cheryll Santos Leus (petitioner) was hired by St. Scholastica's College Westgrove
(SSCW), a Catholic educational institution, as a non-teaching personnel, engaged in
pre-marital sexual relations, got pregnant out of wedlock, married the father of her
child, and was dismissed by SSCW, in that order. The question that has to be
resolved is whether the petitioner's conduct constitutes a ground for her dismissal.
The petitioner's pregnancy out of wedlock is not a disgraceful or immoral conduct
since she and the father of her child have no impediment to marry each other.
There is no substantial evidence to prove that the petitioner's pregnancy out of
wedlock caused grave scandal to SSCW and its students.
27. St. Luke’s Medical v. Sanchez, G.R. No. 212054, March 11, 2015
Doctrine: Labor Code provides that an employer may terminate an employment for
serious misconduct or willful disobedience by the employee of the lawful orders of
his employer or his representative in connection with his work. Note that for an
employee to be validly dismissed on this ground, the employer’s orders,
regulations, or instructions must be: (1) reasonable and lawful, (2) sufficiently
known to the employee, and (3) in connection with the duties which the employee
has been engaged to discharge.
ER:Respondent was caught stealing medical supplies from the hospital. An
investigation and hearing were held to which she was preventively suspended and
ultimately dismissed. The LA ruled in favor of St. Luke's and upheld the dismissal of
Sanchez. The NLRC and CA reversed it and held that the hoarding of supplies is an
accepted company practice. The SC ruled that Sanchez was validly dismissed and it
is the management prerogative of the petitioner to discipline its employees.
28. Universal Canning v. CA, G.R. No. 215047, November 23, 2016
ER: Employees were caught playing cards in company premises. ER dismissed them
for veiolation of company rules + loss of trust and confidence. EE argued that they
cannot be dismissed for loss of trust and confidence since they don’t occupy
positions with such. Court rules for UC, holding that
DOCTRINE: Infraction of the company rules and regulation which is akin to serious
misconduct is a just cause for termination of employment recognized under Article
282(a) of the Labor Code.
FACTS: Petitioner Universal Canning Inc. is a domestic corporation. Respondents
were employed by UC various capacities. Respondents were caught playing cards at
the company's premises during working hours. The incident was immediately
reported to the Personnel Officer, Losaria, who immediately conducted an
investigation. On the sameday, respondents were placed under preventive
investigation pending further investigation bya panel indicated in a memorandum.
Under the same memorandum, respondents were required by the UC to file their
written explanation of the incident. Respondents complied with the directive and
denied that they were involved in gambling activities within the company's
premises during work hours. They stated that were playing cards inside the
company premises but cannot be considered gambling as there was no money
involved, and that it took place during noon break.
Investigating officer held that playing cards was considered an infraction of the
company’s rules and regulations. They were then dismissed on the following
grounds: 1) taking part in a betting, gambling or any unauthorized game of chance
inside the company premises while on duty; and (2) for loss of trust and confidence.
Respondents initiated an action for illegal dismissal.
LA dismissed the complaint; dismissed with just cause + due process. NLRC
affirmed. CA reversed, holding that they could not be dismissed for lack of trust and
confidence as they were not holding positions imbued with trust and confidence.
ISSUE: W/N there was just cause for the dismissal – YES.
RATIO: There is just cause for dismissing the respondents from employment. While
it is true that loss of trust and confidence could not stand as a ground for dismissal
since respondents are not occupying positions of trust and confidence, such is NOT
THE ONLY GROUND relied upon by the company in terminating the respondents.
To constitute a valid cause for dismissal, the employee’s misconduct must be
serious, i.e., of such grave and aggravated character and not merely trivial or
unimportant. Additionally, the misconduct must be related to the performance of
the employee’s duties showing him to be unfit to continue working for the
employer. IN SUM, an employee may be validly dismissed for violation of a
reasonable company rule or regulation adopted for the conduct of the company’s
business. It is the recognized prerogative of the employer to transfer and reassign
employees according to the requirements of its business. For indeed, regulation of
manpower by the company clearly falls within the ambit of management
prerogative.
29. Holcim Phils. v. Obra, G.R. No. 220998, August 8, 2016 [i. Just Causes - a.)
Serious Misconduct/Willful - Disobedience]
D: Misconduct is an improper or wrong conduct, or a 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.72 To
constitute a valid cause for dismissal within the text and meaning of Article 282
(now Article 297) of the Labor Code, the employee's misconduct must be serious,
i.e., of such grave and aggravated character and not merely trivial or unimportant.
[as in this case where the item which respondent tried to takeout was practically of
no value to petitioner. Moreover, ill will or wrongful intent cannot be ascribed to
respondent, considering that, while he asked Castillo not to report the incident to
the management, he also volunteered the information that he had a piece of scrap
wire in his bag and offered to return it if the same could not possibly be brought
outside the company premises sans a gate pass.]
ER: Respondent RENANTE J. OBRA was employed by petitioner as packhouse
operator in its La Union Plant for nineteen (19) years. Respondent was about to exit
Gate 2 of petitioner's La Union Plant when the security guard on duty asked him to
submit himself and the backpack he was carrying for inspection. Respondent
refused and confided to Castillo that he has a piece of scrap electrical wire in his
bag. Soon thereafter, a security guard arrived and directed him to go to the Security
Office where he was asked to write a statement regarding the incident. In his
statement,15 respondent admitted the incident, but asserted that he had no
intention to steal. Petitioner HOLCIM dismissed EE, emphasized that respondent's
actions violated its rules which, among others, limit the use of company properties
for business purposes only and mandate the employees, such as respondent, to be
fair, honest, ethical, and act responsibly and with integrity.
In this case, the Court agrees with the CA and the NLRC that respondent's
misconduct is not so gross as to deserve the penalty of dismissal from service. Court
has held that infractions committed by an employee should merit only the
corresponding penalty demanded by the circumstance.63 The penalty must be
commensurate with the act, conduct or omission imputed to the employee. Neither
can respondent's infraction be characterized as a serious misconduct which, under
Article 282 (now Article 297) of the Labor Code,71 is a just cause for dismissal.
30. Cebu People’s Muti-Purpose Cooperative v. Carbonilla, Jr., G.R. No.
212070, January 27, 2016
Doctrine: Employer cannot be compelled to retain an employee who committed
infractions prejudicial to its interests. Such as in this case, Serious Misconduct is
clearly present - having 16 infractions and toxic attitude in performance of duties,
warrants dismissal.
ER: Carbonilla holds position of Legal and Credit Collector Manager of the
Cooperative. There were 16 memoranda requiring him to explain various
infractions. Unconvinced by his explanations and after conducting investigation, he
was informed of termination on grounds of loss of trust of confidence, serious
misconduct, gross negligence, among others. Carbonilla filed an ID case. LA and
NLRC found no ID because of Carbonilla’s serious misconduct and loss of trust and
confidence, ruling that his infractions are prejudicial to the Coop. CA reversed.
Hence this.
SUPREME COURT ruled there was valid dismissal. Serious Misconduct is
transgression of some established rule or definite rule of action. Elements of
Serious Misconduct to warrant dismissal:
a) Must be serious
b) Must relate to performance of duties showing his becoming unfit to
continue working for employer
c) Must be performed with wrongful intent
Such elements are present in this case. Records reveal that Carbonilla had been
very disrespectful against his colleagues. In all Carbonilla’s replies to the
memoranda he threatened his heads with a lawsuit should the charges against him
be unfounded. He also always shows a law book and points out that his act does not
constitute any of the just causes to warrant his sanction. Such acts are thus serious.
Also connected with his work since all these arose from performance of his duties.
Clearly, he cannot work in such environment anymore. GRANTED.
31. Mansion Printing Center v. Bitara, Jr., G.R. No. 168120, January 25, 2012
Doctrine: EE’s absences and tardiness were not isolated incidents but manifested a
pattern of habituality. 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. Fitness for continued employment cannot be
compartmentalized into tight little cubicles of aspects of character, conduct, and
ability separate and independent of each other.
ER: Petitioners engaged respondent as helper who was later promoted as
company’s sole driver tasked to pick-up raw materials for the printing business,
collect account receivables and deliver the products to the clients within the
delivery schedules. Petitioners closely monitored Bitara’s attendance. They noted
his habitual tardiness and absenteeism. Weekly time record for 1st quarter of 2000
revealed that he came late 19 times out of 47 times he reported to work. He also
incurred 19 absences out of the 66 working days during the quarter. His absences
without prior notice and approval from March 11-16, 2000 were considered to be
the most serious infraction of all because of its adverse effect on business
operations. He was then terminated.
32. Aliling v. Feliciano, G.R. No. 185829, April 25, 2012
Doctrine: An employee’s failure to meet sales or work quotas falls under the
concept of gross inefficiency, which in turn is analogous to gross neglect of duty
that is a just cause for dismissal under Article 282 of the Code. However, in order
for the quota imposed to be considered a valid productivity standard and thereby
validate a dismissal, management’s prerogative of fixing the quota must be
exercised in good faith for the advancement of its interest. The duty to prove good
faith, however, rests with WWWEC as part of its burden to show that the dismissal
was for a just cause.
ER: Respondent Wide Wide World Express Corporation offered to employ
Petitioner Aliling as Account Executive and the offer came with a six (6)-month
probation period condition with this caveat: “Performance during [sic]
probationary period shall be made as basis for confirmation to Regular or
Permanent Status.”; and at any time, be terminated for just cause or in accordance
with the standards defined at the time of engagement.
He got an email from the Director expressing dissatisfaction for his performance. He
was also asked to explain his absences taken without leave. They withheld his
salary, and he tendered his resignation but it was not acted upon. Aliling was
advised of the termination of his services owing to his “non-satisfactory
performance” during his probationary period. He filed for Illegal dismissal saying
that he wasn’t told of the standards to achieve regularization.
WON Respondent prove that Petitioner’s dismissal was due to alleged failure to
achieve his quota? NO. SC ruled in favor of petitioner. See doctrine. Respondent
failed to demonstrate the reasonableness and the bona fides on the quota
imposition. Respondent miserably failed to prove the termination of petitioner was
for a just cause nor was there substantial evidence to demonstrate the standards
were made known to the latter at the time of his engagement.
33. Reyes-Rayel v. Phil. Luen Thai Holdings, G.R. 174893, July 11, 2012
FACTS:Reyes, Corporate HR Director, was dismissed for several reasons – failure to
communicate with supervisor, low rating of 80.2%, condescending attitude that
caused disharmony in the office. Reyes filed a case for illegal dismissal, arguing that
she was not dismissed under any ground specified in the Labor Code. SC held that
Reyes was validly dismissed as the grounds stated made out a case of gross and
habitual neglect of duty, especially considering the position Reyes occupied.
DOCTRINE:Jurisprudence provides that an employer has a distinct prerogative and
wider latitude of discretion in dismissing a managerial personnel who performs
functions which by their nature require the employer’s full trust and confidence.34
As distinguished from a rank and file personnel, mere existence of a basis for
believing that a managerial employee has breached the trust of the employer
justifies dismissal.35 "[L]oss of confidence as a ground for dismissal does not
require proof beyond reasonable doubt as the law requires only that there be at
least some basis to justify it."
34. Philippine Savings Bank v. Barrera, G.R. No. 197393, June 1, 2016
Doctrine: The Courts cannot coerce employer banks to retain an employee whom it
cannot trust to perform duties of the highest fiduciary nature. Employers are
allowed wider latitude of discretion in terminating the employment of managerial
employees, as the latter perform functions that require the employers' full trust
and confidence. The degree of responsibility, care and trustworthiness expected of
bank officials and employees is, by the very nature of their work, far greater than
that of ordinary officers and employees in other business firms.
ER: Respondent was a marketing officer of Petitioner’s Bacolod branch and was put
in command of its loans department. Respondent had allowed a contractual
employee to use the former's user ID for account booking and approval in the
bank's Integrated Loans System when in fact it is a violation of bank policy.
Respondent also made an unauthorized issuance of bank certifications when the
bank policy explicitly states that "no account shall be allowed to be opened for
certification purposes only." Respondent was terminated from work.
 ● SC: In this case, the unauthorized disclosure of username and password by
the Respondent exposed the bank to incalculable losses as well the his
complicity in the issuance of fraudulent bank certifications justifies the loss
of confidence. Hence, respondent’s termination is valid due to loss of trust
and confidence. (See Doctrine)
35. Philippine Auto Components v. Jumadla, G.R. Nos. 218980 & 219124,
November 28, 2016
DOCTRINE: The Labor Code provides that an employer may terminate an
employment based on fraud or willful breach of the trust reposed on the employee.
Breach of trust and confidence, as a just cause for termination of employment, is
premised on the fact that the employee concerned holds a position of trust and
confidence, where greater trust is placed by management and from whom greater
fidelity to duty is correspondingly expected. The betrayal of this trust is the essence
of the offense for which an employee is penalized.
In Wesleyan University Philippines v. Reyes, the Court discussed the requisites for a
valid dismissal on the ground of loss of trust and confidence:
o The first requisite is that the employee concerned must be one holding a
position of trust and confidence, thus, one who is either: (1) a managerial
employee; or (2) a fiduciary rank-and-file employee, who, in the normal
exercise of his or her functions, regularly handles significant amounts of
money or property of the employer.
The second requisite of terminating an employee for loss of trust and confidence is
that there must be an act that would justify the loss of trust and confidence. To be
a valid cause for dismissal, the loss of confidence must be based on a willful
breach of trust and founded on clearly established facts.
36. Interadent Zahntechnik Phils.v . Simbillo, G.R. No. 207315, November 23,
2016
Doctrine: As a managerial employee, the existence of a basis for believing that
Simbillo has breached the trust of petitioners justifies her dismissal. However, to be
a valid ground, loss of trust and confidence must be based on willful breach of trust,
that is, done intentionally, knowingly and purposely, without justifiable excuse, as
distinguished from an act done carelessly, thoughtlessly, heedlessly, or
inadvertently.
ER: Simbillo was Interadent’s Treasurer upon being elected by the Board of
Directors. Petitioners served Simbillo a Memorandum requiring her to submit a
written explanation regarding a message she posted on her Facebook account
“referring to company concerns with the BIR and insulting statements against a co-
worker.” Simbillo argued that she was already constructively dismissed even prior
to her receipt of the Notice to Explain. Petitioners issued a Second Notice informing
her of her termination from service on the ground of loss of trust and confidence.
The Supreme Court held that the act alleged to have caused the loss of trust and
confidence of petitioners in Simbillo was her Facebook post which supposedly
suggests that Interadent was being "feasted on" by the BIR and also contains
insulting statements against a co-worker and hence has compromised the
reputation of the company. According to petitioners, there was disclosure of
confidential information that gives the impression that Interadent is under
investigation by the BIR for irregular transactions. However, we agree with the CA's
observation that the Facebook entry did not contain any corporate record or any
confidential information. Otherwise stated, there was really no actual leakage of
information. No company information or corporate record was divulged by Simbillo.
37. Inocente v. St. Vincent Foundation for Children and Aging, Inc., G.R. No.
202621, June 22, 2016
DOCTRINE: Willful breach of trust, as just cause for the termination of employment,
is founded on the fact that the employee concerned: (1) holds a position of trust
and confidence, i.e., managerial personnel or those vested with powers and
prerogatives to lay down management policies and/or to hire, transfer, suspend,
lay-off, recall, discharge, assign or discipline employees; or (2) is routinely charged
with the care and custody of the employer’s money or property, i.e., cashiers,
auditors, property custodians, or those who, in normal and routine exercise of
their functions, regularly handle significant amounts of money or property. In any of
these situations, it is the employee’s breach of the trust that his or her position
holds which results in the employer’s loss of confidence.
Guidelines for the application of the doctrine of loss of confidence: (1) the loss of
confidence should not be simulated; (2) it should not be used as a subterfuge for
causes which are improper, illegal or unjustified; (3) it should not be arbitrarily
asserted in the face of overwhelming evidence to the contrary; and (4) it must be
genuine, not a mere afterthought to justify earlier action taken in bad faith. In
short, there must be an actual breach of duty which must be established by
substantial evidence.
ER: Petitier Zaida worked for Respondent St. Vincent as a program officer. She then
had relationship with a co-employee. Subsequently, St. Vincent implemented a
CFCA’s Non-Fraternization Policy, which states that “employees who direct and
coordinate the work of others are strongly discouraged from engaging in
consensual romantic or sexual relationships with any employee or volunteer of
CFCA.” Despite this, the romance continued. After suffering a miscarriage, Zaida
was charged with violation of the CFCA Non-Fraternization Policy and of the St.
Vincent’s Code of Conduct. St. Vincent terminated Zaida’s employment for
immorality, gross misconduct and violation of St. Vincent’s Code of Conduct. Zaida
then filed a case for illegal dismissal. SC ruled that Zaida’s dismissal is illegal for lack
of valid cause for failure to sufficiently prove charges to justify her dismissal for
serious misconduct and loss of trust and confidence. The relationship was not
wrong, illegal, or immoral from the perspective of secular morality; it is also not
prohibited by the Non-Fraternization Policy nor is it required, by the Policy, to be
disclosed to St. Vincent’s management or officials. In short, Zaida did not commit
any act or misconduct that willfully, intentionally, or purposely breached St.
Vincent’s trust.
38. Matis v. Manila Electric Co., G.R. No. 206629, September 14, 2016
CASE LAW/ DOCTRINE:
 Loss of confidence applies to: (1) employees occupying positions of trust and
confidence, the managerial employees; and (2) employees who are routinely
charged with the care and custody of the employer’s money or property which
may include rank-and-file employees, e.g., cashiers, auditors, property
custodians, or those who, in the normal routine exercise of their functions,
regularly handle significant amounts of money or property.
 For an employer to validly dismiss an employee on the ground of loss of trust
and confidence, the following guidelines must be observed: (1) loss of
confidence should not be simulated; (2) it should not be used as subterfuge for
causes which are improper, illegal or unjustified; (3) it may not be arbitrarily
asserted in the face of overwhelming evidence to the contrary; and (4) it must
be genuine, not a mere afterthought to justify earlier action taken in bad faith.
More importantly, the loss must be founded on clearly established facts
sufficient to warrant the employee’s separation from work.
Proof beyond reasonable doubt is not needed to justify the loss of confidence as
long as the employer has reasonable ground to believe that the employee is
responsible for the misconduct and his participation therein renders him unworthy
of the trust and confidence demanded of his position.
EMERGENCY RECIT: Matis was a foreman of Meralco when he, along with other
complainants, were dismissed on the grounds of serious misconduct, fraud or willful
breach of trust, and commission of a crime or offense against the employer, on
account of their involvement in the pilferages of Meralco’s electrical supplies by
one Llanes, a non-Meralco employee, particularly, in an incident which took place
on May 25, 2006. LA ruled that they were not illegally dismissed but found that the
penalty of dismissal was too harsh. NLRC reversed and ruled that the dismissal was
valid. It held that they were guilty of gross negligence amounting to a breach of
trust and confidence. CA affirmed. Matis filed the this petition for review on
certiorari, alleging that he may not be removed on the ground of breach of trust
and confidence as he was not a managerial employee or an employee primarily
entrusted with the handling of company funds or property. SC held that he was
validly dismissed. Loss of confidence also applies to rank and file employees who
are routinely charged with the care and custody of the employer’s money or
property. Matis, as the foreman, was routinely entrusted with the care and custody
of Meralco’s properties in the exercise of his function. He was complicit in the
pilferage by being familiar with Llanes, by his inaction while the looting was being
perpetrated, and by not reporting the same to the authorities and to Meralco. The
totality of the circumstances convinces the Court that Matis is guilty of breach of
trust. Meralco was able to establish through substantial evidence that it has
reasonable ground to believe that Matis’ involvement in the incident rendered him
unworthy of the trust and confidence reposed upon him as a foreman of Meralco.
39. Bravo v. Urios College
40. Hocheng Phils. v. Farrales, G.R. No. 211497, March 18, 2015
Doctrine: Theft committed by an employee against a person other than his
employer, if proven by substantial evidence, is a cause analogous to serious
misconduct. But where there is no showing of a clear, valid and legal cause for
termination of employment, the law considers the case a matter of illegal dismissal.
If doubts exist between the evidence presented by the employer and that of the
employee, the scales of justice must be tilted in favor of ee.
ER: Farrales was employed by HPC as Production Operator, followed by promotions,
and was later promoted several times into supervisory position. A motorcycle
helmet of an employee was stolen at the parking lot of HPC; and the video footage
showed that it was Farrales who took the same. Farrales was sent a notice to
explain his involvement, and he explained that he mistakenly took the helmet
pursuant to an agreement with a co-employee who lives in the same brgy as him.
Upon learning that it was the wrong helmet, he immediately reported to the guard
and tried to return it to its owner. After hearing, HPC terminated Farrales because
"stealing from the company, its employees and officials, or from its contractors,
visitors or clients," is akin to serious misconduct and fraud or willful breach by the
employee of the trust. LA ruled illegal dismissal. NLRC ruled valid dismissal. CA ruled
illegal dismissal because the act did not amount to theft. SC affirmed CA. To be
lawful, the cause for termination must be a serious and grave malfeasance to justify
the deprivation of a means of livelihood. Moreover, the penalty imposed on the
erring employee ought to be proportionate to the offense, taking into account its
nature and surrounding circumstances. HPC failed to sufficiently prove that
Farrales’ taking was with intent to gain. Farrales lost no time in returning the
helmet, and immediately admitted his mistake before and during the hearing.
41. Yrasuegui v. PAL, G.R. No. 168081, October 17, 2008
Doctrine: The obesity of a cabin crew, 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.
ER: This case portrays the peculiar story of an international flight steward who was
dismissed because of his failure to adhere to the weight standards of the airline
company. Petitioner weighed 209 pounds, 43 pounds over his ideal weight. In line
with company policy, he was removed from flight duty. Petitioner claimed he was
illegally dismissed.
An employee may be dismissed the moment he is unable to comply with his ideal
weight as prescribed by the weight standards—the dismissal would fall under
Article 282(e) of the Labor Code.
The failure to meet the employer’s qualifying standards is in fact a ground that does
not squarely fall under grounds (a) to (d) and is therefore one that falls under
Article 282(e)—the “other causes analogous to the foregoing.
42. Puncia v. Toyota Shaw/Pasig, Inc., G.R. No. 214399, June 28, 2016
Doctrine: Verily, Puncia's repeated failure to perform his duties - i.e., reaching his
monthly sales quota - for such a period of time falls under the concept of gross
inefficiency. In this regard, case law instructs that "gross inefficiency" is analogous
to "gross neglect of duty," a just cause of dismissal under Article 297 of the Labor
Code, for both involve specific acts of omission on the part of the employee
resulting in damage to the employer or to his business.
ER: Puncia, a Toyota salesman, failed to meet his monthly quota. Toyota’s Notice to
Explain asked him to justify such, which he did. However, Toyota terminated him on
the ground of insubordination his failure to attend the scheduled hearing and justify
his absence. Puncia filed a complaint for illegal dismissal. LA dismissed the
complaint; NLRC reversed LA; CA reversed NLRC. SC upheld his dismissal for just
cause (SEE DOCTRINE) but ordered Toyota to pay Php30k for violation of due
process requirements.
43. Demex Rattencraft v. Leron
44. Blue Sky Trading v. Blas, G.R. No. 190559, March 7, 2012
Doctrine: Preventive suspension for maximum of 30 days is proper during the
pending investigation against an employee, to prevent harm to his colleagues and
employer.
ER: Blas et al were placed under preventive suspension for being accused of gross
dishonesty for conspiring in the Theft of Blue Sky Trading’s property (loss of 6
intensifying screens). With that, Blas et al sent their written explanations.
Unconvinced, Blue Sky dismissed them due to loss of trust and confidence the
positions of Blas et al being granted access to the warehouse of Blue Sky which
contained all their supplies. Hence they filed ID case.
SUPREME COURT held that there is illegal dismissal yet the preventive suspension is
valid.
Preventive Suspension may be legally imposed on employee while pending
investigation against the employee. The purpose of suspension is to prevent an
employee form causing harm or injury to his colleagues and employer. Period shall
not exceed 30 days. In this case, valid suspension which lasted only for 2 days.
**Substantial evidence is needed to prove the charges against Blas et al to be
terminated on the ground of loss of trust and confidence. LA and NLRC both found
that while Blas et al have access to the warehouse, it was for a limited purpose only
and they do not have custody of the missing items.
45. Canadian Opportunities Unlimited v. Dalangin, Jr., G.R. No. 172223,
February 6, 2012
Doctrine: Section 2, Rule I, Book VI of the Implementing Rules and Regulations
provides: If the termination is brought about by the completion of a contract or
phase thereof, or by failure of an employee to meet the standards of the employer
in the case of probationary employment, it shall be sufficient that a written notice is
served the employee WITHIN A REASONABLE TIME from the effective date of
termination.
ER: Dalangin was an immigration and legal manager of Canadian Opportunities, on
probation for 6mo. However, he was removed within a month when he failed to
attend the seminar and because of his negative habits including using more than
the 1hr break during lunch and going out without permission from his superior. He
filed a complaint for illegal dismissal, arguing that he was not given a reasonable
time before effecting a dismissal as a probationary employee. SC held that the
termination of Dalangin was justified based on the evidence presented by the
company. However, the company failed to give a written notice within a reasonable
time as required under Sec. 2. Rule I Book VI of the IRR. Here, He was given a notice
to explain on 26 Oct 2001 with regard to his failure to attend the seminar. The day
after, he was given a notice regarding his termination and was dismissed on that
very day. Hence, the company failed to give Dalangin a written notice within a
reasonable time from the effective date of his termination.
46. Phil. Geothermal Employees Union v. UNOCAL Philippines, Inc.
47. Cheniver Deco Print Technics v. NLRC, 325 SCRA 758
Doctrine: 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.
ER: Cheniver Deco Print (Petitioner) is operating its printing business in Makati
while private respondents (including CFW-Magkakaisang Lakas ng mga
Manggagawa) are its employees. Due to expiry of lease contract and refusal of
lessor to renew, petitioner decided to transfer its business in Sto. Tomas, Batangas.
In view of the impending transfer, petitioner gave its employees to inform
management of their willingness to go with petitioner, otherwise, it would hire
replacements.
Private respondents (other remaining workers) filed for ULP, illegal dismissal,
underpayment of wages, non-payment of legal holiday pay, 13th month pay,
incentive leave pay and separation pay.
LA and NLRC held that the transfer was valid, absolved from charges but it needs to
pay separation pay.
WON the award of separation pay is proper? YES.
SC affirmed NLRC that separation pay should be paid pursuant to Art. 283 of LC.
Court ruled that there is no complete dissolution of petitioner’s business
undertaking but the relocation of petitioners plant to Batangas, amounts to
cessation of petitioners business operations in Makati. See doctrine. Petitioner has
legitimate reason to relocate its plant because of the expiration of the lease
contract on the premises it occupied. It is its prerogative, but even though the
transfer was due to a reason beyond its control, petitioner has to accord its
employees some relief in the form of severance pay.
48. Am-Phil Food Concepts v. Padilla, G.R. No. 188753, Oct 1, 2014
FACTS: Alleging serious and adverse business losses, Am-Phil implemented a
retrenchment program resulting to the termination of Padilla. As a result, Padilla
filed an illegal dismissal case. Am-Phil claimed that Padilla was not illegally
dismissed because the retrenchment was a valid exercise of its management
prerogative. The Court ruled that Am-Phil failed to establish compliance with the
requisites for a valid retrenchment.
DOCTRINE: The requirements for a valid retrenchment, which must be shown by
clear and convincing evidence are:
(1) that the retrenchment is reasonably necessary and likely to prevent
business losses which, if already incurred, are not merely de minimis, but
substantial, serious, actual and real, or if only expected, are reasonably
imminent as perceived objectively and in good faith by the employer;
(2) that the employer served written notice both to the employees and to the
Department of Labor and Employment at least one month prior to the intended
date of retrenchment;
(3) that the employer pays the retrenched employees separation pay
equivalent to one month pay or at least 1/2 month pay for every year of
service, whichever is higher;
(4) that the employer exercises its prerogative to retrench employees in good
faith for the advancement of its interest and not to defeat or circumvent the
employees’ right to security of tenure; and
(5) that the employer used fair and reasonable criteria in ascertaining who
would be dismissed and who would be retained among the employees, such as
status (i.e., whether they are temporary, casual, regular or managerial
employees), efficiency, seniority, physical fitness, age, and financial hardship
for certain workers.
49. Mount Carmel Employees Union v. Mount Carmel, G.R. No. 187621,
September 24, 2014
Doctrine: Rule of evidence: the burden of proving that the termination of services is
for a valid or authorized cause rests upon the employer. In termination by
retrenchment, not every loss incurred or expected to be incurred by an employer
can justify retrenchment.
Retrenchment, as an authorized cause for the dismissal of employees, finds basis in
Article 283 of the Labor Code. Standards have been laid down by the Court in order
to prevent its abuse by an employer, to wit: (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 employer;
(2) That the employer served written notice both to the employees and to the
Department of Labor and Employment at least one month prior to the intended
date of retrenchment; (3) That the employer pays the retrenched employees
separation pay equivalent to one (1) month pay or at least one-half (1⁄2) month pay
for every year of service, whichever is higher; (4) That the employer exercises its
prerogative to retrench employees in good faith for the advancement of its interest
and not to defeat or circumvent the employees’ right to security of tenure; and (5)
That the employer used fair and reasonable criteria in ascertaining who would be
dismissed and who would be retained among the employees, such as status,
efficiency, seniority, physical fitness, age, and financial hardship for certain workers
50. PAL v. Ligan, G.R. No. 203932, June 8, 2016
EMERGENCY RECIT: PAL dismissed is janitors and station attendants, which the
airline employed through Synergy Services, in Mactan Airport. Claiming to be
performing duties directly desirable and necessary to the business of PAL, they filed
a case against the airline. The Court ruled that the employees cannot be whimsically
terminated by PAL but it must show that: (1) their dismissal was for any of the
causes authorized in Article 282 of the Labor Code; and (2) they were given
opportunity to be heard and to defend themselves. Moreover, While retrenchment
is a valid exercise of management prerogative, it is well settled that economic losses
as a ground for dismissing an employee is factual in nature, and in order for a
retrenchment scheme to be valid, all the following elements under Article 283 of
the same. Therefore, the employees were dismissed illegally.
51. PT&T v. NLRC, 456 SCRA 264
DOCTRINE: To justify retrenchment, the employer must prove serious business
losses, as not all business losses suffered by an employer 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
employees. 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.
ER: PT&T decided to implement a temporary retrenchment of some employees
dubbed as Temporary Staff Reduction Program lasting for not more than 5 ½
months. Bayao and Castillo were informed that the position of account executive no
longer existed so they filed a complaint for illegal dismissal. 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. However, the employer'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 employee to payment of
indemnity in the form of nominal damages.
52. GJT Rebuilders v. Ambos
CASE LAW/ DOCTRINE: To prove serious business losses, employers must present in
evidence financial statements showing the net losses suffered by the business
within a sufficient period of time. Serious business losses are substantial losses, not
de minimis. "Losses" means that the business must have operated at a loss for a
period of time for the employer "to [have] perceived objectively and in good
faith" that the business’ financial standing is unlikely to improve in the future.
Generally, it cannot be based on a single financial statement showing losses. Absent
this proof, employers closing their businesses must pay the dismissed employees
separation pay equivalent to one-month pay or to at least one-half-month pay for
every year of service, whichever is higher.
FACTS:
 G.J.T. Rebuilders is a single proprietorship owned by the Trillana spouse. It
was engaged in steel works and metal fabrication, employing Ricardo
Ambos (Ricardo), Russell Ambos (Russell), and Benjamin Putian (Benjamin)
as machinists.
 G.J.T. rented space in the FEA Building in Shaw Boulevard, which served as
the site of its machine shop. On September 8, 1996, a fire partially
destroyed the FEA Building.
 Despite the building owner’s notice to vacate, G.J.T. Rebuilders continued
its business in the condemned building. When the building owner finally
refused to accommodate it, G.J.T. Rebuilders left its rented space and
closed the machine shop. It then filed an Affidavit of Closure before the
Department of Labor and Employment on February 16, 1998 and a sworn
application to retire its business operations before the Mandaluyong City
Treasurer’s Office.
 Having lost their employment without receiving separation pay, Ricardo,
Russell, and Benjamin filed a Complaint for illegal dismissal before the
Labor Arbiter. They prayed for payment of allowance, separation pay, and
attorney’s fees.
 In their defense, G.J.T. Rebuilders and the Trillana spouses argued that
G.J.T. Rebuilders suffered serious business losses and financial reverses,
forcing it to close its machine shop. Therefore, Ricardo, Russell, and
Benjamin were not entitled to separation pay.
  LA - no convincing proof of serious business losses. Even assuming so, the
employees affected were still entitled to separation pay "based on social
justice and equity."
 NLRC – reversed. The demand for its services allegedly declined as "no
same customer would dare to entrust machine works to be done for them
in a machine shop lying in a ruined and condemned building."
CA – on certiorari, reinstated LA decision.
ISSUE(S): W/N GJT suffered substantial loss and not liable to pay separation pay?
HELD: No G.J.T. Rebuilders must pay respondents their separation pay for failure to
prove its alleged serious business losses.
The only time employers are not compelled to pay separation pay is when they
closed their establishments or undertaking due to serious business losses or
financial reverses.
Serious business losses are substantial losses, not de minimis. "Losses" means that
the business must have operated at a loss for a period of time for the employer "to
[have] perceived objectively and in good faith" that the business’ financial standing
is unlikely to improve in the future.
The burden of proving serious business losses is with the employer. The employer
must show losses on the basis of financial statements covering a sufficient period of
time. The period covered must be sufficient for the National Labor Relations
Commission and this court to appreciate the nature and vagaries of the business.
In North Davao Mining Corporation v. NLRC, North Davao Mining Corporation
presented in evidence financial statements showing a continuing pattern of loss
from 1988 until its closure in 1992. The company suffered net losses averaging 3
billion a year, with an aggregate loss of 20 billion by the time of its closure. This
court found that North Davao suffered serious business losses.
Aside from the obligation to pay separation pay, employers must comply with the
notice requirement under Article 283 of the Labor Code. Employers must serve a
written notice on the affected employees and on the Department of Labor and
Employment at least one month before the intended date of closure. Failure to
comply with this requirement renders the employer liable for nominal damages.
We uphold G.J.T. Rebuilders’ decision to close its establishment as a valid exercise
of its management prerogative. G.J.T. Rebuilders closed its machine shop, believing
that its "former customers . . . seriously doubted [its] capacity . . . to perform the
same quality [of service]" after the fire had partially damaged the building where it
was renting space.
Nevertheless, we find that G.J.T. Rebuilders failed to sufficiently prove its alleged
serious business losses. The financial statement G.J.T. Rebuilders submitted in
evidence covers the fiscal years 1996 and 1997. Based on the financial statement,
G.J.T. Rebuilders earned a net income of 61,157.00 in 1996 and incurred a net loss
of 316,210.00 in 1997.
We find the two-year period covered by the financial statement insufficient for
G.J.T. Rebuilders to have objectively perceived that the business would not recover
from the loss. Unlike in North Davao Mining Corporation, Manatad, and LVN
Pictures Employees and Workers Association (NLU), no continuing pattern of loss
within a sufficient period of time is present in this case. In fact, in one of the two
fiscal years covered by the financial statement presented in evidence, G.J.T.
Rebuilders earned a net income. We, therefore, agree with the Labor Arbiter and
the Court of Appeals that G.J.T. Rebuilders closed its machine shop to prevent
losses, not because of serious business losses.
53. Blue Eagle Management v. Naval, G.R. No. 192488, April 19,2016
DOCTRINE: Retrenchment is one of the authorized causes 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.
Proof of financial losses becomes the determining factor in proving the legitimacy
of retrenchment. In establishing a unilateral claim of actual or potential losses,
financial statements audited by independent external auditors constitute the
normal method of proof of profit and loss performance of a company. The
condition of business losses justifying retrenchment is normally shown by audited
financial documents like yearly balance sheets and profit and loss statements as
well as annual income tax returns.
The phrase to “prevent losses” is not limited to actual losses but also covers future
losses. Since if it only covers actual losses the law would actually be compelling the
ER to keep the EEs and wait until the losses are materialized. Such was not the
intention of the lawmakers. Proof of ACTUAL financial losses incurred by the
company is NOT a condition sine qua non for retrenchment and it may be
undertaken by the employer to prevent even FUTURE losses.
While financial statements for previous years may be material in establishing the
financial trend for an employer, these are not indispensable in all cases of
retrenchment.
Court also noted that there should be compliance of the requirement regarding the
use of fair and reasonable criteria in selecting the EEs to be removed.
ER: ER during its 1st yr of operations suffered financial losses and decided to lessen
the EEs. After evaluation using the criteria of position & length of stay of the EEs, it
found 5 EEs for retrenchment including respondent Naval. Even before the plan of
implementing the retrenchment proceeding, the ER met with those 5 EEs and
offered financial package in return that they resign. All of them accepted it and
wrote resignation letters. Because all of them accepted it, ER didn’t initiate
retrenchment proceedings anymore. But respondent Naval asked if she could be
rehired since she had a hard time finding for a new job but ER refused due to its
financial condition. Due to this, respondent Naval filed for illegal dismissal. LA: The
financial statement for 2005 submitted by ER is insufficient. ER should have
shown the financial statements for the previous years to accurately see if there was
indeed a loss or if there was actually an improvement in its condition. NLRC: In
favor of ER. It was able to show that it incurred financial losses by presenting its
income tax return, financial statement and a balance sheet prepared by an
independent external auditors. ERs failure to present its previous financial
statements was justified precisely because it only started its operation in 2005 and
also suffered great loss at the end of the same year. SC: Upheld NLRC ruling. In
favor of ER. Proof of financial losses becomes the determining factor in proving the
legitimacy of retrenchment. In establishing a unilateral claim of actual or potential
losses, financial statements audited by independent external auditors constitute the
normal method of proof of profit and loss performance of a company. The condition
of business losses justifying retrenchment is normally shown by audited financial
documents like yearly balance sheets and profit and loss statements as well as
annual income tax returns.
IN THIS CASE, ER submitted the Annual Income Tax Return and Financial
Statements for 2005 and its Balance Sheet audited by a CPA & independent auditor
whose credibility was never contested by respondent. While financial statements
for previous years may be material in establishing the financial trend for an
employer, these are not indispensable in all cases of retrenchment and in here ER
wasn’t able to present the financial statements before 2005 because it was
organized in 2004 and only started operations in 2005. The Statement of Income
showed net loss of 3M. Such loss is actual & substantial for a newly established
corp. during its 1st yr of operation. It also showed that the loss couldn’t be
recovered in the near future. Also by the end of 2005, the stockholders even had to
infuse cash advances amounting to P7M to cover the deficit of 3M and for the
company to continue its operations. ER had to act swiftly to prevent its loss since
the agreement w/ ADMU was only for 3 yrs. The retrenchment of the EE appear to
be practical course of action by the ER to prevent more losses since the salaries of
the coffee shop & gym EEs was the highest item of the company’s direct costs. Also
the ER used fair & reasonable criteria in evaluating the EE, it looked into the
position and tenure of the EE. Naval had shortest tenure.
54. Maya Farms Employees Org. v. NLRC, 239 SCRA 508
DOCTRINE: Companies have a prerogative to adopt redundancy/retrenchment
programs to minimize/avert losses: (1) the basis for the action must be far from
being whimsical and must be proven by substantial evidence. (2) The
implementation must be in accordance with existing laws, rules, procedure and
CBA. (3) As long as the company's exercise is in good faith to advance its interest
and not for the purpose of defeating or circumventing the rights of employees
under the laws or valid agreements, such exercise will be upheld.
ER: The companies enforced a retrenchment program due to losses. Petitioner
associations/unions argue that respondents committed a CBA violation when it
violated the LIFO rule in retaining an employee who was employed 5 yrs later than
the other. Under the LIFO rule, when there are two or more employees occupying
the same position in the company affected by the retrenchment program, the last
one employed will necessarily be the first to go. SC ruled that the management
used reasonable criteria - the nature of work and experience. Such is not whimsical
nor capricious thus, upheld.
55. Golden Thread Knitting v. NLRC, 304 SCRA 568
Doctrine: see ER on reasonable criteria to determine which ee’s must be terminated
in case of retrenchment.
ER: Complainant ees created union but members were suspended or terminated
and their work shortened; so they considered the foregoing acts as retaliatory
measures for having created the union. Golden Thread contended that they
resorted to rotation of work, which affected practically all employees, because of
the low demand for their towels and shirts; and that they validly dismissed 5 of the
complainants. Golden Thread said that maintain that valid causes exist for the
termination of the 5 ees. 2 out of the 5 terminated were due to redundancy, i.e.,
the Design Section where they worked as artists became overmanned when the
volume of work was drastically reduced. Issue is w/n the the 2 retrenched eeswere
validly dismissed. SC held that they were illegally dismissed. Er failed to show
adequate proof that ee’s services as no longer necessary or sustainable. In selecting
the employees to be dismissed, a fair and reasonable criteria must be used, such
as but not limited to: (a) less preferred status (e. g., temporary employee), (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 LC. The purpose of such notice is to ascertain the verity of the cause of
termination of employment.
56. La Consolacion College v. Pascua
57. GJT Builders v. Ambos, G.R. No. 174184, Jan. 28, 2015
Doctrine: Article 283 of the Labor Code allows an employer to dismiss an employee
due to the cessation of operation or closure of its establishment or undertaking.
The decision to close one’s business is a management prerogative that courts
cannot interfere with. Employers can “lawfully close shop at anytime,” even for
reasons of their own. “Just as no law forces any one to go into business, no law can
compel anybody to continue in it.”
ER: G.J.T. Rebuilders rented space in the Far East Asia (FEA) Building in Shaw
Boulevard, Mandaluyong City, which served as the site of its machine shop. A fire
partially destroyed the FEA Building. Due to the damage sustained by the building,
its owner notified its tenants to vacate their rented units. Despite the building
owner's notice to vacate, G.J.T. Rebuilders continued its business in the condemned
building. When the building owner finally refused to accommodate it, G.J.T.
Rebuilders left its rented space and closed the machine shop.
Having lost their employment without receiving separation pay, Ricardo, Russell,
and Benjamin (respondents) filed a Complaint for illegal dismissal. They prayed for
payment of allowance, separation pay, and attorney's fees. G.J.T. Rebuilders argued
that they suffered serious business losses and financial reverses, forcing it to close
its machine shop. Therefore, Ricardo, Russell, and Benjamin were not entitled to
separation pay. SC held that G.J.T. Rebuilders must pay respondents their
separation pay for failure to prove its alleged serious business losses.
58. Shimizu Phils. v. Callanta, G.R. No. 165923, Sept. 29, 2010
Doctrine: Retrenchment is a valid exercise of management prerogative subject to
the strict requirements set by jurisprudence: (1) That the retrenchment is
reasonably necessary and likely to prevent business losses which, if already
incurred, are not merely de minimis, but substantial, serious, actual and real, or if
only expected, are reasonably imminent as perceived objectively and in good faith
by the employer; (2) That the employer served written notice both to the
employees and to the Department of Labor and Employment at least one month
prior to the intended date of retrenchment; (3) That the employer pays the
retrenched employees separation pay equivalent to one month pay or at least
month pay for every year of service, whichever is higher; (4) That the employer
exercises its prerogative to retrench employees in good faith for the advancement
of its interest and not to defeat or circumvent the employees right to security of
tenure; and (5) That the employer used fair and reasonable criteria in ascertaining
who would be dismissed and who would be retained among the employees, such as
status, x x x efficiency, seniority, physical fitness, age, and financial hardship for
certain workers.
ER: Respondent was terminated due to retrenchment. Both the Labor Arbiter and
the NLRC found sufficient compliance with the substantive requirements of
retrenchment, there being enough evidence to prove that petitioner was sustaining
business losses, that separation pay was offered to respondent, and that notices of
termination of service were furnished respondent and DOLE. However, the NLRC
modified the Decision of the Labor Arbiter by granting respondent indemnity since
the notice to DOLE was served short of the 30-day notice requirement and that
there is no proof of the use of fair and reasonable criteria in the selection of
employees to be retrenched or retained. The CA, then, reversed the Decision of the
NLRC by ruling that the absence of fair and reasonable criteria in implementing the
retrenchment invalidates altogether the retrenchment. The SC ruled that petitioner
implemented its retrenchment program in good faith because it undertook several
measures in cutting down its costs.
59. North Davao Mining v. NLRC, 254 SCRA 721
DOCTRINE: Art. 283 of the Labor Code does not obligate an employer to pay
separation benefits when the closure is due to losses.
FACTS: North Davao Mining Corporation was incorporated in 1974 as a 100%
privately-owned company. As of December 31, 1990 the national government held
81.8% of the common stock and 100% of the preferred stock of said company.
North Davao completely ceased operations due to serious business reverses.
When it ceased operations, its remaining employees were separated and given the
equivalent of 12.5 days’ pay for every year of service, computed on their basic
monthly pay. 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.
Subsequently, a complaint was filed with respondent LA by respondent Guillema
and 271 other seperated employees for additional separation pay of 17.5 days for
every year of service, among others.
ISSUE: W/N North Davao is required to pay separation benefits to its employees at
the time of its closure in an amount equivalent to the separation pay paid before
such closure – NO.
RULING: The basis for the claim of the additional separation benefit of 17.5 days is
alleged discrimination, i.e., unequal treatment of employees, 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.
IN SUM: The law in protecting the rights of the laborer, authorizes neither
oppression nor self-destruction of the employer.
60. Benson Industries Employees Union v. Benson Employees, G.R. No.
200746, August 6, 2014 [ii. Authorized causes - a.) Retrenchment - 5.) Closure of
business]
D: Closure of business may be considered as a reversal of an employer’s fortune
whereby there is a complete cessation of business operations and/or an actual
locking-up of the doors of the establishment, usually due to financial losses. Under
the Labor Code, it is treated as an authorized cause for termination, aimed at
preventing further financial drain upon an employer who cannot anymore pay its
employees since business has already stopped. As a form of recompense, an
employer which closes shop due to serious business losses is exempt from paying
separation benefits under Article 297 of the Labor Code for the reason that the said
provision explicitly requires the same only when the closure is not due to serious
business losses; conversely, the obligation is maintained when the employer’s
closure is not due to serious business losses. For a similar exemption to obtain
against a contract, such as a CBA, the tenor of the parties’ agreement ought to be
similar to the law’s tenor. When the parties, however, agree to deviate therefrom,
and unqualifiedly covenant the payment of separation benefits irrespective of the
employer’s financial position, then the obligatory force of that contract prevails and
its terms should be carried out to its full effect. Verily, it is fundamental that
obligations arising from contracts have the force of law between the contracting
parties and thus should be complied with in good faith
ER: Benson Industries, Inc. (Benson) is a domestic corporation engaged in the
manufacturing of green coils with the brand name Lion-Tiger Mosquito Killer. On
February 12, 2008, Benson sent its employees, including herein petitioners, a notice
informing them of their intended termination from employment on the ground of
closure and/or cessation of business operations.
It is undisputed that a CBA was forged by the employer, Benson, and its employees,
through the Union, to govern their relations effective July 1, 2005 to June 30, 2010.
It is equally undisputed that Benson agreed to and was thus obligated under the
CBA to pay its employees who had been terminated without any fault attributable
to them separation benefits at the rate of 19 days for every year of service. Thus, in
view of the foregoing, the Court disagrees with the CA in negating Benson’s
obligation to pay petitioners their full separation benefits under the said
agreement. The postulation that Benson had closed its establishment and ceased
operations due to serious business losses cannot be accepted as an excuse to clear
itself of any liability since the ground of serious business losses is not, unlike Article
297 of the Labor Code, considered as an exculpatory parameter under the
aforementioned CBA. Clearly, Benson, with full knowledge of its financial situation,
freely and voluntarily entered into such agreement with petitioners. Hence, having
failed to show that the subject CBA provision on separation benefits is contrary to
law, morals, public order or public policy, or that the same can be interpreted as
one with a condition – for instance, that the parties actually contemplated non-
payment of separation benefits in the event of closure due to serious business
losses – the Court is constrained to reinstate the October 24, 2008 VA Decision
ordering Benson to pay each of the petitioners separation benefits.
61. Internat’l Mgt v. Logarta, G.R. No. 163657, April 18, 2012
Doctrine: Proper notice to DOLE within 30 days prior the intended date of
retrenchment is necessary and must be complied with despite the fact that the
employee is an OFW
ER: Logarta worked for Petrocon in Saudi as Piping Designer. However, due to lack
of projects, Petrocon reduced the number of its employees. Logarta was included in
the reduction. Upon return, Logarta sued its recruiter International Mgt. Services
for recovery of unpaid wages on the ground that he was illegally dismissed.
SUPREME COURT held valid dismissal despite non compliance with the 30 day
notice rule to DOLE. Retrenchment is an authorized cause reducing number of work
personnel usually due to poor financial returns aimed to cut down costs for
operation. It is valid when :
(1) The retrenchment is reasonably necessary and likely to prevent business
losses which, if already incurred, are not merely de minimis, but substantial,
serious, actual and real, or if only expected, are reasonably imminent as
perceived objectively and in good faith by the employer;
(2) That the employer served written notice both to the employees and to
the Department of Labor and Employment at least one month prior to the
intended date of retrenchment;
(3) That the employer pays the retrenched employees separation pay
equivalent to one month pay or at least month pay for every year of service,
whichever is higher;
(4) That the employer exercises its prerogative to retrench employees in good
faith for the advancement of its interest and not to defeat or circumvent the
employees' right to security of tenure;
and
(5) That the employer used fair and reasonable criteria in ascertaining who
would be dismissed and
who would be retained among the employees, such as status, x x x
efficiency, seniority, physical fitness, age, and financial hardship for certain
workers.
All the requisites are complied with in this case, except number 2 (lack of notice to
DOLE) and 3 (not pay separation pay). Yet SC declared dismissal valid because such
is just a procedural infirmity. Retrenchment is still an authorized cause allowed by
law. Thus, IMS was just ordered that Logarta be paid separation pay.
62. Lopez v. Irvine Construction, G.R. No. 207253, August 20, 2014
Doctrine: In this case, Irvine failed to prove compliance with Article 286. It merely
completed one of its numerous construction projects which does not, by and of
itself, amount to a bona fide suspension of business operations or undertaking. In
invoking Article 286, the paramount consideration should be the dire exigency of
the business of the employer that compels it to put some of its employees
temporarily out of work. This means that the employer should be able to prove that
it is faced with a clear and compelling economic reason which reasonably forces it
to temporarily shut down its business operations or a particular undertaking,
incidentally resulting to the temporary lay-off of its employees. Due to the grim
economic consequences to the employee, the employer should also bear the
burden of proving that there are no posts available to which the employee
temporarily out of work can be assigned.
ER: Irvine initially hired Lopez as a laborer and thereafter designated him as a guard.
Lopez was purportedly terminated from his employment, whereupon he was told
“Ikaw ay lay off muna.” Thus, he filed a complaint for illegal dismissal. Irvine alleged
that Lopez was only temporarily laid off after the Cavite project was finished and
that eventually, Lopez was asked to return to work through a letter allegedly sent to
him within the 6 month period under Article 286.
63. Poseidon Internat’l v. Tamala, G.R. No. 186475, June 26, 2013
Doctrine: Management has the right to regulate the business and control its every
aspect. Included in this management right is the freedom to close or cease its
operations for any reason, as long as it is done in good faith and the employer
faithfully complies with the substantive and procedural requirements laid down by
law and jurisprudence.
Validity of the cessation of the business operations as a valid ground for the
termination of an overseas employment is subject to compliance with the following
requisites:
1. The decision to close or cease operations must be bona fide in character;
2. Service of written notice on the affected employees and on the
Department of Labor and Employment (DOLE) at least one (1) month prior
to the effectivity of the termination; and
3. Payment to the affected employees of termination or 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.
ER: Poseidon hired respondents(Tamala, et al.), in behalf of Van Doorn, to man the
fishing vessels of the latter. The operations abruptly stopped and did not resume.
EEs and its employer executed two (2) agreements agreeing on the salaries – 1st:
100% of the unexpired portion; 2nd: 50% of the entire amount. Respondents also
executed waivers and quitclaims in favor of Poseidon and its principal employers.
Then, they filed a complaint for illegal termination of employment.
WON the termination arising from the cessation of operation is valid? YES.
Van Doorn’s termination of the respondents’ employment arising from the
cessation of its fishing operations complied with the above requisites and is thus
valid. Van Doorn did not immediately repatriate the respondents or hire another
group of seafarers to replace the respondents in a move to resume its fishing
operations. The respondents, although they were no longer rendering any service
or doing any work, still received their full salary in accordance with their first
agreement. In fact, until they were repatriated to the Philippines, the respondents
still received wages, albeit half of their respective basic monthly salary rate.
Note: Petitioner failed to comply with procedural requisite (written notice to DOLE).
Hence, employees are entitled to nominal damages.
64. Manila Mining Corp. v. Amor, G.R. No. 182800, Apr. 20, 2015
FACTS:Manila Mining is engaged in mining. It failed to renew an environmental
permit for TP 7, wherein Respondents were working. Hence, Manila Mining
temporarily shut down operations for six months. After the said six months, it once
again extended the shut down. SC held that this amounts to constructive dismissal,
as an ER is duty bound to reinstate EEs when cessation of operations exceeds six
months.
DOCTRINE: Without necessarily resulting to a termination of employment, an
employer may at any rate, bona fide suspend the operation of its business for a
period of not exceeding six months under Article 286 of the Labor Code
While the employer is, on the one hand, duty bound to reinstate his employees to
their former positions without loss of seniority rights if the operation of the
business is resumed within six months, employment is deemed terminated where
the suspension exceeds said period.
65. Manarpiis v. Texan Phils., G.R. No. 197011, January 28, 2011
Doctrine: The ultimate test of the validity of closure or cessation of establishment
due to serious losses or financial reverses is that it must be bona fide in character,
where the employer must present sufficient proof of the actual or imminent losses.
A written notice to the DOLE thirty days before the intended date of closure is also
required, the purpose of which is to inform the employees of the specific date of
termination or closure of business operations, and which must be served upon each
and every employee of the company one month before the date of effectivity to
give them sufficient time to make the necessary arrangement.
ER: TPI claimed serious financial losses and used it as basis in notifying its
employees that it is about to cease operations. Petitioner filed for illegal
dismissal. Thereafter, she was subjected to investigation and termination on
grounds of dishonesty, loss of confidence and abandonment of work.
The Court held that petitioner was illegaly dismissed as the announced
cessation of business operations was a subterfuge for getting rid of her There
is no proof that serious business losses is present in this case. The financial
statements although bearing the stamp mark of BIR were not signed by an
independent auditor. The requirements in Art. 283 has not been complied
with. The subsequent investigation and termination of petitioner on grounds
cited above, clearly appears as an afterthought as it was done only after
petitioner had filed an illegal dismissal case. Hence, petitioner was illegally
dismissed. (Then see Doctrine)
66. SPI Technologies v. Mapua, G.R. No. 191154, April 7, 2014
CASE LAW/ DOCTRINE: For a valid implementation of a redundancy program, the
employer must comply with the following requisites: (1) written notice served on
both the employee and the DOLE at least one month prior to the intended date of
termination; (2) payment of separation pay equivalent to at least one month pay or
at least one month pay for every year of service, whichever is higher; (3) good faith
in abolishing the redundant position; and (4) fair and reasonable criteria in
ascertaining what positions are to be declared redundant.
EMERGENCY RECIT: EE was dismissed based on redundancy. Apparently, a
memorandum was issued stating that her work is already performed by another
department. When she was dismissed from work, she saw a job vacancy of her
same position posted in the Inquirer. She alleged that SPI contracted another firm
to procure EEs to fill up her position hence there is no basis for redundancy. SC held
requisites of redundancy and that SPI failed to prove that the position that EE
formerly hold is redundant in its business.
67. Arabit v. Jardine Pacific Finance, Inc., G.R. No. 181719, April 21, 2014
DOCTRINE: Employer must use fair and reasonable criteria in the selection of
employees who will be dismissed from employment due to redundancy. Such fair
and reasonable criteria may include the following, but are not limited to: (a) less
preferred status (e.g., temporary employee); (b) efficiency; and (c) seniority. The
presence of these criteria used by the employer shows good faith on its part and is
evidence that the implementation of redundancy was painstakingly done by the
employer in order to properly justify the termination from the service of its
employees. (Golden Thread doctrine)
For the implementation of a redundancy program to be valid, the employer must
comply with the following requisites: (1) written notice served on both the
employees and the Department of Labor and Employment at least one month prior
to the intended date of retrenchment; (2) payment of separation pay equivalent to
at least one month pay or at least one month pay for every year of service,
whichever is higher;(3) good faith in abolishing the redundant positions; and (4) fair
and reasonable criteria in ascertaining what positions are to be declared redundant
and accordingly abolished. (Asian Alcohol doctrine)
ER: On the claim of financial losses, Jardine decided to reorganize and implement a
redundancy program among its employees. The petitioners (who were also union
officers) were among those affected by the redundancy program. Thereafter,
Jardine hired contractual employees to undertake the functions these employees
used to perform. The petitioners and the Union filed a complaint against Jardine
with the NLRC for illegal dismissal and unfair labor practice. The Supreme Court
held that applying both Golden Thread and Asian Alcohol doctrines, Jardine failed to
set the required fair and reasonable criteria in the termination of the petitioners’
employment, leading to the conclusion that the termination from the service was
arbitrary and in bad faith.
68. PNB v. Dalmacio, G.R. Nos. 202308 & 20235, July 5, 2017
DOCTRINE: One of the authorized causes for the dismissal of an employee is
redundancy. It exists when the service capability of the workforce is in excess of
what is reasonably needed to meet the demands of the business enterprise. A
position is redundant when it is superfluous, and superfluity of a position or
positions could be the result of a number of factors, such as the overhiring of
workers, a decrease in the volume of business or the dropping of a particular line or
service previously manufactured or undertaken by the enterprise. Time and again, it
has been ruled that an employer has no legal obligation to keep more employees
than are necessary for the operation of its business.
For the implementation of a redundancy program to be valid, however, the
employer must comply with the following requisites: (1) written notice served on
both the employees and the DOLE at least 1 month prior to the intended date of
termination of employment; (2) payment of separation pay equivalent to at least 1
month pay for every year of service; (3) good faith in abolishing the redundant
positions; and (4) fair and reasonable criteria in ascertaining what positions are to
be declared redundant and accordingly abolished, taking into consideration such
factors as (a) preferred status; (b) efficiency; and (c) seniority, among others.
ER: PNB outsourced the services of Technopaa, Inc. for the maintenance of its
computers and hardware. PNB implemented a redundancy program and offered a
special redundancy package to the affect employees. Dalmacio and Martinez were
affected because they were an IT Officer and a Junior IT Field Analyst, respectively.
Issue is whether the redundancy was valid? Court held yes. PNB was able to show
substantial proof that it underwent redundancy program and that complainants
herein voluntarily accepted the Special Redundancy Package offered by respondent
bank to its employees. They were officially notified of the management's decision
to terminate their employment. and Complainants and their union officers were
even consulted of the respondent's decision to terminate its employees on the
ground of redundancy.
“PNB's action is within the ambit of "management prerogative" to upgrade and
enhance the computer system of the bank. Dalmacio, being an IT officer whose job
is to maintain the computer system of PNB, his position has become patently
redundant upon PNB's engagement of the contract service with Technopaq. He was
appositely informed of PNB's move to contract the services of Technopaq and as a
result thereof, there were positions that were declared redundant including that of
Dalmacio. PNB conducted series of meetings with Dalmacio and other affected
employees to purposely look for placement of the displaced employees to other
positions suited for them. Finding no other alternative, PNB was constrained to
terminate Dalmacio who thereafter posed no objection thereto, consented to and
willingly received the hefty separation pay given to him. Moreover, records have it
that PNB faithfully complied with the legal procedures provided under Art. 283 of
the Labor Code as evidenced by the individual notices of termination served and
received by Dalmacui as well as the Establishment Termination Report filed by PNB
with the DOLE.”
69. Acosta v. Matiere
70. Manggagagawa sa Komunikasyon ng Pilipinas v. PLDT
71. Marina's Creation Enterprises v. Ancheta, G.R. No. 218333, December 7,
2016
DOCTRINE: The Implementing Rules of the Labor Code impose upon the employer
the duty NOT to terminate an employee until there is a certification by a competent
public health authority that the employee's disease is of such nature or at such a
stage that it cannot be cured within a period of six months even with proper
medical treatment.
ER: Ancheta was in the employ of Marina when he suffered a stroke and was
confined at a hospital. He filed a Sickness Notification with the Social SSS and was
paid sickness benefits. The physician who physically examined Ancheta stated that
Ancheta would be fit to resume work after 90 days. After he recovered from his
illness, he reported for work but Marina wanted him to submit a new medical
certificate before he could resume work. Ancheta did not comply and was not able
to resume his work in Marina then filed a complaint for illegal dismissal against
Marina. SC held that Marina terminated Ancheta from employment without seeking
a prior certification from a competent public health authority that Ancheta's
disease is of such nature or at such a stage that it cannot be cured within a period
of six months even with proper medical treatment. Hence, Ancheta was illegally
dismissed by Marina.
72. Villaruel v. Yeo Han Guan, G.R. No. 169191, June 1, 2011
Doctrine: Sep Pay for termination due to disease presupposes that er terminated
ee. There is no sep pay for voluntary resignation.
ER: Petitioner was employed by respondent. He got sick and was confined in a
hospital; upon return, he was no longer permitted to go back because of his illness.
Respondent alleged that it was petitioner who stopped working. Issue is W/N
petitioner is entitled to sep pay by reason of termination for disease. SC held that
he is not entitled. LC on termination for disease clearly presupposes that it is the
employer who terminates the services of the employee 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. It does not contemplate a
situation where it is the employee who severs his or her employment ties. In this
case, it was proven that the employer did not terminate petitioner; 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. There is no provision in LC which grants separation pay
to voluntarily resigning employees. In fact, the rule is that an employee 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
employer practice or policy.
73. Wuerth Philippines v. Ynson, G.R. No. 175932, February 15, 2012
Doctrine: Article 284 of the Labor Code provides that an employer may terminate
the services of an employee who has been found to be suffering from any disease
and whose continued employment is prohibited by law or is prejudicial to his
health, as well as to the health of his co-employees.
The requirement for a medical certificate under Article 284 of the Labor Code
cannot be dispensed with; otherwise, it would sanction the unilateral and arbitrary
determination by the employer of the gravity or extent of the employee’s illness
and, thus, defeat the public policy on the protection of labor.
ER: After suffering a stroke, Ynson failed to report to work. He immediately
informed Wuerth of his ailment. When he informed the company that he could
begin working again subject to finishing his rehabilitation treatment, the CEO
directed him to appear before the Manila office but Ynson said his doctors
prohibited him from travelling (Ynson was based in Davao). The CEO informed
Ynson the decision of the company to terminate his employment on the ground of
continued absences without filing a leave of absence. Ynson filed a complaint for
illegal dismissal. (See doctrine)
Apart from the clearance of respondent's doctors allowing him to return to work,
he has failed to provide competent proof that he was actually undergoing therapy
and medications. During his absence, nobody was performing the duties of a
National Sales Manager, which is vital to the company's orderly operation and
viability. He did not even show any sincere effort to return to work. Clearly, since
there is no more hindrance for him to return to work and attend the investigations
set by petitioner, respondent's failure to do so was without any valid or justifiable
reason. Respondent's conduct shows his indifference and utter disregard of his
work and his employer's interest, and displays his clear, deliberate, and gross
dereliction of duties.
74. Deoferio v. Intel Technology, G.R. No. 202996, June 18, 2014
Doctrine: Intel’s violation of Deoferio’s right to statutory procedural due process
warrants the payment of indemnity in the form of nominal damages.
ER: Intel terminated Deoferio due to his disease (schizophrenia). The company
relied on a competent public health authority’s certification that (1) his
schizophrenia was not curable within a period of six months even with proper
medical treatment; and (2) his continued employment would be prejudicial to his
and to the other employees’ health. Deoferio alleged that his right to procedural
due process was violated by Intel when it summarily issued a notice of termination.
Intel argued that that the twin-notice requirement is not applicable to terminations
due to disease. SC ruled that a) the twin-notice requirement applies and 2) Intel
failed to comply, entitling Deoferio to nominal damages.
75. King of Kings v. Mamac, G.R. No. 166208, June 29, 2007
Doctrine: The following should be considered in terminating the services of
employees:
1. The first written notice to be served on the employees should contain the
specific causes or grounds for termination against them, and a directive that
the employees are given the opportunity to submit their written explanation
within a reasonable period.
a. “Reasonable opportunity” under the Omnibus Rules means every
kind of assistance that management must accord to the employees to
enable them to prepare adequately for their defense. This should be
construed as a period of at least five (5) calendar days from receipt of
the notice to give the employees an opportunity to study the
accusation against them, consult a union official or lawyer, gather
data and evidence, and decide on the defenses they will raise against
the complaint.
a. Moreover, in order to enable the employees to intelligently prepare
their explanation and defenses, the notice should contain a detailed
narration of the facts and circumstances that will serve as basis for
the charge against the employees. A general description of the
charge will not suffice. Lastly, the notice should specifically mention
which company rules, if any, are violated and/or which among the
grounds under Art. 282 is being charged against the employees.
2. After serving the first notice, the employers should schedule and conduct a
hearing or conference wherein the employees will be given the opportunity to: (a)
explain and clarify their defenses to the charge against them; (b) present evidence
in support of their defenses; and (c) rebut the evidence presented against them by
the management. During the hearing or conference, the employees are given the
chance to defend themselves personally, with the assistance of a representative or
counsel of their choice. Moreover, this conference or hearing could be used by the
parties as an opportunity to come to an amicable settlement.
3. After determining that termination of employment is justified, the employers
shall serve the employees a written notice of termination indicating that: (1) all
circumstances involving the charge against the employees have been considered;
and (2) grounds have been established to justify the severance of their
employment.
ER: Mamac received no written notice of the alleged violations of a company policy
or rule but was made to explain the discrepancy found in his report. Unsatisfied
with the report, KKTI dismissed him from employment due to fraud. So he filed a
complaint for illegal dismissal, claiming that he was dismissed without due process.
LA and NLRC rule that he was illegally dismissed. NLRC awarded him P10,000. But
CA modified the award to full backwages. The SC ruled that KKTI did not comply
the procedural due process by not giving Mamac a first written notice stating the
grounds for dismissal, and no hearing was conducted to give Mamac the
opportunity to explain himself. So, SC sanctioned KKTI to pay Mamac P30,000 as
nominal damages
76. Maersk-Filipinas v. Avestruz, G.R. No. 207010, Feb. 18, 2015 [b.
Procedural Due Process - i. Twin-notice requirement]
D: Section 17 of the POEA-SEC requires the “two-notice rule.” As explained in
Skippers Pacific, Inc. v. Mira: An erring seaman is given a written notice of the
charge against him and is afforded an opportunity to explain or defend himself.
Should sanctions be imposed, then a written notice of penalty and the reasons for it
shall be furnished the erring seafarer. It is only in the exceptional case of clear and
existing danger to the safety of the crew or vessel that the required notices are
dispensed with; but just the same, a complete report should be sent to the manning
agency, supported by substantial evidence of the findings.
ER: Petitioner Maersk-Filipinas Crewing, Inc. (Maersk), on behalf of its foreign
principal, petitioner A.P. Moller Singapore Pte. Ltd. (A.P. Moller), hired Avestruz as
Chief Cook on board the vessel M/V Nedlloyd Drake. Captain Charles C. Woodward
(Captain Woodward) noticed that the cover of the garbage bin in the kitchen near
the washing area was oily. As part of Avestruz’s job was to ensure the cleanliness of
the galley, Captain Woodward called Avestruz and asked him to stand near the
garbage bin where the former took the latter’s right hand and swiped it on the oily
cover of the garbage bin, telling Avestruz to feel it. Shocked, Avestruz remarked,
“Sir if you are looking for [dirt], you can find it[;] the ship is big. Tell us if you want to
clean and we will clean it.” Captain Woodward replied by shoving Avestruz’s chest,
to which the latter complained and said, “Don’t touch me,” causing an argument to
ensue between them. Later that afternoon, Captain Woodward summoned and
required9 Avestruz to state in writing what transpired in the galley that morning.
Avestruz complied and submitted his written statement10 on that same day.
Captain Woodward likewise asked Messman Jomilyn P. Kong (Kong) to submit his
own written statement regarding the incident, to which the latter immediately
complied.11 On the very same day, Captain Woodward informed Avestruz that he
would be dismissed from service.
The Court affirms the finding of the CA that Avestruz was not accorded procedural
due process, there being no compliance with the provisions of Section 17 of the
POEA-SEC as above-cited, which requires the “two-notice rule.” As explained in
Skippers Pacific, Inc. v. Mira: An erring seaman is given a written notice of the
charge against him and is afforded an opportunity to explain or defend himself.
Should sanctions be imposed, then a written notice of penalty and the reasons for it
shall be furnished the erring seafarer. It is only in the exceptional case of clear and
existing danger to the safety of the crew or vessel that the required notices are
dispensed with; but just the same, a complete report should be sent to the manning
agency, supported by substantial evidence of the findings. In this case, there is
dearth of evidence to show that Avestruz had been given a written notice of the
charge against him, or that he was given the opportunity to explain or defend
himself. The statement given by Captain Woodward requiring him to explain in
writing the events that transpired at the galley in the morning of June 22, 2011
hardly qualifies as a written notice of the charge against him, nor was it an
opportunity for Avestruz to explain or defend himself. While Captain Woodward
claimed in his e-mail that he conducted a “disciplinary hearing” informing Avestruz
of his inefficiency, no evidence was presented to support the same. Neither was
Avestruz given a written notice of penalty and the reasons for its imposition.
Instead, Captain Woodward verbally informed him that he was dismissed from
service and would be disembarked from the vessel. It bears stressing that only in
the exceptional case of clear and existing danger to the safety of the crew or vessel
that the required notices may be dispensed with, and, once again, records are
bereft of evidence showing that such was the situation when Avestruz was
dismissed.
77. NDC Tagum Foundation v. Sumakote, G.R. No. 190644, June 13, 2016
Doctrine: Requiring the employee to explain his side and provide defenses prior
dismissal is critical for a dismissal based on just cause to be valid.
ER: NDC Tagum sent letter to Sumakote who is a nursing college instructor therein.
The letter requires her to state her plan if she is going to accept the deanship
offered by another school. Yet, Sumakote did not respond. Subsequently she
received notice requiring her to explain why she should not be dismissed on ground
of neglect of duty. Sumakote complied. Investigation was conducted whish
eventually lead to her dismissal. Suakote filed ID alleging she was denied Du Process
for not having opportunity to present her defense prior dismissal.
SUPREME COURT ruled there is invalid dismissal for failure to comply with
Procedural Due Process.
Two aspects of valid dismissal: complaint with Substantive (complied with in this
case because there is just cause) and Procedural (not complied with).
For PDP of just cause there are twin notices:
1. Written notice to employee informing the ground and requiring him to
explain within reasonable period usually 5 calendar days.
- NOT complied with. It appears that the 1st notice did not require
her to explain but merely asked what her plans were with regard
the deanship offered.
2. Hearing or conference to present evidence or rebut the evidence against
the employee.
3. Written notice of termination to employee indicating the circumstances
and grounds relied upon to justify termination.
Clearly, Sumakote not given any opportunity ot be heard. DENIED.
78. Agabon v. NLRC, G.R. No. 158693, November 17, 2004
Doctrine: Where the employer had a valid reason to dismiss an employee but did
not follow the due process requirement, the dismissal may be upheld but the
employer will be penalized to pay an indemnity to the employee. This is the
Wenphil or Belated Due Process Rule
Where the dismissal is for a just cause, as in this case, the lack of statutory due
process should not nullify the dismissal, or render it illegal, or ineffectual. However,
the employer should indemnify the employee for the violation of his statutory
rights.
ER: Agabon filed for illegal dismissal against Riviera Home Improvements as he was
terminated for abandonment of work. Agabon insists that he was dismissed
because they refused work unless it be on a pakyaw basis, in effect, losing their SSS
benefits. Private respondents argued that the Agabons were dismissed because
they abandoned their work and subcontracted for another work with another
company. SC held that their dismissal was for a just cause based n a abandonment
of work and neglect of duty, a ground for just causes under Art. 282. However, SC
applied the Wenphil doctrine in this case because the private respondents failed to
comply with the procedural due process--It 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 employees’ last known address. Thus, it should be held
liable for non-compliance with the procedural requirements of due process.
79. Jaka Food Processing v. Pacot, G.R. No. 151378, March 28, 2005
Doctrine: There should be a difference in treatment when the ground for dismissal
is one of the just causes under Article 282, and when based on one of the
authorized causes under Article 283:
 if the dismissal is based on a just cause under Article 282 but the employer
failed to comply with the notice requirement, the sanction to be imposed
upon him should be tempered because the dismissal process was, in effect,
initiated by an act imputable to the employee; and
 if the dismissal is based on an authorized cause under Article 283 but the
employer failed to comply with the notice requirement, the sanction
should be stiffer because the dismissal process was initiated by the
employers exercise of his management prerogative.
This case also followed the ruling in Agabon case.
ER: Respondents were terminated by JAKA due to financial straits. JAKA failed to
comply with LC requirement of service of written notice upon the employees and
DOLE at least 1 month before the intended date of termination so respondents filed
for illegal dismissal. LA ruled that they were illegally dismissed so reinstate with full
backwages, or if not possible, separation pay. NLRC initially affirmed LA, but upon
MR, modified and removed backwages and added 2K each as indemnification for
failure to observe due process in retrenchment. CA reversed NLRC.
WON respondents are illegally dismissed due to non-compliance with the notice
requirement? SC reversed CA and upheld the legality of dismissal as an authorized
cause under LC. Jaka was suffering from serious losses at the time it terminated
repsondents. No separation pay because serious business losses duly proven, but
JAKA to pay 50K each as indemnification for non-compliance statutory due process.
80. Deferio v. Intel Technology
CASE LAW/ DOCTRINE: Intel’s violation of Deoferio’s right to statutory
procedural due process warrants the payment of indemnity in the form of
nominal damages.
EMERGENCY RECIT: Intel terminated Deoferio due to his disease
(schizophrenia). The company relied on a competent public health authority’s
certification that (1) his schizophrenia was not curable within a period of six
months even with proper medical treatment; and (2) his continued employment
would be prejudicial to his and to the other employees’ health. Deoferio alleged
that his right to procedural due process was violated by Intel when it summarily
issued a notice of termination. Intel argued that that the twin-notice
requirement is not applicable to terminations due to disease. SC ruled that a)
the twin-notice requirement applies and 2) Intel failed to comply, entitling
Deoferio to nominal damages.
81. Perez v. PT&T, G.R. No. 152048, April 7, 2009
FACTS: EEs were a shipping clerk and a supervisor, in the ER’s Shipping Section. A
special audit team investigated on the alleged anomalous transactions at the
shipping section. It was found that the duplicates of the shipping transactions
showed tampering. EEs were placed on preventive suspension. Without being
apprised of the charges against them or being given a chance to defend themselves,
EEs were terminated. The Supreme Court eventually found that there was an illegal
dismissal. The Supreme Court also made the following findings. First, that other
than the bare allegations against EEs, the evidence presented does not sufficiently
prove that EE was responsible. Second, the illegal dismissal was aggravated by the
failure to observe due process.
One of the issues raised by the EEs was that without a hearing or conference, they
have been denied due process, on the basis of Sec.2 (d) IRR implementing the
Art.277 (b) LC. On this Point, the Supreme Court rejected the EEs’ “overly
restrictive” interpretation of the term “ample opportunity.” While the IRR qualified
“the ample opportunity to be heard” requirement to entail an actual hearing or
conference, the LC couched said requirement in general terms. In this connection,
the Court ruled that holding an actual hearing or conference is not a pre-requisite
for complying with the due process requirement in termination of employment. The
Supreme Court set forth “guiding principles in connection with the hearing
requirement in dismissal cases.”
DOCTRINE: … 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 employee to answer the
charges against him and submit evidence in support of his defense, whether in a
hearing, conference or some other fair, just and reasonable way. (b) a formal
hearing or conference becomes mandatory only when requested by the employee
in writing or substantial evidentiary disputes exist or a company rule or practice
requires it, or when similar circumstances justify it. (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.
82. King of Kings v. Mamac, G.R. No. 166208, June 29, 2007
DOCTRINE: A verbal appraisal of the charges against an employee does not comply
with the first notice requirement.
FACTS: KKTI is a corporation engaged in public transportation and managed by
Claire Dela Fuente and Melissa Lim. Respondent was a conductor for Don Mariano
Transit Corporation (DMTC). He was one of the few people who established
Damayan ng mga Manggagawa, Tsuper at Conductor-Transport Workers Union.
Pending the union’s certification election, respondent was transferred to KKTI. The
KKTI employees later organized the Kaisahan ng mga Kawani sa King of Kings (KKKK)
which was registered with DOLE. Respondent was elected KKKK president.
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 890 pesos. While no irregularity
report was prepared on the October 28, 2001 incident, KKTI nevertheless asked
respondent to explain the discrepancy. He said that such was merely unintentional
as the bus assigned to them that day was smashed and he was confused in making
the trip report. He was then later terminated since sich irregularity was a fraid.
After that, he filed an action for illegal dismissal, among other claims. 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. KKTI averred that it had observed due process in dismissing respondent.
ISSUE: W/N respondent was given due process – NO.
RULING: 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.
The first written notice to be served on the employees should contain the specific
causes or grounds for termination against them, and a directive that the employees
are given the opportunity to submit their written explanation within a reasonable
period. “Reasonable opportunity” under the Omnibus Rules means every kind of
assistance that management must accord to the employees to enable them to
prepare adequately for their defense. This should be construed as a period of at
least five (5) calendar days from receipt of the notice to give the employees an
opportunity to study the accusation against them, consult a union official or lawyer,
gather data and evidence, and decide on the defenses they will raise against the
complaint.
Moreover, in order to enable the employees to intelligently prepare their
explanation and defenses, the notice should contain a detailed narration of the
facts and circumstances that will serve as basis for the charge against the
employees. A general description of the charge will not suffice. Lastly, the notice
should specifically mention which company rules, if any, are violated and/or which
among the grounds under Art. 282 is being charged against the employees.
83. Wallem Maritime v. NLRC, G.R. No. 108433, October 15, 1996
CASE LAW/ DOCTRINE: The law requires the employer 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 employer must furnish the worker with two (2) written notices before
termination of employment can be legally effected: (a) notice which apprises the
employee of the particular acts or omissions for which his dismissal is sought; and
(b) the subsequent notice which informs the employee of the employers decision to
dismiss him.
Emergency Recit: MACATUNO, along with Gurimbao, a filipino crew, was hired as
seamen by petitioner. While at the port of Japan, an altercation took place between
MACATUNO, Gurimbao 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
tankers logbook. They were then summoned by the captain and told them that they
were getting repatriated and terminated. MACATUNO filed for Illegal Dismissal.
POEA: No just or authorized cause. Illegal Dismissal. NLRC: Affirmed. SC:
MACATUNO was illegally dismissed. Any termination of employment under the
grounds provided must be done only after notice and formal investigation have
been accorded the supposed errant worker. IN this case, no investigation was held.
They were summoned to the captain’s office just to be told that they were getting
repatriated. NO investigation was conducted, and petitioner failed to comply with
the twin notice rule, thus invalidly terminating MACATUNO and Gurimbao.
84. Lopez v. Alturas, G.R. No. 191008, April 11, 2011
DOCTRINE: There is no violation of due process even if no hearing was conducted,
where the party was given a chance to explain his side of the controversy. What is
frowned upon is the denial of the opportunity to be heard.
ER: Petitioner was hired by Alturas Group of Companies as truck driver but was
dismissed after he 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. The company issued a Show Cause Notice but after finding the petitioner’s
explanation unsatisfied, the company sent him a Notice of Termination. Petitioner
filed a complaint for illegal dismissal. The Supreme Court upheld the dismissal
finding that company’s loss of trust and confidence arising from petitioner’s
smuggling out of the scrap iron, compounded by his past acts of unauthorized
selling cartons belonging to respondent company, constituted just cause for
terminating his services. The SC also found that 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.
85. Phil. Daily Inquirer v. Magtibay, 528 SCRA 355
DOCTRINE: Within the limited legal six-month probationary period, probationary
employees are still entitled to security of tenure. It is expressly provided in the
afore-quoted Article 281 that a probationary employee may be terminated only on
two grounds: (a) for just cause, or (b) when he fails to qualify as a regular employee
in accordance with reasonable standards made known by the employer to the
employee at the time of his engagement.
Unlike under the first ground for the valid termination of probationary employment
which is for just cause, the second ground does not require notice and hearing. Due
process of law for this second ground consists of making the reasonable standards
expected of the employee during his probationary period known to him at the time
of his probationary employment. By the very nature of a probationary employment,
the employee knows from the very start that he will be under close observation and
his performance of his assigned duties and functions would be under continuous
scrutiny by his superiors. It is in apprising him of the standards against which his
performance shall be continuously assessed where due process regarding the
second ground lies, and not in notice and hearing as in the case of the first ground.
ER: PDI hired Magtibay, on contractual basis, to assist, for a period of five months as
regular phone operator. Before the expiration of Magtibays contractual
employment, he and PDI agreed to a fifteen-day contract extension under the same
conditions as the existing contract.After the expiration of Magtibays contractual
employment, as extended, PDI announced the creation and availability of a new
position for a second telephone operator who would undergo probationary
employment. PDI hired Magtibay as probationary employee for six months. 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. Issue is whether Magtibay
was validly terminated. Court held yes. LA: Magtibays dismissal from his
probationary employment was for a valid reason. Albeit the basis for termination
was couched in the abstract, i.e., you did not meet the standards of the company,
there were three specific reasons for Magtibays termination, to wit: (1) he
repeatedly violated the company rule prohibiting unauthorized persons from
entering the telephone operators room; (2) he intentionally omitted to indicate in
his application form his having a dependent child; and (3) he exhibited lack of sense
of responsibility by locking the door of the telephone operators room on March 10,
1996 without switching the proper lines to the company guards so that incoming
calls may be answered by them. NLRC and CA reversed LA: “Petitioner PDI failed to
prove that such rules and regulations were included in or form part of the standards
that were supposed to be made known to respondent Magtibay at the time of his
engagement as telephone operator. Particularly, as regards the first stated
infraction xxx petitioner PDI, contrary to its assertion, stated in its position paper,
motion for reconsideration and in this petition that respondent Magtibay failed to
abide by the rules and regulations of the company issued by Ms. Benita del Rosario
regarding the entry of persons in the operators booth when respondent was
already working for petitioner PDI. Further, nowhere can it be found in the list of
Basic Responsibility and Specific Duties and Responsibilities of respondent Magtibay
that he has to abide by the duties, rules and regulations that he has allegedly
violated.” SC did not agree with NLRC and CA: PDI invokes the second ground
under the premises. In claiming that it had adequately apprised Magtibay of the
reasonable standards against which his performance will be gauged for purposes of
permanent employment, PDI cited the one-on-one seminar between Magtibay and
its Personnel Assistant, Ms. Rachel Isip-Cuzio. PDI also pointed to Magtibays direct
superior, Benita del Rosario, who diligently briefed him about his responsibilities in
PDI. These factual assertions were never denied nor controverted by Magtibay.
Neither did he belie the existence of a specific rule prohibiting unauthorized
persons from entering the telephone operators booth and that he violated that
prohibition. The CAs observation that nowhere can it be found in the list of Basic
Responsibility and Specific Duties and Responsibilities of respondent Magtibay that
he has to abide by the duties, rules and regulations that he has allegedly violated is
a strained rationalization of an unacceptable conduct of an employee. Common
industry practice and ordinary human experience do not support the CAs posture.
All employees, be they regular or probationary, are expected to comply with
company-imposed rules and regulations, else why establish them in the first place.
Probationary employees unwilling to abide by such rules have no right to expect,
much less demand, permanent employment. We, therefore find sufficient factual
and legal basis, duly established by substantial evidence, for PDI to legally terminate
Magtibays probationary employment effective upon the end of the 6-month
probationary period.
Magtibay failed to qualify as a regular employee in accordance with reasonable
standards made known to him at the time of engagement, only a week before the
expiration of the six-month probationary period. Given this perspective, does this
make his termination unlawful for being violative of his right to due process of law?
IT DOES NOT! See doctrine.
86. Abbott Laboratories v. Alcaraz, G.R. No. 192671, July 23, 2013
DOCTRINE: The usual two-notice rule does not govern in termination a
probationary employee. Section 2, Rule I, Book VI of IRR of LC states that if the
termination is brought about by the failure of an employee to meet the standards
of the employer in case of probationary employment, it shall be sufficient that a
written notice is served the employee, within a reasonable time from the effective
date of termination.
ER: Respondent Alcaraz was hires as a probationary employee of Petitioner Abbott
Lab. Alcaraz was informed that she failed to meet the regularization standards for
the position and asked to resign but to no avail. So, she formally handed a letter
terminating her employment with the detailed explanation for her termination.
Alcaraz then filed a complaint for illegal dismissal. SC held that Alcaraz, a s a
probationary employee, was validly terminated. A different procedure is applied
when terminating a probationary employee; the usual two-notice rule does not
govern. Section 2, Rule I, Book VI of the Implementing Rules of the Labor Code
states that "if the termination is brought about by the xxx failure of an employee to
meet the standards of the employer in case of probationary employment, it shall be
sufficient that a written notice is served the employee, within a reasonable time
from the effective date of termination.” Here, Alcaraz's dismissal was effected
through a letter which she received, Undeniably, this written notice sufficiently
meets the criteria set forth above, thereby legitimizing the cause and manner of
Alcaraz’s dismissal as a probationary employee under the parameters set by the
Labor Code.
87. PAL v. Paz, G.R. No. 192924, November 26, 2014
Doctrine: GR is LA decision of reinstatement entitles employee to reinstatement
salaries if employer refuses to physically reinstate. Reinstatement salaries must still
be paid even if the LA decision was overturned by NLRC (but payment should cover
only the period after issuance of LA decision up to time before NLRC overturned it.)
This case is an exception because PAL’s failure to physically reinstate is due to it
being under receivership, hence not obliged to pay the reinstatement salaries.
ER: Paz claimed that he did not participate in an illegal strike conducted by ALPAP.
LA found that he was illegally dismissed and ordered reinstatement. NLRC reversed
upon PAL showing photos of him in strike. LA granted execution for payment of
reinstatement salaries because PAL did not physically reinstate him. (Note that the
employer has the option to admit the employee back to work or merely reinstate
him in the payroll. Considering, however, that there was no physical reinstatement,
the respondent, as a matter of right, must be reinstated in the payroll). NLRC
sustained award of reinstatement salaries to the respondent albeit suspending its
execution in view of the fact that PAL was under rehabilitation receivership. CA
affirmed NLRC. Issue is whether the respondent may collect reinstatement salaries
which he is supposed to have received from the time PAL received the LA decision,
ordering his reinstatement, until the same was overturned by the NLRC.
SC held that Paz is not entitled to the reinstatement salaries. Applying the case of
Garcia v PAL, GR: employee is entitled to reinstatement salaries, for the period that
LA decision granting reinstatement stands, notwithstanding its subsequent reversal;
this is because the order of reinstatement is immediately executory. The exception
is when there is a restraining order issued. Hence, the unjustified refusal of the
employer to reinstate a dismissed employee entitles him to payment of his salaries
effective from the time the employer failed to reinstate him. However, in this case,
in light of the fact that PAL's failure to comply with the reinstatement order was
justified by the exigencies of corporation rehabilitation, the respondent may no
longer claim salaries which he should have received during the period that the LA
decision ordering his reinstatement is still pending appeal until it was overturned by
the NLRC.
88. Bank of Lubao v. Manabat, G.R. No. 188722, Feb 1, 2012
Doctrine: 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.
ER: The bank’s investigating committee concluded that the respondent Manabat
conspired with a certain Lingad in making fraudulent entries disguised as error
corrections in the bank's computer. The bank filed several criminal complaints for
qualified theft against Lingad and the respondent with the MTC of Lubao,
Pampanga. Thereafter, citing serious misconduct tantamount to willful breach of
trust as ground, it terminated the respondent's employment. Manabat filed a
complaint for illegal dismissal.
Under the law and prevailing jurisprudence, an illegally dismissed employee is
entitled to reinstatement as a matter of right. However, if reinstatement would only
exacerbate the tension and strained relations between the parties, it would be
more prudent to order payment of separation pay instead of reinstatement. (See
doctrine).
The SC affirms that the relations between the parties had been already strained
thereby justifying the grant of separation pay in lieu of reinstatement in favor of the
Manabat.
89. Bustamante v. NLRC, 265 SCRA 61
Doctrine: An employee who is unjustly dismissed from work shall be entitled to
reinstatement without loss of seniority rights and to his backwages computed from
the time his compensation was was withheld from him up to the time of his
reinstatement.
The law specifically declared that the award of backwages was to be computed
from the time compensation was withheld from the employee up to the time of his
reinstatement.
ER: This is a resolution on the motion for reconsideration filed by the private
respondent wherein the court awarded the payment of backwages to the
petitioners from the time of their illegal dismissal. They seek the reversal of the
decision of the first division on the ff. grounds: (a) petitioners are not entitled to
recover backwages because they were not actually dismissed but their probationary
employment was not converted to permanent employment; and (b) assuming that
petitioners are entitled to backwages, computation thereof should not start from
cessation of work up to actual reinstatement, and that salary earned elsewhere
(during the period of illegal dismissal) should be deducted from the award of such
backwages. Petitioners are entitled to backwages
90. Lim v. HMR Phils., G.R. No. 201483, Aug 4 2014
CASE LAW/ DOCTRINE: Computation of full backwages is reckoned from date of
illegal dismissal until actual reinstatement.
mergency Recit: Petitioner Lim was illegally dismissed by respondent HMR. Issue
came about as to the reckoning point of the full backwages to Lim awarded by the
NLRC. There was a conflict because the body of the NLRC decision said reckoning
point is from date of dismissal up to actual reinstatement. But later in the fallo,
NLRC said only up to date of promulgation of the NLRC decision. CRU computed the
full backpay on the basis of the body of the NLRC decision. By the time Lim knew
this, he already filed for execution with respect to the fallo which said that it’s only
up to date of promulgation. Siyempre si HMR natuwa. But the SC said it’s up to date
of actual reinstatement. Another issue to this is whether the fallo was already final
and executory. Thus, if Lim would be permitted to execute the body of the NLRC
decision, would it violate the principle of immutability of judgments? But the SC
said no because in illegal dismissal cases, the monetary claims like backwages,
separation pay, and attorney’s fees are continuing currencies until it is fully satisfied
by the ER. When a decision is executed on this type of case, what is primarily
implemented is the declaratory finding on the status and the rights and obligations
of the parties therein; the arising monetary consequences from the declaration only
follow as component of the parties’ rights and obligations. By the nature of an
illegal dismissal case, the reliefs continue to add on until full satisfaction, as
expressed under LC279. The re-computation in illegal dismissal cases, upon
execution of the decision, does not constitute an alteration or amendment of the
final decision being implemented. The illegal dismissal ruling stands and only the
computation of monetary consequences of this dismissal is affected. This is not a
violation of the principle of immutability of final judgments.
91. Capin-Capiz v. Brent Hospital

CASE LAW/ DOCTRINE: Generally, the computation of backwages is reckoned from
the date of illegal dismissal until actual reinstatement. In case separation pay is
ordered in lieu of reinstatement or reinstatement is waived by the employee,
backwages is computed from the time of dismissal until the finality of the decision
ordering separation pay. Jurisprudence further clarified that the period for
computing the backwages during the period of appeal should end on the date that a
higher court reversed the labor arbitration ruling of illegal dismissal.
FACTS: Cadiz was the Human Resource Officer of respondent Brent Hospital and
Colleges, Inc. (Brent) at the time of her indefinite suspension from employment in
2006. The cause of suspension was Cadiz's Unprofessionalism and Unethical
Behavior Resulting to Unwed Pregnancy. It appears that Cadiz became pregnant out
of wedlock, and Brent imposed the suspension until such time that she marries her
boyfriend in accordance with law.
Cadiz then filed with the LA a complaint for Unfair Labor Practice, Constructive
Dismissal, Non-Payment of Wages and Damages with prayer for Reinstatement.
LA: Cadiz's indefinite suspension amounted to a constructive dismissal;
nevertheless, Cadiz was not illegally dismissed as there was just cause for her
dismissal, that is, she engaged in premarital sexual relations with her boyfriend
resulting in a pregnancy out of wedlock. She was not entitled to reinstatement "at
least until she marries her boyfriend," to backwages and vacation/sick leave pay.
92. Samahang Manggagawa sa General Offset Press, Inc. v. General Offset
Press, Inc., G.R. No. 212960, June 8, 2016
CASE LAW/ DOCTRINE: Invariably, an employer may not be ordered to pay
backwages beyond the date of closure of business where such closure was
due to legitimate business reasons and not merely an attempt to defeat the
order of reinstatement. Employee is entitled to backwages up to date of
closure.
EMERGENCY RECIT: SMGOPI filed a complaint for illegal dismissal against
GOPI. Pending appeal of GOPI before NLRC, complainants moved for
execution pending appeal which was granted. The writ of execution was
issued and P79K was garnished. Issue is WON the garnished amount should
be returned to GOPI. Court ruled in the positive.
93. Solidbank v. CA, G.R. Nos. 166581 & 167187, December 7, 2015
Doctrine: Backwages are computed from the time of dismissal until the finality
of the decision ordering separation pay, and not until promulgation of the
Court's decision.
ER: Lazaro worked as Banker in Solidbank until he was dismissed due to anomalies
found during the audit of such bank. He then filed ID and prayed for backwages. LA
and NLRC found no ID. CA reversed, finding ID thus he was awarded backwages
computed from time of illegal dismissal = salary multiplied by 6 years . CA then
issued an amended decision computing backawages from time of dismissal = salary
multiplied by 43 months. Yet again, CA issued a resolution computing backwages
from time of illegal dismissal up to promulgation of CA’s resolution = salary
multiplied by 98 months. Hence this petition imputing error in the computation of
backwages.
SUPREME COURT held that backwages be computed from time of dismissal until
finality of decision ordering payment of separation pay. In this case, court said the
Lazaro’s backwages be computed from time of his illegal dismissal until Solidbank
ceased operations or 92 months multiplied to his gross monthly pay. To compute
backwages beyond the date of cessation of business would be unjust and
confiscatory depriving employer over its property rights. CA DECISION MODIFIED.
94. Claudia’s Kitchen v. Tanguin, G.R. No. 221096, June 28, 2017
Doctrine: The payment of separation pay and reinstatement are exclusive remedies.
To award separation pay in lieu of reinstatement to an EE who was never dismissed
by his ER would only give imprimatur to the unacceptable act of an EE who is facing
charges related to his employment, but instead of addressing the complaint against
him, he opted to file an illegal dismissal case against his ER. Separation pay in lieu of
reinstatement could not be awarded to an EE whose employment was not
terminated by his ER.
ER: Tanguin was employed by CK as billing supervisor. Due to some complaints
about selling jewelry during office hours, CK placed her under preventive
suspension. Tanguin filed a case for illegal dismissal. LA: no ID, but pay unpaid
salary. NLRC: ordered reinstatement. CA: there was illegal dismissal, however it
ordered separation pay in lieu of reinstatement. W/N separation pay in lieu of
reinstatement may be awarded to an EE who was not dismissed from employment.
NO! Such option is only available to an EE who was actually dismissed. SC held there
was no dismissal at all. Hence, no reinstatement or separation pay (in lieu of
reinstatement) is proper in this case. Tanguin ordered to return to work.
95. Divine Word of Laoag v. Mina, G.R. No. 195155, April 13, 2016
Doctrine: Constructive dismissal is a dismissal in disguise. There is cessation of work
in constructive dismissal 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." To be considered as such, an act must be a display of utter
discrimination or insensibility on the part of the employer so intense that it
becomes unbearable for the employee to continue with his employment. The law
recognizes and resolves this situation in favor of employees in order to protect their
rights and interests from the coercive acts of the employer.
ER: On June 1, 2003, Delfin Mina was assigned as the college laboratory custodian
of the school of nursing and was divested of his teaching load, subject to automatic
termination without need for any further notification. He was the only one among
several teachers transferred to the college department who was divested of
teaching load.
In early June 2004, Mina was offered early retirement by DWCL. He initially declined
the offer. He later received a memorandum from the office of DWCL’s dean
enumerating specific acts of gross or habitual negligence, insubordination and
reporting for work under the influence of alcohol. Sensing that it was pointless to
continue employment with DWCL, he requested that his retirement date be
adjusted to September 2004 to avail of better benefits which was denied. Instead,
he was paid only P275,513.10 as retirement pay. It was made to appear that his
services were terminated by reason of redundancy to avoid any tax implications. He
was also made to sign a deed of waiver and quitclaim.
SC: In this case, Mina’s transfer clearly amounted to a constructive dismissal. For
almost 22 years, he was a high school teacher enjoying a permanent status in
DWCL’s high school department. In 2002, he was appointed as an associate
professor at the college department but shortly thereafter, or on June 1, 2003, he
was appointed as a college laboratory custodian, which is a clear relegation from his
previous position. Not only that. He was also divested of his teaching load. His
appointment even became contractual in nature and was subject to automatic
termination after one year "without any further notification." Aside from this, Mina
was the only one among the high school teachers transferred to the college
department who was divested of teaching load. More importantly, DWCL failed to
show any reason for Mina’s transfer and that it was not unreasonable,
inconvenient, or prejudicial to him.
Also, the CA correctly ruled that Mina’s appointment as laboratory custodian was a
demotion. There is demotion when an employee occupying a highly technical
position requiring the use of one’s mental faculty is transferred to another position,
where the employee performed mere mechanical work – virtually a transfer from a
position of dignity to a servile or menial job. The assessment whether Mina’s
transfer amounted to a demotion must be done in relation to his previous position,
that is, from an associate college professor, he was made a keeper and inventory-
taker of laboratory materials. Clearly, Mina’s new duties as laboratory custodian
were merely perfunctory and a far cry from his previous teaching job, which
involved the use of his mental faculties. And while there was no proof adduced
showing that his salaries and benefits were diminished, there was clearly a
demotion in rank. As was stated in Blue Dairy Corporation v. NLRC, "[i]t was virtually
a transfer from a position of dignity to a servile or menial job."
96. Intec Cebu, Inc. v. Court of Appeals, G.R. No. 189851, June 22, 2016
FACTS:EEs were hired by ER as production workers. Their working hours were
reduced because of lack of job orders. EEs filed illegal dismissal arguing they were
constructively dismissed because ER hired other EEs despite “lack of job orders”. SC
held there was constructive dismissal because Intec’s unilateral and arbitrary
reduction of the work day scheme had significantly greatly reduced respondents’
salaries thereby rendering it liable for constructive dismissal.
DOCTRINE:Constructive dismissal occurs when there is cessation of work because
continued employment is rendered impossible, unreasonable or unlikely; when
there is a demotion in rank or diminution in pay or both; or when a clear
discrimination, insensibility, or disdain by an employer becomes unbearable to the
employee. Intec’s unilateral and arbitrary reduction of the work day scheme had
significantly greatly reduced respondents’ salaries thereby rendering it liable for
constructive dismissal.
97. Divine Word College of Laoag v. Mina, G.R. No. 195155, April 13, 2016
Doctrine: The basis for computing separation pay is usually the length of the
employee’s past service, while that for backwages is the actual period when the
employee was unlawfully prevented from working. The normal consequences of
respondents’ illegal dismissal, then, are reinstatement without loss of seniority
rights, and payment of backwages computed from the time compensation was
withheld up to the date of actual reinstatement. Where reinstatement is no longer
viable as an option, separation pay equivalent to one (1)-month salary for every
year of service should be awarded as an alternative. The payment of separation pay
is in addition to payment of backwages.
Retirement benefits are a form of reward for an employee’s loyalty and service to
an employer and are earned under existing laws, [Collective Bargaining
Agreements], employment contracts and company policies. Separation pay, on the
other hand, is that amount which an employee receives at the time of his severance
from employment, designed to provide the employee with the wherewithal during
the period that he is looking for another employment.
ER: The Society of Divine Word Educational Association established a Retirement
plan which has a provision on portability which allows a member to carry the
earned credit for his number of years of service from his former participating
employer to his new employer.
Mina was first employed as a High School teacher then principal at Academy of St.
Joseph. He was then transferred to DWCL’s college department. Thereafter, he was
assigned as the College Laboratory Custodian and was divested of teaching load. He
was offered early retirement which he initially declined. However, he then accepted
the retirement. He filed a case for illegal dismissal and recovery of separation pay.
Note: Pending the resolution of this case, Mina died.
WON Mina was constructively dismissed? Yes. Mina’s transfer amounted to a
constructive dismissal. His appointment as laboratory custodian was a demotion.
Given the finding of constructive dismissal, Mina, therefore, is entitled to
reinstatement without loss of seniority rights, and payment of backwages
computed from the time compensation was withheld up to the date of actual
reinstatement.
The Court notes that aside from full compulsory retirement pay, the NLRC awarded
full backwages and separation pay, in lieu of reinstatement.
Computation of Mina’s backwages should be from the time he was constructively
dismissed on June 1, 2003 until June 18, 2005.
Separation pay should be awarded since reinstatement is no longer viable due to
Mina’s death in 2005. In the computation of separation pay, the Court stresses that
it should not go beyond the date an employee was deemed to have been actually
separated from employment, or beyond the date when reinstatement was
rendered impossible. The period for the computation of separation pay Mina is
entitled to shall therefore begin to run from June 1, 1979, when he was transferred
to DWCL from ASJ, until his death on June 18, 2005, or for a period of 26 years.
98. Manalo v. Ateneo de Naga University
99. Philippine Span Carriers Corp. v. Pelayo
100. Saudi Arabia Arilines v. Rebrsrncio
101. Pascua v. Bank wise
102. Exocet Security v. Serrano, G.R. No. 198538, September 29, 2014
CASE LAW/ DOCTRINE: While the Court has recognized the security guards’ right to
security of tenure under the "floating status" rule, the Court has similarly
acknowledged the management prerogative of security agencies to transfer
security guards when necessary in conducting its business, provided it is done in
good faith. In Megaforce Security and Allied Services, Inc. vs. Lactao, the Court
explained: “In cases involving security guards, a relief and transfer order in itself
does not sever employment relationship between a security guard and his agency.
An employee has the right to security of tenure, but this does not give him such a
vested right in his position as would deprive the company of its prerogative to
change his assignment or transfer him where his service, as security guard, will be
most beneficial to the client. Temporary "off-detail" or the period of time security
guards are made to wait until they are transferred or assigned to a new post or
client does not constitute constructive dismissal as their assignments primarily
depend on the contracts entered into by the security agencies with third parties.
Indeed, the Court has repeatedly recognized that "off-detailing" is not equivalent to
dismissal, so long as such status does not continue beyond a reasonable time; when
such a "floating status" lasts for more than six months, the employee may be
considered to have been constructively dismissed.”
Emergency Recit: Exocet assigned Serrano as “close-in” security personnel for one
of JG’s corporate officers. He was then reassigned twice 8 years after. Eventually,
Serrano was relieved by JG. For more than 6 months after, he was without any
reassignment. He filed a case for illegal dismissal against Exocet as a result. Exocet
denied dismissing Serrano and claimed that it cannot be faulted for not being able
to give any assignments to Serrano because in those 6 months, it had no client in
need of VIP security. In fact, Exocet offered for Serrano to be temporarily assigned
to general security services, but was declined. LA ruled that Serrano was put on a
floating status and was constructively dismissed. NLRC ruled... [ang labo lol]. CA
ruled in favour of Serrano. The SC ruled for Exocet.
103. Spectrum Security Services, Inc. v. Grave, G.R. No. 196650, June 7, 2017
DOCTRINE: Security guards, like other employees in the private sector, are entitled
to security of tenure. The employment of security guards generally depends on
their employers' contracts with clients who are third parties to the employment
relationship, and the requirements of the latter for security services and what will
be beneficial to them dictate the posting of the security guards. It is also relevant to
mention that their employers retain the management prerogative to change their
assignments and postings, and to decide to temporarily relieve them of their
assignments. In other words, their security of tenure, though it shields them from
demotions in rank or diminutions of salaries, benefits and other privileges, does not
vest them with the right to their positions or assignments that will prevent their
transfers or re-assignments (unless the transfers or re-assignments are motivated
by discrimination or bad faith, or effected as a form of punishment or demotion
without sufficient cause). Such peculiar conditions of their employment render
inevitable that some of them just have to undergo periods of reserved or off-detail
status that should not by any means equate to their dismissal. Only when the
period of their reserved or off-detail status exceeds the reasonable period of six
months without reassignment should the affected security guards be regarded as
dismissed.
Indeed, there should be no indefinite lay-offs. After the period of six months, the
employers should either recall the affected security guards to work or consider
them permanently retrenched pursuant to the requirements of the law; otherwise,
the employers would be held to have dismissed them, and would be liable for such
dismissals.
ER: Petitioner employed and posted the respondents at the premises of Ibiden
located in the First Philippine Industrial Park in Sto. Tomas, Batangas. The
controversy started when the petitioner implemented an action plan as part of its
operational and manpower supervision enhancement program geared towards the
gradual replacement of security guards at Ibiden. Notices to Return to Unit were
issued to the respondents in July and August 2008 directing them to report to its
head office and to update their documents for re-assignment. Respondents filed a
complaint for constructive dismissal. The Supreme Court held that the notices sent
to them contained nothing from which to justly infer their having been terminated
from their employment. SC has already recognized the management prerogative of
the petitioner as their employer to change their postings and assignments without
severing their employment relationship. Respondents failed to properly establish
that they were dismissed by the petitioner. Aside from the respondents’ plain
allegation that they were illegally dismissed, no other evidence was presented by
the respondents to support their contentions.
104. Padilla v. Airborne Security Service Inc.
105. Grace Christian High School v. Lavandera, G.R. No. 177845, Aug 20, 2014
DOCTRINE: Section 5.2, Rule II of the Implementing Rules of Book VI of the Labor
Code, as amended, promulgated to implement RA 7641, further clarifies what
comprises the "½ month salary" due a retiring employee, to wit:
SEC. 5. Retirement Benefits. x x x x
5.2 Components of One-half (1/2) Month Salary.— For the purpose of determining
the minimum retirement pay due an employee under this Rule, the term "one-half
month salary" shall include all the following:
(a) Fifteen (15) days salary of the employee based on his latest salary rate. As used
herein, the term "salary" includes all remunerations paid by an employer to his
employees for services rendered during normal working days and hours, whether
such payments are fixed or ascertained on a time, task, piece or commission basis,
or other method of calculating the same, and includes the fair and reasonable
value, as determined by the Secretary of Labor and Employment, of food, lodging or
other facilities customarily furnished by the employer to his employees. The term
does not include cost of living allowance,profit-sharing payments and other
monetary benefits which are not considered as part of or integrated into the
regular salary of the employees.
(b) The cash equivalent of not more than five (5) days of service incentive leave;
(c) One-twelfth of the 13th month paydue the employee.
(d) All other benefits that the employer and employee may agree upon that should
be included in the computation of the employee’s retirement pay.
ER: GCHS has a retirement plan for its faculty and non-faculty members, which
gives it the option to retire a teacher who has rendered at least 20 years of service,
regardless of age, with a retirement pay of one-half (1/2) month for every year
ofservice. Considering, however, that GCHS computed Filipinas’ retirement pay
without including one-twelfth (1/12) of her 13th month pay and the cash equivalent
of her five (5) days SIL, both the NLRC and the CA correctly ruled that Filipinas’
retirement benefits should be computed in accordance withArticle 287 of the Labor
Code, as amended by RA 7641, being the more beneficent retirement scheme. They
differ, however, in the resulting benefit differentials due to divergent
interpretations of the term "one-half (1/2) month salary" as used under the law.
The Court, in the case of Elegir v. Philippine Airlines,Inc., has recently affirmed that
"one-half (1/2) month salary means 22.5 days: 15 days plus 2.5 days representing
one-twelfth (1/12) of the 13th month pay and the remaining 5 days for [SIL]." The
Court sees no reason to depart from this interpretation. GCHS’ argument therefore
that the 5 days SIL should be likewise pro-rated to their 1/12 equivalent must fail.
106. Universal Robina Sugar Milling Corp. v. Caballeda, 560 SCRA 115
DOCTRINE: In the absence of any provision on optional retirement in a CBA, other
employment contract, or employer's retirement plan, an employee 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 employee.
ER: Complainants were employees of petitioner Universal Robina. Later on, RA 7641
(amending Art. 287 LC on “retirement”). Subsequently, Universal Robina and the
National Federation of Labor, entered into a CBA which provided that the
retirement benefits of the members shall be in accordance with law. Complainants
then having reached the age of 60, were allegedly forced to retire thus, they filed
for illegal dismissal because it was in violation of the provisions of RA 7641 having
been forced to retire at 60 years old, not 65. SC held that R.A.7641 can be given
retroactive effect, as in this case, provided that (1) the claimant for retirement
benefits was still in the employ of the employer 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. Said requisites were satisfied thus
warranting application of RA 7641 which provides that forced retirement is at age
65.
107. Obusan v. PNB, G.R. No. 181178, July 26, 2010
Doctrine: Article 287 of the Labor Code, as amended, applies only to a situation
where (1) there is no CBA or other applicable employment contract providing for
retirement benefits for an employee; or (2) there is a collective bargaining
agreement or other applicable employment contract providing for retirement
benefits for an employee, but it is below the requirement set by law. The rationale
for the first situation is to prevent the absurd situation where an employee,
deserving to receive retirement benefits, is denied them through the nefarious
scheme of employers to deprive employees of the benefits due them under existing
labor laws. The rationale for the second situation is to prevent private contracts
from derogating from the public law.
ER: Obusan was hired by PNB when it was still a GOCC. When PNB was privatized,
they implemented a retirement plan (PNB-RRP) in which the compulsory retirement
age was 60. When Obusan was about to be compulsorily retired, she questioned
the PNB-RRP and filed a complaint for illegal dismissal and ULP, claiming that under
Art. 287 of the LC, she should be retired only at 65 years old. LA, NLRC, and CA ruled
against her. Issue is w/n PNB may unilaterally lower the compulsory retirement age
to 60 years without violating Article 287 of the Labor Code and Obusan’s alleged
right to retire at the age of 65 years? SC held that PNB can. Under LC, the
retirement age is primarily determined by the existing agreement or employment
contract. Absent such an agreement, the retirement age shall be fixed by law. In
this case, there is an agreement which complied with the requirements that 1) the
benefits should not be less that what is provided by law; and 2) employees should
accept the plan. Since the RRP was incorporated in the CBA, and even Obusan, a
managerial employee, did not raise objections, it was deemed accepted by the
employees.
108. Goodyear Phils. v. Angus, G.R. No. 185449, November 12, 2014
Doctrine: In the absence of an express or implied prohibition against it, collection of
both retirement benefits and separation pay upon severance from employment is
allowed. This is grounded on the social justice policy that doubts should always be
resolved in favor of labor rights.
ER: Angus was terminated from employment because her position of Secretary to
the Manager of Quality and Technology was redundant and no longer necessary.
Angus accepted the checks covering her retirement benefits and other benefits.
However, she annotated in the acknowledgement receipt that she did so under
protest claiming also her separation pay. In response to the protest, the company
replied stating that they already gave Angus the most favorable separation benefits.
Angus filed a complaint for illegal dismissal. The company argued that Angus
acceptance of early retirement benefits barred her from recovering separation pay
due to redundancy since the CBA supports only the grant of one benefit. The SC
held that Angus is entitled to both separation pay and early retirement benefit due
to the absence of a specific provision in the CBA prohibiting recovery of both. The
company alleges that there is a provision in the last CBA against the recovery of
both retirement benefits and separation pay. To support their claim, petitioners
submitted a copy of what appears to be a portion of the CBA where Section 1,
Article XI thereof provides that the availment of retirement benefits precludes
entitlement to any separation pay. The same, however, can hardly be considered as
substantial evidence because it does not appear to be an integral part of
Goodyear’s CBA.
109. Robina Farms Cebu v. Villa
Doctrine: Retirement is the result of a bilateral act of both the employer and the
employee based on their voluntary agreement that upon reaching a certain age, the
employee agrees to sever his employment
Emergency Recit: Villa was employed by Robina Farms. She was enticed to avail of
the early retirement plan, which she applied for. Subsequently, she was charged
and found guilty of violating company rules (delay in the submission of the
invoices). She was then suspended for 10 days. After serving such suspension, she
followed up her application. It was initially approved but was later denied and she
was advised to tender her resignation for lower benefits. She manifested her desire
to return to work, but was prevented. She then filed an illegal dismissal case. The SC
ruled that she was illegally dismissed. Her application (which was denied) did not
manifest her intention to sever employment, but opting her to retire by virtue of
her having qualified under the plan. Although she applied, she did so with the belief
of higher benefits. As such, her consent is not deemed freely given. She was illegally
dismissed.
110.United Doctors Medical Center v. Bernadas