UNIVERSITY OF CALOOCAN CITY

CAMARIN CAMPUS

LABOR RELATION
AND NEGOTIATION
HRMEC 321
 GROUP 1 CASE 1
BPI vs. BPI Employees et.al., G.R. No. 164301: October 19, 2011
LEONARDO-DE CASTRO, J.:

FACTS: Bank of the Philippine Islands (BPI) moves for reconsideration of the Supreme
Court’s Decision dated August 10, 2010, holding that former employees of the Far East
Bank and Trust Company (FEBTC) “absorbed” by BPI pursuant to the two banks’
merger in 2000 were covered by the Union Shop Clause in the then existing collective
bargaining agreement (CBA) of BPI with respondent BPI Employees Union-Davao
Chapter-Federation of Unions in BPI Unibank (the Union).
The Union Shop Clause involved in the controversy provided in part, thus: “New
employees falling within the bargaining unit as defined in Article I of this Agreement,
who may hereafter be regularly employed by the Bank shall, within thirty (30) days after
they become regular employees, join the Union as a condition of their continued
employment.”
In seeking the reversal of August 10, 2010 Decision, petitioner insists that FEBTC
employees cannot be considered new employees as BPI merely stepped into the shoes
of FEBTC as an employer purely as a consequence of the merger.
ISSUE: Whether or not the “absorbed” FEBTC employees fell within the definition of
“new employees” under the Union Shop Clause.
RULING: Yes. Although by virtue of the merger BPI steps into the shoes of FEBTC as a
successor employer as if the former had been the employer of the latter’s employees
from the beginning it must be emphasized that, in reality, the legal consequences of the
merger only occur at a specific date, i.e., upon its effectivity which is the date of
approval of the merger by the SEC.
In other words, the obligation of BPI to pay the salaries and benefits of the former
FEBTC employees and its right of discipline and control over them only arose with the
effectivity of the merger. Concomitantly, the obligation of former FEBTC employees to
render service to BPI and their right to receive benefits from the latter also arose upon
the effectivity of the merger.
Hence, what is material is that all of these legal consequences of the merger took place
during the life of an existing and valid CBA between BPI and the Union wherein they
have mutually consented to include a Union Shop Clause.
 GROUP 1 CASE 2
ARELLANO UNIVERSITY EMPLOYEES AND WORKERS UNION, et al. v.
COURT OF APPEALS, et al. 502 SCRA 219 (2006), THIRD DIVISION
(Carpio Morales, J.)

FACTS: An ordinary striking worker may not be declared to have lost his employment
status by mere participation in an illegal strike. The Arellano University Employees and
Workers Union (the Union), the exclusive bargaining representative of about 380
rank-and-file employees of Arellano University, Inc. (the University), filed with the
National Conciliation and Mediation Board (NCMB) a Notice of Strike charging the
University with Unfair Labor Practice (ULP). After several controversies and
petitions, a strike was staged.
Upon the lifting of the strike, the University filed a Petition to Declare the Strike Illegal
before the National Labor Relations Commission (NLRC). The NLRC issued a
Resolution holding that the University was not guilty of ULP. Consequently, the strike
was declared illegal. All the employees who participated in the illegal strike were
thereafter declared to have lost their employment status.
ISSUE: Whether or not an employee is deemed to have lost his employment by
mere participation in an illegal strike

RULING: Under Article 264 of the Labor Code, an ordinary striking worker may not
be declared to have lost his employment status by mere participation in an illegal strike.
There must be proof that he knowingly participated in the commission of illegal acts
during the strike. While the University adduced photographs showing strikers picketing
outside the university premises, it failed to identify who they were. It thus failed to meet
the ―substantiality of evidence test‖ applicable in dismissal cases. With respect to the
union officers, as already discussed, their mere participation in the illegal strike warrants
their dismissal.
 GROUP 1 CASE 3
ASIA PACIFIC CHARTERING (PHILS.) INC. v. MARIA LINDA R. FAROLAN
393 SCRA 454 (2002), THIRD DIVISION (Carpio Morales, J.)
The termination of a managerial employee on the ground of “loss of confidence” should
have a basis and the determination of the same cannot be left entirely to the employer.
FACTS: Petitioner Asia Pacific Chartering (Phils.) Inc. (Asia) is tasked with the selling
of passenger and cargo spaces for Scandinavian Airlines System. Petitioner
Asia, through its Vice President Catalino Bondoc (Bondoc), offered Respondent Maria
Linda R. Farolan (Farolan) the sales manager position to which Farolan accepted. Upon
Vice President Bondoc’s request, Carolan submitted a detailed report
attributing the drop of sales revenue to market forces beyond her control.
Consequently, Asia directed Roberto Zozobrado (Zozobrado) to implement
solutions. Zozobrado informally took over Farolan’s marketing and sales
responsibilities but she continued to receive her salary. Asia claims that
the increase in sales revenue was due to Zozobrado’s management.
Asia then sent a letter of termination to Farolan on the ground of ―loss
of confidence‖, forcing Farolan to file a complaint for illegal dismissal. The Labor Arbiter
found that the dismissal was illegal for lack of just cause, however, such decision was
reversed by the National Labor Relations Commission (NLRC) stating that the
termination of employment due to loss of confidence is within management
prerogative. On appeal, the Court of Appeals upheld the labor arbiter’s
decision. Hence, the filing of this petition.

ISSUE: Whether or not Respondent Farolan’s dismissal was illegal

RULING: A statement of the requisites for a valid dismissal of an employee is thus in

order, to wit: (a) the employee must be afforded due process, i.e., he must be
given opportunity to be heard and to defend himself; and (b) dismissal must be for a
valid cause. The manner by which Respondent Farolan was dismissed violated the
basic precepts of fairness and due process - Respondent Farolan was dismissed,
without being afforded the opportunity to be heard and to present evidence in her
defense. She was never given a written notice stating the particular acts
or omission constituting the grounds for her dismissal as required by law. With respect
to rank and file personnel, loss of trust and confidence as ground for valid dismissal
requires proof of involvement in the alleged events in question and that mere
uncorroborated assertions and accusations by the employer will not be sufficient. But as
regards a managerial employee, mere existence of a basis for believing that such
employee has breached the trust of his employer would suffice for his dismissal.
Loss of trust and confidence to be a valid ground for an employee’s
dismissal must be based on a willful breach and founded on clearly established facts.
A breach is willful if it is done intentionally, knowingly and purposely, without
justifiable excuse.
It is not disputed that Farolan’s job description, and the terms and conditions of
her employment, with the exception of her salary and allowances, were never
reduced to writing. Even assuming, however, that Farolan was a managerial
employee, the stated ground (in the letter of termination) for her dismissal, ―loss of
confidence, ‖ should have a basis and determination thereof cannot be left
entirely to the employer.
 GROUP 1 CASE 4
BACOLOD-TALISAY REALTY AND DEVELOPMENT CORPORATION, et al. v.
ROMEO DELA CRUZ 587 SCRA 304 (2009), SECOND DIVISION (Carpio Morales,
J.)

FACTS: The twin notice requirement provided by law should be observed in order for a
dismissal to be valid. Romeo dela Cruz (respondent) is an employee of Bacolod-Talisay
Realty Development Corporation (Bacolod-Talisay) as an overseer. He was suspended
for 30 days for payroll paddling, selling cane points without the knowledge and consent
of management and misappropriating the proceeds thereof, and renting out tractor for
use in another farm. After 30 days, he received a letter informing him that he was
dismissed from his work. Respondent dela Cruz and Bacolod-Talisay had a
confrontation before the barangay council but they did not reach any settlement. A case
for illegal dismissal was filed by dela Cruz, and it was dismissed by the Labor Arbiter as
well as the NLRC. On the other hand, the Court of Appeals reversed the decision of the
NLRC finding that the Bacolor-Dalisay did not comply with the guidelines for the
dismissal of an employee.

ISSUE: Whether or not petitioner, Bacolod-Talisay observed due process in dismissing

Romeo dela Cruz

RULING: The Court of Appeals correctly held though that Bacolod-Talisay did not
comply with the proper procedure in dismissing respondent. In other words,
BacolodTalisay failed to afford dela Cruz due process by failing to comply with the twin
notice requirement in dismissing him, viz: 1) a first notice to apprise him of his fault, and
2) a second notice to him that his employment is being terminated. The letter dated
June 3, 1997 sent to dela Cruz was a letter of suspension. It did not comply with the
required first notice, the purpose of which is to apprise the employee of the cause for
termination and to give him reasonable opportunity to explain his side. In fine, while the
dismissal of dela Cruz was for a just cause, the procedure in effecting the same was not
observed.
 GROUP 1 CASE 5
BILFLEX PHIL. INC. LABOR UNION et al. v. FILFLEX INDUSTRIAL AND
MANUFACTURING CORPORATION AND BILFLEX (PHILS.), INC. 511 SCRA 247
(2006), THIRD DIVISION (Carpio Morales, J.)
FACTS: Any union officer who knowingly participates in an illegal strike and any worker
or union who knowingly participates in the commission of illegal acts during a strike may
be declared to have lost his employment status. Biflex Philippines Inc. Labor Union and
Filflex Industrial and Manufacturing Labor Union are the respective collective bargaining
agents of the employees of the sister companies Biflex and Filflex which are engaged in
the garment business. They are situated in one big compound and they have a common
entrance. On October 24, 1990, the labor sector staged a welga ng bayan to protest
against oil price hike; the unions staged a work stoppage which lasted for several days,
prompting the companies to file a petition to declare the work stoppage illegal for failure
to comply with procedural requirements. The Labor Arbiter held that the strike is illegal
and declared the officers of the union to have lost their employment status.
ISSUE: Whether or not the staged strike is illegal and a ground for the lost of
employment status of the union officers
RULING: Article 264 (a) of the Labor Code states that any union officer who knowingly
participates in an illegal strike and any worker or union who knowingly participates in the
commission of illegal acts during a strike may be declared to have lost his employment
status. Thus, a union officer may be declared to have lost his employment status if he
knowingly participates in an illegal strike and in this case, the strike is declared illegal by
the court because the means employed by the union are illegal. Here, the unions
blocked the egress and ingress of the company premises thus, a violation of Article 264
(e) of the Labor Code which would affect the strike as illegal even if assuming arguendo
that the unions had complied with legal formalities and thus, the termination of the
employees was valid. The court said that the legality of a strike is determined not only
by compliance with its legal formalities but also by means by which it is carried out.
 GROUP 2 CASE 1
ERIC DELA CRUZ et al. v. COCA-COLA BOTTLERS PHILS. INC.
594 SCRA 761 (2009), SECOND DIVISION (Carpio Morales, J.)
Acts by employees which are inimical to the employer’s interest are deemed willful
breach of the trust and confidence reposed in them.
FACTS: Raymund Sales, a salesman of Coca-Cola Bottlers Phils. Inc (Coca-Cola),
figured an accident while driving a vehicle he was not authorized to use. Sales was
hospitalized and was observed that he was under the influence of liquor at the time of
the accident and was included in the police blotter. Respondent Coca-Cola discovered
that Sales’ co-employees secured a police report and medical certificate which omitted
the fact that Sales was under the influence of alcohol.
Coca-Cola required Sales’ Supervisors John Espina, Raul M. Lacuata (Lacuata), and
Eric dela Cruz (dela Cruz), to explain why no disciplinary action be taken against them.
Espina denied the fact that he altered the documents. Petitioner Dela Cruz said that he
just asked for a copy of the police report one Melvin Asuncion. And lastly, Petitioner
Lacuata said that he has no participation in the alleged alteration because he only
picked-up the medical certificate from the Hospital. Further investigation shows that they
conspired to alter the medical certificate and the police report. After such finding they
were dismissed from employment. Espina, Lacuata and dela Cruz filed separate
complaints for illegal dismissal with the contention that the alleged altering of
documents is work related and is a willful breach of confidence.
The Labor Arbiter dismissed Espina’s complaint for lack of merit. Dela Cruz was found
to be illegally dismissed. Lacuata was found to be at fault for doing nothing to stop
Espina from obtaining false police and medical reports. The respondent Coca-Cola was
ordered to reinstate dela Cruz and pay both petitioners dela Cruz and Lacuata their
respective back wages, 13th month pay and separation pay. On appeal, the National
Labor Relations Commission (NLRC) affirmed the Labor Arbiter’s decision but deleted
the award of moral damages in favor of dela Cruz. Its motion for reconsideration having
been denied, respondent filed a Petition for Certiorari before the Court of Appeals (CA).
The CA set aside the NLRC decision and held that petitioners Lacuata and dela Cruz
were validly dismissed.
ISSUE: Whether or not Lacuata and dela Cruz were validly dismissed on the grounds
of altering the medical certificate and police report of Sales
RULING: Dela Cruz et al. contend, however, that for loss of trust and confidence to be
a ground for termination of employment, it must be willful and must be connected with
the employee’s work. By obtaining an altered police report and medical certificate, Dela
Cruz et al. deliberately attempted to cover up the fact that Sales was under the
influence of liquor at the time the accident took place. In so doing, they committed acts
inimical to respondent’s interests. They thus committed a work-related willful breach of
the trust and confidence reposed in them.
 GROUP 2 CASE 2
ROSA C. RODOLFO v. PEOPLE OF THE PHILIPPINES 498 SCRA 377 (2006),
THIRD DIVISION (Carpio Morales, J.)
“Promises or offers for a fee employment” is sufficient to warrant conviction for illegal
recruitment. FACTS: Petitioner Rosa C. Rodolfo approached private complainants
Necitas Ferre and Narciso Corpus individually and invited them to apply for overseas
employment in Dubai. Rodolfo, being their neighbor, Ferre and Corpus agreed and went
to the former’s office. The office bore the business name ―Bayside Manpower Export
Specialist‖. In that office, Ferre gave P1,000.00 as processing fee and another
P4,000.00. Likewise, Corpus gave Rodolfo P7,000.00. Rodolfo then told Ferre and
Corpus that they were scheduled to leave for Dubai.
However, private complainants and all the other applicants were not able to depart on
the scheduled date as their employer allegedly did not arrive. Thus, their departure was
rescheduled, but the result was the same. Suspecting that they were being hoodwinked,
Ferre and Corpus demanded of Rodolfo to return their money. Except for the refund of
P1,000.00 to Ferre, Rodolfo was not able to return Ferre’s and Corpus’ money. Ferre,
Corpus and three others then filed a case for illegal recruitment in large scale with the
Regional Trial Court (RTC) against Rodolfo. The RTC rendered judgement against
Rodolfo but in imposing the penalty, the RTC took note of the fact that while the
information reflected the commission of illegal recruitment in large scale, only the
complaint of two (Ferre and Corpus) of the five complainants was proven. Rodolfo
appealed to the Court of Appeals (CA). The CA dismissed the petition but modified the
penalty imposed by the trial court. The CA also dismissed Rodolfo’s Motion for
Reconsideration.
ISSUE: Whether or not Rodolfo is guilty of illegal recruitment in large scale
RULING: The elements of the offense of illegal recruitment, which must concur, are: (1)
that the offender has no valid license or authority required by law to lawfully engage in
recruitment and placement of workers; and (2) that the offender undertakes any activity
within the meaning of recruitment and placement under Article 13(b), or any prohibited
practices enumerated under Article 34 of the Labor Code. If another element is present
that the accused commits the act against three or more persons, individually or as a
group, it becomes an illegal recruitment in a large scale.
Article 13 (b) of the Labor Code defines recruitment and placement‖ as any act of
canvassing, enlisting, contracting, transporting, utilizing, hiring or procuring workers,
and includes referrals, contract services, promising or advertising for employment,
locally or abroad, whether for profit or not That the first element is present in the case at
bar, there is no doubt. Jose Valeriano, Senior Overseas Employment Officer of the
Philippine Overseas Employment Administration, testified that the records of the POEA
do not show that Rodolfo is authorized to recruit workers for overseas employment. A
Certification to that effect was in fact issued by Hermogenes C. Mateo, Chief of the
Licensing Division of POEA.
The second element is doubtless also present. The act of referral, which is included in
recruitment, is ―the act of passing along or forwarding of an applicant for employment
after an initial interview of a selected applicant for employment to a selected employer,
placement officer or bureau Rodolfo’s admission that she brought private complainants
to the agency whose owner she knows and her acceptance of fees including those for
processing betrays her guilt. Rodolfo issued provisional receipts indicating that the
amounts she received from the private complainants were turned over to Luzviminda
Marcos and Florante Hinahon does not free her from liability. For the act of recruitment
may be ―for profit or not. It is sufficient that the accused ―promises or offers for a fee
employment‖ to warrant conviction for illegal recruitment. Parenthetically, why Rodolfo
accepted the payment of fees from the private complainants when, in light of her claim
that she merely brought them to the agency, she could have advised them to directly
pay the same to the agency, she preferred no explanation. On Rodolfo’s reliance on
Señoron, true, the Court held that issuance of receipts for placement fees does not
make a case for illegal recruitment. But it went on to state that it is ―rather the
undertaking of recruitment activities without the necessary license or authority‖ that
makes a case for illegal recruitment.
 GROUP 2 CASE 3
SUNACE INTERNATIONAL MANAGEMENT SERVICES, INC. v. NATIONAL LABOR
RELATIONS COMMISSION et al. 480 SCRA 146 (2006), THIRD DIVISION (Carpio
Morales, J.)
There is an implied revocation of an agency relationship when after the termination of
the original employment contract, the foreign principal directly negotiated with the
employee and entered into a new and separate employment contract.
FACTS: Respondent Divina Montehermozo is a domestic helper deployed to Taiwan by
Sunace International Management Services (Sunace) under a 12-month contract. Such
employment was made with the assistance of Taiwanese broker Edmund Wang. After
the expiration of the contract, Montehermozo continued her employment with her
Taiwanese employer for another 2 years. When Montehermozo returned to the
Philippines, she filed a complaint against Sunace, Wang, and her Taiwanese employer
before the National Labor Relations Commission (NLRC).
She alleges that she was underpaid and was jailed for three months in Taiwan. She
further alleges that the 2-year extension of her employment contract was with the
consent and knowledge of Sunace. Sunace, on the other hand, denied all the
allegations. The Labor Arbiter ruled in favor of Montehermozo and found Sunace liable
thereof. The National Labor Relations Commission and Court of Appeals affirmed the
labor arbiter’s decision. Hence, the filing of this appeal.
ISSUE: Whether or not the 2-year extension of Montehermozo’s employment was made
with the knowledge and consent of Sunace
RULING: Contrary to the Court of Appeals finding, the alleged continuous
communication was with the Taiwanese broker Wang, not with the foreign employer.
The finding of the Court of Appeals solely on the basis of the telefax message written by
Wang to Sunace, that Sunace continually communicated with the foreign "principal"
(sic) and therefore was aware of and had consented to the execution of the extension of
the contract is misplaced. The message does not provide evidence that Sunace was
privy to the new contract executed after the expiration on February 1, 1998 of the
original contract.
That Sunace and the Taiwanese broker communicated regarding Montehermozo’s
allegedly withheld savings does not necessarily mean that Sunace ratified the extension
of the contract. As can be seen from that letter communication, it was just an
information given to Sunace that Montehermozo had taken already her savings from her
foreign employer and that no deduction was made on her salary. It contains nothing
about the extension or Sunace’s consent thereto. Parenthetically, since the telefax
message is dated February 21, 2000, it is safe to assume that it was sent to enlighten
Sunace who had been directed, by Summons issued on February 15, 2000, to appear
on February 28, 2000 for a mandatory conference following Montehermozo’s filing of
the complaint on February 14, 2000. Respecting the decision of Court of Appeals
following as agent of its foreign principal, [Sunace] cannot profess ignorance of such an
extension as obviously, the act of its principal extending [Montehermozo’s] employment
contract necessarily bound it, it too is a misapplication, a misapplication of the theory of
imputed knowledge.
The theory of imputed knowledge ascribes the knowledge of the agent, Sunace, to the
principal, employer, not the other way around. The knowledge of the principal-foreign
employer cannot, therefore, be imputed to its agent Sunace. There being no substantial
proof that Sunace knew of and consented to be bound under the 2-year employment
contract extension, it cannot be said to be privy thereto. As such, it and its "owner"
cannot be held solidarily liable for any of Montehermozo’s claims arising from the 2-year
employment extension. As the New Civil Code provides, Contracts take effect only
between the parties, their assigns, and heirs, except in case where the rights and
obligations arising from the contract are not transmissible by their nature, or by
stipulation or by provision of law.
Furthermore, as Sunace correctly points out, there was an implied revocation of its
agency relationship with its foreign principal when, after the termination of the original
employment contract, the foreign principal directly negotiated with Montehermozo and
entered into a new and separate employment contract in Taiwan. Article 1924 of the
New Civil Code states that the agency is revoked if the principal directly manages the
business entrusted to the agent, dealing directly with third persons.
 GROUP 2 CASE 4
U-BIX CORPORATION and EDILBERTO B. BRAVO v. VALERIE ANNE H.
HOLLERO 570 SCRA 373 (2008), SECOND DIVISION (Carpio Morales, J.)
An employer who seeks to dismiss an employee must afford the latter ample
opportunity to be heard and to defend himself with the assistance of his representative if
he so desires.
FACTS: Valerie Anne H. Hollero was hired as a management trainee and was
eventually promoted to facilities manager by U-Bix Corporation (U-Bix). Hollero and
three other employees were later sent to the United States for two months of training for
a newly acquired franchise. Before she left, she signed a contract with U-Bix which
reads that VALERIE ANNE H. HOLLERO shall remain in the employ of UBIX
CORPORATION for a period of five (5) years from completion of her U.S. Training
otherwise she shall reimburse U-BIX CORPORATION for all costs (prorated) and
expenses which U-BIX CORPORATION incurred for her (Hollero's) training in the U.S
U-Bix, citing Hollero’s supposed pattern of tardiness, absences, neglect of duties and
lack of interest, terminated her employment for loss of trust and confidence. U-Bix then
filed against Hollero before the Labor Arbiter for the reimbursement of training expenses
and damages. Subsequently, Hollero also filed a complaint against U-Bix for illegal
dismissal.
The Labor Arbiter (LA) rendered a decision declaring that the dismissal of Hollero is
valid and legal and ordered her to pay U-Bix the reimbursement of her training. It
dismissed Hollero’s complaint for lack of merit. On appeal before the National Labor
Relations Commission (NLRC), the NLRC reversed the LA’s decision. A Motion for
Reconsideration was filed but subsequently denied by NLRC. The Court of Appeals
affirmed the lower court’s decision.
ISSUES: Whether or not Hollero was illegally dismissed by U-Bix
RULING: U-Bix failed to discharge the burden of proof that Hollero’s dismissal is for a
valid and just cause In termination cases, the employer has the burden of proving that
the dismissal is for a valid and just cause. While an employer enjoys a wider latitude of
discretion in terminating the employment of managerial employees, managerial
employees are also entitled to security of tenure and cannot be arbitrarily dismissed at
any time and without cause as reasonably established in an appropriate investigation. In
the case at bar, U-Bix failed to substantiate their allegations of Hollero’s habitual
absenteeism, habitual tardiness, neglect of duties, and lack of interest. Daily time
records, attendance records, or other documentary evidence attesting to these grounds
could have readily been presented to support the allegations but none was. The merits
of a complaint for illegal dismissal do not depend on its prayer but on whether the
employer discharges its burden of proving that the dismissal is valid.
U-Bix failed to comply with the procedural due process of dismissing an employee In
another vein, the Court finds that U-Bix and Bravo failed to comply with the procedural
requirements for a valid dismissal. Hollero being a manager did not excuse them from
observing such procedural requirements. The notice does not inform outright the
employee that an investigation will be conducted on the charges particularized therein
which, if proven, will result to her dismissal. It does not contain a plain statement of the
charges of malfeasance or misfeasance nor categorically state the effect on her
employment if the charges are proven to be true. It does not apprise Hollero of possible
dismissal should her explanation prove unsatisfactory. Besides, the U-Bix and Bravo did
not even establish that Hollero received the memorandum. Neither did U-Bix and Bravo
show that they conducted a hearing or conference during which Hollero, with the
assistance of counsel if she so desired, had opportunity to respond to the charge,
present her evidence, or rebut the evidence presented against her. The meeting with
Hollero on December 23, 1996 did not satisfy the hearing requirement, for Hollero was
not given the opportunity to avail herself of counsel.
Article 277(b) of the Labor Code mandates that an employer who seeks to dismiss an
employee must ―afford the latter ample opportunity to be heard and to defend himself
with the assistance of his representative if he so desires. Expounding on this provision,
the Court held that ―'ample opportunity' connotes every kind of assistance that
management must accord the employee to enable him to prepare adequately for his
defense including legal representation.
 GROUP 2 CASE 5
J-PHIL MARINE, INC. and/or JESUS CANDAVA and NORMAN SHIPPING
SERVICES v. NATIONAL LABOR COMMISSION and WARLITO E. DUMALAOG 561
SCRA 675 (2008), SECOND DIVISION (Carpio Morales, J.)
A compromise agreement is valid as long as the consideration is reasonable and the
employee signed the waiver voluntarily, with a full understanding of what he was
entering into.
FACTS: Worked as a cook on aboard vessels plying overseas, Warlito E. Dumalaog
was employed as a cook on board vessels plying overseas. He filed a pro-forma
complaint on March 4,2002 before the National Labor Relations Commission (NLRC)
against J-Phil Marine, Inc., its then president Jesus Candava, and its foreign principal
Norman Shipping Services. The Labor Arbiter dismissed the complaint for lack of merit.
On appeal, the NLRC reversed the decision of the Labor Arbiter. The Court of Appeals
affirmed the dismissal for failure to attach to the petition all material documents and for
defective verification and certification. Consequently, a petition was filed before the
Court of Appeals. While the case was pending in the Supreme Court, the respondent
entered into a compromise agreement and signed Quitclaims and Release. The same
has been subscribed and sworn to before the Labor Arbiter. Accordingly, the case was
dismissed.
ISSUES: Whether or not the compromise agreement entered into by the respondent,
without his counsel, is valid
RULING: A compromise agreement is valid as long as the consideration is reasonable
and the employee signed the waiver voluntarily, with a full understanding of what he
was entering into. All that is required for the compromise to be deemed voluntarily
entered into is personal and specific individual consent. Thus, contrary to Dumalaoag's
contention, the employee's counsel need not be present at the time of the signing of the
compromise agreement. The relation of attorney and client is in many respects one of
agency, and the general rules of agency apply to such relation. The acts of an agent are
deemed the acts of the principal only if the agent acts within the scope of his authority.
The circumstances of this case indicate that Dumalaoag's counsel is acting beyond the
scope of his authority in questioning the compromise agreement.
 GROUP 3 CASE 1
ALABANG COUNTRY CLUB, et al. v. NATIONAL LABOR RELATIONS
COMMISSION, et al. 466 SCRA 329 (2005), THIRD DIVISION, (Carpio Morales, J.)

FACTS: Petitioner Alabang Country Club, Inc. (ACCI) requested its Internal Auditor
Irene Campos-Ugalde to conduct a study on the profitability of its Food and Beverage
Department (F & B Department). Irene found out that the business had been incurring
substantial losses. Consequently, the management decided to transfer the operation of
the department to La Tasca Restaurant Inc. (La Tasca). ACCI then sent its F & B
Department employees individual letters informing them that their services were being
terminated and that they would receive separation pay. The private respondent Alabang
Country Club Independent Employees Union (Union) filed before the National Labor
Relations Commission (NLRC) a complaint for illegal dismissal, unfair labor practice,
regularization and damages with prayer for the issuance of a writ of preliminary
injunction against ACCI. The Labor Arbiter (LA) dismissed the complaint for illegal
dismissal which was upheld by the NLRC. The Court of Appeals (CA) reversed the
decisions of the LA and NLRC.
ISSUE: Whether or not the ACCI can terminate its business operation
RULING: One of the prerogatives of management is the decision to close the entire
establishment or to close or abolish a department or section thereof for economic
reasons, such as to minimize expenses and reduce capitalization. While the Labor
Code provides for the payment of separation package in case of retrenchment to
prevent losses, it does not obligate the employer for the payment thereof if there is
closure of business due to serious losses. As in the case of retrenchment, however, for
the closure of a business or a department due to serious business losses to be
regarded as an authorized cause for terminating employees, it must be proven that the
losses incurred are substantial and actual or reasonably imminent; that the same
increased through a period of time; and that the condition of the company is not likely to
improve in the near future. The closure of operation of an establishment or undertaking
not due to serious business losses or financial reverses includes both the complete
cessation of operations and the cessation of only part of a company’s activities. For any
bona fide reason, an employer can lawfully close shop anytime. Just as no law forces
anyone to go into business, no law can compel anybody to continue the same. It would
be stretching the intent and spirit of the law if a court interferes with management’s
prerogative to close or cease its business operations just because the business is not
suffering from any loss or because of the desire to provide the workers continued
employment.

GROUP 3 CASE 2
CLARION PRINTING HOUSE, INC. et al. v. NATIONAL LABOR RELATIONS
COMMISSION et al. 461 SCRA 272 (2005), THIRD DIVISION (Carpio Morales, J.)

FACTS: Retrenchment is a valid ground for the dismissal of an employee. Clarion

Printing House (Clarion), a company owned by EYCO Group of Companies (EYCO)
hired Michelle Miclat (Miclat) as marketing assistant on a probationary basis. During that
time, she was not informed of the standards that she should meet to qualify as a regular
employee. EYCO subsequently filed a petition for petition for suspension of payment as
well as an appointment of a rehabilitation receivership committee before SEC on the
ground that they are suffering financial difficulty. Pursuant to this, a retrenchment
occurred, thus terminating Miclat. Conversely, Miclat filed a complaint for illegal
dismissal before the NLRC. Miclat contends that assuming her termination is necessary,
it was not done in a proper manner; there was no notice that was given to her. On the
other hand, Clarion contends that they are not liable for retrenching some employees
because EYCO is being placed under receivership, and a memorandum was given to
employees, hence they substantially complied with the notice requirement. NLRC
rendered its decision in favor of Miclat and found that she was illegally dismissed. On
appeal, the Court of Appeals held that Clarion failed to prove its ground for
retrenchment as well as compliance with the mandated procedure. It further ruled that
Miclat should be reinstated and paid backwages. Hence, this petition.
ISSUE: Whether or not Miclat was illegally dismissed
RULING: It is likewise well-settled that for retrenchment to be justified, any claim of
actual or potential business losses must satisfy the following standards: (1) the losses
are substantial and not de minimis; (2) the losses are actual or reasonably imminent; (3)
the retrenchment is reasonably necessary and is likely to be effective in preventing
expected losses; and (4) the alleged losses, if already incurred, or the expected
imminent losses sought to be forestalled, are proven by sufficient and convincing
evidence. From the provisions of P.D. No. 902-A, as amended, the appointment of a
receiver or management committee by the SEC presupposes a finding that, inter alia, a
company possesses sufficient property to cover all its debts but "foresees the
impossibility of meeting them when they respectively fall due" and "there is imminent
danger of dissipation, loss, wastage or destruction of assets of other properties or
paralization of business operations." That the SEC, mandated by law to have regulatory
functions over corporations, partnerships or associations, appointed an interim receiver
for the EYCO Group of Companies on its petition in light of, as quoted above, the
therein enumerated "factors beyond the control and anticipation of the management"
rendering it unable to meet its obligation as they fall due, and thus resulting to
"complications and problems . . . to arise that would impair and affect [its]
operations . . ." shows that CLARION, together with the other member-companies of the
EYCO Group of Companies, was suffering business reverses justifying, among other
things, the retrenchment of its employees.
 GROUP 3 CASE 3
CARMEN B. DY-DUMALASA v. DOMINGO SABADO S. FERNANDEZ, et al. 593
SCRA 656, (2009), SECOND DIVISION (Carpio Morales, J.)
FACTS: Procedural rules governing service of summons, in quasi-judicial proceedings,
are not strictly construed. Domingo Fernandez, et al., former employees of Helios
Manufacturing Corporation (HELIOS), filed a complaint for illegal dismissal or illegal
closure of business, non-payment of salaries and other money claims against HELIOS.
The Labor Arbiter found that the closure of the Muntinlupa office/plant was a sham, as
HELIOS simply relocated its operations to a new plant in Carmona, Cavite under the
new name of ―Pat & Suzara,‖ in response to the newly-established local union.
HELIOS and it Board of Directors and stockholders were held liable. The NLRC
modified the Labor Arbiter’s Order, holding that Dumalasa is not jointly and severally
liable with HELIOS for Fernandez, et al.’s claim, there being no showing that she acted
in bad faith nor that HELIOS cannot pay its obligations. Dumalasa moved for
reconsideration, but this was denied, hence, she appealed to the Court of Appeals. The
appellate court reversed and set aside the NLRC Resolution, holding that what the
NLRC, in effect, modified was not the Order denying the Motion to Quash the Writ of
Execution, but the Labor Arbiter’s Decision itself. This is an impermissible act since the
Decision has become final and executor; hence, it could no longer be reversed or
modified. Respecting NLRC’s pronouncement that Dumalasa was not jointly and
severally liable, the appellate court held that the same is a superfluity since there was
no statement, either in the main case or in the Writ, that the liability is solidary.
Therefore, Dumalasa is merely jointly liable for the judgment award. Dumalasa moved
for reconsideration of the appellate court’s Decision, which was denied. Hence, this
petition.
ISSUES:
1.) Whether or not the Labor Arbiter acquired jurisdiction over Dumalasa
2.) Whether or not Dumalasa is solidarily liable with HELIOS for the judgment award
RULING: Contrary to Dumalasa’s contention, the Labor Arbiter acquired jurisdiction
over her person regardless of the fact that there was allegedly no valid service of
summons. It bears noting that, in quasi-judicial proceedings, procedural rules governing
service of summons are not strictly construed. Substantial compliance therewith is
sufficient. In the cases at bar, Dumalasa, her husband and three other relatives, were all
individually impleaded in the complaint. The Labor Arbiter furnished her with notices of
the scheduled hearings and other processes. It is undisputed that HELIOS, of which she
and her therein co-respondents in the subject cases were the stockholders and
managers, was in fact heard, proof of which is the attendance of her husband,
President-General Manager of HELIOS, together with counsel in one such scheduled
hearing and the Labor Arbiter’s consideration of their position paper in arriving at the
Decision, albeit the same position paper was belatedly filed. Clearly, Dumalasa was
adequately represented in the proceedings conducted by the Labor Arbiter by the
lawyer retained by HELIOS. Considering the peculiar circumstances of the cases,
HELIOS’ knowledge of the pendency thereof and its efforts to resist them are deemed
to be knowledge and action of petitioner.
That Dumalasa and her fellow members of the Board refused to heed the summons and
avail of the opportunity to defend themselves as they instead opted to hide behind the
corporate veil does not shield them from the application of labor laws. Dumalasa cannot
now thus question the implementation of the Writ of Execution on her on the pretext that
jurisdiction was not validly acquired over her person or that HELIOS has a separate and
distinct personality as a corporate entity. To apply the normal precepts on corporate
fiction and the technical rules on service of summons would be to overturn the bias of
the Constitution and the laws in favor of labor. On Carmen’s liability A perusal of the
Labor Arbiter’s Decision readily shows that, notwithstanding the finding of bad faith on
the part of the management, the dispositive portion did not expressly mention the
solidary liability of the officers and Board members, including Dumalasa.
Ineluctably, absent a clear and convincing showing of the bad faith in effecting the
closure of HELIOS that can be individually attributed to petitioner as an officer thereof,
and without the pronouncement in the Decision that she is being held solidarily liable,
petitioner is only jointly liable. The Court in fact finds that the present action is actually a
last-ditch attempt on the part of Dumalasa to wriggle its way out of her share in the
judgment obligation and to discuss the defenses which she failed to interpose when
given the opportunity.
Even as Dumalasa avers that she is not questioning the final and executory Decision of
the Labor Arbiter and admits liability, albeit only joint, still, she proceeds to interpose the
defenses that jurisdiction was not acquired over her person and that HELIOS has a
separate juridical personality. As for Dumalasa’s questioning the levy upon her house
and lot, she conveniently omits to mention that the same are actually conjugal property
belonging to her and her husband. Whether petitioner is jointly or solidarily liable for the
judgment obligation, the levied property is not fully absolved from any lien except if it be
shown that it is exempt from execution.
 GROUP 3 CASE 4
ADELINO FELIX v. NATIONAL LABOR RELATIONS COMMISSION and REPUBLIC
ASAHI GLASS CORPORATION 442 SCRA 465 (2004), THIRD DIVISION (Carpio
Morales, J.)

FACTS: Petitioner Adelino Felix was hired by the Republic Asahi Glass Corporation as
a Cadet Engineer. Sometime in 1992, Felix was offered a chance to train and qualify for
the position of Assistant Manager but he declined and waived the opportunity to the one
who was next-in-line. By Felix's claim, he was asked by certain officers of the company
to resign and accept a separation package, failing which he would be terminated for
loss of confidence. Felix, however, refused to resign and accept separation benefits,
drawing the officers of the company to, by his claim, start harassing him. Thus, he was
not given work and another employee, Mr. Elmer Tacata, was assigned to take over his
post and function. Unable to withstand the manner by which he was being treated by
the company, Felix, through his lawyer, warned the Republic Asahi Glass Corporation
about the illegality of its actions. Felix attributed the company's harassment against him
to his being a member of the supervisory union then being formed. The Republic Asahi
Glass Corporation subsequently terminated Felix’x services for loss of trust and
confidence. Felix thus lodged a complaint for illegal dismissal. The Labor Arbiter
dismissed Felix's complaint. On appeal, the National Labor Relations Commission
(NLRC) dismissed Felix's complaint for lack of merit. The Court of Appeals likewise
dismissed the complaint.
ISSUE: Whether or not the company’s loss of trust and confidence is founded on facts
established by substantial and competent evidence
RULING: The rule is that high respect is accorded to the findings of fact of quasi-judicial
agencies, more so in the case at bar where both the Labor Arbiter and the NLRC share
the same findings. The rule is not however, without exceptions one of which is when the
findings of fact of the labor officials on which the conclusion was based are not
supported by substantial evidence. The same is true when it is perceived that far too
much is concluded, inferred or deducted from bare facts adduced in evidence. The
employer’s evidence, although not required to be of such degree as that required in
criminal cases i.e. proof beyond reasonable doubt, must be substantial – it must clearly
and convincingly establish the facts upon which loss of confidence in the employee may
be made to rest. In the case at bar, the company failed to discharge this burden. Felix
was hastily dismissed by ASAHI as the former was not given adequate time to prepare
for his defense but was preemptorily dismissed even without any formal investigation or
hearing. It is settled that where the employee denies the charges against him, a hearing
is necessary to thresh out any doubt. The failure of the company to give petitioner, who
denied the charges against him, the benefit of a hearing and an investigation before his
termination constitutes an infringement of his constitutional right to due process. It bears
emphasis that the matter of determining whether the cause for dismissal is justified on
the ground of loss of confidence cannot be left entirely to the employer. Impartial
tribunals do not only rely on the statement made by the employer that there is ―loss of
confidence‖ unless duly proved or sufficiently substantiated. At all events, even if all the
allegations are true, they are not of such nature to merit the penalty of dismissal given
the 14 years in service of Felix. Dismissal is unduly harsh and grossly disproportionate
to the charges. This rule on proportionality – that the penalty imposed should
commensurate to the gravity of the offense – has been observed in a number of cases.
There being no basis in law or in fact justifying Felix’s dismissal on the basis of loss of
trust and confidence, his dismissal was illegal.
 GROUP 3 CASE 5
G & M (PHIL.), INC., v. WILLIE BATOMALAQUE 461 SCRA 111 (2005), THIRD
DIVISION (Carpio Morales, J.)
FACTS: Abdul Aziz Abdullah Al Muhaimid Najad Car Maintenance Association (Abdul
Aziz) hired Willie Batomalaque as car painter through a recruiter and agent petitioner G
& M Phil., Inc. (G&M). Their contract is for 2 years. Batomalaque started working on
March 10, 1992, but on June 7, 1994, he was repatriated. He then filed a complaint
against G&M, Abdul Aziz and Country Empire Insurance Company for non-payment and
underpayment of salaries and damages with the Philippine Overseas Employment
Administration (POEA). The Labor Arbiter (LA) credited Batomalaque’s complaint for
underpayment of salaries during the first year of his contract but denied his other
claims, and ordered G&M and other defendants to pay Batomalaque. On appeal, the
National Labor Relations Commission affirmed the decision of the LA.
ISSUE: Whether or not G&M has the obligation to prove that Batomalaque was paid his
salaries in full
RULING: Specifically, with respect to labor cases, the burden of proving payment of
monetary claims rests on the employer, the rationale being that the pertinent personnel
files, payrolls, records, remittances and other similar documents — which will show that
overtime, differentials, service incentive leave and other claims of workers have been
paid — are not in the possession of the worker but in the custody and absolute control
of the employer. Aside, however, from its bare allegation that its principal Abdul Aziz
had fully paid Batomalaque’s salaries, G&M did not present any evidence, e.g., payroll
or payslips, to support its defense of payment. G&M thus failed to discharge the onus
probandi. G&M, as the recruiter and agent of Abdul Aziz, is thus solidarily liable with the
latter for the unpaid wages of Batomalaque. On repeated occasions, the Court ruled
that the debtor has the burden of showing with legal certainty that the obligation has
been discharged by payment. To discharge means to extinguish an obligation, and in
contract law discharge occurs either when the parties have performed their obligations
in the contract, or when an event the conduct of the parties, or the operation of law
releases the parties from performing. Thus, a party who alleges that an obligation has
been extinguished must prove facts or acts giving rise to the extinction. The fact of
underpayment does not shift the burden of evidence to Batomalaque because partial
payment does not extinguish the obligation. Only when the debtor introduces evidence
that the obligation has been extinguished does the burden of evidence shift to the
creditor who is then under a duty of producing evidence to show why payment does not
extinguish the obligation.

GROUP 4 CASE 1
PEOPLE OF THE PHILIPPINES, Plaintiff-Appellee, v. MOISES DEJOLDE, JR. Y
SALINO, Accused Appellant. G.R. No. 219238, FIRST DIVISION, January 31, 2018,
DEL CASTILLO, J.
After a careful review of the records of this case, the Court finds that the prosecution,
through its witnesses, was able to prove that appellant recruited private complainants
for employment as caregivers in the United Kingdom and that he collected money from
them in the process. Appellant's defense of mere denial could not prevail over the
positive testimonies of the prosecution's witnesses as the Court often views with
disfavor the defense of denial, especially if it is not substantiated by any clear and
convincing evidence.It is an inherently weak defense as it is a self-serving negative
evidence that cannot be given more evidentiary weightthan the affirmative declarations
of credible witnesses.
FACTS: Appellant Moises Dejolde, Jr. y Salino was charged with Illegal Recruitment
Committed in Large Scale and 2 counts of Estafa. During trial, the prosecution
presented the testimonies of private complainants Loman, Doculan, and Marcos. They
testified that the appellant recruited them to work as caregivers in the United Kingdom;
that he charged them P450,000 each for the processing of their visas and cost of plane
fares; that Naty paid appellant the amount of P400,000 while Jessie gave the amount of
P450,000; that they later discovered that the visas were fake and that appellant was not
authorized by the Philippine Overseas Employment Administration (POEA); that they
demanded the return of their monies; and that appellant returned only the amounts of
P50,000 to Naty and P10,000 to Jessie. Appellant denied that he recruited private
complainants to work as caregivers in the United Kingdom. He testified that he was
engaged in the business of processing student visa applications for those who want to
study in the United Kingdom; that the sums of money he received from private
complainants were for the payment of school tuition fees and the processing of the
student visas; and that he was not able to process their applications or refund their
money because he was arrested. The RTC found the appellant guilty. The CA affirmed
the decision with modifications. The CA increased to P1,000,000 the fine imposed in the
case of illegal recruitment in large scale pursuant to Section 7 of RA 8042 and People v.
Chua,as well modified the indeterminate sentence imposed in the estafa cases.
ISSUE: Whether or not the appellant is liable for Illegal Recruitment Committed in Large
Scale and Estafa. (YES)
RULING: After a careful review of the records of this case, the Court finds that the
prosecution, through its witnesses, was able to prove that appellant recruited private
complainants for employment as caregivers in the United Kingdom and that he collected
money from them in the process.
Appellant's defense of mere denial could not prevail over the positive testimonies of the
prosecution's witnesses as the Court often views with disfavor the defense of denial,
especially if it is not substantiated by any clear and convincing evidence.It is an
inherently weak defense as it is a self-serving negative evidence that cannot be given
more evidentiary weight than the affirmative declarations of credible witnesses.
Moreover, it is a settled rule that factual findings of the trial courts are accorded great
respect because they are in the best position to assess the credibility of the witnesses
having had the opportunity to observe their demeanor during the trial.Thus, the Court
finds no reason to disturb the factual finding of the RTC, which was affirmed by the CA,
that appellant was guilty beyond reasonable doubt of the crimes charged.
 GROUP 4 CASE 2
PHILIPPINE GEOTHERMAL, INC. EMPLOYEES UNION (PGIEU), Petitioner, -
versus- CHEVRON GEOTHERMAL PHILS. HOLDINGS, INC., Respondent. G.R. No.
207252, SECOND DIVISION, January 24, 2018, REYES, JR., J.
Prubankers Association v. Prudential Bank and Trust Company laid down the four
elements of wage distortion, to wit: (1) an existing hierarchy of positions with
corresponding salary rates; (2) a significant change in the salary rate of a lower pay
class without a concomitant increase in the salary rate of a higher one; (3) the
elimination of the distinction between the two levels; and (4) the existence of the
distortion in the same region of the country. The apparent increase in Lanao and
Cordovales' salaries as compared to the other company workers who also have the
same salary/pay grade with them should not be interpreted to mean that they were
given a premature increase for November 1, 2008, thus resulting to a wage distortion.
The alleged increase in their salaries was not a result of the erroneous application of
Article VII and Annex D of the CBA, rather, it was because when they were hired by
respondent in 2009, when the hiring rates were relatively higher as compared to those
of the previous years. Verily, the setting and implementation of such various
engagement rates were purely an exercise of the respondent's business prerogative in
order to attract or lure the best possible applicants in the market and which We will not
interfere with, absent any showing that it was exercised in bad faith.
FACTS: Petitioner is a legitimate labor organization and the certified bargaining agent
of the rank-and-file employees of Chevron Geothermal Phils. Holdings, Inc.
(respondent). On July 31, 2008, the petitioner and respondent formally executed a
Collective Bargaining Agreement (CBA) which was made effective for the period from
November 1, 2007 until October 31, 2012. Under Article VII, Section 1 thereof, there is a
stipulation governing salary increases of the respondent's rank-and-file employees. On
October 6, 2009, a letter dated September 20, 2009 was sent by the petitioner's
President to respondent expressing, on behalf of its members, the concern that the
aforesaid CBA provision and implementing rules were not being implemented properly
pursuant to the guidelines and that, if not addressed, might result to a salary distortion
among union members. On even date, respondent responded by letter denying any
occurrence of salary distortion among union members and reiterating its remuneration
philosophy of having "similar values for similar jobs", which means that employees in
similarly-valued jobs would have similar salary rates. It explained that to attain such
objective, it made annual reviews and necessary adjustments of the employees' salaries
and hiring rates based on the computed values for each job. Finding the explanation not
satisfactory, petitioner, with respondent's approval, referred the subject dispute to the
Voluntary Arbitration of the National Conciliation and Mediation Board (NCMB). It
averred that respondent breached their CBA provision on worker's wage increase
because it granted salary increase even to probationary employees in contravention of
the express mandate of that particular CBA article and implementing guidelines that
salary increases were to be given only to regular employees.
To cite an example, petitioner alleged that respondent granted salary increases of One
Thousand Five Hundred Pesos (P1,500.00) each to then probationary employees
Sherwin Lanao (Lanao) and Jonel Cordovales (Cordovales) at a time when they have
not yet attained regular status. They (Lanao and Cordovales) were regularized only on
January 1, 2010 and April 16, 2010, respectively, yet they were given salary increase
for November 1, 2008. As a consequence of their accelerated increases, wages of said
probationary workers equated the wage rates of the regular employees, thereby
obliterating the wage rates distinction based on merit, skills and length of service.
Therefore, the petitioner insisted that its members' salaries must necessarily be
increased so as to maintain the higher strata of their salaries from those of the
probationary employees who were given the said premature salary increases. On the
other hand, respondent maintained that it did not commit any violation of that CBA
provision and its implementing guidelines; in fact, it complied therewith. It reasoned that
the questioned increases given to Lanao and Cordovales' salaries were granted, not
during their probationary employment, but after they were already regularized. It further
asseverated that there was actually no salary distortion in this case since the disparity
or difference of salaries between Lanao and Cordovales with that of the other company
employees were merely a result of their being hired on different dates, regularization at
different occasions, and differences in their hiring rates at the time of their employment.
After due proceedings, the Voluntary Arbitrator rendered a Decision dated August 16,
2010 in favor of respondent, ruling that petitioner failed to duly substantiate its
allegations that the former prematurely gave salary increases to its probationary
employees and that there was a resultant distortion in the salary scale of its regular
employees. Thereafter, a Petition for Review under Rule 65 was filed with the CA on
September 22, 2010. On November 5, 2012, the CA rendered its Decision. It dismissed
the petition for review and sustained the Voluntary Arbitrator's decision. On November
28, 2012, petitioner filed its Motion for Reconsideration. This was, however, denied by
the CA in its Resolution dated May 17, 2013. Hence, this petition.
ISSUE: Whether or not the grant of wage increase to Lanao and Cordovales is a valid
exercise of management prerogative by respondent. (YES)
RULING: There is no wage distortion in this case. Upon the enactment of Republic Act
(R.A.) No. 6727 (Wage Rationalization Act, amending among others, Article 124 of the
Labor Code) on June 9, 1989, the term "Wage Distortion" was explicitly defined as "a
situation where an increase in prescribed wage rates results in the elimination or severe
contraction of intentional quantitative differences in wage or salary rate between and
among employee groups an establishment as to effectively obliterate the distinctions
embodied in such wage structure based on skills, length of service or other logical
bases of differentiation."
Contrary to petitioner's claim of alleged "wage distortion", Article 124 of the Labor Code
of the Philippines only cover wage adjustments and increases due to a prescribed law
or wage order, viz.: Article 124. Standards/Criteria for Minimum Wage Fixing.
Where the application of any prescribed wage increase by virtue of a law or Wage
Order issued by any Regional Board results in distortions of the wage structure within
an establishment, the employer and union shall negotiate to correct the distortions. Any
dispute arising from the wage distortions shall be resolved through the grievance
procedure under their collective bargaining agreement and, if it remains unresolved,
through voluntary arbitration. Prubankers Association v. Prudential Bank and Trust
Company laid down the four elements of wage distortion, to wit: (1) an existing
hierarchy of positions with corresponding salary rates; (2) a significant change in the
salary rate of a lower pay class without a concomitant increase in the salary rate of a
higher one; (3) the elimination of the distinction between the two levels; and (4) the
existence of the distortion in the same region of the country.
The apparent increase in Lanao and Cordovales' salaries as compared to the other
company workers who also have the same salary/pay grade with them should not be
interpreted to mean that they were given a premature increase for November 1, 2008,
thus resulting to a wage distortion. The alleged increase in their salaries was not a
result of the erroneous application of Article VII and Annex D of the CBA, rather, it was
because when they were hired by respondent in 2009, when the hiring rates were
relatively higher as compared to those of the previous years. Verily, the setting and
implementation of such various engagement rates were purely an exercise of the
respondent's business prerogative in order to attract or lure the best possible applicants
in the market and which We will not interfere with, absent any showing that it was
exercised in bad faith. Management prerogative gives an employer freedom to regulate
according to their discretion and best judgment, all aspects of employment including
work assignment, working methods, the processes to be followed, working regulations,
transfer of employees, work supervision, lay-off of workers and the discipline, dismissal
and recall of workers.This right is tempered only by these limitations: that it must be
exercised in good faith and with due regard to the rights of the employees. Petitioner
claims that the wages of other employees should also be increased in order to maintain
the difference between their salaries and those of employees granted a "premature"
wage increase. Such a situation may be remedied if it falls under the concept of a wage
distortion as defined by Article 124 of the Labor Code of the Philippines. However, as
already discussed, there is no wage distortion in the case at bench. Not all increases in
salary which obliterate the salary differences of certain employees should be perceived
as wage distortion.

GROUP 4 CASE 3
PHILIPPINE HEALTH INSURANCE CORPORATION, Petitioner, - versus -
COMMISSION ON AUDIT, CHAIRPERSON MICHAEL G. AGUINALDO, DIRECTOR
JOSEPH B. ANACAY AND SUPERVISING AUDITOR ELENA L. AGUSTIN,
Respondents. G.R. No. 222710, EN BANC, July 24, 2018, TIJAM, J.
Based on the provisions of RA No. 7305 and the IRR, it readily shows that to be
included within the coverage, an employee must be principally tasked to render health
or health-related services. Otherwise stated, an employee performing functions not
primarily connected with the delivery of health services to the public is not a public
health worker within the contemplation of the law. Here, PhilHealth's mandate is the
administrator of the National Health Insurance Program through which, covered
employees may ensure affordable, acceptable, accessible health care services for all
citizens of the Philippines. PhilHealth is prohibited from providing health care directly,
from buying and dispensing drugs and pharmaceuticals, from employing physicians and
other professionals for the purpose of directly rendering care, and from owning or
investing in health care facilities. Clearly, the functions of the PhilHealth personnel are
not principally related to health services. These functions are not similar to those of
persons rendering health or health-related services, or those employees working in
health-related establishments. Undoubtedly, the PhilHealth personnel cannot be
considered public health workers under RA No. 7305. Thus, We maintain that
PhilHealth personnel were not engaged in the delivery of health or health-related
services, and therefore, not public health workers. Accordingly, PhilHealth personnel
are not entitled to the longevity pay under R.A. 7305.
FACTS: R.A. No. 7305, otherwise known as The Magna Carta of Public Health Workers
was signed into law in order to promote and improve the social and economic well-being
of the health workers, their living and working conditions and terms of employment;
develop their skills and capabilities in order that they will be more responsive and better
equipped to deliver health projects and programs; and, encourage those with proper
qualifications and excellent abilities to join and remain in government service.
Accordingly, public health workers (PHWs) were granted allowances and benefits,
among others, the longevity pay, which states: Section 23. Longevity Pay. - A monthly
longevity pay equivalent to five percent (5%) of the monthly basic pay shall be paid to a
health worker for every five (5) years of continuous, efficient and meritorious services
rendered as certified by the chief of office concerned, commencing with the service after
the approval of this Act.
Pursuant to RA No. 7305, which mandates the payment of longevity pay to public health
workers, former Department of Health (DOH) Secretary Alberto G. Romualdez, Jr.
issued a Certification declaring PhilHealth officers and employees as public health
workers. For another, the Office of the Government Corporate Counsel (OGCC) in its
Opinion 064, Series of 2001, stated that the term health-related work under Section 3 of
RA No. 7305, includes not only the direct delivery or provision of health services but
also the aspect of financing and regulation of health services. Thus, in its opinion, the
PhilHealth officers and employees were deemed engaged in healthrelated works for
purposes of entitlement to the longevity pay. Former PhilHealth President and CEO Dr.
Rey B. Aquino issued Office Order No. 0053, S-2011, prescribing the guidelines on the
grant of longevity pay, incorporating it in the basic salary of qualified PhilHealth
employees for the year 2011 and every year thereafter. The PhilHealth Board passed
and approved Resolution No. 1584, S. 2012, which confirmed the grant of longevity pay
to its officers and employees for the period of January to September 2011 in the amount
of PhP5,575,294.70.However, on post-audit of the Personal Services account for
Calendar Year 2011, COA Supervising Auditor Ms. Elena C. Agustin, issued Audit
Observation Memorandum 2012-09 (11), which found lack of legal basis for the grant of
longevity pay, thus recommended the discontinuance of the grant thereof. Philhealth
received the ND No. H.O. 12-005 (11), and after 179 days from receipt thereof, it filed
its appeal memorandum before the COA Corporate Government Sector. The COA
Corporate Government Sector upheld the ND No. H.O. 12-005 (11). The COA ruled that
PhilHealth personnel were not public health workers but merely engaged in paying and
utilization of health services by its covered beneficiaries.
ISSUE: Whether PhilHealth personnel are public health workers. (NO)
RULING: In the case of Kapisanan Ng Mga Manggagawa Sa Government Service
Insurance System (KMG) v. Commission on Audit, Guillermo N. Carague, et al., the
Court held that: Under Section 3 of R.A. No. 7305, the term "health workers" means all
persons who are engaged in health and health related work, and all persons employed
in all hospitals, sanitaria, health infirmaries, health centers, rural health units, barangay
health stations, clinics and other health-related establishments owned and operated by
the Government or its political subdivisions with original charters and shall include
medical, allied health professionals, administrative and support personnel employed
regardless of their employment status. In this regard, the Implementing Rules defines a
"health-related establishment" as a health service facility or unit which performs health
service delivery functions within an agency whose legal mandate is not primarily the
delivery of health services. Health-related establishments include clinics and medical
departments of government corporations, medical corps and hospitals of the Armed
Forces of the Philippines (AFP), and the specific health service section, division or
bureau of a government agency not primarily engaged in health services. Based on the
provisions of RA No. 7305 and the IRR, it readily shows that to be included within the
coverage, an employee must be principally tasked to render health or health-related
services, such as in hospitals, sanitaria, health infirmaries, health centers, clinical
laboratories and facilities and other similar activities which involved health services to
the public; medical professionals, allied health professionals, administrative and support
personnel in the aforementioned agencies or offices; employees of the health-related
establishments, that is, facilities or units engaged in the delivery of health services,
although the agencies to which such facilities or units are attached are not primarily
involved in health or health-related services. Otherwise stated, an employee performing
functions not primarily connected with the delivery of health services to the public is not
a public health worker within the contemplation of the law.
Here, PhilHealth's mandate is the administrator of the National Health Insurance
Program through which, covered employees may ensure affordable, acceptable,
accessible health care services for all citizens of the Philippines. PhilHealth is prohibited
from providing health care directly, from buying and dispensing drugs and
pharmaceuticals, from employing physicians and other professionals for the purpose of
directly rendering care, and from owning or investing in health care facilities. Clearly, the
functions of the PhilHealth personnel are not principally related to health services.
PhilHealth personnel perform functions which pertain to the effective administration of
the National Health Insurance Program or facilitating the availability of funds of health
services to its covered employees, and, among others involve the determination of
requirements and issue guidelines in relation to insurance program; inspection of health
care institutions; inspection of medical, financial, and other records relevant to the
claims, accreditation, premium contribution of employees covered by the program; and,
to keep records of the operations of the Corporation and investments of the National
Health Insurance Fund. These functions are not similar to those of persons rendering
health or health-related services, or those employees working in healthrelated
establishments. Undoubtedly, the PhilHealth personnel cannot be considered public
health workers under RA No. 7305.
It is Our firm view that PhilHealth functions are not commensurate to the services
rendered by those workers who actually and directly provide health care services.
PhilHealth's objective as the National Health Insurance Program provider, is to help the
people pay for health care services; unlike workers or employees of the government
and private hospitals, clinics, health centers and units, medical service institutions,
clinical laboratories, treatment and rehabilitation centers, health-related establishments
of government corporations, and the specific health service section, division, bureau or
unit of a government agency, who are actually engaged in health work services.
It will also be absurd if the same benefits and treatment will be given to the PhilHealth
personnel and to those employees who actually rendered health services. Health
workers or employees are not similarly situated with the PhilHealth employees. Health
workers have sets of skills, training, medical background, work quality and ethical
considerations to patients, and risks in transmission, occupational and hazard
exposures, diseases etc., in the performance of their functions, while in PhilHealth, as
National Health Insurance Program provider, its policy is only to help the people
subsidize; or pay, or finance for the health care services. Thus, We maintain that
PhilHealth personnel were not engaged in the delivery of health or health-related
services, and therefore, not public health workers. Applying the principle of ejusdem
generis, the inescapable conclusion is that a mere incidental or slight connection
between the employee's work and the delivery of health or health-related services is not
sufficient to make a government employee a public health worker within the meaning of
R.A. 7305. The employee must be principally engaged in the delivery of health or
health-related services to be deemed a public health worker. Accordingly, PhilHealth
personnel are not entitled to the longevity pay under R.A. 7305.
 GROUP 4 CASE 4
H. VILLARICA PAWNSHOP, INC., HL VILLARICA PAWNSHOP, INC., HRV
VILLARICA PAWNSHOP, INC. and VILLARICA PAWNSHOP, INC, Petitioner, -
versus- SOCIAL SECURITY COMMISSION, SOCIAL SECURITY SYSTEM, AMADOR
M. MONTEIRO, SANTIAGO DIONISIO R. AGDEPPA, MA. LUZ N. BARROS-
MAGSINO, MILAGROS N. CASUGA and JOCELYN Q. GARCIA, Respondents. G.R.
No. 228087, THIRD DIVISION, January 24, 2018, GESMUNDO, J.
Evidently, there is nothing in RA 9903, particularly Section 4 thereof, that benefits an
employer who has settled their delinquent contributions and/or their accrued penalties
prior to the effectivity of the law. Once an employer pays all his delinquent contributions
and accrued penalties before the effectivity of the law, it cannot avail of the condonation
program because there is no existing obligation anymore. It is the clear intent of the law
to limit the benefit of the condonation program to the delinquent employers.
FACTS: Petitioners are private corporations engaged in the pawnshop business and
are compulsorily registered with the Social Security Systemunder RA 8282, otherwise
known as the Social Security Law of 1997. In 2009, petitioners paid their delinquent
contributions and accrued penalties with the different branches of the SSS. In 2010,
Congress enacted RA 9903, otherwise known as the Social Security Condonation Law
of 2009, which took effect on February 1, 2010. The said law offered delinquent
employers the opportunity to settle, without penalty, their accountabilities or overdue
contributions within six months from the date of its effectivity. Consequently, petitioners
sent letters to the different branches of the SSS seeking reimbursement of the accrued
penalties, which they have paid in 2009. Invoking Section 4 of RA 9903 and Section 2
(f) of the Implementing Rules and Regulations of RA 9903, petitioners claimed that the
benefits of the condonation program extend to all employers who have settled their
arrears or unpaid contributions even prior to the effectivity of the law.
The SSS denied petitioners request for refund stating that there was no provision RA
9903 allowing reimbursement of penalties paid before its effectivity. As a result,
petitioners filed their respective petitions before the SSC claiming that they were entitled
to avail of the benefits under RA 9903 by reason of equity because "one of the purposes
of the law is to favor employers, regardless of the reason for the non-payment of the
arrears in contribution;" and that the interpretation of the SSS "is manifestly contrary to
the principle that, in enacting a statute, the legislature intended right and justice to
prevail." In its Resolution, the SSC denied all the petitions for lack of merit. The CA
affirmed the ruling of the SSC declaring that the intent of the legislature in enacting RA
9903 was the remission of the three percent (3%) per month penalty imposed upon
delinquent contributions of employers as a necessary consequence of the late payment
or non-remittance of SSS contributions.
ISSUE: Whether Section 4 of RA 9903 extends the benefit of the waiver to employers
who have settled their arrears before the effectivity of the law to allow the refund of the
corresponding penalties paid. (NO)
RULING: Under RA 9903 and its IRR, an employer who is delinquent or has not
remitted all contributions due and payable to the SSS may avail of the condonation
program provided that the delinquent employer will remit the full amount of the unpaid
contributions or would submit a proposal to pay the delinquent contributions in
installment within the six month period set by law. Once an employer pays all its
delinquent contributions within the six month period, the accrued penalties due thereon
shall be deemed waived. In the last proviso of Section 4 of the law, those employers
who have settled their delinquent contributions before the effectivity of the law but still
have existing accrued penalties shall also benefit from the condonation program. In that
situation, there is still something to condone because there are existing accrued
penalties at the time of the effectivity of the law. Accordingly, RA 9903 covers those
employers who (1) have existing delinquent contributions and/or (2) have accrued
penalties at the time of its effectivity. Evidently, there is nothing in RA 9903, particularly
Section 4 thereof, that benefits an employer who has settled their delinquent
contributions and/or their accrued penalties prior to the effectivity of the law. Once an
employer pays all his delinquent contributions and accrued penalties before the
effectivity of the law, it cannot avail of the condonation program because there is no
existing obligation anymore. It is the clear intent of the law to limit the benefit of the
condonation program to the delinquent employers. Also, the provisions of RA 9903 and
its IRR state that employers may be accorded the benefit of having their accrued
penalties waived provided that they either remit their delinquent contributions or submit
a proposal to pay their delinquencies in installments (on the condition that there will be
no default in subsequent payments) within the "availment period" spanning six months
from the law’s effectivity.
The Court finds that employers who have paid their unremitted contributions and
already settled their delinquent contributions as well as their corresponding penalties
before RA 9903's effectivity do not have a right to be refunded of the penalties already
paid.
Interpretation in favor of social justice
Social justice in the case of the laborers means compassionate justice or an
implementation of the policy that those who have less in life should have more in law.
And since it is the State's policy to "promote social justice and provide meaningful
protection to SSS members and their beneficiaries against the hazards of disability,
sickness, maternity, old age, death, and other contingencies resulting in loss of income
or financial burden," Court should adopt a rule of statutory interpretation which ensures
the financial viability of the SSS. Here, the State stands to lose its resources in the form
of receivables whenever it condones or forgoes the collection of its receivables or
unpaid penalties. Since a loss of funds ultimately results in the Government being
deprived of its means to pursue its objectives, all monetary claims based on
condonation should be construed strictly against the applicants.

Delinquent contributions and penalties may be paid separately

There is no existing statutory or regulatory provision which requires the simultaneous or
joint payment of corresponding penalties along with the payment of delinquent
contributions. Consequently, it is possible that a class of employers who have settled
their delinquent contributions but have not paid the corresponding penalties before the
effectivity of RA 9903, may exist. As adequately pointed out by the SSC: It is worthy to
note that there is no provision in RA 8282, as amended, nor in any SSS Circular or
Office Order that requires employers to settle their arrears in contributions
simultaneously with payment of the penalty. On the contrary, in its sincere effort to be a
partner in nation building, along with the State's declared policy to establish, develop,
promote and perfect a sound and viable tax-exempt social security system suitable to
the needs of the Philippines, the SSS is empowered to accept, process and approve
applications for installment proposal evincing that employers are not required to settle
their arrears in contributions simultaneously with the payment of the penalty.
 GROUP 4 CASE 5
SOLPIA MARINE and SHIP MANAGEMENT, INC., Petitioner, -versus- MICHAEL V.
POSTRANO, Respondent. G.R. No. 232275, FIRST DIVISION, July 23, 2018, TIJAM,
J
Without the final assessment of the company-designated physician, Postrano is
deemed suffering from temporary total disability. More so, the 120 day-period provided
by law had not yet lapsed. All told, without any final assessment from the company-
designated physician, Postrano's claim for permanent total disability benefits must fail.
Section 20(D) of the POEA-SEC instructs that no compensation and benefits shall be
payable in respect of any injury, incapacity, disability or death of the seafarer resulting
from his willful or criminal act or intentional breach of his duties. Postrano was duty-
bound to complete his medical treatment until declared fit to work or assessed with a
permanent disability grading. As held in Splash Philippines, Inc., et al. v. Ruizo, "under
the POEA-SEC, such a refusal negated the payment of disability benefits."
FACTS: Respondent Michael V. Postrano (Postrano) was engaged by petitioner Solpia
Marine and Ship Management, Inc. (Solpia) as an able seaman aboard MV Daebo IBT,
for and in behalf of its principal Daebo Ship Management Co., Ltd. on a 10-month
contract signed by the parties and approved by the Philippine Overseas Employment
Administration (POEA) on March 13, 2012. Postrano's work involved strenuous manual
work.
On December 9, 2012, Postrano sustained a fracture on his right hand and an open
wound on his left hand when he was pinned while arranging a ladder. Consequently, he
was given medical attention in Indonesia and thereafter, in Korea. Although his
condition was resolved, he was repatriated to the Philippines on January 1, 2013.
Upon his arrival, Postrano was referred to the YGEIA Medical Center, Inc. for x-ray. The
results of the same disclosed that his right forearm suffered incomplete fracture on the
middle third shaft of the right ulna. The company-designated physician then prescribed
medication for pain management. Postrano was advised to undergo physical therapy.
However, he opted, with permission, to continue the same in Compostela Valley as it is
his place of residence. The permission secured was with the condition that Postrano
must return to the company-designated physician for follow-up.
After completing 10 sessions of physical therapy in Tagum Doctors Hospital, Inc. on
March 14, 2013, Postrano complied with the company-designated physician's order to
come back for a follow-up. During such consultation, the latter advised him to continue
with the physical therapy and to return thereafter. Despite said advice, Postrano instead
merely continued with physical therapy and failed to return to the company-designated
physician after completing another series of sessions. In a letter Postrano asked Ms.
Shirley E. Valbuena for the release of his remaining sickness allowance to enable him
to continue his required treatment but to no avail. He once again demanded the same in
another letter; still to no avail. Subsequently, he forwarded to Solpia the certification
issued by the Tagum Doctors Hospital, Inc. that he underwent physical therapy
sessions, for which he demanded the reimbursement of medical and transportation
expenses.
Postrano consulted an independent physician who pronounced that Postrano suffered a
Grade 9 disability.Postrano filed a complaint for permanent total disability benefits
against Solpia, Carlito C. Mendoza (Mendoza) and/or Daebo Ship Management Co.,
Ltd. He argued that the 120/240 dayperiod had lapsed without the company-designated
physician's diagnosis of his condition. On this note, he reasoned financial constraints
anent his failure to comply with the company-designated physician's instruction to return
for a check-up. The Labor Arbiter (LA) dismissed the complaint. When appealed to the
NLRC, the latter affirmed the LA and maintained that Postrano prematurely consulted
an independent physician as he was obligated to report to the company-designated
physician after undertaking physical therapy sessions.On appeal, the CA reversed and
set aside the NLRC ruling. The CA ruled that the failure of the company-designated
physician to give a definitive impediment rating of respondent's disability is sufficient
basis to declare that he suffered permanent and total disability.
ISSUE: Whether respondent is entitled to the award of permanent and total disability
benefits. (NO)
RULING: We cannot give credence to Postrano's position that the company-designated
physician's failure to give him a disability grading automatically amounts to a declaration
that he is indeed suffering from a total permanent disability. A careful examination of the
records shows that it was important for Postrano to report to the company-designated
physician after undergoing the physical therapy sessions because only then can the
latter definitely assess his condition. The advice of undergoing additional physical
therapy sessions was an indicia that Postrano's temporary total disability would be
greatly addressed. Thus, the assessment of the company-designated physician would
be dependent on the outcome of said sessions, as Postrano's condition was notably
improving as a result of the treatment. When Postrano failed to report to the company-
designated physician, there was no way for the latter to make a definitive findings.
Without the final assessment of the company-designated physician, Postrano is
deemed suffering from temporary total disability. More so, the 120 day-period provided
by law had not yet lapsed. In a similar case, We overturned the findings that the
complainant was suffering from permanent and total disability in the absence of a
definitive assessment of the company-designated physician, which absence was
attributed to the fault of the complainant who committed medical abandonment. All told,
without any final assessment from the company-designated physician, Postrano's claim
for permanent total disability benefits must fail. Section 20(D) of the POEA-SEC
instructs that no compensation and benefits shall be payable in respect of any injury,
incapacity, disability or death of the seafarer resulting from his willful or criminal act or
intentional breach of his duties.
Postrano was duty-bound to complete his medical treatment until declared fit to work or
assessed with a permanent disability grading. As held in Splash Philippines, Inc., et al.
v. Ruizo, "under the POEA-SEC, such a refusal negated the payment of disability
benefits."