JURISPRUDENCE ON LABOR LAW2009-2010

AUGUST 2010

Labor Law

Dismissal; abandonment. Time and again, the Supreme Court has held that abandonment is totally inconsistent with the immediate filing of a complaint for illegal dismissal, more so if the same is accompanied by a prayer for reinstatement. In the present case, however, petitioner filed his complaint more than one year after his alleged termination from employment. Moreover, petitioner did not ask for reinstatement in the complaint form, which he personally filled up and filed with the NLRC. The prayer for reinstatement is made only in the Position Paper that was later prepared by his counsel. This is an indication that petitioner never had the intention or desire to return to his job. Elpidio Calipay vs. National Labor Relations Commission, et al., G.R. No. 166411, August 3, 2010.

Dismissal; burden of proof. In termination cases, the employer has the burden of proving, by substantial evidence that the dismissal is for just cause. If the employer fails to discharge the burden of proof, the dismissal is deemed illegal. In the present case, BCPI failed to discharge its burden when it failed to present any evidence of the alleged fistfight, aside from a single statement, which was refuted by statements made by other witnesses and was found to be incredible by both the Labor Arbiter and the NLRC. Alex Gurango vs. Best Chemicals and Plastic, Inc., et al., G.R. No. 174593, August 25, 2010.

Dismissal; burden of proof. The law mandates that the burden of proving the validity of the termination of employment rests with the employer. Failure to discharge this evidentiary burden would necessarily mean that the dismissal was not justified and, therefore, illegal. Unsubstantiated suspicions, accusations, and conclusions of employers do not provide for legal justification for dismissing employees. In case of doubt, such cases should be resolved in favor of labor, pursuant to the social justice policy of labor laws and the Constitution. Century Canning Corporation, Ricardo T. Po, Jr., et al. vs. Vicente Randy R. Ramil, G.R. No. 171630, August 8, 2010.

Dismissal; due process. In termination proceedings of employees, procedural due process consists of the twin requirements of notice and hearing. The employer must furnish the employee with two written notices before the termination of employment can be effected: (1) the first apprises the employee of the particular acts or omissions for which his dismissal is sought; and (2) the second informs the employee of the employer’s decision to dismiss him. The requirement of a hearing is complied with as long as there was an opportunity to be heard, and not necessarily that an actual hearing was conducted. Pharmacia and Upjohn, Inc., et al. vs. Ricardo P. Albayda, Jr., G.R. No. 172724, August 23, 2010.

Dismissal; due process. The Labor Code recognizes the right to due process of all workers, without distinction as to the cause of their termination, even if the cause was their supposed involvement in strike-related violence. In the present case, PHIMCO sent a letter to the affected union members/officers, directing them to explain within 24 hours why they should not be dismissed for the illegal acts they committed during the strike; three days later, the union members/officers were informed of their dismissal from employment. We do not find this company procedure to be sufficient compliance with due process. It does not appear from the evidence that the union officers were specifically informed of the charges against them. Also, the short interval of time between the first and second notice shows that a mere token recognition of the due process requirements was made, indicating the company’s intent to dismiss the union members involved, without any meaningful resort to the guarantees accorded them by law. PHIMCO Industries, Inc. vs. PHIMCO Industries Labor Association (PILA), et al., G.R. No. 170830, August 11, 2010.

Dismissal; employee’s past infractions. A previous offense may be used as valid justification for dismissal from work only if the past infractions are related to the subsequent offense upon which the basis of termination is decreed. The respondent’s previous incidents of tardiness in reporting for work were entirely separate and distinct from his latest alleged infraction of forgery. Hence, the same could no longer be utilized as an added justification for his dismissal. Besides, respondent had already been sanctioned for his prior infractions. To consider these offenses as justification for his dismissal would be

penalizing respondent twice for the same offense. Century Canning Corporation, Ricardo T. Po, Jr., et al. vs. Vicente Randy R. Ramil, G.R. No. 171630, August 8, 2010.

Dismissal; feng shui; breach of trust and confidence. The Court finds that the complainant’s allegations are more credible and that she was dismissed from her employment because the Feng Shui master found that complainant’s Chinese Zodiac Sign was a mismatch to that of respondents. This is not a just and valid cause for an employee’s dismissal.

In contrast, respondent’s pleadings and evidence suffer from several inconsistencies and the affidavits presented by respondents only pertain to petty matters that are not sufficient to support respondent’s alleged loss of trust and confidence. To be a valid cause for termination of employment, the act or acts constituting breach of trust must have been done intentionally, knowingly, and purposely; and they must be founded on clearly established facts. Wensha Spa Center, inc. and/or Xu Zhi Jie ,vs. Loreta T. Yung, G.R. No. 185122, August 16, 2010.

Dismissal; gross negligence and loss of confidence. Gross negligence connotes “want of care in the performance of one’s duties.” Petitioner’s failure on 3 separate occasions to require clients to sign the requisite documents constituted gross negligence. Furthermore, it has been held that if the employees are cashiers, managers, supervisors, salesmen or other personnel occupying positions of responsibility, the employer’s loss of trust and confidence in said employees may justify the termination of their employment. As the Bank’s Personal Banking Manager, petitioner’s failure to comply with basic banking policies and procedures were inimical to the interests of the bank, making his dismissal based on loss of confidence justified. Jesus E. Dycoco, Jr.vs. Equitable PCI Bank (now Banco de Oro), Rene Bunaventura and Siles Samalea, G.R. No. 188271, August 16, 2010.

Dismissal; loss of trust and confidence. Employers are allowed a wider latitude of discretion in terminating the services of employees who perform functions which by their nature require the employers’ full trust and confidence and the mere existence of basis for believing that the employee has breached the trust of the employer is sufficient. However, this does not mean that the said basis may be arbitrary and unfounded. Loss of trust and confidence, to be a valid cause for dismissal, must be based on a willful breach of trust and founded on clearly established facts. The basis for the dismissal must be clearly and convincingly established. It must rest on substantial grounds and not on the employer’s arbitrariness, whim, caprice or suspicion; otherwise, the employee would eternally remain at the mercy of the employer. Century Canning Corporation, Ricardo T. Po, Jr., et al. vs. Vicente Randy R. Ramil, G.R. No. 171630, August 8, 2010.

Dismissal; probationary employment . Though the acts charged against de Castro took place when he was still under probationary employment, the records show that de Castro was dismissed on the ninth month of his employment with LBNI. By then, he was already a regular employee by operation of law. As a regular employee, de Castro was entitled to security of tenure and his illegal dismissal from LBNI justified the awards of separation pay, backwages, and damages Carlos De Castro vs. Liberty Broadcasting Network, Inc. and Edgardo Quigue, G.R. No. 165153. August 25, 2010.

Dismissal; project employees; damages. Prior or advance notice of termination is not part of procedural due process if the termination of a project employee is brought about by the completion of the contract or phase thereof. This is because completion of the work or project automatically terminates the employment, in which case, the employer is, under the law, only obliged to render a report to the DOLE. Therefore, failing to give project employees advance notice of their termination is not a violation of procedural due process and cannot be the basis for the payment of nominal damages. D.M. Consunji, Inc. vs. Antonio Gobres, et al., G.R. No. 169170, August 8, 2010.

Dismissal; separation pay and backwages. The awards of separation pay and backwages are not mutually exclusive and both may be given to the respondent. The normal consequences of a finding that an employee has been illegally dismissed are, firstly, that the employee becomes entitled to reinstatement to his former position without loss of seniority rights and, secondly, the payment of backwages corresponding to the period from his illegal dismissal up to actual reinstatement. These are two separate and distinct remedies granted to the employee and the inappropriateness or non-availability of one does not carry with it the inappropriateness or non-availability of the other. Under the doctrine of

strained relations, the payment of separation pay has been considered an acceptable alternative to reinstatement when the latter option is no longer desirable or viable. The grant of separation pay is a proper substitute only for reinstatement; it cannot be an adequate substitute for both reinstatement and backwages. Century Canning Corporation, Ricardo T. Po, Jr., et al. vs. Vicente Randy R. Ramil, G.R. No. 171630, August 8, 2010.

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

It is noteworthy that prior to this incident, there had been several cases of theft and vandalism involving both respondent company’s property and personal belongings of other employees. In order to address this issue of losses, respondent company issued two memoranda implementing an intensive inspection procedure and reminding all employees that those who will be caught stealing and performing acts of vandalism will be dealt with in accordance with the company’s Code of Conduct. Despite these reminders, complainant took the packing tape and was caught during the routine inspection. All these circumstances point to the conclusion that it was not just an error of judgment, but a deliberate act of theft of company property. Nagkakaisang Lakas ng Manggagawa sa Keihin (NLMK-OLALIA-KMU) and Helen Valenzuela vs. Keihin Philippines Corporation, G.R. No. 171115, August 9, 2010.

Dismissal; union security. In terminating the employment of an employee by enforcing the union security clause, the employer needs to determine and prove that: (1) the union security clause is applicable; (2) the union is requesting for the enforcement of the union security provision in the CBA; and (3) there is sufficient evidence to support the decision of the union to expel the employee from the union. These requisites constitute just cause for terminating an employee based on the union security provision of the CBA.

The petitioner failed to satisfy the third requirement since nothing in the records would show that respondents failed to maintain their membership in good standing in the union. Significantly, petitioner’s act of dismissing respondents stemmed from the latter’s act of signing an authorization letter to file a petition for certification election as they signed it outside the freedom period. The mere signing of an authorization letter before the freedom period is not sufficient ground to terminate the employment of respondents inasmuch as the petition itself was actually filed during the freedom period. The court emphasizes anew that the employer is bound to exercise caution in terminating the services of his employees especially so when it is made upon the request of a labor union pursuant to the Collective Bargaining Agreement. Picop Resources Incorporated (PRI) vs. Anacleto L. Tañeca, et al., G.R. No. 160828, August 9, 2010.

Dimissal; use of illegal drugs. The law is clear that drug tests shall be performed only by authorized drug testing centers. In this case, Sulpicio Lines failed to prove that S.M. Lazo Clinic is an accredited drug testing center nor did it deny the complainant’s allegation that S.M. Lazo Clinic was not accredited. Also, only a screening test was conducted to determine if the complainant was guilty of using illegal drugs. Sulpicio Lines did not confirm the positive result of the screening test with a confirmatory test as required by R.A. 9165. Hence, Sulpicio Lines failed to indubitably prove that Nacague was guilty of using illegal drugs and failed to clearly show that it had a valid and legal cause for terminating Nacague’s employment. When the alleged valid cause for the termination of employment is not clearly proven, as in this case, the law considers the matter a case of illegal dismissal. Jeffrey Nacague vs. Sulpicio Lines, Inc., G.R. No. 172589, August 8, 2010.

Dismissal; validity. The company did not adduce any evidence to prove that Siazar’s dismissal had been for a just or authorized cause, as in fact it had been its consistent stand that it did not terminate him and that he quit on his own. But given the findings of the Court that the company had indeed dismissed Siazar and that such dismissal has remained unexplained, there can be no other conclusion but that the dismissal was illegal. Agricultural and Industrial Supplies Corporation, et al. vs. Jueber P. Siazar, et al., G.R. No. 177970, August 25, 2010.

Due process; decision rendered without due process. The violation of a party’s right to due process raises a serious jurisdictional issue that cannot be glossed over or disregarded at will. Where the denial of the fundamental right to due process is apparent, a decision rendered in disregard of that right is void for lack of jurisdiction. This rule is equally true in quasi-judicial and administrative proceedings, for the constitutional guarantee that no man shall be deprived of life, liberty, or property without due process is unqualified by the type of proceedings (whether judicial or administrative) where he stands to lose the same. Winston F. Garcia vs. Mario I. Molina, et al./Winston F. Garcia Vs. Mario I. Molina, et al., G.R. No. 157383/G.R. No. 174137, August 10, 2010.

Employee; evaluation and promotion. The fact that employees were re-classified from Job Grade Level 1 to Job Grade Level 2 as a result of a job evaluation program does not automatically entail a promotion or grant them an increase in salary. Of primordial consideration is not the nomenclature or title given to the employee, but the nature of his functions. What transpired in this case was only a promotion in nomenclature. The employees continued to occupy the same positions they were occupying prior to the job evaluation. Moreover, their job titles remained the same and they were not given additional duties and responsibilities. SCA Hygiene Products Corporation Employees Association-FFW vs. SCA Hygiene Products Corporation, G.R. No. 182877, August 9, 2010.

Employee; security of tenure. A worker’s security of tenure is guaranteed by the Constitution and the Labor Code. Under the security of tenure guarantee, a worker can only be terminated from his employment for cause and after due process. For a valid termination by the employer: (1) the dismissal must be for a valid cause as provided in Article 282, or for any of the authorized causes under Articles 283 and 284 of the Labor Code; and (2) the employee must be afforded an opportunity to be heard and to defend himself. A just and valid cause for an employee’s dismissal must be supported by substantial evidence, and before the employee can be dismissed, he must be given proper notice of such cause/s and an adequate opportunity to be heard. In the process, the employer bears the burden of proving that the dismissal of an employee was for a valid cause. Its failure to discharge this burden renders the dismissal unjustified and, therefore, illegal. Wensha Spa Center, Inc. and/or Xu Zhi Jie vs. Loreta T. Yung, G.R. No. 185122, August 16, 2010.

Employee benefit; time of death. The death should be deemed compensable under the ECC since Henry was on his way back to Manila in order to be on time and be ready for work the next day when his accidental death occurred. He should already be deemed en route to the performance of his duty at the time of the accident. It should be noted that Henry’s superior allowed him to travel to La Union to visit his ailing mother on the condition that that he return the next day. Under these facts, Henry was in the course of complying with his superior’s order when he met his fatal accident. To be sure, he was not in an actual firefighting or accident situation when he died, but returning to work as instructed by his superior is no less equivalent to compensable performance of duty under Section 1, Rule III of the ECC Rules. Government Service Insurance System vs. Felicitas Zarate, as substituted by her heirs, namely Melanie Zarate, et al., G.R. No. 170847, August 3, 2010.

Illegal dismissal; effect of rehabilitation proceedings. The existence of the Stay Order – which would generally authorize the suspension of judicial proceedings – could not have affected the Court’s action on the present case due to the petitioner’s failure to raise the pendency of the rehabilitation proceedings in its memorandum to the Court. At any rate, a stay order simply suspends all actions for claims against a corporation undergoing rehabilitation; it does not work to oust a court of its jurisdiction over a case properly filed before it. Thus, the Court’s ruling on the principal issue of the case stands. Nevertheless, with LBNI’s manifestation that it is still undergoing rehabilitation, the Court resolves to suspend the execution of our Decision until the termination of the rehabilitation proceedings. Carlos De Castro vs. Liberty Broadcasting Network, Inc. and Edgardo Quigue, G.R. No. 165153. August 25, 2010.

Job contracting. In permissible job contracting, the principal agrees to put out or farm out with a contractor or subcontractor the performance or completion of a specific job, work or service within a definite or predetermined period, regardless of whether such job, work or service is to be performed or completed within or outside the premises of the principal. The test is whether the independent contractor has contracted to do the work according to his own methods and without being subject to the principal’s control except only as to the results, he has substantial capital, and he has assured the contractual employees entitlement to all labor and occupational safety and health standards, free

exercise of the right to self-organization, security of tenure, and social and welfare benefits. Spic n’ Span Services Corp. vs. Gloria Paje, et al., G.R. No. 174084, August 25, 2010.

Management prerogative; transfer of employees. Jurisprudence recognizes the exercise of management prerogative to transfer or assign employees from one office or area of operation to another, provided there is no demotion in rank or diminution of salary, benefits, and other privileges, and the action is not motivated by discrimination, made in bad faith, or effected as a form of punishment or demotion without sufficient cause. To determine the validity of the transfer of employees, the employer must show that the transfer is not unreasonable, inconvenient, or prejudicial to the employee; nor does it involve a demotion in rank or a diminution of his salaries, privileges and other benefits. Should the employer fail to overcome this burden of proof, the employee’s transfer shall be tantamount to constructive dismissal. Pharmacia and Upjohn, Inc., et al. vs. Ricardo P. Albayda, Jr., G.R. No. 172724, August 23, 2010.

Merger; employee terms and conditions. That BPI is the same entity as FEBTC after the merger is but a legal fiction intended as a tool to adjudicate rights and obligations between and among the merged corporations and the persons that deal with them. Although in a merger it is as if there is no change in the personality of the employer, there is in reality a change in the situation of the employee. Once an FEBTC employee is absorbed, there are presumably changes in his condition of employment even if his previous tenure and salary rate is recognized by BPI. It is reasonable to assume that BPI would have different rules and regulations and company practices than FEBTC and it is incumbent upon the former FEBTC employees to obey these new. Not the least of these changes is the fact that prior to the merger FEBTC employees were employees of an unorganized establishment and after the merger they became employees of a unionized company that had an existing CBA with the certified union. Thus, although in a sense BPI is continuing FEBTC’s employment of these absorbed employees, BPI’s employment of these absorbed employees will not be under exactly the same terms and conditions as stated in the latter’s employment contracts with FEBTC. Bank of the Philippine Islands vs. BPI Employees Union-Davao Chapter-Federation of Unions in BPI Unibank, G.R. No. 164301, August 10, 2010.

Reinstatement of employee; doctrine of strained relations. Under the doctrine of strained relations, the payment of separation pay has been considered an acceptable alternative to reinstatement when the latter option is no longer desirable or viable. On the one hand, such payment liberates the employee from what could be a highly oppressive work environment. On the other, the payment releases the employer from the grossly unpalatable obligation of maintaining in its employ a worker it could no longer trust. Wensha Spa Center, Inc. and/or Xu Zhi Jie vs. Loreta T. Yung, G.R. No. 185122, August 16, 2010.

Retirement pay; applicability to employees on commission basis. Even if the petitioner as bus conductor was paid on commission basis, he falls within the coverage of R.A. 7641 and its implementing rules. Thus, his retirement pay should include the cash equivalent of 5-days SIL and 1/12 of 13th month pay. The NLRC’s reliance on the case of R & E Transport, Inc. as a basis for ruling that bus conductors are not covered by the law on SIL and 13th month pay is erroneous since that involved a taxi driver who was paid according to the “boundary system.” There is a difference between drivers paid under the “boundary system” and conductors who are paid on commission basis. In practice, taxi drivers do not receive fixed wages and retain only those sums in excess of the “boundary” or fee they pay to the owners or operators of the vehicles. Conductors, on the other hand, are paid a certain percentage of the bus’ earnings for the day. Rodolfo J. Serrano vs. Severino Santos Transit and/or Severino Santos, G.R. No. 187698, August 9, 2010.

Separation pay. In those instances where an employee has been validly dismissed for causes other than serious misconduct or those reflecting on his moral character, separation pay may still be granted after giving considerable weight to his long years of employment. In this case, equity considerations dictate that respondent’s tenure be computed from 1978, the year when respondent started working for Upjohn, and not only from 1996, when the merger of Pharmacia and Upjohn took place. Pharmacia and Upjohn, Inc., et al. vs. Ricardo p. Albayda, Jr., G.R. No. 172724, August 23, 2010.

Strike; validity of strike. Despite the validity of the purpose of a strike and the union’s compliance with the procedural requirements, a strike may still be held illegal where the means employed are illegal.

While the strike had not been marred by actual violence and patent intimidation, the picketing that respondent PILA officers and members undertook as part of their strike activities effectively blocked the free ingress to and egress from PHIMCO’s premises, thus preventing non-striking employees and company vehicles from entering the PHIMCO compound. In this manner, the picketers violated Article 264(e) of the Labor Code and tainted the strike with illegality. PHIMCO Industries, Inc. vs. PHIMCO Industries Labor Association (PILA), et al., G.R. No. 170830, August 11, 2010.

Union; eligibility of confidential employees to join. Confidential employees are defined as those who (1) assist or act in a confidential capacity, (2) to persons who formulate, determine, and effectuate management policies in the field of labor relations. The two criteria are cumulative, and both must be met if an employee is to be considered a confidential employee – that is, the confidential relationship must exist between the employee and his supervisor, and the supervisor must handle the prescribed responsibilities relating to labor relations. In the present case, there is no showing that the secretaries/clerks and checkers assisted or acted in a confidential capacity to managerial employees and obtained confidential information relating to labor relations policies. And even assuming that they had exposure to internal business operations of the company, as respondent claims, this is not per se ground for their exclusion in the bargaining unit of the rank-and-file employees. Tunay na Pagkakaisa ng Manggagawa sa Asia Brewery vs. Asia Brewery, Inc., G.R. No. 162025, August 3, 2010.

Union; liability for invalid strike. The effects of illegal strikes, outlined in Article 264 of the Labor Code, make a distinction between participating workers and union officers. The services of an ordinary striking worker cannot be terminated for mere participation in an illegal strike; proof must be adduced showing that he or she committed illegal acts during the strike. The services of a participating union officer, on the other hand, may be terminated, not only when he actually commits an illegal act during a strike, but also if he knowingly participates in an illegal strike. PHIMCO Industries, Inc. vs. PHIMCO Industries Labor Association (PILA), et al., G.R. No. 170830, August 11, 2010.

Union shop; effect of merger. All employees in the bargaining unit covered by a Union Shop Clause in their CBA with management are subject to its terms. However, under law and jurisprudence, the following kinds of employees are exempted from its coverage, namely, (1) employees who at the time the union shop agreement takes effect are bona fide members of a religious organization which prohibits its members from joining labor unions on religious grounds; (2) employees already in the service and already members of a union other than the majority at the time the union shop agreement took effect; (3) confidential employees who are excluded from the rank and file bargaining unit; and (4) employees excluded from the union shop by express terms of the agreement. In the absence of any of these recognized exceptions, there is no basis to conclude that the terms and conditions of employment under a valid CBA in force in the surviving corporation should not be made to apply to the absorbed employees. Bank of the Philippine Islands vs. BPI Employees Union-Davao Chapter-Federation of Unions in BPI Unibank, G.R. No. 164301, August 10, 2010.

Labor Procedure

CSC; rules for dismissal. The filing of formal charges against the respondents without complying with the mandated preliminary investigation or at least giving the respondents the opportunity to comment violated the latter’s right to due process. These rules on due process apply even in cases where the complainant is the disciplining officer himself, as in this case. The fact that the charges against the respondents are serious or that the evidence of their guilt is strong cannot compensate for the procedural shortcut undertaken by petitioner. Winston F. Garcia vs. Mario I. Molina, et al./Winston F. Garcia Vs. Mario I. Molina, et al., G.R. No. 157383/G.R. No. 174137, August 10, 2010.

Labor case; due process; reevaluation. A reevaluation is a process by which a person or office (in this case the DOLE secretary) revisits its own initial pronouncement and makes another assessment of its findings. In simple terms, to reevaluate is to take another look at a previous matter in issue. From a procedural standpoint, a reevaluation is a continuation of the original case and not a new proceeding. The evidence, financial reports and other documents submitted by the parties in the course of the original proceeding are to be visited and reviewed again. A reevaluation does not necessitate the introduction of new materials for review nor does it require a full hearing for new arguments. Hence, failure to order the presentation of new evidence in the reevaluation of an Order is not a violation of

due process. NASECO Guards Association – PEMA vs. National Service Corporation, G.R. No. 165442, August 25, 2010.

Labor case; non-lawyer as representative. The respondents in this case were represented by a non-lawyer who never showed any proof of his authority to represent the respondents. Petitioner argued that the respondents’ representative had no personality to appear before the Labor Arbiter or the NLRC, and his representation for the respondents should produce no legal effect. The Court affirmed the ruling of the CA that the cited technical infirmity cannot defeat the respondents’ preferred right to security of tenure, without prejudice to whatever action may be taken against the representative, if he had indeed been engaged in the unauthorized practice of law. Spic n’ Span Services Corp. vs. Gloria Paje, et al., G.R. No. 174084, August 25, 2010.

NLRC; factual findings. Findings of fact of the NLRC, affirming those of the LA, are entitled to great weight and will not be disturbed if they are supported by substantial evidence. The CA had overstepped its legal mandate by reversing the findings of fact of the LA and the NLRC as it appears that both decisions were based on substantial evidence. There is no proof of arbitrariness or abuse of discretion in the process by which each body arrived at its own conclusions. Thus, the CA should have deferred to such specialized agencies that are considered experts in matters within their jurisdictions. Pharmacia and Upjohn, Inc., et al. vs. Ricardo P. Albayda, Jr., G.R. No. 172724, August 23, 2010.

NLRC; review of decisions. The power of the Court of Appeals to review NLRC decisions via Rule 65 or Petition for Certiorari has been settled as early as in our decision in St. Martin Funeral Home v. National Labor Relations Commission. This Court held that the proper vehicle for such review was a Special Civil Action for Certiorari under Rule 65 of the Rules of Court, and that this action should be filed in the Court of Appeals in strict observance of the doctrine of the hierarchy of courts. Moreover, it is already settled that under Sec. 9 of B.P. 129, as amended, the Court of Appeals – pursuant to the exercise of its original jurisdiction over Petitions for Certiorari – is specifically given the power to pass upon the evidence, if and when necessary, to resolve factual issues. Picop Resources Incorporated (PRI) vs. Anacleto L. Tañeca, et al., G.R. No. 160828, August 9, 2010.

Pleading verification. The lack of a verification in a pleading is only a formal defect, not a jurisdictional defect, and is not necessarily fatal to a case. The primary reason for requiring a verification is simply to ensure that the allegations in the pleading are done in good faith, are true and correct, and are not mere speculations. As previously explained in Torres v. Specialized Packaging Development Corporation, where only two of the 25 real parties-in-interest signed the verification, the verification by the two could be sufficient assurance that the allegations in the petition were made in good faith, are true and correct, and are not speculative. Spic n’ Span Services Corp. vs. Gloria Paje, et al., G.R. No. 174084, August 25, 2010.

Procedural rules; strict application. Procedural rules setting the period for perfecting an appeal or filing a petition for review are generally inviolable. It is doctrinally entrenched that an appeal is not a constitutional right, but a mere statutory privilege. Hence, parties who seek to avail themselves of such privilege must comply with the statutes or rules allowing it. Furthermore, the perfection of an appeal in the manner and within the period permitted by law is not only mandatory, but also jurisdictional. Failure to perfect the appeal renders the judgment of the court final and executory. Just as a losing party has the privilege to file an appeal within the prescribed period, so does the winner also have the correlative right to enjoy the finality of the decision. Elpidio Calipay vs. National Labor Relations Commission, et al., G.R. No. 166411, August 3, 2010.

Real party in interest; dismissed employee. It is clear that the petitioners failed to include the name of the dismissed employee in the caption and body of its petition for certiorari and, instead, only indicated the name of the labor union as the party acting on behalf of such dismissed employee. Hence, the Court of Appeals rightly dismissed the petition for not having been filed by an indispensable party in interest. (The Court still proceeded to discuss the substantive issues and merits of the case despite affirming the dismissal of the case based on procedural grounds.) Nagkakaisang Lakas ng Manggagawa sa Keihin (NLMK-OLALIA-KMU) and Helen Valenzuela vs. Keihin Philippines Corporation, G.R. No. 171115, August 9, 2010.

Rule 45; review of factual findings. As a general rule, only questions of law may be raised in petitions for certiorari under Rule 45 of the Rules of Court. However, there are recognized exceptions to the rule. Among the exceptions are when the findings of fact are conflicting and when the findings are conclusions without citation of specific evidence on which they are based. In the present case, the findings of fact of the Court of Appeals conflict with the findings of fact of the NLRC and the Labor Arbiter. Also, the finding of the Court of Appeals that Gurango engaged in a fistfight is a conclusion without citation of specific evidence on which it is based. Alex Gurango vs. Best Chemicals and Plastic, Inc., et al., G.R. No. 174593, August 25, 2010.

July 2010

Labor Law

Assumption of jurisdiction by Secretary of Labor; authority to decide on legality of dismissals arising from strike. The assumption of jurisdiction powers granted to the Labor Secretary under Article 263(g) is not limited to the grounds cited in the notice of strike or lockout that may have preceded the strike or lockout; nor is it limited to the incidents of the strike or lockout that in the meanwhile may have taken place. As the term “assume jurisdiction” connotes, the intent of the law is to give the Labor Secretary full authority to resolve all matters within the dispute that gave rise to or which arose out of the strike or lockout, including cases over which the labor arbiter has exclusive jurisdiction.

In the present case, what the Labor Secretary refused to rule upon was the dismissal from employment of employees who violated the return to work order and participated in illegal acts during a strike. This was an issue that arose from the strike and was, in fact, submitted to the Labor Secretary, through the union’s motion for the issuance of an order for immediate reinstatement of the dismissed officers and the company’s opposition to the motion. The dismissal issue was properly brought before the Labor Secretary and he was mistaken in ruling that the matter is legally within the exclusive jurisdiction of the labor arbiter to decide. Bagong Pagkakaisa ng Manggagawa ng Triumph International, et al. vs. Secretary of Department of Labor and Employment, et al./Triumph International (phils.), Inc. vs. Bagong Pagkakaisa ng Manggagawa ng Triumph International, et al., G.R. No. 167401, July 5, 2010.

Bargaining deadlock; award; findings of Secretary of Labor. Unless there is a clear showing of grave abuse of discretion, the Court cannot, and will not, interfere with the expertise of the Secretary of Labor. The award granted by the Labor Secretary in resolving the bargaining deadlock, drawn as they were from a close examination of the submissions of the parties, do not indicate any legal error, much less any grave abuse of discretion, and should not be disturbed. Bagong Pagkakaisa ng Manggagawa ng Triumph International, et al. vs. Secretary of Department of Labor and Employment, et al./Triumph International (phils.), Inc. vs. Bagong Pagkakaisa ng Manggagawa ng Triumph International, et al., G.R. No. 167401, July 5, 2010.

Dismissal of employees; just cause. Theft committed by an employee is a valid reason for his dismissal by the employer. Although as a rule this Court leans over backwards to help workers and employees continue with their employment or to mitigate the penalties imposed on them, acts of dishonesty in the handling of company property, petitioner’s income in this case, are a different matter. Maribago Bluewater Beach Resort, Inc. vs. Nito Dual, G.R. No. 180660, July 20, 2010.

Dismissal of employees; requirements. The validity of an employee’s dismissal from service hinges on the satisfaction of the two substantive requirements for a lawful termination. These are, first, whether the employee was accorded due process the basic components of which are the opportunity to be heard and to defend himself. This is the procedural aspect. And second, whether the dismissal is for any of the causes provided in the Labor Code of the Philippines. This constitutes the substantive aspect. Erector Advertising Sign Group, Inc. and Arch Jimy C. Amoroto vs. Expedito Cloma, G.R. No. 167218, July 2, 2010.

Dismissal of employees; procedural due process. Furnishing the employee with a suspension order prior to his notice of termination does not satisfy the requirement of a first notice. It implies that the employer has already decided, for the reasons stated therein, to suspend the employee from work in the company, and the wording of the order in the present case gives no indication that the employee is

being given an opportunity to submit his defense or explanation. Erector Advertising Sign Group, Inc. and Arch Jimy C. Amoroto vs. Expedito Cloma, G.R. No. 167218, July 2, 2010.

Dismissal of employees; procedural due process. In order to validly dismiss an employee, he must be accorded both substantive and procedural due process by the employer. Procedural due process requires that the employee be given a notice of the charge against him, an ample opportunity to be heard, and a notice of termination. Even if the aforesaid procedure is conducted after the filing of the illegal dismissal case, the legality of the dismissal, as to its procedural aspect, will be upheld provided that the employer is able to show that compliance with these requirements was not a mere afterthought. New Puerto Commercial and Richard Lim vs. Rodel Lopez and Felix Gavan, G.R. No. 169999, July 26, 2010.

Employee benefits; 13th month pay; definition of basic salary. The term “basic salary” of an employee for the purpose of computing the thirteenth-month pay was interpreted to include all remuneration or earnings paid by the employer for services rendered, but does not include allowances and monetary benefits which are not integrated as part of the regular or basic salary, such as the cash equivalent of unused vacation and sick leave credits, overtime, premium, night differential and holiday pay, and cost-of-living allowances. However, these salary-related benefits should be included as part of the basic salary in the computation of the thirteenth-month pay if, by individual or collective agreement, company practice or policy, the same are treated as part of the basic salary of the employees. Central Azucarera De Tarlac vs. Central Azucarera De Tarlac Labor Union-NLU, G.R. No. 188949, July 26, 2010

Employee benefits; 13th month pay; company policy or practice. The practice of petitioner in giving 13th-month pay based on the employees’ gross annual earnings which included the basic monthly salary, premium pay for work on rest days and special holidays, night shift differential pay and holiday pay continued for almost thirty (30) years and has ripened into a company policy or practice which cannot be unilaterally withdrawn. The petitioner cannot claim that the practice arose from an erroneous application of the law since no doubtful or difficult question of law is involved in this case. The guidelines set by the law are not difficult to decipher. Central Azucarera De Tarlac vs. Central Azucarera De Tarlac Labor Union-NLU, G.R. No. 188949, July 26, 2010

Employee benefits; death benefits. For the death of a seafarer to be compensable under the 1996 POEA Standard Employment Contract, the death must occur during the term of his contract of employment. In this case, the seaman died 2 years after he was repatriated to the Philippines due to medical reasons, hence the claimants are not entitled to receive death benefits under the contract. The decedent’s heirs claimed that the death should be compensable since the nature of his work as a seaman triggered the illnesses that eventually led to his death. However, the Court noted that though the immediate cause of the seaman’s death was pneumonia, the underlying cause of death was advanced HIV (AIDS). Since the claimants failed to prove that the decedent acquired HIV during his 2-month employment aboard the respondents’ vessel, their claim for death benefits was denied. Lydia Escarcha vs. Leonis Navigation Co., Inc., et al., G.R. No. 182740, July 5, 2010.

Employees; government agency. The Armed Forces of the Philippines Commissary and Exchange Services (AFPCES) is a government agency performing proprietary functions. By clear implication of law, all AFPCES personnel should therefore be classified as government employees and any complaint for illegal dismissal involving such employees should be filed with the CSC and not the NLRC. Such fact cannot be negated by the failure of AFPCES to follow appropriate civil service rules in the hiring, appointment, discipline and dismissal of employees. Neither can it be denied by the fact that AFPCES chose to enroll its employees in the SSS instead of the GSIS. Such considerations cannot be used against the CSC to deprive it of its jurisdiction. Hence, the Labor Arbiter’s decision in the illegal dismissal case filed by AFPCES employees is a total nullity for having been rendered without jurisdiction. Magdalena Hidalgo, et al. vs. Republic of the Philippines, G.R. No. 179793, July 5, 2010.

Employer-employee relationship; evidence. Any doubt arising from the evaluation of evidence as between the employer and the employee must be resolved in favor of the latter. It is settled jurisprudence that the burden of proving payment of monetary claims rests on the employer. It was entirely within the company’s power to present personnel files, payrolls, remittances, and other similar documents which would have proven payment of respondent’s money claims as these documents

should necessarily be in its possession; hence, failure to present such evidence must be taken against it. Dansart Security Force & Allied Services Company and Danilo A. Sarte vs. Ms. Jean O. Bagoy, G.R. No. 168495, July 2, 2010.

Government agencies; reorganization. A reorganization is valid provided it is done in good faith. As a general rule, the test of good faith lies in whether the purpose of the reorganization is for economy or to make the bureaucracy more efficient. Removal from office as a result of reorganization must, thus, pass the test of good faith. A demotion in office is tantamount to removal if no cause is shown for it. Consequently, before a demotion may be effected pursuant to a reorganization, the observance of the rules on bona fide abolition of public office is essential. Virginia D. Bautista vs. Civil Service Commission and Dev’t. Bank of the Philippines, G.R. No. 185215, July 22, 2010.

Government agencies; reorganization; personal liability of local official. The RTC of Cadiz declared void a resolution that reorganized the city government and effectively purged the city government of Cadiz of all employees who opposed the mayor politically or disagreed with him in his policies. The RTC ordered the payment of moral damages to the workers, but it was not clear if the payment was to be made by the city government or by Mayor Valera, in his personal capacity. The Court held that Varela is personally liable to pay moral damages. Settled is the principle that a public official may be liable in his personal capacity for whatever damage he may have caused by his act done with malice and in bad faith or beyond the scope of his authority or jurisdiction. In the complaint, the employees stated that, “due to the illegal acts of the Defendant, Plaintiffs suffered mental torture and anguish, sleepless nights, wounded feelings, besmirched reputation and social humiliation.” The State can never be the author of illegal acts. The complaint merely identified Varela as the mayor of Cadiz City. It did not categorically state that Varela was being sued in his official capacity. The identification and mention of Varela as the mayor of Cadiz City did not automatically transform the action into one against Varela in his official capacity. The allegations in the complaint determine the nature of the cause of action. Eduardo Valera vs. Ma. Daisy Revalez, G.R. No. 171705, July 29, 2010.

Illegal dismissal; burden of proof; filing of complaint not sufficient to disprove abandonment. In illegal dismissal cases, the employer bears the burden of proving that the termination was for a valid or authorized cause. However, before the employer is asked to prove that the dismissal was legal, the employee must first establish by substantial evidence the fact of his dismissal from service. Logically, if there is no dismissal, then there can be no question as to its legality or illegality.

Under normal circumstances, an employee’s act of filing an illegal dismissal complaint against his employer is inconsistent with abandonment. However, the courts should not use that one act to conclude that an employee was constructively dismissed when substantial evidence proves otherwise. In this case, substantial evidence proves that Pulgar was not constructively dismissed, and that he had abandoned his duties in order to avoid an investigation being conducted by his employer. Philippine Rural Reconstruction vs. Virgilio Pulgar, G.R. No. 169227. July 5, 2010.

Illegal dismissal; misrepresentation of cause is an act of bad faith. The complainant, Rio Remo, was dismissed from service on the ground of retrenchment. However, the records show that Sentinel hired a replacement soon after Remo’s dismissal, proving that Sentinel’s financial distress was not as serious as it claimed, and that retrenchment was not the real reason for Remo’s dismissal. Sentinel concealed its true intention and committed misrepresentation when it claimed that Remo’s dismissal was due to serious financial losses. This act of misrepresentation is an act of active bad faith that fatally tainted Remo’s dismissal and rendered it illegal. Sentinel Integrated Services, Inc. vs. Rio Jose Remo, G.R. No. 188223, July 5, 2010.

Illegal dismissal; relief available to employee. An illegally dismissed employee is entitled to reinstatement without loss of seniority rights and other privileges and to full backwages, inclusive of allowances, and to her other benefits or their monetary equivalent, computed from the time the compensation was withheld up to the time of actual reinstatement. Where reinstatement is no longer feasible, separation pay equivalent to at least one month salary or one month salary for every year of service, whichever is higher, a fraction of at least six months being considered as one whole year, should be awarded to respondent. An award for moral and exemplary damages cannot be justified unless the employer had acted in bad faith. The award of moral and exemplary damages cannot be justified solely

upon the premise that the employer dismissed his employee without authorized cause and due process. Lambert Pawnbrokers and Jewelry corporation and Lambert Lim vs. Helen Binamira, G.R. No. 170464. July 12, 2010.

Labor-only contracting. Despite the fact that the service contracts contain stipulations which are earmarks of independent contractorship, they do not make it legally so. The language of a contract is neither determinative nor conclusive of the relationship between the parties. The parties cannot dictate, by a declaration in a contract, the character of the contractor’s business as a labor-only contractor or a legitimate job contractor, which should be determined by the criteria set by statute. Here, a closer look at AMPCO’s actual status and participation regarding the employment of the complainants clearly belie the contents of the written service contract. San Miguel Corporation vs. Vicente Semillan, et al., G.R. No. 164257, July 5, 2010.

Labor-only contracting; evidence. A Certificate of Registration as an Independent Contractor is not conclusive evidence of such status. In distinguishing between permissible job contracting and prohibited labor-only contracting, the totality of the facts and the surrounding circumstances of the case are to be considered. San Miguel Corporation vs. Vicente Semillan, et al., G.R. No. 164257, July 5, 2010.

Liability of officers for illegal dismissal. Corporate officers are only solidarily liable with the corporation for the illegal termination of services of employees if they acted with malice or bad faith. In Philippine American Life and General Insurance v. Gramaje, bad faith is defined as a state of mind affirmatively operating with furtive design or with some motive of self-interest or ill will or for ulterior purpose. It implies a conscious and intentional design to do a wrongful act for a dishonest purpose or moral obliquity. The lack of authorized or just cause to terminate one’s employment and the failure to observe due process do not ipso facto mean that the corporate officer acted with malice or bad faith. There must be independent proof of malice or bad faith which is lacking in the present case. Lambert Pawnbrokers and Jewelry corporation and Lambert Lim vs. Helen Binamira, G.R. No. 170464. July 12, 2010.

Preventive suspension. Preventive suspension is justified where the employee’s continued employment poses a serious and imminent threat to the life or property of the employer or of the employee’s co-workers. Without this kind of threat, preventive suspension is not proper. Jose P. Artificio vs. National Labor Relations Commission, RP Guardians Security Agency, Inc. Juan Victor K. Laurilla, Alberto Aguirre, and Antonio A. Andres, G.R. No. 172988, July 26, 2010

Public employees; demotion. There is demotion when an employee is appointed to a position that results in a diminution in duties, responsibilities, status or rank which may or may not involve a reduction in salary. Where an employee is appointed to a position with the same duties and responsibilities with a rank and salary higher than those he enjoyed in his previous position, there is no demotion and the appointment is valid. Virginia D. Bautista vs. Civil Service Commission and Devt. Bank of the Philippines, G.R. No. 185215, July 22, 2010.

Public employees; downgrading of employees. The summary reallocation of Go’s position to a lower degree resulting in the corresponding downgrading of his salary infringed the policy of non-diminution of pay which the Court recognized and applied in Philippine Ports Authority v. Commission on Audit, as well as in the subsequent sister cases involving benefits of government employees. Running through the gamut of these cases is the holding that the affected government employees shall continue to receive benefits they were enjoying as incumbents upon the effectivity of RA 6758. Relevant to the critical issue at hand is Sec. 15 (b) of PD 985 which, as amended by Sec. 13 (a) of RA 6758, pertinently reads: Sec. 13. Pay Reduction — If an employee is moved from a higher to a lower class, he shall not suffer a reduction in salary: Provided, That such movement is not the result of a disciplinary action or voluntary demotion. Gonzalo S. Go, Jr. vs. CA and Office of the President, G.R. No. 172027. July 29, 2010

Redundancy; definition; requisites. Redundancy exists when the service capability of the workforce is in excess of what is reasonably needed to meet the demands of the enterprise. A redundant position is one rendered superfluous by any number of factors, such as over hiring of workers, decreased volume of business, dropping of a particular product line previously manufactured by the company, or phasing out of a service activity previously undertaken by the business. Under these conditions, the employer

has no legal obligation to keep in its payroll more employees than are necessary for the operation of its business.

For a valid implementation of a redundancy program, the employer must comply with the following requisites: (1) written notice served on both the employees and the DOLE at least one month prior to the intended date of termination of employment; (2) payment of separation pay equivalent to at least one month pay for every year of service; (3) good faith in abolishing the redundant positions; and (4) fair and reasonable criteria in ascertaining what positions are to be declared redundant and accordingly abolished. Lambert Pawnbrokers and Jewelry corporation and Lambert Lim vs. Helen Binamira, G.R. No. 170464. July 12, 2010.

Retirement; retirement age. The retirement age is primarily determined by the existing agreement or employment contract. Absent such an agreement, the retirement age under Article 287 of the Labor Code will apply. Amelia R. Obusan vs. Philippine National Bank, G.R. No. 181178, July 26, 2010.

Retirement; retirement plan. Retirement plans allowing employers to retire employees who have not yet reached the compulsory retirement age of 65 years are not per se repugnant to the constitutional guaranty of security of tenure. By its express language, the Labor Code permits employers and employees to fix the applicable retirement age at 60 years or below, provided that the employees’ retirement benefits under any CBA and other agreements shall not be less than those provided by law. Amelia R. Obusan vs. Philippine National Bank, G.R. No. 181178, July 26, 2010.

Retrenchment; definition; requisites. Retrenchment is the termination of employment initiated by the employer through no fault of and without prejudice to the employees. It is resorted to during periods of business recession, industrial depression, seasonal fluctuations, or during lulls occasioned by lack of orders, shortage of materials, conversion of the plant to a new production program, or automation. It is a management prerogative resorted to avoid or minimize business losses.

To effect a valid retrenchment, the following elements must be present: (1) the retrenchment is reasonably necessary and likely to prevent business losses which, if already incurred, are not merely de minimis, but substantial, serious and real, or only if expected, are reasonably imminent as perceived objectively and in good faith by the employer; (2) the employer serves written notice both to the employee/s concerned and the DOLE at least one month before the intended date of retrenchment; (3) the employer pays the retrenched employee separation pay in an amount prescribed by law; (4) the employer exercises its prerogative to retrench in good faith; and (5) the employer uses fair and reasonable criteria in ascertaining who would be retrenched or retained. Lambert Pawnbrokers and Jewelry corporation and Lambert Lim vs. Helen Binamira, G.R. No. 170464. July 12, 2010

Retrenchment; decrease in income is not business loss. A sharp drop in income from P1million to only P665,000.00 is not the kind of business losses contemplated by the Labor Code that would justify a valid retrenchment. A mere decline in gross income cannot in any manner be considered as serious business losses. It should be substantial, sustained and real. Lambert Pawnbrokers and Jewelry corporation and Lambert Lim vs. Helen Binamira, G.R. No. 170464. July 12, 2010.

Separation pay; as equitable relief. Having determined that the imposition of preventive suspension was proper and that the complainant was not illegally dismissed, the Court found no basis to grant backwages. However, given the attendant circumstances of the case — that complainant had been working with the company for a period of sixteen (16) years without any previous derogatory record – the Court held that the ends of social and compassionate justice would be served if the employee is given some equitable relief in the form of separation pay. Jose P. Artificio vs. National Labor Relations Commission, RP Guardians Security Agency, Inc. Juan victor K. Laurilla, Alberto Aguirre, and Antonio A. Andres, G.R. No. 172988, July 26, 2010

LABOR PROCEDURE

Jurisdiction; intra-union disputes. Section 226 of the Labor Code clearly provides that the BLR and the Regional Directors of DOLE have concurrent jurisdiction over inter-union and intra-union disputes. Such disputes include the conduct or nullification of election of union and workers’ association officers. There

is, thus, no doubt as to the BLR’s jurisdiction over the instant dispute involving member-unions of a federation arising from disagreement over the provisions of the federation’s constitution and by-laws. Atty. Allan S. Montaño vs. Atty Ernesto C. Verceles, G.R. No. 168583, July 26, 2010.

Labor tribunal; factual finding. As a rule, a petition for certiorari under Rule 65 is valid only when the question involved is an error of jurisdiction, or when there is grave abuse of discretion amounting to lack or excess of jurisdiction on the part of the court or tribunals exercising quasi-judicial functions. Hence, courts exercising certiorari jurisdiction should refrain from reviewing factual assessments of the respondent court or agency. Occasionally, however, they are constrained to wade into factual matters when the evidence on record does not support those factual findings; or when too much is concluded, inferred or deduced from the bare or incomplete facts appearing on record. The CA rightfully reviewed the correctness of the labor tribunals’ factual findings not only because of the foregoing inadequacies, but also because the NLRC and the Labor Arbiter came up with conflicting findings. Lambert Pawnbrokers and Jewelry corporation and Lambert Lim vs. Helen Binamira, G.R. No. 170464. July 12, 2010.

Money claims; effect of failure to include in prayer for relief. The rule is well-settled that points of law, theories, issues and arguments not adequately brought to the attention of the trial court need not be, and ordinarily will not be considered by a reviewing court as they cannot be raised for the first time on appeal because this would be offensive to the basic rules of fair play, justice and due process. Though there is nothing on record which would show that the amount of P207,693 has been returned to PRRM, a perusal of the pleadings show that PRRM failed to include the return of such amount in its prayer for relief. Hence, the Labor Arbiter cannot act on the same. A prayer for a monetary award should have been raised at the earliest opportunity before the Labor Arbiter. Philippine Rural Reconstruction vs. Virgilio Pulgar, G.R. No. 169227. July 5, 2010.

NLRC Rules of Procedure; certificate of non-forum shopping. The filing of a certificate of non-forum shopping is mandatory in initiatory pleadings; non-compliance with the required certification is fatal. The filing of the same is not waived by the other party’s failure to immediately assert the defect, and neither is it cured by its belated submission on the ground that the party was not in any way guilty of actual forum shopping. In cases where the Court tolerated the deficiency, special circumstances or compelling reasons made the strict application unjustified. In this case, however, the petitioners offered no valid justification for their failure to comply with the Circular. Mandaue Galleon Trade, Inc., et al. vs. Bienvenido Isidto, et al., G.R. No. 181051, July 5, 2010.

Rule 45; when review of facts allowed. As a rule, a petition for review under Rule 45 of the Rules of Court must raise only questions of law. However, the rule has exceptions such as when the findings of the Labor Arbiter, NLRC and Court of Appeals vary, as in this case. Maribago Bluewater Beach Resort, Inc. vs. Nito Dual, G.R. No. 180660, July 20, 2010

JUNE 2010

Labor Law

Acceptance of Benefits, render moot claim under other policies. As in the case of Capili v. National Labor Relations Commission [273 SCRA 576], a claim for benefit under the company’s retirement plan becomes moot when the employee accepts retirement benefits on the basis of Article 287 of the Labor Code. By Yuson’s acceptance of her retirement benefits through a compromise agreement entered into with her employer, she is deemed to have opted to retire under Article 287. Korean Air Co., Ltd and Suk Kyoo Kim v. Adelina A.S. Yuson, G.R. No. 170369, June 16, 2010.

Approval for company’s early retirement program; management prerogative. Approval of applications for the early retirement program (“ERP”) is within the employer’s management prerogatives. The exercise of management prerogative is valid as long as it is not done in a malicious, harsh, oppressive, vindictive, or wanton manner. In the present case, the Court sees no bad faith on the part of the employer. The 21 August 2001 memorandum clearly states that petitioner, on its discretion, was offering ERP to its employees. The memorandum also states that the reason for the ERP was to prevent further losses. Petitioner did not abuse its discretion when it excluded respondent in the ERP because

the latter is already about to retire. To allow respondent to avail of the ERP would have been contrary to the purpose of the program. Korean Air Co., Ltd and Suk Kyoo Kim v. Adelina A.S. Yuson, G.R. No. 170369, June 16, 2010.

Constructive dismissal; definition; transfer as management prerogative. Constructive dismissal is defined as a quitting because continued employment is rendered impossible, unreasonable or unlikely, or when there is a demotion in rank or a diminution of pay. It exists when an act of clear discrimination, insensibility or disdain by an employer has become so unbearable to the employee leaving him with no option but to forego with his continued employment.

Here, there was no diminution of petitioner’s salary and other benefits. There was no evidence that she was harassed or discriminated upon, or that respondents made it difficult for her to continue with her other duties. Absent any evidence of bad faith, it is within the exercise of respondents’ management prerogative to transfer some of petitioner’s duties, if, in their judgment, this would be more beneficial to the corporation. Estrella Velasco vs. Transit Automotive Supply, Inc. and Antonio de Dios, G.R. No. 171327, June 18, 2010.

Constructive dismissal; off-detailing; resignation; notice requirement . The company evidently placed petitioner on floating status after being relieved of her position. But, as the Court has repeatedly ruled, such act of “off-detailing” does not amount to a dismissal so long as the floating status does not continue beyond a reasonable time. In this case, the employee’s floating status ran up to more than six months as of August 16, 2002. For this reason, the company may be considered to have constructively dismissed the employee from work as of that date. Hence, petitioner’s purported resignation on October 15, 2002 could not have been legally possible.

The company claims that it gave petitioner notices on August 23, 2002 and September 2, 2002, asking her to explain her failure to report for work and informing her that the company would treat such failure as lack of interest in her continued employment. But these notices cannot possibly take the place of the notices required by law as they came more than six months after the company placed her on floating status, at which time, the employee is already deemed to have been constructively dismissed her from work. Elsa S. Mali-on v. Equitable General Services Inc., G.R. No. 185269, June 29, 2010.

Death benefits; entitlement . In order to avail of death benefits, the death of the employee should occur during the term of the employment contract. For emphasis, we reiterate that the death of a seaman during the term of employment contract makes the employer liable to his heirs for death benefits, but if the seaman dies after his contract of employment has expired, his beneficiaries are not entitled to the death benefits. Southeastern Shipping, Southeastern Shipping Group, Ltd. vs. Federico U. Navarra, Jr. , G.R. No. 167678, June 22, 2010.

Death benefits; post-medical examination; inadvertence of employer. In the cases of Philippines., Inc. v. Joaquin [437 SCRA 608] and Rivera v. Wallem Maritime Services, Inc.[474 SCRA 714], the Supreme Court stressed the importance of a post-employment medical examination or its equivalent for the award of death benefits to seafarers and/or their representatives in compliance with POEA Memorandum Circular No. 055-96 and Department Order No. 33, Series of 1996, which provide that the seafarer must report to his employer for a post-employment medical examination within three working days from the date of arrival, otherwise, benefits under the POEA standard employment contract would be nullified. However, in the present case, the absence of a post-employment medical examination cannot be used to defeat respondent’s claim since the failure to subject the seafarer to this requirement was not due to the seafarer’s fault but to the inadvertence or deliberate refusal of petitioners. Interorient Maritime Enterprises, Inc. et al. v. Leonora S. Remo, G.R. No. 181112, June 29, 2010.

Dismissal; breach of trust; lack of loss not a defense. The acts of the employee revealed a mind that was willing to disregard bank rules and regulations when other branch officers concurred. Her defense that the bank suffered no loss is of no moment. The focal point is that she betrayed the trust of the bank. Hence, the bank rightfully terminated the services of the employee for willful breach of the trust that it reposed in her. Luzviminda A. Ang vs. Philippine National Bank, G.R. No. 178762, June 16, 2010.

Dismissal; burden of proof. In termination cases, the burden of proof rests upon the employer to show that the dismissal of the employee is for just cause and failure to do so would mean that the dismissal is not justified. This is in consonance with the guarantee of security of tenure in the Constitution, and elaborated in the Labor Code. A dismissed employee is not required to prove his innocence to the charges leveled against him by his employer. The determination of the existence and sufficiency of a just cause must be exercised with fairness and in good faith and after observing due process. Lima Land, Inc., Leandro Javier, Sylvia Duque and Premy Ann Beloy vs. Marlyn Cuavas, G .R. No. 169523, June 16, 2010 .

Dismissal; exercised with compassion and understanding; doubts resolved in favor of employee. While an employer has its own interest to protect, and pursuant thereto, it may terminate a managerial employee for a just cause, such prerogative to dismiss or lay off an employee must be exercised without abuse of discretion. Its implementation should be tempered with compassion and understanding. The employer should bear in mind that, in the exercise of the said prerogative, what is at stake is not only the employee’s position, but his very livelihood, his very breadbasket. Indeed, the consistent rule is that if doubts exist between the evidence presented by the employer and the employee, the scales of justice must be tilted in favor of the latter. The employer must affirmatively show rationally adequate evidence that the dismissal was for justifiable cause. Thus, when the breach of trust or loss of confidence alleged is not borne by clearly established facts, as in this case, such dismissal on the cited grounds cannot be allowed. Lima Land, Inc., Leandro Javier, Sylvia Duque and Premy Ann Beloy vs. Marlyn Cuavas , G .R. No. 169523, June 16, 2010.

Dismissal; gross neglect of duty; duty to family is no defense. Dr. Estampa’s defense is not acceptable. A person’s duty to his family is not incompatible with his job-related commitment to come to the rescue of victims of disasters. Disasters do not strike every day. Besides, knowing that his job as senior medical health officer entailed the commitment to make a measure of personal sacrifice, he had the choice to resign from it when he realized that he did not have the will and the heart to respond. Dr. Edilberto Estampa, Jr. vs. Government of Davao, G.R. No. 190681, June 21, 2010.

Dismissal; loss of confidence not entitled to separation pay . It is significant to stress that for there to be a valid dismissal based on loss of trust and confidence, the breach of trust must be willful, meaning it must be done intentionally, knowingly, and purposely, without justifiable excuse. The basic premise for dismissal on the ground of loss of confidence is that the employee concerned holds a position of trust and confidence. It is the breach of this trust that results in the employer’s loss of confidence in the employee.

In the case of Aromin v. NLRC [553 SCRA 273], the assistant vice-president of BPI was validly dismissed for loss of trust and confidence. The Court disallowed the payment of separation pay on the ground that he was found guilty of willful betrayal of trust, a serious offense akin to dishonesty. Bank of the Philippine Islands and BPI Family Bank vs. Hon. National Labor Relations Commission (1st Division) and Ma. Rosario N. Arambulo, G.R. No. 179801. June 18, 2010.

Dismissal; loss of trust and confidence; managerial employees. Loss of trust and confidence, as a just cause for termination of employment, is premised on the fact that an employee concerned holds a position where greater trust is placed by management and from whom greater fidelity to duty is correspondingly expected. This includes managerial personnel entrusted with confidence on delicate matters, such as the custody, handling, or care and protection of the employer’s property. The betrayal of this trust is the essence of the offense for which an employee is penalized.

It must be noted, however, that in a plethora of cases, the Supreme Court has distinguished the treatment of managerial employees from that of rank-and-file personnel, insofar as the application of the doctrine of loss of trust and confidence is concerned. Thus, 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, the mere existence of a basis for believing that such employee has breached the trust of his employer would suffice for his dismissal. Hence, in the case of managerial employees, proof beyond reasonable doubt is not required, it being sufficient that there is some basis for such loss of confidence, such as when the employer has reasonable ground to believe that the employee concerned is responsible for the purported misconduct, and the nature of his

participation therein renders him unworthy of the trust and confidence demanded of his position. Lima Land, Inc., Leandro Javier, Sylvia Duque and Premy Ann Beloy vs. Marlyn Cuavas , G .R. No. 169523, June 16, 2010.

Dismissal; mere negligence or carelessness not sufficient ground for loss of confidence. Respondent’s negligence or carelessness in her duties, however, are not justifiable grounds for petitioners’ loss of trust and confidence in her, especially in the absence of any malicious intent or fraud on respondent’s part. Loss of trust and confidence stems from a breach of trust founded on a dishonest, deceitful or fraudulent act. In the case at bar, respondent did not commit any act which was dishonest or deceitful. She did not use her authority as the Finance and Administration Manager to misappropriate company property nor did she abuse the trust reposed in her by petitioners with respect to her responsibility to implement company rules. The most that can be attributed to respondent is that she was remiss in the performance of her duties. This, though, does not constitute dishonest or deceitful conduct which would justify the conclusion of loss of trust and confidence. Lima Land, Inc., Leandro Javier, Sylvia Duque and Premy Ann Beloy vs. Marlyn Cuavas, G .R. No. 169523, June 16, 2010 .

Dismissal for just cause, separation pay allowed in exceptional cases. While as a general rule, an employee who has been dismissed for any of the just causes enumerated under Article 282 of the Labor Code is not entitled to separation pay, the Court has allowed in numerous cases the grant of separation pay or some other financial assistance to an employee dismissed for just causes on the basis of equity.

In the leading case of Philippine Long Distance Telephone Co. v. NLRC [164 SCRA 671] the Court stated that separation pay shall be allowed as a measure of social justice only in those instances where the employee is validly dismissed for causes other than serious misconduct or those reflecting on his moral character. In granting separation pay to respondent, the NLRC and Court of Appeals both adhered to this jurisprudential precept and cleared respondent of bad faith. Bank of the Philippine Islands and BPI Family Bank vs. Hon. National Labor Relations Commission (1st Division) and Ma. Rosario N. Arambulo , G.R. No. 179801, June 18, 2010.

Employee benefit; total disability construed. It has been held that disability is intimately related to one’s earning capacity. It should be understood less on its medical significance but more on the loss of earning capacity. Total disability does not mean absolute helplessness. In disability compensation, it is not the injury, which is compensated, but rather the incapacity to work resulting in the impairment of one’s earning capacity. Thus, permanent disability is the inability of a worker to perform his job for more than 120 days, regardless of whether or not he loses the use of any part of his body. Oriental Ship Management Co., Inc. vs. Romy B. Bastol, G.R. No. 186289, June 29, 2010.

Employer-Employee Relationship; agents of insurance companies; exception to the Insular case; Our ruling in the first Insular case [Insular Insurance v. NLRC, 179 SCRA 459] case did not foreclose the possibility of an insurance agent becoming an employee of an insurance company; if evidence exists showing that the company promulgated rules or regulations that effectively controlled or restricted an insurance agent’s choice of methods or the methods themselves in selling insurance, an employer-employee relationship would be present. The existence of an employer-employee relationship is thus determined on a case-to-case basis depending on the evidence on record. Gregorio V. Tongko v. The Manufacturers Life Insurance Co. (Phils) and Renato A. Vergel De Dios, G.R. No. 167622, June 29, 2010.

Nature of employer; privatization; entitlement to benefits. Although the transformation of the PNB from a government-owned corporation to a private one did not result in a break in its life as juridical person, the same idea of continuity cannot be said of its employees. Section 27 of Presidential Proclamation 50 provided for the automatic termination of employer-employee relationship upon privatization of a government-owned and controlled corporation. Further, such privatization cannot deprive the government employees involved of their accrued benefits or compensation.

As for possible benefits accruing after privatization, the same should be deemed governed by the Labor Code since the PNB that rehired the employee has become a private corporation. Under the Omnibus Rules Implementing the Labor Code, Book VI, Rule I, Section 7, the employee’s separation from work for a just cause does not entitle her to termination pay. Luzviminda A. Ang vs. Philippine National Bank, G.R. No. 178762, June 16, 2010.

Nature of employer; privatization no defense; continuity of offense . The offense for which petitioner was removed took place when the government still owned PNB and she was then a government employee. But while PNB began as a government corporation, it did not mean that its corporate being ceased and was subsequently reestablished when it was privatized. It remained the same corporate entity before, during, and after the change over with no break in its life as a corporation. Consequently, the offenses that were committed against the bank before its privatization continued to be offenses against the bank after the privatization. Luzviminda A. Ang vs. Philippine National Bank, G.R. No. 178762, June 16, 2010.

Prescription of labor claims; overseas contract workers. The employment of seafarers, including claims for death benefits, is governed by the contracts they sign every time they are hired or rehired; and as long as the stipulations therein are not contrary to law, morals, public order or public policy, they have the force of law between the parties.

In Cadalin v. POEA’s Administrator [238 SCRA 721, 764] we held that Article 291 of the Labor Code covers all money claims from employer-employee relationship. “It is not limited to money claims recoverable under the Labor Code, but applies also to claims of overseas contract workers”.

Article 291 of the Labor Code is the law governing prescription of money claims of seafarers, a class of overseas contract workers. This law prevails over Section 28 of the Standard Employment Contract for Seafarers, which provides for claims to be brought only within one year from the date of the seafarer’s return to the point of hire. Thus, for the guidance of all, Section 28 of the Standard Employment Contract for Seafarers, insofar as it limits the prescriptive period for the filing of money claims by seafarers, is hereby declared null and void. The applicable provision is Article 291 of the Labor Code, it being more favorable to the seafarers and more in accord with the State’s declared policy to afford full protection to labor, which provides for a three-year prescriptive period. Southeastern Shipping, Southeastern Shipping Group, Ltd. vs. Federico U. Navarra, Jr., G.R. No. 167678, June 22, 2010.

Quitclaims; general rule; requirements for validity; instances when it was annulled. As a rule, quitclaims, waivers, or releases are looked upon with disfavor and are largely ineffective to bar claims for the measure of a worker’s legal rights. To be valid, a Deed of Release, Waiver and/or Quitclaim must meet the following requirements: (1) that there was no fraud or deceit on the part of any of the parties; (2) that the consideration for the quitclaim is credible and reasonable; and (3) that the contract is not contrary to law, public order, public policy, morals or good customs, or prejudicial to a third person with a right recognized by law.

Courts have stepped in to annul questionable transactions, especially where there is clear proof that a waiver, for instance, was obtained from an unsuspecting or a gullible person; or where the agreement or settlement was unconscionable on its face. A quitclaim is ineffective in barring recovery of the full measure of a worker’s rights, and the acceptance of benefits therefrom does not amount to estoppel. Moreover, a quitclaim in which the consideration is scandalously low and inequitable cannot be an obstacle to the pursuit of a worker’s legitimate claim. Interorient Maritime Enterprises, Inc. et al. v. Leonora S. Remo, G.R. No. 181112, June 29, 2010.

Retirement benefits; does not include allowances. Executive Order No. 756 temporary measure; statutory construction. Section 6 of Executive Order No. 756 (“E.O. 756”), which provides for the computation of retirement proceeds including allowances, does not provide for a permanent retirement plan, as against the prohibition of Section 28, Subsection (b) of Commonwealth Act No. 186 (“C.A. 186”), as amended. The E.O. 756 should be read adjunct to its mandate of reorganizing the Philippine International Trading Corporation. The increased benefit under E.O. 756 was clearly meant as an incentive for employees who retire, resign or are separated from service during or as a consequence of the reorganization. As a temporary measure, it cannot be interpreted as an exception to the general prohibition against separate or supplementary insurance and/or retirement or pension plans under C.A. 186, as amended.

In reconciling E.O. 756 with C.A.186, as amended, uppermost in the mind of the Court is the fact that the best method of interpretation is that which makes laws consistent with other laws which are to be

harmonized rather than having one considered repealed in favor of the other. Philippine International Trading Corporation vs. Commission on Audit, G.R. No. 183517, June 22, 2010.

Resignation; burden of proof. The rule in termination cases is that the employer bears the burden of proving that he dismissed his employee for a just cause. And, when the employer claims that the employee resigned from work, the burden is on the employer to prove that he did so willingly. Whether that is the case would largely depend on the circumstances surrounding such alleged resignation. Those circumstances must be consistent with the employee’s intent to give up work. Elsa S. Mali-on v. Equitable General Services Inc., G.R. No. 185269, June 29, 2010.

Solidary liability of employers; proof of bad faith. Based on MAM Realty Development Corporation v. NLRC [244 SCRA 797], for corporate officers to be held solidarily liable in labor disputes there must be evidence of bad faith or malice. Querubin L. Alba and Rizalinda D. De Guzman vs. Robert L. Yupangco, G.R. No. 188233, June 29, 2010.

Labor Procedure

Judgment; amendment of final order; solidary liability. The Labor Arbiter cannot modify a final and executory judgment, even if the modification is meant to correct erroneous conclusions of fact and law, whether it be made by the court that rendered it or by the highest court in the land. The only recognized exceptions are the corrections of clerical errors or the making of so-called nunc pro tunc entries which cause no prejudice to any party and in cases where the judgment is void. Said exceptions do not apply in the present case. Querubin L. Alba and Rizalinda D. De Guzman vs. Robert L. Yupangco, G.R. No. 188233, June 29, 2010.

Judgment; law of the case; definition and application. “Law of the case” has been defined as the opinion delivered on a former appeal—it is a term applied to an established rule that when an appellate court passes on a question and remands the case to the lower court for further proceedings, the question there settled becomes the law of the case upon subsequent appeal. OSCI’s application of the law of the case principle to the instant case, as regards the remand of the case to the Labor Arbiter for clarificatory hearings, is misplaced. The only matter settled in the July 30, 1999 NLRC Decision, which can be regarded as law of the case, was the undisputed fact that Bastol was suffering from a heart ailment. As it is, the issue on the degree of disability of Bastol’s heart ailment and his entitlement to disability indemnity, as viewed by the NLRC through said decision, has yet to be resolved. For this reason, the NLRC remanded the case to Labor Arbiter Mayor, Jr. “for conduct of further appropriate proceedings and to terminate the same with dispatch. Oriental Ship Management Co., Inc. vs. Romy B. Bastol, G.R. No. 186289, June 29, 2010.

Judgment; res judicata; nature and applicability. The nature of res judicata, as now embodied in Sec. 47, Rule 39 of the Rules of Court, has two concepts, which are (i) bar by former judgment and (ii) conclusiveness of judgment. These concepts of the doctrine of res judicata are applicable to second actions involving substantially the same parties, the same subject matter, and cause or causes of action. In the instant case, there is no second action to speak of. Oriental Ship Management Co., Inc. vs. Romy B. Bastol, G.R. No. 186289, June 29, 2010.

Procedure; certificate of non-forum shopping; pro-forma complaints . For the expeditious and inexpensive filing of complaints by employees, the Regional Arbitration Branch (“RAB”) of the NLRC provides pro-forma complaint forms. This is to facilitate the exercise and protection of employees’ rights by the convenient assertion of their claims against employers untrammeled by procedural rules and complexities. To comply with the certification against forum shopping requirement, a simple question embodied in the Complaint form answerable by “yes” or “no” suffices. Employee-complainants are not even required to have a counsel before they can file their complaint. An officer of the RAB, duly authorized to administer oaths, is readily available to facilitate the execution of the required subscription or jurat of the complaint. Oriental Ship Management Co., Inc. vs. Romy B. Bastol, G.R. No. 186289, June 29, 2010.

Procedure; conduct of hearings; discretionary; exemptions. Although, the NLRC, while having appellate jurisdiction over decisions and resolutions of the Labor Arbiter, may not dictate to the latter how to

conduct the labor case before it. Sec. 9 of Rule V of the then prevailing NLRC Rules of Procedure, issued on December 10, 1999, provided for the nature of proceedings before the Labor Arbiter as non-litigious in nature. Hence, the Labor Arbiter is given full discretion to determine, motu proprio, on whether to conduct hearings or not.

Consequently, a hearing cannot be demanded by either party as a matter of right. The parties are required to file their corresponding position papers and all the documentary evidence and affidavits to prove their cause of action and defenses. The rationale behind this is to avoid delay and curtail the pernicious practice of withholding of evidence.

The Court, however, has recognized specific instances of the impracticality for the Labor Arbiter to follow the position paper method of disposing cases; thus, formal or clarificatory hearings must be had in cases of termination of employment: such as, (i) when claims are not properly ventilated for lack of proper determination whether complainant employee was a rank-and-file or a managerial employee, (ii) that the Labor Arbiter cannot rely solely on the parties’ bare allegations when the affidavits submitted presented conflicting factual issues, and (iii) considering the dearth of evidence presented by complainants the Labor Arbiter should have set the case for hearing. Oriental Ship Management Co., Inc. vs. Romy B. Bastol, G.R. No. 186289, June 29, 2010.

Procedure; verification by counsel sufficient. The counsel’s verification in a Position Paper substantially complies with the rule on verification. The second paragraph of Sec. 4, Rule 7 of the Rules of Court provides: “A pleading is verified by an affidavit that the affiant has read the pleading and that the allegations therein are true and correct of his personal knowledge or based on authentic records.” On the other hand, the actual verification of counsel states: “That I am the counsel of record for the complainant in the above-entitled case; that I caused the preparation of the foregoing Position Paper; that I have read and understood the contents thereof; and that I confirm that all the allegations therein contained are true and correct based on recorded evidence.” Oriental Ship Management Co., Inc. vs. Romy B. Bastol, G.R. No. 186289, June 29, 2010.

Procedure; late filing of position paper, and filing of prohibited pleading. The relaxation of rules of technical procedure in the hearing of labor disputes shall not be applicable in case counsel fails to file a position paper before the Labor Arbiter not just once but twice. His situation was compounded when he filed a motion to recall order of dismissal, a prohibited pleading, albeit gratuitously glossed over by the Labor Arbiter, which treated it as an appeal; and when he belatedly paid the appeal fee.

Moreover, not having learned his lesson, petitioner’s counsel filed a motion for reconsideration of the NLRC dismissal of his appeal, which is also prohibited, instead of interposing an appeal before the Court of Appeals. Said motion for reconsideration not having tolled the running of the reglementary period for the filing of a petition for certiorari under Rule 65, petitioner’s petition before the appellate court was filed out of time – three months late. Luis M. Rivera vs. Parents-Teachers Community Association and Easter Yase, G.R. No. 181532, June 29, 2010.

Procedure; late submission of documentary evidence allowed. The nature of the proceedings before the Labor Arbiter is not only non-litigious and summary, but the Labor Arbiter is also given great leeway to resolve the case; thus, he may “avail himself of all reasonable means to ascertain the facts of the controversy.” The belated submission of additional documentary evidence by respondent after the case was already submitted for decision did not make the proceedings before the Labor Arbiter improper. The basic reason is that technical rules of procedure are not binding in labor cases. Oriental Ship Management Co., Inc. vs. Romy B. Bastol, G.R. No. 186289, June 29, 2010.

Procedure; quantum of evidence on appeal; substantial evidence. In administrative proceedings, the quantum of proof required is substantial evidence, which is more than a mere scintilla of evidence, but such amount of relevant evidence which a reasonable mind might accept as adequate to justify a conclusion. The Court of Appeals may review the factual findings of the NLRC and reverse its ruling if it finds that the decision of the NLRC lacks substantial basis. Estrella Velasco vs. Transit Automotive Supply, Inc. and Antonio de Dios, G.R. No. 171327, June 18, 2010.

MAY 2010

Labor law

Illegal dismissal; backwages. The basis for the payment of backwages is different from that for the award of separation pay. Separation pay is granted where reinstatement is no longer advisable because of strained relations between the employee and the employer. Backwages represent compensation that should have been earned but were not collected because of the unjust dismissal. The basis for computing backwages is usually the length of the employee’s service while that for separation pay is the actual period when the employee was unlawfully prevented from working.

As to how both awards should be computed, Macasero v. Southern Industrial Gases Philippines [G.R. No. 178524, January 30, 2009] instructs that the award of separation pay is inconsistent with a finding that there was no illegal dismissal, for under Article 279 of the Labor Code and as held in a catena of cases, an employee who is dismissed without just cause and without due process is entitled to backwages and reinstatement or payment of separation pay in lieu thereof. Thus, an illegally dismissed employee is entitled to two reliefs: backwages and reinstatement. The two reliefs provided are separate and distinct. Golden Ace Builders and Arnold U. Azur vs. Jose A. Talde, G.R. No. 187200, May 5, 2010.

Illegal dismissal; doctrine of strained relations. Under the doctrine of strained relations, the payment of separation pay is considered an acceptable alternative to reinstatement when the latter option is no longer desirable or viable. On one hand, such payment liberates the employee from what could be a highly oppressive work environment. On the other hand, it releases the employer from the grossly unpalatable obligation of maintaining in its employ a worker it could no longer trust.

Strained relations must be demonstrated as a fact, however, to be adequately supported by evidence— substantial evidence to show that the relationship between the employer and the employee is indeed strained as a necessary consequence of the judicial controversy.

In the present case, the Labor Arbiter found that actual animosity existed between petitioner Azul and respondent as a result of the filing of the illegal dismissal case. Such finding, especially when affirmed by the appellate court as in the case at bar, is binding upon the Court, consistent with the prevailing rules that the Court will not try facts anew and that findings of facts of quasi-judicial bodies are accorded great respect, even finality. Golden Ace Builders and Arnold U. Azul vs. Jose A. Talde, G.R. No. 187200, May 5, 2010.

Illegal dismissal; separation pay. In instances where reinstatement is no longer feasible because of strained relations between the employee and the employer, separation pay is granted. In effect, an illegally dismissed employee is entitled to either reinstatement, if viable, or separation pay if reinstatement is no longer viable, and backwages. The normal consequences of respondents’ illegal dismissal, then, are reinstatement without loss of seniority rights, and payment of backwages computed from the time compensation was withheld up to the date of actual reinstatement. Where reinstatement is no longer viable as an option, separation pay equivalent to one (1) month salary for every year of service should be awarded as an alternative. The payment of separation pay is in addition to payment of backwages.

The accepted doctrine is that separation pay may avail in lieu of reinstatement if reinstatement is no longer practical or in the best interest of the parties. Separation pay in lieu of reinstatement may likewise be awarded if the employee decides not to be reinstated. Golden Ace Builders and Arnold U. Azur vs. Jose A. Talde, G.R. No. 187200, May 5, 2010.

Labor procedure

Judgment; final and executory. The Labor Arbiter’s decision has long become final and executory and it can no longer be reversed or modified. Nothing is more settled in law than when a final judgment becomes executory, it thereby becomes immutable and unalterable. The judgment may no longer be modified in any respect, even if the modification is meant to correct what is perceived to be an erroneous conclusion of law or fact, and regardless of whether the modification is attempted to be made by the court rendering it or by the highest court of the land. The only recognized exception are

the correction of clerical errors or the making of so-called nunc pro tunc entries which cause no injury to any party, and, of course, where the judgment is void.

Once a judgment becomes final and executory, the prevailing party should not be denied the fruits of his victory by some subterfuge devised by the losing party. Final and executory judgments can neither be amended nor altered except for correction of clerical errors, even if the purpose is to correct erroneous conclusions of fact or of law. Trial and execution proceedings constitute one whole action or suit such that a case in which execution has been issued is regarded as still pending so that all proceedings in the execution are proceedings in the suit.

It is no longer legally feasible to modify the final ruling in this case through the expediency of a petition questioning the order of execution. Judgments of courts should attain finality at some point lest there be no end in litigation. The final judgment in this case may no longer be reviewed, or in any way modified directly or indirectly, by a higher court, not even by the Supreme Court. The reason for this is that, litigation must end and terminate sometime and somewhere, and it is essential to an effective and efficient administration of justice that, once a judgment has become final, the winning party be not deprived of the fruits of the verdict. Courts must guard against any scheme calculated to bring about that result and must frown upon any attempt to prolong controversies. Marmosy Trading, Inc. and Victor Morales vs. Court of Appeals, et al., G.R. No. 170515, May 6, 2010.

APRIL 2010

Labor Law

Dismissal; backwages. Article 279 of the Labor Code provides that “an employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his compensation was withheld from him up to the time of his actual reinstatement.”

Thus, a number of cases holds that an illegally dismissed employee is entitled to two reliefs: backwages and reinstatement. The two reliefs are separate and distinct. In instances where reinstatement is no longer feasible because of strained relations between the employee and the employer, separation pay is granted. In effect, an illegally dismissed employee is entitled to either reinstatement, if viable, or separation pay if reinstatement is no longer viable, and backwages.

The normal consequences of respondents’ illegal dismissal, then, are reinstatement without loss of seniority rights, and payment of backwages computed from the time compensation was withheld up to the date of actual reinstatement. Where reinstatement is no longer viable as an option, separation pay equivalent to one (1) month salary for every year of service should be awarded as an alternative. The payment of separation pay is in addition to the payment of backwages.

Since reinstatement is no longer feasible in the present case, the award of separation pay in lieu of reinstatement is in order. Petitioner’s prayer for the award of backwages is meritorious, it, and the award of separation pay not being mutually exclusive. Ferdinand A. Pangilinan vs. Wellmade Manufacturing Corporation, G.R. No. 187005, April 7, 2010.

Dismissal; backwages. Reprimand being the appropriate imposable penalty for respondent’s actuations from the very beginning, the Court finds that respondent was unfairly denied from reporting for work and earning his keep, thus, entitling him to the payment of backwages.

The Court is not unmindful of our previous pronouncements in similar cases involving suspension or dismissal from service, wherein the penalty imposed was reduced, but the award of backwages was denied.

Given the circumstances of the case, however, where the proper penalty should only be a reprimand, the Court finds the aforementioned cases to be inapplicable herein. On this note, the Court deems it proper to distinguish between the penalties of dismissal or suspension and reprimand and their

respective effects on the grant or award of backwages. When an employee is dismissed or suspended it is but logical that since he is barred from reporting to work the same negates his right to be paid backwages. He has no opportunity to work during the period he was dismissed or suspended and, therefore, he has no salary to expect. However, the same does not hold true for an employee who is reprimanded. A reprimand usually carries a warning that a repetition of the same or similar act will be dealt with more severely. Under normal circumstances, an employee who is reprimanded is never prevented from reporting to work. He continues to work despite the warning. Thus, in the case at bar, since respondent’s penalty should only be a reprimand, the Court deems it proper and equitable to affirm the Court of Appeals’ (CA’s) award of backwages.

In two instances, the Court granted the award of backwages during the period the employees were prevented from reporting to work despite concluding that the employee concerned violated reasonable office rules and regulations and imposing the penalty of reprimand.

In Jacinto v. Court of Appeals [G.R. No. 124540, November 14, 1997, 281 SCRA 657], the Court awarded petitioner Jacinto backwages after finding that she was only culpable of violating reasonable office rules and regulations for not having asked permission from school authorities to leave the school premises and seek medical attention and for not filing an application for sick leave for approval by the school authorities.

Also, in Bangalisan v. Court of Appeals [G.R. 124678, July 31, 1997, 276 SCRA 619, 633], after affirming the findings that one of the petitioners, Rodolfo Mariano, is only liable for his violation of reasonable office rules and regulations for attending the wake and internment of his grandmother without the benefit of an approved leave of absence and the imposition of the penalty of reprimand, the Court still granted him backwages.

Consistent with the Court’s rulings in Bangalisan and Jacinto, the grant of backwages to respondent is but proper. It is to be stressed that when imposing penalties, it must not only be made within the parameters of the law, but it should also satisfy the basic tenets of equity, justice, and fairplay. National Power Corporation vs. Alan Olandesca, G.R. No. 171434, April 23, 2010.

Dismissal; dishonesty. In Philippine Amusement and Gaming Corporation v. Rilloroza [G.R. No. 141141, June 25, 2001], dishonesty is defined as the disposition to lie, cheat, deceive, or defraud; untrustworthiness; lack of integrity; lack of honesty, probity or integrity in principle; lack of fairness and straightforwardness; disposition to defraud, deceive or betray.

It is not disputed that respondent took several materials and supplies from petitioner’s warehouse without the approved WRS. However, this should not be construed as dishonesty on the part of respondent that would warrant his dismissal from the service for the following reasons: First, the withdrawals of the supplies were duly recorded in the security guard’s logbook. If respondent intended to defraud petitioner, he could have easily taken items from the warehouse without having them recorded as he was then the Supervising Property Officer who had free access to the supplies. Second, right after withdrawing the items, respondent replaced them on his own initiative, without anyone instructing him to do so. This act negates his intent to defraud petitioner. Third, there is no clear showing that respondent misappropriated or converted the items for his own personal use or benefit. Fourth, the Graft Investigation Officer of the Office of the Ombudsman, in its Resolution dated February 5, 1999, in OMB-1-98-2011, dismissed a complaint for qualified theft filed by Teodulo V. Largo, Section Chief, Power Generation Group of petitioner against respondent as there was no competent and sufficient evidence on record to show that there was intent to gain on the part of the respondent, considering that the materials and supplies taken by him were used in fencing the watershed and reservation area of petitioner company. Likewise, there was no basis to charge him for malversation of public property as there was no misappropriation of the supplies for his personal use and that the same were for general purpose and not for any specific use.

Nonetheless, although the respondent did not commit an overt act of dishonesty, he is not exonerated from liability. It was an established company procedure that before materials can be taken out from the warehouse, the issuance of a WRS is an indispensable requirement. In fact, there was even a warning posted at the door of the property office that states:

“BAWAL MAGLABAS NG GAMIT O MAGKARGA NG GASOLINA NG WALANG APRUBADONG WRS.” Being the Supervising Property Officer, respondent knows fully well that taking items from the warehouse without the required WRS is against the company rules and regulations. It is the paramount duty of respondent to protect the properties in the warehouse and to ensure that none shall be taken away without proper documentation.

The Machiavellian principle that “the end justifies the means” has no place in government service, which thrives on the rule of law, consistency and stability. Respondent, by taking the said properties without the approved WRS, violated reasonable office rules and regulations as provided in Section 52 (C), (3), Rule IV of Civil Service Commission Memorandum Circular No. 19, series of 1999 (Uniform Rules on Administrative Cases in the Civil Service). Since this is respondent’s first offense in his more than 16 years of service, the appropriate penalty to be imposed against him is reprimand. National Power Corporation vs. Alan Olandesca, G.R. No. 171434, April 23, 2010.

Dismissal; lost of trust and confidence. To terminate the services of an employee for loss of trust and confidence, two requisites must concur: (1) the employee concerned must be holding a position of trust and confidence and (2) there must be an act that would justify the loss of trust and confidence.

In the present case, respondent failed to justify its loss of trust and confidence on Consolacion even as it imputed to him, via Notice of Formal Investigation of April 14, 2003, non-compliance with (a) established non-written procedures and standards; (b) established written procedures and standards, and (c) verbal orders and/or instructions. These alleged acts of non-compliance are too general and can encompass just about any malfeasance. Nowhere in the Notice was there a detailed narration of the facts and circumstances that would serve as bases to terminate Consolacion, thus leaving to surmise what those procedures, standards and orders were. Anabel Benjamin, et al. vs. Amellar Corporation., G.R. No. 183383, April 5, 2010.

Dismissal; management prerogative. Respondent’s right of management prerogative was exercised in good faith. Respondent presented evidence of the low volume of sales and orders for the production of industrial paper in 1999, which inevitably resulted to the company’s decision to streamline its operations. This fact was corroborated by respondent’s VP-Tissue Manufacturing Director and was not disputed by petitioner. Exercising its management prerogative and sound business judgment, respondent decided to cut down on operational costs by shutting down one of its paper mill. As held in International Harvester Macleod, Inc. v. Intermediate Appellate Court [233 Phil. 655,655-666 (1987)] the determination of the need to phase out a particular department and consequent reduction of personnel and reorganization as a labor and cost saving device is a recognized management prerogative which the courts will not generally interfere with.

In this case, shutting down Paper Mill No. 4 was undoubtedly a business judgment arrived at in the face of the low demand for the production of industrial paper at the time. Despite an apparent reason to implement a retrenchment program as a cost-cutting measure, respondent, did not dismiss the workers affected by the closure of Paper Mill No. 4 outright but gave them an option to be transferred to posts of equal rank and pay. Retrenchment was given only as an option in case the affected employee did not want to be transferred. The Court viewed this as an indication of good faith on respondent’s part since it exhausted other possible measures before retrenchment. Besides, the employer’s prerogative to bring down labor costs by retrenchment must be exercised essentially as a measure of last resort, after less drastic means have been tried and found wanting. Giving the workers an option to be transferred without any diminution in rank and pay belie petitioner’s allegation that the streamlining scheme was implemented as a ploy to ease out employees. Apparently, respondent implemented its streamlining or reorganization plan in good faith, not in an arbitrary manner and without violating the tenurial rights of its employees. Dannie M. Pantoja vs. SCA Hygiene Products Corporation, G.R. No. 163554, April 23, 2010.

Dismissal; retrenchment. The CA committed no reversible error in affirming the NLRC ruling that Talam was validly dismissed on the ground of retrenchment. The Supreme Court came to this conclusion based on the following considerations:

First, the decision to retrench had a basis; it was not simulated nor resorted to for the purpose of getting rid of employees. The decision was upon the recommendation of the company’s external auditor.

Second, the cost-cutting measure recommended involved reduction of TSFI’s payroll expense account which, as the auditor found, makes up 41% of the company’s total operating expenses. Third, Talam was dismissed due to a cause authorized by law – retrenchment to prevent losses. At the time of Talam’s dismissal, TSFI’s financial condition, as found by the external auditor, showed that it was not just expecting losses, it already suffered a net income loss of P2,474,418.00 and retained earnings deficit of P7,424,250.00 for the period ending December 31, 2002. Fourth, TSFI resorted to other measures to abate its losses. It claimed that during the crises period, it used as an office a small-room (a mere cubicle) with only a two-person support staff in the persons of Grapilon and Hermle; it reduced the salaries of its employees by as much as 30%. This submission by the company is substantiated by the schedule of Operating Expenses for the year ended December 31, 2002 and September 30, 2002. A quick glance at the schedule readily shows a reduction of TSFI’s operating expenses across the board. The schedule indicates a substantial decrease in operating expenses, from P5,733,735.00 in September 2002 to P1,698,552.36 as of the end of December 2002. Francis Ray Talam vs. National Labor Relations Commission, 4th Division, Cebu City, et al., G.R. No. 175040, April 6, 2010.

Dismissal; serious misconduct. The findings of the CA and National Labor Relations Commission (NLRC) establish the following: (1) Agad’s request for withdrawal of the 190 cylinders of LPG as stated in a Memorandum dated 12 February 1992 cannot be given credence since the Memorandum pertains to the replacement of the scrap materials due to Boy Bato consisting of 3,000 kilograms of black iron plates and not to the subject LPG cylinders; (2) Agad did not observe Caltex’s rules and regulations when he transferred the said cylinders to Millanes’ compound without the RMRD form as required under Caltex’s Field Accounting Manual; (3) Agad gave specific instructions to Millanes to sell the cylinders without bidding to third parties in violation of company rules; (4) Agad failed to submit the periodic inventory report of the LPG cylinders to the accounting department; (5) Agad did not remit the proceeds of the sale of the LPG cylinders; and (6) even if considered as scrap materials, the LPG cylinders still had monetary value which Agad cannot appropriate for himself without Caltex’s consent.

Considering these findings, it is clear that Agad committed a serious infraction amounting to theft of company property. This act is akin to serious misconduct or willful disobedience by the employee of the lawful orders of his employer in connection with his work, a just cause for termination of employment recognized under Article 282(a) of the Labor Code.

Misconduct has been defined as a transgression of some established and definite rule of action, a forbidden act, a dereliction of duty, willful in character, and implies wrongful intent and not mere error in judgment. To be serious, the misconduct must be of such grave and aggravated character. Caltex (Philippines), Inc., et. al. vs. Hermie G. Abad, et. al., G.R. No. 163554, April 23, 2010.

Due Process; termination. The records belie Amular’s claim of denial of procedural due process. He chose not to present his side at the administrative hearing. In fact, he avoided the investigation into the charges against him by filing his illegal dismissal complaint ahead of the scheduled investigation. These facts show that the employee was given the opportunity to be heard and he cannot now come to the Court protesting that he was denied this opportunity. To belabor a point the Court has repeatedly made in employee dismissal cases, the essence of due process is simply an opportunity to be heard; it is the denial of this opportunity that constitutes violation of due process of law. Technol Eight Philippines Corporation vs. National Labor Relations Commission, et al., G.R. No. 187605. April 13, 2010.

Employer employee relationship . The elements to determine the existence of an employment relationship are: (1) selection and engagement of the employee; (2) the payment of wages; (3) the power of dismissal; and (4) the employer’s power to control the employee’s conduct. In filing a complaint for illegal dismissal, it is incumbent upon Abueva to prove the relationship by substantial evidence.

In this regard, Abueva claims that he has worked with respondent hacienda for more than a year already and that he was allowed to stay inside the hacienda. As such, he is a regular employee entitled to monetary claims. However, petitioners have not presented competent proof that respondents engaged the services of Abueva; that respondents paid his wages or that respondents could dictate what his conduct should be while at work. In other words, Abueva’s allegations did not establish that his relationship with respondents had the attributes of an employer-employee relationship based on the

four-fold test. Abueva was not able to discharge the burden of proving the existence of an employer-employee relationship. Moreover, Abueva was not able to refute respondents’ assertion that he hires other men to perform weeding job in the hacienda and that he is not exclusively working for respondents. Romeo Basay, et al. vs. Hacienda Consolation, et al., G.R. No. 175532, April 19, 2010.

Illegal dismissal . Contrary to the CA’s perception, the Court finds a work-connection in Amular’s and Ducay’s assault on Mendoza. As the CA itself noted, the underlying reason why Amular and Ducay confronted Mendoza was to question him about his report to De Leon – Technol’s PCD assistant supervisor – regarding the duo’s questionable work behavior. The motivation behind the confrontation was rooted on workplace dynamics as Mendoza, Amular and Ducay interacted with one another in the performance of their duties.

Under these circumstances, Amular undoubtedly committed misconduct or exhibited improper behavior that constituted a valid cause for his dismissal under the law and jurisprudential standards. The circumstances of his misdeed rendered him unfit to continue working for Technol. Thus, Amular was not illegally dismissed; he was dismissed for cause. Technol Eight Philippines Corporation vs. National Labor Relations Commission, et al., G.R. No. 187605. April 13, 2010.

Illegal Dismissal . If the school were to apply the probationary standards (as in fact it says it did in the present case), these standards must not only be reasonable but must have also been communicated to the teachers at the start of the probationary period, or at the very least, at the start of the period of application of the said standards. These terms, in addition to those expressly provided by the Labor Code, would serve as the just cause for the termination of the probationary contract. As explained above, the details of this finding of just cause must be communicated to the affected teachers as a matter of due process.

AMACC, by its submissions, admits that it did not renew the petitioners’ contracts because they failed to pass the Performance Appraisal System for Teachers (PAST) and other requirements for regularization that the school implements to maintain its high academic standards. The evidence is unclear on the exact terms of the standards, although the school also admits that these were standards under the Guidelines on the Implementation of AMACC Faculty Plantilla put in place at the start of school year 2000-2001.

While the Court can grant that the standards were duly communicated to the petitioners and could be applied beginning the 1st trimester of the school year 2000-2001, glaring and very basic gaps in the school’s evidence still exist. The exact terms of the standards were never introduced as evidence; neither does the evidence show how these standards were applied to the petitioners. Without these pieces of evidence (effectively, the finding of just cause for the non-renewal of the petitioners’ contracts), the Court has nothing to consider and pass upon as valid or invalid for each of the petitioners. Inevitably, the non-renewal (or effectively, the termination of employment of employees on probationary status) lacks the supporting finding of just cause that the law requires and, hence, is illegal. Yolanda M. Mercado, et al. vs. Ama Computer College, Parañaque City, G.R. No. 183572, April 13, 2010.

Illegal dismissal. The Court is not unmindful of the rule in labor cases that the employer has the burden of proving that the termination was for a valid or authorized cause; however, it is likewise incumbent upon the employees that they should first establish by competent evidence the fact of their dismissal from employment. The one who alleges a fact has the burden of proving it and the proof should be clear, positive and convincing. In this case, aside from mere allegations, no evidence was proffered by the petitioners that they were dismissed from employment. The records are bereft of any indication that petitioners were prevented from returning to work or otherwise deprived of any work assignment by respondents.

In Abad v. Roselle Cinema [G.R. No. 141371, March 24, 2006, 485 SCRA 262, 272], the Court ruled that the substantial evidence proffered by the employer that it had not terminated the employee should not be ignored on the pretext that the employee would not have filed the complaint for illegal dismissal if he had not really been dismissed. The Court held that such non sequitur reasoning cannot take the place of

the evidence of both the employer and the employee. Romeo Basay, et al. vs. Hacienda Consolation, et al., G.R. No. 175532, April 19, 2010.

Illegal Dismissal. The Court views with approval the observation of the CA and the NLRC that the employer cannot justify the defense of abandonment as it failed to prove that indeed the employee had abandoned her work. It did not even bother to send a letter to her last known address requiring her to report for work and explain her alleged continued absences.

The ratiocination of the NLRC on this score merits the Court’s imprimatur, viz: The law clearly spells out the manner by which an unjustified refusal to return to work by an employee may be established. Thus, respondent should have given complainant a notice with warning concerning her alleged absences (Section 2, Rule XIV, Book V, Implementing Rules and Regulations of the Labor Code). The notice requirement actually consists of two parts to be separately served on the employee to wit: (1) notice to apprise the employee of his absences with a warning concerning a possible severance of employment in the event of an unjustified excuse therefor, and (2) subsequent notice of the decision to dismiss in the event of an employee’s refusal to pay heed to such warning. Only after complying with those requirements can it be reasonably concluded that the employee actually abandoned his job. In the present case, more than two (2) months had already lapsed since the employee allegedly started to absent herself when she instituted her action for illegal dismissal. During the said period of time, no action was taken by the company regarding the employee’s alleged absences, something which is quite peculiar had her employment not been severed at all. Accordingly, the Court found no merit in the company’s defense of abandonment in view of an utter lack of evidence to support the same. Hence, the employee’s charge of illegal dismissal stands uncontroverted. Diversified Security, Inc. vs. Alicia V. Bautista. G.R. No. 152234, April 15, 2010.

Preventive Suspension; Process. What the Rules require is that the employer act on the suspended worker’s status of employment within the 30-day period by concluding the investigation either by absolving him of the charges, or meting the corresponding penalty if liable, or ultimately dismissing him. If the suspension exceeds the 30-day period without any corresponding action on the part of the employer, the employer must reinstate the employee or extend the period of suspension, provided the employee’s wages and benefits are paid in the interim.

In the present case, petitioner company had until May 20, 2002 to act on Taroy’s case. It did by terminating him through a notice dated May 10, 2002, hence, the 30-day requirement was not violated even if the termination notice was received only on June 4, 2002, absent any showing that the delayed service of the notice on Taroy was attributable to Genesis Transport. Genesis Transport Service, Inc. et al. vs. Unyon ng Malayang Manggagawa ng Genesis (UMMGT), et al., G.R. No. 182114, April 5, 2010.

Reinstatement. Given the period that has lapsed and the inevitable change of circumstances that must have taken place in the interim in the academic world and at AMACC, which changes inevitably affect current school operations, the Court holds that – in lieu of reinstatement – the petitioners should be paid separation pay computed on a trimestral basis from the time of separation from service up to the end of the complete trimester preceding the finality of this Decision. The separation pay shall be in addition to the other awards, properly recomputed, that the LA originally decreed. Yolanda M. Mercado, et al. vs. Ama Computer College, Parañaque City, G.R. No. 183572, April 13, 2010.

Release, Waiver and Quitclaim . Talam was not an unlettered employee; he was an information technology consultant and must have been fully aware of the consequences of what he was entering into. The quitclaim was a voluntary act as there is no showing that he was coerced into executing the instrument; he received a valuable consideration for his less than two years of service with the company. Thus, from all indications, the release and quitclaim was a valid and binding undertaking that should have been recognized by the labor authorities and the CA.

While the law frowns upon releases and quitclaims executed by employees who are inveigled or pressured into signing them by unscrupulous employers seeking to evade their legal responsibilities, a legitimate waiver representing a voluntary settlement of a laborer’s claims should be respected by the

courts as the law between the parties. In the Court’s view, Talam’s release and quitclaim fall into the category of legitimate waivers as defined by the Court.

With Talam’s voluntary execution of the release and quitclaim, the Court found the filing of the illegal dismissal case tainted with bad faith. Neither can TSFI be made to answer for failure to afford Talam procedural due process. The release and quitclaim, in the Court’s mind, erased whatever infirmities there might have been in the notice of termination as Talam had already voluntarily accepted his dismissal through the release and quitclaim. As such, the written notice became academic; the notice, after all, is merely a protective measure put in place by law and serves no useful purpose after protection has been assured. The Court thus finds no basis for the conclusion that TSFI violated procedural due process and should pay nominal damages. Francis Ray Talam vs. National Labor Relations Commission, 4th Division, Cebu City, et al., G.R. No. 175040, April 6, 2010.

Resignation of Employee. While the letter states that Peñaflor’s resignation was irrevocable, it does not necessarily signify that it was also voluntarily executed. Precisely because of the attendant hostile and discriminatory working environment, Peñaflor decided to permanently sever his ties with Outdoor Clothing. This falls squarely within the concept of constructive dismissal that jurisprudence defines, among others, as involuntarily resignation due to the harsh, hostile, and unfavorable conditions set by the employer. It arises when a clear discrimination, insensibility, or disdain by an employer exists and has become unbearable to the employee. The gauge for constructive dismissal is whether a reasonable person in the employee’s position would feel compelled to give up his employment under the prevailing circumstances. With the appointment of Buenaobra to the position he then still occupied, Peñaflor felt that he was being eased out and this perception made him decide to leave the company.

The fact of filing a resignation letter alone does not shift the burden of proving that the employee’s dismissal was for a just and valid cause from the employer to the employee. In Mora v. Avesco [G.R. No. 177414, November 14, 2008, 571 SCRA 226], the Court ruled that should the employer interpose the defense of resignation, it is still incumbent upon the employer to prove that the employee voluntarily resigned. Manolo A. Peñaflor vs. Outdoor Clothing Manufacturing Corp., et al., G.R. No. 177114, April 13, 2010.

Labor Procedure

Certiorari; questions of law. TSFI asks the Court to dismiss the present petition on the ground that it is procedurally defective as, allegedly, it raises only questions of fact, in contravention of the requirement under Rule 45 of the Rules of Court that an appeal by certiorari shall raise only questions of law. While the petition indeed poses factual issues – i.e., whether the company was suffering from substantial losses to justify a retrenchment measure, whether it observed fair and reasonable standards in implementing a retrenchment, and whether Talam deserved to be retrenched – the Court deems it proper to examine the facts itself in view of the conflicting factual findings among the Labor Arbiter, the NLRC and the CA. Francis Ray Talam vs. National Labor Relations Commission, 4th Division, Cebu City, et al., G.R. No. 175040, April 6, 2010.

Finding of facts . Findings of facts of quasi-judicial bodies like the NLRC, and affirmed by the CA in due course, are conclusive on the Supreme Court, which is not a trier of facts.

Findings of fact of administrative agencies and quasi-judicial bodies, which have acquired expertise because their jurisdiction is confined to specific matters, are generally accorded not only respect, but finality when affirmed by the CA. Such findings deserve full respect and, without justifiable reason, ought not to be altered, modified or reversed. Diversified Security, Inc. vs. Alicia V. Bautista. G.R. No. 152234, April 15, 2010

Res Judicata . On the issue of refund of “underpayment,” petitioners aver that cases of similar import involving also the respondent union have been decided with finality in their favor by the NLRC, viz: UMMGT v. Genesis Transport Service, Inc. (NLRC RAB III Case No. 04-518-03) and Reyes v. Genesis Transport Service, Inc. (NLRC CA No. 04862-04); and Santos v. Genesis Transport Service, Inc. (NLRC CA No. 041869-04). Petitioners thus pray that the Court accord respect to the rulings of the NLRC in the above-cited cases and apply the principle of res judicata vis-à-vis the present case. The

Supreme Court held, however that, absent proof that the NLRC cases cited by petitioners have attained finality, the Court may not consider them to constitute res judicata on petitioners’ claim for refund of the “underpayment” due. Genesis Transport Service, Inc. et al. vs. Unyon ng Malayang Manggagawa ng Genesis (UMMGT), et al., G.R. No. 182114, April 5, 2010

MARCH 2010

Labor law

Cancellation of union registration. Art. 234(c) of the Labor Code requires the mandatory minimum 20% membership of rank-and-file employees in the employees’ union. Twenty percent (20%) of 112 rank-and-file employees in Eagle Ridge would require a union membership of at least 22 employees (112 x 205 = 22.4). When the EREU filed its application for registration on December 19, 2005, there were clearly 30 union members. Thus, when the certificate of registration was granted, there is no dispute that the Union complied with the mandatory 20% membership requirement. Accordingly, the retraction of six union members who later severed and withdrew their union membership cannot cause the cancellation of the union’s registration.

Besides, it cannot be argued that the affidavits of retraction retroacted to the time of the application for union registration or even way back to the organizational meeting. Before their withdrawal, the six employees in question were bona fide union members. They never disputed affixing their signatures beside their handwritten names during the organizational meetings. While they alleged that they did not know what they were signing, their affidavits of retraction were not re-affirmed during the hearings of the instant case rendering them of little, if any, evidentiary value. In any case, even with the withdrawal of six union members, the union would still be compliant with the mandatory membership requirement under Art. 234(c) since the remaining 24 union members constitute more than the 20% membership requirement of 22 employees. Eagle Ridge Gold & Country Club vs. Court of Appeals, et al., G.R. No. 178989, March 18, 2010 .

Cessation of operations; financial assistance. Based on Article 283, in case of cessation of operations, the employer is only required to pay his employees a separation pay of one month pay or at least one-half month pay for every year of service, whichever is higher. That is all that the law requires.

In the case at bar, petitioner paid respondents the following: (a) separation pay computed at 150% of their gross monthly pay per year of service; and (b) cash equivalent of earned and accrued vacation and sick leaves. Clearly, petitioner had gone over and above the requirements of the law. Despite this, however, the Labor Arbiter ordered petitioner to pay respondents an additional amount, equivalent to one month’s salary, as a form of financial assistance.

The award of financial assistance is bereft of legal basis and serves to penalize petitioner who had complied with the requirements of the law. The Court also point out that petitioner may, as it has done, grant on a voluntary and ex gratia basis, any amount more than what is required by the law, but to insist that more financial assistance be given is certainly something that the Court cannot countenance. Moreover, any award of additional financial assistance to respondents would put them at an advantage and in a better position than the rest of their co-employees who similarly lost their employment because of petitioner’s decision to cease its operations. SolidBank Corporation vs. National Labor Relations Commission, et al., G.R. No. 165951, March 30, 2010 .

Cost of living allowance. COLA is not in the nature of an allowance intended to reimburse expenses incurred by officials and employees of the government in the performance of their official functions. It is not payment in consideration of the fulfillment of official duty. As defined, cost of living refers to “the level of prices relating to a range of everyday items” or “the cost of purchasing those goods and services which are included in an accepted standard level of consumption.” Based on this premise, COLA is a benefit intended to cover increases in the cost of living. Thus, it is and should be integrated into the standardized salary rates.

In the present case, the Court is not persuaded that the continued grant of COLA to the uniformed personnel to the exclusion of other national government officials run afoul the equal protection clause

of the Constitution. The fundamental right of equal protection of the laws is not absolute, but is subject to reasonable classification. If the groupings are characterized by substantial distinctions that make real differences, one class may be treated and regulated differently from another. The classification must also be germane to the purpose of the law and must apply to all those belonging to the same class.

The Court found valid reasons to treat the uniformed personnel differently from other national government officials. Being in charge of the actual defense of the State and the maintenance of internal peace and order, they are expected to be stationed virtually anywhere in the country. They are likely to be assigned to a variety of low, moderate, and high-cost areas. Since their basic pay does not vary based on location, the continued grant of COLA is intended to help them offset the effects of living in higher cost areas. Victoria C. Gutierrez, et al. vs. Department of Budget and Management, et al./Estrellita C. Amponin, et al. vs. Commission on Audit, et al./Augusto R. Nieves, et al. vs. Department of Budget and Management, et al./Kapisanan ng mga Manggagawa sa Bureau of Agricultural Statistic (KMB), et al. vs. Department of Budget and Management, et al./National Housing Authority vs. Epifanio P. Recana, et al./ Insurance Commission Officers and Employees, et al. vs. Department of Budget and Management, et al./Fiber Industry Development Authority Employees Association (FIDAEA),et al. vs. Department of Budget and Management, et al./Bureau of Animal Industry Employees Association (BAIEA), et al. vs. Department of Budget and Management, et al./Re: Request of Sandiganbayan for authority to use their savings to pay their Cola Differential from July 1, 1989 to March 16, 1999, G.R. No. 153266/G.R. No. 159007/G.R. No. 159029/G.R. No. 170084/G.R. No. 172713/G.R. No. 173119/G.R. No. 176477/G.R. No. 177990/A.M. No. 06-4-02-SB. March 18, 2010 .

Compensable illness. Jurisprudence provides that to establish compensability of a non-occupational disease, reasonable proof of work-connection and not direct causal relation is required. Probability, not the ultimate degree of certainty, is the test of proof in compensation proceedings.

In this case, the Court sustained the Labor Arbiter and the NLRC in granting total and permanent disability benefits in favor of Villamater, as it was sufficiently shown that his having contracted colon cancer was, at the very least, aggravated by his working conditions, taking into consideration his dietary provisions on board, his age, and his job as Chief Engineer, who was primarily in charge of the technical and mechanical operations of the vessels to ensure voyage safety. Leonis Navigation Co., Inc. and World Marine Panama, S.A. vs. Catalino U. Villamater, et al., G.R. No. 179169, March 3, 2010 .

Compensable illness; entitlement. For disability to be compensable under Section 20 (B) of the 2000 POEA-SEC, two elements must concur: (1) the injury or illness must be work-related; and (2) the work-related injury or illness must have existed during the term of the seafarer’s employment contract. In other words, to be entitled to compensation and benefits under this provision, it is not sufficient to establish that the seafarer’s illness or injury has rendered him permanently or partially disabled; it must also be shown that there is a causal connection between the seafarer’s illness or injury and the work for which he had been contracted.

The 2000 POEA-SEC defines “work-related injury” as “injury(ies) resulting in disability or death arising out of and in the course of employment” and “work-related illness” as “any sickness resulting to disability or death as a result of an occupational disease listed under Section 32-A of this contract with the conditions set therein satisfied.”

Under Section 20 (B), paragraphs (2) and (3) of the 2000 POEA-SEC, it is the company-designated physician who is entrusted with the task of assessing the seaman’s disability.

While it is true that medical reports issued by the company-designated physicians do not bind the courts, the Court’s examination of Dr. Ong-Salvador’s Initial Medical Report have led it to agree with her findings. Dr. Ong-Salvador was able to sufficiently explain her basis in concluding that the respondent’s illness was not work-related: she found the respondent not to have been exposed to any carcinogenic fumes, or to any viral infection in his workplace. Her findings were arrived at after the respondent was made to undergo a physical, neurological and laboratory examination, taking into consideration his past medical history, family history, and social history. In addition, the respondent was evaluated by a specialist, a surgeon and an oncologist. The series of tests and evaluations show that Dr. Ong-Salvador’s findings were not arrived at arbitrarily; neither were they biased in the company’s favor.

The respondent, on the other hand, did not adduce proof to show a reasonable connection between his work as an assistant housekeeping manager and his lymphoma. There was no showing how the demands and nature of his job vis-à-vis the ship’s working conditions increased the risk of contracting lymphoma. The non-work relatedness of the respondent’s illness is reinforced by the fact that under the Implementing Rules and Regulations of the Labor Code (ECC Rules), lymphoma is considered occupational only when contracted by operating room personnel due to exposure to anesthetics. The records do not show that the respondent’s work as an assistant housekeeping manager exposed him to anesthetics.

Accordingly, the Court held that the respondent is not entitled to total and permanent disability benefits on account of his failure to refute the company-designated physician’s findings that: (1) his illness was not work-related; and (2) he was fit to resume sea duties. Magsaysay Maritime Corporation and/or Cruise Ships Catering Services International N.V. vs. National Labor Relations Commissions, et al., G.R. No. 186180, March 22, 2010 .

Constructive dismissal. In constructive dismissal cases, the employer has the burden of proving that its conduct and action or the transfer of an employee are for valid and legitimate grounds such as genuine business necessity. Particularly, for a transfer not to be considered a constructive dismissal, the employer must be able to show that such transfer is not unreasonable, inconvenient, or prejudicial to the employee. Failure of the employer to overcome this burden of proof taints the employee’s transfer as a constructive dismissal.

In the present case, the employer failed to discharge this burden. The combination of harsh actions taken by the bank rendered the employment condition of the employee hostile and unbearable for the following reasons: First, there is no showing of any urgency or genuine business necessity to transfer the employee to the Makati Head Office. The bank’s stated reason that the employee had to undergo branch head training because of his gross inefficiency was not supported by any proof that the employee had a record of gross inefficiency. Second, the employee’s transfer from Dumaguete to Makati City is clearly unreasonable, inconvenient and oppressive, since the respondent and his family are residents of Dumaguete City. Third, the employer failed to present any valid reason why it had to require the employee to go to the Makati Head Office to undergo branch head training when it could have just easily required the latter to undertake the same training in the VISMIN area. Finally, there was nothing in the order of transfer indicating the position which the employee would occupy after his training; thus, the employee was effectively placed in a “floating” status. The bank’s contention that the employee was assigned to a sensitive position in the DUHO Task Force is suspect when considered with the fact that he was made to undergo branch head training which is totally different from a position that entails reconciling book entries of all branches of the former. Reconciling book entries is essentially an accounting task.

The test of constructive dismissal is whether a reasonable person in the employee’s position would have felt compelled to give up his position under the circumstances. Based on the factual considerations in the present case, the Court held that the hostile and unreasonable working conditions of the bank justified the finding of the NLRC and the CA that the employee was constructively dismissed. Philippine Veterans Bank vs. National Labor Relations Commission, et al., G.R. No. 188882, March 30, 2010 .

Disability benefits; entitlement. The seafarer, upon sign-off from his vessel, must report to the company-designated physician within three working days from arrival for diagnosis and treatment. Applying Section 20(B), paragraph (3) of the 2000 Amended Standard Terms and Conditions Governing the Employment of Filipino Seafarers on Board Ocean-Going Vessels, petitioner is required to undergo post-employment medical examination by a company-designated physician within three working days from arrival, except when he is physically incapacitated to do so, in which case, a written notice to the agency within the same period would suffice. In Maunlad Transport, Inc. v. Manigo, Jr., [G.R. No.161416, 13 June 2008, 554 SCRA 446, 459] this Court explicitly declared that it is mandatory for a claimant to be examined by a company-designated physician within three days from his repatriation. The unexplained omission of this requirement will bar the filing of a claim for disability benefits. Alex C. Cootauco vs. MMS Phil. Maritime Services, Inc. Ms. Mary C. Maquilan, and/or MMS Co. Ltd., G.R. No. 184722, March 15, 2010.

Dismissal; damages. Moral and exemplary damages are recoverable where the dismissal of an employee was attended by bad faith or fraud or constituted an act oppressive to labor or was done in a manner contrary to morals, good customs or public policy. With regard to the employees of Promm-Gem, there being no evidence of bad faith, fraud or any oppressive act on the part of the latter, the Court found no support for the award of damages.

As for P&G, the records show that it dismissed its employees through SAPS in a manner oppressive to labor. The sudden and peremptory barring of the employees from work, and from admission to the work place, after just a one-day verbal notice, and for no valid cause, bellows oppression and utter disregard of the right to due process of the concerned petitioners. Hence, an award of moral damages is called for. Joeb Aliviado, et al. vs. Procter & Gamble Philippines, Inc., et al., G.R. No. 160506, March 9, 2010 .

Dismissal; fraud and serious misconduct . In this case, the Court found that Pastoril was as actively involved as Escoto and Omela in the sale of the Toyota Town Ace that resulted in a loss to the company. All three participated in making the company believe that Aquino bought the Toyota Town Ace for P190,000.00 when in fact, Aquino paid P200,000.00 for the vehicle. Thus, Pastoril acted in concert with Escoto and Omela in the transaction that defrauded their employer in the amount of P10,000.00. Pastoril prepared and issued the deed of sale indicating that the vehicle was sold for P190,000.00, although she knew that the buyer was being charged P200,000.00 for the vehicle. Escoto, Omela and Pastoril helped themselves to the price difference and tried to silence Rodriguez (who got wind of the anomaly) by giving him P1,000.00 and passing the P10,000.00 price difference off as the approved discount Aquino asked for. The Court held that there was a conspiracy between and among the three employees, where every participant had made significant contributory acts. White Diamond Trading Corporation and/or Jerry Uy vs. National Labor Relations Commission, et al., G.R. No. 186019. March 29, 2010 .

Dismissal; just cause; loss of trust and confidence. Loss of trust and confidence, as a cause for termination of employment, is premised on the fact that the employee concerned holds a position of responsibility or of trust and confidence. As such, he must be invested with confidence on delicate matters, such as custody, handling or care and protection of the property and assets of the employer. And, in order to constitute a just cause for dismissal, the act complained of must be work-related and must show that the employee is unfit to continue to work for the employer. In the instant case, the petitioners-employees of Promm-Gem have not been shown to be occupying positions of responsibility or of trust and confidence. Neither is there any evidence to show that they are unfit to continue to work as merchandisers for Promm-Gem. Joeb Aliviado, et al. vs. Procter & Gamble Philippines, Inc., et al., G.R. No. 160506, March 9, 2010 .

Dismissal; just cause; misconduct. Misconduct has been defined as improper or wrong conduct; the transgression of some established and definite rule of action, a forbidden act, a dereliction of duty, unlawful in character implying wrongful intent and not mere error of judgment. The misconduct to be serious must be of such grave and aggravated character and not merely trivial and unimportant. To be a just cause for dismissal, such misconduct (a) must be serious; (b) must relate to the performance of the employee’s duties; and (c) must show that the employee has become unfit to continue working for the employer. In other words, in order to constitute serious misconduct which will warrant the dismissal of an employee under paragraph (a) of Article 282 of the Labor Code, it is not sufficient that the act or conduct complained of has violated some established rules or policies. It is equally important and required that the act or conduct must have been performed with wrongful intent. In the instant case, petitioners-employees of Promm-Gem may have committed an error of judgment in claiming to be employees of P&G, but it cannot be said that they were motivated by any wrongful intent in doing so. As such, the Court found them guilty of simple misconduct only, for assailing the integrity of Promm-Gem as a legitimate and independent promotion firm. A misconduct which is not serious or grave, as that existing in the instant case, cannot be a valid basis for dismissing an employee. Joeb Aliviado, et al. vs. Procter & Gamble Philippines, Inc., et al., G.R. No. 160506, March 9, 2010 .

Dismissal; just cause; union security clause. In terminating the employment of an employee by enforcing the union security clause, the employer is required only to determine and prove that: (1) the union security clause is applicable; (2) the union is requesting for the enforcement of the union security

provision in the CBA; and (3) there is sufficient evidence to support the decision of the union to expel the employee from the union. These requisites constitute just cause for terminating an employee based on the union security provision of the CBA.

It is the third requisite that appears to be lacking in this case. It is apparent from the identical termination letters that GMC terminated Casio, et al., by relying upon the resolutions of the union, which made no mention at all of the evidence supporting the decision of the union to expel Casio, et al. from the union. GMC never alleged nor attempted to prove that the company actually looked into the evidence of the union for expelling Casio, et al. and made a determination on the sufficiency thereof. Without such a determination, GMC cannot claim that it had terminated the employment of Casio, et al. for just cause. The failure of GMC to make a determination of the sufficiency of evidence supporting the decision of the union constitutes non-observance by GMC of procedural due process in the dismissal of employees. General Milling Corporation vs. Ernesto Casio, et al. and Virgilio Pino, et al., G.R. No. 149552, March 10, 2010 .

Dismissal pursuant to union security clause; separate notice and haring required. GMC illegally dismissed Casio, et al. because not only did GMC fail to make a determination of the sufficiency of evidence to support the union’s decision to expel Casio, et al., it also failed to accord the expelled union members procedural due process, i.e., notice and hearing, prior to the termination of their employment.

GMC, by its own admission, did not conduct a separate and independent investigation to determine the sufficiency of the evidence supporting the union’s expulsion of Casio, et al. It simply acceded to the union’s demand. Consequently, GMC cannot insist that it has no liability for the payment of backwages and damages to Casio, et al., and that the liability for such payment should fall only upon the union officers and board members who expelled Casio, et al. GMC completely missed the point that the expulsion of Casio, et al. by the union and the termination of employment of the same employees by GMC, although related, are two separate and distinct acts. Despite a closed shop provision in the CBA, law and jurisprudence impose upon GMC the obligation to accord Casio, et al. substantive and procedural due process before complying with the union’s demand to dismiss the expelled union members from service. The failure of GMC to carry out this obligation makes it liable for illegal dismissal of Casio, et al. General Milling Corporation vs. Ernesto Casio, et al. and Virgilio Pino, et al., G.R. No. 149552, March 10, 2010 .

Employee benefit; bonus. By definition, a “bonus” is a gratuity or act of liberality of the giver. It is something given in addition to what is ordinarily received by or strictly due the recipient. A bonus is granted and paid to an employee for his industry and loyalty which contributed to the success of the employer’s business and made possible the realization of profits. A bonus is also granted by an enlightened employer to spur the employee to greater efforts for the success of the business and realization of bigger profits.

Generally, a bonus is not a demandable and enforceable obligation. For a bonus to be enforceable, it must have been promised by the employer and expressly agreed upon by the parties. Given that the bonus in this case is integrated in the CBA, the same partakes the nature of a demandable obligation. Verily, by virtue of its incorporation in the CBA, the Christmas bonus due to respondent Association has become more than just an act of generosity on the part of the petitioner but a contractual obligation it has undertaken.

All given, business losses are a feeble ground for petitioner to repudiate its obligation under the CBA. The rule is settled that any benefit and supplement being enjoyed by the employees cannot be reduced, diminished, discontinued or eliminated by the employer. The principle of non-diminution of benefits is founded on the constitutional mandate to protect the rights of workers and to promote their welfare and to afford labor full protection. Hence, absent any proof that the employer’s consent was vitiated by fraud, mistake or duress, it is presumed that it entered into the CBA voluntarily and had full knowledge of the contents thereof and was aware of its commitments under the contract. Lepanto Ceramics, Inc. vs. Lepanto Ceramics Employees Association, G.R. No. 180866, March 2, 2010 .

Employee; monetary award. The law and the rules are consistent in stating that the employment permit must be acquired prior to employment. The Labor Code states: “Any alien seeking admission to the

Philippines for employment purposes and any domestic or foreign employer who desires to engage an alien for employment in the Philippines shall obtain an employment permit from the Department of Labor.” Section 4, Rule XIV, Book 1 of the Implementing Rules and Regulations provides: “No alien seeking employment, whether as a resident or non-resident, may enter the Philippines without first securing an employment permit from the Ministry. If an alien enters the country under a non-working visa and wishes to be employed thereafter, he may only be allowed to be employed upon presentation of a duly approved employment permit.”

Galera worked in the Philippines without a proper work permit but now wants to claim employee’s benefits under Philippine labor laws. She cannot come to this Court with unclean hands. To grant Galera’s prayer is to sanction the violation of the Philippine labor laws requiring aliens to secure work permits before their employment. WPP Marketing Communications, Inc. et al. vs. Jocelyn M. Galera/Jocelyn M. Galera Vs. WPP Marketing Communications, Inc. et al., G.R. No. 169207/G.R. No. 169239, March 25, 2010 .

Employee vs. corporate officer. Corporate officers are given such character either by the Corporation Code or by the corporation’s by-laws. Under Section 25 of the Corporation Code, the corporate officers are the president, secretary, treasurer and such other officers as may be provided in the by-laws. Other officers are sometimes created by the charter or by-laws of a corporation, or the board of directors may be empowered under the by-laws of a corporation to create additional offices as may be necessary.

An examination of WPP’s by-laws resulted in a finding that Galera’s appointment as a corporate officer (Vice-President with the operational title of Managing Director of Mindshare) during a special meeting of WPP’s Board of Directors is an appointment to a non-existent corporate office. WPP’s by-laws provided for only one Vice-President. At the time of Galera’s appointment on 31 December 1999, WPP already had one Vice-President in the person of Webster. Galera cannot be said to be a director of WPP also because all five directorship positions provided in the by-laws are already occupied. Finally, WPP cannot rely on its Amended By-Laws to support its argument that Galera is a corporate officer. The Amended By-Laws provided for more than one Vice-President and for two additional directors. Even though WPP’s stockholders voted for the amendment on 31 May 2000, the SEC approved the amendments only on 16 February 2001. Galera was dismissed on 14 December 2000. WPP, Steedman, Webster, and Lansang did not present any evidence that Galera’s dismissal took effect with the action of WPP’s Board of Directors.

Additionally, the following provisions in her employment contract are convincing indicators that Galera was an employee and not a corporate officer: (1) it mandates where and how often she is to perform her work; (2) the wages she receives are completely controlled by WPP; (3) she is subject to the regular disciplinary procedures of WPP; (4) section 14 thereof clearly states that she is a permanent employee — not a Vice-President or a member of the Board of Directors; (5) the intellectual property rights created or discovered by petitioner during her employment shall automatically belong to private respondent WPP [Under the Intellectual Property Code, this condition prevails if the creator of the work subject to the laws of patent or copyright is an employee of the one entitled to the patent or copyright]; and (6) the disciplinary procedure states that her right of redress is through Mindshare’s Chief Executive Officer for the Asia-Pacific. This last circumstance implies that she was not even under the disciplinary control of WPP’s Board of Directors, and therefore, she could not have been a WPP corporate officer as only the WPP Board of Directors could appoint and terminate its own corporate officer. WPP Marketing Communications, Inc. et al. vs. Jocelyn M. Galera/Jocelyn M. Galera vs. WPP Marketing Communications, Inc. et al., G.R. No. 169207/G.R. No. 169239, March 25, 2010 .

Illegal dismissal. Under Republic Act No. 6715, employees who are illegally dismissed are entitled to full backwages, inclusive of allowances and other benefits or their monetary equivalent, computed from the time their actual compensation was withheld from them up to the time of their actual reinstatement but if reinstatement is no longer possible, the backwages shall be computed from the time of their illegal termination up to the finality of the decision.

The employees in this case are entitled to backwages and separation pay, considering that reinstatement is no longer possible because the positions they previously occupied are no longer

existing. General Milling Corporation vs. Ernesto Casio, et al. and Virgilio Pino, et al., G.R. No. 149552, March 10, 2010.

Illegal dismissal. WPP’s dismissal of Galera lacked both substantive and procedural due process. Apart from Steedman’s letter dated 15 December 2000 to Galera, WPP failed to prove any just or authorized cause for Galera’s dismissal. The law also requires that the employer must furnish the worker sought to be dismissed with two written notices before termination of employment can be legally effected: (1) notice which apprises the employee of the particular acts or omissions for which his dismissal is sought; and (2) the subsequent notice which informs the employee of the employer’s decision to dismiss him. Failure to comply with these requirements taints the dismissal with illegality. WPP’s acts clearly show that Galera’s dismissal did not comply with the two-notice rule. WPP Marketing Communications, Inc. et al. vs. Jocelyn M. Galera/Jocelyn M. Galera Vs. WPP Marketing Communications, Inc. et al., G.R. No. 169207/G.R. No. 169239, March 25, 2010.

Illegal dismissal; abandonment. Petitioner was, for five times, notified in writing by respondent to resume teaching for the second semester of school year 2003-2004 following the service of her suspension during the first semester. She was advised that a teaching load had already been prepared for her. Respondent never replied to those notices. Petitioner’s justification for her failure to respond to the notices was that her acceptance of the offer could be construed as a waiver of her claims. The Court held that petitioner’s justification is not a valid excuse.

Petitioner contends that her filing of a complaint for illegal dismissal was a manifestation of her desire to return to her job and negated any intention to sever the employer-employee relationship. Petitioner forgets that her complaint for “illegal dismissal” which she filed on June 5, 2003 sprang, not from her dismissal on December 6, 2003 due to abandonment, but from her suspension during the first semester of school year 2003-2004. While the filing of a complaint with a prayer for reinstatement negates an intention to sever the employer-employee relationship, the same contemplates an action taken subsequent to dismissal and not after an employee, by all indications, abandoned her job. Evangeline C. Cobarrubias vs. Saint Louis University, Inc., G.R. No. 176717, March 17, 2010.

Illegal dismissal; monetary awards. Clearly, the law intends the award of backwages and similar benefits to accumulate past the date of the Labor Arbiter’s decision until the dismissed employee is actually reinstated. But if, as in this case, reinstatement is no longer possible, this Court has consistently ruled that backwages shall be computed from the time of illegal dismissal until the date the decision becomes final.

Separation pay, on the other hand, is equivalent to one month pay for every year of service, a fraction of six months to be considered as one whole year. Here that would begin from January 31, 1994 when petitioner Belen began his service. Technically the computation of his separation pay would end on the day he was dismissed on August 20, 1999 when he supposedly ceased to render service and his wages ended. But, since Belen was entitled to collect backwages until the judgment for illegal dismissal in his favor became final, here on September 22, 2008, the computation of his separation pay should also end on that date.

Further, since the monetary awards remained unpaid even after it became final on September 22, 2008 because of issues raised respecting the correct computation of such awards, it is but fair that respondent Javellana be required to pay 12% interest per annum on those awards from September 22, 2008 until they are paid. The 12% interest is proper because the Court treats monetary claims in labor cases the equivalent of a forbearance of credit. It matters not that the amounts of the claims were still in question on September 22, 2008. What is decisive is that the order to pay the monetary awards had long become final. Daniel P. Javellana, Jr. vs. Albino Belen/Albino Belen Vs. Daniel P. Javellana, Jr. and Javellana Farms, Inc., G.R. No. 181913/G.R. No. 182158, March 5, 2010 .

Labor only contracting. Indeed, it is management prerogative to farm out any of its activities, regardless of whether such activity is peripheral or core in nature. However, in order for such outsourcing to be valid, it must be made to an independent contractor because the current labor rules expressly prohibit labor-only contracting. There is labor-only contracting when the contractor or sub-contractor merely recruits, supplies or places workers to perform a job, work or service for a principal, and any of the

following elements are present: (i) the contractor or subcontractor does not have substantial capital or investment which relates to the job, work or service to be performed and the employees recruited, supplied or placed by such contractor or subcontractor are performing activities which are directly related to the main business of the principal; or (ii) the contractor does not exercise the right to control over the performance of the work of the contractual employee.

In the instant case, the financial statements of Promm-Gem show that it has authorized capital stock of P1 million and a paid-in capital, or capital available for operations, of P500,000.00 as of 1990. It also has long term assets worth P432,895.28 and current assets of P719,042.32. Promm-Gem has also proven that it maintained its own warehouse and office space with a floor area of 870 square meters. It also had under its name three registered vehicles, which were used for its promotional/merchandising business. Promm-Gem also has other clients aside from P&G. Under the circumstances, we find that Promm-Gem has substantial investment, which relates to the work to be performed. Under these circumstances, Promm-Gem cannot be considered a labor-only contractor.

On the other hand, the Articles of Incorporation of SAPS show that it has a paid-in capital of only P31,250.00. There is no other evidence to prove how much its working capital and assets are. Furthermore, there is no showing of substantial investment in tools, equipment or other assets.

SAPS’ lack of substantial capital is highlighted by the records which show that its payroll for its merchandisers alone for one month would already total P44,561.00. It had 6-month contracts with P&G. Yet SAPS failed to show that it could complete the 6-month contracts using its own capital and investment. Its capital is not even sufficient for one month’s payroll. SAPS failed to show that its paid-in capital of P31,250.00 is sufficient for the period required for it to generate revenues to sustain its operations independently. Substantial capital refers to capitalization used in the performance or completion of the job, work or service contracted out. In the present case, SAPS has failed to show substantial capital.

Furthermore, the employees in this case performed merchandising and promotion of the products of P&G, which are activities that the Court has considered directly related to the manufacturing business of P&G. Considering that SAPS has no substantial capital or investment and the workers it recruited are performing activities which are directly related to the principal business of P&G, we find that SAPS is engaged in “labor-only contracting”. Joeb Aliviado, et al. vs. Procter & Gamble Philippines, Inc., et al., G.R. No. 160506, March 9, 2010 .

Project employee. The test for distinguishing a “project employee” from a “regular employee” is whether or not he has been assigned to carry out a “specific project or undertaking,” with the duration and scope of his engagement specified at the time his service is contracted. Here, it is not disputed that petitioner company contracted respondent Trinidad’s service by specific projects with the duration of his work clearly set out in his employment contracts. He remained a project employee regardless of the number of years and the various projects he worked for the company.

Generally, length of service provides a fair yardstick for determining when an employee initially hired on a temporary basis becomes a permanent one, entitled to the security and benefits of regularization. But this standard will not be fair, if applied to the construction industry, simply because construction firms cannot guarantee work and funding for its payrolls beyond the life of each project. And getting projects is not a matter of course. Construction companies have no control over the decisions and resources of project proponents or owners. There is no construction company that does not wish it has such control but the reality, understood by construction workers, is that work depended on decisions and developments over which construction companies have no say.

In this case, respondent Trinidad’s series of employments with petitioner company were co-terminous with its projects. When its Boni Serrano-Katipunan Interchange Project was finished in December 2004, Trinidad’s employment ended with it. He was not dismissed. His employment contract simply ended with the project for which he had signed up. His employment history belies the claim that he continuously worked for the company. Intervals or gaps separated one contract from another. William Construction Corp. and/or Teresita Uy and William Uy vs. Jorge R. Trinidad, G.R. No. 183250, March 12, 2010 .

Reinstatement; reimbursement. An employee cannot be compelled to reimburse the salaries and wages he received during the pendency of his appeal, notwithstanding the reversal by the NLRC of the LA’s order of reinstatement. The pertinent law on the matter is not concerned with the wisdom or propriety of the LA’s order of reinstatement, for if it was, then it should have provided that the pendency of an appeal should stay its execution. After all, a decision cannot be deemed irrefragable unless it attains finality. College of the Immaculate Concepcion vs. National Labor Relations Commission and Atty. Marius F. Carlos, Ph.D, G.R. No. 167563, March 22, 2010 .

Representation and Transportation Allowance; entitlement. Statutory law, as implemented by administrative issuances and interpreted in decisions, has consistently treated RATA as distinct from salary. Unlike salary, which is paid for services rendered, RATA belongs to a basket of allowances to defray expenses deemed unavoidable in the discharge of office. Hence, RATA is paid only to certain officials who, by the nature of their offices, incur representation and transportation expenses.

At any rate, the denial of RATA must be grounded on relevant and specific provision of law. By insisting that, as requisite for her receipt of RATA, respondent must discharge her office as Bacnotan’s treasurer while on reassignment at the La Union treasurer’s office, the DBM effectively punishes respondent for acceding to her reassignment. Surely, the law could not have intended to place local government officials like respondent in the difficult position of having to choose between disobeying a reassignment order or keeping an allowance. Department of Budget and Management (DBM) vs. Olivia D. Leones, G.R. No. 169726, March 18, 2010 .

Separation pay; termination for cause. Separation pay is only warranted when the cause for termination is not attributable to the employee’s fault, such as those provided in Articles 283 and 284 of the Labor Code, as well as in cases of illegal dismissal in which reinstatement is no longer feasible. It is not allowed when an employee is dismissed for just cause, such as serious misconduct.

Jurisprudence has classified theft of company property as a serious misconduct and denied the award of separation pay to the erring employee. In this case, the Court saw no reason why this same rule should not be similarly applied in the case of Capor. She attempted to steal the property of her long-time employer. For committing such misconduct, she is definitely not entitled to an award of separation pay.

Capor’s argument that despite the finding of theft, she should still be granted separation pay in light of her long years of service with the Company did not persuade the Court. Indeed, length of service and a previously clean employment record cannot simply erase the gravity of the betrayal exhibited by a malfeasant employee. Length of service is not a bargaining chip that can simply be stacked against the employer. After all, an employer-employee relationship is symbiotic where both parties benefit from mutual loyalty and dedicated service. If an employer had treated his employee well, has accorded him fairness and adequate compensation as determined by law, it is only fair to expect a long-time employee to return such fairness with at least some respect and honesty. Thus, it may be said that betrayal by a long-time employee is more insulting and odious for a fair employer. While we sympathize with Capor’s plight, being of retirement age and having served petitioners for 39 years, we cannot award any financial assistance in her favor because it is not only against the law but also a retrogressive public policy. Reno Foods, Inc., and/or Vicente Khu vs. Nagkakaisang Lakas ng Manggagawa (NLM) – Katipunan on behalf of its member, Nenita Capor, G.R. No. 164016, March 15, 2010.

Termination of employment; conviction in criminal case. Conviction in a criminal case is not necessary to find just cause for termination of employment. Criminal cases require proof beyond reasonable doubt while labor disputes require only substantial evidence, which means such relevant evidence as a reasonable mind might accept as adequate to justify a conclusion. The evidence in this case was reviewed by the appellate court and two labor tribunals endowed with expertise on the matter – the Labor Arbiter and the NLRC. They all found substantial evidence to conclude that Capor had been validly dismissed for dishonesty or serious misconduct. Reno Foods, Inc., and/or Vicente Khu vs. Nagkakaisang Lakas ng Manggagawa (NLM) – Katipunan on behalf of its member, Nenita Capor, G.R. No. 164016, March 15, 2010.

Labor Procedure

Court; findings of fact (labor). A petition for review on certiorari under Rule 45 of the Rules of Court should include only questions of law — questions of fact are not reviewable. A question of law exists when the doubt centers on what the law is on a certain set of facts, while a question of fact exists when the doubt centers on the truth or falsity of the alleged facts. There is a question of law if the issue raised is capable of being resolved without need of reviewing the probative value of the evidence. Once the issue invites a review of the evidence, the question is one of fact.

Whether YEU committed fraud and misrepresentation in failing to remove Pineda’s signature from the list of employees who supported YEU’s application for registration and whether YEU conducted an election of its officers are questions of fact. They are not reviewable.

Factual findings of the Court of Appeals are binding on the Court. Absent grave abuse of discretion, the Court will not disturb the Court of Appeals’ factual findings. In Encarnacion v. Court of Appeals (G.R. No. 101292, 8 June 1993), the Court held that, “unless there is a clearly grave or whimsical abuse on its part, findings of fact of the appellate court will not be disturbed. The Supreme Court will only exercise its power of review in known exceptions such as gross misappreciation of evidence or a total void of evidence.” YTPI failed to show that the Court of Appeals gravely abused its discretion. Yokohama Tire Philippines, Inc. vs. Yokohama Employees Union, G.R. No. 163532, March 12, 2010 .

Court; questions of fact (labor). The petition essentially raises questions of fact. While as a rule, factual findings of the CA are binding on the Court, the Court exercised its discretionary review authority to review the facts of this case in view of the conflict in the findings of facts of the labor arbiter, on the one hand, and the NLRC and the CA, on the other. White Diamond Trading Corporation and/or Jerry Uy vs. National LaborRelations Commission, et al., G.R. No. 186019. March 29, 2010 .

Indispensable party. Rule 3, Section 7 of the Rules of Court defines indispensable parties as those who are parties in interest without whom there can be no final determination of an action. They are those parties who possess such an interest in the controversy that a final decree would necessarily affect their rights, so that the courts cannot proceed without their presence. A party is indispensable if his interest in the subject matter of the suit and in the relief sought is inextricably intertwined with the other parties’ interest.

Unquestionably, Villamater’s widow stands as an indispensable party to this complaint for payment of permanent and total disability benefits, reimbursement of medical and hospitalization expenses, moral and exemplary damages, and attorney’s fees. Leonis Navigation Co., Inc. and World Marine Panama, S.A. vs. Catalino U. Villamater, et al., G.R. No. 179169, March 3, 2010 .

Jurisdiction; estoppel. Petitioner is already estopped from belatedly raising the issue of lack of jurisdiction since it has actively participated in the proceedings before the LA and NLRC. We have consistently held that while jurisdiction may be assailed at any stage, a party’s active participation in the proceedings before a court without jurisdiction will estop such party from assailing such lack of it. It is an undesirable practice of a party participating in the proceedings and submitting his case for decision and then accepting the judgment, only if favorable, and attacking it for lack of jurisdiction, when adverse. Philippine Veterans Bank vs. National Labor Relations Commission, et al., G.R. No. 188882, March 30, 2010 .

Jurisdiction; labor arbiter. Petitioners clearly and consistently questioned the legality of RGMI’s adoption of the new salary scheme (i.e., piece-rate basis), asserting that such action, among others, violated the existing CBA. Indeed, the controversy was not a simple case of illegal dismissal but a labor dispute involving the manner of ascertaining employees’ salaries, a matter which was governed by the existing CBA.

With regard to the question of jurisdiction over the subject matter, Article 217(c) of the Labor Code requires labor arbiters to refer cases involving the implementation of CBAs to the grievance machinery provided therein and to voluntary arbitration. Moreover, Article 260 of the Labor Code clarifies that such disputes must be referred first to the grievance machinery and, if unresolved within seven days, they shall automatically be referred to voluntary arbitration. Under this provision, voluntary arbitrators

have original and exclusive jurisdiction over matters which have not been resolved by the grievance machinery.

Pursuant to Articles 217 in relation to Articles 260 and 261 of the Labor Code, the labor arbiter should have referred the matter to the grievance machinery provided in the CBA. Miguela Santuyo, et al. vs. Remerco Garments Manufacturing, Inc. and/or Victoria Reyes, G.R. No. 174420, March 22, 2010 .

Jurisdiction; labor case. Article 217 of the Labor Code provides that the Labor Arbiters shall have original and exclusive jurisdiction to hear and decide cases involving termination disputes. The NLRC shall have exclusive appellate jurisdiction over all cases decided by Labor Arbiters. Galera being an employee, the Labor Arbiter and the NLRC have jurisdiction over the present case. WPP Marketing Communications, Inc. et al. vs. Jocelyn M. Galera/Jocelyn M. Galera vs. WPP Marketing Communications, Inc. et al., G.R. No. 169207/G.R. No. 169239, March 25, 2010 .

Jurisdiction; NLRC. The Labor Arbiter and the NLRC do not have jurisdiction over LRTA. Petitioners themselves admitted in their complaint that LRTA “is a government agency organized and existing pursuant to an original charter (Executive Order No. 603),” and that they are employees of METRO.

Light Rail Transit Authority v. Venus, Jr. (G.R. Nos. 163782 & 163881, March 24, 2006), which has a similar factual backdrop, holds that LRTA, being a government-owned or controlled corporation created by an original charter, is beyond the reach of the Department of Labor and Employment which has jurisdiction over workers in the private sector, “Employees of petitioner METRO cannot be considered as employees of petitioner LRTA. The employees hired by METRO are covered by the Labor Code and are under the jurisdiction of the Department of Labor and Employment, whereas the employees of petitioner LRTA, a government-owned and controlled corporation with original charter, are covered by civil service rules. Herein private respondent workers cannot have the best of two worlds, e.g., be considered government employees of petitioner LRTA, yet allowed to strike as private employees under our labor laws.”

In fine, the Labor Arbiter’s decision against LRTA was rendered without jurisdiction, hence, it is void. Thus, it was improper for the appellate court to order the remand of the case to the NLRC, and for it (NLRC) to give due course to LRTA’s appeal. Emmanuel S. Hugo, et al. vs. Light Rail Transit Authority, G.R. No. 181866, March 18, 2010 .

NLRC; final decision. Petitioners received the June 15, 2004 resolution of the NLRC, denying their motion for reconsideration, on June 16, 2004. They filed their petition for certiorari before the CA on August 9, 2004, or 54 calendar days from the date of notice of the June 15, 2004 resolution. By reason of the finality of the June 15, 2004 NLRC resolution, the Labor Arbiter issued on July 29, 2004 a Writ of Execution. Petitioners never moved for a reconsideration of this Order regarding the voluntariness of their payment to Sonia, as well as the dismissal with prejudice and the concomitant termination of the case.

However, petitioners argued that the finality of the case did not render the petition for certiorari before the CA moot and academic. On this point, we agree with petitioners.

In the landmark case of St. Martin Funeral Home v. NLRC (G.R. No. 130866, September 16, 1998), we ruled that judicial review of decisions of the NLRC is sought via a petition for certiorari under Rule 65 of the Rules of Court, and the petition should be filed before the CA, following the strict observance of the hierarchy of courts. Under Rule 65, Section 4, petitioners are allowed sixty (60) days from notice of the assailed order or resolution within which to file the petition.

Simply put, the execution of the final and executory decision or resolution of the NLRC shall proceed despite the pendency of a petition for certiorari, unless it is restrained by the proper court. Leonis Navigation Co., Inc. and World Marine Panama, S.A. vs. Catalino U. Villamater, et al., G.R. No. 179169, March 3, 2010 .

POEA; factual findings. As a general rule, factual findings of administrative and quasi-judicial agencies specializing in their respective fields, especially when affirmed by the CA, must be accorded high respect,

if not finality. However, we are not bound to adhere to the general rule if we find that the factual findings do not conform to the evidence on record or are not supported by substantial evidence, as in the instant case.

The self-serving and unsubstantiated allegations of respondent cannot defeat the concrete evidence submitted by petitioner. We note that respondent did not deny the due execution of the withdrawal form as well as the genuineness of his signature and thumb mark affixed therein. On the contrary, he admitted signing the same. When he voluntarily signed the document, respondent is bound by the terms stipulated therein. LNS International Manpower Services vs. Armando Padua, Jr., G.R. No. 179792, March 5, 2010 .

FEBRUARY 2010

Labor Law

Agency; principle of apparent authority. There is ample evidence that the hospital held out to the patient that the doctor was its agent. The two factors that determined apparent authority in this case were: first, the hospital’s implied manifestation to the patient which led the latter to conclude that the doctor was the hospital’s agent; and second, the patient’s reliance upon the conduct of the hospital and the doctor, consistent with ordinary care and prudence.

It is of record that the hospital required a “consent for hospital care” to be signed preparatory to the surgery of the patient. The form reads: “Permission is hereby given to the medical, nursing and laboratory staff of the Medical City General Hospital to perform such diagnostic procedures and to administer such medications and treatments as may be deemed necessary or advisable by the physicians of this hospital for and during the confinement of xxx.”

By such statement, the hospital virtually reinforced the public impression that the doctor was a physician of its hospital, rather than one independently practicing in it; that the medications and treatments he prescribed were necessary and desirable; and that the hospital staff was prepared to carry them out. Professional Services, Inc. vs. The Court of Appeals, et al./Natividad (substituted by her children Marcelino Agana III, Enrique Agana, Jr. Emma Agana-Andaya, Jesus Agana and Raymund Agana and Errique Agana) vs. The Court of Appeals and Juan Fuentes Miguel Ampil vs. Natividad and Enrique Agana, G.R. Nos. 126297/G.R. No. 126467/G.R. No. 127590, February 2, 2010.

Compensable illness. Since cholecystolithiasis or gallstone has been excluded as a compensable illness under the applicable standard contract for Filipino seafarers that binds the seafarer and the vessel’s foreign owner, it was an error for the CA to treat such illness as “work-related” and, therefore, compensable. The standard contract precisely did not consider gallstone as compensable illness because the parties agreed, presumably based on medical science, that such affliction is not caused by working on board ocean-going vessels.

Nor is there any evidence to prove that the nature of the seafarer’s work on board a ship aggravated his illness. No one knows if he had gallstone at the time he boarded the vessel. By the nature of this illness, it is highly probable that he already had it when he boarded his assigned ship although it went undiagnosed because he had yet to experience its symptoms. Bandila Shipping, Inc. et al. vs. Marcos C. Abalos, G.R. No. 177100, February 22, 2010 .

Compensable illness; work related. Melanoma is not listed as an occupational disease under Annex “A” of the Rules on Employees Compensation. Hence, respondent has the burden of proving, by substantial evidence, the causal relationship between her illness and her working conditions. Substantial evidence means such relevant evidence as a reasonable mind might accept to support a conclusion.

The Court in this case agreed with the petitioner and the ECC that respondent was not able to positively prove that her ailment was caused by her employment and that the risk of contracting the disease was increased by her working conditions. While the law requires only a reasonable work-connection and not a direct causal relation, respondent still failed to show that her illness was really brought about by the wound she sustained during the supervised gardening activity in school. The CA accepted the allegation

that the mole appeared right on the spot where respondent sustained the injury without any further proof that the mole appeared because of the injury. The CA further ruled that “the risk of acquiring the said ailment increased by the nature of [respondent’s] work in going to school and in returning to her residence during school days x x x.” However, the CA failed to consider that in a tropical country like the Philippines, exposure to sunlight is common. Unlike farmers, fishermen or lifeguards, it was not shown that respondent had chronic long-term exposure to the sun considered necessary for the development of melanoma. Thus, the Court did not find the risk of contracting the disease to have been heightened by respondent’s exposure to sunlight in going to work and returning to her residence. Government Service Insurance System vs. Rosalinda A. Bernadas, G.R. No. 164731, February 11, 2010

Dismissal; due process. The essence of due process is the opportunity to be heard; it is the denial of this opportunity that constitutes violation of due process of law. The employee was given the opportunity to be heard when a proper notice of investigation was sent to him, although the notice did not reach him for reasons outside the employer’s control. The employee was not also totally unheard on the matter as he was able to explain his side through the two (2) explanation letters he submitted. These letters are clear indications that he intimately knew of the matter for which he was being investigated. If he was denied due process at all, the denial was with respect to the charges of extortion, tardiness and absenteeism, which are grounds invoked separately from loss of trust and confidence. These grounds were not serious considerations in the dismissal that followed, and therefore, were not considered by the Court as material to the present case. Bibiana Farms and Mills, Inc. vs. Arturo Lado, G.R. No. 157861, February 2, 2010 .

Dismissal; due process. In an unlawful dismissal case, the employer has the burden of proving the lawful cause sustaining the dismissal of the employee. The employer must affirmatively show rationally adequate evidence that the dismissal was for a justifiable cause. The employee’s behavior constituted just cause. However, the company cannot deny that it failed to observe due process. The law requires that the employer must furnish the worker sought to be dismissed with two written notices before termination of employment can be legally effected: (1) notice which apprises the employee of the particular acts or omissions for which his dismissal is sought; and (2) the subsequent notice which informs the employee of the employer’s decision to dismiss him. Violation of the employee’s right to statutory due process, even if the dismissal was for a just cause, warrants the payment of indemnity in the form of nominal damages. This indemnity is not intended to penalize the employer but to vindicate or recognize the employee’s right to statutory due process, which was violated by the employer in the present case. Hilton Heavy Equipment Corporation and Peter Lim vs. Ananias Dy, G.R. No. 164860, February 2, 2010 .

Dismissal; due process. Failure to observe due process in the termination of employment for a just cause does not invalidate the dismissal but makes the company liable for non-compliance with the procedural requirements of due process. The violation of the employee’s right to statutory due process warrants the payment of nominal damages, the amount of which is addressed to the sound discretion of the court, taking into account the relevant circumstances. In the instant case, considering that the company already suffered financially because of poor sales performance under the employee’s watch, it is proper to reduce the amount of nominal damages awarded to petitioner to Thirty Thousand Pesos (P30,000.00). The amount of nominal damages awarded is not intended to enrich the employee, but to deter employers from future violations of the statutory due process rights of employees. Rolando P. Ancheta vs. Destiny Financial Plans, Inc. and Arsenio Bartolome, G.R. No. 179702, February 16, 2010

Dismissal; due process. In the dismissal of employees, it has been consistently held that the twin requirements of notice and hearing are essential elements of due process. The employer must furnish the worker with two written notices before termination of employment can be legally effected: (1) a notice apprising the employee of the particular acts or omissions for which his dismissal is sought, and (2) a subsequent notice informing the employee of the employer’s decision to dismiss him. With regard to the requirement of a hearing, the essence of due process lies simply in an opportunity to be heard, and not that an actual hearing should always and indispensably be held.

Likewise, there is no requirement that the notices of dismissal themselves be couched in the form and language of judicial or quasi-judicial decisions. What is required is for the employer to conduct a formal investigation process, with notices duly served on the employees informing them of the fact of

investigation, and subsequently, if warranted, a separate notice of dismissal. Through the formal investigatory process, the employee must be accorded the right to present his or her side, which must be considered and weighed by the employer. The employee must be sufficiently apprised of the nature of the charge, so as to be able to intelligently defend himself or herself against the charge. Wilfredo M. Baron, et al. vs. National Labor Relations Commission, et al., G.R. No. 182299, February 22, 2010 .

Dismissal; gross neglect of duties. Article 282 (b) imposes a stringent condition before an employer may terminate an employment due to gross and habitual neglect by the employee of his duties. To sustain a termination of employment based on this provision of law, the negligence must not only be gross but also habitual.

In the present case, the employer asserts that the employees failed to regularly undertake a monthly physical inventory of the outlet’s merchandise. The Court was not persuaded as it found that inventory preparation and reporting did not fall on the employees’ shoulders since they were to “assist the [stock] clerk” only. Kulas Ideas & Creations, et al. vs. Juliet Alcoseba, et al., G.R. No. 180123, February 18, 2010 .

Dismissal; loss of trust and confidence. In Fungo v. Lourdes School of Mandaluyong, we restated the guidelines for the application of loss of trust and confidence as a just cause for dismissal of an employee from the service, thus: “a) loss of confidence should not be simulated; b) it should not be used as subterfuge for causes which are improper, illegal or unjustified; c) it may not be arbitrarily asserted in the face of overwhelming evidence to the contrary; and d) it must be genuine, not a mere afterthought to justify earlier action taken in bad faith.” In the present case, the employee, who was a warehouseman, held a position of trust and confidence and was given access to and authority over company property with clear tasks and guidelines laid down very early in his employment. Like any business entity, the company has every right to protect itself from actual threats to the viability of its operations. The employee, caught red-handed in a scheme to spirit off unpaid company sacks, not only violated his fiduciary duty as custodian of company property resulting in the company’s loss of trust and confidence in him; he had also become a threat to the viability of company operations. To rule that he should be reinstated would be oppressive to the company. The law, in protecting the rights of the employee, authorizes neither the oppression nor the self-destruction of the employer. Bibiana Farms and Mills, Inc. vs. Arturo Lado, G.R. No. 157861, February 2, 2010 .

Dismissal; loss of trust and confidence. The doctrine of loss of confidence requires the concurrence of the following: (1) loss of confidence should not be simulated; (2) it should not be used as a subterfuge for causes which are improper, illegal, or unjustified; (3) it may not be arbitrarily asserted in the face of overwhelming evidence to the contrary; (4) it must be genuine, not a mere afterthought to justify an earlier action taken in bad faith; and (5) the employee involved holds a position of trust and confidence. Loss of confidence, as a just cause for termination of employment, is premised on the fact that the employee concerned holds a position of responsibility, trust and confidence. He must be invested with confidence on delicate matters, such as the custody, handling, care, and protection of the employer’s property and/or funds. In order to constitute a just cause for dismissal, the act complained of must be “work-related” such as would show the employee concerned to be unfit to continue working for the employer.

The subject employee in this case is a managerial employee holding a highly sensitive position. Being the Head of the Marketing Group of the company, he was in charge, among others, of the over-all production and sales performance of the company. Thus, as aptly pointed out by the CA, his performance was practically the lifeblood of the corporation, because its earnings depended on the sales of the marketing group, which he used to head. The position held by the employee required the highest degree of trust and confidence of his employer in the former’s exercise of managerial discretion insofar as the conduct of the latter’s business was concerned. The employee’s inability to perform the functions of his office to the satisfaction of his employer and the former’s poor judgment as marketing head caused the company huge financial losses. If these were not timely addressed and corrected, the company could have collapsed, to the detriment of its policy holders, stockholders, employees, and the public in general. Rolando P. Ancheta vs. Destiny Financial Plans, Inc. and Arsenio Bartolome, G.R. No. 179702, February 16, 2010

Dismissal; loss of trust and confidence. The Court found convincing evidence that a pattern of concealment and dishonesty marred the purchase of paper materials for the Women’s Journal’s special project, with the employee playing the principal and most active role. There is no question that the employee failed to make a reasonable canvass of the prices of the paper materials required by a company’s special project, resulting in substantial losses to the company. That a rush job was involved, is no excuse as canvassing could be done even in a day’s time as shown by the audit department’s canvass. That the employee was responsible for concealment and omissions also appears clear to us; he failed, under dubious circumstances, to seasonably disclose to his employer material information with financial impact on the purchase transaction.

Thus, the Court cannot but conclude that substantial evidence exists justifying the employee’s dismissal for a just cause – loss of trust and confidence. For loss of trust and confidence to be a ground for dismissal, the law requires only that there be at least some basis to justify the dismissal. The fact that the employee had been with the company for 25 years cannot change the conclusion that he had become a liability to the company whose interests he miserably failed to protect. Philippine Journalist, Inc. vs. Leozar Dela Cruz y Balobal, G.R. No. 187120, February 16, 2010 .

Dismissal; requirements. Under the Labor Code, the requirements for the lawful dismissal of an employee are two-fold, consisting of substantive and procedural aspects. Not only must the dismissal be for a just or authorized cause; the basic requirements of procedural due process – notice and hearing – must likewise be observed before an employee may be dismissed. The burden of proof rests on the employer to show that the employee’s dismissal has met these due process requirements. The case of the employer must stand or fall on its own merits and not on the weakness of the employee’s defense. Bibiana Farms and Mills, Inc. vs. Arturo Lado, G.R. No. 157861, February 2, 2010 .

Dismissal; separation pay. Under Article 279 of the Labor Code, an illegally dismissed employee “shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his compensation was withheld from him up to the time of his actual reinstatement.” In addition to full backwages, the Court has also repeatedly ruled that in cases where reinstatement is no longer feasible due to strained relations, then separation pay may be awarded instead of reinstatement. In Mt. Carmel College v. Resuena, the Court reiterated that the separation pay, as an alternative to reinstatement, should be equivalent to one (1) month salary for every year of service. Sargasso Construction and Development Corporation vs. National Labor Relations Commission (4th Division) and Gorgonio Mongcal, G.R. No. 164118, February 9, 2010 .

Dismissal; serious misconduct. Misconduct has been defined as improper or wrong conduct. It is the transgression of some established and definite rule of action, a forbidden act, a dereliction of duty, willful in character, and implies wrongful intent and not mere error of judgment. The misconduct to be serious must be of such grave and aggravated character and not merely trivial and unimportant. Such misconduct, however serious, must nevertheless be in connection with the employee’s work to constitute just cause for his separation.

In the present case, the Court found substantial evidence to prove that a serious misconduct has been committed to justify termination from employment. The Certified Public Accountant and Corporate Finance Manager of the company submitted a report dated February 19, 2000 stating that in spite of management’s memorandum, the keys to the office and filing cabinets were not surrendered. It was likewise stated in the report that petitioner Wilfredo Baron pulled out some records without allowing a representative from the internal audit team to inspect them. He noticed Wilfredo Baron deleting some files from the computer, which could no longer be retrieved. Moreover, a member of the audit team saw Cynthia Junatas (another petitioner) carrying some documents, including a Daily Collection Report. When asked to present the documents for inspection, Junatas refused and tore the document.

In addition, the audit team discovered that MSI incurred an inventory shortage of One Million Thirty Thousand Two Hundred Fifty-Eight Pesos and Twenty-One Centavos (P1,030,258.21). It found that Wilfredo Baron, the operations manager, in conspiracy with the other petitioners, orchestrated massive irregularities and grand scale fraud, which could no longer be documented because of theft of company documents and deletion of computer files. Unmistakably, the unauthorized taking of company

documents and files, failure to pay unremitted collections, failure to surrender keys to the filing cabinets despite earlier instructions, concealment of shortages, and failure to record inventory transactions pursuant to a fraudulent scheme are acts of grave misconduct, which are sufficient causes for dismissal from employment. Wilfredo M. Baron, et al. vs. National Labor Relations Commission, et al., G.R. No. 182299, February 22, 2010 .

Dismissal; theft; degree of evidence. The long-standing rule is that the existence of a conspiracy must be proved by clear, direct and convincing evidence. In Fernandez v. National Labor Relations Commission, The Court expounded on the degree of evidence required to establish the existence of a conspiracy in this wise: “While it is true that in conspiracy, direct proof is not essential, it must however, be shown that it exists as clearly as the commission of the offense itself. There must at least be adequate proof that the malefactors had come to an agreement concerning the commission of a felony and decided to commit it. x x x For conspiracy to exist, it is essential that there must be conscious design to commit an offense. Conspiracy is not the product of negligence but of intentionality on the part of the cohorts.”

Verily, there was a dearth of evidence directly linking the employee to the commission of the crime of theft, as his mere act of loading the dump truck with aggregates did not show that he knew of the other person’s plan to deliver the load to a place other than the company’s construction site. The only conclusion, therefore, is that the company had illegally dismissed the employee in the present case. Sargasso Construction and Development Corporation vs. National Labor Relations Commission (4th Division) and Gorgonio Mongcal, G.R. No. 164118, February 9, 2010 .

Employee; recovery of personal contributions. May a government employee, dismissed from the service for cause, be allowed to recover the personal contributions he paid to the Government Service Insurance System (GSIS)? The answer is yes.

Section 11(d) of Commonwealth Act No. 186, as amended, provides: “Upon dismissal for cause or on voluntary separation, he shall be entitled only to his own premiums and voluntary deposits, if any, plus interest of three per centum per annum, compounded monthly.” This provision continues to govern cases of employees dismissed for cause and their claims for the return of their personal contributions.

Also, it should be remembered that the GSIS laws are in the nature of social legislation, to be liberally construed in favor of the government employees. The money, subject of the employee’s request, consists of personal contributions made by him, premiums paid in anticipation of benefits expected upon retirement. The occurrence of a contingency, i.e., his dismissal from the service prior to reaching retirement age, should not deprive him of the money that belongs to him from the outset. To allow forfeiture of these personal contributions in favor of the GSIS would condone undue enrichment. Carmelita Lledo vs. Atty. Cesar V. Lledo, Branch Clerk of Court, Regional Trial Court, Branch 94, Quezon City, A.M. No. P-95-1167, February 9, 2010 .

Employee expenses; in-service training. In the present case, Article XXI, Section 6 of the CBA provides that “All expenses of security guards in securing /renewing their licenses shall be for their personal account.” A reading of the provision would reveal that it encompasses all possible expenses a security guard would pay or incur in order to secure or renew his license. In-service training being a requirement for the renewal of a security guard’s license, expenses incurred therefore are claimed to be for the security guard’s personal account. However, the 1994 Revised Rules and Regulations Implementing the Private Security Agency Law (Republic Act No. 5487) provides that it shall be the primary responsibility of the operators of private security agency and company security forces to maintain and upgrade the standards of efficiency, discipline, performance and competence of their personnel. It further provides that “[T]o maintain and/or upgrade the standard of efficiency, discipline and competence of security guards and detectives, company security force and private security agencies upon prior authority shall conduct-in-service training … The cost of training shall be pro-rated among the participating agencies/private companies.”

Since it is the primary responsibility of operators of company security forces to maintain and upgrade the standards of efficiency, discipline, performance and competence of their personnel, it follows that the expenses to be incurred therein shall be for the account of the company. Further, the intent of the law to impose upon the employer the obligation to pay for the cost of its employees’ training is

manifested in the aforementioned provision of law. While the law mandates pro-rating of expenses because it would be impracticable and unfair to impose the burden of expenses suffered by all participants on only one participating agency or company, if there is no centralization, there can be no pro-rating, and therefore, the company that has its own security forces must shoulder the entire cost for such training. If the intent of the law were to impose upon individual employees the cost of training, the provision on the pro-rating of expenses would not have found print in the law. Prior to the signing of the CBA, it was the company providing for the in-service training of the guards. Thus, implicit from the company’s actuations was its acknowledgment of its legally mandated responsibility to shoulder the expenses for in-service training. PNCC Skyway Traffic Management and Security Division Workers Organization (PSTMSWDO), represented by its President, Rene Soriano vs. PNCC Skyway Corporation), G.R. No. 171231, February 17, 2010

Employer-employee relationship; control test. This Court still employs the “control test” to determine the existence of an employer-employee relationship between hospital and doctor. In Calamba Medical Center, Inc. v. National Labor Relations Commission, et al., the Court held that: “Under the “control test”, an employment relationship exists between a physician and a hospital if the hospital controls both the means and the details of the process by which the physician is to accomplish his task. x x x That petitioner exercised control over respondents gains light from the undisputed fact that in the emergency room, the operating room, or any department or ward for that matter, the doctor’s work is monitored through the hospital’s nursing supervisors, charge nurses and orderlies. Without the approval or consent of the hospital or its medical director, no operations can be undertaken in those areas. For the control test to apply, it is not essential for the employer to actually supervise the performance by the employee of his duties, it being enough that it has the right to wield the power.” Professional Services, Inc. vs. The Court of Appeals, et al./Natividad (substituted by her children Marcelino Agana III, Enrique Agana, Jr. Emma Agana-Andaya, Jesus Agana and Raymund Agana and Errique Agana) vs. The Court of Appeals and Juan Fuentes Miguel Ampil vs. Natividad and Enrique Agana, G.R. Nos. 126297/G.R. No. 126467/G.R. No. 127590, February 2, 2010.

Management prerogatives; contract of perpetual employment. The Court cannot countenance the employee’s claim that a contract of perpetual employment was ever constituted. While the Constitution recognizes the primacy of labor, it also recognizes the critical role of private enterprise in nation-building and the prerogatives of management. A contract of perpetual employment deprives management of its prerogative to decide whom to hire, fire and promote, and renders inutile the basic precepts of labor relations. While management may validly waive it prerogatives, such waiver should not be contrary to law, public order, public policy, morals or good customs. An absolute and unqualified employment for life in the mold of petitioner’s concept of perpetual employment is contrary to public policy and good customs, as it unjustly forbids the employer from terminating the services of an employee despite the existence of a just or valid cause. It likewise compels the employer to retain an employee despite the attainment of the statutory retirement age, even if the employee has became a “non-performing asset” or, worse, a liability to the employer. Ronilo Sorreda vs. Cambridge Electronics Corporation, G.R. No. 172927, February 11, 2010.

Suspension; leave without prior authority. While it is true that the union and its members have been granted union leave privileges under the CBA, the grant cannot be considered separately from the other provisions of the CBA, particularly the provision on management prerogatives where the CBA reserved for the company the full and complete authority in managing and running its business. The Court, in the present case, saw nothing in the language of the union leave provision that removes from the company the right to prescribe reasonable rules and regulations to govern the manner of availing of union leaves, particularly the prerogative to require its prior approval. In fact, prior notice is expressly required under the CBA so that the company can appropriately respond to the request for leave. In this sense, the rule requiring prior approval only made express what is implied from the terms of the CBA.

Despite management’s disapproval of his requested leave, the employee still went on leave, in open disregard of his superior’s orders. This rendered the employee open to the charge of insubordination, separately from his absence without official leave. Malayan Employees Association-FFW and Rodolfo Mangalino vs. Malayan Insurance Company, Inc., G.R. No. 181357, February 2, 2010.

Quitclaim; elements. It is true that the law looks with disfavor on quitclaims and releases by employees who have been inveigled or pressured into signing them by unscrupulous employers seeking to evade their legal responsibilities and frustrate just claims of employees. In certain cases, however, the Court has given effect to quitclaims executed by employees if the employer is able to prove the following requisites, to wit: (1) the employee executes a deed of quitclaim voluntarily; (2) there is no fraud or deceit on the part of any of the parties; (3) the consideration of the quitclaim is credible and reasonable; and (4) the contract is not contrary to law, public order, public policy, morals or good customs, or prejudicial to a third person with a right recognized by law. Goodrich Manufacturing Corporation & Mr. Nilo Chua Goy vs. Emerlina Ativo, et al., G.R. No. 188002, February 1, 2010.

Quitclaim; validity. In the case at bar, both the Labor Arbiter and the NLRC ruled that the employees executed their quitclaims without any coercion from the company following their voluntary resignation from the company. The contents of the quitclaim documents are simple, clear and unequivocal. The records of the case are bereft of any substantial evidence to show that the employees did not know that they were relinquishing their right short of what they had expected to receive and contrary to what they have so declared. Put differently, at the time they were signing their quitclaims, respondents honestly believed that the amounts received by them were fair and reasonable settlements of the amounts, which they would have received had they refused to voluntarily resign from the said company. Goodrich Manufacturing Corporation & Mr. Nilo Chua Goy vs. Emerlina Ativo, et al., G.R. No. 188002, February 1, 2010.

Vacation leave; scheduling. Although the preferred vacation leave schedule of employees should be given priority, they cannot demand, as a matter of right, for their request to be automatically granted by the company. If the employees were given the exclusive right to schedule their vacation leave then said right should have been incorporated in the CBA. In the absence of such right and in view of the mandatory provision in the CBA giving the company the right to schedule the vacation leave of its employees, the CBA prevails.

In the grant of vacation leave privileges to an employee, the employer is given the leeway to impose conditions on the entitlement to and commutation of the same, as the grant of vacation leave is not a standard of law, but a prerogative of management. It is a mere concession or act of grace of the employer and not a matter of right on the part of the employee. It is, therefore, well within the power and authority of an employer to impose certain conditions, as it deems fit, on the grant of vacation leaves, such as having the option to schedule the same. PNCC Skyway Traffic Management and Security Division Workers Organization (PSTMSWDO), represented by its President, Rene Soriano vs. PNCC Skyway Corporation), G.R. No. 171231, February 17, 2010

Labor Procedure

Appeal; question of fact. While as a rule, a petition for review on certiorari shall raise only questions of law, we deem it appropriate to examine the facts in this review, given the conflicting factual findings between the Labor Arbiter, on the one hand and, the NLRC and the CA, on the other. The Labor Arbiter sustained Rivera’s dismissal with the finding that he committed acts of dishonesty or fraud against his employer. The NLRC and the CA held that no substantial evidence existed to support Rivera’s dismissal. Philippine Journalist, Inc. vs. Leozar Dela Cruz y Balobal, G.R. No. 187120, February 16, 2010 .

Execution of judgments; separation pay/backwages; computation. In concrete terms, the question is whether a re-computation in the course of execution, of the labor arbiter’s original computation of the awards made pegged as of the time the decision was rendered and confirmed with modification by a final CA decision, is legally proper.

The Court held that under the terms of the decision under execution, no essential change is made by a re-computation as this step is a necessary consequence that flows from the nature of the illegality of dismissal declared in that decision. A re-computation (or an original computation, if no previous computation has been made) is a part of the law – specifically, Article 279 of the Labor Code and the established jurisprudence on this provision – that is read into the decision. By the nature of an illegal dismissal case, the reliefs continue to add on until full satisfaction, as expressed under Article 279 of the Labor Code. The re-computation of the consequences of illegal dismissal upon execution of the decision

does not constitute an alteration or amendment of the final decision being implemented. The illegal dismissal ruling stands; only the computation of the monetary consequences of this dismissal is affected and this is not a violation of the principle of immutability of final judgments. Session Delights Ice Cream and Fast Foods vs. The Hon. Court of Appeals (Sixth Division), Hon. National Labor Relations Commission (Second Division) and Adonis Armenio M. Flora, G.R. No. 172149, February 8, 2010 .

Jurisdiction; absence of employer-employee relationship. Jurisdiction over the subject matter of a complaint is determined by the allegations of the complaint. In Pioneer Concrete Philippines, Inc. v. Todaro, the Court reiterated that where no employer-employee relationship exists between the parties, and the Labor Code or any labor statute or collective bargaining agreement is not needed to resolve any issue raised by them, it is the Regional Trial Court which has jurisdiction. Thus it has been consistently held that the determination of the existence of a contract as well as the payment of damages is inherently civil in nature. A labor arbiter may only take cognizance of a case and award damages where the claim for such damages arises out of an employer-employee relationship.

In the present case, the employee, from the period May 8, 1999 to October 8, 1999, was clearly a project employee of the company. There is, therefore, an employer-employee relationship. Consequently, questions or disputes arising out of this relationship fell under the jurisdiction of the labor arbiter. However, based on petitioner’s allegations in his position paper, his cause of action was based on an alleged second contract of employment separate and distinct from his project employment contract. While there existed an employer-employee relationship between the parties while the project contract of employment existed, the present dispute is neither rooted in the aforestated contract nor is it one inherently linked to it. Petitioner insists on a right to be employed again in respondent company and seeks a determination of the existence of a new and separate contract that established that right. As such, his case is within the jurisdiction, not of the labor arbiter, but of the regular courts. The NLRC and the CA were therefore correct in ruling that the labor arbiter erroneously took cognizance of the case. Ronilo Sorreda vs. Cambridge Electronics Corporation, G.R. No. 172927, February 11, 2010 .

Jurisdiction; void judgment . The company admits that it failed to appeal the January 29, 2003 Order within the period prescribed by law. It likewise admits that the case was already in the execution process when it resorted to a belated appeal to the DOLE Secretary. The company sought to excuse itself from the effects of the finality of the Order by arguing that it was allegedly issued without jurisdiction. As such, it may be assailed at any time.

While it is true that orders issued without jurisdiction are considered null and void and, as a general rule, may be assailed at any time, the fact of the matter is that, in this case, it was well within the jurisdiction of Director Manalo to issue the Order. Under Article 128(b) of the Labor Code, as amended by Republic Act (RA) No. 7730, the DOLE Secretary and her representatives, the regional directors, have jurisdiction over labor standards violations based on findings made in the course of inspection of an employer’s premises. The said jurisdiction is not affected by the amount of claim involved, as RA 7730 had effectively removed the jurisdictional limitations found in Articles 129 and 217 of the Labor Code insofar as inspection cases, pursuant to the visitorial and enforcement powers of the DOLE Secretary, are concerned. The last sentence of Article 128(b) of the Labor Code recognizes an exception to the jurisdiction of the DOLE Secretary and her representatives, but such exception is neither an issue nor applicable here. Tiger Construction and Development Corporation vs. Reynaldo, et al., G.R. No. 164141, February 26, 2010 .

Labor Appeal; cash bond. Article 223 of the Labor Code provides that an appeal by the employer to the NLRC from a judgment of a labor arbiter which involves a monetary award may be perfected only upon the posting of a cash or surety bond issued by a reputable bonding company duly accredited by the NLRC, in an amount equivalent to the monetary award in the judgment appealed from. “Cash,” means a sum of money; cash bail (the sense in which the term “cash bond” is used) is a sum of money posted by a criminal defendant to ensure his presence in court, used in place of a surety bond and real estate.

To comply with the appeal bond requirement, the company deposited the amount of P71,909.77 with the United Coconut Planters Bank and surrendered to the NLRC the passbook covering the deposit, along with a Deed of Assignment it executed assigning the proceeds of the deposit in favor of the employee and authorizing the NLRC to release the same in the event that the Labor Arbiter’s

Decision becomes final and executory. Such Deed of Assignment, as well as the passbook, is neither a cash bond nor a surety bond. The company’s appeal to the NLRC was thus not duly perfected, thereby rendering the Labor Arbiter’s Decision final and executory. Mindanao Times Corporation vs. Mitchel R. Confesor, G.R. No. 183417, February 5, 2010 .

JANUARY 2010

Labor Law

CBA; coverage. As regular employees, petitioners fall within the coverage of the bargaining unit and are therefore entitled to CBA benefits as a matter of law and contract. Under the terms of the CBA, petitioners are members of the appropriate bargaining unit because they are regular rank-and-file employees and do not belong to any of the excluded categories. Most importantly, the labor arbiter’s decision of January 17, 2002 – affirmed all the way to the CA – ruled against the company’s submission that they are independent contractors. Thus, as regular rank-and-file employees, they fall within the CBA coverage. And, under the CBA’s express terms, they are entitled to its benefits.

CBA coverage is not only a question of fact, but of law and contract. The factual issue is whether the petitioners are regular rank-and-file employees of the company. The tribunals below uniformly answered this question in the affirmative. From this factual finding flows legal effects touching on the terms and conditions of the petitioners’ regular employment. Farley Fulache, et al. vs. ABS-CBN Broadcasting Corporation, G.R. No. 183810, January 21, 2010.

Employee benefits; permanent disability benefits. In accordance with the avowed policy of the State to give maximum aid and full protection to labor, the Court applied the Labor Code concept of permanent total disability to Filipino seafarers. The Court held that the notion of disability is intimately related to the worker’s capacity to earn. What is compensated is not the employee’s injury or illness but his inability to work resulting in the impairment of his earning capacity; hence, disability should be understood less on its medical significance but more on the loss of earning capacity.

In the present case, petitioner was able to secure a “fit to work” certification from a doctor only after more than five months from the time he was medically repatriated due to a finding that his disability is considered permanent and total. Significantly, petitioner remained unemployed even after he filed on February 26, 2002 his complaint to recover permanent total disability compensation and despite the August 31, 2005 Decision of the NLRC which was affirmed by the Court of Appeals, ordering respondents to “allow complainant to resume sea duty.”

That petitioner was not likely to fully recover from his disability is mirrored by the Labor Arbiter’s finding that his illness would possibly recur once he resumes his sea duties. This could very well be the reason why petitioner was not re-deployed by respondents. Petitioner’s disability being then permanent and total, he is “entitled to 100% compensation, i.e., US$80,000 for officers,” as stipulated in par. 20.1.7 of the parties’ CBA. Rizaldy M. Quitoriano vs. Jebsens Maritime, Inc./Ma. Theresa Gutay and/or Atle Jebsens Management A/S, G.R. No. 179868, January 21, 2010.

Labor Code; interpretation . Another basic principle is that expressed in Article 4 of the Labor Code – that all doubts in the interpretation and implementation of the Labor Code should be interpreted in favor of the workingman. This principle has been extended by jurisprudence to cover doubts in the evidence presented by the employer and the employee. The petitioner has, at very least, shown serious doubts about the merits of the company’s case, particularly in the appreciation of the clinching evidence on which the NLRC and CA decisions were based. In such contest of evidence, the Court applied Article 4 as basis to rule in favor of the employee. In this case, the Court held that petitioner was constructively dismissed given the hostile and discriminatory working environment he found himself in, particularly evidenced by the escalating acts of unfairness against him that culminated in the appointment of another HRD manager without any prior notice to him. Where no less than the company’s chief corporate officer was against him, petitioner had no alternative but to resign from his employment.

The Court also gave significance to the fact that petitioner sought almost immediate official recourse to contest his separation from service through a complaint for illegal dismissal, and held that this is not the act of one who voluntarily resigned; his immediate filing of a complaint characterizes him as one who deeply felt that he had been wronged. Manolo A. Peñaflor vs. Outdoor Clothing Manufacturing Corporation, et al., G.R. No. 177114, January 21, 2010.

Labor Procedure

Appeal; illegal dismissal . In the present case, the company terminated the services of four drivers who were declared by the labor arbiter to be regular employees of the company in an initial complaint filed by said drivers for regularization. Pending the company’s appeal of the labor arbiter’s decision, the company terminated the employment of said drivers on the ground of redundancy, which action, the Court viewed as an implied admission of the regular employment status of the drivers. The Court held that by implementing the dismissal action at the time the labor arbiter’s ruling was under review, the company unilaterally negated the effects of the labor arbiter’s ruling while at the same time appealing the same ruling to the NLRC. This unilateral move is a direct affront to the NLRC’s authority and an abuse of the appeal process. All these go to show that company acted with patent bad faith. Farley Fulache, et al. vs. ABS-CBN Broadcasting Corporation, G.R. No. 183810, January 21, 2010.

Appeal; questions of fact. The rule that a Rule 45 petition deals only with legal issues is not an absolute rule; it admits of exceptions. In the labor law setting, the Court may look into factual issues when there is a conflict in the factual findings of the labor arbiter, the NLRC, and the CA as in the present case where the labor arbiter found facts supporting the conclusion that there had been constructive dismissal, while the NLRC’s and the CA’s factual findings contradicted the labor arbiter’s findings. The conflicting factual findings are not binding on the Court. The Court held that it retains the authority to pass upon the evidence presented and draw conclusions therefrom. Manolo A. Peñaflor vs. Outdoor Clothing Manufacturing Corporation, et al., G.R. No. 177114, January 21, 2010.

Appeal under Rule 45; questions of law vs. questions of fact . Petitioners in the present case do not question the findings of facts in the assailed decisions. They question the misapplication of the law and jurisprudence on the facts recognized by the decisions. For example, they question as contrary to law their exclusion from the CBA after they were recognized as regular rank-and-file employees of the company. They also question the basis in law for the dismissal of four drivers and the legal propriety of the redundancy action taken against them.

The Court reiterated the established distinctions between questions of law and questions of fact by quoting its rulings in New Rural Bank of Guimba (N.E.) Inc. v. Fermina S. Abad and Rafael Susan [G.R. No. 161818, August 20, 2008, 562 SCRA 503]: “A question of law exists when the doubt or controversy concerns the correct application of law or jurisprudence to a certain set of facts; or when the issue does not call for an examination of the probative value of the evidence presented, the truth or falsehood of the facts being admitted. A question of fact exists when a doubt or difference arises as to the truth or falsehood of facts or when the query invites calibration of the whole evidence considering mainly the credibility of the witnesses, the existence and relevancy of specific surrounding circumstances, as well as their relation to each other and to the whole, and the probability of the situation.” Farley Fulache, et al. vs. ABS-CBN Broadcasting Corporation, G.R. No. 183810, January 21, 2010.

Dismissal; burden of proof. It is a settled rule that in employee termination disputes, the employer bears the burden of proving that the employee’s dismissal was for just and valid cause. That petitioner did indeed file a letter of resignation does not help the company’s case as, other than the fact of resignation, the company must still prove that the employee voluntarily resigned. There can be no valid resignation where the act was made under compulsion or under circumstances approximating compulsion, such as when an employee’s act of handing in his resignation was a reaction to circumstances leaving him no alternative but to resign. In this case, the Court held that petitioner had been constructively dismissed as his resignation was a response to the unacceptable appointment of another person to a position he still occupied. In sum, the evidence does not support the existence of

voluntariness in petitioner’s resignation. Manolo A. Peñaflor vs. Outdoor Clothing Manufacturing Corporation, et al., G.R. No. 177114, January 21, 2010.

DECEMBER 2009

Labor Law

Attorney’s fees; actions for indemnity under employer liability laws . The claim for attorney’s fees is granted following Article 2208 of the New Civil Code which allows its recovery in actions for recovery of wages of laborers and actions for indemnity under the employer’s liability laws. The same fees are also recoverable when the defendant’s act or omission has compelled the plaintiff to incur expenses to protect his interest as in the present case following the refusal by the employer to settle the employee’s claims. Pursuant to prevailing jurisprudence, petitioner is entitled to attorney’s fees of ten percent (10%) of the monetary award. Leopoldo Abante vs. KJGS Fleet Management Manila and/or Guy Domingo A. Macapayag, Kristian Gerhard Jebsens Skipsrenderi A/S, G.R. No. 182430, December 4, 2009 .

Compensability of death; requirements. To be entitled to compensation, a claimant must show that the sickness is either: (1) a result of an occupational disease listed under Annex “A” of the Amended Rules on Employees’ Compensation under the conditions Annex “A” sets forth; or (2) if not so listed, that the risk of contracting the disease is increased by the working conditions.

Based on Francisco’s death certificate, the immediate cause of his death was cardiac arrest; the antecedent cause was acute massive hemorrhage, and the underlying cause was bleeding peptic ulcer disease.

In determining the compensability of an illness, the worker’s employment need not be the sole factor in the growth, development, or acceleration of a claimant’s illness to entitle him to the benefits provided for. It is enough that his employment contributed, even if only in a small degree, to the development of the disease.

P.D. 626 is a social legislation whose primordial purpose is to provide meaningful protection to the working class against the hazards of disability, illness, and other contingencies resulting in loss of income. In employee compensation, persons charged by law to carry out the Constitution’s social justice objectives should adopt a liberal attitude in deciding compensability claims and should not hesitate to grant compensability where a reasonable measure of work-connection can be inferred. Only this kind of interpretation can give meaning and substance to the law’s compassionate spirit as expressed in Article 4 of the Labor Code – that all doubts in the implementation and interpretation of the provisions of the Labor Code, including their implementing rules and regulations, should be resolved in favor of labor. Government Service Insurance System vs. Jean E. Raoet, G.R. No. 157038, December 23, 2009 .

Compensable injury; requirement. Section 20(B) of the POEA Standard Employment Contract provides for the liabilities of the employer only when the seafarer suffers from a work-related injury or illness during the term of his employment.

Petitioner claims to have reported his illness to an officer once on board the vessel during the course of his employment. The records are bereft, however, of any documentary proof that he had indeed referred his illness to a nurse or doctor in order to avail of proper treatment. It thus becomes apparent that he was repatriated to the Philippines, not on account of any illness or injury, but in view of the completion of his contract.

But even assuming that petitioner was repatriated for medical reasons, he failed to submit himself to the company-designated doctor in accordance with the post-employment medical examination requirement under the above-quoted paragraph 3 of Section 20(B) of the POEA Standard Employment Contract. Failure to comply with this requirement which is a sine qua non bars the filing of a claim for disability benefits. Dionisio M. Musnit vs. Sea Star Shipping Corporation and Sea Star Shipping Corporation, Ltd., G.R. No. 182623 , December 4, 2009.

Compensable injury; loss of earning capacity. The Court has applied the Labor Code concept of permanent total disability to Filipino seafarers in keeping with the avowed policy of the State to give maximum aid and full protection to labor, it holding that the notion of disability is intimately related to the worker’s capacity to earn, what is compensated being not his injury or illness but his inability to work resulting in the impairment of his earning capacity, hence, disability should be understood less on its medical significance but more on the loss of earning capacity. Joelson O. Iloreta vs. Philippine Transmarine Carriers, Inc. and Norbulk Shipping U.K. Ltd., G.R. No. 183908, December 4, 2009 .

Dismissal; constructive dismissal. Case law defines constructive dismissal as a cessation of work because continued employment has been rendered impossible, unreasonable, or unlikely, as when there is a demotion in rank or diminution in pay or both or when a clear discrimination, insensibility, or disdain by an employer becomes unbearable to the employee.

The test of constructive dismissal is whether a reasonable person in the employee’s position would have felt compelled to give up his position under the circumstances. It is an act amounting to dismissal but is made to appear as if it were not. In fact, the employee who is constructively dismissed might have been allowed to keep coming to work. Constructive dismissal is therefore a dismissal in disguise. The law recognizes and resolves this situation in favor of employees in order to protect their rights and interests from the coercive acts of the employer.

In the present case, the employer ceased verbally communicating with the employee and giving him work assignment after suspecting that he had forged purchase receipts. In this situation, the employee was forced to leave the employer’s compound with his family and to transfer to a nearby place. The employee’s act of leaving his employer’s premises was in reality not his choice but a situation created by the employer. CRC Agricultural Trading and Rolando B. Catindig vs. National Labor Relations Commission and Roberto Obias, G.R. No. 177664, December 23, 2009 .

Dismissal; constructive dismissal . Constructive dismissal exists when an act of clear discrimination, insensibility or disdain by an employer has become so unbearable to the employee leaving him with no option but to forego with his continued employment.

In this case, the employee, while still employed with the company, was compelled to resign and forced to go on leave. He was not allowed to participate in the activities of the company. His salary was no longer remitted to him. His subordinates were directed not to report to him and the company directed one of its district managers to take over his position and do his functions without prior notice to him.

These discriminatory acts were calculated to make the employee feel that he is no longer welcome nor needed in the company short of sending him an actual notice of termination. The Court held that the employer constructively dismissed the employee from service. Ramon B. Formantes vs. Duncan Pharmaceuticals, Phils., Inc., G.R. No. 170661, December 4, 2009.

Dismissal; corporate officer; jurisdiction. From the documents submitted by the company, petitioner was a director and officer of Slimmers World. The charges of illegal suspension, illegal dismissal, unpaid commissions, reinstatement and back wages imputed by petitioner against the company fall squarely within the ambit of intra-corporate disputes. In a number of cases, the Court has held that a corporate officer’s dismissal is always a corporate act, or an intra-corporate controversy which arises between a stockholder and a corporation. The question of remuneration involving a stockholder and officer, not a mere employee, is not a simple labor problem but a matter that comes within the area of corporate affairs and management and is a corporate controversy in contemplation of the Corporation Code.

It is a settled rule that jurisdiction over the subject matter is conferred by law. The determination of the rights of a director and corporate officer dismissed from his employment as well as the corresponding liability of a corporation, if any, is an intra-corporate dispute subject to the jurisdiction of the regular courts. Thus, the appellate court correctly ruled that it is not the NLRC but the regular courts which have jurisdiction over the present case. Leslie Okol vs. Slimmers World International, et al., G.R. No. 160146, December 11, 2009 .

Dismissal; due process; opportunity to be heard. Although the employee, during some parts of the trial proceedings before the Labor Arbiter was not represented by a member of the bar, he was given reasonable opportunity to be heard and submit evidence to support his arguments, through the medium of pleadings filed in the labor tribunals. He was also able to present his version of the Magat incident during his direct examination conducted by his lawyer Atty. Jannette Inez. Thus, he cannot claim that he was denied due process. Ramon B. Formantes vs. Duncan Pharmaceuticals, Phils., Inc., G.R. No. 170661, December 4, 2009.

Dismissal; just cause; separation pay. The liberality of the law can never be extended to the unworthy and undeserving. In several instances, the policy of social justice has compelled this Court to accord financial assistance in the form of separation pay to a legally terminated employee. This liberality, however, is not without limitations. Thus, when the manner and circumstances by which the employee committed the act constituting the ground for his dismissal show his perversity or depravity, no sympathy or mercy of the law can be invoked.

We have examined the records which indeed show that the employee’s unauthorized absences as well as tardiness are habitual despite having been penalized for past infractions. In Gustilo v. Wyeth Philippines, Inc. [483 Phil. 69, 78 (2004)], we held that a series of irregularities when put together may constitute serious misconduct. We also held that gross neglect of duty becomes serious in character due to frequency of instances. Serious misconduct is said to be a transgression of some established and definite rule of action, a forbidden act, a dereliction of duty, willful in character, and indicative of wrongful intent and not mere error of judgment. Oddly, the employee never advanced any valid reason to justify his absences. The employee’s intentional and willful violation of company rules shows his utter disregard of his work and his employer’s interest. Indeed, there can be no good faith in intentionally and habitually incurring inexcusable absences. Hence, he is not entitled to severance pay. Arsenio S. Quiambao vs. Manila Electric Company, G.R. No. 171023, December 18, 2009.

Dismissal; just cause; sexual abuse. As a manager, the employee enjoyed the full trust and confidence of the company and his subordinates. By committing sexual abuse against his subordinate, he clearly demonstrated his lack of fitness to continue working as a managerial employee and deserves the punishment of dismissal from the service. Ramon B. Formantes vs. Duncan Pharmaceuticals, Phils., Inc., G.R. No. 170661, December 4, 2009.

Dismissal; separation pay in lieu of reinstatement. Under Article 279 of the Labor Code, the illegally dismissed employee is entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages, inclusive of allowances and other benefits or their monetary equivalent, computed from the time his compensation was withheld from him up to the time of his actual reinstatement. Thus, an illegally dismissed employee is entitled to two reliefs: backwages and reinstatement. Where reinstatement is no longer viable as an option, backwages shall be computed from the time of the illegal termination up to the finality of the decision. Separation pay equivalent to one month salary for every year of service should likewise be awarded as an alternative in case reinstatement in not possible.

In the present case, reinstatement is no longer feasible because of the strained relations between the employee and the employer. Time and again, the Court has recognized that strained relations between the employer and employee is an exception to the rule requiring actual reinstatement for illegally dismissed employees for the practical reason that the already existing antagonism will only fester and deteriorate, and will only worsen with possible adverse effects on the parties, if we shall compel reinstatement; thus, the use of a viable substitute that protects the interests of both parties while ensuring that the law is respected.

The payment of separation pay is the better alternative as it liberates the employee from what could be a highly hostile work environment, while releasing the employer from the grossly unpalatable obligation of maintaining in their employ a worker they could no longer trust. CRC Agricultural Trading and Rolando B. Catindig vs. National Labor Relations Commission and Roberto Obias, G.R. No. 177664, December 23, 2009.

Dismissal; twin requirements. Well settled is the dictum that the twin requirements of notice and hearing constitute the essential elements of due process in the dismissal of employees. It is a cardinal

rule in our jurisdiction that the employer must furnish the employee with two written notices before the termination of employment can be affected: (a) the first apprises the employee of the particular acts or omissions for which his dismissal is sought; and (b) the second informs the employee of the employer’s decision to dismiss him.

The barrage of letters sent to petitioner, starting from a letter dated April 22, 1994 until his termination on May 19, 1994, was belatedly made and apparently done in an effort to show that petitioner was accorded the notices required by law in dismissing an employee. As observed by the Labor Arbiter in her decision, prior to those letters, the employee was already constructively dismissed.

Since the dismissal, although for a valid cause, was done without due process of law, the employer should indemnify the employee with nominal damages in the amount of P30,000.00.Ramon B. Formantes vs. Duncan Pharmaceuticals, Phils., Inc., G.R. No. 170661, December 4, 2009.

Dismissal; two-notice requirement. To justify the dismissal of an employee for a just cause, the employer must furnish the worker with two written notices. The first is the notice to apprise the employee of the particular acts or omissions for which his dismissal is sought. This may be loosely considered as the charge against the employee. The second is the notice informing the employee of the employer’s decision to dismiss him. This decision, however, must come only after the employee is given a reasonable period from receipt of the first notice within which to answer the charge, and ample opportunity to be heard and defend himself with the assistance of his representative, if he so desires. The requirement of notice is not a mere technicality, but a requirement of due process to which every employee is entitled.

The employer clearly failed to comply with the two-notice requirement. Nothing in the records shows that the company ever sent the employee a written notice informing him of the ground for which his dismissal was sought. It does not also appear that the company held a hearing where the employee was given the opportunity to answer the charges of abandonment. Neither did the company send a written notice to the employee informing him that his service had been terminated and the reasons for the termination of his employment. Under these facts, the respondent’s dismissal was illegal. CRC Agricultural Trading and Rolando B. Catindig vs. National Labor Relations Commission and Roberto Obias, G.R. No. 177664, December 23, 2009.

Drug testing for employees; employer’s duty. It was Plantation Bay’s responsibility to ensure that the drug tests would be properly administered, the results thereof being the bases in terminating the employees’ services.

The employer failed to indubitably prove that the employees were guilty of drug use in contravention of its drug-free workplace policy amounting to serious misconduct. The employees are therefore deemed to have been illegally dismissed. Plantation Bay Resort & Spa and Efren Belarmino vs. Romel S. Dubrico, et al., G.R. No. 182216, December 4, 2009.

Employee disability benefits. Permanent disability refers to the inability of a worker to perform his job for more than 120 days, regardless of whether he loses the use of any part of his body. What determines the employee’s entitlement to permanent disability benefits is his inability to work for more than 120 days. In the case at bar, it was only on February 20, 2001 that the Certificate of Fitness for Work was issued by Dr. Lim, more than 6 months from the time he was initially evaluated by the doctor on July 24, 2000 and after he underwent operation on August 18, 2000.

It is gathered from the documents emanating from the Office of Dr. Lim that the employee was seen by him from July 24, 2000 up to February 20, 2001 or a total of 13 times; and except for the medical reports dated February 5, 2001 and February 20, 2001 (when the doctor finally pronounced petitioner fit to work), Dr. Lim consistently recommended that the employee continue his physical rehabilitation/therapy and revisit clinic on specific dates for re-evaluation, thereby implying that the employee was not yet fit to work.

Given a seafarer’s entitlement to permanent disability benefits when he is unable to work for more than 120 days, the failure of the company-designated physician to pronounce the employee fit to work within

the 120-day period entitles him to permanent total disability benefit in the amount of US$60,000.00. Leopoldo Abante vs. KJGS Fleet Management Manila and/or Guy Domingo A. Macapayag, Kristian Gerhard Jebsens Skipsrenderi A/S, G.R. No. 182430, December 4, 2009 .

Existence of employer-employee relationship. The elements to determine the existence of an employment relationship are: (1) the selection and engagement of the employee; (2) the payment of wages; (3) the power of dismissal; and (4) the employer’s power to control the employee’s conduct. The most important element is the employer’s control of the employee’s conduct, not only as to the result of the work to be done, but also as to the means and methods to accomplish it. All the four elements are present in this case.

First, the company engaged the services of the worker in 1995. Second, the company paid the worker a daily wage of P175.00, with allowances ranging from P140.00 to P200.00 per day. The fact that the worker was paid under a “no work no pay” scheme, assuming this claim to be true, is not significant. The “no work no pay” scheme is merely a method of computing compensation, not a basis for determining the existence or absence of employer-employee relationship. Third, the company’s power to dismiss the worker was inherent in the fact that it engaged the services of the worker as a driver. Finally, a careful review of the record shows that the worker performed his work as driver under the petitioners’ supervision and control. The company determined how, where, and when the worker performed his task. They, in fact, requested the worker to live inside their compound so he (the worker) could be readily available when the company needed his services. Undoubtedly, the company exercised control over the means and methods by which the worker accomplished his work as a driver. CRC Agricultural Trading and Rolando B. Catindig vs. National Labor Relations Commission and Roberto Obias, G.R. No. 177664, December 23, 2009.

Labor-only contracting. The contract between the principal and the contractor is not the final word on how the contracted workers relate to the principal and the purported contractor; the relationships must be tested on the basis of how they actually operate.

The legitimate job contractor must have the capitalization and equipment to undertake the sale and distribution of the manufacturer’s products, and must do it on its own using its own means and selling methods.

Even before going into the realities of workplace operations, the Court of Appeals found that the service contracts themselves provide ample leads into the relationship between the company, on the one hand, and Peerless and Excellent, on the other. The Court of Appeals noted that both the Peerless and the Excellent contracts show that their obligation was solely to provide the company with “the services of contractual employees,” and nothing more. These contracted services were for the handling and delivery of the company’s products and allied services. Following D.O. 18-02 and the contracts that spoke purely of the supply of labor, the Court of Appeals concluded that Peerless and Excellent were labor-only contractors unless they could prove that they had the required capitalization and the right of control over their contracted workers.

The contractors were not independently selling and distributing company products, using their own equipment, means and methods of selling and distribution; they only supplied the manpower that helped the company in the handing of products for sale and distribution. In the context of D.O. 18-02, the contracting for sale and distribution as an independent and self-contained operation is a legitimate contract, but the pure supply of manpower with the task of assisting in sales and distribution controlled by a principal falls within prohibited labor-only contracting. Coca Cola Bottlers Philippines, Inc. vs. Ricky E. Dela Cruz, et al., G.R. No. 184977, December 7, 2009.

Outsourcing. The employer was within its right in entering the forwarding agreements with the forwarders as an exercise of its management prerogative. The employer’s declared objective for the arrangement is to achieve greater economy and efficiency in its operations – a universally accepted business objective and standard that the union has never questioned. In Meralco v. Quisumbing,[G.R. No. 127598, January 27, 1999] the Court joined this universal recognition of outsourcing as a legitimate activity when it held that a company can determine in its best judgment whether it should contract out a part of its work for as long as the employer is motivated by good faith; the contracting is not for

purposes of circumventing the law; and does not involve or be the result of malicious or arbitrary action. Temic Automotive Philippines, Inc. vs. Temic Automotive Philippines, Inc. Employees Union-FFW, G.R. No. 186965, December 23, 2009.

Regulations; retroactivity of POEA Circular. Respecting the appellate court’s ruling that it is POEA Memo Circular No. 55, series of 1996 which is applicable and not Memo Circular No. 9, series of 2000, apropos is the ruling in Seagull Maritime Corporation v. Dee [G.R. No. 165156, April 2, 2007] involving employment contract entered into in 1999, before the promulgation of POEA Memo Circular No. 9, series of 2000 or the use of the new POEA Standard Employment Contract, like that involved in the present case. In said case, the Court applied the 2000 Circular in holding that while it is the company-designated physician who must declare that the seaman suffered permanent disability during employment, it does not deprive the seafarer of his right to seek a second opinion which can then be used by the labor tribunals in awarding disability claims. Leopoldo Abante vs. KJGS Fleet Management Manila and/or Guy Domingo A. Macapayag, Kristian Gerhard Jebsens Skipsrenderi A/S, G.R. No. 182430, December 4, 2009.

Termination; abandonment . Abandonment of work, or the deliberate and unjustified refusal of an employee to resume his employment, is a just cause for employment termination under paragraph (b) of Article 282 of the Labor Code, since it constitutes neglect of duty. The jurisprudential rule is that abandonment is a matter of intention that cannot be lightly presumed from equivocal acts. To constitute abandonment, two elements must concur: (1) the failure to report for work or absence without valid or justifiable reason, and (2) a clear intent, manifested through overt acts, to sever the employer-employee relationship. The employer bears the burden of showing a deliberate and unjustified refusal by the employee to resume his employment without any intention of returning.

In the present case, the employer did not adduce any proof to show that the employee clearly and unequivocally intended to abandon his job or to sever the employer-employee relationship. Moreover, the filing of the complaint for illegal dismissal on June 22, 2004 strongly speaks against the employer’s charge of abandonment; it is illogical for an employee to abandon his employment and, thereafter, file a complaint for illegal dismissal. CRC Agricultural Trading and Rolando B. Catindig vs. National Labor Relations Commission and Roberto Obias, G.R. No. 177664, December 23, 2009.

Termination; reorganization . Absent explicit statutory authority, the Court cannot sustain the grant of separation pay and retirement benefits from one single act of involuntary separation from the service, lest there be duplication of purpose and depletion of government resources. Within the context of government reorganization, separation pay and retirement benefits arising from the same cause, are in consideration of the same services and granted for the same purpose. Whether denominated as separation pay or retirement benefits, these financial benefits reward government service and provide monetary assistance to employees involuntarily separated due to bona fide reorganization. Efren M. Herrera, et al. vs. National Power Corporation, et al., G.R. No. 166570, December 18, 2009.

Termination; reorganization . The grant of retirement benefits to the employees in addition to the separation pay they have already received effectively amounts to additional compensation for the same services. Unless specifically authorized by law, such additional compensation is not allowed under Section 8, Article IX-B of the Constitution.

There is only one act of exit from the service and only one service to exit from. Employees who chose separation from the service under the NPC’s restructuring plan never really exercised the right to optionally retire; the earlier termination of their employment denied them the opportunity to optionally retire. Consequently, no retirement pay ever accrued in their favor.

This means, in concrete terms, that the employees who opted to be separated from the service under the NPC restructuring plan and who have received separation pay under RA 9136, cannot also be considered to have separately exited from the same service through optional retirement under CA 186, entitling them to separate retirement benefits under this law. RA 9136 provides for separation benefits in the alternative and does not offer both.

Optional retirement clearly is a mere expectancy until availed of by those who are qualified to exercise the option to retire. If not taken because the employee chose the separation package under RA 9136, then optional retirement under CA 186 simply remained an expectancy that never materialized and is now forever lost. To put it differently, given one and the same exit from the one and the same service for which only one separation benefit is provided, there can be no actual retirement under CA 186 after exit via the RA 9136 route has been taken; optional retirement under CA 186 has then become the road not taken. Efren M. Herrera, et al. vs. National Power Corporation, et al., Separate Concurring Opinion of J. Brion, G.R. No. 166570, December 18, 2009.

Termination; retrenchment . Retrenchment is the termination of employment initiated by the employer through no fault of and without prejudice to the employees, it is resorted to during periods of business recession, industrial depression, or seasonal fluctuations or during lulls occasioned by lack of orders, shortage of materials, conversion of the plant for a new production program or the introduction of new methods or more efficient machinery or of automation. It is a management prerogative resorted to, to avoid or minimize business losses.

To effect a valid retrenchment, the following elements must be present: (1) the retrenchment is reasonably necessary and likely to prevent business losses which, if already incurred, are not merely de minimis, but substantial, serious, and real, or only if expected, are reasonably imminent as perceived objectively and in good faith by the employer; (2) the employer serves written notice both to the employee/s concerned and the Department of Labor and Employment at least a month before the intended date of retrenchment; (3) the employer pays the retrenched employee separation pay in an amount prescribed by the Code; (4) the employer exercises its prerogative to retrench in good faith; and (5) the employer uses fair and reasonable criteria in ascertaining who would be retrenched or retained.

The losses must be supported by sufficient and convincing evidence. The normal method of discharging this burden of proof is the submission of financial statements duly audited by independent external auditors. For failure of Asiakonstrukt to clearly and satisfactorily substantiate its financial losses, the dismissal of the employee on account of retrenchment is unjustified. Virgilio G. Anabe vs. Asian Construction (ASIAKONSTRUKT), et al., G.R. No. 183233, December 23, 2009.

Union; cancellation of union registration; grounds. For the purpose of de-certifying a union, it must be shown that there was misrepresentation, false statement or fraud in connection with the adoption or ratification of the constitution and by-laws or amendments thereto; the minutes of ratification; or, in connection with the election of officers, the minutes of the election of officers, the list of voters, or failure to submit these documents together with the list of the newly elected-appointed officers and their postal addresses to the Bureau of Labor Relations.

The bare fact that two signatures appeared twice on the list of those who participated in the organizational meeting would not provide a valid reason to cancel the union’s certificate of registration. The cancellation of a union’s registration doubtless has an impairing dimension on the right of labor to self-organization. For fraud and misrepresentation to be grounds for cancellation of union registration under the Labor Code, the nature of the fraud and misrepresentation must be grave and compelling enough to vitiate the consent of a majority of union members. Mariwasa Siam Ceramics, Inc. vs. The Secretary of the Department of Labor and Employment, et al., G.R. No. 183317, December 21, 2009.

Union; membership requirement. While it is true that the withdrawal of support may be considered as a resignation from the union, the fact remains that at the time of the union’s application for registration, the affiants were members of the union and they comprised more than the required 20% membership for purposes of registration as a labor union. Article 234 of the Labor Code merely requires a 20% minimum membership during the application for union registration. It does not mandate that a union must maintain the 20% minimum membership requirement all throughout its existence. Mariwasa Siam Ceramics, Inc. vs. The Secretary of the Department of Labor and Employment, et al., G.R. No. 183317, December 21, 2009.

Labor Procedure

Appeal; appeal bond a jurisdictional requirement . The Court has always stressed that Article 223, which prescribes the appeal bond requirement, is a rule of jurisdiction and not of procedure. There is little leeway for condoning a liberal interpretation thereof, and certainly none premised on the ground that its requirements are mere technicalities. It must be emphasized that there is no inherent right to an appeal in a labor case, as it arises solely from grant of statute, namely, the Labor Code.

For the same reason, the Court has repeatedly emphasized that the requirement for posting the surety bond is not merely procedural but jurisdictional and cannot be trifled with. Non-compliance with such legal requirements is fatal and has the effect of rendering the judgment final and executory. Hilario S. Ramirez vs. Hon. Court of Appeals, et al., G.R. No. 182626, December 4, 2009.

Appeal; appeal bond reduction. It is daylight-clear from the foregoing that while the bond may be reduced upon motion by the employer, this is subject to the conditions that (1) the motion to reduce the bond shall be based on meritorious grounds; and (2) a reasonable amount in relation to the monetary award is posted by the appellant; otherwise, the filing of the motion to reduce bond shall not stop the running of the period to perfect an appeal. The qualification effectively requires that unless the NLRC grants the reduction of the cash bond within the 10-day reglementary period, the employer is still expected to post the cash or surety bond securing the full amount within the said 10-day period. Hilario S. Ramirez vs. Hon. Court of Appeals, et al., G.R. No. 182626, December 4, 2009.

Appeal; issues raised first time on appeal; exceptions . While it is a well-settled rule, also applicable in labor cases, that issues not raised in proceedings below cannot be raised for the first time on appeal, there are exceptions thereto, among which are, for reasons of public policy or interest.

The NLRC did not err in considering the issue of the veracity of the confirmatory tests even if the same was raised only in the employee’s Motion for Reconsideration of the NLRC Decision, it being crucial in determining the validity of the employee’s dismissal from service.

Technical rules of procedure are not strictly adhered to in labor cases. In the interest of substantial justice, new or additional evidence may be introduced on appeal before the NLRC. Such move is proper, provided due process is observed, as was the case here, by giving the opposing party sufficient opportunity to meet and rebut the new or additional evidence introduced.

The Constitution no less directs the State to afford full protection to labor. To achieve this goal, technical rules of procedure shall be liberally construed in favor of the working class in accordance with the demands of substantial justice. Plantation Bay Resort & Spa and Efren Belarmino vs. Romel S. Dubrico, et al., G.R. No. 182216, December 4, 2009.

Appeal; perfection. Under the Rules, appeals involving monetary awards are perfected only upon compliance with the following mandatory requisites, namely: (1) payment of the appeal fees; (2) filing of the memorandum of appeal; and (3) payment of the required cash or surety bond.

The posting of a bond is indispensable to the perfection of an appeal in cases involving monetary awards from the decision of the Labor Arbiter. The intention of the lawmakers to make the bond a mandatory requisite for the perfection of an appeal by the employer is clearly expressed in the provision that an appeal by the employer may be perfected “only upon the posting of a cash or surety bond.” The word “only” in Articles 223 of the Labor Code makes it unmistakably plain that the lawmakers intended the posting of a cash or surety bond by the employer to be the essential and exclusive means by which an employer’s appeal may be perfected. The word “may” refers to the perfection of an appeal as optional on the part of the defeated party, but not to the compulsory posting of an appeal bond, if he desires to appeal. The meaning and the intention of the legislature in enacting a statute must be determined from the language employed; and where there is no ambiguity in the words used, then there is no room for construction.

Clearly, the filing of the bond is not only mandatory but also a jurisdictional requirement that must be complied with in order to confer jurisdiction upon the NLRC. Non-compliance with the requirement renders the decision of the Labor Arbiter final and executory. This requirement is intended to assure the workers that if they prevail in the case, they will receive the money judgment in their favor upon the

dismissal of the employer’s appeal. Hilario S. Ramirez vs. Hon. Court of Appeals, et al., G.R. No. 182626, December 4, 2009.

Illegal dismissal and rehabilitation proceedings. The term “claim,” as contemplated in Section 6 (c), refers to debts or demands of a pecuniary nature. It is the assertion of rights for the payment of money. Here, petitioners have pecuniary claims—the payment of separation pay and moral and exemplary damages.

In Rubberworld (Phils.), Inc. v. NLRC [365 Phil. 273 (1999)], we held that a labor claim is a “claim” within the contemplation of PD 902-A, as amended. This is consistent with the Interim Rules of Procedure on Corporate Rehabilitation which came out in 2000. Thus, labor claims are included among the actions suspended upon the placing under rehabilitation of employer-corporations.

The suspensive effect of the stay order is not time-bound. As we held in Rubberworld, it continues to be in effect as long as reasonably necessary to accomplish its purpose. Gina M. Tiangco and Salvacion Jenny Manego vs. Uniwide Sales Warehouse Club, Inc. and Jimmy Gow, G.R. No. 168697, December 14, 2009.

NCMB appeal. Rule 43 of the Rules of Court under which petitioners filed their petition before the Court of Appeals applies to awards, judgments, final orders or resolutions of or authorized by any quasi-judicial agency in the exercise of its quasi-judicial functions. Given NCMB’s functions, it cannot be considered a quasi-judicial agency. Hence, its decisions or that of its authorized officer cannot be appealed either through a petition for review under Rule 43 or under Rule 65 of the Revised Rules of Court. Juanito Tabigue, et al. vs. International Copra Export Corporation (INTERCO), G.R. No. 183335, December 23, 2009 .

Strikes and lockouts; assumption and certification order; mandatory ands immediately executory. Articles 263 (g) and 264 of the Labor Code have been enacted pursuant to the police power of the State. The grant of plenary powers to the Secretary of Labor makes it incumbent upon him to bring about soonest, a fair and just solution to the differences between theramiemployer and the employees, so that the damage such labor dispute might cause upon the national interest may be minimized as much as possible, if not totally averted, by avoiding stoppage of work or any lag in the activities of the industry or the possibility of those contingencies that might cause detriment to the national interest.

In order to effectively achieve such end, the assumption or certification order shall have the effect of automatically enjoining the intended or impending strike or lockout. Moreover, if one has already taken place, all striking workers shall immediately return to work, and the employer shall immediately resume operations and readmit all workers under the same terms and conditions prevailing before the strike or lockout.

Assumption and certification orders are executory in character and are to be strictly complied with by the parties, even during the pendency of any petition questioning their validity. Regardless therefore of its motives, or of the validity of its claims, YSS Laboratories must readmit all striking employees and give them back their respective jobs. Accepting back the workers in this case is not a matter of option, but of obligation mandated by law for YSS Laboratories to faithfully comply with. Its compulsory character is mandated, not to cater to a narrow segment of society, or to favor labor at the expense of management, but to serve the greater interest of society by maintaining the economic equilibrium.

Certainly, the determination of who among the strikers could be admitted back to work cannot be made to depend upon the discretion of employer, lest the certification or assumption-of-jurisdiction orders are stripped of their coercive power that is necessary for attaining their laudable objective. The return-to-work order does not interfere with the management’s prerogative, but merely regulates it when, in the exercise of such right, national interests will be affected. The rights granted by the Constitution are not absolute. They are still subject to control and limitation to ensure that they are not exercised arbitrarily. The interests of both the employers and employees are intended to be protected and not one of them is given undue preference. YSS Employees Union-Philippine Transport and General Organization vs. YSS Laboratories, Inc., G.R. No. 155125, December 4, 2009 .

NOVEMBER 2009

Collective bargaining agreement; exclusive bargaining status. While the parties may agree to extend the CBA’s original five-year term together with all other CBA provisions, any such amendment or term in excess of five years will not carry with it a change in the union’s exclusive collective bargaining status. By express provision of the above-quoted Article 253-A, the exclusive bargaining status cannot go beyond five years and the representation status is a legal matter not for the workplace parties to agree upon. In other words, despite an agreement for a CBA with a life of more than five years, either as an original provision or by amendment, the bargaining union’s exclusive bargaining status is effective only for five years and can be challenged within sixty (60) days prior to the expiration of the CBA’s first five years.

In the present case, the CBA was originally signed for a period of five years, i.e., from February 1, 1998 to January 30, 2003, with a provision for the renegotiation of the CBA’s other provisions at the end of the 3rd year of the five-year CBA term. Thus, prior to January 30, 2001 the workplace parties sat down for renegotiation but instead of confining themselves to the economic and non-economic CBA provisions, also extended the life of the CBA for another four months, i.e., from the original expiry date on January 30, 2003 to May 30, 2003.

As discussed above, this negotiated extension of the CBA term has no legal effect on the FVCLU-PTGWO’s exclusive bargaining representation status which remained effective only for five years ending on the original expiry date of January 30, 2003. Thus, sixty days prior to this date, or starting December 2, 2002, SANAMA-SIGLO could properly file a petition for certification election. Its petition, filed on January 21, 2003 or nine (9) days before the expiration of the CBA and of FVCLU-PTGWO’s exclusive bargaining status, was seasonably filed.

We thus find no error in the appellate court’s ruling reinstating the DOLE order for the conduct of a certification election. FVC Labor Union-Philippine Transport and General Workers Organization (FVCLU-PTGWO) Vs. Sama-samang Nagkakaisang Manggagawa sa FVC-Solidarity of Independet and General Labor Organization (SANAMA-FVC-SIGLO), G.R. No. 176249, November 27, 2009 .

Dismissal; attorney’s fees. In San Miguel Corporation v. Aballa, thr Court held that in actions for recovery of wages or where an employee was forced to litigate and thus incur expenses to protect his rights and interests, a maximum of 10% of the total monetary award by way of attorney’s fees is justifiable under Article 111 of the Labor Code; Section 8, Rule VIII of Book III of the Omnibus Rules Implementing the Labor Code; and paragraph 7, Article 2208 of the Civil Code. The award of attorney’s fees is proper and there need not be any showing that the employer acted maliciously or in bad faith when it withheld the wages. There need only be a showing that the lawful wages were not paid accordingly. Philippine Long Distance Telephone Company vs. Inocencio B. Berbano, Jr., G.R. No. 165199, November 27, 2009 .

SEPTEMBER 2009

Dismissal; abandonment . Abandonment is a form of neglect of duty, one of the just causes for an employer to terminate an employee. It is a hornbook precept that in illegal dismissal cases, the employer bears the burden of proof. For a valid termination of employment on the ground of abandonment, Lucinario must prove, by substantial evidence, the concurrence of petitioner’s failure to report for work for no valid reason and his categorical intention to discontinue employment.

Lucinario, however, failed to establish any overt act on the part of petitioner to show his intention to abandon employment. Petitioner, after being informed of his alleged shortages in collections and despite his relegation to that of company custodian, still reported for work. He later applied for a 4-day leave of absence. On his return, he discovered that his name was erased from the logbook, was refused entry into the company premises, and learned that his application for a 4-day leave was not approved. He thereupon exerted efforts to communicate with Lucinario on the status of his employment, but to no avail. These circumstances do not indicate abandonment.

That petitioner immediately filed the illegal dismissal complaint with prayer for reinstatement should dissipate any doubts that he wanted to return to work.

What thus surfaces is that petitioner was constructively dismissed. No actual dismissal might have occurred in the sense that petitioner was not served with a notice of termination, but there was constructive dismissal, petitioner having been placed in a position where continued employment was rendered impossible and unreasonable by the circumstances indicated above. Odilon L. Martinez vs. B&B Fish Broker and/or Norberto M. Lucinario, G.R. No. 179985, September 18, 2009 .

Dismissal; burden of proof . While the employer bears the burden in illegal dismissal cases to prove that the termination was for valid or authorized cause, the employee must first establish by substantial evidence the fact of dismissal from service. This petitioner failed to discharge. He, in fact, failed to refute respondent’s claim that it sent him a Violation Memorandum, which was duly received by him on April 15, 2003, and a subsequent Memorandum via registered mail, requiring him to explain his habitual tardiness on the therein indicated dates but that he failed to comply therewith.

Constructive dismissal contemplates, among other things, quitting because continued employment is rendered impossible, unreasonable or unlikely, or a demotion in rank or a diminution of pay. It clearly exists when an act of clear discrimination, insensibility or disdain by an employer becomes unbearable to the employee, leaving him with no option but to forego his continued employment. Not any of these circumstances exists to call for a ruling that petitioner was constructively dismissed. Romero Montederamos vs. Tri-Union International Corporation, G.R. No. 1767000, September 4, 2009 .

Dismissal; burden of proof. It is well-settled that in termination cases, the burden of proof rests upon the employer to show that the dismissal was for a just and valid cause and failure to discharge the same would mean that the dismissal is not justified and therefore illegal. Hence, in arguing that Sabulao abandoned his work, it is incumbent upon the petitioners to prove: (1) that the employee failed to report for work or had been absent without valid or justifiable reason; and (2) that there must have been a clear intention to sever the employer-employee relationship as manifested by some overt acts. Clearly, jurisprudence dictates that the burden of proof to show that there was unjustified refusal to go back to work rests on the employer.

The NLRC, as affirmed by the Court of Appeals, correctly found that petitioners failed to substantiate its claim that Sabulao abandoned his work. No evidence was presented to prove that Sabulao clearly intended to sever the employer-employee relationship as manifested by some overt acts. As regards petitioners’ allegation that Sabulao is a field personnel and therefore not entitled to the money claims awarded by the NLRC, suffice it to state that the issue was raised only before the Court of Appeals in contravention to the rule that questions not raised before the tribunals a quo cannot be raised for the first time on appeal. As such, it deserves no consideration by this Court. Tacloban Far East Marketing Corporation, et al. vs. The Court of Appeals, et al., G.R. No. 182320, September 11, 2009 .

Dismissal; due process . The essence of due process is simply an opportunity to be heard or, as applied to administrative proceedings, an opportunity to explain one’s side or an opportunity to seek a reconsideration of the action or ruling complained of. What the law prohibits is absolute absence of the opportunity to be heard, hence, a party cannot feign denial of due process where he had been afforded the opportunity to present his side. A formal or trial type hearing is not at all times and in all instances essential to due process, the requirements of which are satisfied where the parties are afforded fair and reasonable opportunity to explain their side of the controversy.

In the present case, petitioners were, among other things, given several written invitations to submit themselves to PLDT’s Investigation Unit to explain their side, but they failed to heed them. A hearing, which petitioners attended along with their union MKP representatives, was conducted on June 25, 2001 during which the principal witnesses to the incident were presented. Petitioners were thus afforded the opportunity to confront those witnesses and present evidence in their behalf, but they failed to do so. Rolando Placido and Edgardo Caragay vs. National Labor Relations Commission and Philippine Long Distance Telephone Company, Incorporated, G.R. No. 180888, September 18, 2009 .

Dismissal; misconduct. By sleeping on the job and leaving his work area without prior authorization, Tomada did not merely disregard company rules. Tomada, in effect, issued an open invitation for others to violate those same company rules. Indeed, considering the presence of trainees in the building and Tomada’s acts, Tomada failed to live up to his company’s reasonable

expectations. Tomada’s offenses cannot be excused upon a plea of being a “first offense,” or have not resulted in prejudice to the company in any way. No employer may rationally be expected to continue in employment a person whose lack of morals, respect and loyalty to his employer, regard for his employer’s rules, and appreciation of the dignity and responsibility of his office, has so plainly and completely been bared.

Misconduct is improper or wrong conduct. It is the transgression of some established and definite rule of action, a forbidden act, a dereliction of duty, willful in character, and implies wrongful intent and not mere error of judgment. The misconduct to be serious must be of grave and aggravated character and not merely trivial or unimportant. Such misconduct, however serious, must nevertheless be in connection with the employee’s work to constitute just cause for his separation. Thus, for misconduct or improper behavior to be a just cause for dismissal, (1) it must be serious; (2) it must relate to the performance of the employee’s duties; and (3) it must show that the employee has become unfit to continue working for the employer. Indeed, an employer may not be compelled to continue to employ such person whose continuance in the service would be patently inimical to his employer’s interest. Eduardo M. Tomada, Sr. vs. RFM Corporation-Bakery Flour Division, et al., G.R. No. 163270, September 11, 2009 .

Dismissal; redundancy . The separation of the petitioner by reason of redundancy was supported by the evidence on record. She was separated from the service after the respondent’s reorganization where her position as Administrator was declared redundant. She was served notice within the statutory period of thirty (30) days and so was the DOLE-NCR. The petitioner was assured of all the benefits under the law.

The petitioner imputes bad faith and malice on the respondent in declaring her position as Administrator redundant, but failed to present convincing proof that the respondent abused its prerogative in terminating her employment or that it was motivated by ill-will in doing so. It was a business decision arrived at in the face of financial losses being suffered by the company at the time. Miriam B. Elleccion vda. De Lecciones vs. National Labor Relations Commission, et al., G.R. No. 184735, September 17, 2009 .

Dismissal; retrenchment. The burden of proving the validity of retrenchment is on the petitioner. Evidence does not sufficiently establish that petitioner had incurred losses that would justify retrenchment to prevent further losses. The Comparative Income Statement for the year 1996 and for the months of February to June 1997 which petitioner submitted did not conclusively show that petitioner had suffered financial losses. In fact, records show that from January to July 1997, petitioner hired a total of 114 new employees assigned in the petitioner’s stores located in the different places of the country. Emcor, Incorporated vs. Ma. Lourdes D. Sienes, G.R. No. 152101, September 8, 2009 .

Dismissal; retrenchment . Retrenchment to avoid or minimize business losses is a justified ground to dismiss employees under Article 283 of the Labor Code. The employer, however, bears the burden to prove such ground with clear and satisfactory evidence, failing which the dismissal on such ground is unjustified. Bio Quest Marketing Inc. and/or Jose L. Co vs. Edmund Rey, G.R. No. 181503, September 18, 2009 .

Employee benefits; retirement. It is settled that entitlement of employees to retirement benefits must specifically be granted under existing laws, a collective bargaining agreement or employment contract, or an established employer policy. No law or collective bargaining agreement or other applicable contract, or an established company policy was existing during respondents’ employment entitling them to the P200,000 lump-sum retirement pay. Petitioner was not thus obliged to grant them such pay. Kimberly-Clark Philippines, Inc. vs. Nora Dimayuga, et al. G.R. No. 177705, September 18, 2009 .

Employee benefits; suicide. The general rule is that the employer is liable to pay the heirs of the deceased seafarer for death benefits once it is established that he died during the effectivity of his employment contract. However, the employer may be exempted from liability if he can successfully prove that the seafarer’s death was caused by an injury directly attributable to his deliberate or willful act. In sum, respondents’ entitlement to any death benefits depends on whether the evidence of the petitioners suffices to prove that the deceased committed suicide; the burden of proof rests on his

employer. Great Southern Maritime Services Corp., et al. vs. Leonila Surigao, et al., G.R. No. 183646, September 18, 2009 .

Employer-employee relationship; existence. The Contract between the Cooperative and DFI, far from being a job contracting arrangement, is in essence a business partnership that partakes of the nature of a joint venture. The rules on job contracting are, therefore, inapposite. The Court may not alter the intention of the contracting parties as gleaned from their stipulations without violating the autonomy of contracts principle under Article 1306 of the Civil Code which gives the contracting parties the utmost liberality and freedom to establish such stipulations, clauses, terms and conditions as they may deem convenient, provided they are not contrary to law, morals, good custom, public order or public policy.

Petitioners’ claim of employment relationship with the Cooperative’s herein co-respondents must be assessed on the basis of four standards, viz: (a) the manner of their selection and engagement; (b) the mode of payment of their wages; (c) the presence or absence of the power of dismissal; and (d) the presence or absence of control over their conduct. Most determinative among these factors is the so-called “control test.”

There is nothing in the records which indicates the presence of any of the foregoing elements of an employer-employee relationship.

There being no employer-employee relationship between petitioners and the Cooperative’s co-respondents, the latter are not solidarily liable with the Cooperative for petitioners’ illegal dismissal and money claims. Oldarico S. Traveño, et al. vs. Bobongon Banana Growers Multi-Purpose Cooperative, et al., G.R. No. 164205, September 3, 2009 .

Resignation. Resignation as “the voluntary act of employees who are compelled by personal reasons to disassociate themselves from their employment. It must be done with the intention of relinquishing an office, accompanied by the act of abandonment.” In this case, the evidence on record suggests that respondent did not voluntarily resign. The more logical conclusion, based on the evidence, is that respondent was then being forced or pressured to resign, which is tantamount to illegal dismissal. Casa Cebuana Incoporada, et al. vs. Ireneo P. Leuterio, G.R. No. 176040, September 4, 2009 .

Retirement. The line between voluntary and involuntary retirement is thin but it is one which this Court has drawn. Voluntary retirement cuts employment ties leaving no residual employer liability; involuntary retirement amounts to a discharge, rendering the employer liable for termination without cause. The employee’s intent is the focal point of analysis. In determining such intent, the fairness of the process governing the retirement decision, the payment of stipulated benefits, and the absence of badges of intimidation or coercion are relevant parameters.

Nothing in the records offends any of these criteria. Arsenio F. Quevedo, et al. vs. Benguet Electric Cooperative Incorporated, et al., G.R. No. 168927, September 11, 2009 .

Waiver; binding effect . Petitioners bound themselves, in individually signed contracts, to “forever release, waive and quitclaim all causes of action or claims arising from or as a consequence” of their early retirement. Petitioners concede that this blanket stipulation bars this suit. However, they seek to avoid compliance by again pleading vitiated consent. Although contracts executed in the context of employment are imbued with public interest, triggering closer scrutiny, they remain contracts binding the parties to their terms.

To excuse petitioners from complying with the terms of their waivers, they must locate their case within any of three narrow grounds: (1) the employer used fraud or deceit in obtaining the waivers; (2) the consideration the employer paid is incredible and unreasonable; or (3) the terms of the waiver are contrary to law, public order, public policy, morals or good customs or prejudicial to a third person with a right recognized by law. The preceding discussion on the voluntariness of petitioners’ retirement from service effectively removes these grounds beyond petitioners’ argumentative reach. Accordingly, petitioners, by the terms of their waivers, are barred from filing this suit. Arsenio F. Quevedo, et al. vs. Benguet Electric Cooperative Incorporated, et al., G.R. No. 168927, September 11, 2009 .

Waiver; binding effect. While quitclaims executed by employees are commonly frowned upon as being contrary to public policy and are ineffective to bar claims for the full measure of their legal rights, where the person making the waiver has done so voluntarily, with a full understanding thereof, and the consideration for the quitclaim is credible and reasonable, the transaction must be recognized as being a valid and binding undertaking. In the case at bar, Nora and Rosemarie are Accounting graduates. They have not alleged having been compelled to sign the quitclaims, nor that the considerations thereof (P1,024,113.73 for Nora and P682,721.24 for Rosemarie) are unconscionable. Kimberly-Clark Philippines, Inc. vs. Nora Dimayuga, et al. G.R. No. 177705, September 18, 2009

Waiver; union members . Going now to the question of whether respondent’s members’ individual acceptance of the award and the resulting payments made by petitioner operate as a ratification of the DOLE Secretary’s award which renders CA-G.R. SP No. 72965 moot, we find that such do not operate as a ratification of the DOLE Secretary’s award; nor a waiver of their right to receive further benefits, or what they may be entitled to under the law. The appellate court correctly ruled that the respondent’s members were merely constrained to accept payment at the time. Christmas was then just around the corner, and the union members were in no position to resist the temptation to accept much-needed cash for use during the most auspicious occasion of the year. Time and again, we have held that necessitous men are not, truly speaking, free men; but to answer a present emergency, will submit to any terms that the crafty may impose upon them.

Besides, as individual components of a union possessed of a distinct and separate corporate personality, respondent’s members should realize that in joining the organization, they have surrendered a portion of their individual freedom for the benefit of all the other members; they submit to the will of the majority of the members in order that they may derive the advantages to be gained from the concerted action of all. Since the will of the members is personified by its board of directors or trustees, the decisions it makes should accordingly bind them. Precisely, a labor union exists in whole or in part for the purpose of collective bargaining or of dealing with employers concerning terms and conditions of employment. What the individual employee may not do alone, as for example obtain more favorable terms and conditions of work, the labor organization, through persuasive and coercive power gained as a group, can accomplish better. Univeristy of Santo Tomas vs. Samahang Manggagawa ng UST (SM-UST), G.R. No. 169940, September 18, 2009 .

AUGUST 2009

Labor Law

Benefits; backwages . The issue on the proper computation of Mutuc’s backwages has been rendered moot by our decision that Mutuc was validly dismissed. Backwages is a relief given to an illegally dismissed employee. Since Mutuc’s dismissal is for an authorized cause, she is not entitled to backwages. Lowe, Inc., et al. vs. Court of Appeals and Irma Mutuc, G.R. Nos. 164813 & G.R. No. 174590, August 14, 2009 .

Benefits; service charge. Since Dusit Hotel is explicitly mandated by the Article 96 of the Labor Code to pay its employees and management their respective shares in the service charges collected, the hotel cannot claim that payment thereof to its 82 employees constitute substantial compliance with the payment of ECOLA under WO No. 9. Undoubtedly, the hotel employees’ right to their shares in the service charges collected by Dusit Hotel is distinct and separate from their right to ECOLA; gratification by the hotel of one does not result in the satisfaction of the other. Philippine Hoteliers, Inc./Dusit Hotel Nikko-Manila vs. National Union of Workers in Hotel, Restaurant, and Allied Industries (NUWHARAIN-APL-IUF) Dusit Hotel Nikko Chapter, G.R. No. 181972, August 25, 2009 .

Dismissal; illegal strike . A perusal of the Labor Arbiter’s Decision, which was affirmed in toto by the NLRC, shows that on account of the staging of the illegal strike, individual respondents were all deemed to have lost their employment, without distinction as to their respective participation.

Of the participants in the illegal strike, whether they knowingly participated in the illegal strike in the case of union officers or knowingly participated in the commission of violent acts during the illegal strike in the case of union members, the records do not indicate. While respondent Julius Vargas was

identified to be a union officer, there is no indication if he knowingly participated in the illegal strike. The Court not being a trier of facts, the remand of the case to the NLRC is in order only for the purpose of determining the status in the Union of individual respondents and their respective liability, if any. A. Soriano Aviation vs. Employees Association of A. Soriano Aviation, et al., G.R. No. 166879, August 14, 2009 .

Dismissal; misconduct . In its 14 February 2000 decision, PNB’s Administrative Adjudication Panel found Maralit guilty of serious misconduct, gross violation of bank rules and regulations, and conduct prejudicial to the best interest of the bank. Maralit violated bank policies which resulted in the return of unfunded checks amounting to P54,950,000. Accordingly, PNB dismissed Maralit from the service with forfeiture of her retirement benefits effective at the close of business hours on 31 December 1998.

PNB may rightfully terminate Maralit’s services for a just cause, including serious misconduct. Serious misconduct is improper conduct, a transgression of some established and definite rule of action, a forbidden act, or a dereliction of duty. Having been dismissed for a just cause, Maralit is not entitled to her retirement benefits. Ester B. Maralit vs. Philippine National Bank, G.R. No. 163788, August 24, 2009 .

Dismissal; negligence. Gross negligence connotes want or absence of or failure to exercise even slight care or diligence, or the total absence of care. It evinces a thoughtless disregard of consequences without exerting any effort to avoid them. To warrant removal from service, the negligence should not merely be gross, but also habitual. A single or isolated act of negligence does not constitute a just cause for the dismissal of the employee.

In JGB and Associates, Inc. v. National Labor Relations Commission, the Court further declared that gross negligence connotes want of care in the performance of one’s duties. Habitual neglect implies repeated failure to perform one’s duties for a period of time, depending upon the circumstances. Fraud and willful neglect of duties imply bad faith of the employee in failing to perform his job, to the detriment of the employer and the latter’s business. Chona Estacio and Leopoldo Manliclic vs. Pampanga I, Electric Cooperative, Inc. and Loliano E. Allas, G.R. No. 183196. August 19, 2009

Dismissal; negligence. Under Article 282 (b) of the Labor Code, negligence must be both gross and habitual to justify the dismissal of an employee. Gross negligence is characterized by want of even slight care, acting or omitting to act in a situation where there is a duty to act, not inadvertently but willfully and intentionally with a conscious indifference to consequences insofar as other persons may be affected.

In the present case, petitioner, as respondent’s Accounting Manager, failed to discharge her important duty of remitting SSS/PhilHealth contributions not once but quadruple times, resulting in respondent’s incurring of penalties totaling P18,580.41, not to mention the employees/members’ contributions being unupdated. Eden Llamas vs. Ocean Gateway Maritime and Management, Inc., G.R. No. 179293, August 14, 2009 .

Dismissal; redundancy. Redundancy exists when the service of an employee is in excess of what is reasonably demanded by the actual requirements of the business. A redundant position is one rendered superfluous by any number of factors, such as overhiring of workers, decreased volume of business, dropping of a particular product line previously manufactured by the company or phasing out of a service activity formerly undertaken by the enterprise.

For a valid implementation of a redundancy program, the employer must comply with the following requisites: (1) written notice served on both the employee and the DOLE at least one month prior to the intended date of termination; (2) payment of separation pay equivalent to at least one month pay or at least one month pay for every year of service, whichever is higher; (3) good faith in abolishing the redundant position; and (4) fair and reasonable criteria in ascertaining what positions are to be declared redundant. Lowe, Inc., et al. vs. Court of Appeals and Irma Mutuc, G.R. Nos. 164813 & G.R. No. 174590, August 14, 2009.

Dismissal; redundancy. We agree with the Labor Arbiter that Lowe employed fair and reasonable criteria in declaring Mutuc’s position redundant. Mutuc, who was hired only on 23 June 2000, did not deny that

she was the most junior of all the executives of Lowe. Mutuc also did not present contrary evidence to disprove that she was the least efficient and least competent among all the Creative Directors.

The determination of the continuing necessity of a particular officer or position in a business corporation is a management prerogative, and the courts will not interfere unless arbitrary or malicious action on the part of management is shown. It is also within the exclusive prerogative of management to determine the qualification and fitness of an employee for hiring and firing, promotion or reassignment. Indeed, an employer has no legal obligation to keep more employees than are necessary for the operation of its business. Lowe, Inc., et al. vs. Court of Appeals and Irma Mutuc, G.R. Nos. 164813 & G.R. No. 174590, August 14, 2009.

Dismissal; resignation. In termination cases, it is incumbent upon the employer to prove either the non-existence or the validity of dismissal. Inasmuch as respondents alleged petitioner’s resignation as the cause of his separation from work, respondents had the burden to prove the same. The case of the employer must stand or fall on its own merits and not on the weakness of the employee’s defense.

Resignation is the voluntary act of an employee who is in a situation where one believes that personal reasons cannot be sacrificed in favor of the exigency of the service, and one who has no other choice but to dissociate oneself from employment. It is a formal pronouncement or relinquishment of an office, with the intention of relinquishing the office accompanied by the act of relinquishment. As the intent to relinquish must concur with the overt act of relinquishment, the acts of the employee before and after the alleged resignation must be considered in determining whether, in fact, he intended to sever his employment.

In this case, we find no overt act on the part of petitioner that he was ready to sever his employment ties. Baltazar L. Payno vs. Orizon Trading Corp./ Orata Trading and Flordeliza Legaspi, G.R. No. 175345, August 19, 2009 .

Dismissal; transfer . ATI’s transfer of Bismark IV’s base from Manila to Bataan was, contrary to Aguanza’s assertions, a valid exercise of management prerogative. The transfer of employees has been traditionally among the acts identified as a management prerogative subject only to limitations found in law, collective bargaining agreement, and general principles of fair play and justice. Even as the law is solicitous of the welfare of employees, it must also protect the right of an employer to exercise what are clearly management prerogatives. The free will of management to conduct its own business affairs to achieve its purpose cannot be denied.

On the other hand, the transfer of an employee may constitute constructive dismissal “when continued employment is rendered impossible, unreasonable or unlikely; when there is a demotion in rank and/or a diminution in pay; or when a clear discrimination, insensibility or disdain by an employer becomes unbearable to the employee.”

Aguanza’s continued employment was not impossible, unreasonable or unlikely; neither was there a clear discrimination against him. Among the employees assigned to Bismark IV, it was only Aguanza who did not report for work in Bataan. Aguanza’s assertion that he was not allowed to “time in” in Manila should be taken on its face: Aguanza reported for work in Manila, where he wanted to work, and not in Bataan, where he was supposed to work. There was no demotion in rank, as Aguanza would continue his work as Crane Operator. Furthermore, despite Aguanza’s assertions, there was no diminution in pay. Gualberto Aguanza vs. Asian Terminal, Inc., et al., G.R. No. 163505, August 14, 2009 .

Jurisdiction; Secretary of Labor . In the case at bar, the Secretary of Labor correctly assumed jurisdiction over the case as it does not come under the exception clause in Art. 128(b) of the Labor Code. While petitioner Jethro appealed the inspection results and there is a need to examine evidentiary matters to resolve the issues raised, the payrolls presented by it were considered in the ordinary course of inspection. While the employment records of the employees could not be expected to be found in Yakult’s premises in Calamba, as Jethro’s offices are in Quezon City, the records show that Jethro was given ample opportunity to present its payrolls and other pertinent documents during the hearings and to rectify the violations noted during the ocular inspection. It, however, failed to do so, more particularly

to submit competent proof that it was giving its security guards the wages and benefits mandated by law.

Jethro’s failure to keep payrolls and daily time records in Yakult’s premises was not the only labor standard violation found to have been committed by it; it likewise failed to register as a service contractor with the DOLE, pursuant to Department Order No. 18-02 and, as earlier stated, to pay the wages and benefits in accordance with the rates prescribed by law. Jethro Intelligence & Security Corporation and Yakult, Inc. vs.. The Hon. Secretary of Labor and Employment, et al., G.R. No. 172537, August 14, 2009 .

Labor organization. Article 212(g) of the Labor Code defines a labor organization as “any union or association of employees which exists in whole or in part for the purpose of collective bargaining or of dealing with employers concerning terms and conditions of employment.” Upon compliance with all the documentary requirements, the Regional Office or Bureau shall issue in favor of the applicant labor organization a certificate indicating that it is included in the roster of legitimate labor organizations. Any applicant labor organization shall acquire legal personality and shall be entitled to the rights and privileges granted by law to legitimate labor organizations upon issuance of the certificate of registration. Sta. Lucia East Commercial Corporation vs. Hon. Secretary of Labor and Employment, et al., G.R. No. 162355, August 14, 2009 .

Labor organization; bargaining unit. A bargaining unit is a “group of employees of a given employer, comprised of all or less than all of the entire body of employees, consistent with equity to the employer, indicated to be the best suited to serve the reciprocal rights and duties of the parties under the collective bargaining provisions of the law.” The fundamental factors in determining the appropriate collective bargaining unit are: (1) the will of the employees (Globe Doctrine); (2) affinity and unity of the employees’ interest, such as substantial similarity of work and duties, or similarity of compensation and working conditions (Substantial Mutual Interests Rule); (3) prior collective bargaining history; and (4) similarity of employment status. Sta. Lucia East Commercial Corporation vs. Hon. Secretary of Labor and Employment, et al., G.R. No. 162355, August 14, 2009 .

Strike; illegal strike. It is hornbook principle that the exercise of the right of private sector employees to strike is not absolute (see Section 3 of Article XIII of the Constitution).

Indeed, even if the purpose of a strike is valid, the strike may still be held illegal where the means employed are illegal. Thus, the employment of violence, intimidation, restraint or coercion in carrying out concerted activities which are injurious to the right to property renders a strike illegal. And so is picketing or the obstruction to the free use of property or the comfortable enjoyment of life or property, when accompanied by intimidation, threats, violence, and coercion as to constitute nuisance.

Here, the Union members’ repeated name-calling, harassment and threats of bodily harm directed against company officers and non-striking employees and, more significantly, the putting up of placards, banners and streamers with vulgar statements imputing criminal negligence to the company, which put to doubt reliability of its operations, come within the purview of illegal acts under Art. 264 of the Labor Code and jurisprudence. A. Soriano Aviation vs. Employees Association of A. Soriano Aviation, et al., G.R. No. 166879, August 14, 2009.

JULY 2009

Labor Law

Dismissal; loss of confidence. Loss of confidence applies only to cases involving employees who occupy positions of trust and confidence, or to those situations where the employee is routinely charged with the care and custody of the employer’s money or property. To be a valid ground for an employee’s dismissal, loss of trust and confidence must be based on a willful breach. A breach is willful if it is done intentionally, knowingly and purposely, without justifiable excuse.

In dismissing an employee on the ground of loss of confidence, it is sufficient that the employer has a reasonable ground to believe, based on clearly established facts, that the employee is responsible for

the misconduct and the nature of his participation renders him unworthy of the trust and confidence demanded by his position. If the employer has ample reason to distrust the employee, the labor tribunal cannot justly deny the former the authority to dismiss the latter. Renita Del Rosario, et al. vs. Makati Cinema Square Corporation, G.R. No. 170014. July 3, 2009 .

Dismissal; loss of confidence. To be a valid ground for dismissal, loss of trust and confidence must be based on a willful breach of trust and founded on clearly established facts. A breach is willful if it is done intentionally, knowingly and purposely, without justifiable excuse, as distinguished from an act done carelessly, thoughtlessly, heedlessly or inadvertently. It must rest on substantial grounds and not on the employer’s arbitrariness, whims, caprices or suspicion; otherwise, the employee would eternally remain at the mercy of the employer. Such ground of dismissal has never been intended to afford an occasion for abuse because of its subjective nature. Davao Contractors Development Cooperative (DACODECO), represented by Chairman of the Board Engr. L. Chavez vs. Marilyn A. Pasawa, G.R. No. 172174, July 9, 2009 .

Dismissal; probationary employee. Under Article 281 of the Labor Code, a probationary employee can be legally dismissed either: (1) for a just cause; or (2) when he fails to qualify as a regular employee in accordance with the reasonable standards made known to him by the employer at the start of the employment. Nonetheless, the power of the employer to terminate the services of an employee on probation is not without limitations. First, this power must be exercised in accordance with the specific requirements of the contract. Second, the dissatisfaction on the part of the employer must be real and in good faith, not feigned so as to circumvent the contract or the law. Third, there must be no unlawful discrimination in the dismissal. In termination cases, the burden of proving just or valid cause for dismissing an employee rests on the employer.

Here, petitioner did not present proof that respondent was duly notified, at the time of her employment, of the reasonable standards she needed to comply with for her continued employment. Davao Contractors Development Cooperative (DACODECO), represented by Chairman of the Board Engr. L. Chavez vs. Marilyn A. Pasawa, G.R. No. 172174, July 9, 2009 .

Employee benefits; compensable illness . In any determination of compensability, the nature and characteristics of the job are as important as raw medical findings and a claimant’s personal and social history. This is a basic legal reality in workers’ compensation law.

What the law requires is a reasonable work connection and not direct causal relation. Probability, not the ultimate degree of certainty, is the test of proof in compensation proceedings. For, in interpreting and carrying out the provisions of the Labor Code and its Implementing Rules and Regulations, the primordial and paramount consideration is the employee’s welfare. To safeguard the worker’s rights, any doubt on the proper interpretation and application must be resolved in favor of labor. Government Service Insurance System vs. Salvador A. De Castro, G.R. No. 185035, July 15, 2009 .

Employee benefits; retirement. Retirement is the result of a bilateral act of the parties, a voluntary agreement between the employer and the employee whereby the latter, after reaching a certain age, agrees to sever his or her employment with the former. Retirement is provided for under Article 287 of the Labor Code, as amended by Republic Act No. 7641, or is determined by an existing agreement between the employer and the employee.

In this case, respondent offered the Special Separation Incentive Program (SSIP) to overhaul the bank structure and to allow it to effectively compete with local peer and foreign banks. SSIP was not compulsory on employees. Employees who wished to avail of the SSIP were required to accomplish a form for availment of separation benefits under the SSIP and to submit the accomplished form to the Personnel Administration and Industrial Relations Division (PAIRD) for approval.

Petitioner voluntarily availed of the SSIP. Marcelino A. Magdadaro vs. Philippine National Bank, G.R. No. 166198, July 17, 2009 .

Employee benefits; salary increase . It is a familiar and fundamental doctrine in labor law that the collective bargaining agreement (CBA) is the law between the parties and they are obliged to comply

with its provisions. If the terms of a contract, in this case the CBA, are clear and leave no doubt upon the intention of the contracting parties, the literal meaning of their stipulations shall control.

A reading of the above-quoted provision of the CBA shows that the parties agreed that 80% of the TIP or at the least the amount of P1,500 is to be allocated for individual salary increases.

The CBA does not speak of any other benefits or increases which would be covered by the employees’ share in the TIP, except salary increases. University of San Agustin, Inc. vs. University of San Agustin Employees Union-FFW, G .R. No. 177594, July 23, 2009 .

Employee benefits; seamen. The terms and conditions of a seafarer’s employment is governed by the provisions of the contract he signs at the time he is hired. But unlike that of others, deemed written in the seafarer’s contract is a set of standard provisions set and implemented by the POEA, called the Standard Terms and Conditions Governing the Employment of Filipino Seafarers on Board Ocean-Going Vessels, which are considered to be the minimum requirements acceptable to the government for the employment of Filipino seafarers on board foreign ocean-going vessels. Thus, the issue of whether petitioner Nisda can legally demand and claim disability benefits from respondents Sea Serve and ADAMS for an illness suffered is best addressed by the provisions of his POEA-SEC, which incorporated the Standard Terms and Conditions Governing the Employment of Filipino Seafarers on Board Ocean-Going Vessels. When petitioner Nisda was employed on 7 August 2001, it was the 2000 Amended Standard Terms and Conditions Governing the Employment of Filipino Seafarers on Board Ocean-Going Vessels (hereinafter referred to simply as Amended Standard Terms and Conditions for brevity) that applied and were deemed written in or appended to his POEA-SEC. Carlos N. Nisda vs. Sea Serve Maritime Agency, et al., G.R. No. 179177, July 23, 2009 .

Employee benefits; service award . Respondent’s service award under Article 87 of the Saudi Labor Law has already been paid. The severance pay received by respondent was his service award. LWV Construction Corporation vs. Marcelo B. Dupo, G.R. No. 172342, July 13, 2009 .

Employees; project employee. The principal test for determining whether a particular employee is a project employee or a regular employee is whether the project employee was assigned to carry out a specific project or undertaking, the duration and scope of which were specified at the time the employee is engaged for the project. “Project” may refer to a particular job or undertaking that is within the regular or usual business of the employer, but which is distinct and separate and identifiable as such from the undertakings of the company. Such job or undertaking begins and ends at determined or determinable times.

Here, the specific projects for which respondent was hired and the periods of employment were specified in his employment contracts. The services he rendered, the duration and scope of each employment are clear indications that respondent was hired as a project employee. Alcatel Philippines, Inc. vs. Rene R. Relos, G.R. No. 164315, July 3, 2009 .

Juri sdiction; Regional Director . Respondent contested the findings of the labor inspector during and after the inspection and raised issues the resolution of which necessitated the examination of evidentiary matters not verifiable in the normal course of inspection. Hence, the Regional Director was divested of jurisdiction and should have endorsed the case to the appropriate Arbitration Branch of the NLRC. Considering, however, that an illegal dismissal case had been filed by petitioners wherein the existence or absence of an employer-employee relationship was also raised, the CA correctly ruled that such endorsement was no longer necessary. Victor Meteoro, et al. vs. Creative Creatures, Inc., G.R. No. 171275. July 13, 2009

Labor claim; deed of release . As a rule, deeds of release or quitclaim cannot bar employees from demanding benefits to which they are legally entitled or from contesting the legality of their dismissal. The acceptance of those benefits would not amount to estoppel. Furthermore, there is a gross disparity between the amount actually received by petitioner as compared to the amount owing him as initially computed by VA Calipay. The amount of the settlement is indubitably unconscionable; hence, ineffective to bar petitioner from claiming the full measure of his legal rights. In any event, the Supreme Court deemed it appropriate that the amount he received as consideration for signing the quitclaim be

deducted from his monetary award. Rafael Rondina vs. Court of Appeals former special 19th Division, Unicraft Industries International Corp., Inc. Robert Dino, Cristina Dino, Michael Lloyd Dino, Allan Dino and Mylene June Dino, G.R. No. 172212, July 9, 2009 .

Labor claim; liability of corporate officers. To hold a director personally liable for the debts of the corporation, and thus pierce the veil of corporate fiction, the bad faith or wrongdoing of the director must be established clearly and convincingly. Bad faith is never presumed. Bad faith does not connote bad judgment or negligence. Bad faith imports a dishonest purpose. Bad faith means breach of a known duty through some ill motive or interest. Bad faith partakes of the nature of fraud. Rafael Rondina vs. Court of Appeals former special 19th Division, Unicraft Industries International Corp., Inc. Robert Dino, Cristina Dino, Michael Lloyd Dino, Allan Dino and Mylene June Dino, G.R. No. 172212, July 9, 2009 .

Strike; illegal strike. It is undisputed that the notice of strike was filed by the union without attaching the counter-proposal of the company. This, according to petitioners and the labor arbiter, made the ensuing strike of respondents illegal because the notice of strike of the union was defective.

The Implementing Rules use the words “as far as practicable.” In this case, attaching the counter-proposal of the company to the notice of strike of the union was not practicable. It was absurd to expect the union to produce the company’s counter-proposal which it did not have. One cannot give what one does not have. Indeed, compliance with the requirement was impossible because no counter-proposal existed at the time the union filed a notice of strike. The law does not exact compliance with the impossible. Nemo tenetur ad impossibile.

Another error committed by the labor arbiter was his declaration that respondents, as union officers, automatically severed their employment with the company due to the alleged illegal strike. In the first place, there was no illegal strike. Moreover, it is hornbook doctrine that a mere finding of the illegality of the strike should not be automatically followed by the wholesale dismissal of the strikers from employment. Club Filipino, Inc. and Atty. Roberto F. De Leon vs. Benjamin Bautista, et al., G.R. No. 168406, July 13, 2009 .

Union; check-off. Article 222(b) of the Labor Code, as amended, prohibits the payment of attorney’s fees only when it is effected through forced contributions from the employees from their own funds as distinguished from union funds. Hence, the general rule is that attorney’s fees, negotiation fees, and other similar charges may only be collected from union funds, not from the amounts that pertain to individual union members. As an exception to the general rule, special assessments or other extraordinary fees may be levied upon or checked off from any amount due an employee for as long as there is proper authorization by the employee.

A check-off is a process or device whereby the employer, on agreement with the Union, recognized as the proper bargaining representative, or on prior authorization from the employees, deducts union dues or agency fees from the latter’s wages and remits them directly to the Union. Its desirability in a labor organization is quite evident. The Union is assured thereby of continuous funding. The system of check-off is primarily for the benefit of the Union and, only indirectly, for the individual employees.

Here, the requisites for a valid levy and check-off of special assessments, laid down by Article 241(n) and (o), respectively, of the Labor Code, as amended, have not been complied with in the case at bar. To recall, these requisites are: (1) an authorization by a written resolution of the majority of all the union members at the general membership meeting duly called for the purpose; (2) secretary’s record of the minutes of the meeting; and (3) individual written authorization for check-off duly signed by the employee concerned. Eduardo J. Mariño, Jr. et al. vs. Gil Y. Gamilla, et al., G.R. No. 149763, July 7, 2009 .

JUNE 2009

Labor Law

Diminution of benefits; company practice . To be considered a company practice, the giving of the benefits should have been done over a long period of time, and must be shown to have been consistent and deliberate. The test or rationale of this rule on long practice requires an indubitable showing that

the employer agreed to continue giving the benefits knowing fully well that said employees are not covered by the law requiring payment thereof.

With regard to the length of time the company practice should have been exercised to constitute voluntary employer practice which cannot be unilaterally withdrawn by the employer, jurisprudence has not laid down any hard and fast rule. In the case of Davao Fruits Corporation v. Associated Labor Unions, the company practice of including in the computation of the 13th-month pay the maternity leave pay and cash equivalent of unused vacation and sick leave lasted for six (6) years. In another case, Tiangco v. Leogardo, Jr., the employer carried on the practice of giving a fixed monthly emergency allowance from November 1976 to February 1980, or three (3) years and four (4) months. While in Sevilla Trading v. Semana, the employer kept the practice of including non-basic benefits such as paid leaves for unused sick leave and vacation leave in the computation of their 13th-month pay for at least two (2) years. In all these cases, the Supreme Court held that the grant of these benefits has ripened into company practice or policy which cannot be peremptorily withdrawn. The common denominator in these cases appears to be the regularity and deliberateness of the grant of benefits over a significant period of time. Metropolitan Bank and Trust Company vs. National Labor Relations Commission, Felipe A. Patag and Bienvenido C. Flora, G.R. No. 152928, June 18, 2009 .

Compensable illness . A government employee, who suffers complete and permanent loss of sight in one eye, is entitled to income benefit from the GSIS beginning the first month of said employee’s disability, but no longer than the maximum period of 25 months. Government Service Insurance System vs. Jaime K. Ibarra, G.R. No. 172925, June 18, 2009 .

Compensable illness . Although the Court commiserates with petitioner’s sufferings, the Court cannot close its eyes to the need to ensure that the workmen’s trust fund is protected from depletion due to claims for illnesses which may not be truly work-related. Rodolfo B. Arceño Vs. Government Service Insurance System, G.R. No. 162374, June 18, 2009 .

Downsizing. Retrenchment is the reduction of work personnel usually due to poor financial returns, aimed to cut down costs for operation particularly on salaries and wages. Redundancy, on the other hand, exists where the number of employees is in excess of what is reasonably demanded by the actual requirements of the enterprise. Both are forms of downsizing and are often resorted to by the employer during periods of business recession, industrial depression, or seasonal fluctuations, and during lulls in production occasioned by lack of orders, shortage of materials, conversion of the plant for a new production program, or introduction of new methods or more efficient machinery or automation. Retrenchment and redundancy are valid management prerogatives, provided they are done in good faith and the employer faithfully complies with the substantive and procedural requirements laid down by law and jurisprudence.

For a valid retrenchment, the following requisites must be complied with: (1) the retrenchment is necessary to prevent losses and such losses are proven; (2) written notice to the employees and to the DOLE at least one month prior to the intended date of retrenchment; and (3) payment of separation pay equivalent to one-month pay or at least one-half month pay for every year of service, whichever is higher.

In case of redundancy, the employer must prove that: (1) a written notice was served on both the employees and the DOLE at least one month prior to the intended date of retrenchment; (2) separation pay equivalent to at least one month pay or at least one month pay for every year of service, whichever is higher, has been paid; (3) good faith in abolishing the redundant positions; and (4) adoption of fair and reasonable criteria in ascertaining which positions are to be declared redundant and accordingly abolished.

It is the employer who bears the onus of proving compliance with these requirements, retrenchment and redundancy being in the nature of affirmative defenses. Otherwise, the dismissal is not justified. Hotel Enterprises of the Philippines, Inc., etc. vs. Samahan ng mga Manggagawa sa Hyatt-National Union of Workers in the Hotel Restaurant, etc., G.R. No. 165756, June 5, 2009 .

Employer-employee relationship. There existed no employer-employee relationship between the parties. De Raedt is an independent contractor, who was engaged by SGV to render services to SGV’s client TMI, and ultimately to DA on the CECAP project, regarding matters in the field of her special knowledge and training for a specific period of time. Unlike an ordinary employee, De Raedt received retainer fees and benefits such as housing and subsistence allowances and medical insurance. De Raedt’s services could be terminated on the ground of end of contract between the DA and TMI, and not on grounds under labor laws. Though the end of the contract between the DA and TMI was not the ground for the withdrawal of De Raedt from the CECAP, De Raedt was disengaged from the project upon the instruction of SGV’s client, TMI. Most important of all, SGV did not exercise control over the means and methods by which De Raedt performed her duties as Sociologist. SGV did impose rules on De Raedt, but these were necessary to ensure SGV’s faithful compliance with the terms and conditions of the Sub-Consultancy Agreement it entered into with TMI. Sycip, Gorres, Velayo, & Company vs. Carol De Raedt, G.R. No. 161366, June 16, 2009 .

Ground for dismissal; abandonment. The rule is that the burden of proof lies with the employer to show that the dismissal was for a just cause. In the present case, the petitioner claims that there was no illegal dismissal since the respondent abandoned his job. The petitioner points out that it wrote the respondent various memoranda requiring him to explain why he incurred absences without leave, and requiring him as well to report for work; the respondent, however, never bothered to reply in writing.

In evaluating a charge of abandonment, the jurisprudential rule is that abandonment is a matter of intention that cannot be lightly presumed from equivocal acts. To constitute abandonment, two elements must concur: (1) the failure to report for work or absence without valid or justifiable reason, and (2) a clear intent,manifested through overt acts, to sever the employer-employee relationship. The employer bears the burden of showing a deliberate and unjustified refusal by the employee to resume his employment without any intention of returning. We agree with the CA that the petitioner failed to prove the charge of abandonment. Pentagon Steel Corporation vs. Court of Appeals, et al., G.R. No. 174141, June 26, 2009 .

Ground for dismissal; gross negligence. Respondent’s actions, at their worse, reveal his negligence, but said negligence can hardly be deemed gross and habitual, as to constitute a just ground for his dismissal under Article 282(b) of the Labor Code.

Gross negligence under Article 282 of the Labor Code connotes want of care in the performance of one’s duties, while habitual neglect implies repeated failure to perform one’s duties for a period of time, depending upon the circumstances. Gross negligence has been defined as the want or absence of even slight care or diligence as to amount to a reckless disregard of the safety of person or property. It evinces a thoughtless disregard of consequences without exerting any effort to avoid them. To constitute a just cause for termination of employment, the neglect of duties must not only be gross but habitual as well. The single or isolated act of negligence does not constitute a just cause for the dismissal of the employee. AMA Computer College-East Rizal, et al. vs. Allan Raymond R. Ignacio, G.R. No. 178520. June 23, 2009 .

Ground for dismissal; gross negligence . Gross negligence is characterized by want of even slight care, acting or omitting to act in a situation where there is a duty to act, not inadvertently but willfully and intentionally with a conscious indifference to consequences insofar as other persons may be affected.

Mateo was undisputedly negligent when he left the motorcycle along Burke Street in Escolta, Manila without locking it despite clear, specific instructions to do so. His argument that he stayed inside the LBC office for only three to five minutes was of no moment. On the contrary, it only proved that he did not exercise even the slightest degree of care during that very short time. Mateo deliberately did not heed the employer’s very important precautionary measure to ensure the safety of company property. Regardless of the reasons advanced, the exact evil sought to be prevented by LBC (in repeatedly directing its customer associates to lock their motorcycles) occurred, resulting in a substantial loss to LBC. LBC Express Metro Manila, Inc. and Lorenzo A. Niño vs. James Mateo, G.R. No. 168215, June 9, 2009 .

Ground for dismissal; lost of confidence. Recent decisions of this Court have distinguished the treatment of managerial employees from that of the rank-and-file personnel,insofar as the application of the doctrine of loss of trust and confidence is concerned. Thus, 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, the mere existence of a basis for believing that such employee has breached the trust of his employer would suffice for his dismissal. Hence, in the case of managerial employees, proof beyond reasonable doubt is not required. It is sufficient that there is some basis for the employer’s loss of trust and confidence, such as when the employer has reasonable ground to believe that the employee concerned is responsible for the purported misconduct, and the nature of his participation therein renders him unworthy of the trust and confidence demanded of his position. Nonetheless, the evidence must be substantial and must establish clearly and convincingly the facts on which the loss of confidence rests and not on the employer’s arbitrariness, whims, and caprices or suspicion. Triumph International (PHILS.), Inc., vs. Ramon L. Apostol, et al., G.R. No. 164423, June 16, 2009 .

Ground for dismissal; loss of confidence. To be a valid ground for dismissal, loss of trust and confidence must be based on a willful breach of trust and founded on clearly established facts. A breach is willful if it is done intentionally, knowingly and purposely, without justifiable excuse, as distinguished from an act done carelessly, thoughtlessly, heedlessly or inadvertently. It must rest on substantial grounds and not on the employer’s arbitrariness, whims, caprices or suspicion; otherwise, the employee would eternally remain at the mercy of the employer. Further, the act complained of must be work-related and must show that the employee concerned is unfit to continue working for the employer. Sarabia Optical and Vivian Sarabia-Orn vs. Jeanet B. Camacho, G.R. No. 155502, June 18, 2009 .

Ground for dismissal; loss of confidence. Nissan failed to prove that Tagulao and Serrano were responsible for the loss of two rolls of tint. The records of the case show that there was a discrepancy between the dates of pick up and delivery as alleged by Nissan and as alleged by Tagulao and Serrano. Even Catudio, Nissan’s employee, stated that she changed the dates on the delivery receipt of the two rolls of tint on the instruction of her boss.

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. The burden of proof of dismissal rests entirely upon the employer. In the present case, Nissan illegally dismissed Tagulao and Serrano because Nissan failed to prove that Tagulao and Serrano were terminated for a valid cause. Tagulao and Serrano are thus entitled to reinstatement and to receive backwages. Nissan North Edsa Balintawak, Quezon City vs. Angelito Serrano, Jr. and Edwin Tagulao, G.R. No. 162538, June 4, 2009

Ground for dismissal; loss of confidence . The first requisite for dismissal on the ground of loss of trust and confidence is that the employee concerned must be one holding a position of trust and confidence.

The second requisite of terminating an employee for loss of trust and confidence is that there must be an act that would justify the loss of trust and confidence. To be a valid cause for dismissal, the loss of confidence must be based on a willful breach of trust and founded on clearly established facts.

We find that it was not established that respondent used her authority to influence her subordinates to stage a “no work day”; and assuming that she performed this act as alleged by petitioners, it does not satisfy the jurisprudential requirements for valid termination due to loss of trust and confidence.

Loss of trust and confidence stems from a breach of trust founded on a dishonest, deceitful or fraudulent act. In the case at bar, respondent did not commit any act which was dishonest or deceitful. She did not use her authority as the Administration Manager to misappropriate company property nor did she abuse the trust reposed in her by petitioners with respect to her responsibility to implement company rules. The most that can be attributed to respondent is that she influenced a single subordinate, without exerting any force or making any threats, not to report to work. This does not constitute dishonest or deceitful conduct which would justify the conclusion of loss of trust and confidence. M+W Zander Philippines, Inc. and Rolf Wiltschek vs. Trinidad M. Enriquez, G.R. No. 169173, June 5, 2009 .

Grounds for dismissal; serious misconduct. Under the circumstances, our conclusion can only be for Salon’s dismissal for two counts of valid causes – i.e., for serious violation of TIP’s Memorandum No. P-66, for unauthorized selling of examination papers, and for serious misconduct, for falsifying Manalo’s grade and violating the grading rules under the Manual of Regulations for Private Schools. Technological Institute of the Philippines Teachers and Employees Organization and its member Magdalena T. Salon vs. the Honorable Court of Appeals, et al., G.R. No. 158703, June 26, 2009.

Ground for dismissal; willful disobedience. Willful disobedience of the employer’s lawful orders, as a just cause for dismissal of an employee, requires the concurrence of two (2) elements: (1) the employee’s assailed conduct must have been willful, i.e., characterized by a wrongful and perverse attitude; and (2) the order violated must have been reasonable, lawful, made known to the employee, and must pertain to the duties which he had been engaged to discharge.

Gilles’ resignation from CBI and sudden departure from India was not approved by SKI. When he asked the company’s permission to return to Manila, the management instructed him to stay in India until a suitable replacement was found. He knew of the critical stage of the Project due to the accelerated period of its completion. Thus, when he left the Project, despite the clear and lawful instructions of the management for him to stay, his act constituted willful disobedience and gross neglect of duty under Article 282 of the Labor Code.

Gilles’ departure from India, despite the instruction of SKI for him to stay, was impelled by the financial difficulties he encountered thereat. The money given to him before he left for India was already spent. Rickie Sarque, the Chief Accountant of SKI, admitted on the witness stand that Gilles was paid his salaries for the 3 ½ months when he was already back in Manila. Added to this were the problems he encountered due to the acceleration of the job completion period, the obligations he had to meet at home for his aged mother at that time, now deceased, and the relatives who needed his financial support. Clearly, Gilles had a valid reason to leave India.

SKI’s failure to pay Gilles’ salary on time was intolerable. For neglecting its duties as an employer, SKI may, thus, be considered to have acted in bad faith. It may be deemed as utter disregard by SKI of the welfare and well-being of its employee, especially at a time when he was far away from home.

We, therefore, find that Gilles was constructively dismissed from employment. Constructive dismissal exists when the employee involuntarily resigns due to the harsh, hostile, and unfavorable conditions set by the employer. It arises when there is clear discrimination, insensibility, or disdain by an employer and this becomes unbearable to the employee.

Invariably, the law recognizes and resolves such a situation in favor of the employees in order to protect their rights from the coercive acts of the employer. Resignation contemplates a voluntary act; thus, an employee who is forced to relinquish his position due to the employer’s unfair or unreasonable treatment is deemed to have been illegally terminated or discharged. The test of constructive dismissal is whether a reasonable person in the employee’s position would have felt compelled to give up his position under the circumstances. Bienvenido C. Gilles vs. Court of Appeals, Schema Konsult and Edgardo Abores, G.R. No. 149273, June 5, 2009 .

Illegal dismissal; attorney’s fees. aAtorney’s fees may be awarded only when the employee is illegally dismissed in bad faith and is compelled to litigate or incur expenses to protect his rights by reason of the unjustified acts of his employer. In the case at bar, respondent’s unjustified and unwarranted dismissal prompted her to engage the professional services of a counsel and she is thus entitled to an award of attorney’s fees. M+W Zander Philippines, Inc. and Rolf Wiltschek vs. Trinidad M. Enriquez, G.R. No. 169173, June 5, 2009 .

Illegal dismissal; moral damages. There is sufficient basis to award moral damages and attorney’s fees to respondent. We have consistently ruled that in illegal dismissal cases, moral damages are recoverable only where the dismissal of the employee was attended by bad faith or fraud, or constituted an act oppressive to labor, or was done in a manner contrary to morals, good customs or public policy. Such an award cannot be justified solely upon the premise that the employer fired his employee without just cause or due process. Additional facts must be pleaded and proven to warrant the grant of moral

damages under the Civil Code, i.e., that the act of dismissal was attended by bad faith or fraud, or constituted an act oppressive to labor, or was done in a manner contrary to morals, good customs or public policy; and, of course, that social humiliation, wounded feelings, grave anxiety, and similar injury resulted therefrom.

In previous cases where moral damages and attorney’s fees were awarded, the manner of termination was done in a humiliating and insulting manner, such as in the case of Balayan Colleges v. National Labor Relations Commission where the employer posted copies of its letters of termination to the teachers inside the school campus and it also furnished copies to the town mayor and Parish Priest of their community for the purpose of maligning the teachers’ reputation. So also in the case of Chiang Kai Shek School v. Court of Appeals, this Court awarded moral damages to a teacher who was flatly, and without warning or a formal notice, told that she was dismissed.

In the case at bar, we see it fit to award moral damages to respondent because the manner in which respondent was treated upon petitioners’ suspicion of her involvement in drafting and in circulating the letter of appeal and the alleged staging of the “no work day” is contrary to good morals because it caused unnecessary humiliation to respondent. M+W Zander Philippines, Inc. and Rolf Wiltschek vs. Trinidad M. Enriquez, G.R. No. 169173, June 5, 2009 .

Illegal dismissal; liability of corporate officer. The general manager of a corporation should not be made personally answerable for the payment of an illegally dismissed employee’s monetary claims arising from the dismissal unless he had acted maliciously or in bad faith in terminating the services of the employee. The employer corporation has a separate and distinct personality from its officers who merely act as its agents.

The exception noted is where the official “had acted maliciously or in bad faith,” in which event he may be made personally liable for his own act. That exception is not applicable in the case at bar, because it has not been proven that Wiltschek was impleaded in his capacity as General Manager of petitioner corporation and there appears to be no evidence on record that he acted maliciously or in bad faith in terminating the services of respondent. His act, therefore, was within the scope of his authority and was a corporate act for which he should not be held personally liable for. M+W Zander Philippines, Inc. and Rolf Wiltschek vs. Trinidad M. Enriquez, G.R. No. 169173, June 5, 2009 ; see also Bienvenido C. Gilles vs. Court of Appeals, Schema Konsult and Edgardo Abores, G.R. No. 149273, June 5, 2009 .

Illegal dismissal; procedural due process. Procedural due process in the dismissal of employees requires notice and hearing. The employer must furnish the employee two written notices before termination may be effected. The first notice apprises the employee of the particular acts or omissions for which his dismissal is sought, while the second notice informs the employee of the employer’s decision to dismiss him. The requirement of a hearing, on the other hand, is complied with as long as there was an opportunity to be heard, and not necessarily that an actual hearing was conducted. Herminigildo Inguillom, et al. vs. First Philippine Scales, Inc., et al., G.R. No. 165407, June 5, 2009 .

Illegal dismissal; reinstatement . The respondent’s illegal dismissal carries the legal consequence defined under Article 279 of the Labor Code: the illegally dismissed employee is entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages, inclusive of allowances and other benefits or their monetary equivalent, computed from the time his compensation was withheld from him up to the time of his actual reinstatement. The imposition of this legal consequence is a matter of law that allows no discretion on the part of the decision maker, except only to the extent recognized by the law itself as expressed in jurisprudence. Pentagon Steel Corporation vs. Court of Appeals, et al., G.R. No. 174141, June 26, 2009 .

Reinstatement; union shop steward. A shop steward leads to the conclusion that it is a position within the union, and not within the company. A shop steward is appointed by the union in a shop, department, or plant and serves as representative of the union, charged with negotiating and adjustment of grievances of employees with the supervisor of the employer. He is the representative of the union members in a building or other workplace. Black’s Law Dictionary defines a shop steward as a union official elected to represent members in a plant or particular department. His duties include

collection of dues, recruitment of new members and initial negotiations for the settlement of grievances.

A judgment of reinstatement of the petitioner to the position of union Shop Steward would have no practical legal effect since it cannot be enforced. Based on the requirements imposed by law and the APCWU-ATI CBA, and in the nature of things, the subsequent separation of the petitioner from employment with respondent ATI has made his reinstatement to union Shop Steward incapable of being enforced. Teodoro S. Miranda, Jr. vs. Asian Terminals, Inc. and Court of Appeals, G.R. No. 174316, June 23, 2009 .

Resignation; separation pay. No provision in the Labor Code grants separation pay to voluntarily resigning employees. Separation pay may be awarded only in cases when the termination of employment is due to (a) installation of labor-saving devices, (b) redundancy, (c) retrenchment, (d) closing or cessation of business operations, (e) disease of an employee and his continued employment is prejudicial to himself or his co-employees, or (f) when an employee is illegally dismissed but reinstatement is no longer feasible. In fact, the rule is that an employee who voluntarily resigns from employment is not entitled to separation pay, except when it is stipulated in the employment contract or collective bargaining agreement (CBA), or it is sanctioned by established employer practice or policy.

Here, the primary consideration that impelled respondent to tender his resignation letter was the assurance that he would be paid his separation pay. It is thus unlikely for someone to just leave his employer for whom he has worked for twelve (12) years without any expectation of financial assistance. Hence, the former employee is entitled to receive separation pay. “J” Marketing Corporation, represented by its Branch Manager Elmundo Dador, G.R. No. 163924, June 18, 2009 .

Strike; requisites for validity. The requisites for a valid strike are: (a) a notice of strike filed with the DOLE 30 days before the intended date thereof or 15 days in case of ULP; (b) a strike vote approved by a majority of the total union membership in the bargaining unit concerned obtained by secret ballot in a meeting called for that purpose; and (c) a notice to the DOLE of the results of the voting at least seven (7) days before the intended strike. The requirements are mandatory and failure of a union to comply therewith renders the strike illegal. Hotel Enterprises of the Philippines, Inc., etc. vs. Samahan ng mga Manggagawa sa Hyatt-National Union of Workers in the Hotel Restaurant, etc., G.R. No. 165756, June 5, 2009 .

Union security. “Union security” is a generic term, which is applied to and comprehends “closed shop,” “union shop,” “maintenance of membership” or any other form of agreement which imposes upon employees the obligation to acquire or retain union membership as a condition affecting employment. There is union shop when all new regular employees are required to join the union within a certain period as a condition for their continued employment. There is maintenance of membership shop when employees, who are union members as of the effective date of the agreement, or who thereafter become members, must maintain union membership as a condition for continued employment until they are promoted or transferred out of the bargaining unit or the agreement is terminated. A closed-shop, on the other hand, may be defined as an enterprise in which, by agreement between the employer and his employees or their representatives, no person may be employed in any or certain agreed departments of the enterprise unless he or she is, becomes, and, for the duration of the agreement, remains a member in good standing of a union entirely comprised of or of which the employees in interest are a part.

In terminating the employment of an employee by enforcing the Union Security Clause, the employer needs only to determine and prove that: (1) the union security clause is applicable; (2) the union is requesting for the enforcement of the union security provision in the CBA; and (3) there is sufficient evidence to support the union’s decision to expel the employee from the union or company. Herminigildo Inguillom, et al. vs. First Philippine Scales, Inc., et al., G.R. No. 165407, June 5, 2009 .

MAY 2009

Labor Law

Abandonment. It is well settled that abandonment as a just and valid ground for dismissal requires the deliberate and unjustified refusal of the employee to return for work. Two elements must be present, namely: (1) the failure to report for work or absence without valid or justifiable reason, and (2) a clear intention to sever the employer-employee relationship. The second element is more determinative of the intent and must be evinced by overt acts. Mere absence, not being sufficient, the burden of proof rests upon the employer to show that the employee clearly and deliberately intended to discontinue her employment without any intention of returning. In Samarca v. Arc-Men Industries, Inc, the Supreme Court held that abandonment is a matter of intention and cannot lightly be presumed from certain equivocal acts.

To constitute abandonment, there must be clear proof of deliberate and unjustified intent to sever the employer-employee relationship. Clearly, the operative act is still the employee’s ultimate act of putting an end to his employment. However, an employee who takes steps to protest her layoff cannot be said to have abandoned her work because a charge of abandonment is totally inconsistent with the immediate filing of a complaint for illegal dismissal, more so when it includes a prayer for reinstatement. When Eleonor filed the illegal dismissal complaint, it totally negated petitioner’s theory of abandonment.

Also, to effectively dismiss an employee for abandonment, the employer must comply with the due process requirement of sending notices to the employee. In Brahm Industries, Inc. vs. NLRC, the Supreme Court ruled that this requirement is not a mere formality that may be dispensed with at will. Its disregard is a matter of serious concern since it constitutes a safeguard of the highest order in response to man’s innate sense of justice. Petitioner was not able to send the necessary notice requirement to Eleonor. Petitioner’s belated claim that it was not able to send the notice of infraction prior to the filing of the illegal dismissal case cannot simply unacceptable. Based on the foregoing, Eleonor did not abandon her work. South Davao Development Company, Inc., et al. vs. Sergio L. Gamo, et al., G.R. No. 171814, May 8, 2009.

Appeal to DOLE Secretary; appeal bond. The purpose of an appeal bond is to ensure, during the period of appeal, against any occurrence that would defeat or diminish recovery by the aggrieved employees under the judgment if subsequently affirmed. The Deed of Assignment in the instant case, like a cash or surety bond, serves the same purpose. First, the Deed of Assignment constitutes not just a partial amount, but rather the entire award in the appealed Order. Second, it is clear from the Deed of Assignment that the entire amount is under the full control of the bank, and not of petitioner, and is in fact payable to the DOLE Regional Office, to be withdrawn by the same office after it had issued a writ of execution. For all intents and purposes, the Deed of Assignment in tandem with the Letter Agreement and Cash Voucher is as good as cash. Third, the execution of the Deed of Assignment, the Letter Agreement and the Cash Voucher were made in good faith, and constituted clear manifestation of petitioner’s willingness to pay the judgment amount. People’s Broadcasting vs. The Secretary of the Department of Labor and Employment, et al., G.R. No. 179652, May 8, 2009.

Appeal; private carrier. In this case, petitioner availed of the services of LBC, a private carrier, to deliver its notice of appeal to the NLRC. Had petitioner sent its notice of appeal by registered mail, the date of mailing would have been deemed the date of filing with the NLRC. But petitioner, for reasons of its own, chose to send its notice of appeal through a private letter-forwarding agency. Therefore, the date of actual receipt by the NLRC of the notice of appeal, and not the date of delivery to LBC, is deemed to be the date of the filing of the notice of appeal. Since the NLRC received petitioner’s notice of appeal on 26 February 2001, the appeal was clearly filed out of time. Petitioner had thus lost its right to appeal from the decision of the Labor Arbiter and the NLRC should have dismissed its notice of appeal. Charter Chemical and Coating Corporation vs. Herbert Tan and Amalia Sonsing, G.R. No. 163891, May 21, 2009.

Compensable illness; definition . P.D. No. 626, as amended, defines compensable sickness as “any illness definitely accepted as an occupational disease listed by the Commission, or any illness caused by employment subject to proof by the employee that the risk of contracting the same is increased by the working conditions.” Under Section 1 (b), Rule III, of the Amended Rules on Employees’ Compensation, for the sickness and the resulting disability or death to be compensable, the same must be an “occupational disease” included in the list provided (Annex “A”), with the conditions set therein satisfied; otherwise, the claimant must show proof that the risk of contracting it is increased by the

working conditions. Otherwise stated, for sickness and the resulting death of an employee to be compensable, the claimant must show either: (1) that it is a result of an occupational disease listed under Annex “A” of the Amended Rules on Employees’ Compensation with the conditions set therein satisfied; or (2) if not so listed, that the risk of contracting the disease is increased by the working conditions.

Here, the CA correctly considered Cardiopulmonary Arrest T/C Fatal Arrythmia in this case a cardiovascular disease – a listed disease under Annex “A” of the Amended Rules on Employees’ Compensation. The Death Certificate of Judge Vicencio clearly indicates that the cause of his death is Cardiopulmonary Arrest T/C Fatal Arrythmia. Whether, however, the same was a mere complication of his lung cancer as contended by petitioner GSIS or related to an underlying cardiovascular disease is not established by the records of this case and, thus, remains uncertain. The Supreme Court held that Cardiopulmonary Arrest T/C Fatal Arrythmia, the cause of death stated in Judge Vicencio’s Death Certificate, should be considered as a cardiovascular disease – a listed disease under Annex “A” of the Amended Rules on Employees’ Compensation. Government Service Insurance System vs. Marian T. Vicencio, G.R. No. 176832, May 21, 2009.

Compensable illness; evidence. The degree of proof required under P.D. No. 626 is merely substantial evidence, or “such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.” The Supreme Court hasrepeatedly held that to prove compensability, the claimant must adequately show that the development of the disease is brought largely by the conditions present in the nature of the job. What the law requires is a reasonable work-connection and not a direct causal relation. It is enough that the hypothesis on which the workmen’s claim is based is probable. Medical opinion to the contrary can be disregarded especially where there is some basis in the facts for inferring a work-connection. Probability, not certainty, is the touchstone. Government Service Insurance System (GSIS) vs. Teresita S. De Guzman, G.R. No. 173049, May 21, 2009.

Due process. Respondent was given ample opportunity to explain and rebut the evidence against him. A full adversarial hearing was not required. The essence of due process is simply the opportunity to be heard. As applied in administrative proceedings, it is merely an opportunity to explain one’s side or an opportunity to seek a reconsideration of the action or ruling complained of.

Petitioners complied with the twin-notice requirement. The notice dated October 17, 2000 served on respondent was the written notice specifying the charges against him. The subsequent notice dated February 7, 2001 (notice of adjudication specifying therein the causes for respondent’s termination and the decision to dismiss him) served as the written notice of termination. In view of respondent’s valid dismissal due to serious misconduct and loss of trust and confidence, respondent is not entitled to separation pay. Telecommunications Distributors Specialist, Inc., et al. vs. Raymund Garriel, G.R. No. 174981, May 25, 2009.

Employer-employee relationship; evidence. It has long been established that in administrative and quasi-judicial proceedings, substantial evidence is sufficient as a basis for judgment on the existence of employer-employee relationship. Substantial evidence, which is the quantum of proof required in labor cases, is “that amount of relevant evidence which a reasonable mind might accept as adequate to justify a conclusion.” No particular form of evidence is required to prove the existence of such employer-employee relationship. Any competent and relevant evidence to prove the relationship may be admitted. Hence, while no particular form of evidence is required, a finding that such relationship exists must still rest on some substantial evidence. Moreover, the substantiality of the evidence depends on its quantitative as well as its qualitative aspects.

In the instant case, save for respondent’s self-serving allegations and self-defeating evidence, there is no substantial basis to warrant the Regional Director’s finding that respondent is an employee of petitioner. People’s Broadcasting vs. The Secretary of the Department of Labor and Employment, et al., G.R. No. 179652, May 8, 2009.

Employer-employee relationship; existence . In order to determine the existence of an employer-employee relationship, the Court has frequently applied the four-fold test: (1) the selection and engagement of the employee; (2) the payment of wages; (3) the power of dismissal; and (4) the power

to control the employee’s conduct, or the so called “control test,” which is considered the most important element.

From the time they were hired by petitioner corporation up to the time that they were reassigned to work under Gamo’s supervision, their status as petitioner corporation’s employees did not cease. Likewise, payment of their wages was merely coursed through Gamo. As to the most determinative test―the power of control, it is sufficient that the power to control the manner of doing the work exists, it does not require the actual exercise of such power. In this case, it was in the exercise of its power of control when petitioner corporation transferred the copra workers from their previous assignments to work as copraceros. It was also in the exercise of the same power that petitioner corporation put Gamo in charge of the copra workers although under a different payment scheme. Thus, it is clear that an employer-employee relationship has existed between petitioner corporation and respondents since the beginning and such relationship did not cease despite their reassignments and the change of payment scheme. South Davao Development Company, Inc., et al. vs. Sergio L. Gamo, et al., G.R. No. 171814, May 8, 2009.

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

Thus, before the DOLE may exercise its powers under Article 128, two important questions must be resolved: (1) Does the employer-employee relationship still exist, or alternatively, was there ever an employer-employee relationship to speak of; and (2) Are there violations of the Labor Code or of any labor law? The existence of an employer-employee relationship is a statutory prerequisite to and a limitation on the power of the Secretary of Labor, one which the legislative branch is entitled to impose.

The rationale underlying this limitation is to eliminate the prospect of competing conclusions of the Secretary of Labor and the NLRC, on a matter fraught with questions of fact and law, which is best resolved by the quasi-judicial body, which is the NRLC, rather than an administrative official of the executive branch of the government. If the Secretary of Labor proceeds to exercise his visitorial and enforcement powers absent the first requisite, as the dissent proposes, his office confers jurisdiction on itself which it cannot otherwise acquire. People’s Broadcasting vs. The Secretary of the Department of Labor and Employment, et al., G.R. No. 179652, May 8, 2009.

Independent contractor. There is permissible job contracting when a principal agrees to put out or farm out with a contractor or a subcontractor the performance or completion of a specific job, work or service within a definite or predetermined period, regardless of whether such job or work service is to be performed within or outside the premises of the principal. To establish the existence of an independent contractor, we apply the following conditions: first, the contractor carries on an independent business and undertakes the contract work on his own account under his own responsibility according to his own manner and method, free from the control and direction of his employer or principal in all matters connected with the performance of the work except to the result thereof; and second, the contractor has substantial capital or investments in the form of tools, equipment, machineries, work premises and other materials which are necessary in the conduct of his business.

The Implementing Rules and Regulation of the Labor Code defines investment—as tools, equipment, implements, machineries and work premises, actually and directly used by the contractor or subcontractor in the performance or completion of the job, work, or service contracted out. The investment must be sufficient to carry out the job at hand.

In the case at bar, Gamo and the copra workers did not exercise independent judgment in the performance of their tasks. The tools used by Gamo and his copra workers like the karit, bolo, pangbunot, panglugit and pangtapok are not sufficient to enable them to complete the job. Reliance on

these primitive tools is not enough. In fact, the accomplishment of their task required more expensive machineries and equipment, like the trucks to haul the harvests and the drying facility, which petitioner corporation owns. South Davao Development Company, Inc., et al. vs. Sergio L. Gamo, et al., G.R. No. 171814, May 8, 2009.

Loss of trust and confidence. Petitioner cites Article 282 of the Labor Code, specifically loss of trust and confidence as the ground for validly dismissing respondent. Under the law, loss of confidence must be based on “fraud or willful breach by the employee of the trust reposed in him by his employer or duly authorized representative.” In this regard, the Supreme Court has ruled that ordinary breach does not suffice. A breach of trust is willful if it is done intentionally, knowingly and purposely, without any justifiable excuse, as distinguished from an act done carelessly, thoughtlessly, heedlessly or inadvertently.

Here, respondent was investigated on and dismissed for misappropriation of company funds through falsification of company documents, as shown in the termination letter. Records, nevertheless, neither showed nor convinced us that there was misappropriation of funds that benefited anybody which warranted the dismissal of respondent for the first offense. Respondent admittedly committed padding of accounts and/or paper renewal, which respondent claims to be a practice among salesmen and such claim was not disputed by petitioner. The paper renewal committed by respondent may be considered as falsification, but we agree with the Labor Arbiter and the CA that such paper renewal did not amount to misappropriation that could justify outright dismissal for the first offense, as what petitioner did to respondent. Otherwise, the company rules would not have separated these two offenses under Rule Nos. 15 and 16. Besides, we agree with the CA that although petitioner did in fact violate company Rule No. 15 by falsifying company records and documents through paper renewal, such falsification has to be qualified. San Miguel Corporation vs. NLRC, et al., G.R. No. 153983, May 26, 2009.

Serious misconduct. Respondent’s acts of forging subscribers’ signatures, attempting to cover up his failure to secure their signatures on the coverage waivers, selling a personally owned mobile phone to a company customer (a defective one at that) and attempting to connive with other employees to cover up his illicit schemes were serious acts of dishonesty. Respondent’s acts clearly constituted serious misconduct which is a ground for termination of employment by an employer. Respondent’s acts were likewise grounds for loss of trust and confidence, another valid cause for termination of employment. Only employees occupying positions of trust and confidence or those who are routinely charged with the care and custody of the employer’s money or property may be validly dismissed for this reason. Telecommunications Distributors Specialist, Inc., et al. vs. Raymund Garriel, G.R. No. 174981, May 25, 2009.

APRIL 2009

Labor Law

Backwages. The Court agrees with the NLRC’s conclusion that petitioner is not entitled to backwages. He never bothered to redeem his driver’s license at the soonest possible time when there was no showing that he was unlawfully prevented by respondent from doing so. Thus, petitioner should not be paid for the time he was not working. The Court has held that where the failure of employees to work was not due to the employer’s fault, the burden of economic loss suffered by the employees should not be shifted to the employer. Each party must bear his own loss. It would be unfair to allow petitioner to recover something he has not earned and could not have earned, since he could not discharge his work as a driver without his driver’s license. Respondent should be exempted from the burden of paying backwages. Bernardino V. Navarro vs. P.V. Pajarillo Liner and NLRC, G.R. No. 164681, April 24, 2009.

Breach of trust. The documentary evidence of petitioner indubitably establishes that respondent committed payroll padding, sold canepoints without the knowledge and consent of management and misappropriated the proceeds thereof, and rented tractor to another farm and misappropriated the rental payments therefor. These acts constitute willful breach by the employee of the trust reposed in him by his employer – a ground for termination of employment. Bacolod-Talisay Realty and Development Corp., et al. vs. Romeo Dela Cruz, G.R. No. 179563, April 30, 2009.

CBA. Just like any other contract, a CBA is the law between the contracting parties and compliance therewith in good faith is required by law. HFS Phlippines, Inc., Ruben T. Del Rosario and IUM Ship Management vs. Ronaldo R. Pilar, G.R. No. 168716, April 16, 2009.

Due process. The Court of Appeals correctly held that petitioners did not comply with the proper procedure in dismissing respondent. In other words, petitioners failed to afford respondent 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 respondent 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 rasonable opportunity to explain his side. The confrontation before the barangay council did not constitute the first notice – to give the employee ample opportunity to be heard with the assistance of counsel, if he so desires. Hearings before thebarangay council do not afford the employee ample opportunity to be represented by counsel if he so desires because Section 415 of the Local Government Code mandates that “[i]n all katarungang pambarangay proceedings, the parties must appear in person without the assistance of counsel or his representatives, except for minors and incompetents who may be assisted by their next-of-kin who are not lawyers.” The requirement of giving respondent the first notice not having been complied with, discussions of whether the second notice was complied with is rendered unnecessary. Bacolod-Talisay Realty and Development Corp., et al. vs. Romeo Dela Cruz, G.R. No. 179563, April 30, 2009.

Due process; lack of jurisdiction. The proceedings before the Labor Arbiter deprived David of due process. MACLU and NAFLU filed their complaint against MAC on 12 August 1993. Arbiter Ortiguerra’s decision shows that MACLU, NAFLU, and MAC were the only parties summoned to a conference for a possible settlement. Because of MAC’s failure to appear, Arbiter Ortiguerra deemed the case submitted for resolution. David’s resignation from MAC took effect on 15 October 1993. NAFLU and MACLU moved to implead Carag and David for the first time only in their position paper dated 3 January 1994. David did not receive any summons and had no knowledge of the decision against him. The records of the present case fail to show any order from Arbiter Ortiguerra summoning David to attend the preliminary conference. Despite this lack of summons, in her Decision dated 17 June 1994, Arbiter Ortiguerra not only granted MACLU and NAFLU’s motion to implead Carag and David, she also held Carag and David solidarily liable with MAC. Armando David vs.. National Federation of Labor Union, et al, G.R. No. 148263 and 148271-72, April 21, 2009.

Hearing. The guiding principles in connection with the hearing requirement in dismissal cases are:

(a) “ample opportunity to be heard” means any meaningful opportunity (verbal or written) given to the employee to answer the charges against him and submit evidence in support of his defense, whether in a hearing, conference or some other fair, just and reasonable way;

(b) a formal hearing or conference becomes mandatory only when requested by the employee in writing or substantial evidentiary disputes exist or a company rule or practice requires it, or when similar circumstances justify it;

(c) the “ample opportunity to be heard” standard in the Labor Code prevails over the “hearing or conference” requirement in the implementing rules and regulations. Felix B. Perez, et al. Vs. Philippine Telegraph and Telephone Company, G.R. No. 152048, April 7, 2009.

Illegal dismissal; abandonment . Petitioner insists that there cannot be any illegal dismissal because in the first place, there was no dismissal to speak of, as it was respondent who abandoned his work, after finding out that he was being investigated for theft. It is a basic principle that in the dismissal of employees, the burden of proof rests upon the employer to show that the dismissal is for a just cause and failure to do so would necessarily mean that the dismissal is not justified. Petitioner failed to discharge the burden of proof that complainant was guilty of abandonment. It did not adduce any proof to show that petitioner clearly and unequivocally intended to abandon his job. It has been repeatedly stressed that for abandonment to be a valid cause for dismissal there must be a concurrence of intention to abandon and some overt act from which it may be inferred that the employee had no more interest to continue working in his job. An employee who forthwith takes steps to protest his layoff

cannot by any logic be said to have abandoned his work. Otherwise stated, one could not possibly abandon his work and shortly thereafter vigorously pursue his complaint for illegal dismissal. In the instant case, save for the allegation that respondent did not submit him to the investigation and the latter’s failure to return to work as instructed in the 8 February 1999 letter, petitioner was unable to present any evidence which tend to show respondent’s intent to abandon his work. Neither is the Court convinced that the filing of the illegal dismissal case was respondent’s way to avoid the charge of theft. On the contrary, the filing of the complaint a few days after his alleged dismissal signified respondent’s desire to return to work, a factor which further militates against petitioner’s theory of abandonment. Harbor View Restaurant vs. Reynaldo Labro, G.R. No. 168273, April 30, 2009.

Illegal dismissal; burden of proof. Under the Labor Code, as amended, the requirements for the lawful dismissal of an employee are two-fold, the substantive and the procedural. Not only must the dismissal be for a valid or authorized cause, the rudimentary requirements of due process – notice and hearing – must, likewise, be observed before an employee may be dismissed. One does not suffice; without their concurrence, the termination would, in the eyes of the law, be illegal.

As the employer, petitioner has the burden of proving that the dismissal of petitioner was for a cause allowed under the law and that petitioner was afforded procedural due process. Petitioner failed to discharge this burden. Indeed, it failed to show any valid or authorized cause under the Labor Code which allowed it to terminate the services of individual respondents. Neither did petitioner show that individual respondents were given ample opportunity to contest the legality of their dismissal. No notice of such impending termination was ever given to them. Individual respondents were definitely denied due process. Having failed to establish compliance with the requirements on termination of employment under the Labor Code, the dismissal of individual respondents was tainted with illegality. Iligan Cement Corporation vs. Iliascor Employees and Workers Union-Southern Philippines Federation of Labor, et al., G.R. No. 158956, April 24, 2009.

Illegal dismissal; penalty. The worst that respondent committed was an inadvertent infraction. For that, the extreme penalty of dismissal imposed on him by petitioners was grossly disproportionate. Taking into account the managerial position he held and the prior warning issued to him for failing to communicate with his superiors, the penalty commensurate to the violation he committed should be suspension for three months. Gulf Air Jassim Hindri Abdullah, et al. vs. NLRC, et al., G.R. No. 159687, April 24, 2009.

Intra-union dispute. Pending the final resolution of the intra-union dispute, respondent’s officers remained duly authorized to conduct union affairs. De La Salle University, et al. vs. De La Salle University Employees Association (DLSUEA-NAFTEU),G.R. No. 177283, April 7, 2009.

Labor only contracting. We are not convinced that Vedali is an independent contractor. Petitioner failed to present any service contract with Vedali in the proceedings with the Labor Arbiter. There is nothing on record that Vedali has a substantial capital or investment to actually perform the service under its own account and responsibility. Petitioner is a mere labor-only contractor because it only supplied workers to petitioner to work at its pier. In a labor-only contract, there are three parties involved: (1) the “labor-only” contractor; (2) the employee who is ostensibly under the employ of the “labor-only” contractor; and (3) the principal who is deemed the real employer. Under this scheme, the “labor-only” contractor is the agent of the principal. Iligan Cement Corporation vs. Iliascor Employees and Workers Union-Southern Philippines Federation of Labor, et al., G.R. No. 158956, April 24, 2009.

Liability of corporate officers. Article 212(e) of the Labor Code, by itself, does not make a corporate officer personally liable for the debts of the corporation because Section 31 of the Corporation Code is still the governing law on personal liability of officers for the debts of the corporation. There was no showing of David willingly and knowingly voting for or assenting to patently unlawful acts of the corporation, or that David was guilty of gross negligence or bad faith. Armando David vs. National Federation of Labor Union, et al, G.R. No. 148263 and 148271-72, April 21, 2009.

Loss of confidence. Loss of trust and confidence, as a valid ground for dismissal, must be based on willful breach of the trust reposed in the employee by his employer. Such breach is willful if it is done intentionally, knowingly, and purposely, without justifiable excuse, as distinguished from an act done

carelessly, thoughtlessly, heedlessly or inadvertently. Elsewise stated, it must be based on substantial evidence and not on the employer’s whims or caprices or suspicions; otherwise, the employee would eternally remain at the mercy of the employer. A condemnation of dishonesty and disloyalty cannot arise from suspicion spawned by speculative inferences. Adam B. Garcia vs. NLRC (Second Division) Legazpi Oil Company, Inc. Romeo F. Mercado and Gus Zuluaga, G.R. No. 172854, April 16, 2009.

Loss of Confidence. Without undermining the importance of a shipping order or request, the respondents’ evidence is insufficient to clearly and convincingly establish the facts from which the loss of confidence resulted. Other than their bare allegations and the fact that such documents came into petitioners’ hands at some point, respondents should have provided evidence of petitioners’ functions, the extent of their duties, the procedure in the handling and approval of shipping requests and the fact that no personnel other than petitioners were involved. There was, therefore, a patent paucity of proof connecting petitioners to the alleged tampering of shipping documents. The alterations on the shipping documents could not reasonably be attributed to petitioners because it was never proven that petitioners alone had control of or access to these documents. Unless duly proved or sufficiently substantiated otherwise, impartial tribunals should not rely only on the statement of the employer that it has lost confidence in its employee. Felix B. Perez, et al. vs. Philippine Telegraph and Telephone Company,G.R. No. 152048, April 7, 2009.

Prescription. Articles 1139 to 1155 of the Civil Code provide the general law on prescription of actions. Under Article 1139, actions prescribe by the mere lapse of time prescribed by law. That law may either be the Civil Code or special laws as specifically mandated by Article 1148. In labor cases, the special law on prescription is Article 291 of the Labor Code. The Labor Code has no specific provision on when a monetary claim accrues. Thus, again the general law on prescription applies – Article 1150 of the Civil Code. Juanaria A. Rivera vs. United Laboratories, Inc., G.R. No. 155639, April 22, 2009.

Resignation. Resignation is defined as the voluntary act of an employee who finds himself in a situation where he believes that personal reasons cannot be sacrificed in favor of the exigency of the service and he has no other choice but to disassociate himself from his employment. Respondent’s resignation can be gleaned from the unambiguous terms of his letter to Captain Cristino. Respondent’s bare claim that he was forced to execute his resignation letter deserves no merit. Bare allegations of threat or force do not constitute substantial evidence to support a finding of forced resignation. That such claim was proferred a year later all the more renders his contention bereft of merit. Virgen Shipping Corporation, et al. vs. Jesus B. Barraquio, G.R. No. 178127, April 16, 2009.

Resignation. Petitioner voluntarily resigned. Her employer cannot be held liable for constructive dismissal. Gloria Artiaga vs. Siliman University and Siliman University Medical Center, G.R. No. 178453, April 16, 2009.

Security of Tenure. Security of tenure in the career executive service, which presupposes a permanent appointment, takes place upon passing the CES examinations administered by the CES Board. It is that which entitles the examinee to conferment of CES eligibility and the inclusion of his name in the roster of CES eligibles. Under the rules and regulations promulgated by the CES Board, conferment of the CES eligibility is done by the CES Board through a formal board resolution after an evaluation has been done of the examinee’s performance in the four stages of the CES eligibility examinations. Upon conferment of CES eligibility and compliance with the other requirements prescribed by the Board, an incumbent of a CES position may qualify for appointment to a CES rank. Appointment to a CES rank is made by the President upon the Board’s recommendation. It is this process which completes the official’s membership in the CES and confers on him security of tenure in the CES. Petitioner does not seem to have gone through this definitive process.

At this juncture, what comes unmistakably clear is the fact that because petitioner lacked the proper CES eligibility and therefore had not held the subject office in a permanent capacity, there could not have been any violation of petitioner’s supposed right to security of tenure inasmuch as he had never been in possession of the said right at least during his tenure as Deputy Director for Hospital Support Services. Hence, no challenge may be offered against his separation from office even if it be for no cause and at a moment’s notice. Not even his own self-serving claim that he was competent to continue serving as Deputy Director may actually and legally give even the slightest semblance of authority to his

thesis that he should remain in office. Be that as it may, it bears emphasis that, in any case, the mere fact that an employee is a CES eligible does not automatically operate to vest security of tenure on the appointee inasmuch as the security of tenure of employees in the career executive service, except first and second-level employees, pertains only to rank and not to the office or position to which they may be appointed. Jose Pepito M. Amores M.D. vs. Civil Service Commission, Board of Trustees of the Lung Center of the Philippines as represented by Hon. Manuel M. Dayrit and Fernando A. Melendres, M.D., G.R. No. 170093, April 29, 2009

SSS. The claim for funeral benefits under P.D. No. 626, as amended, which was filed after the lapse of 10 years by the therein petitioner who had earlier filed a claim for death benefits, had not prescribed. Soledad Muños Mesa vs. Social Security System, et al., G.R. No. 160467, April 7, 2009.

Transfer. Jurisprudence recognizes the exercise of management prerogative to transfer or assign employees from one office or area of operation to another, provided there is no demotion in rank or diminution of salary, benefits, and other privileges, and the action is not motivated by discrimination, made in bad faith, or effected as a form of punishment or demotion without sufficient cause. To determine the validity of the transfer of employees, the employer must show that the transfer is not unreasonable, inconvenient, or prejudicial to the employee; nor does it involve a demotion in rank or a diminution of his salaries, privileges and other benefits. Should the employer fail to overcome this burden of proof, the employee’s transfer shall be tantamount to constructive dismissal.

We have long stated that the objection to the transfer being grounded solely upon the personal inconvenience or hardship that will be caused to the employee by reason of the transfer is not a valid reason to disobey an order of transfer. Such being the case, petitioner cannot adamantly refuse to abide by the order of transfer without exposing herself to the risk of being dismissed. Hence, her dismissal was for just cause in accordance with Article 282(a) of the Labor Code. Aileen G. Herida vs. F4C Pawnshop and Jewelry Store/Marcelino Florete, Jr., G.R. No. 172601, April 16, 2009.

Unfair labor practice; burden of proof. Petitioner makes several allegations that UST committed ULP. The onus probandi falls on the shoulders of petitioner to establish or substantiate such claims by the requisite quantum of evidence. In labor cases as in other administrative proceedings, substantial evidence or such relevant evidence as a reasonable mind might accept as sufficient to support a conclusion is required. In the petition at bar, petitioner miserably failed to adduce substantial evidence as basis for the grant of relief. UST Faculty Union vs. University of Sto. Tomas, Rev. Fr. Rolando De la Rosa, Rev Fr. Rodelio Aligan, Domingo Legaspi, and Merecedes Hinayon, G.R. No. 180892, April 7, 2009.

MARCH 2009

Labor Code

Compensable illness. Cordero has substantially proved her claim to compensability. Under Section 1(b), Rule III implementing P.D. No. 626, sickness or death is compensable if the cause is included in the list of occupational diseases annexed to the Rules. If not so listed, compensation may still be recovered if the illness is caused or precipitated by factors inherent in the employee’s work and working conditions. Here, strict rules of evidence are not applicable since the quantum of evidence required under P.D. No. 626 is merely substantial evidence, which means “such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.” What the law requires is a reasonable work-connection and not a direct causal relation. It is sufficient that the hypothesis on which the workmen’s claim is based is probable since probability, not certainty, is the touchstone. Government Service Insurance System Vs. Maria Teresa S.A. Cordero/Employees Compensation Commission Vs. Maria Teresa S.A. Cordero, G.R. No. 171378/G.R. No. 171388, March 17, 2009.

Constructive dismissal. Case law holds that constructive dismissal occurs when there is cessation of work because continued employment is rendered impossible, unreasonable or unlikely; when there is a demotion in rank or diminution in pay or both; or when a clear discrimination, insensibility, or disdain by an employer becomes unbearable to the employee. Respondent’s sudden, arbitrary and unfounded adoption of the two-day work scheme which greatly reduced petitioners’ salaries renders it liable for constructive dismissal. Fe la Rosa, et al. Vs. Ambassador Hotel, G.R. No. 177059, March 13, 2009.

Declaration of illegality of strike. Article 264(e) of the Labor Code prohibits any person engaged in picketing from obstructing the free ingress to and egress from the employer’s premises. Since respondent was found in the July 17, 1998 decision of the NLRC to have prevented the free entry into and exit of vehicles from petitioner’s compound, respondent’s officers and employees clearly committed illegal acts in the course of the March 9, 1998 strike. The use of unlawful means in the course of a strike renders such strike illegal. Therefore, pursuant to the principle of conclusiveness of judgment, the March 9, 1998 strike was ipso facto illegal. The filing of a petition to declare the strike illegal was thus unnecessary. Jackbilt Industries, Inc. Vs. Jackbilt Employees Workers Union-Naflu-KMU, G.R. No. 171618-19, March 13, 2009.

Employment of registered nurse. Article 157 does not require the engagement of full-time nurses as regular employees of a company. Under Article 157, Shangri-la, which employs more than 200 workers, is mandated to “furnish” its employees with the services of a full-time registered nurse, a part-time physician and dentist, and an emergency clinic which means that it should provide or make available such medical and allied services to its employees, not necessarily to hire or employ a service provider. While it is true that the provision requires employers to engage the services of medical practitioners in certain establishments depending on the number of their employees, nothing is there in the law which says that medical practitioners so engaged be actually hired as employees. The law only requires the employer “to retain”, not employ, a part-time physician who needed to stay in the premises of the non-hazardous workplace for two (2) hours. The phrase “services of a full-time registered nurse” should thus be taken to refer to the kind of services that the nurse will render in the company’s premises and to its employees, not the manner of his engagement. Jerome D. Escasinas, et al. Vs. Shangri-la’s Mactan Island Resort, et al., G.R. No. 178827, March 4, 2009.

Part-time employment. For a private school teacher to acquire permanent status in employment, the following requisites must concur: (1) the teacher is a full-time teacher; (2) the teacher must have rendered three consecutive years of service; and (3) such service must have been satisfactory. The burden is on petitioners to prove their affirmative allegation that they are permanent teaching personnel. However, there is not enough evidence on record to show that their total working day is devoted to the school. There is no showing of what the regular work schedule of a regular teacher in respondent school is. What is clear in the records is that Evelyn and Alwyn spent two hours and four hours, respectively, but not the entire working day, at the respondent school. They do not meet requirement “c” of Section 45 of the Manual. Hence, we sustain the findings of the Court of Appeals that the petitioners are part-time teachers. Being part-time teachers,they cannot acquire permanent status. Spouses Alwyn Ong Lim and Evelyn Lukang Lim Vs. Legazpi Hope Christian School, et al., G.R. No. 172818, March 31, 2009.

Piercing the Corporate Veil for Labor Claims

Pantranco Employees Asso., et al. vs. NLRC, et al./Philippine National Bank Vs. Pantranco Employees Association Inc., et al., G.R. No. 170689/G.R. No. 170705, March 17, 2009, is an interesting case wherein former employees of a company sought to satisfy their unpaid labor claims against another company that eventually acquired, and then sold, the employer company.

The Gonzales family owned two corporations, namely, the Pantranco North Express, Inc. (PNEI) and Macris Realty Corporation (Macris). PNEI provided transportation services to the public, and had its bus terminal at the corner of Quezon and Roosevelt Avenues in Quezon City. The terminal stood on four valuable pieces of real estate (known as Pantranco properties) registered under the name of Macris. The Gonzales family later incurred huge financial losses despite attempts of rehabilitation and loan infusion. In March 1975, their creditors took over the management of PNEI and Macris. By 1978, full ownership was transferred to one of their creditors, the National Investment Development Corporation (NIDC), a subsidiary of the PNB.

Macris was later renamed as the National Realty Development Corporation (Naredeco) and eventually merged with the National Warehousing Corporation (Nawaco) to form the new PNB subsidiary, the PNB-Madecor.

In 1985, NIDC sold PNEI to North Express Transport, Inc. (NETI), a company owned by Gregorio Araneta III. In 1986, PNEI was among the several companies placed under sequestration by the Presidential Commission on Good Government (PCGG) shortly after the historic events in EDSA. In January 1988, PCGG lifted the sequestration order to pave the way for the sale of PNEI back to the private sector through the Asset Privatization Trust (APT). APT thus took over the management of PNEI.

In 1992, PNEI applied with the Securities and Exchange Commission (SEC) for suspension of payments. A management committee was thereafter created which recommended to the SEC the sale of the company through privatization. As a cost-saving measure, the committee likewise suggested the retrenchment of several PNEI employees. Eventually, PNEI ceased its operation. Along with the cessation of business came the various labor claims commenced by the former employees of PNEI where the latter obtained favorable decisions.

On July 5, 2002, the Labor Arbiter issued the Sixth Alias Writ of Execution commanding the National Labor Relations Commission (NLRC) sheriffs to levy on the assets of PNEI in order to satisfy the P722,727,150.22 due its former employees, as full and final satisfaction of the judgment awards in the labor cases. The sheriffs were likewise instructed to proceed against PNB, PNB-Madecor and Mega Prime. In implementing the writ, the sheriffs levied upon the four valuable pieces of real estate located at the corner of Quezon and Roosevelt Avenues, on which the former Pantranco Bus Terminal stood. These properties were covered by Transfer Certificate of Title (TCT) Nos. 87881-87884, registered under the name of PNB-Madecor. Subsequently, Notice of Sale of the foregoing real properties was published in the newspaper and the sale was set on July 31, 2002.

Having been notified of the auction sale, motions to quash the writ were separately filed by PNB-Madecor and Mega Prime, and PNB. They likewise filed their Third-Party Claims. PNB-Madecor anchored its motion on its right as the registered owner of the Pantranco properties, and Mega Prime as the successor-in-interest. For its part, PNB sought the nullification of the writ on the ground that it was not a party to the labor case. In its Third-Party Claim, PNB alleged that PNB-Madecor was indebted to the former and that the Pantranco properties would answer for such debt.

On September 10, 2002, the Labor Arbiter declared that the subject Pantranco properties were owned by PNB-Madecor. It being a corporation with a distinct and separate personality, its assets could not answer for the liabilities of PNEI. Considering, however, that PNB-Madecor executed a promissory note in favor of PNEI for P7,884,000.00, the writ of execution to the extent of the said amount was concerned was considered valid. PNB’s third-party claim – to nullify the writ on the ground that it has an interest in the Pantranco properties being a creditor of PNB-Madecor, – on the other hand, was denied because it only had an inchoate interest in the properties.

The NLRC affirmed the Labor Arbiter’s decision. The CA also affirmed the NLRC’s decision. The appellate court pointed out that PNB, PNB-Madecor and Mega Prime are corporations with personalities separate and distinct from PNEI. As such, there being no cogent reason to pierce the veil of corporate fiction, the separate personalities of the above corporations should be maintained. The CA added that the Pantranco properties were never owned by PNEI; rather, their titles were registered under the name of PNB-Madecor. If PNB and PNB-Madecor could not answer for the liabilities of PNEI, with more reason should Mega Prime not be held liable being a mere successor-in-interest of PNB-Madecor.

The former PNEI employees argued before the Supreme Court that PNB, through PNB-Madecor, directly benefited from the operation of PNEI and had complete control over the funds of PNEI. Hence, they are solidarily answerable with PNEI for the unpaid money claims of the employees. Citing A.C. Ransom Labor Union-CCLU v. NLRC, the employees insist that where the employer corporation ceases to exist and is no longer able to satisfy the judgment awards in favor of its employees, the owner of the employer corporation should be made jointly and severally liable. The Supreme Court ruled that the former PNEI employees cannot attach the properties (specifically the Pantranco properties) of PNB, PNB-Madecor and Mega Prime to satisfy their unpaid labor claims against PNEI. According to the Supreme Court:

“First, the subject property is not owned by the judgment debtor, that is, PNEI. Nowhere in the records was it shown that PNEI owned the Pantranco properties. Petitioners, in fact, never alleged in any of their pleadings the fact of such ownership. What was established, instead, in PNB MADECOR v. Uy and PNB v.

Mega Prime Realty and Holdings Corporation/Mega Prime Realty and Holdings Corporation v. PNB was that the properties were owned by Macris, the predecessor of PNB-Madecor. Hence, they cannot be pursued against by the creditors of PNEI. We would like to stress the settled rule that the power of the court in executing judgments extends only to properties unquestionably belonging to the judgment debtor alone. To be sure, one man’s goods shall not be sold for another man’s debts. A sheriff is not authorized to attach or levy on property not belonging to the judgment debtor, and even incurs liability if he wrongfully levies upon the property of a third person.

Second, PNB, PNB-Madecor and Mega Prime are corporations with personalities separate and distinct from that of PNEI. PNB is sought to be held liable because it acquired PNEI through NIDC at the time when PNEI was suffering financial reverses. PNB-Madecor is being made to answer for petitioners’ labor claims as the owner of the subject Pantranco properties and as a subsidiary of PNB. Mega Prime is also included for having acquired PNB’s shares over PNB-Madecor.

The general rule is that a corporation has a personality separate and distinct from those of its stockholders and other corporations to which it may be connected. This is a fiction created by law for convenience and to prevent injustice. Obviously, PNB, PNB-Madecor, Mega Prime, and PNEI are corporations with their own personalities. The “separate personalities” of the first three corporations had been recognized by this Court in PNB v. Mega Prime Realty and Holdings Corporation/Mega Prime Realty and Holdings Corporation v. PNB where we stated that PNB was only a stockholder of PNB-Madecor which later sold its shares to Mega Prime; and that PNB-Madecor was the owner of the Pantranco properties. Moreover, these corporations are registered as separate entities and, absent any valid reason, we maintain their separate identities and we cannot treat them as one.

Neither can we merge the personality of PNEI with PNB simply because the latter acquired the former. Settled is the rule that where one corporation sells or otherwise transfers all its assets to another corporation for value, the latter is not, by that fact alone, liable for the debts and liabilities of the transferor.

Lastly, while we recognize that there are peculiar circumstances or valid grounds that may exist to warrant the piercing of the corporate veil, none applies in the present case whether between PNB and PNEI; or PNB and PNB-Madecor.

Under the doctrine of “piercing the veil of corporate fiction,” the court looks at the corporation as a mere collection of individuals or an aggregation of persons undertaking business as a group, disregarding the separate juridical personality of the corporation unifying the group. Another formulation of this doctrine is that when two business enterprises are owned, conducted and controlled by the same parties, both law and equity will, when necessary to protect the rights of third parties, disregard the legal fiction that two corporations are distinct entities and treat them as identical or as one and the same.

Whether the separate personality of the corporation should be pierced hinges on obtaining facts appropriately pleaded or proved. However, any piercing of the corporate veil has to be done with caution, albeit the Court will not hesitate to disregard the corporate veil when it is misused or when necessary in the interest of justice. After all, the concept of corporate entity was not meant to promote unfair objectives.

As between PNB and PNEI, petitioners want us to disregard their separate personalities, and insist that because the company, PNEI, has already ceased operations and there is no other way by which the judgment in favor of the employees can be satisfied, corporate officers can be held jointly and severally liable with the company. Petitioners rely on the pronouncement of this Court in A.C. Ransom Labor Union-CCLU v. NLRC and subsequent cases.

This reliance fails to persuade. We find the aforesaid decisions inapplicable to the instant case.

For one, in the said cases, the persons made liable after the company’s cessation of operations were the officers and agents of the corporation. The rationale is that, since the corporation is an artificial person, it must have an officer who can be presumed to be the employer, being the person acting in the interest

of the employer. The corporation, only in the technical sense, is the employer. In the instant case, what is being made liable is another corporation (PNB) which acquired the debtor corporation (PNEI).

Moreover, in the recent cases Carag v. National Labor Relations Commission and McLeod v. National Labor Relations Commission, the Court explained the doctrine laid down in AC Ransom relative to the personal liability of the officers and agents of the employer for the debts of the latter. In AC Ransom, the Court imputed liability to the officers of the corporation on the strength of the definition of an employer in Article 212(c) (now Article 212[e]) of the Labor Code. Under the said provision, employer includes any person acting in the interest of an employer, directly or indirectly, but does not include any labor organization or any of its officers or agents except when acting as employer. It was clarified in Carag and McLeod that Article 212(e) of the Labor Code, by itself, does not make a corporate officer personally liable for the debts of the corporation. It added that the governing law on personal liability of directors or officers for debts of the corporation is still Section 31 of the Corporation Code.

More importantly, as aptly observed by this Court in AC Ransom, it appears that Ransom, foreseeing the possibility or probability of payment of backwages to its employees, organized Rosario to replace Ransom, with the latter to be eventually phased out if the strikers win their case. The execution could not be implemented against Ransom because of the disposition posthaste of its leviable assets evidently in order to evade its just and due obligations. Hence, the Court sustained the piercing of the corporate veil and made the officers of Ransom personally liable for the debts of the latter.

Clearly, what can be inferred from the earlier cases is that the doctrine of piercing the corporate veil applies only in three (3) basic areas, namely: 1) defeat of public convenience as when the corporate fiction is used as a vehicle for the evasion of an existing obligation; 2) fraud cases or when the corporate entity is used to justify a wrong, protect fraud, or defend a crime; or 3) alter ego cases, where a corporation is merely a farce since it is a mere alter ego or business conduit of a person, or where the corporation is so organized and controlled and its affairs are so conducted as to make it merely an instrumentality, agency, conduit or adjunct of another corporation. In the absence of malice, bad faith, or a specific provision of law making a corporate officer liable, such corporate officer cannot be made personally liable for corporate liabilities.

The Court ruled that assuming, for the sake of argument, that PNB may be held liable for the debts of PNEI, petitioners still cannot proceed against the Pantranco properties, the same being owned by PNB-Madecor, notwithstanding the fact that PNB-Madecor was a subsidiary of PNB. The general rule remains that PNB-Madecor has a personality separate and distinct from PNB. The mere fact that a corporation owns all of the stocks of another corporation, taken alone, is not sufficient to justify their being treated as one entity. If used to perform legitimate functions, a subsidiary’s separate existence shall be respected, and the liability of the parent corporation as well as the subsidiary will be confined to those arising in their respective businesses.