2006 Final Case Index

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NLRC Case IndexSeptember 2005 - December 2006

Absorption ...5

Appeal ..6

Perfection of Appeal

Period of Appeal

Questions of Law

Assumption by the Secretary..10

Improper service of Assumption of Jurisdiction Order

of the Secretary of Labor

Attorneys Fees ..10

Backwages ..11

Computation of Backwages

Piece Rate Workers Backwages

No Backwages during the Strike Rule

Exception to the NO BACKWAGES RULE

Bond ....16

Posting of Appeal Bond

Effect of Non-Payment of Appeal Bond

Supersedeas BondBank Certification not a Valid Compliance

with the Bond Requirement

Liberal Interpretation on Posting of Bond

Boundary System ........20

Burden of Proof....21

Business Judgment Rule...... 25

Certificate of Non-Forum Shopping.26

Liberal interpretation of the rule on forum shopping

Certificate of Non-forum Shopping by a Corporation

Certiorari..28

Remedies of appeal under Rule 45 and an original action

for certiorari under Rule 65; mutually exclusive

Classification of Employment....32

a. Regular Employment

Househelper as Regular Employee


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National Labor Relations Commission

Continuous Rehiring of Employees

b. Contractual Employment

Seafarers are Contractual Employees

Collective Bargaining Agreement.37

Command Responsibility 38

Commissions.. 38Company Investigation.................................... 39

Company Policy.....39

Compromise Agreement......40

Res Judicata

Force and Effect of Compromise Agreement

Authority to Compromise

Confidentiality of Conciliation Proceeding...42

Constructive Dismissal..42

Contract of Employment....43

Alteration of Employment ContractContract Stipulations

Cooperatives.....44

Damages ......44

Decision/Judgment....46

Distinction between Xerox Copies and True Copies

Conclusiveness of Decision

Finality of Judgment

Desertion..48

D etermination of Employer-Employee Relationship....48

TWO-TIERED TEST

1. Economic Dependence Test

2. Control Test

Supervision and control

Relationship of employee, contractor &

sub-contractor

Diminution of pay ......52

Disability53

Disability" is not synonymous with "sickness" or illness

Procedure to claim disability benefitsPermanent Total Disability

Test of determining permanent total disability

Total disability is considered permanent if it lasts

continuously for more than 120 days

Disability Benefits for Seafarers

Death of a seaman even during the term of employment

does not automatically give rise to compensation

Created by: RESEARCH, INFORMATION & PUBLICATIONS DIVISION 2


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Dismissal/Termination from Employment.58

1.Authorized Causes58

Redundancy

Retrenchment

Cessation of Operation of Business EstablishmentEffect of Closure or Cessation of Business Operation

Force majeure

Requisites for a valid cessation of business operations

Notice of Closure or Cessation of Business

2. Just Causes ...62

Abandonment

Requisites of Abandonment

Loss of Trust and Confidence

Distinction on the treatment of Trust and Confidence on

managerial employee/s and rank-and-file employeesIncompetence/Inefficiency

Gross Negligence

Serious Misconduct

Willful disobedience or Insubordination

Due Pro cess...76

Procedural Due Process

Substantive Due Process

Effect of non-compliance to procedural due process

Effect of Employee's Acquittal in the Criminal Case..87

Estoppel..88

Evidence 89

Lack of Sufficient Evidence

Substantial EvidenceExecution..92

Exhaustion of Administrative Remedies..93

Finality of Factual Findings..93

Financial Assistance..95

Floating Status.96

Grave Abuse of Discretion96Illegal Dismissal......97

Illegal Work Stoppage98

Independent Contractor98

Interlocutory Order.98

Job contracting ..99

Jurisdiction..99

Claims against Government Owned and Controlled Corporations



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Labor-only Contracting102

Rationale in Prohibiting Labor-Only Contracting

Management Prerogative.103

Limitations to the Exercise of Management Prerogative

Managerial Staff/Supervisor106

Money Claims. 107Money Claims arising from CBA

Corporate Officers not liable for money claims

Prescriptive Period

Motion for Reconsideration108

Negative Pregnant.110

No Work, No Pay110

Overtime Pay..110

Payment of Interest on Awards110

Payslips111

Petition for Review112Piercing the Veil of Corporate Fiction.112

POEA Rules113

Preliminary Injunction..113

Prescriptive Period ..113

Presumption of a Perceived Danger... 114

Presumption of Regularity of Judicial Proceeding..114

Preventive Suspension.......114

Principle of Shared Responsibility..115

Project Employee.. ..115

Protection to Labor,.116

Protest.118

Quitclaims...118

Real Party-in Interest...121

Reinstatement...121

Relaxation of the Rules on Payment of Docket Fees.122

Repatriation...122

Resignation...123

Res Judicata..124

Retirement..125Rules of Procedure(NLRC)127

Rule on Technicality129

Security of Tenure132

Separate Corporate Personality...135

Separation Pay..135

Social Justice137

Solidary Liability..138



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Strained Relationship.139

Strike...140

Circumstances justifying a less drastic

penalty for ordinary striking workers

Illegal strike

Requisites for a Valid StrikeIllegal Acts During Strike

Effects of Illegal Strike

Supervisory and Managerial Employees......141

Teacher's Probationary Employment....144

Probationary Period145

Proportionality between the Offense

and the Penalty145

Termination......146

Guidelines

Termination ReportsTermination due to Illegal Strike

Treatment on the Unexpired portion of

employment contract

Union......148

Chartered Local Union

Union Officers Termination

Purpose of Affiliation of Local Unions

Unfair Labor Practice........149

Verification150

Wage Increase.....151



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Absorption

Furthermore, under the principle of absorption, a bona fide buyer or transferee of

all, or substantially all, the properties of the seller or transferor is not obliged to absorb the

latters employees. The most that the purchasing company may do, for reasons of publicpolicy and social justice, is to give preference of reemployment to the selling companys

qualified separated employees, who in its judgment are necessary to the continued

operation of the business establishment.

In any event, the national government (in whose trust APT previously held themortgage credits of BISUDECO) is not the employer of petitioner-unions members, whohad been dismissed sometime in May 1991, even before APT took over the assets of thecorporation. Hence, under existing law and jurisprudence, there is no reason to expecany kind of bailout by the national government. Even the NLRC found that no employer-employee relationship existed between APT and petitioners. Thus, the Commission

gravely abused its discretion in nevertheless holding that APT, as the transferee of theassets of BISUDECO, was liable to petitioners. (Abundio Barayoga, Bisudeco-PhilsucorCorfarm Workers Union (PACIWU CHAP-TPC) vs. Asset Privatization Trust, G. R. No.160073,October 24, 2005)

In other words, the liabilities of the previous owner to its employees are notenforceable against the buyer or transferee, unless (1) the latter unequivocally assumesthem; or (2) the sale or transfer was made in bad faith. Thus, APT cannot be heldresponsible for the monetary claims of petitioners who had been dismissed even before itactually took over BISUDECOs assets. (Abundio Barayoga, Bisudeco-Philsucor CorfarmWorkers Union (PACIWU CHAP-TPC) vs. Asset Privatization Trust, G. R. No.

160073,October 24, 2005)

Appeal

Moreover, we perceive a patent error in the mode of appeal elected by petitioner forthe purpose of assailing the Decision of the Court of Appeals. One of the requisites ofcertiorari is that there be no available appeal or any plain, speedy and adequate remedyWhere an appeal is available, certiorari will not prosper, even if the ground therefore isgrave abuse of discretion. In the case at bar, the proper remedy of petitioner VRESCO todispute the Decision of the appellate court is to file a petition for review on certiorari underRule 45 of the Rules of Court, which should be instituted within 15 days from receipt of the

assailed decision or resolution. In a long line of cases, the Court has consistentlyemphasized that after the lapse of the 15-day period to file a petition for Review onCertiorari, the special civil action of certiorari under Rule 65 is not, and cannot be, asubstitute for a lost remedy of appeal. In the case at bar, the petition was filed 45 daysafter receipt of the Resolution of the Court of Appeals denying its Motion forReconsideration, evidently beyond the 15-day period for filing a petition for review oncertiorari, hence the period to appeal was lost. Therefore, the instant petition cannoprevail since a petition for certiorari cannot substitute for a lost appeal, specially if oneserror in ones choice of remedy occasioned such loss or lapse. (MC Rural Electric Service



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Cooperative Inc., vs The Hon. Court of Appeals, G.R. No. 153144,October 12, 2006)

In Tomas Claudio Memorial College, Inc. v. Court of Appeals, we held that theabove provision governs appeals from awards or final orders of the Labor Arbiter to theNLRC. The right to appeal is not part of due process but a mere statutory privilege thathas to be exercised only in the manner and in accordance with the provisions of law

Since the perfection of an appeal within the statutory reglementary period is not onlymandatory but also jurisdictional, petitioners failure to perfect their appeal to the NLRCseasonably rendered the Labor Arbiters Decision final and executory. Accordingly, theNLRC has no jurisdiction to give due course to petitioners appeal, much less render aResolution modifying the Labor Arbiters Decision. Indeed, such Resolution is a patennullity for want of jurisdiction. (United Field Sea Watchman and Checkers Agency, vsWillie Requillo,G.R. No. 143527,December 6, 2006)

First, it is well settled that the remedy to obtain reversal or modification of judgmenton the merits is appeal. This is true even if the error, or one of the errors, ascribed to thecourt rendering the judgment is its lack of jurisdiction over the subject matter, or theexercise of power in excess thereof, or grave abuse of discretion in the findings of facts orof law set out in the decision. In the present case, the CA disposed of CA-G.R. SP No52373 on the merits. Petitioner claims that he received the Decision of the CA on May 17,2001. Consequently, he had 15 days from said date of receipt of assailed judgment, oruntil June 1, 2001, within which to file a petition for review on certiorari, the reglementaryperiod prescribed by Rule 45 of the Rules of Court to avail of said action. On July 9, 2001close to two months after said receipt, petitioner filed the present petition. Evidentlypetitioner has lost his remedy of appeal. The filing of the instant petition for certiorarcannot be used as a means of recovering his appeal as it is settled that certiorari is not asubstitute for lost appeal. The remedies of appeal and certiorari are mutually exclusive andnot alternative or successive.[Felix M. Cruz, Jr., vs CA, NLRC AND Citytrust BankingCorporation ,G.R. NO. 148544,July 12, 2006)

Perfection of Appeal

The perfection of an appeal in the manner and within the period prescribed by law

is not only mandatory but jurisdictional upon the court a quo, and the failure to perfect that

appeal renders its judgment final and executory. A fundamental precept is that the

reglementary periods under the Rules are to be strictly observed for being considered

indispensable interdictions against needless delays and an orderly discharge of judicial

business. The strict compliance with such periods has more than once been held to beimperative, particularly and most significantly in respect to perfection of appeals. The

finality of a judgment becomes a fact upon the lapse of the reglementary period to appeal

if no appeal is perfected, and the court loses all jurisdiction over the case, and it becomes

the ministerial duty of the court concerned to order execution of the judgment. After the

judgment has become final and executory, vested rights are acquired by the winning

party. Just as the losing party has the right to file an appeal within the prescribed period,

so also the winning party has the correlative right to enjoy the finality of the resolution of



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the case. (Becton Dickinson Phils. Inc. and Wilfredo Joaquin vs. NLRC, et. al.,G.R. Nos.

159969 & 160116, November 15, 2005)

A final note. We feel the need to point out that the delay incurred by counsel for

petitioner employees in filing the petition for certiorari before the Court of Appeals was

inexcusable. Their counsels claim of ignorance exacerbates more than relieves him of

accountability for his negligence. We can not over-emphasize that lawyers are duty-bound

nay, mandated, by the oath they took, to keep abreast of legal developments and to

participate in continuing legal education programs. To reiterate, the perfection of an appeal

in the manner and within the period permitted by law is not only mandatory, but also

jurisdictional. The rules on periods for filing appeals are to be observed religiously, and

parties who seek to avail themselves of the privilege must comply with the rules

(Reynaldo Dela Cruz and Elur S. Nono vs. Golar Maritime Services Inc. and Gotaas

Larsen Ltd.,G.R. No. 141277,December 16, 2005)

The failure of the petitioners to comply with the aforementioned NLRC Resolution is

fatal to their cause for their non-compliance with the requirement relative to the filing of

certificate of non-forum shopping did not toll the running of the period for perfecting their

appeal. Perfection of appeal on time is mandatory and jurisdictional. Failure to do so

makes the March 26, 2002 Decision of the Labor Arbiter final and executory. (Words in

bracket added). (Becton Dickinson Phils. Inc. and Wilfredo Joaquin vs. NLRC, et. al.,G.R.

Nos. 159969 & 160116, November 15, 2005)

The law is clear. An appeal, per article 223 of the Labor Code, shall be perfectedonly upon posting of a cash or surety bond in cases involving monetary award. Onperfection of appeal, it is well entrenched in this jurisdiction that perfection of an appea

within the period and in the manner prescribed by law is jurisdictional and non-compliancewith such requirement is fatal and has the effect of rendering the judgment final andexecutory.

In implementing article 223, respondent NLRC however laid down the rule allowingreduction of the amount of bond which it can approve in meritorious cases. There is acaveat however that the filing of the motion to reduce bond does not stop the running ofthe period to perfect appeal.

The plain import of article 223 of the Labor Code and the amended section 6, RuleVI of the New Rules of Procedure is that the reduction of the bond should be approved

within the ten (10) day appeal period and the appellant should exert its utmost diligence toobtain the approval of respondent NLRC before the lapse of the period or else there is abig risk that the appeal will be dismissed for non-perfection of the appeal due to theabsence of the appeal bond. This is evident form the last sentence of Section 6, Rule VIthat the filing xxx of the motion to reduce bond shall not stop the running of the period toperfect appeal. Thus the present rule is unequivocal that the filing of the motion does nottoll the running of the period of appeal and the logical implication and inevitable result isthe dismissal of the appeal if the reduction is denied. xxx. Thus respondent NLRCcorrectly affirmed the decision of Arbiter Santos since the appeal was not perfected due to

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lack of an appeal bond.(Stolt-Nielsen Marine Services Inc. (now Stolt-NielsenTransportation Group Inc.) vs. NLRC, et al, G.R. No. 147623,)December 13, 2005

There is no excuse for petitioners erroneous choice of remedy. In Heirs ofMarcelino Pagobo v. Court of Appeals, this Court ruled in no uncertain terms that redressfrom the CAs adverse decision in a special civil action for certiorari under Rule 65 should

not be sought under the same Rule but rather under Rule 45.

]

After all, Rule 45 is clearthat decisions, final orders or resolutions of the CA in any case, i.e., regardless of thenature of the action or proceeding involved, may be appealed to this Court by filing apetition for review, which would be but a continuation of the appellate process over theoriginal case. And in an even earlier case,] this Court stated that the remedy to obtain areversal or modification of a decision on the merits, as petitioners are attempting to dohere, is appeal. This is true even if the error ascribed to the appellate court is its lack of

jurisdiction over the subject matter, or the exercise of power in excess thereof, or graveabuse of discretion in the findings of fact or of law set out in its decision. Therefore,petitioners allegation that the CA committed grave abuse of discretion amounting to lackor excess of jurisdiction in rendering its decision and resolution in a manner contrary tolaw and applicable jurisprudence on the matter does nothing to advance their cause(Davao Merchant Marine Academy, et al. Vs. Court of Appeals, et al.G.R. No. 144075.

April 19, 2006)

It is clear, therefore, that the appeal filed by petitioner was dismissible. Respondentdid not even cite in its motion for reconsideration any justifiable excuse for the belatedfiling of the memorandum of appeal.[12] Well-settled is the principle that the perfection oan appeal within the statutory or reglementary period is not only mandatory, bu

jurisdictional, and failure to do so renders the questioned decision final and executory anddeprives the appellate court of jurisdiction to alter the final judgment, much less toentertain the appeal. The underlying purpose of this principle is to prevent needless delaya circumstance which would allow the employer to wear out the efforts and meagerresources of the worker to the point that the latter is constrained to settle for less thanwhat is due him.[13] This Court has declared that although the NLRC is not bound by thetechnical rules of procedure and is allowed to be liberal in the interpretation of the rules indeciding labor cases, such liberality should not be applied where it would render futile thevery purpose for which the principle of liberality is adopted. The liberal interpretationstems from the mandate that the workingmans welfare should be the primordial andparamount consideration. (Sallvador Bunagan vs. Sentinel Watchman & ProtectiveAgency, Inc.,G.R. No. 144376,September 13, 2006)

Rule on the Remedy of Appeal under Rule 45 and Certiorari under Rule 65

Meanwhile, in Hanjin Engineering and Construction Co., Ltd., v. CA, we held thathe remedy of appeal under Rule 45 and an original action for certiorari under Rule 65 aremutually exclusive and not alternative or cumulative.[19] Thus, a party should not joinboth petitions in one pleading. In Mercado v. Court Appeals, we held that when a partyadopts an improper remedy, as in this case, his petition may be dismissed outright. Wethen further elucidated that:

Indeed, not infrequently, litigants and parties to a petition have invoked liberaconstruction of the Rules of Court to justify lapses in its observance. Hopefully, it is not

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simply a cover-up of their own neglect or sheer ignorance of procedure. While indeed thisCourt has on occasion set aside procedural irregularities in the interest of justice, it mustbe stressed that liberality of construction of the rules should not be a panacea for alprocedural maladies. For this Court will not tolerate wanton disregard of the procedurarules under the guise of liberal construction. (Nagkahiusang Mamumuo sa PicopResources Inc et al. vs Court of Appeals, G.R. Nos. 148839-40, November 2, 2006)

Period of AppealEvident it is from the foregoing that an appeal from rulings of the Labor Arbiter to

the NLRC must be perfected within ten (10) calendar days from receipt thereof, otherwisethe same shall become final and executory. In a judgment involving a monetary award, theappeal shall be perfected only upon (1) proof of payment of the required appeal fee and(2) posting of a cash or surety bond issued by a reputable bonding company and (3) filingof a memorandum of appeal. A mere notice of appeal without complying with the otherrequisites mentioned shall not stop the running of the period for perfection of appeal.(Stolt-Nielsen Marine Services Inc. (now Stolt-Nielsen Transportation Group Inc.) vs.NLRC, et al, G.R. No. 147623,December 13, 2005)

In case of a judgment involving a monetary award, an appeal by the employer maybe perfected only upon the posting of a cash or surety bond issued by a reputable bondingcompany duly accredited by the Commission in the amount equivalent to the monetaryaward in the judgment appealed from. [Emphasis supplied.]

The period to appeal under Rule 45 is 15 days from notice of judgment or denial ofa duly-filed motion for reconsideration. Since petitioners made a timely motion forreconsideration of the adverse decision of the CA, their period to bring the matter to us onappeal began when they received notice of the CAs denial of their motion, May 2, 2000.Therefore, petitioners had until May 17, 2000 to file a petition for review on certiorari withthis Court. Petitioners lost their right to appeal when they allowed that period to lapsewithout having filed either a petition for review or even a motion for extension of time to fileone. Consequently, the decision of the CA became final and executory. (Davao MerchantMarine Academy, et al. Vs. Court of Appeals, et al.G.R. No. 144075. April 19, 2006)

QUESTIONS OF LAW

Petitioners are raising factual issues which are not proper in a petition for review.Well-entrenched is the rule that in an appeal via certiorari, only questions of law may be

reviewed. The question of whether petitioners were regular employees and were dismissed

without notice and hearing is a factual issue. It had been exhaustively discussed and ruledupon in the negative by both the Labor Arbiter and the NLRC. It bears stressing that factuafindings of quasi-judicial bodies that have acquired expertise are generally accorded greatrespect and even finality, if they are supported by substantial evidence.

In this case, we find no cogent reason to disturb the factual findings of the LaborArbiter as affirmed by the NLRC. We find supported by evidence on record their findingthat petitioners were not illegally dismissed, and that they were not regular employees tobegin with.(Jimmy Kent Rambuyon, et. al. vs. Fiesta Brands Inc.,G.R. No.

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157029,December 15, 2005)

Assumption by the Secretary

The Secretarys assumption of jurisdiction power necessarily includes mattersincidental to the labor dispute, that is, issues that are necessarily involved in the dispute

itself, not just to those ascribed in the Notice of Strike; or, otherwise submitted to him forresolution. As held in the case of International Pharmaceuticals, Inc. v. Sec. of Labor andEmployment, x x x [t]he Secretary was explicitly granted by Article 263 (g) of the LaborCode the authority to assume jurisdiction over a labor dispute causing or likely to cause astrike or lockout in an industry indispensable to the national interest, and decide the sameaccordingly. Necessarily, this authority to assume jurisdiction over the said labor disputemust include and extend to all questions and controversies arising therefrom, includingcases over which the Labor Arbiter has exclusive jurisdiction. Accordingly, even if notexactly on the ground upon which the Notice of Strike is based, the fact that the issue isincidental to the resolution of the subject labor dispute or that a specific issue had beensubmitted to the Secretary of the DOLE for her resolution, validly empowers the latter to

take cognizance of and resolve the same.(Skippers Pacific Inc and J.P. SamartzsisMaritime Enterprises Co., S.A., vs. Jerry Maguad and Porfero Ceudadano ,G.R. No.166363,August 15, 2006)

Improper service of Assumption of Jurisdiction Order of the Secretary of Labor

Applying this principle in the case at bar, presumption of receipt of the copies of theAssumption of Jurisdiction Order could not be lightly inferred from the circumstancesconsidering the adverse effect in case the parties failed to heed to the injunction directedby such Order. Worthy to note that in a number of cases, we have ruled that defiance ofthe assumption and return-to-work orders of the Secretary of Labor after he has assumed

jurisdiction is a valid ground for the loss of employment status of any striking union officeror member.[26] Employment is a property right of which one cannot be deprived ofwithout due process.[27] Due process here would demand that the respondent union beproperly notified of the Assumption of Jurisdiction Order of the Secretary of Laboenjoining the strike and requiring its members to return to work. Thus, there must be aclear and unmistakable proof that the requirements prescribed by the Rules in the mannerof effecting personal or substituted service had been faithfully complied with. Merelyposting copies of the Assumption of Jurisdiction Order does not satisfy the rigidrequirement for proper service outlined by the above stated rules. Needless to say, themanner of service made by the process server was invalid and irregular. Respondentunion could not therefore be adjudged to have defied the said Order since it was not

properly apprised thereof. Accordingly, the strike conducted by the respondent union wasvalid under the circumstances. {FEU-NRMF vs FEU-NRMF EMPLOYEESASSOCIATION-ALLIANCE OF FILIPINO WORKERS (FEU-NRMFEA-AFW), G.R. No168362, October 12, 2006}

Attorneys Fees

Under Article 2208 of the New Civil Code, attorney's fees can be recovered inactions for the recovery of wages of laborers and actions for indemnity under employer's



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liability laws. Attorney's fees is also recoverable when the defendant's act or omission hascompelled the plaintiff to incur expenses to protect his interest. Such conditions beingpresent in the case at bar, we find that an award of attorney's fees is warranted.( BernardoRemigio vs. NLRC, C.F. Sharp Crew Mgt., Inc. & New Commodore Cruise Line, Inc.,April12, 2006)

The award of attorneys fees is sustained. In actions for recovery of wages owhere an employee was forced to litigate and thus incurred expenses to protect his rightsand interests, a maximum of ten percent (10%) of the total monetary award by way ofattorneys fees is justified under Article 111 of the Labor Code, Section 8, Rule VIII, BookIII of its Implementing Rules, and paragraph 7, Article 2208 of the Civil Code. There neednot be any showing that the employer acted maliciously or in bad faith when it withheld thewages. There need only be a showing that the lawful wages were not paid accordinglyand that the employee was forced to file a case, as in the instant case. (Asian InternationaManpower Services, Inc. (AIMS), vs Court of Appeals and Aniceta Lacerna, G.R. No169652, October 9, 2006)

Here, petitioners illness and disability were the direct results of the demands of hisshipboard employment contract and the harsh and inhumane treatment of the officers onboard the vessel Olandia. For no justifiable reason, respondents refused to pay theircontractual obligations in bad faith. Further, it cannot be gainsaid that petitioners disabilityis not only physical but mental as well because of the severe depression, mental torture,anguish, embarrassment, anger, sleepless nights and anxiety that befell him. To protechis rights and interest, petitioner was constrained to institute his complaint below and hirethe services of an attorney. (Robert B. Cabuyoc vs Inter-Orient NavigationShipmanagement, Inc. , G.R. No. 166649,November 24, 2006)

In the present case, it is true that the Labor Arbiter and the NLRC failed to state thereasons why attorneys fees are being awarded. However, it is clear that privaterespondent was illegally terminated from his employment and that his wages and otherbenefits were withheld from him without any valid and legal basis. As a consequence, heis compelled to file an action for the recovery of his lawful wages and other benefits and, inthe process, incurred expenses. On these bases, the Court finds that he is entitled toattorneys fees. (PCL Shipping Philippine, Inc. and U-Ming Marine Transport Corporationvs NLRC,G.R. No. 153031,December 14, 2006)

Backwages

However, petitioner should not be made to pay private respondents backwages. InAgabon v. National Labor Relations Commission, it was held that where the dismissal isfor a just cause, as in the instant case, the lack of statutory due process should not nullifythe dismissal, or render it illegal, or ineffectual. However, the employer should indemnifythe employee for violation of his statutory rights. Thus, applying Agabon, the Court, inCentral Luzon Conference Corporation of Seventh Day Adventist Church, Inc. v. Court ofAppeals, modified the decision of the Court of Appeals by awarding P30,000.00 to anemployee who was dismissed for just cause but was not afforded due process. (ElectroSystem Industries Corporation vs. NLRC, G.R. No. 165282, October 5, 2005)



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Resolving the protracted litigation between the parties necessitates us to revisit ourpronouncements on the interpretation of the term backwages. We said that backwages ingeneral are granted on grounds of equity for earnings which a worker or employee has lostdue to his illegal dismissal. It is not private compensation or damages but is awarded infurtherance and effectuation of the public objective of the Labor Code. Nor is it a redress

of a private right but rather in the nature of a command to the employer to make publicreparation for dismissing an employee either due to the formers unlawful act or bad faithThe Court, in the landmark case of Bustamante v. National Labor Relations Commission,had the occasion to explicate on the meaning of full backwages as contemplated by Article279of the Labor Code of the Philippines, as amended by Section 34 of Rep. Act No. 6715.The Court in Bustamante said, thus:

The Court deems it appropriate, however, to reconsider such earlier ruling on the

computation of backwages as enunciated in said Pines City Educational Center case, by

now holding that conformably with the evident legislative intent as expressed in Rep. Act

No. 6715, above-quoted, backwages to be awarded to an illegally dismissed employee,should not, as a general rule, be diminished or reduced by the earnings derived by him

elsewhere during the period of his illegal dismissal. The underlying reason for this ruling is

that the employee, while litigating the legality (illegality) of his dismissal, must still earn a

living to support himself and family, while full backwages have to be paid by the employer

as part of the price or penalty he has to pay for illegally dismissing his employee. The

clear legislative intent of the amendment in Rep. Act No. 6715 is to give more benefits to

workers than was previously given them under the Mercury Drug rule or the deduction of

earnings elsewhere rule. Thus, a closer adherence to the legislative policy behind Rep

Act No. 6715 points to full backwages as meaning exactly that, i.e., without deducting

from backwages the earnings derived elsewhere by the concerned employee during theperiod of his illegal dismissal. In other words, the provision calling for full backwages to

illegally dismissed employees is clear, plain and free from ambiguity and, therefore, must

be applied without attempted or strained interpretation. Index animi sermo est.( Equitable

Banking Corpo. vs. Ricardo Sadac,G.R. No. 164772,June 8, 2006)

The Tayags are correct in pointing out that they are entitled to full backwages byreason of their illegal dismissal, notwithstanding the award of separation pay. The Courtmade this point clear in Santos v. NLRC.

The normal consequences of a finding that an employee has been illegallydismissed 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. The

statutory intent on this matter is clearly discernible. Reinstatement restores the employee

who was unjustly dismissed to the position from which he was removed, that is, to his

status quo ante dismissal, while the grant of backwages allows the same employee to

recover from the employer that which he had lost by way of wages as a result of his



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dismissal. These twin remediesreinstatement and payment of backwagesmake the

dismissed employee whole who can then look forward to continued employment. Thus do

these two remedies give meaning and substance to the constitutional right of labor to

security of tenure. The two forms of relief are distinct and separate, one from the

other. Though the grant of reinstatement commonly carries with it an award of

backwages, the inappropriateness or non-availability of one does not carry with itthe inappropriateness or non-availability of the other. Separation pay was awarded in

favor of petitioner Lydia Santos because the NLRC found that her reinstatement was no

longer feasible or appropriate. As the term suggests, separation pay is the amount that an

employee receives at the time of his severance from the service and, as correctly noted by

the Solicitor General in his Comment, is designed to provide the employee with "the

wherewithal during the period that he is looking for another employment." In the instant

case, the grant of separation pay was a substitute for immediate and

continued re-employment with the private respondent Bank. The grant of

separation pay did not redress the injury that is intended to be relieved by the

second remedy of backwages, that is, the loss of earnings that would have accruedto the dismissed employee during the period between dismissal and reinstatement

Put a little differently, payment of backwages is a form of relief that restores the

income that was lost by reason of unlawful dismissal; separation pay, in contrast, is

oriented towards the immediate future, the transitional period the dismissed

employee must undergo before locating a replacement job. It was grievous error

amounting to grave abuse of discretion on the part of the NLRC to have considered

an award of separation pay as equivalent to the aggregate relief constituted by

reinstatement plus payment of backwages under Article 280 of the Labor Code. The

grant of separation pay was a proper substitute only for reinstatement; it could not

be an adequate substitute both for reinstatement and for backwages. In effect, the

NLRC in its assailed decision failed to give to petitioner the full relief to which she

was entitled under the statute. (Emphasis supplied)( Equitable Banking Corpo. vs.

Ricardo Sadac,G.R. No. 164772,June 8, 2006)

With the reality that the petitioner was not illegally dismissed, she is not entitled tobackwages. Backwages may be granted only when there is a finding that the dismissal isillegal. (Nenuca A. Velez vs Shangri-las Edsa Plaza Hotel, G.R. No. 148261,October 92006)

Lastly, as to the award of backwages, we refer to Article 279 of the Labor Code (asamended by Section 34 of R.A. 6715) which provides that an employee who is unjustlydismissed from work is entitled to reinstatement without loss of seniority rights and otherprivileges, and to the payment of his full backwages, inclusive of allowances, and otherbenefits or their monetary equivalent computed from the time his compensation waswithheld from him (which, as a rule, is from the time of his illegal dismissal) up to the timeof his actual reinstatement. Similarly, under R.A. 6715,[36] employees who are illegallydismissed are entitled to full backwages, inclusive of allowances and other benefits or theirmonetary equivalent, computed from the time their actual compensation was withheld from



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them up to the time of their actual reinstatement but if reinstatement is no longer possiblethe backwages shall be computed from the time of their illegal termination up to the finalityof the decision. (Petron Corporation vs National Labor Relations Commission,G.R. No.154532, October 27, 2006

Petitioner further avers that the CA committed an error of law in ordering payment

of backwages from dismissal up to reinstatement instead of ordering backwages only fromthe time the CA ruled that there was illegal dismissal. Petitioner is mistaken. In the firstplace, the CA never ordered the reinstatement of respondents but instead ordered thepayment of separation pay. As to issue of backwages, the Court has ruled in a long line ofcases that where an employee would have been entitled to reinstatement with fulbackwages, but circumstances, i.e., strained relationships, makes reinstatemenimpossible, the more equitable disposition would be an award of separation pay equivalentto at least one month pay, or one month pay for every year of service, whichever is higherin addition to full backwages, inclusive of allowances, and other benefits or their monetaryequivalent, computed from the time the employees compensation was withheld from himup to the time of his supposed actual reinstatement. In this case, since payment ofbackwages and separation pay were ordered only upon promulgation of the CA Decision,and the case was further elevated to this Court, then the supposed actual reinstatement,had reinstatement been feasible, would have been upon the finality of this Courtsdecision. Thus, the computation of full backwages, inclusive of allowances, and othebenefits or their monetary equivalent, should be computed from the time the respondentscompensation was withheld from them up to the time of the finality of this decision. (StarPaper Corporation vs Carlito Espiritu, et al.,G.R. NO. 154006,November 2, 2006)

Computation of Backwages

Article 279 mandates that an employees full backwages shall be inclusive of

allowances and other benefits or their monetary equivalent. Contrary to the ruling of theCourt of Appeals, we do not see that a salary increase can be interpreted as either an

allowance or a benefit. Salary increases are not akin to allowances or benefits, and

cannot be confused with either. The term allowances is sometimes used synonymously

with emoluments, as indirect or contingent remuneration, which may or may not be

earned, but which is sometimes in the nature of compensation, and sometimes in the

nature of reimbursement. Allowances and benefits are granted to the employee apart or

separate from, and in addition to the wage or salary. In contrast, salary increases are

amounts which are added to the employees salary as an increment thereto for varied

reasons deemed appropriate by the employer. Salary increases are not separate grants

by themselves but once granted, they are deemed part of the employees salary. Toextend the coverage of an allowance or a benefit to include salary increases would be to

strain both the imagination of the Court and the language of law. As aptly observed by the

NLRC, to otherwise give the meaning other than what the law speaks for by itself, will

open the floodgates to various interpretations. Indeed, if the intent were to include salary

increases as basis in the computation of backwages, the same should have been explicitly

stated in the same manner that the law used clear and unambiguous terms in expressly

providing for the inclusion of allowances and other benefits.(Equitable Banking Corpo. vs.



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Ricardo Sadac,G.R. No. 164772,June 8, 2006)

Piece Rate Workers Backwages

However, the Court recognizes that there may be some difficulty in ascertaining the proper

amount of backwages, considering that the Tayags were apparently paid on a piece-rate

basis. In Labor Congress of the Philippines v. NLRC, he Court was confronted with a

situation wherein several workers paid on a piece-rate basis were entitled to back wages

by reason of illegal dismissal. However, the Court noted that as the piece-rate workers had

been paid by the piece, there [was] a need to determine the varying degrees of

production and days worked by each worker, and that this issue is best left to the

[NLRC]. We believe the same result should obtain in this case, and the NLRC be tasked

to conduct the proper determination of the appropriate amount of backwages due to each

of the Tayags. (Pepito Velasco vs. NLRC, G.R. No. 161694,June 26, 2006)

No Backwages during the Strike Rule

For the general rule is that backwages shall not be awarded in an economic strikeon the principle that a fair days wage accrues only for a fair days labor. Even in casesof ULP strikes, award of backwages rests on the courts discretion and only in exceptionalinstances.

Thus, J.P. Heilbronn Co. v. National Labor Union, instructs:

When in case of strikes, and according to the C[ourt of] I[ndustrial] R[elations] even ifthe strike is legal, strikers may not collect their wages during the days they did not go to

work, for the same reasons if not more, laborers who voluntarily absent themselvesfrom work to attend the hearing of a case in which they seek to prove and establish theirdemands against the company, the legality and propriety of which demands is not yetknown, should lose their pay during the period of such absence from work. The age-oldrule governing the relation between labor and capital or management and employee isthat of a fair days wage for a fair days labor. If there is no work performed by theemployee there can be no wage or pay, unless of course, the laborer was able, willingand ready to work but was illegally locked out, dismissed or suspended. It is hardly fairor just for an employee or laborer to fight or litigate against his employer on theemployers time. (Emphasis and underscoring supplied)

This Court must thus hearken to its policy that when employees voluntarilygo on strike, even if in protest against unfair labor practices, no backwages during the

strike is awarded. (Philippine Diamond Hotel and Resort, Inc. (Manila Diamond Hotel),

vs. Manila Diamond Hotel Employees Union,G.R. No. 158075,June 30, 2006)

Exception to the NO BACKWAGES RULE

Jurisprudential law, however, recognizes several exceptions to the no backwages rule, to

wit: when the employees were illegally locked to thus compel them to stage a strike; when



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the employer is guilty of the grossest form of ULP; when the employer committed

discrimination in the rehiring of strikers refusing to readmit those against whom there were

pending criminal cases while admitting nonstrikers who were also criminally charged in

court; or when the workers who staged a voluntary ULP strike offered to return to work

unconditionally but the employer refused to reinstate them. Not any of these or

analogous instances is, however, present in the instant case. (Philippine Diamond Hoteland Resort, Inc. (Manila Diamond Hotel), vs. Manila Diamond Hotel Employees

Union,G.R. No. 158075,June 30, 2006)

In Cromwell Commercial Employees and Laborers Union (PTUC) v. Court o

Industrial Relations, this Court made a distinction between two types of employees

involved in a ULP: those who are discriminatorily dismissed for union activities, and those

who voluntarily go on strike even if it is in protest of an ULP. Discriminatorily dismissed

employees were ordered entitled to backpay from the date of the act of discrimination, that

is, from the day of their discharge, whereas employees who struck as a voluntary act of

protest against what they considered a ULP of their employer were held generally notentitled to backpay. (Philippine Diamond Hotel and Resort, Inc. (Manila Diamond Hotel),

vs. Manila Diamond Hotel Employees Union,G.R. No. 158075,June 30, 2006)

Bond

Posting of Appeal Bond

From the foregoing, it is clear that the law only requires that the amount of theappeal bond be equivalent to the monetary award in the judgment appealed from. In thecase at bar, the Labor Arbiters decision specified the Peso equivalent of the US dollaramounts awarded, such that the respondent companies could validly choose, as they sochose, to file a cash/surety bond in the specified Peso equivalent. Had the assaileddecision not particularly indicated the Peso equivalent, but instead stated or its Pesoequivalent, petitioner employees line of argument would necessarily require that the Pesoequivalent be computed at the official conversion rate on the date of rendition of thedecision. Anything less would inevitably result in an inadequate or deficient bond; thus,would result in non-perfection of an appeal before the NLRC. Lamentably, such is not thecase here. Petitioner employees stance failed to consider that foreign currency conversionrates, which by their very nature, are floating. (Reynaldo Dela Cruz and Elur S. Nono vs.Golar Maritime Services Inc. and Gotaas Larsen Ltd.,G.R. No. 141277,December 16,2005)

The mandatory filing of a bond for the perfection of an appeal is evident from theaforequoted provision of Article 223 of the Labor Code which explicitly states that theappeal may be perfected only upon the posting of cash or surety bond. The word onlymakes it perfectly clear that the lawmakers intended the posting of a cash or surety bondto be the exclusive means by which an employers appeal may be perfected. Thisrequirement is intended to dissuade employers from using the appeal to delay, or evenevade, their obligation to satisfy their employees just and lawful claims.

It is true that the requirement of posting a bond on appeals involving monetary



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awards has been given a liberal interpretation in certain cases. However, relaxation ofthis rule can only be done where there was substantial compliance of the NLRC Rules ofProcedure or where the party involved, at the very least, demonstrated willingness toabide by the rules by posting a partial bond.

Petitioner did not post a full or partial appeal bond within the prescribed period

Petitioner could have even paid a moderate and reasonable sum as premium for suchbond as the law does not require outright payment but merely the posting of a bond toensure that the award will be eventually paid should the appeal be dismissed, but stillpetitioner failed to do so. Hence, we find no cogent reason to apply the same liberainterpretation in this case.

While, admittedly, Section 6, Rule VI of the NLRC Rules of Procedure allows thereduction of the appeal bond upon motion of the appellant, the exercise of theauthority is not a matter of right on the part of the movant but lies within the sounddiscretion of the NLRC upon showing of meritorious grounds. Nevertheless, even grantingarguendo that petitioner has meritorious grounds to reduce the appeal bond, the resultwould have been the same since it failed to post cash or surety bond within the prescribedperiod.(Stolt-Nielsen Marine Services Inc. (now Stolt-Nielsen Transportation Group Inc.)vs. NLRC, et al, G.R. No. 147623,December 13, 2005)

The second paragraph of Article 223 of the Labor Code states that when a judgment involving monetary award is appealed by the employer, the appeal may beperfected only upon the posting of a cash or surety bond issued by a reputable bondingcompany duly accredited by the Commission in the amount equivalent to the monetaryaward in the judgment. This is to assure the workers that if they finally prevail in the casethe monetary award will be given to them upon dismissal of the employers appeal, and ismeant to discourage employers from using the appeal to delay or evade payment of theiobligations to the employees. However, as provided for in Section 6, Rule VI of the NewRules of Procedure of the NLRC, such amount of the bond may be reduced in meritoriouscases, upon motion of the appellant. The exercise of this authority is not a matter of righon the part of the movant but lies within the sound discretion of the NLRC upon showing ofmeritorious grounds. Indeed, an unreasonable and excessive amount of bond would beoppressive and unjust, and would have the effect of depriving a party of his right to appeal(Ronaldo B. Casimiro, et. al. vs. Stern Real Estate Inc. Rembrandt Hotel and/or GraceKristin Meehan (General Manager), and Eric Singson (Owner),G.R. No. 162233,March 102006)

The posting of appeal bond is mandatory.[ Philippine Transmarine Carriers, Inc. vCortina, G.R. No. 146094, 12 November 2003, 415 SCRA 714, 717. ] Thus, Section 6Rule VI of the amendments to the New Rules of Procedure of the NLRC decrees:

SECTION 6. BOND. In case the decision of the Labor Arbiter or the RegionaDirector involves a monetary award, an appeal by the employer may be perfected onlyupon the posting of a bond, which shall either be in the form of cash deposit or suretybond equivalent in amount to the monetary award, exclusive of damages and attorneysfees.

In case of surety bond, the same shall be issued by a reputable bonding companyduly accredited by the Commission or the Supreme Court, and shall be accompanied by



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original or certified true copies of the following:a) a joint declaration under oath by the employer, his counsel, and the bonding

company, attesting that the bond posted is genuine, and shall be in effect until finaldisposition of the case;

b) an indemnity agreement between the employer-appellant and bondingcompany;

c) proof of security deposit or collateral securing the bond: provided, that a checkshall not be considered as an acceptable security;d) a certificate of authority from the Insurance Commission;e certificate of registration from the Securities and Exchange Commission;

f) certificate of authority to transact surety business from the Office of thePresident;

g) certificate of accreditation and authority from the Supreme Court; andh) notarized board resolution or secretarys certificate from the bonding company

showing its authorized signatories and their specimen signatures.

A cash or surety bond shall be valid and effective from the date of deposit orposting, until the case is finally decided, resolved or terminated, or the award satisfied.This condition shall be deemed incorporated in the terms and conditions of the suretybond, and shall be binding on the appellants and the bonding company.(CiudadFernandina Food Corporation Employees Union-Associated Labor Unions vs.Court ofAppeals,G.R. No. 166594 - July 20, 2006)

Under the second paragraph of Article 223 of the Labor Code, when a judgmentinvolving monetary award is appealed by the employer, the appeal is perfected only uponthe posting of a cash or surety bond issued by a reputable bonding company dulyaccredited by the NLRC in an amount equivalent to the monetary award in the judgmentThis assures the workers that if they finally prevail in the case, the monetary award will begiven to them on dismissal of the employers appeal. It is also meant to discourageemployers from using the appeal to delay or evade payment of their obligations to theemployees.(Intercontinental Broadcasting Corporation, vs Reynaldo Benedicto,G.R. No.152843, July 20, 2006)

Effect of Non-Payment of Appeal Bond

The case of Quiambao v. National Labor Relations Commission, was stressed in thesubsequent case of Santos v. Velarde where the petitioner therein appealed the LaborArbiters decision with the NLRC within the reglementary period but did not pay the bondon the ground that the appeal is made by one who is not an employer, hence, there is noneed for the posting of a cash or surety bond. This Court considered the appeal as nohaving been perfected due to the non-payment of the appeal bond and reiterated that theposting of a cash or surety bond is a requirement sine qua non for the perfection of anappeal from the Labor Arbiters monetary award. (Ciudad Fernandina Food CorporationEmployees Union-Associated Labor Unions vs.Court of Appeals,G.R. No. 166594 - July20, 2006)

In the case at bar, petitioner did not post a full or partial appeal bond within theprescribed period, thus, no appeal was perfected from the decision of the Labor ArbiterFor this reason, the decision sought to be appealed to the NLRC had become final and



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executory and therefore immutable. Clearly then, the NLRC has no authority to entertainthe appeal, much less to reverse the decision of the Labor Arbiter. Any amendment oralteration made which substantially affects the final and executory judgment is null andvoid for lack of jurisdiction, including the entire proceeding held for that purpose.[33](Emphasis and underscoring supplied) (Rural Bank of Coron vs. Annalisa Cortes,G.R. No164888,December 6, 2006)

Supersedeas Bond

Art. 223 of the Labor Code provides that in case of a judgment involving a monetary

award, an appeal by the employer may be perfected only upon the posting of a cash or

surety bond issued by a reputable bonding company duly accredited by the Commission in

the amount equivalent to the monetary award. We have ruled that the word only makes it

perfectly clear that the lawmakers intended that the posting of the bond is the exclusive

means by which an employers appeal may be perfected. The filing of a supersedeas

bond, which is actually a security required from an appellant to ensure payment of the

adjudged monetary award in case the appeal fails, is indispensable to the perfection of theappeal. We further held that the posting of a cash or surety bond for the perfection of an

appeal is jurisdictional, without which the NLRC, as in this case, does not have the

authority to review and revise the judgment of the labor arbiter.(Emma Cordova, et.

al.vs.KEYSAS Boutique,G.R. No. 156379,September 16, 2005)

Bank Certification not a valid compliance

with the Bond Requirement

In the case at bar, the respondents cannot be excused from making a substantial

compliance with the bond requirement. The law does not require outright payment of the

appealed monetary award, but only the posting of a cash or surety bond issued by a

reputable bonding company duly accredited by the NLRC or this Court, and not a mere

bank certification which only states the total amount of deposit existing in such bank as of

a certain date. The cash or surety bond will ensure that the award will be eventually paid in

case the appeal fails. A mere bank certification of the type submitted by respondents wil

not. What respondents have to pay is a moderate and reasonable sum for premiums for

such bond.( Emma Cordova, et. al.vs.KEYSAS Boutique,G.R. No. 156379,September 16,

2005)

Liberal Interpretation on Posting of Bond

The provision of Article 223 of the Labor Code requiring the posting of a bond forthe perfection of an appeal of a monetary award must be given liberal interpretation in linewith the desired objective of resolving controversies on the merits. If only to achievesubstantial justice, strict observance of the reglementary periods may be relaxed iwarranted. However, this liberal interpretation must be justified by substantial compliancewith the rule. As we declared in Buenaobra v. Lim King Guan:



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It is true that the perfection of an appeal in the manner and within the periodprescribed by law is not only mandatory but jurisdictional, and failure toperfect an appeal has the effect of making the judgment final and executory.However, technicality should not be allowed to stand in the way of equitablyand completely resolving the rights and obligations of the parties. We have

allowed appeals from the decisions of the labor arbiter to the NLRC, even iffiled beyond the reglementary period, in the interest of justice.[ Id., citingPhilippine-Singapore Ports Corporation v. National Labor RelationsCommission, G.R. No. 67035, 29 January 1993, 218 SCRA 77]( Intercontinental Broadcasting Corporation, vs Reynaldo Benedicto,G.R.No. 152843, July 20, 2006)

Boundary System

As early as 1956, the Court ruled in National Labor Union v. Dinglasan that the

jeepney owner/operator-driver relationship under the boundary system is that of employer-

employee and not lessor-lessee. This doctrine was affirmed, under similar factuasettings, in Magboo v. Bernardo and Lantaco, Sr. v. Llamas, and was analogously applied

to govern the relationships between auto-calesa owner/operator and driver, bus

owner/operator and conductor, and taxi owner/operator and driver.

The boundary system is a scheme by an owner/operator engaged in transporting

passengers as a common carrier to primarily govern the compensation of the driver, that

is, the latters daily earnings are remitted to the owner/operator less the excess of the

boundary which represents the drivers compensation. Under this system, the

owner/operator exercises control and supervision over the driver. It is unlike in lease of

chattels where the lessor loses complete control over the chattel leased but the lessee is

still ultimately responsible for the consequences of its use. The management of the

business is still in the hands of the owner/operator, who, being the holder of the certificate

of public convenience, must see to it that the driver follows the route prescribed by the

franchising and regulatory authority, and the rules promulgated with regard to the business

operations. The fact that the driver does not receive fixed wages but only the excess of

the boundary given to the owner/operator is not sufficient to change the relationship

between them. Indubitably, the driver performs activities which are usually necessary or

desirable in the usual business or trade of the owner/operator. (Oscar Villamaria, Jr. vs.

Court of Appeals, G.R. No. 165881,April 19, 2006)

Under the boundary-hulog scheme, petitioner retained ownership of the jeepne

although its material possession was vested in respondent as its driver. In cas

respondent failed to make his P550.00 daily installment payment for a week, the agreemen

would be of no force and effect and respondent would have to return the jeepney t

petitioner; the employer-employee relationship would likewise be terminated unles

petitioner would allow respondent to continue driving the jeepney on a boundary basis o



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P550.00 daily despite the termination of their vendor-vendee relationship.(Oscar Villamaria

Jr. vs. Court of Appeals, G.R. No. 165881,April 19, 2006)

Burden of Proof

We find a flaw in petitioners assertion that private respondents reconnecting the

electric service, although the payment was insufficient, was an indication that hemisappropriated petitioners funds. As pointed out by the Labor Arbiter, petitioner did noadduce any evidence that private respondent caused the said reconnection. The assertionhas no probative value unless proven. When private respondent cancelled the receiptsthe petitioner should have been put on notice that there was something unusual, before itallowed the reconnection.

In dismissal cases, the employer carries the burden of proving that the dismissal isin order. Article 277 (b) of the Labor Code states in no uncertain terms:

The burden of proving that the termination was for a valid or authorized causeshall rest on the employer.(Manila Electric Company (MERALCO),VS. NLRC and ManuelH. Delos Santos,G.R. No. 153180, September 2, 2005)

Time and again we have said that in illegal dismissal cases, the employer is

burdened to prove just cause for terminating the employment of its employee with clear

and convincing evidence. The weakness of the employees defense should not operate to

relieve nor discharge the employer of its burden to prove its charges pursuant to the

guaranty of tenure granted by the Constitution to employees under the Labor Code. The

case of the employer must stand or fall on its own merits. (Robert C. Casol and

NAGSAMA-PUREFOODS-PULO vs. Purefoods Corporation G.R. No. 166550,September

22, 2005)

In dismissing an employee, the employer has the burden of proving that the formerworker has been served two notices: (1) one to apprise him of the particular acts oromissions for which his dismissal is sought, and (2) the other to inform him of hisemployers decision to dismiss him. In Tan v. NLRC, it was held that the first notice muststate that dismissal is sought for the act or omission charged against the employeeotherwise, the notice cannot be considered sufficient compliance with the rules. (ElectroSystem Industries Corporation vs. NLRC, G.R. No. 165282, October 5, 2005)

In Electro System Industries Corporation v. National Labor Relations Commission[16] we held that, in dismissing an employee, the employer has the burden of proving that

the worker has been served two notices: (1) one to apprise him of the particular acts oromissions for which his dismissal is sought, and (2) the other to inform him of hisemployers decision to dismiss him. The first notice must state that the dismissal is soughtfor the act or omission charged against the employee, otherwise the notice cannot beconsidered sufficient compliance with the rules. It must also inform outright that aninvestigation will be conducted on the charges particularized therein which, if proven, wilresult to his dismissal. Further, we held that a notation in the notice that the employeerefused to sign is not sufficient proof that the employer attempted to serve the notice to theemployee. (Lakpue Drug Inc., et. al. vs. Ma. Lourdes Belga, G.R. No. 166379, October



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20, 2005)

In termination cases, like the present controversy, the burden of proving thecircumstances that would justify the employees dismissal rests with the employer. Thebest proof that petitioner should have presented to prove the probationary status ofrespondent is her employment contract. None, having been presented, the continuous

employment of respondent as an account specialist for almost 11 months, from April 17,2000 to March 12, 2001, means that she was a regular employee and not a temporaryreliever or a probationary employee. The 2 Payroll Authorities offered by petitionershowing that respondent was hired as a replacement, and later, as a probationaryemployee do not constitute substantial evidence. As correctly found by the NLRC, none ofthese documents bear the conformity of respondent, and are therefore, self-serving.

And while it is true that by way of exception, the period of probationary employment

may exceed six months when the parties so agree, such as when the same is established

by company policy, or when it is required by the nature of the work, none of these

exceptional circumstance were proven in the present case. Hence, respondent whose

employment exceeded six months is undoubtedly a regular employee of petitioner.(San

Miguel Corporation vs. Caroline C. Del Rosario,G.R. Nos. 168194 & 168603,December

13, 2005)

On this, the Court could not be any clearer in Mayon Hotel & Restaurant vsRolando Adana, et al, when we held that inasmuch as respondents therein have set outwith particularity in their complaint, position paper, affidavits and other documents thelabor standard benefits they are entitled to, and which they alleged that petitioners thereinhave failed to pay them, it became incumbent upon the employers to prove that they havepaid these money claims. This is in tune with the general precept that: one who pleadspayment has the burden of proving it, and even where the employees must allege

nonpayment, the general rule is that the burden rests on the defendant to provenonpayment, rather than on the plaintiff to prove non payment. The reason for the rule isthat the pertinent personnel files, payrolls, records, remittances and other similardocuments which will show that overtime, differentials, service incentive leave and otherclaims of workers have been paid are not in the possession of the worker but in thecustody and absolute control of the employer. (Veterans Security Agency Inc. and JesusR. Vargas vs. Felipe Gonzalvo, jr.,G.R. No. 159293,December 16, 2005)

In constructive dismissal, the employer has the burden of proving that the transferof an employee is for just and valid grounds, such as genuine business necessity. Theemployer must be able to show that the transfer is not unreasonable, inconvenient, or

prejudicial to the employee. It must not involve a demotion in rank or a diminution ofsalary and other benefits. If the employer cannot overcome this burden of proof, theemployees transfer shall be tantamount to unlawful constructive dismissal. (WestmontPhamacueticals, Inc., United Laboratoties, Inc., and/or Jose Yao Campos, Carlos Ejercito,Ernesto Salazar, Eliezer Salazar, Jose Solidum, Jr. vs. Ricardo C. Samaniego,G.R. Nos.146653-54,Ricardo C. Samaniego vs. Westmont Pharmaceuticals, Inc. and UnitedLaboratories, Inc.,G.R. Nos. 147407-08,February 20, 2006)

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The Court is well-aware that in labor cases, the employer has the burden of

proving that the employee was not dismissed or if dismissed, that the dismissal was not

illegal, and failure to discharge the same would mean that the dismissal is not justified and

therefore illegal. The Court ruled in Great Southern Maritime Services Corp. v. Acua, to

wit:

Time and again we have ruled that in illegal dismissal cases like the present one,the onus of proving that the employee was not dismissed or if dismissed, that thedismissal was not illegal, rests on the employer and failure to discharge the same wouldmean that the dismissal is not justified and therefore illegal. Thus, petitioners must not onlyrely on the weakness of respondents evidence but must stand on the merits of their owndefense. A party alleging a critical fact must support his allegation with substantiaevidence for any decision based on unsubstantiated allegation cannot stand as it wiloffend due process. x x x (Emphasis supplied)(Dina Abad, Joseph Martinez and EliseoEscanillas, JR., vs. Roselle Cinema, Silverscreen Corp. and Vermy Trinidad,G.R. No.141371March 24, 2006)

In conjunction with the above-mentioned policy of the law, it is well-encrypted inour jurisprudence that the employer has the burden of proving that the dismissal is for justcause, and failure to do so would necessarily mean that the dismissal was unjustified and,therefore, illegal. It is the employer who must prove its validity, and not the employee whomust prove its invalidity. To allow an employer to dismiss an employee based on mereallegations and generalities would place the employee in a dangerous situation. He wouldbe at the mercy of his employer and the right to security of tenure, which this Court isbound to protect, would be unduly emasculated.(Sanyo Travel Corporation v. NationalLabor Relations Commission, 345 Phil. 346, 357 (1997)(Tower Industrial Sales, et al. Vs.Hon. Court of Appeals, et al.G.R. No. 165727. April 19, 2006)]

Time honored is the rule that in dismissal cases, the burden of proof is on theemployer to show that the employee was dismissed for a valid and just cause. In the caseat bar, ETPI dismissed Diamse based on loss of trust and confidence. However, to be avalid ground for dismissal, the loss of trust and confidence must be based on a willfulbreach and founded on clearly established facts. A breach is willful if it is doneintentionally, knowingly and purposely, without justifiable excuse, as distinguished from anact done carelessly, thoughtlessly, heedlessly or inadvertently. Loss of trust andconfidence must rest on substantial grounds and not on the employers arbitrariness,whims, caprices or suspicion, otherwise, the employee would eternally remain at themercy of the employer. The employer, thus, carries the burden of clearly and convincingly

establishing the facts upon which loss of confidence in the employee may be made to rest.(Eastern Communications Phils., INC., vs. Maria Charina Diamse,G.R. No. 1692997)

Petitioner, however, insists that during his four-day absence, respondent wasleading an illegal strike in its sister company. In the first place, there is no showing thatthe strike held at the Genuino Agro Industrial Development Corporation is illegal. It is abasic rule in evidence that each party must prove his affirmative allegation. Since theburden of evidence lies with the party who asserts the affirmative allegation, the plaintiff orcomplainant has to prove his affirmative allegations in the complaint and the defendant or

http://www.supremecourt.gov.ph/jurisprudence/2006/april2006/G.R.%20No.%20165727.htmhttp://www.supremecourt.gov.ph/jurisprudence/2006/april2006/G.R.%20No.%20165727.htm


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the respondent has to prove the affirmative allegation in his affirmative defenses andcounterclaim. Since it was petitioner who alleged that such strike is illegal, petitioner must,therefore, prove it. Except for such bare allegation, there is a dearth of evidence in thiscase proving the illegality of said strike. (Genuino Ice Company, Inc. vs. Alfonso S.Magpantay, G.R. No. 147790,June 27, 2006)

It bears stressing that in termination cases, the employer bears the onus of proving

that the dismissal was for just cause. Indeed, a condemnation of dishonesty and disloyaltycannot arise from suspicions spawned by speculative inferences. Because of itssubjective nature, this Court has been strictly scrutinizing the allegations and the evidencein cases of dismissal based on loss of trust and confidence because they can easily beconcocted by an abusive employer. Thus, when the breach of trust or loss of confidencealleged is not borne by clearly established facts, as in this case, such dismissal on thecited grounds cannot be allowed. The fact that respondent is a managerial employee doesnot by itself exclude him from the protection of the constitutional guarantee of security oftenure. We agree with the NLRC and the CA that one month suspension, and notdismissal, is the proper sanction against respondent under the circumstances of this case.(C.F. SHARP & CO., INC., vs Renato Zialcita,G.R. No. 157619, July 17, 2006)

It must be emphasized at this point that the onus probandi to prove the lawfulnessof the dismissal rests with the employer. In termination cases, the burden of proof restsupon the employer to show that the dismissal is for just and valid cause. Failure to do sowould necessarily mean that the dismissal was not justified and therefore was illegal. Inthe instant case, petitioners failed to discharge the burden of proving the legality andvalidity of respondents dismissal.(NLRC vs MA. Bernabette S. Salgarino,G.R. No164376,July 31, 2006)

As for the medical examination result which petitioner belatedly presented beforethe Court of Appeals, the law clearly requires that there should first be a job order relatingto an existing overseas position before a worker shall be subjected to a medica

examination. In this case, as petitioner is the one insisting that a job order exists, he bearsthe burden of producing the same. After all, the rule is settled that he who alleges musprove.[32] Petitioner miserably failed to discharge this burden.(Godofredo Morales, vsSkills International Company and/or Maher Daas and Marivic Daas and/or Wallal AlWallan, G.R. No. 149285,August 30, 2006)

In termination cases, the employer has the burden of proving that an employee has beenlawfully dismissed. Respondents have discharged the burden of proving seriousmisconduct in this case. As defined, [m]isconduct is improper or wrongful conduct. It isthe transgression of some established and definite rule of action, a forbidden act, adereliction of duty, willful in character, and implies wrongful intent and not mere error of

judgment. To be a just cause for dismissal under Art. 282 of the Labor Code, suchmisconduct (a) must be serious; (b) must relate to the performance of the employeesduties; and (c) must show that the employee has become unfit to continue working for theemployer.(Estrella S. Baez, et al. vs. De La Salle University,G.R. No. 167177,September27, 2006)

As correctly pointed out by petitioners, the burden of proving just cause fordismissing an employee rests upon the employer, and the employers failure to dischargesuch burden results in a finding that the dismissal is unjustified and therefore illegal. It is



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the employer who must prove the validity of the termination and not the employee whomust prove the reverse. The employer must affirmatively show rationally adequateevidence that the dismissal was for a justifiable cause. (Nelson Zagala and Feliciano M.

Angelesvs. Mikado PhilippinesCorporation ,G.R. No. 160863, September 27, 2006)

Moreover, one who pleads payment has the burden of proving it. The reason for the

rule is that the pertinent personnel files, payrolls, records, remittances and other similardocuments which will show that overtime, differentials, service incentive leave, and otherclaims of workers have been paid are not in the possession of the worker but in thecustody and absolute control of the employer. Thus, the burden of showing with legacertainty that the obligation has been discharged with payment falls on the debtor, inaccordance with the rule that one who pleads payment has the burden of proving it.[38]Only when the debtor introduces evidence that the obligation has been extinguished doesthe burden shift to the creditor, who is then under a duty of producing evidence to showwhy payment does not extinguish the obligation. In this case, petitioner was unable topresent ample evidence to prove its claim that respondent had received all his salariesand benefits in full. (G & M Philippines, Inc vs Romil V. Cuambot,G.R. No162308,November 22, 2006)

The Court agrees with the analysis and conclusion of the CA that, based on thefacts of the case, respondents were constructively dismissed. It must be stressed thawhere an employee complains of constructive dismissal, it is the employer who bears theburden of proving that the transfer of an employee is for just and valid grounds, such asgenuine business necessity, and such transfer is not unreasonable, inconvenient, orprejudicial to the employee. An employers failure to discharge such burden would makehim liable for unlawful contructive dismissal. (Star Paper Corporation vs Carlito Espiritu, eal.,G.R. NO. 154006,November 2, 2006)

It is well-settled that the employer has the burden of proving that the dismissal wasfor a valid and just cause. Failure to discharge this burden of proof substantially meansthat the dismissal was not justified and therefore, illegal.[14] Given petitioners failure todischarge this burden, the Court sustains the finding of illegal dismissal vis--visrespondent Joselito Tinghil. (Pamplona Plantation Company,vs Ramon Acosta, et al., GR.No. 15319,December 6, 2006)

Business Judgment Rule

While it may indeed be conceded that the previous dispensation of petitioner IBC-13 footed the bill for the withholding taxes, upon discovery by the new management, thiswas stopped altogether as this was grossly prejudicial to the interest of the petitioner IBC-13. The policy of withholding the taxes due on the differentials as a remedial measure wasa matter of sound business judgment and dictates of good governance aimed at protectingthe interests of the government. Necessarily, the newly-appointed board and officers of thepetitioner, who learned about this grossly disadvantageous mistake committed by theformer management of petitioner IBC-13 cannot be expected to just follow suit blindly. Anillegal act simply cannot give rise to an obligation. Accordingly, the new officers werecorrect in not honoring this highly suspect practice and it is now their duty to rectify thisanomalous occurrence, otherwise, they become remiss in the performance of their sworn



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responsibilities. .(IBC 13 vs NOEMI B. AMARILLA, G.R. No. 162775,October 27, 2006)

Certificate of Non-Forum Shopping

Petitioners appreciation of the Escorpizo ase is less than accurate. The petitioners

therein were Esperanza Escorpizo, a dismissed teacher, and the union to which she

belonged, the University of Baguio Faculty Education Workers Union. Neither the teachenor the union signed the certification of non-forum shopping. It was their counsel who

executed and signed the certification. We thus held that the certification of non-forum

shopping must be by the plaintiff or any of the principal party and not the attorney.

Escorpizo laid down the doctrine that a certification of non-forum shopping signed only by

the parties counsel is insufficient. Nowhere in the said case, other than a mere obiter

dictum, did we categorically rule that a certification of non-forum shopping signed by only

one of the principal parties is sufficient compliance with the rules. Therefore, petitioners

reliance on Escorpizo is patently misplaced.(Jimmy Kent Rambuyon, et. al. vs. Fiesta

Brands Inc.,G.R. No. 157029,December 15, 2005)

The requirement that a petitioner or principal party should sign the certificate ofnon-forum shopping applies even to corporations, considering that the mandatorydirectives of the Rules of Court make no distinction between natural and juridical persons(LDP Marketing, Inc. and Ma. Lourdes De La Pea, vs. Erlinda Dyolde Monter,G.R. No.159653,January 25, 2006)

Liberal interpretation of the rule on forum shopping

The Court finds petitioners reasons justifiable enough to warrant a relaxation of therule on certification against forum-shopping. In addition, it has been ruled that where theparties share a common interest in the case or filed the case as a collective, raising onlyone common cause of action or defense, then the signature of one of the petitionersacting as representative, is sufficient compliance.(Tirso Enopia, Virgilio Nano,et al vsCourt of Appeals, G.R. No. 147396, July 31, 2006)

It must also be kept in mind that while the requirement of the certificate of non-forum shopping is mandatory, nonetheless the requirements must not be interpreted tooliterally and thus defeat the objective of preventing the undesirable practice of forum-shopping (Bernardo v. NLRC, 255 SCRA 108 [1996]). Lastly, technical rules of procedureshould be used to promote, not frustrate justice. While the swift unclogging of courdockets is a laudable objective, the granting of substantial justice is an even more urgenideal. (Italics in the original; emphasis and underscoring supplied) (LDP Marketing, Inc.and Ma. Lourdes De La Pea, vs. Erlinda Dyolde Monter,G.R. No. 159653,January 25,2006)

Certificate of Non-forum Shopping by a Corporation



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The necessity for a certification of non-forum shopping in filing petitions for certioraris found in Rule 65, Section 1, in relation to Rule 46, Section 3 of the Rules of CourtThese provisions require it to be executed by the corresponding petitioner or petitionersAs no distinction is made as to which party must execute the certificate, this requirement ismade to apply to both natural and juridical entities. When the petitioner is a corporation,the certification should be executed by a natural person. Furthermore, not just any person

can be called upon to execute the certification, although such a person may have personalknowledge of the facts to be attested to.(Philippine Airlines, Inc., Manolo Aquino, JorgeMa. Cui, Jr. and Patricia Chiong, vs. Flight Attendants AND Stewards Association of thePhilippines (FASAP) and Leonardo Bhagwani G.R. No. 143088,January 24, 2006)

In Zulueta v. Asia Brewery, Inc.,[ G.R. No. 138137, 8 March 2001, 354 SCRA 100we held that the requirement for petitioner to sign the certificate of non-forum shoppingapplied even to corporations, considering that the mandatory directives of the Rules ofCourt made no distinction between natural and juridical persons.

In case of a corporation, it has long been settled that the certificate must be signedfor and on its behalf by a specifically authorized officer or agent who has personaknowledge of the facts required to be disclosed.

We discussed the rationale behind the rule in National Steel Corporation v. Court ofAppeals:

Unlike natural persons, corporations may perform physical actions onlythrough properly delegated individuals; namely, its officers and/or agents.

The corporation, such as the petitioner, has no powers except those expresslyconferred on it by the Corporation Code and those that are implied or

incidental to its existence. In turn, a corporation exercises said powersthrough its board of directors and/ or its duly authorized officers or agents.Physical acts, like the signing of documents, can be performed only by naturalpersons duly authorized for the purpose by corporate by-laws or by specificact of the board of directors.(Metro Drug Distribution, nc. vs Noel M. Narciso,G.R. No. 147478,July 17, 2006)

Board Resolution

Thus, only individuals vested with authority by a valid board resolution may sign thecertificate of non-forum shopping in behalf of a corporation. In addition, the Court has

required that proof of said authority must be attached. Failure to provide a certificate ofnon-forum shopping is sufficient ground to dismiss the petition. Likewise, the petition issubject to dismissal if a certification was submitted unaccompanied by proof of thesignatorys authority. (Philippine Airlines, Inc., Manolo Aquino, Jorge Ma. Cui, Jr. andPatricia Chiong, vs. Flight Attendants AND Stewards Association of the Philippines(FASAP) and Leonardo Bhagwani G.R. No. 14

2006 Final Case Index

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Transcript of 2006 Final Case Index