Ayanna Noelle H.

Villanueva
Labor 1 – Summer CASE DIGESTS

Case: Hinatuan Mining Corp v. NLRC, et al

G.R. No: G.R. No. 117394
Date promulgated: February 21, 1997
Rationale/Doctrine: 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. 

Facts: Private respondent Margot Batister filed a case for separation pay with prayer for moral
and exemplary damages, against her employer, petitioner Hinatuan Mining Corporation.

Private respondent was employed by petitioner on July 20, 1981. Her duty was to examine and
analyze the nickel content of ores in petitioner’s mine site before they are shipped to Japan. In
November and December 1991, petitioner sent private respondent for training in Japan and
resumed working for the Petitioner. On January 25, 1993, a year after her training, private
respondent tendered her resignation effective February 15, 1993. Petitioner reminded private
respondent that she had to stay with the company for three (3) more years in exchange for the
expenses it incurred for her training in Japan. Petitioner denied her request and instead offered
to give her financial assistance in the amount of P20,000.00.

Private respondent thus filed a complaint with the labor arbiter claiming separation pay and
damages against petitioner. She cited the cases of her former co-employees who were both
given separation pay by petitioner despite their voluntary resignation. Petitioner opposed
private respondent’s claim for separation benefits on the grounds that:
(1) The provisions regarding retirement or separation benefits under the CBA do not
apply to managerial officers and non-union members like private respondent;
(2) Private respondent is not entitled to separation pay for she voluntarily resigned from
service;
(3) She did not comply with the 30-day advance notice when she tendered her
resignation on January 25, 1993, and;
(4) Petitioner spent P175,000.00 for her training in Japan and as per the company’s
policy, private respondent, as beneficiary of a training grant, should work with the
company for at least four (4) years.

The Labor Arbiter dismissed the complaint and ruled in favor of the petitioner. Private
respondent appealed to NLRC invoking three cases of previously voluntary resigned employees
which was awarded with separation pays. NLRC reversed the Labor Arbiter's decision and
granted private respondent of separation pay equivalent to one month salary per year of
service, attorney's fees and moral and exemplary damages.

Issue/s: Whether or not Private Respondent may be granted with separation pay.

Ruling: The judgment of public respondent NLRC is affirmed with modification.

It is well to note that there is no provision in the Labor Code which grants separation pay to
voluntarily resigning employees except when it is stipulated in the employment contract or
CBA, or it is sanctioned by established employer practice or policy. In the case at bar, it has
been shown beyond doubt that there is an established employer practice of awarding
separation pay to resigning employees. In the precedent three previously resigned employee's
cases, they were granted a separation pay. Thus, we see no valid reason why private
respondent’s separation pay should be withheld from her.

However, as to the actual amount of separation pay, we find that the NLRC erred in computing
the same at the rate of one (1) month pay for every year of service. Following the same
precedent, the computation of private respondent’s separation pay should be reduced to one-
half (½) month pay for every year of service. We also hold that the award of damages to private
respondent is supported by evidence. Petitioner, without just and valid cause, unduly withheld
from private respondent her separation pay although it has previously granted the same to its
resigning employees similarly situated as Private Respondent.
Ayanna Noelle H. Villanueva
Labor 1 – Summer CASE DIGESTS

Case digest by: Ayanna Noelle H. Villanueva

Case: JPL Marketing Promotions v. CA
G.R. No.: G.R. No. 151966
Date promulgated: July 8, 2005
Rationale/Doctrine: Separation pay shall be allowed as a measure of social justice in those cases
where the employee is validly dismissed for causes other than serious misconduct or those
reflecting on his moral character, but only when he was illegally dismissed.

Facts: Petitioner JPL Marketing and Promotions (JPL) is a domestic corporation engaged in the
business of recruitment and placement of workers. Private respondents Noel Gonzales, Ramon
Abesa III and Faustino Aninipot were employed by JPL as merchandisers on separate dates and
assigned at different establishments in Naga City and Daet, Camarines Norte as attendants to
the display of California Marketing Corporation (CMC), one of petitioner's clients.
On 13 August 1996, JPL notified private respondents that CMC would stop its direct
merchandising activity effective 15 August 1996. They were advised to wait for further notice as
they would be transferred to other clients. However, on 17 October 1996, private respondents
Abesa and Gonzales filed before the NLRC complaints for illegal dismissal, praying for
separation pay, 13th month pay, and service incentive leave pay and payment for moral
damages. Aninipot filed a similar case thereafter.

Private respondent’s claim that their dismissal, while not illegal, was tainted with bad faith.
They allege that they were deprived of due process because the notice of termination was sent
to them only two (2) days before the actual termination. JPL disagrees that the notice it sent to
them was a notice of actual termination. The said memo merely notified them of the end of
merchandising for CMC, and that they will be transferred to other clients. JPL counters that it
was private respondents who acted in bad faith when they sought employment with another
establishment, without even the courtesy of informing JPL that they were leaving for good,
much less tender their resignation.

Issue/s: Whether or not private respondents are entitled to separation pay, 13th month pay
and service incentive leave pay.

Ruling: The petition is granted in part. The award of separation pay is deleted. Petitioner is
ordered to pay private respondents their 13th month pay commencing from the date of
employment up to 15 August 1996, as well as service incentive leave pay from the second year
of employment up to 15 August 1996.

In the instant case, there was no dismissal to speak of. Private respondents were simply not
dismissed at all, whether legally or illegally. What they received from JPL was not a notice of
termination of employment, but a memo informing them of the termination of CMC's contract
with JPL. More importantly, they were advised that they were to be reassigned. At that time,
there was no severance of employment to speak of.

As clearly borne out by the records of this case, private respondents sought employment from
other establishments even before the expiration of the six (6)-month period provided by law. As
they admitted in their comment, all three of them applied for and were employed by another
establishment after they received the notice from JPL. JPL did not terminate their employment;
they themselves severed their relations with JPL. Thus, they are not entitled to separation pay.

Nonetheless, JPL cannot escape the payment of 13th month pay and service incentive leave pay
to private respondents. Said benefits are mandated by law and should be given to employees as
a matter of right.

Case Digest by: Ayanna Noelle H. Villanueva

Ayanna Noelle H. Villanueva
Labor 1 – Summer CASE DIGESTS

Case: Gaco v. NLRC

G.R. No.: G.R. No. 104690
Date promulgated: February 23, 2004
Rationale/Doctrine: Unjustified demotion, in effect, constitutes constructive dismissal, which is
illegal, and which would entitle complainant to reinstatement and payment of back wages.

Facts: Petitioner Zenaida Gaco was hired by private respondent Orient Leaf Tobacco
Corporation on April 17, 1974 for the position of Picker. In 1975, after a year of service, she was
promoted to the position of Production Recorder. She held this position for a period of fourteen
(14) years until the end of private respondent's working season in 1989. In April, 1990, when
petitioner reported for work at the start of the working season for that year, she found out that
her position was already occupied by another employee and that she was being demoted to the
position of Picker.

Petitioner believed that her demotion was not justified considering it as constructive dismissal,
she refused to report for work and filed a complaint before the Labor Arbiter for payment of
separation pay. Private respondent raised the defense that the demotion of petitioner was
effected on a valid ground, that is, gross inefficiency.

When complainant Gaco refused to report for work as Picker, they immediately promoted
somebody to that position and offered her the lower position of Reject Piler and, when
complainant again refused to report, they offered a much lower position from the Relief Crew,
a very positive indication of constructive dismissal.

The Labor arbiter ruled that the demotion of complainant is unjustified and respondent to pay
complainant her back wages and separation pay with computation of one month for every year
of service in lieu of reinstatement.

NLRC ruled that there was no constructive dismissal and computation of the separation pay will
be 1/2 month pay for every year of service.

Issue/s:
1. Whether or not the petitioner was illegally dismissed.
2. Whether the computation of petitioner's separation pay is equivalent to 1 month for every
year of service or 1/2 for every year of service.

Ruling: The petition is hereby granted. The decision of the NLRC is set aside and the decision of
the Labor Arbiter is reinstated.

We ruled on the basis of the foregoing jurisprudence defining the term constructive dismissal,
we sustain the ruling of the Labor Arbiter and his rationalization thereon. Consequently,
petitioner is entitled to her full back wages, inclusive of allowances, and other benefits or their
monetary equivalent computed from the time her compensation was withheld from her up to
the time of her actual reinstatement.

Again, we sustain the ruling of the Labor Arbiter granting separation pay in the amount of one
(1) month to pay for every year of service. This has been our consistent ruling in numerous
decisions awarding separation pay to an illegally dismissed employee in lieu of reinstatement.

Case Digest by: Ayanna Noelle H. Villanueva

Ayanna Noelle H. Villanueva
Labor 1 – Summer CASE DIGESTS

Case: Planters’ Products, Inc. v. NLRC

G.R. No.: G.R. Nos. 78524 and 78739
Date Promulgated: January 20, 1989
Doctrine:  The findings of fact of administrative agencies are binding on this Court if supported
by substantial evidence.

Facts: This case involves about 440 retrenched employees of the respondent Planters Products
Inc. (PPI) from its Bataan and Makati-based operations. All the Complainants, except the
Complainants-Intervenors, are members of either one of the following Unions (PPEU, FLAME
and Super 21) of workers/employees of the Respondent. These unions always had a collective
bargaining agreement. Their 1975-1978 CBA was formally ratified while their 1978-1981, 1981-
1984, 1984-1987 CBAs were not formally submitted for ratification.

On October 11, 1982, the respondent instituted a Retirement and Pension Plan (RPP) for all
employees and was funded exclusively by PPI.

On February 23, 1984, they entered the RPP into a Trust Agreement with Philippine Trust Co.,
Inc. (PTC).

On September 28, 1984, the 1984-1987 CBA was signed between PPI and the directors and
Principal Officers of its Union but was never formally submitted to its members for ratification.

The respondent modified the provisions in the previous CBAs on 'termination allowance' or
benefit, and limited its scope to separation from the service of PPI by reason solely of disability.
The RPP was submitted to the Bureau of Internal Revenue for qualification as an approved
Retirement and Pension Plan and approved by the BIR Deputy Commission Officer. After the
RPP was approved by the BIR, PPI issued a circular to all employees announcing the funding of
the RPP and its approval by the BIR pursuant to R.A. 4917.

On September 15, 1985, without formally informing the PPI employees-beneficiaries of the
RPP, the RPP was unilaterally amended by the company and was approved by the BIR.

On September 26, 1985 a circular was issued to all employees of RPI announcing that
employees laid off from its Bataan operations on July 8 and August 15, 1985, were being
terminated effective as of September 30, 1985; while those laid off from its Makati office would
be terminated effective as of October 15, 1985.

Between their lay-off dates and their announced termination/retirement dates, all of the
concerned employees did not render service to PPI.

On September 27, 1985, individual letters were sent to each employee notifying them of their
formal termination and the termination benefits that they would be granted

On or about October 11, 1985 PPI issued to the individual Complainants/Complainants-

Intervenors computer print-outs reflecting the respective computations of their separation
benefits for all employees terminated during the said periods shows that the separation pay
granted to the Bataan-based and Makati-based employees who were not retireable, was only
one (1) month of basic pay for each year of service with one- half paid from the RPP and the
balance from PPI operating funds and all employees entitled to optional or forced retirement,
were granted retirement benefits based on their basic pay. These benefits ranged from 1.02 to
1.43 months of basic pay per year of service as computed in accordance with the RPP.

Some of the employees who were retired/retrenched effective June 1, 1986, have been
subsequently re-hired by PPI under certain conditions.
Ayanna Noelle H. Villanueva
Labor 1 – Summer CASE DIGESTS

The labor arbiter rendered judgment against Planters Products, Inc., holding it guilty of unfair
labor practice. This was affirmed on appeal to the NLRC, with the modification that it set aside
the award for actual, exemplary and moral damages, and attorney's fees.

Issues:
1. Whether or not the 1984-1987 CBA was validly entered into.
2. Whether or not PPI was guilty of unfair labor practice.
3. Whether or not PPI erred in not integrating the allowances with the basic salary and
pro-rated death benefits in the computation of the separation pay.

Ruling: WHEREFORE, the decisions of the Labor Arbiter and the National Labor Relations
Commission are hereby SET ASIDE and a NEW ONE is ENTERED ordering Planters Products, Inc..,
to re-compute the terminal benefits of the complainants/complainants-intervenors by including
their allowances, the amount of which shall be taken from the assets which the Court enjoined
Planters Products, Inc., from disposing. 

It is contended that the 1984-1987 CBA was not only negotiated in bad faith but was also not
formally ratified. There was allegedly bad faith in limiting the application of the termination
allowance as the company already had plans to retrench the workers. Under Article 231 of the
Labor Code and Sec. 1, Rule IX, Book V of the Implementing Rules, the parties to a collective
agreement are required to furnish copies to the appropriate Regional Office with accompanying
proof of ratification by the majority of all the workers in the bargaining unit. This was not done
in the case at bar. But we do not declare the 1984-1987 CBA invalid or void considering that the
employees have enjoyed benefits from it.

There is nothing in the records before us to show that PPI was guilty of unfair labor practice.

However, PPI erred in not integrating the allowances with the basic salary in the computation of
the separation pay. The salary base properly used in computing the separation pay should
include not just the basic salary but also the regular allowances that an employee has been
receiving. 
The allowances of the remaining PPI employees were made part of their basic pay. This
increased the computation bases for their terminal benefits. This should have been the case
also for the complainants/complainants-intervenors. The death benefits are payable only in the
event of the death of the employee. Since petitioners and intervenors-petitioners are still alive,
they obviously are not entitled thereto. 

Case Digest by: Ayanna Noelle H. Villanueva

Ayanna Noelle H. Villanueva
Labor 1 – Summer CASE DIGESTS

Case: San Jose vs. NLRC and Ocean Terminal Services, Inc.,
G.R. No: G.R. No. 121227
Date promulgated: 1998
Rationale/Doctrine: The Voluntary Arbitrator or panel of Voluntary Arbitrators shall have
original and exclusive jurisdiction to hear and decide all unresolved grievances arising from the
interpretation or implementation of the Collective Bargaining Agreement and those arising
from the interpretation or enforcement of company personnel policies referred to in the
immediately preceding article.

Facts: Vicente San Jose, in his position paper, states that he was hired sometime in July 1980 as
a stevedore continuously until he was advised in April 1991 to retire from service considering
that he already reached 65 years old. That accordingly, he did apply for retirement and was
paid P3,156.39 for retirement pay.

Contentions of Ocean Terminal Services is that San Jose only worked on rotation basis and not
seven days a week due to numerous stevedores who cannot all be given assignments at the
same time; That he performed stevedoring job only on call, so while he was connected with the
company for the past 11 years, he did not actually render 11 years of service; That the burden
of proving that San Jose’s latest salary was P200.00 rests upon him; That he already voluntarily
signed a waiver of quitclaim.

The Labor Arbiter decided the case solely on the merits of the complaint. LA arrived at the
computation that the retirement differential is P25,443.70.

NLRC reversed LA on the ground that the differential being claimed by San Jose is based on
their CBA and as provided under the Labor Code, interpretation or implementation of CBA
should be referred by the LA to the grievance machinery or voluntary arbitrator. 

Issue: Who has jurisdiction over the dispute?

Ruling: The Voluntary Arbiter has exclusive jurisdiction over unresolved grievances. As provided
under the Labor Code, the NLRC correctly ruled that the Labor Arbiter had no jurisdiction to
hear and decide petitioners money claim underpayment of retirement benefits, as the
controversy between the parties involved an issue arising from the interpretation or
implementation of a provision of the collective bargaining agreement.

The Voluntary Arbitrator or Panel of Voluntary Arbitrators has original and exclusive jurisdiction
over the controversy under Article 261 of the Labor Code, and not the Labor Arbiter. The court,
however, will no longer order the remand of the case The Court will not remand the case to the
Voluntary Arbitrator or Panel of Voluntary Arbitrators for hearing. This case has dragged on far
too long - eight (8) years. Any further delay would be a denial of speedy justice to an aged
retired stevedore.

There is further the possibility that any Decision by the Voluntary Arbitrator or Panel of
Voluntary Arbitrators will be appealed to the CA, and finally to this Court. Formula adopted by
LA will be followed. To recapitulate; the Court hereby rules:
1. That the NLRC correctly ruled that the LA had no jurisdiction over the case, because the case
involved an issue arising from the interpretation or implementation of a Collective Bargaining
Agreement;
2. That we adopt the computation formula for the retirement benefits by the LA, and the basis
thereof.
Ayanna Noelle H. Villanueva
Labor 1 – Summer CASE DIGESTS

The respondent must therefore pay the petitioner the additional amount of Twenty-Five
Thousand Four Hundred Forty-Three and Seventy Centavos (P25,443.70) Pesos.

Case Digest by: Ayanna Noelle H. Villanueva

Case: Pepsi-Cola Bottling Co. v. Martinez

G.R. No.: G.R. No. L-5887
Date promulgated: March 15, 1982
Rationale/Doctrine: Jurisdiction over the subject matter in a judicial proceeding is conferred by
the sovereign authority which organizes the court; and it is given only by law: 1.) Jurisdiction is
never presumed; 2.) it must be conferred by law in words that do not admit of doubt.

Facts: Private respondent Abraham Tumala Jr., employee of petitioner Pepsi Cola Bottling Co.,
was a salesman of the company in Davao City from 1977 up to August 21, 1980; that in the
annual "Sumakwel" contest conducted by the company in 1979, Tumala was declared winner of
the "Lapu-Lapu Award" for his performance as top salesman of the year, an award which
entitled him to a prize of a house and lot. Petitioners, despite demands, have unjustly refused
to deliver said prize. Petitioners, "in a manner oppressive to labor" and "without prior clearance
from the Ministry of Labor," "arbitrarily and illegally" terminated his employment. He prayed
that petitioners be ordered, jointly and severally, to deliver his prize of house and lot or its cash
equivalent, and to pay his back salaries and separation benefits, plus moral and exemplary
damages, attorney’s fees and litigation expenses. He did not ask for reinstatement.

Petitioners moved to dismiss the complaint on grounds of lack of jurisdiction and cause of
action. Petitioners further alleged that Tumala was not entitled to the "Sumakwel" prize
through various deceitful and fraudulent manipulations and machinations in the performance
of his duties as salesman and depot in-charge. The alleged commission of these fraudulent acts
was also advanced by petitioners to justify Tumala’s dismissal.

Issue/s:
Whether or not claim of prize under an incentive program falls within the jurisdiction of the Lab
or Arbiter.

Ruling: We rule that the Labor Arbiter has exclusive jurisdiction over the case. Jurisdiction over
the subject matter in a judicial proceeding is conferred by the sovereign authority which
organizes the court; and it is given only by law:
1 Jurisdiction is never presumed; it must be conferred by law in words that do not admit of
doubt. 2. Since the jurisdiction of courts and judicial tribunals is derived exclusively from the
statutes of the forum, the issue before us should be resolved on the basis of the law or statute
now in force.

The claim for said prize unquestionably arose from an employer-employee relation. Tumala
would not have qualified for the contest, much less won the prize, if he was not an employee of
the company at the time of the holding of the contest. Besides, the cause advanced by
petitioners to justify their refusal to deliver the prize the alleged fraudulent manipulations
committed by Tumala in connection with his duties as salesman of the company involves an
inquiry into his actuations as an employee.

Case Digest by: Ayanna Noelle H. Villanueva

Ayanna Noelle H. Villanueva
Labor 1 – Summer CASE DIGESTS

Case: San Miguel Corp. vs. NLRC

G.R. No.: G.R. No. 80774
Date promulgated: May 31, 1988
Rationale/Doctrine: Those accounts have no relevance to the Labor Code. The cause of action
was one under the civil laws, and it does not breach any provision of the Labor Code or the
contract of employment of defendant.

Facts: San Miguel Corporation sponsored an Innovation Program and under which, the
management undertook to grant cash awards to all SMC employees except higher ranked
personnel who submit to the Corporation ideas and suggestions found to be beneficial to the
Corporation. Rustico Vega then submitted a proposal but was not accepted. Vega filed a
complaint against the company with the Regional Arbitration Branch No. VII, contending that
he should be paid 60,000 since his idea was implemented. The petitioner in his answer stated
that they turned down the proposal for lack of originality. The labor Arbiter dismissed the
complaint on the ground that the money claim is not a necessary incident of his employment.
Upon appeal of Vega to the NLRC, it ordered the petitioner to pay the 60,0000. Petitioner then
seek to annul the judgment on the ground that the Labor Arbiter and NLRC have no jurisdiction
over the case.

Issues: Whether or not the fact that the money claim of an employee arose out of or in
connection with employment relation with his company, is enough to bring such money claim
within the original and exclusive jurisdiction of Labor Arbiter.

Ruling: No, just because the claim arises from employer-employee relationship, it does not
follow that it is automatically within the jurisdiction of the Labor Arbiter.

The company’s undertaking, though unilateral in origin, could nonetheless ripen into an
enforceable contractual (facio ut des) obligation on the part of petitioner Corporation under
certain circumstances. Thus, whether or not an enforceable contract, albeit implied arid
innominate, had arisen between petitioner Corporation and private respondent Vega in the
circumstances of this case, and if so, whether or not it had been breached, are preeminently
legal questions, questions not to be resolved by referring to labor legislation and having nothing
to do with wages or other terms and conditions of employment, but rather having recourse to
our law on contracts.

If the relief sought is to be resolved not by reference to the Labor Code or other labor relations
statute or a collective bargaining agreement but by the general civil law, the jurisdiction over
the dispute belongs to the regular courts of justice and not to the Labor Arbiter and the NLRC.
In such situations, resolution of the dispute requires expertise, not in labor management
relations nor in wage structures and other terms and conditions of employment, but rather in
the application of the general civil law.

Case Digest by: Ayanna Noelle H. Villanueva